    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

    .                         [H.A.S.C. No. 116-58]

                       SUPERCHARGING THE INNOVATION BASE

                                   __________

                                    HEARING

                                   BEFORE THE

                          FUTURE OF DEFENSE TASK FORCE

                                     OF THE

                          COMMITTEE ON ARMED SERVICES

                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  HEARING HELD

                                FEBRUARY 5, 2020

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    41-442                      WASHINGTON : 2022

    -----------------------------------------------------------------------------------

                          FUTURE OF DEFENSE TASK FORCE

                    SETH MOULTON, Massachusetts, Co-Chairman
                        JIM BANKS, Indiana, Co-Chairman

    SUSAN A. DAVIS, California           SCOTT DesJARLAIS, Tennessee
    CHRISSY HOULAHAN, Pennsylvania       PAUL MITCHELL, Michigan
    ELISSA SLOTKIN, Michigan             MICHAEL WALTZ, Florida
                     Laura Rauch, Professional Staff Member
                   Eric Snelgrove, Professional Staff Member
                              Rory Coleman, Clerk

                                C O N T E N T S

                                  ----------
                                                                       Page

                  STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

    Banks, Hon. Jim, a Representative from Indiana, Co-Chairman,
      Future of Defense Task Force...................................     2
    Moulton, Hon. Seth, a Representative from Massachusetts, Co-
      Chairman, Future of Defense Task Force.........................     1

                                   WITNESSES

    Brose, Chris, Chief Strategy Officer, Anduril Industries.........     8
    Fanning, Hon. Eric, President and CEO, Aerospace Industries
      Association....................................................     3
    Shah, Raj, Chairman and Co-Founder, Arceo.ai.....................     5

                                    APPENDIX

    Prepared Statements:

        Brose, Chris.................................................    51
        Fanning, Hon. Eric...........................................    31
        Shah, Raj....................................................    40

    Documents Submitted for the Record:

        [There were no Documents submitted.]

    Witness Responses to Questions Asked During the Hearing:

        [There were no Questions submitted during the hearing.]

    Questions Submitted by Members Post Hearing:

        Mrs. Davis...................................................    63

                       SUPERCHARGING THE INNOVATION BASE

                                  ----------

                      House of Representatives,
                           Committee on Armed Services,
                                  Future of Defense Task Force,
                           Washington, DC, Wednesday, February 5, 2020.
        The task force met, pursuant to call, at 9:00 a.m., in room
    2118, Rayburn House Office Building, Hon. Seth Moulton (co-
    chairman of the task force) presiding.

     OPENING STATEMENT OF HON. SETH MOULTON, A REPRESENTATIVE FROM
        MASSACHUSETTS, CO-CHAIRMAN, FUTURE OF DEFENSE TASK FORCE

        Mr. Moulton. Good morning. The hearing will come to order.
        I would like to welcome our task force members and the
    witnesses testifying before us today. This hearing addresses
    technology and the innovation base for the Committee on Armed
    Services' Future of Defense Task Force.
        Technology is at the heart of today's great power
    competition and the United States no longer enjoys unrivaled
    dominance. Countries like Russia and China are not just trying
    to compete with the United States conventional military
    capability, they are trying to leapfrog us in emerging
    technologies to blaze a new technological frontier. As I speak,
    our adversaries are working to surpass us in a dizzying array
    of emerging technologies, from artificial intelligence to
    quantum computing to biotechnology and 5G, just to name a few.
        My co-chair, Representative Jim Banks, and I just returned
    from Southeast Asia, where we saw firsthand the overwhelming
    influence of China's Belt and Road Initiative. We also saw the
    fruits of its technological revolution, where companies like
    Huawei, ZTE [Zhongxing Telecommunications Equipment], and
    Alibaba have made significant gains on U.S. competitors. China
    is investing billions and is resolute in its endeavor to be the
    world leader in many of these emerging technologies.
        One cannot understate the fact that whoever wins this race
    will likely enjoy both military and economic superiority. To
    ensure U.S. strategic overmatch in these increasingly common
    battlespaces, the Pentagon must work to supercharge its
    innovation base. It will need to grow human capital, enhancing
    funding for research and development, foster partnerships with
    tech innovators in the private sector, and bolster ties with
    academia. We also need immigration policies that ensure the
    United States attracts the most talented people globally. And
    this effort will require a whole-of-government approach. The
    Pentagon will play an enormous role in that effort.
        Initiatives like DARPA [Defense Advanced Research Projects
    Agency] have created a historical context. With an initial
    funding of $520 million, which would be $4.5 billion in today's
    dollars, DARPA led to current initiatives like DIU [Defense
    Innovation Unit] which, while particularly noteworthy, simply
    doesn't get the same level of support with a mere $41 million
    budget. We cannot expect the same success without the same
    level of commitment.
        Additionally, the defense acquisition process is clearly
    broken, particularly with regards to the emerging technologies
    often discussed on this task force. The private sector must
    help provide the impetus for change. The simple truth is that a
    majority of the breakthroughs in innovation are occurring in
    the private sector and the DOD [Department of Defense] must
    emphasize agility to capitalize on these innovations and
    talent, as our national security depends on it.
        Frankly, that is why the Future of Defense Task Force
    exists. We need to innovate. We need to create and leverage new
    capabilities, and we must win this race. Furthermore, we must
    create technological and economic advantages, and those
    advantages come through our American talent. We cannot lose
    that.
        I have heard far too many stories about talented young
    people with the skills we need choosing to leave national
    security and the defense community. They do not depart out of a
    lack of patriotism but out of frustration with slow-moving
    bureaucracy and antiquated personnel policies. We owe them
    better.
        As Congress considers the future of defense, it is
    important to remember the American warfighters. We owe it to
    our warfighters, and it is our duty as policymakers to catalyze
    innovation and maintain the military and technological
    superiority that not only deters conflict, but keeps our young
    people out of wars, and if that conflict occurs, makes sure
    that they never enter a fair fight.
        I would like to thank Chairman Smith and Ranking Member
    Thornberry for continuing to support the task force, and I want
    to recognize my fellow task force members for their ongoing
    efforts in this important endeavor.
        Now I would like to turn it to my co-chair, Congressman Jim
    Banks of Indiana.

    STATEMENT OF HON. JIM BANKS, A REPRESENTATIVE FROM INDIANA, CO-
                 CHAIRMAN, FUTURE OF DEFENSE TASK FORCE

        Mr. Banks. Thank you, Chairman Moulton. And thank you to
    the witnesses for being here today. I have really been looking
    forward to this hearing that we are about to have.
        The task force has just crossed its halfway point. Over the
    last 3 months, we have held hearings and briefings focused on
    the theories of victory and explored the different critical
    technology areas that are fundamental to our national security:
    autonomous systems, biotechnology, cyber, artificial
    intelligence, and hypersonics.
        Just as importantly, we have investigated how these
    technologies will interact in future conflicts that will
    require a fully sensing, intelligent, and distributed command
    and control environment. And while we are still a long way out
    from realizing the battlefield of the future that I described,
    the investments that we make today in our innovation base and
    technology infrastructure will shape our future military
    superiority.
        But government alone cannot lead this charge. It is
    critical that we partner with industry, leverage commercial
    research and development, harness emerging technologies, and
    break down the barriers that prevent the most innovative
    businesses from wanting to work with the Department of Defense.
        This task force has also surveyed the front lines of the
    great power competition landscape where the U.S. and Chinese
    influence, technologies, and narratives are vying for a
    receptive global audience. One of the common themes that we
    have heard was the importance of U.S. competitiveness in
    critical technologies and the desire for Western alternatives
    to Chinese offerings. We must recognize that there is
    opportunity for the U.S. to lead in the development and
    responsible use of these capabilities, but also acknowledge
    that this will require additional investment in our domestic
    innovation base.
        Welcome to our witnesses once again. Thank you, Mr. Eric
    Fanning, a special thank you to Mr. Raj Shah and Mr. Chris
    Brose, who I also had the privilege of serving with on the
    Reagan Institute Task Force on Innovation and National
    Security. It is good to see you all again. Each of the
    organizations that you represent exemplify our competitive
    advantage as a Nation. I applaud your willingness to tackle
    some of our most pressing defense challenges and your
    relentless courage to innovate. I look forward to hearing from
    our witnesses today.
        And, with that, I yield back.
        Mr. Moulton. Thank you, Chairman Banks.
        You know, this is an unusual subcommittee or task force in
    that Jim Banks and I are co-chairmen. So it is fully
    bipartisan, an equal number of Democrats and Republicans, and
    we recognize that this is a very bipartisan mission.
        I am pleased to recognize the witnesses that we have today,
    and I want to thank you all for being here and echo my co-
    chairman's remarks.
        Mr. Eric Fanning is the president and CEO [chief executive
    officer] of the Aerospace Industries Association and former
    Secretary of the Army. Thanks for being here, Eric.
        Mr. Raj Shah is chairman and co-founder of Arceo.ai and the
    former head of DIUx [DIU Experimental]. Raj, great to see you.
        Mr. Chris Brose is the chief strategy officer of Anduril
    and former staff director for the SASC, for the Senate Armed
    Services Committee, under Senator John McCain, someone whose
    presence in American politics we dearly miss today. So, Chris,
    thank you for being here as well.
        So thank you all, and, Mr. Fanning, we will begin with you.

