1
Feb

THE TIME AND THE VOICE OF STRATEGIC DEFENSE COMPANIES

THE TIME AND THE VOICE OF STRATEGIC DEFENSE COMPANIES

Article by Eduardo Marson Ferreira for “Air Force Magazine”
1 February, 2018

The final days of 2008 brought auspicious news for the defense sector, especially for our industrial base. After all, President Lula’s government green-lighted structuring programs such as PROSUB and H-XBR and paved the way for F-X, SISFRON and SisGAAz. These were moments of a Brazil that wanted to be great and, to that end, was thinking of equally grandiose programs. And industry thought it would be able to ride on the coat-tails of this greatness.

It was also the time of the launching of the National Defense Strategy, the debate on which began with the National Defense Policy of 2005, which was solemnly announced at the Palácio da Alvorada by Defense Minister Nelson Jobim and Strategic Affairs Minister Mangabeira Unger. The latter, at the close of his speech, in perfect Portuguese forged by decades of experience at Harvard, solemnly prophesized: “the future is destined to be dangerous.” From the perspective of 2018, as the engineers of turn-key projects that we are, we now know what is made of this future …

But let us look forward…

The Natonal Denfense Strategy, by stressing the importance of a solid Defense Industrial Base – made up of Brazilian industry and science and technology institutes – established the foundations of Provisional Measure 544 of 2011, which became Law 12598 of March 21, 2012. At the heart of the law is national sovereignty, the stimulus to innovation in Brazil or, as former Defense Minister Nelson Jobim always reminds us, “Brazil’s right to say no when it has to say no.”

The law “ESTABLISHES SPECIAL RULES FOR THE PURCHASE, CONTRACTING AND DEVELOPMENT OF DEFENSE-RELATED PRODUCTS AND SYSTEMS; LAYS DOWN THE PROVISIONS ON INCENTIVE RULES FOR THE STRATEGIC AREA OF DEFENSE.”

But, above all else, it recognizes the existence of “Strategic Defense Companies,” “Strategic Defense Products,” and “Defense Systems.” Since that time, the contracting of these companies, products and systems by the Ministry of Defense and Armed Forces supposedly uses rites that are differentiated from those established in the Federal Acquisitions Act, the famous “Law 8666.”

Behind these rites, once again, is the understanding by Brazil’s leaders that this type of contracting carries a very high degree of preservation of sovereignty and independence in relation to countries that produce defense material, an intrinsic complexity not adequately translated into general law and an extremely high level of secrecy in the name of national security. “Law 12598” was at that time known as the “Buy Brazilian Act,” in reference to the “Buy American Act” – a US defense procurement law that favors local business acquisitions in that country. Therefore, Brazilian lawmakers were not creating anything new, but rather reproducing a system that was already firmly established around the globe, not only in America in Europe as well.

It may seem like “bringing sand to the beach” to be here reminiscing on that law to an audience that is known to be quite accustomed to the subject. But I think that – five years after the law was enacted – it’s important for us to remember the characters and the reasons that made us get to this point – what worked, and what didn’t. The industry and its institutional representation – the Defense and Security Division (COMDEFESA) of the São Paulo State Federation of Industries (FIESP), the Brazilian Association of Defense and Security Materials Industries (ABIMDE), and the National Union of Defense Materials Industries (SIMDE), for example – all played a central role in the discussion and approval of Law 12598. I remember the steadfast discourse of my late friend Jairo Cândido to the four corners of Brazil… We thought we could make the IDB evolve through the provisions of the law. Today, the reality is that, unless I’m mistaken, there hasn’t been a single acquisition in Brazil of a “Strategic Defense Product” or “Defense System” produced or developed by a “Strategic Defense Company” even so many years after the law was passed!

If there are gaps in the law, if there are adjustments to be made in the name of legal certainty, let them be made. We just can’t – and shouldn’t – relinquish the achievements of the IDB. One of the most significant ones is the understanding of treating the major domestic industries with the precedence that other countries also treat them in their own territories. And this differential treatment was considered to be fully compatible with the Brazilian Constitution in a recent report by renowned lawyers from Brasília, engaged by the Brazilian Association of Defense and Security Industries (ABIMDE) to issue an opinion on this matter.

A major contribution toward making the law truly effective would be clear and legally grounded guidelines handed down by the Defense Ministry to all entities authorized to approve expenditure on Strategic Defense Products and Defense Systems, on how to apply the provisions of Law 12598. And to organize dialogue with the controlling bodies to promote a common understanding of such application.

It is therefore imperative for the promise of publishing a “Usage Handbook” on the Defense Acquisitions Act to be fulfilled as soon as possible by the Defense Ministry. We cannot back down from our achievements.

Click here to access the scanned version.

