MILITARY DEFENSE AEROSPACEAn Industry Overview

Presented by: Tracy Lea

ASU Entrepreneurship & Innovation Group

The Arizona LandscapeDiscretionary Spending, 2010 $ 689 Billion

Discretionary Spending, 2015 $ 752 Billion

Total Defense Contracts, 2010 $ 372 Billion

Total Arizona Defense Contracts, 2010 $ 11 Billion

Sources: ACA, CBO, USASpending.gov

Tucson, Phoenix and Yuma serve as the primary hubs for defense related activities and employment-associated with military installations.

Agenda

• Arizona Landscape• Small Business• Government Contracting and Procurement• Timing and Payment• Additional Government Opportunities• Competitive Advantages• Best Practices

The Arizona Landscape

Military Installations:

Installation/Location Activity

Davis-Monthan AFB-Tucson Air Combat Command-355th Fighter Wing

Fort Huachuca-Sierra Vista Army Intelligence Center

Luke AFB-Glendale Air Combat Command-56th Fighter Wing-F 35 Training

Marine Corps Air Station-Yuma 3rd Marine Aircraft WIng

Economic Impact

Aerospace/Defense in AZ Direct Impact*• $300 million tax revenues, 2009• 39,400 workersIndirect Impact• 93,800 jobs• $8.8 billion gross product

*Source: “The Economic Impact of Aerospace and Defense Firms on the State of Arizona,” W.P. Carey School of Business, Arizona State University, September 2010.

Top Arizona Defense Contractors

2009 2010 2011 2012 201312.4 10.8 12.91 12.9 5.2

Total AZ DoD Contracts (in billions)Source: USASpending.gov

1. Raytheon 48%2. TriWest 11% ***3. Boeing 7.3%4. Honeywell 5.2%5. General Dynamics 4.6%

Source: ACA, USASpending.gov

AZ Regional Focus

DoD Contracts, 2010• Tucson– $ 5.2 billion

• Phoenix– $ 4.4 billion

Source: ACA, USASpending.gov

Products

Product Lines, 2010

OtherGuided MisslesGeneral Health CareMissiles/SpaceGuided Missiles/Sub-systemsAircraft Rotary Wing

Source: USASpending.gov

Areas of Focus

• Defense Missile & Space Systems• Guided Missiles• Rotary Wing Aircraft• Gas Turbines• Defense Electronics/Communications Systems• Maintenance

Additional Areas

• Support for the F 35’s at Luke AFB• UAS• Radar• Personal Armor• Cyber-security

Extensive opportunities within the value chain

Air Transport Industry Value Chain*

* Sources: ACA, Oxford Economics

Where Does Small Business Fit In?

$ 100 billion in US spending Small Business

Small Business typically defined <500 employeeswww.sba.gov/size - check to verify for your industry

Q. Why is this important?A. Federal law stipulates a small business contracting goal.

Small Business

Small Business Contracting Targets• Overall 23%– WOB 5%– Disadvantaged 5%– HUBZone 3%– SDVOB 3%

• VA– VOSB 7%

Getting Started

Do your research!!Know the industryKey players-end users***Proper etiquetteSeek legal advice

Government Contracting & Procurement

Key Terms:• COTS-Commercial Off the Shelf• FAR-Federal Acquisition Regulation-www.acquisition.gov/far/ • CFR-Code of Federal Regulations• CO-Contracting Officer• NAICS-North American Industry Classification System

– www.census.gov/epcd/www/naics.html • FSC-Federal Supply Class

– www.logisticsinformationservice.dla.mil/H2/search.aspx • D-U-N-S Data Universal Numbering System

– https://iupdate.dnb.com/iUpdate/companylookup.htm • SAM-System for Award Management- www.sam.gov

Government Contracting

FREE Tech and Marketing assistance in the realm of government contracting to:

• Small business owners• HUBZone companies• Women/Minority owned small business• Veteran/Service Disabled Veteran

Checklist

1. Be sure your business is organized properly2. Have a good track record*3. Obtain a DUNS number4. NAICS code5. Certifications-self certify or 3rd party6. Register with SAM

Procurement Types/Methods

www.acquisition.gov

www.FedBizOpps.gov >$25,000

Micro-purchase• <$3,000• Do not require bids

Procurement Types

Sealed Bidding• Specific requirements• ID potential bidders• IFB-Invitation for Bid• Lowest bidderRequest for Proposal• Looking for solution via objective• Contractors propose solution• Generally more complex in nature• Subject to negotiation

Procurement Types

Sole Source/Set Aside• One vendor in mind• Open for a particular group• Patents, IP, unique scale, geography• Direct negotiationMultiple Awards• Items common among agencies

– Computers, phones, office supplies

• GSA-General Services Administration• Price competitive• Past performance, financial strengthwww.gsa.gov

Procurement TypesSubcontracting• >$650,000 require subcontracting to SB• Register with SAM to be searchable for subcontracting• http://web.sba.gov/subnet/ Teaming• Several companies “team” up

– 1 Prime– 1 Subcontractor

• Great opportunity for small business• Leverage relationships to bring larger company• Mutually beneficial

Caution: Get NDA and legal advice before entering into a Teaming contract

Procurement Links

Procurement Technical Assistance CentersFederal Business OpportunitiesBiz.gov – Federal Opportunities

BidSourceCentral Contractor Registration

ProcureAZCity of Phoenix

SBA Office of Government ContractingArizona State Procurement Office

Source: www.AZPTAC.com

Timing & Payment

• Know contract cycles– Government FY runs OCT 01-SEP 30

• Fiscally different than private sectors• When possible negotiate terms to incentivize timely

payment• Ensure paperwork is submitted correctly• Know the payment terms-plan cash flow accordingly• Commercial payment cards• EFT-Electronic Funds Transfer

Additional Government Opportunities

STTR-Small Business Technology Transfer– Commercializing technology through private sector– Pairs small business with non profit research institution

SBIR-Small Business Innovation Research– Develops ideas– Federal agencies specify topics for solicitation

Competitive Advantage

Market your business to win business!

Keep a clean recordPPIRS-Past Performance Information Retrieval System

Best Practices

Document properlyKnow the rules-not knowing can hurt you

Operate in good faithManage cash flows

Understand SOW/MetricsDevelop relationships

Don’t overstep your boundsDevelop an audit plan

Compliance