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

Tom Temin I think there is an assumption in this interview that there is a problem with the defense industrial base, we saw this with the howitzer shell capacity, but the issue is much broader than that. Why don’t you define it for us based on the data Govini collected?

Jeb Nadaner Govini is a software and data company; Commercially, we produce purpose-built software for the defense acquisition system. The message I’m getting is the defense procurement system that has produced less and less for more and more dollars in most categories over the last 30 years. The defense gain system doesn’t need to be this bad. One of the problems is that the Department of Defense does not use the software and data that every world-class business in the world, friend or foe, uses, whether in the United States or abroad. And bringing this type of software and data into the defense acquisition system can really change timelines and costs.

Tom Temin So this is the Department of Defense’s decision on platforms etc. It assumes that everything it needs for, everything it needs for logistics and to support troops and activities around the world is available, is there in the US economy, they can’ I can’t find it because of the supply system.

Jeb Nadaner Thus, the United States has gone through several waves of deindustrialization relative to industrialization. There is still a certain amount produced by us and our allies. And sometimes we are down to 1 or 2 suppliers compared to 30 years ago there might have been 30 suppliers for a particular part. The key is to find a supplier or a single replacement supplier really quickly, rather than missing the part and the supply, having the production line shut down for four months while people were looking at the Yellow Pages. This is an unacceptable solution. We cannot recreate a defense industrial base like World War II. Within the next 3 to 5 years, possibly even a decade or two. What we can do is to make better use of the defense industry base we have.

Tom Temin Well, let me challenge you here. Let’s say I’m purchasing a gyroscopic component for navigation for a platform and I need it replaced. That company is there, I’m already buying from them, and all I have to do is submit a task order or request for proposal to the same company.

Jeb Nadaner Let’s say we, the company purchased by the US Department of Defense. Let’s say the couple who owns the place is getting old. They decide to retire. They closed it. They closed their small factories. This has been happening for over 30 years. We have fewer and fewer small businesses, and small businesses really form the basis of the defense industrial base. And we lose a great deal of talent when they retire. If that happens, okay, what’s the alternative then? Import the part from China. This is definitely an option. And we do a lot of that. But I think there is a better option; Try to find the other supplier that works on the commercial side in the US, find the supplier in Italy or Korea. This is a much better alternative. Or there’s something else you can do with software. If you have the right software and data, like Govini in the post, the flow of information on all these kinds of topics, one can find the patents for the technology and then perhaps qualify for a new supplier. This is all possible, but not if one is relying on a spreadsheet or the memory of Charlie or Jane at the back of the room.

Tom Temin This is almost like a market research challenge.

Jeb Nadaner Part of this is the challenge of market research. Realistically speaking, the United States of America, as a country, has a population of over 350 million. So the defense industrial base is not what it used to be. Even with commercial production, there’s still a lot of talent. And of course we have Mexico and the best alliance system in the world. So there’s still a lot we can do. The easy thing to always do, after all, is to order from China. This is really easy to do.

Tom Temin And they will be happy to take the order.

Jeb Nadaner However, this brings with it huge risks if trade stops or slows down or if they decide to punish us.

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

Jeb Nadaner This is exactly the situation. They may need to tweak it a little bit based on the draft and the requirement, but it’s something they can do, and it’s something we’ve helped a number of program managers and the Department of Defense do; this is the Ministry of Defense located outside the Beltway. In fact, it is responsible for managing and supervising these long contracts or supply chains from the very beginning. And that’s something we do with the Minuteman system, for example. To continue this system. In other words, there are parts in that system that entered the system in 1970. The supplier is no longer available but we will then identify alternative suppliers or suppliers that do something fairly close. And then suddenly you have a part of yourself that you didn’t have before.

Tom Temin You mentioned looking at patent status and patent requiring some AI to review all patents on prior art, but that’s definitely a clue as to who’s doing what. But what if you’re looking for something whose patents may have expired and there are still alternative sources? What are other ways, besides the patent system, to identify potential suppliers?

Jeb Nadaner One of the beauties of machine learning, AI-powered data. This is not data like a footnote that says I found a book in college and here is the source. Instead, if you’re collecting huge amounts of data and constantly hoovering it up like we did. The data and then machine learning actually starts to create correlations, starts to combine data formats. So you get very rich things. So if you take patent data, all kinds of technology data, financial data, capital flow data, you can actually discover parts, components, and technologies that might not be easily found when you look at a single source. The important thing is to combine all this data. Meanwhile, no one sitting in a program execution office can move from database to database, database to database, they don’t have time for that. This unification is what they need, and that’s the beauty of AI.

Tom Temin Give us an example. Can you think of a time when someone, using Govini data, found, Aha, John and Joe have a shop of exactly the caliber we need.

Jeb Nadaner We did this on the Minuteman show. We did this in military rotation programs. We will start doing this once the F-35 is ready. And being prepared requires knowing not only your parts, but also the parts you have. You need to know your alternative suppliers. You need to know something like the F-35 because its stealth capabilities require all kinds of special coatings, which are ultimately advanced chemicals and polymers. So these are some of the areas where a supply chain problem that might take five, six years to solve, you can sometimes solve in minutes by looking at this platform with these combined data and software workflows.

Tom Temin And you mentioned that some of the top industrial companies are using this technology, this approach commercially to find 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 from Japan, a company like Weiwei from China. Now DoD manages these large contracts from the bottom up to all subcontractors and lower echelons while also working on their industrial needs. It has some unique problems. One of these is the law that regulates it.

Tom Temin This hinders China.

Jeb Nadaner Yes, it definitely is. So the workflows of a DoD employee, whether a uniformed personnel or a government employee, will differ from their counterparts in a commercial company. And not only do they need to use it, they also need designed software. They don’t want to make sudden moves to do something, they want to do it in two strokes. So what Govini did was create software designed around their workflow, but we did it all with entrepreneur money. No state’s R&D is out of the question. Launched, ready, advanced and now available.

Tom Temin Going back to the original theme here, you believe there is much more to support the Department of Defense on an industrial basis than the department is currently aware of.

Jeb Nadaner Yes, there is much more talent. I can’t say that he doesn’t go rogue like he did in the 1950s or even the 1980s. However, if you have the right information in the kill chain, you can find what you are looking for.

Tom Temin By the way, does this include electronics? Because we were talking about macro parts that you can forge, hammer, cast, bend, and even inject into the mold. But electronics are a different colored horse in terms of recreating an outdated circuit, for example. But this is the circuit you need.

Jeb Nadaner Yes. So electronics come in millions of different forms, from small parts to larger assemblies. Electronics are really important. This is a major security vulnerability of the United States. A certain amount is still produced in the USA. If it is not produced, if we do not make it, we sometimes see evidence that it can be produced differently using advanced production techniques. Sometimes it will be cheaper. And this is something many companies do in the US and abroad. But you need to know who brings this talent. That’s where having something like Arc is so useful is that you can identify these advanced manufacturers, some of whom don’t necessarily make defense products, but actually have the ability to make very unusual, bespoke DoD parts.

Tom Temin So our bumper sticker here can be engraved for DIB.

Jeb Nadaner I love this.