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#DisruptthePentagon|ForeignPolicy

#Disrupt the Pentagon

Can Ash Carter bring Silicon Valley's culture of innovation to a bloated Defense
Department?
BY KATE BRANNEN

FEBRUARY 10, 2015

KATE.BRANNEN

@K8BRANNEN

There was a time, not that long ago, when the Pentagons budget for research and development drove
technology investment in the United States. No longer. Today, the countys cradle of innovation resides in
Silicon Valley, and the Defense Department is struggling to keep up.

Peter Newell learned that truth a few years ago, when he was the director of an Army task force charged
with getting new equipment to troops in Iraq and Afghanistan without going through the Pentagons
normal bureaucracy. In 2012, Newell, then an Army colonel, was sitting with a Google executive in
Mountain View, California, discussing an energy problem that Newell was desperately trying to solve.
We had a great discussion, with great ideas, and eventually I said to him, How much would it cost you to
do X, Y, and Z? Newell said in a recent interview. And the guy laughed.
The Google exec drew a little dot on a dry-erase board and then drew a big circle around it.
He pointed to the dot, and said to Newell, This is your budget. The big circle? Its mine. I dont want your
money. I want your problem.
This was an epiphany to Newell, who realized that many in Silicon Valley were attracted to the challenge
of fixing a specific thorny problem not just to the money they could earn doing so.
In Silicon Valley, Newell said, problems are currency. The challenge, he added, is that the Pentagon does
a crappy job explaining those challenges to the bright minds likely to be most energized about trying to
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a crappy job explaining those challenges to the bright minds likely to be most energized about trying to
solve them.
With the Pentagon about to get a defense secretary with a proven interest in the intellectual energy of
Silicon Valley, people like Newell are hoping that Ashton Carter can force the Defense Department to get
better at identifying its problems and attracting the right people inside and outside of the defense
industry to fix them. That will be a difficult shift for a Pentagon used to spending years designing and
bidding out new weapons systems and decades actually building them, but it will have to happen if the
military is going to keep its technological edge.
Carter, the former deputy secretary of defense, is also an academic with undergraduate degrees in physics
and in medieval history from Yale University. He understands how broken the Pentagons acquisition
system is but hes also familiar with the ways and mores of Silicon Valley. He is an acolyte of William
Perry, who served as defense secretary under President Bill Clinton and spent much of his career in Silicon
Valley, working at high-tech companies and teaching at Stanford. While serving as deputy defense
secretary, Carter traveled to Silicon Valley with Perry, and the two men met with CEOs and toured hightech companies like Bloom Energy and Acuitus.
Those arent his only ties to Silicon Valley. Carter stepped down as deputy defense secretary in December
2013. During his year away from the Pentagon, he put down his own roots in the heart of Californias hightech economy. He received $50,000 from Stanford University, where he was a visiting fellow and lecturer,
according to financial disclosure forms provided to the Senate. He was also an advisor at the file-sharing
firm Box Inc. and a member of the advisory council at the network-security firm Palo Alto Networks. As is
customary, if Carter is confirmed by the Senate this week as expected, he will step down from these posts,
but his engagements with the Valley will certainly shape his time as defense secretary.
A spokesman for Carters transition team declined to comment for the story.
Perry and Carter are some of the few defense secretaries who actually understand the technology
programs that they are making judgments about, said Kori Schake, a research fellow at the Hoover
Institution whos worked on the National Security Council staff and at the Pentagon. Schake is also a

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contributor to Foreign Policy.

Thats vital for a Pentagon thats trying to keep up with the rapid pace at which technology is changing
and with competitors who have easy access to commercial technology. Finding the next-generation
defense contractor who understands and can help defend against new threats will be imperative for Carter
and his top aides.
His closest allies in that fight are likely to be Deputy Defense Secretary Bob Work and Pentagon acquisition
chief Frank Kendall, both of whom are also committed to changing the way the Pentagon develops and
buys technology.
Paired with this troika is new leadership in Congress, where Rep. Mac Thornberry, the new Republican
chairman of the House Armed Services Committee, and Sen. John McCain, the Republican chairman of
the Senate Armed Services Committee, say they too want to improve how the Pentagon does business.
At Carters confirmation hearing last week, McCain decried how resources had been wasted at the
Pentagon over the years, citing the Armys Future Combat Systems, which Defense Secretary Robert Gates
canceled in 2009 after $20 billion was spent, and the F-35 Joint Strike Fighter, whose cost to research,
engineer, and build has jumped from around $220 billion for 2,800 planes to $330 billion to buy 400 fewer
planes.
With Carter, Work, and Kendall at the Pentagons helm and with receptive leaders on Capitol Hill, the final
years of the Obama presidency could see a potentially long-lasting change in how the Pentagon develops,
builds and buys weapons in an era of shrinking defense budgets.
Carter told the Senate Armed Services Committee last week that this is a top priority for him. Before
becoming deputy defense secretary, Carter served as the Defense Departments chief weapons buyer, and
it was a job that frequently left him frustrated.
The experience that I had all too often in trying to support Iraq and Afghanistan as the acquisition
executive was that when the troops said they needed something, the response of the bureaucracy tended
to be, Oh, were making one of those, or, we have one, it will be finished in 10 years, Carter told the panel
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during his confirmation hearing.

