The service has been experimenting with ‘pitch days’ across the country over the last year, such as the Space Pitch Days held in San Francisco in November when the service handed out $22.5 million to 30 companies over two days.
“PENTAGON: The Air Force will roll out the final stage in its commercial startup investment strategy during the March 13-20 South By Southwest music festival, granting one or more contracts worth at least $10 million to startups with game-changing technologies, service acquisition chief Will Roper says.
So, if the Air Force investment fund, called Air Force Ventures, puts in $20 million, the private capital match would be $40 million.
AFWERX, the Air Force’s innovation unit, has one of its hubs in Austin.
“This has been a year in the making now, trying to make our investment arm, the Air Force Ventures, act like an investor, even if it’s a government entity,” Roper explained. “We don’t invest like a private investor — we don’t own equity — we’re just putting companies on contract. But for early stage companies, that contract acts a lot like an investor.”
The goal is to help steer private resources toward new technologies that will benefit both US consumers and national security to stay ahead of China’s rapid tech growth, Roper told reporters here Friday.
The Air Force wants to “catalyze the commercial market by bringing our military market to bear,” he said. “We’re going to be part of the global tech ecosystem.”
Figuring out how to harness the commercial marketplace is critical, Roper explained, because DoD dollars make up a dwindling percentage of the capital investment in US research and development. This is despite DoD’s 2021 budget request for research, development, test and evaluation (RDT&E) of $106.6 billion being “the largest in its history,” according to Pentagon budget rollout materials. The Air Force’s share is set at $37.3 billion, $10.3 billion of which is slated for Space Force programs.
“We are 20 percent of the R&D is this country — that’s where the military is today,” Roper said. “So if we don’t start thinking of ourselves as part of a global ecosystem, looking to influence trends, investing in technologies that could be dual-use — well, 20 percent is not going to compete with China long-term, with a nationalized industrial base that can pick national winners.”
The process for interested startups to compete for funds has three steps, Roper explained, beginning with the Air Force “placing a thousand, $50K bets per year that are open.” That is, any company can put forward its ideas to the service in general instead of there being a certain program office in mind. “We’ll get you in the door,” Roper said, “we’ll provide the accelerator functions that connect you with a customer.
“Pitch days” are the second step, he said. Companies chosen to be groomed in the first round make a rapid-fire sales pitch to potential Air Force entities — such as Space and Missile Systems Center and Air Force Research Laboratory — that can provide funding, as well as to venture capitalists partnering with the Air Force.
As Breaking D broke in October, part of the new acquisition strategy is luring in private capital firms and individual investors to match Air Force funding in commercial startups as a way to to bridge the ‘valley of death’ and rapidly scale up capability.
Roper said he intends to make “maybe 300 of those awards per year,” with the research contracts ranging from $1 million to $3 million a piece and “where program dollars get matched by our investment dollars.”
The final piece of the strategy, Roper explained, is picking out the start-ups that can successfully field game-changing technologies.
“The thing that we’re working on now is the big bets, the 30 to 40 big ideas, disruptive ideas that can change our mission and hopefully change the world,” Roper said. “We’re looking for those types of companies.”
If the strategy is successful, Roper said, the chosen firms will thrive and become profitable dual-use firms focused primarily on the commercial market.
“The, we’re starting to build a different kind of industry base,” Roper enthused. “So, we’ve gotta get the big bets right. Then most importantly, if you succeed in one of the big bets, then we need to put you on contract on the other side, or else the whole thing is bunk.”
“This imagined scenario involves a host of platforms, teamed with in-the-flesh Marines, moving rapidly across wide swaths of the Pacific.
Those small teams of maybe a platoon or even a squad could work alongside robots in the air, on land, sea and undersea, to gain a short-term foothold that then could control a vital sea lane Chinese ships would have to bypass or risk sinking simply to transit.“
“Somewhere off the coast of a tiny island in the South China Sea small robotic submarines snoop around, looking for underwater obstacles as remotely-controlled ships prowl the surf. Overhead multiple long-range drones scan the beachhead and Chinese military fortifications deeper into the hills.
A small team of Marines, specially trained and equipped, linger farther out after having launched from their amphibious warship, as did their robot battle buddies to scout this spit of sand.
Their Marine grandfathers and great-grandfathers might have rolled toward this island slowly, dodging sea mines and artillery fire only to belly crawl in the surf as they were raked with machine gun fire, dying by the thousands.
But in the near-term battle, suicidal charges to gain ground in a fast-moving battlefield is a robot’s job.
It’s a bold, technology-heavy concept that’s part of Marine Corps Commandant Gen. David Berger’s plan to keep the Corps relevant and lethal against a perceived growing threat in the rise of China in the Pacific and its increasingly sophisticated and capable Navy.
In his planning guidance, Berger called for the Marines and Navy to “create many new risk-worthy unmanned and minimally manned platforms.” Those systems will be used in place of and alongside the “stand-in forces,” which are in range of enemy weapons systems to create “tactical dilemmas” for adversaries.
“Autonomous systems and artificial intelligence are rapidly changing the character of war,” Berger said. “Our potential peer adversaries are investing heavily to gain dominance in these fields.”
And a lot of what the top Marine wants makes sense for the type of war fighting, and budget constraints, that the Marine Corps will face.
“A purely unmanned system can be very small, can focus on power, range and duration and there are a lot of packages you can put on it — sensors, video camera, weapons systems,” said Dakota Wood, a retired Marine lieutenant colonel and now senior research fellow at The Heritage Foundation in Washington, D.C.
The theater of focus, the Indo-Pacific Command, almost requires adding a lot of affordable systems in place of more Marine bodies.
That’s because the Marines are stretched across the world’s largest ocean and now face anti-access, area-denial, systems run by the Chinese military that the force hasn’t had to consider since the Cold War.
“In INDOPACOM, in the littorals, the Marine Corps is looking to kind of outsource tasks that machines are looking to do,” Wood said. “You’re preserving people for tasks you really want a person to handle.”
