# Defense AI Strategy and Procurement Reform

**Podcast:** a16z Podcast
**Published:** 2026-03-13

## Transcript

We're faced with the biggest military buildup in history.
We're trending toward artificial general intelligence, a substrate, a layer, something that'll touch everything.
But we're way behind in AI as a department.
You are CTO for the Department of War.
How do you take stock of where those priorities are?
When I took the role, we had 14 critical priority areas.
We got them down to six.
And there were the places where I thought we had the greatest opportunity for change and for growth and impact.
There has been an incredibly public discussion about commercial AI models being used in the Pentagon.
What has changed in this latest discussion?
I had a holy cow moment because there were things well beyond what you've been hearing in the press in the last couple of weeks.
When Emile Michael was confirmed as Under Secretary of Defense for Research and Engineering, he took inventory.
What he found was a department with 14 critical technology priorities, most unchanged for nearly a decade, written in a language so vague, no one could act on them.
He cut the list to six.
Applied AI went to the top.
Within 90 days, 1.2 million of the department's three million personnel had used some form of AI.
When he started, that number was 80,000.
The more urgent problem was what he found inside existing contracts.
AI models baked into the most sensitive commands in the U.S.
military, under terms that could shut the software off mid operation.
A company's internal values document, he argues, cannot be the governing authority for American command and control.
This conversation with Emile Michael, Under Secretary of Defense for Research and Engineering, and acting director of the Defense Innovation Unit was recorded at the A16Z American Dynamism Summit in Washington, DC.
All right, thank you for being with us.
I know every week is very busy for you, but it feels like this past week has probably been the most publicly busy for you.
So thanks for joining us.
My pleasure.
Good to be here.
Look, we're gonna talk about anthropic AI and defense, but I think we want to talk first a little bit about you, how you got into this seat.
This is not your first tour of duty in government.
You have decided to be a public servant before and for a long time.
For half this room that comes from the technology side, they know you as an incredibly accomplished Silicon Valley executive, highly sought after, very successful.
Let's start with what pulled you into public service.
How did it start?
Why do it?
And why take on this role now?
You know, after my first company, Tell Me Network, so we have this speech recognition software we sold to Microsoft in 07.
I kind of needed a break from tech, so I applied to this White House fellowship program, which was super cool.
Colin Powell had done it, chairman of joint chiefs of staff, General Kane had done it.
It was just a cool program.
It was a year, nonpartisan program.
And I got selected, which was awesome, and I got assigned to Robert Gates, who was a Secretary of Defense at the time.
So I get to spend time in Afghanistan, Iraq, Pakistan.
I got a passion for that world, and it was so new to me.
And I said someday I'll come back when I'm ready to really go.
And then President Trump got elected, and I was like, wow, this is a moment where you have a disruptor at the top.
He chose Secretary of Hexath, and that meant all the problems I'd seen, there'd be a clearer way to solve them.
And you could see by the pace we're moving at, the executive orders, critical minerals, new tech, new entrance, the pace is incredible relative to what it was before.
So I'm excited to be there.
Awesome.
Well, why don't you talk to us a little bit about that?
You have been outspoken that the Department of War cannot operate at peacetime speed.
This is kind of like how we tell founders, you can be a wartime CEO or a peacetime CEO.
What does peacetime speed mean?
What is the problem with it?
And what is winning look like?
What is moving with urgency look like?
Peacetime speed started after the Cold War was over at the Department of War.
And I guess there was some famous event called The Last Supper, where the leaders of the Pentagon said to industry, hey, there's not gonna be a lot more buying of weapon systems or innovation.
So y'all should consolidate and slow down your growth, basically, and become dividend payers and stock buybackers.
And that lasted for a long time, and then the industry consolidated down to four or five primes.
So then we're faced with the biggest military buildup in history in China, starting in the mid-2000s, like 2010.
And we didn't catch up.
So all of a sudden, we've outsourced a lot of our key domestic production on many different areas.
Whether it's critical minerals, batteries, a lot of the supply chain stuff.
And then you look up and you're like, holy cow, we've got a lot of catching up to do.
So wartime speed is ensuring that we're redomesticating the critical things we need for national strength.
