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2024 CNDI Affirmative
Defense Industry Affirmative › Economy Advantage › New Entrants/Small Firms Key- Spillover

Defense Innovation is low but on the right track, new defense priorities spur new tech needs – plan ensures, increased innovation is key for US military defense

Klempner and Swartz 24, Jesse is a leader in McKinsey’s Aerospace & Defense, Private Equity & Principal Investors, and Automotive & Assembly Practices. He has led numerous strategic engagements for A&D primes and subcontractors as well as industrial companies, studies across the full M&A lifecycle. Dale is a Partner in McKinsey’s Silicon Valley office and is a leader in our Aerospace & Defense, Semiconductor, and Strategy & Corporate Finance practices. He focuses on growth & innovation in strategic industries. Publisher: McKinsey and Company “A rising wave of tech disruptors: The future of defense innovation” https://www.mckinsey.com/industries/aerospace-and-defense/our-insights/a-rising-wave-of-tech-disruptors-the-future-of-defense-innovation

For several decades, national security agendas focused primarily on asymmetric and transnational threats such as terrorism and cybercrime. However, sometimes the uncertain global geopolitical environment can cause peer and near-peer competition, as evidenced in the national security strategies published since 2022 in Germany, Japan, the United Kingdom, and the United States. These strategies can lead to demand for new technologies to increase resilience and efficacy—in particular, technologies that will support new disaggregated and “joint all-domain” concepts. We have noticed that there is a call for three overlapping sets of capabilities: Disaggregating capabilities: By disaggregating capabilities into networks of smaller nodes, force planners can reduce points of failure and increase the likelihood of successful missions connecting air, land, sea, and space assets. This could improve operational coverage while boosting resilience. Instead of one high-value satellite, for example, the preference might be for an array of smaller, linked satellites; instead of one manned submarine, a coordinated fleet of unmanned underwater vehicles. Effective communication networks: For such disaggregated assets to function collectively, real-time intelligence sharing—enabled by resilient and effective communication networks—is important. Resilient networks can ensure instant communication between assets (meshing sensors to effectors) and allow for smooth, responsive operations. Resilient network-enabling technologies such as 5G, phased-array antennas, artificial intelligence (AI), and high-density computing can enable the movement of responsive decision making to the tactical edge where they can have the greatest mission impact. New technologies: Engineering high bandwidth, resilient networks would likely involve retrofitting existing platforms—or developing entirely new architectures (such as AI-powered command-and-control systems that connect users across services and collation partners in air, land, sea, and space). The density of technology-enabled mission systems is likely to continue to increase for the foreseeable future. Either way, new technologies—including decentralized cloud computing, data management, edge analytics, autonomy-enabling systems, and a plethora of hardware solutions and novel materials—are frequently cited capability needs. Start-ups (along with their commercial hyperscaler counterparts) are well positioned to fulfill critical national security needs, complementing the traditional industrial base. In addressing these needs, the traditional defense industrial base can bring various strengths to national security customers: for example, an understanding of specific missions; deep technical expertise in designing for those missions; long-established security protocols and infrastructure to host classified data; business development, customer relationships, and acquisition; program management excellence; and integration opportunities within existing, installed platforms. These capabilities alone, however, may no longer be enough. In response to evolving needs, a new generation of security tech companies has materialized. This new cohort features both start-ups and commercial technology hyperscalers and can offer different but complementary benefits: greater spend on high-risk R&D, relative to size, than the average defense contractor top-tier software and a new generation of STEM talent with fluency in digital technologies such as AI, quantum computing, and advanced microelectronics product-oriented business models that tend to be faster, cheaper, and more innovative a focus on commercially priced, scalable products and services The European Union and the United States have signaled interest in these novel capabilities. The US Department of Defense has taken steps to access commercial technology through new acquisition and budgeting authorities—for example, increasing the prominence of the Defense Innovation Unit and establishing the Replicator initiative in 2023 to rapidly field autonomous, attritable systems. NATO has formed an innovation accelerator (DIANA) to foster collaboration with start-ups and other tech companies, and has announced the €1 billion NATO Innovation Fund focused on dual-use technologies. Private capital has also indicated an intent to pursue defense tech opportunities, and we have observed that VC investment in such technologies outpaced the overall growth in venture spending between 2019 and 2023. Meanwhile, traditional defense firms have increased their corporate venture funds to be able to access the emerging tech. New defense tech companies face obstacles Despite this momentum, many next-generation defense tech firms have struggled to do business at scale with national security organizations. This is likely due to three main challenges: Reconciling program-centric versus product-centric operating models. National security customers often seek bespoke solutions to very specific problems versus an “out of the box” commercial offering. With limited access to classified information and other sources of insight, tech firms can struggle to understand the precise nature of these problems. The effort to tailor an existing solution to the “last mile” in defense may also not be compatible with the commercial scale business models favored by tech companies. Building a go-to-market muscle for defense markets. New defense tech companies can be constrained by unfamiliarity with the government sales and contracting landscape. Scaling a solution in defense markets requires a robust government affairs operation and an understanding of unique government procurement processes. Start-ups, in particular, often lack a track record of performing on programs of record at defense agencies, which can be an important requirement for winning new contracts. Aligning revenue timelines with investor expectations. Government contracting often offers an atypical return profile to private capital (such as VCs and growth equity) that has become the primary backer of defense tech start-ups. Private investors tend to look at three- to five-year horizons for returns—which can be out of sync with the slower (traditionally seven- to ten-year) pace of defense programs of record. A start-up may run short on funding before consistent revenue from government contracts begins to materialize. This mismatch is likely to deter private investment. Public markets are unlikely to fill this gap entirely, given their emphasis on short-term results and an aerospace and defense investor base that often emphasizes stable cash flows versus at-risk investments in novel technologies. Meanwhile, governmental entities in Europe and the United States generally invest less in innovation than their private sector counterparts: for example, the US national security community has recently been spending less than 5 percent of its total budget on developing innovative technologies, whereas a typical commercial technology firm spends three to four times that share of revenue annually. Successful defense tech disruptors use five strategies How to tackle these challenges? Lessons learned from successful defense tech companies include five strategies that they effectively employ. Lay the infrastructure for scaling from the outset. Most defense tech companies ultimately become hardware companies, and many are now facing the same scaling challenges as their more at-scale peers and competitors—such as maintaining manufacturing speed and quality, resilient supply chains, and machining or technical talent. Building scaling infrastructure into the initial plan, from prototyping resources onwards, can make the difference on time to market. Lower barriers by leveraging more established partners. Once a product’s validity has been demonstrated, partnership with an established industrial defense company could facilitate its entry to market. Established suppliers can bring installed bases, mission expertise, and customer familiarity that complements tech companies’ capabilities. Established suppliers often shape access to the aircraft, land systems, and ships that new mission systems will be integrated into by providing the “socket” into which a disruptor’s “lightbulbs” can plug. The list of recent partnership announcements between defense tech disruptors and traditional defense organizations span hardware and software across a range of technology focus areas, including 5G, hypersonic aircraft, autonomy for next-generation tactical aircraft, AI, and edge networks. Take, for example, defense disruptor, Helsing, which was able to get to a program of record in fewer than three years by partnering with an existing defense prime (Saab). Helsing’s AI and signal processing expertise complemented Saab’s hardware-based sensors and self-protection systems. As a result of the two companies growing closer, Saab in September 2023 made a sizeable investment of €75 million in Helsing’s most recent venture round, at an overall valuation of €1.5 billion. Go dual use. Purely can struggle to achieve scale defense-focused start-ups before investors become frustrated with delays. But, companies that find nonmilitary applications for their technologies can build scale in commercial markets, while buying the time needed to secure a long-term defense contract. However, pursuing dual-use innovations may also mean designing a two-speed business model to accommodate disparate timelines and unique international security requirements. Strong demand and healthy capital inflows have allowed certain dual-use tech organizations to thrive. Private investors, who have a higher tolerance for risk than public markets or government R&D appropriators, in many cases are looking to back dual-use technology, given its large potential returns and broad applicability. Vertically integrate to provide software and hardware in one solution. Defense customers generally are comfortable with purchasing integrated hardware and software products, rather than stand-alone software capabilities that can be applied to a range of hardware. For tech disruptors, opting to sell a piece of differentiated software packaged within hardware can be beneficial (for example, a fleet of ready-to-deploy drones rather than a drone operating system). Tailor sales capabilities to the customer. Selling to defense customers can be a challenge if a company hasn’t set up a government affairs unit with proper clearances and extensive experience. Tech companies can look beyond a defense organization’s broad requests for proposals and focus on communicating with potential customers about granular needs. Defense oriented technology is a vital and enduring component of national security. Start-ups, scaled commercial organizations, traditional defense contractors, and investors all have roles to play in integrating innovative new technologies into the defense ecosystem.