The Corps’ shift back to the sea and closer work with the Navy has been brewing in the background in recent years as the United States slowly has attempted to disentangle itself from land-based conflicts in the Middle East. Signaling those changes, recent leaders have published warfighting concepts such as expeditionary advanced based operations, or EABO, and littoral operations in contested environment.
EABO aims to work with the Navy’s distributed maritime operations concept. Both allow for the U.S. military to pierce the anti-access, area denial bubble. The littoral operations in contested environment concept makes way for the close-up fight in the critical space where the sea meets the land.
That’s meant a move to prioritize the Okinawa, Japan-based III Marine Expeditionary Force as the leading edge for prioritizing Marine forces and experimentation, as the commandant calls for the “brightest” Marines to head there.
Getting what they want
But the Corps, which traditionally has taken a backseat in major acquisitions, faces hurdles in adding new systems to its portfolio.
It was only in 2019 that the Marines gained more funding to add more MQ-9 Reaper drones. The Corps got the money to purchase its three Reapers in this year’s budget. But that’s a platform that’s been in wide use by the Air Force for more than a decade.
But that’s a short-term fix, the Corps’ goal remains the Marine Air-Ground Task Force unmanned aircraft system, expeditionary, or MUX.
The MUX, still under development, would give the Corps a long-range drone with vertical takeoff capability to launch from amphib ships that can also run persistent intelligence, surveillance and reconnaissance, electronic warfare and coordinate and initiate strikes from other weapons platforms in its network.
Though early ideas in 2016 called for something like the MUX to be in the arsenal, at this point officials are pegging an operational version of the aircraft for 2026.
Lt. Gen. Steven Rudder, deputy commandant for aviation, said at the annual Sea-Air-Space Symposium in 2019 that the MUX remains among the top priorities for the MAGTF.
Sustain and distract
In other areas, Marines are focusing on existing platforms but making them run without human operators.
One such project is the expeditionary warfare unmanned surface vessel. Marines are using the 11-meter rigid-hull inflatable boats already in service to move people or cargo, drop it off and return for other missions.
Logistics are a key area where autonomous systems can play a role. Carrying necessary munitions, medical supplies, fuel, batteries and other items on relatively cheap platforms keeps Marines out of the in-person transport game and instead part of the fight.
In early 2018 the Corps conducted the “Hive Final Mile” autonomous drone resupply demonstration in Quantico, Virginia. The short-range experiment used small quadcopters to bring items like a rifle magazine, MRE or canteen to designated areas to resupply a squad on foot patrol.
The system used a group of drones in a portable “hive” that could be programmed to deliver items to a predetermined site at a specific time and continuously send and return small drones with various items.
Extended to longer ranges on larger platforms and that becomes a lower-risk way to get a helicopter’s worth of supplies to far-flung Marines on small atolls that dot vast ocean expanses.
Shortly after that demonstration, the Marines put out requests for concepts for a similar drone resupply system that would carry up to 500 pounds at least 10 km. It still was not enough distance for larger-scale warfighting, but is the beginnings of the type of resupply a squad or platoon might need in a contested area.
In 2016, the Office of Naval Research used four rigid-hull inflatable boat with unmanned controls to “swarm” a target vessel, showing that they can also be used to attack or distract vessels.
And the distracting part can be one of the best ways to use unmanned assets, Wood said.
Wood noted that while autonomous systems can assist in classic “shoot, move, communicate” tactics, they sometimes be even more effective in sustaining forces and distracting adversaries.
“You can put machines out there that can cause the enemy to look in that direction, decoys tying up attention, munitions or other platforms,” Wood said.
And that distraction goes further than actual boats in the water or drones in the air.
As with the MUX, the Corps is looking at ways to include electronic warfare capabilities in its plans. That allows for robotic systems to spoof enemy sensors, making them think that a small pod of four rigid-hull inflatable boats appear to be a larger flotilla of amphib ships.
Marines fighting alongside and along with semi-autonomous systems isn’t entirely new.
In communities such as aviation, explosive ordnance disposal and air defense, forms of automation, from automatic flight paths to approaching toward bomb sites and recognizing incoming threats, have been at least partly outsourced to software and systems.
But for more complex tasks, not so much.
How robots have worked and will continue to work in formations is an evolutionary process, according to former Army Ranger Paul Scharre, director of the technology and national security program at the Center for a New American Security and author of, “Army of None: Autonomous Weapons and the Future of War.”
If you look at military technology in history, the most important use for such tech was in focusing on how to solve a particular mission rather than having the most advanced technology to solve all problems, Scharre said.
And autonomy runs on a kind of sliding scale, he said.
As systems get more complex, autonomy will give fewer tasks to the human and more to the robot, helping people better focus on decision-making about how to conduct the fight. And it will allow for one human to run multiple systems.
When you put robotic systems into a squad, you’re giving up a person to run them and leaders have to decide if that’s worth the trade off, Scharre said.
The more remote the system, the more vulnerable it might be to interference or hacking, he said. Built into any plan for adding autonomous systems there must be reliable, durable communication networks.
Otherwise, when those networks are attacked the systems go down.
That means that a Marine’s training won’t get less complicated, only more multifaceted.
Just as Marines continue to train with a map and compass for land navigation even though they have GPS at their fingertips, Marines operating with autonomous systems will need continued training in fundamental tactics and ways to fight if those systems fail.
“Our preferred method of fighting today in an infantry is to shoot someone at a distance before they get close enough to kill with a bayonet,” Scharre said. “But it’s still a backup that’s there. There are still bayonet lugs on rifles, we issue bayonets, we teach people how to wield them.”
Where do they live?
A larger question is where do these systems live? At what level do commanders insert robot wingmen or battle buddies?
Purely for reasons of control and effectiveness, Dakota Wood said they’ll need to be close to the action and Marine Corps personnel.
But does that mean every squad is assigned a robot, or is there a larger formation that doles out the automated systems as needed to the units?