This mindset is a relic of the Cold War, when speed was not important, Carter said. Today, that pace is not
going to cut it, especially as foreign countries can tap the global technology base to advance their own
militaries, he said.
Weve got to turn faster as a military, Carter said during a hearing marked by so much bipartisan praise
that hes guaranteed an easy path through the Senate.
And who turns faster than Silicon Valley?
When William Lynn was deputy defense secretary, he noted that the Pentagon took 81 months to field a
new computer system, while it took Apple 24 months to develop the iPhone. And each year, the company
brings out an updated version with additional capabilities and better hardware usually at the same
price or even lower.
Lynn is now CEO of DRS Technologies, Inc., a traditional defense contractor, but he continues to worry
about the U.S. military losing its technological edge unless it harnesses the innovation of Silicon Valley.
In a November essay in Foreign Affairs titled The End of the Military-Industrial Complex, Lynn
described how Silicon Valley doesnt need the Pentagons money, the lesson Peter Newell learned sitting
in his meeting with Google.
Lynn noted that Googles nearly $400 billion market value is more than double that of General Dynamics,
Northrop Grumman, Lockheed Martin, and Raytheon combined. Google may not need defense contracts,
but the Pentagon needs more and better relationships with companies like Google. Only the private sector
can provide the kind of cutting-edge technology that has given U.S. troops a distinct advantage for the past
70 years.
Enlisting Silicon Valley to help fight the wars of the future wont be easy, in part because of a regulatory
climate that scares off new companies and a cost-cutting culture inside the Pentagon thats led to officers
not being allowed to travel across the country to meet the people inventing the new technologies.

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There is a theoretical opportunity for West Coast start-ups to help the Defense Department with its
innovation challenges and DOD would love that, except there are very few incentives for those start-ups to
get involved, said Ben FitzGerald, director of the Technology and National Security Program at the Center
for a New American Security.
FitzGerald noted that the process the Pentagon uses to develop new technology is very measured and
controlled over a long period of time, with risk mitigation being a top priority, FitzGerald said. Start-ups,
and the venture capitalists behind them, by contrast, assume huge amounts of risk and investors who
back high-tech firms know that they might fail multiple times before hitting it big.
The Department of Defense is never going to be able to say to the taxpayer, Of our R&D budget of $60
billion, $50 billion didnt work out, but the $10 billion is really good, FitzGerald said.
In addition to that cultural divide, Silicon Valley start-ups do not have the same laws and regulations
governing to whom they can sell and how they manage their intellectual property as traditional defense
contractors.
If youre working on robotics and you cant sell to the Chinese market, for example, that would be a big
inhibition for a lot of robotics firms, Schake said.
Because of these reasons a company like Apple is OK with the Defense Department buying its products off
the shelf, but its not interested in building something exclusively for the military, said FitzGerald. Its
not a market thats worth it to them.
Then there is what Silicon Valley calls the Valley of Death, the space between coming up with a workable
idea and taking it to market.
In DOD, its a Grand Canyon, FitzGerald said.
This is a problem that Newell is all too familiar with. Since retiring from the Army, he has become a
managing partner at BMNT Partners, a consulting company that tries to match government problems with
the right tech companies that can solve it.
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Newell said hed just received an email from someone in the Army who was frustrated by the responses
hed received to a request for information hed posted on FedBizOpps.gov.
Im going to have to tell him that companies looking at this thing would say, Why bother. Theyre not
interested in an esoteric discussion about what might happen three years down the road. Thats just a
waste of time, Newell said.
At the Pentagon, they make rules designed to save them a dime and end up wasting a million dollars in
the process, he added.
This is what frustrates companies like Palantir and SpaceX, California-based tech firms that have been
trying to break down the barriers to doing business with the Defense Department.
Both companies portray themselves as the little outsider going up against big, entrenched stakeholders in
the defense industry and at the Pentagon. Not surprisingly, things have gotten a little ugly along the way.
Silicon Valley firms tend to be more sharp-edged in their competition, Schake said. Most defense firms
would not play the game that aggressively because there are going to be future rounds to the game.
Last month, SpaceX, founded by billionaire Elon Musk, agreed to drop its lawsuit challenging the Air
Forces award of a sole-source contract to the United Launch Alliance, a joint venture of Boeing and
Lockheed Martin.
Musk said he was satisfied with steps the Air Force had taken to improve competition in the military
satellite launch market. But before this agreement was reached, Musk questioned the integrity of the Air
Forces acquisition officials, suggesting their decisions were shaped by their desire to secure a future job
with Boeing or Lockheed, something that was not received well by Air Force Secretary Deborah Lee James.
I think those are rather unfortunate comments. I dont know who he means, she said at a press briefing
in January.
Palantir has also been going toe-to-toe with a multibillion-dollar Army intelligence system called the
Distributed Common Ground System (DCGS), built by a consortium of major Beltway contractors,
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Distributed Common Ground System (DCGS), built by a consortium of major Beltway contractors,
including Raytheon, Northrop Grumman, Lockheed Martin, and General Dynamics.
The company, which was created through a combination of funding from the CIA and investments from
Silicon Valley venture capitalists, aggressively campaigns on Capitol Hill and in the media to unseat
DCGS, which Palantir says is an inferior product to its own software.
Both companies want to shake things up, make things better and more cost-effective, said FitzGerald,
but the billions of dollars the United States has already invested in other technologies cant just be
ignored.
We dont have a clear solution for this problem yet, but the takeaway is that the Department of Defense
has to learn how to create the right environment to make good on its intent, because its not going to get
what it needs otherwise, FitzGerald said.
DoD Photo By Glenn Fawcett

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