Preserving the American Edge: Revitalizing the Defense Industrial Base

Hi, I'm Kyle Atwell, the co-founder and current chair of the board at the Irregular Warfare Initiative. And I'm Jeff Schumann, co-director of IWI's new emerging technology program. AI, autonomous systems, cyber, electronic warfare, these tools are all moving so fast that just keeping up is a challenge. As new technologies are creating strategic advantages, they're also introducing new risks, uncertainties, and trade-offs to include in the irregular warfare space. Given the amount of interest in these challenges, IWI is proud to announce the launch of the Emerging Technology Program. This new program will bridge the gap between research, scholarship, and the private sector by building the emerging technology community, driving public dialogue, and investing in technology leaders. To find content on technology and irregular warfare or get involved, visit www.irregularwarfare.org and find the Emerging Technology Program. Again, that is www.irregularwarfare.org. Thank you for your interest and for continuing to be part of the IWI community. Now, on to today's episode of the Irregular Warfare Podcast. To quote Paul Kennedy in The Rise and Fall of the Great Powers, where he says, it is incontestable that in a long, drawn-out great power war, victory has repeatedly gone to the side with a more flourishing, productive base. So this isn't just theory that we're talking about this is productive base and a production base is critical to win wars so then the challenge that the army is really trying to work through and set you hit this a couple times in your book was the scale problem it's really easy to do something really well once maybe twice maybe three times but if you're talking about the scale of the department of war you're talking about the scale of the department of the army you are talking about hundreds of thousands to millions of copies of some things. And the only way that we can do that efficiently and effectively is to actually leverage the manufacturing capacity that exists outside of the defense industrial base. Welcome to episode 147 of the Irregular Warfare Podcast. I'm your host, Ben Jebb, and my co-host today is Kyle Atwell. Today's episode examines the past, present, and future of America's defense industrial base. Our guests begin by exploring why America's military advantage ultimately rests on the strength of its industrial base, and what happens if it falls behind. They then examine lessons from past great power competitions, the challenges posed by China's manufacturing scale, and how the Army is rethinking acquisition to harness commercial innovation at speed. From munition shortfalls to next-generation platforms, this conversation reveals what it will take for Washington to preserve its technological edge in an era of renewed strategic rivalry. We are joined today by Dr. Alexander Miller and Dr. Seth Jones. Dr. Miller is the Chief Technology Officer to the Chief of Staff of the U.S. Army. He holds a Master's Degree in Systems Engineering from Johns Hopkins and a Doctorate of Technology from Purdue University's Polytechnic Institute. Dr. Seth Jones is president of the Defense and Security Department and Harold Brown chair at the Center for Strategic and International Studies. He focuses on defense strategy, the defense industrial base, and irregular warfare. His new book, entitled The American Edge, The Military Tech Nexus and the Sources of Great Power Dominance, serves as the anchor for today's conversation. You are listening to the Irregular Warfare Podcast, a joint production of the Princeton Empirical Studies of Conflict Project and the Modern War Institute at West Point, dedicated to bridging the gap between scholars and practitioners to support the community of irregular warfare professionals. Here's our conversation with Dr. Alex Miller and Dr. Seth Jones. All right, Seth Jones, Alex Miller, great to have you both on today. Welcome to the Irregular the Warfare podcast. Thanks, guys. It is great to be on again. Thanks for having us. Well, welcome back to the show, Seth. Before digging into the nuance of defense industrial policy, I was hoping to just start by asking, what motivated you to write such a sweeping narrative of America's defense industrial base? Well, there were two primary reasons. The first one is that I have been involved in a number of war games, including some unclassified ones, but also some classified ones over the years. And what was striking was that how in those games, particularly ones around Taiwan, a Chinese invasion or even a quarantine blockade that escalates up, the U.S. runs out of some of its key munitions, like long-range anti-ship missiles, after a week. And those numbers didn't change a lot over time. So we were still running out of key munitions and getting challenged with other platforms and systems in a Taiwan contingency and also noting some of the challenges with our industrial base in just aiding the Ukrainians after the full-scale Russian invasion. So that was the first one is just is the industrial base was strained with both games and then the situation in Ukraine. The second is there really hadn't been much like a history of the industrial base for quite some time. There was the great Arthur Herman book on Freedom's Forge. That really was a look at World War II. And then as I spoke to Arthur about it, he didn't write another book after that on that topic. He'd actually pitched his publisher and they were not interested, saying nobody would be interested in something like that. And there'd been a few other books, like it was a Jack Gantzler book. Jack was the Undersecretary Defense for Acquisition Technology and Logistics in the Pentagon. But it's a pretty hardcore academic book and not really a history. So it struck me that with the big challenges before us, nobody had written anything that went back like a century or so to the interwar period between World War I and World War II, and it was time for something to be out. And I think it felt like it was timely. And I didn't quite know how timely it was going to be, but that's sort of the origin of it. Alex, I'm sure you have plenty to say on the topic. Could you just introduce yourself to the audience as the Army's Chief Technology Officer. What is your role in the Pentagon and what do you hope to accomplish during your tenure? Sure, absolutely. I have a unique role. It's actually the first time that the Army's had a Chief Technology Officer. So in my role, there's a couple of things that I really have to be able to do. It's stay abreast of what's happening inside the Army, stay abreast of what's happening inside the Joint Force, and then make sure that I am acting as both a scout for what's happening in industry, but also bridging a lot of communities that were supposed to talk to each other, but might not have been talking to each other. For example, contracting and technology developers or the test and evaluation and the actual engineers building technology. So that's my role in a nutshell. What I hope to accomplish is pretty drastic. We want to get down to the bedrock and fundamentally change the way that we do problem enumeration, so problem identification inside the Army. And I think if we do that, we can change the way that we address