WASHINGTON, DC – Leading strategy and management consulting firm The Avascent Group today welcomed Mike Kotarski as a Principal with the firm. "We are excited to have Mike join the leadership team at Avascent," said president Steve Irwin. "His demonstrated expertise in defense, civilian, and intelligence M&A and hands-on experience in strategic planning and business process consulting significantly strengthens our capabilities."
Recent efforts at earmark reform raise a number of strategic questions for federal contractors and challenge them to create a more balanced portfolio of external and internal funding streams. What hard questions should firms that have benefited from earmarks be asking as they prepare for coming change?
The Avascent Group, Washington, DC’s leading strategy and management consulting firm, has released its latest white paper covering growth in new markets. "Growing When Growth is Hard – Finding New Opportunities in an Uncertain Market" builds off of Avascent’s recent presentation at the Wharton Aerospace Conference at the University of Pennsylvania. Each piece of analysis is aimed at helping businesses plan for and achieve growth in difficult budget and economic environments.
In 2009, a long-awaited moderation in defense
spending began in earnest, coinciding
with a redirection of defense priorities away
from expenditure-heavy platform acquisition
and enhancement. A market that is steady
but not growing creates a new reality with
which corporations serving the defense community
will cope for some time to come. For
companies primarily focused on aerospace
and defense (A&D) in particular, this begs
the critical strategic question: How do we
hold our own, or even sustain growth, in a
down cycle?
Leading strategy and management consulting firm, The Avascent Group, announced today that it has deepened its capabilities in the space, telecom and defense markets with the addition of Stephen Ganote as a Principal with the firm.
Leading strategy and management consulting firm, The Avascent Group, announced today that its employees, with a company match to AmeriCares (www.americares.com), have contributed close to $13,000 to Haitian earthquake victims.
Leading strategy and management consulting firm, The Avascent Group, announced today the formation of Avascent International (AI), a strategic advisory firm focused on helping corporations, financial institutions and governments identify and capture strategic opportunities around the world.
Diversification into attractive adjacent markets provides an opportunity for traditional aerospace & defense (A&D) firms to offset potential declines in their core business in the face of defense spending reductions and/or declines in the highly cyclical commercial aerospace market. This presentation—given by The Avascent Group at the Wharton Aerospace 2010 Conference—considers key strategic questions faced by A&D industry leaders as they evaluate various paths for expanding into several potential adjacent markets, including cyber-security, health care information technology, energy, and “smart” power.
Despite major changes to the nation's aviation security system since September11, 2001, the United States remains vulnerable to large-scale terrorist attacks on civil aviation. These vulnerabilities are particularly disconcerting given continued terrorist fixation on civil aviation targets, as evidenced most recently by the foiled London based plot to destroy commercial airliners en route over the Atlantic Ocean.
Prime contractors, subsystem manufacturers and component suppliers have benefited from strong growth in the defense market over the past 11 years. Long-term development and procurement programs have grown side-by-side with urgent operational requirements coming out of Iraq and Afghanistan. This growth has not only benefited traditional defense contractors, it has also opened the door to non-traditional suppliers that have brought off-the-shelf competencies and technologies to bear on the complexities of military operations against insurgency threats. However, all segments of industry must now recognize that this period of growth is ending. Current strategic planning and business development processes should therefore be focused on how to succeed in this new funding environment.
Tactical vehicle contractors have seen strong growth in their markets over the past few years. Core tactical vehicle programs have driven this growth by way of procurement, upgrades, and remanufacturing to improve and sustain the vehicle fleet deployed to Iraq and, to a lesser degree, Afghanistan. Planned mid- and long-term light tactical vehicle replacement programs were given high priority and visibility by the Army and Marine Corps and had aggressive specifications which contributed to the need to link strong prime contractors with specialized subs. Finally, and most surprising from the historical perspective of the tactical vehicle market, contractors saw high-value, short-term opportunities emerge in non-traditional vehicle segments such as mine protected vehicles and all terrain vehicles. Many primes and suppliers perceive that their role in the tactical vehicle market upswing has established them as part of the industrial base and provided them with all the incumbency advantages such a position would seem to imply. However, there will be a rationalization of primes and suppliers within the tactical vehicle market with no company guaranteed a position going forward.
In April 2009, Secretary of Defense Robert Gates announced that Department of Defense (DoD) would cancel the development and procurement of manned ground vehicles (MGV) under the Future Combat Systems (FCS) program. Based on that decision, DoD will reevaluate its requirements and the available technologies in order to develop a concept design for a new ground combat vehicle (GCV). While a decision to break up the FCS program has been expected for several years, the cancellation of all vehicle variants and several technologies anticipated as spin-outs, came as a surprise to many. The elimination of the manned vehicles component of FCS – many variants of which were intended to replace aging Army combat platforms – fundamentally alters the discussion of current vehicle readiness and sustainment and reopens the debate over future combat vehicle design and procurement strategy.
