Silicon Valley Giants — Not Start-Ups — Dominate DoD Tech $$

Military members wearing lanyards stand in an ebay lobby.

The Pentagon has spent much of the last decade trying to entice Silicon Valley start-ups to work with the military.

ALBUQUERQUE – The big companies of Silicon Valley are more entangled in Pentagon contracts than the industry tends to publicly admit, according to a review of thousands of contracts by technology accountability nonprofit Tech Inquiry. But if the Pentagon’s keenest interest in the valley is in buying cutting edge tech from small, agile firms, it’s not reflected in the actual acquisitions data, which instead show vast spending going primarily to giants working with subcontractors.

“Recent narratives decrying a massive divide between Silicon Valley and the military are anecdotal and qualitatively false,” concludes the Tech Inquiry report.

The dataset offers a window into not just the scale of tech involvement with the military, intelligence agencies, and federal law enforcement. It also highlights the size advantages that enable giants like HP, IBM, and Microsoft to navigate government contracting, while even explicitly military-friendly firms like Palantir and Anduril lag behind their more established peers. The irony here is that HP, when co-founder David Packard ran things, helped turn Silicon Valley and the tech industry against doing business with the military, which he criticized as too slow and cumbersome to do business with.

“It’s daunting for a company that has to be focused on near-term successes to work with an organization that tracks historically how long it takes for them to contract and integrate a technology not in months but in years,” says Peter Dixon, CEO and Co-founder of Second Front Systems, a company whose specific mission is to shepherd dual-use technologies through the acquisition process.

By subcontracting, firms with acquisitions expertise can partner with firms that otherwise could not sell to the Pentagon. This process also creates a false sense of distance between the commercial and military sides of a business.

“Silicon Valley is there because of defense, aerospace contractors,” says Margaret O’Mara, a historian of technology industry at the University of Washington. Her book “The Code” examines the interplay between the federal government and the technology sector it fostered.

Tech Inquiry’s deep study of industry work with the Pentagon is informative both in the content of the contracts, the scale of industry engagement and also the paths by which new ideas go from commercial companies to soldiers in uniform.

“We are always tempted to refer to Silicon Valley as a monolithic entity in terms of politics or in terms of its business model,” says O’Mara. “One of the things this does reveal is you have a real variety of opinion about the merits and the downsides of working with federal law enforcement and defense.”

Big firms with years of experience and resources to spend can acquire and then guide small contracts through the perplexing and often siloed acquisition markets. Experienced defense sector companies can contract with commercial software giants to redesign code to applications the workers who originally wrote it may never have intended. Getting tech from where it is designed may be partly about finding people willing to do the work, but it is at least as much about the ability of companies to navigate contracting.

“Even when products are successfully postured for national security and military use,” says Dixon, “they still rarely make it through bureaucratic hurdles to go from prototype into fielding, where they can actually make the difference for a lance corporal or specialist in harm’s way.”

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