Congress is Redefining Federal Government Subcontracts


What is a Subcontract


“Currently, there is no uniform definition of subcontract in the applicable procurement regulations or in the procurement chapters under Titles 10 and 41 of the U.S. Code. 

Congress is looking to address this lack of uniformity.  Accordingly, government contractors at all tiers should closely monitor developments related to this new definition of subcontract, as it will have significant ramifications downstream.”


“These requirements are intended to protect the government’s interests, and have significant ramifications for contractors such as increasing transaction costs and expanding potential areas of exposure. These compliance obligations and risks can even deter some companies from performing under government contracts, especially those companies offering commercial items.

So what is a “subcontract?”

Indeed, there are more than 20 varying definitions of subcontract in the Federal Acquisition Regulation and Defense Federal Acquisition Regulation Supplement, with many clauses failing to specify which definition applies.

The House version of the fiscal year 2019 National Defense Authorization Act, which passed on May 24, offers a single definition of subcontract that would be added to Chapter 1 of Title 41 and Chapters 137 and 140 of Title 10. Section 832 of the House NDAA generally defines a “subcontract” to mean “a contract entered into by a prime contractor or subcontractor for the purpose of obtaining supplies, materials, equipment, or services of any kind under a prime contract. The term includes a transfer of a commercial product or commercial service between divisions, subsidiaries, or affiliates of a contractor or subcontractor.”

More importantly, Section 832 excludes the following categories of agreements from the definition of subcontract: “a contract the costs of which are applied to general and administrative expenses or indirect costs; or an agreement entered into by a contractor or subcontractor for the supply of a commodity, a commercial product, or a commercial service that is intended for use in the performance of multiple contracts.” (See Section 831 for the definitions of a “commercial product” and a “commercial service,” which would replace the term “commercial item.”)

The House Armed Services Committee report explains that a single definition of subcontract would provide “clarification, simplicity and consistency for defense procurement actions.” The Section 809 Panel — an independent advisory board on streamlining Defense Department acquisition regulations — likely would agree with the committee’s assessment, as the House’s definition of “subcontract” appears to have been taken directly from the panel’s January 2018 report.

The House’s proposed definition of subcontract is significant because it would exclude a broad range of agreements from that definition. As a result, fewer agreements would be subject to the mandatory flow-down, compliance and reporting requirements imposed on procurement contracts.

“Questions that must be answered include: would this new definition apply retroactively?”

This approach is consistent with the intent of the Section 809 Panel, which noted in its January report that excluding commodities, commercial products and commercial services from the definition of subcontract “makes clear to both government and industry that Congress is serious about simplifying the procurement process, especially for items that are clearly available on the commercial market, for which the burden would be the greatest.”

However, there still remain a number of hurdles before contractors can rely on this narrowing of obligations. First, this new definition of subcontract must make its way into the final version of the 2019 NDAA. The definition is missing from the Senate version which passed on June 18.

Second, even if this new definition becomes part of the final bill that is signed into law, it still must be implemented through the FAR and DFARS.

Similarly, questions surrounding the implementation of this new definition and its potential impact would need to be addressed. For example, would this new definition apply to every mention of the word “subcontract” in the FAR and DFARS? Or, would exceptions to the general definition be needed, for example, to avoid potential ambiguity in a clause or subpart, to ensure that particular requirements flow-down to certain categories of agreements?

Other questions that must be answered include: would this new definition apply retroactively? What is the definition of a “commodity”? How will this new definition reconcile with requirements that exist, at least in part, outside the FAR and DFARS, such as requirements pertaining to Department of Labor regulations and related executive orders?

And, finally, how would the new definition impact the underlying regulatory requirements that higher-tier contractors currently must flow-down to certain of their suppliers?

As for timing, that remains unclear. To draw a parallel, Section 874 of the 2017 NDAA and Section 820 of the 2018 NDAA both included a definition of subcontract with less expansive exclusions that would apply only to commercial item subcontracting under 10 U.S.C. § 2375 and 41 U.S.C. § 1906, respectively. To date, regulations still have not been promulgated, though the government has signaled that they are likely to be issued soon.”



A Never Ending Saga – The Influence Peddling “Revolving Door”


Revolving Door


“An elite Washington is comfortable with what it calls “the revolving door” ― the movement of government officials into lobbying, contracting or consulting jobs where they can exploit government connections for profit.

It’s not considered a particularly admirable career path, but it is nevertheless accepted as a normal part of life in the nation’s capital.”


“The last 18 months have been difficult for former members of the Obama administration. They’ve been replaced by a regime, which, in the words of former Domestic Policy Council director Melody Barnes, “shows virtually no respect for constitutional principles, or often, basic human decency.” And now they can do little more than complain about their successors’ parade of outrages.

“Our democracy is under attack,” warned former Attorney General Eric Holder. Former Assistant AG Lanny Breuer called the Trump administration’s immigration agenda, “contrary to the core values of this nation.” Conscientious public servants “cannot stay silent,” wrote former Department of Homeland Security Secretary Jeh Johnson, who also said President Donald Trump’s separation of migrant children from their asylum-seeking parents is “immoral and un-American.” Former White House spokesman Jay Carney worried about “the country’s credibility” under Trump. “Donald Trump is sort of to politics what Bernie Madoff was to investment,” according to ex-Agriculture Secretary Tom Vilsack. His birth control policy, said Obama campaign manager David Plouffe, is “unconscionable.”

And yet for all the damage the Trump administration is doing to American democracy, several prominent Obama alums seem to have quietly made their peace with a subtler attack on the legitimacy of U.S. institutions. Today, many are lending the prestige of their White House resumes to scandal-fraught organizations in return for large sums of money. Some are even doing business with the Trump administration.

Plenty of former Obama officials are leading scholarly lives as academics, working with nonprofits or in sectors of the corporate world far from the purview of their previous duties in Washington. Obama spokesperson Eric Schultz told HuffPost that Obama “implemented unprecedented ethics rules, including cracking down on the revolving door by prohibiting former lobbyists from working on issues on which they lobbied, and by preventing appointees from lobbying the White House after working there.”

Schultz added that “President Obama’s White House was the first in modern history to not have a major scandal.”

None of the officials named in this article would comment on the record.

These days, Johnson receives $290,000 a year to serve on the board of directors at Lockheed Martin, the largest American defense contractor and the world’s biggest weapons manufacturer. It has been fined over $767 million for various forms of misconduct since forming in 1995, according to the Project on Government Oversight.

Directors of large corporations are nominally responsible for pretty important stuff: setting executive compensation, managing risk and generally ensuring that a company’s management acts in the best interest of its shareholders. But American corporate governance has been weak for decades. In practice, serving on a board means attending a few meetings a year and collecting paychecks. The Lockheed Martin board met nine times last year.

Lockheed Martin sells rockets, missiles, bombs, “guided projectiles,” “laser weapon systems,” “integrated surface warfare,” fighter jets, attack helicopters and drones, along with tech support, systems operation and various training programs. All told, the company does $35 billion a year in business with the federal government, much of it contracted with the very department Johnson recently headed. The company’s sales are rising along with Trump’s defense budgets.

Johnson has been publishing opinion pieces in The Washington Post on DHS policy of late, presenting his cachet as Obama’s DHS Secretary as a relevant credential. The pieces have not disclosed the fact that he works for a defense contractor that stands to profit from DHS business.

Barnes is also working at a defense contractor, earning upwards of $210,000 a year serving on the board at Booz Allen Hamilton, which held eight meetings in 2017. Barnes, who recently penned an op-ed for The Hill calling “to build an inclusive, multicultural democracy that provides opportunity, community and security for all” through “community wealth building,” has been working for the firm since 2015. Last year, the company announced it was the subject of a Department of Justice criminal investigation over irregularities in its government billing and accounting. According to the Center for Responsive Politics, in 2016 and 2017 alone, the company received $63 million in contracts to work with Immigration and Customs Enforcement ― the militarized deportation agency at the heart of the Trump administration’s family separation scandal. Booz Allen Hamilton revenues are up almost 15 percent since Trump came to town.

Ride-sharing titan Uber also hired Barnes in May 2016 in an apparent effort to clean up its image as a stream of Uber scandals began to dominate headlines. Roughly eight months after she joined a new policy advisory board at the company, a major sexual harassment scandal broke, and Barnes has remained at the company as it has weathered a barrage of subsequent debacles far removed from her role, including the improper seizing of an alleged rape survivor’s medical records in an apparent attempt to discredit her accusations.

Uber seems to have been a preferred landing pad for Obama officials. Former Transportation Secretary Ray LaHood joined Barnes on the policy advisory board, and Obama’s 2008 campaign manager David Plouffe worked as a senior vice president at the company from August 2014 until January 2017. He was fined $90,000 by the city of Chicago for illegally lobbying the city’s mayor, Rahm Emanuel, while working for Uber. Emanuel, who served as Obama’s first White House Chief of Staff, has distinguished himself as mayor by covering up the police shooting of Laquan McDonald.

Uber has also paid Holder for various legal work. After the sexual harassment story became front-page news, Uber commissioned Holder to conduct a study and issue a report detailing problems with the company’s workplace culture and management approach.

As attorney general, Holder refused to prosecute Wall Street crime related to the 2008 financial crisis, even as banks agreed to pay billions upon billions of dollars in settlement after settlement with the federal government. Even in cases where major banking institutions pleaded guilty to felony charges, Holder and the DOJ declined to prosecute any actual bankers for crimes.

So it makes a perverse kind of sense that Holder is now a partner at the law firm of Covington and Burling, a D.C.-based outfit that specializes in work on behalf of the banking industry. In a remarkable interview with MSNBC’s Chris Hayes this April, Holder downplayed the significance of financial misconduct, suggesting that law enforcement agencies have more important things to deal with.

“There’s a lot of crime that happens I think generally that doesn’t get reported ― people are stealing things out of grocery stores, people are doing things in banks that they shouldn’t be doing,” Holder said. “But when it comes to the things that are truly consequential that are truly important, I think that law enforcement … generally holds people to account.”

