Pillar 2: Rapidly Expand Commercial Innovation into the Defense Industrial Base—Broaden the Deployment of Dual-use Technologies

Recommendation 5: Re-imagine the defense industrial base to include, under proper conditions and governance, commercial companies developing important dual-use technologies for national security. 

The national security technology ecosystem is a major driver of U.S. competitiveness. Today, cutting-edge technology increasingly rests in commercial companies and universities—including the technologies the Department of Defense (DoD) and defense primes need. The defense industrial base must therefore find ways to open up and engage more productively with the private sector and optimize dual-use opportunities—for the battlefield but also in cyber defense and economic defense. 

In response, the DoD has established dozens of organizations, programs, and other initiatives to foster partnerships with commercial companies. However, this has created “silos of opportunity” that are difficult for commercial companies, especially small businesses, to navigate. Building on the April 9, 2025, “Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base” Executive Order, the TLSI recommends the following specific actions to address the challenge of accelerating the development and deployment of dual-use technologies for national defense: 

1. Developers of some dual-use technologies— for example, artificial blood that could be used in civilian hospitals and on the battlefield—face significant challenges in gaining access to the DOD, which leads many firms to remain on the sidelines. These companies often find it more profitable to focus on civilian applications, where they encounter less stringent regulation. Defense systems integrators should serve as a “bridge” between commercial innovation and defense application, working with leading-edge commercial firms to integrate and deliver their advanced technologies to the Department of Defense. 
   
2. The DoD should efficiently catalyze a new technology and innovation ecosystem to meet national security needs by opening competition to more firms, and integrating and leveraging the different capabilities and skillsets of commercial firms, defense primes, universities, incubators and accelerators, and the venture capital community. 
   
3. The DoD should optimize its R&D enterprise to leverage the modern defense industrial base (DIB) and what it has to offer. This means reforming the DoD lab enterprise and the many new agencies and organizations that were created to engage the private sector. To this end, the DoD should rationalize, streamline, and adequately fund its organizations and programs that serve as gateways to the defense market for commercial firms of all sizes. USD(R&E) should take the lead here and optimize the labs and this new outreach for success.
   
4. National laboratories should serve as conveners for pre-competitive consortia and research initiatives, bringing together industry, defense, commercial sectors, and universities for collaborative research. 
   
5. The DoD should consider procurement requirements that reward partnerships between defense contractors and commercial entities. Public-private and private-private partnerships should be encouraged through solicitations, encouraging greater partnerships to solve DoD challenges. 
   
6. A new DIB can leverage the existing workforce and manufacturing capabilities within the traditional DIB, minimizing disruption during the modernization process. Joint manufacturing efforts between commercial and defense companies could also be pursued. 
   
7. The federal government must make bigger bets and assume greater risk to drive innovation more quickly. These should be national initiatives that encourage the entire R&D ecosystem to be brought to bear to solve defense challenges.
   
8. For small businesses performing DoD-funded research and technology development, the DoD should articulate clear pathways and provide support in advancing their innovations to Technology Readiness Level 5 (TRL-5) and above, and help transition them to a national security application, a systems integrator, a defense service, or program of record. 
   
9. Establish secure facilities for interactions between universities, companies, and the Department of Defense. Perceived as neutral grounds, universities could be a place to establish secure facilities for multiple users. Regional secure facilities and government facilities on industry sites should also be considered for this purpose. This would allow larger firms to help small businesses and start-ups secure access to facilities.