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“Fielding Technology and Innovation: Industry Views on Department of Defense Acquisition”

House Armed Services Committee Hearing

September 16, 2024 (recording linked here)

HEARING INFORMATION

Witnesses and Written Testimony (linked):

• Mr. Mark Valentine: President of Global Government Business, Skydio

• Mr. Brandon Tseng: Co-Founder, President, and Chief Growth Officer, Shield AI

• Mr. Shyam Sankar: Chief Technology Officer and Executive Vice President,

  Palantir

• Mr. Peter Ludwig: Co-Founder and Chief Technology Officer, Applied Intuition

• Mr. Richard Jenkins: Founder and Chief Executive Officer, Saildrone, Inc.

Keywords:

Drones, Ukraine, innovation, capabilities, AI, software, acquisition, Sankar, defense, battlefield, GPS.

IN THEIR WORDS

OPENING STATEMENTS FROM THE COMMITTEE

• Chairman Rogers expressed frustration with the Department of Defense’s (DoD) slow pace in adopting and deploying new innovations, despite the committee's efforts to reform acquisition processes over the past decade. He emphasized that the U.S. cannot afford to lag behind adversaries like China, who have rapidly developed and deployed capabilities specifically aimed at countering the U.S. military.

• Ranking Member Smith highlighted that, despite the authorities given to DoD to make innovations, progress remains slow due to a rigid focus on requirements and processes instead of solutions. The Ranking Member pointed out that this cultural issue within the DoD hampers its ability to pivot and adapt swiftly, unlike more flexible organizations. He concluded by emphasizing the need for collaboration with the Appropriations Committee to provide the DoD with greater flexibility in using its authority, stressing that whoever innovates first in technology gains a significant advantage on the battlefield.

WITNESS HIGHLIGHTS

• Mr. Mark Valentine, President of Skydio’s government business, highlighted the importance of rapid acquisition of small drones for military success. Drawing from his experience as a former combat fighter pilot, he noted the transformation of air power through small drones, especially in contested environments like Ukraine, where drones have become essential for military operations. Mr. Valentine emphasized Skydio's commitment to supporting Ukraine by deploying over 1,000 drones and learning from real battlefield conditions to improve their technology. He concluded by urging the DoD to significantly increase its small drone inventory, warning that failure to do so would leave the U.S. unprepared for future conflicts.

• Mr. Brandon Tseng, co-founder and president of Shield AI, argued that the DoD should shift from a requirements-based acquisition system to a problem-based one, allowing companies to propose innovative solutions rather than just meeting predefined specifications. Tseng also recommended increased funding and use of autonomous systems, particularly in light of growing threats from adversaries like Russia, China, and Iran, who are actively countering traditional U.S. technologies with advanced electronic warfare. He stressed that AI autonomy is crucial for maintaining air superiority and deterrence.

• Mr. Shyam Sankar, Chief Technology Officer of Palantir, highlighted the current state of global conflict and criticized the DoD’s outdated procurement processes, which he likened to centralized planning akin to communist models. He traced the issue back to the 1990s, when defense spending cuts led to reduced competition and innovation within the defense industrial base. Sankar called for empowering commercial solutions and allowing more flexibility in defense spending, suggesting that the government should enable creativity and rapid adaptation in military technology. He emphasized that the only true requirement in defense is winning, and recommended reforms that would support rapid, innovative procurement to maintain an advantage over adversaries.

• Mr. Peter Ludwig, co-founder and CTO of Applied Intuition, emphasized the importance of rapid software development and integration in autonomous systems for the DoD. He noted that while the DoD has recognized the value of commercial technology through programs like the Small Business Innovation Research contracts, scaling these technologies remains a challenge. Ludwig recommended enhancing collaboration between the DoD and the commercial sector and advocated for increased use of software acquisition pathways and firm fixed-price contracts to promote continuous improvements in military technology. He stressed that maintaining a competitive edge requires agile, adaptable software that evolves with the speed of modern warfare.

