There’s more in the defense industrial base than the Defense Department may be aware of

Tom Temin I guess there’s a presumption in the way I stated this interview is that there is a problem with the defense industrial base, we’ve seen it in the capacity for Howitzer shells, but it’s much wider than that. Why don’t you define it for us based on the data that Govini has amassed.

Jeb Nadaner Govini is a software and data company, we produce on a commercial basis, purpose built software for the defense acquisition system. The message I have is the defense acquisition system, which has been producing really ever less in most categories for ever more dollars over the last 30 years. The defense acquisition system does not have to be this bad. And one of the problems is the Defense Department doesn’t use the software and data that all first-class enterprises in the world, whether in the U.S. or abroad, friendly or adversary uses. And bringing that kind of software and data into the defense acquisition system can really change the timelines and the costs.

Tom Temin Well, that then is presupposing that everything the Defense Department needs for platforms and etc., and for logistics and for whatever it is they need to support troops and activities around the world is existing, is there in the U.S. economy, they just can’t find it because of the procurement system.

Jeb Nadaner So the U.S. has been through several waves of deindustrialization, relative to industrialization. There’s still a certain amount that we produce and our allies produce. And sometimes we’re down to 1 or 2 suppliers, compared to just 30 years ago, there might have been 30 suppliers for a given part. The key is to find that one supplier or the one substitute supplier really quickly rather than missing the part and the supply, the production line shuts down for four months while people look through Yellow Pages. That’s an unacceptable solution. We can’t recreate a defense industrial base like World War II. In the next 3 to 5 years or probably even a decade or two. What we can do is we can make a lot better use of the defense industrial base that we’ve got.

Tom Temin Well, let me challenge you here. Suppose I’m buying a gyroscopic component for navigation for a platform and I need replacements. That company is there, I’ve been buying from it already and all I need to do is issue a task order or a request for proposals to the same company.

Jeb Nadaner Well, let’s say the that company that we, the U.S. Defense, DoD has been buying from. Let’s say the couple that owns it ages out. They decide to retire. They shut down. They shut down their little plant. That’s been happening over 30 years. We have ever fewer small businesses and small businesses really form the base of the defense industrial base. And when they retire out, we lose a major capability. So if that happens, ok, what’s the alternative then? Import the part from China. That’s definitely an option. And we do a lot of that. But I think there’s a better option, which is try and find that other supplier that may be working on the commercial side in the U.S., find the supplier that’s in Italy or Korea. That’s a much better alternative. Or here’s something else that you can do with software. If you have the right software and data, like our Govini’s arc, the arc of knowledge on all these kinds of things, one can find the patents for the technology, and then maybe qualify a new supplier. That’s all possible, but it’s not possible if one is relying on a spreadsheet or Charlie or Jane’s memory in the back of the room.

Tom Temin That sounds almost like a market research challenge.

Jeb Nadaner Well, part of it’s a market research challenge. United States as a country, realistically speaking, we’re above 350 million people. So defense industrial base is not what it was. Even commercial manufacturing, but it’s still a lot of capability. And then we’ve got, of course, Mexico and the best alliance system in the world. So there’s still a lot we can do. The easy thing to do always is to order ultimately from China. That’s a really easy thing to do.

Tom Temin And they’ll be glad to take the order.

Jeb Nadaner But that comes with immense risks should there be a trade shutdown or a slowdown, or they decide to penalize us.

Tom Temin We’re speaking with Jeff Nadaner. He is senior vice president for government relations at Govini. And just to get back to a point that we went by pretty quickly, if you can find someone that is making a similar product or a related product, or a product using the same say, I’ll just use casting technology that you need for the DoD part, then they could be persuaded with the possibility of a contract to expand what they do to make the military version or the shape we need of that particular casting, because we know they can already cast.

Jeb Nadaner That’s exactly the case. They may need to tweak a little bit based on the blueprint and the requirement, but something they can do, and this is something that we help a number of program executive officers and DoD, this is the DoD that exists outside the Beltway. It is actually in charge of managing and overseeing these long contract or supply chains from the primes on down. And that’s something we do, for example, with the Minuteman system. Keeping that system going. So there are parts in that system that entered the system in 1970. The supplier no longer exists, but we will then identify alternative suppliers or suppliers that do something pretty close. And then you suddenly have a part that you didn’t have before.

