How the Defense Industry Price Gouges the Pentagon

“THE NATIONAL INTEREST” By Julia Gledhill

“The distillation of the defense industry as the number of prime military contractors shrank from over fifty to just five, bodes poorly for both the military and taxpayer because it produces waste, not to mention a strong profit incentive for war”

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“As a matter of practice, military contractors have overcharged the Pentagon for years—at the expense of both taxpayers and the military.

However, several members of Congress are working to end the practice. Senators Warren (D-MA), Braun (R-IN), and Grassley (R-IA) teamed up with Reps. Garamendi (D-CA) and Deluzio (D-PA) to introduce legislation that addresses the legal loopholes that enable military price gouging.

Acquisition experts understand these loopholes well, but unfortunately, most lawmakers are still unaware of how common it is for contractors to overcharge the military. Without a better understanding of the true scale of military price gouging, Congress is unlikely to pass legislation to prevent it.

That’s why Congress should approve the final defense policy bill Rep. Doggett’s (D-TX) provision to investigate potential overcharging by sole-source suppliers of military products and services. Due to unchallenged market power, sole-source contractors are well positioned to profiteer. Doggett’s provision would establish a panel to review sole-source military contracts and “determine whether the Department of Defense paid fair and reasonable prices.” By focusing on sole-source contracts, the panel would shine much-needed light on the issue of military price gouging writ large, the scale of which is near impossible to discern because so much of it is legal.

Over the course of decades, military contractors have consolidated and harnessed market power to slowly obscure military price gouging. Industry consolidation began when the Cold War ended, and the Clinton administration slashed defense spending. However, as Richard Loeb—former Executive Secretary and Counsel of the Cost Accounting Standards Board in the Office of Management and Budget—has pointed out, the administration simultaneously catalyzed an era of “acquisition reform” to protect contractor profits even as defense spending plummeted and the number of prime military contractors shrank from over fifty to just five. Merger mania has continued, further concentrating market power among the few. Military contractors wield that power on Capitol Hill, lobbying Congress to gradually chip away at acquisition laws designed to protect the government from unfair pricing schemes on military contracts. In so doing, lawmakers have left the Pentagon in the dark about contract negotiations with the defense industry.

Acquisition reform and industry consolidation have helped contractors overbill the military in pursuit of excess profits. As a result, military contractors have overcharged the Pentagon to the tune of hundreds of millions of dollars on a single program, generating nearly 40 percent in excess profits. Indeed, a CBS investigation last year revealed that the Pentagon saved $550 million on the Patriot PAC-3 missile after conducting a 2015 cost review of Lockheed Martin and Boeing’s previous work on the program. Both contractors are repeat offenders, and they have long been among the top five prime contractors dominating the defense industry. The Pentagon’s internal watchdog exposed Boeing for inflating prices on spare parts in 2013 and 2011. In one case, the company charged over 177,000 percent above the fair and reasonable price for a helicopter spare part—$71.01 for a tiny metal pin worth 4 cents at the time. The trend continues. Just last month, two Lockheed subsidiaries agreed to a $70 million settlement with the Navy for doing the same thing—inflating prices on spare parts.

The Pentagon can’t negotiate reasonable prices with military contractors because it doesn’t have sufficient bargaining power. Contractors are often exempt from providing the Pentagon with “certified cost or pricing data.” Without this information, the Pentagon has little idea what companies’ costs are and, thus, what their profit margins might look like. Contracts may be valued below the mandatory disclosure threshold. Contractors may also produce a product that’s considered commercial—and theoretically, price competitive. However, the statutory definition of “commercial” is overly broad, encompassing products that aren’t sold to the public and sometimes never have been. Lawmakers expanded the commercial definition and raised the mandatory disclosure threshold for certified data at the behest of industry and under the guise of cutting red tape.

Without legal requirements for certified data, the Pentagon may ask contractors for historic or uncertified cost and pricing data. Yet, the Pentagon has few tools to ensure that this data meets requisite standards; among them, that they include “the minimum information necessary to permit a determination that the proposed price is fair and reasonable.” According to the Pentagon, current statutory and regulatory requirements discourage officials from requesting uncertified data. Instead, contracting officers often rely on historical cost and pricing data. Still, according to the Pentagon Inspector General, the department cannot evaluate price reasonableness “based solely on historical price comparison.” This is particularly concerning given the watchdog’s extensive analysis of contract pricing in recent years, which shows that price analysis methods like historical cost comparison enable “sole source contractors to earn excess profits without detection by contracting officers.” Effectively, military contractors can provide the Pentagon with any cost figures without consequence—even if they give zero indication of how reasonable current prices are. In other words, contractors can price gouge the military legally, likely under the government’s radar.