• Mr. Richard Jenkins, founder and CEO of Saildrone, highlighted Saildrone's success in providing low-cost, unmanned surface vehicle solutions for naval operations, reducing operational costs by up to 95% compared to traditional methods. Jenkins called for the creation of a dedicated bridge fund to support the immediate deployment of new, validated technologies that currently face multi-year delays due to the rigid DoD budget process. He argued that such a fund would enable quicker scaling of innovative solutions and provide critical operational experience before formal appropriations, ensuring that effective technologies are not lost in the valley of death.

SUMMARY OF Q and A

• Chairman Rogers asked Mr. Valentine what lessons had been learned from deploying drones in Ukraine. Mr. Valentine responded that speed was crucial, emphasizing that in great power conflicts, not all assets would return safely, unlike recent non-peer conflicts. He noted that drones were making a strategic difference in Ukraine but faced significant challenges from Russian electronic warfare, which disrupted communications and navigation. He highlighted the importance of rapid iteration in technology, leveraging commercial advancements, and scaling production to meet the high demand observed in Ukraine.

  The Chairman then inquired about the appropriate scale for drone production. Mr. Valentine suggested that with Ukraine losing around 10,000 drones per month, the U.S. inventory would not last long in a similar conflict, advocating for stockpiling drones or their components to address potential shortages. The Chairman expressed concern that stockpiled technology might quickly become outdated, to which Mr. Valentine argued that the software-driven nature of these systems allowed for rapid updates, mitigating concerns about obsolescence.

  The Chairman asked Mr. Tseng what lessons had been learned from testing Shield AI's products in Ukraine. Mr. Tseng stated that Ukrainians refused to use equipment that did not work on the battlefield, noting that many U.S. systems failed under combat conditions, particularly those dependent on GPS, such as certain HIMARS munitions. He stressed the importance of testing equipment under realistic conditions, including communication and GPS jamming, to prepare adequately for great power competition.

  The Chairman also asked Tseng what level of funding he considered serious for advancing technology like AI and autonomy in the DoD. Mr. Tseng compared current DoD funding to major historical investments, such as the Manhattan Project, arguing that the department’s current spending on autonomy was insufficient. He suggested that billions, rather than millions, would be required to achieve significant progress in strategic technologies.

  The Chairman asked Mr. Sankar how he would restructure the DoD’s procurement process to be more agile. Mr. Sankar emphasized the importance of quickly identifying and correcting errors in defense systems and advocated for empowering Combatant Commands (COCOMs) to experiment and innovate based on front-line feedback. He pointed out that much of the current procurement process stifled innovation and failed to learn from active conflict zones like Ukraine. The Chairman further questioned how much funding should be allocated to COCOMs to make a meaningful impact. Mr. Sankar suggested reallocating 2-5% of the defense budget to the COCOMs, arguing that this would introduce competitive pressures within the military services, encouraging faster adoption of innovative technologies and more effective resource use.

• Ranking Member Smith highlighted the challenges of balancing demand signals for drone production with the need for flexibility and adaptation, asking Mr. Valentine what changes are necessary to increase drone production capacity. Mr. Valentine suggested that providing a strong, consistent demand signal would encourage manufacturers to invest in long lead items and scale up production. When the Ranking Member asked what was preventing this demand signal, Mr. Valentine noted that although there were signals in place, they were often inconsistent or rhetorical rather than backed by actionable commitments.

  The Ranking Member asked Mr. Tseng about the obstacles to creating a flexible and adaptive acquisition process. Mr. Tseng argued that the current requirements process locks funds into rigid allocations, preventing innovation. He suggested that a transition to a problem-based acquisition system would free up money from strict requirements and allow for more adaptive spending. When the Ranking Member asked how to initiate this shift, Mr. Tseng proposed mandating that 25% of acquisition dollars be allocated to problem-based acquisition within three years, which would force the DoD to develop a more flexible approach.

  The Ranking Member asked Mr. Ludwig how to balance the industry’s desire for demand signals with the need for flexibility. Mr. Ludwig emphasized the importance of agile software methodologies, agreeing with the idea of a problem-based system. However, he acknowledged that finding the right balance between long-term commitments and flexibility remains a challenge that the DoD must navigate carefully.

  The Ranking Member pressed Mr. Sankar on the concept of demand signals, asking how the DoD could remain adaptable while still encouraging industry investment. Mr. Sankar argued that instead of committing to long-term contracts, the focus should be on reducing the time and effort needed to make purchasing decisions, advocating for a fiscal process that allows for frequent buying decisions—ideally every two months. This approach, he suggested, would keep the DoD agile and responsive to technological changes.