problems in the Army and, quite frankly, the Joint Force. Yeah, so what we're talking about is why we're discussing the defense industrial base today from both your perspective. I'd like to motivate this specifically for the irregular warfare audience. So the broader acquisitions environment, the broader role of technology, this impacts all of national security. I'll start with you, Seth. Do you see a distinction between acquisitions for irregular warfare contacts and capabilities and those for large-scale combat operations? I think one of the challenges is in the area of irregular warfare, my general sense is that Special Operations Command has funds, including science and technology shop, that it can move a little faster, or at least it has moved faster than much of the conventional forces have, at least historically. So if we look, for example, at what General Fenton put in place while he was the SOCOM commander, one of the big, for me, just in dealing with him a range of times on this, getting the companies that were at the front edge of unmanned, uncrewed systems, autonomy, to the warfighter was really a kind of a development that was, we weren't seeing as much in some of the other services. One of the challenges I think we've had with the Navy, really, is trying to break through the sort of acquisition service folks at the service level so that you can connect warfighters at like the DDG level or destroyer level to companies that are building platforms and working with commanders on those ships that can work through issues that they're facing as they're deployed to places like the Taiwan Straits or in and around the South China Sea. So I think in general, the conceptual framework is generally the same in many ways because you're trying to maximize production, trying to connect better your technology companies that really are at the forefront, some of the most innovative in the world. I just think how it's been done, there is a difference in how the special operations community in particular has dealt with this than at least some of the services. So I'd love to just jump in and double tap on that a little bit. I agree. However, if you look at the soft truths, right, soft truth number five, most soft operations require non-soft support. One of the things that we've seen, especially during the global war on terror, is if you get so exquisite in your soft capabilities, if you move so fast, if you sort of break all the china and there's no connective tissue, a lot of those lack the support they need. So what we have been trying to do, and I hear this all the time, I hear it in industry, I hear it inside the government, is everybody goes, we want to look and feel and act like we want Special Operations Command. We want to look and feel like the command. What's really interesting is JSOC has almost no special authorities. They have almost no special laws that support their acquisition. What they have is a cultural difference in how they approach the buying, the using and the stopping of things that don't work when they find out that they don't work. And that is something that we have been trying very hard inside the army to wrap our heads around and institutionalize, because I would say that the biggest challenge that we've had to achieve what Seth just laid out is there are too many people who think the process is the product. And a lot of folks have forgotten that if a soldier can't or won't use the end product, that is a failure of the entire apparatus. Just to add to that, I had a discussion maybe a year or two ago with the first sea lord. By the way, the British titles for their jobs are fantastic. It seems like carrying a trident. Anyway, the first Sea Lord had this comment because we were talking about the industrial base, and he highlighted a book that I then went and read by the British naval historian Andrew Gordon. And he said – and I'm sort of taking the naval concept and bringing it to the industrial base. He said that in peacetime mindsets – and this is sort of a cultural mindset issue – you get regulators. And so as Alex just mentioned, this sort of think about process, bureaucracy in a wartime environment, what you need on the industrial base. So think it's not just World War II, but maybe the first and second offsets during the Cold War. You need a mentality that looks closer to what Andrew Gordon calls rat catchers, those who are committed to minimizing unnecessary regulations to effectively win wars. So to focus on production, to take risks, and if things don't work out, then to move on. But it is a very different mentality than a kind of regulatory mindset right now. So that strikes me as sort of where JSOC has been along those lines. It's rat catcher rather than a regulator mentality. Seth, I'm going to start referring to Kyle as the first pod lord for now on. But the conversation on IW soft truce current issues is great. But before digging into our contemporary challenges, I do want to start with a quick historical review because I feel like there's a lot to learn there. Seth, you start in the book by looking back and drawing upon historical examples like when FDR tapped the General Motors guy, William Knudsen, I think, to put America on a wartime footing in the lead up to World War Two. What are some of the most important historical vignettes that can help us understand our current moment? Yeah, I mean, the great thing about Knudsen was that he was a manufacturer. He had come from General Motors and had cut his teeth helping sort of manufacture things. So his goal really was to build and produce. Part of what I think is interesting is when you look at periods where the U.S. really is trying to build things and innovate in a competitive environment, that there is this synergy that takes place when the culture is there, the mindset is there, the money is there, because that is also important, between the government and then the private sector. So there are a couple of cases briefly on vignettes. I'll just touch on them that I think are fascinating. Everybody is or most everybody is aware of the B-29 and its strategic bombing innovations during World War II because that's what we use. That's what the U.S. uses by the end of the war to bomb targets in Japan, including dropping both of the nuclear weapons. I think what people are not as familiar with is the immense work that went on between the government and Boeing and those other companies involved, including the key engineers, George Sherr, Edward Wells, Wellwood Beal, that were involved in building the B-29, something that had never been done before, that large of an aircraft that needed to carry that big of a payload and fly at the range that it did. And if you look at the next couple of decades, it's a similar story that plays out in strategic reconnaissance with the U-2. It's a very innovative process that Kelly Johnson and his team at Lockheed Skunk Works continue on in building that U-2, which is essential for understanding what the Soviets are up to in Soviet territories. That U-2 is able to fly over the Soviet Union. And as we get near the end of the Cold War, you know, that same storyline, those vignettes on stealth, it's F-117 against Lockheed. But these are now engineers like Ben Rich, which are involved in it. Texas Instruments, which gets