Forging the Defense Industrial Base for the Digital Age

[Originally published in DefenseScoop]

“The tech bros aren’t helping us too much [in Ukraine].”

That was Dr. Bill LaPlante, DoD’s top acquisition executive, at a recent defense conference.

He also said: “If somebody gives you a really cool liquored up story about a DIU [project] or OTA [contract] ask them when it’s going into production, ask them how many numbers, ask them what the [unit cost] is going to be, ask them how it will work against China. Ask them all those questions because that’s what matters. And don’t tell me it’s got AI and quantum in it. I don’t care.”

Dr. LaPlante is right to focus on volume production of munitions. This is a critical issue for Ukraine and for our own national security. I can appreciate his passion for wanting DoD to send a demand signal to ensure sufficient, long-term manufacturing capacity for Javelins, Stingers, High Mobility Artillery Rocket Systems (HIMARS), and other advanced munitions that America and its allies would need in a future conflict.

His flippant comments on commercial technology, however, are misleading. “Tech Bros” aren’t providing artillery, but the Ukrainians are directing the warfight on iPhones, social media, secure messaging apps, Starlink, and software applications they’re building on the fly. They are getting their intelligence from commercial satellite companies. And they are directing strikes using commercial drones. Commercial technology matters in the current conflict. More so than in any recent combat operation.

I’d humbly suggest to Dr. LaPlante that if commercial technology isn’t scaling fast enough inside the DoD, it is precisely because the DoD isn’t focused on scaling commercial technology. And that falls squarely in his inbox as DoD’s chief acquisition executive.

The Existing Defense Industrial Base Isn’t Sufficient

Beyond underplaying the value of commercial technology in Ukraine, Dr. LaPlante set up a false dichotomy about volume production versus emerging commercial technologies. We need both. And indeed neglecting either could leave the U.S. military unprepared for the next fight, as numerous studies have warned.

Building the necessary capabilities to aid the Ukrainians and deter China requires considering not only how much we produce, but also what we produce, and how fast. This is one of the central findings in the interim report of the Strategic Competitive Studies Project (SCSP) Economy Panel. It calls for a new American techno-industrial strategy that harvests the best of traditional defense manufacturing and emerging technology through improved public-private partnerships.

We will not be able to maximize our probability of deterring future conflict with China by focusing on systems that align with our current concepts and operational plans. That is exactly the same mistake Russia made, and we should not repeat it.

Let’s be honest: will the existing traditional defense contractors create small unmanned drones, new cyber tools, and space-based communication and sensing capabilities — at high volumes and radically lower costs? That we can easily share with allies? That can be rapidly adapted, integrated, and repurposed — even in the fog of war?

Heidi Shyu, the DoD CTO, has identified 14 critical technology areas that are vital to national security. And the former Defense Innovation Unit Director, Mike Brown, observed that commercial industry already leads in 11 of those 14 areas. Maintaining our technological edge depends more on partnering with “tech bros” than ever, even if that’s not the industrial base that makes the Pentagon comfortable.

Of course, we need traditional defense contractors and weapons systems. But they are not sufficient. We need to focus on how fast the DoD can incorporate emerging commercial technologies into its existing arsenal and future plans.

As former Navy acquisition executive James “Hondo” Geurts and General Joe Votel have argued, we need to take “full advantage of [technology] initially intended for commercial purposes.. and agilely adapt such emerging technologies to defense use without costly and time-consuming reinvention and reduplication.”

VC-Backed Startups and Scaleups: Commercial Innovation We Need

The good news: many of the newer, innovative companies we need already exist.

Startups and especially scaleups — startups that have good product-market fit and are rapidly growing revenue — can help DoD field important new capabilities. There is an entire ecosystem of ambitious defense-tech and dual-use companies in Silicon Valley and in other innovation hubs around the country. U.S. defense and aerospace startups raised $10B in 2021, triple the amount from 2019. More broadly, across industries, artificial intelligence and machine learning startups raised $115B in 2021.