And we are moving out on that.
We have exquisite capabilities.
We have a lead in so many areas, but we have to make sure that we're self-reliant in key areas.
And so we're running as hard as we can on that.
You know, it was amazing to me.
We work with a company called SkyDeo, and they were sanctioned by China.
And we usually hear stories about how companies are sanctioned by the United States from doing business here.
But it actually, if you're a company that's an important company and you get sanctioned by China and you can no longer buy motors or batteries or other really key things that primarily come from China, it stinks.
And if those products make it into the defense procurement cycle, and we can't get them anymore, it's a huge problem.
So we've learned in our practice that it's not just the defense industrial base, but also all those precursors.
So talk to us a little bit about as you stepped into the role, you are CTO for the Department of War.
How do you prioritize?
How do you take stock of where those priorities are?
How do you figure out?
I mean, if you read the news, it feels like there's an endless list of things that we need to catch up on.
I when I took the role in May, I was sworn in, like did the inventory like any new leader would do, and we had 14 critical priority areas in this role.
And my predecessors had 10, and then someone added four.
So they're 14, and they hadn't changed in nearly a decade.
So I get to look at them and say, well, okay, well, why are these critical?
And by the way, who can remember 14 things when you're trying to motivate a workforce?
And what is an integrated network systems of systems?
There were sort of techno babble.
So I said, well, let's study and say what's really important.
And we got them down to six.
And they were the places where I thought we had the greatest opportunity for change and for growth and impact on our combat power and for our industrial base.
And that was a starting point.
And applied AI was number one.
So then we moved the chief digital and AI office into my group, and we were able to run extremely fast with that, because we're way behind in AI at the department.
And we know it's penetrating the rest of the world so dramatically so quickly.
And our adversaries were also using it for lots of different purposes because they have less trust in their command and control.
So they want to use computers to sort of eliminate human decision making.
We want to enhance human decision making.
So that's been a priority, and we've kind of in 90 days, I think we've had 1.2 million of the three million people at the department use some form of AI when that was that number was 80,000 before I started.
Incredible.
Yeah.
Let's talk a little bit more about why it's important to have advanced AI capabilities.
Maybe some people would say, well, we've been really good at you know being a world power without all this AI capability.
Why is it important?
Can't we just focus on like making missiles and stuff?
Well, you AI can help make missiles if it help you solve physics problems, material science problems, aerodynamics problems, or opportunities.
But we split up the AI sort of efforts into three areas, like enterprise corporate use cases, like any big organization would do for efficiency purposes.
And that's just normal the goodness.
Everyone's happier when you could do mundane tasks faster.
And then intelligence purposes, which is we collect an enormous amount of intelligence.
We have huge repositories of data at the department that's sitting there siloed, unused.
Imagine decades of satellite imagery that you could use to train a model and get insights and then use that to do anomaly detection so you could find out what's happening.
So you take a human analyst and you increase their throughput by a thousand.
And then for war fighting, war fighting they talk about is big part of it as logistics.
How do you plan logistics and find assets and do war gaming and plan operations and do simulations and so on?
So there's a lot of really important use cases that we could benefit from.
Yeah, I think we are the beneficiaries of startups that pitch us their ideas all the time.
And because it's American dynamism, we hear about companies that say, look, we're gonna save 15% of the Pentagon's fuel budget through logistics by using AI.
We're gonna figure out how do you move the troops and the equipment and the vehicles in the most efficient way in a contested environment.
These are all amazing, totally amazing, incredible use cases.
So look, in the last week, there has been an incredibly public discussion about commercial AI models being used in the Pentagon, including Anthropic, being used inside the department.
What you know, in the old software days, and I'm gonna really be in the old software days before even SaaS, people would just buy software and then the customer would use it however they want.
What has changed in this latest discussion?
What has come up?
What are the issues?
I assume most people in this room have been following along.
So we should, I think it's safe to assume there's a baseline understanding.
But what have become the key issues and why did they come up now?
Well, they came up now because as I started to look at the contracts that had been written during the last administration for the use of AI, I had a whole holy cow moment because there were things not well beyond what you've been hearing in the press in the last couple weeks.
