Pete Hegseth (26:51)
AI is an important part of the future. But here's another truth that we've ignored for too long. Beyond AI, we've treated every other kind of innovation as if they're the same as you know they're not. We need to break down unnecessary barriers to rapid technological development, adoption and transition. Some of you will remember this a generation ago. One of my predecessors, in a dinner speech to industry now infamously known as the Last Supper, advocated for the consolidation of our defense industrial base. This consolidation created a closed innovation ecosystem dominated by just a handful of prime contractors. The results have been characterized by soaring costs, sluggish delivery, and stagnant innovation. That's what President Trump's recent executive order on the defense industrial base and defense companies seeks to address. It makes crystal clear that the priority of the legacy prime contractors must be our nation's national security, not the next earnings call. That means less focus on stock buybacks and more investment on the men and women on the factory floor. It means less stockholder dividends, more investment in infrastructure, plant and equipment. Today, that old era comes to an end. The Department of War is reopening to the disruptive energy and agile creativity of our nation's tech startups, funded by our world's leading capital markets. I'm directing my chief Technology officer to lead this charge and his wingman, as always in this effort, Under Secretary for Acquisitions and Sustainment, Mike Duffy. For too long, we organized our ecosystem around stages and silos. Labs over here, so called rapid units over there, commercial outreach in a different building or on another coast altogether, and war fighters somewhere at the end, almost an afterthought. The result is duplication, drift and confusion. And like the acquisition process, we are already fixing the creation of organizations to work around the problems in the innovation ecosystem rather than taking the bold steps needed to transform it. We created an old ecosystem to get around the actual system. No more. Every dollar of innovation, whether it may be in a lab or a start startup or a classified shop, must exist to deliver one of three things. Game changing technology, scalable products, or new ways of fighting. If it's not doing one of those three things at speed, it will be realigned or it will go away. And that's why I'm entrusting Emil as the cto, to ensure that this directive across the department is rapidly carried out. Emil, you're going to be busy again. What we're talking about today is a transformation in the way we think about innovation. In requirements reform, led by Mike Duffy, we killed an old model, a sclerotic model, and rewired the department so that problems, money and experimentation live in one system. In acquisitions reform, we killed the defense acquisition system and created accountable portfolio acquisition executives, making speed to delivery, speed to delivery our organizing principle. We're going to do the same for technological innovation. That's why today, at my direction, we are ending the Alphabet soup of councils that Meet and brief and write memos and schedule meetings, but never decide and rarely, if ever, accelerate outcomes. Effective immediately, the Defense Innovation Steering Group, the Defense Innovation Working Group and the CTO Council are disestablished and abolished. In their place, the CTO will convene a CTO Action Group to assist him in making decisions, clearing bureaucratic blockers, holding leaders accountable, and most importantly, quickly, quickly delivering new technologies to our war fighters. Every organization in this ecosystem must earn its place by delivering war fighting advantages faster than our adversaries can adapt. No sacred cows, no exceptions to back up the cto. Today, at my direction, we are realigning two pillars of the War Department's innovation ecosystem. First, the Defense innovation unit, or DIU. Since its establishment 10 years ago, DIU has lived through shifting reporting structures and uneven administrative support. Doing great things, but at times, its portfolio overlapped with other parts of the department. Effective today, DIU is designated a Department of War Field Activity providing exceptional tech scouting, rapid contracting and other common services to the Department executed at commercial tempo. The CTO will provide support to DIU for administrative and resource matters and ensure that the Unit's efforts fit into the Department's innovation priorities. The Director of DIU will also continue to report directly to me as a Principal Staff Staff Assistant and carry out its statutory duties. And I'm appointing Mr. Owen west, executor of my Drone Dominance Initiative, as the director of Diu starting in March when the FY27 budget cycle firms up. As a Marine with lots of combat experience, Owen will bring a war fighters mentality to diu's core mission of transitioning technology to arm troops. Owen also has the private capital experience needed to ensure DIU remains working hand in glove with the venture and investor communities and continues to on ramp new entrants into the War Department. Owen led DOGE at dow, the most effective DOGE effort across the administration, saving tens of billions of dollars for our department and and now he will lead diu. Our world leading defense tech startups have attracted billions of dollars in capital. They're reshaping warfare through the proliferation of high tech low cost technologies. Diu's mission is to accelerate the adoption of this commercial technology to help convert entrepreneurial products into tangible combat power. Second, the Strategic Capabilities Officer Scoff is also being designated a Department of War Field Activity aligned under the cto. SCO will maintain focus on its core mission of identifying and prototyping disruptive applications of new systems, the unconventional uses of existing systems and near term technologies to create strategic effects. SCO will continue to maintain its statutory direct reporting relationship to the Deputy Secretary, but will be operationally realigned under the CTO to eliminate duplication and ensure the relentless daily focus on delivering near and medium term capabilities to our warfighters. Relentless urgency and focus is our focus. Today's defense innovation ecosystem is too fragmented, resulted in insufficient technology transition to the warfighter. We address some of this in the transformation we are making in the acquisitions ecosystem. But it also needs to enter the innovation ecosystem for too long and I know a lot of you have experienced this and others we met with in Los Angeles recently. The experience of founders and entrepreneurs has been running endless laps around the Pentagon looking for the right office, the right program and the right motivated sponsor. And too often new entrants are ultimately stymied by the bureaucracy. We hear it time and time again, they don't know where to go. And then when they go to that place, it's not the right place to go. Then they go somewhere else. It didn't want them in the first place. And the lap continues. For example, SpaceX and Palantir had to sue the Department of War just to get a shot at competing for department contracts. The bottom line is that new entrants need both a shot on goal, but also faster yeses and faster nos from the department. Rather than being strung along with a never ending stream of rudderless maybes at the Secretary of War level, we will replace the existing maze into two clear channels. The mission Engineering and Integration activity. MIA will tell industry what problems we're trying to solve. And DIU will help program offices adopt what industry has already built. This will help get the faster yeses or faster no clear guidance, clear guide rails, clear demand signal, which is what industry and capital expects. Now. This isn't just an office of the Secretary of Reform. The services need to transform their innovation ecosystems as well. The army, the Navy, the Space Force, the Marine Corps and the Air Force. That's why today, at my direction, our military services will take the following actions. Within 90 days, the secretaries of the military departments will brief the CTO on service innovation plans, how they will consolidate strategies, streamline and refocus their labs, research expertise, experimental units and rapid capability offices around three innovation outcomes.