[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                     
          
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                      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.]

                                  [all]