Deputy Defense Secretary Kathleen Hicks' Fireside Chat with Honorable Mac Thornberry at the National Defense Industrial Association Emerging Technologies ConferenceContracts[...]

FORMER HASC CHAIRMAN HONORABLE MAC THORNBERRY: Talking about all the progress you all have made, making greater use of OTAs, middle tiers, some things Congress gave you a few years ago, I'll have to mention.

DEPUTY SECRETARY OF DEFENSE KATHLEEN HICKS: Yes. Thank you to the Chairman of the HASC, yes.

MAC THORNBERRY: Yeah, but I guess the question -- and your -- lots of accolades about a Replicator- deservedly so. The question is, are we getting better fast enough? I notice that the British chief of staff of the army said he thinks Russian rearmament, Chinese timetable on Taiwan, Iranian nuclear program, are going to come together between now and 2030 to create war. Nobody knows for sure, but. But I guess the fundamental question progress is undeniable. Are we getting better fast enough?

KATHLEEN HICKS: Yeah, I think the measure is, are we fulfilling our potential? And the answer is no. And I think we have so much inherent advantage in our system and certainly in the innovation base that a market economy provides, let alone the demographics that we have in the United States, just an incredible talent pool.

And we're not fulfilling that potential. I think that's the bigger issue. I'm very confident in our deterrent posture, I think is what I would say today, but we want to make sure we stay- there's never a question. We keep that edge. We advance that edge. And for that, we do need to increase speed.

We do have to increase scale in addition to speed. We have to put out the right kinds of capabilities. So force design is so important. It's not just about arms-racing capacity. That's not the way we should think about the future character of warfare. And we -- again, we have a lot of advantages in all those areas that we can fulfill better than we are today.

And that's what we're trying to clear the way for- create pathways for, change the culture for. And I do think, as you know, I've said inside the building, the fact that we can make that kind of change in four years and then even see the acceleration from that four years to what we've been able to do in one year, I truly believe the foundation is being laid to keep seeding and again to scale that to spread that systemically across the Department in all kinds of areas.

MAC THORNBERRY: No doubt Replicator's made tremendous progress. What are the lessons you would take away from the last year since you announced it at this program last year? What are the lessons that would apply more broadly?

KATHLEEN HICKS: Sure. Well, you know, let me step back a little bit because as I indicated, Replicator really builds on things we started early on. I mentioned RDER, CAP, which I know Bill LaPlante's going to talk about here, capability acquisition pathways. Where we started to look at ways, you know, to make sure we were. In the case of radar connecting very clearly our focus areas for innovation broadly into what were the most pressing demands for the warfighter and how do we bridge through experimentation to get systems validated and out the door?

And then with CAP, we looked at what were the challenges that we could take on ourselves absent any statutory or resource changes? Those are sort of the constraints I created for CAP. And we found all kinds of ways to break through our own bureaucratic challenges. So those really led to Replicator- those building blocks- along with where the technology was in the particular capability area of attritable autonomy.

And I think what we're taking away now from Replicator going forward is those same basic lessons. First, a tremendous amount can be accomplished by senior leaders breaking through old habits and assumptions. And even, you know, that often takes paperwork. Like, you will see me often, you know, hold my pen up in a meeting.

I'm happy to sign it. What do you need signed? You know. And sometimes it is genuinely that simple. You could look at our reciprocity on ATO memo that I signed, which you know, languished for some time at lower levels as folks discussed back and forth. That, you know, signed it, got it out the door. We have not had challenges with it since.

That's a good example of what we're seeing in Replicator, same kind of thing- is there a joint- you know, the requirements process- do we have a requirement? Well, the vice chairman is right at the table. And tell me, tell me what you need for the requirement.

Let's run that through a process, get it done. That takes an immense amount of time out while still keeping the rigor. Having the test and evaluation community at the table, you know, the director of OT&E at the DISG, which is where we run Replicator at my level and having his team and then across the services team mates Doug Beck's DIWG, making sure we're understanding where that test effort needs to be in order to make sure we're rigorous even as we speed through.

Those are things, again, that are usually done serially, and they are significant challenges to moving at speed. And by bringing it up to a high level and working across the end-to-end capability development process, we're able to work through a lot of that.