3
Jan

IN TIMES OF ABSOLUTE CONTROL

IN TIMES OF ABSOLUTE CONTROL

Article written by Eduardo Marson Ferreira, president of Fundação Ezute, for Revista Força Aérea (Air Force Magazine – December\2017)

São José dos Campos, Christmas Eve in the year 2027. When the population prepares for family festivities, all the city lights are turned off, the traffic lights flash on yellow and the cellphone signal stations are muted. Suddenly, the TVs transmit the communication of a terrorist group until then unknown requesting a ransom in virtual currency to release the systems. The authorities, astonished, wonder how all this could have happened.

Ten years prior, we were in full “boom” in the Public-Private Partnerships (PPPs) in Brazil and the stars were the cities’ public lighting systems. After all, with regard to the environment and to the taxpayer, the old halogen lights had to give way to the more efficient and economical LED.

However, the complex of public lighting is perhaps one of the highest-capillarity systems in an urban agglomeration, arriving at the doors of the majority of citizens and covering almost the whole of the urban territory of a municipality. It has an energy transmission grid attached with cables going in and out in all directions, usually near the place where the fiber optic network passes. Nothing more logical, therefore, than using this system as the basis for transforming cities into Smart Cities (Intelligent Cities).

The concept of Intelligent Cities designs urban projects that utilize intensively information technology (sensors, transducers, transmitters, networks, etc.), associated with the capacity to analyze a large amount of data, focused on physical and social intervention in the planning of urban space, making it sustainable and improving the quality of life of the population.

, it essentially depends on the massive use of objects with a great capacity to generate and transmit information (“Internet of Things”, or IoT), “Big Data” and a system of management and urban planning based on algorithms aimed at guiding decision-making. With the world’s urban population growth and technological advancement more rapid and disruptive than ever experienced before, there is nothing more natural than using a part of this technology in favor of humanity itself.

After all, on replacing bulbs with LEDs, São José took the opportunity to “install” in the system high-resolution cameras and various sensors that send images and data to a large command and control center, which processes and generates data aimed at improving the management of the city. In addition to simply enabling the police to capture live images of crimes, the system began to recognize suspicious behavior in the main traffic routes, like a motorcycle stationed beside the driver of a vehicle in congestion or the same car passing by the same point several times. The buses now operate with British precision, optimized by algorithms of supply and demand for public transport constructed from tons of gigabytes of data captured by sensors and analyzed by powerful software. The number of arrests of criminals has increased by the implementation of facial recognition software in the surveillance system, interconnected with the police and the judicial database.

This is only to illustrate the labyrinth of interconnected and interdependent systems that were generated from a simple PPP of public lighting! I am sure that many people remember the movie “Eagle Eye”, where a couple of youths are sent around the world on a suicide mission by an uncontrolled computer of the American defense system, which handles cellphone calls, public transportation systems, traffic lights, digital billboards, social networks, intelligent cranes and even immigration management systems at the airport. Imagine if in that distant year of 2008 of the release of the film, the self-driving car (replete with sensors, processors and interconnectivities) had already been the reality that it is today…

Obviously this is not about discussing the First Law of Isaac Asimov, where the robot is programmed to never attack the human being, as in “Eagle Eye”, “Hal 9000” and “2001”. Rather, it is about drawing attention to an important dimension of the adoption of “intelligence” and the learning capacity of the systems, equivalent to the adoption of robust cybersecurity, a concern that needs to be considered of even more relevance by the industry in services of defense and security.

The “smarter” the cities are, the more susceptible they are to the scenario at the beginning of this article. And cities will increasingly become the privileged battleground of Asymmetrical Warfare, also in its new dimension: cybernetics.

As a parallel, the so-called classic battlegrounds will also become increasingly “smart”! Combatants on foot or aboard planes and ships are true command and control centers, which are loaded with sensors and processors of all kinds, forming huge networks through the ability  to communicate by various means. This is what today is called Network Centric Warfare (NCW).

Industry and services need to combine efforts with the government in implementing a strong governance of cybersecurity, in the equipment, programs and algorithms of interpretation and generation of scenarios and solutions. Otherwise, perhaps it would be best to buy an old petrol generator for Christmas in 2027…

Click here for the PDF version.

23
Oct

SPACE… THE BORDER AT LAST?

SPACE… THE BORDER AT LAST?

Article written by Eduardo Marson Ferreira, president of Fundação Ezute, for Revista Força Aérea (Air Force Magazine – October\2017)

In a recent presentation at the monthly meeting of COMDEFESA of FIESP*, my master Anastácio Katsanos gave the audience a brilliant lecture on the evolution of the space market in the world, which revolves  around something like US$323 billion per year. There was no proposal at any time to analyze the current state of things in the sector in Brazil, but the lecture was no less impactful to all the Brazilians present.