For example, an infantry battalion has some vehicles but for larger movements, leaders look to a truck company, Wood said. The maintenance, care, feeding, control and programming of all these systems will require levels of specialization, expertise and resources.
The Corps is experimenting with a new squad formation, putting 15 instead of 13 Marines in the building block of the infantry. Those additions were an assistant team leader and a squad systems operator. Those are exactly the types of human positions needed to implement small drones, tactical level electronic warfare and other systems.
The Marine Corps leaned on radio battalions in the 1980s to exploit tactical signals intelligence. Much of that capability resided in the larger battalion that farmed out smaller teams to Marine Expeditionary Units or other formations within the larger division or Marine Expeditionary Force.
A company or battalion or other such formation could be where the control and distribution of autonomous systems remains.
But, current force structure moves look could integrate those at multiple levels. Maj. Gen. Mark Wise, deputy commanding general of Marine Corps Combat Development Command, said recently that the Corps is considering a Marine littoral regiment as a formation that would help the Corps better conduct EABO operations.
Combat Development Command did not provide details on the potentially new regimental formation, confirmed that a Marine littoral regiment concept is one that will be developed through current force design conversations.
A component of that could include a recently-proposed formation known as a battalion maritime team.
Maj. Jake Yeager, an intelligence officer in I MEF, charted out an offensive EABO method in a December 2019 article on the website War On The Rocks titled, “Expeditionary Advanced Maritime Operations: How the Marine Corps can avoid becoming a second land Army in the Pacific.”
Part of that includes the maritime battalion, creating a kind of Marine air-sea task force. Each battalion team would include three assault boat companies, one raid boat company, one anti-ship missile boat battery and one reconnaissance boat company.
The total formation would use 40 boats, at least nine which would be dedicated unmanned surface vehicles, while the rest would be developed with unmanned or manned options, much like the rigid-hulled inflatable boats which the Corps is currently experimenting with.”
“The International Traffic In Arms Regulations (ITAR) are a set of government regulations administering the export, re-export and import of defense-related articles, services and technology on the U.S. Munitions List, or USML.
Unlike the Cold War, the high degree of technology integration with China results in a paradoxical interdependence, the remedy for which includes, not only finely tuned adjustments to U.S. investment and export control regulation, but also an informed embrace of a competitive strategy of investment.“
“Largely the result of European space and defense manufacturer design outs, the “U.S. International Trade in Arms Regulations-free” movement began in the 1990s. Since that time, the ITAR-free movement has diffused into other industry sectors and regions. For example, in 2017, the German Ministry of Defence announced tenders for new assault rifles for the German armed forces. The tender included an ITAR-free exclusion criterion not only for the rifles but for supplies as well. India’s space program is working with vendors on the basis of ITAR-free systems.
ITAR controls are highly stringent, so much so that the Obama administration in 2010 initiated the Export Control Reform Initiative to streamline controls to make them both effective and to increase American competitiveness.
As the U.S. government controls the re-export of USML items, the ITAR are an internationally well-known quantity. In many instances, foreign defense product producers and consumers know the ITAR more intimately than their U.S. counterparts. Transferring or re-exporting U.S. defense items requires U.S. government approval no matter how seemingly trivial the part or mundane the transfer. The practical effect of ITAR requirements makes U.S. defense items very sticky and cumbersome; therefore: the ITAR-free movement.
In terms of other strategic items, the U.S. Department of Commerce licenses the exports of dual-use components in a similar manner, albeit to a much more nuanced degree. The Export Administration Regulations, or EAR, require consumers of U.S.-origin dual-use items to seek licenses for re-exports and transfers of said items depending upon the amount of U.S.-origin technology/components and/or the proposed destination of the transfer. In contrast to ITAR controls, EAR re-export and retransfer controls are simultaneously more complicated, but more flexible.
The Trump administration’s on-going technology war with China is now bleeding into the arcane world of the EAR. Recently, the Commerce Department announced its intention to revise two EAR provisions that regulate U.S.-origin technology incorporated into foreign-produced products. Apparently, the effort is born out of frustration with the government’s limited ability to curtail exports (or, more precisely, re-exports) to Huawei. Revising the two provisions — the de minimis and direct product rules — would allegedly further empower the government to limit Chinese and others’ acquisition of EAR-controlled items. However, several major U.S. technology companies have warned about the dire consequences of revising the rules, particularly if they are modified against specific targets.
At a recent meeting of the Department of Commerce’s Regulations and Procedures Technical Advisory Committee, Assistant Secretary of Commerce for Export Administration Rich Ashooh said of changes to the direct product and the de minimis rules: “We are looking at those two and many others,” noting that “the U.S. has entered a new realm when it comes to export controls.” The looking-glass notwithstanding, the tech sector is decidedly spooked.
In a recent letter to Commerce Secretary Wilbur Ross, a consortium of tech industry trade associations cautioned that further tightening of technology controls would “encourage the design-out of U.S. technology by non-U.S. firms, while also imposing massive new compliance burdens for U.S. and non-U.S. companies alike …. and …. could set a dangerous precedent.” The current private sector admonishments are of piece with earlier jeremiads about overly burdensome U.S. product and technology controls. The effects for this current round of tech redlining could very well be the same: EAR-free foreign products.
The other cautionary note concerns market exit. Last month, the RISC-V Foundation, which directs the development of an open-source instruction set architecture for central processing units, announced that it will incorporate in Switzerland from its current corporate address in Delaware. The RISC-V Foundation chief executive, Calista Redmond, observed about the move: “From around the world, we’ve heard that ‘If the incorporation was not in the U.S., we would be a lot more comfortable.’ ”
Similar warnings were also articulated in comments to the Department of Commerce’s advanced notice of proposed rule making regarding emerging and foundational technologies. One commenter conjectured: “If significant controls were to be imposed …. then the employees and foreign companies will usually choose to leave the United States and take their skills to foreign competition.”
