We have all been watching the news regarding the changes in Executive priorities and for those in the Defense Industry we have had our eyes in particular on changes to DoD. You might have noticed, for example, that this is not just an Executive Branch shift, but that Congress is weighing in also with elements like the proposed FORGED (Fostering Reform and Government Efficiency in Defense) Act by Sen Wicker:
So What Is The Implication For Innovators?
First, let’s deal with the elephant in the room of this proposal – will all the work simply shift from traditional defense Primes and OEMs like Lockheed to new large behemoth commercial companies like Tesla? Inquiring minds want to know how to interpret this quote:
Poor performance results from bureaucratic practices that have separated our commercial industrial base from defense, leaving our weapon systems generations behind. For example, the computing power of the F-35 lags behind new consumer items like a Tesla.
…
To draw entrepreneurship and technology back into defense, we must start buying advanced systems from the best talent that exists today.
It is pretty important to note that computing resources in this scenario are enabled by suppliers who build these components, not just the whole system providers that use them on the platforms. I will leave it to the reader to explore the FORGED Act proposal and the text surrounding this quote to determine how to respond, yet it is clear that disruption is on the horizon.
It is worth mentioning that the best talent is not just in the OEMs, it is in the non-traditional and small business innovation marketplace that are willing to start a new company, serve a new market leveraging their existing resources, and meet a new demand signal with an innovation drawn from their workforce. I do not think Sen Wicker meant to say that we fail to get smart people in defense; we should always embrace the challenge that intelligent people have the option to balance the pursuit of money and the pursuit of purpose. We fail to keep them in defense and, if they stay, we rob them of their purpose by allowing “too many barnacles” on the ship.
I think his point is simply that the bureaucracy has prevented those American innovators already working in defense from seeing their effort get into the hands of actual warfighters. The smart people that have been working within the system are frustrated instead of being truly productive; many often move on to commercial ventures instead of bringing solutions forward to their desired audience in service of the nation. Perhaps I will go ask him, if our newly emerging MOSA Network is willing to help me afford the travel; advocacy does not happen simply because we want it to – after all, most of us are not independently wealthy when we have dedicated our lives and careers to defense innovation (and someone has to pay the bills). More about advocacy in a later, for now let’s stay focused on FORGED.
What Is FORGED Proposing?
Based on the Restoring Freedom’s Forge proposal, the envisioned modifications to Title 10 emphasize reducing bureaucratic inefficiencies in defense acquisition and increasing the role of private sector innovation in defense procurement. The plan has 5 key elements:
- Cut Red Tape
- Unleash American Innovation
- Create Competitive Pressure
- Enable Decisive Action
- Modernize Defense Budgeting
Ok, so here is my beef… we know it need to change, but we already have an example (MOSA+OTA) that empowers many of these exact things (with the most notable challenge being the budgeting process, of course, more on that in a later post). However, according to the GAO Report programs are still finding it easier to do things in the historically normative ways…
Hundreds of pilot programs have been created over the last few years. Many of them are permissive, which has created the false impression that the workforce can act only if it is specifically allowed in statute. To unleash the ingenuity of the acquisition workforce, we should make that mandate clear from statute through regulations and guidebooks.
The above quote from the FORGED Act proposal recommends guidebooks, and we have examples like the Navy MOSA Guidebook (and quite a few other resources like it, I might add). However, we still have behavior than snaps back to the organizational model – buy whole systems. This is why it is critical to get the actual voice of non-traditional contractors who already work in the defense space (not just the ones on the outside complaining about it) into the conversation. This is perfectly aligned to the very reason we form groups like the Vertical Lift Consortium (VLC) and Aviation and Missile Technology Consortium (AMTC).
How Can We Get Our Voices Heard In This?
It should be pretty clear by now that I am soliciting feedback for a more formal response to this – partly that can just come in words I am empowered with by the community for board meetings and white papers. More importantly, I plan to take some of those words directly to Congress in meetings that will pass along what I am hearing from the larger ecosystem. It is interesting to note that the key elements of the FORGED proposal align quite well to the key elements relevant to the MOSA Network’s component marketplace and innovator advocacy objectives that I have written about elsewhere on this site.