It became clear that the market of access to space dominated by spacecraft has had three drivers since the 1940s and 1950s: first of all, strong state leadership through agencies like NASA in the USA and its counterparts in the former USSR and in Europe; already at the end of the 20th century, the destinations of the market were dictated by large users, such as mass communication companies of voice, data and images, like Iridium, Inmarsat and Google. Now, the third wave is dominated, behold, by the so-called venture capital or private capital willing to run high levels of risk!

Up to 5 or 10 years ago, the names of the investors Elon Musk, Richard Branson and Jeff Bezos were known respectively as PayPal, Virgin Records and Virgin Atlantic, and Amazon Books. Paul Allen was just the former partner of Bill Gates at Microsoft. They were!

Elon Musk and his Space X, a revolutionary first-stage reusable launch vehicle, enabled the cost of putting satellites into orbit to decrease. Ten years ago when he declared that he would do this, the space community laughed at the entrepreneur. Today, after several successful launches, including one with 20 satellites on board, the simultaneous launch of three spacecraft from different sites is now in the planning stage. His business plan predicts a launch every 15 days!!! Any doubts now that he will be able to this?

The dyslexic Richard Branson decided to fly higher than his Boeing of Virgin Altantic Airways and launched the race for space tourism. Despite a fatal accident with the first prototype of his jet launched from an airplane, the White Knight II, he will soon be taking some lucky people into the stratosphere. In the future, he plans to run trips to the Moon and Mars, the same path taken by Jeff Bezos of Amazon.

Now Paul Allen has decided to join two Boeing 747s in a single structure, and in some years, intends to launch satellites from this platform at a much lower cost than a traditional artifact. With this superplane, he could fly up to the Equator and launch the rocket with the satellite in the more efficient longitude to enter into orbit, ending the competitive advantage of sites of traditional launch like Kourou and… Alcântara!

Brazil kicked off its space program at the end of the 1950s, more or less at the same time as India and North Korea. Although we had important advances, the comparison with these other countries gives an ultimate ruling on the lack of priority that the industry has in our country: India today, after having developed and launched satellites of various sizes as well as a launch vehicle, is about to put a human into orbit; we do not need to comment on what the Koreans have achieved, their intercontinental missile protagonizing global TV networks on a daily basis.

From the point of view of the industry, the focal point of this column is that we expect over time, despite the ups and downs, to build a minimal Industrial Space Base, with various manufacturers pulverized and gravitating around the Instituto Nacional de Pesquisas Espaciais (INPE – National Institute of Space Research) and the Departamento de Ciência e Tecnologia Aeroespacial (DCTA – Department of Aerospace Science and Technology). Satellite programs like the China-Brazil Earth Resources Satellite (CBERS) and the Multimission Platform (PMM) created a small network of suppliers and integrators of subsystems, and more recently, the SGDC gave us a more robust integration methodology.

The industry, good or bad, exists! However, in a country with strong state interventionism, as in the cases of developed countries in the 1950s, the industry expects to know where to go. However, the Brazilian State itself does not seem to know what to do with a sector of strategic and technological importance. Note that I said Brazilian State: because access to space and to the services originating from it to the population, in areas such as agriculture, meteorology, navigation, disaster aid, territorial planning, geoprocessing or defense, neither can nor should be the only program of this or that government.

The dichotomy, many times Manichean, of the simultaneous existence of a civil and a military program of access to space, with the natural dispute for the limited budget, puts us forever on hold. Urgent convergence is needed of national interests of the space sector at the highest level of the Republic, to become a true State program, forgetting the biases and disagreements of the past through robust governance. A Brazilian Space Program should be, before anything else, an element of national unity around a common objective.

We have already lost too much time. Soon, the equatorial advantage of Alcântara will be supplanted by Allen’s Boeing. It will be better to build a 4-km runway for superplanes in Maranhão than launch pads to try to capture a share of the business!

Either we all converge now, State, academia and industry, in a common project, or we risk seeing the likes of Richard Branson shaping the destiny of our access to space and all the wealth that comes, or may come, with it. After all, it’s not by chance that there should be such a precedence of Venture “CAPITAL” in the industry…

*Departamento da Indústria de Defesa da Federação das Indústrias do Estado de São Paulo (Department of the Defense Industry of the Federation of Industries for the State of São Paulo)

Click here for the PDF version.