The Obama administration’s strategy for combating terrorism is to integrate soft and hard power into “smart power.” It is the collective use of military, diplomatic, economic and development efforts to achieve security objectives. A critical element of smart power is to assist friendly governments so they can take over more military and law enforcement missions, thus lessening the need for direct U.S. military involvement.
The confirmation of Charlie Bolden and Lori Garver as NASA’s new leadership team signals the time for industry to begin aligning operations with the agency’s new objectives and priorities and to start identifying new tactical opportunities. NASA will not be sitting idle over the next several months and years, and it would be unwise for companies to be complacent if they want to grow or maintain a successful space business. Industry needs to be aware of how the agency will shift, and in some cases there will be opportunities to help lead NASA in the right direction.
The $787 billion American Recovery and Reinvestment Act (ARRA) will allocate approximately $195 billion toward construction-related activities. Investment of this magnitude will underwrite a wide range of horizontal and vertical projects for new construction as well as revitalization of aging infrastructure. The ARRA clearly presents a large number of construction companies in this fragmented sector a wide range of opportunity—by construction type, project size, customer, work scope, geography, and any number of other defining variables.
In the wake of shifting priorities over the Obama administration’s first 6 months, the government contractor community is assessing the meaning of these changes for their business plans over the next 2-4 years. With a drawdown in Iraq expected and cuts in several longstanding Defense Department programs (i.e. F-22, Future Combat Systems, etc), where should contractors be directing their business development efforts? Three areas have emerged as clear areas of emphasis for the new administration: clean energy, infrastructure modernization, and healthcare information technology.
Given the increased focus on the Renewable Energy marketplace and the ARRA Stimulus, Avascent has published its first in a series of reviews of the clean technology and renewable energy marketplace. The report, Clean Technologies & Renewable Energy, focuses on the impact of ARRA spending on the Energy sector and on venture & private equity investment across a number of Renewable Energy sectors (e.g. solar, energy storage, etc).
Cybersecurity is a problem of interdependencies. Because these interdependencies are also the strength of the networks and systems on which government and society alike have become so dependant, it is only through better coordination that cyber capabilities, both defensive and offensive, will be improved. The government market for cyber solutions, however, features a critical paradox: For all the value of close coordination among players, the market is characterized by widely disparate approaches to cyber issues and solution development. These differences are driven by a multitude of factors, but they combine to make the task of achieving coordinated solutions very difficult. Recent controversies over leadership roles in Federal cybersecurity, and the recent publication of the Obama administration’s Cyberspace Policy Review, highlight these problems.
The Avascent Group, Washington, DC’s leading strategy and management consulting firm, recently released an analysis of the American Reinvestment and Recovery Act (ARRA) and its implications for businesses looking to expand into new markets. Titled “A $787B Glass Half Empty or Half Full? How Business Leaders Can Strategically Approach the ARRA for Maximum Success,” the assessment cautions companies against aggressive opportunity pursuits without careful, process-oriented evaluations of markets and associated funding streams.
From C-level corporate leaders to general managers, entrepreneurs, program managers and investors, there is universal interest in the potential opportunities presented
by the recently passed American Reinvestment and Recovery Act (ARRA). At a time when there appear to be so few avenues for new growth, the size, diversity and rapid rollout of the plan make the stimulus bill simply too important for
companies to ignore, whether they are long-standing government suppliers or new entrants exploring potential growth areas. With funding flowing to such diverse areas
as alternative energy, health information technologies, and infrastructure projects, a broad spectrum of players is examining its potential near- and long-term strategies and the challenges associated with implementing those strategies.
The Avascent Group has released an analysis of the upcoming 2010 Quadrennial Defense Review. The assessment highlights that the QDR will be driven by a range of Department of Defense objectives, including a reordering of defense investment priorities.
Defense Secretary Robert Gates intends to force a significant reordering of defense investment priorities. For over a year, Gates has indicated his belief that the Defense Department must field a different mix of capabilities than currently planned. While Gates’ actions suggest a variety of objectives that could gain prominence in the coming Quadrennial Defense Review and the fiscal year 2010 and 2011 budgets, the touchstone of the Secretary’s campaign has been “balance.”
At its heart, balance implies a greater commitment to supporting irregular warfare and stability operations at the expense of investment in advanced conventional capabilities. For leaders on Capitol Hill and in industry,this shift carries the threat of cuts to major programs, even as it creates new, albeit ill-defined opportunities elsewhere.
