By David Vergun
Army News Service
WASHINGTON, Feb. 10, 2015 – Getting top-notch gear to
warfighters in the most cost-effective and efficient manner is what the
American public expects of defense contractors.
Some do that very well, and others not as well as they
should, say top Defense Department officials who oversee delivery of such gear.
One way the military services are giving industry incentive
to improve is recognizing top performers through the Superior Supplier
Incentive Program, or SSIP.
"We're doing this so people get some feedback from us
about how their performance is, relative to their peers," said Frank
Kendall, undersecretary of defense for acquisition, technology and logistics.
"Then, they can take whatever action they think they need to do to improve
their ratings."
Program Rates Companies’ Business Segments
SSIP uses performance data gathered through the Contractor
Performance Assessment Reporting System, or CPARS, to rate the 25 largest
companies, based on contract obligations, doing business with each of the three
services. It categorizes their business segments into one of three performance
tiers, with "Tier I" being the best.
Within a large defense contractor, for instance, one
business segment might develop electronic systems products, while another
develops missiles and fire-control products. Both of those business segments
would be given a separate rating by each military department that works with
them.
Business segments benefit because they receive recognition,
“and it's also useful for companies that are not at the top end to understand
where they are and to benchmark themselves against others," Kendall said.
Incentives for Top Performers
While the SSIP will not be used to give anyone a direct
competitive advantage or monetary incentives, the program provides other
potential incentives, he said. Tier I business units, for example, may be
invited to meet with military department acquisition leaders to discuss ways
which both parties can streamline administrative burdens. This may result in
increased efficiency, Kendall explained.
Military department acquisition chiefs said they expect SSIP
to result in improved performance of their suppliers.
"It's recognition for business units that have been
doing a superb job," said Heidi Shyu, assistant secretary of the Army for
acquisition, logistics and technology.
Being in Tier I is "a big deal,” she added. “There's a
huge amount of pride when you worked your butt off," Shyu said, speaking
from decades of private-sector experience.
William A. LaPlante, assistant secretary of the Air Force
for acquisition, highlighted another reason for publishing the list. "We
do this in all parts of our society,” he said. “We rank-order people [and]
businesses, and frankly, we owe it to the taxpayer and the companies to show
where people are."
Shyu said recognition has reverberations throughout highly
rated companies. "Industry presidents and business segment managers are
very competitive,” she said. “They know it reflects on their leadership, and it
shows the company and the shareholders that you're a great leader. You've
executed well what you've promised your customer. Your customer is happy with
your work. To the employees, it's a huge morale booster.
"People tend to underestimate that recognition,"
she continued. "It means you contributed to the fight" in a
meaningful way.
LaPlante agreed. "It's a point of pride for companies
to be called out for being at the top of their game," he said.
Officials Explain Methodology
David Weber, chief of the Air Force Industrial Liaison
Office, said the 25 largest companies were selected for comparison using data
from USASpending.gov, which was used to identify the businesses with the
highest contract obligations during the previous three fiscal years.
Within each company, business sectors were determined based
on the best available information. For example, publicly traded companies were
broken out in the same way they are reported to the U.S. Securities and
Exchange Commission, he said.
Planning for the Army and Air Force SSIP started last year,
Weber said, after the Navy SSIP pilot was announced in June.
Now, the Army, Navy and Air Force each do their own ratings
based on the CPARS for each service's awarded contracts, Weber said. For
example, F-35 contracts are managed by the Navy, so CPAR scores associated with
F-35 are included in the Navy's SSIP ratings.
Future SSIP scores are expected to be released annually in
late spring or early summer, Weber said.
Potential for Program Expansion
Curtis M. Smith, a senior Army procurement analyst, there
may be potential to expand the SSIP program to include categories such as small
business, services, information technology and others.
Smith said business units that earn a Tier III rating also
will benefit from the candid assessment of their performance by their
customers. "I think that will allow them to focus and engage more with the
customer regarding their performance,” he said. “It should serve as an
incentive to improve."
Weber said he thinks it's possible large investors will look
at SSIP ratings over time, and as trends become evident, use them to gauge
future competitiveness of companies, creating additional incentives for
companies to improve.
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