involved in Paveway 1, 2, and 3, so precision bombing. And then that's Weldon Word and his team at Texas Instruments. And then finally by the end of the Cold War and in the early post 9 years it that work between CIA originally and General Atomics the Neil and Lyndon Blue Abe Karam Tom Cassidy that develops what become Predator and Reaper It's really the synergy that happens between the government and the private sector. And they've got to think outside of the box and, again, think maximizing productivity, effectiveness, and then pushing the money in to do that. So those are a couple of vignettes, I think, that help us understand some of the big moments over the last couple of decades. Yeah, and you really talk about mobilization of the defense industrial base and the interaction. And what I took from the book is really the collaboration between the private sector and government. And one thing that stood out to me was that it seemed like we faced similar challenges through different periods of time and similar solutions. So, for example, you have a vignette on efforts to reform the acquisition programming in the Reagan administration and some of the language that described the problem set with long lead times for acquisitions, the desire to gold plate acquisitions programs and overstate the threat in the future. It almost felt like you could just copy and paste that stuff to some of the concerns we hear today. So I'd love to hear, Alex, your feedback on any similarities we see over time. How long term are these problem sets? Are we just rehashing the same solutions over and over? In some sense, we're rehashing some of the same problems. I find it ironic. The entire procurement system is regulation. There's lots of laws that back it up, but the notion that there's overregulation is systemic in the fact that it is regulation at its basis and regulation tends to self-perpetuate. One of the things I like to talk about or at least try to push on is as we talk about mobilizing the defense industrial base, the reason we won World War II was because we really pushed the American industrial base. The defense industrial base couldn't have done that. That is why we reached out to what is traditionally outside of defense from our perspective and something that we're trying to pull back in. And so the B-29, the super fortress is, frankly, a physics anomaly. No one thought that it would fly. But if you look at the B-24 Liberator, the reason that Ford and other companies were able to support that is because we took the philosophical approach of being cool based in our manufacturing rather than trying to do bespoke tooling. And what I mean by that is it is the same reason that companies like IBM in the 40s built the M1 carbine. It is the same reason that General Motors was able to stamp out M16A1 parts in the 60s and the 70s. Rather than trying to identify the most bespoke tools and build those, we took the tooling that was available, the manufacturing capacity that was available, and we said, what can we build with this? Another good example, like Kelly Johnson will always be an American hero with Lockheed and for what he was doing with Skunk Works. But if you look at why the F-117A Nighthawk, the polygonal ape or the stealth, the reason that that plane was put together the way it was not because we developed something from scratch to do that is because the computers they had at the time were limited in how much processing power they had. But therefore, he took what was available. He said, here are the characteristics that I need. I need to be able to look and feel like a marble moving through air at this altitude, at this speed. And they used the processing power that was available to build literally by control surface what that should look like. And that is the shape that came out of the computer. If they had to start from scratch today, it would look radically different because different tooling is available. But one of the things that I would like your listeners to take away is we have over-engineered every part of this process from the requirements determination to how we assess, to how we buy, to how we build, to how we go through and field and get feedback. And if we take a step back, the way that we bring the American industrial base into the fold is to look at the capacity that exists today in the United States, which is insane. insane. I had an opportunity to go to both General Motors and Ford Motor Company last week to talk about what they're doing and leveraging that instead of everything having to be exquisite. Yeah, just to hit on two points. One is there is no question this is much bigger than defense industrial base. This is really an industrial base issue. And actually, that, in my view, has been one of the most important contributions that we've seen from U.S. presidents that have gotten engaged. FDR during the late 1930s and the World War II era, Eisenhower, Reagan, even some of the key people like Harold Brown and William Perry during the last part of the Carter administration. It's understanding that this is an industrial-based issue, not just a defense one, because when you're dealing with key technologies, there's going to be plenty of stuff that's outside of just the defense space. It's actually one of the challenges when we get to it that comes out of the last supper years in the 1990s because so many commercial companies exit the defense market. The other thing I would just highlight to build on what Alex said is that there has been a sense of urgency that has led during these periods to this push for innovation, both in the defense and the broader commercial sector. It is not a coincidence that would pushes policymakers during the late 1930s. And then in 1940, during FDR's Arsenal democracy speech is the German war machine and the need to start lend lease first with the British. And then obviously, then the US gets engaged both in the European and the Pacific theaters. And that same story is the story that Eisenhower is feeling in the 1950s because the Soviets have such an advantage in Europe at that point that there is a real need to figure out how is the industrial base going to help deter Soviet aggression in Europe. And then by the 1970s, when the Soviets had not just still, they still had roughly a three to one, if not more, advantage in conventional forces, they've got nuclear parity by that point. And there's this urgency that if the U.S. industrial base does not start innovating in ways that help deter the Soviets, that they are potentially going to push through that full gap around the inter-German border or in parts of northern Germany and be able to get into the second and third echelons of U.S. and NATO forces. So there's this big strategic urgency that is also like pushing the industrial base and senior policymakers to act. It's not happening in a vacuum. Alex, I've got a quick follow-up for you. As a neophyte and someone who just doesn't understand that much about this space, you made a distinction between the defense industrial base and the industrial base writ large. Could you talk more about that? Because I just assumed the US government needs to find a way to make more shells, but it sounds like that's not necessarily the case. Absolutely. I think it is the case that we need the ability to make more