Still, the defense industry appears to resist almost any attempt by the Pentagon to evaluate contract price reasonableness. “Sweeping” is a process through which contractors overwhelm the Pentagon with cost and pricing data that was “reasonably available at the time of price agreement” but submitted after the fact. According to Senator Warren, contractors often sweep the Pentagon after price agreements and before contract awards to absolve themselves of the liabilities associated with breaking acquisition law and potentially “to hide data that might give the [Pentagon] a better price.” In other cases, contractors outright refuse to provide the Pentagon cost and pricing data, claim they can’t share it, or delay the provision of such data to the extent that the Pentagon may blindly agree to a contract price due to time sensitivity. So, the Pentagon doesn’t just struggle to obtain certified cost and pricing data. It’s a challenge to get any cost and pricing data—even from sole-source contractors, which are relatively uninhibited by the forces driving price competition.

The Pentagon has admitted that data denials “may be more prevalent [than reported], particularly with respect to sole source commercial items.” This is especially nefarious in a market that looks like a monopsony but operates like a monopoly, where sole-source contractors reign as kings. They have a documented history of refusing to provide even uncertified cost and pricing information. Since 1998, the Pentagon’s Inspector General has published several reports detailing data denials by sole-source contractors. TransDigm, Inc. is the most recent example and perhaps the most notorious. According to the Pentagon, the company “accounted for all Defense Logistics Agency cost and pricing data denials” in FY 2022. The company failed to respond to 401 requests for cost and pricing data from the agency, and that was after the Pentagon Inspector General exposed TransDigm for twice price gouging the Pentagon. The contractor generated a total of nearly $40 million in excess profits.

Ultimately, withholding cost and pricing data bolsters a contractor’s ability to increase profits by charging the Pentagon unfair and unreasonable prices. However, the defense industry already significantly outperforms other industries financially, and this is not just because the United States spends over a trillion dollars annually on national security. In many cases, the Pentagon reimburses contractors for research and development costs. It will even cover some capital costs, including those associated with the depreciation of assets like machinery and equipment. As a result, military contractors enjoy returns on assets and invested capital that are difficult to achieve in other industries where companies make those investments themselves. Still, military contractors leverage special treatment from the government to increase executive compensation and cash paid to shareholders, even at the expense of capital investment and internal research and development.

If the defense industry continues to consolidate, it will only get harder for the Pentagon to negotiate fair prices with military contractors. The department will have to rely on more and more sole-source contractors, which not only increases the risk of overcharging but also presents national security risks, like supply chain vulnerability and reduced availability of certain resources. The entire nuclear triad is already dependent on one company, Northrop Grumman. As far as U.S. contractors go, General Dynamics manufactures a significant portion of tracked combat vehicles. Boeing, Lockheed Martin, and Northrop Grumman produce the military’s fixed-wing aircraft. The distillation of the defense industry to a handful of companies bodes poorly for both the military and taxpayer because it produces waste, not to mention a strong profit incentive for war.

As the defense industry’s primary customer and a steward of taxpayer dollars, the Pentagon needs to be a stronger buyer. However, never-ending acquisition reform continues to prevent that. Current laws are insufficient even to document price gouging by military contractors, much less prevent or remedy it. If retained in the final defense policy bill, Rep. Doggett’s provision would help the Pentagon better understand the scope of overcharging by sole source contractors—and ultimately, give lawmakers the information they need to hold industry accountable for overcharging the government at the expense of the taxpayer.

Congress does not yet have the tools to investigate and root out the full scale of defense contractor fleecing of the DOD.”

“National Interest” How Defense Industry Price Gouges Pentagon

ABOUT THE AUTHOR:

Julia Gledhill is a Research Associate for the National Security Reform Program at The Stimson Center. She focuses her research and writing on Pentagon spending, military contracting, and acquisition. In previous roles at the Project On Government Oversight and the Friends Committee on National Legislation, Julia worked on various national security issues related to Pentagon accountability, war powers, civilian protection, drone policy, the torture program, and U.S. lethal strikes.

A Formula For U.S. Long Term Strategic Vision

Although by far the most powerful country in the world, the U.S. is suffering from a lack of long term vision. The individual citizen is as much at fault for this condition as the politician or the military industrial complex.

From our relationships with each other and with other countries, from corporate board rooms to Wall Street stock run ups, we must use long term strategic vision in lieu of pursuing short term gains.

Polarization, ignoring environmental and  geopolitical realities, engaging in costly war intrusions, neglecting education/infrastructure and accumulating a $39 Trillion National Debt, heavily mortgaging future generations, are all symptoms of our lack of long term strategic vision.

Geopolitical Realities and the US Role

George Friedman accurately addressed the historical geopolitical state in a recent article:

“To put it simply, a vast swath of the Eurasian landmass (understood to be Europe and Asia together) is in political, military and economic disarray.

Drawing on the recollection of Desert Storm  it was assumed that American power could reshape the Islamic world at will after the US was attacked September 11th, 2001. All power has limits, but the limits of American power were not visible until later in the 2000’s.

At that point two other events intervened.

The first was the re-emergence of Russia as at least a regional power when it invaded Georgia in 2008. [The invasion tactic continued with the Ukraine War]

The other was, of course, the financial crisis. Both combined to define the current situation. [COVID continued the strain on the world economy]

The United States is, by far, the worlds most powerful nation, That does not mean that the United States can — or has an interest to — solve the problems of the world, contain the forces that are at work or stand in front of those forces and compel them to stop. Even the toughest guy in the bar can’t take on the entire bar and win.”