     STATEMENT OF HON. ERIC FANNING, PRESIDENT AND CEO, AEROSPACE
                         INDUSTRIES ASSOCIATION

        Mr. Fanning. Chairman Moulton, Ranking Member Banks,
    members of the task force, thank you for inviting me to be a
    part of today's hearing. I am always happy to return to HASC
    [House Armed Services Committee], where I started my career as
    a research assistant under Chairman Les Aspin more years ago
    than I can count.
        I have spent much of my ensuing time in government,
    primarily in the Department of Defense. I am drawing on that
    experience as I think through today's hearing, but I am also
    drawing on the many things, some surprising, that I have
    learned about industry since becoming president and CEO of the
    Aerospace Industries Association [AIA].
        The subject today is a broad one and includes a large
    ecosystem that Senator Jim Talent laid out in his testimony to
    this task force last year. It is not enough to focus on how to
    increase innovative capabilities and culture in each part of
    the ecosystem; we must also focus on how to strengthen the
    partnerships between the various parts. I have seen great
    innovation in the Department of Defense, the large and
    established defense primes, and new entrants. However,
    sometimes it has been hard for the innovation taking place in
    industry to find its way to our military in the field.
    Government must better adjust to private sector developments
    rather than force those developments to fit its needs.
        At AIA, we focus our efforts in three broad categories--
    investment, framework, and workforce--all the elements
    necessary to maintain our competitive advantages. I think we
    need to look for changes and improvements in all three of these
    areas in order to supercharge innovation and across all aspects
    of the national security industrial base.
        First, under investment, it is worth stating the obvious.
    We need to find a way back to regular order in the Federal
    budget process. The threat of continuing resolutions and
    government shutdowns, followed by the reality of continuing
    resolutions and shutdowns, is extremely disruptive to the
    planning and unimpeded work necessary to make sure we do not
    lose our technological and national security edge. China does
    not periodically shut down its government. Too often, we do.
        It would also help, for planning purposes, to look beyond
    1-year budgeting cycles. This is certainly not a new idea, but
    increasingly important as China accelerates and technology
    iterates faster.
        The U.S. also needs to increase R&D [research and
    development] spending. While we have seen increases in defense
    R&D and overall defense spending in recent NDAAs [National
    Defense Authorization Acts], governmentwide spending in R&D has
    generally been declining, and in terms of percentage of GDP
    [gross domestic product], fell to pre-Sputnik levels in 2017.
        Second, under framework, or in the case of this discussion,
    the acquisition process, much important work has been done
    inside the Department and recent NDAAs have included aggressive
    reform. And while the Department still needs to fully implement
    some of these reforms, more can be accomplished.
        We have seen cases where the Department is becoming less
    prescriptive with requirements, particularly at the prototyping
    and demonstration phases. They indicate a smaller set of higher
    priority requirements and allow flexibility in competing to
    offer more diverse solutions. That said, including other
    players in the innovation ecosystem earlier in the conversation
    could prove useful, large primes and new entrants.
        Discussing the original problem sets, when appropriate,
    before even getting to high-end requirements, might open the
    solutions aperture even wider. The problem, however, is that
    even though more entrants have access to these early phases,
    the valley of death before becoming a full program of record
    still exists for those new entrants and for the existing
    primes.
        This has severe ramifications for all participants. Large
    companies may be better situated to survive this valley, but it
    can impede their ability to lock up partnerships with the many
    subcontractors they need from the supply chain, who are less
    able to survive.
        Program managers and program executive officers develop
    schedules, but more emphasis should be placed on speed.
    Successful prototypes that the Department pursues should
    include plans on the Department's side to scale and field
    quickly.
        We should also look for ways that returning to Congress
    doesn't needlessly slow down development. Oversight is
    critical, but technology moves faster than our budget process.
    For example, program managers and PEOs [program executive
    officers] might be given wider flexibility with program
    spending in the early phases when they are still defining
    costs.
        This all, of course, leads to workforce. More authorities
    and more control with the expectation of increased risk require
    better training than the Department typically provides its
    workforce. And this is particularly true of the civilians who
    are not afforded the same development opportunities as those in
    uniform. It is not enough to pass reforms in the NDAA. We need
    to make sure that those on the receiving end are fully
    empowered to utilize that reform.
        In addition to training the current workforce, we need to
    attract the future workforce. The United States needs to
    seriously recalibrate its investment in STEM [science,
    technology, engineering, and math] education at all levels. On
    so many different metrics, the Chinese are investing more than
    we are in this area.
        Finally, there are many places throughout DOD and the
    government where interesting innovation is taking place and
    where we could find lessons to scale across the larger
    enterprise.
        As this panel comes up with a series of recommendations for
    innovation in the national security ecosystem, it is worth
    noting that Congress just created a new branch of the military.
    We could shape the Space Force using templates from the last
    time we created a new service in 1947, or we could think of it
    as a test bed for all the changes we need to maintain our
    national security advantages.
        Thank you. I look forward to your questions.
        [The prepared statement of Mr. Fanning can be found in the
    Appendix on page 31.]
        Mr. Moulton. Thank you very much.
        Mr. Shah.

