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A battle is brewing between Secretary of Defense Pete Hegseth and big contractors in the military-industrial complex over how the nation buys weapons systems. Some of Hegseth’s notions, which have been circulating in reform circles for a decade, are laudable. But his style of running the Pentagon—including the way he’s put forth his new policy—gravely dims his chances for success.
His policy—laid out in a six-page memo, which he presented to top corporate executives at a meeting on Friday—is meant to cut through the sclerotic bureaucracies, in the Pentagon and at defense contractors, which have slowed the development of weapons programs, boosted their cost, and neglected the needs of the servicemen and -women who would actually use the weapons in training and combat.
Whether his new policy would actually solve these problems—whether it could create the structures and incentives to override bureaucratic and corporate interests—is another matter.
Many of Hegseth’s ideas stem from the Defense Innovation Unit, a small branch of the Defense Department created in 2015 by then–Defense Secretary Ash Carter, a Harvard-educated physicist and historian who foresaw back in 2000 that commercial industries would soon overtake defense labs at innovation and that, in order to preserve America’s technological edge over adversaries, the Pentagon would have to form new relationships with the private sector. By the time he joined President Barack Obama’s Pentagon, first as undersecretary for acquisition, then as top official, Carter was stunned to learn that nothing had changed. He reached out to Silicon Valley and created DIU.
For the new unit’s director, he chose Raj Shah, a former Air Force pilot, now a Valley technologist. As an F-16 pilot during the Iraq war, Shah noticed a problem: The display screen in his cockpit had no moving map. The GPS showed him ground coordinates, but there was no overlaid image—no moving dot or icon—that showed where he was in relation to those coordinates. Flying close to the border, he didn’t know whether he was in Iraq’s or Iran’s airspace. During home leave, he bought an iPAQ, one of the early Pocket PCs, and loaded it with a standard aviation-map program. Back in his F-16, he strapped the pad to his lap and relied on it—not the plane’s multimillion-dollar mil-spec software—for navigation.
In other words, Shah was the ideal person to realize Carter’s vision.
DIU set up shop in Silicon Valley, seeking out small firms with innovations that could have military applications. At first, the unit’s budget was small—tens of millions of dollars. Its small but specialized staff worked under the radar, employing an obscure statute, known as other transaction authority, that let particularly cheap projects evade normal procurement procedures.
Shah and his team also used their connections to talk with military commanders in the field, finding out what they needed to improve performance. (Shah told me nobody in the Pentagon or among any of the F-16’s contractors had ever asked Shah about his cockpit navigator in Iraq.)
In its first quarter of operation, DIU signed 12 contracts worth a total of $136 million. All the products had been designed for the commercial marketplace; no one in the military had known they existed. The average time between the initial proposal and the signed contract was 59 days. This was revolutionary in every way. Under typical Pentagon procedures, the military services write a “requirement,” which bureaucrats translate into a “request for proposal.” Corporations respond with product designs, which still more bureaucrats evaluate, and on it goes until prototypes are introduced. The officers who wrote the original requirements never speak to the managers who manufacture the resulting hardware or software.
Hegseth’s policy explicitly aims to broaden the DIU revolution—to apply its techniques and style to the entire realm of weapons-buying, to the extent possible. It’s unclear to what extent this is possible, even if all the actors try to make it so—and it’s a sure bet that some of the crucial actors won’t try.
Over the past decade, as DIU expanded its scope, it met fierce resistance from various actors—the big contractors, the Pentagon managers whose careers and promotions were tied to the contractors’ fortunes, and congressional leaders whose districts won jobs and revenue from those contractors. (Shah and his DIU colleague, Christopher Kirchhoff, now both in private industry, wrote a memoir last year, Unit X: How the Pentagon and Silicon Valley Are Transforming the Future of War, which colorfully detailed their struggles.)
