Policy Studies Cybersecurity Policy

Commercial dual-use technologies in defense acquisition reform

Over the last 20 years or so, the United States’ defense acquisition system has grown too risk-averse, too slow and too costly. As a result, our military technological advantage has atrophied to the detriment of the development and fielding of new, innovative warfighting capabilities.

Instead, today, the most promising advances in technological innovation come from the commercial sector, where research and development (R&D) now dwarfs U.S. government investments—so much so that even to combine the R&D spending of the U.S. Defense Department’s (DOD) top five prime contractors would not rank them among the top 20 industrial spenders worldwide.

Against this backdrop, more and more of the technologies that the military will need to remain dominant are being developed by commercial firms, in particular by commercial startups that are pioneering in the areas of satellite imaging, robotics and autonomous mobility, information security and encryption technology, AI-enabled sensor fusion platforms, machine vision and multi-spectrum sensors, mobile computing, flexible electronics, hypersonic munitions, directed energy, electronic warfare, nanotechnology and lightweight protective materials. However, many of these companies have traditionally avoided doing business with the DOD and thus if the United States does not find a way to foster better collaboration with these firms, it will continue to fall behind.

Recognizing this problem, Congress has enacted significant reforms over the past few years that have sought to close the defense technological gap between the United States and its adversaries. For example, it has reorganized the DOD’s acquisition directorate to make it more effective at ensuring continued access to commercial innovation. It has also created alternative pathways to improve and accelerate the DOD’s acquisition and adaptation of new commercial technologies for military use. It has also promoted fairness and consistency in commercial-item and price-reasonableness determinations that are akin to what these companies encounter in the commercial marketplace.

Meanwhile, over the same period, the DOD has established defense technology outposts in Silicon Valley and other technology hubs around the country that have helped to identify and support commercial technologies that can be applied for military use and to help those developers do business with the DOD. As a result, today, the opportunities for small, commercial, nontraditional suppliers of new, technologically innovative products and services to sell to the DOD are as promising as ever. And, in part, this has been made possible by a regulatory environment that has become favorable to doing business with the Pentagon.

Accordingly, many venture capital (VC) funds have taken notice of investment opportunities that have arisen from the DOD’s engagement with these suppliers and have injected billions of dollars of outside investment capital to seed and support these startups. However, in order for the DOD to have continued access to these emerging technologies and to leverage them in connection with its procurement priorities, it will effectively have to manage the ecosystem within which all of these stakeholders operate.

In order to do this, the DOD should: 1) reorganize the acquisition directorate and implement the recent legislative reforms, as intended by Congress; 2) place the right acquisition professionals in the right management positions at the DOD and give them the necessary authority and resources to discharge their newly created responsibilities; 3) drive this new innovation paradigm through the military departments so that they can employ rapid acquisition modalities to help the warfighter to obtain what they need in a timely and cost-effective manner; and 4) use performance metrics to track how successfully the DOD procures and employs innovative commercial technologies from nontraditional suppliers.

Put simply, the status quo is unaffordable and unsustainable, and thus the DOD (and Congress) must maintain and promote a new defense technological innovation ecosystem that allows all relevant stakeholders—particularly the DOD—to extract intended benefits. While it may be true that such a strategy is not a panacea for all that ails the defense procurement process, it would do much to correct a problem that the DOD and Congress have struggled with for decades.

Image by Moon Light PhotoStudio


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