  The Ranking Member asked Mr. Jenkins where the DoD could save money to redirect toward drone production and other strategic needs. Mr. Jenkins criticized the disproportionate amount spent on research and development compared to the lack of funding for scaling and operational testing, arguing that this imbalance prevents new technologies from being fully realized and implemented. He recommended equalizing funds between R&D and the testing phase to bridge the gap between innovation and deployment.

  The Ranking Member sought specific areas where the DoD could cut spending, to which Mr. Tseng suggested rethinking investments in expensive, vulnerable systems like ships and fighter jets that could be easily neutralized by cheaper countermeasures. He proposed a shift toward a “high-low mix” strategy that balances a few sophisticated systems with a large number of affordable, unmanned alternatives. The Ranking Member provocatively suggested that the DoD might not need as many F-35s, to which Mr. Tseng agreed, reinforcing the need to rethink legacy spending priorities in favor of more flexible, cost-effective solutions.

• Rep. Gaetz criticized the current defense acquisition system, highlighting that billions are spent on legacy systems like the F-35, which have low operational readiness, while innovative technologies receive far less funding. He argued that the system's inefficiencies are not accidental but designed to benefit a few large companies through campaign donations and lobbying. He cited a report by Senator Elizabeth Warren detailing the revolving door between the Pentagon and defense contractors, questioning whether smaller companies like Mr. Jenkins' could compete fairly. Mr. Jenkins responded that it is not a fair playing field, as smaller companies cannot match the lobbying power of large primes, and advocated for direct competition between technologies to select the best solutions.

  Rep. Gaetz emphasized the disconnect between funding and effectiveness, noting that billions of dollars are spent on systems that do not work in combat while cutting-edge technologies receive minimal investment. He asked Mr. Tseng how much U.S. equipment sent to Ukraine was not being used because it was ineffective. Mr. Tseng estimated the amount to be in the billions, underscoring the misalignment between spending priorities and battlefield needs. Gaetz concluded by condemning the acquisition system as corrupt and deeply flawed, highlighting the enormous waste of taxpayer dollars on ineffective equipment while underfunding transformative technologies that could define future warfare.

• Rep. Khanna highlighted the need to balance traditional military platforms like F-35s and aircraft carriers with emerging technologies like drones and AI. He asked Mr. Tseng if technology companies could improve the delivery of platforms like the F-35 or if their role would be limited to advancing new technologies. Mr. Tseng responded that while technology companies could enhance the effectiveness of platforms like the F-35 on the battlefield, they were not positioned to address issues such as the low operational readiness rates of these legacy systems.

  Rep. Khanna questioned whether technology companies could eventually compete with traditional defense primes in providing core military platforms. Mr. Sankar argued that Silicon Valley companies have significant potential to influence production processes and improve existing systems, citing his company’s involvement in commercial industries like aviation and shipbuilding. He criticized the defense acquisition process as being too centralized and resistant to market forces, which stifles innovation and competition.

  Ranking Member Smith interjected to explain that major defense systems, like the B-21 bomber, were being developed differently than the F-35, utilizing other transactional authorities that bypass many traditional requirements and maintained competition within subsystems. He emphasized that this approach allowed for more flexibility and innovation, suggesting that even large, traditional platforms could benefit from competitive and agile acquisition processes.

  Rep. Khanna asked Mr. Ludwig for his perspective on how tech companies could make traditional defense platforms more competitive, noting that the American public would not be convinced by a military solely composed of drones and AI in the near future. Mr. Ludwig emphasized the critical role of software in modern defense systems, particularly in advancing autonomy. He argued that prime contractors, which are not inherently software companies, often treat software as a cost rather than a strategic asset, resulting in suboptimal performance. Mr. Ludwig suggested that technology companies, which prioritize software and attract top talent, could significantly enhance the capabilities of existing platforms like the F-35 by integrating advanced software and autonomy features.

