A new House panel focused on helping companies contract with the Pentagon during its inaugural hearing yesterday examined risks the industry faces.
Rep. Bill Shuster (R-Pa.), chairman of the House Armed Services Committee’s (HASC) new Panel on Business Challenges within the Defense Industry, kicked off the work of the seven-member panel by quizzing a witness on why firms find it risky to work with the Pentagon.
“A lot of people would consider doing business with the Pentagon not very risky and burdensome,” Shuster said.
A.R. “Trey” Hodgkins, senior vice president for national security and procurement policy at TechAmerica, in response noted the potential loss of intellectual property companies face.
“Many companies will walk away from the business on that basis alone,” Hodgkins said, testifying with a panel of industry representatives.
He said his trade association believes contracting proposals currently being weighed could give the government the rights to more intellectual property from contractors than some companies want to relinquish. For small to mid-sized companies, losing the rights to the data behind their patents could threaten their survival, he said.
Also, firms are concerned about increasing requirements for them to disclose information–through acquisition regulation reporting requirements and on contractor databases–that their competitors could see, he said.
“The disclosure of what they deem to be the secret sauce of the success of their company on a public website or some form of a database that competitors may see it, they see that as too big of a risk to overcome, and so they choose not to face those challenges and face the commercial market instead,” Hodgkins said.
Shuster said he and other lawmakers hear from businesses in their districts–particularly small firms and those focused on science and technology–about varied problems they have trying to navigate the Pentagon acquisition system.
“While there are programs out there to assist businesses in transitioning innovative ideas and technologies to a final end product that satisfies a military requirement, there are many obstacles in the way,” the panel chairman said. “In these current economic times, we must make good use of every tax dollar we spend on defense. And we can do this by leveraging the heart of the American workforce, small businesses.”
He maintained reducing barriers to entry for such firms will “generate competition, spur innovation, and stimulate the economy.”
Rep. Rick Larsen (D-Wash.), an outspoken Boeing [BA] supporter, is the ranking member of the Panel on Business Challenges within the Defense Industry, which also includes Reps. Allen West (R-Fla.), Betty Sutton (D-Ohio), Jon Runyan (R-N.J.), Colleen Hanabusa (D-Hawaii), and Bobby Schilling (R-Ill.).
The HASC, in announcing the new panel last week, said it will “examine the current defense business environment, to identify contracting or regulatory issues facing the defense industry; the use of incentives and mandates to meet established goals; structural challenges facing various sectors within of the industrial base, including universities and research institutes; impact of the current fiscal environment on the defense industry, at both the prime and subcontractor levels; and opportunities to reduce barriers to entry.”
Shuster said the HASC leaders told the panel to “take a deep-dive into the challenges facing firms that already work with the Department of Defense and those that want to do business with the department.”