Tom Temin And you mentioned to looking at the patent situation, and the patent that takes some AI to look through all the patents in the prior art, but that’s definitely a clue to who’s doing what. But what if you’re looking for something for which patents might have expired and there’s still alternative sources. What are some other routes besides the patent system for identifying potential suppliers?

Jeb Nadaner So one of the beauties of machine learning AI-enabled data. This is not data like in a footnote in college where you say, I found a book and here’s a source. Rather, if you collect vast amounts of data, and you’re vacuuming it and constantly, as we do. The data, then the machine learning actually ends up creating correlations, it begins merging forms of data. So you end up with very rich things. So if you take patent data, all sorts of technology data, financial data, capital flow data, you  can actually discover parts and components and technologies that would not be readily available just if you looked at a single source. The importance is the merger of all this data. By the way, no one is sitting in a program executive office can go from database to database to database, they don’t have the time for that. What they need is this merging, and that’s the beauty of AI.

Tom Temin Give us an example. Can you think of a time where, say, using Govini data someone found, Aha, there’s John and Joe’s shop that makes exactly the caliber we need.

Jeb Nadaner Well, we’ve done it on the Minuteman program. We’ve done it in military rotary programs. We are going to start doing it on F-35 readiness. And readiness involves, you’ve got to know not only your parts, but you got to know your parts on hand. You need to know your alternative suppliers. You need to know something like the F-35, because of its stealth characteristics requires all sorts of specialized coatings, which really, at the end of the day, are advanced chemicals and polymers. So these are some of the areas that a problem which might have taken five, six years to solve the supply chain problem with looking into the arc, into this platform with this merged amalgamated data and software workflows, you can solve it sometimes in minutes.

Tom Temin And you mentioned at the top that some of the top industrial concerns commercially use this technology, this approach I should say, to finding things like a company like John Deere. Is that what you mean?

Jeb Nadaner A company like John Deere, a company like Apple, a company like Komatsu out of Japan, company like Weiwei in China. Now the DoD for its industrial needs as it manages these large contracts with from the primes on down to all the subcontractors and lower tiers. It’s got some unique issues. One is the law that governs it.

Tom Temin Which precludes China.

Jeb Nadaner Yes, definitely does. So the DoD employee, whether it’s a uniformed personnel or it’s a civil servant, their workflows are going to be different than their peers in a commercial company. And they can’t just use, they need software that’s designed. They don’t want to go through sudden strokes to do something, they want to do it in two strokes. So what Govini did is we produced software that’s designed for their workflows, but we did it all on entrepreneurial dollars. There’s no government R&D involved. It’s off the shelf, it’s ready, it’s sophisticated and can be used now.

Tom Temin So to get back to the original theme here, it’s your belief that there is much more in the industrial base to support DoD than the department is essentially aware of right now.

Jeb Nadaner Yes, there is a lot more capability. I wouldn’t say it’s not overflowing like it was in the 1950s or even in the 1980s. But if you have the right information kill chain, you can find what you’re looking for.

Tom Temin And by the way, does this extend to electronics? Because we were talking about macroparts that you can forge and hammer and cast and bend or even inject mold and so on. But electronics, that’s sort of a horse of a different color, in terms of recreating, say, a circuit that might be obsolete. But that’s the circuit you need.

Jeb Nadaner Yes. So the electronics come in millions of different forms from little pieces to larger assemblies. Electronics are really key. That’s a major U.S. vulnerability. There’s still a certain amount that is made in the U.S. And if it’s not made, if we’re not making it, we’re seeing evidence that sometimes you can make it differently using advanced manufacturing techniques. Sometimes it will come out cheaper. And that’s something that a number of companies are doing in the U.S. and abroad. But you have to know who brings that capability. And that’s where it’s very helpful have something like the Arc where you can identify those advanced manufacturers, some of whom are not necessarily making defense products, but they have that capability to make essentially a very unusual bespoke DoD part.

Tom Temin So our bumper sticker here could be dig for the DIB.

Jeb Nadaner I like that.