Cross-domain solutions, unmanned systems, DoD budget optimism high at Sea-Air-Space expo

Every month the McHale Report will host an online roundtable with experts from the defense electronics industry – from major prime contractors to defense component suppliers. Each roundtable will explore topics important to the military embedded electronics market. This month we cover the emerging technology trends at the Navy League’s Sea-Air-Space exposition. Panelists discuss the general optimism behind the increases in Department of Defense (DoD) budget, the intellectual property () behind commercial-off-the-shelf () components, and the importance of management in the U.S. Navy.

This month’s panelists are: Ron Keene, Director of Business Development at Esterline Control & Communication Systems; Carl Wallace, Chief Strategy Officer at IXI Technology; Aneesh Kothari, Vice President of Marketing at Systel, Inc.; and Steve Travis, Cofounder and Vice President of Sales at Chassis Plans.

MCHALE REPORT: What trends did you see emerging this week at the Sea-Air-Space show? What was the buzz?

TRAVIS: A big trend was , where you have a hyper-converged server and inside of it you have red and black servers, so you have secure and non-secure information living all within one computer. Up until recently it was always taboo. You keep those machines separate so there’s no potential for somebody that’s on a secure server to be able to navigate accidentally or intentionally into a an unsecured server or into a secure server. There’s software being developed now that secures that environment.

KEENE: Many electronics systems requirements focus on subsystems of larger systems. These larger systems typically have non-government program managers charged with [operations and maintenance] responsibility. Tech insertion, or unscheduled product improvements become the responsibility of the contract system provider. This can slow the rate of change improvements as program funding, contractor profitability, and adherence of the original specification can dictate the pace of product improvements.

Unfortunately, the speed of innovation adaptation can be further constricted due to the limited visibility of individual electronics appliances in the larger systems proposition. Procurement of individual electronics is budget-dependent and padded with multitier management fees. Unfortunately the entire process moves the electronics appliance provider further from the end user. It can become difficult anticipating operational requirements forcing providers into reactive mode, which doesn’t innovation. A company’s competitive posture can be tempered to the point of un-affordability, [making it difficult] to remain a viable and competitive supplier.

KOTHARI: We thought the show was terrific. I read it had the most attendance of any Sea-Air-Space Show to date. Something we found very interesting and exciting was the emphasis on . We sponsored a panel discussion the last day of the show on unmanned aerial systems and how they integrate into the Navy’s maritime lethality [strategy]and with distributed operations such as in littoral environments.

[During the panel Q&A] questions focused on managing the resistance to risk with pursuing new technology. [Each panelist agreed] that their orders coming from the top focus ont pushing new technology out there. New technology highlighted included unmanned submersible, underwater vehicles and swarms in close littoral waters for combat missions.

WALLACE: For us, as a group, we were impressed with the innovation efforts both at the SBIR SBTR [Small Business Innovation Research/ Small Business Technology Transfer] program as well as the Navy Research Lab () and other research labs like the one at Penn State. A great deal of focus is on new types of nano-materials and hydrophobics. Overall it was innovation presented by small firms that grabbed the attention.

MCHALE REPORT: How do U.S. Navy requirements differ from those of the other services when it comes to electronics procurement?

WALLACE: Overall, we’ve seen a lessening in sole-source procurement and an increase in requests for COTS components. That being said, COTS often has customized components that include unique intellectual property (IP).

KOTHARI: Comparing [Navy requirements] to the other branches, Army, Air Force, Marines, Coast Guard, or even the Homeland Security Department, we don’t see much differentiation in how they procure. We definitely see a lot of emphasis on obsolescence management [with Navy customers].

Managing obsolescence is a team effort. [Suppliers need to make sure] they have a robust end-of-life obsolescence management program in place [that can support components] five, 10, 15 years. At Systel we don’t enter into a vendor-customer type relationship, but more a technology-partner type relationship in the naval space where we can work together on road maps to properly support long programs. Within Navy applications obsolescence management is a mix of working with the primes as well as working with the government end users..

