Mike Frederickson is the CEO of Systems Innovation Engineering. He was director of the Office of Naval Research Electronics Manufacturing Technology Center and retired from the Air Force.
Federal Newswire:
Can you explain the science of logistics?
Mike Frederickson:
I spent the better part of my time in uniform in the logistics area, [in] a combat communications scenario and also with an F-16 squadron. The science of logistics is at the end, when you talk about solving a problem or you talk about a solution or you talk about the science of something.
I always like to start off with what your end state is. What are you trying to achieve?
[For example,] it's being able to supply a war fighter at the time they need the part. It rolls back to always assuring that you have the ability to acquire the parts you need, and then the ability to deliver those parts to where they need to be.
There's one other component. That is ensuring that we design-in reliability, so we need less parts to begin with. When you look at logistics, reliability is your friend, because if things don't break, you don't need to supply them.
Federal Newswire:
Did COVID expose problems in our approach to supply chain management?
Mike Frederickson:
My experience is mostly defense. I believe that what the pandemic did is expose supply chain issues in the Defense Department. We are very used to saying, "Well, our systems are more complex… Therefore, I only have one supplier, or I designed a system or a subsystem that only one company can produce." We lived with that for a while.
In fact, the last administration listed all these archetypes. They said all of these were significant risks.
When the pandemic came along, I think when we found out that the supply chain at the very base component level–things that we were getting from foreign sources or that we were getting from even domestic sources–were mispredicted. They thought that the supply chain was going to go down, so they ratcheted down. The whole reason we have the problem is they ratcheted down their production.
But at the end of the day, I think what really became paramount on the defense side was that it really taught us that we need to do a better job.
It's much like logistics. What's the end state? The end state is to never get caught without a supplier, without having some level of protection or some level of a second source, or some level of designing in a product that may be more of a commodity.
My mentors used to teach me that facts and fallacies look a lot alike, but the reality is that a fallacy looks like a fact. The fact is that defense systems are complex, but they can be designed with resiliency.
Federal Newswire:
How bad is this vulnerability with companies that supply material for the Department of Defense?
Mike Frederickson:
There are different grades. You can start at materials, then you start at components, and then you start at next level assemblies.
The Defense Department has exotic materials. From that perspective, I think you must secure your supply chain. Maybe there's a single source, maybe there's a possibility you could bring in another source.
I think as you get into components, in the electronics side, we for the most part buy commercial components. We're pretty much already there.
As you start rolling up into subsystems, now there is an opportunity…to look at, at least two different sources that can provide a subsystem.
One of the things that we've learned over the past five or six years is to design in supply chain resiliency–a subsystem that multiple companies can produce.
Federal Newswire:
If somebody invents a new system and the DoD wants to buy it, how do they build in resiliency and take advantage of the innovation?
Mike Frederickson:
Let's back up [and] approach it from a slightly different angle. We want innovation. We want small businesses. We want companies that continuously provide us innovative solutions. We want to protect their IP. I mean, that is our country's founding innovation. Our ability to stay ahead of our adversaries is through innovation and technology.
But I'm going to reverse your argument. If we do a good job, we go out to the innovators and make it clear what we’re looking for. They will innovate.
I don't think we necessarily do a really good job of that today. But if you create a clear demand, now that innovator is going to come back and provide you a solution that is what you're looking for.
You can have two or three people with different technologies providing you that innovation, and now you have competition.
Federal Newswire:
How does shifting politics affect the DoD’s ability to give clear direction to innovators?
Mike Frederickson:
When we're looking at a threat to national security and we're trying to design in ways to defeat it, I'd love to live in a world that says that's not political.
But let's step back and look at a political dimension of priorities. Maybe one political position is more industrial-focused–putting billions of dollars into supply chains and workforce readiness. Maybe another political position might be to enhance and to grow major programs to drive more systems.
Both need to be done, and both are are good for this country. I contend that both need to be in check. I think overfunding an industrial base and not checking to assure that we are achieving the objectives would be money not well spent.