5
Sep

“7×1, 1×0…!” – Article by Eduardo Marson Ferreira for Revista Força Aérea (Air Force Magazine – Aug/2017)

“7×1, 1×0…!” – Article by Eduardo Marson Ferreira for Revista Força Aérea (Air Force Magazine – Aug/2017)

I suggest to the readers of this column of Revista Força Aérea who have not had the opportunity to read the previous edition to do so… It is important to have a notion of the “Theory of the Black Swan” to understand my argument from here onwards. And I write this text one day after the German conquest over Chile at the Confederations Cup, with the younger team in the competition, on average in their early twenties. Against Alexis Sanchez, Vidal and the “pitch bull” Medel. A renewed, discredited, and courageous team… Courage of their manager Joachim Low, and of the managers. July 12, 2000, the German football team experiences its greatest misfortune in history. The team that one day was commanded by Franz Beckenbauer, the all-powerful three times world champion and most successful team of the planet in the 1990s, succumbed on drawing to the weak Romania in the first phase of the Eurocup that year. Harbinger of the elimination without a single victory that year, eight days later.

“Black Swan”, announced disaster or not, perceived or not, the German football organization thought then how we Brazilians think… In the words of the former player Paul Breitner, “Before this we thought in systems of two years, from the Eurocup to the Cup. From the Cup to the Eurocup. If we won the Cup, everything was fine and nothing needed to be done. And we wouldn’t do anything, just stalling for two years. And so we just continued, winning and losing, without changing anything. But if you win anything without playing good football, football at a good level, you need to think about this. And to change this football it needs to change in six, or eight years”. And he concludes, after the Brazilian disaster at the Mineirão: “It will not change with players who are 17, 18 and 19 years old. And yes boys who are 11, 12 and 13 years old. And you really need to change things that matter. That is the way. When you say that our last title was in 1996, it was a turning point in German football. And we thought we were the best, that we did not have to learn anything with anyone. This is the situation of Brazilian football today.”

What has changed since then happened mainly due to the humility of the players involved, who bowed down to the facts.

As mentioned in an article on ESPN, “since the embarrassment of the Eurocup 2000, the German government directed expenditure that exceeds US$ 1 billion in football. There are, today, 370 training centers for minors throughout the country, with more than 25 thousand young people trying their luck in the sport. Another important point is the question of the box office: the prices of tickets have been frozen, which makes the fans always fill the stadiums – the average audience of the Bundesliga surpasses 45 thousand people per game”.

The article continues: “Magnates and foreign businesspeople were prohibited from buying teams. This is reflected in the fact that all the Bundesliga clubs are up-to-date with their finances. The mighty Bayern Munich, for example, has five training camps distributed in 70 thousand square meters that train almost 200 players, 90% of them in the region, with a clear idea of creating athletes identified with the roots of the team from Bavaria – R$ 10 million per year invested in the base”.

“We changed what was a priority until then in Germany, which was the physical condition. This work takes 4, 5 or 6 years to take effect. And now, in these last two or three years, we see the first generation of 19, 20 and 21 years of age. A young team that has a great future for the next four, or six years. This team still has much to learn. The team has developed step by step and we are one of the favorites to win the World Cup in Brazil and also in Russia, in 2018, because we are now on the right path,” said Paul Breitner.

This was before they conquered the World Cup in Brazil, with the humiliating 7×1, which I witnessed personally in Belo Horizonte, against our team, before beating the favorite Chile in the qualifiers for the Russian World Cup two days ago.

As readers already know, I love making these provocations that apparently are not related to the theme of the Industry of Defense. But it is not so! I’m talking about long-term planning, shaking up the status quo, as they did in Germany. Doing now what will only take effect in the next generation!

How many years ago did we witness in the legislative sessions more assertive expressions of solidarity with the National Defense and with the strategic character of the Industrial Base of Defense? How many show themselves as true connoisseurs of the reality of the industry, emulating the Germans who did not need intuitions from anyone in the 1990s? Meanwhile, the reality of the BID is bleak.

In the various seminars, fairs and events on Defense, it seems that the discourse was stagnated at the beginning of the year 2000 when I joined the EADS group, today the Airbus Group… There are times we don’t hear anything “outside the box”. We need to be defiant! The speeches given at these events appear to be written by the same character! Absolutely NOTHING has changed.

Joachim Low, German manager, winner of the World Cup and of the Confederations Cup, dared not to select Neuer as goalkeeper, world champion and star of Bayern Munich, and dared to select the rookie Ter Stegen.

What I mean is… when will we have a fertile field in Defense to plan for the long term, with method, effectiveness… and, especially, when we think outside the box, to leave our truths aside and try something new, and daring? Let us renew the players! Let us promote the rookies!

And above all… let’s stop thinking from one year to another, from one Budget to another, in an uninterrupted playback of the lukewarm, the predictable…

Sorry for getting this off my chest, as a supporter…

Click here to access the PDF.

