Access Impedes Innovation in Defense — There is a Simple Solution
Part of a series of posts on the challenges of scaling a startup whose primary customer is the Department of Defense (DOD). See second post on crossing the contracting ‘valley of death’ (post 2) and the third post on contracting for excellence (post 3). These are meant to be conversation starters and are based on my personal experiences bringing new technologies to the defense and intelligence communities. I am interested in comments on these posts — particularly if you’ve worked these challenges and have insights into actionable solutions.
We were at a Department of Defense (DOD) facility, briefing Anduril Industries’ latest technology release. The demo concluded, and one of the government personnel turned to our team and told us, “We love your technology.” Any company would be happy to hear these words, and yet, we knew that we still faced a major obstacle. It was summed up in his next question: “We’d love to work with you, but does Anduril have a facility security clearance?” We didn’t, because per DOD policy, we needed to be on contract to get a clearance. There was clearly a circular issue here: without a clearance, we were unlikely to secure a contract, but we also couldn’t secure a clearance without one. Having now leaped past this hurdle at Anduril it remains a sore spot for me and my colleagues as we think about how to create a community of new defense technology companies challenging the status quo.
Innovative technology start-ups hoping to work with the DOD encounter many barriers, including heavy capital requirements, long contract cycles, mysterious acquisition processes, access to data, and cultural risk aversion by the government. However, one of the most frustrating is that of security clearances. I have worked now at two separate companies injecting innovative technologies into DOD and I have run into this barrier to entry at both. Companies like mine are told that they need a contract (including a DD-254, the document granting your company the right to secure information) in order to secure a clearance but are also frequently deemed ineligible to secure those contracts because they don’t already have a clearance. There are legitimate security reasons to restrict access to clearances for some companies, but the existing set of byzantine rules, regulations, and procedures have the practical effect of cutting off DOD from some of the most talented engineers and innovative companies in America. This unfortunate Catch 22 is occurring at the same time that the country faces accelerating security threats from emerging technologies leveraged by near-peer competitors. As a country, we stand to lose that competition if our best talent does not apply itself to assist in the effort.
Based on these unfortunate policies, a company without a clearance (but often with cleared employees) that is interested in partnering with the government on classified work is pushed to using inefficient workarounds. The two most common options are signing a cooperative research and development agreement (CRADA) for a project, or, partner as an advisor or consultant with a friendly company that can hold their clearances. The first of these options can be expensive (as no dollars flow to the company under a CRADA) and therefore impractical for early-stage companies who are already capital constrained. The second relies on the benevolence of another company and is fundamentally inconsistent with the ‘spirit’ of the existing security guidelines. However, without reform, these are the only real options left for a small company. If it simply waited to receive an appropriate contract that would grant the clearance, it would be waiting roughly three years to actually begin performing any work (and receiving any revenue). For many small companies, this timeline is simply impossible.
Our recommendation would be for the government to designate an organization as the “bridge” for emerging technology companies who have previously cleared personnel but no facility security clearance. This organization, potentially within an existing entity already working with the private sector such as the Defense Innovation Unit, would be granted the resources and authority to hold the existing clearances for personnel within these companies and begin the clearance processes for their engineering teams. There would be no need to reform the clearance process — employees of the company would follow the standard process. This organization would truly act only as a bridge, with the explicit intention of getting the companies a contract including a DD-254 so that their clearances won’t have to be held forever by the government organization.
At the highest level, the government should be making it easier for innovative companies who want to collaborate to do so. Breaking down barriers to entry like the current security clearance policy would represent a major step in that direction, and a true relief to American startups motivated to help in the national security mission.
