A Burning Platform for Building Bridges: Expanding the National Security Innovation Base

While much of the rhetoric surrounding the National Security Innovation Base has focused on tapping into commercial innovation, traditional defense players play a critical role in helping commercial technology bridge the valley of death.

Defense primes have the mission and CONOPs expertise, platform and system understanding, and security access to securely integrate commercial technologies into warfighting systems and transition the technology into programs of record.

Moreover, traditional defense primes must tap commercial innovation to competitively differentiate and reduce organic investment burden.

However, defense primes’ embrace of commercial technology has been at best uneven to date, with an enduring tendency to organically develop with internally and customer-funded research & development funding, even if duplicative with more mature commercial investments.

To better identify and integrate commercial technology, defense primes must:

• Build bridges to the broader commercial technology investment ecosystem,
• Institutionalize commercial pull-through as one tool in the investment toolbox,
• Bolster enablers such as multi-level security engineering environments, and
• Streamline partnering bureaucracy.

The Burning Platform: The Shift to a National Security Innovation Base

At the early December Reagan National Defense Forum, Secretary of Defense Lloyd Austin cited “America’s unique competitive advantage in innovation” as a key enabler of integrated deterrence, the central theme of the soon to be released National Defense Strategy.

Austin argued that accessing “cutting-edge technology” and “state-of-the-art capabilities” through DoD lab engagement with investors and corporate leaders, bolstered use of Small Business Innovation Research grants, proliferation of regional tech hubs, and use of the new Rapid Defense Experimentation Reserve is key to maintaining our military edge.

Austin’s statements build on the prior National Defense Strategy’s call for expansion of the defense industrial base beyond its traditional players to a more comprehensive “national security innovation base.” Beyond the firms that focus on serving the Department of Defense, this new definition would include a network of investors and innovators driving commercial technologies that may have had little contact with DoD.

The central argument in favor of this expansion is the recognition that investment by commercial industry in areas like artificial intelligence, quantum computing, communication and networking, and advanced manufacturing, among others, vastly exceeds the scale of DoD-funded research and development.

To compete with adversaries investing in disruptive technologies, DoD must effectively identify, protect, and integrate critical commercial technology into its weapon systems. This is all the more true as America’s adversaries are already leveraging combined technology investment streams from commercial and academic sources on top of government-sponsored investment.

Indeed, DoD leaders have recently sounded the alarm that adversarial capital investments in US technology firms may compromise the United States’ ability to advance its own national security interests.

The Sustained Role of the Traditional Defense Prime

The focus of national security innovation base discussions has centered primarily around bringing commercial firms into the Department of Defense ecosystem. Defense primes, however, play a key role in pulling through these technologies into DoD missions and associated programs, given their familiarity with the platforms and systems that will leverage commercial technology, ability to navigate the complex DoD bureaucracy, and access to high-side networks.

Looking at just three of the Department’s high-priority investments – hypersonic weapons, electronic warfare, and directed energy weapons – demonstrates the critical intersection of commercial know-how with defense prime expertise.

While a predominantly commercial company will not have the expertise or security access necessary to serve as systems integrators of hypersonic weapons systems, commercial firms can bring additive manufacturing capabilities critical to producing complex components made of high-temperature composites and metals needed to operate in hypersonic flight regimes.

Likewise, commercial innovators are unlikely to provide complete solutions to conduct electronic attacks against enemy radar or communications system, but their investment in advanced RF microelectronics packaging techniques could offer reduced space, weight and power (SWaP) and enhanced performance for these solutions.

Additionally, commercial investment in power supply and thermal management vastly outpaces the defense sector and could provide critical capabilities for integrated directed energy weapons.

The Shift from Wait & See to Identify & Integrate

Whereas DoD needs defense primes to apply and integrate commercial technology, these primes must proactively “pull” commercial technologies to reduce investment requirements and align with customer acquisition strategies.

The DoD’s intensifying focus on networked, family-of-systems architectures under the Combined Joint All Domain Command and Control (CJADC2) umbrella, will increasingly rely on technology such as mesh networking and data analytics where commercial investment sets the pace.

To realize networked concepts such as the Air Force’s Advanced Battle Management System, Navy’s Project Overmatch, and Army’s Project Convergence, defense primes will have to master accessing and integrating cutting edge commercial innovations.

Proactive use of commercial technologies is a growing competitive differentiator, with those relying solely on internal resources and traditional supply chains increasingly at a disadvantage.