• Rep. Gimenez expressed concerns about whether the DoD still punishes those who challenge conventional thinking, citing historical examples like Hyman Rickover and Billy Mitchell. He asked Mr. Tseng how AI-powered F-16s compared to piloted versions in simulated combat. Mr. Tseng replied that AI won 99.9% of the time and was expected to improve further, suggesting that the F-35 could potentially be the last manned aircraft. Rep. Gimenez agreed, arguing that the American public would support using machines in battle to avoid losing human lives.

  Rep. Gimenez asked Mr. Valentine about China’s capacity to produce drones, noting concerns about the U.S. falling behind. Mr. Valentine stated that although he did not know the exact production capacity, China was likely producing at least 10,000 drones per month, as evidenced by Ukraine’s replenishment of its drone stock from Chinese sources. He emphasized the difficulty of competing with a state-backed industry and stressed the need for the U.S. to keep pace in this critical area.

  Rep. Gimenez questioned how Ukraine was managing to challenge the Russian Navy in the Black Sea without a significant naval fleet. Mr. Tseng explained that Ukraine’s success lay in the tactical use of asymmetric capabilities, such as low-cost one-way attack drones, which had put the Russian Navy in a strategic dilemma despite their superior numbers and firepower. Rep. Gimenez highlighted this as an example of thinking differently and questioned whether the U.S. military was too focused on traditional, expensive platforms like submarines and aircraft carriers.

  Rep Gimenez criticized the DoD and Congress for fostering a risk-averse culture that favors established, conventional solutions over innovative, asymmetric approaches. He expressed frustration with the military’s reluctance to adopt new technologies and dispersed assets, arguing that the current mindset leaves the U.S. vulnerable in modern warfare. He called for a shift in both military and legislative thinking to embrace more flexible and forward-looking strategies in defense.

• Rep. Jacobs asked for feedback on the DoD's Replicator initiative, which aims to move toward problem-based acquisition. Mr. Jenkins explained that Replicator has a very narrow focus on kinetic, explosive devices specifically for a potential conflict near Taiwan, limiting its broader applicability. He acknowledged the program's emphasis on speed but cautioned that without recurring funding, its impact would be minimal and at risk of being outdated quickly due to rapid countermeasures seen in conflicts like Ukraine.

  Rep. Jacobs asked Mr. Valentine if the strategic concept behind Replicator could serve as a model for other challenges. Mr. Valentine responded that Replicator's strategic concept aligns with a problem-based acquisition approach and envisions a future battlefield dominated by autonomous systems. However, he critiqued the acquisition side of the program, noting that it had not yet lived up to its potential or rhetoric.

  Rep. Jacobs asked about transitioning commercially funded innovations into DoD applications, given the differing levels of accuracy required between commercial and military uses. Mr. Ludwig recommended expanding the use of the software acquisition pathway, which has proven effective but underutilized. He cited the overlap in challenges between commercial applications like autonomous cars and military systems, suggesting that these pathways could facilitate the integration of commercially developed technologies into defense contexts.

  Rep. Jacobs raised concerns about balancing proprietary technology rights with the DoD's need for oversight, repair capabilities, and interoperability. To which Mr. Sankar emphasized that the real issue is not vendor lock itself but the switching costs associated with changing technologies. He argued that the DoD should focus on reducing these switching costs rather than attempting to build proprietary systems, which often isolates them from commercial innovation. Mr. Sankar suggested that fostering competition based on switching costs could drive better outcomes and align DoD practices more closely with the commercial sector.

• Rep. Mace asked Mr. Tseng about addressing the GPS issue, particularly in light of its vulnerabilities to jamming and hacking. Mr. Tseng emphasized the importance of training in realistic battlefield conditions to better understand the limitations of GPS-reliant systems. He argued that military units often lack sufficient exposure to electronic warfare scenarios, which leads to a lack of preparedness when deployed. Rep. Mace further questioned how to move away from reliance on GPS. Mr. Tseng suggested building systems that do not depend on GPS, as it will not be reliable in future conflicts, highlighting that human training without GPS should extend to weapon systems as well. Mr. Valentine expanded on the GPS discussion, stating that AI could be the solution to overcoming GPS jamming and spoofing. He described how Skydio’s drones use visual-based navigation systems that compare images to determine location, effectively bypassing the need for GPS. Mr. Valentine shared a success story from Ukraine where their drone landed within 20 feet of its operator after a 40-minute flight under GPS jamming conditions, demonstrating the efficacy of AI-driven navigation. Mr. Ludwig highlighted that the GPS issue is fundamentally a software problem, not a hardware one. He explained that sophisticated software solutions, such as software-defined radios and advanced test infrastructures, are key to countering electronic interference. Mr. Ludwig stressed the importance of viewing these challenges through a software lens, as it separates the hardware and software components, providing the flexibility needed to adapt quickly.