2024 CNDI Affirmative
Defense Industry Affirmative › Economy Advantage › New Entrants/Small Firms Key- Spillover

Competition in contracting allows new market entrants- spurs innovation across all sectors of the DIB, expands infrastructure, and

Aaron Holland in 2024

Analyst at the National Institute for Deterrence Studies; Investing in National Security: The Case for Fostering Competition in the Defense Industry; Global Security Review;

The United States stands at a critical juncture. As tensions rise and threats from Russia, China, North Korea and Iran evolve, it is paramount that the nation ensure it possess the strength needed to defend against adversary aggression. Central to this effort is the need to foster competition in key areas of the defense industrial base, including naval shipyards, intercontinental ballistic missile (ICBM) manufacturing, nuclear weapons design and manufacturing, and aircraft production. Such investments are not only vital for maintaining America’s military edge but also for safeguarding our nation against emerging threats. Encouraging competition and redirecting investments away from major defense contractors such as Raytheon, General Dynamics, Lockheed Martin, Boeing, and Northrop Grumman, towards emerging companies (Space X, Looking Glass, Kodiak) with innovative approaches and cost-effective capabilities, can enhance national security. This shift has the potential to lower defense procurement costs, provide technological advantages, and reduce the monopolistic control and price gouging these major contractors have over government defense contracts. Shipyards Naval shipyards are the backbone of maritime defense, yet their capacity and efficiency were challenged in recent years. Currently, the top military shipbuilding corporations are General Dynamics, Huntington Ingles, Lockheed Martin, Northrop Grumman, and Raytheon. The nation cannot continue to rely on these companies to produce cost-effective, on-time results for the Navy. The simple truth is almost every contract awarded to these companies ends up over budget and delayed years. By fostering competition among up-and-coming companies we can revitalize our shipbuilding industry, introducing new technologies and innovative approaches that improve cost-effectiveness and speed of construction. Paramount to the issue, the US needs to invest in developing additional shipyards to combat the growing Chinese capabilities as a new maritime superpower. This will not only strengthen the US naval fleet, but also allow the Navy to counter the rising threat and reverse the nation’s downward trajectory, creating jobs and stimulating economic growth. ICBM Manufacturing Enhancing ICBM manufacturing capabilities is essential for maintaining a strong nuclear deterrent. Currently, Boeing is responsible for producing key components for US and UK Trident II (D5) missiles and US Minuteman III ICBMs, while General Dynamics manufactures key components for US and UK Trident II (D5) missiles. Lockheed Martin plays a role in upgrading Trident II (D5) missiles for the US and UK, as well as Minuteman III, and also manages a UK nuclear weapons laboratory along with several US nuclear weapons facilities. Northrop Grumman is involved in similar activities, including Trident II (D5) missile upgrades for the US and UK, Minuteman III, and management of some US nuclear weapons facilities. Additionally, in 2020, Northrop Grumman was awarded a sole-source $13.3 billion contract for engineering and manufacturing Sentinel missiles to replace the current arsenal of 400 deployed Minuteman III ICBMs. They have also acquired Orbital ATK, which has similar involvements. Unfortunately, every nuclear modernization project went over budget and was delayed despite tens of billions of dollars pledged towards the modernization goal. Ultimately, increasing competition in this sector can spur innovation, resulting in more dependable and advanced missile systems at a more cost-effective price. Encouraging companies like SpaceX, Blue Origin, and Virgin Galactic to invest in defense manufacturing of rocket technology, possibly through government contracts, could drive progress. Furthermore, diversifying the manufacturing base can mitigate the risk of supply-chain disruptions, ensuring a consistent supply of these critical weapons. Nuclear Weapons Facilities Nuclear weapons design and manufacturing facilities are another area where competition can yield significant benefits. Currently, the Pantex Plant in Amarillo, Texas, is the only nuclear weapons assembly and disassembly facility. The nation needs more than a single facility for this task. This is a national security concern. Any issue with this facility, and assembly and disassembly of nuclear weapons is hampered. By encouraging competition, the nation can modernize the nuclear arsenal, ensuring it remains safe, secure, and effective. Moreover, competition in the assembly and disassembly process can lead to cost savings, which enables the nation to allocate resources to other pressing defense needs. Aircraft Manufacturing The need for a robust aircraft manufacturing capability is paramount. Navy Adm. John C. Aquilino, the head of US Indo-Pacific Command said, in recent congressional testimony, that China has the world’s largest navy and is soon to be the world’s largest air force. With potential adversaries investing heavily in advanced aircraft, America must maintain a competitive edge. With the looming prospect of having to fight and fund a three-front war (Ukraine-Russia, Israel-Iran, and China-Taiwan), the US needs to maintain its ability to obtain and provide air superiority in whatever conflicts it enters. By fostering competition, we can spur innovation in aircraft design and production, ensuring air superiority in future conflicts. Investing in cost-effective drone swarms and continued advancements of our 5th- and 6th-generation fighters is essential. Furthermore, the US must increase the number of strategic stealth bombers in its arsenal from 20 to 200 to 300. Development and purchase of 100 B-21 Raiders is a good start, but there needs to be more competition or manufacturing supply-chain issues will continue to plague this modernization process. Fallout Shelter Investments Investing in a more robust fallout shelter system is crucial for ensuring the safety and protection of the American population in the event of a nuclear attack or other catastrophic event. While government efforts have historically been the primary driver of fallout shelter development, there is also a role for private entities to play in this important endeavor. During the Cold War, the United States undertook a massive effort to build fallout shelters in anticipation of a potential nuclear conflict with the Soviet Union. The government constructed thousands of public fallout shelters in buildings such as schools, government offices, and subway stations. Private individuals and organizations also built their own shelters to protect against nuclear fallout. The government entities involved with fallout shelters are the Federal Emergency Management Agency (FEMA) and the Department of Defense (DoD). FEMA is responsible for coordinating federal government efforts in disaster response and recovery, including the development and maintenance of fallout shelters. The DoD is involved in the construction and maintenance of fallout shelters, particularly those designed to protect military personnel and assets such as the Cheyenne Mountain Complex. The primary private entities involved in developing and manufacturing fallout shelters are Atlas Survival Shelters, Rising S Company, and Hardened Structures. Atlas Survival Shelters specializes in the design and construction of underground shelters for protection against nuclear, biological, and chemical threats. Rising S offers a range of underground bunkers and shelters for protection against various threats, including nuclear fallout. Similarly, Hardened Structures provides custom-designed shelters and bunkers for protection against nuclear, biological, and chemical threats. While the number of public fallout shelters declined since the end of the Cold War, there are still thousands of designated shelters across the country, although most are unknown, rundown, and primarily used for storage. They should be refurbished and updated to properly address the sheer number of citizens that would be required to shield from not only the initial blast, but any possible fallout. Ultimately, it is essential that efforts to develop and maintain fallout shelters continue, as the threat of nuclear conflict remains a major concern in today’s world. By fostering competition in this sector, the nation can drive innovation and ensure that every American has access to adequate protection in the event of a nuclear attack or other catastrophic event. Conclusion The United States must prioritize investments in fostering competition and innovation across key areas of the defense industry to strengthen national security. By redirecting investments from major defense contractors towards emerging companies with cost-effective military capabilities, the nation can enhance its military edge, reduce costs, and mitigate the near-monopolistic control of government defense contracts. Revitalizing naval shipyards, enhancing ICBM manufacturing capabilities, modernizing nuclear weapons facilities, advancing aircraft manufacturing, and investing in a robust fallout shelter system are critical steps in safeguarding our nation against emerging threats. By encouraging competition and diversifying the manufacturing base, the nation can drive innovation, ensure a continuous supply of critical weapons, and maintain a technological edge over adversaries. It is imperative that the nation act now to secure the future of our national security.

2024 CNDI Affirmative
Defense Industry Affirmative › Economy Advantage › New Entrants/Small Firms Key- Spillover

Expanded access to military contracts is the key market signal- boosts all parts of the DIB, including production and arms export potential

Mike Brown in 2024

partner at the VC firm Shield Capital; Capitalism Can Revive The Defense Industrial Base; Forbes;

The Department of Defense recently introduced its first-of-a-kind industrial strategy, raising the point that the United States is no longer the arsenal of democracy, and our adversaries know it. Not only has our industrial base eroded over the past decades but our most important long-range missiles (Harpoons, Tomahawks, JDAMs, JRAMs and others) cannot be made without dozens of Chinese suppliers. This comes on the heels of the PPBE Commission, the Atlantic Council’s report on defense innovation adoption and new organizations like the Defense Innovation Unit that have been created in part to augment our industrial base. More important than any new strategy is the market signal to suppliers through meaningful contracts. According to data from Govini, $406 billion of defense contracts were awarded to traditional defense companies while only $4 billion was awarded to venture-backed companies last year. Contracts are the capitalist signal to current and future suppliers that we need more production and more production capacity. Non-traditional suppliers like venture-backed companies can be an important part of the solution but not if they must wait years for an antiquated Pentagon process to develop requirements and assign contracting responsibility followed by a multi-year budgeting process. The U.S. Army, Navy and Air Force—who do most of the buying at DoD—must issue large-scale and multi-year contracts to a larger base of suppliers if we want to grow the defense industrial base. The new strategy acknowledges the increasing risk to national security from a shrinking supplier base of six vendors who receive two-thirds of all procurement dollars, down from 50 vendors in 1990. A key part of the strategy is to “expand relationships with companies and technologies not traditionally in the defense industrial base.” I would go farther in saying that the practical way to expand these relationships is with production contracts to new entrants, leveraging how capitalism works in private industry. While we still need to improve capacity for more traditional defense items like munitions and weapons platforms, increasingly we must prepare for the digital transformation on the battleground that parallels what’s happening across our economy. In fact, 11 of the 14 technologies critical to U.S. national security, outlined by the Pentagon’s CTO, are being developed first by commercial companies rather than defense contractors. This includes AI, cyber tools, synthetic biology, autonomy and microelectronics where commercial demand far outstrips military needs. Break The Uniqueness Paradigm In buying more commercial technology, we break the paradigm that the military can only use specialized gear produced in low volumes at high prices. Much of what the military does—short of kinetic effects—can be done with commercial technology. Additionally, commercial technology enables our allies to field the same solutions as the U.S., making solutions interoperable and creating export markets for U.S. suppliers. Buying commercial solutions means getting the latest technology which potentially gives our warfighters an advantage over adversaries because commercial products iterate rapidly to improve performance, cost and functionality—especially in software. The reverse is also true, if we field lagging tech, we give our adversaries the advantage. DIU, which I led for four years until 2022, focuses on integrating commercial technology for defense applications, most often from new vendors, and often fielding capability in less than 24 months. DIU has helped the DoD add more than 100 new vendors but there are not enough follow-on production contracts to significantly grow the defense supply base. Buying more from non-traditional vendors is one of the fastest ways to expand warfighter capabilities and expand our industrial base. With this simple change, we provide the market-based demand signal that allows suppliers to invest in more production capacity and investors to provide more capital. We also make defense markets more competitive, supply chains more resilient, stimulate expanded capacity and encourage more companies and more investment in solutions enhancing national security. We influence capital markets to provide more solutions for our warfighters instead of more dating apps or better ad-targeting.