The US has deployed a large number of advanced military technologies throughout the wars in Iraq and Afghanistan including combat drones, advanced surveillance technologies, remote weapon stations, and new bombs and missiles. However, unlike Operation Desert Storm, which is largely remembered as a push-button war of advanced Cold War technologies, OIF and OEF will likely be remembered as a “soldiers’ war” that brought frequently overlooked equipment such as trucks, rifles, and body armor to the forefront of policy makers’ and public attention. The asymmetric tactics employed by the Iraqi insurgency and resulting loss of life focused both the public and Congress on the vulnerabilities of the largely unarmored tactical vehicle fleet.
Leading strategy and management consulting firm, The Avascent Group, today released its current analysis of the tactical wheeled vehicle market. This represents the second in a series of white papers authored on the strategic implications for industry of developments in this critical and dynamic sector of the defense market. The firm’s assessment reinforces the constraints on growth in this market, but also highlights areas of opportunity as the Department of Defense grapples with reset and recapitalization requirements.
The Avascent Group, Washington, DC’s premier strategy and management consultancy, today welcomed Daryle Lademan as a Principal with the firm. “We are pleased to welcome Daryle as a member of our senior team,” said Steve Irwin, Avascent’s president.
The Avascent Group is pleased to have concluded 2008 with significant support of various national and local charities and foundations.
Leading strategy and management consulting firm The Avascent Group today welcomed Jon Barney as a Principal with the firm. “Jon brings a wealth of industry and consulting experience and further expands our ability to help clients as they grapple with their most pressing strategic challenges,” said Steve Irwin, Avascent’s president.
Defense and government markets strategy and management consulting firm The Avascent Group has named James Tinsley as its newest Partner. “We are pleased to recognize Jim’s tremendous contributions to our clients’ success and our continued strong growth,” said Steve Irwin, president of The Avascent Group.
Behind the headlines of the incoming administration’s ambitious plans to jump start the economy is a set of initiatives aimed at addressing the issues of energy, efficiency, and the environment. Indeed, such projects have more in common with Barack Obama’s long-standing policy goals on energy and global warming than do the massive public works projects now being discussed. Moreover, they are more likely to provide real opportunities for experienced technology firms with long track records of meeting public needs.
Successful strategies in the tactical wheeled vehicle (TWV) market will be distinguished by differentiated positions, products, and services within the specific contexts of program opportunities. Given the revenue potential of the TWV market, it behooves competitors to invest in activities that maximize their insight into how their particular capabilities can address market demands. Specifically, aspiring vehicle prime- and sub-contractors must develop strong contingency plans and tailored processes to gain market traction. Those that can demonstrate a clear understanding of customer requirements through an offering that aligns with prevailing needs and priorities can certainly be TWV players for years to come.
Post–9/11 security requirements have increased demand for security capabilities across all nodes of the international maritime trade network. However, actual investment by government and industry is fragmented across three overlapping but unique domains: ports; shipping; and naval defense. The result is a fragmented market space dominated by an appetite for low-cost, low-risk solutions that can easily be integrated into current infrastructure and platforms.
Despite major changes to the nation’s aviation security system since 9/11, the United States remains vulnerable to large-scale terrorist attacks on civil aviation. While a completely failsafe system is improbable for both practical and financial reasons, there is no doubt that the roughly $24 billion spent on aviation security since 9/11 could be better deployed. Invested dollars should favor solutions and systems that are cost-effective, reliable, and ultimately less intrusive to passengers. In some instances, this approach may portend a shift from relying on technology to using more practical, personnel-driven solutions. In other instances, it may require minimizing the role of personnel in favor of technology and automation.
Supply chains are highly vulnerable to infrastructure failures. The overlap of public and private assets and responsibilities further complicates risk management within the supply chain, often impeding effective coordinated action and the implementation of appropriate solutions. Notwithstanding these difficulties, much can, and should, be done to secure supply chains. Both the government and the private sector have a role to play in supply chain security, while security providers need to be able to assess vulnerabilities comprehensively and develop solutions for managing fully all supply chain risks, whether man-made, natural, or accidental.
Private asset protection in the United States was managed traditionally through a combination of private and public security, focused on loss-control measures and post-incident law enforcement respectively. These measures were never meant to provide total security. The destruction of the World Trade Center and the consequent loss in corporate assets signaled a change in private-sector threat perceptions. Businesses now have to plan for low-probability, high-consequence events that challenge the traditional calculus of cost-effective security investment.
Post-merger integration is a difficult process, with potential long-term implications for the acquiring company. Avascent has developed a customized post-merger integration (PMI) methodology suited for companies active in the defense, intelligence, and homeland security markets. Based on the GE Capital PMI methodology, the resulting framework can serve as a guidepost for defense buyers before, during and after a transaction.
As US government priorities have shifted during the past five years, so has the mergers and acquisitions market for government contractors. Growth in federal government spending has created a dynamic marketplace for corporate buyers and sellers, especially in the defense space.
