Defense spending on advanced technologies keep trending up

Defense Secretary Lloyd Austin gave a new task to the Defense Innovation Board to establish a national defense science and technology strategy.

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Earlier this year, Defense Secretary Lloyd Austin gave a new task to the Defense Innovation Board to establish a national defense science and technology strategy. It covers 14 critical topics such as quantum science, hypersonics, and artificial intelligence. Well, it turns out spending on these technologies has been rising. That’s according to analysis by Govini. Joining the Federal Drive with Tom Temin  with the latest, Govini’s vice president of strategy, Billy Fabian.

Interview transcript:

Tom Temin: And as we speak, the defense national strategy, the overall strategy for defense is just fresh off the presses. And you’re finding that it includes a lot of these critical technologies, critical needs that were identified by that strategy. And by the Defense Innovation Board.

Billy Fabian: That’s right. So we’ve actually had two, we’ve got the National Security Strategy, which is issued by the White House and signed by the President came out a few weeks ago. And then just yesterday, the national defense strategy, which is released by the Department of Defense and signed by the Secretary of Defense come out, and it does include these technologies, these 14 critical technology areas as a critical component to U.S. military advantage and competitiveness, particularly vis a vis China going forward.

Tom Temin: Interesting. These are identified as critical technologies, but in many cases, they’re not actually new technologies. Even artificial intelligence, which has really come out of the gates as a big effort does go back in some sense to the 1960s, ditto over hypersonics, directed energy lasers have been around forever. Military grade 21st century versions of all of this stuff, though, I guess we have yet to achieve.

Billy Fabian: I think that’s really the key is where the the antecedents go far back, it’s that these technologies are getting to a point in maturity, where they’re going to have potentially significant impact on the battlefield, in national competition. I mean, we’re already seeing some of this in the Ukraine with the use of autonomous and semi autonomous unmanned vehicles playing a huge role. So it’s that these these technologies will sort of define the future in ways that they haven’t previously.

Tom Temin: Because it seems like whatever you read, the idea that missiles are going to be the main way that wars are fought, as opposed to opposing armies. I mean, Russia’s army, not much left at this point. And so what they’re using is missiles of all sorts. And so there’s missiles to counter missiles, and so on. Same thing I’ve been reading about should there be some type of conflict over Taiwan? It’s likely to be missile, because missiles can keep ships at bay. So you need missiles to keep out the missiles that keep the ships at bay and so on. A lot of these things are missile related, then?

Billy Fabian: Yeah, I mean, so certainly, I think missiles will be and other smart munitions will be a huge part of any future conflict. But it’s not just the the actual munition itself. It requires the ability to sense the environment, identify targets, to get that information back to somewhere where it can be processed, parsed, and then to be able to make a decision to act and then effectively employ that ammunition against it all, like on a rapid, rapid timescale. And I think, you know, interesting in Ukraine, what you’re seeing is the use of sort of newer emerging technologies like drones to do the sensing, but what they’re sending information back to you is conventional artillery systems that have been around in some form or fashion for centuries. Sure, a combination of high tech and traditional conventional capabilities, where together the sum is greater than the parts.

Tom Temin: These items doesn’t necessarily represent gigantic levels of dollars, these new and emerging technologies, the hypersonics, the artificial intelligence, I mean, the big dollars are still on the metal platforms that carry all these things. And so you can be deceived that we’re not making progress by what looks like small numbers in defense context. Fair enough?

Billy Fabian: I think that’s fair. So there certainly has been rising spending by the U.S. government in general, and the Department of Defense in particular, on these emerging technologies, you know, artificial intelligence being a prime example. But the dollar numbers right are much smaller as compared to large systems, it doesn’t mean they’re not making progress. You know, I think the challenge going forward will be to take the fruits of that spending, and to scale them to integrate them into the weapon systems to make them so they’re actually in the hands of the warfighter, as opposed to just a research project or a prototype that they actually turn into real capabilities.

Tom Temin: We’re speaking with Billy Fabian, he’s vice president of strategy at Govini. And just review for us what types of spending patterns you have identified, Govini has identified in some of these emerging technologies.

Billy Fabian: So it’s interesting. So we looked over the last five years at all U.S. government spending via contracts, grants, other transaction authorities, things like that. And what we saw is that spending on these 14 technology areas has essentially doubled, not quite but almost doubled over the last five years. However, a good chunk of this spending in FY ’20 And FY ’21 was related to COVID research on vaccines, on treatments on things like that, you know, billions of dollars, which, is a good thing, and certainly something that the government should be doing when you when you take away the COVID spending, and just look at sort of the spending across these technologies, areas outside of that  there’s sort of  steady growth over the last five years. Not quite, where it’s doubled in five years, but but still steady growth.

