TSIS 2020 – Highlights from Day 2

MS&T Group Editor Marty Kauchak provides the Navy-focused highlights of proceedings from Day 2 of the Training & Simulation Industry Symposium 2020 Virtual Event.

Leadership Perspectives

Mr. James F. Geurts, Assistant Secretary of the Navy for Research, Development and Acquisition, provided several “inside the Pentagon” perspectives on diverse, albeit related S&T topics for the delegates.

Geurts initially reflected on his service’s training enterprise, and looking into the future, said it must “include agility in the way we train” and offered specifics to clarify his challenge. “While there are things we can do more efficiently, home basing, for example, we need to add more tools to constantly be training in a widely distributed fashion. We must leverage artificial intelligence and some of the other new tools to simplify how to train on, use and maintain these very, very complex systems, so that ships aircraft and our other platforms can be more self-sufficient at the point of use.”

Peering further across his service, he called on the delegates to build business, technical and programmatic architectures that allow the service to bring in more ideas more quickly and get them from discovery into deployment in the field. Of specific interest, he opined the military tends to get “a little too enamored on the discovery phase, holding contests, price challenges and such, and don’t deliver them to the end user in the field in an expedient fashion. And even when we do, we probably don’t deliver them with the full training apparatus that goes along with it.” And while the service accelerates the pace of technology development, and decreases cost for materiel solutions, Geurts added, “we must also be able to rapidly insert capabilities in the field. We must also have the training systems that are equally as agile, and where possible, get away from purpose built, very complex capital investments in large training systems, and must become much more nimble to deliver our training in different form factors and features.”

The latest version of the Pentagon’s Cybersecurity Maturity Model Certification (CMMC) program www.acq.osd.mil/cmmc/docs/CMMC_Model_Main_20200203.pdf has started to generate interest in the US S&T industry, as it outlines more rigorous requirements through a product’s life cycle. Indeed, in the presentation’s Q&A session, Jim Robb, NTSA President, raised this issue as a discussion point on behalf of his members. The service executive responded, that while CMMC has the opportunity to become “a government bureaucracy onto itself, and if we do that, it fails,” he added, likewise, “just because you’re a small business or even a non-traditional employer, doesn’t mean you should have some basic ‘cyber hygiene.’” He offered the key to CMMC from the DoD’s perspective will “be balance on its side, to make sure we have the requirements right in terms of levels, and make sure it doesn’t become bureaucratized.”

Show Us the Money

Another data point on the increasing strength of the S&T community prior to the COVID-19 pandemic was the number of new companies or first-time exhibitors present at I/ITSEC 2019. The companies, regardless of their niche in the broad S&T market, shared one common bond – they were somewhere on their journey on the capital continuum - needing government and eventually private sector (venture capital, bank, other) funding to continue and expand their presence and viability.

NavalX ( www.secnav.navy.mil/agility/Pages/default.aspx) serves as the Department of Navy workforce “super-connector,” focused on scaling non-traditional agility methods across the department’s workforce. Under its charter, the office moderated an attention-getting session which provided an important, 101-level discussion on funding options – a topic not recently addressed on MS&T’s web site or print pages.

Commander Samuel Gray, Deputy Director at NavalX, and the moderator for the panel discussion on the Private Sector Funding Continuum, provided the imperative to better understand funding mechanisms. Pointing out there is a natural life cycle as companies grow, he added, “there is a challenge to pair the revenue they are generating through SBIRs [US DoD Small Business Innovation Research contracts] and moving into later contracts, OTAs [US DoD Other Transaction Authority contracts] and others, and then hopefully getting that ‘golden ticket’ – the actual recurring revenue that they can show by becoming part of a program of record – and where capital fits into those different pieces.”

There are different funding mechanisms available, and recommended, to companies at different points on the capital continuum. On the “left side” of the continuum, Dennis Pape, Co-founder and CEO of SeedFunders, noted his company is focused on providing capital to very early stage companies – those just getting a product ready for the market and focused on capitalizing on that market. Benjamin Patz, Managing Partner, DeepWork Capital, concurrently emphasized, “One of the key things to take away, is there is a different partner for these companies, depending where they are on their journey.” For his part, Patz told the delegates that his company gets involved in the capital continuum “to take a purely governmental application to a commercial application… What we’re looking to do is to figure out what changes need to happen in the sales process, more so than the technology process, in order to use this technology and grow it into the commercial space. And what we’re interested in, is how easily that process can be scaled.”

SeedFunders’ Pape, further encouraged delegates to consider grants and similar funding mechanisms as the way to get their get their company “off the ground” and develop their technology core. “Once you have that, and are orienting toward the commercial market place, there’s a whole different change in mindset on the customer base, how you get to customers and how you scale in the commercial market space,” he told the viewing attendees, and encouraged them to go after, and seek to win, only those government contracts which are strategically aligned with a product development path.

A bit further down the continuum, once early stage companies are awarded contracts, Matt Stavish, Vice President, Republic Capital Assets, noted his company “will help with the acceleration and the cash flow that is needed to execute on those SBIRs, or OTAs, or maybe the first several government contracts for which you are looking to get working capital into the company. We have found there are two primary drivers for needing working capital, to pay people in a timely manner and buy something to make your widget and you need something to do that.”

And for company’s yet further down the capital continuum, banks provide more traditional, less risky funding mechanisms. Barry Forbes, Vice President & Market Manager at Truist (ex-BB&T and SunTrust banks), noted once a company has established a track history on a particular contract or on a group of contracts, “you are looking for more efficient, cheaper ways to provide working capital to run and grow the business. The good thing about our traditional funding source is that it is ‘cheap’ compared to other sources – it does not require giving up any equity positions and it is a very tried and true method.”

[Editor’s note: briefing slides from all Day 2 TSIS presentations, in particular those with detailed service contract content, will be posted on the NTSA web site  www.trainingsystems.org/]