China the Peace Maker 

David Grammig enlightens us in an article in “Geopolitical Monitor “to an alternative to war and debt laden international finance being practiced by the Chinese:

“Geopolitical calculations are as much a reason for this 2-trillion-dollar project as economic ones.

The OBOR project represented one of China’s new overarching foreign policy goals, and it demonstrated a willingness and ability to challenge old power structures, especially in Central Asia and the Middle East.

The Silk Road, or OBOR project, aimed at creating an enormous economic bloc and fostering trade, cultural exchange, political collaboration, and military cooperation among its members – under Chinese domination. [ The recent military competition against U.S. interests and associated weapons buildup by China with threats to Taiwan served as a diversion from China’s overarching foreign policy goals through the Silk Road Project]

An obvious competitor against Russia’s Eurasian Union and India’s Act East and Connect Central Asia initiatives, the OBOR project had many Central Asian and Middle Eastern states justifiably worried of being caught up in a race for dominance in the region, producing somewhat cautious reactions to China’s big plans. Yet, some countries in the region – even those torn by sectarian conflict – may still be inclined to step into a new age due to China’s vast investments and its associated desire to protect its economic engagements.

The United States and its military interventions on the other hand, which aimed at securing political influence and protecting economic interests, bore no sustainable fruits and have led to growing instability in the region. Furthermore, US policy in the Middle East yielded anti-American resentment in the public and political spheres.

China’s approach, however, will most likely not lead to demonstrations, burning flags, and attacks against its embassies, because it will not be seen as a war-mongering imperialistic force, giving itself a chance to establish itself as a partner whose outstretched hand is worth taking.”

The US Market Mirage 

Rana Foroohar demonstrates in Time Magazine how the folly of short term thinking often drives poor investment in the stock market when assessing the value of companies:

“One of the hardest-dying ideas in economics is that stock price accurately reflects the fundamental value of a given firm. It’s easy to understand why this misunderstanding persists: price equals value is a simple idea in a complex world. But the truth is that the value of firms in the market and their value within the real economy are, as often as not, disconnected. In fact, the Street regularly punishes firms hardest when they are making the decisions that most enhance their real economic value, causing their stock price to sink.

There are thousands of examples I could cite, but here’s a particularly striking one: the price of Apple stock fell roughly 25% the year it introduced the iPod. The technology that would kick-start the greatest corporate turnaround in the history of capitalism initially disappointed, selling only 400,000 units in its debut year, and the company’s stock reflected that. Thankfully, Steve Jobs didn’t give a fig. He stuck with the idea, and today nine Apple i Devices are sold somewhere in the world every second.  CEOs, who are paid mostly in stock and live in fear of being punished by the markets, race to hit the numbers rather than simply making the best decisions for their businesses long term. One National Bureau of Economic Research study found that 80% of executives would forgo innovation-generating spending if it meant missing their quarterly earnings figures.

Nobody–not Economists, not CEOs and not policymakers–thinks that’s good for real economic growth. Yet the markets stay up because of the dysfunctional feedback loops. Eventually, of course, interest rates will rise, money won’t be cheap anymore, and markets will go back down. None of it will reflect the reality on the ground, for companies or consumers, any more than it did during the boom times.”

Achieving Strategic Vision

From the above analysis by experts, it is apparent that the US is in dire need of strategic vision.  To achieve it we must:

Face  environmental, geopolitical and economic realities, stop war interventions and invest in relationships within and without our country by offering mutual collaboration.

Cease dwelling on threat and build long term infrastructure, education and international development.  The threats will melt away.

Invest for the long term at the stock holder, company and  national levels based on a strategy dealing with present day and long term challenges in education, communication and society value transitions.

Elect a Congress and an Administration that knows how to strike a balance between long and short term actions. We must then let them know what we think regularly by communicating with them.

Know that most cultures and societies in upheaval today are watching our national model and choosing whether or not to support it, ignore it or attack it.

A Spin On The Revolving Door: Pentagon Officials Turned Venture Capitalists

 

"NEW YORK TIMES" By Eric Lipton

"Retiring generals and departing top Pentagon officials once migrated regularly to the big established weapons makers. Now they are increasingly flocking to venture capital firms that have collectively pumped billions of dollars into Silicon Valley-style startups"

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"When Defense Secretary Lloyd J. Austin III and other top officials assembled for an event at the Ronald Reagan Presidential Library, they walked into a lesson in how the high-stakes world of Pentagon lobbying is being altered by the rise of defense technology startups.

Inside, at this elite gathering near Los Angeles of senior leaders from government and the arms industry, was a rapidly growing group of participants: former Pentagon officials and military officers who have joined venture capital firms and are trying to use their connections in Washington to cash in on the potential to sell a new generation of weapons.

They represented a new path through the revolving door that has always connected the Defense Department and the military contracting business.

Retiring generals and departing top Pentagon officials once migrated regularly to the big established weapons makers like Lockheed Martin and Boeing.

Now they are increasingly flocking to venture capital firms that have collectively pumped billions of dollars into Silicon Valley-style startups offering the Pentagon new war-fighting tools like autonomous killer drones, hypersonic jets and space surveillance equipment.

