Acquisitions Reform is Cultural Reform

The mission is bigger than technological innovation, it is elite reformation.

Over the past decade, a new culture has shoved its way into the national security ecosystem. West Coast builders have arrived in the East, driven by a multitude of factors. Some have recognized, across the Pacific, a rising power intent on disrupting the geopolitical order and — as bosom fellows with disruption — know how complete it can be. Others have seen among their fellows a seething hatred for the very nation and culture which made their success possible, a rejection of the duties of citizenship and a true embrasure of the End of History. Still others have seen the Pentagon’s outlays of cash to decrepit, near traitorous, corporations based in Northern Virginia and believed themselves equal to the task. The most visionary among them have recognized all three.

These new players have achieved major successes across two administrations despite strong opposition from entrenched interests. They enlisted Biden’s Deputy Secretary of Defense Kathleen Hicks to validate their arguments.¹ And now they’re helping to lead the Trump administration.² They did this, in part, by proving their mettle — building at least two leading defense companies and investing in a host of other challengers. In concert with these efforts, they chose two massively unpopular adversaries to fight: the defense acquisition system and the defense primes.

No one would dispute — in private — that the defense acquisitions system is horribly broken. Not only is it broken, but it is getting worse. The federal government itself admits it, recently finding “that the average amount of time for major defense acquisition programs to deliver capability increased from 8 to 11 years.”³ This dysfunction, which was relevant before they arrived, has made the system an easy target. Anduril, in Rebuilding the Arsenal of Democracy, accused the system of having five critical flaws: Adherence to a Lengthy Bureaucratic Process, Working off Onerous System Specifications, Spending Little on Internal Research & Development, Prioritizing Proposals Over Performance, and Tolerating Prolonged Failure.⁴ A variety of other critiques have followed, latching onto some of the most egregious defense procurement failures, like the cost of the F-35 or the state of the DoD’s software.

The beneficiaries of this system, the defense primes, are little better and have been easy targets. “Before the fall of the Berlin Wall,” Shyam Sankar points out, “only 6% of defense spending went to defense specialists.”⁵ Today, 86% of defense spending goes to specialists. The days of companies maintaining both defense and commercial business lines are long gone. That spending is full of waste, a consequence of the primes’ reliance on the cost-plus contract, which allows them to consistently overrun their budgets by massive amounts — a state of affairs which calls for criminal prosecutions rather than additional funding.⁶

Given the system’s rot, and the rivers of money which would accompany a loosening of its bowels, it is no wonder that the tech disruptors have focused tightly on the acquisitions system and its current beneficiaries. But this narrow focus, as correct as it is, elides a greater and more pressing problem.

The first duty of all American institutions and the elites that lead them is to advance the well-being of the American people. In this sense, the death of a broad system of dual-use companies has been devastating for America’s elite culture. It is only natural that, as companies become less and less involved in questions of national security, they care less about their duties to the nation, and to the nation’s people. A company that operates a munitions manufacturing department along with their normal business will care more about the national interest than a company which does not. Not only do most American companies care less about the national interest today than they did in the 70s — a vast majority of them reject working on behalf of the national interest. Palantir’s founder, Alexander Karp, excoriated Silicon Valley for this attitude. “The wunderkind of Silicon Valley…charge themselves with constructing vast technical empires but decline to offer support to the state whose protections and underlying social fabric have provided the necessary conditions for their ascent. They would do well to understand that debt.”⁷

As such, defense tech should see its mission of reforming the acquisitions process in a broader context. Procurement reform is a pathway to cultural reform. It is critical that American executives and investors, as a class, become accustomed to working on behalf of the nation’s security. The purpose of reformation must not be only to promote more innovation. It must be much larger — giving every sufficiently motivated American company, seeking to utilize their expertise on behalf of the nation, the opportunity to build defense products and to be aligned themselves with the national interest. In this sense, DoD dollars can, and should, be used for the purpose of rebuilding elite American culture.

Reframing acquisitions in this manner pushes us to the understanding that government must actively recruit companies into its influence. Procurement reforms, on their own, will not convince American corporations, who have only done commercial work, to take on the task of working in defense. They must be persuaded to do so. The federal government must seek them out, persuade them to build out robust defense departments dedicated to building the kinds of equipment and munitions necessary for waging war. This kind of effort has been made before. Think of Sidney Weinberg, appointed to the War Production Board by FDR, who went to the nation’s CEOs to persuade them to send the government their very best executive leaders to organize a war production effort:

this is how you recruit for government pic.twitter.com/xiAQjUbW8E

— Defense Analyses and Research Corporation (@DefenseAnalyses) December 30, 2024

Today the task should be much easier. CEOs will not be asked to give up much of anything. They will, instead, be offered the chance to make money.

Seeing procurement reform as an instrument of cultural reform additionally makes plain one dimension of this project that even the Tech Right has missed. The recent controversy around H-1B visas revealed that the Tech Right has not intuited that for American tech companies to truly advance the well-being of the American people, they must prioritize American workers. For an industry which is so publicly skeptical of modern educational institutions, they have proven remarkably unwilling to invest into alternative methods of training for American talent.

How, then, does defense acquisitions reform change this dynamic? Through International Traffic in Arms Regulations (ITAR). Increasing the number of tech companies working with the DoD would naturally increase the number of commercial job positions beholden to ITAR regulations — this obligates them to rely on US persons for their defense programs, where their most interesting and complex problems will reside. Companies can, of course, submit applications to the State Department’s Directorate of Defense Trade Controls to receive a DSP-5 license, so that critical non-US persons can work in their defense programs. But this is the exception. Defense programs of commercial businesses become labor policy, ensuring that American citizens, permanent residents, and selected categories of refugees are prioritized by the most dynamic and capable American tech companies.

ITAR’s restrictions, which could be tightened further in furtherance of this mission, could prove a valuable instrument for changing American corporate culture not just in tech but across any industry. If a broad base of commercial companies can be persuaded to participate in DoD acquisition processes, but are limited mainly to American talent to staff the resulting programs, they will naturally begin investing in training and mentoring American citizens — a result well in accord with the principle that American companies have a duty to Americans. One example of this model is SpaceX, who has achieved $350 billion in market cap despite being subject to ITAR restrictions due to their work as a defense contractor. They have pursued, hired, trained, and paid Americans extremely well as a result of the restrictions of their work with the federal government and for that reason, along with others, should be lauded as an American champion.

Hastening innovation is a noble goal, particularly in the face of an adversary’s rise. But to limit oneself to reforming acquisitions with that shallow technological goal alone is too low an aim. America was better off when a greater swath of her institutions were, daily, involved in securing her interest. And not just her interest, but the well-being of normal, everyday Americans. The DoD has a role to play in reviving the spirit of civic responsibility and duty among American elites, and it should do so urgently.