MAC THORNBERRY: That raises another question. You mentioned the National Strategy Commission that came out last week. One of the things they, as you pointed out, praised Replicator. But then one of the things they said is too often at DOD, significant change takes place with a sustained direct involvement of the Secretary or the Deputy Secretary. That leadership is vital, but personalized efforts cannot possibly scale to all the change needed. So I think about Replicator. Kudos to you for taking it on, on track, but you can't do everything. How do you think about broadening it out?

KATHLEEN HICKS: Yeah, I mean I think you have to have a theory of change. I have two thoughts. One is this and I'll get to the broader reform side. And our theory of change is around demonstrating from the top that you can do things people thought were just off the table. And in doing that, you're surfacing the actual barriers.

It's not just in people's heads. The actual barriers that exist in the system is why we talk about debugging the innovation ecosystem. Too much energy, I find, is spent on repeated recitation of challenges. And then not enough on the back end of how do we dig into that and remove that particular barrier?

You know, everyone probably has one they can come to mind with that they hear everywhere. You can't do this. We can't do this. We're too slow. Now, we're the greatest country on earth. We're going to do it. What do we need to do? Where do we need Congress? Where do we need industry? What can we take care of ourselves?

And I think that is -- showing that from the top is not personalized in the sense that it doesn't sustain. I think I built on what came before me. And others will build on what the Secretary and I put forward here. And leadership is always important. That is the reality of human nature. Now as to systemic reform- look, I think there are definitely reasons to think we should look at big reforms in the future- that PPBE Commission has come forward with some.

The appropriators have indicated they're not fond of those. We need the appropriators. That does have to come. They need to be at the table. Reforms have to make sense to them. So we need to come up with reforms, you know, that can work for the oversight committees. And then we also have, as you say, the NDS Commission.

I'm a former NDS commissioner. I was on the last commission. These are great patriots who are trying to think hard about how to improve things for the country. But you got to get in there and solve the problems, not just flag the problems. And that's where I think there's much more opportunity than people give credit for to use the authorities that people like you and your counterparts have created for us to better fully utilize them to use the resources we have to leverage.

As I said, everything from the OTA authority, middle tier acquisition- let's start using those and demonstrating. And by the way, that builds trust across all those components. And that's the theory of change.

MAC THORNBERRY: Another thing the Strategy Commission wrote was that they find the US defense industrial base is unable to meet the equipment, technology and munitions needs of the US, its allies, and partners. What's your reaction to that?

KATHLEEN HICKS: My first reaction is that that's not a bar we should have. The United States is not meant to supply all capabilities to all US and allies and partners. Instead, what we've built very carefully and with intent over more than half a century is a federated system that involves allies and partners in the development of coherent interoperable combined capabilities.

That's really the bar we should be aiming for. Now, the US defense industry, no doubt, is a stalwart in that enterprise and needs to be stronger, more capable. We get the defense industry that we have focused on and invested in. And as you, I think all would agree with the NDS commission, that has significantly ramped up in the last five years, certainly since COVID, certainly since Ukraine.

There's been a lot of demonstration of that. You look at areas on the broader US economy like the CHIPS and Science Act on microelectronics and you see the potential for major investment return where the federal government comes together with the private sector to go after a big area. Microelectronics is one we're heavily dependent on, but can't drive the market.

So, you know, that's reflective of many parts of what we need in defense. We're not necessarily the drivers of the market. But even where we are the drivers of the market, I think what we've seen is an ability to look in, identify the major challenge areas, and again move beyond that to systemically, how do we fix those problems?

I think there's too much of a reflective approach of more dollars equals more output. I'm not against more dollars. I would challenge folks on the assumption that you're going to get better outcomes and output because all the energy goes on to the dollars. Let's put a lot of that energy onto, OK, well, how do we translate that?

And that's actually a lot of what we've been doing as well in the Department is building out, measuring outcome, data flow, and other approaches that help us see where those investments are going. All of that will read down to our ability to strengthen what we need from the federal government to help the private sector alongside those major production investments that we've been making across critical supply chains as well as end items.

MAC THORNBERRY: I loved your FDR airplane analogy. It shows what we can do. But how do you think about the capital required to go from 2000 airplanes to 50,000 airplanes? And if you're -- and you are -- talking about thousands of things relevant to a China fight. It doesn't have to be government money, it can be private sector money, but they've got to have enough to support their investors. You know, willing to put their money on the table.

