A BETTER BUREAUCRACY CAN CLOSE THE GAP BETWEEN DEFENSE AND COMMERCIAL TECHNOLOGY
As it is currently organized, the U.S. government is ill-equipped to deal with the growing number of national security challenges that exist at the intersection of commercial and defense technology. Innovation opportunities are slipping between Washington’s organizational gaps, and America’s enemies are too.
President Joe Biden has already taken several steps that suggest he recognizes the gravity of this problem. He has elevated the science adviser to a Cabinet-level position, appointed a number of talented individuals to high-level cyber security posts, and created a national security adviser for cyber and emerging technology. But more changes are needed. Most importantly, Biden should create a deputy national security adviser with sufficient staff and authority to coordinate innovation and technology policies across the entire government.
From artificial intelligence to biotechnology, U.S. national security is inexorably and increasingly intertwined with commercial technology. Unlike in the Cold War, advancements in areas with important national security implications come from private sector research labs and are driven by consumer demand rather than government directives. Yet it remains unclear who in the government now sets policy for — or has final say over — issues that cross the boundaries between academia, defense, commerce, and diplomacy. In addition to the National Security Council, bureaucratic contenders currently include the Commerce Department, Federal Communications Commission, Federal Aviation Administration, Council of Economic Advisers, Treasury Department, the Office of Science and Technology Policy, and the Office of Management and Budget.
In theory it is the National Security Council that should coordinate a “whole of government” response that brings together tools from different agencies to address emerging threats. Indeed, this was the purpose for which the council was created in 1947. However, Cabinet members who are responsible for vertical portfolios still manage the government’s large functional agencies, and there continues to be significant overlap between those who handle commercial, defense, and diplomatic policy. It is this organizational design that creates blurred bureaucratic lines and weakens U.S. national security.
There are a number of specific areas where these blurred lines led to subpar policies that undermined America’s technological competitiveness and left the country weaker against adversaries like Russia and China. Consider four recent examples: semiconductors, drones, the SolarWinds hack, and SpaceX’s Starship.
In the absence of a coordinated technology and industrial policy, the United States has become dangerously reliant on computer chips produced in a handful of countries for all its defense and commercial needs. Originally, all of America’s computer chips were produced in Silicon Valley. Today, none are made there. The United States is dependent on two companies, Taiwan Semiconductor Manufacturing Co. in Taiwan and Samsung in Korea, for the chips used to build a substantive part of its defense electronics. Around 60 percent of the chips Taiwan Semiconductor Manufacturing Co. makes are for American companies. Even Intel, the supplier of most of the central processing units used in desktop computers and data centers, will be outsourcing manufacturing of its next generation of chips to Taiwan. Taiwan Semiconductor Manufacturing Co. has announced that it will build a chip factory in the United States, but even when complete it will produce less than 3 percent of the company’s capacity in Taiwan.
In the case of drones, the U.S. government also missed an opportunity to maintain the country’s competitive edge. Where there was once a nascent U.S. commercial drone industry, the Chinese company DJI now controls 69 percent of the global market. Not only is DJI at the cutting edge of such crucial drone technologies as motors, speed controllers, radio modules, cameras, and artificial intelligence, but it has also allegedly used its hobby drones to map U.S. military installations. As a result, the former assistant secretary of the Air Force for acquisition, technology, and logistics lamented that the lack of Defense Department support for American drone startups was a critical missed opportunity.
In some cases, the danger is more immediate. The SolarWinds cyber attacks revealed how the failure to secure commercial software can compromise even well-secured government networks. In this case, the Russian government exploited commonly used civilian network management software in order to infiltrate the Treasury, State, and Defense departments. By adding malicious code to the SolarWinds update tool, hackers gained access to the data of 18,000 customers — including many in the U.S. government.
Efforts to harden government agencies and protect sensitive information against infiltration will fail so long as adversaries can circumvent them through commercial companies. Private companies have lobbied Congress against requirements that would mandate expensive investments to secure their systems. Furthermore, financial penalties for large-scale breaches of commercial companies are trivial. SolarWinds received national attention because it was an attack on the government, but cyber attacks on private companies continue unabated.
Finally, the fate of the SpaceX Starship offers an example of how government oversight agencies can stifle innovation when they are unable to keep pace with the speed of contemporary technological development. In temporarily halting test launches of the SpaceX Starship, the Federal Aviation Administration sought a lengthy investigatory period that put unnecessary roadblocks in the way of a company that is transforming access to space. In innovation, failure is part of the process. Test rockets blow up, test airplanes may crash. If you do not push the envelope and discover the limits of your design you are not innovating fast or far enough. It goes without saying that you strive to minimize loss of life and property, but the rules governing innovation programs should recognize a heightened need for speed. The U.S government appreciated this when developing rockets and experimental aircraft in the 1950s and 1960s — better organization could help it apply this understanding again today.
Reorganize to Win
To solve these problems, the White House needs to ensure there is a single organization that has stewardship of all the issues that cross existing lines between national security, commerce, and technology.
An effective way to do this would be to create. Armed with sufficient resources and influence, this position would be given real responsibility to help shape the budget, trade policy, and alliance strategy. This adviser would ideally sit on both the National Security Council and National Economic Council, where they could coordinate policies covering a range of technological and scientific issues. These would include the fields of artificial intelligence, machine learning, biotech, hypersonics, and microelectronics, to name just a few. This position would also be responsible for building a civil-military alliance for protecting civilian assets and incentivizing private companies to do work with a national security payoff. The reach of the new deputy national security adviser could also be enhanced by putting appointees in key agencies such as the Department of Defense, the Office of Management and Budget, and the Office of Science and Technology Policy who would be responsible for leading and coordinating innovation policy across the government.
The Biden administration may opt for a different form of reorganization. Several plausible alternatives have been proposed. Regardless of the approach, the important thing is for Washington to recognize and close the organizational gaps its adversaries have exploited.
Joe Felter is the former deputy assistant secretary of defense for South and Southeast Asia. He is currently at the Stanford Center for International Security and Cooperation at the Hoover Institution. He is a former U.S. Army special forces and foreign area officer and previously served as Director of West Point’s Combating Terrorism Center.
Steve Blank is an adjunct professor at Stanford University, 8-time serial entrepreneur, ex-member of the Defense Business Board, co-author of Hacking For Defense and the NSF I-Corps and co-creater of the Lean Startup Methodology.
Raj M. Shah is the Managing Partner of Shield Capital and Chairman of Resilience. Previously he was the head of the Defense Innovation Unit Experimental (DIUx) and an F-16 pilot in the Air National Guard with multiple combat tours. A serial entrepreneur, he’s a visiting fellow at Stanford’s Hoover Institution.