In addition to potentially cooling U.S.-based technology exports, Pyrrhic control parameters could also accelerate technology autarky efforts in the target economy (i.e., China). Ironically, the ensuing panicked reaction to Beijing’s announcement of its Made in China 2025 policy has only accelerated Beijing’s efforts to create an autonomous –— or at least non-U.S. based — innovation ecosystem.
In 2018, Chairman Xi Jinping asserted that “self-reliance is the foundation for the Chinese nation to stand firmly in the world, while independent innovation is the only way for us to climb the peak of the world’s science and technology.” Even for countries not in the market for tech self-sufficiency, there is an increased general appetite for a U.S.-free alternative, either homegrown or non-U.S. sourced.
Based on the preliminary responses from U.S. and foreign technology companies, the proposed Commerce rules changes would have immediate and, perhaps, lasting negative effects for U.S. exporters.
The ITAR-free moniker is bad enough; do we really need an EAR equivalent?”
“Although the U.S. government is working to prevent foreign telecommunications firms like Huawei from building 5G networks in the U.S. and abroad, there are still few answers on how to secure the government’s technology supply chain, according to federal Chief Information Security Officer Grant Schneider.
“Could [a company] come under the influence of a foreign adversary in any way shape or form? Is there quality where we need it to be? … How do we ensure their supply chain and the parts that they’re taking in and putting inside their box are actually the parts they’re expecting?” Schneider said at the Fortinet Security Summit, produced by FedScoop and StateScoop. “I don’t think we have an answer on what are the solutions to all those [questions.]”
The administration also isn’t clear yet on whether the government itself should be assessing which contractors are meeting requirements, or whether that assessment should be completed elsewhere, according to Schneider.
“As we look at our supply chain and we look at what our supply chain programs need to have, there’s going to be a variety of due diligence,” Schneider said. “And I think one of the things we’re looking at in the government is how much of that do we put on our providers.”
As far as whether the pendulum is swinging in the direction of government involvement or contractor control over supply chain decisions, Schneider does not think the government is in a position to presume suppliers and subcontractors are meeting supply chain requirements upfront.
“I’m probably not going to directly trust you’ve done them all,” Schneider told CyberScoop on the sidelines of the event.
It’s not just the tech that the government needs to worry about. When it comes to a recent case of two former Twitter employees who were charged with spying on Saudi dissidents on behalf of the Saudi Kingdom, Schneider indicated the private sector has a large role to play. When asked what the Trump administration should be doing to thwart tech companies being allegedly used for foreign espionage, Schneider pointed to Twitter.
“I think everyone has … a responsibility for their workforce and to know the actions that their workforce is taking and need[s] to have ways to be sure that they … have the proper controls in place,” Schneider said.”
“It’s often said that the U.S. Department of Defense is the biggest buyer in the world. But the DoD also has among the most expansive networks of consumers of parts and supplies.
And the Defense Logistics Agency is charged with managing the bulk of those — from raw materials to spare parts; to fuel and sustenance; to the reutilization of military equipment and infrastructure; to the storage and tracking of inventories and suppliers.
With that in mind, securing the supply chain can seem like a game of whack-a-mole involving cyberthreats, counterfeit goods and a shrinking industrial base.
In the words of the DLA director, Lt. Gen. Darrell Williams, the supply chain “simply cannot afford to not be protected.”
Defense News spoke to Williams during a panel discussion and a one-on-one interview at the annual meeting of the Association of the United States Army in October.
How does supply chain security fit into the mission of the Defense Logistics Agency?
I just want to start the whole conversation by saying our motto at DLA is “war fighter first.” And so this whole discussion is all about how do we take care of our war fighters. And with that in mind, and understanding what a big problem security is, not just for the DLA but for the entire Department of Defense, we do in fact take it very, very seriously.
That’s the mindset that we have when we start talking about this issue on supply chain security. It obviously has several different levels for us. It’s our relationship with the over
12,000 suppliers that DLA deals with. It’s obviously all of our customers — foremost among them being the war fighter. But we also have other customers that we work with, like the whole of government. And so anytime you see hurricane and disaster relief operations that are happening that involve the Federal Emergency Management Agency, or FEMA, there’s a DLA component to that.
And so from our standpoint, the business of supply chain security is every bit as important as the actual support that we provide.
Talk about vetting suppliers. How do you ensure suppliers are who they say they are and don’t pose a risk?
It’s definitely a daily challenge, there’s no doubt about that. But we do have a very, very strong vetting process. I will say that nefarious actors are constantly challenging our ability to do that. As they change their tactics, we have to stay ahead of those. One of the tactics that was being used a few years ago was an issue of them trying to provide nonconforming parts. We had to find out who exactly those vendors were, stop that within the supply chain, and then find new vendors who could provide the types of products that our troops deserve and need.
And now they have moved on to yet another tactic, what we call “CAGE siphoning,” where they attempt to steal the identity of a legitimate actor [using the Commercial and Government Entity code] and have the funds transferred to their accounts. And so this is the challenge that we do face within the supply system. We’re doing everything we can in combination with the services that we interface with — with Cyber Command, and with others — to stay ahead of these kinds of issues. But no question about it, it is a persistent problem.
How far down in the supply chain is the biggest risk?
I mentioned that we deal with about 12,000 different suppliers. A vast majority of those suppliers are small businesses. A vast majority of those are second- and third-tier suppliers. And so often times it’s not the prime — the large businesses that we do business with. It is those feeder companies that are much, much more difficult to certify, and that is where the challenges come in.
How do we get both the subs and the small business primes that don’t have the resources of some of the larger businesses cyber compliant? Because this is coming, and they’re going to be essentially forced to do so in fiscal 2020. What happens when we have a small business supplier who does not meet National Institute of Standards and Technology standards, but becomes a sole-source supplier for a major weapon system?
I’ve talked with a lot of the larger businesses, and they feel pretty good about the suppliers that are in their down trace. They’re working with them on a daily basis, they’re getting them there. Many of them have already made it a qualifier to do business with them and, in effect, do business with DLA. But it’s the list of independent [suppliers] who don’t fully understand the requirement or don’t have the resources to get there and still remain very, very critical to DLA support to the war fighter.
