Tag Archives: defense innovation

Defense Industry Needs New Small Business Entrants During Crisis

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Image: “Fundinggates.com

DEFENSE NEWSBy: Venture capital community leaders

How can the Pentagon best preserve its innovation base and develop the most competitive and advanced technologies? The answer is simple: Buy commercial. New and emerging defense startups — and our men and women in uniform — don’t need symbolic gestures.

What they need is concerted action to bring the latest and most advanced technologies — many of which are routinely used in industry — to dangerously antiquated defense weapons systems and internal IT infrastructure. This was true before COVID-19, it is true now and it will be true when the next crisis strikes.

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“The COVID-19 health crisis is quickly leading to an economic meltdown, throwing millions of Americans out of work and forcing strategic reevaluations across industries. The defense industry is no exception. We are praying for a swift end to the crisis, but its effects will linger, shaping the Pentagon’s priorities, organizational structure, military operations, logistics, supply chains and interactions with the defense-industrial base for years to come.

In the past few weeks, we have had numerous conversations with government officials about our venture and growth equity investments in the defense sector. These discussions have centered on the eligibility rules of the CARES Act’s Paycheck Protection Program and the risk of foreign capital seeking entry into defense technology startups desperate for investment in these trying times.

All too often the government has responded to crises by circling wagons around incumbent firms — the large prime contractors, whose political connections afford them bailouts in the name of “ensuring ongoing competition.” This process is already underway. After announcing its hope for a $60 billion relief package for the aerospace manufacturing industry, Boeing successfully lobbied for $17 billion worth of loans for firms “critical to maintaining national security.”

The CARES Act also announced provisions to streamline the Defense Department’s contracting process, which sounds promising, except for the fact that these provisions apply only to contracts worth over $100 million. This discriminates against smaller, more nimble innovators and providers of cutting-edge technology.

This isn’t how things have always been. After complaints about large horse dealers monopolizing military contracts during the Civil War, the government allowed quartermasters to purchase horses and mules from any dealer on the open market. In World War II, Congress created the Smaller War Plants Corporation, which awarded tens of thousands of contracts to small, competitive firms. Today, through innovative use of Small Business Innovation Research money, other transactional authorities, rapid work programs and the like, the Pentagon is certainly signaling interest in emerging technologies.

But let us be clear: We are not advocating continuing to invest larger dollar amounts into never-ending, short-term pilots and prototypes. The key to sustaining the innovation base through this crisis and any future crises is transitioning the best of these companies and products into real production contracts serving the day-to-day needs of the mission. Host tough, but fair competitions for new innovations, and then rapidly scale the winners.

America’s technological supremacy has afforded our country nearly a century of military hegemony, but it is not a law of nature. Sovereign states and peer competitors like Russia and China will quickly outpace us if we take our prowess for granted. We need new entrants into the defense industry more than ever, but without government support through crises like this one, the talent and capital simply won’t be there.

As the Department of Defense readily acknowledges, its mission is fundamentally changing. Breakthroughs in technological fields like artificial intelligence, autonomous systems, robotics, resilient networks and cyberwarfare mean that future conflicts will look nothing like those we have seen before. The DoD of tomorrow needs a fresh wave of technical expertise to understand and respond to these new kinds of threats.

That is not to say that legacy defense contractors are not needed; their expertise in large air and sea vehicles is currently unparalleled. But the expertise to build these new technologies resides in pockets of talent that the big and bureaucratic incumbents, who made their names with 20th century technology, lost access to decades ago.

The DoD has publicly exalted the importance of innovative defense startups for years. That is partly why we are so excited to invest capital into the defense sector at this moment in history. Silicon Valley has a chance to live up to its oft-ridiculed but sincere ambition to make the world a better place by investing in American national security.

However, we as venture capitalists and growth equity investors also have a duty to our limited partners who have entrusted us to invest and grow their capital. If we see the same old story of the government claiming to support small businesses but prioritizing its old incumbents, those investment dollars will disappear.