Former Assistant Attorney General of the U.S. Justice Department's Criminal Division Lanny A. Breuer

Former Assistant Attorney General of the U.S. Justice Department’s Criminal Division Lanny A. Breuer

Breuer, who was in charge of DOJ’s criminal division during the Obama years, is also a partner at Covington and Burling. He currently spends his time “helping clients navigate financial fraud investigations, anti-corruption matters, money laundering investigations, securities enforcement actions, cybercrime incidents, Congressional investigations, and other criminal and civil matters presenting complex regulatory, political, and public relations risks,” according to the firm’s website.

Obama’s first Securities and Exchange Commission Chair Mary Schapiro has also found her way into Wall Street’s good graces. She now advises financial firms for the consulting firm Promontory Financial Group, and serves on the board of Morgan Stanley ― an investment banking behemoth that has settled 24 separate allegations of misconduct with the federal government since her departure from the SEC. This includes a multibillion-dollar case for defrauding investors with toxic securities during the financial crisis. Schapiro just started at Morgan Stanley and her compensation hasn’t been disclosed, but according to a recent SEC filing, the bank’s directors receive between $338,333 and $378,333 a year. The Morgan Stanley board met a total of 16 times last year.

Former Treasury Secretary Timothy Geithner, meanwhile, is now president of the private equity firm Warburg Pincus, which owns Mariner Finance, an installment lender that targets poor families with high-interest loans. A devastating Washington Post story published last week detailed the case of one Mariner customer who borrowed $2,000 from the firm, only to find himself owing over $3,200 in less than a year, even after making a few payments on the loan. Mariner initially got in touch with the man by mailing him a check for $1,200 “out of the blue,” labeled as loan with a 33 percent interest rate.

Former Agriculture Secretary Tom Vilsack is now advocating for some of the country’s biggest dairy interests, including Schreiber Foods, Sargento, Hershey and YUM! Restaurants (better known as KFC, Taco Bell and Pizza Hut), as president of the U.S. Dairy Export Council.

Ex-White House Chief of Staff Pete Rouse is now chair of the Public and Strategic Affairs Group at the law firm of Perkins Coie, where he, “provides policy analysis and offers strategic advice on navigating Congress and the executive branch” and “counsels senior level executives on federal and state policy issues and related public communication challenges.” Such activity is known to the general public as “lobbying,” but ― conveniently ― does not need to be described as such for legal purposes.

And then there’s Carney. Prior to Trump’s election, perhaps no American in the 21st century had displayed greater ingenuity when attempting to discredit legitimate journalism than the former White House spokesman. Carney worked for Time magazine as a political editor before joining the White House, and he joined Amazon as a senior vice president in March 2015 after leaving the administration in the summer of 2014. When the New York Times ran a story detailing a host of problems with Amazon’s harsh workplace culture, Carney authored a lengthy reply on Medium publicly challenging the company employees quoted in the story (why Amazon thought this would contribute to an image as a supportive employer was not clear) and accusing the Times of journalistic malpractice.

Big, prestigious corporations just didn’t do this sort of thing at the time. Read Carney’s piece and ask yourself if the final paragraph doesn’t read like a memo from Sarah Huckabee Sanders. It’s a masterpiece of innuendo and half-truth, of molehills presented as mountains and unsubstantiated accusations. Carney even attacked lead reporter Jodi Kantor by name, devoting nearly 400 words to a narrative suggesting that her months of communication with the company for the story were really just an underhanded campaign of deception.

The Times stood by their story, and a month after Carney published his piece, Amazon spontaneously announced it would be implementing a more generous maternity leave policy. Kantor went on to share the 2018 Pulitzer Prize for National Reporting for breaking the Harvey Weinstein sexual misconduct story.

In a statement provided to HuffPost, an Amazon spokesperson noted that the paper’s public editor had called the Times story “unbalanced.” “The Medium article outlined the facts about the individuals mentioned in the New York Times story, and the information in it is all correct,” the spokesperson said.

This isn’t a full accounting of everything everyone in the administration has done since leaving office. Holder is chairing a the National Democratic Redistricting Committee to combat gerrymandering, for instance, while Barnes is vice chair of the Thomas Jefferson Foundation that oversees Monticello.

And elite Washington is comfortable with what it calls “the revolving door” ― the movement of government officials into lobbying, contracting or consulting jobs where they can exploit government connections for profit. It’s not considered a particularly admirable career path, but it is nevertheless accepted as a normal part of life in the nation’s capital.

But much of what passes for normal in Washington is considered grotesque in the rest of the country. If the Trump administration weren’t bumbling between different crimes against humanity, it’s hard to imagine anyone getting nostalgic for the era when these folks ran the free world.”

The SBA Role In Appealing Small Business Federal Government Contracting NAICS Size Codes


NAICS Protests

EDITORS’S NOTE:   As Mark Amtower astutely writes in this “Washington Technology” article, ” The NAICS [Code] assigned to a solicitation is a huge deal. It dictates the size of firms that are able to pursue a small business set-aside. “

We highly recommend Mark’s article to all small business federal government contractors for excellent insights into associated government processes  (and potential abuses) surrounding the government’s code selection as well as avenues to respond. 


“How One Small Firm Took On NAVAIR’s NAICS Decision And Won” 


“In Selling to the Government, I devote a chapter to “The Myth of the Level Playing Field.” There are many ways Congress and Federal Acquisition Regulations try to make the playing field level (although much of the legislation is a bad joke), and the Small Business Administration interjects with small biz size standards and various set-aside categories.

Those who read my column know that I hit certain themes again and again. My regular topics are issues that, over 35 years of observing the government contracting marketplace, I’ve seen what separates the most successful firms from the rest.

Successful firms have a grasp on the unique importance of research, resources, and relationships, the “Three R’s of Government Contracting.” Of course, the three R’s are important in pretty much any kind of business, but in the GovCon world they are your lifeblood. To be successful, you have to think in terms of the three R’s every day.

The rules and laws that govern this marketplace are often vague and ambiguous. From the FAR, to the DFAR, to the CFR, and the Small Business Administration, the GovCon marketplace has a lot of ins-and-outs and tons of red tape.

That’s why your day-to-day game has to include research. You have to understand the rules that govern the GovCon domain.

One practice that has irritated me from the time I found out about it (back in the days of the Commerce Business Daily) was hiding bids under categories that had little of nothing to do with the work to be performed.

Now that the CBD is gone. some contracting offices use the NAICS “shell game” to limit or even pre-select the players that can bid.

Regularly checking out the GAO protest docket is worthwhile and you can gain a lot of useful knowledge. I also recommend monitoring the SBA’s Office of Hearings and Appeals (OHA) website.

Did you know that you can appeal an agency’s choice of NAICS code? A lot of people don’t. The SBA OHA decides if the NAICS code applied to a solicitation is appropriate, and if necessary will direct an agency to change a NAICS.

The NAICS assigned to a solicitation is a huge deal. It dictates the size of firms that are able to pursue a small business set-aside.

Sometimes, the assignment of a solicitation’s NAICS code can reveal the fingerprints left by the incumbent firm’s relationship with government decision makers. Such fingerprints are more obvious when the NAICS code of a long-existing contract suddenly changes in a dramatic fashion. For example, a blatantly incorrect NAICS gets assigned to a solicitation that used to have a smaller size standard, and the new NAICS just happens to help an incumbent too large to bid to now be able to submit a proposal.

A recent SBA OHA decision provides a good example. In this appeal, the small contractor Rollout Systems won a big NAICS battle with Naval Air Systems Command . Rollout Systems submitted an appeal which resulted in SBA directing NAVAIR to change a solicitation’s NAICS from the 1,000 employee size standard of the research and development NAICS to the $27.5M revenue standard of the information technology. This was a big change and it re-scoped the competitive field. Based on SBA ordering NAVAIR to change the NAICS, the long-time incumbent can no longer bid the solicitation.

I strongly recommend that you review SBA’s Rollout Systems decision as a research opportunity. SBA’s decision provides a lot of info if you are able read between the lines. It was a slam dunk. It seems that neither the solicitation’s statement of work or labor categories addressed actual R&D. Also, the incumbent contract was not classified under an R&D NAICS code. After reading SBA’s decision, it’s hard to see how NAVAIR all of a sudden thought this work had become R&D.

I’m sure it was just an “oversight.”

If your customer base includes agencies focused on RDT&E you ought to keep the Rollout Systems decision in your back pocket. This decision, all in one document, gives small business the ammunition they need to understand the standards that must be met to use an R&D NAICS, shows the fingerprints left by government decision makers seeking to choose an R&D NAICS to favor an incumbent, and demonstrates that even a small firm can leverage SBA’s authority and get a positive resolution.

The NAVAIR solicitation at issue in the Rollout Systems appeal (N00421-17-R-0040) was recently released on under its new NAICS. It might be worth a look as well, as a further research opportunity.

To be fair, the constructive misuse of the R&D NAICS happens not just within NAVAIR, but in many DOD commands that are focused on research, development, test, and evaluation (RDT&E). The problem also reaches beyond DOD. Maybe government decision makers feel that since their agency supports RDT&E, they can get away with assigning an R&D NAICS to most any contract.

That’s why it’s worth reading the Rollout Systems decision closely, and truly understanding the rigorous standards that SBA OHA applies in such cases.

As stated in SBA’s decision, to justify the use of the R&D NAICS, the work must lead to the creation of new products or processes. The solicitation must also include both research and development. One or the other alone just won’t do. Plus, the development must be “experimental development.” Also, SBA’s regulations restrict the definition of R&D to mean only “laboratory or other physical research and development.” That can rule out many types of work, which although technical in nature, are not appropriate for an R&D NAICS.

The point here is that to make legitimate use of an R&D NAICS an agency has to meet some specific criteria. If the agency is using an R&D NAICS and you don’t think the solicitation meets SBA’s standards, it might be worth considering a NAICS appeal to resolve the matter.

