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Need a Game Changer
00:13:40
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unidentified
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Types of related cases. | |
| All this week, watch C-SPAN's new Members of Congress series, where we speak with both Republicans and Democrats about their early lives, previous careers, families, and why they decided to run for office. | ||
| On Tuesday at 9:30 p.m. Eastern, our interviews include Montana Republican Congressman Troy Downing, who paused his career in business to enlist in the Air Force after the September 11th attacks. | ||
| I was actually moose hunting in Alaska when September 11th happened, so I was one of the last people on the planet to find out about it. | ||
| I didn't see it on TV and got stuck there because the borders were closed. | ||
| I couldn't fly over Canada. | ||
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unidentified
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And as soon as I could get home, I walked into a recruiter's office. | |
| I said, hey, I've got a pilot's license. | ||
| I used to, you know, was a researcher at NYU. | ||
| What can you do with me? | ||
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unidentified
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Watch new members of Congress all this week, starting at 9.30 p.m. Eastern on C-SPAN. | |
| Now hearing on ways to make the Defense Department's acquisition process more innovative. | ||
| Topics included cutting red tape, reducing regulations and compliance requirements, and modernizing the budget process to keep up with commercial technologies. | ||
| From the Senate Armed Services Committee, this is two and a half hours. | ||
| This hearing will come to order. | ||
| Thank you all for coming. | ||
| The committee meets this morning to discuss a topic that is of great interest to every member of this panel. | ||
| We're here to talk about defense innovation. | ||
| We must change the way the Pentagon does business. | ||
| Otherwise, there's no way we can maintain deterrence, particularly against China. | ||
| Today we'll hear from three experts. | ||
| Sham Sankar serves as the chief technology officer at Planeteer, which has done important work for the military. | ||
| Mr. Sankar has published widely on innovation, and we look forward to hearing his ideas today. | ||
| We'll also hear from Nate Diller, who has worked at both the Department of Defense and the House Appropriations Committee, where I previously worked in another life. | ||
| Today, Mr. Diller is the CEO of Divergent Technologies, which is seeking to make revolutionary changes in manufacturing, and we need revolutionary changes in DOD. | ||
| And finally, James Gertz is with us today. | ||
| In addition to having one of the coolest nicknames around, Hondo, he has ably and successfully served this country as the acquisition executive for both SOCOM and the Navy. | ||
| So thank you all for being here to talk about innovation. | ||
| The past few years have been marked by some success in innovation improvements, but we have much more work to do. | ||
| Most of our work is actually ahead of us in this regard. | ||
| I believe we're poised to go faster and further than we have thus far. | ||
| I'm optimistic that many of my colleagues' ideas for improvements and reform will have an enthusiastic reception in this new Pentagon team. | ||
| I appreciate my friend Ranking Member Reed for holding a hearing in the previous Congress on the Planning, Programming, Budgeting, and Execution Reform Commission. | ||
| I expect we can continue to make progress in this new Congress. | ||
| As a matter of fact, Mr. Reed and my colleagues, we need a game changer, and we need it right now. | ||
| The committee took steps last year to remove unnecessary steps from the acquisition process and get defense innovators more powerful hiring authorities. | ||
| We can and should continue on that positive trajectory. | ||
| I recently released the Forged Act. | ||
| and published this white paper entitled Restoring Freedom's Forge, America's Innovation Unleashed. | ||
| And I must say, I appreciate the positive comments and response that we've heard from industry and from government officials. | ||
| The white paper lays out in specific detail my plan to implement smart spending practices at DOD. | ||
| The Forged Act proposes the most comprehensive set of budgeting and acquisition reforms in decades. | ||
| It focuses on five areas. | ||
| First, we must cut the red tape that burdens our defense workforce. | ||
| Our regulations are full of outdated and excessive compliance requirements. | ||
| Addressing this is exactly the type of work that DOGE is contemplating, and I hope we can make progress in this area. | ||
| Contracting regulations total more than 6,000 pages. | ||
| Financial regulations add up to more than 7,000 pages. | ||
| I'm interested to hear our witnesses address how this committee can reduce the statutory and regulatory burdens, even as we retain the core elements of good policy. | ||
| Second, we should harness one of our nation's core advantages, our world-class tech sector, which is built by American entrepreneurial spirit. | ||
| Government-unique requirements have made it nearly impossible for commercial companies and startups to do business with the Department of Defense. | ||
| We need to reward commercial innovation by making it possible for innovative companies to work with the Pentagon. | ||
| Third, we must create competitive pressure by rapidly qualifying new suppliers to help build our weapon systems. | ||
| More than 20,000 suppliers have exited the Navy's shipbuilding industrial base in the past 20 years, and that's just the Navy's industrial base. | ||
| 20,000 suppliers gone. | ||
| I hope our witnesses will address how we can lower barriers to second sources and how we can adopt technologies like 3D printing, which can dramatically reduce costs and expedite production schedules. | ||
| Fourth, we must enable senior officials to manage programs by reducing the bureaucracy's ability to veto their decisions. | ||
| A typical acquisition must satisfy nearly 50 documentation requirements and get 50 external sign-offs. | ||
| We need to be careful about the taxpayers' money, but that is excessive. | ||
| We need to give program managers all of the tools they need to success while retaining an appropriate level of checks and balances. | ||
| Finally, we should modernize the defense budget process by allowing money to move as fast as technologies and threats change. | ||
| It currently takes at least two years to request and receive funding. | ||
| Meanwhile, the commercial sector deploys new generations of technologies in less than two years, and the Pentagon is continually lagging behind. | ||
| We cannot keep conducting business as usual. | ||
| I repeat, we need a game changer in this regard, and we need it now. | ||
| Because the United States is entering the most dangerous period we've faced since World War II. | ||
| Our adversaries are rapidly innovating and leveraging commercial technologies. | ||
| In response, we must expand our capacity to produce and sustain high-end weapons like ships, aircraft and missiles. | ||
| At the same time, we must adopt autonomous, adaptive, and networked or swarming systems. | ||
| This is not an either-or effort. | ||
| We must produce traditional and innovative systems quickly and at the scale of relevance. | ||
| Doing so will ensure that we can deter our adversaries from taking action against us. | ||
| and our interests. | ||
| In other words, peace through strength. | ||
| I look forward to discussing those initiatives and more with our witnesses. | ||
| And again, I welcome all three of them to our hearing, and I recognize my friend, Ranking Member Reid, for his remarks. | ||
| Thank you very much, Mr. Chairman. | ||
| And let me join you in welcoming our witnesses, Mr. James Gertz, Mr. Shiyam Shan Kha, and Mr. Nathan Dilla. | ||
| Thank you, gentlemen. | ||
| You bring unique and important perspectives to this discussion, and this is a very serious and important discussion. | ||
| For many years, this committee has examined various challenges for the defense acquisition system. | ||
| Time and time again, we have heard the system is too slow, too rigid, and too outdated to keep pace with the changing world. | ||
| As such, the committee has worked hard and made progress towards streamlining the acquisition system. | ||
| Importantly, we have helped provide the Department of Defense with significant flexibility in the acquisition authorities, including initiatives like middle-tier acquisition, rapid acquisition authority, and other transaction authority. | ||
| These authorities are intended to enable the Department to tailor acquisition strategies and contracting approaches to fit the needs of each program. | ||
| Indeed, lengthy, risky programs demand more rigor and oversight, whereas less risky, non-developmental programs may move quicker with fewer bureaucratic checks on the process. | ||
| I would ask our witnesses for their views on the successes and shortcomings of these acquisition authorities. | ||
| Responsible regulation is key to the success of the acquisition and innovation ecosystem. | ||
| Decentralizing certain aspects of the system is beneficial, but going too far may result in poor coordination among officers and could introduce duplication and waste. | ||
| The lack of coordination among the services or stovepiping is especially problematic for programs that are intended to improve jointness throughout the force. | ||
| Several years of legislation to reform stovepiping has helped alleviate the issue, and further deregulation in some areas may be useful, but I would caution against quick decisions that could undercut the progress we have made. | ||
| Many existing statutes and regulation exist because of past failures by the Department or poor behavior from industry, and it is important that we remain uncompromising stewards of taxpayers' dollars. | ||
| And I would ask for the witnesses' views on this issue also. | ||
| Further, we must remember that our acquisition network is only as strong as our workforce. | ||
| To meet growing demands, the acquisition workforce must grow accordingly to include contracting officers, subject matter experts, and skilled technicians in the defense industrial base. | ||
| In this regard, I am concerned that we have already begun to see attacks on the Department's civilian workforce. | ||
| The Trump Administration has taken pride in its threat to slash the bureaucratic workforce, arguing a false equivalence between fewer personnel and greater efficiency. | ||
| Ironically, reducing the acquisition workforce is likely to increase the contracting timeline and eliminate positions that support acquisition professionals will inject new inefficiency into the network. | ||
| I would appreciate our witnesses' thoughts on the interdependencies of the acquisition workforce and their recommendations to make sure that acquisition workforce is appropriately sized and trained. | ||
| Finally, I would like to point out that innovation is more than technology. | ||
| Improving the Defense Department's innovation strategies will require more than overhauling systems or increasing funding. | ||
| It will require bold thinking by leaders at every level of the enterprise. | ||
| I am reminded of a quote attributed to Winston Churchill. | ||
| Gentlemen, we have run out of money. | ||
| Now we have to think. | ||
| Successful innovation requires creative people to not only adapt to new technologies, but to adapt processes to new situations where technology is not yet available. | ||
| Now we must think. | ||
| To help us do so, I look forward to hearing from this insightful panel of experts, and I hope we can work together to develop a better understanding of how the Department of Defense can adapt quickly to a changing world. | ||
| Thank you again to our witnesses, and I look forward to your testimony. | ||
| Thank you, Mr. Chairman. | ||
| Thank you very much, Mr. Reed. | ||
| And let me say we're going to hear from our witnesses now, and then we'll have a five-minute round. | ||
| We will have a round of five-minute question and answer. | ||
| I'm going just so that this senator will understand and be prepared. | ||
| I'm going to yield my five minutes to Mr. Sheehee because he has to preside in a few moments. | ||
| So after the opening statements, Mr. Sheehee will ask questions and then be followed by the ranking member. | ||
| And then we'll go forward with Senator Fisher and on down. | ||
| Mr. Sankar, we're delighted to have you, and you are recognized for as much as five minutes. | ||
|
Building America's Hardware Advantage
00:09:50
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| Well, thank you, Chairman Wicker, Ranking Member Reed, members of the committee, thank you for the opportunity to testify today. | ||
| Mr. Chairman, I want to commend you on your proposal. | ||
| I was fist pumping in the air when I was reading it. | ||
| This is exactly the kind of reform that we need to win. | ||
| I've spent nearly two decades at Palantir fighting the bureaucracy to deliver cutting-edge technology to our warfighters. | ||
| And my message today is simple: that defense innovation and procurement are broken at precisely the moment we need them to deter and defeat our adversaries, and for reasons that are profoundly un-American. | ||
| The root of the problem is that the Pentagon is a bad customer. | ||
| It's also the only customer. | ||
| The defense market is functionally a monopsony, where a sole buyer shapes the market with prescriptive requirements, complex regulations, and five-year plans worthy of Stalin. | ||
| The Cold War is over, and everyone has given up on communism except for Cuba and seemingly the DOD. | ||
| The monopsony has created a divide between defense and commercial sectors. | ||
| I call this the great schism, but you can think of it like the Berlin Wall. | ||
| On the commercial side of the wall, companies are free to compete and to innovate. | ||
| On the defense side, a dwindling number of contractors toil away for the monopsony. | ||
| More and more, they resemble state-owned enterprises instead of the innovative, founder-driven companies that they once were. | ||
| The companies fit enough to climb the wall and defect to the free world did so long ago. | ||
| Mr. Chairman, if we're going to win again, we need to tear down this wall. | ||
| And your report helps us do just that. | ||
| First, cut the red tape. | ||
| Defense procurement is constrained by mountains of regulations that paralyze leaders and punish creativity. | ||
| This is not what was intended, but this is reality. | ||
| And the road to hell is paved with good intentions. | ||
| For example, the DOD 5000 series, it was seven pages when David Packard wrote it in the 70s. | ||
| It's now 2,000 pages. | ||
| That's an 11 percent compounded growth rate, one of the few areas the department outperforms the market. | ||
| Eliminating burdensome regulation must be a priority because no amount of process can save us, but it can destroy us. | ||
| Second, unleash innovation. | ||
| To do that, we need to reverse this great schism. | ||
| During the Cold War, 6% of defense spending on major weapons went to defense specialists. | ||
| Chrysler made cars and missiles. | ||
| General Mills made cereal and torpedoes. | ||
| That great schism, we need to turn it on its head. | ||
| Today, that 6% has turned into 86% going to defense specialists. | ||
| America needs our primes, and that's precisely why we need to ensure that they are subject to commercial incentives and to market pressure to keep them fit. | ||
| We can fix this by ending the cost-plus mentality, which makes us slower, poorer, and dumber. | ||
| SpaceX reduced launch costs by 85%. | ||
| That simply isn't possible in a cost-type domain. | ||
| We also need to stress a commercial-first mindset in procurement. | ||
| FASA is already the law of the land. | ||
| Perhaps we should just enforce it. | ||
| Third, increase competition. | ||
| Yes, please. | ||
| But also, we need to increase competition inside of government. | ||
| During the early Cold War, the services competed against each other to develop the best ballistic missiles. | ||
| The Navy's Polaris and the Air Force's Minuteman ultimately won, but not before the Regulus, Jupiter, Thor, Atlas, and Titan were developed in some form. | ||
| Today, the bureaucracy would disparage that contest as duplication. | ||
| I see a competitive market with multiple buyers, pressure to innovate, and no single point of failure for the department. | ||
| Fourth, enable decisive action. | ||
| We are a nation born of founding fathers. | ||
| We understand the importance of great creative leadership. | ||
| In place of the cargo cult that worships process, let's empower our people. | ||
| We wouldn't have ICBMs without Triver, the Nuclear Navy without Rick Ober, the Apollo program without Gene Krantz. | ||
| I challenge you to name a comparable figure overseeing most major programs today. | ||
| And it's not for a lack of talent. | ||
| But we need to stop rotating people like fungible cogs every two or three years and give them the time and the space to create. | ||
| Fifth, modernize the budget process. | ||
| A budget is a plan. | ||
| And right now, we are planning to fail. | ||
| No private company could survive if it took two years to budget for projects internally. | ||
| They would be completely out-competed in the market. | ||
| The fiscal OODA loop is not survivable, and that's what sets the pace for the industrial base. | ||
| Decision makers in the building deserve to be treated like decision makers with a pot of money and the discretion to reprogram rapidly to meet new threats, unless we actually do believe in central planning. | ||
| We shouldn't be under any illusions about how hard these changes will be. | ||
| You have to mobilize talent around it and attack the problem again and again. | ||
| And that's why I think this hearing and this proposal are so valuable, Mr. Chairman. | ||
| I look forward to taking your questions. | ||
| Thank you. | ||
| Thank you very much, Mr. Sunkar. | ||
| Mr. Diller, you're recognized. | ||
| Chairman Wicker. | ||
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unidentified
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Chairman Wicker, Ranking Member Reid, and distinguished members of the committee, it is an honor to discuss defense innovation and acquisition reform with you today. | |
| At the core of this discussion, must focus on ensuring America's ability to deter aggression and create that overwhelming strength while minimizing risk to human life and reducing the burden on the taxpayer. | ||
| Unfortunately, America's ability to deter is at its lowest point in many, many decades. | ||
| That said, the FORGE Act, coupled with a multitude of other successes, leaves me more optimistic today that America can not only reverse this trend, but actually do it in a way that creates a renaissance in American manufacturing and actually unlocks human creativity. | ||
| But we must act today. | ||
| I think the word forge provides some personal markers for me. | ||
| America's manufacturing output tripled that of China during the time that I was pulling forged plows growing up on a farm. | ||
| By the time I flew F-16s dropping forged bombs, we were at parity. | ||
