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One of the key things the Replicator program will test is the DoD’s ability to engage industry to deliver operational capability that is rapidly adaptable to warfighters, at scale and at low cost. The DoD’s approach to designing and producing strategically critical defense capabilities has evolved greatly over time – pre-WWII saw a preference for in-housing design and production competencies, but today we see a more de-centralized network of co-creators, collaborators, and sponsors across government, industry, and academia.
The in-housing approach had some benefits in providing greater control and oversight over capital (taxpayer money) deployed, along with greater intimacy between end users, designers, and production; however, the government was simply not geared to deliver cutting-edge technological innovation, or production efficiency, and the U.S. found itself outmaneuvered in the skies by adversaries early in WWII. Partnering with commercial aerospace firms brought U.S. to a point of air superiority by the end of WWII, laying the foundation for the industrial landscape we see today.
Bringing industry into the fold introduced a profit motive and level of competition that fostered innovation not just in the design process, but also through production – the most innovative, and efficient supplier should (in theory) enjoy the greatest reward. Innovation post WWII provided the U.S. military with certain asymmetric advantages, e.g. enhanced military effect despite operating leaner force structures during the Korean War. These asymmetric advantages are not dissimilar to those being sought out by the Replicator program – China’s major advantage is sheer mass, and the ability to deploy a high concurrency set of defense capabilities. The Replicator program aims to augment existing force structures to achieve mass, providing that scale.
Succeeding with this modern approach requires a few things:
1) DoD must quickly deploy capital: Industry can demonstrate nascent technologies, and the DoD must be willing to risk its own capital on the right solution, quickly, and at the appropriate scale. Replicator timelines and unit volume requirements warrant a high production rate; something that will not be cheap to build and scale. The market will also be reliant on robust demand signals from the DoD to whet their appetite. In addition, DoD needs to enable the right incentives for partners deploying capital, e.g. through state/local/federal tax abatement, tech tax incentives, etc.
2) Create a hybrid or blended ecosystem of traditional and non-traditional partners: Anduril Industries is a good example of IP developed for commercial end markets being adapted to provide a competitive advantage within defense use cases. Judging by the scale of resource that capital markets have diverted towards Anduril, this is a model that is working. When we start considering future themes of autonomy, AI, cyber, etc., defense may find they are not always at the forefront, and other industries (automotive, tech, etc.) are leading the way, benefiting from the free-market dynamics of a western democracy. The DoD must have mechanisms in place to commercially engage with the private sector in a way that offers the ability to adapt IP, and/or processes in a controlled, secure manner; without limiting partners’ commercial opportunities within non-defense end-markets. This is a shift away from the traditional defense prime model, and will be a tough change to make.
What made the SDA so successful is that they actively involved and encouraged industry, solicited their thoughts and involved it in developing RFPs – this included solicitations in all mediums, even LI (very non-traditional channel) and evangelized the process at every opportunity. Replicator needs to mirror that approach – collaborate thru iteration.
3) Pivot to speed-to-market; agility, and flexibility vs risk adversity: A key tenet of Replicator is to move faster than the adversary. Historically, government organizations (mainly those procuring heavily bespoke, big-ticket capital assets) have managed delivery exposure by employing a “prime contractor” whose responsibility it is to manage the trade-offs between performance, cost, and time on behalf of the centralized authority (with oversight. of-course). In a de-centralized, co-creator/collaborator future, this role of a prime needs to evolve. The prime can no longer determine how risk and rewards are shared; rather, an approach that encourages the most competent party managing risks and realizing commensurate rewards must be encouraged. This becomes a commercial model question; a very complex one that requires more space than we have here to unpack.
4) Develop a requirements model that does not trade-off innovation for commercial rigidity: In the UK, the MoD are undergoing an overhaul of their procurement processes, attempting to better adapt to a future where acquisition needs to keep pace with technological advancement. This will see a shift away from obsolescence management to more “evergreen” capability management/evolution. Future capabilities must be developed around certain key principles, not against an overly rigid (and potentially restrictive) set of requirements.
Currently, the DoD sets program requirements representative of operational need, but, over the duration of protracted delivery timelines, these bespoke capabilities tend to become over-engineered, difficult to maintain, and stray further from the operational need. Replicator relies on a COTS approach to deliver urgent operational need, with a clear upgrade pathway.
Replicator wants to leverage the best of industry, so, industry should be given the freedom to shape what that looks like. The days of Waterfall are (mostly) behind us.
5) Embrace a digital operating model: Managing a complex ecosystem of (often global, i.e., UK and Australia plus Five Eyes, Quad, and NATO at times) partners against a shared vision becomes a lot easier through digital. Interoperability in tools and processes can processes can support more efficient ways-of-working, and enhanced outputs. Defense organizations are investing in building digital estates; extending these to the outside world can make collaboration a less arduous task, and increase the likelihood of outpacing the threats.
These are some high-level thoughts on complex issues being faced by most of our clients and across their supply chains, not limited to the Replicator program or the DoD. Our clients in the UK will recognise the UK MoD are experiencing similar themes across some of the more future-leaning programs. This is especially apparent on programs where the authority are taking greater ownership of responsibilities typically associated with primes within design/delivery/acquisition programs that must be more nimble and agile. For a deeper discussion on any of this please contact Anirudh Suneel or email globaldefense@bceconsulting.com.
Anirudh is a Principal at BCE Consulting based in London UK. Anirudh’s experience spans Strategy through to Transformation, covering Corporate and Business Unit Strategy, M&A advisory, Operating Model design, Change management and complex Programme and Project management. Anirudh’s industry specialism is across the A&D supply-chain where he has worked on various Strategy and Transformation engagements for the likes of Airbus, Babcock, Leonardo and the various arms of the UK Ministry of Defence. Anirudh holds an MBA from Warwick Business School.