This new route to the private sector is one indicator of the ways in which the United States is trying to become more agile in harnessing technological advances to maintain military superiority over China and other rivals.

But the close ties between venture capital firms and Defense Department decision makers have also put a new twist on long-running questions about industry access and influence at a time when the Pentagon is under pressure to rethink how it allocates its huge procurement budget.

During Mr. Austin’s visit to the Reagan Library, Mark T. Esper, who served as defense secretary under President Donald J. Trump, was on hand with business cards from Red Cell, a venture capital firm. Red Cell has invested in new military startups like Epirus, whose anti-drone technology Mr. Esper said in an interview he had helped pitch to top Pentagon officials.

Also on the guest list for the event were Ryan McCarthy, the former Army secretary, and Raj Shah, the former head of the Pentagon’s Defense Innovation Unit. Both now work for venture capital firms.

The New York Times has identified at least 50 former Pentagon and national security officials, most of whom left the federal government in the last five years, who are now working in defense-related venture capital or private equity as executives or advisers. In many cases, The Times confirmed that they continued to interact regularly with Pentagon officials or members of Congress to push for policy changes or increases in military spending that could benefit firms they have invested in.

“There’s panache now with the ties between the defense community and private equity,” said Ellen M. Lord, a former under secretary of defense for acquisitions, who said she had been solicited by a number of venture capital firms but had decided to focus on advising individual military contractors. “But they are also hoping they can cash in big-time and make a ton of money, too.”

This new generation of venture capitalists has big incentives to tap into its network of government and military contacts, many of whom it previously helped move ahead in their careers.

Unlike former officials who have joined the big military contractors, they are not salaried executives inside public companies.

Instead, as venture capitalists who profit in part when the startups they are backing make it big, they are wagering that at least a few of the companies they have invested in will hit the jackpot in the form of major military contracts — enough, perhaps, to generate a lucrative buyout offer or even to drive one of the startups to sell shares and go public, potentially generating an even bigger windfall for the early investors.

“A few years back you would have gone to be executive vice presidents at Lockheed Martin — totally not sexy,” said Chris O’Donnell, a former Navy SEAL and now a director at Franklin Venture Partners, whose investments include Air Space Intelligence, an air traffic control company, and CesiumAstro, a space communications company.

“Now, a venture capital guy comes up and says, ‘I will pay you twice as much. I will give you a cut in the form of carried interest in the deal and you will hobnob with the C.E.O.s of the companies we invest in,’” Mr. O’Donnell said during an interview, as he prepared to host a dinner for top Pentagon officials, members of Congress and other industry executives. “It’s much more attractive.”

The new venture capitalists say they typically use their access to press the Pentagon to provide more funding for emerging technologies in general, rather than to push for contracts for a particular startup they are backing.

“I can really leverage my experience, my positions, my voice to help accelerate innovation adoption,” Mr. Esper, a former defense industry lobbyist, said in an interview.

Pushing for a bigger share of the pie

One recent focus for the venture capitalists has been urging Congress to set aside at least $1 billion in the coming year for the kinds of cutting-edge technologies their startups are pursuing. Ensuring that innovative new firms get a bigger slice of Pentagon spending after decades in which the business has been dominated by a handful of giant prime contractors, they say, is vital to national security.

“The military-industrial-congressional complex is pretty comfortable with market share as it is,” said Sally Donnelly, a former Defense Department official who is now a founding partner at Pallas Ventures, which invests in startups while also helping them interact with Pentagon officials. “It’s a precooked system that needs to be shaken up a little bit.”

Pentagon procurement officials confirmed that they had repeatedly met with former Defense Department officials who are now venture capitalists. They said recommendations pushed by the venture capitalists had played a role in changes they are making in the way they acquire technology, helping accelerate purchases from some of the startups, like Saildrone, which makes marine surveillance equipment.

“We definitely hear from them,” said Schuyler Moore, the chief technology officer at Central Command.

In the last four years, at least $125 billion of venture capital has flooded into startups that build defense technology, according to data assembled for The Times by PitchBook, which tracks these investments, compared with $43 billion in the prior four years.

But at least so far, the defense-tech sector has had only a few breakthrough success stories. They include Palantir, which makes artificial intelligence software and went public in 2020, and Elon Musk’s SpaceX, which has a market valuation of more than $175 billion, larger than the market capitalization of Lockheed Martin, the world’s largest military contractor.

Much more frequently, it has been a continuing struggle for venture-backed defense technology companies to secure large-scale contracts.

That is where the new generation of well-connected venture capitalists comes in.

More than a dozen of them, assisted by think tanks and other nonprofits that get funding from venture capital groups, have been pushing Congress and the Defense Department to accelerate spending with defense-tech companies, or to make policy changes that make it easier for them to get Pentagon money.

Lawmakers and Pentagon officials said they welcomed the input.

“They want to do things,” said Representative Ken Calvert, Republican of California and chairman of the House Appropriations subcommittee that oversees the Pentagon budget. “Let’s face it, their budgets for research and development of new technologies are much better than ours. So they’re developing technologies that we can’t.”

