You can’t skip the step of getting the data right because data is the currency of future operations. This is a tough conversation to have, and to make it even tougher, I have to tell Congress that ‘Oh, by the way, a significant amount of the Air Force portfolio is classified. So I’m asking you to give up something that isn’t classified that we can talk about to invest in something that is classified that we can’t.’ That’s a tough conversation to have.
Right now, we have tripled the number of engagements we have done on the Hill, one-on-one and one-on-two, in classified spaces. When they see what we’re buying, I’ll tell you I haven’t had one member of Congress or one staffer not look at me and say, ‘I get it. This makes perfect sense.’
That was Air Force Chief of Staff Dave Goldfein speaking with David Deptula on the Mitchell Institute’s “Aerospace Nation” series. The Air Force has $15.7 billion in classified RDT&E effort in the FY21 budget request, and the Space Force has $3.6 billion. That’s nearly 40% of the Dept. of Air Force RDT&E budget.
I think what Goldfein was alluding to with the difficulty of communicating the value of data is that unlike a hardware platform, it’s hard to know precisely what the data will enable you to do ahead of time. This is a major issue with AI/ML efforts and how programs are currently justified. It is experimental. If you knew exactly what data and how much data you needed to enable a particular computer vision algorithm to detect particular objects, then you would have already solved the problem.
Here’s another interesting part:
One of the thing I worry more than anything else is the health of our industrial base. I started a pretty robust conversation with CEOs, and said, ‘I’ve never been a CEO, but I am your customer, and I want to know how to be a better customer.’ So we’ve had this on going dialogue. One of the things they’ve told me is, ‘Hey Chief, we make bets and take financial risk in our company based on what we hear you say. We need clarity based on where you’re going so we can make smart financial decisions.’ That was a really helpful conversation we have kept up over time.
My reaction is: how much financial risk do defense primes really take? Perhaps just 10 percent of their profits, or 1-2 percent of revenue? Most of that independent research and development often goes toward existing program requirements — and in any case much of it is reimbursed through the G&A rate on existing contracts and contributes for profit considerations. Allowable IRAD becomes something of a “profit center” in itself. The kind of risk defense companies take on IRAD pales in comparison to commercial firms. But of course, commercial firms face very different customers, which are often heterogeneous rather than monopsonistic.
Boeing has traditionally done larger IRAD, such as the T-7A trainer, because it can afford the costs with a much larger commercial sector. This gives it it the ability to be patient and make the money back on production and sustainment.
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