Reducing Barriers to Entry for Non-Traditional Defense Contractors
The act recognizes that current procurement processes hinder smaller, innovative companies from participating in defense contracts due to excessive compliance burdens. We also noted that in some of our early writing and even more importantly in the years of effort by key voices in this ecosystem at speaking events across the nation. It would appear that the FORGED Act is listening to this, however I will point out that he quotes large new entrants and not the consolidated voice of actual non-traditional contractors… perhaps because until the creation of the MOSA Network the collective voice was too weak.
Encouraging Competitive Pressure
The proposal suggests creating competitive sourcing, second-source qualifications, and technology verification programs to prevent sole-source supplier monopolies. We cannot simply exchange the bureaucracy of long contracts for single platforms with a different form of monopolies for large primes that have private capital – if we are truly to unleash American Innovation we have to actually allow competition at the FEATURE level – which ties to the budgeting reforms and alternative contract pathways for sure – and let innovators win contracts directly instead of as subcontractors.
Expediting Acquisition Pathways
The act proposes prioritizing Other Transaction Authorities (OTAs) and commercial contracting procedures to bring technology from prototype to procurement faster. While I like the quote “Innovative nontraditional defense contractors should be on speed dial, not struggling for access,” this will not happen all on its own or through some FFRDC managed boutique working group that samples 10 hand picked small innovators instead of just connecting to the >5,000 non-traditional companies already engaging in collaboration through OTA consortia! We already have the speed dial list!
Leveraging Private Investment
The proposal highlights the increasing role of venture capital in defense technology and the need for DoD to work with private investors rather than solely relying on traditional large defense contractors. However, we need folks on Capitol Hill to understand that building a business is hard enough in the commercial world – and small businesses are the major source of disruption in the market – however that due to the small market size and production quantities in Defense, just making private capital available will not solve the problem facing innovators. It is not just that small businesses should be exempt from Federal Acquisition Regulations (FAR) based contracts – we can already do that with OTAs (even though the FAR-like rules keep finding their way into those contracts) – the entrenched behavior of our system causes it to be slow off the starting gun. Small businesses need to make payroll and, as they scale up even just a little bit, often need to resort to having owners get a second mortgage or personally guarantee a line of credit just to hire the next 10 people – and that is AFTER they win the contract. Investors don’t care so much about that 10 person contract as they do a 10x return on investment, which means having a dual use or at least cross-service (e.g. modular and open) solution that can have multiple customers. Attracting private capital is not the only challenge we have here, and it would be a good idea to listen to the small business owners who have made it work in Defense this far – do not punish the survivors! Making investment options easier is not just about making investment available – it is about allowing these small businesses to structure in normative commercially viable ways that align things like “product-market-fit”.
Foster Component Level Acquisition
While this is similar to the “Enable Decisive Action” bullet in FORGED, that element is focused on getting to the decision power of individual PMs. That won’t really change much unless they have a supplier marketplace to meet them at the demand signal and allow them to be customers of an ecosystem – you need both things. It is worth noting that PMs are already MANDATED by Congress to explore component level acquisition using MOSA and many are (according to the GAO report) simply finding reasons to work around it (subject for another post). Giving the ability to act will not ensure decisive action – you must also educate and provide the tools to enable the action in the intended direction.
Enabling Defense Innovation Through a MOSA Component Marketplace, Private Investment, and Advocacy
The FORGED Act proposal calls for sweeping reforms to integrate private sector innovation into national security solutions. The legislation echoes what many of us in the MOSA ecosystem have long understood: that non-traditional defense suppliers hold the key to rapidly deployable, cost-effective, and scalable technologies—but they need better pathways to procurement and investment.
The document is 18 pages long, so this short post is only skimming the surface – let me hear your feedback and recommendations on how we can amplify our collective voice. Whatever I hear can go directly up to the boards for the VLC, AMTC, NDIA, and a few other channels – however, I think we can do even more than that across the larger ecosystem if we speak up and articulate our concerns and recommendations.
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