The NAVAIR’s NAICS appeal loss is instructive on many levels, not the least of which is that taking your case to SBA may be the best route on selected occasions, especially if you think you’ve been NAICS bitten.”

Mark Amtower

About the Author

Mark Amtower advises government contractors on all facets of business-to-government (B2G) marketing and leveraging LinkedIn. Find Mark on LinkedIn at 


America’s ‘Culture Of Security’ Imperative Is Here


Culture of Cybersecurity

“THE HILL” By Steve Grobman

“We need to create a culture of security — a culture in which security is baked into the vision and values, and where security serves as a lens through which every decision is viewed.

Building a culture of security means security isn’t just a job for the information technology and security experts, but a mindset and best practices that influence hiring, partnering, technology development, internal and external communications — everything.”


“As a chief technology officer of a cybersecurity company, I’m often asked what it will take to mitigate the cyber risks we face today. While technology certainly is a big part of the answer, it’s not the only factor.

In Silicon Valley, for example, the culture of risk-taking is embedded in people’s values and actions. You don’t have to teach entrepreneurs that experimentation is good and that failure is a necessary part of the innovation process; they simply know it’s true and act on the basis of it.  We need the same kind of cultural attitude about security — one where people don’t even have to think about it, but automatically incorporate security into their processes.

It also is an economic imperative to create a culture of security. The U.S. Council of Economic Advisers estimates that cybercrime cost the U.S.economy between $57 billion and $109 billion in 2016 alone. A 2018 report by the Center for Strategic and International Studies (CSIS) estimates that cybercrime costs the world economy almost $600 billion, or 0.8 percent of global gross domestic product.

While understanding the impact of cyber is necessary, it is not sufficient. To build a culture of security requires action and a broad-scale change in behavior. This may sound daunting, but the United States has a history of changing behavior when we put together the right combination of tech, policy and communications.

In 1966, Congress authorized the federal government to set safety standards for new cars by making seat belts, padded dashboards and other safety features mandatory by 1968. By 1979, all states had laws requiring infants and young children to wear seat belts or sit in car seats. Then came national ads from the U.S. Traffic Safety Administration with slogans such as “It’s a nice way to say I love you.” Those were followed by perhaps the most influential part of the safety equation: “Click it or Ticket.” That catchy slogan rolled out nationally, through advertising directed largely at teens.

Through improved technology, laws and thought-changing communication campaigns, America’s view of seatbelts and car safety evolved, and the number of car deaths decreased significantly from over 53,000 in 1968 to less than 38,000 in 2016 — despite three times as many miles now driven each year. In essence, we can credit the combination of using technical innovation such as seat belts, anti-lock brakes, airbags and collapsible steering columns in conjunction with new attitudes around using the technology and reducing threats that were caused by unsafe behaviors, such as driving under the influence of alcohol or drugs.

So how do we apply these examples to better protecting our nation from cyber threats?

There’s no question that we’re going to need the help of policymakers to support a multi-year culture of security campaign, just as they supported the seatbelt and anti-drunken driving campaigns of the past. Implementing effective public policy cannot rely solely on traditional government tools such as legislation, regulations or taxes.

Adopted strategies should be comprehensive and balanced, and include education, public information, mass media, appropriate legislation and encouraging measures such as grants or other forms of assistance.

It also is critical for legislators to hold hearings on how to build a more substantive culture of security, inviting experts from cyber and other fields to share their perspective on how we can create a different mindset and effect behavioral changes.

These are high stakes. Businesses and governments know it. Consumers? They’re coming around. Nearly everyone who uses a credit card or has an email address has encountered cybersecurity threats, from phishing emails and frustrating malware to stolen identities and financial fraud.

As attackers grow more sophisticated, and the threat of large-scale attacks against our national security increases, we can’t be passive. We need to act to instill a security-first mindset in every citizen and every business in the United States. We need political will, we need business leadership, we need targeted campaigns, we need technology — and ultimately, we need citizens to stand up to help protect our nation and the world. When we’ve accomplished this, we will have built a culture of security.”

Steve Grobman

Steve Grobman is senior vice president and chief technology officer for McAfee. In this role, he sets the technical strategy and direction to create technologies that protect smart, connected computing devices and infrastructure worldwide.

Can $500M In Modernization Funds Reduce $7B of Federal Government Technical Debt?

Digital Currency. Dollar

“Getty Images”


“Technical debt is what happens when an organization takes the “quick-fix” approach to IT instead of investing in a long-term solution.  

The U.S. government’s current level of technical debt is $7 billion, and agencies are already fighting for every dollar to modernize.”


“In February the Office of Management and Budget released a memo to guide the Implementation of the Modernizing Government Technology (MGT) Act. The MGT Act aims to help make IT modernization a reality, while the memo outlines how agencies can take advantage of the funds set aside for digital transformation through the Technology Modernization Fund (TMF).

This is great progress and an important effort, but the $500 million in modernization funds is just a drop in the bucket compared to $7 billion in technical debt the federal government has accrued. With OMB’s new memo in mind, and significant opportunity for modernization on the horizon, how can agencies step back to ensure they make the most of any funding available, whether from the TMF or existing budgets?

To determine how to reduce technical debt, it’s important to first understand what it is and how it’s accrued.

Technical debt is what happens when an organization takes the “quick-fix” approach to IT instead of investing in a long-term solution. Legacy IT systems should be fully inventoried and upgraded rather than simply patched, otherwise, agencies will find themselves spending far more money trying to correct mistakes that crop up as a result.

If the U.S. government’s current level of technical debt is $7 billion, and agencies are already fighting for every dollar to modernize, is there going to be any budget left for true digital transformation?

Is there a solution?

The most valuable step an agency can take toward reducing technical debt is to plan ahead; think long-term versus employing stop-gap measures that will only serve short-term requirements.

To modernize, agencies need to invest in cloud-ready infrastructure. Modernization can’t be thought of as a one-time deployment, but an investment in becoming adaptive to future advances and increasing data needs. Investing in future-proof modernization means looking at long-term solutions, rather than settling for short fixes that will require additional funding and keep the debt accumulating.

Second, agencies need to keep a focus on automation in the forefront. Automation can help streamline operations and create a seamless path to a hybrid cloud, by first focusing on an open, flexible and scalable private cloud. Automation can help agencies become more service-oriented, with the tactical, monotonous elements of keeping IT infrastructure effectively running addressed without the need for human interference. Not only is this a more efficient approach, but automation eliminates the risk of human error in IT processes.

Lastly, agencies will benefit from continually working with industry to explore newer, faster model of operations. The government is recognizing the power of cloud environments in enabling greater efficiency and agency cost savings. However, in some cases, this has created a rush toward hosted cloud environments that isn’t necessarily the most effective approach for mission objectives and achieving long-term technological needs. Cloud is an operating model, not a destination. A hybrid cloud environment can help agencies in supporting this, making it possible to select the approach best suited for an individual workload and preventing agencies from getting locked into an environment that might not support long-term needs.

The MGT Act has generated infectious optimism among government agencies and provided the opportunity for much needed IT modernization industry-wide. The TMF helps move the needle even further. Together these efforts and the overall mood in federal IT will no doubt encourage modernization progress. To turn energy into meaningful, lasting results, agencies need a long-term plan that is focused on their mission. Agencies can begin mitigating technical debt by modernizing their infrastructure and becoming cloud-ready, automating IT operations wherever possible, and utilizing newer, faster models of operations.”




$40 Million SBA Modernization Services Request for Proposal (RFP) to 8(a) Firms



8A IT Mod Opportunity


“The Small Business Administration [SBA] issued a solicitation Monday worth up to $40 million to 8(a) companies for  IT professional services to support the Office of the CIO’s modernization initiatives over five years.

SBA hopes to make up to three awards to 8(a) small businesses on the multiple-award indefinite delivery, indefinite quantity contract “to provide the SBA’s OCIO with technical professional services…”


[RFP QUOTE] “……..provide the SBA’s OCIO with technical professional services to support the Chief Information Officer (CIO)’s strategic planning and engineering efforts for FY 2018-2022, architecture and engineering expertise in the implementation of CIO initiatives and technologies, and other support as may be required for mission accomplishment.”

While the contract would give the SBA OCIO — currently led by Maria Roat — broad help to achieve the objectives laid out for it in the agency’s strategic five-year plan, the request for proposals specifically keys in on things like architecture and engineering services for cloud, cybersecurity and mobility, as well as program management, enterprise data management and business intelligence services, among others.

SBA already has its first task order ready, which it plans to award at the same time as the IDIQ contract spots, for cloud migration and data center closures.

“The Small Business Administration (SBA) Office of the Chief Information Officer (OCIO) is seeking Professional Services and support to the CIO’s strategic initiatives in evaluating, assessing, architecting, engineering and providing operational support for the continued development and implementation of SBA’s cloud environments (Azure and Amazon Web Services),” the task order says. “The services will also include providing technical support to the SBA’s Data Center Optimization Initiative (DCOI) to close existing physical data centers and migrating those locations to the SBA cloud.”

SBA will consider responses to that first task order as part of its evaluation process for spots on the greater IDIQ contract.

The contract will have one base year and four one-year options. Proposals are due July 31.

SBA Administrator Linda McMahon tasked the OCIO in her 2018-22 strategic plan with implementing enterprisewide IT modernization and “cost-effective technology” to strengthen SBA’s ability to serve small businesses.

As the plan says: “The SBA will take an enterprise approach to modernize, innovate, and test new capabilities to optimize meeting the business needs of its customers. SBA’s information technology infrastructure is the foundation that enables SBA programs and operations. Delivering a consistent, reliable, and secure infrastructure is imperative to achieving this mission. The SBA will upgrade its core infrastructure to become current with existing technologies, and will improve the reliability and availability of services that will help improve the Agency’s security posture.”


Pentagon Investing In Microelectronics Technology

Circuit Board - Space

Photo:  “Istock”


“With the security of Chinese-manufactured chips being called into question, the Defense Department is considering beefing up its investment in microelectronics, officials have said.