Are Chinese investments in U.S. companies a threat?
You know, we focus a lot on China, and we focus a lot on some other countries, but what I would tell you is that technology has become so sophisticated that often times it’s difficult to decipher where the business is that you’re dealing with. You think you’re dealing with a company in the United States, but as you pull the string on it, by routing through three or four different areas, we [discover] they’re actually operating from somewhere else.
The other issue is, oftentimes, it has nothing to do with that country itself. It may be a nefarious actor operating from that country. And so it’s becoming increasingly difficult to isolate who the vendors are that you’re actually working with. That is one of our persistent problems.
How has new technology transformed how you manage logistics for the military?
New technology is part and parcel of what DLA does. We’re always looking for better ways to do business, to bring value to the Department of Defense and then more importantly, as I talked about earlier, to improve our performance so that we get what’s needed to the war fighter even faster. DLA operates nine different supply chains, and we provide almost all of the subsistence or food that our war fighters need, and we provide almost all of the bulk petroleum that they need. All of that involves some element of technology.
The DLA invested in [computer-programmed robotic process automation] more for our internal processes. We have three “bot teams,” each one of them capable of — after we have identified what we want them to do — putting in place and then monitoring about 25 different bots within the DLA processes.
We’ve found them extraordinarily helpful. It has the ability to increase production. We’ve used them primarily in inventory, in inventory reconciliation, reconciliation against our financial systems.
Another area where we’re experimenting with the bots is going from the person having to be sitting there the entire time to now having several of them that are able to operate on a 24-hour basis unassisted, with monitoring. We do also think it does have some applications to security. It can do much more, along with the artificial intelligence, of helping to monitor our network, and identifying patterns, for example, of nefarious actors that would then bring them to our attention and allow us to take further action in a way that perhaps, from a human standpoint, we would not be able to do so.
Is technology a necessity for managing the inventory?
DLA operates a network of about 24 distribution centers on a global basis, and the technology that we are using to run that global network of warehouses that feeds into and supports all of our military services is quite old, 25 or 30 years old.
And so one example is a new warehouse management system that we want to put in place that is going to improve our accuracy, it’s going to improve our accountability, it’s going to improve our support to the war fighter. That’s an example of a piece of technology that we will roll out over the next two to five years that will enhance that.
We would like to use an off-the-shelf capability, and we’re going to try to not customize that as much as we possibly can, but it does have to meet all of the cybersecurity standards that are required.
We’re also starting to use artificial intelligence primarily in the area of demand planning, making [that process] a bit more accurate. And the impact of that is it will eventually allow us to reduce the cost of our services to the military services and to the war fighter. Why? Because it’s going to allow us to reduce the amount of inventory that we have to hold on the shelves.
All of that are the types of things that DLA is using from a technology standpoint to improve our support.
It sounds a lot like lessons learned from Amazon.
Amazon certainly is one of the standards, and when you talk about Amazon, you’re really talking about a capability that others in the industry provide as well. But to your point, yes, we certainly look at that as one of the standards by which we benchmark how well DLA is doing business.
I’ve actually personally visited an Amazon fulfillment center to try to take some of the industry best practices and bring them back to the Defense Logistics Agency. But that’s one of many different capabilities that we benchmark ourselves against industry to make sure that we are keeping pace with the best things that are happening in academia, happening in the industry, to allow us to deliver the best possible support at the lowest possible price to our war fighters on the front line.
Cybersecurity is a priority in logistics and the supply chain. How is DLA approaching cyberthreats?
Cybersecurity is way up on our list of priorities and something we’re taking a hard look at. One of the things that we have done in DLA in just this past year is stand up an enterprise risk-management framework. And then subordinate to that, we’ve stood up a supply chain security component of that, and then within supply chain security we’re looking very, very closely at cybersecurity.
A couple of things we’ve done specifically is appoint a chief risk officer. One of their primary responsibilities is to look at the impact of cyber on our entire supply chain. Another thing we’ve done dating back to the last three or four years is we’ve looked at the number of logistics applications that are required to operate the Defense Logistics Agency. And we have dramatically reduced that number of applications.
The DLA reduced the number of vulnerabilities on the network.
Absolutely. We’ve also tried to take all of our business and placed it behind the defense firewall where it’s even more protected; and now we’re trying to move it in accordance with the rest of the Department of Defense into the cloud, where it can be even more protected.
I don’t think a day goes by that we don’t get 200-300 phishing attacks on the network, so training our people not to respond to those things that come across is a constant training challenge for us, but there’s also, we found, so much more practical things to do that don’t have a lot to do necessarily with technology.
We’re not completely there yet, but this will be a major effort for us this year to not just talk about this in pockets, to identify all of our critical areas of vulnerability, and to monitor those areas on a daily basis and see what impact they’re having on the supply chain. We want this to be systemic and not episodic.”
“Aventura Technologies is accused of lying to customers, including the U.S. military, for over a decade by claiming to make their equipment in Long Island while surreptitiously importing it from China.
In doing so, Aventura exposed its customers to “serious, known cybersecurity risks, and created a channel by which hostile foreign governments could have accessed some of the government’s most sensitive facilities. “
“U.S. prosecutors on Thursday announced charges against a New York company and seven of its current and former employees for allegedly selling Chinese-made surveillance equipment with known cybersecurity flaws while falsely claiming the technology was made in the U.S.
The U.S. Air Force, Navy, and the Department of Energy were among Aventura’s clients.
Jack Cabasso, the company’s de facto owner, his wife, Frances, and other senior company executives were charged with conspiracy to commit wire and bank fraud and “unlawful importation,” prosecutors said. Four of the defendants were charged with defrauding the U.S. government by falsely asserting that Aventura was owned by Frances Cabasso in order to win government contracts reserved for female-owned firms.