But not everyone on Capitol Hill is pleased with the new revolving door, including Senator Elizabeth Warren, Democrat of Massachusetts, who raised concerns about it with the Pentagon this past summer.

The growing role of venture capital and private equity firms “makes President Eisenhower’s warning about the military-industrial complex seem quaint,” Ms. Warren said in a statement, after reviewing the list prepared by The Times of former Pentagon officials who have moved into the venture capital world. “War profiteering is not new, but the significant expansion risks advancing private financial interests at the expense of national security.”

‘Let’s go faster’

The annual Reagan National Defense Forum, the event attended by Mr. Austin this month, drew a substantial contingent of venture capitalists eager to mingle with government decision makers at cocktail parties and over meals, some held in the main atrium of the Reagan Library, where the plane used by President Ronald Reagan as Air Force One hangs suspended over visitors.

Doug Philippone, a former Army Ranger who is now the co-founder of Snowpoint Ventures, a defense-sector venture capital firm, was busy during the event chatting with various members of Congress and Pentagon officials. They included Heidi Shyu, the under secretary of defense for research and engineering, and Representative Pat Ryan, Democrat of New York, a West Point graduate who serves on the Armed Services Committee.

Mr. Philippone, whose firm has invested $172 million over the last two years mostly in defense-tech companies, said he had repeatedly urged government officials to pick winners to get money flowing to them.

“Let’s go faster,” Mr. Philippone said, recalling his message. “Why does it take so long?”

Certain startups like Shield AI are initially building their business almost entirely around revenue from Pentagon contracts and research awards, a risky bet given how slowly the Defense Department moves.

The result is a lot of pressure on the companies, resulting in an almost frantic push for support from Washington.

“A venture capitalist that is going to put tens of millions or even hundreds of millions of dollars into your startup, they are expecting to see revenue of $50 and $100 million a year,” said A.J. Piplica, the founder and chief executive of Hermeus, a venture-capital-funded startup that is working to build a new type of hypersonic jet. “And building a book of revenue of that scale, when you are working with the Defense Department primarily, is very, very difficult.”

Mr. Philippone, who is widely known in the industry for his role in helping build Palantir’s Pentagon sales before he set up his venture capital firm, is not shy about his advocacy. He said he works with every company he invests in to push the Pentagon or other agencies to move more quickly.

“I’m meeting with members of Congress,” he said. “I’m talking to members of the military. I’m introducing them to different people.”

But he said he was not a lobbyist because he is not paid for the advocacy work and it does not make up at least 20 percent of his time, the threshold for disclosure in federal law. Almost none of the venture capitalists promoting defense technology are registered as lobbyists.

Mr. Esper would not disclose the names of the government officials he spoke with on behalf of his firm’s investments, other than to say they included Pentagon officials. At times, he said, he urged them to consider specific technologies, like those from Epirus, which uses an electromagnetic pulse to disrupt or disable enemy drones. Mr. Esper said his effort in this field is based on a belief that he can help the Pentagon confront change.

“Part of this is just kind of being able to reach out to leaders within the building and say, hey, there’s a neat tech. You should check it out,” Mr. Esper said. “Because it’s being worked through echelons down. So if you know there’s a need and you can put a technology in front of them and say, just check it out, see how it works.”

Nick Sinai, an Obama-era White House official who is now a venture capitalist with Insight Partners, traveled to the Middle East last spring to meet with Gen. Michael E. Kurilla, who oversees the Pentagon’s Central Command operations in the region, to suggest ways to enhance military equipment now in use.

He suggested that the Pentagon acquire more data from commercial satellite companies that can help it improve awareness of what is happening on ocean waters. Among his firm’s investments is HawkEye 360, a startup that sells satellite data that can allow the military to track enemy movements.

Several months after the visit, the Navy doubled the size of a contract with HawkEye 360 to provide a more extensive array of satellite data. Mr. Sinai said the larger contract, worth $12.3 million, was unrelated to his intervention.

Many of the venture capitalists keep ties to Washington. Mr. Shah, the former head of the Defense Innovation Unit, serves on a congressionally appointed commission looking at ways to revamp the Pentagon’s budgeting process.

“D.C.-wise, we are very plugged in,” Mr. Shah said of his firm, which includes Michael Brown, who also served as head of the Defense Innovation Unit until he left last year.

Mr. Esper is co-chairman of a commission set up by the Atlantic Council that is studying ways to accelerate the Pentagon’s embrace of new technology. The Atlantic Council staff set up a series of 70 briefings for Pentagon and congressional officials to promote their ideas.

The lead author of the report, Stephen Rodriguez, is an executive at a defense venture capital firm. He also serves as an adviser to Applied Intuition, a software startup and military contractor that helped fund and promote the report. Funding for the Atlantic Council report also came from several other venture-backed defense startups and Mr. Philippone’s Snowpoint Ventures.

Mr. Rodriguez and his team keep a chart of all the recommendations that have resulted in policy changes, including expanding the power of the Defense Innovation Unit by making the new leader of the office a direct report to the defense secretary, and eliminating the prohibition on firms with more than 50 percent financing from venture capitalists from getting Pentagon small-business grants.

