These are days of change for the defense contracting community. Just yesterday, Defense Secretary Robert Gates announced a 2010 Pentagon budget that showcases far-reaching changes to Defense Department priorities. In the midst of Secretary Gates’ announcement, ExecutiveBiz recently sat down with Dan Mongeon, president and CEO of Agility Defense and Government Services. Mongeon weighs in on trends to watch in defense, and explains how Agility — a global $7 billion company, with roughly $2.6 billion in federal business — is preparing to bring new solutions in military and civilian logistics to the table.
A key business challenge for defense contractors has been figuring out where the Defense Department is headed under the Obama administration. Any ideas?
Dan Mongeon: I think when all is said and done, the Obama administration will conclude there is a clear role for the defense contractor. Contractors who do the job right provide value for the troops and save the taxpayers money. So, where it makes sense to leverage best business practices and commercial capabilities, I think the Department of Defense will continue to do so.
Another thing defense contractors are mindful of is the draw down of troops in Iraq. How do you see Agility’s efforts unfolding in that area?
Dan Mongeon: There are some opportunities with those draw downs: the retrograde of equipment, the tons and tons of excess in scrap equipment, and then the build-up in Afghanistan. With those areas, another focus will be on resetting the forces and figuring out how much of that will be done in the United States and how much overseas. We need to make sure we understand what the Defense Department is going to look like in the next three years.
What trends do you see in operations and strategy?
Dan Mongeon: Innovative logistics continues to be a growth industry. It has been for Agility. We’ve had success with innovative solutions [that address] difficult logistics problems and have application in the military. That includes both a peace-time application and a war-time application. We’ve also done a lot of “concept papers” or white papers. These offer concepts that [articulate] a solution that can be a win-win and add value to the Defense Logistics Agency and others.
Any advice for small businesses looking to partner with Agility?
Dan Mongeon: Be innovative. Look at how you can clearly differentiate yourself from other small businesses. Look at where you can either work with a larger business or with a big customer such as the Army, Air Force, or Navy or, say, the Defense Logistics Agency. Get the best of all of those worlds. When a small business will look at it in that perspective — not simply go it alone — but look at how they can form a team that puts together a value-added proposition, I’ve seen success. So, look for good partners, partners you can trust, and who can add value to whatever particular contract or project they are focused on. Then work to have a series of partners and leverage their capabilities in support of larger contracts.
What publications help you stay on top defense trends?
Dan Mongeon: Obviously magazines. Harvard Business Review, BusinessWeek, and Fortune are three I read fairly regularly. BusinessWeek I read almost religiously. I also read military defense journals Defense News, Government Executive, Federal Times, Jane’s, and Army Magazine. It’s good to get both a commercial and defense perspective.
Any associations that also help you stay on top defense trends?
Dan Mongeon: The National Defense Industrial Association (NDIA), the National Defense Transportation Association (NDTA), and the Association of the United States Army (AUSA). Agility does a lot with all three of those organizations; that participation does give us a good idea of what’s going on.
Acting on trends inevitably entails risk. How have some of Agility’s risks paid off?
Dan Mongeon: Agility took risks —really big risks — at an early stage. It put a lot of money behind those risks in order to get into the game in the first place. So there is a culture of getting everybody in a room and figuring out, “Is there a risk worth taking here for us?” That [risk-taking] has been a hallmark of the company’s success. There are some expensive, world-class Agility warehouses and food facilities in Kuwait that were built entirely on spec, for example. They have paid off. We accepted the risk, put our own skin in the game, and made it all work for our customers and our shareholders.
Where is Agility placing its bets next?
Dan Mongeon: A couple of areas come to mind. First, we are aggressively diversifying our business offerings. As a result, we’ve won several significant contracts to manage different commodities for defense and government customers — fuels, repair parts, equipment for troops, and other goods. Second, believe we can out-compete others in challenging markets, such as Afghanistan and Africa. We have resources and expertise in the world’s most demanding environments. That gives us an edge when it comes to building efficient supply chains in those environments.
Interview conducted by JD Kathuria
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