Success, however, will be predicated on defense primes’ ability to identify and integrate commercial technology into the design of their systems and their design and manufacturing processes. To capitalize on the potential of the broader commercial innovation base, leaders at defense primes should prioritize four important initiatives.

1. Build bridges to the defense and commercial technology venture investment ecosystem.
   Several defense primes have formed internal venture capital groups to gain early access to emerging technologies. Units such as Lockheed Martin Ventures seed investment in early-stage technologies in exchange for defense market collaboration. At the same time, however, primes should foster relationships with DoD investors such as the Defense Innovation Unit and non-profit investment groups like In-Q-Tel to extend their reach. Beyond this, they should develop connections to the broader venture capital and private equity communities that are also engaged in scanning the market for promising new technologies. Firms may kill two birds with one stone by making strategic hires directly from these communities. For example, Northrop Grumman brought in Chip Walter, who helped drive the CIA’s sourcing strategy from its In-Q-Tel contract, to serve as the corporate Director of Strategic Venture and Partnerships. Additionally, involvement in the industry consortia that court small, emerging players and commercial tech firms can provide further pathways into these communities.
2. Institutionalize commercial pull-through as one tool in the investment toolbox.
   Effective pull-through of commercial innovation can give primes access to billions in externally-funded research and engineering developments that can yield significant competitive advantage. When developing investment roadmaps, defense primes should consider commercial partnering as a core component of their overall strategy, on par with other tools such as internally- and customer-funded R&D, mergers and acquisitions, and strategic hiring. Rolling out use of this investment tool will require training of strategy, engineering, and supply chain management talent to cooperatively scout maturing commercial technologies and integrate that technology into design and product development roadmaps. This will require investment in “receiving mechanisms” such that internal teams understand and can apply the capabilities they find in the broader market. Moreover, teams must be directly incentivized to break the cost curve of investment, foregoing expensive IR&D requests in favor of sourcing more advanced and less costly technologies whenever possible through commercial pull-through. BAE Fast Labs, for example, has integrated venture funding alongside its major internal R&D efforts, offering one model for synergizing IR&D and technology scouting.
3. Develop multi-level security engineering environments and zero trust supply chain architectures:
   It is not hard to imagine how commercially-driven data processing investments could be instrumental to, for example, the Department’s revitalized Nuclear Command, Control, and Communications infrastructure. Tactical collaboration between defense firms and commercial partners on the most sensitive national security systems, however, has proven challenging. Use of multi-level security-enabled engineering environments will be critical for partnering with commercial firms in such highly classified environments. Additionally, embracing the DoD’s call for zero trust supply chain management and complying with increasingly stringent Cybersecurity Maturity Model Certification requirements will yield a side benefit of laying the foundation for securely collaborating with commercial partners.
4. Bust the bureaucracy of commercial partnering:
   Finally, defense primes must reduce the red tape associated with commercial partnering efforts and clarify the access points for potential collaborators. 3-5 years ago, the common concern was the commercial businesses were not interested in serving the DoD due to smaller business cases compared to commercial industries. Increasingly, DoD is realizing that commercial firms, especially small software startups, are excited by the business prospects offered by large, secure government-funded programs but daunted by the institutional hurdles associated with partnering with DoD’s preferred providers. When DoD customers match commercial firms with defense primes to support integration of major systems, startups are frequently crushed by the primes’ onerous bureaucratic processes which extend timelines and undermined the anticipated return on investment. Firms that are best able to simplify the partnering process by mitigating the flow down of DoD-driven regulations and policies will compete more effectively for emerging opportunities. Obviously, implementing cultural change and streamlining processes across massive, multi-billion-dollar companies is no easy feat. Integrating commercial partnering into the performance metrics of leadership and providing specific, financial incentives for those able to apply commercial technology to their programs will be necessary to drive institutional momentum.

The Future of the National Security Innovation Base

Defense primes have both the mandate and incentive to foster a broader, robust, and more diverse national security innovation base. It is no longer sufficient to “wait and see” which commercial technologies or companies mature and gain traction in DoD, as dual use company valuations skyrocket, strategic (and exclusive) partnerships become more commonplace, and customers increasingly consider commercial technology as they shape concepts and requirements.

To enable this shift, leaders at defense primes can start with low cost investments such as establishing relationships across the ecosystem of entities looking to build defense-commercial bridges.

However, driving meaningful change will require new investment and engineering approaches and innovative thinking to break through entrenched bureaucracies and capitalize on critical emerging opportunities.