| Today, as we discuss the Forge Act, China more than doubles our manufacturing output. | ||
| After years in defense innovation and acquisition, I'm convinced that a nation that does not manufacture technology cannot maintain a technological and military advantage. | ||
| And this is what led me to transitioning two Divergent technologies today, led by Kevin Zinger and his son Lucas, where they are truly revolutionizing the factory today, bringing us an ability to actually turn great ideas into hardware for deterrence. | ||
| Daily, Divergent seemingly transforms a car factory into a weapons factory. | ||
| It is operating at production scales, leveraging 700 patents driven by AI, and right now we are literally printing our 253-mile-an-hour hypercar in the morning and cruise missiles in the afternoon. | ||
| This can be done. | ||
| It is all made in America. | ||
| We're in agreements with most defense primes and many of our great American startups, delivering capabilities for air, land, sea, and space. | ||
| The capital efficiency that comes from this agility can reduce taxpayer burden, increase warfighting capability, and quickly rebuild U.S. global innovation and manufacturing dominance. | ||
| What acquisition reform is needed to bolster defense innovation and attract companies like Divergent to create American military advantage? | ||
| First, we have to be very clear of turning America's software advantage into a hardware advantage. | ||
| We must foster competition for fully digital and AI-driven design and production systems so America can build. | ||
| We must scale innovation successes. | ||
| New acquisition paths and organizations have created access to mobilize a broad industrial base with the ability to create a hedge portfolio of software-driven hardware. | ||
| But it is not clear that we have the structure to scale this to success. | ||
| Three, we need to build a civil reserve manufacturing network so America can build. | ||
| The factory is the weapon. | ||
| The taxpayer buys billions of dollars of weapons every year solely for war. | ||
| Why are we not buying some factories as a service? | ||
| These factories distributed could produce parts for legacy platforms to ensure we can fight tonight, can scale a hedge portfolio or produce commercial goods in a way that bolsters competition, increases our military resiliency and capabilities, and saves billions of dollars to the taxpayer. | ||
| The term forge is fitting to express the gravity of this moment. | ||
| This act of forging has literally defined eras in civilization going back to the Bronze Age as societies use the process to turn ideas into hardware. | ||
| The Title Forge Act is appropriately to communicate the emergency situation that we are in in America today as our eroded capacity of turning ideas into hardware is creating this national crisis. | ||
| Fortunately, visionaries mobilized a whole of nation effort in World War II. | ||
| It is time for Freedoms Forge 2.0. | ||
| And while we're in an emergency state, I am optimistic because I believe the ingredients are present for a general generational shift in manufacturing and defense innovation that could be more notable than going from the Stone Age to the Bronze Age. | ||
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Time to Build
00:03:30
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unidentified
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I am confident America will forge that peaceful and prosperous era together. | |
| Ladies and gentlemen, it is time to build. | ||
| Thank you very, very much, Mr. Diller. | ||
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unidentified
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Mr. Goertz, Chairman Wicker, Ranking Member Reid, distinguished members of the committee, it's good to be back here with you again. | |
| And it's quite an honor to be here for this discussion. | ||
| Having spent the last almost 40 years of my career trying to drive innovation and acquisition as a person in uniform, as a civilian, as an appointee, and now in the private sector, it's a subject that's near and dear to my heart and I think critically important for our nation. | ||
| I've had the honor to lead some of the nation's finest acquisition teams in time of war and global competition, and I've seen what's possible when there's a clear understanding of intent, a sense of urgency at all levels of the organization, a close connection between the acquirer and the operator, a robust and diverse network of industry partners, transparency to all the stakeholders, and an empowered and accountable acquisition workforce. | ||
| Unfortunately, over the last several decades, our ability to do this at scale across the department has decayed. | ||
| The industrial base that served us so well after World War II is not up to the challenges right now that we need as a nation alone. | ||
| The accumulation of decades of statutes, regulations, processes, special interests, all well-intentioned, about which permeate the bureaucracy, have hobbled our ability to adapt and change. | ||
| The risk-averse culture that that's driven has diffused accountability across multiple organizations, departments, and the workforce so that it's unclear who's actually accountable to deliver, and they are not empowered to actually deliver the results we need from them. | ||
| The challenges facing the Department of Nation are many. | ||
| The nation needs to be innovative, productive, and agile, while also ensuring they're relentless stewards of the taxpayer dollar. | ||
| Rather than trying to rebuild the industrial base we once had, I believe we need to focus on building the future industrial network that we need that gives us the ability to scale and the ability to be agile in this time of global competition. | ||
| Harnessing our collective capabilities, talents, and innovations into such a dynamic and aligned network will help overcome the limitations and linear thinking, risk-averse approaches that have been impairing the nation's competitive capabilities since. | ||
| I'm thankful that this committee is placing such an emphasis on this issue and am optimistic with the tenets of the Forge Act. | ||
| We have a systematic issue and we've got to tack it systematically. | ||
| We've tried over the last couple decades, tweaking, making some changes here, making some changes there. | ||
| But if we're really going to act at the scale and with the speed we need as a nation, we need to overhaul both our approach to the industrial base, focusing on this industrial network, as well as leveraging a clearly accountable and empowered acquisition workforce. | ||
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Hold Program Managers Accountable
00:11:57
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unidentified
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Thanks for the opportunity to appear before you, and I look forward to your questions. | |
| Thanks to all three of you. | ||
| I must add, for the benefit of the listening public and those in the audience, typically in a hearing like this where there's three witnesses, the majority suggests two of the witnesses, the minority suggests one, it would be hard for the listening public to know which witness today was a majority witness and which witness was a minority witness. | ||
| So I do appreciate your thoughtful testimony. | ||
| And at this point, to begin our questioning, Senator Shahey, you are recognized for five minutes. | ||
| Thank you, Chairman. | ||
| Everything you guys said, of course, is, I think, pretty blatantly accurate for everybody. | ||
| And the word innovation is thrown around a lot for defense acquisition and systems development. | ||
| And I don't think we really have an innovation problem. | ||
| Private companies innovate. | ||
| We have all these fusion labs within the military that innovate actually pretty well. | ||
| The challenge is adopting the innovation on a programmatic level and then fielding it quickly. | ||
| And I think, Hondo, you know, when you and I were in together, you know, I served as a SEAL team leader and we'd have IED threats that would the enemy would watch with binoculars how we would disarm an IED or what technology we'd use. | ||
| And the next day they would change their design. | ||
| Literally the next day. | ||
| I mean they'd go back to their garage, they'd rewire, and they come out the next day. | ||
| And our policies for fielding equipment to counter those IEDs were stuck at the pace of our defense acquisition system. | ||
| We'd send that feedback back home and maybe a year or two later we'd get a new jammer or a new tactic out and God bless the guys out there doing it, which is me a lot of the time. | ||
| Unfortunately, our ability to innovate, we didn't innovate at the speed of the threat. | ||
| We innovated at the speed of bureaucracy. | ||
| And we can innovate, but adopting that quickly is the biggest challenge. | ||
| So, I mean, it's open to anybody, especially you, Hondo, coming from a career in that acquisition system. | ||
| You know, what's the single biggest change we can make as a legislative body quickly to encourage adoption of the innovation that already exists? | ||
|
unidentified
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Yes, sir. | |
| Thank you for the question. | ||
| I'd concur. | ||
| Many of our roadblocks are self-inflicted and culturally reinforced. | ||
| And it's for a lot of different reasons. | ||
| I think one number one thing you can do is you can empower the program manager and hold them accountable. | ||
| Right now, program managers answer to dozens and dozens of folks. | ||
| They have to go get permission to move a dollar to a better priority. | ||
| If they see a new technology that comes out, they have to spend years creating a program to adopt that technology. | ||
| I think that's one. | ||
| And then two, breaking down this barrier so that, listen, we need defense primes, as Sean said. | ||
| We need new entrants. | ||
| We need commercial providers. | ||
| We need program managers that have the authority to actually pick, have visibility of all those things and then rapidly be able to choose the best performer. | ||
| And then finally, we've got to break down the barrier that we've created between the person buying the equipment and the person using the equipment. | ||
| Again, well-intentioned headquarters staffs that have accumulated over time. | ||
| Reviewing that reviewer-to-doer ratio. | ||
| So get the doers doing, get them aligned with the operational needs, give them the flexibility to make the best decisions, and it'll hold them accountable to deliver. | ||
| And Mr. Sunkert, a question for you. | ||
| I love your write-up, by the way. | ||
| I agree 100%. | ||
| And when I got out, I actually started a defense company myself. | ||
| We ended up having to split the company in two, largely for investment purposes, because what you referred to as that wall, which is very accurately portrayed. | ||
| But in addition to the acquisition regulations and the DCA accounting requirements and all that, there's also a restriction of you can innovate something commercially and to bring that innovation back in and have a cross-feed valve where the defense technology benefits from commercial innovation is almost not allowed. | ||
| And therefore, we're missing out on a massive pool of knowledge, especially as we move into machine learning models and AI, we can't benefit from commercial. | ||
| In your experience, how can the DOD better leverage commercial innovations to make sure that the defense innovation is adopted at the speed that private sector innovation is? | ||
| Well, thank you. | ||
| You know, I think Congress in its wisdom saw this in the 90s, right? | ||
| This is why we have the Federal Acquisition Streamlining Act, which is that the commercial, you have a much broader market around which you can amortize your RD in the commercial world. | ||
| You can bring that stuff at a lower risk and with much greater speed to the DOD. | ||
| We were able to deliver the Operation Warp Speed supply chain in two weeks during Operation Warp Speed because actually two years before that, we had built very similar solutions in oil and gas. | ||
| You can't connect those dots prospectively. | ||
| I didn't make that investment in oil and gas because I knew it would pay off when the nation needed it for COVID vaccine distribution. | ||
| But really, if you're going after these hard problems, you can benefit the whole of nation. | ||
| At some point in time, every car, camera, and serial box that Americans bought actually subsidize our national security. | ||
| So I think I would attack this systematically by thinking about what are the barriers that have meant that we have developed a defense industrial base and lost our American industrial base. | ||
| Now, I think the real issue here, to your point, we don't have an innovation problem. | ||
| Innovation doesn't need capital. | ||
| America's capital markets are the deepest and richest in the world. | ||
| Dare I say, if you're unable to finance your idea, that probably tells you something about your idea in this country. | ||
| But innovation does need customers. | ||
| And so shortening that OODA loop, the fiscal OODA loop, of how quickly, I think we'd be better off spending half the money twice as quickly. | ||
| It's really time, speed has a quality all of its own here, and that's how we drive up commercial adoption. | ||
| It will pull these folks into the industrial base in a way that we really need. | ||
| Yes, we need to cut the red tape. | ||
| We need to get rid of some of these regulations, but I think the biggest barrier is encouraging adoption, empowering our people. | ||
| So much of this, I couldn't agree more with Senator Reed's comments that technology is not a technology problem. | ||
| It's actually a people problem, a leadership problem. | ||
| You can't chop off a lot of our regulations. | ||
| Something goes wrong, we come up with a new rule. | ||
| We're trying to chop off one end of the distribution of all the things that can go wrong. | ||
| You can't do that without making sure nothing can go right either. | ||
| Thank you, Mr. Sankar. | ||
| Mr. Reed. | ||
| Thank you very much, Mr. Chairman. | ||
| Mr. Gertz, we all recognize how critical a workforce is to get anything done. | ||
| And this is particularly the case in acquisition. | ||
| What's your assessment of the department's acquisition workforce today in terms of its capacity and capability? | ||
|
unidentified
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I think it is mixed. | |
| We have a very talented workforce that's been hobbled for a bunch of years, but they are also not fully informed on the full market that's available to them. | ||
| And so I think as we make, as the committee here makes all of these what has looked like very value-added changes, we've got to make sure we handle the implementation step. | ||
| Because right now we have lots of great authorities in the department. | ||
| We have not implemented them to their full extent nor trained the workforce to be able to leverage them to their full extent. | ||
| So part and part with change in authorities and rules needs to be rapid implementation guidance and then rapid training and then hold everybody accountable after you've done those two steps. | ||
| One of the observations that I made, particularly in regard to submarine construction, is COVID sort of triggered a premature retirement of a lot of government supervisors, workforce, acquisition specialists, et cetera. | ||
| And we're lacking in those people their experience, frankly. | ||
| And it comes down to people, as Mr. Sankar said. | ||
| Do we have to make a special effort to rebuild that workforce? | ||
|
unidentified
|
Sir, I would do two things. | |
| One, we've got to review the reviewer-to-doer ratio. | ||
| So we have a lot of the workforce tied up in multiple levels of review that could be deployed to help immediately and get those assets doing work, not reviewing other people's work they're doing. | ||
| Secondly, we need to create a training pipeline which fully informs them of how commercial markets work, how venture capital markets work, how traditional manufacturing works, how new advanced manufacturing works. | ||
| So they're exposed to all of these opportunities and then hold them accountable for creating a strategy that best leverages all of those capabilities. | ||
| Thank you. | ||
| Ms. St. Clark, thank you for your testimony. | ||
| One of the approaches we took was trying to attract the nontraditional defense contractor. | ||
| That was a term that has sort of changed over time because now many of these non-traditional defense contractors are actually defense contractors. | ||
| In addition, they also have access to and involved with governments in many different capacities. | ||
| Would you recommend any changes to this approach of the nontraditional defense contractor? | ||
| Thank you. | ||
| I think what we seek with non-traditionals is the same power of the American economy, which is that people will take their private capital and put it at risk to build new things and offer it to the government, not at the taxpayers' expense. | ||
| And if it works, that's great. | ||
| And if it doesn't, no harm to the taxpayer. | ||
| And that's what you see with the nontraditionals, that they are going and raising private capital. | ||
| They are putting their balance sheet at risk. | ||
| They are delivering these innovations. | ||
| If I was to contrast that to the traditional market, what the monopsonist prefers is, I will pay you by the hour. | ||
| I will control everything you are doing. | ||
| I will own what you ultimately create. | ||
| And then we are surprised that that category of traditional player isn't investing more in R ⁇ D. | ||
| Well, I think literally we have gotten the industrial base that we have incentivized getting. | ||
| So I think my hope is actually we could find more ways of turning what today we view as the traditionals into nontraditionals. | ||
| That would be the alchemy that really powers our national security. | ||
| One other aspect, just observation, and we all understand that the defense industrial base has shrunk dramatically from 20 years ago. | ||
| A lot of that was through mergers, acquisitions, in some cases, looking at a threatening young competitive company and buying it for reasons that might not be appropriate. | ||
| How can we sort of stop that? | ||
| Well, I'm spending my time personally on that. | ||
| So I think the antidote to the Last Supper, this consolidation wave that happened, is what we should call a first breakfast. | ||
| As Palantir has blazed the trail, survived the valley of death, I want to now lower the ladder and make it possible for many more new entrants to get there. | ||
| How do I reduce the time it takes to get accreditation? | ||
| How do I enable you to field yourself not in an exercise that's not real, but in the actual warfighting needs, get more feedback and more scale as a consequence? | ||
|
Positive Sum Mindset Needed
00:15:16
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||
| We need a positive sum mindset here. | ||
| And the big shrinking that happened during the Last Supper encourages a zero-sum thinking, which we need to get out of. | ||
| Thank you. | ||
| Thank you very much, Mr. Reed. | ||
| Before I turn to Senator Fisher, Mr. Gertz, this changing the reviewer to doer ratio, we could do that without changing the statute, could we not? | ||