Tom Temin: Because in many cases, the technologies are known, they know how to make a laser beam that can cut through steel, I have a sample hanging in my studio. The trouble is integrating it into the platforms where it would be useful. So it’s not so much a technological development. But how do we get this laser beam to be launched from something that fits inside a tank, a ship or on a drone? It’s almost engineering now, more than basic research?

Billy Fabian: I think it depends a bit on which of the sort of technology areas you’re talking about. Certainly, in some cases, you’re spot on, Tom. In other cases,  the technology is much more niche. And so it’s still in an earlier phase. In fact, when the Department of Defense talks about these, they generally break them down into a bit of like, where they are in that development process. You  group the technologies that way.

Tom Temin: And what’s your sense of where we’re still at the most basic level with a lot of learning to do about the technology itself?

Billy Fabian: Yeah, I think probably quantum that’s the quantum sciences, quantum computing. That’s probably the probably the most nascent of the group.

Tom Temin: Right. And where are we most advanced? Probably directed energy, maybe, and hypersonics?

Billy Fabian: Yeah, perhaps. But I think those are two. In fact, the Department of Defense talks about those are sort of the ones with direct military application as the ones that are most focused on military capabilities and less dual purpose. There’s certainly there’s prototypes of directed energy weapons, prototypes of hypersonics. Those are moving moving along quite quite a bit, some of the sort of advanced communication type things are relatively relatively advanced, too.

Tom Temin: And in the last round of major technological leap forward for the United States, which was probably about 50 years ago, and stealth technologies came in, when guided missiles, true precision guidance, which had been a dream for 50 years before that. The other nations didn’t have that stuff. But nowadays, it seems like the technology of these latest ones are much more diffuse around the world. And China talks about their lasers and their hypersonics, et cetera, et cetera, their artificial intelligence and quantum. So what’s your sense of what the nation has to do? So that the next adoption of these latest things really does give us an advantage that can last for awhile?

Billy Fabian: Yeah, I mean, I think  there’s two interesting things that are different from the Cold War, which some of those technologies that you reference,  were developed because of the Cold War even though some didn’t come to fruition until after its conclusion is one. The Soviet Union, except in a few niche areas was never really a technological fear of the United States. We always had a distinct technological advantage. Also, that the competition was really about who could develop the best weapons. And some technologies that were developed to make those weapons that had civilian application. The difference now is one, the technologies are much more diffuse. China is much more of a technological peer than the Soviet Union ever was. And many of these technologies are dual use, and are the cutting edge, the state of the art is being driven by the commercial sector. And the challenge for the United States is to readily adapt those technologies that the commercial sector is producing for military use or defense use.

Tom Temin: Yes. And one of the charges from Lloyd Austin back in February, I think it was, to the Defense Innovation Board was to examine how well the military works with venture backed companies. The idea being that those are the startups and they have the latest and greatest ideas. They talk about it a lot. Do we know how well the Defense Department has been able to bring in and inculcate those companies and their technologies?

Billy Fabian: Yeah, I think it’s it’s there has been some progress. But it remains a significant challenge, as the Secretary noted, which is why he gave the Defense Innovation Board this task. There’s been a lot of laudable efforts through things like tech accelerators and incubators, the use of tools like other transaction authorities to try and reach these companies. But I don’t think we’ve done well enough. So looking at these advanced technologies, when we looked at all the vendors that government has been partnering with on these, you know, only 4% were either venture capital backed or private equity backed which is a pretty a pretty small number if if these are indeed the parts of the U.S. economy that are the most innovative and are leading the way on these technologies.

Tom Temin: Of course, if the U.S. venture backing 99% of the companies on how to deliver food better, or some something like that, probably, maybe 4%. That’s the whole field that could help the Defense Department.

Billy Fabian: Perhaps I think there’s probably quite a bit of places like in artificial intelligence for one, where the applications that they are developing for the civilian sector with some modification would be be useful for the military. Not necessarily a missile, but in things that help you process information, make decisions, conduct activities more autonomously, those types of things, right, have a lot of utility.

Tom Temin: And now it looks like we’ll be able to kill the enemy with autonomous electric tweets. Billy Fabian is vice president of strategy at Govini.

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