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Building relationships

Feature, Markets | November 1, 2014 | By:

Working with the military requires patience, agility and a thorough understanding of government processes—and shifting markets.

In July, the Senate appropriations committee passed a 2015 base defense budget of $549.3 billion and another $59.7 billion to fund overseas contingency operation. While the numbers appear staggering, they mark
a drop of about $20 billion in each category from 2014. The 2015 budget prioritizes streamlining modernization programs and increasing acquisition efficiency, among other cost-saving measures.

As a result, end product manufacturers who make textile goods for the military are establishing strategies that address the realities of declining defense purchases in certain sectors. But one thing remains constant: mastering the process necessary to secure a military contract and ensure that products are delivered to specification on time and on budget.

Lessons in procurement

Establishing a relationship with the military takes more than a great idea or product, says Ron Houle, vice president of government relations for DHS Systems LLC, based in Tanner, Ala. DHS, which has contracted with the military since 1986, manufactures integrated command post solutions for the U.S. Department of Defense (DoD) that include Deployable Rapid Assembly Shelters, or DRASH; mobile power generation equipment; and environmental control units, or ECUs, which provide heating and air conditioning within the shelters.

“You have to identify a need and provide a material solution to that need that may or may not be expressed as a formal procurement requirement,” Houle says. “If you have that, it really is the first step to doing business with the government.”

Having worked with the military for 70 years, Diamond Brand Mfg. in Fletcher, N.C., is no stranger to DoD procurement policies. The certified small business has 105 employees—70 of which are in the manufacturing division—and produces a variety of lightweight tactical tents and shelters; various types of transport bags and packs; and a myriad of protective operational, armament and shipping covers for military equipment.

“You need to have a strong understanding of the ins and outs of the contracting process, the requirements of the contract under the law and the administration required for preparing and shipping orders,” says Will Gay, president and CEO of Diamond Brand Mfg. “It takes a dedicated effort, patience and an understanding that the government works very differently than most businesses.”

One hallmark of government contracts is the paperwork involved. Philadelphia, Pa.-based Ehmke Mfg. Co. Inc. has been manufacturing goods for the military for the last 21 years and knows what to expect from the procurement process. Its 135 employees create a range of products, including thermal/acoustic blankets for the interior of military rotor and fixed wing aircraft; High Ground tactical gear supporting special operations; and curtains, screens and canopies for mobile kitchen trailers (MKT) for the U.S. Army, among other offerings.

“You typically are required to follow a process filling out a solicitation of 80 pages and submitting what at times seems like endless documentation and certifications, but 75 of those pages have no impact if your company delivers exactly what they say they will deliver on time with no defects,” says Bob Rosania, CEO of Ehmke. “That’s the pact you make with a military customer. Otherwise, the process can become very onerous.”Â

Securing military business

Despite a familiarity that many manufacturers have when working with the military, some challenges exist. Operating with a staff of nine, First Line Technology LLC in Chantilly, Va., works diligently to counter the barriers it faces as a small business. The company designs, manufactures and markets disaster preparedness and response equipment, including AmbuBus® Kit, a mass-casualty transport system; PhaseCore® cooling vests; and FiberTect® dry decontamination wipes.

One of the company’s biggest obstacles is getting enough coverage across all the military services, and having support from within to start a contract. “With a sales team of just two people, plus myself and our vice president, that makes for a lot of traveling and time away from the office to reach end users,” says president Amit Kapoor, whose company has worked with the military since its founding in 2003. “And it’s the end users who you need to gain acceptance of your product.”

A combination of perseverance and unflappability also is required when working with the government. “If you win a contract, you’ll get a big revenue stream at the end, but it takes a long time, so you have to be able to stay in the game and have the patience,” Kapoor says. “And you have to be able to convince all of your other small business partners to be patient as well, and maintain consistent pricing.”

Still, channels exist for small players in a big military market. “Statutory requirements, such as the Berry Amendment and Buy American Act, helps domestic producers like Ehmke compete for U.S. DoD contracts,” Rosania says.

Rosania also believes that the conventional wisdom of associating less risk with purchasing from large businesses has shifted, particularly when companies once considered too big to fail have declared bankruptcy.

