My recently completed research focuses on the lobbying decision of defense executives. A primary goal of all dissertation research is to fill a gap in existing academic literature. To my surprise, the lobbying decision of defense executives had never been previously examined. Space constraints prevent me from framing and reproducing the entirety of the research here, but I do want to highlight some confirmed facts that might inform your own executive development going forward.
The Winners in Defense Acquisition
The winners in defense acquisition are far more consolidated at the top of the U.S. defense industrial base than some realize. Existing research confirms half of defense acquisition dollars go to 50 companies and their subcontractors. There are hundreds of thousands of companies competing within the U.S. defense industrial base. In fact, a DoD report on the defense industry in 2019 acknowledged we don’t know the exact size of the defense industrial base, but that it could be one million companies. Set-asides shape the industry and outcomes as well.
Annually, congressionally-mandated small business goals strive to assure that 25% of contract awards go to specific socioeconomic categories of small businesses. In defense, that 25% equates to roughly 50,000 companies annually. While acknowledging the mix of dollars vs. contracts in these two statistics, hundreds of thousands of companies are competing for just a fraction of the opportunity.
It’s no secret that several issues shape the consolidation of winners of defense contracts over time, including a shrinking industrial base, offshoring of critical manufacturing capacity, the introduction of other transaction authorities (OTAs), indefinite delivery indefinite quantity (IDIQ) contracts, and the relative increase in lobbying activity since the post-World War II era. Over the past 30 years, while registered federal lobbyists grew to over 12,000, fewer than 1,000 registered lobbyists represent defense interests. A fraction of one percent of defense companies is registered to lobby. Defense lobbying does not rank even among the top ten industries that lobby Congress.If the competitive opportunity is so fierce, why would more companies not use every tool in their toolkit to gain better leverage? Click To Tweet
The Lobbying Decision of Defense Executives: Themes That Emerged
Several themes emerged in my research that contribute to the executive mindset. I’ll describe just a few here:
Awareness: awareness captures an executive’s ability to synthesize specific sub-elements of the budget cycle to include lobbying knowledge, experience, connections, appropriations, authorizations, networks, working with Congress, strategy, and colors of money. Some executives demonstrate quite sophisticated levels of awareness, while others demonstrate a general lack of awareness. The lack of awareness of these interrelated concepts inhibits an executive’s ability to compete at the highest levels of the U.S. defense industry. It sounds logical until you add in that nearly all executives claim they learned how to succeed in the defense industry through on-the-job training (OJT). Reliance on OJT and levels of awareness go hand-in-hand.
Process: lobbying requires that a defense executive synthesize complexities of the budget, legislative and lobbying processes, and their interrelationships. Defense executives who possess an awareness of process knowledge perceive lobbying Congress as a tool or lever at their disposal. Conversely, defense executives with low process knowledge do not have the same perceptions of lobbying. Process knowledge of defense executives is generally low but also difficult to measure—as one might measure an accountant or attorney’s base levels of competence via exams. It is typically measured through performance, which means the company pays that expensive tuition of errors, mistakes and missteps.
Communications and Contacts: for an executive to draw on distributed networks and communicate effectively throughout the federal sales cycle, they require both a strong message and extensive networked coordination. Robust networks with effective and timely communications support those executives with adequate process awareness. Support from mentors and knowing with whom to speak can serve those with high levels of process awareness. Networks of defense executives are often geographically diverse, but narrow in scope.
Defense executives spend considerable time and energy determining with whom they must communicate amid a government audience that frequently changes positions and does not routinely publish useful contact information directories. Communications in the executive branch and Congress are governed by rules and norms—each requiring varying degrees of sophistication that coincide with the executives’ level of awareness. Higher levels of awareness facilitate the decision to lobby, while lower levels of awareness present a barrier to the decision to lobby.
How have you invested in your executive teams’ level of knowledge? How have you encouraged your executive team by communicating that their investment in themselves is an essential element of their career success? I observe that this concept of executive investment is not discussed openly. Rather, the message is assumed to be understood by all. Have you tested this assumption in your company?