        STATEMENT OF RAJ SHAH, CHAIRMAN AND CO-FOUNDER, ARCEO.AI

        Mr. Shah. Co-Chairmen Moulton and Banks, members of the
    task force, thank you for the opportunity to share my thoughts
    on what I believe to be the central challenge facing our
    Nation's long-term security: How best to harness our Nation's
    innovation strength to sustain security and peace around the
    world.
        As someone who has spent large portions of his career both
    in our Armed Forces and in Silicon Valley, I applaud the focus
    of this task force. These two worlds are populated with
    extremely talented, mission-driven individuals, but have
    drifted apart in terms of both business process and culture.
        The title of this hearing, Supercharging the Innovation
    Base, is aptly named. The challenges we face from an
    increasingly autocratic world are real. I fear that without an
    organized effort by the Department of Defense, the preeminence
    of our fighting force may no longer be undisputed.
        Underpinning our innovation prowess is foundational
    research and development, a world-class talent base, strong
    connectivity between the DOD and companies leading development
    in technologies such as AI, autonomy, and cybersecurity.
        But, to me, the word ``supercharging'' represents not an
    incremental improvement, but a step change. Apropos, the
    supercharger on the Merlin engine helped turn the tide in World
    War II. I strongly encourage this task force to think broadly
    about how we can implement change at significant scale.
        The pacing challenge in thinking about innovation and
    national security, of course, is the remarkable progress made
    by China. Their public commitment to lead the world in
    innovation, particularly in AI [artificial intelligence],
    coupled with their concepts of civil-military fusion, make them
    a formidable competitor. With a growing population of 1.4
    billion, China is turning to AI to perfect dictatorship, and
    its access to massive amounts of data has allowed it to close
    the gap with U.S. industry. For example, the most valuable AI
    facial recognition company in the world is Chinese.
        This steady emphasis is bearing fruit. China now has more
    supercomputers than the U.S., total private venture capital
    investment surpassed the U.S. for the first time in 2018, and
    as of 2017, Chinese Government R&D as a percentage of GDP was
    higher than the U.S. Furthermore, the People's Liberation Army
    and technology startups enjoy close, though perhaps compelled,
    collaboration.
        To counter these trend lines, the U.S. must play to its
    strengths: having the most vibrant ecosystem in the world,
    Silicon Valley, Boston, and other places; historic strong
    support for science funding; being a welcoming place for
    immigrants; and longstanding alliances with the free nations of
    Europe and Asia.
        So I quickly would highlight five areas where I think this
    task force can have real, real impact. First and foremost,
    human capital. Our innovation superpower for the past half
    century has been our investment in human capital. From Wernher
    von Braun to the current CEOs of Microsoft, Google, and soon
    IBM [International Business Machines Corporation], the U.S. has
    been a magnet for foreign technical talent. The DOD has also
    attracted top talent for short tours without hindering their
    private sector careers, most notably McNamara's Whiz Kids. And
    finally, with a sprawling infrastructure of bases across the
    country, military service and the ethos of its members was ever
    present across all socioeconomic groups.
        Unfortunately, all three of these human capital advantages
    have withered, and now is the time to reinvigorate. We can talk
    more in the recommendations that I might submit during the Q&A
    [question and answer], but let me highlight a few.
        One, reopen a major military installation in each of our
    leading innovation centers, San Francisco and Boston, to help
    build personal community relationships; establish a national
    security innovation visa to fast track green cards for experts
    in key technical fields; increase opportunities for civilian
    service through a STEM corps; and expand Reserve and national
    service opportunities.
        Second, engagement at scale. The Department of Defense's
    engagement with the innovation ecosystems have shown early
    success, but not yet at scale. Now is the time to supercharge
    DOD's access to innovation for new entrants as well as
    traditional defense contractors. The DOD spends less than $500
    million annually with venture-backed startups and less than a
    billion in true AI research. This represents a half percentage
    point of the Department's procurement and R&D budget of $243
    billion, quite literally a rounding error.
        If we believe that the innovations transforming our daily
    lives, from self-driving cars to voice-activated televisions,
    will be core to future national security, we should massively
    increase support to the organizations meeting these challenges
    head on.
        My recommendation would be to increase by tenfold the spend
    on successful innovation efforts, such as the Air Force's Pitch
    Day, DIU, Joint AI Center, and many others. Additionally,
    increasing Federal R&D to its historical levels of 1.1 percent
    would be very important.
        Point number three, train and equip for the future. From
    the Section 809 Panel to the sustained efforts of the House and
    Senate Armed Services Committees, including Mr. Brose here,
    great progress has been made in the area of acquisition reform,
    so much so that I would submit that the real impediment is
    reforming management incentives rather than additional
    legislation. More importantly, there is a need to structurally
    refocus the training and equipping of our forces to meet an
    enemy emboldened by autonomous weapons. This tectonic shift of
    how we will fight is being overshadowed by the acquisition
    reform debate.
        How do our concepts of operations change in the face of
    low-cost drones with embedded facial recognition? It will
    require congressional leadership to enable the DOD to be
    ambitious and depart from its comfort zones. One result will be
    large programs of records for nontraditional weapon systems.
    The sooner that we can recognize this coming change, make large
    bets on specific technologies and new companies, the quicker
    entrepreneurs and the venture investment community will apply
    their talents and risk capital to solve DOD needs at scale. In
    essence, who are the Billy Mitchells and William Knudsens of
    today?
        My fifth point, allies and partners. Addressing the
    challenges discussed today will only be easier with our allies
    and partners. Fortunately, we have built goodwill over decades
    and can deepen these relationships to enact coordinated
    economic and defense strategies.
        And in conclusion, finally, I wish to highlight one final
    near-term opportunity that Mr. Fanning did as well, which is,
    with the establishment of the Space Force, the Department can
    take a clean sheet approach to the technology and talent
    acquisition process. The timing is especially fortuitous as the
    commercial space industry is in the midst of a renaissance led
    by new entrants.
        In sum, while the challenges are real and growing, our
    Nation has all the elements necessary to prevail in the defense
    of democratic values. We just need the collective will to do
    so. Many august organizations have developed robust
    recommendations. I urge you to help lead Congress and our
    Nation in their implementation.
        Thank you, and I look forward to your questions.
        [The prepared statement of Mr. Shah can be found in the
    Appendix on page 40.]
        Mr. Moulton. Thank you very much.
        Mr. Brose.