I would like to say the work that we're doing today in both the last administration and this administration, I think the work is the same. We're trying to deliver affordable weapons systems.
Federal Newswire:
Can having a surplus of equipment be helpful?
Mike Frederickson:
Yeah. I have to admit, how much surplus you maintain is probably not one of the areas that I've spent a lot of [time on].
One of the challenges given what's happening in Ukraine from a supply chain perspective, is we now need to start up production.
There was a wonderful comment from the Deputy Secretary of Defense. She says, "... we must figure out how to produce," which comes back to the supply chain and our domestic capability. That's really what it rolls back to.
I think those are the challenges when you talk about surplus. Those are the examples that are hard problems we're trying to solve right now.
We need to build more missiles, we need to build more. Congress has appropriated the funding, which is good. I think we've got the priorities right. The real question–back to the deputy secretary–we have to produce.
It comes back to our domestic supply chain. How do we expand our domestic supply chain? How do we achieve something far beyond what we have today? I think that's it.
Federal Newswire:
How do things like higher labor and regulatory costs impact our ability to start domestic production? Is there anything that can be done about it in the name of improving the supply chain system?
Mike Frederickson:
We obviously have more regulatory types of activities than other countries. I contend that you can stay competitive. There are plenty of examples.
One that I'm very familiar with, the area of RF microelectronics. Go look at capability down in Texas, North Carolina, and Oregon…They're competing globally and we are manufacturing these products here.
With what's happening in Arizona, with fabs opening up there, more fabs opening up in Texas, and with automation, innovation, we can be competitive globally.
Federal Newswire:
How does the CHIPS Act deal with supply issues?
Mike Frederickson:
Our association with the CHIPS ACT has been more or less on the defense side. We've been able to make recommendations.
There's two components of the CHIPS Act. There's the component that's the Department of Commerce, and then there's a component that is the Department of Defense, which is a much smaller area, actually. It’s executed under a program called ME, or Microelectronic Commons.
I'm back to the end-state. If you're going to spend money, know what your end-state is, and measure yourself against that.
The expertise that I've been connected to…over the past year…within the US that I never knew existed–bringing people together to go try to solve this problem–I think is amazing.
The CHIPS Act [brought] forward the capability that our country has at world-class universities, and companies, and [resulted in] companies working together to solve this problem. The CHIPS Act … caused that to come together. Coming together to solve this problem is huge.
Back to the end state. If we don't have more fab capability here and we still have dependencies in places like China, then I would say that we were not necessarily that successful.
Federal Newswire:
How does the CHIPS Act get implemented into the regulatory side of things?
Mike Frederickson:
I know that the Department of Commerce has reached out to a few program executive offices that we support. They're providing some avenue to have direct support from commerce to program executive offices.
I would say my most familiarity is with the DoD side. My understanding is they had over 1,000 project submissions of ideas. It was significant. There were six different commodity areas. There was a whole variety of different sectors that they divided it into.
As far as bringing the best of what America has together to go work within the defense side, I thought the work done by the folks running it did a good job. I mean, they really got the word out.
Federal Newswire:
How can these reforms apply to the general government?
Mike Frederickson:
Let's step back and talk about what I believe the work that we've done to date, and then I'll explain that transition.
We were asked by an organization within industrial policy called the Industrial Base Analysis Sustainment Program to go look at emerging weapons systems. Very quickly as we started looking at domestic vulnerabilities–this is pre-pandemic–what we began to realize was that it's not a simple spreadsheet.
Let's step back for a minute and look at our supply chain. When we are actually managing our supply chain, are we quantifying and maintaining that capability that we're acquiring? Do we even know what capability we're acquiring?
What we learned very early on was that one tier would say, "This is a domestic resource. We can't lose this resource." The other tier [may say], "They cannot meet our requirement."
What you begin to realize is that your supply chain is very dependent upon the demand you're putting on it. We can ask, "Is there a tieback to China? Have they declared bankruptcy?"
But if you ask, "Can that company continue to keep providing me the capability I'm looking for?," we don't do a good job tracking that.
