Silicon Valley defense technology companies have urged the US government to overhaul the way it procures military systems from private groups and companies, warning in an open letter that the country risks rapidly losing ground on the "technological battlefield".
Venture capital investment into defense tech companies has boomed in recent years as the war in Ukraine and geopolitical tensions have fueled hopes that the US government will give contracts to start-ups producing innovative systems.
The Financial Times said that the letter, sent to defense secretary Lloyd Austin on Friday, was signed by venture capital firms that have invested hundreds of millions of dollars into fledgling defense tech companies over recent years.
This move is an attempt to apply further pressure on the government to open up its huge Pentagon budget, worth $886bn for 2024, to start-ups backed by leading Silicon Valley investors.
The letter suggests the governments process for buying military technology was "antiquated" and had "drastically limited" its access to cutting-edge defense and weapons systems.
"While most critical technologies being developed today reside in the commercial sector, they are not being leveraged at the speed and scale required for us to maintain advantage relative to our competitors," it reads.
The signatories propose a series of recommendations for reforming defense procurement, such as $20bn in additional spending towards corporate research and development projects and the creation of a $250mn "bridge fund" to help companies further develop technology that has been proved to work. It said adopting these changes "will dramatically improve the ability of Silicon Valley to deliver the worlds best technologies to the war-fighter".
The newspaper mentioned that as many as six defense tech unicorns -start-ups valued at more than $1bn- have emerged from the flood of funding: Shield AI, HawkEye 360, Anduril, Rebellion Defense, Palantir and Epirus. The companies provide the US military with technology ranging from artificial intelligence-powered fighter pilots and automated drones to satellite mapping.
However, large government contracts of the scale required to manufacture complex systems remain rare. Many start-ups have failed due to the long gap between developing a prototype and being awarded a government contract.
An investor said that they are now facing extremely technologically-sophisticated nation states as adversaries, adding "we need tech to win the next generation of warfare, and that tech is available in the tech sector, but we dont have a mechanism to get it into the government." He also mentioned that the Department of Defense has been "log-jammed by bureaucracy" for decades that had prohibited reforms to procurement, which has traditionally favored established defense contractors.
In recent years, the United States has established a series of government agencies to encourage private sector development of technology for national security applications, including the Defense Innovation Unit in 2015 and the AFWERX 2017 program, which allows private companies to sell innovative technology to the US Air Force.
Earlier, the Financial Times said that "US venture capitalists have agreed more than 200 defence and aerospace deals in the first five months of this year worth nearly $17bn more than the sector raised during the entire of 2019, according to data from PitchBook." Many investors believe that recent technological developments related to artificial intelligence have placed an additional responsibility on Silicon Valley groups to assist in US defense efforts.
Dan Gwak, managing partner at Point72 Private Investments, said that "the common wisdom for founders has historically been: dont build a start-up reliant on selling into the government." "Now there is an existential technology advancement that I think can shift the global superpower balance," he said, referring to the rapid development of AI. "The last time that happened was with the atom bomb. Finally were seeing the government taking steps to win the tech race."
Source: Qatar News Agency