The defense industrial base is 'in crisis,' expert tells Hill panel

Rep. Ro Khanna, D-Calif., shown here at a House Armed Services Committee hearing in July 2023, recently called for a strategy to make sure the Pentagon can acquire innovative commercial technology.

Rep. Ro Khanna, D-Calif., shown here at a House Armed Services Committee hearing in July 2023, recently called for a strategy to make sure the Pentagon can acquire innovative commercial technology. Drew Angerer/Getty Images

The defense establishment is not equipped to develop, acquire and onboard emerging technologies at scale, according to a draft report from the Pentagon, and witnesses at a recent House hearing called for deeper, stronger ties between government and industry.

The Pentagon needs to harness the innovative capabilities of private industry to ensure that the U.S. military keeps pace with the technological advances of global adversaries like China, a panel of experts told lawmakers during a House Armed Services Cyber, Information Technologies and Innovation Subcommittee hearing on Wednesday. 

Looking back at technological breakthroughs during previous conflicts –– including during the interwar period between World War I and World War II and during the Cold War –– lawmakers and witnesses said the modern Department of Defense has ceded too much progress to the commercial sector without adequately tapping into this hub of innovation. 

Rep. Ro Khanna, D-Calif. — the panel’s ranking member –– noted that the Defense Advanced Research Projects Agency was responsible for the development of a wide range of integral technologies, including the internet and advancements in GPS systems. 

Khanna called the notion that the Pentagon isn’t innovative “historically inaccurate,” but added that “now that we see so much disruptive innovation taking place in the commercial sector, we need a strategy to make sure that the Department of Defense remains the most innovative and also that these technologies are accurately and fully deployed for us in the case of war or combat.”

Arthur Herman –– a senior fellow at the Hudson Institute and director of the conservative think tank’s quantum alliance initiative –– expressed similar concerns, telling the panel that the nation’s defense industrial base “is in crisis.” 

He cited a recent draft of the national defense industrial strategy that said, in part, that the base “does not possess the capacity, capability, responsiveness or resilience required to satisfy the full range of military production needs at speed and scale.”

“The question is how to better incorporate the innovations taking place in our private sector –– from AI and robotics to cyber and quantum –– into our defense industrial base,” Herman said.

Experts at the hearing said the current geopolitical climate –– with the U.S. involved to some degree in conflicts across the Middle East and Eastern Europe and keeping a close watch on provocations across Asia –– was also reminiscent of other periods in which the U.S. government was able to successfully tap into the commercial sector’s capabilities. 

To bolster these types of historically beneficial public-private partnerships, the witnesses called for DOD to fully harness the power of the tech industry and the capabilities of startups and other early-stage companies. 

One challenge Herman noted was the difficulty that smaller companies experience when navigating the federal government’s acquisition and contracting process, adding that “there are certainly lost opportunities when you have reduced competition.”

“One of the things we need to do is to find ways to ease in and continue the involvement of small companies, of startup companies with great ideas and great technologies and to enable them to reach the point where they become part of programs of record and part of the mainstream with it,” he said.

Andrew Krepinevich –– a senior fellow at the Hudson Institute and an adjunct senior fellow at the Center for a New American Security –– said there was room for venture capital in these efforts, adding that “there is a role and historically there has been a role.”

“If you look at some of the technologies today –– artificial intelligence, additive manufacturing, synthetic biology, right on down the line with some exceptions, for example, like directed energy and hypersonics –– a lot of that is in the commercial sector,” Krepinevich said. 

While the Pentagon has taken steps to enhance its relationship with the commercial sector –– such as standing up the Office of Strategic Capital last year to connect firms developing national security technologies with private funding –– the witnesses said that cultural differences between DOD and private industry must be addressed to fully unleash the potential of these partnerships.

Herman said DOD appears to view venture capital “as substitute capital,” but that these companies are looking “for a long-term fostering of growth from a technology or product that has national security uses, but which will ultimately pay off in the commercial realm.”

“I think finding a way in which to bring those two communities together involves bringing a mindset shift to DOD on the one hand, which is that venture capitalists can be a useful ally, but they're not thinking the way you do about money and about investment,” he added.