If you’re right out at the pointy end of the spear, you might not want chips made in China being the foundation of your communications gear.”


“Richard W. Linderman, deputy director for research and engineering in the office of the assistant secretary of defense[–] “Investment in microelectronics is expected to “increase dramatically,” he said at a recent conference in Arlington, Virginia.

The Pentagon is not only looking for high performance chips but trusted ones that have been manufactured in the United States, he said.

Mary Miller, who is performing the duties of the assistant secretary of defense for research and engineering, said China’s investment in microelectronics technology is worrying.

The issue “is of great concern to DoD because every weapon system we have has microelectronics,” she said during remarks at the inaugural Defense Department Human Capital Symposium in Southbridge, Massachusetts, according to a Pentagon news release.

China is investing $150 billion to match the United States’ capability by the early 2020s, she added. It wants to be the global leader in the technology by 2030.

Dean Cheng, a senior research fellow at the Heritage Foundation’s Asian Studies Center, said chips manufactured by China present a risk to the United States because the country could hardwire them with malicious programs and apps that run silently in the background.

“What is it that is going into our offices, carried in our purses on our bodies? What is going into our computers, … into DoD systems?” he said. Potentially vulnerable U.S. military equipment includes everything from aircraft avionics to weapons guidance systems, he noted.

Commercial-off-the-shelf items present a particular risk because many of them are manufactured in China, he added.

The Defense Microelectronics Activity runs the Defense Department’s Trusted Foundry program that uses certain foundries to manufacture chips for highly sensitive systems, he said. But with a military of over 1 million service members and countless pieces of equipment, those facilities cannot support all the chips that are needed, Cheng said.

“The Trusted Foundry is simply not large enough to do that kind of thing,” he said.

The U.S. government could better test Chinese chips for malicious programs, but there are challenges, he noted.

“Computer programs have zero-day exploits. Those are just gaps, flaws, failures, etc., that weren’t even necessarily programmed in,” he said. “What you would [also] be looking for here is potentially stuff that somebody was deliberately creating and hiding.”

The United States could also invest more money to develop its own chips, but that would be costly, Cheng added.”



American Identity and the Threats of Tomorrow





“Americans are tired of war. They want to go home and shut the world out, and with the death of al Qaeda leader Osama Bin Laden on May 2, 2011, they feel that they have the opportunity to do so.

Second, the American military is battle-weary. It needs to rest, recuperate and digest the lessons of the wars it has just fought, and American politicians are in a mood to allow it to do just that.”


“Editor’s Note

This installment on the United States, presented in two parts, is the 16th in a series of Stratfor monographs on the geopolitics of countries influential in world affairs.Click here for part one.

We have already discussed in the first part of this analysis how the American geography dooms whoever controls the territory to being a global power, but there are a number of other outcomes that shape what that power will be like. The first and most critical is the impact of that geography on the American mindset.

The formative period of the American experience began with the opening of the Ohio River Valley by the National Road. For the next century Americans moved from the coastal states inland, finding more and better lands linked together with more and better rivers. Rains were reliable. Soil quality was reliable. Rivers were reliable. Success and wealth were assured. The trickle of settlers became a flood, and yet there was still more than enough well-watered, naturally connected lands for all.
And this happened in isolation. With the notable exception of the War of 1812, the United States did not face any significant foreign incursions in the 19th century. It contained the threat from both Canada and Mexico with a minimum of disruption to American life and in so doing ended the risk of local military conflicts with other countries. North America was viewed as a remarkably safe place.
Even the American Civil War did not disrupt this belief. The massive industrial and demographic imbalance between North and South meant that the war’s outcome was never in doubt. The North’s population was four times the size of the population of free Southerners while its industrial base was 10 times that of the South. As soon as the North’s military strategy started to leverage those advantages the South was crushed. Additionally, most of the settlers of the Midwest and West Coast were from the North (Southern settlers moved into what would become Texas and New Mexico), so the dominant American culture was only strengthened by the limits placed on the South during Reconstruction.
As a result, life for this dominant “Northern” culture got measurably better every single year for more than five generations. Americans became convinced that such a state of affairs — that things can, will and should improve every day — was normal. Americans came to believe that their wealth and security is a result of a Manifest Destiny that reflects something different about Americans compared to the rest of humanity. The sense is that Americans are somehow better — destined for greatness — rather than simply being very lucky to live where they do. It is an unbalanced and inaccurate belief, but it is at the root of American mania and arrogance.
Many Americans do not understand that the Russian wheat belt is the steppe, which has hotter summers, colder winters and less rain than even the relatively arid Great Plains. There is not a common understanding that the histories of China and Europe are replete with genocidal conflicts because different nationalities were located too close together, or that the African plateaus hinder economic development. Instead there is a general understanding that the United States has been successful for more than two centuries and that the rest of the world has been less so. Americans do not treasure the “good times” because they see growth and security as the normal state of affairs, and Americans are more than a little puzzled as to why the rest of the world always seems to be struggling. And so what Americans see as normal day-to-day activities the rest of the world sees as American hubris.
But not everything goes right all the time. What happens when something goes wrong, when the rest of the world reaches out and touches the Americans on something other than America’s terms? When one is convinced that things can, will and should continually improve, the shock of negative developments or foreign interaction is palpable. Mania becomes depression and arrogance turns into panic.
An excellent example is the Japanese attack on American forces at Pearl Harbor. Seventy years on, Americans still think of the event as a massive betrayal underlining the barbaric nature of the Japanese that justified the launching of a total war and the incineration of major cities. This despite the fact that the Americans had systemically shut off East Asia from Japanese traders, complete with a de facto energy embargo, and that the American mainland — much less its core — was never threatened.
Such panic and overreaction is a wellspring of modern American power. The United States is a large, physically secure, economically diverse and vibrant entity. When it acts, it can alter developments on a global scale fairly easily. But when it panics, it throws all of its ample strength at the problem at hand, and in doing so reshapes the world.
Other examples of American overreaction include the response to the Soviet launch of Sputnik and the Vietnam War. In the former, the Americans were far ahead of the Soviets in terms of chemistry, electronics and metallurgy — the core skills needed in the space race. But because the Soviets managed to hurl something into space first the result was a nationwide American panic resulting in the re-fabrication of the country’s educational system and industrial plant. The American defeat in the Vietnam conflict similarly triggered a complete military overhaul, including the introduction of information technology into weapon systems, despite the war’s never having touched American shores. This paranoia was the true source of satellite communications and precision-guided weapons.
This mindset — and the panic that comes from it — is not limited to military events. In the 1980s the Americans became convinced that the Japanese would soon overtake them as the pre-eminent global power even though there were twice as many Americans sitting on more than 100 times as much arable land. Wall Street launched its own restructuring program, which refashioned the American business world, laying the foundation of the growth surge of the 1990s.
In World War II, this panic and overreaction landed the United States with control of Western Europe and the world’s oceans, while the response to Sputnik laid the groundwork for a military and economic expansion that won the Cold War. From the Vietnam effort came technology that allows U.S. military aircraft to bomb a target half a world away. Japanophobia made the American economy radically more efficient, so that when the Cold War ended and the United States took Japan to task for its trade policies, the Americans enjoyed the 1990s boom while direct competition with leaner and meaner American firms triggered Japan’s post-Cold War economic collapse.

Land, Labor and Capital

All economic activity is fueled — and limited — by the availability of three things: land, labor and capital. All three factors indicate that the United States has decades of growth ahead of it, especially when compared to other powers.
The United States is the least densely populated of the major global economies in terms of population per unit of usable land (Russia, Canada and Australia may be less densely populated, but most of Siberia, the Canadian Shield and the Outback is useless). The cost of land — one of the three ingredients of any economic undertaking — is relatively low for Americans. Even ignoring lands that are either too cold or too mountainous to develop, the average population density of the United States is only 76 people per square kilometer, one-third less than Mexico and about one-quarter that of Germany or China.


