Purchasing intellectual property from industry is expensive up front, but will ultimately reduce the cost of sustaining combat systems in the long run, according to the service’s chief logistician.

Gen. Gustave Perna, chief of Army Materiel Command (AMC), has directed lawyers and contracting officers under his command to purchase IP rights and technical data packages from industry whenever feasible.

“We need to purchase the intellectual property of the equipment that we are going after,” Perna told defense reporters during a Nov. 1 breakfast in Washington, D.C., hosted by George Washington University’s Project for Media and Security.

Army Gen. Gus Perna, commander of Army Materiel Command, gives opening remarks at the Warrant Officer Education Summit on  July 14, 2017, at Redstone Arsenal, Alabama. (U.S. Army photo by Sgt. 1st Class Teddy Wade)
Army Gen. Gus Perna, commander of Army Materiel Command, gives opening remarks at the Warrant Officer Education Summit on July 14, 2017, at Redstone Arsenal, Alabama. (U.S. Army photo by Sgt. 1st Class Teddy Wade)

In his first year at the head of AMC, Perna has directed his workforce to pursue data rights as part of contracts to secure spare parts and services. That has involved getting lawyers and contracting personnel involved in “breaking the paradigm, taking them off the hamster wheel,” Perna said.

“We got used to not asking for the tech data rights,” he said. “It just became the norm that we weren’t going to ask for it because it costs too much money. So I have challenged my lawyers and contracting officers to get involved and challenge that and not just roll over at the first dollar amount. … At some point in time – I don’t know, I wasn’t the commander – the decision was made not to address that. I have challenged my team to address that.”

“We don’t need to own the intellectual property in total, but we need to have access to the property to allow us to have availability to the supply chain and so that after a piece of equipment comes into the system, we are not limited by access to one organization for repair parts,” he added. “We want to maintain good competition and relative prices for repair parts.”

Often when a vehicle breaks down, the Army can only get spare parts from the original equipment manufacturer at a markup when the same part could be made cheaper in house or by a third-party manufacturer, Perna said. For that reason, the Army needs to own the technical specs of certain pieces of equipment and should be willing to pay a premium for that IP, he said.

“This is not something that we have been used to doing because if the metric is cost, schedule and performance, you make decision accordingly,” he said. “Intellectual property, rightly so, should cost some money because they developed it, they are putting it in their system. They’re industry, they ought to make money for the things they’re doing. I’m not against that. But not at disadvantage to us.”

Much of the Army’s heavy equipment has been idle for years because it was not needed in the wars in Iraq and Afghanistan. Abrams tanks, Bradley Fighting Vehicles and other combat platforms are in good shape because they have been maintained but are now beginning to break down because of a ramp-up in “decisive-action” training for a potential near-peer fight, Perna said. Wherever possible, Perna wants to produce spare parts in house or launch competitions that will drive down supply chain cost.

“In simplest terms – widget A – I might be able to repair it or produce it at one of my depots, arsenals or plants for a significantly lower amount of money that what would be sold to me by industry,” he added. “That’s not a dig. That’s just a complement to our great industrial base that we have … working for us.”

The Army is also contending with budgetary restrictions that will keep legacy vehicles in service for decades to come, which entails expensive sustainment programs. As the Army modernizes those legacy vehicles and begins to bring replacements on board, the job becomes more complicated and expensive, Perna said. Over the past decade and half of war, AMC personnel settled into a familiar pattern of letting contracts that did not include data rights as a requirement. They also were not looking forward to a possible large-scale conflict that would require readying, fielding and maintaining huge numbers of combat vehicles.

“We weren’t doing anything wrong, but we were allowing ourselves to make decisions, in my opinion, based on the wrong metrics,” Perna said. “Having the tech data rights will enable us to reduce the cost of future sustainment requirements. The up-front money in the purchase of equipment is significant, but it is not as significant as what future sustainment cost will be.”

Perna has aligned AMC with acting assistant secretary of the Army for acquisition, logistics and technology Steffanie Easter to “set the conditions so that sustainment is … executable,” Perna said. In negoatiation of all future AMC contracts, Perna expects IP and technical data rights to be on the table. Data rights likely cannot be retroactively obtained for current or legacy systems, he said.

“Once it’s out of the barn door, it’s out of the barn door,” he said.