Six of the accused were arrested Thursday morning, authorities said. The fate of the seventh defendant wasn’t immediately clear. U.S. authorities also seized the Cabassos’ 70-foot yacht and froze some $3 million of the defendants’ ill-gotten gains, the Justice Department said.
Neither a spokesperson nor an attorney for Aventura could be immediately reached for comment.
In a statement, U.S. Attorney Richard Donoghue accused the defendants of “padding their pockets with money from lucrative contracts without regard for the risk” to U.S. national security posed by their products. The company made more than $20 million off of federal contracts, U.S. officials said.
The announcement is just the latest example of Chinese technology, which U.S. officials have often tried to exclude from government supply chains, slipping into the government’s procurement process. On Wednesday, Sen. Marco Rubio, R-Florida, wrote to the Department of Defense asking why more than 2,700 Chinese-made surveillance cameras had reportedly been installed at U.S. defense facilities.
The Justice Department announced in April that Fortinet, a U.S. security vendor, had agreed to pay the equivalent of $545,000 to settle allegations it sold the government Chinese-made equipment while claiming the technology originated in North America.
U.S. officials also have gone to great lengths to try to keep equipment from Chinese telecommunication giants like Huawei and ZTE out of federal networks amid espionage concerns. Both companies deny any wrongdoing.
In May, President Donald Trump issued an executive order that warned companies not to use surveillance-enabling telecom equipment coming from overseas. A defense policy bill signed by Trump last year bans U.S. government agencies from using certain Huawei and ZTE components.”
“What does it take to spot a spy? Not the old trenchcoat-wearing, cloak-and-dagger caricature of a Cold War-era secret agent, but the modern spy — the insider, perhaps — who can take down a business or betray a government with a digital weapon.
We hear a lot about how global corporations and modern governments are vulnerable to intrusion, even from their own employees. But what does a spy look like and how can he or she be caught?
In To Catch a Spy, The Art of Counterintelligence, James Olson, a former chief of counterintelligence at the CIA, says the United States needs to do a better job at stopping threats from Chinese, Russian and Cuban spy services. Olson shared some of his own spy secrets with Stratfor Chief Security Officer Fred Burton.”
For the Pentagon, happy days are here again (if they ever left). With a budget totaling more than $1.4 trillion for the next two years, the department is riding high, even as it attempts to set the stage for yet more spending increases in the years to come.
With such enormous sums now locked in, Secretary of Defense (and former Raytheon lobbyist) Mark Esper is already going through a ritual that couldn’t be more familiar to Pentagon watchers. He’s pledged to “reform” the bureaucracy and the spending priorities of the Department of Defense to better address the latest proposed threats du jour, Russia and China. His main focus: paring back the Pentagon’s “Fourth Estate” — an alphabet soup of bureaucracies not under the control of any of the military services that sucks up about 20% of the $700 billion-plus annual budget.
Esper’s promises to streamline the spending machine should be taken with more than the usual grain of salt. Virtually every secretary of defense in living memory has made similar commitments, with little or nothing to show for them in terms of documented savings. Far from eliminating wasteful programs, efforts pursued by those past secretaries and by Congress under similar banners have been effective in only one obvious way: further reducing oversight and civilian control of the Pentagon rather than waste and inefficiency in it.
Examples of gutting oversight under the guise of reform abound, including attempting to eliminate offices focused on closing excess military bases and sidelining officials responsible for testing the safety and effectiveness of weapon systems before their deployment. During the administration of President Bill Clinton, for instance, the slogan of the day — “reinventing government” — ended up, in Pentagon terms, meaning the gutting of contract oversight. In fact, just to repair the damage from that so-called reform and rebuild that workforce took another $3.5 billion. Gordon Adams, former associate director for national security and international affairs at the White House Office of Management and Budget, noted accurately that such efforts often prove little more than a “phony management savings waltz.”
Secretary of Defense Esper has also pledged to eliminate older weapons programs to make way for systems more suited to great power conflict. Past efforts along these lines have meant attempts to retire proven, less expensive systems like the A-10 “Warthog” — the close-air-support aircraft that protects troops in combat — to make way for the over-priced, underperforming F-35 jet fighter and similar projects.
Never mind that a war with either Russia or China — both nuclear-armed states — would be catastrophic. Never mind that more effort should be spent figuring out how to avoid conflict with both of them, rather than spinning out scenarios for fighting them more effectively (or at least more expensively). Prioritizing unlikely scenarios makes for a great payday for contractors, but often sacrifices the ability of the military to actually address current challenges. It takes the focus away from effectively fighting the real asymmetric wars the U.S. has been fighting since World War II. It leaves taxpayers with massive bills for systems that almost invariably turn out to be over cost and behind schedule. Just as an infamous (and nonexistent) “bomber gap” with the Soviet Union was used by the Pentagon and its boosters to increase military spending in the 1950s, the current hype around ultra-high-speed, hypersonic weapons will only lead to sky’s-the-limit expenditures and a new global arms race.
Esper’s efforts may end up failing even on their own narrow terms. Reforming the Pentagon is hard work, not only because it’s one of the world’s largest bureaucracies, but because there are far too many parochial interests that profit from the status quo. Under the circumstances, it matters little if current spending patterns aren’t aligned with any rational notion of what it would take to defend the United States and its allies.
A Revolving-Door World
The Department of Defense regularly claims that it has implemented “efficiencies” to ensure that every penny of your tax dollars is being wisely spent. Such efforts, however, are little more than marketing ploys designed to fend off future calls for cuts in the Pentagon’s still-ballooning budget. Here are just two recent examples of this sadly familiar story.
In September 2018, the Government Accountability Office (GAO) released a report stating that the Department of Defense had provided insufficient evidence that $154 billion in alleged “efficiency savings” from fiscal years 2012 to 2016 had been realized; the department claimed credit for them anyway.