  Rp. Mace asked how the U.S. could force innovation and become more nimble given the current bureaucratic environment, to which Mr. Sankar suggested breaking up monopolistic structures within the government by fostering competition, similar to commercial practices. He proposed that major defense programs should have multiple program managers competing against each other, which would drive faster adoption of new technologies and provide constant iterative feedback from different needs and perspectives.

  Rep. Mace asked for practical steps to improve innovation in the next 12 months. Mr. Valentine recommended expanding private sector fellowship programs for military personnel to learn about innovation. Mr. Tseng proposed creating a sense of urgency by framing technological challenges as emergencies, similar to mini-Manhattan Projects. Mr. Ludwig emphasized increasing software procurement to unlock innovation, while Mr. Jenkins advocated for incentivizing both private companies and government budget creators to make bold, competitive choices in defense technology.

• Rep. Veasey asked Mr. Tseng about integrating VBAT drones with the Air Force's Collaborative Combat Aircraft (CCA) program, which focuses on AI-piloted jets working alongside crewed aircraft like the F-35. Mr. Tseng explained that the VBAT addresses targeting problems by providing long-endurance capabilities essential for identifying and tracking targets ahead of time, a crucial step before employing strike assets like fighter jets. He emphasized that VBAT drones could forward-deploy without runways and work in electronically contested environments, complementing the CCA program by establishing a targeting picture well before kinetic actions are needed.

  Rep. Veasey further asked how VBAT teams and Shield AI's technology could enhance joint operations with the F-35. Mr. Tseng responded that VBATs could create targeting pictures far ahead of traditional assets, thus enhancing air superiority missions by working in tandem with manned and unmanned strike platforms.

  Rep. Veasey asked Mr. Sankar whether it was feasible to make the significant changes needed in defense procurement without drastically increasing defense spending, and whether adopting AI and unmanned systems would be sufficient to deter war. Mr. Sankar argued that the main issue was not the level of spending but how funds were allocated, stressing that current investments do not maximize lethality. He highlighted the disconnect between the commercial and defense sectors, contrasting it with China’s integrated approach where commercial activities indirectly subsidize military advancements. He further explained that the U.S. defense procurement process, with its fixation on cost-based contracting, stifles innovation and price competition. He called for a shift to value-based contracting, where companies are rewarded for delivering better capabilities rather than merely covering costs. This shift, he argued, would free up significant budget resources to reinvest in technologies that enhance U.S. military effectiveness, countering similar moves by strategic competitors like China.

• Rep. Kiggans asked how impactful Ukraine aid has been for companies developing drone technology. Mr. Sankar stated that despite having a full office in Kyiv since May 2022, his company had received zero resources from Ukraine aid. He noted that the primary value came from learning on the ground, which exceeded what could be learned in other theaters. Mr. Valentine shared that most of the 1,000 systems his company has in Ukraine were either donated or purchased by the donor community at the conflict’s start. He emphasized the clear need for these systems in Ukraine, where they provide significant tactical and strategic advantages. Rep. Kiggans then asked about strengthening the domestic supply chain for drones. Mr. Valentine suggested that consistent purchasing from the DoD would create a reliable demand signal, allowing companies to stockpile components and be ready for demand shocks. He also highlighted the importance of securing chip manufacturing within friendly nations.

  Rep Kiggans inquired about how software companies integrate the latest technology with prime contractors and engage with warfighters to understand their needs. Mr. Tseng explained that his company regularly collaborates with primes and follows best practices in product management, similar to commercial companies, by gathering input from customers and refining solutions based on feedback. Mr. Sankar added that his company deploys 90,000 software upgrades weekly to its fleet, highlighting the importance of rapidly iterating software changes based on real-time feedback from the battlefield. He stressed that being directly engaged with warfighters allows for quick updates and adjustments, making software a highly adaptable weapon system.

