Partnering with Dynamic Tech Can Return the Pentagon to its Warfighting Roots

The United States in World War II and the early Cold War created (perhaps stumbled upon it is a better description) the greatest innovation playbook the world had ever known. Then beginning in 1960s, in an unfathomable blunder, the Pentagon intentionally walked away from it. As the government embarked on another path, this innovation model was taken up by Silicon Valley and improved upon by market forces and private venture capital finance. This “Dynamic Tech” model has propelled commercial development ever since.

While the Department of Defense (DOD) calcified itself in bureaucracy, process and compliance, the time-based innovation practices that underpinned Moore’s Law in the commercial market focused on speed, efficiency and disruptive innovation. Government reformers (mostly in Congress) over the last three decades tried to return DOD to its roots and open up the defense market to these non-traditional sources of innovation. These experiments for the most part failed due to bureaucratic inertia, hubris, and political interference despite pathways and authorities being put in place for DOD to do so.

Understanding this history of failed Pentagon management reforms is critical. Rather than pursue incremental reforms that will ultimately be undermined, the new Secretary of War needs to blow up much of the Pentagon’s processes if we are to compete with China in the coming decades. A full-scale war needs to be waged on the Pentagon’s culture as its current requirements, budgeting, acquisition, contracting, and security processes are replaced. The Administration must adopt the type of wartime approaches that worked in the past and now drive advances in Silicon Valley.

The American national security innovation system that emerged during WWII and the initial decade of the Cold War was unlike any other that came before. It rested on several concepts. The first was the civil-military integration of commercial companies, technologies, and ideas into the defense industrial base that was so well documented by Arthur Herman in his book Freedom’s Forge. The next component was to incentivize this whole of nation industrial capacity to meet new never been done before disruptive goals. Flexible and fungible funding was available that could be moved to projects that worked, while those that didn’t could be immediately shut down. Finally, and most importantly the mission was seen as urgent and compelling so projects were constrained by time.

As a result, World War II saw the US military deliver a remarkable string of time-driven innovations in weapon systems. This was a unique period for disruptive defense technological developments because time was clearly the pacing factor on innovation. Significant advances were made in the mass production of new military items using technologies such as radar, sonar, computing, and electronic warfare, and then ultimately the development of nuclear weapons.

After the war, Congress and the military services did not initially destroy this wartime acquisition model. The early Cold War competition with the Soviet Union incentivized the U.S. military to maintain a World War II sense of urgency. Innovation efforts conducted during the war, in the 1950s, and then in the subsequent space race with the Soviet Union in the 1960s had several things in common: a focus on time, rapid experimentation, multiple technological pathways, rapid operational prototyping, flexible funding, and a risk-taking culture that embraced creating something new and revolutionary. This resulted in the creation of multiple disruptive new technologies – ICBMs, satellites, advanced jet aircraft, and nuclear submarines.

This Golden Age of US defense innovation lasted less than two decades. The problem with successful innovation is that it can be messy and unpredictable. Investing in multiple pathways where many of those paths end up failing seems inefficient and wasteful. This opens the process up to criticism and a desire for greater certainty and political control. The auditors, bureaucrats, and Luddites saw an opening to bound the system and they seized upon it.

Central planning and linear step by step processes would eventually replace the free-for-all of competitive experimentation and entrepreneurial incentives. Sputnik rattled the nation and offered the narrative that Soviet style central planning was superior to American capitalism and relentless competition. Systems analysis (an outgrowth of successful time-constrained operations research practices during the war) offered a hubristic scientific approach to management, but was divorced from speed and time. Finally, an anti-scientific backlash that culminated with the arms control movement placed limitations on future progress.

Rather than efficiency the result was stagnation. Time-based innovation was driven from the system and DOD’s acquisition and innovation processes came to a crawl. Defense requirements, budget, acquisition, and contracting practices become less commercial-like while multiple new unique security compliance regimes created new barriers to working with the government. The traditional acquisition system saw decision time to start a program and get it on contract rise from less than a year in the 1950s to closer to 9 years today, while time to initial operational capability or new innovation in the field had gone from 4 years to 10-20 years.