Just this month, the GAO came to a similar conclusion regarding a proposed Pentagon reform plan that was to save $18.4 billion between fiscal years 2017 and 2020. Its report stated that the Pentagon had “provided limited documentation of… progress,” which meant the GAO “could not independently assess and verify” it. Consider that a charitable way of suggesting that the Department of Defense was once again projecting a false image of fiscal discipline, even as it was drowning in hundreds of billions of your tax dollars. The GAO, however, failed to mention one crucial thing: even if those alleged savings had been realized, they would simply have been plowed into other Pentagon programs, not used to reduce the department’s bloated budget.
Esper and his colleagues have argued that it will be different this time. In an August 2nd memo, his principal deputy, David Norquist, stated that “we will begin immediately and move forward aggressively… The review will consider all ideas — no reform is too small, too bold, or too controversial to be considered.”
Even if Esper and Norquist were, however, to propose real changes, they would undoubtedly run into serious interference within the Pentagon, not to mention from their commander-in-chief, President Donald Trump, a man determined to plough ever more taxpayer dollars into the military, and from members of Congress in states counting on jobs generated by the military-industrial complex. Inside the Pentagon, on the other hand, resistance to change will be spearheaded by officials who previously held jobs in the defense industry or hope to do so in the future. We’re talking, of course, about those who have made use of, or will make use of, the infamous “revolving door” between weapons companies and the government. Consider that the essence of the military-industrial complex in action.
Such ties start at the top. During the Trump administration, the post of secretary of defense has been passed from one former defense industry figure to another, as if it were literally reserved only for key officials from major weapons makers. Trump’s first secretary of defense, retired General James (“Mad Dog”) Mattis, came to the Pentagon straight from the board of General Dynamics, a position he returned to shortly after leaving the department. Interim Secretary Patrick Shanahan, who followed him, had been an executive at Boeing, while current Secretary Esper was Raytheon’s former chief in-house lobbyist. The Pentagon’s number three official, John Rood, similarly comes courtesy of Lockheed Martin. And the list only goes on from there.
This has been a systemic problem in Democratic and Republican administrations, but there has been a marked increase in such appointments under Donald Trump. A Bloomberg Government analysis found that roughly half of the Obama administration’s top Pentagon officials had defense contractor experience. In the Trump administration, that number has reached a startling 80%-plus.
That revolving door, of course, swings both ways. Defense executives come into government, where they make decisions that benefit their former colleagues and companies. Then, as retiring government officials, they go to work for defense firms where they can use their carefully developed government contacts to benefit their new (or old) employers. This practice is endemic. A study by the Project On Government Oversight found 645 cases in which the top 20 defense contractors hired former senior government officials, military officers, members of Congress, or senior legislative staff as lobbyists, board members, or senior executives in 2018 alone.
There is, of course, nothing new about any of this. The late Senator William Proxmire (D-WI) pinpointed the problem with the revolving door back in 1969:
“The easy movement of high-ranking military officers into jobs with major defense contractors and the reverse movement of top executives in major defense contractors into high Pentagon jobs is solid evidence of the military-industrial complex in operation. It is a real threat to the public interest because it increases the chances of abuse… How hard a bargain will officers involved in procurement planning or specifications drive when they are one or two years from retirement and have the example to look at over 2,000 fellow officers doing well on the outside after retirement?”
For his part, President Trump has repeatedly bragged about his role in promoting defense-related employment in key states, both from Pentagon budget increases and the sale of arms to repressive regimes like Saudi Arabia. In March, he held a one-hour campaign-style rally for workers at a tank plant in Lima, Ohio, at which he typically suggested that his budget increases had saved their jobs.
As for Congress, when the Army, in a rare move, actually sought to save a modest amount of money by canceling an upgrade of its CH-47 transport helicopter, the Senate struck back, calling for funding that the Pentagon hadn’t even requested in order to proceed with the program. The reason? Protecting jobs at Boeing’s Philadelphia-area factory that was scheduled to carry out the upgrades. Unsurprisingly, Trump seems fine with this congressional initiative (affecting the key battleground state of Pennsylvania), which still needs to survive a House-Senate conference on the defense bill.
The bottom line: Donald Trump is likely to oppose any changes that might have even the smallest impact on employment in states where he needs support in election campaign 2020. Defense industry consultant Loren Thompson summed up the case as follows: “We’re too close to the presidential election and nobody [at the White House] wants to lose votes by killing a program.” And keep in mind that this president is far from alone in taking such a stance. Similar reelection pressures led former President Jimmy Carter to increase Pentagon spending at the end of his term and caused the George H. W. Bush administration to reverse a decision to cancel the troubled V-22 Osprey, a novel part-helicopter, part-airplane that would later be implicated in crashes killing dozens of Marines.
“We Won’t Get Fooled Again”
What would a genuine Pentagon reform plan look like? There are areas that could easily yield major savings with sufficient political will and persistence. The most obvious of these might be the Pentagon’s employment of more than 600,000 private contractors, many of whom do jobs that could be done by government civilians for less. Cutting that work force to “only” about half a million, for example, could save more than a quarter of a trillion dollars over the next decade, as noted in a recent report by the Center for International Policy’s Sustainable Defense Task Force (of which both authors of this article were members).
Billions more could be saved by eliminating unnecessary military bases. Even the Pentagon claims that it has 20% more facilities than it needs. A more reasonable, restrained defense strategy, including ending America’s twenty-first-century forever wars, would make far more bases redundant, both at home and among the 800 or so now scattered around the planet in an historically unprecedented fashion. Similarly, the president’s obsession with creating an expensive Space Force should be blocked, given that it’s likely only to increase bureaucracy and duplication, while ensuring an arms race above the planet as well as on it.
Real reform would also mean changing how the Pentagon does business (not to speak of the way it makes war). Such savings would naturally start by simply curbing the corruption that comes from personnel in high positions who are guaranteed to put the interests of defense contractors ahead of those of taxpayers and the real needs of American security. (There are also few restrictions on former officials working for foreign governments and almost no public disclosure on the subject.) The Project On Government Oversight found hundreds of Pentagon officials leaving for defense industry jobs, raising obvious questions about whether decisions they made were in the public interest or meant to advance their own future paydays.
