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A CEO’s Perspective on
National Imperatives
Paul Cofoni
President & CEO, CACI International Inc
National Contract Management Association
Government Contract Management Conference
December 10, 2010
CACI International, Inc | December 10, 2010
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The Market Environment –
Spending Reductions Are Inevitable
 No segment of federal, state, or local government
will be spared
 Reductions not likely to occur evenly
 Politics likely to have a delaying effect
 National imperatives will dictate
CACI International, Inc | December 10, 2010
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The Market Environment –
What Are Our National Imperatives?
 Job Creation/Growth in GDP
 Education – STEM
 Cost and Accessibility of Good Health Care
 Energy Independence and Security
 Environmental Improvement
 National Security
 Cyber Defense
 Everything Else
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Job Creation/Growth in GDP –
What Can Make It Happen?
 Innovation of new or improved products and services
 Serve global needs, not just domestic
– The biggest opportunity lies in developing economies
 Innovation has been a consistent driver of our
economy over our nation’s history
– Demand fulfillment
– Demand creation
 Competition and the associated
risk/reward paradigm leads
to innovation
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Economic Growth Model
National Commitment + Competition + Profit Motive
Innovation + Entrepreneurialism
New Value Creation (Improved Products & Services)
Increased Jobs and Domestic Sales + Exports (GDP)
Increased Personal Income and Corporate Profits
Increased Federal Revenues
Increased Federal Spending for Citizen Services
Competition Is the Pressure That Creates Diamonds
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Education – STEM
(Science, Technology, Engineering, and Mathematics)
“We owned higher education in the 20th Century. And we still ‘own’
it, so to speak. Over a third of the top 100 institutions in the
Shanghai rankings are U.S. based.”
“The population of international students declined from 689,000 to
618,000 between 2001 and 2003. But the numbers have rebounded
greatly, with 859,000 F1 visas awarded in 2008.”
“While students used to stay and get jobs in America, they are now
choosing to go home and help build their economies.”
Watson Scott Swail, Ed.D.
President & CEO, Educational Policy Institute
Trends in International Student Enrollment P2
May 2010
In 2004, the U.S. graduated
137,437 engineers vs. 112,000
from India and 351,537 from China
Bloomberg Businessweek, Dec. 12, 2005
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PhD Degrees Awarded by U.S. Universities
and National Origin (1958-2003)
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Cost and Accessibility of Good Healthcare

Healthcare challenges may be opportunities and not just problems

Opportunity for economic growth in the U.S. healthcare industry

Healthcare services, plus combined medical technology
and pharmaceutical industries = Opportunity to lengthen
human life