Times of rapid and unprecedented change, as COVID-19 has precipitated, also provide opportunities. The DoD and Congress can reshape budget priorities to put their money where their mouths have been and support innovative defense technologies. Each dollar awarded to a successful venture capital and growth equity-backed defense startup through a competitively awarded contract attracts several more dollars in private investment, providing the DoD significantly more leverage that if that same dollar was spent on a subsidy or loan to a large legacy contractor. This leverage of private capital means that every contract a startup receives accelerates by up to 10 times their ability to build technology and hire talent to support the DoD’s mission.

The bottom line is this: There’s no reason to let a health crisis today become a national security crisis tomorrow. The DoD has an opportunity to not only sustain but grow its innovation base, and give contracts, not lip service, to innovators. We, the undersigned, hope they do.”

The contributors to this commentary are: Steve Blank of Stanford University; Katherine Boyle of General Catalyst; James Cham of Bloomberg Beta; Ross Fubini of XYZ Capital; Antonio Gracias of Valor Equity Partners, who sits on the boards of Tesla and SpaceX; Joe Lonsdale of 8VC, who also co-founded Palantir; Raj Shah of Shield Capital, who is a former director of the U.S. Defense Innovation Unit; Trae Stephens of, Founders Fund; JD Vance of Narya Capital; Albert Wenger of Union Square Ventures; Josh Wolfe of Lux Capital; Hamlet Yousef of IronGate Capital; and Dan Gwak of Point72.

https://www.defensenews.com/opinion/commentary/2020/05/04/the-defense-industry-needs-new-entrants-and-a-supportive-government-during-crises/

The Pentagon Wants Roadside Assistance In Space

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A rendering of Orbital ATK’s first Mission Extension Vehicle, MEV-1, a spacecraft capable of transporting satellites. The Defense Innovation Unit is looking for a commercial service specifically for on orbit satellite maintenance.

“C4ISRNET”

The Defense Innovation Unit (DIU) wants physical access to its satellites in geostationary orbit through a multi-phased commercial effort, starting with a systems engineering study before moving on to demonstrations of on-orbit capabilities.

More information can be found on the DIU’s open solicitations A prototype should be ready for flight within 36 months of contract award. Responses are due Feb. 16.

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“Satellites are valuable due to their unique location — hundreds to tens of thousands of miles above the Earth — where they can produce unique imagery of the surface or extend communications to far-flung locales. But that unique vantage also puts limits on orbiting satellites.

Because they are largely inaccessible, operators can’t switch out broken or outdated hardware, and they can’t even refuel them. Whatever hardware and fuel is on a satellite at launch is all it’s got for its entire life span.

But what if there was a service dedicated to efforts in space that allows the military to access, repair and tow its on-orbit satellites?

That’s what the Defense Innovation Unit wants. The Pentagon technology hub has issued a solicitation for a low-cost logistics service that can provide physical access to military satellites all the way from low-Earth orbit to geostationary orbit, or even cislunar orbit.

Specifically, DIU wants multi-orbit logistics vehicles capable of ferrying payloads between satellites in completely different orbits, acting as on-orbit fuel depots, or transferring space vehicles to new orbits. Here are the different commercial services and vehicle types for which DIU is looking:

  • Light utility m-OLV: capable of transporting (hosting) one or more mechanically coupled payloads (about 50-kilogram payload capacity). The vehicle should have sufficient propellant capacity to transport one payload from low-Earth orbit to geostationary orbit with guidance and control to support cooperative rendezvous, proximity operations and release of its payload at the end of the transit.
  • Heavy utility m-OLV: capable of transporting (hosting) one or more mechanically coupled payloads or spacecraft (500-plus-kilogram payload capacity). Sufficient propellant for persistent operations and maneuver to another orbit. The vehicle should include guidance and control to support cooperative rendezvous, proximity operations, and berthing with a space outpost or servicer.
  • Fuel depot: capable of storing and transferring sufficient chemical and/or electrical propellant to a m-OLV or self-propelled satellite to achieve a transfer from low-Earth orbit to geostationary orbit. The depot should include the necessary mechanisms, sensors and controls to couple the customer vehicle to the depot for refueling.
  • Ride-sharing approach: provide transport of detachable payloads or propellant to an m-OLV or an outpost in geostationary, cislunar or another exotic orbit.

