Reorganizing the DoD to Deter China and Win in the Ukraine – A Road Map for Congress

This article previously appeared in Defense News. It was co-written with Joe Felter, and Pete Newell.

Today, the U.S. is supporting a proxy war with Russia while simultaneously attempting to deter a China cross-strait invasion of Taiwan. Both are wakeup calls that victory and deterrence in modern war will be determined by a state’s ability to both use traditional weapons systems and simultaneously rapidly acquire, deploy, and integrate commercial technologies (drones, satellites, targeting software, et al) into operations at every level.

Ukraine’s military is not burdened with the DoD’s 65-year-old acquisition process and 20th-century operational concepts. It is learning and adapting on the fly. China has made the leap to a “whole of nation” approach. This has allowed the Peoples Liberation Army (PLA) to integrate private capital and commercial technology and use them as a force multiplier to dominate the South China Sea and prepare for a cross-strait invasion of Taiwan.

The DoD has not done either of these. It is currently organized and oriented to execute traditional weapons systems and operational concepts with its traditional vendors and research centers but is woefully unprepared to integrate commercial technologies and private capital at scale.

Copying SecDef Ash Carter’s 2015 strategy, China has been engaged in Civil/Military Fusion employing a whole of government coordinated effort to harness these disruptive commercial technologies for its national security needs. To fuel the development of technologies critical for defense, China has tapped into $900 billion of private capital in Civil/Military Guidance (Investment) Funds and has taken public state owned enterprises to fund their new shipyards, aircraft, and avionics.  Worse, China will learn from and apply the lessons from Russia’s failures in the Ukraine at an ever increasing pace.

But unlike America’s arch strategic rival, the US to date has been unwilling and unable to adapt and adopt new models of systems and operational concepts at the speed of our adversaries. These include attritable systems, autonomous systems, swarms, and other emerging new defense platforms threaten legacy systems, incumbent vendors, organizations, and cultures. (Until today, the U.S. effort was still-born with its half-hearted support of its own Defense Innovation Unit and history of lost capabilities like those that were inherent the US Army’s Rapid Equipping Force.)

Viewing the DoD budget as a zero-sum game has turned the major defense primes and K-street lobbyists into saboteurs for DoD organizational innovation that threaten their business models. Using private capital could be a force multiplier by adding 100’s of billions of dollars outside the DoD budget. Today, private capital is disincented to participate in national security and incentives are aligned to ensure the U.S. military is organized and configured to fight and win the wars of the last century.  The U.S. is on a collision course to experience catastrophic failure in a future conflict because of it. Only Congress can alter this equation.

For the U.S. to deter and prevail against China the DoD must create both a strategy and a redesigned organization to embrace those untapped external resources – private capital and commercial innovation. Currently the DoD lacks a coherent plan and an organization with the budget and authority to do so.

A reorganized and refocused DoD could acquire traditional weapons systems while simultaneously rapidly acquiring, deploying, and integrating commercial technologies. It would create a national industrial policy that incentivizes the development of 21st-century shipyards, drone and satellite factories and a new industrial base along the lines of the CHIPS and Innovation and Competition acts.

Congress must act to identify and implement changes within the DoD needed to optimize its organization and structure. These include:

  1. Create a new defense ecosystem that uses the external commercial innovation ecosystem and private capital as a force multiplier. Leverage the expertise of prime contractors as integrators of advanced technology and complex systems, refocus Federally Funded Research and Development Centers (FFRDCs) on areas not covered by commercial tech (kinetics, energetics, nuclear and hypersonics).
  2. Reorganize DoD Research and Engineering. Allocate its budget and resources equally between traditional sources of innovation and new commercial sources of innovation and capital. Split the OSD R&E organization in half. Keep the current organization focused on the status quo. Create a peer organization – the Under Secretary of Defense for Commercial Innovation and Private Capital.
  3. Scale up the new Office of Strategic Capital (OSC) and the Defense Innovation Unit (DIU) to be the lead agencies in this new organization. Give them the budget and authority to do so and provide the services the means to do the same.
  4. Reorganize DoD Acquisition and Sustainment. Allocate its budget and resources equally between traditional sources of production and the creation of new from 21st-century arsenals – new shipyards, drone manufacturers, etc. – that can make 1,000s of low-cost, attritable systems.
  5. Coordinate with Allies. Expand the National Security Innovation Base (NSIB) to an Allied Security Innovation Base. Source commercial technology from allies.