  Rep. Kiggans asked how pilots feel about the evolving landscape where autonomous systems are becoming increasingly relevant. Mr. Tseng responded that pilots and other combat professionals understand the high risks associated with manned missions, such as operating in environments heavily defended by integrated missile systems. He emphasized that autonomous systems can reduce the need for humans to face these extreme dangers, aligning with the views of pilots who recognize the strategic shift toward unmanned technologies.

• Rep. McCormick asked about the need to develop new technologies to counter drones and protect larger legacy systems from adversaries like Iran and China. Mr. Sankar emphasized the importance of maintaining production capabilities rather than merely stockpiling outdated systems. He argued that innovation is driven by continuous production and adaptation, which keeps the knowledge cycle alive and responsive to evolving threats. He highlighted the need for rapid, scalable production to maintain an innovative edge.

  Rep. McCormick questioned whether HIMARS were effective in Ukraine, given Tseng's earlier comments. Mr. Tseng clarified that HIMARS using GPS-guided rounds had limited success due to the prevalence of GPS jamming on the battlefield. Rep. Veasey also asked why the U.S. was not delivering stockpiled weapons to Ukraine. Mr. Tseng explained that the issue was a combination of bureaucratic processes and the logistical challenges of working directly with Ukrainian forces, who demand companies test their products on the front lines to ensure effectiveness.

  Rep. McCormick inquired about the integration of quantum, AI, and autonomy technologies and their potential to shape future battlefields. Mr. Ludwig explained that while AI and autonomy are advancing rapidly and are closely intertwined, quantum technology remains in the research phase, primarily focusing on cryptography. He stressed that AI and autonomy are already evolving at a fast pace and are crucial for modern warfare, yet the Department of Defense often overlooks the importance of advanced software in making traditional systems like planes and ships effective in contemporary conflicts.

• Chairman Rogers asked if there were any difficulties selling products to Ukraine due to restrictions from the U.S. government. Mr. Valentine explained that while their systems are not under ITAR, they are BIS-controlled, which makes obtaining export licenses challenging. The process often requires end-user certifications, which are difficult to obtain from Ukrainian soldiers and the Ministry of Defense. The Chairman further inquired about export limitations. Mr. Tseng noted that while export regulations have largely been addressed and licenses are required, these factors haven't been major obstacles in getting capabilities to Ukraine.

  The Chairman appreciated Tseng’s comments on the requirements-based acquisition system and asked for other takeaways from the hearing. Mr. Tseng emphasized the need to be warfighter-centric, focusing on realistic training that prepares soldiers for modern electronic warfare, which is currently lacking.

  The Chairman asked Mr. Sankar for statutory suggestions to force necessary changes within the Department of Defense (DoD). Mr. Sankar suggested increasing internal competition within the department, such as having competing program managers to foster innovation and efficiency. He also stressed the need to allow more flexibility and creativity, citing the space sector’s success due to its competitive nature as an example.

  The Chairman closed by encouraging the witnesses and their peers to suggest specific statutory language that could serve as a forcing function to drive change within the DoD. He highlighted the importance of spending wisely and increasing defense spending as a percentage of GDP, noting that current levels are historically low and inadequate for maintaining global security and defense capabilities.

• For his closing, Ranking Member Smith expressed that unity can often suppress necessary challenges and innovation, suggesting that dissent is crucial for progress. He highlighted the importance of reviewing how service members are trained for modern battle conditions, noting that readiness should be a key focus for the committee. He acknowledged that while Congress has given the DoD the authority for a problem-solving-based acquisition process, it has not provided sufficient funding, which constrains innovative efforts.

  The Ranking Member criticized Congress’s tendency to protect local projects at the expense of broader defense needs, arguing that this parochialism hinders flexibility and innovation. He pointed out that protecting programs for political reasons often does not yield electoral benefits, urging a shift away from this mindset. He also defended the DoD, emphasizing that congressional intolerance for failure discourages innovation and bold decision-making. He concluded that the greatest obstacle to progress is the resistance to change and stressed the need to overcome this to implement the necessary reforms.