2024 CNDI Affirmative
Defense Industry Affirmative › Economy Advantage › Small Contractors Internal

Large and Small firms are both key to solve BUT state-acquired IP prevents small firms from interfacing

Farley 16 ((Robert Farley; Dr. Robert Farley has taught security and diplomacy courses at the Patterson School since 2005.  He received his BS from the University of Oregon in 1997, and his Ph.D. from the University of Washington in 2004., “Intellectual Property, Cyber Espionage, and Military Diffusion,” Global Security and Intelligence Studies, Volume 1, Number 2, Jan 1, 2016, doi: 10.18278/gsis.1.2.2)-KuGa

Why concentrate on IP law? Historically, the security studies subfield has paid little attention to development in international or domestic IP law, beyond a comment here or there about how technological innovation requires a sound legal basis.4 Few studies, however, have focused on how legal foundations affect a military–industrial complex or how the emerging international IP regime might affect the diffusion of military technology. But there are now several reasons to believe that IP law, both in its domestic development and in the context of the emerging international IP regime, may be having a strong, independent effect on the way states innovate and on how those innovations find their way around the international community. First, political demands of defense contracting have grown steadily more complex. Arms export agreements have increasingly taken on the character of transnational public–private partnerships. To sell fighter jets, US firms have to agree to build components in the customer country, as well as to transfer technology associated with the weapon system. This creates the need for intricate legal arrangements that delineate where and how firms can transfer technology. Second, alliances between defense firms have become ever more important to the production and development of military technology. James Hasik notes in Arms and Innovation that many of the best-known military systems of the last decades have emerged from alliances between large, traditional defense producers and small, nontraditional firms.6 These alliances inherently create the potential for conflicts over the ownership of technology and trade secrets, both between the firms themselves and between the firms and the government. To the extent that the nature of IP law affects the prospects of these alliances, it has an impact on military innovation. Third, the importance of dual-use technologies, especially in the computing and communications sectors, has complicated the relationships that firms have with the government. While most firms like selling to the government, few nontraditional providers envision the Defense Department as their only customer. Rather, they plan to sell their technological innovations on the open market- hence, “dual use.” State interest in acquiring the IP rights to the data, patents, and trade secrets of firms developing dual-use technologies runs directly counter to their commercial efforts. Finally, private firms have, over the past five decades, committed an ever-increasing percentage of total funds devoted to technological research and development. At the same time, the government remains deeply involved in most defense research, committing substantial resources to the development of new weapon technologies. Most new systems, consequently, involve some mix of state and private funding. This creates problems for the ownership of the IP associated with technological innovations, problems that IP law can either solve or exacerbate. While the broader project this article is associated with examines the role of IP law in both diffusion and innovation, this article concentrates on the former. Specifically, it examines how developments in IP law may have changed the nature of industrial espionage, especially in cyberspace. The article hopes to develop a framework for understanding the relevance of the efforts of the PLA to target the IP of defense-related firms in the United States and Europe.

2024 CNDI Affirmative
Defense Industry Affirmative › Economy Advantage › Small Contractors Internal

Inability of investors to access contracts deters new entrants into the market- this undermines the DIB and risks collapse of US power projection

Jeff Decker, and Noah Sheinbaum in 2024

Jeff Decker, Ph.D. is managing director of Tech Transfer for Defense at Stanford University’s Doerr School of Sustainability and is a co-instructor of the graduate-level Hacking for Defense course. Follow his work at Stanford’s Hacking for Defense blog.; Noah Sheinbaum is the founder of Frontdoor Defense, a platform to simplify the defense industry for mission-aligned builders and operators. He also co-founded Defense Tech Jobs, a jobs board for defense technology companies, and consults for various purpose-driven companies.

Shining a Light on the Defense Department’s Industrial Base Problems; The Strategist Vol 7, Iss 1 Winter 2023/2024 | 75-88 Stable URL: https://doi.org/10.26153/tsw/50673

2024 CNDI Affirmative
Defense Industry Affirmative › Economy Advantage › Small Contractors Internal

DoD IP policy undermines the DIB by pushing new entrants out of the market, reducing innovation

Scott A. Freling & Alexander Hastings on February 23, 2022

Scott Freling represents civilian and defense contractors, at all stages of the procurement process, in their dealings with federal, state, and local government customers and with other contractors Alex Hastings advises clients across a broad range of government contracting issues, including advising clients in transactional matters involving government contractors and assisting defense contractors and pharmaceutical companies in securing and performing government contracts. DoD Signals Increased Scrutiny of Gov Con M&A and Renewed Interest in Background IP Rights; Global Policy Watch-Key Public Policy Developments Around the World; https://www.globalpolicywatch.com/2022/02/dod-signals-increased-scrutiny-of-gov-con-ma-and-renewed-interest-in-background-ip-rights/

In the meantime, contractors might expect DoD to increase its focus on securing greater rights in contractor IP when conducting procurements. The report raises concerns that data rights held by contractors limit competition in DoD procurements and result in “vendor lock” — by which contractors with proprietary data rights in a government system gain an advantage during future procurements. In response, DoD suggests that it could increase competition by enhancing its rights in contractor background data, including by requiring contractors to provide form, fit and function data sufficient to allow the government to “reverse engineer” the proprietary elements of a larger system and plug in alternative components or subsystems. The report also suggests that DoD should negotiate broader special license rights in background IP on the front end that would essentially allow DoD to provide background IP to third parties for incorporation into larger systems during follow-on procurements. The report recognizes, albeit in passing, that “IP rights encourage technology innovations that are critical to DoD’s capabilities and mission by enhancing the return on investment for those entities that invest in creating such technology.” However, the report does not address the potential impact that requiring additional IP rights in background IP could have on DoD’s persistent efforts to expand participation in the defense industrial base. Indeed, many companies (particularly those with commercial offerings) rely on protection of their background data rights when developing solutions for DoD platforms, as these rights are often core to a company’s value, including in the commercial market. Requiring contractors to turn over rights that would allow the government to reverse engineer proprietary solutions or provide those proprietary solutions to competitors is likely to discourage new entrants in the defense industrial base, further highlighting the tension between the report’s stated objectives.

2024 CNDI Affirmative
Defense Industry Affirmative › Economy Advantage › Small Contractors Internal

Unlimited rights agreements are a blunt tool used by the DoD – they deter new entrants and smaller companies from entering the defense market, undermining competition and innovation

Babak Siavoshy in 2022

general counsel at Anduril Industries; How Data Rights Stifle Innovation in the DoD (and How to Fix Them); https://future.com/data-rights-stifle-innovation-in-the-dod/

Government purpose rights and unlimited rights agreements are the most common rights in military software solicitation and, accordingly I’ll spend the most time on them. These rights are not well suited to modern software projects. In fact, it would be difficult to come up with a data rights framework that is more likely to scare away modern software talent, software investment dollars, and software companies than government purpose rights or unlimited rights. Government purpose rights afford the government – that is, the entire United States government, forevermore – the “rights to use, modify, reproduce, release, perform, display, or disclose technical data or computer software within the Government without restriction, to release or disclose technical data or computer software outside the Government, and to authorize persons to whom release has been made to use, modify, reproduce, perform, or display that technical data or computer software, provided that the recipient exercises such rights for Government purposes only.” (A “government purpose” is any activity where the U.S. government is a party. It is well established that the government can take software obtained with these rights from one contractor and simply give it to another contractor as part of a separate contract for similar work.) Upon expiration of the five-year period, the government gains unlimited rights. Unlimited rights are similar to government purpose rights, but allow the government to share the software for any purpose whatsoever – including, should it choose to, sharing it with the vendor’s commercial competitors for pure commercial use. Government purpose rights and unlimited rights come with the implicit threat that if the vendor underperforms or attempts to raise prices on their product, the government may hand the source code to another vendor to maintain, modify, and profit from. (A strange feature of data rights is that they are negotiated separately from deliverables, so that it is possible to have government purpose rights to software but no source code delivery, or vice versa. For this discussion I am assuming the government has requested source code with the rights, though there are some high-profile examples where it has failed to do so.) They also permit the government to take software provided for a specific use and a specific agency, and deploy it for a totally different use in a totally different government agency, and with a different vendor – without paying the original creator of the software any additional fees. The problems with government purpose rights and unlimited rights Understandably, acquisition officials use government purpose rights and unlimited rights as a blunt tool to prevent vendor lock-in and impose downward price pressure on software providers. However, these rights also have costs, encouraging gamesmanship and abuse by both vendors and the government – to the detriment of U.S. taxpayers and the American warfighter. Vendors, for their part, can manipulate these superficially broad data rights frameworks to lock the government into their proprietary systems even when the vendor contributed relatively little to the overall solution. Government purpose rights and unlimited rights are tied directly to government funding, meaning that a vendor can work around these rights by self-funding a critical aspect of a piece of software and asserting proprietary rights to it. In a typical example, a vendor self-funds the development of a small-but-critical component of a larger government-funded system, and secures proprietary rights to that component. The vendor has effectively “locked in” the Government into its system, even though the vendor did not bear the balance of the risk and did not contribute the balance of the value in developing and fielding the larger system. The government is left with what it calls “Swiss cheese data rights” for a system it largely funded. Just as common is the opposite scenario: The government, aware of the risk of lock-in, end-runs the “funding-focused” data rights regime and structures solicitations around expansive government purpose rights or unlimited rights from the get-go. While the government cannot legally require that a vendor provide government purpose rights to its self-funded proprietary systems, it can set up its solicitation so that vendors with proprietary systems simply fail to score well at the proposal stage of the solicitation – typically on scoring criteria such as vendor lock-in, which are then narrowly interpreted as a stand-in for the vendor’s willingness to provide government purpose or equivalent rights to the system. In doing so, the Government can effectively exclude vendors that offer proprietary solutions from ever winning such solicitations. The problem with this approach is that, while it avoids vendor lock in, it destroys competition – which is the opposite of the desired effect. By structuring software solicitations around broad data rights agreements, the government virtually guarantees that many of the best software providers will opt out of competing for DoD contracts. With a few idiosyncratic exceptions, modern software companies will simply not work under expansive data rights agreements without a clear path to production. The primary reason is simple economics: Modern software development is expensive. It requires fast and risky development cycles funded by internal research and development (IRAD) dollars. As a result, the software and computing industry spends a full order of magnitude more on IRAD than does the aerospace industry. Commercial software companies expect to recoup the significant sums of time and money associated with this IRAD through successful deployment of robust software across numerous customers. Profit margins for commercial software are higher than in other industries, which in turn supercharges IRAD, competition, and investment in the field of commercial software, generating a virtuous cycle that is responsible for much of the technology we take for granted today. The DoD should be aiming to recreate this virtuous cycle in its acquisitions. To be sure, government purpose rights and unlimited rights agreements do not bother traditional defense contractors, who are used to building bespoke systems off cost-plus contracts. Traditional defense contractors are unable to compete in the commercial software market, and therefore perform very little true IRAD. They are used to having their development costs covered by U.S. taxpayers through hourly labor contracts. They are the greatest beneficiaries from the government’s insistence on expansive data rights, which effectively clear the field of competition from companies with more innovative IRAD and software deployment models.