Things like you couldn't move a satellite, you couldn't plan, you know, uh an operation, couldn't plan it, not use AI to execute it if it would potentially lead to a kinetic strike or something.
Done dozens of restrictions, and yet this this these AI sort of models were baked into some of the most sensitive and important places in the US military where we do exercise combat power.
Central command now that's sort of uh air of responsibilities Iran, or in you know, Indo PayCom, who's air of responsibilities China, or Southcom, which is uh uh Venezuela and South America, we're all using this model, and there was no two vendors, it was a vendor-locked situation with terms that in theory, if the model was designed to turn off when you violated the terms, could just stop in the middle of an operation and put lives at risk.
So that was the one moment I was like, okay, we have to fix this and clean this up while we're deploying this in the department.
So that raised all these uh issues.
And then, second, after the Maduro raid, one of the the primary vendor for this had raised the question, senior exec, about whether their software was used during the Maduro raid, which is one of the most successful military operations of our lifetime.
Like truly an incredible operation.
And that sort of it's been a bad few months for the enemies of America.
It has been.
And I get to meet the the guys who did that, the lead helicopter uh guy who got the Mel of Honor was a truly outstanding American.
I mean, he he was shot and and kept his cool, didn't tell anyone shot, so that the first landing team could land, and uh it didn't freak it out, and it could have blown whole operations.
So the courage was it was incredible.
And when when a company says to you, hey, was our software used there?
Because we're not sure we'd like that, chill goes up your spine.
It's like you you're at a coffee shop, and some stranger's like, hey, I saw your kid at school yesterday playing cake ball, and you're like, Who who are you?
You know, what?
Um, so that set off a series of events of whoa, are we single-threaded on a vendor who's concerned about how we're using their software after the most successful military raid and the terms of service do not comport with the future world.
We've got to get other partners in here and we've got to move.
Um, and if you if you think about AI as like what we're trending toward AGA, artificial general intelligence, a substrate, a layer, something that'll touch everything, like the internet touched everything, or the telecommunications network touched everything.
Then to tell the users of that substrate of technology, you can't use it for legal things, things that have come through the democratic system, laws passed by Congress, executed by the executive branch.
In the military, which is the most sensitive part of the US government, because we're our job is to be the strength department to protect Americans, you do have a moment of truth there, like we've had, which is this you this technology, if we're losing using it lawfully, the substrate, um, has to be our choice.
It can't, the software, the soul, someone's soul of their model, their constitution, which is not the US constitution, can't be dictating our command and control environment and telling generals and war fighters what to do and not do.
That's right.
So it it it first of all, I think you just shared a bunch of backstory and information that um you know has not been readily uh found, I think, by reading the news and following along.
Although probably a lot of people in this room could have could have guessed, but it's nice to hear that part of the impetus for this and the catalyst for this discussion was originally about making sure that you have ways to use this capability that fit in with our democratic norms.
And you know, you mentioned that you know we have a constitution and they have a constitution.
It's kind of crazy that a company even has a constitution.
There's not that many companies, I think, that have their own culture.
Corporate values, yes, constitutional no.
Corporate culture, corporate values, for sure.
I don't I don't know how many have a term that they say this is our constitution, um, especially when there's you know, often a revolving door of executives at companies, like you know, who knows what they'll think tomorrow.
Um so talk a little bit about the role of democratic oversight, elected leadership, uh that that sort of guides the process that we have in this country uh for deploying AI capabilities uh for national security, for defense.
Yeah, so when when it comes to um American civil liberties, there's a very robust debate historically, especially after 9-11 and um foreign Intelligence Surveillance act, the National Security Act 1947, all these acts where people the government has tried to balance civil liberties, and the good news has been like a robust debate on it.
And maybe those those laws and rules haven't been updated yet, and maybe they should be.
If you believe in the system.
If you don't believe in the system, as as imperfect as it is, then what do you believe in, right?
Then you're not you're taking upon yourself to kind of be God.
And that's not that's not something that I want, even though I'm a small government free market person, you still have to have the government has to have a monopoly on violence to protect its country.
America is just as an idea, but it's also a nation.