Insight Partners, where I work, has invested in Rebellion Defense, Hawkeye360, Shift5, and LeoLabs — and we have met with most of the national security entrepreneurs seeking venture capital. We are also one of the larger venture and growth investors in AI, cyber, and enterprise software companies — many of which are also serving the U.S. government.

I can say from a first-hand perspective: the innovation is here today. In most cases, commercial vendors are delivering important new capabilities at a much faster rate than any of the large defense contractors.

Software and data analytics — which drive the intelligence that DoD desperately needs to deter next-generation conflict — do not rely primarily on physical production. Instead, software and AI are made, iteratively, by product managers, software developers, system reliability engineers, and data scientists.

Fortunately, VC-backed scaleups attract some of the best software and AI talent in the world. Scaleups compete on talent density, which creates product velocity and faster customer feedback cycles. And increasingly, talented technologists want to work on national security problems.

Focus on the Program Executive Offices

More good news: thanks to the efforts of current and past public servants — most notably the late Secretary Ash Carter, who was instrumental in pushing the DoD on this topic — thousands of startups and scaleups are already working with DoD. Through labs, rapid prototyping groups, and innovation units, venture-backed companies are coming through the DoD front door, alongside the traditional defense industrial base. It’s a positive development that the Department has become more startup-friendly with its R&D dollars. Now, it’s time to move the winners — those that have product-market fit inside the DoD — into production.

The DoD should accelerate the buying and integration of commercial technologies by focusing on where procurement happens at scale: the program executive offices (PEOs). From ships to planes to enterprise logistic systems, PEOs are how the Defense Department buys and integrates technology into existing platforms, primarily through large defense contractors.

The Department should provide incentives for acquisition professionals inside the PEO portfolios to buy emerging tech for integration into existing programs. Winning technologies should be able to scale across different programs — what is known as “portfolio management” — even programs that comprise a number of different traditional defense contractors. Imagine the impact that would result from technology companies competing to become a “capability of record” for the DoD, rather than owning a smaller piece of a single program of record.

PEOs should support innovative commercial companies by committing to procurement actions at the speed of relevance — and committing to experiment continuously with their capabilities. PEOs could accomplish this by creating a new executive role — a Portfolio Innovation Director — and giving them resources, tools, and most importantly, an innovation scaling mandate.

Building bridges with the PEOs is a two-way street, and the innovation community needs to do its part. I’ve been honored to participate in the U.S. Air Force training program, Banshee, talking with talented mid-career acquisition officials about how VC-backed companies differ from the defense contractors they are more familiar with. And as part of the Defense Ventures fellowship program, Insight Partners has hosted active duty service members — including acquisition professionals — to build greater familiarity with the VC-backed innovation ecosystem.

Let’s Get Silicon Valley Tech Into Production

Dr. LaPlante’s “tech bro” comments divert attention from the real issue: DoD won’t win a future war without embracing commercial tech. Commercial technology has changed the course of the conflict in Ukraine. Deterring a peer adversary like China will require the DoD to exploit a wide array of commercial technologies across the U.S. and our Allies. And if deterrence doesn’t work, the side that can introduce new emerging technologies and updated software faster than the other is likely to gain a competitive tactical and operational advantage.

As a former public official, I know how hard it can be to make changes in a large bureaucracy. It takes knowing the system deeply, starting small but aiming big, and partnering with unlikely allies. Heck, I wrote a book about it. The DoD machinery of requirements generation, acquisition, and budgeting is big and complicated. It’s easy to criticize DoD from the outside, and hard to make meaningful change from the inside. But with leadership commitment, it can be done.

Dr. LaPlante, you are the chief buyer for the entire Defense Department. You can lead the way. Will you put Silicon Valley into production?

Nick Sinai is a Senior Advisor at Insight Partners, a Commissioner on the Atlantic Council’s Commission on Defense Innovation Adoption, and a Senior Fellow at the Belfer Center for Science and International Affairs at Harvard Kennedy School.