During the Cold War, defense money funded much of Northern California’s nascent tech industry, and the military worked closely with universities and companies to develop electronics, microwave devices, semiconductors, and spy satellites. But the military did not stay connected to the venture capital–fueled tech industry that emerged in Silicon Valley in the 1980s. Until recently, the Pentagon didn’t see this as a liability: The United States enjoyed unmatched technological superiority on the battlefield. That advantage, though, is now dissipating. China and Russia have invested heavily in new systems. ISIS is using hobby-style drones for reconnaissance. Rebels in Syria are using iPads to aim mortars. Equipment like this was once prohibitively expensive. Now you can get a lot of what you need off the shelf. ... As much as Defense Department officials say they want better access to commercial technology, the way the Pentagon functions often makes this impossible. The military has spent decades configuring itself to work with defense contractors to build complicated systems that take years to produce, like fighter jets and aircraft carriers. With its cumbersome rules and processes, the Department of Defense is not set up to race alongside small, agile companies. ... The Pentagon is beginning to realize it must operate differently. Some of the most advanced work in computing, big data, cybersecurity, energy, robotics, and space — all areas the military draws on — is being done by tech companies, not traditional defense contractors. Last year, the Pentagon kicked off a large-scale effort called the Defense Innovation Initiative.
The DOD of course has a long history of jump-starting innovation. Historically, it has taken the megafunding and top-down control structures of the federal government to do the kind of investing required to create important technology for the military. Digital photography, GPS, the Internet itself—all were nourished by defense contracts before being opened up to the private sector, which then turned them into billion-dollar industries. ... Now the flow has reversed. Defense has been caught in the throes of the same upheaval that has disrupted legacy industries, unseated politicians, and upended global dynamics. In the digital age, innovation more often comes from smaller entrepreneurs than from the hierarchical structures that were the hallmark of 20th-century government and business. ... Defense contracting is notorious for bureaucratic lethargy and technological backwardness. And executives are leery of appearing to be too close to the US government while they seek to expand overseas. Put bluntly, they don’t want to alienate potential customers. ... The Valley is a place where brainpower is its own kind of currency, and Carter, who holds a PhD in theoretical physics from Oxford, made an impression on the locals. ... somehow Carter must instill the seeds of a cultural and logistical overhaul that will make the modern military-industrial complex nimble enough to provide the kind of innovation and support its 21st-century fighting force needs.
Hikmatullah Shadman, an Afghan trucking-company owner, earned more than a hundred and sixty million dollars while contracting for the United States military; for the past three years, he has been battling to save much of his fortune in a federal court in Washington, D.C. In United States of America v. Sum of $70,990,605, et al., the Justice Department has accused Hikmat, as he’s known, of bribing contractors and soldiers to award him contracts. Hikmat has maintained his innocence, even as eight soldiers have pleaded guilty in related criminal cases. Several members of the Special Forces who have not been accused of wrongdoing have defended him. In a deposition, Major Jerry (Rusty) Bradley, a veteran Special Forces officer, said, “The only way to right a wrong of this magnitude is to be willing to draw your sword and defend everything that you believe in.” ... Hikmat, who is in his late twenties, looks disarmingly young and gentle. Slim, with a high brow that he often furrows, he countered the charges against him in grave, deliberate English. “The people who did this investigation were sitting in air-conditioned rooms,” he told me. “They don’t know what was happening in the field.” He offered to explain how he had made his fortune. “I was part of the Special Forces family,” he said. “I was trained by them.” ... Before the Americans came, Hikmat lived with his father, a schoolteacher; his mother; and five siblings in a four-room mud-walled house in one of the oldest parts of Kandahar City, in southern Afghanistan. In the summer of 2001, Hikmat was fourteen years old, and he and his friends chafed at the narrowness of life under the Taliban. No one had a telephone, televisions were banned, and there was rarely any electricity. ... He had started a side business selling fruit and soft drinks to the base, and that winter he quit his job as an interpreter in order to work on the business full time. Hikmat told me that a sergeant major at the Special Forces headquarters helped him register it at the main U.S. base, known as Kandahar Airfield, or KAF. On February 25, 2007, Hikmat signed a “blanket purchase agreement” with the U.S. military, an open-ended contract for trucking services. He started with a single rented truck.
While Donald Trump was promising last year to drain the swamp in Washington, a long, quiet battle to drain an especially entrenched, money-wasting corner of that morass was reaching a surprising turning point in a courthouse that sits a few hundred feet from the White House. ... Only days before the presidential election, a judge in the U.S. Court of Federal Claims ordered the Pentagon to reverse course in a major procurement bidding process. The decision marked the dramatic end of a long first round in what was an unusually bitter and consequential fight for this obscure court. As of press time, the ruling was being appealed through the usual legal channels. ... the dispute’s outcome may now be determined not by the courts, but rather by President Trump and some of his administration’s most powerful players. They are all connected to a controversial company that began an unprecedented battle eight years ago to crash a long-running, exclusive party involving the annual dispensing of hundreds of billions of taxpayer dollars. ... The Army chose instead to favor an updated version of a deeply flawed system created by a team of defense contractors that epitomizes the Washington establishment: Raytheon, Lockheed Martin, Northrop Grumman, and others. Over 16 years the system had produced cascading cost overruns, and bills of nearly $6 billion. The result had been a platform that troops in the field and Government Accountability Office auditors agreed was so clunky to use, when it worked at all, that it often sat unplugged and shoved under desks at various outposts. ... Yet the requirements for the new version disqualified what Philippone believed was Palantir’s proven, off-the-shelf platform, which could be supplied to all the troops for about $100 million a year.