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Comment by mNovak | Hacker News Reader

Having a small business that works in defense, I can tell you the upper tiers of military recognize and are worried about diverse production and innovation.

But, there's an issue called the "Frozen Middle", where the middle managers, decision makers, and contract officers will still pick the mega-primes because they're perceived as safe, in an environment were compliance and liability is extreme. So, it's hard for (very) small businesses to get a secure foothold, and god forbid they start winning bigger contracts, because the Primes will come muscle them out.

Not mentioned in the article is the issue of blatant technology theft by the Primes from small business. This is very well known in the industry, and a huge issue because typically the Primes are the gatekeepers to integration on a weapons platform.

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You totally left off corruption at military level. The "Revolving Door" of the Pentagon where the big ones keep hiring the very people that issue them contracts and letting them go back. They get cozy six-figure jobs or other perks for issuing contracts starting in the millions. Last write-up with lots of detail I saw here was this one on SAIC:

https://www.vanityfair.com/news/2007/03/spyagency200703

There's also the Congress side where the contracts they're pushing bring jobs to their districts. One joke, which might be true, about the B2 was that the ridiculously-expensive project kept getting support since part of it is made in every state. I never confirmed if that one was true, though. Just remembered it as a funding strategy. ;)

In case anyone hasn't heard about SAIC in a while, they now go by Leidos.

Thanks! Just made a few headlines make more sense to me.

>because the Primes will come muscle them out.

Over and over people mention this phenomena. I am not sure why its okay, or that people even suggest giving these organizations more money.

Regulation- the kind that creates red tape- favors the biggest companies. One of my favorite clients had a software product that their contacts in the military said stood head and shoulders above what they were currently using. Unfortunately, they were not the people in charge of procurement, and didn't have the clout necessary to make inroads enough to land a contract that would keep the company afloat.

In the end, they pivoted to market their software to commercial enterprise clients (think data analytics) and they've been going ever since. It's a shame, really.

The flip side, of course, is that a lot of the same regulations I bemoan as red tape exist because someone, somewhere, bought something that either completely failed, or the supplier wasn't big enough to support the military's scale. I've seen businesses make similar reactions- every time there's a mistake, layer on another new process or documentation requirement.

There's got to be a middle ground somewhere between the needs of auditing, accountability and avoiding regulatory capture, but I don't really have a good answer for what it is.

I always think of the two kids that got rich gaming the new Internet bidding process to buy tons of ammo that went to the military in george jrs. Iraq war that was completely useless.

> I am not sure why its okay, or that people even suggest giving these organizations more money

Nobody ever got fired for buying IBM

They better start doing that then

The reason "no one gets fired for buying IBM" is because big players (IBM, Microsoft, Google, Amazon, etc) are known quantities (so you don't need to answer questions around "why would you choose that fly-by-night company, you must have some financial interest!") and critically, if something goes wrong they're big enough to sue.

If you pick a small company and something goes wrong, they might go out of business and leave you with nothing. If they stay in business, you might try to sue them but the company isn't worth enough to make a lawsuit worthwhile. IBM, Microsoft, Amazon, Google, Apple, etc, they're big enough to sue. Which is kind of an insurance policy against something going wrong in the contract.

Except IBMs products are a contract, maintenance and usability nightmare, much worse than the other options

> So, it's hard for (very) small businesses to get a secure foothold,

While I can't speak to the what the big guys do, the government itself is an enemy of the smaller businesses from what I have seen.

Every government contract I have seen always has the equivalent of "We can cancel this contract and quit paying you money at any time."

That misaligns the incentives immediately.

1) A small company can't commit a significant fraction of its resources and risk getting yanked. Any small company that does is run by an idiot.

2) From the small company perspective, the primary useful goal is to do nothing as long as possible while collecting as much money as possible and deliver as little as possible to fulfill the contract. The ideal outcome is to do nothing and have the government actually yank the money and default on the contract. The secondary outcome is to collect all the money and do all the work in the last month of the contract.

3) The small company will pile everything into change orders and charge the government a fortune up front on those.

The problem here is that those are rational behaviors when the government behaves that way in its contracts.

This is 1000% wrong.

You wrote: "We can cancel this contract and quit paying you money at any time."

That is an incorrect statement. The link below tells you how a DoD contract can be canceled.

http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfar...

If you meet your SoW, you will get paid. The FAR is very, very clear on this issue.

1) All of my resources are committed to the gov and I am not an idiot.

2) This is simply not true. It doesn't matter what flavor of contract you have: time and materials, cost plus fixed fee, etc. You have milestones and deliverables that are defined by your SoW. If you don't meet the milestones, you will not get paid. There is no incentive to "do nothing and wait for the last month of the contract"

3) This is an especially idiotic statement. These are called ECPs, which are a contract mod, which if there are enough of, the contract can get re-competited. Adding ECPs is a very, very bad idea.

You clearly have no idea what you are posting about wrt to gov contracts

Source: I own a small R&D company that works for the DoD and IC

> If you meet your SoW, you will get paid. The FAR is very, very clear on this issue.

I am glad for you that your experience does not match mine. However, I'm going to stick by my statement.

I have had my funding pulled on a budgetary rearrangement. I have had Congressional staffers threaten my contract to score patronage after an election changeover. I have had already completed and signed off milestones suddenly get reexamined as not complete. And, while contracts are very well specified, there is not a lot of point in trying to litigate a contract on someone in the government who is determined to break it.

While my commercial contracts generally work beautifully (not always, but probably less than 5% cause serious issues), all but one government contract I have had longer than 12 months has had some government-initiated disaster (short contracts are better but you often waste too much time acquiring them for the amount of money involved).

I am glad you have never been high enough on anyone's radar to hit this or that you have a powerful champion as your protector. However, I have talked to more than a few people about this and I can tell you that I'm very much not alone.

> Source: I own a small R&D company that works for the DoD and IC

The difference may be R&D vs production. Someone is always looking to score political points by slapping around a supplier.

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