“We were not in the business of pitching or lobbying,” Mr. Rodriguez said. “We were just briefing our recommendations, and had detailed discussions about what the implementation of them would look like.”

Mr. O’Donnell, of Franklin Venture Partners, helped start what he calls the Silicon Valley Defense Group, which has sponsored a dozen “salon” dinners over the last year offering off-the-record opportunities for venture capital executives to meet with Pentagon officials and members of Congress.

The group has sent letters to members of Congress to push them to invest $1 billion next year in the Defense Innovation Unit, which is distributing a large share of its money to tech startups.

“The goal is to get a lot of conversations with the right people,” said Sam Gray, a former Pentagon acquisitions executive who is now the Washington-based director of the Silicon Valley Defense Group, as well as a partner at Franklin Venture Partners.

While many of the startups have yet to win substantial government funding, some are beginning to hit pay dirt.

Anduril secured a contract worth up to $1 billion with the U.S. Special Operations Command to identify, track and intercept enemy drones. Hermeus, the hypersonic jet startup whose investors include Ms. Donnelly’s firm, as well as funds set up by the investor Peter Thiel and Sam Altman, the chief executive of Open AI, recently secured a major Defense Innovation Unit contract.

Doug Beck, a former Apple executive who now leads the Defense Innovation Unit, said in an interview that the venture capitalists were not getting any special favors, nor did they ask for them.

“They are leaning in on policies that help break down systemic barriers, because that rising tide of defense innovation lifts all their boats,” he said, “and because they believe in the impact for the nation.”

A Spin On The Revolving Door: Pentagon Officials Turned Venture Capitalists

ABOUT THE AUTHOR

Eric Lipton is investigative reporter for The New York Times, who digs into a broad range of topics from Pentagon spending to toxic chemicals. https://www.nytimes.com/by/eric-lipton

 

Retirement – Personal Invention and Re-Invention

If one aspires to simply maintain one’s material life style, retain responsibility for those close to us and relax as objectives, that is one form of retirement – call it maintenance.

Many cannot undertake a maintenance retirement due to challenges such as the economic events of recent years, family responsibilities involving their children, or aging parents. They must continue to generate an income but must adjust to advancing age and find new ways to generate revenue.

I hear from many individuals who seek to go into business for themselves on-line or in the home as a way to supplement their retirement.

Given reasonably good health and a responsibility-free environment, most find retirement rather boring after a time and seek continued professional growth. In fact it has been espoused that such a lethargic existence can be hazardous to our health.

Balance is the key – Balancing age with wisdom, lifestyle with responsibility and available means; a new professional endeavor, volunteer work, recreation, the arts, – that which gives meaning to continued existence.

If the need to generate revenue is a prominent factor, care must be taken in assessing risk to health and fortune by investing too much in effort or treasure. That is where the balance comes in.

We have heard 40 is the new 30, but yet I think “old” seems to always stay the same distance for me. At 25 I thought 50 was old, at 35 I thought 60 was old, now that I am approaching 80 years of age, 95 is old.

I know true age is more a matter of mind. I took a fall on the ice in front of the Middle School and 2 dozen 5th graders. The fall didn’t hurt nearly as much as the laughter and the subsequent whispers this year, “There goes that old guy again, do you think he might fall?”

I took a nap out in the wildlife refuge in a beautiful stand of aromatic pines. When I awoke I found two huge turkey buzzards staring at me intently from their perch nearby. I had known I was getting older but had not realized I had reached the carrion stage.

I reported a pollution spill in the Vermilion River and the Minneapolis paper picked up the story. A reader commented on the web site that the Minnesota pollution control program had now been relegated to an “Old Guy” in the vets home.

I feel fine about getting old. It’s how I am perceived by others that bothers me.

We will all retire in some form. We have no choice. What we invent or re-invent along the way to make the most of it is our personal challenge.

Ken Larson

She Kills People From 7,850 Miles Away - High Tech Warfare Today

 

"THE DAILY BEAST" By Kevin Maurer  

"Anne, ["SPARKLE"] an Air Force staff sergeant, a remotely piloted aircraft (RPA) sensor operator or “sensor.”

“When you hit a truck full of people, there are limbs and legs everywhere,” Sparkle said. “I watched a guy crawl away from the wreckage after one shot with no lower body. He slowly died. You have to watch that. You don’t get to turn away."

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"Anne crawled out of bed in her North Las Vegas house around 10 p.m. and started to get ready for her shift.

She pulled her chestnut hair into a bun and slipped on her olive green flight suit. In the kitchen, she packed fruit to snack on during her shift and stuffed her schoolwork into her backpack-sized lunchbox just in case it’s a boring night. Most nights she doesn’t have a chance to open a book.

Giving her dog, a tan Sher-Pei/pit bull mix, one last pat, she left her house and joined thousands of other workers leaving for the midnight shift. While most people were heading to hotels and casinos in town, Hubbard was on her way to Creech Air Force Base and a war.