2024 CNDI Affirmative
Defense Industry Affirmative › Uniqueness › DoD IP Hurts DIB- Broad

DoD acquisition policy is undermining the DIB- this puts every aspect of US military and tech power at risk

Moshe Schwartz and Michelle Johnson in 2022

President of Etherton and Associates, a consulting and lobbying firm specializing in defense acquisition, industrial base, and cybersecurity policy; Communications Manager at the Acquisition Research Program at the Naval Postgraduate School (NPS); The Slow Destruction of the Defense Industrial Base; Acquisition Research Program Department of Defense Management Naval Postgraduate School; Excerpt from the Proceedings of the Nineteenth Annual Acquisition Research Symposium; Acquisition Research: Creating Synergy for Informed Change May 11–12, 2022

The National Security Innovation and Industrial Base (NSIB) is the bedrock upon which American military strength is built.1 This national security base draws its strength from the economic powerhouse that is the U.S. economy. In recent years, however, a strange and disturbing trend has emerged. The NSIB is becoming detached from the greater U.S. economic base. Specifically, in a departure from most of U.S. history, much of the domestic economic engine—private industry—is choosing not to work with the federal government in general, and the Department of Defense (DoD) in particular. This drifting of private industry is occurring precisely at a time that the federal government increasingly relies on commercial technologies. The pace of technological change is accelerating every year, and we have known for decades that the DoD needs to better align business practices with those of the private sector to reap the benefits of commercial innovation. In 1995, the Clinton administration released the policy document Dual-Use Technology: A Defense Strategy for Affordable, Leading-Edge Technology, the technology strategy corresponding to acquisition reform outlined in the Federal Acquisition and Streamlining Act of 1994. This strategy ambitiously set out to mirror defense business processes around commercial practices to make it easier to incorporate commercial technology into defense programs. Then Under Secretary of Defense for Acquisition and Sustainment Paul Kaminski (1995) detailed the need for the DoD to “place greater reliance on the commercial sector to reduce costs, shorten acquisition cycle times and retain technologically advanced defense equipment.” More recently, the 2018 National Security Strategy noted that “Technologies that are part of most weapon systems often originate in diverse businesses as well as universities and colleges” (The White House, 2018, p. 21). Many DoD purchases incorporate or depend on commercial technologies such as cloud computing, software, and other information technology (IT) capabilities. In 2022, the DoD’s list of 14 critical technology areas vital to national security identified only three that are defense-specific (hypersonics, directed energy, and integrated sensing and cyber). The vast majority of critical technologies on this list are either the result of “existing vibrant commercial sector activity” (Under Secretary of Defense for Research and Engineering, 2022, p. 4) or emerging technologies being developed in the private sector or in collaboration with the DoD. Some of the commercial technologies identified are artificial intelligence, autonomy, microelectronics, space technology, advanced computing and software, and human-machine interfaces (pp. 3–6). Despite this reliance on commercial capabilities, defense acquisition and business processes continue to become more complex, more heavily regulated, and out of synch with the private sector. The consequences of this trend for U.S. military strength are considerable. The DoD and other national security agencies are not leveraging the most advanced technologies and capabilities the commercial markets have to offer – but many of our competitors and potential adversaries are. Start-ups have access to global capital and markets, innovation is diversifying across borders, and technology development in areas relevant to the military is proliferating. The U.S. failure to leverage commercial industry is a recipe for losing our military, cyber, and intelligence advantages.

2024 CNDI Affirmative
Defense Industry Affirmative › Uniqueness › DoD Hurts IP Now

DoD forcing contractors under more control – DoD is expanding DFARS pushing contractors into negotiated prices and special license rights

Nagel and Hayes 20, Chris Nagel is a government contracts (GovCon) attorney based in Holland & Knight's Tysons office whose practice is focused on litigation and compliance matters. His work includes a particular focus on companies that contract with the U.S. Department of Defense (DoD) and U.S. Intelligence Community (IC), as well as other aspects and matters that involve national security. Kelsey Hayes is a government contracts attorney and litigator in Holland & Knight's Tysons office. She regularly and successfully litigates bid protests, claims and disputes before the U.S. Government Accountability Office (GAO). Holand and Knight “DOD's New IP Rules May Impact Contractors' Rights in Computer Software and Technical Data” December 22, 2020 AS

Defense contractors may soon face changes to their rights in computer software and technical data. The U.S. Department of Defense (DOD) has proposed revisions to the Defense Federal Acquisition Regulation Supplement (DFARS) designed to shift intellectual property rights terms from the current standard to terms that are more individualized by contract – resulting in ownership and license rights that are more favorable to the government and less favorable to contractors. Among other changes, the new rules will require contractors to assign monetary value to their technical data and computer software in proposals. The new rules also will encourage the government to negotiate for special license rights. These proposed revisions, DFARS Case 2018-D071 and Case 2018-D018 (collectively referred to as the DFARS Cases), will revise the DFARS to comply with sections of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018. In their current form, however, the revisions address a wide range of changes that extend beyond the requirements of NDAA FY 2018. Contractors should begin to plan now for implementation of the new rules. Proposed Rules Late last year and earlier this year, DOD published Advanced Notices of Proposed Rulemaking (ANPR) addressing the DFARS Cases. As of the date of this publication, both DFARS Cases are currently under review by the Defense Acquisition Regulation Council's (DARC) Patents, Data and Copyrights Committee. The NPRM is forthcoming. DFARS Case 2018-D071 , the first ANPR published on Nov. 12, 2019, will implement Sections 835(a)(1), as amended by Section 867 of NDAA FY 2019 (10 U.S.C. § 2439) and 835(c) (10 U.S.C. § 2320(f)). Negotiation of Price for Technical Data (10 U.S.C. § 2439) Notably, while 10 U.S.C. § 2439 only requires price negotiations for data for major weapon systems, DOD's proposed rule would expand the regulatory requirement to "include commercial technical data, noncommercial technical data, and computer software (and associated license rights)[.]" According to the ANPR, DOD policy is to acquire needed technical data and computer software and associated license rights under contracts for the acquisition of supplies, services, and business systems. Accordingly, the primary proposed change would extend the scope of regulatory coverage to encompass contracts other than those for engineering and manufacturing development, production, or sustainment (including services contracts). DOD primarily is proposing to revise DFARS 215.470(a), which will direct contracting officers to require offerors provide estimates of the prices of data and associated licenses rights in order to evaluate cost to the government. The revision provides that "before making a source selection decision or awarding a sole-source contract, the contracting officer shall negotiate a price for data (including technical data and computer software) and associated license rights to be . . . provided under a contract for the development, production, or sustainment of a system, subsystem, or component; or services" (emphasis added). The proposed rule states that "such negotiations should be based upon the use of appropriate intellectual property valuation practices and standards." According to DOD, "it is only in the case when neither party desires a special license agreement (e.g., because neither party anticipates doing so would more equitably address the parties' relative interests), that the parties are not required to negotiate." Effectively, however the rule forces the contractor to engage in negotiations with the government, providing DOD with leverage to seek more rights and forcing the contractor to decide just how much it is willing to give away to secure the award. DFARS, Case 2018-D018 , the second ANPR published on Jan. 14, 2020, will implement Section 871 (10 U.S.C. § 2322a). DOD again proposes regulatory reform beyond the scope of the statute. As stated in the ANPRM, "although the statute focuses on detailed aspects of the delivery requirements for noncommercial computer software, the proposed DFARS revisions also recognize that the government must consider and acquire appropriate license rights in order to utilize those deliverables." DOD stated that, for this reason, it included references to "necessary license rights" and "associated license rights" throughout the proposed revisions. DOD is proposing to add the requirements of 10 U.S.C. 2322a, subsection (a) to DFARS 227.7203-2(b) nearly verbatim, requiring that the government's "needs determination" address "the acquisition at appropriate times in the life cycle of all computer software, related data, and associated license rights necessary to" (emphasis added) meet the government's needs for life cycle activities (e.g., reproducing, building, recompiling, testing, and deploying the software). The requirements of subsection (b) are to be included under DFARS 227.7203-2(c), making contracting officers responsible for ensuring that solicitations and contracts require "that any computer software, related data, and associated license rights identified in the needs determination" 1) include software in digital format, 2) not rely on external or additional software or data and 3) when the negotiated terms do not permit the inclusion of external or additional software or data, "include sufficient information to support maintenance and understanding of interfaces and software revision history, along with all necessary license rights" (emphasis added). As noted above, DFARS 252.227-7014 already provides DOD with substantial rights in noncommercial computer software and documentation. With this new DFARS provision, DOD seeks to expand its intellectual property (IP) rights even further. Conclusion Whether these proposed changes survive DARC's review, the notice rulemaking period and ultimately end up in the DFARS remains to be seen. DOD is taking an aggressive stance when it comes to rights in technical data and computer software – evidently with strong Congressional support. The DFARS Cases, as well as DOD's and Congress's actions, will continue to be monitored

2024 CNDI Affirmative
Defense Industry Affirmative › Uniqueness › DoD Hurts IP Now

Pentagon demanding ALL IP rights from DIB – they are getting more assertive

Graham 24, Edward Graham is a technology reporter for Nextgov/FCW, where he reports on national security technologies and policies, the Department of Veterans Affairs and election security issues. He received his master’s degree in Journalism and Public Affairs from American University in 2016. Defense One “All Pentagon contracts should secure data rights, says advisory board” February 6, 2024, https://www.defenseone.com/policy/2024/02/defense-innovation-board-looks-lock-data-access-all-vendor-agreements/393930/