shells, more munitions, more communications equipment, more of all the things that we deployed with. However, and Seth, I'm glad you brought up The Last Supper. So after The Last Supper, there became this de facto caste system for who the government can have contractual relationships with. So traditionally, it's the defense industrial base. You have several primes between six and 10, depending on how you count. And generally, our relationships are a black box with them. So if we go to a prime and we say, I need 100,000 155 rounds, we don't get to go to their sub suppliers. We don't go to the folks who are building the energetics. We don't get to go to the folks who are actually molding the shells themselves. We have to interact with the prime. Well, something that we lost as part of The Last Supper is when a lot of these companies divested their defense segments, they took their best and brightest and most technologically driven and really the risk takers and they put them into their commercial markets because what we really wanted was the rest of the winners to look and feel and act like us to be able to build the big things that we thought were really unique and what i will say is it's really easy to come off like we're talking down about the defense primes our stuff is legitimately the best capability in the world if you look at the big five coming out of the cold war into desert storm Patriot, M1 Abrams, M2 Bradley, Blackhawk, Apache, best things in the world. However, as we're thinking about what the mix of exquisite systems and less than exquisite systems are, we've lost our ability to interact with the rest of industry who might be building like really interesting toys. And I mean that literally like toys that might be able to be militarized or be dual use for warfare. It's just been really fascinating for me to be able to work across and move across that blood brain barrier where we can go, oh, instead of having to go through the, oh, do you have a duty to five, four? Do you have a cage code? Do you have security clearances? Do you have facility clearances? Have you gone through all the environmental and NEPA things, all the regulations that we've put in place to interact with the government? As soon as you step out and look at what the venture landscape, the private equity landscape, what they're able to find and bring to bear, you realize there is a whole rest of the Venn diagram that we have not even been looking at because our comfort zone has been go to the people that look and feel like us because they know how to speak the languages that we speak and they know how to provide things in the process that we have set up, not the products that we most need. If people are now scratching their head and asking about what the Last Supper is because we've brought it up a few times and maybe they're getting a little hungry, just to back up there, because it's an important period, I think, and understanding where we are today. There are two key components of that I think are probably worth highlighting. One is the collapse of the Soviet Union and really the end of the Cold War leads to the second issue, which is President Clinton comes in and during his election campaign says categorically that the U.S. is he calls it a new covenant and he's going to establish a leaner government. It's understandable in many ways that the defense budget is going to go down because for the decades over the course of the Cold War, the main enemy is now gone. I mean, literally gone. So in May of 1993, the Pentagon leadership brings in the CEOs of roughly two dozen of the top defense companies to this cryptic dinner at the Pentagon in 3E912. Got the room number for that. Spoke with Norm Augustine at that meeting. after the dinner, they go in and they get a briefing. And Pentagon leadership at the time, Les Aspen, William Perry, say to them, essentially, in all the major areas that you CEOs are producing, let's take aircraft. We want to go from three companies that are producing bombers down to one, four that are producing helicopters down to two. They say that in all the other major areas, space shipbuilding, track vehicles and missiles. And you figure out how you're going to get there and you figure out what mergers and acquisitions or other steps industry is going to take. But that's where we want you to go. So by the end of the decade, you get Lockheed Martin, you get Boeing, you get Raytheon, Northrop Grumman, General Dynamics and a couple of others. And there are just lots of companies that say we're out of the defense space. We're leaving. So you You get a significant shrinking of companies involved in the defense space and a lot of those commercial companies. And Alex mentioned them during World War Two, the Fords and Chryslers and General Motors that had been involved in World War Two. Many others, General Electric, were involved in various elements of it. But that landscape changes dramatically over the course of the 1990s after that Last Supper dinner and the years after that. Yes to all. And the reason I mentioned that it becomes a cast system is because what that creates is a set of companies who have good engineering talent. I will not back down from the best things. The U.S. military has the best capabilities in the world, even though we want more of them. But what it also creates is all of these defense companies have a monopsony relationship with the federal government. We are their only customer. They can only sell to us. So the notion of dual use technology goes out the window. The notion of generating revenue from other streams goes out the window. So then you end up in the late 90s into the global war on terror. And to today, you end up with this rat race of both sales to the federal government and foreign military sales to drive their revenue because otherwise there is nothing driving that. So a key takeaway I have from this is that some of the most talented innovators are in the commercial sector. And also one of the key points that I took from your book, Seth, is that actually our just industrial production power is also in the private sector. A lot of these big private commercial companies just have a lot more capacity than even our defense primes do. And so the challenge is how do we mobilize it? I'm going to open up a can of worms here and ask just a very simple question, which is, what are the various private and public models that we can come up with to actually mobilize the defense industrial base? And I'll start with a primer of the book talks about how the Soviet model was extremely centralized. And the challenge there is that it stymied innovation. And that was that was very detrimental to Soviets. My question for you, Seth, starting with you, is what about China? Are they creating competition internally with their new model? or is it a highly centralized model that continues to lack innovation? You know, it's interesting. It's a little bit of both. The vast majority of Chinese companies that are building weapons systems right now are state-owned enterprises. And what is interesting is that there's an upside to the centralization, which is the government, in this case, Xi Jinping and the Chinese leadership, can direct massive amounts of spending. And you see that in areas like shipbuilding, where they've got a