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Aberdeen plans to form profitable company

by Mike Cast

ABERDEEN PROVING GROUND, Md. (Army News Service, Feb. 7, 2003) -- The Aberdeen Test Center is seeking to form a profitable partnership with private industry and academic institutions by establishing a "limited liability company."

This type of business enables the partners to pool their resources, business capital and diverse expertise to provide products and services, while limiting the financial liability of each partner for any civil lawsuits that might result from the work it does.

ATC is planning to form a partnership referred to as the National Testing Training and Technology Company, said John Roth, ATC's driving force behind the efforts to establish the company. Roth expects the test center to select partners and set up the company by fiscal year 2004, provided the Army and Congress complete authorizing legislation.

Operation of the company will then be a five-year pilot program that Roth expects to be a radical departure from business as usual. Though the test center will seek to generate new business and income through the new company, it will continue to conduct its core business of testing developmental weapon systems.

The Secretary of the Army Thomas White has approved a recommendation from the Defense Department's Business Initiatives Council to test the LLC concept and has asked for fiscal year 2004 enabling legislation. Dr. John Foulkes, the director of the Army's Test and Evaluation Management Agency, is the Pentagon champion for this program.

The process for creating the company began two-and-a-half years ago, Roth said. Its impetus was Section 246 of the National Defense Authorization Act for fiscal year 1999. The bill included authority to waive Department of Defense policies, procedures and regulations not required by law so that government agencies could operate more like businesses.

Section 245 of the fiscal year 2000 bill authorized DoD to explore ways to improve operational efficiency. Its purpose was to enable participating organizations to attract a workforce with the appropriate mix of skills and experience, and to compete effectively in hiring the best scientific talent available.

Philip Coyle, the Pentagon's former head of testing and evaluation, funded ATC to study a wide variety of innovative business practices, and recommend the best ways to meet the letter and spirit of Section 246. ATC conducted the study over the past year through a cooperative research and development agreement with Drexel University of Philadelphia and Batelle Memorial Institute, an organization based in Columbus, Ohio, that regularly does work for the Army. Forming a limited liability company turned out to be the most promising idea.

Only 25 percent of ATC's funding comes directly from Army appropriations while the other 75 percent comes from test customers, Roth said. ATC is not only faced with the challenge of maintaining a multi-disciplined, flexible workforce that can meet the high-tech needs of a transforming Army, but also must obtain the funding necessary to keep its test facilities current with state-of-the-art test technologies. ATC's share of any profits made by the company will go to infrastructure improvement at the discretion of the commander.

As well as benefiting its partners by reducing liability and pooling expertise and resources, the company could help maintain ATC's test facilities in an optimum condition for military test programs by using some of the test facilities more regularly and providing testers with more practice and experience, Roth said. Operating the company will also drive down indirect costs, he added.

To explain the type of work the company might undertake, he used the example of a military system beset by technical problems too difficult for the manufacturer or the Army to solve without outside expertise. Testers and evaluators are good at pinpointing problems with systems, he said, but they may not be able to provide the solutions. The combined resources and talents of the National Testing Training and Technology Company, on the other hand, could deliver solutions, and in less time than is now standard.

The company will market its capabilities through trade shows, technical symposia and technical magazines, Roth added.

ATC will solicit for members by advertising on the Interactive Business Opportunities Web page. Interested businesses will receive a briefing and tour. They will be required to submit written and oral proposals that will be rated by a disinterested panel of testing professionals.

The panel will recommend membership to the selection authority, who will make the final decisions on who, and how many members, will be selected. Members, including ATC, will be required to contribute $150,000 per year for a maximum of three years to pay for LLC operating costs. After that the LLC should be self-sustaining, officials said.

The commander of ATC will be the Army chair for the company, and others in similar leadership positions at member organizations will be included on the board, which will set company policy, Roth said. He said the selection process should take about nine months. The LLC staff will include a managing director, a technical director, administrative support and people who provide contract and legal support. This staff will be hired through an employment agency, officials said.

(Editor's note: Mike Cast is with the Developmental Test Command.)