Congress should require all Pentagon contracts to secure data rights from the vendor, the Defense Innovation Board says. “The current state of data access within DOD vendor agreements is fragmented and inconsistent,” the advisory board wrote in its most recent , which includes suggested legislative text for the FY2025 National Defense Authorization Act that would "enshrine DOD data access and rights in all vendor agreements.” An independent oversight committee that provides technology recommendations to the defense secretary and other senior Pentagon officials, the board was in October 2023 by David Honey, defense undersecretary for research and engineering, to help the department improve its use of data. The study was cleared for public release on January 23. The report called the Pentagon’s efforts to quickly access and use needed data across the entire department “outdated,” noting that inadequate data access practices are “inhibiting effective interoperability and utilization of data across various platforms” needed to enable the DOD’s Combined Joint All-Domain Command and Control initiative. Known as CJADC2, the departmentwide effort seeks to streamline information-sharing across disparate military domains into one cohesive network. The board said the NDAA proposal — which it called an “initial action” to address the department’s broader data access issues — would ensure that all future DOD vendor agreements “incorporate clear language on data rights and interoperability that manages data procured or generated under defense industrial contracts, and that facilitates, safeguards and future-proofs DOD’s access to this data.” The DIB report also recommended that the proposed requirement “direct the formation of a federated defense industrial data catalog for defense companies and the department, a trusted community of interest for accessing this federated data catalog and an oversight body for this new data marketplace.” During the DIB’s on Jan. 26, Ryan Swann — a board member and the chief data analytics officer at Vanguard — said the recommended NDAA proposal would help the Pentagon “prioritize data rights and data interoperability so that we can get data out of our platforms and systems so they can be shared securely, kind of across the enterprise where we find value, or where we are able to leverage AI to create value.” While the board’s report said including its recommendation in the next must-pass defense policy bill would not, on its own, be a panacea for all of DOD’s data challenges, it wrote that “enhanced collaboration with commercial vendors will propel DOD’s antiquated approach to data access decades forward in the next 12 to 18 months.”

2024 CNDI Affirmative
Defense Industry Affirmative › Uniqueness › DoD Hurts IP Now

Government agencies have increased their focus on acquiring more data rights – requiring contractors to provide data with greater license

Weist 20, Nicole is nationally recognized in two of the most complex areas of government contracting: cost and pricing and intellectual property/data rights. She is one of only six lawyers recognized by Chambers USA in the “Cost Dispute Spotlight” for her depth of experience in cost accounting litigation. Crowell “Government Contracts – Government and Industry Tensions Around Intellectual Property” . January 22, 2020 AS

Government agencies continue to require contractors to provide more technical data and computer software to the government, along with greater license rights in that data. That means that contractors should expect to see more IP-related litigation. “When it comes to IP in government contracting, the rules are quite different than in the commercial space—and there are different rules for civilian agencies and the DoD,” says Nicole Owren-Wiest, a partner in Crowell & Moring’s Government Contracts Group. When a government contract requires technical data and computer software to be delivered to the government, the government acquires a license in the data that is referred to as “data rights.” With Department of Defense contracts, the scope of the government’s license generally depends on the source of funding for development (government, private, or mixed), the nature of the item or software (commercial or noncommercial), and any negotiated terms of the contract. If the development is government-funded, the government is entitled to an unlimited rights license, which means that it may disclose (i.e., sublicense) the data outside the government for any purpose. If the development is funded exclusively by the contractor, the government is entitled to a limited or restricted rights license, meaning the data can only be disclosed within the government and not, for example, to other contractors, subject to certain exceptions. If the development funding is mixed, the government may be entitled to government purpose rights, which allows the government to disclose the data outside the government, including to other contractors, for government purposes, such as competing for and performing a government contract. There are also subsets of technical data, such as “form, fit, and function” data and data that is “necessary for operation, maintenance, installation, and training purposes.” With this technical data, the government is entitled to an unlimited rights license regardless of the source of funding. Contractors must assert the applicable data rights in their proposals and mark the data they claim is subject to rights restrictions. The government can challenge contractors’ assertions for up to several years after final payment under the contract. For the past few years, government agencies have increased their focus on both acquiring more contractor technical data and software under its contracts and gaining greater rights in that data, even when the items or software being acquired have been developed exclusively at private expense. This has been particularly true for DoD agencies, which tend to view such data as critical to their ability to enhance competition and sustain systems and subsystems over their life cycle. For example, says Owren-Wiest, “we are seeing more solicitations requesting the contractor deliver detailed manufacturing or process data and computer software, including source code, with at least government purpose rights, even when development was accomplished exclusively at private expense, because the government asserts the data are necessary for its sustainment objectives and to avoid vendor lock-in.” These requests are directly at odds with the contractor’s objective to protect its IP. This tension is resulting in an increased number of data-rights disputes between contractors and the government. Owren-Wiest notes that in 2018, a contractor filed a pre-award bid protest challenging the terms of an Air Force solicitation that required the delivery of an additional broad category of data, including software, for enabling the installation and maintenance of the system, including installation, de-installation, disassembly, and reassembly activities, with at least government purpose rights. “The company challenged the terms that it believed were overreaching, including the requirement to deliver software developed exclusively at private expense with government purpose rights,” she says. That issue was not addressed by the Government Accountability Office because, during the protest, the Air Force clarified that offerors would not be required to sell or otherwise relinquish to the government any rights in software developed exclusively at private expense (except for certain identified exceptions not at issue in the protest), either as a condition of being responsive to the solicitation or as a condition for award. Similar pre-award protests are likely in the near future. “In talking with companies, we find that more are considering filing pre-award bid protests around far-reaching data-rights terms and requirements for delivery of technical data and software,” she says. A Range of Disputes The government can negotiate with offerors to purchase technical data and software that it has determined are necessary to satisfy its needs, as well as to evaluate the license rights an offeror is willing to grant the government as part of the government’s source selection. However, some government solicitations have included fairly aggressive data-rights requirements, Owren-Wiest notes. “The question is, at what point do these requirements cross the line? The statute 10 U.S.C. 2320 says that the government cannot require a contractor to relinquish greater rights in technical data as a condition of being responsive to the solicitation or eligible for award. Also, the government cannot prohibit or ‘discourage’ contractors from proposing to deliver a solution that was developed exclusively at private expense solely because the government’s rights in the data related to that solution may be restricted. Those two restrictions have never been tested. What does it mean to be ‘discouraging’? In the next year or so, we will probably see contractors testing those prohibitions.” Government agencies are also being more proactive about questioning contractors’ data-rights assertions. “We are seeing more formal challenges to contractors’ assertions and markings by the government during contract performance, resulting in more formal disputes,” Owren-Wiest says. For example, the contractor may deliver noncommercial technical data or software with limited or restricted rights because they were funded exclusively at private expense. Nevertheless, the government may question the contractor’s markings and rights assertions if it believes that some portion of the development was funded by the government. The government is increasingly likely to issue such challenges when the contractor’s solution was tested or modified at some point under a government contract.

2024 CNDI Affirmative
Defense Industry Affirmative › Uniqueness › DoD Hurts IP Now

2024 NDAA directs the DoD to increase its acquisition of intellectual property in defense contracts

Tina D. Reynolds in 2024

NOTABLE PROVISIONS OF THE FY 2024 NATIONAL DEFENSE AUTHORIZATION ACT; Government Contract Insights; https://govcon.mofo.com/topics/notable-provisions-of-the-fy-2024-national-defense-authorization-act

On December 22, 2023, President Biden signed the National Defense Authorization Act for Fiscal Year 2024 into law after bipartisan congressional majorities approved the bill earlier in the month. The annual bill authorizes appropriations and sets policy for the Department of Defense (“DoD”) and generally reflects the priorities of the House and Senate Armed Services Committees. Below, we review select provisions likely to be of greatest interest to government contractors. Many of these provisions will only take effect after the government promulgates implementing regulations, following notice-and-comment procedures. Noteworthy Provisions Contract Administration Expansion of Multiyear Contracts. A need for industrial base stability can now justify multiyear procurement contracts. Previously, multiyear contracts were only permissible if the DoD determined they would bring “significant savings” to the total price that the government would pay over the course of the contract. In expanding the availability of multiyear contracts, Congress determined that reliance on cost savings only was too restrictive and that promoting defense industrial base stability was sufficient justification for longer contracts. (Section 820) Extension of Inflation Relief. The DoD will have more time to write inflation adjustments into fixed-price contracts as the NDAA extends an inflation relief program first enacted in the Fiscal Year 2023 NDAA by a year, until December 31, 2024. The program allows DoD contracting officers to make price adjustments to contracts as compensation for high inflation, even for fixed-price contracts that do not otherwise provide for economic price adjustment. (Section 824) Waiver of Procurement Rules for Replenishment of Stockpiles. Emergency acquisition authorities can now be invoked to replace military supplies that have been provided to allies. This provision expands upon emergency acquisition authorities at 10 U.S.C. § 3601, which allow the military to waive certain procurement rules, including competition requirements, in emergency situations. The provision was designed to accelerate the pace at which the United States can refill its stockpiles of weapons and other equipment that have been sent to Ukraine. (Section 831) Earned Value Management System Exemption. DoD contracts and subcontracts for purchase of software will be exempt from Earned Value Management System requirements. The DoD has 180 days from the NDAA’s enactment to update the Defense Federal Acquisition Regulation Supplement (DFARS) to implement this provision. (Section 827) Contracting Innovation Increasing Use of Commercial Products and Services. As part of its continued efforts to simplify the process for DoD acquisition of commercial goods and services, Congress has directed the Under Secretary of Defense for Acquisition and Sustainment to prepare a report about the feasibility of several measures that would reduce administrative barriers to procuring commercial goods and services. The first measure would “establish a default determination” that products and services the military buys are commercial. Another measure would direct more acquisitions under FAR Part 12, which contains specialized procedures for commercial purchases. (Section 875) Supply Chain Scrutiny. The supply chains of five weapons platforms will receive greater scrutiny under a DoD pilot program. The pilot program should “identify critical suppliers” and “potential risks to and vulnerabilities of” those suppliers. The program could also be used to develop strategies to expand production of each platform’s components. New technologies, such as artificial intelligence and machine learning, could aid in the identification and analysis of supply chain vulnerabilities. (Section 856) DoD to Obtain Enhanced Data Rights. Congress wants the DoD to experiment with innovative intellectual property strategies to acquire more data rights in information technology products. The suggested new strategies include holding intellectual property data in an escrow account or the innovative use of royalties and licenses. Each military department must select one acquisition program for the new strategies, and an additional program will come from one of the DoD agencies or field activities. DoD components have until May 1, 2024, to designate the data rights pilot programs. (Section 808)

