As one of the first concrete steps in its much-touted plan to build tighter bonds with Silicon Valley, the Pentagon said Friday that it will become the largest investor in a new research and manufacturing consortium that hopes to create a new generation of flexible electronic components.

In what Defense Secretary Ashton Carter called a “historic” occasion, DoD said it would invest $75 million in a new Flexible Hybrid Electronic Institute. Its main mission will be to develop a new breed of materials that would allow a wide array of electronics and sensors to be embedded into or attached to everyday items, potentially revolutionizing the hardware used in a wide range of information technologies.

“Flexible hybrid electronics have enormous potential for our defense mission,” Carter said Friday at NASA’s Ames Research Center near Mountain View, California. “For example, our industry partners will be able to shape electronics to things after decades of having to do it the other way around. By seamlessly printing lightweight, flexible structural integrity sensors right onto the surfaces of ships and aircraft, for example, or folding them into cracks and crevices where rigid circuit boards and bulky wiring could never fit, we’ll be able to have real-time damage reports. Our troops will be able to lighten their loads with sensors and electronic gear embedded in their clothing, and wounded warriors will benefit from smart prosthetics that have the full flexibility of human skin. But the reality is we don’t know all the applications this new technology will make possible. That’s the remarkable thing about innovation, and that’s another reason why America and our military must get there first.”

Carter characterized DoD’s new investment as a emblematic of its aspirations to rejuvenate a relationship the military once enjoyed with the U.S. high-tech sector, when Defense investments in technologies like microprocessors, GPS and network technology eventually became foundational elements of commercial IT and formed the basis for the Internet itself.

He told reporters after his Ames speech that he is looking for longer-term remedies to DoD’s larger acquisition process, which has, in effect, built a wall between the department and commercial innovators over the last several decades.

“But I’m also in a hurry, so I’m going to dig some tunnels in that wall,” he said. “And how do you do that? Well, you make the department more agile in how it invests in companies, and you create internships and externships, ways that people from the Valley can spend a little time working national security problems and people from the government can spend some time learning how the tech industry works .”

The Flexible Hybrid Electronic Institute is the latest in a series of 15 public-private “manufacturing hubs” the Obama Administration announced it wanted to create across the country in 2013 as part of a Nationwide Network for Manufacturing Innovation, and is the fifth such institute sponsored with DoD funds.

Its day-to-day operations will be run by the leaders of a consortium called the FlexTech alliance, which will be based in San Jose, California The group is made up of 160 organizations, including universities, nonprofits, and companies including large names like Apple, Lockheed Martin and Xerox. Together, they raised $96 million in non-federal funds to pay for the effort and won the DoD funding as part what the Pentagon says was a “highly competitive” bidding process with entrants from across the country.

The San Jose City Council also agreed to kick in $400,000 from the city’s own coffers, said Mayor Sam Liccardo.

“We went to the council and said we wanted to commit $400,000 for something we have no idea we’re going to win. You can imagine it took some persuading,” he said. “But we had a council that got it: they understood the opportunity to leverage that, along with federal and private funds into expanding our manufacturing in Silicon Valley again. We’ll employ thousands of residents who’ve been left behind in the great boom our region’s been seeing recently.”

Carter said the private sector’s willingness to put its own money into a technology that’s still over-the-horizon is partially a testament to the potentially broad applications of flexible electronics outside the Defense sector, if and when DoD shows that the technology can work.

“Smart bandages that can analyze biomarkers in a patient’s sweat will help doctors catch infections earlier. Stretchable sensors can be put on cars, bridges, and buildings to help keep people safe,” he said. Flexible medical diagnostics for x-rays and breast cancer tests will be more accurate and less painful. And instead of tracking athletic performance with bulky devices on our wrists, flexible electronics coupled with new, revolutionary fibers and textiles will let us embed washable, wearable, featherweight sensors in our clothes, giving us an even clearer picture of our health and fitness. This new partnership is only the latest of what we’re doing to rebuild the bridge between the Pentagon and the technology community.”

Carter has made that bridge a major priority since his first days as Defense Secretary. In April, he announced the standup of a new organization called Defense Innovation Unit-Experimental, also based at Moffett Field. DIU-X is now operational, and on Friday, Carter led its first corporate roundtable.

Rep. Zoe Lofgren (D-Calif)., who represents part of Silicon Valley, said the rebuilding effort is welcome.

“It’s true that there has been a lot of suspicion here in the Valley. Most of that related to certain NSA activities,” she said. “But this is a new day. It doesn’t relate to encryption, it relates to manufacturing. We need to celebrate it.”

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