This is what we did within industrial policy. We started to say, “we need to start tracking domestic capability and capacity. Now we're directly supporting a major program executive office in this exact venture with this exact same thought process. Because tracking your domestic capability really provides you [with the knowledge that you] know exactly what I'm getting from this supplier, [and it] allows me to go get maybe another supplier.
Second, is sourcing. Electrical engineers designing a component that didn't work, probably wouldn't stay in their jobs very long. But as systems engineers, we'll design a subsystem with a specification that nobody can produce. We'll do that all day long. And then we'll go out and try to negotiate, and we can't find any sources. It's a simple thing to say, it's a hard thing to do.
But what we need to be doing–and this works for defense, medical, anything–is design in a resilient supply chain.
Federal Newswire:
Would you call a reconnaissance platform a weapons system?
Mike Frederickson:
It's a sensor. When you think about a weapon system [it] can either sense something, track something, or kill something. That's the kill chain. When we talk about weapon systems, they have a variety of different things that they do.
Federal Newswire:
Are our adversaries working to erode our supply chain?
Mike Frederickson:
Oh, they are. In fact, when we were first brought on board, in the first year, we found that capability matters. It really does. I also want to say another lesson that we learned is the little things matter.
We were starting to study high-energy lasers and we started to review this. What we found in the first year is that one of our adversarial countries, China, had come in and procured the majority [supplier for] a $2,000-$3,000 component. They basically undermined our entire supply chain. It was [just] a component, but it's the little things that matter.
Now, there's not a laser that is produced today for industrial purposes or other purposes that doesn’t need these parts. Immediately you become dependent on foreign sources because you have one source left. Because it's a $1,000 part, everybody says, "It's just a commodity part, it's a $1,000 part," and, "It doesn't matter.”
Our adversaries are very good at getting at a lower level and basically eroding the underpinning. You're going to get to the point where you're not going to be able to buy a $1,000 part, but that's going to upend a $10 million system.
Federal Newswire:
Who should be monitoring our supply chains to prevent this?
Mike Frederickson:
It's gotten a lot better. There's an organization very close to where we report called CFIUS. They've done a good job. You kind of have to have market knowledge.
If you look at how we track company capabilities today, sector by sector, we have really smart people in those sectors. Subject matter experts in the RF microelectronics sector, the optics and EOIR sectors, or in the composite sectors. We have what I'll call inherent market knowledge.
I don't necessarily have the right answer to say who should be doing that. I know who tracks it and sees it. I know when others see it, there is a process to file with CFIUS to prevent that.
Federal Newswire:
What does CFIUS do?
Mike Frederickson:
Basically, they are the folks that whenever a foreign entity is procuring, or even an alignment of companies, they have a say in whether it can occur. When we see [issues], we do report and others do.
When we've held a couple of supply chain workshops, they've shown up to our meetings. They're very active, they're very proactive. I would say that in the last five or six years, they've become extremely proactive.
Federal Newswire:
If you became Secretary of Defense for a day, what would you do on that one day?
Mike Frederickson:
I believe that what we're focusing on now is the right answer. From what I'm reading, the leadership…[in] the past five or six years has been the best leadership I've ever seen in the Defense Department. All the way. It's amazing. I think the focus is right.
I think the one shift that I would make is, it's the little things that matter. It is understanding our domestic supply chain. Not just understanding big data and what we can grab. Clearly understanding our domestic capability and capacity, and finding innovative ways of doing that, I think is equally important. Once you now have that, you then begin to understand where your dependencies are at a very rudimentary level.
We still procure materials from China. You can pass as many laws and acts and executive orders as you want, the system is in place. When you buy commercial products, which we do in the Defense Department, there is a point when there is no other source where you're just stuck.
Federal Newswire:
How do people find out more about your work?
Mike Frederickson:
We have a website. That's one way. Certainly a lot of the stuff that we're working on with the Defense Department is not on the website, but we're more than happy to have a conversation, and that's the best way to get a hold of us.
