Braxton Taylor
A briefing slide offers a window into the philosophy of the consultant tapped to be the Pentagon’s next industrial-policy chief.
“Embracing risk, investing into digital and securing the best talent will be key to competitive advantage in the decades to come,” Mike Cadenazzi, a managing director for consulting giant EY, wrote in his 2022 presentation to defense investors.
Cadenazzi, who began his career as a junior officer in naval intelligence, has spent most of his professional life advising clients, including as founder of VisualDOD, a data-visualization tool he sold in 2015 to McKinsey & Co. He has worked as a forecasting consultant for Toffler Associates, for decision and data science company Govini, and most recently for EY, where he has written articles and participated in podcasts.
On Tuesday, Cadenazzi was nominated to become the Trump administration’s first assistant defense secretary for industrial-base policy.
Cadenazzi arrives as the Defense Department is poised to reform many of its core policies for buying weapons, maintaining supplies, and engaging start-ups with emerging technologies. Congress, the services, and the White House share the broad goal of reforming an acquisition process widely believed to be too slow, inefficient, and overly weighted toward established defense contractors. Industrial-base policy may help buy newer technology faster and at the scale to deter a fight with a well-funded and -armed adversary.
By one 2020 estimate, the Pentagon spends seven to 10 years getting to initial operating capability after deciding to buy something, a far cry from the pace of modern warfare as demonstrated on the fields of Ukraine, where militaries are adopting and adapting new technologies week by week. The Defense Department has been moving to buy more dual-use technologies: commercial products that can be modified for defense needs. But those efforts aren’t as commonplace as they should be.
At a House Armed Services Subcommittee meeting last month, Rep. Adam Smith, D-Wash., noted rigid practices for decision-making that don’t keep pace with the speed of digital innovation.
“How quickly we make decisions and are able to adapt to new technologies and buy new equipment. The processes are too slow. We all know that. We’ve talked about that repeatedly,” Smith said. “We cannot possibly spend the amount of money and build what is needed to meet all of the threats that we keep talking about. It’s simply not possible.”
At a Senate Armed Services Committee hearing on Wednesday, Army vice chief Gen. James Mingus also highlighted the problem of processes—specifically, congressional rules that require the services to make formal requests for even small purchases through budget justification books, or J-books.
“Every line of accounting, every piece of equipment, every radio has its own individual line within the J-books that come back in our budget line items on the back end of appropriation,” Mingus said. “We all submit a J-book and a budget almost 18 to 20 months before we actually see an enactment in an appropriation. A lot can happen in that 18 to 20 months…For high-tech things, [unmanned aerial vehicles] high-tech command-and-control systems, that evolve at a rate faster than our budget cycle, we would like to compress those lines to allow us to move in year of execution.”
While Congress and the services recognize the burdensome rigidity and slow pace in the way the Pentagon buys things, tackling those problems will require both sides to accept change and compromise. “Embracing risk” is easier said than done, especially in terms of helping the Defense Department build and support the industrial base it says that it wants.
The Government Accountability Office has proposed a variety of solutions over the years. In December, a report encourages the services to more aggressively use Other Transaction Authorities—smaller contracts that require less oversight than more formal ones—and alternative contracting mechanisms, at least for digital products and services. Last Friday, the Defense Department took a step in that direction with a rule change.
The Defense Department is also struggling to incorporate artificial intelligence not just into operations but across business processes such as acquisitions. While commanders, officials, and lawmakers have all highlighted the importance and potential benefits of artificial intelligence, particularly for speeding up operations, the size and complexity of all the different things that the Defense Department does have prevented it from implementing AI across all the different areas where it could make an impact.
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