Over the last week, startup CEOs and defense industry experts have been ramping up efforts to push for a more agile, fast-paced way of dealing with the Department of Defense on developing and acquiring new technology and equipment.
With the United States’ technological superiority eroding and today’s threat environment presenting dramatic new challenges, there’s been an increased clamor for reform with Silicon Valley’s “fail fast” ethos at its core. And the drumbeat to encourage innovation and experimentation has grown as the House and Senate Armed Services Committees (HASC and SASC) roll out drafts of this year’s National Defense Authorization Act (NDAA) and consider potential changes to the 1986 Goldwater-Nichols Act, which reorganized the Defense Department and made major changes to the military’s acquisition system.
Although Defense Secretary Ash Carter has made a push for innovation a cornerstone of his tenure, many in Silicon Valley want more from the government. And in true startup style, they want change fast.
On the ideal agenda of things to deal with include sorting out intellectual property rights, speeding up the process of acquiring new technology, and giving much needed room for innovation and experimentation — which can mean failure, something that the DoD and Congress just aren’t yet comfortable with in this high-stakes and high-cost realm.
A willingness to fail
Agility and adaptability need to be the basis of acquisition reform, according to those in the industry pushing for changes.
“It’s really about speed, delivering capabilities as fast as possible, and if you’re going to fail, fail fast so you can try something else,” former Air Force acquisition chief Dr. William LaPlante of Mitre Corporation said on Monday at a Center for Strategic and International Studies event on defense acquisition reform.
The Aerospace Industries Association’s John Luddy said, “we’ve got to get to where we build in the kind of flexibility, willingness to fail, that much of the commercial marketplace has.”
“The need for speed — that’s sort of the operating statement of the problem,” Luddy added.
These issues aren’t just being raised in the commercial sector. In Congress, reform efforts are expected to take center stage as the full HASC kicks off the mark up of the defense authorization bill on Wednesday and the SASC is set to hammer out its version of the bill in May.
HASC chair Mac Thornberry (R-Texas) is looking to promote agility with his proposal to require major weapon systems to be designed with a modular open system architecture, which allows for different components to be tested, added, and removed more easily in order to evolve with technology and threats. For example, ground vehicles, ships or aircraft would include components, such as sensors or telecommunications packages, that could be more readily updated.
Trying to leverage innovation coming out of Silicon Valley has been of high importance to Carter. That is why he created the DoD’s Silicon Valley outpost, known as the Defense Innovation Unit-Experimental (DIUx). And in Thornberry’s defense acquisition reform plan, prototyping and experimenting would also be key to help the Pentagon maintain its technological edge as well as to foster a better business climate for startups and smaller companies.
But in a world where failure often means being dragged before Congress to account for what happened, one of the key questions is whether Thornberry will be able to persuade his colleagues to adopt a framework “where failure is the norm,” Kate Blakely, a research fellow at the Center for Strategic and Budgetary Assessments, said. This aggressive rethinking of the defense acquisition timeline would allow there to be a much faster technological innovation cycle but would hinge on both personnel and oversight to allow it to work, she noted.
A need for speed
John De Santis, the chairman and CEO at Hytrust, said he is often confronted by fellow CEOs who tell him he is “so stupid slash brave to be doing work with the federal government.” Quite simply, working with the DoD just takes too long, De Santis said.
“Because what a risk it is, from a timing perspective, when you have to meet quarter, quarter, quarter, year, year, year, and so on. It’s a real challenge for us. I consider it brave, rather than stupid,” he said. “Because, frankly, there’s a lot of patriots in Silicon Valley, there’s a lot of patriotism, there’s a lot of desire to do the right thing. And we just wish there were more contracting officers, better ways for acquisition and purchasing.”
Congress and the DoD are increasingly looking to the procedures used by private industry for inspiration to develop reforms to deliver and field equipment more quickly. But some of the ideas the CEOs raised at the Atlantic Council event that were specifically geared toward the DIUx may be outside that group’s current scope.
DoD spokesman Maj. Roger Cabiness said the DIUx’s “mission is to bridge the cultural and bureaucratic gaps that impede DoD’s efforts to work effectively with Silicon Valley.”
The CEOs proposed a number of ideas that may not quite link up with DIUx’s current stated role to simply cultivate and build connections between the DoD and nontraditional companies. Top of their wish list was promoting even further information exchange by getting DIUx contracting officers to come over to Silicon Valley firms and sending over some people from the commercial space to teach the government about their processes. Another key issue the CEOs said they want addressed is money: Companies and small startups should be able to come to DIUx to pitch their ideas and get significant funding — a quarter of a million dollars or more — very quickly.
But pushing for speed in innovation and scoring deals is something that Silicon Valley entrepreneurs emphasize again and again as essential if the government wants to work with them.
Gary Gysin, the president and CEO of Liquid Robotics, said that although his company does do business with the DoD, there’s a pace to getting deals done elsewhere that just doesn’t compare.
“We’re in almost every country in Asia, and they make decisions, rapid decisions, and we’re in selling our platform,” Gysin said. “And if we’re in selling our platform and we’re not selling it to our government at the same pace — that worries me.”
Another deep concern for small businesses and starts up is intellectual property rights. “You’re worried, do you have to give up IP? Can I build a commercial project or am I going to effectively have to give up the IP that all the engineers are working on?” he asked.
The contentious issue of ownership of intellectual property is also dealt with prominently in the Chairman Thornberry’s bill, which proposes that privately-funded components would remain the IP of the developer, while those jointly-funded would have to be subject to negotiation between the government and the developer.
Another point of disconnect between startup culture and the government process is on what an appropriate timeline is. In the defense sector, the contracting process is expected to take years and may even reach into decades, but investors in startups simply can’t imagine anything taking that long, said Charvat, who has been involved with DIUx and has been approached by the military to look at cognitive capacity in troops.
While there remain large gaps between the defense community and Silicon Valley in terms of what is wanted and what can truly be achieved in defense acquisition reform, this year’s debate is taking on a serious tenor, according to CSIS’s Andrew Hunter.
Even though it may seem to observers like a debate over defense reform is always on tap, with “substantial signaling” from both congressional committees as well as the fact that Goldwater-Nichols is up for discussion, “the possibility of more fundamental change appears to be on the table,” Hunter said.
Mackenzie Weinger is a National Security Reporter with the Cipher Brief.
