The United States Navy’s next aircraft carrier, the USS Gerald R. Ford (CVN-78), will be the lead ship of her class when she officially enters service in 2019. The total cost of construction has been reported to be $12.8 billion plus another $4.7 billion in estimated R&D costs. In other words, when completed the Gerald R. Ford will be the most expensive warship ever produced for the U.S. military.
At the same time the Pentagon has plans to buy some 2,500 F-35 Joint Strike Fighters, costing nearly $400 billion. Accordingly to Government Accountability Office (GAO) reports the total cost of the JSF program over its lifetime could be nearly $1 trillion.
Yet, not everything the military is investing in these days carries such sticker shock. On the other end of the spectrum the U.S. military is seeking low-cost solutions – not merely as a means of penny-pinching but also because low-cost but high-tech options can solve problems, proving that throwing money at a problem isn’t always the best method.
“There is a lot of innovative technology that is now available that doesn’t cost a lot,” said Zachary Fryer-Biggs, senior Washington reporter for IHS Jane’s. “There are commercially available platforms that can be both cost effective but also a viable alternative to developing technology from the ground up.”
To this end the military has turned its sights on Silicon Valley, and even opened a new office in San Francisco that could pump money into tech startups. Last spring U.S. Defense Secretary Ash Carter unveiled this new approach, which is designed to operate akin a venture capital-type program. Dubbed “Defense Innovation Unit X” – with the “X” meaning “experimental,” it will work closely with startups.
“There is a lot of innovation that takes place through startups and the military is taking advantage of that to get products at an inexpensive price,” explained Darrell West, vice president of governance studies at the Brookings Institution.
Good for Innovation
These startups could answer the question posed by Edwin Star in his song, “War, What is it Good For?” The answer is “innovation,” as West noted, “the military seeks ways of promoting innovation. This is especially true in wartime but it carries over into peace time as well,” he added. “The military needs ways of accomplishing the mission.”
The military is also playing catch up in working with startups, and here is where the intelligence community has had a lead. Already the Defense Department has funneled money into the CIA’s startup-backing program that is dubbed “In-Q-Tel.” According to its website IQT’s mission is to identify, adapt and deliver innovative technologies to support the missions of both the CIA and broader U.S. intelligence community.
“The intelligence community has a better track record of accessing tools from the small business world in a way that Pentagon doesn’t or can’t,” added Fryer-Biggs.
The U.S. Army meanwhile is also working from within via the Army Cyber Institute at West Point, which made news for its events to develop a low-cost Wi-Fi “rifle” that could shoot down a Parrot AR Quadcopter. While the weapon resembles a rifle, it was actually developed as a Wi-Fi antenna that was powered with the low-cost Raspberry Pi, Linux-based computer. The entire device cost less than $150 and only took a reported 10 hours to build.
It was notable in that it shows the low-cost alternatives that are available. There is also the fact that many of West Point’s cadets may have grown up with exposure to video games and gadgets.
“This generation is adept at using these devices,” added West. “This is why the military planners even use video games for instructive purposes, as it is familiar to today’s soldiers. Businesses need to understand that the military needs low-cost but high tech solutions just as it uses big ticket items.”
Opportunities for Small Business
Programs such as Defense Innovation Unit X could also ensure that the military hits the mark in other ways, notably ensuring that the “next best thing” or opportunity for superior technology isn’t lost because the start up failed to get the right backing.
“The Pentagon could be missing out on a number of technologies, but there is also the concern that it is missing out on thetalent and the expertise that it brings,” said Fryer-Biggs. “Not everything the military is developing is as expensive as the Ford or the JSF program. Today there are dual forces that include those off-the-shelf products, along with the user friendly nature of productions – not to mention that generation of kids who used video game controllers and systems. All this makes it easier to integrate the systems.”
Then there is the fact that the Pentagon already has money set aside for the little guys. Today contracts exist that are only for small businesses. This has included the Better Buying Power (BBP) program, which was launched in 2010, with the goal of providing affordable, value-added military capability to today’s warfighter.
“This pool is there and this allows for small companies to get some of it,” said Michael Blades, senior industry analyst for aerospace and defense at Frost & Sullivan. “The big guys can’t even try to submit for those contracts. The Better Buying Power is all about this innovation. It includes making systems that are open architecture so that any company can come in and work with this system as a way to drive that innovation.”
Job Opportunities in start-ups
Programs such as BBP can also be job creators as it allows money to flow to the start ups. In many cases these firms can ramp up in personnel as the military money flows in.
“There is absolutely going to be opportunity for job creation in small business as the military looks to these small firms,” said Blades. “This is also coming as the large defense contractors are downsizing. These firms haven’t had a huge exodus of talent, but what we are seeing is that they are scaling back and still making profits.”
This hasn’t translated to a negative growth in profits however.
“The cuts are coming as the Pentagon has cut some spending,” said Fryer-Biggs. “It is a tactic to improve the return on investment and please shareholders. But even with these cuts those with the right skills will still find plenty of job opportunities.”
In fact this has been about what Blades said fits the industry jargon of “right sizing” as the pipeline for talent to the big shops has slowed. By contrast now could be the opportunities for those small firms to fill the void. It could also be a win-win for the industry in some ways.
“You are going to see some talent leave and take early retirement, but others will start a new company,” explained Blades. “These small firms may already be doing some of the R&D work – especially where high-tech is concerned – and for the big firms it may be cheaper to just scope those firms up. In this way more jobs could be created by the innovators than lost by the large defense contractors, so it is very cyclical as it becomes more focused on contract services.”
