Silicon Valley is pulling the Pentagon to give more funds to defense start-ups
Silicon Valley venture capitalists and tech companies have written an open letter to Pentagon chief Lloyd Austin to pressure the US government to overhaul the procurement system
Silicon Valley venture capitalists urge Pentagon chief to reform defense procurement.
The founders and investors of Silicon Valley defense technology companies on Friday urged the US government to overhaul the procurement system from private groups in an open letter addressed to Defense Secretary Lloyd Austin. Breaking Defense brings it back.
“The move is an attempt to put more pressure on the government to open up its huge Pentagon budget, worth $886 billion for 2024, to start-ups backed by major Silicon Valley investors,” notes the Financial Times .
Large government contracts of the size needed to produce complex systems remain rare in the United States. Many start-ups have failed because of the long gap – dubbed the "valley of death" – between the development of a prototype and the award of a government contract, reports the American newspaper.
That is why, according to the signatories, without defense procurement reform, the Pentagon risks rapidly losing ground on the "technological battlefield".
All the details.
THE LETTER TO THE HEAD OF THE PENTAGON FOR THE REFORM OF DEFENSE PROCUREMENT
The letter suggests the government's process for purchasing military technology is "outdated" and has "drastically limited" its access to state-of-the-art defense systems and weapons.
“Although most of the critical technologies being developed today reside in the commercial sector, they are not being exploited at the speed and scale needed to maintain an edge over our competitors,” reads the missive published by Breaking Defense .
THE PROPOSAL
The signatories propose a number of recommendations to reform defense procurement.
First, the creation of a $250 million “bridging fund” to help companies further develop technology that has been proven to work, and $20 billion in additional spending on corporate R&D projects.
After that: an enhanced Defense Innovation Unit, the Pentagon embassy in Silicon Valley; an improved user interface for the federal procurement website, SAM.gov; relaxed cost accounting rules for contractors and more generous grants through the Small Business Innovation Research program.
The adoption of these changes – says the letter – "will greatly improve the ability of Silicon Valley to provide the best technologies in the world to the military."
ANDURIL, PALANTIR AND APPLIED INTUITION AMONG THE 13 SIGNATORY
Signatories include Lux Capital, General Catalyst, Floodgate, Kleiner Perkins, Shield Capital, Haystack, Snowpoint Ventures, Hermeus, Founders Fund, and Primer. as well as the heads of some of the most solid startups in the sector, such as Anduril,Palantir and Applied Intuition.
The latter, leader of the initiative, is a Silicon Valley company that has begun to create software for self-driving cars. It later expanded to work on the Army's Robotic Combat Vehicle program and Air Force sensors. Based in Mountain View, Calif., Applied has pushed to raise his profile in Washington, working with the Atlantic Council's reform committee, Breaking Defense recalls.
COMPARISON OF MARKET VALUES
But with a market valuation of $3.6 billion, Applied is one of the smaller companies compared to the other co-signatories, Breaking Defense points out. Anduril is valued at $8.4 billion, Palantir at $29.7 billion. Both already have significant defense assets in their portfolios.
Venture capital firm General Catalyst reportedly manages about $33 billion in assets. All told, the signatory tech companies have a total market value of at least $42 billion. Venture capitalists have at least $50 billion in assets under management. "In short, these are companies with the financial clout and high-tech capabilities to get the attention of the Pentagon and Congress," Breaking Defense commented.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/la-silicon-valley-strattona-il-pentagono-per-dare-piu-fondi-alle-start-up-della-difesa/ on Tue, 27 Jun 2023 06:16:32 +0000.