Why Is It Up To Congress?

National power is ephemeral. Nations decline when they lose allies, economic power, interest in global affairs, experience internal/civil conflicts, or miss disruptive technology transitions and new operational concepts.

The case can be made that all of these have or are happening to the U.S.

There is historical precedent for Congressional action to ensure the DoD is organized to fight and win our wars. The 1986 Goldwater/Nichols Act laid the foundation for conducting coordinated and effective joint operations by reorganizing the roles of the military services, and the Joint Chiefs, and creating the Joint Staff and the combatant commands. US Congress must take Ukraine and China’s dominance in the South China Sea as call for action and immediately establish a commission to determine what reforms and changes are needed to ensure the U.S. can fight and win our future wars.

While parts of the DoD understand we’re in a crisis to deter, or if that fails, win a war in the South China Sea, the DoD as a whole shows little urgency and misses a crucial point: China will not defer solving the Taiwan issue on our schedule. Russia will not defer its future plans for aggression to meet our dates.  We need to act now.

We fail to do so at our peril and the peril of all those who depend on U.S. security to survive.

10 Responses

  1. The war with China is not one of the south China sea. It needs to be one that is focused on the overthrow of the Hegemonarchy of the Xi-CCP regime of “Beijing”, and for it to be replaced with the Government of Taiwan. This horsing around in the seas and bogs of China is a a non-starter. Ditto for Russia. . .

  2. Do I understand correctly that in the event of a China-US conflict, the Middle Kingdom would now have a better chance of gaining dominance?

  3. I honestly don’t see any serious thinkers or leaders in the US government or military at this level of engagement. Our industrial base has atrophied to the point that the capability building new offensive or defensive weapons is uncertain at best. With $32 trillion in national debt, it will be difficult to finance an all-out war in the Pacific.

    • Which is why the need to limit that war to the elimination of the Xi-CCP Hegemonarchy in Beijing, that sits less than 100 miles off the coast.

  4. Business strategy and competition through innovation is great, but why does the US have to take this to the level of war. What has the political dispute between China and Taiwan got to do with the US? Or is silicon / tech manufacturing the “new oil”? To couch this in terms of war with China or even being responsible for deterring China (that mostly seems to be responding to US visits to Taiwan) seems to me like the US wants to build and maintain its global hegemony. Play business – make your own silicon / tech manufacturing industry – not war!

    • Corporate US wants the availability of compliant coolie labour in the off-shore, so that US corporations can act like a black box for capital that relies on close to zero assets. A situation that Joe Public also likes, since they get to play the stock market. The same applies to the UK, so the US cannot claim any exceptionalism, other than unparalleled magnitude 🙂

  5. It’s true: “Using private capital could be a force multiplier by adding 100’s of billions of dollars outside the DoD budget”. And I have said the same about “tiered and unimaginative” approaches to innovation, be it Technology Transfer Offices at Universities or R&D grants – making North America fall behind countries like Korea, Japan, Germany, Israel, and more…

    But there is a very simple solution to tap the 100’s of billions of dollars outside the DoD budget by allowing the DOD to act as a gigantic CVC… Just imagine, if DoD invested in Microsoft 20 years ago and owned 1% of MSFT’s equity, it would have been worth today… $21 billion.

    And the same applies to taking equity stakes in Defense Contractors – large and small. Not only would DoD investments guarantee purchase orders to such companies – they would also serve as a magnet and attract massive amounts of private capital…

    Demonstrating TRACTION is extremely important to Venture Capital. And as an investor, DoD offers the best possible traction to the defense industry – while also benefiting from the market capitalization of its investees in the future.

    I call it The Push and Pull strategy that is needed to bootstrap defense excellence. The DoD’s cash for the development of critical innovation is the Pull. And the purchase orders that follow – are a significant Push behind it.

    Just look at the Norwegian Push/Pull. Simply put: Norway wouldn’t lead the world in the number of EVs owned per capita just by PUSHING the sales of EVs. It also created a tremendous PULL by offering FREE charging, FREE parking, and FREE logistic platforms using AI to optimize the search for the nearest charging station…

  6. This is a very clear summary of the current state and a compelling call to action. What is less clear are what are the first steps that need to be taken immediately to being to turn the US military ship in a different direction and establish some degree of urgency. I look forward to the next update.

Leave a Reply

%d bloggers like this: