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For Replicator to succeed, the government must stay out of the production business

"Replicator should be a triumphant moment for modern American industrial policy and free market economics — not an attempt to emulate China’s command economy over the proven value of American ingenuity," write Jeff Decker and Noah Sheinbaum.

The announcement of Defense Department’s Replicator initiative has come with a host of question, not the least of which is where the idea of mass numbers of unmanned systems might come from. Breaking Defense recently ran an op-ed calling for a greater government role in production for Replicator. In the following response, Jeff Decker and Noah Sheinbaum argue the government should take a step back instead.

Earlier this month, Deputy Secretary of Defense Kath Hicks announced the Replicator program aimed at delivering thousands of low-cost attritable autonomous systems (AAS) across multiple domains in 18-to-24 months. Replicator seeks to leverage “existing funding, existing programming lines, and existing authorities to accelerate production and delivery [of autonomous attritable systems] at scale.” If successful, Replicator will strengthen the industrial base fostering partnerships between government and commercial industry.

It’s been suggested in these pages that the Department of Defense (DoD) should “invest in new government owned production facilities, not simply the systems themselves.” This would be a mistake. Not only would it undo eight years of defense innovation efforts aimed at procuring commercial products for defense application, but it would misinterpret the historical role the US government has played in guiding emerging technologies such as aircraft, computers and transistors.

Replicator should be a triumphant moment for modern American industrial policy and free market economics — not an attempt to emulate China’s command economy over the proven value of American ingenuity.

The strength of the US defense industrial base relies on a symbiotic partnership between government and commercial industry that has grown and evolved over time. Prior to WWI, the US government owned production of all mission-critical technologies. It possessed the technical talent required to design the material it needed, and it owned the shipyards, armories and arsenals required to produce. On the rare occasion the government outsourced manufacturing, it used government-created designs and prototypes to determine winning proposals.

The importance of air superiority in WWII forced the US government to restructure production. American fighter planes couldn’t compete with German aircraft in the skies, nor could its anti-aircraft weapons protect against the Luftwaffe Blitz or Japanese Kamikazes. Previous Army and Air Force attempts at designing, prototyping and manufacturing aircraft failed, forcing the government to turn to a handful of commercial companies for assistance producing airframes, electronics and jet engines. Commercial collaborations established the modern aerospace industry, and companies like Boeing and Lockheed Martin. These partnerships also unlocked American air superiority. At the close of WWII the US government owned over 70 percent of aircraft and aircraft engines in the world.

As battlefield technologies advanced, the US government further relinquished control of the design and manufacture of technologies to the commercial sector. While government arsenals continued to mass-produce “low-tech” weaponry such as bullets, DoD sought “high technology” from the commercial sector to offset the superior numbers American forces faced on the Korean peninsula (1950-1953). The US pursued these technologies without a pre-defined outcome, concept of operation (CONOP) or timeframe. This commercial-led approach to technology created defense capabilities such as the “Defense Calculator,” IBM’s first production computer. Likewise, between 1948-1958, DoD (specifically the Army Signal Corps) opted to guide the development of transistors and serve as the primary consumer rather than the developer and manufacturer. The government provided R&D funding, subsidized the construction of manufacturing facilities and helped set standards to birth the transistor industry.

Today, the US government continues to play the role of investor and primary customer for domestically-produced semiconductors, when it serves the national interest. Last year Congress passed the Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (CHIPS Act). The CHIPS Act seeks to replicate the success of the commercial-led aircraft and transistor production model by supporting basic research, subsidies for manufacturing and equipment, and a commitment to purchase domestically-produced semiconductors.

From aircraft to computers and transistors to semiconductors, when it comes to bleeding-edge innovation, history is clear: DoD is most effective when it supports technology development by generating demand when it can, and investing when it must. Breakthrough discoveries do not require the government to establish its own production facilities to compete with industry.

The Fast-Follower Strategy: Eight Years of Restructuring American Defense Innovation

Then-Secretary of Defense Ash Carter reflected in 2015 that “[today] much more technology is commercial, and the technology base is global.” Now more than ever, the US looks to industry for future technologies to outpace its adversaries.

Over the last decade, DoD endeavored to create an innovation pipeline capable of transitioning commercial products into defense capabilities. It began in 2015 with the creation of Defense Innovation Unit Experimental (DIUx) to serve as the Pentagon’s principal liaison to commercial companies with defense-relevant technologies. More programs followed, each aimed at a piece of the commercial-defense technology pipeline, including: identifying companies (SOFWERX, AFWERX), experimenting with new technologies (Rapid Defense Experimentation Reserve), testing emerging capabilities (Accelerate the Procurement and Fielding of Innovative Technologies), and investing in capabilities that need a boost (National Security Innovation Capital, Office of Strategic Capital).

Former DIU Director Mike Brown called this the “fast follower strategy,” arguing that the military must quickly assess and field commercial technologies “where the military isn’t leading” rather than attempt to duplicate those capabilities. Capital markets responded to the strategy, and investors began deploying venture capital into the defense sector. There were more defense-related venture deals at a higher aggregate value in each of 2021 and 2022 than in all of 2010 through 2019 combined. In-Q-Tel founder Gilman Louie commented that he doesn’t “know of a single major fund out there that isn’t thinking about disruptive tech investing in the US.” Pentagon demand and capital markets are helping to create massive technology companies like Anduril, which had the fourth-largest fundraise of any US-based startup last year. The fast follower strategy is succeeding in turning commercial attention to defense.

Programs like Replicator Must Leverage Commercial Production

China, through a combination of IP theft, dramatic investment and state-owned enterprises, is challenging the US in many critical technology areas, and scaling fast. Replicator intends to leverage “attritable autonomous systems across all domains to help us overcome the PRC’s advantage in mass: more ships, more missiles, more forces.” For Replicator to succeed, DoD will need to streamline the programs and pathways it created in the past eight years by leveraging organizations like AFWERX, DIU, and the Strategic Capabilities Office to identify companies capable of doing the work; entities like OSC and its authorities to help them scale; and tools such as Commercial Solutions Offerings and/or Other Transaction Authority to contract to get the capability in the hands of the warfighter, fast.

DoD will also have to meet commercial providers halfway. While private companies have the talent and capability to produce what DoD needs, modifying commercial facilities and ramping up production requires the same level of sustained commitment that spurred the scaled production of aircraft, computers and transistors. Too tepid a signal, and investors may hedge or pull out. Too strong a move into in-house production, and the government will create a chilling effect on private industry.

Despite the steps taken to enable commercially-led defense innovation, most gains to date have been ad hoc. Replicator offers an opportunity to tie each disparate pieces together into a comprehensive innovation strategy, and a new model for the future. If Replicator can acquire, adapt and deploy commercial capabilities to the warfighter within 18-to-24 months, the Pentagon will be sending an unmistakable signal to capital markets and industry partners that their newfound focus on defense will not be for naught.

In this way, Replicator is about much more than drones: it is about validating the case for commercial companies to focus on defense. A commercially-led strategy will not only allow the best chance for success, it will also be essential for sustained private investment in other dual-use technologies that we will need to deter and win in the next chapter of geopolitical competition.

Jeff Decker, PhD, is managing director of Tech Transfer for Defense at Stanford University’s Precourt Institute of Energy and is a co-instructor of the graduate-level Hacking for Defense course. Noah Sheinbaum is a consultant, defense tech operator, and co-founder of Defense Tech Jobs, the jobs board for defense startups.

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