The Pentagon’s future relationship with AI got a little clearer last week when the Senate — after managing to sidestep a minefield of social issues — passed its version of the National Defense Authorization Act, complete with some new mandates for the Pentagon’s effort to acquire and develop AI technology.
With its huge budget and must-pass annual bill, the Pentagon has become a key vehicle for setting some federal rules and expectations around AI, especially with Congress making little progress on broader AI regulations. Some of the NDAA’s provisions were introduced as amendments by a bipartisan group of lawmakers, and require the military to monitor and safeguard against vulnerabilities in its AI systems, create a process for sharing data, and update its AI acquisition procedures. None of this is a done deal. Both chambers still need to debate their versions of the bill, a faceoff heightened this year due to the House’s flurry of culture war NDAA provisions. Other defense AI ideas are still in limbo, such as a law introduced last month to analyze how the U.S. fares against its adversaries on AI. One of the big questions for the Pentagon is how one of the largest federal agencies actually buys AI. As Mohar Chatterjee has reported for POLITICO, the military has struggled for years with emerging tech, and some legislators see this bill as a chance to add some key reforms that will make the process quicker and smoother for young companies that often struggle to deal with the Pentagon’s procurement rules. Sometimes, those ideas can work together with other government programs to encourage smaller companies to participate. Like other agencies, the Pentagon also awards R&D grants to small companies through the Small Business Innovation Research program. Today, a small California-based tech company that received SBIR funding, Qylur Intelligent Systems, is touting itself as one of the program’s success stories: It’s announcing it received a Phase I contract from AFWERX, the Air Force’s innovation arm, which was created in 2017 to foster innovation within the service, and now has a budget of more than $1 billion. Qylur’s experience with military contracting has been an indication of what frustrates small companies trying to work with the Pentagon: “It's just a nearly impossible thing to do,” Qylur founder and CEO Lisa Dolev said in an interview. “The processes are onerous for a small company. The timing can kill a small company.” She calls the AFWERX program a “complete game changer” that made it possible to navigate the process. It’s the kind of contract many in Washington hope the Pentagon can keep writing. The department’s biggest contractors have become large enough to worry military leaders, including Deputy Secretary of Defense Kathleen Hicks, who told lawmakers during her confirmation hearing in 2021: “Extreme consolidation does create challenges for innovation. We need to have a lot of different good ideas out there. That’s our competitive advantage over authoritarian states like China, and Russia.” “What you really don't want,” said Gregory Allen, with the Center for Strategic and International Studies, in an interview, “is companies who are winning because they can accommodate working within the limitations of the Department of Defense, or because they're familiar with using outdated technologies.” | 