Real reform would close the many loopholes in current ethics laws, extend cooling-off periods between when an official leaves government and when he or she can work for an arms contractor, and make far more prominent information about when retired national security officials switch teams from government to industry (or vice versa). Unfortunately, since Esper himself has refused to pledge not to return to the world of the corporate weapons makers after his stint as secretary of defense, this sort of reform will undoubtedly never be part of his “reform” agenda.
One outcome of his initiative, however, will definitely not be money-saving in any way. It will be to boost spending on high-tech systems like missile defense and artificial intelligence on the almost laughable grounds (given the past history of weapons development) that they can provide more military capability for less money. Whether you look at the Navy’s Fordaircraft carriers — the first two costing $13.1 billion and $11.3 billion — or the Air Force’s aerial refueling tanker (which has taken nearly two decades to procure), it’s not hard to see how often vaunted technological revolutions prove staggeringly costly — far, far beyond initial estimates — yet result in smaller, less effective forces. As longtime Pentagon reformer Tom Christie has pointed out, to really change the acquisition system would require building in significantly more discipline. That would mean demonstrating the effective and reliable use of new technology through rigorous field-testing before advancing fragile weapons systems to the production stage, ensuring future maintenance and other headaches for troops in combat.
There is, in addition, a larger issue underlying all this talk of spending reform at the Pentagon. After all, Esper’s “reforms” are visibly designed to align Pentagon spending with the department’s new priority: combatting the security challenges posed by Russia and China. Start with one crucial thing: these challenges have been greatly exaggerated, both in the Trump administration’s national defense strategy and in the report of the industry-led National Defense Strategy Commission. That document, when you analyze its future math, even had the nerve to claim that the Pentagon budget would need to be boosted to nearly $1 trillion annually within the next five years, reports Taxpayers for Common Sense.
Russia has much to answer for — from its assistance to the Syrian army’s ongoing slaughter of civilians to its military meddling in the affairs of Ukraine — but the response to such challenges should not be to spend more on ships, planes, and advanced nuclear weapons, as current Pentagon plans would do. In reality, the economy and military of Russia, a shaky petro-state only passing for a great power, are already overshadowed by those of the U.S. and its NATO allies. Throwing more money at the Pentagon will do nothing to change Russian behavior in a positive fashion. Taking measures that are in the interests of both countries like renewing the New START nuclear reduction treaty and beginning new talks on curbing their massive nuclear arsenals would be extremely valuable in their own right and might also open the door to negotiations on other issues of mutual concern.
China’s challenge to the U.S is significantly more economic than military and, if those two nations wanted to make the planet a safer place, they would cooperate in addressing the threat of climate change, not launch a new arms race. Genuine reform of the Pentagon’s massive budget is urgently needed, but rest assured that Secretary of Defense Esper’s claims about implementing real changes to save taxpayer dollars while making the U.S. military more effective are the equivalent of bestseller-list Pentagon fiction. The motto of Congress, not to speak of the White House and the public, with respect to the Pentagon’s latest claims of fiscal probity should be “we won’t get fooled again.”
“The additions have caused a reshuffling of positions relative to last year’s Top 100, but the absence of Chinese enterprises had painted an incomplete picture of the structure of the global defense sector. https://people.defensenews.com/top-100/
Some planners and analysts may scoff at the inclusion of Chinese firms, or for that matter enterprises of other countries that don’t have markets open to U.S. and European firms. But this raises the first of three lessons that can be learned from the Top 100: Pay attention to China.”
“The U.S. Defense Department and other defense ministries have been paying a lot of attention to China for more than a decade, and contractors have undeniably benefited from spending to counter China’s emerging defense capabilities.
The data listed in the Top 100 for eight Chinese enterprises raises a host of questions: Are these firms profitable? How much do they spend on research and development? What are management incentives and goals? How do these firms benefit from commercial enterprises that are often part of their business portfolios?
A recent McKinsey & Company study observed that the largest 100 Chinese firms in all sectors generated approximately 18 percent of sales internationally, compared to 44 percent for U.S. firms in the broad S&P 500 market index.
The same relationship may hold for China’s defense contractors. China’s major defense export customers have tended to be relatively small in number — Pakistan, Bangladesh, Thailand, Myanmar and some African states.
There are harbingers of change, however, with a Chinese firm selected in 2013 to supply Turkey with an air defense system (the deal fell through) and more recent UAV and ballistic missile sales as well as local development for Saudi Arabia. It’s likely that companies listed in the Top 100 will see more Chinese enterprises in global markets in the years to come.
The second lesson from the Defense News rankings is that it’s difficult for contractors to make significant moves on organic sales growth alone. Lockheed Martin has been the No. 1 ranked company since 2003; Boeing, Northrop Grumman, Raytheon, General Dynamics and BAE Systems have been ranked between No. 2 and No. 6.
There are two possible exceptions to this rule, however, in SpaceX and General Atomics, neither of which appear on the Top 100. There’s been a general dearth of new entrants in defense that have reached scale. Big moves in relative position have typically resulted from divestitures, or mergers and acquisitions .
For contractors that are on the list, this leads to a third lesson: The things you can’t see may kill you, or at least trip up your well-laid plans.
SpaceX is possibly an anomaly, as there are not that many billionaires with very different business models and goals targeting specific defense segments. But defense customers will continue to demand new and innovative products and services, and the number of potential competitors is far greater than those listed in the Top 100. The threats here may come from smaller firms that can rapidly scale up in new market segments — such as space, cyber or artificial intelligence — or protracted forays by large commercial technology firms into markets dominated by traditional contractors.
There are other companies not listed in the Top 100 that will play impactful roles in defense market segments. The initial public offering of Parsons raises its profile in defense. Kaman’s plan to sell its distribution business and concentrate on engineered products is another change, and the agreement between AeroVironment and Kratos announced in 2019 is another factor to weigh.”