Sunday, July 14, 2024

Point taken: How North Carolina hustles on defense

Military spending has a big impact on North Carolina. Shrewd efforts are making it even bigger.

Getting more military contract dollars for North Carolina has been a major state priority. For 20 years, state agencies and private groups have worked to build up its ability to do that.

The military is important to North Carolina. We have more than 147,000 military and civilian Department of Defense personnel, up 9% in the past dozen years. That is the fourth-largest military footprint among the states.

Fort Bragg is home to 10% of the U.S. Army and sprawls over four counties in the Sandhills. Camp Lejeune in Jacksonville is the largest Marine Corps base on the East Coast. The Marines also have air stations at Cherry Point in Havelock and New River, next to Camp Lejeune.

Seymour Johnson Air Force Base in Goldsboro is home to the 4th Fighter Wing. The Coast Guard has an air station in Elizabeth City, and the Department of Defense has its main ammunition shipping terminal at Sunny Point on the Cape Fear River south of Wilmington.

In economic terms, the military makes up nearly 13% of North Carolina’s gross state product, trailing only farms and agribusiness. Last year, businesses in 83 counties were awarded $6.1 billion in prime contracts.

Others control the number of military personnel based in North Carolina. But the state has some ability to influence the military contract dollars that flow into N.C.

There are two tracks to expanding the military’s economic importance in the state. One is strategic, described last year in a study led by the Defense Alliance of North Carolina and executed by RTI International and the N.C. Department of Commerce. It focuses on North Carolina as a high-tech state that can compete for high-tech military work.

The other track looks more at boosting our share of everyday products and services that the military buys.

These two approaches result from a public-private platform that has been evolving with little fanfare over 20 years, consisting of state agencies such as the N.C. Military Business Center and private nonprofit groups including the influential Defense Alliance of N.C.

The strategic approach: Clusters

The cluster study looked at where the military’s technological needs are growing and whether the state’s companies can meet those needs. Many N.C. companies work in autonomous systems involving unmanned vehicles, robotics and artificial intelligence. There are more than 103,000 folks working in this particular cluster, a 32% increase from 2013 to 2018. But only 17% of our autonomous-systems companies had defense contracts, so there is plenty of room to grow.

In the human-performance cluster, which includes everything from nutrition to sensors that can tell how a soldier is doing, N.C.’s job growth rate led the nation, increasing 36% over five years. The state has nearly 53,000 folks in this sector, but only 13% of the companies have defense contracts.

RTI executive Dennis McGurk, a retired Army research psychologist, is helping develop what he hopes will become the N.C. Center for Optimizing Military Performance.

“Human performance was one of those critical areas that looked like there were enough legs already,” says Paul Friday, the defense alliance’s executive director, “existing legs in North Carolina that you could make some progress early on.”

“The No. 1 problem for Army medical research is prolonged field care,” McGurk says. “Stopping people from bleeding out and dying on the battlefield. No. 2 is maximizing human potential. A former Army surgeon general once said we know more about our trucks that we do about our people.”

Scott Dorney’s world

While the DANC/RTI study has provided a roadmap for North Carolina’s high-tech defense efforts, the state is leaving money on the table in the lower-tech markets because many companies do not bid on military contracts for common products and services.

The state has a robust system to help businesses win military contracts, if they use it. A key component is the Military Business Center run by Scott Dorney.

A retired Fort Bragg deputy garrison commander, Dorney was running the human resources department for the city of Fayetteville when he was asked to increase economic development related to the base. His team proposed an organization to help businesses navigate the complex military contracting system.

Tony Rand, a powerful Fayetteville-based state senator who passed away last year, saw big potential in the program.

“I still remember Sen. Rand, to this day, saying [in 2004], ‘This doesn’t need to be local. It needs to be statewide,’” Dorney says.

Since then, the center has helped businesses get 3,772 contracts worth $14.8 billion. It is based at Fayetteville Technical Community College.

Growth isn’t easy. To do business with the Department of Defense, businesses have to register as federal contractors. That means having a DUNS (Data Universal Numbering System) ID number and knowing your NAICS (North American Industry Classification System) code. It means getting a CAGE — Commercial and Government Entity — code. It means looking at 65-page DOD contract solicitations and understanding the FAR — federal acquisition rules.

Fortunately, there are folks to help companies through this jibber jabber at the Military Business Center, the community colleges’ Small Business Center Network, and the Small Business and Technology Development Center sites at UNC schools. There’s also the N.C. PTAC, or Procurement Technical Assistance Center.

The Military Business Center includes the N.C. Defense Technology Transition Office, which helps high-tech businesses and researchers who are working on something that might attract military funding.

Denny Lewis, head of the technology transition office, told me his pitch to universities is: “Why don’t you let me come in to talk to folks early on in the fall semester so they know what the needs are in DOD and Homeland Security. … If they have something that may have commercial use, maybe if they paint it green they can sell it to the Army.”

I think companies without DOD experience will struggle to get military contracts unless they tap into this state network. That shouldn’t be surprising. If you want to sell to Microsoft, you have to figure out Microsoft’s procurement system.

In any case, companies should be signed up on, which is used by Dorney’s operation and has 23,000 N.C. businesses registered. Every day, the DOD posts contracts, and MatchForce determines if it has a company in that line of work and shoots off an email every morning with opportunities.

The biggest challenge is getting more businesses into the military market. “I mean, we have a lot of businesses in the federal market,” Dorney says. “But we should double, triple, quadruple the number of businesses that we have.”

The coffee call

The defense economy is its own subculture, which is evident on the weekly Friday DEFTECH Coffee Calls. It is a video-networking event hosted by Denny Lewis and Bob Burton, often with as many as 50 folks on the call.

They attract impressive guest speakers such as a presenter from the Army Futures Command in Austin, Texas. Another week, it was a U.S. Military Academy cybersecurity expert. It’s a good place to meet folks who understand procurement and to get a sense of where the military is headed in technology acquisition.

On a March call, Lewis gave a shoutout to Hal Aldridge, CEO of Secmation, a cybersecurity firm in Raleigh. Aldridge is a former NASA engineer, N.C. State University grad and Carnegie Mellon Ph.D. who founded his company in 2016. Secmation recently landed $1 million in funding from the Office of Naval Research for technology making it easier to provide cybersecurity for unmanned systems like drones.

“You know a million-dollar win’s pretty good,” Lewis says. He asked Aldridge to briefly describe a very complex project.

Aldridge gave what sounded like a well-practiced elevator pitch. The goal, he said, is to build a system for rapid prototyping of unmanned aerial vehicle drones and other unmanned systems. “The key is we’re building a system that … builds in the security as part of the process.

Twenty years ago, there wouldn’t have been much awareness in official circles of the state’s defense economy of what a 10-employee startup like Secmation had done. Now the support system in North Carolina knows about Secmation and can celebrate its win. And that’s what all this activity is about: wins. ■

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