“We have found that government buyers have given our company ample opportunity to earn business,” Rosania says. “Many divisions of the government and DoD have small-business set-aside mandates that require a certain percentage of their overall business be procured from companies classified as small businesses, which has been helpful.”Â

Keep it nimble

In its 40-plus years of operation, Outdoor Venture Corp. in Stearns, Ky., has learned a number of lessons about the importance of product diversity. The company, which launched in 1972 as a family camping tent manufacturer, grew into the second largest supplier of these tents in the United States. By 1983, however, Outdoor Venture was losing ground to offshore competition.

That same year, the company secured its first military contract for a modular polyester tent. In 1985, the company exited the family camping tent business to focus on military tent contracting, then almost shut down permanently after the Gulf War ended in the early 1990s because, as president J.C. Egnew admits, “We were only producing one or two types of tents and we had put all of our eggs in one basket. We promised ourselves we would diversify our business.”

To that end, Outdoor Venture produces everything from miner safety shelters to fireproof air cargo covers, in addition to the multipurpose modular tents for the military that can be configured into dining halls, hospitals and other uses around a base camp.
Egnew also recommends working with multiple areas of the military and staying on top of emerging technologies. “Even when things slow down, the military is still spending money,” he adds.

With the U.S. military exiting Iraq and preparing to minimize its presence in Afghanistan, diversity in customer bases and products becomes even more important. “If you don’t have other non-military customers and areas of focus to carry you when defense spending is at a minimum, it can mean the difference between your business surviving or not,” says Gay, noting that Diamond Brand is also an outdoor retailer. “When defense spending is down, contracts are bid more competitively. We have seen some bid at cost.”

Advantage: technology

Working with the military requires end product manufacturers to be agile, efficient and forward-thinking in their operations and the products they create. “All of these new requirements that come from fighting a war have changed the demand for technical textiles,” Egnew says.

One such demand addresses the military’s mobility requirements in war zones. “Rather than putting a bunch of troops in one place, we are now more expeditionary with our military equipment,” he adds. “That means having equipment that can easily ship, air drop, pack up and move, which creates demand for much stronger, lighter-weight material that can fold up into small cubes.”

Temporary military shelters have transitioned from basic protection to structures that can collect energy and deflect radar. “For example, when you integrate solar-collection devices into soldiers’ gear, you don’t need shipments of batteries coming in continuously to replenish your power source,” Egnew says.

DHS is developing intelligent power technology (IPT) systems that feature a mobile tactical grid, whereby generators are connected to and communicate with one another. “The generators are able to automatically sense what the demand is for power and only provide what is required, rather than all of these independent generators at a field hospital or command post running 24 hours a day, seven days a week,” Houle explains. “The generators are sharing power and turning on and off automatically, which results in huge savings for power and maintenance.”

In addition, DHS continues to improve its insulation technologies. Says Houle, “There is emphasis on energy efficiency and whatever industrial fabrics can do to keep interior environments cool or warm and reduce consumption of fuel by the generators.”

For its part, First Line Technology is focusing on more durable textiles that have a longer shelf life. “The military has less money but still has the same mission, and so they can’t buy throw-away product,” Kapoor notes. “ In the past, the requirement used to be five-year shelf life; now it’s 10 years with a 15-year optimal.”

On a tighter budget

As the U.S. defense budget shrinks, so do many of the larger contract opportunities for end product manufacturers. “Over the past three to five years, contracts have been awarded in much smaller delivery increments than during the days of [Iraq and Afghanistan],” Gay says, “making the government contracting component of our business much less predictable and more challenging to plan.”

This shift, however, doesn’t mean that military spending is disappearing completely. “We have seen a recent increase in the demand for our products for training purposes for future conflicts. There is also additional emphasis on products for the special operations community, but they are smaller and often more demanding customers,” Gay says. “While this drives technology and forces us to produce products with elevated performance criteria, it often means producing smaller lot sizes as these requirements may be mission-specific to a particular part of the world or environment.”

From Ehmke’s perspective, Rosania says, “it comes down to aligning our product offerings to those military programs that address the emerging threats developing throughout the world. Unfortunately, the world is not always a safe, peaceful place. It’s our responsibility as a defense contractor to provide quality products so our warfighters can accomplish their mission and return home safely.”

Holly O’Dell is a California-based freelance writer and a regular contributor to the Review.

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