Where’s ‘America first’ when it comes to U.S. defense contracts?

Matt Bellis, president of Seikowave, demonstrated his 3D scanner in 2014
Matt Bellis, president of Seikowave, demonstrated his 3D scanner in 2014 Herald-Leader file photo

Like many Americans, I was challenged by the choice of candidates in the 2016 presidential election. Although my preferred candidate was not among the final list of candidates, I was cautiously optimistic about the outcome.

After the election, I chose to remain cautiously optimistic. After all, Americans generally want to see other Americans succeed. I looked forward to new policies that would help foster change and growth in America. The emphasis on building American businesses was one policy that I welcomed.

Yet, my company has twice lost the opportunity to provide American-made, American-designed products to American service personnel. In both cases, we lost to much larger foreign entities with more expensive products.

I work for a Kentucky company with a very non-Kentucky sounding name: Seikowave. My company is a spinoff from the engineering department of the University of Kentucky. We have commercialized amazing technology developed by a team of people located in Lexington. Much of the initial funding for the development of the technology came from research funded by the U.S. Army. We employ 12 people, all in Kentucky.

We are privileged to have the support of investors from the commonwealth and around the United States. The technology from UK has allowed us to develop a 3D camera that can be used for a variety of important measurement applications. From 3D scanning-to-print to reverse engineering to automation to safety, our 3D technology solves a wide variety of problems.

The U.S. government provides small business set-asides for U.S. companies that meet the specific criteria. These set-asides are intended to help build American businesses. Late last year, the Army issued a request for proposal for a 3D imaging system. The request was a small business set-aside. We partnered with SSI, a small, veteran-owned business from Lancaster and responded to the Army’s request.

The Army specified a brand name part from another company (Creaform). We recommended that the Army use our tool instead of the Creaform tool. The Army rejected our bid and purchased the Creaform tool, which is manufactured by a Canadian company that is part of an international multi-billion dollar conglomerate. Hardly a small business, hardly a U.S. business.

Last month, the Army at Ft. Knox issued a request for proposal. This proposal specified the Artec 3D imaging tool. We proposed that the Army use our 3D imaging tool instead. Artec is another multi-national company with their main office in Moscow. In our response to the Army request, we offered the lowest price, the best performance and local support.

We lost. The Army decided to purchase a more expensive product designed and manufactured in Moscow (Artec is headquartered in Luxembourg). The Army will be using a 3D imaging tool made in Russia to take 3D data on American munitions.

The government procurement process is broken.

According to Deltek, a U.S. market research firm, the pool of small businesses winning defense contracts has declined by 25 percent since 2010. The fact that a small, veteran-owned business partnered with a small U.S. manufacturer lost a U.S. Army small business set-aside contract to a Russian business that offered an inferior and more expensive product is an example of how the small business set-aside program is not working.

My cautious optimism for policy change has been replaced by activism. Blaming the administration, or a branch of the administration, is no solution. The problem, like many in government, is complex.

A real solution requires discussion and coordination between Congress and the various branches of the administration tasked with interpreting our laws. This discussion begins with awareness. Please contact your congressional representatives; make them aware of the need for change in this process.

Matt Bellis, president of Seikowave, can be reached at mbellis@seikowave.com.