It’s no secret that big name defense contractors aren’t impressed with the Pentagon’s recent Silicon Valley infatuation. But can tech startups offer something these traditional companies can’t?
For more than a year now, U.S. defense secretary Ash Carter has called on Silicon Valley to provide innovative answers to the country’s defense challenges. From cybersecurity to precision navigation, the Pentagon chief sees California’s tech startups as potential partners for the future of defense.
Unlike his predecessors, Ash Carter has spent a great deal of time courting—at times, perhaps, convincing—Silicon Valley leaders to take a bigger interest in the country’s defense needs.
In an April 2015 speech at Stanford University, he explained that tech advancements have created both opportunities and hazards for the country’s safety. Those best placed to combat security risks are the tech companies that helped create them.
He concluded:
“There are also really great opportunities to be seized through a new level of partnership between the Pentagon and Silicon Valley—opportunities that we can only realize together.”
One example of Carter’s Silicon Valley investment is his $75 million deal with the Flexible Hybrid Electronic Institute, a group of 162 companies dedicated to developing paper-thin sensors to eventually replace circuit boards on ships, planes and weapons. Most recently, Carter met with Silicon Valley’s artificial intelligence experts with the aim of building partnerships and integrating AI technology into military strategy.
The procurement problem
Procurement has been one of Carter’s biggest bugbears throughout his Pentagon career. He is set on transforming the DoD’s overly bureaucratic and inefficient procurement processes in order to get new technologies to the Pentagon faster.
In April 2016, Carter unveiled significant reforms to the 1986 Goldwater Nichols Act, the basis on which the Pentagon has been structured since the Cold War era. The reforms included reducing the number of members on the Defense Acquisition Board and giving service chiefs greater power in defense acquisitions.
His changes will, in turn, make it easier for Silicon Valley to get a foot in the door and bid on key defense projects.
The pushback
Although the Pentagon has high hopes for Silicon Valley’s increased role in security innovation, historic defense contractors are more sceptical. The importance of experience and military expertise, they say, shouldn’t be underestimated.
Michael Daly, chief technology officer for Raytheon Cybersecurity and Special Missions, aired his scepticism in a July 2015 Politico article, saying:
“Silicon Valley folks? Their main focus is on speed to market. When you’re making technology in the defense market, you also have to address other aspects, including mission assurance, acquisition compliance — these things are important…there’s an overhead to that. That can slow you down if you’re not structured to deal with it.”
Ken Bedingfield, chief financial officer at Northrop Grumman, has also contributed to the pushback, citing the distinction between technologies designed solely for defense and technologies designed for the commercial market. He recently told the Washington Business Journal,
"I think as a defense industry we’ve tended to stay ahead of Silicon Valley in terms of those technologies that are relevant to the security of our nation. It’s about our country’s ability to differentiate our technology from our country’s adversaries’ technologies and, inherently, commercial technology is hard to differentiate because any other country can acquire that technology."
The possibilities for collaboration
As the relationship between Silicon Valley and the DoD grows, traditional defense contractors needn’t necessarily be left out. By working together with experienced defense suppliers, tech companies could combine their technical prowess with the expertise of military experts.
As Northrup Grumman CFO Ken Bedingfield explained, a new technology isn’t enough on its own, but requires the filter of longstanding defense suppliers like Northrup.
"How that technology would be integrated into a defense asset that could be utilized for our nation’s security or our allies' security, I think would be the trick.”