And it can only protect it to protect the people if we have the best tools and use them lawfully.
And Congress is responsible for dictating that law, and we're responsible for writing regulations on that law.
And you know, we've got 40-page internal directives that have been there for years about autonomous weaponry, and we're looking at Ukraine and Russia and seeing what's happening there.
And then we're looking at the Chinese stealing American models, taking the guardrails off, and potentially using those against us.
So am I gonna have a uh my arm tied behind my back against the same model that has been stolen by by the adversary?
It's sort of you get into Orwellian sort of situations where it's hard to have anyone make sense of it and sort of be on the other side of that question.
Yeah, absolutely.
I think the the point about our adversaries is well made.
They are not having this debate.
They're they are full steam ahead.
Um how do we was there anything more you want to share about where we are today in the AI?
Well, what where are we today in the AI debate discussion?
Um and what and like is this put to bed, or are we, is there is there a long road ahead?
I I think there's still there's still work to do.
Um and it's interesting, you have four companies that you could call frontier companies, and then you have this sort of major league baseball roster of researches, like a thousand who they're trading amongst themselves, who, if you ask the leaders of these companies, are so incredibly valuable that it's a it's a very strange dynamic.
Four companies, a thousand sort of researchers who who uh everyone feels are vital.
And how do you how do we work with that dynamic where we have enough um companies engaged with us so I'm not never single-threaded again, which is a a terrible gift that the last administration handed us?
So we have multiple avenues who are interested in national security, who are patriotic, very much like the 2018 um Maven where where Google didn't want to bid on the on the contract.
Now Google is a great partner, you know, and so I'd hope some of the newer companies would learn from what Google did, which is, you know, they didn't want to serve the government because they had employee mob issues, but now they're some of one of the government's best partners.
We we see uh the Google Project Maven moment in 2018 in many ways as a galvanizing moment to actually wake up a lot of founders and builders and say, hey, wait a minute.
I I actually do want the government to have the best technology and best capabilities.
I do want to build.
I mean, that, you know, I would say if you fast forward, that gave rise to the American dynamism movement.
We we provided a landing zone for a lot of those founders that said, wait, I don't I don't agree with the protesters at Google.
I I want first responders and uh, you know, the men and women who defend our country to have the best technique, technologies and capabilities.
And uh I always, whenever whenever someone asks me these questions, I always remind them look, like Project Maven was used to make sure that we didn't leave anyone behind in Afghanistan.
Like that's literally what the technology that was used in this public.
And uh, like, do you not did you want to leave someone behind?
Like what how what's the alternative?
Um, and so I think that uh this will also be a galvanizing moment.
I certainly hope it will be for a whole nother set of founders that are excited to support their country and and the people that serve the government.
Um let's talk about the Department of War structurally inside, things that need to change.
Uh, you know, in order to make sure that you have the best capabilities, best technology, and you get them out in the field.
You know, we saw on the news, I won't I won't ask you about it directly because you probably can't even answer, but you know, we saw photos in the news of what looks like new new technology, new capabilities.
But what what is changing culturally and structurally inside the Department of War?
You know, obviously it starts with bringing in people that understand technology like you.
Um, but but what is changing to actually enable the Department of War to modernize?
Uh well, Secretary Higgs has says we're we're on an unstoppable battle against the bureaucracy.
That's not the people, it's the bureaucracy that's built up over decades that prevents new companies with new technologies from getting their concept or their product deployed in the department.
So what I'm trying to do with the various tools I have is trying to create normal contracting processes, normal requirements for form uh requirements.
So for example, we used to do things like here's the thousand requirements in our RFP.
A vendor would sort of fill it out and say yes, SSS.
Even if it was physically impossible, the physics didn't work.
Right.
Then we put them on a cost plus contract, and they're like, oh, that didn't work out.
And change order, change order at least for another three years of development, another couple billion dollars.
So we're trying to move it to simple requirements.
I need a missile that goes this far in this environment with this payload, et cetera.
You industry come in me with your ideas and how to do it.
And then you get a five pay for it.
Yeah.
Yeah.
And and and we'll buy it and uh firm fixed price.