The timing of the solicitation is interesting. SpaceLogistics, a Northrop Grumman subsidiary, is expected to provide the first commercial instance of on-orbit satellite servicing this month. The company’s Mission Extension Vehicle-01 is expected to dock with an Intelsat communications satellite and then use its own propulsion system to move the Intelsat satellite to a new orbit.

MEV-01’s mission is to extend the life of on-orbit satellites that are low on fuel by acting as a replacement propulsion system. But SpaceLogistics plans for future vehicles to be able to complete more complex missions, such as using mechanical arms to conduct repairs, or to replace an on-orbit payload with a new, more advanced model delivered from Earth.

The Space Enterprise Consortium has issued a contract to SpaceLogistics to look into servicing four national security satellites.

Of course, SpaceLogistics isn’t the only entity pursuing on-orbit maintenance and transport services. Astroscale is building space vehicles that can secure and de-orbit space debris such as defunct satellites, while the Defense Advanced Research Projects Agency is developing robotic arms capable of performing maintenance on satellites in geostationary orbit.

NASA is also trying to build capabilities in this area, awarding a $142 million contract to Maxar last month for robotic arms to perform in-space assembly.”

https://www.c4isrnet.com/battlefield-tech/space/2020/02/05/the-pentagon-wants-a-roadside-assistance-service-in-space/

What’s Impeding the Department of Defense Push For Innovation?

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Innovation in Government

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“Greater speed in translating technology into fielded capability is where we can achieve and maintain our technological edge. To increase speed the Pentagon needs to streamline the way it approaches innovation from both inside and out.

We are in a constant competition in a world that now has equal access to technology, said Griffin. Innovation will remain important always, but speed becomes the differentiating factor.”

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“As the pressure builds for the Defense Department to develop better, faster solutions in an arms race with Russia and China, officials said that a top-down bureaucracy is stymieing the pace.

Testifying at a House Armed Services Committee hearing Tuesday on innovation within the DOD, Under Secretary of Defense for Research and Engineering Michael Griffin and former Google CEO Eric Schmidt — currently chair of the Defense Innovation Board — said that constrictive acquisition, appropriation and human capital policies have hamstrung pockets of agile transformation within the agency and need to be remedied.

“Greater speed in translating technology into fielded capability is where we can achieve and maintain our technological edge.”

To increase speed, Griffin and Schmidt said the Pentagon needs to streamline the way it approaches innovation from both inside and out.

“We have fantastic people who are trapped in a very bad system,” Schmidt said. “I’m concerned that [Congress] is not going to get what you think you are going to get because of the deficiencies of the system.”

Throughout the hearing, Griffin and Schmidt pointed to several problems limiting DOD’s innovation and possible solutions, including:

The acquisition process

Schmidt said that the DIB — a collection of private sector and academic leaders tasked with providing recommendations on how to make the DOD more agile and innovative — found plenty of innovators within the agency but no mechanism to foster it and little incentive to scale it up. That, coupled with a complex acquisition process, means that when the DOD does pursue new technology, it’s often outdated by the time it develops or acquires it.

“The DOD violates pretty much every rule in modern product development,” Schmidt said. “The [specification] is developed and finalized before production starts. The way you really do it is you start it iteratively and you learn from your mistakes and so forth — that’s called agile development. It’s essentially impossible to do because of the way the rules are set.”

The result, he said, is dozens of examples where military personnel were working with severely outdated software, including a Navy minesweeper that was just recently updated to Windows XP.

Schmidt added that the DIB has to date offered several recommendations to improve innovation in the DOD, such as developing a system that would promote people to take risks, collecting more data to fuel potential artificial intelligence gains and the establishment of an AI center.

