A three-star Air Force general today alleged that some of the Pentagon's largest prime contractors sometimes acquire small, innovative start-up companies so they can "kill them" and protect legacy profits.
While briefing the Defense Innovation Board at the Pentagon, Air Force Deputy Chief of Staff for Strategy, Integration and Requirements Lt. Gen. S. Clinton Hinote said that when a start-up discovers a “disruptive way of fighting,” it threatens the profit margins of prime contractors that are built on sustaining equipment over a period of time.
“What ends up happening sometimes is that the primes buy up interest in the small startups and while they may say -- and I think in some cases they would be accurate -- that they're trying to ingest the technologies into their companies, in some cases, we know that they kill them,” Hinote said.
The general didn’t publicly name any specific contractors that have potentially stifled a start-up, but he continued to brief the board in a closed session today.
Throughout his public remarks, Hinote listed 16 ways that the Defense Department stifles innovation, although he mentioned he could list “30 or 40 off the top of my head.”
Among Hinote’s grievances with the Pentagon’s handling of new technology is the way it writes requirements.
“I can't write a decent requirement for 2038 in this environment,” he said. “But yet, that's what the bureaucracy would like because then if it's far enough out, first of all, doesn't hurt too many of the current programs and you can have a very relaxed acquisition process to be able to meet that requirement. I don't know what technologies will be most prevalent, most salient in 2038. I don't know in 2030.”
Technology is ever-changing and “makes things possible that no one can imagine,” Hinote said, so fulfilling the DOD’s need for concrete requirements is difficult.
Hinote added that the department is plagued with a “culture of compliance,” and incentivizes its people to be compliant with processes, rather than produce outcomes that could make a difference to warfighters.
Former Air Force acquisition chief Will Roper, a member of the DIB, lauded Hinote’s remarks, saying that the biggest challenge to defense innovation is the “misalignment of incentives.”
Current and former defense officials have sounded the alarm over the Pentagon’s approach to requirements and acquisition, such as former Defense Innovation Unit director Mike Brown, who has repeatedly advocated for expanding the avenues to bring commercial technology into the department.
DIB priorities take shape
Chaired by former New York Mayor Michael Bloomberg, the DIB convened this week for its second meeting to provide an update on its efforts and receive briefs on various innovation initiatives.
Defense Secretary Lloyd Austin and Pentagon research and engineering chief Heidi Shyu have tasked the DIB with conducting two studies -- one to assess the Pentagon’s ties to investment capital and the other to help shape the military’s science and technology strategy.
Following the board’s restart last year, the DIB launched with fewer members than in the past but features individuals with more government-focused backgrounds than before.
First started under then-DOD Secretary Ash Carter in 2016, the advisory board originally had 20 members, mostly from outside the federal government, and was chaired by former Google CEO Eric Schmidt. The board now has nine members.
Since its first meeting in October, the re-launched DIB divided its orders into two task forces: the Strategic Investment Capital Task Force and National Defense S&T Strategy Review Task Force, with Roper leading the former effort and Mac Thornberry, previous ranking member and chairman of the House Armed Services Committee, spearheading the latter.
Roper told Inside Defense last week that he’s beginning his role as chair of the investment team by gathering feedback and surveying the Pentagon’s performance when it comes to teaming with new vendors and small businesses.
Since Thornberry wasn’t present at today’s meeting, Ryan Swann, chief data analytics officer for Vanguard, delivered an update on the board’s S&T effort, noting that there’s alignment on the technology areas, but the execution is where they can “move the needle when it comes to an innovation strategy.”
“I do think though, as we think about talent, as we think about the processes, as we think about implementation, there are some areas we can innovate,” Swann said.
Joining the board this year is new member Charles Phillips, co-founder of Recognize, a technology investment firm.
Other DIB members include retired Adm. Mike Mullen, who previously served as chairman of the Joint Chiefs of Staff and chief of naval operations, and Reid Hoffman, co-founder of LinkedIn and Inflection AI. Hoffman is the only holdover member of the board, having previously served under Schmidt.
The board also includes Sue Gordon, former principal deputy director of national intelligence and deputy director of the National Geospatial-Intelligence Agency and Gilda Barabino, president of the Olin College of Engineering.