And if you make a better margin because you're able to economize, this is sort of the Elon model, and why he was so successful at SpaceX.
Um, well, then everyone wins, right?
There'll be and the venture community sort of is very comfortable with that model, right?
You bet on winners, some are not everyone's gonna win, but uh cost plus endless, um, endless development cycles doesn't work.
Um so we need faster development cycles, risk sharing with industry, clear demand signals, simpler ways to do business.
And that those are the kind of bureaucracies that like every day I'm moving the debris out to try to make it happen.
That's good.
You're like regulatory Moses.
Pardon me.
That's good.
Uh so we we we that that to me is one of the most important things that's changed, and it actually gets the founders fired up to build.
What what is it that uh that the companies can do better to work with the government to work with you?
You know, you've done this Arsenal freedom tour, you've visited a bunch of startups.
Um, but what is it that you need now that the government is saying we're we're ready to do business, we're gonna make it easier to do business, we want the best capabilities.
What do you what do you need from the companies and the startups?
Um so we need companies to uh this is this is just the the one thing the primes have an advantage on is not the inventiveness.
Um it's the the production and manufacturing ability to scale what they do with with what they've initially built.
And I think the opportunity for startups is to take the the great technologies and concepts, build up their muscle on how do you build a factory and produce these things at scale and do the quality testing and all that thing, all that kind of stuff.
And so you do have to borrow from the old world to do that effectively, so you're not just reinventing the whole thing.
Um and I think that's the next stage.
And you're gonna see companies start to cross that chasm here in the next one to two years where they've demonstrated or they've footfaulted, but then they've hired the right people and they figured it out.
And then that hope it hopefully encourages a lot of other companies, like this can be done.
And then venture capital dollars will continue to coalesce around this this marketplace, which I desperately want.
So I think that's the thing to consider.
And there are the other thing, if I'm on your side, if I'm on the on the new entrance side, you could always find someone in department at three million people say, Man, this is great.
I love it.
I love you, man.
I love your love your product.
And but money talks.
So are they buying it?
Are they testing it?
Are they doing those?
Are they are they actually pushing pulling you through the process?
Because that's the best signal of your are you actually successful?
Because the culture there again is to never say no.
And I've tried to move it to faster yeses, faster no's, so that if you're a startup, and I'm I felt this pain as a startup guy.
When you don't really know if you're getting a deal, I'd rather be told no so that I can either move on to the next partner, readjust my product strategy, do something, and and that's where we're trying to let move the culture to, and which I tell the the young founders out there.
Awesome.
Well, we're very appreciative of those efforts, and uh it's good for the taxpayer.
Last question as we wrap up here.
You know, you have uh you have a good life, you're very successful.
This is not a nine to five job, I assume.
You have a family, takes you away from your family.
Um what what would you say to people that are in the startup and tech side of the world who are thinking about spending time working with the government, supporting the government, um, and look at you as an inspiration and somebody who whose shoes they would like to follow and steps they would like to follow.
Well, I I think you know, everyone can most patriots figure out a way to give back, and there's lots of ways to give back.
This was my way, which is you know, I'm an immigrant, my first language was Arabic.
I moved to this country, I get to Silicon Valley.
I've seen some of the and been able to participate and build some of those interesting companies around.
And it was the right time in my life to say, like, okay, well, this is the way I'm gonna serve my country.
I want to have my kids see it so that they can see that this, you know, our system doesn't come for free.
People they have to have builders, people who care, people who sacrifice to do it.
Um, not to mention all the boar fighters who sign up for the jobs that say they sign up.
This is the way I could sign up.
And you know, put making sure that they feel that.
For me, that's incredibly motivating.
And ever hope everyone else who's in the the startup world finds their own moment to do that, if not in business, but after in the right point in your career and all that, because we need more people to do that because we used to have government service as an honored profession, the Manhattan Project, the best scientist.
Now, industries has a lot of opportunities to really exercise your brain and your you know in those ways, but we can't forget that we need Patriots to kind of come do these kinds of things every now and again.
Well, thank you.
We are so appreciative of the work you're doing, and thank you for being with us today.
We know you are extraordinarily busy.
Thank you.
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