2024 CNDI Affirmative
Defense Industry Affirmative › Uniqueness › DIB Decline Now

The DIB is shrinking even as military spending increases- small and large firms are both declining each year

Moshe Schwartz and Michelle Johnson in 2022

President of Etherton and Associates, a consulting and lobbying firm specializing in defense acquisition, industrial base, and cybersecurity policy; Communications Manager at the Acquisition Research Program at the Naval Postgraduate School (NPS); The Slow Destruction of the Defense Industrial Base; Acquisition Research Program Department of Defense Management Naval Postgraduate School; Excerpt from the Proceedings of the Nineteenth Annual Acquisition Research Symposium; Acquisition Research: Creating Synergy for Informed Change May 11–12, 2022

The NSIB is shrinking. According to a recent report by the U.S. Government Accountability Office (GAO), from FY2011 to FY2020, the number of small businesses receiving DoD contract awards decreased by 43% (dropping from 42,723 to 24,296), even as obligations to small businesses increased by approximately 15% (GAO, 2021). This phenomenon extends to all businesses, as companies of all sizes are choosing not to work with the DoD. As the GAO (2021) pointed out, “The number of larger businesses receiving contract awards fell by 7.3 percent per year on average from 2011–2020, while the number of small businesses receiving contract awards fell by 6 percent per year” (p. 9). Analysis from Bloomberg Government (2021) shows this trend continuing in FY2021. By their count, the number of prime vendors declined from 142,000 to 97,000 in the past decade. As they point out, The federal industrial base is shrinking even as contractors are asked to respond efficiently to increasingly complex requirements and crises … A decade-long, 23% increase in contract spending since fiscal 2012 means larger and fewer contracts are going to larger and fewer companies while agencies rationalize burdensome portfolios to keep pace with urgent priorities such as pandemics, cyberattacks, wars, climate change, and infrastructure modernization. (Bloomberg Government, 2021) The past decade has seen variability in defense toplines, averaging a 10% decline from 2011 to 2020 (adjusted for inflation). However, this decline does not align with the 31–36% drop in vendors (Duffin, 2021). The decline in industry participation in the government marketplace also stands in sharp contrast to the overall U.S. economy. U.S. GDP grew by 34% from 2011 ($15.6 trillion) to 2020 ($20.9 trillion; The World Bank, 2022). The total number of businesses in the U.S. economy also grew, increasing 7% from 2010 to 2019 (U.S. Census Bureau, 2021). As the above data indicate, even increased defense and government spending is not a sufficient enough incentive to persuade companies to work with the DoD.

2024 CNDI Affirmative
Defense Industry Affirmative › Uniqueness › DIB Decline Now

US DIB at risk of falling behind China and Russia- they are both scaling up investment and production

Hoffman 4/18 [Elizabeth Hoffman, Southwestern University, George Washington University, Director of Government Affairs & Fellow at Center for Strategic and International Studies (CSIS); 18 April 2024; “How Supporting Ukraine Is Revitalizing the U.S. Defense Industrial Base”; Center for Strategic & International Studies; ]//InTr

Regardless of the funding mechanism—whether replenishment for PDA or for USAI—this money flows into the United States’ DIB. This has direct, and substantial, impacts on what the DOD has identified as “prime vendors and critical suppliers in 37 states.” The map below demonstrates the massive influx of funds into the DIB since January 2022, shortly before the inception of the war, by identifying parts of the DIB relevant to restocking or future manufacturing for transfers to Ukraine. This map includes all contract funding for relevant systems and munitions, not just those destined for Ukraine, and thus shows the extent of the full demand signal bolstering the U.S. DIB. This map shows funding by congressional district, not to draw attention to specific members of Congress, but because this distinction is made in DOD contracting documents and allows for greater specificity than showing investment by state. As shown in the map, there are several districts that received substantial contract spending between 2022 and 2023, notably, in descending order, Texas-33, Arizona-3, Arizona-7, Michigan-10, Pennsylvania-10, Massacheusetts-6, Florida-10, Alabama-5, and Missouri-1. These specific states have received a significant influx of cash into their factories that not only provides jobs for Americans but also creates “opportunities for local suppliers, shops, restaurants and other businesses that support the factories rolling out weapons.” These benefits overflow to surrounding areas as workers will sometimes cross state borders, let alone congressional district lines, to meet the specialized workforce needs of these facilities. Analysis shows that the DIBs of China and Russia have significantly scaled up production and are on wartime footing. If the United States fails to respond to this strategic reality and fails to scale up and sustain production across a range of capabilities, it may find itself unable to deter and defend against the current threat environment for the first time in decades. A supplemental spending bill focused on providing Ukraine with the arms it needs to fend off Russia’s illegal aggression could start to move the needle in the right direction. As Congress considers another supplemental spending bill for Ukraine, this analysis reveals that this infusion of cash is just as valuable, if not more so, to U.S. readiness and deterrence as it is to sustaining Ukraine on the battlefield. Walking away from Ukraine will not only put NATO and the United States at risk but also undermine bipartisan efforts to make the necessary investments in the DIB creating further challenges for any future fight.

2024 CNDI Affirmative
Defense Industry Affirmative › Uniqueness › DIB Decline Now

The U.S. is at risk---DIB currently lacks capacity for war

Jones and Palmer ‘24(Seth G. Jones is senior vice president, Harold Brown Chair, director of the International Security Program, and director of the Warfare, Irregular Threats, and Terrorism Program at the Center for Strategic and International Studies (CSIS). Alexander Palmer is an associate fellow in the Warfare, Irregular Threats, and Terrorism Program at the Center for Strategic and International Studies (CSIS)); March 6,2024; “China Outpacing U.S. Defense Industrial Base”; ; AB

China’s defense industrial base is operating on a wartime footing, while the U.S. defense industrial base is largely operating on a peacetime footing. Overall, the U.S. defense industrial ecosystem lacks the capacity, responsiveness, flexibility, and surge capability to meet the U.S. military’s production and warfighting needs. Unless there are urgent changes, the United States risks weakening deterrence and undermining its warfighting capabilities. China is heavily investing in munitions and acquiring high-end weapons systems and equipment five to six times faster than the United States. China is also the world’s largest shipbuilder and has a shipbuilding capacity that is roughly 230 times larger than the United States. One of China’s large shipyards, such as Jiangnan Shipyard, has more capacity than all U.S. shipyards combined. Second, the U.S. defense industrial base continues to face a range of production challenges, including a lack of urgency in revitalizing the defense industrial ecosystem. The U.S. Department of Defense has taken some helpful steps to strengthen the industrial base, such as developing a National Defense Industrial Strategy, increasing production for some weapons systems, and pushing for multiyear procurement. But there is still a shortfall of munitions and other weapons systems for a protracted war in such areas as the Indo-Pacific. Supply chain challenges also remain serious, and today’s workforce is inadequate to meet the demands of the defense industrial base.

2024 CNDI Affirmative
Defense Industry Affirmative › 1AC › 1ac – Hegemony Advantage

Heg is good and sustainable – working international structures, U.S. security commitments, and democratic commonality

Kagan ’18 – Senior Fellow at the Brookings Institute

[Friedman Senior Fellow with the Project on International Order and Strategy, Foreign Policy Brookings Program, written several books regarding the international order and U.S. hegemony, contributing columnist to the Washington Post, 9-18-2018, “The Jungle Grows Back: American and Our Imperiled World,” accessed 3-2-2020]

Despite everything that has happened, if we reject the counsels of the new “realism” and resume our support for the liberal world order, it is still within our capacity to defend it and put off its collapse, perhaps for some time. Today the order remains intact, despite the hostility of the present administration and the weakness of the last. The international structures supporting it are durable. This is partly because they rest on geographical realities and a distribution of power that still favor the liberal order and still pose obstacles to those who would disrupt it. It is also because liberal values, though under assault, remain a force that binds the democratic nations of the world together. Authoritarianism also has its appeal and will always compete with liberalism, but the authoritarian governments do not feel the same sense of commonality as the monarchies and aristocracies of the early nineteenth century. The Chinese and Russians are not adversaries, but they are not allies either. They share little except their antipathy to liberalism. The democratic nations, however, are bound together by more than common adversaries, as the post–Cold War era has proved. America’s alliances in Europe and Asia have so far held, therefore, despite the weakening of America’s commitment under two administrations. There is still a liberal world order to be salvaged, if the American people decide it is worth salvaging.

2024 CNDI Affirmative
Defense Industry Affirmative › 1AC › 1ac – Hegemony Advantage

Preserving protections for core IPs solves government concerns about vendor lock while encouraging innovation for defense contractors

SHYAM SANKAR et al in 24, CAITLIN DOHRMAN, AND MADELINE ZIMMERMAN in 2024

Shyam Sankar is the Chief Technology Officer of Palantir Technologies. Caitlin Dohrman is the Chief Executive Officer of Tangram Flex. Madeline Zimmerman is a Department of Defense Deployment Strategist at Palantir Technologies. THE MILITARY’S INSISTENCE ON OWNING COMMERCIAL INTELLECTUAL PROPERTY IS LIMITING INNOVATION; War On The Rocks;