How did this impact the industrial base? Initially, commercial firms when faced with new non-
commercial compliance regimes split their companies – creating new government facing
subsidiaries that specialized in the arcaneness of government procurement regulations and
processes. Eventually, culminating in the great sell off of defense companies and subsidiaries in the wake of the so-called 1993 “Last Supper,” commercial companies divested their defense holdings until only five defense prime contractors were left.

DOD returned to the monopsonist and monopolistic arsenal system of the pre-WWII era, only with ownership being in private hands rather than with the government. Large scale manufacturing became a thing of the past as new programs were planned to be produced first at uneconomic levels and then due to budget constraints would never enter full-scale economic production. Programs became focused on building exquisite handcrafted unique items over long time periods to keep the base employed. The Arsenal of Democracy was transformed into the Artisans of Social Welfare.

Once this system was established, the only way to innovate quickly or produce at scale in an emergency was to take programs outside of the traditional acquisition and budgeting system. This was seen first with intelligence, special access, stealth and precision guided munitions programs in the 1970s, the first autonomous systems from the 1990s, and Mine-Resistant Ambush Protected vehicles and Counter-IED programs in the 2000s. More recently, OTAs were used with SpaceX to restore space access in the wake of the retirement of the Space Shuttle and then again during the development of the COVID vaccine.

End-arounds of the system are required due to the Pentagon’s inability to attract the most innovative companies because of its outdated rules. This is important because disruptive innovation is no longer led by the government as it was at the height of the Cold War. The commercial market became the leading source of innovation in many areas of relevance to national security. Advances made by Silicon Valley in artificial intelligence, data analytics, robotics, autonomous systems, and quantum computing are at the forefront of recent DOD and other countries’ interest in the future applications of these technologies in weapon systems. From an industrial base standpoint, the most innovative sources of these new “enabling technologies” are in the civilian sector, not the defense sector.

A key question to ask is why is this the case. The first reason has to do with money. This started in 1980 when U.S. private R&D first overtook U.S. government R&D. From parity in 1980, the U.S. government’s share of U.S. R&D has been rapidly falling ever since. The rise of commercial R&D subsequently led to a technological leveling of key dual-use technologies on a global scale as global R&D began to dwarf combined U.S. governmental and commercial R&D.

Still, R&D spend is not the complete answer as it is more important how this money is being used. At least in the US, the commercial sector adopted the Pentagon’s old time-based R&D model. This happened when Silicon Valley evolved from its 1950s role of providing radar technology and supporting the Pentagon’s need to miniaturize electronic circuits to fit on an ICBM. Marrying the time-based development model to the venture capital power law is the main source of dynamic tech’s rise to new heights.

As a result, commercial investment has been ruthless. One succeeds or fails fast. The process on one hand is incremental. It is focused on quickly building a minimal viable product to test in the marketplace and then improve upon it in a series of new product releases. It is also disruptive in that it is focused on big things. For venture to succeed only a small number of investments are successful while the majority fail. These successful investments need to provide something like a 10X return to cover those other failed investments. To get that type of return, one needs to disrupt the existing market through major improvements in productivity at a fraction of the cost, develop something new that has never been done before, or both.

DOD once did this and must do so again. Partnering with venture backed disruptive tech is the quickest way to do this. The industrial base and the acquisition authorities are there: time-based MTAs, OTAs, and waivers to go around the sclerotic acquisition system can be used now. Still, more than temporarily circumventing the system is needed to access dynamic tech solutions. As was recently done with JCIDS the old system needs to be blown up and we must start anew. That means the PPBE, FAR, MDAP, CAS, TINA, business systems, certifications, security and ITAR processes need to be targeted and destroyed if the new Department of War wants to live up to its name.