26
Jul

THE IMPORTANCE OF A GOOD DESIGN IN THE LIFECYCLE OF PROJECTS

THE IMPORTANCE OF A GOOD DESIGN IN THE LIFECYCLE OF PROJECTS

Article written by Eduardo Marson Ferreira, president of Fundação Ezute, for Revista Tecnologia & Defesa (Technology & Defense Magazine)

We live in a complex world marked by constant changes, which forces the different types of mindset to take quick decisions and to adapt to survive. This trend can be represented by an acronym, embedded in the jargon of defense, which translates this scenario: the “VUCA” – volatility, uncertainty, complexity and ambiguity). The term may be appropriate for the management of projects, which often deals with problems which are volatile, uncertain, complex and ambiguous.

In this context, the pressures for quick results and acquisitions of technology by opportunity make the initial stages of the lifecycle for the execution of a project to be neglected. And the consequences can be devastating, from expenses many times higher than those originally envisaged, until the complete unfeasibility of a project, with the creation of the so-called “white elephants”.

In the face of this growing complexity, the reduction of the risk associated to the stages of a project become of vital importance. So, before kicking off, a thorough analysis of its lifecycle is necessary, which includes the stages of design, requirements, architecture, development/production and operation, until its service is withdrawn/disposed.

This strategy is crucial in the context of complex projects, in which a systemic vision is necessary, materialized in the methodology of systems engineering – which goes far beyond the technical vision. Applied in a vision of Systems-of-Systems, it presents itself as the ideal methodology for the design and development of complex projects, because it analyzes the integrated form of all of the components and stakeholders. In this way, a better global result is obtained than that which would be obtained by applying the traditional management strategy.

It is a holistic approach, based on a high-level view, which allows you to implement and analyze systems composed of heterogeneous, complex and independent elements, to be integrated in a cooperative and effective manner. But, to be successful, it is necessary to focus specially on the initial stages of conception and resist focusing exclusively on the stage of development and production.

To illustrate the importance of the initial stages of the lifecycle of projects, I would like to reference a study prepared by the US Department of Defense (DoD). Based on the history of several projects executed, the DoD has undertaken a study of the costs during its lifecycle, which is presented in the graph below. Special attention was given to the moment in which decisions are made, which define the costs of the project and also the impact of corrections applied, when they are considered in different moments of their lifecycle.

In this graph, the total cost includes the costs incurred from its conception until its withdrawal from service, accumulatively. The stage of design, architecture and requirements, as indicated in the graph, represents 20% of the total accumulated cost of the project.

Definition of cost of the Life Cycle

% Accrued Cost during the Life Cycle x Time

 

In red: cost to remove a defect
Design, Requirements, Architecture / Development / Operation

Re: adapted from the Incose Systems Engineering Handbook

The graph also highlights the moments in which the costs are defined, represented by the yellow curve. These moments represent the definition of the technologies to be used, the means of integration to other systems, logistical aspects, human capacities and facilities required for its entry into operation, maintenance and evolution throughout its lifecycle, until withdrawal from service. Through the graph, it can be observed that only the design stage determines 70% of the cost of the lifecycle of a project/program. The other 25% are defined in the steps of requirements and architecture. Thus, 95% of the costs are defined before the start of production. Significant, right?

These aspects assume a more important role when we realize that a lousy definition or an incorrect requirement will represent a correction of direction for the project in the future. These adjustments involve costs for the correction of a defect or error in the specification of the system. Taking as reference a symbolic value of “1” for the cost of correction of a defect during the stage of design, this cost will be exponentially greater if the same defect is detected in later stages of the life cycle. If this defect is detected in the production phase, the cost for its correction will be around 500 to 1000 times greater than if it were detected in the phase of design. This represents a hidden cost in the lifecycle of a project that can lead it to never be completed and will certainly result in a final cost much greater than originally foreseen in the budget. Therefore, even though we have inputs considered urgent, we must take due care with the initial phases of definition of a new solution or system, and work with the methodology of systems engineering for increased efficacy of projects. The apparent N. of R.: Eduardo Marson Ferreira is president of Fundação Ezute. The high initial cost for the definition of the solution will certainly avoid, in the course of the project, hidden costs that may lead to the complete failure of an initiative.

Click here to access the PDF.

25
May

HONEST BROKER

Honest Broker

Article written by Eduardo Marson Ferreira and published in Revista Força Aérea (Air Force Magazine/May 2017)

In 2015, the Ministry of Defense (MoD) sought explanations of why it had stayed behind in terms of innovation, which for decades had been a trademark of this institution. And, for the diagnosis, it hired Rand Corporation Europe, a subsidiary of the American organization of the same name in the old continent.

Organizations such as Rand, MITRE and SAIC, in support of the public management, technological development and resolution of complex problems of the US administration, began to flourish between the end of the 1940s and during the 1950s, in part by the dissolution of the American telephony monopoly and the consequential boom of the famous Bell Labs. But also laboratories of major universities and research centers had been formed, such as the MIT (MIT Research, or simply MITRE) and the Jet Propulsion Lab, which is connected to NASA.

