Amazon in Crystal City: Threat and Opportunity for the Defense Department


Amazon’s recent announcement that it has chosen two locations for its second headquarters has been greeted with a general deflation of enthusiasm mixed with pique. Despite the Cinderella dreams of the many people who wanted the behemoth to choose a city beyond the Acela corridor, it looks like Amazon will use its magic wand to transform already glutted metropolitan areas into even more glutted metropolitan areas.

Amazon’s landing just outside of Washington, in particular, has some worrisome implications beyond adding to traffic on the beltway and pushing housing prices from being really unaffordable to truly astronomical. Unless Congress and the Defense Department respond quickly, Amazon’s arrival may come at a cost to the U.S. national security apparatus —especially to the Pentagon just up the road.

The Department of Defense is already working hard to expand its ranks of staff with STEM expertise and, as is the case with Stanford’s Hacking for Defense class, to cultivate a pipeline of people interested in and familiar with defense technology needs. So too is the department seeking new ways to acquire products from the local start-up ecosystem; the Defense Innovation Unit, for example, has a mandate to fund pilot contracts for promising technologies. Still, the department overall is not well-positioned to compete against Amazon either for talent or for product. The challenge with talent is not only a function of salary disparity, though that certainly matters, but also of the ancillary features of employment that people — especially young, technologically–minded, and creative people — tend to care about: professional development, organizational performance, and workplace culture. This is not to say that all those currently at the Defense Department, or those considering it, will queue up at Amazon’s new headquarters instead — many are strongly motivated by military and civil service — but some of them will, and they won’t be easily replaced.

The Defense Department also compares unfavorably against Amazon as a purchaser of emerging technology. Despite the Department’s insistence that its doors are open for innovation, the obstacles facing start-ups are considerable. At a recent conference in Washington, the innovation advisor to the Pentagon’s chief management officer acknowledged that successful engagement with the Department will require start-ups pitching their technology as a solution to a specific and military-relevant problem. So too will it be up to the companies themselves to find the right Department official to make that pitch to. Neither task is easy given the limitations of classification and the fact that there is no go-to Pentagon rolodex. Assuming the Defense Department and companies are successful in these steps, they then must also be willing and able to plod through the rest of the lengthy procurement process. Start-ups facing imperatives — funding, for example — that are incompatible with this grueling test of endurance may soon have a much more appealing and business-ready target in Amazon.

A thinning of the talent pool available to the Department of Defense sits uncomfortably against the fact that there is widespread and emphatic agreement about the importance of technology in what the National Security Strategy describes as the return of great power politics. Hypersonic weapons, precision fire munitions, all things cyber, and of course artificial intelligence dominate conversations about force modernization and international competition, most especially with China. Maturing these systems requires consistent funding, an ability to work with young companies with new ideas, and retention of a workforce able to identify, capture, and implement those ideas.

This certainly does not go unappreciated by the federal government, which clearly is willing to spend money, and lots of it, on technology. Sen. John McCain long led senate efforts to create more and better openings for next-generation technologies. In the House, the Armed Services Committee has released legislation for four consecutive years intended to “declutter” the legal provisions and offices that govern acquisition. Even better is congressional legislation granting the Defense Department “Other Transaction Authority,” a streamlining mechanism intended to facilitate access to early research and prototyping, and the National Defense Authorization Act for Fiscal Year 2018’s subsequent preferencing of these authorities for science and technology specifically.

The Pentagon itself is instantiated by the Defense Innovation Board and the Defense Innovation Unit, participates in multiple incubator, accelerator, and connector hubs, and has enabled the U.S. Army not only to create the technology-oriented Futures Command, but also to locate its headquarters in entrepreneurial Austin. The White House recently feted Google, Apple, Microsoft, and others to pitch them on the idea of talent sharing through “tours of duty” in government.

All of this is worth pursuing, but it won’t really address the long-term concern because it neither reshapes the Pentagon’s management of its ranks of requirements analysts, engineers, developers, and product managers, nor resolves impediments that stymie timely acquisition, implementation, and adoption of the high-tech capabilities it needs. Other Transaction Authorities are a step in the right direction, but one step does not the journey make. It’s true that acquisition code is in need of pruning, but if prior efforts demonstrate anything it’s that reforming code doesn’t necessarily reform practice — not because of intentional malfeasance so much as unintended consequences and perverse incentives. Similarly, while Army Futures Command is well funded, it is not endowed with independent procurement authority, so it remains unclear whether this model of centralization and co-location will prove as agile as is hoped.

One possible outcome of Amazon’s new headquarters, then, is that it will pile on what some consider to be an already-underway erosion of America’s military-technological advantage. Another possible outcome is that the Pentagon and Congress together will recognize in Amazon’s arrival even more reason to move quickly to reform defense business processes so that the department can resource adequately, and perhaps even more efficiently, for the future force. There are many quality proposals and recommendations to choose from — from the Government Accountability Office, the cluster of D.C. think tanks, and expert-packed commissions — for how, where, and in what ways to implement reforms that balance the need for congressional oversight with the Defense Department’s need to execute work. What remains to be seen is if Amazon’s selection of Crystal City is transformative enough to render that most powerful of combinations: congressional will and Pentagon follow-through.


Melanie W. Sisson is Senior Fellow at the Stimson Center, where she leads the Defense Strategy and Planning Program. Her current work focuses on when, how, why, and to what effect U.S. armed forces are employed in ways short of war to achieve foreign policy objectives.

Image: Flickr/Beyond DC