|
unidentified
|
In some cases, yes, in some cases, no. | |
| Okay. | ||
|
unidentified
|
So there are certain parts of the statute that require different offices review things. | |
| I think over time we've let the functional side get, you know, the contracting folks have to review it independently, independent flight test authority. | ||
| So many of those are internal, but a lot of those are driven by either statute or intent from external stakeholders. | ||
| Thank you very much. | ||
| Senator Fisher, you're recognized. | ||
| Thank you, Mr. Chairman. | ||
| Mr. Gertz, the impact of CRs on the Department, it's well documented, whether limiting new starts or the challenges of increasing production rates. | ||
| While CRs result in concrete negative impacts, the Department has little influence over whether a CR actually occurs since appropriations are the purview of Congress. | ||
| Based on your experience, are there any specific recommendations you have that would enable the department to continue to make progress on certain programs, even through a CR? | ||
|
unidentified
|
Thank you. | |
| Yes, CRs are very damaging to a rapid and agile workforce. | ||
| One of the reasons is you have to, if you're applying a word of contract for the year and now the CR is occurring, you're doing it in three-month increments or two-month increments, and it ties up both sides. | ||
| So, I think anywhere we can create authorities, if it's small programs, if it's programs that were no. | ||
| Is there any place right now that the department can continue its progress, or does it, do you know of any? | ||
|
unidentified
|
It's really challenging because of the specificity of the CR and the challenges. | |
| I think some of the services have asked for special authorities in areas that are very dynamic. | ||
| I know the Army has asked for authorities to be able to rapidly reprogram and be flexible in like electronic warfare and UAS's encounter UAS. | ||
| So, I think there's areas where it's really a dynamic environment that I think we could work together to build the trust to be able to have more flexibility in the CR period. | ||
| Okay, thank you. | ||
| Mr. Daylor, do you have anything to add from a private sector perspective on this? | ||
|
unidentified
|
Yes. | |
| Senator, I think there have been some notable changes just over starting with the FY24 defense appropriations bill that provided some of that agility that is key. | ||
| If we look at how quickly our acquisition model works, where we're budgeting, and in instances it's taking four years for something to actually come available, that certainly is not the case from the private sector if we look at the pace that large language models and artificial intelligence have occurred. | ||
| Those budgets were being built two to four years ago. | ||
| And so I would commend the work of the appropriators that have looked to see what type of flexibility allows the speed of innovation that is actually happening in the private sector. | ||
| It gets to this question of adoption of innovation. | ||
| And so I think really great pilots have happened. | ||
| And when we look at the ability to scale, it certainly, at some point, the measure needs to be how can we get the funding that actually allows that production and the movement. | ||
| And I think there's been increased ability as we look at digital approaches to actually creating trust across the Potomac River where the Pentagon and the Congress can actually get a higher degree of assurance that the money is being spent quickly. | ||
| This is being piloted right now with DIU, and I think that is going well. | ||
| It's good for industry. | ||
| It's good for trust across the legislative and executive branch. | ||
| Thank you. | ||
| Mr. Sankar, in your work with the department, what are some of the key factors that limit your company's ability to innovate? | ||
| I think really if you think about our, when we first started the business, I thought our competition was going to be the primes, that the primes would be threatened by the innovation we were creating. | ||
| But actually, the entity that was most threatened was the existing program of record. | ||
| So it's our inability to tolerate heterogeneous innovation coming from a number of places. | ||
| You know, all innovation starts off as something that is heterodox. | ||
| It's going to challenge the status quo. | ||
| It's going to upset the apple cart. | ||
| So we need to enable more flowers to bloom and to recognize that innovation is fundamentally messy and chaotic, and any attempt to put process around it and make it clean destroys the innovation. | ||
| Mr. Goertz, as a former acquisition official, what do you think are DOD's most promising initiatives to be able to take advantage of that commercial innovation? | ||
|
unidentified
|
So I think if I look back 10 to 15 years ago, I think there was a divide between the commercial industry's interest in national security and the government's trust that they could actually deliver something relevant to national security. | |
| And if you look over the last five years in particular, that element is broken down. | ||
| So the conversations are starting to occur. | ||
| The trust is starting to occur. | ||
| The demonstrated success is starting to occur. | ||
| Now we have to do that at scale as a matter of business, not as an exception. | ||
| Thank you. | ||
| Thank you, Mr. Chair. | ||
| Thank you, Senator Fisher. | ||
| Senator Shaheen. | ||
| Thank you, Mr. Chairman, and thank you to each of our witnesses for being here today. | ||
| I recently took over as the ranking member of the Senate Foreign Relations Committee. | ||
| And one area that comes up over and over again is ensuring that our foreign military sales process works not just for us, but for our allies, for our military, and for our industries. | ||
| And to ensure that we maximize the capabilities of our alliances, we need to focus on being able to fight in an interoperable and coordinated way with our allies and partners. | ||
| I assume that you would each agree with that. | ||
| You're nodding. | ||
| So, Mr. Goertz, how should we think about, how should industry and government think about and be working to ensure that American businesses can work with our counterparts, with our allies in Australia and Japan and South Korea to ensure that systems are built on compatible architectures that allow coordination between our forces in combat? | ||
|
unidentified
|
I think a couple things. | |
| One would be anywhere we can reducing the FMS burden in terms of regulation and statute and things that make it hard to do FMS sales and things that disincentivize our allies and partners wanting to use the FMS system. | ||
| Secondly, I think as commercial. | ||
| Are there specifics that you would point to? | ||
|
unidentified
|
I think there's been a number of studies on areas that we can break down. | |
| A lot of it's the review timeline. | ||
| A lot of it's the external authorities. | ||
| I think there's work to be done there. | ||
| And then I think as commercial is global, there are areas where we can leverage commercial capabilities that do span many of our allies and partners that are already interoperable from the start and leverage those versus trying to back in interoperability from a custom DOD-made area. | ||
| We've got to differentiate it. | ||
| It's not one or the other. | ||
| We need both. | ||
| I certainly agree with that. | ||
| Mr. Diller, one of the things that has happened as the result of the war in Ukraine is that we've watched how creative the Ukrainians have been with many of their responses to that war. | ||
| Do you think that there are lessons that we should be taking from what the Ukrainians have been able to do? | ||
|
unidentified
|
Yes, ma'am. | |
| Unfortunately, I don't know that our defense primes or our startups responded in the way that we necessarily would want to that type of crisis. | ||
| I do think fundamentally, as has been discussed with my colleagues, this is an industrial-based problem in America, not just a defense-industrial-based problem. | ||
| And so, how do we look at taking the next leap that allows the factory to be part of that warfighting system? | ||
| You see agility in Ukraine that you are actually getting hardware to evolve at the speed of software. | ||
| On your previous question about FMS, if we can actually have a 21st-century manufacturing system that is digitally driven, it allows us to actually have that factory evolving at the pace of the war to close that OODA loop, as it's called, and to create both interoperability between nations and to be able to scale and remain agile in warfare in an entirely different way than has been a leap ahead, | ||
| even of those initial lessons that we've seen in Ukraine. | ||
| Thank you. | ||
| Mr. Sanker, I'm a big proponent of small business. | ||
| They create 16 times more patents than large businesses. | ||
| One of the ways that we try and take advantage of that innovation is through the Small Business Innovation Research Program, which has been very successful. | ||
| I know it's a program that Palantir has worked with extensively. | ||
| So I am very concerned about the order that just came out from the acting director at the Office of Management and Budget that essentially puts on hold any financial assistance that's dedicated to any programs like SBIR. | ||
| There are 82 of those programs within the Department of Defense. | ||
| What does it do to the research that's going on in our small businesses when there's that kind of a halt on the program? | ||
| And we don't know how long it's going to last, and we don't know whether it's going to be forever or if they're going to be able to resume what they're doing. | ||
| Well, what I can certainly speak to is the value of small business. | ||
| So if we think about the American system, this is about David versus Goliath. | ||
| And we need the small business program to continue to encourage many more Davids to get out there. | ||
| But we should be clear that we want David to get big. | ||
| Where the small business program may be failing our existing entrepreneurs is it's just enough to keep them small, a class of indentured servants living as small businesses. | ||
| But that's not what we aspire for them. | ||
| We want the small guy to have an opportunity to become the next king. | ||
| And so if there were ways of continuing to evolve that program so that we were holding ourselves collectively more accountable to how many of our small businesses were able to get big, how many of them are now defining the next frontiers of what we're doing in defense innovation, I think the nation would be much better off. | ||
| Thank you very much. | ||
| I certainly agree with that and hope that we can look at the next stages of the SBI program to do that. | ||
| Thank you, Senator Shaheen. | ||
| Senator Rounds. | ||
| Thank you, Mr. Chairman. | ||
| First of all, let me thank all of you for being here today and helping us in this project. | ||
| Albert Einstein, in a letter to President Roosevelt, identified the risk of losing to Nazi Germany as regards to the possibility of a nuclear bomb. | ||
| He talked about the need for the United States to take a lead role and basically begin that project. | ||
| At the same time, once that occurred and the Manhattan Project was ordered, we started a process within our industrial base and within the scientific community that was unbelievable at the time. | ||
| And part of it had to do with a whole lot of really, really bright people talking to one another, both from within the Department of Defense, within the national laboratories as they had existed back then, the universities, but also the military, and the political leaders. | ||
| Today, I guess my question to begin with, we face a very similar situation right now with the implementation of AI and with adversaries who are moving very, very rapidly. | ||
| And this tool that we have, this AI tool, The countries that are best able to incorporate it and to move it forward as quickly as possible are going to win the race militarily and economically as well. | ||
| Mr. Goertz, in the time that you were within the Department of Defense, how often did you actually have a roundtable or a visit with some of the key thought leaders, industrial-based leaders, innovators? | ||
| Did you ever sit down and just have a roundtable with them, or is that restricted? | ||
|
unidentified
|
Yes, sir, I did. | |
| Both in my time in Special Ops and in the Navy, we would create the forum for those kinds of discussions, and I would concur. | ||
| Having those kinds of discussions is fully available within the statute and critically important to understanding the opportunities that are in front of us and how to leverage the full ecosystem. | ||
| Mr. Sankar, Palantir is recognized as an innovative organization, a thought leader, a proven facilitator in many cases with regard to AI implementation. | ||
| How often are you invited into the Pentagon to sit down and to visit to talk about how you can coordinate with our purchasing organizers, the acquisition people, in terms of actually acquiring the best and coordinating it with the weapon systems that we have today? | ||
| I'd say it's pretty a mixed bag. | ||
| There are certain parts of the community that are very proactive and seeking advice and interest from outsiders, actually even seeking help and pulling together the right groups of folks who would be completely non-traditional and very far away from defense. | ||
| And there are others that have a more captive sort of approach to this. | ||
| Have you ever been invited in to sit down and talk? | ||
| A few times I have, yes. | ||
| Mr. Dillard? | ||
|
unidentified
|
So that I think if we look at the innovation progress that's happened over the last decade or so, I think you kind of see three different eras of this, starting with the conversation with the launch of the IU. | |
| Eventually, though, that conversation needed to move into something more meaningful, which I think started where we got to contracts, where notable CIBBA reform allowed those conversations to happen against sometimes large inertial hurdles that thought that conversation couldn't happen. | ||
|
Scaling SBIR for War Mobilization
00:13:06
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|
unidentified
|
I think we need to get to this third era that actually is how do we turn this into capability? | |
| How do we actually scale to get hardware and software so that this is not an episodic conversation, but this is the way we conduct war in America. | ||
| This is how we mobilize America for war. | ||
| And that is still a gap that I think is needing to be filled. | ||
| But I am optimistic that we are on a path building on these successes and these pilots at this point. | ||
| Look, I agree with you that that's the path forward. | ||
| I'm just questioning whether or not our acquisition process today will allow that to happen. | ||
| Mr. Goertz, we have a rapid acquisitions process that some of the branches are able to access. | ||
| Is there any reason why all of our acquisitions shouldn't be based upon a rapid acquisitions approach? | ||
|
unidentified
|
Sure, I couldn't agree more. | |
| I get a little frustrated when we have the rapid acquisition community and then everybody else. | ||
| We should all be rapid. | ||
| And to your previous point, I'm a huge believer in the networks. | ||
| And we do have a culture of lawyers that look to everything bad about having conversations versus what's appropriate. | ||
| And I think that's an area where we can do much, much better as a community. | ||
| In fact, we have to. | ||
| Mr. Sankar, rapid acquisitions? | ||
| I could not agree more that everything should be rapid. | ||
| Speed is our greatest strength. | ||
| The American entrepreneurial spirit of essentially when everything is on the line, we throw away the rule book and we execute. | ||
| Mr. Dillard, you agree? | ||
|
unidentified
|
100%. | |
| Thank you. | ||
| Thank you, Mr. Chairman. | ||
| Mr. Sankar, if there were a roundtable and your competitors were invited and not you, you'd have a problem with that. | ||
| Well, arguably that's what's happening today. | ||
| I mean, you know, look, it happens. | ||
| People need to get the best counsel they can. | ||
| We need to move together. | ||
| There are going to be lots of opportunities to keep competing. | ||
| What we need to move away from is a big monolithic approach where you had one chance to get involved to actually every quarter. | ||
| We are adapting new technologies and there's a constant kind of reshuffling of who are the performers on the work. | ||
| Very helpful, very helpful, senator Hirono. | ||
| Thank you, mr chairman. | ||
| Mr Diller, as one of the authors of the recently released Blueprint For Breakthroughs in Defense innovation report, you recommend giving the combatant commanders, including in the Paycom, the largest a or specific funding to accelerate the rapid fielding of new technologies to solve theater specific problems. | ||
| What advantages would such a change inject into the defense acquisition system and how would you address concerns from those who argue the combatant commanders already have a say in how do prioritize and prioritizes and procures emerging technologies? | ||
|
unidentified
|
Yes senator, those recommendations were specifically building on the success that chairman Calvert on the House Appropriations Committee championed when he added 220 million dollars of colorless funding to a DIU, agile and enterprise fielding capability. | |
| There there's been incredible success in being able to provide that flexibility directly to the combatant command who right now is urgently developing capabilities to ensure the potential 2027 risk uh is deterred and the to make sure that there is proper balance uh. | ||
| This was specifically how do we move into 21st century acquisitions of making sure that there's a digital thread, there's digital accountability between the appropriators, making sure that that is tied back into a resourcing approach that is institutionalized in the Pentagon and is tied directly to that warfighter capability. | ||
| So it's not necessarily acquisition, it's not acquisition authority, but it is something that's more strength, much more stronger than just the combatant command asking they actually have a say of where dollars go. | ||
| I think that that that is an important kind of a re-looking at who gets to make these kinds of decisions and who gets to weigh in, and I agree with you that I think the combatant commanders should have a greater say. | ||
| For, Mr. Gurz, everyone agrees that DOD's acquisition workforce must manage complex requirements, pathways and extensive reporting structures, which does create a risk-averse culture. | ||
| We it's been acknowledged that the DOD has a risk-averse culture. | ||
| What kind of training Or tools do acquisition professionals need to better leverage the existing innovative procurement pathways like OTA, it's the other transaction authorities or the middle-tier acquisition pathway? | ||
| So we've tried to create innovative ways for faster acquisition, but not if people do not take advantage of these pathways. | ||
|
unidentified
|
Yes, Senator. | |
| There are plenty of pathways. | ||
| At SOCOM, I think we created 17 different ways to buy things, and then we empowered program managers to pick the right one and held them accountable to deliver. | ||
