MOSA – What Does the Industry Really Want
A commercial sector approach to acquisition of major defense systems and platforms qualitatively garners support across government and industry. The desire for increased innovation, competition and speed are (generally) criteria embraced by the Defense ecosystem. However, the introduction and inclusion of MOSA as a business model categorically brings to light its variance from the traditional defense prime model.
To be clear, the traditional Defense Industrial Base and its corresponding business model has evolved as a derivative of its customer: the US Federal Government. Based upon acquisition and procurement structures put in place over the latter half of the twentieth century, the Department of Defense has purchased products and services from industry. They have done this purchasing in a manner that has created a customized ecosystem of businesses with attributes (some costly, cumbersome, and extremely nuanced) that are unique to a singular customer’s needs.
In this monopsony, aspects like contractual limitations on profit margins and preference for cost-plus pricing have resulted in a business model in which there is increasing reliance on the sustainment phase to generate a substantial portion of its revenue. The security of revenue afforded by this tranche of the platform’s lifecycle provides visibility that is needed when justifying the initial investment in said platform.
As the Department of Defense pivots its acquisition strategy to embrace MOSA, there are requisites for Industry to be a successful partner to the Mission. If the model is to be changed, then Industry – the collective ecosystem of companies in the Defense Industrial Base – needs to have a voice in how change transpires.
Government commitment to MOSA
As a fundamental shift in acquisition approach, industry needs a commitment from government to maintain MOSA standards and adhere to the model for the duration of a program or platform’s lifecycle. While this seems rudimentary, clearly defined variables are required as many in Industry must tweak their formula to calculate return on investment.
Visibility is key
Visibility is needed to prioritize resources and plan investments. The establishment of roadmaps for the development of future programs is critical, providing industry the needed inputs to plan resources and make informed bid/no-bid decisions. Roadmaps also demonstrate the government’s long-term commitment to MOSA. The existing industry-government working groups (such as MOSWG) are valuable to fostering regular communication and information sharing and represent a model for other DoD organizations looking to implement MOSA.
MOSA should be implemented at enterprise-level
For industry, one of the incentives for MOSA implementation is to expand market opportunities across systems and programs, opening the door to new prospective customers. For this to transpire, MOSA needs to be implemented at an enterprise level across the Department of Defense. While Army is most prominent in utilizing MOSA, the participation of other DoD entities at scale would offer industry more revenue-generating opportunities.
Intellectual Property – enough said.
A by-product of increased modularity and openness of data is enabling competitor and “frenemy” access to a company’s intellectual property. Discussions with government and industry have evolved – often in working groups – to define which portions of IP can be retained, and what is truly necessary to access. Allowing industry to retain below-interface IP encourages continued investment and provides a more welcome environment for non-traditional vendors.
Software licensing commercial best-practices
It’s not just about hardware. MOSA also applies to software. Let’s apply what has been successful in the commercial sector via software licensing to allow the government to procure the most innovative solutions in a way that is compatible with industry business models.
Integration rulebook is needed
How modular is too modular? When systems are broken down to the sub-component level, the need for increased levels of integrations is introduced to the platform. Who (or what) bears fault when something goes wrong as a result of interoperability issues vs the failure of one single module?
In a free market economy, industry will always follow financial opportunity. As a new method of procurement (rather, a new-to-DoD method) is embraced by the government, industry will augment existing business models to enable continue support of the mission while generating return on investment. It’s the American way.