       STATEMENT OF CHRIS BROSE, CHIEF STRATEGY OFFICER, ANDURIL
                               INDUSTRIES

        Mr. Brose. Thank you. Chairman Moulton, Ranking Member
    Banks, members of the task force, it is an honor to appear
    before you today. I am grateful for the opportunity, and I
    applaud the excellent work that you are doing.
        When it comes to our defense innovation base, here is our
    predicament. I think the chairman and the ranking member laid
    it out well in their opening statements. Most of the people and
    companies that are most expert in the kinds of emerging
    technologies that the U.S. military needs for the future are
    not currently doing defense work, while traditional defense
    companies, despite their remarkable people and expertise, are
    not at the forefront of these emerging technologies.
        The question then is how to realign our innovation base,
    and I have come to believe that we in Washington are
    overthinking this problem. Ultimately, it comes down to one
    thing: incentives.
        Consider the scale of this problem. When the Cold War
    ended, there were 107 major defense firms. By the end of the
    1990s, there were five. And since then, the middle tier of our
    defense sector has been systematically hollowed out, bought up
    by larger companies or driven out of business altogether.
        At the same time, the defense sector has not been
    attracting and retaining new companies. From 2001 to 2016, of
    new companies that sought to work for the U.S. Government, 40
    percent were gone after 3 years, more than half were gone after
    5 years, and nearly 80 percent were gone after 10 years.
        Indeed, since the end of the Cold War, in every technology
    sector in America there have been literally more than 100
    startups that have grown to be valued at more than $1 billion,
    and in the national security sector there have been only two.
        This didn't just happen. This was the result of incentives
    that we created in Washington, some conscious, some
    unconscious. Most detrimentally, we carved up what little money
    we have spent on research and development into lots of small
    contracts for lots of small companies that rarely make it
    across the valley of death that we have talked about this
    morning, rarely have become large-scale military programs and
    enables new companies to grow.
        This is why so many of America's best technologists and
    investors have turned away from defense. It is not because they
    are unpatriotic; it is because they have not believed they
    could fully realize their talents, build successful companies,
    and make large returns on investments by working in defense.
    And three decades of empirical evidence suggests they were not
    wrong.
        Defense will never be a free market, but it is still
    governed by incentives. To supercharge the innovation base, we
    have to create different incentives, and we can, but the U.S.
    Government must recognize its proper role in this innovation
    ecosystem.
        Innovative companies do not need the U.S. Government to try
    to play venture capitalist. America has plenty of money.
    Indeed, the amount of private capital in our Nation dwarfs the
    defense budget many times over. This money is not ideological.
    It will flow to what it perceives to be good investments.
    America also has plenty of innovators and engineers who would
    be willing to work with our military. More of them will want to
    do that if they perceive it to be a path to fulfillment,
    success, and wealth. They do not need U.S. defense agencies to
    try to turn themselves into tech startups or software
    development factories.
        Innovative companies that are doing defense work need one
    thing more than any other from the U.S. Government: revenue.
    They need contracts for the best capabilities they are
    building, not tiny one-time awards for science projects that
    never get fielded, transitioned, and scaled into programs of
    record, but the kind of recurring revenue that comes from
    building and shipping products to more and more customers.
        If the Department of Defense and Congress value AI-enabled
    capabilities, autonomous systems, small drones, and other
    emerging technologies that we are talking about here, you have
    to buy more of them. This will enable the companies that are
    doing this work to do more of it, to grow, to attract more
    engineering talent, to develop new technologies, and raise many
    times their current value in private capital that is just
    sitting on the sidelines and looking for good things to do. And
    as more of those investors come to see defense as a viable
    business model, they will direct more of their considerable
    resources to founding and helping to grow new innovative
    companies that want to work for the U.S. military.
        Not all of those bets will succeed, but the ones that do
    can be huge winners, and their success can attract even more
    engineers, companies, and investors back into the defense
    innovation base, enabling it to grow larger, more vibrant, and
    more competitive. It can and must be a virtuous circle, but it
    all comes back to the U.S. Government creating the right
    incentives. This is starting to change, and we have talked a
    bit about it, but just barely.
        At present, two things are simultaneously true. Thanks to
    the many reforms and new authorities that you all and your
    colleagues of Congress have given to the Department of Defense,
    it has never been easier for new innovative companies to get
    small contracts to work for the U.S. military. At the same
    time, it has never been harder for those companies to
    transition their good work, displace established but less
    capable programs of record, and win large-scale procurement
    contracts.
        Ultimately, the way to supercharge the defense innovation
    base, in my opinion, is actually relatively simple: Buy more of
    what that innovation base is building right now. It is a
    question of supply and demand. The most important thing the
    U.S. Government can do is create greater demand. It has to
    clearly define our most important operational problems, hold
    regular, fair, and open competitions to determine what
    capabilities and concepts work better than others. Pick
    winners. Do not try to make a thousand flowers bloom.
    Concentrate our limited government resources in smaller numbers
    of larger bets on the most promising capabilities that our
    Nation's innovation base is producing.
        Getting from the military we have to the military we need
    will be a daunting challenge, but it can be done. We have the
    people, the technology, and enough money to do it, but we have
    to get the incentives right and we have to move with a sense of
    urgency, which I applaud this task force for working to create.
        Thank you very much again for the opportunity to be here,
    and I look forward to your questions.
        [The prepared statement of Mr. Brose can be found in the
    Appendix on page 51.]
        Mr. Moulton. I thank you all very much.
        Now, the last time we had a hearing, our witnesses had so
    much to say and kind of maybe got a little bit carried away
    that my questions took forever. So I have offered to the
    committee to defer my questions to the end, and so we will
    start with my co-chairman, Mr. Banks.
        Mr. Banks. Thank you, Mr. Chairman. We accept your offer.
        Mr. Brose, last year in Foreign Affairs, you wrote, quote,
    ``a military made up of small numbers of large, expensive,
    heavily manned and hard-to-replace systems will not survive the
    future battlefield, where swarms of intelligent machines will
    deliver violence at a greater volume and higher velocity than
    ever before,'' end quote.
        We are a week out from receiving the President's fiscal
    year 2021 budget request. What are some of the technology areas
    that you would recommend additional investment in order to
    realize the future battlefield that you described?
        Mr. Brose. Thank you very much for the question. I think
    many of the things that I would be looking for are investments
    in the kinds of autonomous systems, AI-enabled capabilities
    that you referenced. I think the way that we are going to, as
    the U.S. military, get to the type of scales of systems that I
    believe are going to be necessary for future effectiveness are
    by automating a lot of that process of understanding and
    decisionmaking and action and really delegating a lot of that
    to kind of increasingly capable military systems.
        The other thing, though, that I would encourage you to look
    for is, we are spending plenty of money on command and control
    battle management, software-defined capabilities like that. I
    think the U.S. Government has got too little value out of what
    we have spent on systems like that.
        And I would echo the point you made in your opening
    statement, that, to me--and it is in my written testimony--the
    real comparative advantage for us in the future is going to be
    command and control. It is going to be the ability to make
    sense of enormous amounts of information that our military
    collects, turn that into understanding of the battlespace,
    enable human beings to make good and relevant and timely
    decisions, and then direct actions to what will likely be
    highly autonomous systems, and do that at a pace and at a scale
    that we have really not contemplated before.
        Mr. Banks. You also wrote, quote: ``Military pilots and
    ship drivers are no more eager to lose their jobs to
    intelligent machines than factory workers are. Defense
    companies that make billions selling traditional systems are as
    welcoming of disruptions to their business model as the taxicab
    industry has been of Uber and Lyft,'' end quote.
        Can you point to specific examples of where the Department
    is falling short in innovation and where additional engagement
    with the private sector is needed?
        Mr. Brose. Thanks. I would say there are areas where we
    have been working on programs as a government for so long that
    we have failed to realize that commercial technology has just
    passed us by. You know, I think an area that is kind of near to
    my heart in my current life is counter-drone systems where, you
    know, we can now use things like artificial intelligence,
    machine learning, computer vision to rapidly make sense of
    information and cue human decisions in the time-relevant way
    that is going to be necessary. Many of those technologies were
    not available several years ago, and I think we can take more
    advantage of it.
        I would say another area is the way we process information.
    You have mentioned in your opening statement the distribution
    of command and control. That will only happen if we can
    distribute the process of computation. So edge computer
    processing, moving that out of large centralized operation
    centers is something that the commercial industry has done
    remarkably well in the form of self-driving vehicles. That
    amount of computational power is many times what is on the best
    military systems today. It is something that I think we have to
    take advantage of, because we are not going to be able to rely
    on a military that is fundamentally tethered to large operation
    centers or command centers that may not exist or be available
    in a future conflict.
        Mr. Banks. Mr. Fanning, we have taken some important steps
    over the last few months with the establishment of the Space
    Force, as you have already acknowledged, and have begun to
    recognize how critical the space domain will be in further
    conflicts. How can the United States better compete with China
    to increase the number of launches and resulting space
    capability, and should the Department of Defense continue to
    play a larger role in the launch industry or is there
    opportunity to increase partnership with commercial launch
    providers?
        Mr. Fanning. Thank you for the question. I get this
    question a lot, we all do, I think, and I don't think it is an
    either-or. I mean, if you look at the historical evolution of
    the commercial space market, it started with the government
    deciding it wanted to go to the moon when there wasn't a
    commercial market, turning to industry to get us to the moon,
    and those investments leading to the market that we have now.
        And I think it is an artificial separation in many ways
    when we talk about the defense industrial base space and
    commercial space, because I think that they are in many ways
    one and the same. When I think of commercial space, I think of
    paying for a service, and you can go to any company to do that.
        The benefit for us as a country in our competition with
    China in launch is the increased demand for launch, both
    military and commercial. And we ought to be thinking about that
    in a combined way when we think about making sure we don't lose
    a competitive edge to China.
        Mr. Banks. Okay. Mr. Shah, your experiences in the military
    as director of Defense Innovation Unit and now in the
    commercial sector provides an interesting perspective on the
    innovation gaps within the national security arena. In your
    written statement, you highlighted the need to, quote, ``engage
    at scale with the innovation ecosystem.'' Can you elaborate on
    your recommendation on how we scale up these efforts across the
    Department?
        Mr. Shah. Great. Thank you for the question. I think there
    has been a lot of initiatives over the last few years to tackle
    this problem directly, and some of them are starting to bear
    real fruit. I think I highlight a few of them. Of course, DIU,
    DDS [Defense Digital Service], Air Force Pitch Day. I think
    they all are finding different pathways for these companies to
    get both smaller contracts that Chris highlighted, but then
    also bridge those gaps to get to prime contracts.
        I think capital, venture capitalists, they are in the
    business of understanding where they can maximize return. We
    don't need to engage them. You don't even need to call them. If
    you make bets on companies that you think will be decisive for
    national security, they will follow, at least the good ones
    are. That is their job.
        And I think you have to put yourself in the shoes of a
    young entrepreneur that is one of the leaders in their field,