How does that figure into your calculation? Because it seems to me there's a lot of money out there, but you always hear demand signal from the Department. And I'm not sure what that means.

KATHLEEN HICKS: Well, two things I've already mentioned, I think are really important. One is OSC. The view that we can with loan processes, leverage a lot more capital for defense. And I think that's been a big bet that's going to pay off hugely.

And then, again, DIU as the vanguard of a really an ecosystem of folks who interface day to day with non-traditionals across all the services, across combatant commands, really energizing that workforce and focus area with DIU again at the vanguard of it. Making sure we understand the signals we're sending, what is received versus what we think we're sending, which is often to your point, a gap.

MAC THORNBERRY: Yes.

KATHLEEN HICKS: You know, the biggest demand signal I believe we can send is our defense budget. It is a healthy defense budget. We certainly, again can argue about getting it even healthier. But it's not a small amount of money. And we've made clear even when we rolled out the '25 budget that we believe it has to grow in the out years.

So it's -- we've already sent signals about an increasing defense budget need. And we're very specific about the critical technology areas we're going after. And Heidi Shyu has laid those out very clearly. And then again, what we're investing over time in big, you know, swaths of capability. That's the kind of demand signal at the enterprise level that I think we're sending.

I think the question, as best I can interpret it, given that I think we're sending all that, is more down at the program level. I do think CRs are a big problem. I think they are an interrupter in that transmission of what is the plan and program, where is the consensus, and where therefore we can lean forward in industry to put capital. We need a strong consistent message from Congress in order to support that system. It's not just about DOD and industry.

MAC THORNBERRY: One thing we haven't talked about too much that is included in every study I've ever seen about innovation is people- the talent management. How are you thinking about that? Where are we as far as the people part which is the essential part of this equation?

KATHLEEN HICKS: Yeah, first, it is the essential part. As I mentioned, we have incredible talent and a talent advantage, frankly, from education to depth and breadth of capability. But we aren't fulfilling our potential on it. I think the building blocks are coming together. We have created a chief talent management officer in response to the defense business board.

I had tasked the Defense Business Board early on, on talent. That was one of their major recommendations. We've implemented that. We're starting to move that system of that Chief Talent Management Officer looking across the Department and determining where again that barrier analysis is so important rather than jumping to assumptions about where the problems are.

They've completed a lot of that and are moving now into piloting, for example, with the cyber workforce, for example, with our financial management workforce, sexual assault prevention, looking at some key areas where we have to innovate, I'll use that term broadly, and move fast to get on top of challenges. And they're starting to help move that flywheel.

On recruitment, we're in a really good place. And I think what we've learned through that process also is it's certainly about understanding the changing, you know, dynamic into which we are operating as recruiters. For example, the state of the economy, low unemployment, challenging times we've seen before, but also we have a youth population as we always do, that has a, you know, a set of values and principles it seeks in a workplace, and we have to make sure we can target to that. And by the way, we're wildly well-aligned with that because they seek mission and purpose. And boy, do we bring mission and purpose. But you've seen a lot of advances on recruitment, actually, in more traditional how do you incentivize the recruiters, how do you make sure, you know, we understand how to reward people once they're in the system for retention? Our retention is very high.

Now we come to the innovation base. And it's a very similar set of approaches, I think, that we're trying to pursue. I know Admiral Mullen has put out his piece. The Defense Innovation Board has a report that just came out on this. That's about aligning -- very similar -- aligning incentives, showing folks a pathway.

As I said before, leading from the top, showing them that there's a reward for being a risk taker, an innovator. We can do that inside the Department. I will stress again the slap on the hand can come -- for risk taking -- can come from outside the Department.

MAC THORNBERRY: It can.

KATHLEEN HICKS: So that also would have to come along in order for us to be, you know, convincing that the picture is there for innovators. The last thing I'll just say is that talent base is not just about what's in DOD. It's also about what's out with all of you. We need that healthy ecosystem. It's great to have talent in the private sector. We don't have to draw it all inside the Department, but we have to make sure you can use the talent that's out there so that you can take risks, you can advance capabilities. And we are open for business to hear, the right ways of being able to hear and listen for what we need to change so you can leverage that talent too.

MAC THORNBERRY: Madam Secretary, I think every person here wishes you great success in all of your efforts. Thank you again for being with us.

KATHLEEN HICKS: Thank you. Thank you for all you've done.

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