At Creech, she is assigned to a reconnaissance squadron flying missions over Iraq and Afghanistan. Few weapons in the American arsenal are more relentless than the RPA fleet, often called drones. For more than a decade, the United States has flown RPAs over Afghanistan and Iraq, providing forces on the ground with an eye in the sky to spot terrorists and insurgents, and in most cases the firepower to destroy them.

As she rode to work, Anne—or “Sparkle” as she’s known to her fellow drone operators—wasn’t focused on the desert outside her window. It was 2009 and President Obama was sending troops in a surge to Afghanistan. Sparkle’s mind was on a desert 7,000 miles away. Over the next 24 hours she would track an insurgent, watch as he was killed by a Hellfire missile, and spy on his funeral before ending her night with a breakfast beer and a trip to the dog park.

The RPA has become the symbol of America’s ongoing wars, from Afghanistan to Somalia to Syria. And, 14 years after a U.S. “drone” first fired a missile at an al Qaeda operative, the morality and legality of remote strikes remains a matter of intense controversy. Earlier this year, the U.S. government revealed it accidentallykilled one of its own citizens with a drone—a hostage held by al Qaeda—triggering another round of debate about when the U.S. is justified in using the remotely piloted planes to attack.

The Intercept published a cache of new documents about RPA missions in Afghanistan, Somalia and Yemen. The documents paint a damning picture of the RPA, including an internal U.S. military study that found a “critical shortfall” in how targets are identified. The government's reliance on cellphones has led to the wrong target being killed. The new documents also call into question the accuracy of the RPA. The Intercept reports more than 200 people were killed – only 35 were actual targets - in Afghanistan between January 2012 and February 2013.

This outrageous explosion of watchlisting—of monitoring people and racking and stacking them on lists, assigning them numbers…  assigning them death sentences without notice, on a worldwide battlefield—it was, from the very first instance, wrong,” the source of the documents told the Intercept. “We’re allowing this to happen. And by ‘we,’ I mean every American citizen who has access to this information now, but continues to do nothing about it.

But for all the attention paid to RPAs, the men and women who operate the 21st century’s most divisive weapons system remain largely hidden from public view—except for reports about strikes, especially when a missile kills civilians."

She Kills People From 7,850 Miles Away - High Tech Warfare Today

Kevin Maurer is the co-author of Hunter Killer: Inside America’s Unmanned Air War.

The Vietnam War Echos In Warfare And Politics Today

 By Ken Larson

My comrades and I who served in the Vietnam War were reminded of that period when reading the words of our leaders in the Washington Post Freedom of Information Act victory in the courts.  Washington Post Afghanistan Investigative FOIA Government Disclosures

We remember clearly the friends, innocence, physical and mental health lost in battle. We see the continuing implications of similar conflicts in which our country has since been involved.

Our conclusion is that war has become a racket and the capitalistic gains motive within the massive Military Industrial Complex (MIC) that Eisenhower warned us about as he left office has materialized.  

As the STRATFOR article below conveys, similar geopolitical conditions to today existed 50 years ago. 

Yet we have continued to approve this catastrophic money burner and debt creator https://www.usdebtclock.org/ in the interest of National Security making defense companies rich. It cannot continue.

“STRATFOR WORLDVIEW – Weighing the Geopolitics of the Vietnam” War

SUMMARY

“South Vietnam’s capital city, Saigon, fell to invading North Vietnamese troops on April 30, 1975. The image of an overloaded Huey helicopter on top of the U.S. Embassy in Saigon, frantically loading refugees, was forever seared into the American mind. It was the ignominious end of more than a decade of involvement by the United States in Vietnam.

Ultimately, Washington’s failure to win the war in Vietnam resulted from factors beyond the conflict zone. The United States was heavily constrained by its global commitments — principally its need to secure Western Europe against Warsaw Pact invasion. Washington could not align military capabilities with realistic political goals to justify bringing the full might of U.S. armed forces to bear to defend its peripheral interests in Vietnam. Unable to comprehend North Vietnamese resolve and incapable of bringing about a swift victory, the United States’ will to continue the war crumbled as the human cost mounted. Today, the dominant narrative among the American public is that Vietnam was a crushing American defeat. Forty years after the fall of Saigon, however, it is apparent that Vietnam had only a limited impact on the overall U.S. position within the broader context of the Cold War.

The United States’ involvement in the Vietnam War resulted from the evolution of U.S. grand strategy in the wake of World War II. As part of the overall containment structure that Washington hoped to set in place around the Soviet Union — and eventually China as well — a network of allied countries became necessary to block the spread of communism. Many allies found themselves in direct proximity to the communist states America wanted to contain. This meant that any future war between the West and the Soviet Bloc would not be fought in the NATO heartland, but on the far-flung fringes of the two camps’ spheres of influence.

At the root of Washington’s alliance structure was the promise of U.S. support, hardened by what was supposed to be seen as a clear guarantee of assistance should the worst happen. In a divided Europe, for example, an attack on West Germany would be treated as an attack on the United States. Washington had given its word to assist, but by doing so, it put its credibility on the line. Despite written obligations, it was a constant struggle to fully convince the NATO allies that the United States, an ocean away, would truly risk nuclear war to defend West German soil in the event of a Warsaw Pact invasio

A wave of helicopters from the 1st Air Cavalry Division fly over an isolated landing zone during Operation Pershing, in the region of the Bong Son Plain and An Lao Valley of South Vietnam, Jan. 3, 1967.