And it is not as if the space available is clustered in one part of the country, as is the case with Brazil’s southern interior region. Of the major American urban centers, only New Orleans and San Diego cannot expand in any direction. In fact, more than half of the 60 largest American metropolitan centers by population face expansion constraints in no direction: Dallas-Fort Worth, Philadelphia, Washington, Atlanta, Phoenix, Minneapolis-St. Paul, St. Louis, Denver, Sacramento, Cincinnati, Cleveland, Orlando, Portland, San Antonio, Kansas City, Las Vegas, Columbus, Charlotte, Indianapolis, Austin, Providence, Nashville, Jacksonville, Memphis, Richmond, Hartford, Oklahoma City, Birmingham, Raleigh, Tulsa, Fresno and Omaha-Council Bluffs. Most of the remaining cities in the top 60 — such as Chicago or Baltimore — face only growth restrictions in the direction of the coast. The point is that the United States has considerable room to grow and American land values reflect that.
Demographically, the United States is the youngest and fastest growing of the major industrialized economies. At 37.1 years of age, the average American is younger than his German (43.1) or Russian (38.6) counterparts. While he is still older than the average Chinese (34.3), the margin is narrowing rapidly. The Chinese are aging faster than the population of any country in the world save Japan (the average Japanese is now 44.3 years old), and by 2020 the average Chinese will be only 18 months younger than the average American. The result within a generation will be massive qualitative and quantitative labor shortages everywhere in the developed world (and in some parts of the developing world) except the United States.
The relative youth of Americans has three causes, two of which have their roots in the United States’ history as a settler state and one of which is based solely on the United States’ proximity to Mexico. First, since the founding populations of the United States are from somewhere else, they tended to arrive younger than the average age of populations of the rest of the developed world. This gave the United States — and the other settler states — a demographic advantage from the very beginning.
Second, settler societies have relatively malleable identities, which are considerably more open to redefinition and extension to new groups than their Old World counterparts. In most nation-states, the dominant ethnicity must choose to accept someone as one of the group, with birth in the state itself — and even multi-generational citizenship — not necessarily serving as sufficient basis for inclusion. France is an excellent case in point, where North Africans who have been living in the Paris region for generations still are not considered fully “French.” Settler societies approach the problem from the opposite direction. Identity is chosen rather than granted, so someone who relocates to a settler state and declares himself a national is for the most part allowed to do so. This hardly means that racism does not exist, but for the most part there is a national acceptance of the multicultural nature of the population, if not the polity. Consequently, settler states are able to integrate far larger immigrant populations more quickly than more established nationalities.
Yet Canada and Australia — two other settler states — do not boast as young a population as the United States. The reason lies entirely within the American geography. Australia shares no land borders with immigrant sources. Canada’s sole land border is with the United States, a destination for immigrants rather than a large-scale source.
But the United States has Mexico, and through it Central America. Any immigrants who arrive in Australia must arrive by aircraft or boat, a process that requires more capital to undertake in the first place and allows for more screening at the point of destination — making such immigrants older and fewer. In contrast, even with recent upgrades, the Mexican border is very porous. While estimates vary greatly, roughly half a million immigrants legally cross the United States’ southern border every year, and up to twice as many cross illegally. There are substantial benefits that make such immigration a net gain for the United States. The continual influx of labor keeps inflation tame at a time when labor shortages are increasingly the norm in the developed world (and are even beginning to be felt in China). The cost of American labor per unit of output has increased by a factor of 4.5 since 1970; in the United Kingdom the factor is 12.8.
The influx of younger workers also helps stabilize the American tax base. Legal immigrants collectively generate half a trillion dollars in income and pay taxes in proportion to it. Yet they will not draw upon the biggest line item in the U.S. federal budget — Social Security — unless they become citizens. Even then they will pay into the system for an average of 41 years, considering that the average Mexican immigrant is only 21 years old (according to the University of California) when he or she arrives. By comparison, the average legal immigrant — Mexican and otherwise — is 37 years old.
Even illegal immigrants are a considerable net gain to the system, despite the deleterious effects regarding crime and social-services costs. The impact on labor costs is similar to that of legal immigrants, but there is more. While the Mexican educational system obviously cannot compare to the American system, most Mexican immigrants do have at least some schooling. Educating a generation of workers is among the more expensive tasks in which a government can engage. Mexican immigrants have been at least partially pre-educated — a cost borne by the Mexican government — and yet the United States is the economy that reaps the benefits in terms of their labor output.
Taken together, all of these demographic and geographic factors give the United States not only the healthiest and most sustainable labor market in the developed world but also the ability to attract and assimilate even more workers.


As discussed previously, the United States is the most capital-rich location in the world, courtesy of its large concentration of useful waterways. However, it also boasts one of the lowest demands for capital. Its waterways lessen the need for artificial infrastructure, and North America’s benign security environment frees it of the need to maintain large standing militaries on its frontiers. A high supply of capital plus a low demand for capital has allowed the government to take a relatively hands-off approach to economic planning, or, in the parlance of economists, the United States has a laissez-faire economic system. The United States is the only one of the world’s major economies to have such a “natural” system regarding the use of capital — all others must take a far more hands-on approach.
  • Germany sits on the middle of the North European Plain and has no meaningful barriers separating it from the major powers to its east and west. It also has a split coastline that exposes it to different naval powers. So Germany developed a corporatist economic model that directly injects government planning into the boardroom, particularly where infrastructure is concerned.
  • France has three coasts to defend in addition to its exposure to Germany. So France has a mixed economic system in which the state has primacy over private enterprise, ensuring that the central government has sufficient resources to deal with the multitude of threats. An additional outcome of what has traditionally been a threat-heavy environment is that France has been forced to develop a diversely talented intelligence apparatus. As such, France’s intelligence network regularly steals technology — even from allies — to bolster its state-affiliated companies.
  • China’s heartland on the Yellow River is exposed to both the Eurasian steppe and the rugged subtropical zones of southern China, making the economic unification of the region dubious and exposing it to any power that can exercise naval domination of its shores. China captures all of its citizens’ savings to grant all its firms access to subsidized capital, in essence bribing its southern regions to be part of China.
In contrast, the concept of national planning is somewhat alien to Americans. Instead, financial resources are allowed largely to flow wherever the market decides they should go. In the mid-1800s, while the French were redirecting massive resources to internal defenses and Prussia was organizing the various German regional private-rail systems into a transnational whole, a leading economic debate in the United States was whether the federal government should build spurs off the National Road, a small project in comparison. The result of such a hands-off attitude was not simply low taxes but no standard income taxes until the 16th Amendment was adopted in 1913.
Such an attitude had a number of effects on the developing American economic system. First, because the resources of the federal government were traditionally so low, government did not engage in much corporate activity. The United States never developed the “state champions” that the Europeans and Asians developed as a matter of course with state assistance. So instead of a singular national champion in each industry, the Americans have several competing firms. As a result, American companies have tended to be much more efficient and productive than their foreign counterparts, which has facilitated not only more capital generation but also higher employment over the long term.
Consequently, Americans tend to be less comfortable with bailouts (if there are no state companies, then the state has less of an interest in, and means of, keeping troubled companies afloat). This makes surviving firms that much more efficient in the long run. It hardly means that bailouts do not happen, but they happen rarely, typically only at the nadir of economic cycles, and it is considered quite normal for businesses — even entire sectors — to close their doors.
Another effect of the hands-off attitude is that the United States has more of a business culture of smaller companies than larger ones. Because of the lack of state champions, there are few employers who are critical specifically because of their size. A large number of small firms tends to result in a more stable economic system because a few firms here and there can go out of business without overly damaging the economy as a whole. The best example of turnover in the American system is the Dow Jones Industrial Average (DJIA). The DJIA has always been composed of the largest blue-chip corporations that, collectively, have been most representative of the American economic structure. The DJIA’s specific makeup changes as the U.S. economy changes. As of 2011, only one of its component corporations has been in the DJIA for the entirety of its 115-year history. In contrast, German majors such as Deutsche Bank, Siemens and Bayer have been at the pinnacle of the German corporate world since the mid-19th century, despite the massive devastation of Europe’s major wars.
Because the American river systems keep the costs of transport low and the supply of capital high, there are few barriers to entry for small firms, which was particularly the case during the United States’ formative period. Anyone from the East Coast who could afford a plow and some animals could head west and — via the maritime network — export their goods to the wider world. In more modern times, the disruption caused by the regular turnover of major firms produces many workers-turned-entrepreneurs who start their own businesses. American workers are about one-third as likely to work for a top 20 U.S. firm as a French worker is to work for a top 20 French firm.
The largest American private employer — Wal-Mart — is the exception to this rule. It employs 1.36 percent of U.S. workers, a proportion similar to the largest firms of other advanced industrial states. But the second largest private employer — UPS — employs only 0.268 percent of the American work force. To reach an equivalent proportion in France, one must go down the list to the country’s 32nd largest firm.
The U.S. laissez-faire economic model also results in a boom-and-bust economic cycle to a much greater degree than a planned system. When nothing but the market makes economic apportionment decisions, at the height of the cycle resources are often applied to projects that should have been avoided. (This may sound bad, but in a planned system such misapplication can happen at any point in the cycle.) During recessions, capital rigor is applied anew and the surviving firms become healthier while poorly run firms crash, resulting in spurts of unemployment. Such cyclical downturns are built into the American system. Consequently, Americans are more tolerant of economic change than many of their peers elsewhere, lowering the government’s need to intervene in market activity and encouraging the American workforce to retool and retrain itself for different pursuits. The result is high levels of social stability — even in bad times — and an increasingly more capable workforce.
Despite the boom/bust problems, the greatest advantage of a liberal capital model is that the market is far more efficient at allocating resources over the long term than any government. The result is a much greater — and more stable — rate of growth over time than any other economic model. While many of the East Asian economies have indeed outgrown the United States in relative terms, there are two factors that must be kept in mind. First, growth in East Asia is fast, but it is also a recent development. Over the course of its history, the United States has maintained a far faster growth rate than any country in East Asia. Second, the Asian growth period coincides with the Asian states gaining access to the U.S. market (largely via Bretton Woods) after U.S. security policy had removed the local hegemon — Japan — from military competition. In short, the growth of East Asian states — China included — has been dependent upon a economic and security framework that is not only far beyond their control, but wholly dependent upon how the Americans currently craft their strategic policy. Should the Americans change their minds, that framework — and the economic growth that comes from it — could well dissolve overnight.
The laissez-faire economic system is not the only way in which the American geography shapes the American economy. The United States also has a much more disassociated population structure than most of the rest of the world, developed and developing states both. As wealth expanded along American rivers, smallholders banded together to form small towns. The capital they jointly generated sowed the seeds of industrialization, typically on a local level. Population rapidly spread beyond the major port cities of the East Coast and developed multiple economic and political power centers throughout the country whose development was often funded with local capital. As large and powerful as New York, Baltimore and Boston were (and still are), they are balanced by Chicago, Pittsburgh, St. Louis and Minneapolis.
Today, the United States has no fewer than 20 metropolitan areas with an excess of 2.5 million people, and only four of them — New York, Philadelphia, Boston and Washington-Baltimore — are in the East Coast core. In contrast, most major countries have a single, primary political and economic hub such as London, Tokyo, Moscow or Paris. In the United States, economic and political diversification has occurred within a greater whole, creating a system that has grown organically into a consumer market larger than the consumer markets of the rest of the world combined.
And despite its European origins, the United States is a creature of Asia as well. The United States is the only major country in the world that boasts not only significant port infrastructure on both the Atlantic and the Pacific but also uninterrupted infrastructure linking the two. This allows the United States to benefit from growth in and trade with both Pacific and Atlantic regions and partially insulates the United States when one or the other suffers a regional crash. At such times, not only can the United States engage in economic activity with the other region, but the pre-existing links ensure that the United States is the first choice for capital seeking a safe haven. Ironically, the United States benefits when these regions are growing and when they are struggling.
When all these factors are put together, it is clear how geography has nudged the United States toward a laissez-faire system that rewards efficiency and a political culture that encourages entrepreneurship. It is also clear how geography has created distributed economic centers, transportation corridors and a massive internal market and provided easy access to both of the world’s great trading basins. Byproducts of this are a culture that responds well to change and an economy characterized by stable, long-term growth without being dependent on external support. In short, there is a geographic basis for U.S. prosperity and power, and there is no geographic basis to expect this condition to change in the foreseeable future.

