Overlooking innovation: The need to include Silicon Valley in the military-industrial complex

Through a series of interviews with Silicon Valley venture capitalists and executives, traditional defense industrial base representatives, and government officials, Federal Executive Fellow Jason Tama puts his finger on one of the perennial hot-button questions in Washington: Why can’t the Pentagon (and federal government overall) attract new, innovative entrants to the military-industrial complex? It’s no secret that there are high barriers to entry for “non-traditional” companies pushing the boundaries of technological innovation, but the report’s findings reveal that they are higher than leaders in Congress or the Department of Defense realize.

If the United States Armed Forces are going to maintain their battlefield prowess into the digital age, they will need to look beyond their traditional suppliers for information technology systems, smaller-scale hardware platforms, and other logistics and management network tools. Traditional defense companies will always be needed, but when fast-paced and global complexity threaten continued American military superiority, it’s imperative that the defense acquisitions community look to attract pioneering, commercially diversified members.

The Silicon Valley perspective on this situation, however, is one less explored. Here’s just a brief snapshot of what some executives had to say about their experience with defense acquisitions:

• “There was always one more meeting, but it never went anywhere.”—Jim Marggraff, CEO, Eyefluence
• “The whole process was incredibly painful. All we wanted was some transparency and easier access to the people involved. Instead the websites we had to use seemed overly complex and were very difficult to navigate, you had to do handstands and cartwheels just to get limited information and sign up for the program.”—Milan Minsky, vice president of product development, Rayvio
• “It took one person working full-time in Washington to get one company on the GSA schedule and we ultimately got some deals out of it after three years; you can’t build a company on this kind of business.”—John Balen, general partner, Canaan Ventures

The research found that the Snowden affair was generally a red herring and had little impact on actual business decisions. Overall, Tama found that many Silicon Valley-type firms are interested in assisting the national security enterprise, but reforms must first mitigate the worst barriers to entry:

• The defense acquisitions process is too difficult, slow, and opaque.
• The size and specialized nature of the defense market offer limited growth opportunities relative to deeper, more liquid, and faster moving commercial markets.
• Cultural differences exacerbate structural hurdles.
• Resultant bias toward larger, more mature defense “primes.”

The report identifies a number of ways to help break down these roadblocks and create opportunities for collaboration with less traditional firms:

• Restore some semblance of certainty and rationality to the federal budget process.
• Recognize that this is a whole of government problem.
• Initiate a national conversation to better define acceptable cost, schedule, and performance risks in the context of improving our ability to innovate.
• Acknowledge the need for difficult civil service and military personnel reform.

See the full report, There’s no app for that: Disrupting the military-industrial complex, for over two dozen detailed policy recommendations and thoughts from Silicon Valley innovators.

For more ways the Department of Defense can do business better, see Michael O’Hanlon’s recent report, Pentagon acquisition policy: Three-quarters right, one-quarter broken.