    say it is AI or autonomy. You have a small company of 25 people
    building cutting-edge technology. You have to make a decision
    as to where do I want to put my resources, my engineers, and my
    sales team. The way that the life of a young company works is
    that you have to show demonstrated success every 12 to 18
    months to continue to stay in business and get the next round
    of financing. If you don't, you go out of business, and that is
    the venture capital world.
        And so if you know that you need to show traction in 12 to
    18 months, even if you would love to work for national security
    problem sets because it is the mission and you are excited
    about it, if you can't show traction in 18 months, you are not
    going to do it. And that cycle continues until perhaps they
    become a very large company, a public company. And the
    unfortunate downside is the Department doesn't get access to
    its cutting-edge technology till 5 years later.
        So my recommendation is that we have already experimented
    in several ways. The ones that are demonstrating success, 10X
    their budget, 10X their ability to bring these companies into
    the fold, and then you will get multiple orders of magnitude of
    private capital and support behind that naturally.
        Mr. Banks. I yield back.
        Mr. Moulton. Thanks very much.
        I now turn to Ms. Houlahan.
        Ms. Houlahan. Thank you. And thank you very much for
    coming. I am really, really excited to have this conversation.
    This committee makes me happy, because we are really actually
    thinking about the things that I think matter.
        By way of my background, I am an engineer. I worked in the
    Air Force on command and control issues. I am an educator of
    STEM. And I think all of the issues that you are talking about
    are really, really important.
        And what I want to dive deep on and my first question is,
    you all spoke about recalibrating STEM and STEAM [science,
    technology, engineering, art, and math] efforts for the
    workforce. Can you explain what does that mean? You mentioned
    STEM corps as an example.
        Just to give you a little background of what is going on
    here in Congress, I am a freshman. I have been here for 13
    months. We founded the Women in STEM Caucus about a week ago.
    There has never been a caucus like that. But what I discovered
    as I founded that is there isn't an engineering caucus either.
    And so it really is pretty remarkable that there are only about
    15 of us in Congress who have STEM or STEAM backgrounds, and I
    just want your help to try and articulate what it is that we
    can be doing to be helpful to recalibrate the STEM workforce.
        Mr. Shah. Thank you for that question. I think we are in a
    war for talent. We are in a war for these people that have very
    specific skills in AI and autonomy, and there are only so many
    of them.
        Many of them would love to spend some years of their life,
    their formative career in the Department of Defense or the U.S.
    Government. We have the biggest problems, the biggest datasets,
    the most interesting things to work on. But if you are a recent
    grad and you are weighing a process that may take 3, 6, to 12
    months to get a job versus four competing job offers, we are
    making it difficult for the folks that even want to serve.
        And I think there are two downstream effects that--a result
    of this that we could fix. One, in the short run, we don't have
    access to that talent, right? So we are making decisions as to
    which technologies to invest in, which products to buy. You
    need these people on our side of the fence or the government's
    side of the fence to help decide.
        But I think there is a longer-term issue as well, that even
    when these high-end talented people go and build their own
    companies, when they are in senior leadership roles, they have
    never had any direct experience with the government. And so
    they don't understand the nuances and the way the government
    needs to digest technologies. And that rift will continue to
    grow.
        So I think there is also a long-term challenge, and by
    doing something such as a STEM corps, where folks can come in,
    spend a couple of years working on interesting government
    problems, continue to serve in some part-time capacity, can
    help ameliorate.
        Ms. Houlahan. Mr. Fanning.
        Mr. Fanning. I would--I am watching the clock tick down.
    Two things in particular. One, this is a place where I think
    government has an important role, which is seeding the field so
    that we have the most talent coming out of that pipeline when
    we need it. And that means increased STEM opportunities at
    every level of education. I mean, I see STEM as a series of
    off-ramps. It has got to be a big funnel, a wide funnel at the
    start to get the workforce you need at the end. And it is not
    just Ph.D.s, although that is an important part of it. It is
    vocational training. It is all sorts of things in the larger
    STEM ecosystem.
        And that also means thinking even more seriously about
    diversity and inclusion, because we are leaving half of the
    country off the table in many ways at the start when you look
    at the demographics in STEM, even going back to elementary
    school.
        And then one other thing that just to key off something Raj
    said. We can't think of industry and government as adversaries.
    The partnership is so critically important, and a key component
    of that has to be understanding each side. That is government
    understanding industry. There are so many misunderstandings
    inside of government. But industry also understanding
    government better.
        And to the degree that we can build on some of this cross-
    pollinization, it just will make us stronger into the future
    and I think might get at some of the problems Raj hinted at or
    talked about, in terms of attracting talent into the government
    side. We want to create a career path for people in the
    government side that probably includes time outside of
    government. It is healthy for them and it is healthy for us and
    it makes that opportunity more attractive for them.
        Ms. Houlahan. Yeah. And that is definitely something that
    in my early time here I have been trying through the NDAA
    process to elevate is the importance of creating career paths.
    As a young engineer, I couldn't see myself going anywhere. I
    didn't know where my path would go and largely separated
    partially because of that reason.
        I have only 27 seconds, and I am confident that Elissa will
    be asking something similar, but I just want to put out in the
    ether, if we are creating something like the Space Force but we
    are putting it under the umbrella, at least at this point in
    time, of the Air Force and we are talking about having to
    innovate, I worry that we are just going to create another
    organization that looks like the one that came before it, which
    will have all the flaws that it had before.
        How do we break up and destroy that would be my next
    question, and I will leave that on the table because I have run
    out of time, but I would love to come back around to that.
        Mr. Moulton. Great. And we should have time to come back
    around.
        So now over to Mr. Mitchell.
        Mr. Mitchell. Thanks, Mr. Moulton.
        A question for you, Mr. Shah, on venture capital
    investment. I came from the private business world before I
    showed up here, interestingly. And I think one of the conflicts
    we have is the investment window of venture capital or private
    equity in development of any kind of technology or program in a
    government sector. We almost, regardless what we do, or I guess
    I would be interested as to what input you have in how we can
    bridge that, which you guys call the valley of death, so that,
    in fact, it makes it attractive without literally just throwing
    money at it in order to keep venture capital happy because, I
    will be honest with you, I worked in that world and, well, that
    is great, more money. So can you help explain how we bridge
    that gap without just tossing buckets at it?
        Mr. Shah. It is a great question, sir. And I guess I would
    reframe it as in I wouldn't focus on how do we get venture
    capitalists interested in defense companies, but, rather, to
    focus on what do we think, as the title of this task force, the
    future of defense is. What are the key technologies that we
    need and demand to get them earlier, right?
        So if we think that software and command and control is
    important, we should say, we want to have a system that works,
    it needs to work within 12 months, and it is a fair and open
    playing field for anybody. And if we then actually follow up
    and award large contracts to companies that are at the
    forefront of this type of development, the venture capitalists,
    the private equity, that whole ecosystem will follow.
        I think, again, it is the signal here that the government
    is willing to invest in the capabilities that we need for the
    future and understand that software is built differently, that
    the way low-cost hardware is built is differently, and are
    willing to put markers in the sand.
        So, again, so my focus, again, would be on being able to
    work with these companies at scale, and the rest of it will
    solve itself.
        Mr. Mitchell. Let me ask you a question, I would be
    interested, any of the panelists, I mean, the Department of
    Defense recently announced that they were effectively
    abandoning the procurement on the Optionally Manned Fighting
    Vehicle that, in fact, ultimately they only had one bid that
    met their expectations. And they abandoned that after the
    investment by a private contractor, admittedly a large one, in
    that.
        What message does that send to the investment community you
    are talking about when, in fact, a significant investment was
    made and because, literally, there was only one that really
    came close, they are starting over? What message does that
    send, in your opinion, to that community?
        Mr. Shah. I think it is very difficult when the public
    pronouncements and the followthrough on the acquisition side
    are at odds. So there has been no shortage of senior-level
    folks that have come to places like the Valley and Boston and
    say, we want this innovation, we love it, but then when it
    comes time to find relatively modest contract sizes say, look,
    it's unable, you know, we love AI, but we can't find, you know,
    $20 million for this project. To me, it just--it is a signal
    that it is not really important.
        And the advantage, again, I think that the DOD has is that
    of scale, and they should use it to maximize its value.
        Mr. Mitchell. Let me pivot. Mr. Brose, you may have an
    answer to that, but I want to pose another question for you
    before time runs out. Under the Optionally Manned Fighting
    Vehicle as well as any distributed computing, one of the big
    challenges is communication in a contested environment. And I
    pursued answers to that question in multiple, including
    classified briefings and, at best, received what I would
    consider to be a pretty vague and lame answer to that question.
        So I would like to know your confidence--in this
    environment we can talk about it--of achieving that. Otherwise,
    we have a significant problem with that idea.
        Mr. Brose. To answer that and then a couple points on the
    previous comment.
        Mr. Mitchell. Sure.
        Mr. Brose. My assumption in terms of how we have to build
    military forces for the future is that we are going to have to
    do all of this at the tactical edge. We are not going to have
    backhaul to a cloud. We are not going to have backhaul to a
    centralized operations center.
        So the question becomes, how can I collect, make sense of,
    interpret, make decisions on information forward where, you
    know, you actually have troops in contact? I think the good
    news is the technology is actually helping us solve a lot of
    those problems, particularly in the form of edge computer
    processing.
        To touch on the previous question, just two brief points
    that I would add. I mean, I think on the requirements question,
    this is something that I know Congress has done a lot of
    thinking and work on, and I would encourage you to keep going.
        I think part of the problem that I have seen in my career
    is that the Department of Defense treats requirements as a one-
    way street. They micromanage the exact thing that they believe
    they want, and then they go out and ask industry to build it.
    If I approached my mobile device that way, I would have the
    best flip phone in America right now. We have got to be open to
    being surprised by industry and things that industry are doing
    that we in the defense establishment just aren't aware of.
        The other thing I would say just briefly is, injecting
    competition into programs is critical, and it is going to be
    harder with larger capital-intensive hardware systems. But
    there are plenty of systems--battle management, command and
    control, other types of programs--where winning a program of
    record can't be like getting tenure at a university, where you
    have it and forever it is yours. Like, every year or so you
    have got to find a way for, you know, some new company to come
    in and take a swing at the current incumbent and give yourself
    the option of on-ramping a better capability, but then telling
    that incumbent, look, we are going to come back and do this in
    a year or two, bring your A game and you will have a chance to
    win back what is yours. Finding a way to inject that
    competition I think is critical to making sure that you are
    getting the best capabilities for your dollars out to the
    warfighter.
        Mr. Mitchell. Thank you. My time has run out.
        Thank you, Mr. Moulton.
        Mr. Moulton. All right. Thank you very much.
        Ms. Slotkin.
        Ms. Slotkin. Thanks for being here. This is great. And I
    think one of the things that this committee is trying to do is
    make our recommendations actually relevant and actionable,
    including in the NDAA that hopefully is coming right around the
    corner.
        My question is, I think we have successfully diagnosed the
    problem and we agree with you that we just don't have a culture
    around innovation in the Defense Department that supports
