DOD leaders to meet next week with industry executives

By Tony Bertuca / March 25, 2021 at 1:09 PM

Senior Pentagon acquisition officials are scheduled to meet March 31 with defense industry associations to discuss a range of issues, according to a Defense Department spokeswoman.

Officials from the Office of the Secretary of Defense and the military services will attend the meeting, according to Jessica Maxwell, a Pentagon spokeswoman. A list of planned attendees was not immediately available.

Top Pentagon acquisition officials typically meet quarterly with contractor associations like the Aerospace Industries Association, the National Defense Industrial Association and the Professional Services Council. The associations did not immediately respond when asked about their participation in the meeting.

There are multiple areas of concern for defense contractors that could come up during the discussion.

For instance, the Biden administration is expected to request a flat fiscal year 2022 defense budget and senior Pentagon officials have made it clear they will seek to reduce or eliminate legacy programs in favor of developing new technologies to counter China.

The F-35 Joint Strike Fighter, manufactured by Lockheed Martin, is one system being eyed for possible reductions.

Additionally, defense contractors and their suppliers say they are still feeling the economic impact of the COVID-19 pandemic. Senior defense officials have told Congress they need about $11 billion in supplemental funding to address the pandemic’s impact on the defense industrial base, but lawmakers have yet to provide the funding.

Contractors also remain interested in the Pentagon’s progress payment structure, which determines defense industry cash flow.

A year ago, Pentagon acquisition officials approved an increase in progress payment rates to help contractors cope with the COVID-19 crisis, raising the rate from 80% to 90% for large businesses and from 90% to 95% for small businesses.

It is unclear how long the current structure will remain in place, but the Pentagon has entered into arrangements with three universities to study key areas related to contract finance and pricing that could impact the way defense contractors are paid.

Defense officials and lawmakers are also concerned about supply chain security and the defense industry’s cyber vulnerabilities.

Meanwhile, Lockheed, the world’s largest defense contractor, wants the federal government to approve its proposed $4.4 billion acquisition of Aerojet Rocketdyne. The deal is being challenged by Raytheon Technologies.

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