These entities have in common the fact that they are all not for profit, nonprofit, which does not differ from non-profit organizations (NGOS). And because they are organizations free of conflict of interests, by maintaining a healthy equidistance between government, industrial and service companies (suppliers, therefore) and academia, instances which normally defend their particular points of view inherent to their activities (profit, university research, proprietary technologies).

Such centers started their activities in the post-war period to respond to military needs. They sought to attract the best scientific minds, provide a favorable environment for research, perform independent and impartial analysis, ensure the long-term survival of the work, to disassociate the centers from the need to obtain profit, stabilize interdisciplinary teams and develop appropriate technologies to the problems faced.

More than 150 of these organizations were created in the post-war years in the USA, 70 of them, sponsored by the Department of Defense (DoD). Many were dissolved, but about fifty percent remain active today, in various areas of interest to the administration, such as Defense, Public Security, Development of the Judiciary, Energy, and Public Health, among others. They use the tools of the private sector for their tasks, typical of the governmental agency that is sponsoring them, and, therefore, have privileged access to the data of the agency and of its suppliers. That is why they have to conduct the work with the absolute impartiality and confidentiality on which this partnership with the State counts.

In the presentations of the MITRE, you can read their mission, which summarizes well the nature of these organizations: “company of public interest, working with the industry and academia to advance and apply the science, technology, engineering systems and strategy, allowing the government and the private sector to make better decisions and implement solutions to complex challenges of national and global importance”. Voilà!

Let us return to the British MoD and its problems of innovation. In the conclusions of the Rand study, as well as the players of the defense market, it clearly reads that the “MoD should make an explicit change from a client/ supplier relationship to a relationship focused on the partnership with external players. Efforts to change the cultural dynamics would be complemented by the establishment of an honest broker, an organization that can actively seek out these relationships, encourage them, and also identify opportunities that are more attractive to the MoD, where these partnerships should focus”. Thus it introduces a shaft that rotates the triple propeller of innovation involving government, the private sector and academia.

In the medieval era, the honest broker was an independent arbitrator to settle disputes between subjects of the kingdom. Here, it designates the organizations already widely described in the text, and in the lack of a better term, it can be translated as “independent” or “unbiased articulator”.

Here is an idea… why not?

Click here to access to PDF.

3
May

WHILE WE WAIT FOR THE BLACK SWAN

WHILE WE WAIT FOR THE BLACK SWAN

Article written by Eduardo Marson Ferreira and published in Revista Força Aérea (Air Force Magazine / May 2017)

Nassim Nicholas Taleb is a mathematician and Lebanese writer who lives in the United States and is the author of The Black Swan: the Impact of the Highly Improbable, 2007. He is also a mega investor, having made a large part of his fortune in moments of major crises in the global financial market.

In this book, he explains that before the advent of the occupation of the Australian continent by Europeans, they thought that the occurrence of a black swan in a population of these birds was a rare and extraordinary fact. Therefore, he used this term, “Black Swan”, to describe unexpected or unpredictable events, and of high impact, for good and for bad.

In this way, events such as the attack on the Twin Towers on September 11 in New York or the beginning of World War I, the advent of the internet itself, would be classified as “black swans”. After all, in spite of the risks inherent in the American military-diplomatic positioning in the world, which generates feelings of hatred in various regions of the planet, who in good conscience could believe that on September 10, 2001, a suicide attack of those proportions could happen in Uncle Sam’s garden the next morning?

Taleb also speaks in his book of the lavish human capacity simply to invent logic to explain the “Black Swan” after the “catastrophic” event had already occurred. This ability to join many pieces of information that supposedly were offset in the sight of all, that explain what happened, but that nobody would have had the ability to build a causal relationship between them before. Make comments and criticisms already knowing what happened is easy… a typical attitude of an “engineer of a ready-made project”, as we say here in the homeland. As Taleb reports, if any legislator had approved a law making mandatory the installation of costly armored doors in the cabin of all American aircraft, who knows if they would have prevented the worst. But, certainly, this character would not be remembered as a hero, but for bringing more costs to the debilitated air transport industry, since no major catastrophe would have occurred.

Finally, the logic of the black swan tries to teach the reader to understand the signs that precede events of this nature and prepare for them, who knows even to surf the wave that succeeds them. By the success of the author on the capital market, it seems that the formula has worked!

And what has all of this to do with the Defense Industry?

In Brazil, we emphasize the quiet character of citizens, the long period without conflict and the alleged absence of threats to our territorial integrity as an explanation for the small interest of the population in the theme of Defense. Since the advent of the Ministry of Defense (MoD), there are countless diagnoses made in this direction, which often end up occupying prominent spaces in the prologues of official documents, certainly produced to defend the investment in the industry! It seems that we have started these documents apologizing in advance for spending on the DEFENSE OF THE COUNTRY!