| I think we have to get away from the idea that we're efficient if we pick one way to do everything and then train everybody to one standard as opposed to exposing them to all the different opportunities and then training them what's the right tool to pick for what's the right job. | ||
| Part of that is empowering the program manager so they have the authority to pick that tool and it's not spread out between what legal thinks, what contracts thinks, what the operator thinks. | ||
| I think that will go a long way. | ||
| Do the other panelists agree with Mr. Goertz's approach? | ||
| Yes, I do agree. | ||
| If I would add one thing on top of that, it's really bringing acquisition closer to the operators, to the warfighters. | ||
| There's a way in which we divide these things up so cleanly and expect that acquisition can deliver on its own. | ||
| Another way of thinking about your question on combatant commanders is it's the answer to the monopsony. | ||
| You know, we have 13 co-comms. | ||
| We can introduce a lot more demand signal. | ||
| We should be celebrating the heterogeneity and the needs across our COCOMs rather than having a unitary solution driven by the services that needs to be universal. | ||
| Before I run out of time, I wanted to mention the importance of SBIR. | ||
| And this is a way for us to really support and encourage particularly small companies to be innovative and creative, and we should be supporting it. | ||
| But now apparently there's a pause on these initiatives, SBIR. | ||
| So, Mr. Sankar Mission, I think that you understand the importance of SBIR. | ||
| I'd like to know if the other two panel members agree. | ||
| Mr. Miller. | ||
|
unidentified
|
Yes, ma'am. | |
| I, as the Director of AppWorks, issue thousands of them a year. | ||
| There are reforms that should happen, but it has done incredible things to help mobilize the American industrial base. | ||
| Yes, ma'am. | ||
| Mr. Goertz. | ||
| You agree? | ||
| Thank you, Senator. | ||
|
unidentified
|
Thank you. | |
| Senator Ernst. | ||
| Thank you, Mr. Chair and gentlemen. | ||
| Thank you for being here today. | ||
| I am particularly excited about the discussion today, and I hope that we can take this information and your thoughts and actually act on it. | ||
| So I'll start with you, Mr. Diller. | ||
| I serve as the chair of the Senate Committee on Small Business and Entrepreneurship, and I'm working on a bill to actually reform SBIR. | ||
| While it's important, I agree it needs to be reformed. | ||
| So what I'd like to do is revamp Phase 3 acquisitions. | ||
| And a number of the efforts you've helped create have been very successful in scaling technologies from innovative small businesses to the warfighter. | ||
| So Mr. Diller, how can we reform SBIR and expand on this work across the DOD innovative ecosystem? | ||
|
unidentified
|
Yes, ma'am. | |
| First, thank you for your leadership and being a champion for small businesses. | ||
| We talk about mobilizing America. | ||
| This particular capability with SBIR is key. | ||
| When we picked it up in AFWORCS, it was not a perfect program, but it was a tool that we had. | ||
| And thanks to the help here on Capitol Hill, it has been better year after year. | ||
| I think there are three important things that we need to do in the SBIR program. | ||
| One, I think expanding the number of companies who can get in. | ||
| This frustrates to sometimes the venture capitalists because they can't pick easily. | ||
| But this is a venue, the conversation about how do we bring in many companies for the conversation. | ||
| This is the venue for that conversation. | ||
| So actually, more SBIRs with lower dollar amounts initially. | ||
| But we also need to be very deliberate about scaling and only scaling quickly those best companies. | ||
| We need to be better at judicious reviewers of which companies to scale and then building on things like the Stratfield program that can literally take a company from a $50,000 program in one year to a $50 million program the next year through proper due diligence internal to the Department of Defense. | ||
| The last piece of that is that due diligence, making sure that the dollars that are going through the SBIR program are actually going to American companies and are not feeding the adversary. | ||
| And that piece is making sure that that is consistent and rigorous across the department with clarity for those companies that want to make sure they have clean capital. | ||
| How is that conversation happening? | ||
| And there's more opportunity to build the proper relationship with industry to get everyone on board with that mobilization. | ||
| Nope, that's fantastic. | ||
| And making sure the dollars go to American companies is extremely important as well. | ||
| I have focused on that. | ||
| Mr. Sanker, as chair of the Senate Doge caucus, I couldn't agree more with your defense reformation paper where you state that small business programs should not be welfare. | ||
| I agree wholeheartedly. | ||
| And in the past decade, 25 companies, they're notoriously known in my circles as SBIR Mills, received 18% of all award dollars at DOD amounting to about $2.3 billion. | ||
| That's a $92 million windfall per company in a program meant for small businesses. | ||
| GAO reports that these frequent flyers have lower sales and investments and fewer resulting patents. | ||
| We have a problem here. | ||
| So, Mr. Sanker, how can we eliminate this waste of taxpayer dollars and reorient the SBIR program to its original purpose as a source of merit-based seed funding? | ||
| I could not agree more. | ||
| That's clearly an abuse of the intent here. | ||
| One thing we could think about is time limiting how long a company is eligible. | ||
| It's not just about the size and staying below some sort of threshold, but look, we aspire for this small company to get big. | ||
| And I don't know if the right threshold is five years or 10 years, but there's some amount of time that we would expect you to have the opportunity to get big. | ||
| And we're going to bet on other entrepreneurs in the future. | ||
| The other part is more of a top-down. | ||
| As we measure the efficacy of the CIBRA programs, we should really be thinking about how many big companies were we able to create. | ||
| And I think that will help us have a clear head as we think about the next rounds of investments that we're going to make. | ||
| Yeah, I agree. | ||
| And if you go back and you look at the companies that are benefiting from these programs right now, most of them exist on the East and West Coast. | ||
| Very few of those dollars are actually getting spread into Middle America. | ||
| And I do think that this will change in the future and provide opportunity for more small businesses. | ||
| Mr. Goertz, I will get back with you on questions for the record, but I appreciate your service to our nation. | ||
| Thank you. | ||
|
unidentified
|
Thank you, ma'am. | |
| Thank you. | ||
| Thank you, Mr. Chair. | ||
| Thank you very much, Senator Ernst. | ||
| A few of our members of the committee have referred to a paper written by Mr. Sankar entitled The Defense Reformation, consisting of 19 pages. | ||
| Some of them are just title pages. | ||
| But I ask unanimous consent that we enter that into the record right after Mr. Sankar's testimony. | ||
|
Acquisition Innovation Challenges
00:15:38
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||
| Without objection. | ||
| Without objection, it is so ordered. | ||
| And Senator King, you are recognized. | ||
|
unidentified
|
Thank you, Mr. Chair, and thanks to our witnesses. | |
| I appreciate this hearing. | ||
| I think it's really important that we dig into this. | ||
| And if I could, Mr. Chairman, I'd like to recommend as we're looking at this topic that we also think about a hearing on workforce, because I think acquisition reform is needed. | ||
| I think a lot of our challenges are also around inadequate workforce in the defense industrial base. | ||
| And I'd love to have a committee hearing on that topic as well. | ||
| This is something Mr. Goertz and I have talked about before. | ||
| Mr. Diller, you mentioned DIU, the Defense Innovation Unit, and I want to ask you and then the others, if you care to comment, how would you assess? | ||
|
unidentified
|
I've been impressed with their mission and I've been impressed with some of what they've done, but I haven't been involved with it in a day-to-day way as maybe you all have. | |
| How would you assess both the performance of DIU, but maybe more importantly, the promise of DIU? | ||
| Certainly. | ||
| From a performance perspective, this is a startup inside a very, very complex bureaucracy. | ||
| For years, those startups internal to the bureaucracy largely get eaten by the bureaucracy. | ||
| You can look at the rate of hiring to actually be able to build the organization, even when the top leadership in the Pentagon says go hire, the frozen middle certainly makes that a challenge. | ||
| I saw the same thing when I was in AFWORK. | ||
| So given those headwinds that they must address, I think it provides, they've been making great progress. | ||
| There have been great companies that are getting built because of the collaboration, first that conversation, real contracts and now turning into capability that is actually deterring an adversary. | ||
| What advice would you give to the Pentagon today about DIU and the way they should sort of position DIU within the DOD? | ||
| I think the NDAA that had been passed over the last couple of years of elevating specifically the challenge that we've had with innovation in the past is when these new technologies come to the forefront, it does not necessarily fit in with our traditional program executive officers. | ||
| It doesn't necessarily fit in with our training and adoption pipelines. | ||
| And many times it doesn't necessarily have an obvious fit in one of the services. | ||
| And this is nothing pejorative to the service. | ||
| It's just new and we don't have a home for it. | ||
| And so DIU has fit that place of actually identifying joint capabilities to support the joint warfighter. | ||
| And I think that elevation as it is being reported directly to the Secretary of Defense so that the conversation with great companies in this ecosystem can be free and open so that it is encouraging actual use of existing authorities, right? | ||
| Is it culture change? | ||
| That it is using existing authorities to create the speed so that we can actually move in a relevant pace. | ||
| And I think that structure is, there's a lot still to build out in that structure. | ||
| DIU is the small acquisition piece of this. | ||
| There's an adoption piece on the back end that might not quite be there. | ||
| And there are some questions of what specific problems are these organizations solving. | ||
| That doesn't fit in at the beginning either. | ||
| So there's room. | ||
| Let me switch gears. | ||
| A lot of the testimony this morning has been about encouraging innovation and emerging technologies that, as you say, might not fit directly within the silo mentality. | ||
| I want to talk about acquisition innovation in an ongoing area that we've had a lot of problems, and that's shipbuilding and subs. | ||
| We had to put $5.7 billion at the end of the year into the Virginia-class sub-program to try to move it more into on-time on budget. | ||
| And that was after we did a supplemental bill in April putting money into the program on top of the base budget. | ||
| Mr. Goertz and I have dealt with this. | ||
| What would be a way to think of acquisition reform in the context of like ship and sub-building? | ||
|
unidentified
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Should we look at different contract vehicles? | |
| What would your thoughts be on that? | ||
| Yes, sir. | ||
| I think we should look at innovation acquisition reform in all phases. | ||
| There's great technology. | ||
| We spend over $10 billion a year on SurePrepaire. | ||
| There's state-of-art technology that could enhance that today, reduce those bills, get throughput up. | ||
| I go back to this. | ||
| We need a network of performers. | ||
| We need a big shipbuilding, you know, capitally intensive shipyards, but we need to have them connected to a whole network, whether it's commercial service providers that's got digital data, whether it's NAITES, rapid manufacturing, and adaptable things. | ||
| That's a piece I think we're missing. | ||
| We have these kind of pockets of old legacy things, new commercial things. | ||
| We haven't yet tied that together into a well-performing network where people can come in and out of that network as their performance merits. | ||
| Others have thoughts on shipbuilding in particular in my last 17 seconds. | ||
| Just briefly, if you go look at the whole 30 seconds. | ||
| I'm second. | ||
| Look, we're living in an industrial age that does not match the talent pool that we have out there. | ||
| We must think about what the next leap is in manufacturing. | ||
| So that back to the workforce question. | ||
| I appreciate that. | ||
| Thank you, Mr. Chair. | ||
| Thank you very much, Senator Kaine. | ||
| Senator Budd. | ||
|
unidentified
|
Mr. Gertz, thanks for your service for U.S. SOCOM. | |
| So what are some of the takeaways that you've had from SOCOM's approach to rapid acquisition, and do you think it's realistic to apply those lessons learned to military services? | ||
| Absolutely. | ||
| I think a couple of those key things are rapid decision-making, creating venues to get exposed to all the technical capabilities and performance that are out there, like SoftWorks. | ||
| I think it is having the trust of Congress and a relationship to be flexible. | ||
| And I think it's empowering the program executive officers to manage a portfolio, not manage individual programs. | ||
| I appreciate that. | ||
| Mr. Sankar, Mr. Diller, Mr. Sankar, we'll start with you first. | ||
| So what's been your company's experience having navigated the Pentagon's accounting and invoicing standards, regulatory requirements, terms of payment, all that? | ||
| How has that affected your ability to do business with the DOD? | ||
| And you said you've been there, I believe, a couple of decades, Mr. Sankar. | ||
| So maybe in the early days as a smaller company, it may be much more intimidating at that point. | ||
| So if you want to go back in history a little bit, what was it like as a startup trying to do business with DOD? | ||
| It was quite complicated. | ||
| I can't tell you the number of times we submitted invoices and somehow didn't fill out the right tick box somewhere and that meant the invoices would get kicked back. | ||
| People always say you can count on the government to pay its bills. | ||
| I think you can in the end, but perhaps not always on time, just given how Byzantine the process is. | ||
| So I think it's not commercial. | ||
| That's kind of the reality of it. | ||
| And we should be thinking about where the divergence from commercial standards helps the taxpayer, helps the government, and where is a vestige of how we've built the system over time. | ||
| I think it does act as a deterrent to new entrants coming in. | ||
|
unidentified
|
So for the small business folks that are out there listening, what would payment terms be like for a small business perhaps in the early days? | |
| What would be expected? | ||
| Well, everything is paid in arrears, of course, so you can't structure it any other way. | ||
| Maybe the payment terms are quite reasonable, net 30, something like this. | ||
|
unidentified
|
And then what's the difference between that and reality? | |
| Yeah, you could probably add a couple months on that. | ||
|
unidentified
|
Ouch. | |
| Well, I'm glad you survived. | ||
| Mr. Diller? | ||
| Sure. | ||
| We have one contract right now with the government that is a cost accounting. | ||
| If we can avoid it, we will not do that again. | ||
| It does not serve, I don't think, the government well for this type of work, and it certainly does not serve the small business well. | ||
| And so I think there are, you know, going back to this question of the reviewer versus the doer, we still have failed to get the Department of Defense into the 21st century to digitize the reviewer part at a pace of relevance so that there can be more doers. | ||
| And that work still is lacking significantly. | ||
| It's slowing down the government, it is creating waste, and it is keeping us from getting the best technologies in the hands of our warfighter. | ||
| Thank you. | ||
| Mr. Goertz, you know, acquisition professionals, they often cite the high costs, the robust penalties, and disincentives to taking programmatic risks. | ||
| And I think it results in a culture of compliance or innovation. | ||
| You've mentioned that a little bit this morning. | ||
| So in contrast, in the non-DOD world, many industry-leading companies, they celebrate failure and they adopt an iterative approach to learning quickly. | ||
| How might program managers be able to achieve rapid iteration while minimizing the risks of failure? | ||
| It seems to me, if you want to address the cultural issue here, and I don't know if it's a class or I've heard somebody ask what tools do you need. | ||
| I think it's more than that. | ||
| I think it's a cultural issue. | ||
| So if you agree or disagree, please weigh in on that a little bit too. | ||
| It is absolutely a cultural issue. | ||
| There's training you can do to expose people to the tools, but if they're in the wrong culture, they won't take advantage of the tools. | ||
| And so I think it goes back to being outcome focused, having unity of command, who's in charge, and then holding that person accountable. | ||
| And in the SOCOM world, there was more of that than there was, and there was flexibility. | ||
| You can create strategies where you'll have rivalries and multiple performers because you can act very efficiently. | ||
| And then if a company performs well and has a product the operator wants, you buy more of them. | ||
| If they don't, you buy less and go to a different product. | ||
| That doesn't align well with a centrally planned, you know, where 30 percent of our program elements are less than $10 million a year, where you send 47,000 pages of budget documentations, and then you get hauled up in front of a staffer if you make a decision that's the right decision but doesn't align with that bureaucracy. | ||
| We've got to get to a better spot in that regard. | ||
| Thank you. | ||
| Thank you, Senator Budd. | ||
| Senator King. | ||
|
unidentified
|
Thank you, Mr. Chairman. | |
| I'd like to go back to Senator Reed's opening statement at the end where he talked about Churchill and the necessity of thinking first. | ||
| The first step, it seems to me, in this process is to have a better focus on what we need in the future and not what we needed in the past. | ||
|
unidentified
|
The prime examples to me are hypersonics and directed energy. | |
| The ground-based interceptor program, those missiles up in Alaska that are designed to hit a bullet with a bullet, are $70 million apiece. | ||
|
unidentified
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By the way, I got that number from an AI app on my phone. | |
| But the point is we have been fighting the last war. | ||
| Instead of talking about directed energy, which costs 50 cents of shot rather than 70 million, the focus has been on missiles and missiles. | ||
