General Dynamics, Lockheed Units Praised by U.S. Navy

Business divisions of General Dynamics Corp. (GD), Lockheed Martin Corp. and Raytheon Co. (RTN) are among nine recognized by the U.S. Navy as “superior suppliers.”

The units named today by Sean Stackley, the Navy’s assistant secretary for acquisition, will be invited by the service to make a pitch for reduced regulation such as less frequent inspections. An earlier version of the pilot program dangled the prospect of more tangible “post-award advantages,” such as favorable payment terms.

The winners were chosen based on standardized Pentagon criteria including cost, meeting schedules, performance, quality and business relations. They were evaluated using performance data going back three years for about 80 business divisions of the service’s top 30 contractors, according to service officials.

“The only thing this will allow them to do” is “to get an invitation from us to enter into a dialog” for “how we might be able to mutually” improve Navy business processes and relieve them of some requirements, Elliott Branch, Navy deputy assistant secretary for acquisition, said in an interview.

“We are reaching out to them: ‘What’s your shopping list? Let’s talk,’” Branch said. The recognition won’t give them advantages in weapons contract awards, he said.

Weapons Costs

The units recognized received about 20 percent of the Navy dollars spent in fiscal 2013 on weapons, major systems and related research, according to service figures.

The Navy’s Superior Supplier Incentive program is a pilot project under the Pentagon’s Better Buying Power initiative, unveiled in September 2010 by Defense Secretary Robert Gates. It was designed to reduce weapons costs, streamline the weapons-buying bureaucracy and provide incentives for companies to improve their internal processes.

The business divisions recognized today are:

-- General Dynamics’ Marine and Combat Systems units

-- Lockheed (LMT)’s Mission Systems and Training

-- GE Aviation (GE)

-- Northrop Grumman Corp. (NOC)’s Aerospace Systems

-- Raytheon’s Integrated Defense Systems and Intelligence, Information and Services units

-- Rolls-Royce Holdings Plc (RR/)’s defense aerospace unit

-- Lockheed and United Technologies Corp.’s joint venture for maritime military helicopter support and repair.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editors responsible for this story: John Walcott at jwalcott9@bloomberg.net Larry Liebert, Stephanie Stoughton

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