As a consequence, this lack of support of public opinion makes the sector a strong candidate to have its investments cut by the machete of the budget contingency every year. In 2017, it was no different, with 40% of the budget of the Ministry of Defense in this situation. The consequences we already know, and one of them is the focus of interest in this column: the weakening, destructuring and, often, the disappearance of several companies and entire production chains of the sector. I don’t need to exemplify this here, I know the reader will have in mind various such cases or have experienced the daily drama of them in their own companies.

The Armed Forces are already suffering the consequences of this destructuring of the industrial base of Defense in various projects. The signs are clearly there to anyone who is willing to understand them and neither are they as disconnected as those that preceded September 11. Soon we will see a torrent of black swans, and with much imagination we will classify them as unpredictable and come to the conclusion that the negative impact is relevant on the industrial capacities in the country. We will probably build an extremely rational explanation for the events, saying that we had everything to avoid them. But the reality is only one: the industry needs predictability and visibility of the financial flow of military programs, current and future. That is it! No black swan!

In times of revision of the National Defense Strategy and the White Defense Book, I recommend the preliminary reading of Nassim Taleb’s book.

Get out, swan!

Click here to access the whole article.

21
Feb

WHEN THE PUBLIC AND PRIVATE SECTORS MEET

WHEN THE PUBLIC AND PRIVATE SECTORS MEET

Article written by Eduardo Marson Ferreira and published in Revista Força Aérea (Air Force Magazine)
Feb/2017

The crown jewels of the Telebrás System, Embratel was privatized in 1998 and has allowed the access of millions of Brazilians to a phone line. Or have they forgotten that one day the telephone was so expensive and restricted that it needed to be declared on the income tax return? The control of the company then passed to the American Worldcom that would file for bankruptcy in 2002 and became the target of greed of several global players, among them the Mexican billionaire Carlos Slim. With this background, a friend of mine who worked in the Defense Ministry told me: “Damn, all the communication in the X-band of the MoD is hanging in the satellites of Embratel, which will now be in the hand of the Citi Group or of the Mexican! It’s ludicrous!” I asked him where the satellite was controlled from and he replied that it was from Mangaratiba/RJ. “Look, dude, if the American or Mexican do not behave, put the troops in the ground control station and you operate it,” I said.

Of course, none of this was necessary and Brasilsat still carries a good part of the provision of Broadband X. Just to illustrate that even in the most critical issues of defense, the encounter between the public and private sectors usually ends in a success story, something that the British discovered a long time ago. Nowhere in the world are the PPPs, or Public-Private Partnerships, used in such large scale to finance the needs of the State. In 2008, 85% of the public purchases of the United Kingdom were already made in this modality.

In a recent article here in this column I talked about new ways of thinking about the “core business” of the Armed Forces, and stated the example of the subjects of Her Majesty who have already equipped the Navy with surface media or your MoD with secure communications, originating from some kind of PPP process. One friend of mine who criticized in 2004 the process of Embratel would be amazed if they knew that the British secure communications pass through the X-band transponders leased from a French satellite.

Here in Brazil things have been so slow since the regulatory mark of the PPP, Law no. 11,079 of 2004. From there, just 121 contracts have been signed in the various levels of government, federal, state and municipal. The lack of consistency of projects and the managerial difficulties of the State have been suggested as probable causes of this reduced number. However, according to the site Radar PPP, in June 2016, there were 734 projects in Brazil, from 29 segments, in 11 stages of the lifecycle of a PPP, which goes from the public intention right through to the signing of the contract.

It is evident that in times of budgetary difficulties the Public-Private Partnership presents itself as an almost solitary option to respond to the investment needs of the State. Since he took over, President Michel Temer has made clear his priority to this activity and literally all the newly elected mayors began talking about PPPs.

In Defense, today there are ten PPP projects, most of them related to health and education, in addition to logistics. The exception is the Integrated Communication Network of DECEA, theme of recent articles in the press. Very little for a sector that is facing serious budgetary difficulties and very shy for the intensions of a continental country, with Armed Forces widespread across the four corners of this vast territory.

To change this state of affairs, it is important for the MoD and individual forces to discuss areas that may be attractive for the private sector and equip them to model the partnerships and their implementation, aiming at a higher number of projects that remain in force. And the most important thing: maintain an open channel of dialog with the private initiative so that there are more and more Procedures for Expression of Interest (PMI) and may ease the hardships resulting from the lack of budget.