The appropriations process

Griffin said because DOD appropriations are only authorized to be spent on a purpose defined in the National Defense Authorization Act, there is little room in the budget to promote innovation for projects like studying defenses against drone swarms.

“Unless I can find money appropriated for that purpose and authorized for that purpose, I don’t have a documentable chain of permission going to the very top of the government that allows me to do these things,” he said.

The solution, Griffin and Schmidt argued, is more partnerships with public universities to leverage laboratories and research facilities to foster technology development.

“This is what got us where we are,” Griffin said, citing research successes at the Jet Propulsion Laboratory, Los Alamos National Laboratory and others. “One of my goals is to make sure those partnerships are strengthened —and reaffirmed into the future.”

The compliance cost

Both Griffin and Schmidt said that small businesses are often the source for innovation in the defense marketplace, but the current compliance structure often prices them out of government contracting opportunities.

Schmidt said the Defense Innovation Unit Experimental, or DIUx, and the Strategic Capabilities Office are “central to solving this problem” because of their focus on supporting small disruptive businesses and prototyping new technologies.

“Everything that the DOD can do to encourage more choices for innovation is a good thing,” he said. “Whether it’s individual contracting — it’s possible, for example, to hire small teams of software people through special consulting arrangements — all of that should be tried.”

https://www.fedscoop.com/whats-impeding-dods-push-innovation-turns-lot/

 

 

A New Pentagon Cyberstrategy Unit Led by a Civilian & A Military Deputy

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The cyber-triad, as described by DOD’s new cyber strategy.

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“Formally titled the “Defense Innovation Unit X,” the small command will be led by a civilian with a military deputy and staffed by an elite team of active-duty, reserve and civilian personnel, the defense official said. It will probably be located at Moffett Airfield, a former Navy base, in Silicon Valley, according to a senior defense official.

That team will “scout for breakthrough and emerging technologies; and function as a local interface node for the rest of the department. Down the road, they could potentially help startups find new ways to work with DoD,”  [Defense Secretary] Carter said.

On a trip to California’s Silicon Valley, Carter highlighted the risks of high-tech digital attacks, saying the Defense Department’s sophisticated weapons and the command-and-control networks that control them are “no good if they’ve been hacked.”

Similar ventures may follow in other areas with high-tech industries, including the New York City area, a senior defense official said.

Some reservists welcomed the proposal to ramp up the Pentagon’s presence in the nation’s technology hubs, which could help build up the cyber talent pool in the reserve components.

“There will be people who want to serve but they also don’t want to serve on active duty all the time. If the department is set up in areas where there are private-sector tech centers or academic tech centers, you are going to have a higher population of reservists who do this work already,” said Col. Mark DiTrolio, commander of the Army Reserve Information Operations Command, in an interview from his home in San Antonio.

The military services are about halfway toward their goal of creating an operational cyber force of about 6,200 troops by the end of next year. The long-term target size for the cyber force remains under discussion.

“We are still thinking about the right investment in the cyber mission force,” a senior defense official said. “We’ll be looking at that closely over the next year or so to see if we need increased investment in terms of personnel or technology.”

Carter’s trip to Silicon Valley — the first for a defense secretary in nearly 20 years — was the latest sign that he is making a focus on cyber capabilities central to his tenure in the military’s top civilian job.

After taking over the post in February, Carter spoke at U.S. Cyber Command headquarters in Maryland and suggested the command could someday break off to form a separate military service.

In March, he suggested a slate of far-reaching reforms to the military’s antiquated personnel system that could help DoD better compete with the private sector for the top talent in the cyber field.

The 33-page official cyber strategy that the Pentagon released April 23 was the first major update since 2011.

After his speech, Carter met with Facebook chief operating officer Cheryl Sandberg, followed by a visit to Andreessen Horowitz, a major Valley venture capitalist firm.”

http://www.militarytimes.com/story/military/pentagon/2015/04/23/pentagon-cyber-strategy-silicon-valley-ashton-carter/26256877/