How much GDP growth could come from domestic sales and
export of life extension?
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Energy Independence and Security
 Military relies on unrestricted access to
energy sources
 Sharp increases in energy costs wreak havoc
on economy
 Environmental issues associated with
energy affect the quality and length of life
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Environmental Improvement
 There is no satisfying answer to the question:
– How much pollution should we accept in the air we breathe,
the water we drink, or the ground in which we grow our food?
“From 2003 to 2020, the number of vehicles in
China will rise from 26 million to 120 million. And
then there is India, Russia, and the Middle East –
the rest.”
– McKinsey Global Institute
“Between 2006 and 2012, China and India will
build 800 new coal-fired power plants –
with combined CO2 emissions five times the
total savings of the Kyoto accords.”
– The Post-American World, Fareed Zakaria
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National Security
 Without this, not much else matters –
The wolf is always at the door
 This is the one challenge where the U.S. holds
the #1 position
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The Emerging World of Cyber Threats
 Cyber attack vectors – Stuxnet
 Insider treason/disloyalty –
WikiLeaks
 Pre-kinetic/battlefield preparation –
Georgia/Estonia attacks
 Crime – Zeus botnik
 Terrorism – Jihadist recruiting
 Counterintelligence – Signal hacking
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The Emerging World of Cyber Threats
 Who are the adversaries?
 What constitutes war?
 Laws to allow maximum defense?
– Privacy vs. security
 What is the high ground in this fight?
 What is the deterrent?
 What is trust? Who can you trust?
– “Send me your leaks!”
 Contract management organizations will be at the
center of addressing these threats
Another race to the moon?
Another Manhattan Project?
Another supercomputer consortium?
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Cyber Threat Implications for
Acquisition and Contracting
 Increased complexity for IT systems requirements and
acquisition strategies
 Supplier base challenges and implications
•
One hundred percent testing and inspection and increased
infrastructure costs for companies
•
Likely increase in security classification requirements
•
Decreased number of “acceptable” suppliers
•
Increased cost and infrastructure barriers for small business
 Limitations on data and information that can be posted
to Internet
Likely impacts – increased costs,
smaller supplier base, longer
acquisition cycles, real challenges for
small businesses
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What Are the Implications for the Nation?
 National strategies are required for these large,
complex problems
 These challenges will be with us for decades
 These challenges cannot be met with specifications
and RFPs alone – Can we move from arms length to
collaborative undertakings?
 Understand the relationship between risk and reward
in the government-industry relationship
 Shifting risk is not managing risk – may actually
increase risk
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There Will Be Winners and Losers –
Consolidation Will Increase
Rockwell
Boeing
Argo Systems
Litton Precision Gear
McDonnell Douglas
Hughes Electronics Satellite
Jeppesen Sanderson
Boeing
Honeywell-Electro-Optics
Fairchild Weston Systems Inc.
Loral
Ford Aerospace
BDM International Inc.
Librascope
LTV–Missile Business
IBM–Federal Systems
Unisys Defense
General Dynamics–Ft. Worth
MEL
Lockheed
Martin Marietta
Gould Ocean System Division
General Electric–Aerospace
COMSAT Corp.
Loral
BDM (Carlyle)
Lockheed
Martin
Aerospace Electronic Systems
Affiliated Computer Services Inc. (ACS)
Commercial Aerostructures
Logicon
General Dynamics Space Business
Northrop
LTV–Aircraft Operations
Grumman Corp.
Westinghouse El. Defense
Ryan Aeronautical
Kistler Aerospace Corp.
Alvis Logistics–EDD Business
Northrop – West Virginia
Northrop
Grumman
Teledyne Ryan Aeronautical
Federal Data Corp.
Taratin
TASC (Primark)
PRC (Black & Decker)
General Instruments–Defense
Varian–Solid State Devices
Litton Industries
Avandale Industries
Newport News Shipbuilding
TRW
Hughes
General Motors
BET PLC's Rediffusion Simulation
General Dynamics Missile Division
Magnavox
REMCO SA
Raytheon
STC PLC–Navigation Systems
TRW-LSI Products Inc.
Corporate Jets
E-Systems
Chrysler Techn. Airborne
TI Defense
Raytheon
Hughes Electronics
Raytheon – Flight Simulation
Raytheon Co-Plant, Quincy
Eng &
Const.
Int’l
Aircraft
Integration
Systems
Segment
Vertex
Aerospace
Veridian Corp
GM Defense
Motorola Integrated Info Sys
Galaxy Aerospace
Primex Technologies
Santa Barbara
GTE Government Systems Corp. Units
Gulfstream Aerospace
NASSCO Holdings, Inc.
Computing Devices International, Inc
Lucent Advanced Technology Systems
Lockheed Martin Defense Sys, Armament Sys
Bath Iron Works
Chrysler Defense, Inc
General Dynamics
Source: CSIS, SDC, DACIS DM&A
‘80
‘82
‘84
Missile
Operations
‘86
‘88
‘90
Peace
Breaks Out
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‘92
Electronics
Division
Fort
Worth
Div.
General
Dynamics
Space
Propulsions
Space Systems
‘94
‘96
‘97
‘98
‘99
‘00 ‘01
AWF Greatly
Reduced
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‘02 ‘03
‘04
How Do We Deal With New Federal Spending Realities?
New Focus Areas – Move from resourcing the need to:
 Hard choices
 Across-the-board federal productivity improvement
 Managing demand
 Pay for output, not input
 Return to lean, process reengineering, and process
standards to improve efficiency
 Examine what is core and what is not
 Innovation, streamlining, and service excellence
become more important differentiators
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CEO Constituencies
Employees
Shareholders
Board of
Directors
CEO
Gov’t
Oversight
Contract Management
SEC/DCAA/GAO
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Clients
Congress
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Going Forward
 Hard choices must be made as government, as companies,
and as citizens
 How do we convert challenges into opportunities for
growth?
 How do we combat the cyber threat to our nation?
 National strategies must be developed to address
all of these issues
 Contract and acquisition managers will be the architects of
the future relationship between industry and government
•
You will help determine how risk is understood, shared,
and managed
•
You will help structure lasting business relationships
•
You will be central in helping to incentivize innovation
to develop solutions
•
You will help build mutually beneficial partnerships
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Going Forward (cont’d)
Never underestimate
your role in moving us
forward to meet the
challenges we face!
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