DIU regained momentum in 2022, after Russia’s invasion of Ukraine. Silicon Valley firms, many of which had resisted cooperating with the military, eagerly lent their talents to what they conceded was a good cause—helping a democratic country stave off imperial aggression—and sold Ukraine’s suppliers in the Biden administration a variety of wares that they had been developing: autonomous drones, real-time intelligence sensors, new communications devices, etc., and helped Ukrainian firms build their own devices as well.
The Silicon Valley firms built and supplied a wide range of hardware and software with much greater agility and speed than any of the major contractors could have managed. The military role of commercially developed high technology—and of commercial high-tech firms in providing it—could no longer be disputed, at least for some wartime purposes. But fierce disputes remain over how broadly the lessons of Ukraine should be applied.
Which brings us back to Hegseth’s six-page memo. It purports to streamline the process of approving weapons programs; to put one office in charge of specific programs, to create accountability; and to provide more space for commercial firms, even startups, to compete for Pentagon projects.
Much of the memo looks good on paper, but implementation is another matter. Hegseth personally has little experience at managing anything, much less multibillion-dollar weapons systems. Budget cuts and Department of Government Efficiency firings have emptied out the Pentagon’s acquisition bureaus; there simply aren’t enough personnel to manage this revolution (and, if the memo were put into place, it would amount to a revolution).
Nor does the memo provide the personnel with specific guidance on how to do their jobs. For instance, the memo states that in setting deadlines and goals for weapons projects, the new, streamlined, held-accountable program managers will “make trades between speed, performance and cost.” At least the memo acknowledges that there are trade-offs here; higher speed or lower costs can sometimes mean degraded performance. But on what criteria, using what metrics, should the bedraggled managers—who have never had to do this before—make the trade-offs now? On what basis would managers be judged successes or failures—and thus expect promotion or firing? Those are key questions in motivating a junior officer or civil servant to behave in certain ways. They are not addressed, much less answered, here.
Finally, Hegseth’s personal style creates a special layer of self-sabotage. He called the executives to a meeting on Friday (just as he called hundreds of generals and admirals to hear a speech in September) not to elicit their ideas or feedback to a draft of tentative proposals, but rather to tell them what he’d decided to do, spell out how it will change their livelihoods, and order them to get with the program.
Generals and admirals at least are duty-bound to obey lawful orders from their civilian overseers (and, at that speech, President Donald Trump, the commander in chief, added his weight to Hegseth’s message). This is not true with defense contractors, which are private companies.
One former defense and intelligence official, who has worked both sides of the weapons-acquisition business, who asked not to be named because he still does consulting work for the Pentagon and for industry, told me in an email: “Those executives are asking, what &&%%$3$ do you think you’re doing? Who do you think actually makes this stuff?” The consultant added that he thinks several of Hegseth’s proposals would improve the system, theoretically, but, he added, this has “little bearing on the reality and the reaction inside the Beltway.”
The mainstream press could have helped Hegseth spread the message, but he has locked out all of the experienced reporters. (In advance of Friday’s meeting, only industry websites had even reported on the memo.) Strong legislation would also firm up his case, but the relevant congressional committees are annoyed with him for failing to brief them on policy matters of all sorts. Most lawmakers will thus be more receptive than usual to industry lobbyists—and they’re already receptive, given that the major contractors’ weapons systems provide their districts with lots of jobs and revenue. Drones and software improvements do not so much.
Which leads to a larger question still. It is not at all clear—it has not been demonstrated, in theory or practice—whether the DIU model, while perfect for drones and software, is well-suited for designing and building combat planes, warships, submarines, missiles, and other major weapons systems. This is what consumes more of the hundreds of billions of dollars allocated each year to the Pentagon’s research, development, and procurement accounts.
The timing has never been better for the cooperation between the military and high-tech industry that Ash Carter envisioned and that the Defense Innovation Unit did much to jump-start. There has rarely been a more ill-suited crew of senior Pentagon officials to push the clock forward.
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