huge advantage over the United States on ships being built, both for defense and commercial. Roughly, the Chinese have a capacity, it's about 230 times the capacity of the U.S. to build ships right now. Now, the Chinese aren't 10 feet tall. We can talk about a host of their weaknesses, and we can even talk about the quality of some of their systems. But there is an upside to the decentralization there's also a downside it's inefficient there is massive corruption as we have seen in in the last couple of years the one area where there is some innovation and there's a little bit of decentralization we had the ceo of nvidia over a couple of months ago jensen wong you know his comment um was that was that huawei for example actually is a pretty serious competitor of NVIDIA from his perspective They not a state enterprise although we know anybody that in the Chinese market CCP has significant influence in. But they have, in addition to leveraging stolen U.S. technology, which is partly the way Chinese do business, they have also innovated in areas like artificial intelligence and quantum. So I think it is just empirically false to categorize all of China as A, centralized and B, is not innovative because that is not what I'm seeing in some areas of their broader technology is definitely some innovation. And they're getting better in some areas that are very relevant to the defense sector. This is an area I'm pretty passionate about. When I became an army civilian i was actually at the night vision labs for those of you who remember that down at fort belvoir and had access to a lot of the research and engineering and i had the ability to talk to industry on like a research basis there is a radical difference between trying to plan out what the future looks like and being able to adapt and adopt and acquire technology pretty rapidly and i'll give you two examples there on what the army's done recently and kyle you've seen this firsthand is we started this process called transforming and contact and it is a departure from the five or 10 year plans that we used to have in place that were they were a hundred percent all the time but they were a hundred percent wrong all the time so what we allowed commanders to do was take their organization and take the kit and customize it to the fight they were going to be and so we started with second brigade 101st and they went down to fort polk louisiana then we We went down to 2nd Brigade, 25th Infantry Division in Hawaii, and we went to 3rd Brigade, 10th Mountain in Hohenfelsch, Germany in February. And we said, all of you are fighting in different ways, which is okay. Organize your brigades the way you think they should be organized, and then we're going to compare notes across all this. But we wanted to have process and product innovation be diffuse because maybe we were missing something in D.C. Maybe we were not really good fortune tellers. Maybe we didn't have all the answers. and the tactical units would tell us that. Then what we could do is rather than letting a thousand flowers bloom and having it be so diffuse that we don't actually consolidate gains and make progress, we could take the best of that and then champion those things. If we saw the same problem cropping up in multiple places, that was probably the target we needed to shoot because it kept popping up. So then the challenge that the army is really trying to work through, and Seth, you hit this a couple times in your book, was the scale problem. It's really easy to do something really well once. maybe twice maybe three times but if you're talking about the scale of the department of war if you're talking about the scale of the department of the army you are talking about hundreds of thousands to millions of copies of some things and the only way that we can do that efficiently and effectively is to actually leverage the manufacturing capacity that exists outside of the dib and i'll give you two two finite examples and i'll stop talking vehicles one of the vehicles that we recently put into formations is the infantry squad vehicle It is a collaboration between General Motors and Route. It is based on the Chevy Colorado. It is a commercial pickup truck that we do a little bit of militarization at the end. We skeletonize it. We upgun the suspension so that it can go anywhere, and then we put a slightly larger engine in it. What we have seen over time is even though we started fielding that two or three years ago, General Motors, because they're running a product line with a commercial set of customers, anytime they make an improvement to that product line, we get the downstream benefit of it. That truck gets better every time they cycle on it. As we hope to bring in more folks like Ford Motor Company, as we bring in Caterpillar to work on the M1E3, the next generation of Abrams, as we bring in Sapa, as we bring in all these commercial industry, we will always get the downstream benefit of their commercial customer base and their commercial innovation. And that is a wholesale change from how we've done things for the last 10, 15 years, other than in places like the agency, places like the work programs that I was working with In-Q-Tel or places like the command. Yeah, if I could just highlight sort of the scale, Alex just mentioned scale and volume, just to highlight the challenge the U.S. has right now, particularly with the Chinese. But a decade ago, there were zero, zero Chinese companies in the list of 100 top defense companies. Zero, not one. You fast forward today, they have five in the top 10 right now. They've got Aviation Industry Corporation, China State Shipbuilding, China North Industries, China South Industries, and China Electronics Technology Group. Now, those are combined defense and non-defense revenue, and that's important because of what we're talking about, this combination of both defense and commercial technology. So that combines them both. But these are massive enterprises right now that are now, especially two of them, larger than Boeing, larger than General Electric and Lockheed and Raytheon and all the others. We are dealing with a country now that is mass producing its weapon systems. And I think this is the challenge that we face today. Alex I've got a quick follow-up for you first of all I like the vignette about the infantry squad vehicle as someone who prefers old pickup trucks to Humvees and austere environments but the process you're describing could it be simplified at least conceptually to the idea of you know in the past maybe higher echelon headquarters units identified requirements and equipment and pushed it down to tactical units and now we're trying to do the opposite with a little bottom-up refinement from battalions, brigades, at training centers, and then pushing up requirements? That's an interesting way to ask it. I think the crux of your question is, can we refine the requirements process to actually generate the outcomes that we want? I think that's the crux of your question. My initial answer is yes, and I'll give you an example. One is inside the Army and one is outside the Army. counter unmanned systems is an exceptionally necessary capability now we've seen it grow in in europe we've seen it grow in the middle east again we've seen it grow in the pacific traditionally and seth