Paul Finley, defence and security expert at PA Consulting, speaks to Defence IQ about defence contracts.
Paul says: “There is policy in place to try to make the defence sector friendly for small businesses, but the way in which defence organisations go to market is the single biggest factor affecting the relationship.”
When asked about when defence organisations seek to do less in-house work, Paul says “this tends to result in asking for larger contracts that SMEs won’t or can’t take on directly – they are then at the mercy of the good behaviour of the primes. There are parallels here with the construction sector where primes were holding onto cash to ease the very fine margins they were operating to, as an example of the risks run by SMEs.”
Paul continues “to win a defence contract, you need to understand how the enterprise at hand works. Only then can you understand what the customer needs and how to integrate your solution in the defence environment, for example, people, processes, doctrine, information sources and requirements etc. You also need to get to grips with the contracting regulations.”
On managing defence contracts, Paul says: “The wide array of contracts makes managing defence contracts an increasingly complex affair. The key to managing defence contracts is to keep them as simple as possible and to make sure that in placing contracts, you have the product and service integration capability in place too. This is true for any contracting situation, and the only thing that is specific to defence is understanding how to do the integration in a defence context.”
The article goes on to talk about the pro’s and cons of offsets. Paul says: “Offsets can be beneficial for the receiving country if they are in or can get themselves into a position to properly exploit them. For example, using them to turbo-charge the development of industrial capabilities is actually quite hard if it is going to be sustained over the longer term. For example, providing a sustainable source of people with the base education, enthusiasm and experience required to play key roles. What you could call ‘dislocated offsets’ e.g. provision of education and facilities, can be easier to exploit.”
Paul adds: “Technology and intellectual property (IP) transfer from the selling party’s point of view, as you can only sell IP once. This means you have to strike a fine balance between offering enough to win, but not so much that you can’t then exploit your IP elsewhere.”
Read the full article in Defence IQ