This ambiguity was not lost on Moscow, and Russia continued to probe and pick at the perceived fault-lines in the American grand plan. By manufacturing crises, the Soviets hoped to generate a crippling uncertainty in America’s allies while emboldening their own clients. The Soviet insinuation was that, at a critical moment, the United States would not make good on its promises. So, when the United States found itself more and more involved in Vietnam, Washington was less interested in what Saigon was thinking or doing, or its virtues as a government, and more concerned with how its other allies, especially those in Europe, perceived the seriousness of the U.S. commitment to check the spread of communism within an allied country. When it came due for the United States to live up to its word, it was the international community and not Saigon that Washington looked toward. 

A Small Part of a Big Standoff

Vietnam was one small piece of a much bigger security challenge for Washington, with little intrinsic geopolitical value of its own. The real battles of the period — political and otherwise — were in Central Europe. Europe had to be prioritized, for if its resources and industrial capacity fell to the Warsaw Pact, the United States and its remaining allies would be unable to compete on either an economic or a military basis. For North Vietnam, however, the commitment to national unification was absolute. It pursued its own fundamental geopolitical interests and would give everything to achieve a victory — a single-minded devotion reflected in the horrendous casualties it suffered and the decades of conflict it endured. In the spectrum of conflict, the North Vietnamese were willing to embrace totality. This resolve was backed up with the support of powerful benefactors, namely the Soviets and the Chinese. From the United States’ perspective, committing the resources of the entire country against the North Vietnamese flew in the face of rational wisdom. Washington just had too many other interests. The conflict was ultimately decided by this imbalance of resolve.

U.S. Air Force F-100 bombs a military target near Saigon on Feb. 8, 1965.

The argument remains that the United States could have beaten North Vietnam by committing more forces. While this may be accurate, the United States, burdened by its greater contest with the Soviet Union, could not afford to trade the security of its global commitments for a localized victory in Vietnam. The fact of the matter remains that the defense of Indochina was only worth a certain amount of blood and treasure. The U.S. military was saddled with self-imposed constraints and only allocated limited resources to the campaign that, ultimately, proved insufficient for an extended nation-building effort. The United States had to think about strategic balance elsewhere and was limited in what it could realistically commit. Securing the resources required to defeat a massive foreign-sponsored insurgency in the dense Vietnamese jungle had little chance of finding political backing. The fact that the American public deeply opposed the war — a direct result of Vietnam’s murky strategic significance — further eroded the tenuous support for U.S. operations in Vietnam.

Provisional Revolutionary Government fighters seize control of the presidential palace in Saigon after the fall of the city. May 3, 1975.

Once troops were committed, the rationale of Washington’s grand strategy maneuvered the United States into a damning position. U.S. leaders believed that by circumventing the conflict, and showing that the United States was willing to welch on its promises, irreparable fissures could have weakened the alliance structure Washington had fought so hard to construct. Conversely, being unable and unwilling to fully commit to a conflict over a peripheral interest, a clear victory could not be assured, especially against a dedicated and well-supported enemy. 

Limited Geopolitical Impact

The United States did not retreat from the world in the wake of Vietnam. Still determined to contest Soviet influence but eager to avoid overcommitting itself again in the developing world, Washington became more judicious in its use of military force. Instead of relying on direct interventions, Washington shifted the burden of fighting to its clients across the world, providing less direct assistance when necessary. These shadowy operations were well suited for areas of peripheral importance. When they failed, their costs were relatively small; when they succeeded, they often had an outsize impact. This was demonstrated during the Soviet invasion of Afghanistan, when the Soviet Union found that it was not prepared to pay the costs of a long counterinsurgency against U.S.-backed mujahideen.

A line of captured South Vietnamese soldiers walk through the streets of Saigon on April 30, 1975, escorted by communist troops.

The Vietnam War is popularly remembered as a U.S. defeat at the hands of an enemy a fraction of its size but, from a broader geopolitical perspective, it is hard to say what the United States really lost. The human cost of the war was certainly tremendous. Some 58,000 U.S. soldiers gave their lives in the conflict, and the war exacerbated huge social rifts in American society. Millions of Vietnamese perished on both sides — along with hundreds of thousands of people in Laos and Cambodia. Both victor and vanquished inherited a country broken by decades of war.

For the United States, the war was over in 1975. For the people of former Indochina, war would continue until 1979, consuming untold millions of lives. Yet, Washington’s worst fears did not materialize with the fall of Saigon. The United States retained its overall combat power and U.S. allies did not break from NATO en masse. The Soviets did not cross the Fulda Gap into West Germany, emboldened by a supposedly conspicuous collapse of U.S. resolve. Perhaps the U.S. refusal to empty its garrisons in Western Europe was far more meaningful a sign for America’s allies and adversaries than an iron commitment to Vietnam. Ultimately, for the United States, the geopolitical cost of the war was greatly overestimated.”