you hit this really well in the timelines part comparison between the prc and the u.s traditionally it takes about a year for a requirements document to be generated it takes about six to seven months for that once it is generated once that piece of paper is is written to be approved up to four-star level. And then it takes between five and six years from the time that document is approved until the first unit is equipped with the thing that we approved. And then it's another, and I'm being very generous, another five to seven years between the first unit equipped and full fielding. So you're talking 10 to 12 years from idea to everyone in the Army has it. That process is wildly long. There was a requirements document that was pushed up last year for counter unmanned systems. And it had three attributes that were really driving what we were going to go out and buy. It was the operational survivability. It was the operational availability. And it was the operational effectiveness. And those are, we call them the ilities. They're the measures of performance. But the operational effectiveness, you want it to be high. So it was like 95%. But when you look at operational survivability, and that's really from a cyber perspective, it was something like 85%. And the operational availability was another 75% or 80%. which briefs really well until you actually apply math to it and you multiply all those statistics together and you get something like 50% that the system only had to work roughly half the time. And we were going to spend an artificially inflated bazillion dollars on this across the entire force, but no one had stopped to think, what is the outcome we actually want to drive? What is the run that we want to buy? What's the money ball for counter UAS? So General George kicked that back. The staff went back and said, ooh, this is not what we're trying to do. This is over-specified. It's gold-plated. We will spend billions of dollars to get something that clearly doesn't really meet the need. And the need is, depending on what they're throwing at us, whether it's a Shehead variant in the Middle East or a cheaper munition, we can't keep slamming them with PAC-3 missiles at almost $4 million apiece. How do we do something differently? So that's one on the inside of the Army. On the outside of the Army, the largest obstacle we have to requirements is I think that we've solved this inside the Army is actually how do we fund things? And Seth, one of the things I took away is you mentioned one set of voters, and you only mentioned them passing a couple times, and that's Congress. So we have a board of directors that is 535 people strong, and they all get a say in how this works. So even though I think that we've done a really good job at refining how requirements operate inside the Army and, frankly, inside the department with the SECWAR's announcements on acquisition reform, there have been plenty of times when we have told the Hill, we do not need this equipment. Humvee is a good one. We have had it in the formation for 40 years. in before Desert Storm, we had 105,000 Humvees in the formation. Today, after GWAT, we have 104,000 Humvees in the formation. We don't need any more, but we consistently get told through appropriations, you will buy this. So even though we've gotten much better at delineating our requirements, writing them down, changing the process so it's not a hugely linear, long process, we still get told to buy things that we don't need. And I don't know if your listeners or the audience really understand that we are not the final say. It's not just the army screwing up and saying, we're going to do all these things the wrong way. There are other people who actually control the pocketbooks. Seth, do you have anything for that? I do if you don't. I don't want to jump on that. No, I mean, I'd like to dig just like one more level deeper into this question about the relationship between the government and the private sector and really how do you spurn private sector defense industrial base we need. We actually had this conversation on a recent podcast with August Colon Rear, Admiral Mark Schaefer, from a different perspective on how do you field the COCOMs with critical equipment. And it also might present some potential pushback to your argument, Seth, in the process. So there's two specific examples I think we can use to frame this. One is the book argues that the defense industrial base needs surge capacity, which I understand is just the idea that we need to be able to scale up production of critical tools in a time of conflict. And then the other one is critical stockpiles, which is the idea we have stockpiles of key resources and tools and ammunition that are there for preparation for war. The first part of this is if you're asking a factory, a private sector factory to have surge capacity, it seems like what you're asking them to do is have a lot of capital invested in a factory and investment to maintain that, but operate only at maybe 20 to 25% production. So I'm guessing operating at a loss. So at a very tactical level, how do you convince the private sector to do this? What tools do we have for that for both of you? And then the second broader question is if we're on a wartime footing, It would make sense that you would need to invest a lot of capital into critical stocks and surge capacity. But what do you say to people who say this is actually not an effective use of limited national resources for what if scenarios? Like this is not the most efficient thing we can do when every dollar that goes toward defense isn't going towards some other priority. Yeah, good. Good question. A couple of things. One is this is not rocket science. This is not the first time the U.S. has had to look at capital investments. It did it in the late 30s. It did it in the 40s. Those are war times. Those are actual war environments, but it also did it in the 50s during New Look, and then it did it during the second offset period in the late 1970s and 1980s. So how did it do it at that point? First of all, there has to be recognition that whether these are fully commercial companies or defense companies operating in a monopsony, that they have shareholders at the end of the day that they have to be mindful of. The way the U.S. has done this historically, and I think effectively, is that it has given money to defense sector and the commercial sector to build at that capacity, typically with things like multi-year contracts, and to allow the private sector to build in infrastructure as part of the surge capacity. If you think about any company that is building additional factories for weapons production or the components supply chain for weapons production, there has to be built into that. A, that this is not just a one-off, one-year request, but this is going to be a multi-year request. And then the second is, and I'm shocked we're really not at this level yet, which is the U.S. has a range of operational plans or war plans, O plans, with major adversaries overseas. If you assess, which I think we're in the position where we should be, assess that a war with a major adversary is likely to be protracted, then the question is, let's say you're at 120 days or 360 days. days? What kind of munitions are you going to need to fight a war that