Data rights is a broad category that refers to both a company’s intellectual property and ownership of government data. While ownership of government data is self-explanatory, for software firms, intellectual property refers to the proprietary source code needed to recreate the software. Enterprise software-as-a-service companies are not advocating to own customer data, believing that the U.S. government should always exclusively own its data. Instead, disagreements between government and industry tend to revolve around rights to commercially financed and owned intellectual property. It is critical that the Department of Defense be able to own and access its data for many reasons, including preparedness and the execution of war, the sustainment and improvement of existing capability, senior leader decision support, and more. As the 2020 Department of Defense Data Strategy explains, “DoD data is a high interest commodity,” and it “must be made available for use by all authorized individuals and non-person entities through appropriate mechanisms.” While the department’s requirement to exclusively own its data is both reasonable and necessary, the claim to commercial intellectual property is more complex and controversial. Within the department, there is a general view that owning, not renting, a new capability or system — through requiring unlimited rights and government purpose rights requirements — will help avoid vendor lock with specific software providers and improve the interoperability of software-based systems. This term refers both to the government being locked into using a specific vendor (and therefore being susceptible to price extortion), as well as being locked in to a given vendor’s architecture that is not interoperable with the government’s current or future investments. For example, the Department of Defense’s 2022 State of Competition in the Industrial Base concluded, “If a component or subsystem becomes vendor-locked, the process for acquiring, supporting, and upgrading the overarching system or subsystem can be subject to the pressure of that vendor lock, because the overall support for that system depends on the exclusive IP rights governing a critical subsystem or component.” While the department’s fear of vendor-lock tends to focus on software providers (versus hardware providers), the concern is universal. After all, the production of a plane, tank, or ship can include substantial vendor-lock as the government does not have the opportunity to switch providers until there is a new class of that platform. Simply put, vendor-lock is the opposite of interoperability: It limits competition for government contracts, increasing costs; it undermines the government’s ability to engage in flexible modification and sustainment when software updates are needed, or during times of rapid change in requirements; and it ultimately prevents the government from acquiring the best new technologies. What Does Industry Want Out of Data Rights? While commercial software companies do not seek ownership over government data, the request by government buyers for unlimited rights and government purpose rights requirements on core commercial intellectual property is a difficult proposition. However, this preference is not related to commercial providers seeking to create vendor lock-in or undermine interoperability. In fact, we advocate that industry consent to unlimited rights or government purpose rights on non-core intellectual property, including all derivative logic, models, analysis, interface control documents, application programming interfaces to other government systems, and computer software configuration items. Commercial software companies object to the sweeping terms stipulated in unlimited rights and government purpose rights because protection of core intellectual property — typically built with independent research and development dollars or outside funding like venture capital — is central to their ability to remain a viable company. If companies had to give up their intellectual property every time they sold to a customer, whether government or commercial, they would struggle to remain in business as it would be too easy for competitors to copy their product for free. American tech companies don’t want their intellectual property stolen by China, and they also don’t want to turn it over to the U.S. government as the price of entry to provide national security capabilities.

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Defense Industry Affirmative › 1AC › 1ac – Hegemony Advantage

Success in Ukraine key to preventing Russian expansion – the impact is WW3.

Jeffrey Sonnenfeld & Steven Tian 2-14, Lester Crown Professor, Leadership Practice, Yale School of Management. President, Yale Chief Executive Leadership Institute; Director, Research, Yale Chief Executive Leadership Institute, "Why the U.S. Has the Most to Gain From Supporting Ukraine," TIME, 02/14/2024, https://time.com/6694915/ukraine-aid-bill-what-united-states-gains/. //JDi

Having catalyzed 1,200 major global corporations to exit Russia two years ago in protest over the bloody invasion of a peaceful, sovereign nation, we are not surprised to have received scores of alarmed messages. We have been reviewing the economics behind continuing U.S. support to Ukraine, and even setting aside the terrible human suffering amidst thousands of civilian deaths; the fact that helping Ukraine defend itself is saving millions of lives and forestalling World War III given Putin's imperial ambitions; as well as the diplomatic and national security value of such aid, in actuality, the U.S. is the single biggest winner from supporting Ukraine. Here are three tangible reasons why.

90% of Ukraine aid spending stays in the U.S., creating thousands of jobs

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Independently, a robust defense industry is key to defeat Russia in Ukraine.

Nataliya Bugayova and Frederick Kagan, 3-27-2024, [Chief Producer of Russian Foreign Policy Articles, master’s in public policy, Harvard University, Professor of Military History, U.S. Military Academy at West Point, BA, Soviet and East European Studies, Yale University], "Institute for the Study of War," https://www.understandingwar.org/backgrounder/denying-russia%E2%80%99s-only-strategy-success/tw

The challenges facing the United States are easier to solve than those facing Russia. The gap that Ukraine and its partners need to close to help Ukraine win is smaller than the gap that Russia needs to close to achieve its objectives in Ukraine. The Kremlin has mobilized a lot of its resources — far from all that the Kremlin can mobilize but orders of magnitude higher than what the West has mobilized on behalf of Ukraine. Russia had every advantage in the last ten years and occupied 18% of Ukraine at an enormous cost. Putin will mobilize more manpower and material, but Russia’s surge capacity is neither unlimited nor without costs and constraints. The West is not as fragile as Russia wants us to think. Putin sought but failed to freeze Europe.[67] He has been trying but has failed to break NATO (though he will have a real chance to do so if Russia wins in Ukraine). Minimizing the West’s perception of its own strength is a core component of the Kremlin’s perception manipulation. The West is awakening. Many Western leaders and societies have awakened to the reality that there is no going back to the status quo ante, that Russia is a self-declared adversary, and that the West has two choices: counter the threat or surrender to it. Ukraine’s European and Asia-Pacific partners began forming coalitions for weapon procurement to support Ukraine; European countries began ramping up their defense industrial bases to restock NATO supplies and assist Ukraine.[68] French President Emanuel Macron warned the West against showing any signs of weakness to Russia as he entertained the prospect of sending Western troops into Ukraine.[69] But US leadership remains indispensable. Western advantage is not a permanent condition. Ukrainian lives and the Western advantage over Russia are the costs of US and Western decision-making delays. Ukraine’s agency and will to fight are assets of historical proportions that should not be taken for granted. Delaying resource mobilization decisions in the West will erode this center of gravity. Putin has considered Russia to be at war with the West for a while and has been acting like it. Putin recently signed decrees restoring the Moscow and Leningrad Military Districts, which may be in preparation for a potential future large-scale conventional war against NATO.[70] The Kremlin intensified the use of rhetorical threats against Finland and the Baltic countries, including accusing Baltic countries of intolerance towards ethnic Russians in the region.[71] The erosion of the West’s capability to counter the Russian threat will be proportionate to the delays in the Western realization of the threat itself. V. The Next Decisions The United States must restore its strategic clarity and get the big idea right: the best course of action for US interests is to support Ukraine to its victory, as the only path to a durable peace rather than a temporary respite, and then help Ukraine rebuild, putting the largest combat-effective friendly military in Europe at the forefront of NATO’s defense.[72] The United States needs to surge and then persist in support of this objective. A sustained US effort, rather than a one-time surge, will grant Ukraine the certainty about resourcing that it can expect from international partners so Ukraine can plan for future operations. The US decision to persist should also stem from a recognition that Russia is a persistent challenge that requires persistent effort. The costs of persistence are minor compared to the catastrophic and irreversible consequences of letting Russia prevail in Ukraine. The United States and other Ukrainian allies need to take several specific and immediate steps: 1. Provide Ukraine with sufficient military aid and other support required for Ukraine to restore maneuver to the battlefield.[73] 2. Support Ukraine’s effort to expand its defense industrial base (DIB) but also ramp up the US and allied DIB to support Ukraine in the medium term and to strengthen our own deterrence capabilities against Russia and other US adversaries. 3. Target Russia’s capability to sustain the war against Ukraine.[74] Deny Russia’s sanctuaries. Russia is not entitled to sanctuaries when it is trying to erase a nation. The West must abandon the Russian information line that Russia, having launched an unprovoked invasion of Ukraine, can demand immunity from attack with Western or Ukrainian weapons. The United States must remove any existing constraints on Ukraine to target legitimate Russian military and defense industrial capabilities in Russia. The West should also develop a long-term strategy against “sacred Russian cows” in the West, such as the Russian state nuclear energy corporation Rosatom. Rosatom is a major arm of the Kremlin, doing its bidding from Ukraine to the Arctic to Africa largely unimpeded due the Western economic interdependencies.[75] The long-term divestment from Rosatom is likely feasible, but it requires just that — for us to think in terms of a long-term strategy of denying Russia its capability sanctuaries. Focus on asymmetries. Ukraine has exposed numerous Russian weaknesses from the vulnerabilities of the Black Sea Fleet to the vulnerability of Russian defense industrial assets to Ukrainian drone and missile strikes.[76] The United States should amplify and accelerate not constrain these effective asymmetric warfare approaches that also impact Russia’s battlefield operations and force Putin to make hard choices about resource allocation. Target Russia’s capability globally. Putin is playing the full board, so should we – targeting Russia’s capability from Africa to the Arctic. Strip the Kremlin of its offset capabilities. The United States must defy the Kremlin’s efforts to alter our own decision making and will. The United States must also deny the Kremlin the luxury of time to regroup on the battlefield, and to rebuild Russia’s broader military and perception manipulation capabilities only later to be used against us.

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That war goes nuclear---Multiple scenarios for escalation.

Talmadge 18, Associate Professor of Security Studies at the Edmund A. Walsh School of Foreign Service at Georgetown University. (Caitlin, 10/15/18, "Beijing’s Nuclear Option: Why a U.S.-Chinese War Could Spiral Out of Control", Foreign Affairs, https://www.foreignaffairs.com/articles/china/2018-10-15/beijings-nuclear-option)