Current Context: Threats to the Imperatives

Normally, Stratfor closes its geopolitical monographs with a discussion of the major challenges the country in question faces. The United States is the only truly global power in the modern age, but there are a number of potential threats to American power (as Stratfor founder George Friedman outlined in his book “The Next 100 Years”). Indeed, over the next century, any number of regional powers — a reunified Germany, a reawakened Turkey, a revitalized Japan, a rising Brazil, a newly confident Mexico — may well attempt to challenge American power.
But rather than dwell on the far future, it is more instructive to focus on the challenges of today and the next few years. Stratfor now turns to challenges to the United States in the current global context, beginning with the least serious challenges and working toward the most vexing.
The war in Afghanistan is not one that can be won in the conventional sense. A “victory” as Americans define it requires not only the military defeat of the opposing force but also the reshaping of the region so that it cannot threaten the United States again. This is impossible in Afghanistan because Afghanistan is more accurately perceived as a geographic region than a country. The middle of the region is a mountainous knot that extends east into the Himalayas. There are no navigable rivers and little arable land. The remaining U-shaped ring of flat land is not only arid but also split among multiple ethnic groups into eight population zones that, while somewhat discrete, have no firm geographic barriers separating them. This combination of factors predisposes the area to poverty and conflict, and that has been the region’s condition for nearly all of recorded history.
The United States launched the war in late 2001 to dislodge al Qaeda and prevent the region from being used as a base and recruitment center for it and similar jihadist groups. But since geography precludes the formation of any stable, unified or capable government in Afghanistan, these objectives can be met and maintained only so long as the United States stations tens of thousands of troops in the country.
Afghanistan indeed poses an indirect threat to the United States. Central control is so weak that non-state actors like al Qaeda will continue to use it as an operational center, and some of these groups undoubtedly hope to inflict harm upon the United States. But the United States is a long way away from Afghanistan, and such ideology does not often translate into intent and intent does not often translate into capacity. Even more important, Afghanistan’s labor, material and financial resources are so low that no power based in Afghanistan could ever directly challenge much less overthrow American power.
The American withdrawal strategy, therefore, is a simple one. Afghanistan cannot be beaten into shape, so the United States must maintain the ability to monitor the region and engage in occasional manhunts to protect its interests. This requires maintaining a base or two, not reinventing Afghanistan in America’s image as an advanced multiethnic democracy.
Most Americans perceive China as the single greatest threat to the American way of life, believing that with its large population and the size of its territory it is destined to overcome the United States first economically and then militarily. This perception is an echo of the Japanophobia of the 1980s and it has a very similar cause. Japan utterly lacked material resources. Economic growth for it meant bringing in resources from abroad, adding value to them, and exporting the resulting products to the wider world. Yet because very little of the process actually happened in Japan, the Japanese government had to find a means of making the country globally competitive.
Japan’s solution was to rework the country’s financial sector so that loans would be available at below-market rates for any firm willing to import raw materials, build products, export products and employ citizens. It did not matter if any of the activities were actually profitable, because the state ensured that such operations were indirectly subsidized by the financial system. More loans could always be attained. The system is not sustainable (eventually the ever-mounting tower of debt consumes all available capital), and in 1990 the Japanese economy finally collapsed under the weight of trillions of dollars of non-performing loans. The Japanese economy never recovered and in 2011 is roughly the same size as it was at the time of the crash 20 years before.
China, which faces regional and ethnic splits Japan does not, has copied the Japanese finance/export strategy as a means of both powering its development and holding a rather disparate country together. But the Chinese application of the strategy faces the same bad-debt problem that Japan’s did. Because of those regional and ethnic splits, however, when China’s command of this system fails as Japan’s did in the 1990s, China will face a societal breakdown in addition to an economic meltdown. Making matters worse, China’s largely unnavigable rivers and relatively poor natural ports mean that China lacks Japan’s natural capital-generation advantages and is saddled with the economic dead weight of its vast interior, home to some 800 million impoverished people. Consequently, China largely lacks the capacity to generate its own capital and its own technology on a large scale.
None of this is a surprise to Chinese leaders. They realize that China depends on the American-dominated seas for both receiving raw materials and shipping their products to global markets and are keenly aware that the most important of those markets is the United States. As such, they are willing to compromise on most issues, so long as the United States continues to allow freedom of the seas and an open market. China may bluster — seeing nationalism as a useful means of holding the regions of the country together — but it is not seeking a conflict with the United States. After all, the United States utterly controls the seas and the American market, and American security policy prevents the remilitarization of Japan. The pillars of recent Chinese success are made in America.
Iran is the world’s only successful mountain country. As such it is nearly impossible to invade and impossible for a foreign occupier to hold. Iran’s religious identity allows it considerable links to its Shiite co-religionists across the region, granting it significant influence in a number of sensitive locations. It also has sufficient military capacity to threaten (at least briefly) shipping in the Strait of Hormuz, through which roughly 40 percent of global maritime oil exports flow. All of this grants Iran considerable heft not just in regional but in international politics as well.
However, many of these factors work against Iran. Being a mountainous state means that a large infantry is required to keep the country’s various non-Persian ethnicities under control. Such a lopsided military structure has denied Iran the skill sets necessary to develop large armored or air arms in its military. So while Iran’s mountains and legions of infantry make it difficult to attack, the need for massive supplies for those infantry and their slow movement makes it extremely difficult for the Iranian military to operate beyond Iran’s core territories. Any invasion of Iraq, Kuwait or Saudi Arabia while American forces are in theater would require such forces — and their highly vulnerable supply convoys — to march across mostly open ground. In the parlance of the U.S. military, it would be a turkey shoot.
Mountainous regions also have painfully low capital-generation capacities, since there are no rivers to stimulate trade or large arable zones to generate food surpluses or encourage the development of cities, and any patches of land that are useful are separated from each other, so few economies of scale can be generated. This means that Iran, despite its vast energy complex, is one of the world’s poorer states, with a gross domestic product (GDP) per capita of only $4,500. It remains a net importer of nearly every good imaginable, most notably food and gasoline. There is a positive in this for Iran — its paucity of economic development means that it does not participate in the Bretton Woods structure and can resist American economic pressure. But the fact remains that, with the exception of oil and the Shiite threat, Iran cannot reliably project power beyond its borders except in one place.
Unfortunately for the Americans, that place is Iraq, and it is not a location where Iran feels particularly pressured to compromise. Iran’s Shiite card allows Tehran to wield substantial influence with fully 60 percent of the Iraqi population. And since the intelligence apparatus that Iran uses to police its own population is equally good at penetrating its Shiite co-religionists in Iraq, Iran has long enjoyed better information on the Iraqis than the Americans have — even after eight years of American occupation.
It is in Iran’s interest for Iraq to be kept down. Once oil is removed from the equation, Mesopotamia is the most capital-rich location in the Middle East. While its two rivers are broadly unnavigable, they do reliably hydrate the land between them, making it the region’s traditional breadbasket. Historically, however, Iraq has proved time and again to be indefensible. Hostile powers dominate the mountains to the north and east, while the open land to the west allows powers in the Levant to penetrate its territory. The only solution that any power in Mesopotamia has ever developed that provided a modicum of security is to establish a national security state with as large a military as possible and then invade neighbors who may have designs upon it. More often than not, Persia has been the target of this strategy, and its most recent application resulted in the Iraq-Iran War of 1980-1988.
Simply put, Iran sees a historic opportunity to prevent Iraq from ever doing this to it again, while the United States is attempting to restore the regional balance of power so that Iraq can continue threatening Iran. It is not a dispute that leaves a great deal of room for compromise. Iran and the United States have been discussing for five years how they might reshape Iraq into a form that both can live with, likely one with just enough military heft to resist Iran but not so much that it could threaten Iran. If the two powers cannot agree, then the Americans will have an unpalatable choice to make: either remain responsible for Iraq’s security so long as Persian Gulf oil is an issue in international economic affairs or leave and risk Iran’s influence no longer stopping at the Iraq-Saudi Arabia border.
At the time of this writing, the Americans are attempting to disengage from Iraq while leaving a residual force of 10,000 to 25,000 troops in-country in order to hold Iran at bay. Iran’s influence in Iraq is very deep, however, and Tehran is pushing — perhaps successfully — to deny the Americans basing rights in an “independent” Iraq. If the Americans are forced out completely, then there will be little reason for the Iranians not to push their influence farther south into the Arabian Peninsula, at which point the Americans will have to decide whether control of so much of the world’s oil production in the hands of a single hostile power can be tolerated.
Russia faces no shortage of geographic obstacles to success — its wide-open borders invite invasion, its vast open spaces prevent it from achieving economies of scale, its lack of navigable rivers makes it poor, and its arid and cold climate reduces crop yields. Over the years, however, Russia has managed to turn many weaknesses into strengths.
It has consolidated political and economic forces to serve as tools of the central state, so that all of the nation’s power may be applied to whatever tasks may be at hand. This may be woefully inefficient and trigger periods of immense instability, but it is the only method Russia has yet experimented with that has granted it any security. Russia has even turned its lack of defensible borders to its advantage. Russia’s vast spaces mean that the only way it can secure its borders is to extend them, which puts Russia in command of numerous minorities well-aware that they are being used as speed bumps. To manage these peoples, Russia has developed the world’s most intrusive intelligence apparatus.
This centralization, combined with Russia’s physical location in the middle of the flat regions of northern Eurasia, makes the country a natural counterbalance to the United States and the state most likely to participate in an anti-American coalition. Not only does Russia’s location in the flatlands of Eurasia require it to expand outward to achieve security (thus making it a somewhat “continent-sized” power), its natural inclination is to dominate or ally with any major power it comes across. Due to its geographic disadvantages, Russia is not a country that can ever rest on its laurels, and its strategic need to expand makes it a natural American rival.
Unfortunately for the Americans, Russia is extremely resistant to American influence, whether that influence takes the form of enticement or pressure.
  • Russia’s lack of a merchant or maritime culture makes any Bretton Woods-related offers fall flat (even today Russia remains outside of the WTO).
  • Russia is the biggest state in its region, making it rather nonsensical (at least in the current context) for the United States to offer Russia any kind of military alliance, since there would be no one for Russia to ally against.
  • Russia’s maritime exposure is extremely truncated, with its populated regions adjacent only to the geographically pinched Baltic and Black seas. This insulates it from American naval power projection.
  • Even the traditional American strategy of using third parties to hem in foes does not work as well against Russia as it does against many others, since Russia’s intelligence network is more than up to the task of crippling or overthrowing hostile governments in its region (vividly demonstrated in Russia’s overturning of the Kremlin-opposed governments in Ukraine, Georgia and Kyrgyzstan in recent years).
This means that the only reliable American option for limiting Russian power is the same strategy that was used during the Cold War: direct emplacement of American military forces on the Russian periphery. But this is an option that has simply been unavailable for the past eight years. From mid-2003 until the beginning of 2011, the entirety of the U.S. military’s deployable land forces have been rotating into and out of Iraq and Afghanistan, leaving no flexibility to deal with a resurgence of Russian power. The American preoccupation with the Islamic world has allowed Russia a window of opportunity to recover from the Soviet collapse. Russia’s resurgence is an excellent lesson in the regenerative capacities of major states.
Merely 12 years ago, Russia was not even in complete control of its own territory, with an insurgency raging in Chechnya and many other regions exercising de facto sovereignty. National savings had either disappeared in the August 1998 ruble crisis or been looted by the oligarchs. During the American wars in the Islamic world, however, the Russians reorganized, recentralized and earned prodigious volumes of cash from commodity sales. Russia now has a stable budget and more than half a trillion dollars in the bank. Its internal wars have been smothered and it has re-assimilated, broken or at least cowed all of the former Soviet states. At present, Russia is even reaching out to Germany as a means of neutralizing American military partnerships with NATO states such as Poland and Romania, and it continues to bolster Iran as a means of keeping the United States bogged down in the Middle East.
Put simply, Russia is by far the country with the greatest capacity — and interest — to challenge American foreign policy goals. And considering its indefensible borders, its masses of subjugated non-Russian ethnicities and the American preference for hobbling large competitors, it is certainly the state with the most to lose.
The United States
The greatest threat to the United States is its own tendency to retreat from international events. America’s Founding Fathers warned the young country to not become entangled in foreign affairs — specifically European affairs — and such guidance served the United States well for the first 140 years of its existence.
But that advice has not been relevant to the American condition since 1916. Human history from roughly 1500 through 1898 revolved around the European experience and the struggle for dominance among European powers. In the collective minds of the founders, no good could come from the United States participating in those struggles. The distances were too long and the problems too intractable. A young United States could not hope to tip the balance of power, and besides, America’s interests — and challenges and problems — were much closer to home. The United States involved itself in European affairs only when European affairs involved themselves in the United States. Aside from events such as the Louisiana Purchase, the War of 1812 and small-scale executions of the Monroe Doctrine, Washington’s relations with Europe were cool and distant.
But in 1898 the Americans went to war with a European state, Spain, and consequently gained most of its overseas territories. Those territories were not limited to the Western Hemisphere, with the largest piece being the Philippines. From there the Americans participated in the age of imperialism just as enthusiastically as any European state. Theodore Roosevelt’s Great White Fleet steamed around the world, forcing Japan to open itself up to foreign influence and announcing to the world that the Americans were emerging as a major force. Once that happened, the United States lost the luxury of isolationism. The United States not only was emerging as the predominant military and economy of the Western Hemisphere, but its reach was going global. Its participation in World War I prevented a German victory, and by the end of World War II it was clear that the United States was one of only two powers that could appreciably impact events beyond its borders.
Such power did not — and often still does not — sit well with Americans. The formative settler experience ingrained in the American psyche that life should get better with every passing year and that military force plays little role in that improvement. After every major conflict from the American Revolution through World War I, the Americans largely decommissioned their military, seeing it as an unnecessary, morally distasteful expense; the thinking was that Americans did not need a major military to become who they were and that they should have one only when the need was dire. So after each conflict the Americans, for the most part, go home. The post-World War II era — the Cold War — is the only period in American history when disarmament did not happen after the conflict, largely because the Americans still saw themselves locked into a competition with the Soviet Union. And when that competition ended, the Americans did what they have done after every other conflict in their history: They started recalling their forces en masse.
At the time of this writing, the American wars in the Islamic world are nearly over. After 10 years of conflict, the United States is in the final stages of withdrawal from Iraq, and the Afghan drawdown has begun as well. While a small residual force may be left in one or both locations, by 2014 there will be at most one-tenth the number of American forces in the two locations combined as there were as recently as 2008.
This has two implications for the Americans and the wider world. First, the Americans are tired of war. They want to go home and shut the world out, and with the death of al Qaeda leader Osama Bin Laden on May 2, 2011, they feel that they have the opportunity to do so. Second, the American military is battle-weary. It needs to rest, recuperate and digest the lessons of the wars it has just fought, and American politicians are in a mood to allow it to do just that. But while the U.S. military is battle-weary, it is also battle-hardened, and alone among the world’s militaries it remains easily deployable. Three years from now the U.S. military will be ready once again to take on the world, but that is a topic to revisit three years from now.
Between now and then, potential American rivals will not be able to do anything they wish — American power is not evaporating — but they will have a relatively free hand to shape their neighborhoods. American air and sea power is no small consideration, but inveterate land powers can truly be countered and contained only by ground forces.
  • Russian power will consolidate and deepen its penetration into the borderlands of the Caucasus and Central Europe. While the Americans have been busy in the Islamic world, it has become readily apparent what the Russians can achieve when they are left alone for a few years. A U.S. isolationist impulse would allow the Russians to continue reworking their neighborhood and re-anchor themselves near the old Soviet empire’s external borders, places like the Carpathians, the Tian Shan Mountains and the Caucasus, and perhaps even excise NATO influence from the Baltic states. While the chances of a hot war are relatively low, Stratfor still lists Russia’s regeneration as the most problematic to the long-term American position because of the combination of Russia’s sheer size and the fact that it is — and will remain — fully nuclear armed.
  • Iranian power will seek to weaken the American position in the Persian Gulf. A full U.S. pullout would leave Iran the undisputed major power of the region, forcing other regional players to refigure their political calculus in dealing with Iran. Should that result in Iran achieving de facto control over the Gulf states — either by force or diplomacy — the United States would have little choice but to go back in and fight a much larger war than the one it just extracted itself from. Here the American impulse to shut out the world would have imminent, obvious and potentially profound consequences.
  • Stratfor does not see Chinese power continuing to expand in the economic sphere on a global scale. China suffers under an unstable financial and economic system that will collapse under its own weight regardless of what the United States does, so the United States turning introverted is not going to save China. But America’s desire to retreat behind the oceans will allow the Chinese drama to play itself out without any American nudging. China will collapse on its own — not America’s — schedule.
  • German power will creep back into the world as Berlin attempts to grow its economic domination of Europe into a political structure that will last for decades. The European debt crisis is a catastrophe by all definitions save one: It is enabling the Germans to use their superior financial position to force the various euro nations to surrender sovereignty to a centralized authority that Germany controls. Unlike the Russian regeneration, the German return is not nearly as robust, multi-vectored or certain. Nonetheless, the Germans are manipulating the debt crisis to achieve the European supremacy by diplomacy and the checkbook that they failed to secure during three centuries of military competition.
The Americans will resist gains made by these powers (and others), but so long as they are loath to re-commit ground forces, their efforts will be half-hearted. Unless a power directly threatens core U.S. interests — for example, an Iranian annexation of Iraq — American responses will be lackluster. By the time the Americans feel ready to re-engage, many of the processes will have been well established, raising the cost and lengthening the duration of the next round of American conflict with the rest of the world.”