• In a second round of questioning Rep. Gaetz asked Mr. Ludwig to expand on his statement that the next big innovation will be in software, not hardware. Mr. Ludwig explained that AI is fundamentally a software problem, and while there is much focus on hardware like advanced chips, the real innovation lies in software capabilities.

  Rep. Gaetz then turned to Mr. Sankar, highlighting the need for competition in software, and questioned whether it is wise to grant defense companies full system performance contracts. Mr. Sankar agreed and emphasized that software is a unique American strength. Mr. Ludwig added that hardware and software should be competed and procured separately to encourage the best innovation. Rep. Gaetz criticized the full system performance contracts that currently limit competition and the ability of companies to present software solutions. He argued that separating hardware and software procurement would unlock competition and better achieve the goals of defense innovation.

• Rep. Khanna asked if there were recommendations for effective leaders in the Department of Defense. Mr. Sankar suggested leveraging the experience of industry experts as part-time service members to provide valuable advice and guidance to military leaders. Mr. Tseng noted that while he had specific names to suggest, the key was to find people who have solved problems at scale and have direct experience in the industry, emphasizing the importance of practical, hands-on knowledge in leadership roles.

  Rep. Khanna encouraged the panel to provide specific names of forward-looking individuals who could be influential in the Department of Defense, citing Ash Carter as an example of a forward-thinking leader. He suggested that sharing recommendations with the chairman or ranking member would be beneficial during the upcoming transition. He then asked about the recruitment of young technology talent, particularly outside of the top 15 universities, and whether the Department of Defense could become a primary employer for such individuals. Mr. Valentine responded affirmatively, highlighting an innovative program called the Defense Civilian Technology Corps (DCTC), likening it to a civilian version of ROTC. He praised this initiative as an excellent pipeline for bringing young tech talent into government service and suggested that it should be expanded.

• Rep. Gimenez raised concerns about U.S. military aid to Ukraine, asking whether the U.S. was deliberately sending equipment that doesn't work or if Ukraine requested it but later found it ineffective. Mr. Tseng stated it was likely a combination of both, emphasizing that warfighters prioritize effective equipment, which may explain why some U.S. equipment is not being used.

  Rep. Gimenez also questioned whether AI and automation could turn older fighter jets into more advanced versions, such as converting fourth-generation fighters into fifth or sixth-generation models. Mr. Tseng confirmed this was possible, noting that retrofitting aircraft with advanced AI could enhance their capabilities beyond current limitations imposed by human pilots. Mr. Ludwig added that the human body is the most fragile component of an aircraft, and advanced AI could unlock new capabilities. Mr. Sankar argued that legacy platforms should compete with newer models like the F-35 to prove their continued relevance.

  Rep. Gimenez also criticized the military’s personnel management practices, particularly the frequent movement of officers every three years, which disrupts continuity and expertise. He suggested that successful leaders should remain in their roles longer, especially if they are critical to their mission. Mr. Ludwig and Mr. Tseng agreed, highlighting the importance of deep expertise and accountability, and noting that program managers should be held responsible for the success or failure of their projects over time.

• Rep. Jacobs asked the panel about strategies for modernizing shipbuilding, emphasizing the challenges in the industry and seeking ways to foster innovation similar to other sectors like drones. Mr. Jenkins highlighted that shipbuilding faces complex issues, such as narrow requirements leading to more efficient, smaller, and adaptable ships. He emphasized the importance of integrating unmanned systems alongside traditional ships, as hypersonics have changed naval warfare by pushing large ships out of direct conflict zones. Mr. Sankar added that improving the efficiency of shipbuilding in the U.S. requires addressing complex incentives, noting that shipbuilders often avoid efficiency improvements due to fears of losing profits.

  Rep. Jacobs also asked how to change the entrenched culture within the DoD and suggested accountability mechanisms, leadership evaluations, and innovation performance reviews. Mr. Tseng stressed the importance of aligning incentive structures to drive desired behaviors, stating that the right incentives could empower dedicated personnel to achieve significant results. Mr. Sankar agreed, emphasizing the need for a culture that accepts risk and failure in pursuit of innovation. He argued that by trying to eliminate risk entirely, the DoD creates a culture that prevents success.