Due diligence is best approached as an objective review of a prospective deal rather than a rubber stamp of a proposed transaction. This is especially true in the defense and federal sectors, where potential buyers face additional market-specific challenges. Three recent case studies illustrate the potential pitfalls of due diligence in the federal market.
CFIUS has long troubled foreign companies eager to buy their way into the US market. For foreign buyers eyeing companies with a presence in critical defense and infrastructure markets, CFIUS seems to pose an especially high barrier. In the aftermath of the DP World controversy, such concerns are not likely to subside soon. Foreign investors in the United States need to consider a number of potential obstacles. Avascent’s long history of monitoring the foreign direct investment environment suggests several key imperatives.
Many critics have charged that the most recent Quadrennial Defense Review (QDR) does not contain anything new, but rather repackages previous initiatives. Taking this view, however, ignores some of the shifts in thinking that are formalized in this document.
Changes in process outlined in the 2006 Quadrennial Defense Review (QDR) continue to feature many of the elements that have characterized past reform initiatives, including an emphasis on jointness and the need to empower organizations other than the Services. But the reform proposals set out in the 2006 QDR also differ from those tried before in that they are informed by practical experience and lessons learned from past initiatives.
In contrast to the Quadrennial Defense Reviews (QDRs) of 1997 and 2001, the 2006 QDR has been designed as a continuing review to ensure implementation of its recommendations. With the commissioning of so-called Execution Roadmaps, the Department of Defense hopes to keep the QDR process going, but a number of challenges could stall this process and put at risk the implementation of related reforms.
The fiscal year 2007 request was considered a pleasant surprise by the defense industry and Wall Street, as it put off major decisions that could have had an adverse impact on many companies’ bottom lines. Yet the celebration will likely be short-lived, as recent developments indicate that the heyday of defense investment spending may be tailing off. There are a number of options industry should consider to ease the pain caused by slower defense spending growth.
For many years, contract research organizations have played an important role in support of drug development through their outsourced services. Better coordination between drug companies and CROs can lead to major competitive gains for both parties based on improvements in the three core drivers of their business: timeliness, quality, and cost control.
The Exploration Systems Architecture Study (ESAS) is a victory for Mike Griffin, as it signals his transformation of NASA over the past five months. The new administrator has surprised everyone with how quickly he has moved to reorganize the agency's priorities and programs, and how sweepingly he has changed out most of the senior personnel. The questions for industry are whether these changes are going to endure, what more upheaval is on the way, and how should companies reposition themselves to address the new priorities.
While the Korean defense market has grown dramatically over the past decade, it remains a notoriously difficult market for US defense providers. The Ministry of National Defense (MND) has continued to place hurdles in front of US and international companies, often requiring significant offset arrangements, technology licensing, or localized co-production. However, for those willing to accept the challenge the payout is becoming increasingly attractive. If current plans remain on track, the MND may accelerate top line spending by more than 30 percent by 2009. Few developed nations can match this growth rate and fewer still have committed to acquisition reform on the same scale.
Defying analysts’ predictions, Southwest Airlines announced on October 20, 2005, that it would begin servicing Denver International Airport in early 2006. This decision suggests a number of challenges for Southwest and points to important lessons for operations strategy in general.
Military logistics has traditionally been organized, performed, and managed by the Armed Services in cooperation with certain Defense Department-wide agencies. More recently, logistics services covering the transportation, warehousing, and management of assets have been entrusted to commercial players. These outsourcing trends, combined with recent reorganization efforts, have paved the way for a more extensive use of commercial solutions to complex supply and logistics challenges.
For many years, contract research organizations have played an important role in support of drug development through their outsourced services. Better coordination between drug companies and CROs can lead to major competitive gains for both parties based on improvements in the three core drivers of their business: timeliness, quality, and cost control.
In times of increasing constraints on defense modernization spending, preserving a healthy core program portfolio must be a major concern. The first step in managing such a portfolio is to develop a consistent understanding of the types of risk that programs face. Avascent has identified a set of patterns that explain both the factors that give rise to program vulnerabilities and the actions government officials are likely to take in response to those vulnerabilities. Such analyses, which we label “customer-centric risk” (CCR) assessments, explicitly recognize and assess the external vulnerabilities a program may face.
Is it time for defense executives to think anew about diversification? Given the seemingly dismal record of otherwise successful top-tier defense companies in moving beyond their core business, why should executives even think about launching diversification efforts today? The answer is simple: times are changing. A number of recent developments in the competitive landscape make the time ripe for a fresh look at defense diversification.
Currently, the US biodefense market consists of a hodge-podge of small niche players blended with very few large biopharmas and select defense contractors. Despite some early encouraging signs the vision of a biodefense industrial complex is still far from being a reality. In the face of continued barriers to entry, should companies seek to invest in developing biodefense solutions? A closer look at the market suggests potential biodefense opportunities for both the defense industrial base and traditional pharmaceutical and biotech firms.