| And by the way, those missiles won't do anything with hypersonics. | ||
| That's another technology that we were late on. | ||
| And so this process has to start with acquiring the right things. | ||
| New technologies win wars. | ||
| Genghis Khan conquered the world because of the invention of the stirrup. | ||
| The Battle of Agincorps was won by the longbow. | ||
| World War I, the tank. | ||
| World War II, the atomic weapon. | ||
| So we are, I think this discussion has to start before we get to all the processes that we're going after the right products. | ||
| Mr. Seichard, do you have any thoughts on that? | ||
| Yes, I do. | ||
| I love the tank example in particular because it was the Royal Navy that built the tank. | ||
| It was widely. | ||
|
unidentified
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They were called tanks because the code name was Tankers for the Eastern Front or something like that. | |
| And I think this shows you, I think before the tank, there was the land boat, which Churchill, you know, this seems to be a hearing about Churchill in many ways. | ||
| But the reason I think that's really important is it was a heterodox approach. | ||
| If you had asked the Army, the British Army to think of what they were going to need to win World War I, they would have been wrong. | ||
| In fact, they were wrong. | ||
|
unidentified
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They would have said more troops and deeper trenches. | |
| And so how do we have to recognize that the innovation to fight and win the next war will come from the edges of our military, the people who are closest to those problems? | ||
| It's very unlikely to come from this city. | ||
|
unidentified
|
Well, we wouldn't have had a nuclear Navy but for Admiral Rickover. | |
| And as Zumbalt said, the Navy had three enemies, the Soviet Union, the Air Force, and Hyman Rickover. | ||
| So he was not widely loved. | ||
| But I think we need more tolerance for the heretics, you know, because these heretics end up being our heroes. | ||
|
unidentified
|
Well, I hope that, and I don't know how you inject creativity into the process. | |
| Mr. Kirst, do you have any thoughts on that? | ||
| I also think, sir, that we need to invest in the capacity to act quickly. | ||
| So back to Mr. Diller's comment, even if we plan much better, if we don't have the industrial network that can react quickly, then we're going to, if we have to wait to create that, decide the perfect thing we want. | ||
| And so I'm also a fan of the plan for the unplanned, create the capacity, rebuild. | ||
| We've lost the middle of our industrial base. | ||
| We've got very big performers, a lot of little small performers. | ||
| And that's where I think the commercial marketplace venture, you know, scaling into that middle becomes really important. | ||
| Speaking of acting quickly, this is a chart that derived from our dear departed Chairman Jim Inhoff. | ||
| It compares the time it takes from concept to a new product. | ||
| Starting back in 1945, the dark line is a military aircraft. | ||
|
unidentified
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The light blue line is a commercial aircraft. | |
| And the red line is an automobile. | ||
| So back around in the 60s and 70s, those three things took about the same time to get to prototype and actually going. | ||
|
unidentified
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But something happened. | |
| And now a military aircraft is like 25 or 30 years from concept to development. | ||
| Commercial aircraft, much, much faster. | ||
| And an automobile has gone down. | ||
| So I believe that a lot of this is because of the bureaucratic things that we've been talking about today, the impediments to actually getting some of these products to market. | ||
|
unidentified
|
The other thing that bothers me is the proclivity of the Pentagon to have to have its own product. | |
| It can't buy something off the shelf. | ||
| Senator Tillis used to bring the spec for the handgun, which was, I don't know how many thousand pages, instead of going to a commercially available handgun, all of that we require. | ||
|
unidentified
|
Requirements creep is another problem. | |
| The definition of requirements and then requirements keep stacking up. | ||
| Mr. Diller, you have any thoughts on those ideas? | ||
| Sure. | ||
| The Air Force has emptied the museums and the boneyards for C-130 pubcaps. | ||
| This took us days to build. | ||
| It will take months to get it certified. | ||
| It finally was, to fly. | ||
| It took months to certify. | ||
| Nothing changed. | ||
| The data was available on day one. | ||
| The hardware was available on day one. | ||
| It did not change. | ||
| We have to change the pace of adoption. | ||
|
Protest and Risk Aversion
00:14:32
|
||
|
unidentified
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We must digitize our industrial base. | |
| We must digitize our bureaucracy. | ||
| With your indulgence, Mr. Chairman, one of the problems is the risk averse, which has been discussed. | ||
| As I've observed, the development of hypersonics, for example, the Chinese seem willing to fail. | ||
| They do tests and fail. | ||
| We have to have every test work, and that has dramatically, in my view, slowed down our development of some of these important technologies. | ||
|
unidentified
|
Mr. Sanker, you're nodding your head. | |
| Is that correct? | ||
| I mean, just like the Starship. | ||
| Elon learns more from the Starship breaking up than he does from inherently waiting and slowing down to get the right perfect launch one time around. | ||
| The value, the rate of learning, the first derivative of learning, is our competitive weapon. | ||
| It is how quickly we are adapting, not what are we capable of doing today. | ||
| It's how much are we changing tomorrow. | ||
| I could not agree more. | ||
|
unidentified
|
Thank you. | |
| Thank you, Mr. Chairman. | ||
| Well, thank you very much. | ||
| Now, before I recognize Senator Banks, I think we need to add to the record a smaller copy of that chart that I find it very interesting. | ||
| And also, Mr. Diller, if you don't mind, Senator Banks, what is the object that you just picked up? | ||
| And tell us a little more about that. | ||
|
unidentified
|
So, Senator Wicker, going to your first point, if America goes to war tonight, we will go to war with the multi-trillion dollar legacy force that we have today. | |
| When we talk about innovation, while there are great third offsets, hedge forces, replicators of autonomous robots, we must make sure that innovation is supporting the multi-trillion dollar force that we have today. | ||
| The C-130, as the Air Force has said, did not have a supply chain for hubcaps. | ||
| They had emptied the museums, they had emptied the boneyards. | ||
| This is available to be 3D printed, literally designed by Kevin Zinger and his team at Divergent Technologies, and did it in days, digitally designed. | ||
| There was a degree of data available that is unprecedented with legacy approaches. | ||
| But the challenge of getting this adopted into the DOD bureaucracy is one that it goes back to this risk aversion. | ||
| It goes back to how do we digitize this entire system, how to use digital engineering and digital manufacturing, because this saves the taxpayer billions of dollars, and it allows aircraft that are available today in a legacy force to fly tonight. | ||
| Many of them cannot do that today because of the horrific, horrific debt that we have at our depots and in our sustainment enterprise. | ||
| This needs innovation. | ||
| It is there and available. | ||
| Be a little more specific about what the holdup is. | ||
|
unidentified
|
The holdup is the risk aversion. | |
| Look, there are things that fail. | ||
| It goes through our airworthiness processes. | ||
| As you look at this, in some instances, there are some parts that if they fail, it is a loss of human life. | ||
| And how is it that we make sure that we're using digital approaches to identify where are those safety critical things? | ||
| How do I consume data in a 21st-century manner that is a digitized touch to that engineering design that is taking a degree of data when we are certifying cars parts for Aston, Martin, Bugatti, McLaren? | ||
| We are doing that with data sets that are unprecedented and unconsumable today by the Department of Defense. | ||
| Those companies, the highest, the most highest brand name companies in the world would not be offering those safety-critical parts on their vehicles if they did not have assurance of those data sets. | ||
| When we look at the Department of Defense, that's going to take years unless there is encouragement. | ||
| And thanks to your team, this initial language started with the 25 NDAA. | ||
| We must build on it. | ||
| We must drive that adoption. | ||
| There are incredible innovators in the Department of the Air Force that want to do this, but it is going to take a nudge to actually digitize and to make sure that that massive risk aversion is saving dollars for the taxpayer and providing warfighting capability. | ||
| Thank you very much, Senator Banks. | ||
| You've been indulgent, and the chair will be indulgent with you on your question. | ||
| Thank you, Mr. Chairman. | ||
| Mr. Sankar, what kind of a difference would it make if we gave the combatant commands their own acquisition authority? | ||
| I think it is the single biggest difference that we can make here. | ||
| You know, the Department of Defense is the only institution I know of that divides up supply and demand. | ||
| The integration of supply and demand is the beating heart of any company, that consensus driving process. | ||
| The COCOMs handle the demand, real-world events, the services man, train, equip. | ||
| They provide the supply. | ||
| That would work if we really thought every COCOM and all needs were perfectly knowable and unitary across space and time here. | ||
| But actually, all of our advantage comes from the fact that we might need slightly different things, and the signal for where that comes from is the combatant commander. | ||
| So how do we give the people closest to the fight the ability to express a little bit of competitive demand signal? | ||
| 90% of what you want is probably coming from the services, but that 10% gap is what's going to make or break us in that fight. | ||
| How do we give them a little bit of budget, a little bit of authority, an ability to break the monopsony and introduce something like a free market where there's multiple demand signals coming? | ||
| And if we go back to a world where like, how did we have a world where every service was competing to build an ICBM? | ||
| Well, maybe a COCOM commander should decide whether the Navy or the Air Force has the better idea and concept for their specific force employment or the emergent needs that they're actually seeing. | ||
| And I think that competition will get us all to be better. | ||
| Seems like common sense. | ||
| Why aren't we doing that already? | ||
| You know, I think having the luxury of having won the Cold War is we view that as duplication. | ||
| We view that as wasteful. | ||
| Why can't we just pick the right answer up front? | ||
| I think our system is exquisitely designed to solve all problems that can be solved deductively, top-down. | ||
| We can think our way through it. | ||
| But the promise of America is that there's so much messiness. | ||
| It's all inductive. | ||
| Our system is very, very bad. | ||
| It's poorly set up currently to find the things you've got to reason your way through. | ||
| You've got to experience it, roll up your sleeves, get dirty, and realize new insights as a consequence of doing that. | ||
| I think we solve that by giving a little bit of strategic autonomy to the COCOM commanders to buy what they need and to build what they need. | ||
| So play that out. | ||
| How would the services and the defense agencies react if they had to compete with another body? | ||
| I think, you know, like most people don't really like competition. | ||
| Of course, part of that's going to be a threat. | ||
| But I think what you would, if you get past the initial hysteresis you'll have, the next step from that is, okay, well, how do I actually change what I'm building so that the COCOM commander wants what I'm building? | ||
| That's where we're going to start to get the leverage from that. | ||
| You know, I can think about it as this is also the idea around competing programs and competing program managers that I saw in the Forged Act, where if we have, you know, what is the incentive for a program manager to adopt new commercial approaches that actually disrupts their existing program? | ||
| So I think today's incentive with a unitary effort is deny, deny, deny, pretend it doesn't exist, block it, versus actually I'm competing against another great American one corridor down. | ||
| I want to be the first person to adopt the disruptive technology so that I can win. | ||
| Do you have a good example where the combatant command's lack of acquisition authority caused delays or even hurt the mission? | ||
| Well, I think you could look at the success of Project Maven, which really didn't come from the services. | ||
| You know, people love to deride OSD-level efforts as bureaucratic or not sustainable, but that innovation really came from the 18th Airborne. | ||
| It came from CENTCOM. | ||
| It came from UCOM. | ||
| It came from the Afghan NEO. | ||
| It came from the emerging demand signal in the world, the crisis that had to be responded to. | ||
| The learning that could only happen there folded in capabilities that ultimately scaled to the force. | ||
| Mr. Gertz, program managers in the private sector are obviously paid more than government employees. | ||
| They also get bonuses and stock options for good performance. | ||
| But in DOD, the uniformed military personnel and civilians managing our critical weapons programs get paid the same whether they deliver or not. | ||
| Do you think the limited pay-for-performance system that the DOD has tried has worked? | ||
|
unidentified
|
My experience, both personally and professionally, is it's not a pay issue. | |
| The high majority of program managers want to deliver an operationally relevant capability for the warfighter. | ||
| They are just mired in a bunch of distractions, a bunch of outside stakeholder. | ||
| Many more people can say no than can say yes. | ||
| And so they spend 90% of their time managing the bureaucracy, not managing the effort. | ||
| And then I think the other piece is we've got to also get to the point to be innovative, you have to start things quickly. | ||
| We also have to be able to kill things quickly. | ||
| And for lots of different reasons, and I think that's one of the challenges: if you give COCOMs acquisition authority, we'll start a lot of things. | ||
| But if we can't kill the things that aren't performing for whatever reason, then you won't have a highly functioning adaptive system. | ||
| Well put. | ||
| I yield back. | ||
| Thank you very much. | ||
| Senator Kramer. | ||
|
unidentified
|
Thank you, Chairman Wicker, Senator Reed. | |
| Thank all three of you for being here. | ||
| I've stayed the whole time because this is what, frankly, this is why I'm here, is what you're talking about. | ||
| I'm not sure of all the solutions, but so far I like what I'm hearing. | ||
| And this is exactly why, by the way, Senator Kelly and I stood up the Defense Modernization Caucus. | ||
|
unidentified
|
So thank you for your comments today. | |
| I'm going to go a completely different direction than I was planning to, or that my staff was planning me to. | ||
| I was thinking back to my first days on SASC in the Senate, and it was at that time when DOD was looking for somebody to win a contract for computing, cloud computing, and the JEDI, remember the JEDI competition. | ||
|
unidentified
|
And I remember they chose Microsoft and Amazon early 2019 to compete. | |
| Late in 2019, they awarded to Microsoft. | ||
| And what did that, what resulted in that was, of course, an immediate protest. | ||
| And then they went on a while longer, flipped the script, chose Amazon, then Microsoft protested, and then NSA took over. | ||
| And anyway, about five years later, we finally have multiple companies doing cloud computing. | ||
| I was very frustrated by the ability for a company who didn't win the contract, regardless who the company is, to protest the company who did and then hold up modernization by five years. | ||
|
unidentified
|
Now, a lot of things were happening in the meantime. | |
| But then we fast forward to today where we read about now what I believe to be the most innovative agency within the DOD, the Space Development Agency, which has been under attack since the day we stood it up by swamp creatures and legacy space operators and legacy acquisition of procurement officials and a protest that I almost guarantee you will slow up. | ||
| proliferated war fighter space architecture, which is the worst thing that could happen. | ||
| And it's even led, as you know, to a PIA claim that looks more political than it does real to me, quite honestly. | ||
| And I would just like each of your comments or opinions about the protest regime and whether there's more that can be done there. | ||
|
unidentified
|
Don't get me wrong, competition requires the ability to challenge, but it shouldn't provide the opportunity to make the country less safe. | |
| And I'll just start with you, Mr. Gertz. | ||
| We can just go down that. | ||
| Yes, sir. | ||
| I do agree there needs to be an avenue, but that avenue over time has gotten abused. | ||
| One thing I suggested early on was you get one bite at the apple. | ||
| You could protest the GAO or Court of Federal Claims. | ||
| You couldn't protest twice. | ||
| I also think there should be some look at behavior over time and some disincentive for what I would call chronic protesting, particularly by incumbents. | ||
| I agree. | ||
| It's also been abused. | ||
| I think it's a hard problem for the reasons that you've already articulated, but I think one way that we could really buy this down is by doing more bake-offs, more things in parallel, getting more things fielded, because anyone can win a fiction writing contest. | ||
| You know, that has no correlation to your ability to perform. | ||
| But when we have the satellites in space, we'll be able to tell one way or another. | ||
| Maybe we'll decide, actually, we should have 50-50. | ||
| Maybe we should have multiple performers. | ||
| Maybe we're making bad decisions because we're evaluating you through a fiction writing contest instead of empirically in the field. | ||
|
unidentified
|
I thought, by the way, the examples one of you used a little bit ago of Elon Musk learning more from Blow Down. | |
| I was at the Starship launch with President Trump, and it was very confusing for several of the business people there to hear Elon speak so positively about the booster that didn't come back and they had to put in the water. | ||
|
unidentified
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But we learned so much, you know. | |
| That's a tough culture in our business and in government, but it's one we have to foster. | ||
| Mr. Diller, your comments on the protest. | ||
| Sure. | ||
| It gets to that risk. | ||
| I went to the French test pilot school, and the speed that my five-year-old was able to learn French compared to me, he didn't care, right? | ||
