Reagan Institute releases 'National Security Innovation Base Report Card'

By Tony Bertuca / March 13, 2023 at 12:01 AM

(Correction: The NSIB Summit will be held Tuesday not Wednesday as previously reported.)

The Ronald Reagan Presidential Foundation and Institute has released a "National Security Innovation Base Report Card," giving the Pentagon poor grades when it comes to providing "clarity" to defense contractors and for failing to expand its pipeline for technological talent.

The report card, crafted in partnership with McKinsey & Co., states there is “broad consensus” that the Pentagon’s acquisition process must “go faster and be bolder” if it is to meet its stated goal of keeping pace with China.

“Major Defense Acquisition Program (MDAP) cycle times remain close to their 20-year averages, record venture funding has not sufficiently addressed the ‘valley of death’ for startups, and the talent gap is the widest in a generation -- and growing,” the report card states. “The metabolic rate of change will need to increase substantially, given the negative trendlines noted for many of the key outputs.”

The group is releasing the report card ahead of a Washington conference it plans to host Tuesday.

In terms of “customer clarity,” the group gave the Pentagon a “D,” the lowest grade on the report card, indicating “ongoing major vulnerabilities that are significantly undermining health of the NSIB.”

“There is a noticeable gap in late-stage [research and development], prototyping and procurement funds available for NSIB actors,” the report states. “Recent efforts such as the Accelerate the Procurement for Fielding of Innovative Technology (APFIT) program seek to address this gap but should be increased to $1 billion and minimum award size increased to $30 million.”

The report card notes the failure of lawmakers to submit and pass on-time budgets and appropriations further complicates the issue.

Additionally, the group notes there is “no clearly articulated pathway to a program of record for a majority of the priority NSIB technologies outlined by the U.S. Government.”

The lack of a path is “particularly notable in ‘fast follower,’ commercially led technology areas (e.g., [artificial intelligence], microelectronics, biotech) where the DOD does not have the same level of market power that it commanded from industry during the Cold War,” the report states.

The report card also gives the U.S. government a "D+" regarding the management of its innovation talent base.

“The United States will need to foster a diverse global talent pipeline that not only attracts the world’s top talent but provides a mechanism to remain in the country upon graduation. Interventions under discussion have included H1-B reform and Congress establishing a National Security Innovation Base Visa program,” the report states.

The group, however, gave the government an “A-” for “innovation leadership,” the highest grade on the report card.

“America’s overall innovation leadership across a range of emerging technology areas remains a competitive advantage, but one that cannot remain static,” the report states. “Strategic competitors are investing heavily to catch up.”

The group, however, gave the government a “C” for “defense modernization.”

“While DOD use of prototype Other Transaction Authorities (OTAs) is on the rise, the increase is slowing. The key is to award follow-on production OTAs to field new capabilities,” the report states. “There is an opportunity to expand the Software and Digital Technology Pilot Program to a greater number of programs, as requested by the Secretary of Defense in both FY-22 and FY-23. In order to justify growth of the pilot program, the DOD must provide the requested data to allow for a thorough evaluation of the programs impact.”

The report also recommends increasing the “number and scope of bilateral and multilateral technology alliances to better compete against growing Chinese investments.”