Foreign Governments Receiving Obsolete Export F-35s Until 2023


F-35-Money-4-copy AR15 dot com


“Three-quarters of all the F-35 Joint Strike Fighters delivered to foreign customers until 2023 are [or will be] obsolete and will require major retrofits before they can deliver their promised performance.  

[10] Foreign “partners,” [See table] who have already paid a portion of the F-35’s development costs as well as paying for their own aircraft, will realize that they have been abused by Lockheed and the Pentagon.”


“An analysis of F-35 contracts awarded to date shows that fully 343 – or 74% — of the 460 export F-35s that Lockheed is to deliver until end 2024 will be in the current, obsolete Low-Rate Initial Production configuration.

These 343 aircraft are limited both in terms of operational capabilities and of the weapons they can use. They are, and will remain, obsolete because their software is incomplete and because their sensors – designed over 20 years ago – have been overtaken by several generations electronics progress.

Lockheed and the F-35 Joint Program Office have quietly decided that all of the planned sensor and avionics upgrades needed to bring the F-35 to full capability will be deferred until 2023, when the first Full-Rate Production (FRP) aircraft (Lot 15) will begin to roll off the production lines.

All this, however, is a best-case scenario, and assumes that the F-35 will pass its Initial Operational Test & Evaluation (IOT&E). Due to be completed in 2019 or 2020, IOT&E will allow the Pentagon to take the (Milestone C) decision to launch Full-Rate Production (FRP).

If it doesn’t – and the GAO reported on June 5 that “As of January 2018, the F-35 program had 966 open deficiencies, of which 111 category 1 (critical)” – then all bets are off, and the program will have to undergo a major restructuring.

