Shanahan Wants Industry Feedback In Setting Standards And Prioritizing DoD Changes

The second highest Pentagon civilian said on Tuesday that industry has to help the Defense Department change how it does business in procurement and adopting technology.

Deputy Secretary of Defense Patrick Shanahan focused on several key points where industry can help the department as it moves forward with the new national defense strategy.

Patrick M. Shanahan, Deputy Secretary of Defense, poses for his official portrait in the Army portrait studio at the Pentagon in Arlington, Virginia, July 19, 2017.  (U.S. Army photo by Monica King/Released)

Patrick M. Shanahan, Deputy Secretary of Defense, poses for his official portrait in the Army portrait studio at the Pentagon in Arlington, Virginia, July 19, 2017. (U.S. Army photo by Monica King/Released)

First, the government and industry together share a significant vulnerability in the cyber realm. Shanahan said industry probably cannot now sign a sort of cyber disclosure statement, akin to a financial disclosure statement, saying everybody you do business with is secure.

“I mean, I don’t think you can sign that tomorrow, but we need to get to that level because your secrets, our secrets are exposed. And the culture we need to get to is we’re going to defend ourselves,” Shanahan said at the USNI/AFCEA WEST 2018 conference.

He said that just as with security clearances, the department wants the bar to become so high that cyber security becomes just a condition of doing business with the Defense Department. However, he clarified there were no plans to change those standards in the near term.

“We won’t drop that safe on anyone’s head right away but that’s where we want to get to. It’s too important,” he said.

Shanahan also said as the lead person on Foreign Military Sales (FMS) “the Department of Defense is open for business” and he will be industry’s advocate on those sales. He recognized there are problems with FMS and he is responsible for them and vowed the department will improve them.

Although feedback through industry groups is especially helpful, he wants them to stay honest and needs help specifically in prioritizing department changes. Shanahan said there are a thousand different items that should be changed, but the Pentagon needs help distilling those to the most critical ones.

The deputy secretary brought up the importance of affordability, but said he does not just want things at a lower percentage cost than before. Rather, he is looking to go beyond measuring improvement to get an absolute scale of what an item or service can or should cost.

Shanahan compared it to a 40-yard dash in football, saying he wants to see how fast you can run in relation to your position on the team.

He also underscored that industry should set standards rather than the department because they are on the “front end” and spend more time thinking about how technology evolves. DoD needs a better means of testing and then it can more quickly iterate and integrate capabilities, Shanahan said.

Shanahan said his overall core message to industry at the conference was about opportunity for partnership.

“I think, to me, partnerships goes back to this thing around performance. How do we really get at performance, what good is? I know there’s a lot of work that I have to do internally to make it easier to do business with the government. It’s a big place.”

He said the department wants to focus on prioritizing, stability, and telling industry where they should invest.

“Half of what we do in the Pentagon is buy things. On the services side of the business we buy 1,000 things a day. There are 30,000 contracting officers. So it’s not as though with 5 or 6 meetings we’re going to just whip the place into shape.”

However, Shanahan said by combining prioritization in the near-term and doing good business DoD can help the defense industry be more stable. “I understand how important it is to have stability, Stability is crucial,” he said.

Longer term, he said DoD wants to help be clearer to industry on where to invest. “We know that you’re going to invest, it’s just we have to be very clear on how we want to integrate those investments and how we want to involve certain capabilities.”

Shanahan said in his position he thinks there is a real chance “to do something great in the sense that we have the best industrial base in the world. The commercial sector is leveraging it more than the Department of Defense and the Department of Defense needs to move up in its ability to leverage it.”

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