    bringing in ideas that are readily available in the private
    sector in a quick and then scaleable way. And the valley of
    death I think is perfect.
        We know inside the Department that we have a problem in our
    culture around innovation and incorporating innovation, but
    also around failure, right, which I gather, as someone who
    hasn't been in the private sector, is important when you are
    innovating. Sometimes you are going to fail. And, actually,
    Congress has made it hard for the Defense Department to fail at
    things without us kind of jumping on them.
        So, Mr. Shah, you had a very good comment on this, that we
    need to change the culture in the Department. Give us three
    ways to do it.
        Mr. Shah. Well, thank you for that question. The first
    thing I would say is, actually, I would not say the Department
    has an innovation problem, in the sense that if you go out to
    our warfighters and deployed forces, they are the most
    innovative people you see.
        Ms. Slotkin. Of course, on the ground, in the field, the
    best. But back at the Pentagon----
        Mr. Shah. They will take whatever kit we have given them
    and not fail. And so the problem is, we have actually shifted
    risk of innovation from cubicles in the building out to people
    actually fighting.
        So three recommendations that perhaps I would make is, one,
    incentivize what we want. So if we think speed is important,
    then incentivize speed. But no one gets fired for going too
    slow, no one gets promoted for going faster. Let's incentivize
    the behavior that we want.
        Two, if we think about technologies of the future, AI,
    autonomy, they are very software-driven and -heavy, impossible
    to create a list of requirements and get what you want at the
    outset. So find ways to get the operator closer to the
    developer. Right now, there are four steps in between, and they
    don't really get to work in this iterative, iterative manner.
        And then thirdly, make big bets on and be willing to make
    big bets on initial indicators of success. So there are lots of
    these R&D and trial programs, AI to solve driving ships,
    planes. Pick two or three that we think are promising and bet
    big on them and watch them flower.
        Ms. Slotkin. And, Mr. Brose, we have talked before about
    the personnel systems and how they affect kind of who comes
    into the Department and when. My question is, on folks who have
    a STEM background on these high-demand fields, do you think it
    is more valuable that they come in in the beginning of their
    career, like a PMF, a Presidential Management Fellowship, for
    STEM folks who get to come in for 2 years early on and
    hopefully you hook them? Do we want mid-career professionals?
    In order to work on some of these, the nexus between the
    Department and the innovators, what is the right way to bring
    personnel in to do that?
        Mr. Brose. Thank you. I think the answer is yes. I think
    the thing that is most needed in our personnel system is
    greater flexibility, and I know the committee has done thinking
    and work on DOPMA [Defense Officer Personnel Management Act]
    reform, and I would really encourage you to keep going with
    that. I think the real question is the ability to bring in
    talent and recognize that your future workforce is going to
    want flexibility and permeability in their career.
        So, to your question, absolutely, you want to be able to
    bring that new person in at the front of their career, but then
    recognize that it might be the best thing for that person for
    whatever reason, it might be the best thing for the government
    to say, you know what, take 5 years, go out, work in industry,
    work somewhere else, develop new skills, but then I want to
    compete for your talent and bring you back in as a mid career
    when you start to say, you know, I miss government service, I
    want to get back into the mission.
        It is that ability to go in and out without being
    penalized, without losing your sort of place and rank that I
    think we have to get a better hold on, both because that is
    just the way our economy and workforce is shaping up now, I
    think it is what people expect and want for their careers, and
    I think it is going to give us the best ability to compete for
    the top talent.
        Ms. Slotkin. And then, Mr. Fanning, can you just talk to us
    about tradeoffs? And, you know, we don't live in a place of
    infinite resources. You know, we have folks, frankly, both on
    the left and the right who are pushing for smaller Pentagon
    budgets. So can you help me understand if we are going to
    invest in promoting innovation and bringing that into the
    Department, what gets to go?
        Mr. Fanning. Well, I think--I don't want to use the time to
    talk about what prevents us from being able to do that. And
    part of it is----
        Mr. Moulton. Your microphone.
        Mr. Fanning. Part of what prevents us, I think, from being
    able to make those hard choices is the process by which we go
    about that. We are all responsible for making sure we are
    delivering what the warfighter needs, and yet when we decide to
    make a change to move investment from one place to another
    place, that is when the antibodies come out.
        It is usually a conversation between people who have stakes
    in those things and not all of the people who have stakes in
    those things at the same time.
        Industry has a huge stake in this. They have invested in
    the technology. They have invested in workforces, which take a
    very long time to build and are very difficult to maintain.
    Obviously, Congress has a stake in this in deciding on the
    budget, and clearly the customer, the Department of Defense,
    does. And so I think we need to find ways to make these
    decisions together. I wouldn't recommend anything like the BRAC
    [base realignment and closure] process, but if we think--and
    the existence of this panel leads me to believe that we do--
    that we are at a moment in time where we may need to make some
    pivots, we need to find a way to do this and to support the
    Department when it is trying to make some of the hard choices.
        Mr. Moulton. Okay. Thank you very much.
        Dr. DesJarlais.
        Dr. DesJarlais. Thank you, Mr. Chairman. Thank you all for
    being here today.
        We have kind of been nibbling around this all day, and
    maybe I just don't fully understand. Who is ``we''? Who
    currently oversees R&D, and who makes the big bets? That sounds
    like a big responsibility. Is it a panel? Is it one person? How
    does that work?
        Mr. Fanning. I would start by saying I think there are
    phases in this. And we talked about government R&D as a
    percentage of GDP. For me, there is basic research, and that is
    a part of it. But I look at the ecosystem as a timeline. I see
    government and research facilities, academia as being part of
    the early thing. Doing the basic research where maybe there
    isn't a commercial market. Industry, investors figuring out how
    to take and apply that research.
        And so there are multiple places--and then government again
    deciding what they want to buy. There are multiple places
    where----
        Dr. DesJarlais. I guess my point is, who makes those
    decisions? Who do you present that to, and who is responsible
    for overseeing these choices that we make, who we invest in,
    who we pick?
        Mr. Fanning. I think it is a collaborative effort of all
    those, Congress, industry, academia, working together to figure
    out where the most promise is.
        Dr. DesJarlais. But somebody has got to make the call.
        Mr. Shah. The central place is the program executive
    offices, the PEOs, the major weapon systems, which, of course,
    are overseen by the committees here. And, again, while I think
    the research and development arms, again, of each one of the
    services have done great progress, the set of incentives for
    the PEOs has not been necessarily to take on the risk of
    working with new entrants.
        And so there is sort of a continuum, right? You go from
    R&D, PEOs, all within DOD. There is something I think we
    haven't talked about that highlights the importance of this is
    that many of the things that a PEO or a service does to invest
    in a particular technology will have implications that go far
    beyond the Department of Defense.
        I can share two examples, right? If we talk about the fact
    that low-cost drones, 80 percent of the world market is owned
    by one company, DJI [Da-Jiang Innovations], you know, Chinese
    with clear ties to the PLA [People's Liberation Army]. If we
    think about the upcoming revolution in 5G, there is not really
    a strong American player that is economically viable.
        So if we were to--if the DOD were to lead helping to grow
    companies in these two spaces, it would have dramatic
    implications for our allies, for the country even more broadly
    than national security. And so I think that has so many cross-
    components that Congress, I believe, is the one place that can
    start to begin to draw those lines.
        Dr. DesJarlais. Okay. I am going to yield back because I
    know, Chairman, you haven't had a chance to ask questions and
    we are up against another hearing. Thank you.
        Mr. Moulton. All right. Doctor, thank you very much.
        Great questions. This is a fantastic panel. I want to just
    try to understand things a little bit more in relation to some
    of the other testimony that we have heard and briefings that we
    have received over the past few months.
        Mr. Brose, you talked a lot about decisionmaking at the
    tactical edge, and you also talked about how our comparative
    advantage should be in command and control. But a lot of the
    briefings that we have received on some of these other, you
    know, advanced technologies require very sophisticated
    communication networks. In fact, at the last hearing, we heard
    that one of the most promising programs right now is the Air
    Force's command and control system and new communication
    system. It is being run well. It is the kind of advanced
    communication system that we need. But that seems to conflict
    with your point about making decisions at the tactical edge.
        So can you kind of dissect that a little bit for us so we
    can better understand what you mean?
        Mr. Brose. Thank you. The way I see it is I think the model
    that we have built our military on is just fundamentally going
    to have to change. You know, it has been very centralized and
    concentrated, where information at the edge is sort of brought
    back to the center so that, you know, generally and sort of
    highly manual processes, we can make sense of it and then push
    decisions out.
        I think we are going to have to do this in a distributed
    way, not least because our adversaries have figured out how we
    fight and they are building weapons to cripple and shatter our
    ability to command and control our forces.
        I think the opportunity with kind of edge computer
    processing and making sense of information at the edge is that
    particularly when you bring in artificial intelligence and
    machine learning, you now have the ability to collect and make
    sense of information at the tactical edge. So you are not
    actually transmitting huge amounts of information back to, you
    know, a rear area, a TOC [tactical operations center] or
    something like that. So you actually don't need the large pipes
    and sort of communications infrastructure to get that
    information back.
        You actually need what you are going to have, which is
    probably pretty degraded, spotty comms [communications]. You
    have to be pretty agnostic as to what network you are going to
    ride on. But the recognition is that, you know, looking for
    decisions and information is like looking for needles in
    haystacks. Right now, we send all of the hay back to a central
    place for people to go looking for the needles.
        If I have automated processes that can collect and make
    sense of information right at the point of decision, I am
    actually not sending all of that back to one place. I am not
    taxing my networks the way that we are now. You are actually
    sending around the bits of information that are most relevant
    so that human beings can make decisions quickly, which is
    actually what I think we need for operational effectiveness. It
    is also more in line with what I think we should expect in
    terms of how degraded and denied our communications in the
    future are going to be.
        Mr. Moulton. Mr. Shah and Mr. Fanning, do you agree with
    that assessment?
        Mr. Shah. I do, in the sense that we need resilient
    solutions in the face of heavy cyberattacks, direct attacks on
    network nodes, and in the light that many of our threat
    scenarios have us playing an away game versus a home game and
    distributed forces. We need to be resilient in the face of new
    and novel attacks, and as Chris said, having distributed edge
    computing where systems, both autonomous and manned, can make
    their own decisions to pursue a particular strategy is
    important.
        Mr. Fanning. I think of it as a both, as a yes answer. I
    mean, for all the reasons Raj said, we need to be able to, if
    we lose that pipe back to the central place where a higher
    echelon view of the battle's taking place, we need the forces
    that are distributed and are forward deployed to be able to
    continue to fight. And so it is fighting through all the anti-
    access, anti-denial capabilities that the adversary might have.
    And so I see it--I think of it as an aspect of resiliency, like
    Raj said.
        Mr. Moulton. It seems like it would also be very important
    for us to be able to communicate with our allies, not just back
    at a central headquarters, but on the battlefield. And I also
    take your point, several of you made, but I think Mr. Brose
    emphasized, on concepts of operations that reflect this. It
    doesn't seem like we are playing war games right now that
    reflect the reality of this kind of warfighting environment.
        Mr. Brose. I would completely agree with that. I think one
    of the things we have lost in the past 10 to 15 years is just a
    focus on experimentation. I think we need to be doing a lot
    more of that. I think we need to be funding that. And to your