As China’s power has grown in recent years, so, too, has the risk of war with the United States. Under President Xi Jinping, China has increased its political and economic pressure on Taiwan and built military installations on coral reefs in the South China Sea, fueling Washington’s fears that Chinese expansionism will threaten U.S. allies and influence in the region. U.S. destroyers have transited the Taiwan Strait, to loud protests from Beijing. American policymakers have wondered aloud whether they should send an aircraft carrier through the strait as well. Chinese fighter jets have intercepted U.S. aircraft in the skies above the South China Sea. Meanwhile, U.S. President Donald Trump has brought long-simmering economic disputes to a rolling boil. A war between the two countries remains unlikely, but the prospect of a military confrontation—resulting, for example, from a Chinese campaign against Taiwan—no longer seems as implausible as it once did. And the odds of such a confrontation going nuclear are higher than most policymakers and analysts think. Members of China’s strategic com­munity tend to dismiss such concerns. Likewise, U.S. studies of a potential war with China often exclude nuclear weapons from the analysis entirely, treating them as basically irrelevant to the course of a conflict. Asked about the issue in 2015, Dennis Blair, the former commander of U.S. forces in the Indo-Pacific, estimated the likelihood of a U.S.-Chinese nuclear crisis as “somewhere between nil and zero.” This assurance is misguided. If deployed against China, the Pentagon’s preferred style of conventional warfare would be a potential recipe for nuclear escalation. Since the end of the Cold War, the United States’ signature approach to war has been simple: punch deep into enemy territory in order to rapidly knock out the opponent’s key military assets at minimal cost. But the Pentagon developed this formula in wars against Afghanistan, Iraq, Libya, and Serbia, none of which was a nuclear power. China, by contrast, not only has nuclear weapons; it has also intermingled them with its conventional military forces, making it difficult to attack one without attacking the other. This means that a major U.S. military campaign targeting China’s conventional forces would likely also threaten its nuclear arsenal. Faced with such a threat, Chinese leaders could decide to use their nuclear weapons while they were still able to. As U.S. and Chinese leaders navigate a relationship fraught with mutual suspicion, they must come to grips with the fact that a conventional war could skid into a nuclear confrontation. Although this risk is not high in absolute terms, its consequences for the region and the world would be devastating. As long as the United States and China continue to pursue their current grand strategies, the risk is likely to endure. This means that leaders on both sides should dispense with the illusion that they can easily fight a limited war. They should focus instead on managing or resolving the political, economic, and military tensions that might lead to a conflict in the first place. A NEW KIND OF THREAT There are some reasons for optimism. For one, China has long stood out for its nonaggressive nuclear doctrine. After its first nuclear test, in 1964, China largely avoided the Cold War arms race, building a much smaller and simpler nuclear arsenal than its resources would have allowed. Chinese leaders have consistently characterized nuclear weapons as useful only for deterring nuclear aggression and coercion. Historically, this narrow purpose required only a handful of nuclear weapons that could ensure Chinese retaliation in the event of an attack. To this day, China maintains a “no first use” pledge, promising that it will never be the first to use nuclear weapons. The prospect of a nuclear conflict can also seem like a relic of the Cold War. Back then, the United States and its allies lived in fear of a Warsaw Pact offensive rapidly overrunning Europe. NATO stood ready to use nuclear weapons first to stalemate such an attack. Both Washington and Moscow also consistently worried that their nuclear forces could be taken out in a bolt-from-the-blue nuclear strike by the other side. This mutual fear increased the risk that one superpower might rush to launch in the erroneous belief that it was already under attack. Initially, the danger of unauthorized strikes also loomed large. In the 1950s, lax safety procedures for U.S. nuclear weapons stationed on NATO soil, as well as minimal civilian oversight of U.S. military commanders, raised a serious risk that nuclear escalation could have occurred without explicit orders from the U.S. president. The good news is that these Cold War worries have little bearing on U.S.-Chinese relations today. Neither country could rapidly overrun the other’s territory in a conventional war. Neither seems worried about a nuclear bolt from the blue. And civilian political control of nuclear weapons is relatively strong in both countries. What remains, in theory, is the comforting logic of mutual deterrence: in a war between two nuclear powers, neither side will launch a nuclear strike for fear that its enemy will respond in kind. The bad news is that one other trigger remains: a conventional war that threatens China’s nuclear arsenal. Conventional forces can threaten nuclear forces in ways that generate pressures to escalate—especially when ever more capable U.S. conventional forces face adversaries with relatively small and fragile nuclear arsenals, such as China. If U.S. operations endangered or damaged China’s nuclear forces, Chinese leaders might come to think that Washington had aims beyond winning the conventional war—that it might be seeking to disable or destroy China’s nuclear arsenal outright, perhaps as a prelude to regime change. In the fog of war, Beijing might reluctantly conclude that limited nuclear escalation—an initial strike small enough that it could avoid full-scale U.S. retaliation—was a viable option to defend itself. STRAIT SHOOTERS The most worrisome flash point for a U.S.-Chinese war is Taiwan. Beijing’s long-term objective of reunifying the island with mainland China is clearly in conflict with Washington’s longstanding desire to maintain the status quo in the strait. It is not difficult to imagine how this might lead to war. For example, China could decide that the political or military window for regaining control over the island was closing and launch an attack, using air and naval forces to blockade Taiwanese harbors or bombard the island. Although U.S. law does not require Washington to intervene in such a scenario, the Taiwan Relations Act states that the United States will “consider any effort to determine the future of Taiwan by other than peaceful means, including by boycotts or embargoes, a threat to the peace and security of the Western Pacific area and of grave concern to the United States.” Were Washington to intervene on Taipei’s behalf, the world’s sole superpower and its rising competitor would find themselves in the first great-power war of the twenty-first century. In the course of such a war, U.S. conventional military operations would likely threaten, disable, or outright eliminate some Chinese nuclear capabilities—whether doing so was Washington’s stated objective or not. In fact, if the United States engaged in the style of warfare it has practiced over the last 30 years, this outcome would be all but guaranteed. Consider submarine warfare. China could use its conventionally armed attack submarines to blockade Taiwanese harbors or bomb the island, or to attack U.S. and allied forces in the region. If that happened, the U.S. Navy would almost certainly undertake an antisubmarine campaign, which would likely threaten China’s “boomers,” the four nuclear-armed ballistic missile submarines that form its naval nuclear deterrent. China’s conventionally armed and nuclear-armed submarines share the same shore-based communications system; a U.S. attack on these transmitters would thus not only disrupt the activities of China’s attack submarine force but also cut off its boomers from contact with Beijing, leaving Chinese leaders unsure of the fate of their naval nuclear force. In addition, nuclear ballistic missile submarines depend on attack submarines for protection, just as lumbering bomber aircraft rely on nimble fighter jets. If the United States started sinking Chinese attack submarines, it would be sinking the very force that protects China’s ballistic missile submarines, leaving the latter dramatically more vulnerable. Even more dangerous, U.S. forces hunting Chinese attack submarines could inadvertently sink a Chinese boomer instead. After all, at least some Chinese attack submarines might be escorting ballistic missile submarines, especially in wartime, when China might flush its boomers from their ports and try to send them within range of the continental United States. Since correctly identifying targets remains one of the trickiest challenges of undersea warfare, a U.S. submarine crew might come within shooting range of a Chinese submarine without being sure of its type, especially in a crowded, noisy environment like the Taiwan Strait. Platitudes about caution are easy in peacetime. In wartime, when Chinese attack submarines might already have launched deadly strikes, the U.S. crew might decide to shoot first and ask questions later. Adding to China’s sense of vulnerability, the small size of its nuclear-armed submarine force means that just two such incidents would eliminate half of its sea-based deterrent. Meanwhile, any Chinese boomers that escaped this fate would likely be cut off from communication with onshore commanders, left without an escort force, and unable to return to destroyed ports. If that happened, China would essentially have no naval nuclear deterrent. The situation is similar onshore, where any U.S. military campaign would have to contend with China’s growing land-based conventional ballistic missile force. Much of this force is within range of Taiwan, ready to launch ballistic missiles against the island or at any allies coming to its aid. Once again, U.S. victory would hinge on the ability to degrade this conventional ballistic missile force. And once again, it would be virtually impossible to do so while leaving China’s nuclear ballistic missile force unscathed. Chinese conventional and nuclear ballistic missiles are often attached to the same base headquarters, meaning that they likely share transportation and supply networks, patrol routes, and other supporting infrastructure. It is also possible that they share some command-and-control networks, or that the United States would be unable to distinguish between the conventional and nuclear networks even if they were physically separate. To add to the challenge, some of China’s ballistic missiles can carry either a conventional or a nuclear warhead, and the two versions are virtually indistinguishable to U.S. aerial surveillance. In a war, targeting the conventional variants would likely mean destroying some nuclear ones in the process. Furthermore, sending manned aircraft to attack Chinese missile launch sites and bases would require at least partial control of the airspace over China, which in turn would require weakening Chinese air defenses. But degrading China’s coastal air defense network in order to fight a conventional war would also leave much of its nuclear force without protection. Once China was under attack, its leaders might come to fear that even intercontinental ballistic missiles located deep in the country’s interior were vulnerable. For years, observers have pointed to the U.S. military’s failed attempts to locate and destroy Iraqi Scud missiles during the 1990–91 Gulf War as evidence that mobile missiles are virtually impervious to attack. Therefore, the thinking goes, China could retain a nuclear deterrent no matter what harm U.S. forces inflicted on its coastal areas. Yet recent research suggests otherwise. Chinese intercontinental ballistic missiles are larger and less mobile than the Iraqi Scuds were, and they are harder to move without detection. The United States is also likely to have been tracking them much more closely in peacetime. As a result, China is unlikely to view a failed Scud hunt in Iraq nearly 30 years ago as reassurance that its residual nuclear force is safe today, especially during an ongoing, high-intensity conventional war. China’s vehement criticism of a U.S. regional missile defense system designed to guard against a potential North Korean attack already reflects these latent fears. Beijing’s worry is that this system could help Washington block the handful of missiles China might launch in the aftermath of a U.S. attack on its arsenal. That sort of campaign might seem much more plausible in Beijing’s eyes if a conventional war had already begun to seriously undermine other parts of China’s nuclear deterrent. It does not help that China’s real-time awareness of the state of its forces would probably be limited, since blinding the adversary is a standard part of the U.S. military playbook. Put simply, the favored U.S. strategy to ensure a conventional victory would likely endanger much of China’s nuclear arsenal in the process, at sea and on land. Whether the United States actually intended to target all of China’s nuclear weapons would be incidental. All that would matter is that Chinese leaders would consider them threatened. LESSONS FROM THE PAST At that point, the question becomes, How will China react? Will it practice restraint and uphold the “no first use” pledge once its nuclear forces appear to be under attack? Or will it use those weapons while it still can, gambling that limited escalation will either halt the U.S. campaign or intimidate Washington into backing down? Chinese writings and statements remain deliberately ambiguous on this point. It is unclear which exact set of capabilities China considers part of its core nuclear deterrent and which it considers less crucial. For example, if China already recognizes that its sea-based nuclear deterrent is relatively small and weak, then losing some of its ballistic missile submarines in a war might not prompt any radical discontinuity in its calculus. The danger lies in wartime developments that could shift China’s assumptions about U.S. intentions. If Beijing interprets the erosion of its sea- and land-based nuclear forces as a deliberate effort to destroy its nuclear deterrent, or perhaps even as a prelude to a nuclear attack, it might see limited nuclear escalation as a way to force an end to the conflict. For example, China could use nuclear weapons to instantaneously destroy the U.S. air bases that posed the biggest threat to its arsenal. It could also launch a nuclear strike with no direct military purpose—on an unpopulated area or at sea—as a way to signal that the United States had crossed a redline.