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9
Jan

STRATEGIC SUSTAINABILITY AND PARTNERSHIPS

STRATEGIC SUSTAINABILITY AND PARTNERSHIPS

Article by Tarcisio Takashi Muta for Revista Tecnologia & Defesa (Magazine Technology & Defense – Jan/2017)

In the United States, the decade following the end of the Second World War generated demands of work that were not met satisfactorily by the existing organizations, be they private companies, government or academia. For example, a first test of a public-private partnership model was the Air Force Project, approved by the DoD for implementation in partnership with the Douglas Aircraft in 1946, and when rapidly the parties experienced conflicts of interest between the activities of supply of equipment (hardware) and the research and analysis with the objectives of guiding the long-term decisions for the Air Force. As a result, already in 1947, at the suggestion of Douglas, 50 researchers were segregated in a non-profit organization, who went on to receive sufficient funds to cover the costs of those researches. This situation led to the innovation of quasi-governmental organizations. This model of organization was gradually extended and improved and, currently, there are about 40 of this type supporting the U.S. federal government.

It was thus that in the 1940s/50s the embryo arose of what today is the Mitre Corporation, a non-profit organization under private law, which operates several centers of research and development, funded by agencies of the Federal Government of the United States. Currently, Mitre works with government agencies in the areas of studies and analyses; research and development; and systems engineering and integration, always seeking innovative solutions of public interest. A differential in the operation of this model is the existence of funds defined for the projects undertaken, creating continuity in the treatment of subjects and projects of relevance to the State and to the North American society. These are the FFRDCs (Federal Funded Research and Development Centers).

The first steps of Mitre were made in the laboratories of the Massachusetts Institute of Technology (MIT), during the Second World War, with the request to investigate the use of computers to develop a simulator for the training of a bomber crew, which culminated in the development of the first high-capacity digital computer – Whirlwind. At the beginning of the Cold War, the U.S. Air Force decided to use computers for interception control and the Whirlwind was the only one appropriate for this mission. In 1958, the Mitre Corporation was commissioned by Congress as a nonprofit private corporation, to provide engineering services and technical advice to the government, with an initial focus on defense needs. It was then commissioned to develop the SAGE, a semi-automatic air defense system, and, due to its complexity, it demanded the organization to communicate with the sectors of the military, industry and of universities. With this, Mitre consolidated its operations in Systems Engineering and Integration, a characteristic that became its main DNA, meeting current needs and allowing the government and the private sector to make the best decisions and implement solutions for the complex challenges of national and global importance to the USA.

Operating detached from any commercial interest, only providing for the government and not even being able to develop products for the market, nor to compete with private enterprises, these organizations guarantee greater objectivity in the development of the projects of the government and the inter-relationship with other entities related to the Federal Government, private companies and universities, allowing a more fluid interaction between the various bodies of the federation.

This differential and the continued presence of the partnership have made these entities strategic organizations because they do not use the privileged and confidential information to which they have access for any competitive advantage, and they apply all the knowledge acquired in various projects with continuity, ensuring that the best practices and the most modern technologies are applied and disseminated in society’s favor.

In the case of Mitre, it is involved directly in projects of national importance, applying the concepts of systems engineering and advanced technologies. The organization has, for this reason, a multidisciplinary team of specialists and this diversity elevates the level of qualification of the institution to address the challenges to meet the needs of government and the common good of society—with excellence.

This systemic and integrative role has led Mitre to working not only for military agencies of defense and intelligence, but also for civil ones in the areas of aviation, health, legal, cybersecurity, modernization of organizations, and the judiciary.

The big difference that these organizations bring to the government agencies is the continuous availability and updated training, supplying the needs of the government organizations in their mission to society, without common discontinuities arising from the movement of people and leaders, technological updates, examples that typically occur in public organizations and that hinder their productivity, and that of society.

We can say that in Brazil there are similar models of organizations, but that do not have the minimum guarantees of continuity and survival by the absence of a structured and modern institutional design and more appropriate of government, separating the legitimate interests from the market forces of those associated with strategic interests or of long-term effects for the State and for government organizations, which are necessarily considered in high-level strategic planning. As a result, we have gaps in the legislation of purchases and the qualitative poverty in government budgets, a transparent and repetitive reality in Brazilian life.

The Brazilian government could have great benefits if it accepts and knows how to integrate the operations of Defense and of Science and Technology and promotes the partner performance jointly with organizations of this kind.

A vision of the value of this model can be found in an excerpt from an interview of the minister Mangabeira Unger entitled “Criticism of the Brazilian Legal Thought, according to Mangabeira Unger” reproduced below:

“…But there is another option. And this other option will become increasingly important during the course of the 21st century and presents a major challenge to Law. This other option is the engagement of independent civil society, as not for profit, as a partner of the State in the qualification of public services.”

This reality can also be seen as an opportunity for the Ministry of Defense, which needs a continued solution for the constitutional and operational mission instituted for the Armed Forces and, consequently, to make its contribution more real, practical and visible for technological development and national sovereignty, in partnership with the Ministry of Science and Technology, as in most developed nations.

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