is 90 days, 120 days, 360 days? And then what should we be telling industry to build so that we can fight a protracted war? And then I would say it is still infinitely cheaper to have those stockpiles and to deter an adversary from conducting an action than not to have those stockpiles of key munitions. I'm not saying everything, but key munitions for fighting a major adversary. Because if you fail to deter, then the costs go up axiomatically. Then you're talking about World War III, and you're talking about blood costs, and you're talking about huge impacts on GDP. Yeah, I want to double click on that. So what we're really talking about is how do we create the demand signal that's reasonable So a couple of things can happen. One, the demand signal such that the government and the taxpayer, because this is like there is no government dollars, it's all taxpayer dollars, can spend to generate the peace through strength. That is a real outcome that we want to generate peace through strength and spend the dollars early to start doing that. The second one is how do we create a demand signal such that the companies outside of the defense sector can generate capital or raise capital, particularly in the VC and the PE world, so they can start making the investments because they see the demand and probably because they have enough exposure outside that they can figure out other ways to do business or other markets to so that their total addressable market is not just us. there's a couple of areas where that's not going to be feasible propulsion and energetics for specifically for explosives okay that's probably bespoke generally i can't generally town and buy imx however propulsion systems elon figured out that spacex was a real opportunity and they could do that for lofting other space equipment So that one side The way that the government solved this in the past was actually establishing the organic industrial base. So within the Army, that's 23 depots, arsenals, and manufacturing plants. I was actually at Pine Bluff Arsenal on Friday with General George and our acquisition executive, Honorable Ingram, to talk about what does the future of the organic industrial base look These were the facilities that built or repaired vehicles. These were the facilities like the Iowa Army Ammunition Plant that filled 155s and ramped up from, I think it was 8,000 some odd a month to 40,000 a month to support efforts in Europe. So these are the paid for locations with blue collar and white collar civilians and army civilians who actually do some of this work to be a strategic reserve for the nation on top of the American industrial base. The last thing is a lot of this comes down to how we actually build contracts. Seth, you wrote it a couple of times. Cost plus contracting has probably run its course for things that we know how to do. So if you're not familiar, cost plus contract, it was actually the first one was used in 1907. They were formalized to the National Offense Authorization Act in 1916. And what they did is they were supposed to be a method where if the government didn't know how to do something, an industry was trying to do something new, brand new, first time, the government would give them a contract that covered all of their costs for that new thing and then added an incentive profit margin, the plus part that said, you are guaranteed a profit of this much. and we will cover all the costs for you to do business. That's where the cost plus came through. However, over time, what that has become is just a way to prolong development, production, building a first article, rather than saying, I'm going to buy a run, I'm going to buy an outcome, and then we'll guarantee profit because that's how you actually incentivize industry to do really hard things that we might not know how to do right now. Just to add one comment on industry, You know, there are a number of types of companies that have what I would say stuck their toe in the defense market but are not fully there. And there are areas where I think there is an opportunity. So we talked about the Last Supper. I don't know if it's the first breakfast or something along those lines. But take a look at – if you take a look at internal research and development and you look at this period between 2021 and 2023, the prime – so think Lockheed, Raytheon, RTX, Northrop, General Dynamics, and Boeing spent $34 billion on internal research and development for sort of next generation systems, platforms. If you look at the top emerging and technology companies in the world, the U.S. ones, Apple, NVIDIA, Microsoft, Google, Amazon, and Meta, and they are at the cutting edge of some of the most important advancements even on the defense sector of artificial intelligence, quantum. During that same period, they spent $600 billion on internal research and development. That's 20 times the amount. Yet in terms of how engaged – I sat down with the CEO of NVIDIA. How engaged are they in the defense sector? Limited amounts. It's not an easy regulatory system to operate in. I mean, at some point, we have got to figure out how to better integrate some of the most advanced technology companies that are American in the world into our defense sector and to provide incentives for them to do that. I mean, it's a huge area. As I've talked to CEOs in the defense space, it is an area where they know they need to get better. it's an area that there is enormous opportunity if we can get there but i would just just highlight that as boy if we can really tap our technological advantages not just over the chinese but anybody else in the world right now with those companies we've got huge advantages i wholeheartedly agree i had a something that really bugs me about the term irad is i see it outside in terms of your Apple's, your Microsoft's, your Google's, your NVIDIA's. And then when I look in the defense sector, there's actually rules on IRAD. And if you're working on the FAR, IRAD is really a billable expense back to the government. It's billable as overhead. So when I ask vendors and they say, hey, we're spending this much money on IRAD, my follow-up question is, is that out of your revenue or is that really the government's money that you've billed in addition as overhead? Because if it's the latter, it's really taxpayer dollars. We're spending taxpayer dollars for innovation. That's one of the questions in terms of what I would ask the listeners. As you're engaging, as you're continuing to work with industry, with government, the best thing you can do is just ask the second and third order question because it makes it a little bit easier to follow the money. It makes it a little easier to dig and to drive the outcome that you really want. But Seth, I wholeheartedly agree on getting some of those outside voices in. We've had Secretary Driscoll and General George have been huge supporters of bringing in outside folks. So actually on Thursday before I left for Pine Bluff and Camden, saw two OIB facilities that day. I actually met with the NVIDIA team in the building, asked them how we make sure that they are aware of what our needs are and what steps can we take to make it easier for them and their peers. Because we also want the AMDs of the world. We also want the folks who, you know, the super micros, the micron, like