| He did not have this risk-averse culture. | ||
| It's the same with Elon Musk. | ||
| When we look at these protests, if we take this approach, our chairman of the Joint Chiefs of Staff uses this phrase, acquire to require, and it's exactly what Sean was saying. | ||
|
Pricing Data Transparency
00:15:36
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|
unidentified
|
How do we slowly build trust? | |
| Because at the core, it's a trust issue. | ||
| If we actually work together at the beginning in ways that OTs allow us to, that trust can be built. | ||
| Thank you very much, Senator Kramer. | ||
| Mr. Sankar, before I go to Senator Warren, do we have the statutory authority in place to have the type of bake-off that you described? | ||
| We absolutely do, and we have participated in just those sorts of down-select processes. | ||
| Okay, so it's just a matter of the volunteers. | ||
| Senator Warren. | ||
| Thank you, Mr. Chairman, and thank you for holding this hearing. | ||
| So DOD buys a lot of stuff from defense contractors. | ||
| And to protect the military and taxpayers, it's long been the law that defense contractors must give DOD contracting officers certified cost and pricing data to help verify that a price that's being charged is fair and reasonable. | ||
| One of the big exceptions to this, though, is for, quote, commercial goods and services based on the principle that the market will make sure it's a fair price. | ||
| If you could buy it on Amazon, that's a fair price. | ||
| You don't have to go into all the background on how you got there. | ||
| I get that. | ||
| And I am all for commercial buying. | ||
| But the fact is, this has turned into a massive loophole where big defense contractors withhold data even though there's no market and DOD, effectively the only customer, doesn't have this information so that these giant companies can price gouge the military. | ||
| So I want to give you an example here. | ||
| For years, the Army was buying Chinook helicopter engines from Honeywell. | ||
| And Honeywell successfully lobbied Congress so its engines would be treated as commercial and Honeywell wouldn't have to turn over the certified cost and pricing data. | ||
| Now, Mr. Sanker, you're the CTO of Palantir, a billion-dollar tech company that contracts with DOD. | ||
| Once Honeywell got the engine moved to a commercial engine, what do you think happened to the price? | ||
| I'm not familiar, Senator. | ||
| Well, it went up, not down, by 100%. | ||
| And that's the problem we've got here. | ||
| Too often, DOD is outgunned when it is negotiating with these giant defense contractors, which is exactly why it needs the cost and pricing data to avoid being ripped off. | ||
| Now, Mr. Sanker, your company, Palantir, is looking to create a consortium with another defense tech company, Andreal, is that right? | ||
| Yeah, to jointly bid for something called, quote, other transactions agreements, or since we have to give everything initials, OTAs, where the government also waives taxpayer protections on how to get pricing information. | ||
| And I'm sure it is not your intent to team up with another organization in order to price gouge the military. | ||
| So this next question should probably be easy here. | ||
| DOD's inspector general recommended requiring big contractors to alert military contracting offices when the price of a good or service goes up by 25 percent. | ||
| In other words, move it up so other people know and can get eyes on it. | ||
| Mr. Sankar, do you agree with the IG's recommendation? | ||
| I do agree. | ||
| I think the price signal is part of the competitive market and encouraging more entrants and capital to efficiently be allocated to price improve things. | ||
| Excellent. | ||
| And will Palantir agree to do that voluntarily? | ||
| I would defer to my team here, but I don't think we would have any conceptual disagreement with that about. | ||
| Okay, so can I treat that as a yes? | ||
| I would defer to my team. | ||
|
unidentified
|
Well, I want to be clear here because I don't speak on the business side. | |
| Look, we only know about most of these overcharges because of the work that the Department of Defense Inspector General has done. | ||
| This is the person who President Trump just illegally fired on Friday night, along with at least 16 other IGs. | ||
| I am deeply concerned that this administration is removing exactly the cops on the beat that we need to identify waste and to prevent these kinds of increases. | ||
| So, Mr. Sanker, do you think it helps or hurts national security to have Senate-confirmed watchdogs who can be there on pricing questions like this to call balls and strikes? | ||
| As a technologist, what I can speak to is when you look at Intel in the late 60s, 96% of the market for integrated circuits was the Apollo program and the DOD. | ||
| But Bob Noyce says the co-founder of Intel, the co-inventor of the transistor, always envisioned a bigger commercial market. | ||
| Our ability to deliver a salt breaker and ultimately have an asymmetric threat against the Soviets. | ||
| Can you relate that to the question? | ||
| I'm just going to get there. | ||
| So our ability to deliver a salt breaker was because actually he could create integrated circuits that were thousands of times cheaper than when we were building Apollo. | ||
| That was only possible because he had an eye towards the commercial market. | ||
| So I completely agree that if you have a fake commercial item that doesn't actually have commercial applicability, if the company is not able to leverage a diversified RD base that goes beyond the government, that that is the promise that should lead to price performance improvements for the government, then you're not getting the value of the commercial item. | ||
| But when we look at space, for example, I grew up in the shadow of the Space Coast. | ||
| The cost to get the cost to get a kilogram into orbit for the shuttle was $50,000 a kilogram. | ||
| The cost with Starship heavy reuse will be $10. | ||
| So, Mr. Schecker, I very much appreciate that you're trying to push here on cost. | ||
| I am too. | ||
| The question I had asked you is whether or not we need IGs who are the whistleblowers who say people are cheating on the cost, for example, on the definition of commercial, or somebody who can help us bring these costs down. | ||
| Pentagon is spending $440 billion this year on contracts. | ||
| It's important for us to get better procedures in place to get some eyes on what they're doing. | ||
| And IGs help us do that. | ||
| Thank you. | ||
| Thank you very much, Senator. | ||
| Perhaps Mr. Sankar would like to respond on the record to that last matter. | ||
| And with regard to deferring to your team, once you've had a chance to do that, perhaps, Mr. Sankar, you could supplement your question on the record along with other things. | ||
| Senator Schmidt. | ||
| Thank you, Mr. Chairman. | ||
| And I'll start where Mr. Senkar left off and ask a question. | ||
| And all three of you feel free to chime in. | ||
| I also serve on the Commerce Committee. | ||
| And to my surprise, in my first year, I was named the ranking member of the Space and Science Subcommittee. | ||
| I would not have put that on my bingo card in coming into the Senate in my first two years, but I found it fascinating because of the innovation that's happening in space, driven by the commercial private sector, right? | ||
| One of the things that we were able to do was to extend the learning period, which is kind of essentially allowing these companies to innovate and any regulations that would come really sort of follow the path of what has worked. | ||
| So not to artificially constrain the innovation on the front end with a bunch of bureaucrats who are just sort of making it up, not really knowing where the, you know, what the rules of the road really should be. | ||
| I'm wondering, is there a scenario or how would we construct something similar? | ||
| I mean, we're all trying, we're all getting at this challenge of innovation. | ||
| And how do you unlock it in what seems to be a Pentagon that has just sort of been captured by centralized planning? | ||
| I mean, I think our great advantage against communist China is our ability to innovate. | ||
| They're really good at copying. | ||
| We're really good at innovating. | ||
| But if we hamstring our ability to innovate, we lose our advantage, right? | ||
| So this example of a learning period as it relates to commercial space, what would be a version in your mind that we could sort of replicate in the NDAA? | ||
| Well, I think commercial space is a great example where SpaceX wasn't given the monopoly. | ||
| They had to earn it. | ||
| We had multiple competing approaches to get to space, and they thought that they could do that at a price performance level no one else could. | ||
| And that's clearly been proven to be true. | ||
| And I think if we applied that more generally, which is like the inductive bottoms-up innovation is the American spirit. | ||
| That is our competitive advantage. | ||
| How do we get more shots on goal for all the efforts we're going to? | ||
| Less certainty in the top-down centralized planning, more space to have new performers, new entrants present the heterodox ideas. | ||
| I think for that to really take hold, you either need to have competitive program offices within the services, or you need to empower the co-comps to create that sort of demand signal that varies that pushes and pushes the adoption of innovation. | ||
| If I look at our own company, the history, all of our adoption came from the field. | ||
| It came from Iraq, it came from Afghanistan. | ||
| It didn't come from the program offices. | ||
| It actually came despite the program offices. | ||
| They were resistant to this as something that was going to screw up their cost schedule performance. | ||
| And so I think if we, the kiss of death, would be trying to create some sort of smooth process to go from new ideas that are innovative to scaling them. | ||
| I promise you that is always going to be hard, that is always going to be messy, it's going to be interpersonally frictionful. | ||
| If we wrap that in process, we will kill it and smother it. | ||
| But if we enable ourselves to lean into that friction, we will be able to feel the cutting-edge technologies we need. | ||
| So, in addition, I want the other two to chime in too. | ||
| So, in addition to in our meeting prior to this hearing, we talked a little bit about having the competition among services as an idea. | ||
| Combatant commanders having some flexibility to adjust, so whether it's sort of a separate pot of money dedicated for that. | ||
| We've talked about in this committee about having a separate pot for you know smaller players, the disruptors who might come into the marketplace. | ||
| What other concrete ideas exist? | ||
| And I guess, because I won't have time to ask the second question, but in the context of if we were at war right now, like let's say we're at war with China tomorrow, like what would we do differently? | ||
| Like, what would we do differently that we're not doing now? | ||
|
unidentified
|
Yeah, just quickly and happy to do a follow-up. | |
| But I think we leverage the full, I go back to this industrial network. | ||
| We have tremendous commercial capacity we aren't tapping into and leveraging. | ||
| We have tremendous, we have to rebuild manufacturing, but not rebuild what we used to have, rebuild it with modern technology that's flexible. | ||
| We have to think about, let's take contested logistics, leveraging electric vehicles, things that already exist, rather than trying to recreate this giant purpose-built force, become really fast adopters, integrators, and not try and be the inventors of everything. | ||
| There's plenty of invention around. | ||
| We need to be super fast at importing it, integrating it, and then getting it into the hands of our women and men in service. | ||
| I think there are models that exist. | ||
| They have been practiced over the last few years. | ||
| They were not scaled. | ||
| I don't know that we have the structure to actually go scale those currently. | ||
| We have done incredible work. | ||
| The department should be commended on incredible work of these multiple pilot projects. | ||
| Eventually, that must turn into without becoming overly bureaucratic, right? | ||
| This is the risk. | ||
| Build on those successes of reaching out to thousands of companies, and speed is everything. | ||
| How do you scale them in a relevant timeline? | ||
| It's possible. | ||
| It does require some flexibility. | ||
| It requires transparency from the department. | ||
| That's going to create the trust for speed. | ||
| Thank you. | ||
| Thank you, Mr. Chairman. | ||
| Thank you, Senator Schmidt. | ||
| Mr. Sankar, I'm so glad Senator Schmidt asked that question. | ||
| If we found ourselves at war immediately, go ahead and be the third response to that question. | ||
| I think we would lean in heavily into the primacy of people. | ||
| Do you have the right person in charge of these programs? | ||
| You'd stop rotating them immediately. | ||
| You'd go deep on focus. | ||
| You'd probably do a lot more with vertical integration of the capabilities, not reliant on thin horizontal supply chains. | ||
| But I think we would organize around the most credible people and humans we have and limit the number of programs we have, concentrate our arrows behind those things. | ||
| And today, we kind of have this bingo card approach to rotating our general officers around, making sure in the spirit of jointness that they have this array of experiences. | ||
| I think that probably helps you in peacetime, but I think it strictly hurts you. | ||
| You haven't even been in the role long enough to learn from the mistakes you've made. | ||
| You don't even know their mistakes yet. | ||
| It takes a long time for these programs to get to the point where you're up the learning curve. | ||
| I don't think you could just randomly replace Elon or Glenn Shotwell and expect these rockets to keep working. | ||
| They have accumulated this knowledge over 20-plus years of building them. | ||
| Are we in peacetime now? | ||
| In my opinion, no. | ||
| But I think we've got to get the whole country to realize that. | ||
| Thank you very much. | ||
| Senator Rosen. | ||
| Well, thank you, Chairman Wicker, and, of course, Ranking Member Reid. | ||
| A really important hearing. | ||
| I'd like to thank each of you for being here and testifying today. | ||
| You know, I want to build upon a little bit about what Senator Warren brought up on competitive pricing, because consolidation of our defense industrial base is concerning, to say the least. | ||
| Because since the 1990s, the number of U.S. aerospace and defense prime contractors have shrunk from 51 down to five, 51 to 5. | ||
| As a result, the Department of Defense is increasingly dependent on a small number of contractors for critical defense capabilities. | ||
| This constrains us in many ways, and I hope for a bigger conversation on the value of early stage research and what it can teach us. | ||
| You've been speaking to that, but that's a much larger conversation we can have in five minutes. | ||
| Mr. Diller, how should DOD help support advanced technology, small businesses that do that, especially those who struggle to find private capital? | ||
| We want them to be more attractive for investment so they can survive the infamous Valley of Death stage, accomplish technology transition, and become part of our defense industrial base. | ||
| And for Secretary Goertz, I'm going to ask you a follow-up. | ||
| For those defense-focused small businesses who can't find the private capital, they don't make it across the Valley of Death, how might public-private partnerships incentivize domestic investors to help support them? | ||
|
Scaling Incubator Technologies
00:04:10
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||
| So, Mr. Diller and then Mr. Goertz. | ||
|
unidentified
|
Yes, ma'am. | |
| Thank you. | ||
| When we launched what we called AFWORX 2.0 in 2020, we created this process called this AFWORX Prime process. | ||
| You can say what you want about the particular marketing arena, but what it did is it recognized that there are many technologies, emerging technologies, that DOD can actually become an incredible incubator to, one, reduce the technical risk, two, reduce the regulatory risk, and three, reduce the adoption risk. | ||
| And we were able in a few instances to actually, I think, establish a dual-use set of technologies to some degree an actual market in America because of that approach. | ||
| Because very quickly, some of those companies at the beginning came in on a $50,000 small business contract that we've been talking about. | ||
| But we were given authorities to turn that $50,000 contract into a $50 million contract over the course of a year. | ||
| And so speed is everything. | ||
| Getting the Department to understand the critical nature of speed. | ||
| And as we are in a wartime footing, that is ever more critical. | ||
| Those things have been piloted. | ||
| There have been initial moves by the Department to create the flexible funding to actually get them to scale. | ||
| We must double down and make sure that that success can scale. | ||
| Mr. Goertz, what do we do if they don't make it across? | ||
| How do we incentivize these public-private partnerships? | ||
|
unidentified
|
I think we need to be careful that I don't think every company is going to make it across. | |
| And we want to make sure we don't over-rotate the other way so that if you don't have a product that meets a need at a price that's affordable and reasonable, then you may not make it across. | ||
| Where I do think we have to focus more is how to quickly scale the products and services that we need. | ||
| And in many cases, these small businesses have a piece of the solution, but aren't the whole solution. | ||
| And so that's where I think there's opportunity to create a network where either they get together or they band together with either a commercial or another company that can help get them across. | ||
| You can connect them, they can potentiate their value together. | ||
| Well, I want to keep a little bit on this potentiation because technologies depend on a fragile global supply chain, from critical minerals to semiconductors. | ||
| Nevada, of course, my home state, we mine lithium, magnesium, and other critical minerals. | ||
| Well, we have a role to play in these technologies too, but only if we make a concerted effort to strategically leverage our resources, leverage our advantages to overcome our global supply chain challenges. | ||
| So, again, Secretary Goertz, what specific strategies can the U.S. employ to mitigate these vulnerabilities, investing in domestic industry to help strengthen our supply chain resilience? | ||
|
unidentified
|
I'm really optimistic on the focus of not only owning our supply chain, but adding multiple sources of supply to build resilience. | |
| And I think five years ago, that wasn't part of the conversation. | ||
| It's part of every conversation now. | ||
| And looking at all the resources we have and then how do we incentivize that is going to be critically important, whether it's the rare earth and minerals all the way to being able to remanufacture a part that has been out of production for 30 years. | ||
| Thank you. | ||
| And I'll submit this question for the record. | ||