  Rep. Jacobs then inquired about the successes of DIU, specifically mentioning Saildrone, and asked how to replicate these successes to help more companies overcome bureaucratic barriers. Mr. Jenkins pointed out that despite Saildrone’s achievements, it still lacks a program of record, highlighting the DoD's struggle to transition promising innovations into sustained operations. He emphasized that DIU has been effective in engaging commercial minds through project-based requirements rather than strict definitions, but there is a need for mechanisms to operationalize these innovations and incentivize those in charge of budgets to take risks.

• Rep. Mace asked about the current challenges and vulnerabilities related to chip manufacturing, specifically focusing on the reliance on Taiwan for advanced chips, and how to address this issue. Mr. Valentine explained that the majority of chips are designed in the United States but manufactured in Taiwan, creating a strategic vulnerability. He emphasized the need to onshore chip production capabilities to ensure access to these critical components during times of need.

  Rep. Mace then shifted the discussion to the energy requirements needed to support advances in AI and technology, particularly the infrastructure for data centers and energy production. Mr. Sankar responded by highlighting the need for a whole-of-government effort to significantly increase energy production. He noted that energy generation has been stagnant for decades and that to maintain the U.S. lead in AI and technological innovation, it’s essential to have diverse energy sources and a robust infrastructure to meet future demands.

• Rep. Veasey asked Mr. Jenkins about a statement regarding the superior technological capabilities of Chinese vehicles compared to Tesla and the implications for military readiness, especially considering ongoing debates about the role of electric vehicles in American society. Mr. Ludwig responded, clarifying that China is experiencing rapid innovation in its automotive industry, with over 140 car companies, including around 20 that are highly competitive globally. He highlighted that Chinese vehicles receive software updates at a much faster rate than typical vehicles in the U.S., emphasizing the need for the U.S. to enable rapid software updates across all hardware systems to prevent technological obsolescence.

• Rep. Kiggans asked Mr. Valentine and Mr. Tseng if their companies have benefited from U.S. aid to Ukraine, expressing concern about ensuring that taxpayer dollars support the defense industry and contribute to military readiness. Mr. Valentine responded that while his company could not directly trace any funds from U.S. aid, the overall funding was making a significant difference by supporting Ukraine, benefiting the U.S. industrial base, and enhancing competitiveness against global rivals. Mr. Tseng added that the aid incentivizes companies to solve complex problems, knowing there are opportunities if they succeed.

  Rep. Kiggans inquired if progress made in the European conflict could be applied to Southeast Asia, where potential future conflicts may occur. Mr. Tseng noted that electronic warfare, such as GPS and communication jamming seen in Ukraine, is expected to be relevant in a potential China-Taiwan conflict. He highlighted that while there are geographical differences, the core principles of operating without GPS and communications remain consistent.

  Rep. Kiggans also asked if the military is effectively learning and applying lessons from civilian companies involved in Ukraine. Mr. Tseng acknowledged that there are pockets of success where lessons are translated into military action, but this is not uniformly true across all commands.

• Rep. McCormick shared his skepticism about retrofitting aircraft, arguing that older planes like the F-16, which were designed around human limitations, cannot be upgraded to fully meet modern demands. He noted that dogfighting is outdated, as modern combat relies more on advanced radar and long-range weapons. He advocated for smaller, more maneuverable systems that require less fuel. He also criticized past U.S. efforts in Afghanistan, noting that inefficiency and waste were far worse there than in Ukraine, and stressed the importance of accountability to the American public in the current conflict.

  Rep. McCormick also expressed concerns about the Chips Act, stating it does not adequately address the production of advanced AI chips needed for defense and technological superiority. He warned that the U.S. is not moving quickly enough to secure chip production, especially given China's intentions towards Taiwan, which could jeopardize the supply of advanced chips. Mr. Valentine agreed, emphasizing the urgency of bringing chip manufacturing back to the U.S. Mr. Sankar applauded the effort behind the Chips Act but highlighted the need for a coordinated, whole-of-government approach to expedite the process. Rep. McCormick concluded by drawing parallels to the need for domestic production of medications, arguing that too much reliance on foreign manufacturing leads to quality control issues, which pose risks to U.S. safety and security.

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