bae systems proprietary unpublished work copyright 2013 bae systems. all rights reserved. national...

BAE SYSTEMS PROPRIETARY Unpublished Work Copyright 2013 BAE Systems. All rights reserved.

National 8(a) Association 2015 Winter Conference

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02 FEB 2015

Presenter: Susan King

Director, Small Business Operations

Electronic Systems, Nashua, NH

Subcontracting Navigating through the new Landscape


Introduction to BAE SYSTEMS

Global Company – Core Values

Global Pressures on Defense Spending

Five Year Outlook for Defense Budgets

Declining DoD Budgets in US

Increased Regulation on Defense Contractors

New Normal Pressures Small Business Opportunities

Good News! - US Government DoD CSP extended

What Can Small Businesses Do?

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Today’s Topic’s


GLOBAL COMPANYCore Values to Small Business

BAE Systems, Plc – Global Defense Contractor - ~84,000 EmployeesHome Markets - United Kingdom, United States, Australia, India, Saudi Arabia

Core Values to Market Strategy:Build significant indigenous capability and footprintMutually beneficial partnerships with investment in local businessesSharing of skills and technologiesProvide sustainable employment for local people

Core Commitment in Small Business Mission Statement:

“BAE Systems is committed to partnering with and providing opportunities to qualified small businesses. We believe small businesses are an essential component of the BAE Systems team. Together we can drive innovative solutions and make the technology leaps necessary to be leaders in the industry. We recognize that supporting and strengthening our small businesses not only benefits the economy, but delivers BAE Systems a stronger and more diverse supply base.”

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BAE SYSTEMS PROPRIETARY Unpublished Work Copyright 2013 BAE Systems. All rights reserved. 4

Global Pressures on Defense Spending

1. The recovery in global Defence expenditure will stall

With further cuts required to government spending in the West and declining oil revenues dampening growth in the Middle East, Defence expenditure may contract marginally in 2015.

2. Defence budgets will continue to fall in the West

NATO accounting for more than half of global Defence spend; largest portion of NATO funding comes from the US.

US Budget Control Act of 2011 set caps on Defence spending through FY21.

3. Rapid growth in Middle East & North Africa will end as oil revenues slump

With Defence spending having grown at an average annual rate of almost 9 per cent in real terms over the past three years, declining returns from the oil sector will temper short term growth in MENA.

4. Asia-Pacific will solidify role as key driving force for future growth

Growth in Asian Defence expenditure is expected to accelerate from 3.3 per cent in 2014 to 4.8 per cent in 2015

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5. Ukraine & Islamic State continue as cause of uncertainty

*Source: IHS Jane's Defence Budgets 2014 End of Year Report

BAE SYSTEMS PROPRIETARY Unpublished Work Copyright 2013 BAE Systems. All rights reserved. 5

Five Year Defense Spending Trends:

*Source: IHS Jane's Defence Budgets End of Year Report

Five Year Defense Spending Trends: 1. Slow rate of decline of ~7% over 5 years in North America (-1.25% per Year)2. Slowing rate of increase of ~20% over 5 years in Asia Pacific (+4% per Year)3. Stagnant rate of increase of ~5% over 5 years in ROW (~1% per Year)

http://www.ihs.com/jdb





• Government Spending Budget Uncertainties• Shifting Priorities

• Affordability Focus• Increased competition for Fewer Programs• Low Cost and Technical Acceptable vs. Best Value

• Agility / Responsiveness• “Award Stagnation” - Longer Award Cycle Times• Shorter Delivery Cycle Times

• Execution is a given• Quality / Delivery / Technical performance

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The “New Normal”

Changed Landscape for New Defense Markets……


“New Normal” - Customer Directives

Target affordability and controlling cost growth

You will establish an affordability target to be treated by the program manager (PM) like a Key Performance Parameter (KPP).

... you will provide a quantitative analysis of the program’s portfolio or mission area across the life cycle of all products in the portfolio or mission area ...

DoD Directives Affordability Responsiveness

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Special Operators Want Lighter, User-Friendly Equipment – And Fast National Defense MagazineBy Grace V. Jean August 2010

The U.S. Special Operations Command doesn’t care whether industry has the latest and greatest technology if it can’t put it quickly into the hands of troops. “Innovation and responsiveness are keys to our success. Agility is essential,” said Navy Adm. Eric T. Olson, head of U.S. Special Operations Command, in a speech to the 2010 Special Operations Industry Conference, in Tampa, Fla. If the speed of acquisition is throttle that determines the speed of war, then fielding new technologies “as rapidly as possible is a primary method of shortening conflicts and saving lives,” Olson said. Since 9/11, SOCOM’s equipment budget has more than doubled from $900 million to $2 billion in 2010 — $1.5 billion in procurement and about $500 million in research and development. Next year, however, R&D funding will drop by 26 percent, which means that SOCOM will be doing less of its own development and will be searching for new technology in the private sector, said James Cluck, SOCOM’s acquisition executive. “We would never have enough money to pay for it all ourselves,” said Cluck in an interview with National Defense. Another challenge is the slow pace of the military acquisition process. “We try to do it as rapidly as we can, but it’s tough to match up science and technology with the way we do budgeting and programming in the department,” he said. “We have to wring every bit of capability out of the technologies that are available,” said Cluck. “Sometimes we just need to figure out how to use current technologies better.”

