DoD to help trusted companies and investors meet to build industrial base

The Defense Department (DoD) is setting up a new organization to find trusted companies to pair with investors to build critical technologies that could be compromised by foreign influence.

The Trusted Capital Marketplace (TCM), announced by Undersecretary for Acquisition and Sustainment Ellen Lord, will give the United States a medium to build up vulnerable industrial bases.

“TCM will convene trusted sources of private capital with innovative companies critical to the defense industrial base and national security,” Lord said Friday at the Pentagon. “TCM will support small- and medium-sized companies to manufacture emerging defense and commercial technologies.”

The announcement comes as DoD’s concerns continue to grow about companies like Huawei and ZTE using their ubiquitous products to spy on the United States.

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DoD expects to roll out the entire program sometime in July and already has about 50 companies in mind that are trusted enough to join the marketplace.

“The first step is to set up a website infrastructure to bring providers of trusted capital together with businesses looking for capital infusion,” Lord said. “I’m constrained legally from introducing one company to one venture capitalist; however, what we can do is segment the marketplace and then put in companies that need capital infusions that we think have critical technology for us. We can also vet critical providers of capital.”

Lord said DoD put out a request for proposals two weeks ago through an other transaction authority to find a provider for the website.

“A lot of these companies are small innovative companies that don’t have the resources, sophistication or contacts to reach sources of capital,” Lord said. “What we are trying to do is enable that, so they don’t have to go through a lot of time and expense with legal firms to find out who is out there. Likewise, we have some incredible patriots who have come to us and said ‘We are interested in putting our money somewhere that will make a difference in our national defense.’ There are two willing sides there and there is an unmet need that somebody like government can provide the ecosystem to make it work.”

Lord said DoD is still deciding how much money it will put into the program, but she noted TCM will satisfy a requirement made by the 2018 defense authorization act to help secure the defense supply chain.

TCM isn’t the only thing DoD is doing to address the industrial base and supply chain issue for developing technologies.

“We are tightly coupled with the intelligence community to find out what is out there,” Lord said. “We will continue not to buy from sources that are not trusted. A prime supplier to the Department of Defense has responsibility to understand their supply chain. The security of that supply chain, whether its two or three levels down or six or seven levels down, is the responsibility of the prime. That’s why we are developing standards that are very, very clear.”

That ties into DoD’s “deliver uncompromised” initiative, which hopes to bear capabilities without critical information or technology being lost, stolen, denied, degraded, given away or sold. The initiative establishes security as a primary metric for acquisition. That puts more responsibility on industry to beef up cybersecurity and be more cognizant of its supply chain.

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