Redefining Defense: Urgent Innovations in US Military Technology
As the former CEO of Mercury Systems, along with my many colleagues, we pioneered a new business model and strategy for the defense industry. During my 15+ year tenure, we built Mercury into a uniquely focused high-tech company serving the defense industry, not a defense contractor paid by the government to develop high technology.
The difference is fundamental. Particularly in how we funded innovation, our prudent approach to development risk as well as the speed and agility with which we ultimately moved.
Over time, we successfully positioned the company to sit at the intersection of the high-tech and defense industries, helping to fund and speed the rate of innovation and adaptation of commercially developed technologies on behalf of the warfighter.
Today, we stand at the crossroads of modern geopolitical challenges, the United States faces an unprecedented dual threat: Russia's acute military modernization and territorial ambitions and China's long-term strategic and economic might combined with their 'Whole Nation System'. This new era of strategic competition has made it glaringly evident that the traditional US defense acquisition process, characterized by lengthy timelines and inefficiencies, is ill-suited for the rapid pace of innovation needed today.
During the Cold War, defense innovation was primarily driven by military and federally funded research organizations. However, the current landscape is vastly different. Today's defense innovation largely stems from commercial dual-use technology and advancements by smaller, nontraditional companies. These entities are crucial in the defense market due to their agility and quick adaptation to evolving technological and threat landscapes. Despite the technological prowess demonstrated by US companies, these advancements are underutilized in deterring conflict due to the slow procurement processes of the Department of Defense (DoD).
Recognizing the disconnect between the evolving operational needs and the outdated acquisition processes, the Atlantic Council’s Forward Defense Program established the Commission on Defense Innovation Adoption in 2022. This initiative aimed to modernize the DoD’s approach to integrating new technology and enhancing its capability to field dual-use technologies rapidly.
The Commission identified several challenges faced by the DoD, including an outdated R&D model, long timelines, inflexible execution processes, a shrinking defense industrial base, and bureaucratic impediments stifling innovation. To overcome these challenges, the Commission proposed ten recommendations, including:
Empowering program executive offices through a new capability portfolio model for faster procurement and integration of innovative technologies.
Simplifying budget submissions and enhancing flexibility in response to warfighter needs.
Modifying reprogramming authorities to facilitate quicker responses to dynamic threats.
Elevating the Defense Innovation Unit (DIU) for better alignment of capabilities with modern industrial bases.
Strengthening capital market programs for mission-critical technologies.
Incentivizing leading technology companies to engage with the DoD.
Allocating funds to address scaling challenges for operationally relevant technologies.
Adopting the Space Development Agency model for rapid fielding and scaling of technologies.
Modernizing the DoD’s requirements processes for dynamic systems and streamlined document integration.
Implementing these recommendations could significantly enhance the United States' ability to swiftly deploy cutting-edge technology at scale, addressing immediate deterrence gaps and reinforcing a robust posture against evolving threats. As of November 2023, six of these recommendations have been partially or fully implemented by the DoD or Congress.
This strategic shift is not just about adopting new technologies; it’s about reshaping the entire defense innovation ecosystem. By embracing private sector’s rapid innovation and modernizing acquisition and budgeting processes, the US can amplify its leadership in defense innovation, crucial in today's era of strategic competition.
Question: How can private equity, venture capital and increased corporate investment in the defense sector contribute to accelerating these recommended changes in defense innovation and adoption?
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