1. National 8(a) Association 2015 Winter Conference
Subcontracting
Navigating through the new Landscape
02 FEB 2015
Presenter:
Susan King
Director, Small Business Operations
Electronic Systems, Nashua, NH

2. Today’s Topic’s 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?

3. GLOBAL COMPANY Core Values to Small Business
BAE Systems, Plc – Global Defense Contractor - ~84,000 Employees
Home Markets - United Kingdom, United States, Australia, India, Saudi Arabia 
Core Values to Market Strategy:
Build significant indigenous capability and footprint
Mutually beneficial partnerships with investment in local businesses
Sharing of skills and technologies
Provide 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.”

4. Global Pressures on Defense Spending

5. Five Year Defense Spending Trends:
Slow rate of decline of ~7% over 5 years in North America (-1.25% per Year)
Slowing rate of increase of ~20% over 5 years in Asia Pacific (+4% per Year)
Stagnant rate of increase of ~5% over 5 years in ROW (~1% per Year)
*Source: IHS Jane's Defence Budgets End of Year Report

6. The “New Normal” Changed Landscape for New Defense Markets……
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
Changed Landscape for New Defense Markets……

7. “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 ...
Special Operators Want Lighter, User-Friendly Equipment – And Fast
National Defense Magazine
By 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.
This slide provides examples of how the DoD customer is switching focus to fund more affordable and quick reaction projects.
DoD Directives
Affordability
Responsiveness

8. “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”

9. “New Normal” - Better Buying Power (BBP) 2.0
Affordability as a Requirement
Superior Supplier Incentive Program
Leverage Industry IR&D
Enforce Open Architectures
Increase Small Business Opportunities
NO MENTION – “COST OF INCREASED REGULATION”

10. Non-Compliance = We’re out of the game
“New Normal” Increasing Regulation
Enforcement:
DCAA adds 3,000 Auditors
DFARS
FAR
Small Business
Participation
FFATA
Cooperation & Communication is essential for efficient & effective Compliance.
Specialty Metals, Buy American
Dodd/Frank: Conflict Minerals Reporting
ENVIRONMENTAL: Safe Chemicals Act (pending); TSCA; Hexavalent Chromium restriction; potential ban on Phthalates, REACH;…. …..
ITAR
COUNTERFEIT PARTS
Non-Compliance = We’re out of the game

11. Good News! – CSP Extension Comprehensive Subcontracting Plan (CSP)
What Happened?
Department of Defense announced the extension of the CSP until December 31, 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 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

12. What can Small Businesses Do. 1
What can Small Businesses Do? 1. Develop Supply Chain Strategy – Your Core Skill
Prime Contractor who presents many opportunities
Supplier
Focus on one target opportunity for a product or service. Find your niche and exceed the customers expectation.
Over 3K active SB suppliers on our base. You can’t be everything to all people. Takes a variety of suppliers to satisfy the broad range of diverse business requirements. We have to choose the best of what will make us more competitive and win business

13. Reliable, Trusted, Performance
What can Small Businesses Do? 2. Gain Competitive Advantage
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
Lessons Learned - Always deliver on your commitments. Communicate early on if you have a problem. Not after the fact. Take your mistakes as a learning experience to improve. Building & Maintaining relationships is a 2 way street. Challenges/Solutions - We have thousands of Suppliers and technical requirements. One SB can’t satisfy all of them.

14. What can Small Businesses Do? 3. Understand Prime Contractor Challenges
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 Preference for Domestic Specialty Metals
Matching Technology to requirements

15. What can Small Businesses Do. 4
What can Small Businesses Do? 4. Deliver Successful Results – to Customer NEED
Focus on “Core Competency”
Provide “First Rate” Customer Service
Create Loyalty & Enthusiasm in Customer Base
Understand & Manage Customer:
Needs / Requirements / Expectations
Manage Your Business (Cash Flow / People)
Look for Mentor-Protégé Opportunity’s
(Both formal, informal, and w/ other business owners)
Create Lasting Partnering Relationships
Mentoring - It is an opportunity to share your knowledge base within a community and society at large. Skill development as a business person from front line product development to management or consulting. An avenue to learn and share new ideas, processes and successes.

16. What can Small Businesses Do. 5
What can Small Businesses Do? 5. Understand your Customer 1st – Info and POC’s
Visit our BAE Systems website……
Sector Structure
Electronic Systems
Intelligence & Security
Platforms & Services
Enterprise 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. 16

17. Questions?
Thank you