TRAVIS: Everybody definitely likes their own spin on things, and so every group has its own preference. The Navy is pushing [for more networked approaches], getting systems to talk together.

There’s also a push towards standardization. For some applications, we’ll have a Navy project with shock and vibration-type requirements as it’s going to be going onboard a ship. While other environments don’t require as much ruggedization such as lab simulation environments.

In those benign environments the customer worries more about revision control. In other words if you buy a Dell computer, and then order the same part number tomorrow, it may come a little differently configured, which cause issues with the software. Revision control has become important across all the services.

MCHALE REPORT: How does the Navy approach COTS procurement compared to the other services?

KOTHARI: The Navy wants quick program integration and low risk factors. [One way to meet these needs is by ensuring that] products are purpose-built. In other words, building systems tailored specifically to applications – either specific platforms and applications or more general mission types such as intelligence, surveillance, and reconnaissance (ISR) orelectronic warfare .

KEENE: COTS procurement typically happens via designated systems managers and tech insertion can be a long and cumbersome process that is heavily dependent on specification redefinition to introduce innovation or ECP’s [engineering change proposals].

WALLACE: Custom COTS are often service interrelated because companies can still insert that customized IP, especially in the server market. Navy ship servers often are 90 percent COTS, but that remaining 10 percent will have a unique part or process that has an IP component from the company that finishes the rest of the procurement requirements.

TRAVIS: They’re obviously trying to push for commercial off-the-shelf (COTS) hardware and trying to get the best price. Additional requirements that are being pushed down to companies like us are counterfeit and conflict materials.

[Another request occurring more and more is for removing Chinese content from computers, which is a pretty hard thing to do because most of the computer components are manufactured in Taiwan. You have to be more selective about the hardware that you’re selecting in building these types of systems – making sure that you can prove that the products are not counterfeit and that the computer components going into the system aren’t counterfeit.

[This is very challenging] as you have system builders on one side just trying to build the cheapest computer to sell and then , where other companies like Chassis Plans, that charge more of a premium for their product. [we charge a higher price] because we do our due diligence on making sure that we’re not going out and buying components off of eBay, or gray market places where there’s a potential where we can introduce a counterfeit component into a computer system.

MCHALE REPORT: How do you see the U.S. Navy market and DoD market as a whole trending in 2018?

KEENE: We see tremendous growth opportunity in the Navy market. With the introduction of newer generations of ships and submarines, the Navy’s 2018 Ship Building Plan is more lucrative than ever for Tier 2 & 3 providers. However, team building is starting earlier in the platform development phase and baseline designs for new ships and submarines are being determined by the last tech insertion of older platforms. Obviously fleet compatibility is important, but innovation [shouldn’t] be sacrificed to preserve platform continuity.

WALLACE: Overall, I think it’s very positive. I think the current administration has put an emphasis on DoD funding [based on the] number of bills presented. The latest being the revamping of the 28 defense agencies. A lawmaker out of Texas, Mac Thornberry put forth a bill that would have eliminated/cut 28 agencies that provide backroom and administrative support. The intent of the bill was for them to use the proceeds from those agencies to use directly in the DoD. It’s evident to us there is a strong emphasis on improving the overall , but finding new efficiencies is still important.

KOTHARI: We see it trending very favorably. I mentioned at the top of this conversation, with the new military budget announced at the beginning of the year, the level of energy and optimism we’re seeing in the DOD market as a whole, especially throughout this year, at the various shows we’ve attended, has been phenomenal, and there’s a lot of excitement over new programs and new capabilities.

DoD Secretary James Mattis’s mandate has been “Build a more lethal, resilient, agile, ready joint force. Strengthen alliances, attract new partners, and reform the department’s business practices for greater performance and affordability.”

The new budget allows for those things to happen [and is] great news for the industry and great news for all the [embedded computing] suppliers, including us. There’s a lot of optimism in the air.