    point, technology is not going to save us. It ultimately is the
    thing that will enable us to operate differently, fight
    differently, make different kinds of decisions.
        Unless we are experimenting with how to use that technology
    to do different things, we are just going to be kind of
    continuing the way that we have.
        Mr. Moulton. So, Mr. Brose, just to double-down on Ms.
    Slotkin's question earlier, you have been a staff director of
    the Senate Armed Services Committee. A lot of what we are
    talking about is investing in new technologies at the expense
    of old technologies. We have to get rid of some of the old
    stuff to free up time, energy, personnel, and most of all,
    money. How do we change the incentives here in Congress to make
    people willing to do that?
        Mr. Brose. Yeah. It is a great question, and to me it is
    the crux of the matter. I think ultimately what it comes down
    to is greater competition. You know, it may be that a new
    technology is going to be a better answer. It may be that
    actually an old technology used in a different way is the
    better answer. It may be that a blend between the two is the
    better answer. Unless we are actually taking these things out
    into real-world environments, to your point, experimenting with
    them and figuring out based on real operational metrics,
    outcome-oriented metrics, what works best, we are just not
    going to know.
        And that is why I think a lot of these technologies don't
    transition. It is like, interesting lab project, did some cool
    stuff, but it never actually showed itself to be different in
    an operational case, so it never went anywhere.
        I think the real challenge is going to be, Congress always
    wants to know how the Department is spending its money, and you
    are entitled to that. I think that we have gone too far as a
    Nation in tying the hands of the Department. I think greater
    flexibility for experimentation in current fiscal year is
    vital. I can't tell you the number of instances I have had in
    my time since leaving the SASC where someone in the government
    says, you guys are doing really interesting stuff, we would
    love to bring you in and do this, I don't have any money, I can
    POM [program objective memorandum] for you 2 years from now. It
    is like you have billions of dollars, you say this is
    important; 2 years from now, like, I might not exist. Like, we
    have got to find a way to bring this in, experiment, and make
    it outcome-oriented.
        Mr. Moulton. Great. Thank you.
        I will defer now to my co-chairman, Mr. Banks, for any
    additional questions.
        Mr. Banks. Mr. Chairman, that is all I have. This has been
    a very good hearing, very insightful. I appreciate it very
    much.
        Mr. Moulton. Okay. I have a couple more questions, then. So
    I want to get back--one of the things that Mr. Shah and Mr.
    Brose have emphasized is we have got to be willing to make some
    big bets. You know, it is not enough just to do a little
    science experiment and then say, oh, that was nice, but we are
    not going to employ it operationally, we are not going to
    experiment with it, we are not going to be willing to make a
    significant investment so that there is the correct incentives
    for people, for private sector companies to compete and
    actually do well by pursuing a contract like that.
        But how do you square that with another comment that you
    made, Mr. Brose, which is that the government can't play VC
    [venture capitalist]? Can you kind of dissect that a little? I
    think I understand, but so that we are all on the same page
    here and we understand the difference between making big bets
    but also not, quote/unquote, playing VC?
        Mr. Brose. Yeah, for sure. When I talk about making big
    bets, I talk about betting on capabilities that have proven to
    be effective in the kinds of operational experimentation, real-
    world scenarios that we are talking about. You don't want to
    make bets on paper airplanes and PowerPoint presentations. I
    think we have done a lot of that in the past, and we have
    gotten into problems as a result of it.
        I think you want to find a way to bring technology in, be
    clear in defining what your operational problems are. I think a
    lot of times we talk about joint all-domain command and
    control. It is like, what does that mean? Like, explain it in a
    way that a military operator and an engineer can understand to
    build a capability to help solve that problem.
        And then I think you have to fly things off. I think you
    have to take them out and say, you know, may the best system,
    may the best program, may the best technology win, and where
    you see effectiveness in new capability, that is when I think
    you really double-down and try to scale.
        It is not injecting money into companies in the sense of
    financing. You know, there is plenty of money to do that in
    America. What that money is looking for is the most important
    thing the government can do, which is say, I have defined my
    problems and I have identified winning capabilities that I
    think are best positioned to solve them. That is when private
    money is going to flow in behind government money and help
    companies scale.
        But it is really on that side of things that are being
    proven out to solve real problems that the warfighter has.
    There has got to be a way to identify those winning solutions,
    you know, in competition with other capabilities, and then
    scale the things that are successful.
        Mr. Shah. Thanks. The nuance, I guess I would add, is that
    the entrepreneurial world and new technology is moving so fast
    and the cultural divides between these two worlds is so deep
    that we have to engage early in order to help shape these
    companies, to build the solutions we want to eventually get en
    masse.
        I can give you a specific example. We worked with--when I
    was in government service, we worked with a fast-growing
    company that was building analytics for a whole host of things,
    but their focus was on maintenance of energy systems, oil
    transport, refineries, et cetera. They had done no work with
    the Department of Defense, but we said, look, your technology
    and your ability to incorporate data could help us with one of
    the key operational problems that the Department is facing,
    which is low--the maintenance of airplanes. And so we worked
    with this company, took paper forms from the E-3 Sentry. They
    did their analysis and had drastic improvement in their ability
    to predict when parts were going to fail and improve the
    availability rates.
        Just last week, it was announced that this company has
    received now a program of record, I believe, close to a hundred
    million dollars, to take this to the F-35 and into the Navy.
    But I think if we had not engaged with that company earlier in
    its development path, it may not have built the tech that we
    need.
        So I think there--I agree with Chris that it comes down to
    contracting, but things are moving so fast we need to engage
    early.
        Mr. Moulton. So just continuing on this line of
    questioning. Mr. Fanning, you were Secretary of the Army. How
    do we get the services to actually do the kind of CONOPS
    [concept of operations] planning and experimentation that Mr.
    Brose is talking about?
        Mr. Fanning. I think we have to build that in to the very
    earliest part of the planning. We talk about cost, schedule,
    and risk. The Department is now talking about cybersecurity as
    an element of that. But schedule and speed are different
    things. And Raj and Chris have both talked about what attracts
    and incentivizes investment.
        It is not just a clear demand signal from the Department
    about a technology or a capability that is necessary. It is the
    investor seeing that there is a payoff, that there is a light
    at the end of the tunnel for it.
        And I think every--the program element of the Department of
    Defense, when they are thinking about investing in something,
    placing a big bet, whatever you want to call it, they should be
    required to have a plan, not just to scale it quickly, but to
    make it operational quickly. And so the CONOPS that we have
    talked about from the start, that is one of the things, I
    think, that you would want to see early on in your oversight as
    you are thinking about making these big bets in a different
    way. How has the Department convinced you that they have a
    CONOP for it and they are going to be able to field it, in
    addition to scaling it to speed, so that the investment is
    incentivized to continue?
        Mr. Moulton. What about just getting our commanders to play
    more innovative war games?
        Mr. Fanning. I think there is clear--I think all of us
    would agree with this. You have heard it. We need more
    wargaming to think through how--because, you know, it is a
    circle, and where does that circle start in terms of the
    requirements, the investments, the technology development and
    so forth. And, ultimately, it comes back to what is our larger
    concept of how we fight war, how we deter, and how does that
    drive the deployment of forces, which then drives what the
    Department is trying to buy. I think wargaming, in term of
    testing some of these technologies earlier, would be--it has to
    be a part of this.
        I mean, I will go back, I am the only one that has spoken
    about the OMFV [Optionally Manned Fighting Vehicle]. I think
    there was a signal from industry, all parts of industry, that
    the requirements that were being levied for this weren't
    realistic when taken in their totality. There was a clear
    signaling from the defense industrial base that the
    requirements from the Army weren't realistic. And we have
    talked about the requirements being a one-way street, how we
    can make the requirements maybe less prescriptive, but I think
    you want to go back before that altogether and have a
    conversation with the collective industrial base--national
    security industrial base, what are the effects we want, what
    are the problems we are facing, and how--what ideas might we
    have to go about these differently, and then test them.
        Mr. Moulton. Okay. So just one final question, and it is
    about investing in innovation. Mr. Shah, you were the head of
    DIUx, and DIUx has been widely praised by people we have heard
    from on the short length of this task force. It may not be
    perfect, but it is--it is doing the kind of thing that we want
    to see more of here.
        Now, the comparison I made in my opening remarks was to
    DARPA. I think DARPA was started under President Johnson. It
    was a bipartisan effort funded to the tune of $4.5 billion in
    today's money. Right now, DIU has a $41 million budget.
        Sometimes I think these numbers are hard to kind of really
    understand. That is 40 compared to 4,500. Or in other words, if
    you sort of reduce that fraction, using my STEM knowledge, you
    know, 4 to 450. For every 450--for every $4 we put into DIU, we
    put $450 into DARPA.
        Are we making a big mistake? Are we--or do you think that,
    no, this is right-sized for the effort?
        Mr. Shah. I guess I go back to my earlier statement. As we
    think about the technologies of the future and we think about
    how that is going to change our concepts of operations, and if
    we believe that we want these types of technologies--and
    everyone says they are--then we must double-down and bet on
    organizations that are working. And I think I would say it is--
    I would say two things.
        So, one, I think the reason why that organization is
    working is it has the right types of people, meaning it has
    people that have deep operational knowledge--military
    knowledge, as well as knowledge of what is happening in the
    innovation ecosystem, very focused on speed, and then again,
    having a way to put operators next to developers.
        But, again, if we believe that these things are the future,
    there is no better signal to entrepreneurs than 10X-ing that
    budget, because all of that will eventually flow to those
    companies. And, you know, for every--I think we get so much
    leverage. For every dollar you put towards these types of
    companies, you are getting $5 to $10 of private investment,
    risk capital. All those companies may not succeed, but I think,
    I guess I would urge, look at the range of programs and let's
    supercharge, let's go to scale to the ones we think are
    working.
        Mr. Brose. Just a very brief comment to add. I think the
    real question for you to track, like literally track as a
    metric, is which of these organizations is transitioning the
    capabilities they are bringing in most successfully to the
    operational forces. We have DIU, we have DARPA, we have all the
    research agencies, we have AFWERX. We have a proliferation of
    organizations that are trying to bring new entrants research
    capability into the Department. Where does it go?
        I mean, in my last life, I couldn't have told you, on the
    SASC, you know, how many of these things were transitioning. I
    mean, if I were back in my old job, I would literally want like
    a baseball card of, you know, how successfully are these
    companies, are these programs bridging the valley of death and
    getting into the operational forces where they can make a real
    impact. And then reward the ones that are doing best, you know,
    give them more money.
        Mr. Moulton. Great. All right. Well, thank you all very
    much. It is an honor to have you here. Your expertise means a
    lot to this panel, and we will be in touch as we go forward.
        As I have often said about this Future of Defense Task
    Force, fundamentally we are a task force that should not have
    to exist. We exist today because we are not thinking enough
    about the future defense. And if we are successful in our
    recommendations, we will get back to a place where we don't
    have to stand up this task force again, where it is inherent to
    the daily work of the Department of Defense and, frankly, this
    committee here in Congress, to think far into the future, to
    prepare for the challenges that are coming well down the road,
    and to make sure that this country is safe, not just for us,
    but for our kids.
        Thank you all very much.
        [Whereupon, at 10:16 a.m., the task force was adjourned.]

