How should the military relate to billionaires who don’t follow its playbook?
At the NewSpace 2016 conference in Seattle last month, a questioner in the audience wanted an opinion about “Jeff Bezos, Yuri Milner, Paul Allen, Richard Branson and Elon Musk: all of these billionaires, instead of buying yachts, are investing in space.” As panel moderator Alan Boyle responded, “they’re building yachts too.” Space yachts maybe too, opined Space News in its coverage. Some of them are interested in the urgent and emergent problems of defense as well. There’s an analogy here to Henry J. Kaiser—taking time off from running a business empire, and creating the concept of the HMO, to figure out how to build Liberty Ships faster than Karl Dönitz could sink them. Some of today’s magnates, however, seem troubled by how the government doesn’t seem so appreciative.
For years of late, the salient case has been Elon Musk and SpaceX. It’s easy to imagine CEO Musk and COO Gwynne Shotwell as Tony Stark and Pepper Pots: they’re both smart, driven, and appealing characters. In building a space boosters business from scratch—where others had remarkably failed—they sought the business the US Air Force was sending to United Launch Alliance (ULA) for head-of-the-line service. To get access to those launch contracts, at a lower price-for-service-point, the company sued the department—the very customer it sought. But whatever goodwill SpaceX expended, its stratagem seems to have worked; the Air Force appears now far less laudatory about ULA and almost inspired by Musk.
Jeff Bezos’s Blue Origin is providing a new rocket engine for ULA, which is working hard both to replace its current Russian inputs and to catch up with SpaceX’s cost-competitiveness. But Bezos’ big contribution to national security has already come through Amazon, which since 2013 has been providing the secure cloud computing environment for the intelligence agencies. The previous incumbent was IBM, and as Sandra Erwin of National Defense magazine wrote, that rather “shook up the federal IT world.” All the same, Amazon won while playing by the rules, whether Amazon liked the rules or not.
For a less cooperative by equally valuable supplier, General Atomics was for years Exhibit A. Owned by billionaire brothers Linden and Neal Blue, the company’s Aeronautical Systems subsidiary was long run by Tom Cassidy, a retired Top Gun admiral of a certain temperament. Tom became infamous for threatening his customers with political action, essentially saying you can buy my drones, or I’ll go to Congress; they’ll make you buy them, and you won’t like it. That sales strategy may also have burned some bridges here and there, but it basically worked. By the end of 2001, as one Bush Administration official put it, the main thing wrong with the Predator was that the Air Force hadn’t bought enough.
Alexander Karp of Palantir doesn’t invest in space, but he’s another compelling figure with commercial and governmental business interests. Austin Wright and Jeremy Herb of Politico have recently written about how SpaceX and Palantir have “refused to play by the unwritten rules of federal contracting.” Now the latter is following suit, so to speak, in its business strategy. Calling the Army’s approach to renewing its Distributed Common Ground System for intelligence (DCGS) an “irrational procurement strategy,” Palantir has hired Boies, Schiller & Flexner to take the government to court. According to the review by Jen Judson of Defense News, the company claims that the Army Department has simply ignored a statute that requires military organizations “to define requirements in a manner that allows for the procurement of commercial items, such as Palantir’s Gotham, ‘to the maximum extent practicable’.” If you won’t, you can explain it to the jury.
Is this an indication of just how bad the government really is at being a good customer? All these billionaires are trying to help the Pentagon, and the bureaucrats are just ignoring them. That’s certainly one way to see the issue. But let me note that Tony Stark never sued his customer. The government basically stole his Iron Man Suit, and he still didn’t sue the customer. That was itself wrong, but does when government have the right to be wrong? That wait-until-I’m-ready launch contract with ULA cost a lot more, but for a while, the Air Force liked it that way. There is, after all, an argument to be made for that presumably higher level of readiness. And haven’t we all had enough of contract protests generally?
Certainly, but billionaires and the people who work for them don’t get their space yachts to Mars by following convention. As David Fulghum of Aviation Week once said about Cassidy, “he knew enough about the military… to know if you built what they asked for, you’d go broke.” West of Russia, billionaires actually do mostly play by rules. Musk and Karp might argue that they’re emphasizing the written rules of codified legislation over the unwritten conventions of military practice. Because that customer isn’t a monolithic collective, the help-us-help-you appearance of the right lawsuit can inspire mavericks within the bureaucracy to act out. Besides, we might remind the government, it could be worse. Musk and Karp could be Brin and Page—buying up defense contractors, and then taking their ball home to play alone.
James Hasik is a senior fellow at the Brent Scowcroft Center on International Security.