SYDNEY J. FREEDBERG JR.
WASHINGTON — This morning a coalition of 13 tech execs and venture capitalists announced they’d written Defense Secretary Lloyd Austin, asking in an open letter for major changes to how the military procures cutting-edge technology.
Topping their agenda: a beefed-up Defense Innovation Unit, the Pentagon’s embassy in Silicon Valley; a better user interface for the federal contracting website, SAM.gov; less rigid cost-accounting rules for contractors; more generous grants through the Small Business Innovation Research program; a $250 million “bridge fund” to scale up new tech from field tests to production; and most dramatically, an additional $20 billion in annual procurement. The execs cherry-picked these proposals from a much longer list of suggestions in a recent report by the Atlantic Council’s Commission on Defense Innovation Adoption, which is co-chaired by former Defense Secretary Mark Esper and former Air Force Secretary Deborah Lee James.
“Unfortunately, antiquated methods for developing requirements and selecting technologies have drastically limited the Department of Defense’s… access to the best commercial innovation. This must change,” says the letter [PDF], delivered to Austin’s office Friday. “To this end, we strongly endorse the recommendations of the bipartisan Atlantic Council Commission…. Our window to act decisively is closing every day.”
The ringleader of the 13 companies is Applied Intuition, a Silicon Valley firm that started out making software for self-driving cars and then expanded to work on the Army’s Robotic Combat Vehicle program and Air Force sensors. Based in Mountain View, Calif., Applied has pushed to raise its profile in Washington, working with the Atlantic Council’s reform commission and co-sponsoring a DC policy conference with the Council just this past May.
But with a market valuation of $3.6 billion, Applied is dwarfed by some of its co-signers. Anduril is valued at $8.4 billion, Palantir at $29.7 billion. Both do significant defense work already. VC firm General Catalyst has reported it manages some $33 billion in assets. All told, the tech companies signing the letter have a total market value of at least $42 billion, and the venture capitalists have at least $50 billion in assets under management. Long story short, these are firms with the financial clout and high-tech chops to make the Pentagon and Congress pay attention.
“Our co-signers, they have incredibly deep industry experience across multiple technologies that the Department of Defense has designated as its strategic priorities,” said Applied’s co-founder, Peter Ludwig, on a phone call with reporters. “Leading companies and investors in Silicon Valley are eager to work with the government, [but] there’s a lot of outstanding commercial technology that is not being leveraged by the government… The root cause of this is a complex web of outdated processes.”
Ahmed Humayun, Applied’s head of federal services and a member of the Atlantic Council’s commission, said that “even in your best-case scenarios when everything is working correctly, it can take as much as six years…to get a company on contract… It takes too long.”
One particular point of pain, the letter signers said, was SAM.gov — short for System for Award Management — a site that is notoriously difficult to use, with a small industry devoted to helping companies just to navigate it. When the execs were picking acquisition reform recommendations to highlight in their letter, “We – I – very, very deliberately wanted SAM.gov in there because I have spent an inordinate amount of my life scavenging through that website, trying to figure out what the government wants, how it wants, what I’m supposed to do,” Humayun said. “It really introduces a ton of friction [for] a lot of people who …. could be providing enormous value to the Department, just because of that user unfriendliness.”
By contrast, Ludwig pointed to a internet behemoth that manages to combine ease of use and reliable performance with frequent software updates: Youtube.
“I think everybody would agree that YouTube is an innovative product,” he argued. “They regularly launch innovative [features], and they also operate with a reliability that is five nines [i.e. 99.999 percent], meaning that in an entire year, YouTube will be down for, at most, a few minutes.”
“Hopefully,” Humayun said with a laugh, “if one thing comes out of this, SAM.gov will be fixed.”
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