The new U.S. National Defense Strategy is a road map for our military’s new focus on Russia and China, who are challenging the United States military’s primacy by rapidly leveraging emerging technologies.
In the Air Force, we are meeting that challenge in many ways, to include shortening the timeline to develop new technologies, rekindling a culture of innovation and rethinking how we approach future conflict. And as we plan for deterring and, if need be, defeating future adversaries, it is essential that we build much greater flexibility into how we buy and develop the weapons necessary to win.
Although it does not get a lot of attention, one important issue going forward will be how we treat intellectual property rights in future weapons purchases. Historically, defense contractors have held the IP rights on a wide variety of weapons, from fighter planes to missiles to remotely piloted aircraft. Holding IP rights typically gives the producers of military systems near-exclusive control over technology upgrades during the several decades that many defense weapons remain in the inventory.
That business model has provided consistent profitability for defense contractors, who often underbid the front-end price on large weapons contracts, knowing that they will likely make up the shortfall on the back end in the “sustainment,” or upkeep, of the weapons. More often than not, these cases of “vendor lock” prevent other companies from competing to upgrade weapons or systems. With this problem in mind, Under Secretary of Defense Matthew Donovan chartered a cross-functional team 18 months ago to identify better IP strategies.
The reality is that the Air Force can simply no longer afford to do business this way if we are to stay ahead of the Russians and the Chinese, who are innovating rapidly in areas like quantum computing, hypersonic flight and artificial intelligence. Congress has recognized the necessity to build in more flexibility, and it recently passed legislation to provide more leeway in customizing intellectual property strategies for the military.
Changing our current weapons acquisition model will be difficult but not impossible. Our goal is not to bankrupt or do harm to the U.S. industrial base. Rather, we recognize that finding a new model, one in which defense companies can profit and the Air Force benefits from new kinds of flexibility, can be a win-win. One idea already under discussion is paying more for new weapons up front and using the intellectual property rights on the back end to greatly reduce our sustainment costs.
Fully, 70 percent of any weapon’s overall cost is tied up in sustainment after it is fielded. Imagine if instead of relying on one company to upgrade a complex system, in the future we could unleash the creativity of small businesses, startups and others who have historically been locked out of contributing innovative ideas to defense programs.
The power of this approach is perhaps best illustrated by the iPad, introduced by Apple in 2010. Apple was visionary in allowing any company to build apps for its tablet, freeing up Apple engineers and designers to focus on making better iPads. The result was a transformative technology made better by the inputs of thousands of companies that developed unique apps from Google Earth to Netflix.
We believe that same ethos can be introduced into military weapons buying. Imagine a theoretical missile with open architecture and open IP rights. As we think about improving that missile over time, any company can now compete to build a guidance system, software or a target seeker. Such a model would reduce costs, expand the industrial base and in all likelihood make our weapons better.
Make no mistake: Defense contractors will remain viable, and the Air Force will work with them as we implement a smart IP strategy. Together we will ensure we protect ourselves from foreign exploitation and protect our rights to technical data and software in order to remain the world’s leader in artificial intelligence, additive manufacturing and predictive maintenance as we drive down our sustainment costs. That may mean paying more up front for some weapons or structuring deals much more creatively. But in the end, we believe there is a path for industry, the government and the American people to benefit from greater flexibility and security. The time is now to start trailblazing.
Thomas Ayres is the general counsel of the U.S. Air Force.