| But as the only former software developer here in the United States Senate, I want to talk a little bit about high-quality systems and software and how we prioritize across the enterprise DOD's management of technical debt, which costs of choosing speed over quality. | ||
| And when we develop software systems, I'll submit that for the record for you. | ||
| Thank you. | ||
| Thank you, Senator Rosen. | ||
| Senator Scott. | ||
| Thank you, Chairman. | ||
| Thank you for holding this hearing. | ||
|
Purpose-Driven Funding
00:03:31
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| Mr. Goertz, when I was in business, I had a written purpose for everything we spent money on. | ||
| When I went to Wall Street to raise money, they wanted to get a return on their investment. | ||
| When I became governor of Florida, there are 4,000 lines of the budget. | ||
| What we did was we had a written purpose for every line. | ||
| And if they didn't meet the purpose, we didn't continue to fund them. | ||
| Is that how DOD works? | ||
|
unidentified
|
I would say yes and no. | |
| I would say there is a written purpose in about a stack of budget docs this thick where there is a purpose against every budget line. | ||
| Are those looked across and are they scrubbed the way they need to be? | ||
| No. | ||
| Is return on investment looked at as close as it needs to be? | ||
| No. | ||
| And are we good at stopping things we started? | ||
| We're horrible at that. | ||
| And that's one of our biggest inhibitors to innovation: we can't stop things that aren't adding value to fund things that we need to be working on. | ||
| Can you give me an example where it didn't hit a purpose and there was some accountability? | ||
| Like did they stop a program? | ||
| Did somebody lose their job? | ||
| Can you give me one example of, you know, there was a written purpose for something, it didn't happen, and some of there was change made? | ||
|
unidentified
|
I'm not sure I have a clear example of that as much as many times we are issued, sometimes through congressional budget changes, activities to go work on that were not in our original plan. | |
| Some of that can be value-added, some of that may not be value-added. | ||
| I can't think of an example of where there was a purpose for funding that and somebody didn't execute the purpose. | ||
| You could argue whether the purpose was the right purpose, but I can't think of an example. | ||
| So, you don't have an example where anybody was ever held accountable for not fulfilling their purpose. | ||
|
unidentified
|
I think there's plenty of examples of that. | |
| You can look at what I did as a Navy secretary and a Ford program manager. | ||
| So, what happened? | ||
| Did somebody get fired? | ||
|
unidentified
|
Yes, he did. | |
| And what didn't he do? | ||
|
unidentified
|
I didn't execute the outcomes I expected as a program manager. | |
| Good. | ||
| Mr. Sankar, Mr. Dillard, do you guys like to compete? | ||
| I love it. | ||
| How about you? | ||
|
unidentified
|
Absolutely. | |
| Okay. | ||
| So, to compete, does it make you better? | ||
|
unidentified
|
100%. | |
| Okay. | ||
| Without exception. | ||
| Have you lost? | ||
| Yes. | ||
|
unidentified
|
Often. | |
| Okay. | ||
| And when you did, what did you do? | ||
|
unidentified
|
Get better. | |
| Yeah. | ||
| Try harder. | ||
|
unidentified
|
Okay. | |
| So do you feel like that's the way DOD operates, where they are out trying to get people to go compete to find out the best product, service, things like that? | ||
| I think it attempts to, but sometimes the nature of the competition can be a fiction writing contest like an RFP. | ||
| Sometimes the competition is so constrained and not real-world enough that it doesn't provide a long enough runway. | ||
| Sometimes the competitions are just too short, where actually what you want is you want to be able to get a bunch of people in continuous competition. | ||
|
Impact on Defense Readiness
00:07:18
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| That just because you're winning today, I want to have an incentive to invest my private capital into RD and show up next month with a better mousetrap and try to win with that and show up the month after that and do that again. | ||
|
unidentified
|
And are you rewarded for that? | |
| Spiritually, right now we are, but I think we're at the beginning of a broader transition with DOD where I think that can result in the sort of rewards that make this sustainable. | ||
| Okay. | ||
| For both of you, if you had three things you're going to do to force big change at DOD, what would you do? | ||
| I feel like I'm starting to sound like a broken record, but my two core suggestions, the first would be have competing programs. | ||
| Do not give a program a monopoly on a certain capability area. | ||
| Let multiple departments, organizations, units, programs within the government compete with each other. | ||
| That's why space is so innovative right now, is because it is a food fight between various different agencies. | ||
| We should embrace that. | ||
| When we were winning, that's what it looked like. | ||
| The second one is push more authority to the combatant commanders to decide what they need. | ||
| Use that to drive signal and reformation to the services and the department broadly. | ||
| Mr. Diller? | ||
|
unidentified
|
Digitize. | |
| The future is digital and we are not there yet. | ||
| Second, be clear that there are different types of portfolios that attract different types of companies that need a different culture and make sure that there is a path of doing that. | ||
| And lastly, make sure that we actually have the ability to manufacture in America. | ||
| DOD could be the catalyst to actually shift American manufacturing. | ||
| Manufacturing is not a DOD problem. | ||
| This is an American problem and it must be solved to avoid the crisis that we have in building, turning ideas into hardware. | ||
| Thank you, Chairman. | ||
| Very good, Senator Scott. | ||
| Senator Kelly. | ||
| Thank you, Mr. Chairman. | ||
| Thank you, all of you, for being here today. | ||
| As the ranking member of the Airlands Subcommittee and the co-chair of the Defense Modernization Caucus, along with Senator Kramer, I'm focused on maintaining our competitive edge over our adversaries. | ||
| To achieve this, we've got to ensure that our military is not only equipped with cutting-edge technology, but also has the infrastructure to remain effective in contested environments where supply chains and sustainment could be disruptive. | ||
| I don't know if the three of you saw an order from OMB from the White House last night or yesterday, an expansive order with repercussions across the country. | ||
| And it's unprecedented. | ||
| In this order, and I will explain here in a second where I think the defense impact could be. | ||
| But this is cutting pausing Medicaid health plans, Pell Grants, Meals for Kids, Nutrition programs for pregnant mothers, programs to help homeless veterans. | ||
| And it appears that it also may freeze Federal funding and grants for Department of Defense research and manufacturing technology and other small business innovation programs. | ||
| So I want to ask each of you, starting with Mr. Goertz, have you looked at this memo that was issued last night? | ||
| And are you concerned that a blanket freezing of these funds how would impact our readiness and ability to compete with China and other adversaries? | ||
| I want to start with Mr. Goertz. | ||
|
unidentified
|
Sir, I have not seen the exact memo you referenced, but more globally, one of the challenges with the DOD as a customer is there is lack of trust that they will be there and they will start, stop, start, stop. | |
| And I think that could send a bad signal to business. | ||
| And then also, if we stop a bunch of research and are not staying on the technical edge, that could be detrimental to the force. | ||
| And, Mr. Senkar, for Palantir specifically, let's just say in a couple days you find out that that contract payment that you were about to receive, you are not going to receive it, and you are not going to receive it next month or the month after that. | ||
| Could you talk specifically about how it would impact your company? | ||
| I think you can imagine that it causes quite a bit of heartburn, particularly for services already rendered. | ||
| But it is a difficult environment. | ||
| And where are your employees? | ||
| All over. | ||
| All over. | ||
| How many? | ||
| 4,000 total. | ||
| If you didn't get paid by the Federal Government for the next three months, how many of them do you think you would have to lay off? | ||
| I would rather not think about it. | ||
| You would rather not think about it. | ||
| Okay, Mr. Diller, for Divergent, what would be the impacts if your Federal dollars contract payments were to stop? | ||
|
unidentified
|
As a dual-use company that really is just starting into the defense space, certainly it would deter us from continuing that. | |
| I think we have seen this over the years, and this is one of the many things that creates risk for companies. | ||
| And in some instances, when I was the director of AFWORKS, you simply could not convince some commercial companies to go do business with the Department of Defense. | ||
| And so obviously, trust is key on these things, and understanding continuity of agreements made is important. | ||
| Yes, so you are going to find out in the next probably 24 hours if it is going to impact you and your company and your employees and people who live in those communities. | ||
| But this is an unprecedented overreach from the White House to, with a directive from OMB, to freeze programs that folks on this committee in the United States Senate authorized money to be appropriated for very specific programs, | ||
| programs I will get back to that help homeless vets, nutrition programs for moms, but also programs that affect our safety, our readiness, our troops to make sure that they have the combat power that they need to win, win in a very tough environment. | ||
| So I am very concerned about this action that the White House took without, I guess they notified us. | ||
| They say it goes into effect at 5 p.m. | ||
| I suggest when you get back to your companies that you take a close look and see what the impact is going to be to you and your employees and our readiness. | ||
| Thank you, Mr. Chairman. | ||
| Thank you, Senator Kelly. | ||
| Senator Sullivan. | ||
| Thank you, Mr. Chairman. | ||
| I'll comment on the follow-up on Senator Rosen's comment about critical minerals. | ||
| I'll actually comment on a really good executive order. | ||
| And the critical mineral issue is the good news is Biden's out, Trump's in, especially for my state. | ||
| We have incredible resources of critical minerals for our military. | ||
|
Biden's Legacy in Minerals
00:06:00
|
||
| And Joe Biden spent four years shutting down Alaska because radical environmental groups said don't mine in Alaska. | ||
| Get it from China. | ||
| So that's what we did for four years. | ||
| And Donald Trump is changing that on day one. | ||
| So Senator Rosen asked about critical minerals. | ||
| The good news, the most important news for critical minerals for America is Biden's gone and Trump's in. | ||
| And that is really good for the people in my state who have been sanctioned more than freaking Iran and Venezuela by the last administration. | ||
| But let me, I'm venting here a little bit, Mr. Chairman. | ||
| Sorry. | ||
| Let me get to the point of the hearing. | ||
| Thank you for holding this hearing. | ||
| This is really something all three of you are going to have experience on. | ||
| So I really want to get a sense of it. | ||
| Mr. Sankar, you might remember at the lunch that you and I were at recently where Admiral Paparo was talking about contracting officers who are in the middle of their careers, don't want to rock the boat, this idea of a frozen middle in the Pentagon. | ||
| We all love our military. | ||
| I think, Mr. Diller, you actually served as a contracting officer, an acquisition officer. | ||
| What are some of the ways that we can best incentivize contracting officers in the Pentagon to take risks on newer companies as opposed to always default to Lockheed and Raytheon and take the easy route? | ||
| Because I think the culture in the Pentagon is one thing we've got to work on, and you all have experience on that. | ||
| So I'd love to get your sense quickly because I have some other questions. | ||
| But culture, contracting officers, how do we incentivize risk-taking without people being scared in the big bureaucracy of the Pentagon? | ||
| Go ahead. | ||
| All three of you take a crack. | ||
| I'll offer a thought here. | ||
| First is get them out of the Pentagon. | ||
| You know, maybe we need to have our contracting officers, our acquisition folks forward-deployed, closer to where the problems are, understanding the ways this really, you know, there's a reason SpaceX locates their RD engineers on the production floor. | ||
| That is a heterodox approach that we certainly would not see in the defense industrial base, but that's where you observe the problems, you change your design, you're able to close those loops very quickly. | ||
| We could do that now, could we? | ||
| We could. | ||
| Go ahead. | ||
| The second part is have another American one corridor down that they're competing against. | ||
| The risk of disrupting your schedule is outweighed by the fact that that person is going to win and you're going to lose. | ||
|
unidentified
|
Good. | |
| I love that idea. | ||
| Anyone else? | ||
|
unidentified
|
Incentivize speed. | |
| In AFWERX, we went from no contracting shop and we deliberately were saying we are establishing a different culture. | ||
| There are people in the Department of Defense, I would say most of them actually, that want to move at speed. | ||
| As the Honorable Gurtz mentioned, this is not necessarily about money. | ||
| It is a mission that they actually want to engage in. | ||
| And when leadership actually takes on the risk themselves and unlocks the people working for them, you can attract incredible contracting officers. | ||
| There are so many of them out there, and they are ready to move at speed to buy the right thing. | ||
| They need to be told from the top down, hey, it's okay to contract with this up-and-coming upstart versus the big guy who's going to take 15 years to get his product out, correct? | ||
|
unidentified
|
Yes, sir. | |
| One, you got to get them aligned with the program manager so that they're not on an island of their own. | ||
| And then that team puts together the strategy and is held accountable for looking across the entire thing. | ||
| The second thing, which the Forge Act is helping, the burden we put on a contract now to award a contract, the number of things they have to sign, the number of certifications is ungodly. | ||
| And so, this committee could really help by scrubbing a bunch of that underbrush. | ||
| That's not in statute, is it? | ||
|
unidentified
|
Yes, sir. | |
| Is it? | ||
| Okay. | ||
|
unidentified
|
I mean, it's statute, which then we propagate, you know, implementation and processes. | |
| And then, well, maybe for the record, if you have some ideas on that, real quick, I want to just ask one final question. | ||
| Mr. Sankar, you did a great job on your defense reformation piece published in October. | ||
| But there's, and I love the idea of competition between programs. | ||
| But how do you envision the acquisition system working when the services have a lot of combatant commands, and I get that, and that makes a lot of sense. | ||
| But the services also have a lot of skin in the game. | ||
| And is there a challenge that if you're moving it to combatant commands, the services are going to be, hey, that's my piece of the territory. | ||
| What do we need to do? | ||
| And how do you make them work together better? | ||
| Well, I think if we thought about it at the margin, a little bit of overlap is actually what gets them to rise to the occasion. | ||
| That's your competition thesis. | ||
| Yes. | ||
| And so I think, you know, I'm not sure you'd say, Air Force, please go build me an aircraft carrier, you know, but it's really like, where are we on the margin? | ||
| If I was offer one example, when we were trying to build JAD C2, we have Overmatch, we have ABMS, and we had Project Convergence. | ||
| But each of those is just trying to build software or JAD C2 within their service, which you could argue is a little bit of a contradiction on the concept of JAD C2 to begin with. | ||
| Maybe a more productive frame would have been each of them is actually seeking to field software and capabilities to the combatant commanders across components, across services, and that's going to create the productive tension to win. | ||
|
Bipartisan Approach to DOD
00:15:37
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| And that would also force interoperability. | ||
| It would force a lot of the things that we aspire for. | ||
| It would be MOSA in practice instead of MOSA on paper. | ||
| And so I think we forget that first you have to be effective before you can focus on efficiency. | ||
| Members can supplement their answers. | ||
| Thank you very much. | ||
| Sandra Slotkin. | ||
|
unidentified
|
Thank you. | |
| Chairman, thank you for holding this hearing. | ||
| I was glad that our first official hearing beyond a confirmation hearing was on something where we should have very bipartisan approach to this issue. | ||
|
unidentified
|
I'm a former CIA officer and Pentagon official, so I feel like I saw a lot of this up close. | |
| And I think the most important stat for me that I think about that I measure our success or failure at is someone told me that to go for the Chinese government to go from concept to fielding a program in their military is a one-year string. | ||
| And for the United States, it's a three-year string, right? | ||
| And I can't imagine all the man hours in between those three years. | ||
| And so to me, I mean, we hope we never have a conflict with China or anybody else, but we have to have the speed of decision-making to change on a dime. | ||
| I have seen in three tours in Iraq, particularly with some special authorities the special forces have, to really innovate in the field. | ||
|
unidentified
|
The most exciting stuff I've ever seen was just where the flash to bang was like, boom, we got a problem. | |
| We have authority to go do it. | ||
| Let's go do it. | ||
| And so I would describe, I did six years on the House Armed Services Committee, that our committee in a bipartisan way was ready to hurl authorities at the Pentagon if we thought it would actually help move things. | ||
|
unidentified
|
You have an open sort of door, I think, with Democrats and Republicans. | |
| I have come to believe that culture is critical. | ||
| The idea that a mid-level contracting officer is going to break out and do something new when they're not getting their pressure in a chain of command organization is like saying that Senator Wicker's mid-level staff should be doing something on his behalf. | ||
|
unidentified
|
At the end of the day, the buck stops with him. | |
| And so I think a reform-minded Secretary of Defense, again, not talking about party, is the most important thing to taking this on and prioritizing it. | ||