Fully-capable F-35 only after 2023

Aircraft of the first Full-Rate Production batch (Lot 15) will be the first to benefit from the new package of sensors, electronics and software bringing them to full capability, and which will notably include:

— a new TR-3 (Technology Refresh 3) computer supplied by Harris Corporation that is key to allowing integration of the new capabilities planned for the Block 4 standard. This will include computing infrastructure for new panoramic cockpit displays, advanced memory systems and navigation technology, according to Brad Truesdell, Harris Corp.’s senior director of aviation systems.

— Raytheon’s new Electro-Optical Distributed Aperture System, which Lockheed announced June 13 would replace Northrop Grumman’s current AN/AAQ-37.

— a new Advanced Electro-Optical Targeting System (EOTS) to replace the current system, also made by Lockheed. The company says the current EOTS meets all the contractual specifications, but that the new system – which offers a significant increase in terms of target recognition and detection capability – “would be a further upgrade option purchased at the discretion of the DOD and international F-35 partners and customers,” Lockheed told FlightGlobal at the time.

— a new Panoramic Cockpit Display System (PCDS) made by Elbit Systems of America. In June 2017, Elbit announced a contract from Lockheed Martin to develop a panoramic cockpit display unit to replace the current one, made by L3 Aviation Products.

These new sensors are crucial for the F-35 to achieve the capabilities it was designed to deliver, but which are still not available today, after 17 years of development. Lockheed says, for example, that the new DAS will have five times the reliability and twice the performance of the current system, despite being 45% cheaper to buy and 50% cheaper to operate.

However, Lot 15 deliveries will only begin in early 2023 and, meanwhile, deliveries will continue with the current electronics and sensors.

The US services will also receive obsolete aircraft, but their problem is less severe because they all operate other kinds of combat aircraft, and because they already have indicated they may use the early aircraft for flight-training or as spare parts banks if the cost of upgrading them to Block 4 standard is too expensive.

This is not an option for export customers, however, as for several – notably Denmark, Norway, the Netherlands — the F-35 will be the only combat aircraft, while for all others it is the primary strike aircraft.

Allies to receive obsolete aircraft until 2022

Until 2023, all the Low-Rate Initial Production (LRIP) aircraft ordered by the program’s foreign partners (Australia, Denmark, Italy, Netherlands, Norway, Turkey and the United Kingdom) and Foreign Military Sales customers (Israel, Japan and South Korea) will be delivered in the current configuration.

They will require substantial — and expensive — upgrades to bring them up to the latest Block 4 standard, after the new sensors and electronics become available in 2023.

The cost of developing and implementing the Block 4 configuration is as yet unknown, and figures have been quoted of between $3.9 billion and as much as $16.4 billion.

In any case, it is high enough that the F-35 Program Executive Officer, Vice Admiral Mat Winter, “said his office is exploring the option of leaving 108 aircraft in their current state because the funds to upgrade them to the fully combat-capable configuration would threaten the Air Force’s plans to ramp up production in the coming years,” according to an October 2017 report by the Project On Government Oversight (POGO)

To our knowledge, European operators of the F-35 also have “overlooked” mentioning the cost of upgrading their older aircraft to Block 4 standard when reporting to their respective Parliaments, to which they will now have to go cap-in-hand to request the necessary funds. One can imagine the welcome they will receive from their lawmakers.

And Block 4 is non-negotiable because unless upgraded, all F-35s delivered before 2023 will be severely limited in their capabilities and will only be able to use very few weapons.

Lockheed is currently delivering aircraft with the latest Block 3F software, the first “combat-capable” standard. Block 3F should (but maybe will not) be retrofitted to earlier aircraft. Block 3F allows the use of the Small Diameter Bomb, Joint Direct Attack Munition (JDAM) and the AIM-9X short-range air-to-air missile, in addition to the Advanced Medium Range Air-to-Air Missile (AMRAAM), Advanced Short-Range Air-to-Air Missile (ASRAAM) and various kinds of laser-guided bombs used with earlier software.

Only Block 4 allows most capable weapons – after 2023 

But only Block 4 will allow the F-35 to use the most capable air-to-air missile in the Western inventory – MBDA’s Meteor – as well as two new long-range missiles being developed specifically for the F-35: the Joint Strike Missile (made by Kongsberg, Norway) and the SOM-J air-launched cruise missile (Roketsan, Turkey) as well as the Small Diameter Bomb II and other cutting-edge weapons to come.

If 74% of all export F-35s will be obsolete when delivered, some export customers will receive an even higher proportion: Australia will receive 63 of its 72 aircraft (87%) in LRIP configuration, while the proportion of LRIP aircraft will attain 100% for South Korea, 81% for Japan and 77% for Norway. (see Table 1 above).

Foreign operators will receive a few of the state-of-the-art Lot 15/Block 4 aircraft after 2023, except for South Korea, whose deliveries will be completed in 2021. Quantities will be limited, however, as for example Norway will receive only 12 Block 4 aircraft out of 52, and Australia only 9 out of 72.

These foreign operators are caught up in a dilemma: the F-35 needs new sensors, but cannot integrate them without new computers and memories that will only be available with Block 4 software, in 2023 at the earliest.

In other words, pray there’s no shooting war in the next 6-7 years.

Assuming they do decide to retrofit Block 4 improvements, export customers will have to pay for it themselves, on top of acquisition and post-delivery upgrade costs.

This is when foreign “partners,” who have already paid a portion of the F-35’s development costs as well as paying for their own aircraft, will realize that they have been abused by Lockheed and the Pentagon who, in their rush to produce as many F-35s as fast as possible, have delivered “fifth-generation” aircraft that do not meet contractual performance and cannot match the capability of “legacy” aircraft like Typhoon, and the latest F-15 and F-16s.”


5 Technology Trends Driving An Intelligent Military


Intelligent Military


“The rise of non-traditional actors, cyberattacks and state-sponsored subversion is challenging democratic governance and creating an increasingly volatile operational and security environment for defense agencies.

To address these threats, military organizations must be able to operate seamlessly and intelligently across a network of multinational partners.”


“This year’s Accenture Technology Vision identified five trends that are essential components of any intelligent defense organization: Citizen AI, extended reality, data veracity, frictionless business and Internet of Thinking.

Private AI: training AI as an effective troop member

Harnessing AI’s potential is no longer just about training it to perform a specific task: AI will increasingly function alongside people as a full-fledged member of a team. In the high-stakes world of defense, it’s especially important that AI systems act as trustworthy, responsible and efficient colleagues.

AI could have a major impact for military organizations, including defense logistics and cybersecurity. An adversary equipped with advanced AI capabilities will not wait for its enemies to catch up technologically before launching an offensive. AI’s ability to process and analyze vast amounts of data has significant implications across the Observe, Orient, Decide, Act (OODA) loop. From augmenting our ability to detect new threats to analyzing countless variables, AI could transform surveillance and situational awareness.

Extended Reality: The end of distance

Extended reality (XR), which includes virtual reality (VR) and augmented reality (AR), is the first technology to relocate people in both time and place—effectively eliminating distance.

For the defense sector, the ability to simulate and share a common view of an operational theatre is immensely powerful. Recently, Accenture created a mixed reality proof of concept using Microsoft HoloLens and gaming engine Unity that provides military personnel with an interactive map showing real-time location and status data for troops and resources on the ground. With a simple command, a user can order reinforcements or supplies, or create and test different scenarios through a mixed reality interface.

XR technology can also enhance operational command capabilities in the field. For example, AR goggles could provide dashboards and data visualizations where and when they are needed – such as at an operating base. XR also will have major implications for training, allowing soldiers and pilots to engage in highly realistic combat simulations.

Data veracity: the importance of trust

As defense organizations become increasingly data-driven, inaccurate and manipulated information is a persistent and serious threat. Agencies can address this vulnerability by building confidence in three key data-focused tenets: provenance, or verifying data from its origin throughout its life cycle; context, or considering the circumstances around its use; and integrity, or securing and maintaining data.

The ability to trust and verify the data that flows between multinational partners is critically important. Organizations must be capable of delivering the right data to the right recipient, at the right time – which can only be accomplished by radically reorienting how data is shared across today’s armed forces. Today’s vertical approach involves passing information up and down the command stack of a nation’s military. In contrast, multinational military operations demand that information is also shared horizontally across the forces of different nations and partners. This shift requires a profound change in technology, mindset and culture within agencies.

Frictionless defense: built to partner at scale

Our recent survey found that 36 percent of public service leaders report working with twice as many strategic partners than two years ago. And when partnerships between industry, academia and military organizations are horizontally integrated and technology-based, they can expand faster and further than ever before. But legacy systems weren’t built to support this kind of expansion, and soon, outdated systems will be major hindrances to collaboration.

With this in mind, defense organizations must develop new IT architectures to reduce complexity. Agile IT systems will allow innovation to flourish, unimpeded by internal politics and employee resistance. A modern IT architecture will push organizations to clearly define the services they offer and turn each service into a potential enabler of collaboration.

The Internet of Thinking: intelligent distributed defense capabilities

Today’s technology infrastructures are designed around a few basic assumptions: enough bandwidth to support remote applications, an abundance of computing power in a remote cloud and nearly infinite storage. But the demand for immediate response times defies this approach. Recent projections suggest that by 2020, smart sensors and other Internet of Things devices will generate at least 507.5 zettabytes of data. Trying to manage the computational “heavy-lifting” offsite will become limiting.

The need for real-time systems puts hardware back in focus: special-purpose and customizable hardware is making devices at the edge of networks more powerful and energy efficient than ever before. Public service organizations are taking note: our survey indicates 79 percent of leaders believe it will be very critical over the next two years to leverage custom hardware and accelerators to meet new computing demands.

The next generation of military strategies ride on pushing intelligence into the physical world. Defense organizations have to embrace new operating models to enable high-speed data flows, harness the potential of distributed intelligence and successfully neutralize threats.

The defense sector is challenged to respond to new types of threat, political volatility and even new combat arenas, and acquiring new technology capabilities is a strategic imperative. Delivering greater situational awareness and the ability to respond rapidly to unpredictable adversaries requires investments in AI, edge computing and other emerging technologies. Likewise, today’s information architectures will need to be redesigned to collaborate quickly, effectively and securely.”