2015 Defense Industry Outlook

Interview with John Powers

What are the opportunities for the Department of Defense to become more efficient and innovative while addressing the increase in cyber threats? John Powers, Deloitte’s Defense Sector Leader, talks about what’s ahead for Department of Defense in 2015.

What are the biggest opportunities for the Department of Defense in the coming year?

The Department of Defense (DoD) is committed to finding new ways to do business, is open to policy and process changes, and providing incentives for business partners to come along for the journey. This approach by DoD can create opportunities for innovation in weapons systems, supply chain management, deployment, and support service delivery.

There are a wide range of new ideas–from autonomous vehicles, drones, artificial intelligence, and sensors–that are in development or in the early stages of introduction and application. When you look at this wave of innovation, it also has an impact on how the rest of DoD functions in order to scale adoption. Training and deployment, systems integration, and allocation of resources are all at play when innovations like these are being adopted.

Additionally, the DoD is driving efficiency in the way it executes services across its many branches and units. There are efforts underway to make infrastructure less redundant such as moving websites and non-mission services to the cloud. The DoD should consider products that enable it to standardize and simplify its internal operations, which at the end of the day makes a more efficient and effective DoD.

What trends do you see disrupting ‘business as usual’ in 2015?

Technology is the fundamental disruptive force at work, and the DoD is experiencing this force internally in terms of its IT systems. More significantly, however, are external technology disruptors. Cheaper and more advanced technologies are available to adversaries of the U.S. Cyber-related attacks and activity will likely continue to be disruptors in 2015 and beyond. Defending U.S. networks through super-computing and artificial intelligence will likely continue to be critical to minimizing, deflecting, and defeating cyber-related attacks.

On a more positive note, another disruptor is additive manufacturing. Right now, additive manufacturing is being used on a small scale but if used more broadly in the next few years, it has the potential to be a disruptor by significantly changing DoD’s supply chain. Whether it is operations that require high levels of customization, parts in remote locations, or in low volume, additive manufacturing has the ability to better serve many of DoD’s specialized needs.

Part of the challenge for DoD is determining the best application for additive manufacturing. Questions remain as to the best areas within DoD to continue implementing this technology in order to build up the knowledge base, as well as capacity in the workforce so it can be adopted more broadly throughout the supply chain. A recent Deloitte study describes how additive manufacturing could be piloted more broadly within the DoD.

What are some innovative actions federal organizations could adopt to meet mission objectives more efficiently?

In the center of this discussion about DoD opportunities and innovation is acquisition reform. Last year, there was good momentum towards it. And that effort should continue because of what it could mean for the DoD. Acquisition reform could have significant benefits for DoD, including better buying power and incentives for industry to possibly invest more in research and development. So at the end of the day, the DoD budget could go farther and more innovation could take place.

Two important pieces of acquisition reform are the training of the acquisition workforce along with contract requirements and measure outcomes. The acquisition workforce needs greater knowledge of the products and services being bought, which has the likelihood of providing the government and industry a better quality of acquisition.

And lastly, there is still a gulf between contract requirements and measurable outcomes. Improved communication and dialogue with industry is needed as well as simplified acquisition processes and better acquisition leading practices. This improved communication is important if the DoD wants to broaden the spectrum of procurement to include more commercial items and leading practices.

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