The U.S. Special Operations Command doesn’t care whether industry has the latest and greatest technology if it can’t put it quickly into the hands of troops.“Innovation and responsiveness are keys to our success. Agility is essential,” said Navy Adm. Eric T. Olson, head of U.S. Special Operations Command, in a speech to the 2010 Special Operations Industry Conference, in Tampa, Fla.


“New Normal” - Affordability

“When I talk about affordability, I’m really not talking about cost-

control, per se…I’m talking about not

starting programs that we can’t afford”

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BBP

2.0

Affordability as a

Requirement

Superior Supplier Incentive Program

Leverage Industry

IR&DEnforce Open

Architectures

Increase Small

Business Opportunities

“New Normal” - Better Buying Power (BBP) 2.0

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NO MENTION – “COST OF INCREASED REGULATION”


Enforcement:DCAA adds

3,000 Auditors

ITAR

document number 10

ENVIRONMENTAL: Safe Chemicals

Act (pending); TSCA; Hexavalent

Chromium restriction; potential ban on

Phthalates, REACH;…. …..

FARDFARS

“NEW NORMAL” INCREASING REGULATION

Dodd/Frank: Conflic

t

Minerals Reporting

FFATA

Specialty Metals,

Buy American

COUNTERFEIT

PARTSNon-Compliance = We’re out of the game

Small Business

Participation

Cooperation & Communication is essential for efficient & effective Compliance.


What Happened?• Department of Defense announced the extension of the CSP until December 31,

2017. New requirements set forth in the NDAA FY15

Why is this Good for Small Businesses?• Drives efficiency, long-range planning and strategic Small Business partnerships• Allows increased small business spend and Outreach rather than cost of reporting• Enables consistent streamlined structure and reporting across the enterprise

• Capitalizes policy effort for small business utilization • Two reports twice a year instead of 600+ government reports twice a year• Maximizes small business supplier selection and Outreach efforts• Understanding and high visibility of small business efforts by senior executives

• CSP participants are subject to annual DCMA reviews and performance rating • New small business initiatives required each year and must be achieved• BAE Systems CSP spend performance exceeds statutory requirements

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Good News! – CSP ExtensionComprehensive Subcontracting Plan (CSP)


What can Small Businesses Do?1. Develop Supply Chain Strategy – Your Core Skill

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Prime Contractor who presents many opportunities

Focus on one target opportunity for a product or service. Find your niche and exceed the customers expectation.

Supplier


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Strategy Focus

• Know the Market• Set yourself apart

from competition• Create a strong

business plan in niche environment

• Find a Mentor; whether a Small Business Subject Matter Expert or a fellow business owner. Reach Out!

Reliable, Trusted, Performance

• Build / Maintain Valued Relations

• Create Belief• Build the Trust• Master Open

Communication• Consistent

Accomplished Performance

• Adaptable• Flexible

Challenges

• Meeting Customer Expectations

• Understanding Big Company Culture

• Credit /Cash Flow • Employees;

Locating, Hiring, and Training

• Networking

What can Small Businesses Do?2. Gain Competitive Advantage


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Security – Classified information

Understanding FAR / DFARS compliance

ITAR- Export Control / US Citizens

DMS- Diminishing material / Obsolescence

Communications- Public Releases

Gifts/Gratuities/Business Courtesies

Counterfeit Parts Prevention

Specialty Metals DFARS 252.225-7014 Preference for Domestic Specialty Metals

Matching Technology to requirements

What can Small Businesses Do?3. Understand Prime Contractor Challenges

http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/dfars/Dfars252_220.htm


What can Small Businesses Do?4. Deliver Successful Results – to Customer NEED

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1) Focus on “Core Competency”

2) Provide “First Rate” Customer Service

3) Create Loyalty & Enthusiasm in Customer Base

4) Understand & Manage Customer:

Needs / Requirements / Expectations

5) Manage Your Business (Cash Flow / People)

6) Look for Mentor-Protégé Opportunity’s

7) (Both formal, informal, and w/ other business owners)

8) Create Lasting Partnering Relationships


Visit our BAE Systems website……http://www.baesystems.com/supplierdiversity

• Sector Structure

Electronic SystemsIntelligence & SecurityPlatforms & ServicesEnterprise Shared Services

Welcome to the US Supplier Website. Supplier information on each of the following businesses is available. Click the module links below for supplier information specific to your sector of choice, or navigate this page for information on BAE Systems, Inc. as a whole.

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What can Small Businesses Do?5. Understand your Customer 1st – Info and POC’s

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http://www.baesystems.com/supplierdiversity

http://www.baesystems.com/supplierdiversity


Thank you

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Questions?

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bae systems proprietary unpublished work copyright 2013 bae systems. all rights reserved. national...

Documents

bae systems team

small business bae systems

year slide

defense spending slide

small businesses

year defense spending

new defense markets

new landscape slide