ORGANIZATION OF FULFILLING THE BUSINESS MODEL TRANSFORMATION PROJECT

The article presents the results of studying the problems of fulfilling a comprehensive project on transforming a defense enterprise business model, mastering modern approaches to build production systems, including the concepts of lean manufacturing, “6 sigma”, CALS technology, and others. The ongoing reduction of the government defense contracts to the level ensuring the planned renewal of the army and navy armament requires an increase in manufacturing civilian products by defense enterprises to load the released capacity. The President of the Russian Federation has set the task of bringing the share of such products to 30% by 2025 and to 50% by 2030. However, the entry of these enterprises into the competitive market is not adequately prepared due to their lack of market competencies, the mastery of which requires significant changes in the organization of production, labor and management, or otherwise - transformation of the business model being implemented. The business model in the study refers to the conditional representation of the enterprise’s business, which allows us to understand the composition and interconnections of its elements, ensuring the creation and delivery of value to the consumer. In turn, the value approach focused on maximum customer satisfaction is contrasted with a conservative product approach to building production systems based on the priority of the capabilities of the existing production apparatus. The application of the modern concepts provisions for production and business modeling made it possible to identify features and to justify organizing the project for transforming the business model of a defense enterprise, mastering modern methods of constructing production systems, the composition and tasks of its participants, as well as the mechanism for consolidating the results of changes in the regulatory and methodological framework enterprises. Thus, based on the recommendations of the study, organizational prerequisites are formed for the successful diversification of defense enterprises, as well as the institutionalization of transformations of the production system in the practice of their work.

Offsets in practice: The experience of South Africa

Numerous countries require that defense manufacturers commit to substantial offsets when defense materiel is purchased. However, there is extremely limited data regarding the economic efficacy or rationality of offsets. Recent disclosures related to South Africa’s controversial 1999 “Arms Deal” about the economic performance of its sizeable offset obligations provides solid evidence that the manipulation of offset scoring systems allowed defense manufacturers to invest far less than originally contracted. The South African experience indicates that there are likely to be structural features inherent in all civilian offsets flowing from defense contracts that exert a downward pressure on the actual economic investments delivered by defense manufacturers.

Crimes in the Military-Industrial Complex (MIC)

In this article, the peculiarities of the criminal prosecution for the crimes in the military-industrial complex and state defense contracts in the modern Russian realia. Our conclusions aim to improve the respective enforcement practices and the current criminal procedure of the Russian Federation.

Defense Contracts as a Factor of Intensification of the Financial Capital Formation Process on the Eve and During World War I (on the Example of the Joint-Stock Company of Bryansk Factory and the Russo-Asiatic Bank)

This article discusses the role of defense contracts as a factor of intensification of the financial capital formation process in Russia on the eve and during World War I. The author made an attempt to analyze how the activities of private enterprises carried out for the Ministry of War influenced their merging with commercial banks on the example of the Joint-Stock Company of Bryansk Factory and the Russo-Asiatic Bank. The switch of leading Russian metal-working and metallurgical corporations to military production was caused by objective reasons, since it allowed them to increase profitability and avoid many economic risks. The profits obtained as a result of the fulfillment of government contracts stimulated the banking sector to invest more actively in the industrial complex, which led to merging banks with industrial firms and to the creation of monopoly concerns of a higher level. In the case of the Bryansk Factory Company and the Russo-Asiatic Bank, it was a matter of large-scale production of army products and of particularly large operations in the Russian market. Among other things, the activities of these companies were closely associated with the foreign capital represented by French financial industrial groups. This study is based on such historical sources as documentary materials from the archives in St. Petersburg and Moscow.

Revisiting reliability of estimates at completion for department of defense contracts

Purpose Within earned value management, the cost performance index (CPI) and the critical ratio (CR) are used to generate the estimates at completion (EACs). According to the research in the 1990s, estimating the final contract’s cost at completion (CAC) using EACCR is a quicker predictor of the actual final cost versus using EACCPI. This paper aims to investigate whether this trend stills holds for modern department of defense contracts. Design/methodology/approach Accessing the Cost Assessment Data Enterprise (CADE) database, 451 contracts consisting of 863 contract line item numbers (CLINs) were initially retrieved and analyzed in three stages. The first replicated the work conducted in 1990s. The second stage entailed calculating 95 per cent confidence intervals and hypothesis tests regarding percentage accuracy of EACs for a contract’s final CAC. Lastly, regression analysis was conducted to characterize major, moderate and minor influencers on EAC reliability. Findings For modern contracts, EACCR aligns more with EACCPI and no longer demonstrates early accuracy of a contract’s final CAC. Contract percentage completion strongly reduced the per cent error of estimating CAC, while cost-plus-fixed-fee contracts and those with no work breakdown structure greater than Level 2 negatively affected accuracy. Social implications To militate against optimism of early assessment of a contract's true cost. Originality/value This paper provides empirical evidence that EACCR behaves more like EACCPI with respect to modern contracts, suggesting that today’s contracts have relatively high SPI. Therefore, caution is warranted for program managers when estimating the CAC from contract initiation up to and slightly beyond the mid-point of completion.

Improving defense innovation programs to enhance force readiness

Purpose The purpose of this study is to evaluate Department of Defense (DoD)-backed innovation programs as a means of enhancing the adoption of new technology throughout the armed forces. Design/methodology/approach The distribution of 1.29 million defense contract awards over seven years was analyzed across a data set of more than 8,000 DoD-backed innovation program award recipients. Surveys and interviews of key stakeholder groups were conducted to contextualize the quantitative results and garner additional insights. Findings Nearly half of DoD innovation program participants achieve no meaningful growth in direct defense business after program completion, and most small, innovative companies that win follow-on defense contracts solely support their initial sponsor branch. Causes for these program failures include the fact that programs do not market participants’ capabilities to the defense community and do not track participant companies after program completion. Practical implications Because the DoD does not market the capabilities of its innovation program participants internally, prospective DoD customers conduct redundant market research or fail to modernize. Program participants become increasingly unwilling to invest in the DoD market long term after the programs fail to deliver their expected benefits. Originality/value Limited scholarship evaluates the efficacy of DoD-backed innovation programs as a means of enhancing force readiness. This research not only uses a vast data set to demonstrate the failures of these programs but also presents concrete recommendations for improving them – including establishing an “Innovators Database” to track program participants and an incentive to encourage contracting entities and contractors to engage with them.

Pens, Planes, and Politics

This chapter combines political, labor, and cultural history methodologies to compare the Lockheed aircraft factory in Marietta, Georgia, and the Scripto pen and pencil factory in nearby Atlanta. While the mostly male employees at Lockheed, a majority-white plant, enjoyed the job security delivered by defense contracts at the height of the Cold War military-industrial complex, the Scripto workers, the majority of whom were African American women, faced the more capricious turns of the market. Many of the disparities between these factories stemmed from their common management history found in the career of attorney, businessman, and civic leader, James V. Carmichael. Although situated within close geographical proximity, Lockheed and Scripto helped create disparate racial, political, and cultural worlds in the mid-twentieth century. The tale of these two factories uncovers the stark contrasts between the ways race, gender, and government intervention shaped different sectors of the postwar southern economy.