| I hope that the Secretary of Defense, again, gets through what I see as really sort of side issues and gets back, as he says he wants to, to war fighting, which is the speed of decision-making and taking a hold of that acquisition system and changing it. | ||
|
unidentified
|
But to me, this is about culture. | |
| And until we get that right, we're just going to be spinning our wheels. | ||
| I would also note that you guys, you know, in the private sector, you get to gamble with your shareholders or with your investors' money. | ||
| Gambling with taxpayer dollars is just a higher threshold, right? | ||
|
unidentified
|
It's going to be a higher threshold. | |
| It's never going to be like the private sector. | ||
| And we all complain when the F-35 goes over budget and all these things because they're wasting taxpayer dollars. | ||
| So there's a conundrum there that doesn't make DOD perfect as an analogy for the private sector. | ||
| But we're in violent agreement that we need to do something to speed things up. | ||
| I just think it has to be top-down, and I hope we can push that agenda in a bipartisan way together. | ||
| In the meantime, I do have to say, following on what Senator Kelly just said, Senator Wicker, we have a constitutional issue going on right now where this body has appropriated money for defense programs and a million other things. | ||
| And the Trump administration has come in and contravened your own and all of our guidance on programs in the past. | ||
|
unidentified
|
I'm not talking about programs in the future. | |
| Every president gets to decide how they want to create programs that they want to implement. | ||
| But for things that have already been appropriated, right now, the military health system as research projects are all on hold that talk about service members' safety and health. | ||
|
unidentified
|
Funding for the Fisher House, wounded warriors, on hold. | |
| All Army contracts on hold. | ||
| Okay? | ||
| I don't see how this isn't just purely throwing the baby out with the bathwater. | ||
| I get that Mr. Trump is going to make change. | ||
|
unidentified
|
I want on the same ballot as Mr. Trump. | |
| I understand that. | ||
| But this is, to me, breaking the constitutional rules that we have set up here. | ||
|
unidentified
|
So I would assume we're going to see some serious action from this body, I hope, on a bipartisan basis. | |
| I've filibustered my entire time. | ||
| But all this to say, Mr. Chairman, you have a friend in this cause. | ||
|
unidentified
|
I want to make it a top-down cause so we actually move the needle. | |
| Otherwise, we're just giving scraps at the margins for contract officers who are going to do what their boss says if their boss demands action. | ||
|
unidentified
|
I'll leave it at that. | |
| Thank you, Senator Slock. | ||
| And let me just respond very briefly. | ||
| I think all three of these witnesses have not had a chance to read the memo to which you and Senator Kelly referred. | ||
| And questions are being asked around Capitol Hill at this very moment about that. | ||
| And there'll be more visiting about that issue. | ||
| So it is almost the end of the first round, and I'm the last questioner. | ||
| Let me ask a thing or two. | ||
| Mr. Senkar, you said the stockpile is not the deterrent. | ||
| The flow of mass production is the deterrent. | ||
| And Mr. Diller, you say the factory is the weapon. | ||
| And if we need more factories for sustainment and war, we should be buying that capacity now. | ||
| You're both saying the same thing there, are you not? | ||
| Nodding yes. | ||
| Now, Mr. Diller, when you say we should be buying that capacity now, you're not talking about ownership of the factory, are you? | ||
|
unidentified
|
No, Senator. | |
| What I'm suggesting is that today we have a crisis in sustainment. | ||
| And there is an instance because of the, both from a national industrial base perspective and because of some of the challenges in defense innovation, we have locked our depots and our sustainment out of being able to actually create the parts that are needed today to fill the multi-trillion dollar portfolio we have. | ||
| Those depots could actually field today factories as a service that would have incredible agility to ensure that the legacy force that we must have, that we've invested trillions of dollars in, is ready to fight tonight. | ||
| That needs to be a wildly agile factory as a service. | ||
| That same factory, as Honorable Goertz had mentioned, becomes this network then so that small companies are able to go build entirely new things, if we call these hedge portfolios, right? | ||
| The autonomous light up tradable mass. | ||
| The agility of these factories that are available in an entirely new step of American manufacturing, that is possible today. | ||
| Our depots could be an incubator for that type of thing to actually go through digital certification processes for tools like this to be able to save the taxpayer dollars, to be able to drive innovation. | ||
| Holds up the hubcap. | ||
|
unidentified
|
Yes, sir. | |
| Yes. | ||
| Now, Mr. Gertz, shall we make it unanimous on that point? | ||
|
unidentified
|
Yes, sir. | |
| And I'd also add, we are really enthusiastic about prototyping, and we're completely underperforming in production. | ||
| We are actually not producing much new capability. | ||
| And in the cases and replicator we have, we may spin up a production and then shut it down six months later. | ||
| So I do think a focus on production, both in terms of capacity, how to network that production, how to digitize that production, and get to producing more and getting our iteration speed up, would do two things. | ||
| One, it would allow us to grow this manufacturing capacity that in itself is deterrence. | ||
| Secondly, it would allow us to field new things to the field versus just doing one-off prototypes and doing onesies twosies. | ||
| Mr. Senkar, in your white paper, you say on page nine that our centralized predictive program budgeting management and oversight process values time spent rather than time saved. | ||
| Will you elaborate on that and then we'll let our other two witnesses give their the way that we want to provide resource is based on how expensive is it to do something. | ||
| But that is a complete disincentive for reimagining things. | ||
| My critique around production versus stockpile is really that we do not have the necessary incentive to design for manufacturability. | ||
| You know, we are so proud of the exquisite weapon that we made as a prototype to Hondo's point here. | ||
| But we didn't think through, can I make 10,000s of these? | ||
| How long will it take? | ||
| If it takes two years to build a single munition, that's not going to scare she. | ||
| So really, we need to be thinking about manufacturability from the very beginning here. | ||
| And that, I think, then leads us to thinking about entirely different classes of weapon systems and different ways of organizing ourselves and our industrial base to go accomplish that. | ||
| Mr. Hondo Gertz, time spent versus time saved. | ||
|
unidentified
|
I would agree with that. | |
| I do think we have to differentiate the market. | ||
| So the DOD buys a lot of stuff. | ||
| And so we need lots of different ways to do things, not try and pick one that's, you know, will do everything well. | ||
| And I think that's an opportunity. | ||
| I think the second piece is we need to get to continuous competition on many of our products so that we can bring in new entrants and continually drive the system. | ||
| Because right now, because of the time to budget for a program and the rigidity of all the planning, it's kind of a big bang theory. | ||
| We have one big contract award and then you're stuck with that for 15 or 20 years versus what I would say continuous competition, which then incentivizes all the kind of behaviors we're looking for. | ||
| Mr. Dillard, anything to add? | ||
|
unidentified
|
The technology is there. | |
| It is available to rapidly transform our Department of Defense today. | ||
| It is adoption, adoption, adoption. | ||
| We have to engage with this bureaucracy, accelerate this bureaucracy, so that we are actually mobilizing that entire industrial base because it is urgent. | ||
| This is a critical time, and I am very, very optimistic that America is going to be able to build together. | ||
| Thank you very much. | ||
| Senator Slotkin, do you have other questions? | ||
| I do. | ||
| Okay, then we'll begin round two. | ||
| And it's only Senator Wicker participating. | ||
| Gentlemen, Mr. Senkar thinks it's a shame that companies that used to make other products non-defense related are no longer in that business, only 6%. | ||
| Chrysler used to make cars and missiles. | ||
| Ford made cars and satellites. | ||
| General Mills made cereal and artillery and guidance systems. | ||
| Does he have a point there, Mr. Goertz? | ||
|
unidentified
|
Absolutely. | |
| The second I would add to that is that we've also systematically lost the middle of our industrial base. | ||
| And this is where I think a lot of the venture-backed companies, we need to scale them quickly so that we've got companies that are agile enough to move quickly, right, but big enough to move at scale. | ||
| And that's one of the things I think as we build this industrial network of the future, we've got to build back the middle of the industrial base. | ||
| Mr. Sankar, there's a reason that happened, and can it be reversed? | ||
| Yeah, it can be reversed. | ||
| I think we have to remember the industrial base we had today. | ||
| We think of it as Northrop Grumman, but it was Jack Northrup. | ||
| It was Leroy Grumman. | ||
| It was Glenn Martin, not Lockheed Martin. | ||
| You had these difficult founders. | ||
| We would recognize them as Elon Musk type personalities who were interested in doing something big. | ||
| It was not about this quarter's results. | ||
| It was actually, they were dual purpose, not just dual use. | ||
| It wasn't about the cereal. | ||
| It was everything I learned, building machinery to process cereal, I could turn into artillery to defend the nation. | ||
| And we have those founders back. | ||
| $120 billion of private capital has been deployed into national security companies. | ||
| That's funding founders. | ||
| It's funding the Palmer-Luckies of the world, the Sang brothers of the world. | ||
| We need to empower them. | ||
| And I think that's how we get back this long-term commitment to the problems and challenges our nation actually faced, the reindustrialization of the nation. | ||
| We can't have an anodyne view of capital. | ||
| Europe has created zero companies worth $100 billion or more in the last 50 years. | ||
| We created all of our trillion-dollar companies in America in the last 50 years with founders. | ||
| Is that a mindset or a statute that needs to be changed? | ||
| I think it is a mindset. | ||
| It's recognizing that within our buyers in the Pentagon as well. | ||
| Why did these people leave the industrial base? | ||
| As much as we want to point at the Last Supper as the moment, those conversations started in the boardrooms of America in the 70s and the 80s. | ||
| And what was slowly building up is where I started with my oral is that the Pentagon is a bad customer. | ||
| It doesn't actually, if you just look at it purely financially, it makes more sense for Ball to sell aluminum cans than to build satellite buses. | ||
| And as a monopsonist, the Pentagon needs to look at that and say, how do we fix that? | ||
| I want Ball building satellite buses. | ||
| I want the American industrial base, not a group of yes men in the defense industrial base who have permuted their businesses to serve just me. | ||
| On that issue, Mr. Diller, do you wish to weigh in? | ||
|
unidentified
|
Certainly. | |
| Look, for all the pejorative things that we've said about the Department of Defense, it has done incredible things. | ||
| And it has actually an opportunity to do something that I don't know that any other institution can. | ||
| And it has created incredible things. | ||
| I was a program manager in the global positioning system. | ||
| It drove adoption of one of the most incredible networks in the world. | ||
| There are instances where DOD has been the catalyst for wild change. | ||
| And with all the great things that we've said about commercial, you cannot look at a downward trend for many decades now of the loss of not defense industrial manufacturing, but of American industrial manufacturing. | ||
|
Force Industry Agility
00:04:54
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|
unidentified
|
And now, Chairman, is the time for DOD to be that catalyst again. | |
| It is possible to do exactly what Shama said. | ||
| Divergent is today manufacturing cars. | ||
| We are today printing missiles. | ||
| We are today printing satellite buses in the same exact factory floor. | ||
| If we look to a future that is going to actually counter an adversary, there are people who dislike change. | ||
| There are three groups of people that very much dislike change. | ||
| One, they are the bureaucrats. | ||
| They like to continue doing what they have done in the past. | ||
| I would say industry to some degree doesn't like change because we have built ourselves on legacy approaches to manufacturing. | ||
| And they look at this and they don't want the uncertainty. | ||
| The last group that doesn't like change is the enemy. | ||
| The enemy hates change. | ||
| If we want to deter, we must be agile. | ||
| We must force the bureaucracy to be agile. | ||
| We must force the industry to be agile. | ||
| That can happen today. | ||
| But America cannot afford $200 million facilitization costs for every new munitions factory, especially when it's a legacy munitions factory. | ||
| It is possible today to create a network of 21st century AI-driven industry 5.0, pick your buzzword, but it does not look like anything that has ever been manufactured in the history. | ||
| It is a step change. | ||
| It literally is going from the Stone Age to the Bronze Age. | ||
| It could happen today. | ||
| It is the only way that you can afford real deterrence, where you have a dual-use factory, you have dual-use capabilities that come out of that factory, you have dual-use capital that is coming from an incredible source of American strength, and most importantly, it is dual-use talent. | ||
| We can't talk about a workforce problem. | ||
| We're telling our sons and daughters to go back and pound rivets and weld in the same way that their great-grandparents did. | ||
| Children have grown up playing Lego robotics, playing in AI. | ||
| That is not what our factories look like today. | ||
| It could be. | ||
| This committee could be the catalyst for that change and is the only way that we are going to create real deterrence in the timely manner that must happen for America to remain in its lead, both from a manufacturing perspective, from an economic perspective, from a technological perspective, and from a military perspective. | ||
| By the same token, Mr. Dillard, we hate it when our enemies engage in change. | ||
|
unidentified
|
100%. | |
| Yes, absolutely. | ||
| Well, a couple more questions. | ||
| And you have been most helpful to us. | ||
| Mr. Gertz, let's talk about the requirements process. | ||
| Does it often overly specify a solution that then gets turned over to industry? | ||
| Should programs be able to develop multiple capabilities within a requirements portfolio, broadening the scope of the acquisition management? | ||
|
unidentified
|
Yes, sir. | |
| I think we need to transform our thinking into: we've got problem statements, not requirement statements. | ||
| And then you empower a PEO or now a portfolio acquisition executive to go tackle those problems with close association to their operator. | ||
| Back to your previous question, we have program managers that want to go out and eat meat, right? | ||
| They want to go drive change. | ||
| They have not been incentivized or rewarded for moving outside the system. | ||
| With the top cover this committee is putting forth in the Forged Act, with those actions, I think you'll see that culture Senator Slotkin talked about. | ||
| That's what we've got to go off and attack. | ||
| Thank you. | ||
| And finally, Mr. Sankar, you sometimes find yourself competing not with other businesses, but with the government itself. | ||
| I would say quite often. | ||
| More often do we find ourselves competing with the government than with other industries. | ||
| Sometimes that takes the form of FFRDCs where they have a privileged position. | ||
| You could say there's maybe even a conflict of interest where they're deciding what needs to be built and then specifying how it's going to be built in a way that is structurally anti-commercial. | ||
| I'd say at the very beginning of our company, we were a threat to certain programs of record and the way that they were doing it. | ||
| I don't think the industrial players were resisting us so much as the acquisition community was resisting us, despite the signal from the warfighter. | ||
| And I think we solved these problems by embracing the fact that there are going to be heterogeneous approaches, there's going to be constant new technology insertion, and that actually you as a program of record don't have a monopoly. | ||
|
Time Constraints Announced
00:03:25
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| There's someone a corridor down who could move faster on this new capability, and that provides you the incentive to move faster. | ||
| Thank you, gentlemen. | ||
| This has been one of the most informative two and a half hours that I've ever had as a member of this committee. | ||
| And also, I'm proud of the members of this committee, and I hope you are. | ||
| There's a lot of talent, a lot of brainpower, and a lot of thought that has gone into this hearing. | ||
| And I appreciate the participation. | ||
| We had 100% attendance today, and I appreciate that. | ||
| Now, let me check and see if I need to make an announcement with regard to the record remaining open or anything of that nature. | ||
| There will be questions for record, and we'll notify the witnesses as to the time constraints. | ||
| With that, the hearing is adjourned. | ||
|
unidentified
|
Yeah, we're off to your point. | |
| This afternoon, a look at charges that elite colleges are not committed to free speech and rigorous academic instruction. | ||
| The American Enterprise Institute for Public Policy Research hosts watch live at 4:30 p.m. on C-SPAN. | ||
| C-SPAN Now, our free mobile video app, or online at c-span.org. | ||
|
Fragile Ceasefire Update
00:00:48
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unidentified
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C-SPAN's Washington Journal, our live forum inviting you to discuss the latest issues in government, politics, and public policy. | |
| From Washington and across the country. | ||
| Coming up this morning, the president of the Alliance for American Manufacturing, Scott Paul, explains Trump administration trade and tariff policies and how they might impact the manufacturing sector. | ||
| Then, Natasha Hall, MIDI's program senior fellow at the Center for Strategic and International Studies. | ||
| She talks about the latest and the fragile ceasefire between Israel and Hamas and Trump administration Gaza plans. | ||
| And Spectrum News national political reporter Taylor Populars discusses White House News of the Day. | ||
| C-SPAN's Washington Journal. | ||