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                                A P P E N D I X

                                February 5, 2020

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                  PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                                February 5, 2020

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                  QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                                February 5, 2020

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                       QUESTIONS SUBMITTED BY MRS. DAVIS

        Mrs. Davis. Mr. Fanning, in your opening statement, you said ``It's
    not enough to pass reform in the NDAA. We need to make sure those on
    the receiving end are fully empowered to utilize that reform.'' Can you
    talk about how we can better train and empower the workforce? Are there
    specific opportunities in the short term (like DAU or formal education
    programs)?
        Mr. Fanning. [No answer was available at the time of printing.]
        Mrs. Davis. At our last hearing, the witnesses wisely steered us
    away from further changes to the acquisition process. That brought up
    some interesting questions, maybe we shouldn't focus as much on how we
    buy but instead what we decide to buy. Are their areas in the
    requirements process that might make the Department be more innovative
    and agile?
        Mr. Fanning. [No answer was available at the time of printing.]
        Mrs. Davis. Mr. Shah, can you discuss the ``problem curation''
    process that DIUx used under your leadership? How do you think that
    process could be used more broadly when it comes to requirements across
    the department?
        Mr. Shah. [No answer was available at the time of printing.]
        Mrs. Davis. At our last hearing, the witnesses wisely steered us
    away from further changes to the acquisition process. That brought up
    some interesting questions, maybe we shouldn't focus as much on how we
    buy but instead what we decide to buy. Are their areas in the
    requirements process that might make the Department be more innovative
    and agile?
        Mr. Shah. [No answer was available at the time of printing.]
        Mrs. Davis. At our last hearing, the witnesses wisely steered us
    away from further changes to the acquisition process. That brought up
    some interesting questions, maybe we shouldn't focus as much on how we
    buy but instead what we decide to buy. Are their areas in the
    requirements process that might make the Department be more innovative
    and agile?
        Mr. Brose. [No answer was available at the time of printing.]

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