all these companies who exist outside. How do we be better customers? And part of being a better customer is better enumerating how they engage with us. gentlemen this has been a fascinating conversation but kyle and i also need to be mindful of everyone's time so we're going to wrap up here seth to close out we like to finish with tangible takeaways for the audience so based on today's conversation what are the implications for practitioners and policymakers interested in defense and industrial policy yeah i've got a couple of key tangible takeaways one is just a reminder to quote paul kennedy and the rise and fall of the great powers where he says it is incontestable that in a long drawn out great power war victory has repeatedly gone to the side with a more flourishing productive base so this isn't just theory that we're talking about this is a productive base and a production base is critical to win wars particularly protected one second is china is a big challenge for the u.s right now because of its production right now at mass and scale and if we're not careful we are going to risk losing deterrence particularly in the western pacific to a china that is very serious about its industrial base and producing weapon systems in all the major domains so you put those two together there's a huge incentive to moving along these lines and then just let me finish with one with one final one, which it is significantly cheaper to spend the money now to do this than to have to fight World War III. When people talk to me about money and the need to spend it, my comment is the context of if we have to fight a war because of this, it's going to get a lot more expensive. And then, Alex, similar question to you. What are some of the implications for national security professionals here? Absolutely. I'm going to answer in two short stories. My one takeaway is ask more questions. And then even in your national security job, it is okay to make metaphors to your personal life, particularly in areas like budget. And two short stories. The Army's budget for 2025 was roughly $186 billion. And that sounds like a lot of money because it is. However, 50% of that, a little bit more than 50% off the top is military pay and civilian pay. 25% on top of that is congressional direction. We have no flexibility. It is fixed. So that means the rest of that money, so that roughly 20% of the Army is $186 billion. That is our, I'll use air fingers, discretionary money for transformation, for readiness, for all the things that we've talked about today. So it's not just an infinite well that we have infinite flexibility over what we have spent. I say we, the entire Army team has spent the last year working with Congress on is asking for more flexibility. So in the 60s, when you look at the budget of the United States, it's very high level. It's very abstract. There's only a couple of programs mentioned. There's no program elements. There's no budget line items other than those big, big hairy items like soldiers and families and ammunition and certain aircraft and Nike weapon systems. But today in the budget, everything is so atomic and itemized that it has created almost no flexibility to do the things we're talking about. And the second one is, in terms of changing the process, I would like to just brag on the Army team. We have changed almost every process for how we do the procurement, the requirements, the contracting, so that we aren't living in the 80s or 90s anymore. During GWAT, we figured out that it was legal, moral, and ethical to do quick reaction capabilities. We figured out it was legal, moral, and ethical that we could spend a year of execution money and buy the things that we needed to save soldiers' lives and, frankly, go find and kill the bad guys, which means it's legal, moral, and ethical to do now. However, in the GWAT, we didn't go back and fix the process in total. And that's what we're working to do right now. So that hopefully when you guys go back to command and Kyle, when you are working on your next thing, you aren't looking at the same process that stymied us going into GWAT. Thank you very much for giving me an opportunity. Alex, before we let you go, I mean, we have the Army Chief Technology Officer on. I'll ask one more uplifting question. When you look at the technologies coming, what are the most exciting technologies coming to the Army that you think will blow people's mind or you think might be game changers for us? Oh, man. Okay, trick question. Actually, I'm going to brag. I'm going to brag on the Army team. So I had an opportunity last week. I was up in Detroit, actually week over week, at the Detroit Auto Show where we unveiled the M1E3 main battle tank. So it is the successor to the M1A2 SEPV3 Abrams. That tank is the hardware manifestation of software. It is no longer the same Bradley fighting vehicle or M1 stick and rudder that we grew up with Atari where you have two yokes and you're moving around. It's got an F1 chassis on the inside. It is fully digitized. There's an actual digital bus that moves around that tank. There are sensor pops for if you want to do acoustic sensors, you can hear a drone coming in. If you want to do optical sensors, if you want to put counter UAS, if you want to put crews on there. That tank, which didn't exist a year ago, the team actually went almost all commercial and generated that brand new main battle tank in under a year just by saying, what can we do in the commercial space? Who can we bring in? How can we partner? So what you'll see after we generate the first four this year for a platoon to put it through live fire and gunnery and make sure that it's rocking and rolling is you'll see things like a Caterpillar engine in that. You'll see things like a SAPPA transmission. You have multiple autonomy providers who want to put their software on top of that main battle tank. So I think that is probably the biggest, most glaring result of the cultural and philosophical change. There's all kinds of other cool things that the Army's doing, but that a main battle tank that didn't exist a year ago, that is the physical manifestation of software and is plug and play like a Lego set for the things that you want to put on it. And it will go through gunnery as a platoon this year when it wasn't supposed to exist until 2032. Alex, lethality and speed are great metrics, but the true measure of success is how much does it complicate my hand receipt? So I guess we have yet to test that proposition. But to Seth Jones and Alex Miller, this has been a great and a very wonky conversation about an exceptionally important topic. Thank you so much for joining us on the Irregular Warfare podcast today. Thank you. Thanks, guys. thanks again for joining us for the irregular warfare podcast be sure to subscribe to the regular warfare podcast so you don't miss an episode if you enjoyed today's show please leave a comment and positive rating on apple podcasts or wherever you listen to the irregular warfare podcast. It really helps expose the show to new listeners. And one last note, what you hear in this episode are the views of the participants and do not represent those at Princeton, West Point, or for any agency in the U.S. government. Thanks again, and we'll see you next time. Thank you. Thank you. Thank you.