That image problem goes away when you want to close a 7-8 figure TCV Fed deal to make your quarterly sales KPI.
The bigger stumbling block is procurement.
Software Procurement by Federal standards is relatively straightforward so a Series E+ startup can make it if they spend around $7-10M and 1-1.5 years on a dedicated roadmap for FedRamp and FIPS compliance.
Once you step out of software, procurement becomes paperwork hell. Throw in the paperwork hell from R&D Grantmakers like the DoD and DoE, and you end up with a quasi-Soviet procurement system.
Ironically, most of these compliance and regulatory checks were added for good intentions - primarily to minimize corruption and graft, yet it basically clogged up the entire system, and dissuades startups and innovators from working directly with the Defense community.
Some projects like DIUx and and In-Q-Tel are trying to change that, but it's too little too late, and our defense base is entirely dependent on firms like Microsoft, Cisco, Crowdstrike, Zscaler, etc acquiring promising startups to evangelize their innovations internally.
> Software Procurement by Federal standards is relatively straightforward
> FedRamp and FIPS compliance
It’s odd to see these in the same sentence. FedRAMP is so insanely complex/difficult to achieve in a straightforward way. Even by your own estimate for a series E startup (with lots of capital and the ability to spend >18 months< on compliance) there’s a 3M$ variation in cost.
That rules out every startup or SME in software and that’s why you have Palantir, half baked tech that rarely delivers/is somehow more universally hated in USG than ServiceNow. Yet able to seize the space and hike prices endlessly due to compliance being so difficult to achieve — they realize/accept this as their edge as well and it’s why they so aggressively pursued IL6.
The good news is that this is going away and USG is strongly reconsidering its approach here. CMMC, imo, is a huge step in the right direction.
At the end of the day, most work done by technical teams within Defense Agencies is implementation, and the R&D related work is done by specific vendors or very autonomous labs (either National Labs or a specific PI at a University)
This is how it works at the Fed just like any other corporation, as well as with any other peer country.
While there are internal R&D projects, most agencies aren't having their engineers design and productionize bespoke environments from scratch - they're implementing existing tooling and buying it off the shelf.
For example, if you want an internal cloud platform, you'll just use Azure GovCloud. If you want to spin up a K8s cluster, you'll spin up an AKS cluster. Want to protect your cluster? You'll just purchase an off the shelf CNAPP.
For defense, R&D is important, but that isn't the DoD's forte and distracts from it's core mission, which is why they offload innovation to the private sector. Even the USSR did this to a certain extent by the 1970s by supporting defense corporations like Mikoyan and Sukhoi that basically operated as state owned corporations that competed with each other.
The issue is the amount of suppliers in the US has shrunk dramatically since the 1990s due to the compliance overhead and requirements such as a single platform DoD wide (a major reason for F35 cost overruns).
On top of that, any fundamental research requires a significant amount of paperwork to justify funding and sets limits on salaries for PIs and Postdocs that are significantly lower than market rate.
Basically, American private industry has largely been divorced from the MIC, and aside from a handful of major enterprises, there isn't an incentive to enter the procurement space. We've accidentally remade the entire 70s-80s Soviet procurement system in the US today.
There are some changes happening in Software and Satellite procurement, but not as much in other sectors like Avionics.
They aren't a significant portion of the DoD R&D infra.
Most FFRDCs and UARCs are staffed by civilians employed concurrently with a regional University or Industry Vendor, and these labs in turn are PPPs often operated by a private sector firm like Lockheed or a university like UCB.
On top of that, the bulk of the budget goes to funding research done outside of FFRDCs and UARCs via programs like DARPA, grants from the DCTO S&T, SBIR/STTR, etc
This fusion of university research, private sector research, and some limited in-house research is what's called Civil-Military Fusion.
The issue is the private sector portion has increasingly been divorced from the private sector, as up and coming private sector opportunities or promising startups don't have an easy on-ramp into the existing defense procurement or research infrastructure, and grantwriting+compliance overheads plus limited grant funding dissuade most companies aside from your Charles River Analytics types from going thru the hurdles.
That has nothing to do with it. You responded to a comment saying "X makes it hard for the DoD to hire people" by saying "X doesn't affect procurement". If you actually realized they were talking about hiring, what you should have said is "they never have to hire anyone so the difficulty with hiring you are talking about is not relevant".
The Pentagon has more image problems than being a difficult customer to work with.
The "mission" they tout as being the main driver to work for then is often ill-defined and what is best known typically has an atrocious public image problem surrounding it.
There are people in the Valley who will work for less money if it's for a cause they believe in.
The Pentagon's work? It isn't a cause they believe in. In-fact many see it as a more noble cause to thwart all military actors - our own included.
Most research is in some way shape or form is funded by the military. The era of having some general commanding eggheads is long gone.
Since the 1970s, it's almost all outsourced to the private sector via PPPs because private sector players can deploy capital and execute much quicker than the DoD or DoE who have regulatory requirements and need to have specific line items defined for them within budgets.
Also, I think you underestimate or don't realize how much DoD related work is done in the Valley today. I'd estimate that 30-40% of startups in the Bay Area are in some way funded by the DoD - either via Federal sales or via strategic investments via In-Q-Tel or their private sector counterparts.
On top of that, most STEM research grants at Bay Area universities come from either the DoD, DoE, or DHHS.
This public private partnership model is what China copied, which is unsurprising, as most of their middle level leadership and policymakers attended these programs and benefited from the US-China Science and Technology Agreement which evangelized the American PPP R&D model in China since the 1970s.
The difference is, the Chinese system is much more lax about compliance and graft, which allows for it to be much nimbler. The downside is graft can be MASSIVE, such as the corruption scandals surrounding China's Big Fund and fiascos such as the collapse of Tsinghua Unigroup
That image problem goes away when you want to close a 7-8 figure TCV Fed deal to make your quarterly sales KPI.
The bigger stumbling block is procurement.
Software Procurement by Federal standards is relatively straightforward so a Series E+ startup can make it if they spend around $7-10M and 1-1.5 years on a dedicated roadmap for FedRamp and FIPS compliance.
Once you step out of software, procurement becomes paperwork hell. Throw in the paperwork hell from R&D Grantmakers like the DoD and DoE, and you end up with a quasi-Soviet procurement system.
Ironically, most of these compliance and regulatory checks were added for good intentions - primarily to minimize corruption and graft, yet it basically clogged up the entire system, and dissuades startups and innovators from working directly with the Defense community.
Some projects like DIUx and and In-Q-Tel are trying to change that, but it's too little too late, and our defense base is entirely dependent on firms like Microsoft, Cisco, Crowdstrike, Zscaler, etc acquiring promising startups to evangelize their innovations internally.