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"Building the Base" - an in-depth series of conversations with top entrepreneurs, innovators, and leaders from tech, financial, industrial, and public sectors.
Our special guests provide their unique perspectives on a broad selection of topics such as: shaping our future national security industrial base, the impact of disruptive technologies, how new startups can increasingly contribute to national security, and practical tips on leadership and personal development whether in government or the private sector.
Building the Base is hosted by Lauren Bedula, is Managing Director and National Security Technology Practice Lead at Beacon Global Strategies, and the Honorable Jim "Hondo" Geurts who retired from performing the duties of the Under Secretary of the Navy and was the former Assistant Secretary of the Navy for Research, Development & Acquisition and Acquisition Executive at United States Special Operations Command.
Lauren Bedula 00:30
Welcome back to building the base, Lauren Badulla, here with my co host Hondo Gertz. And we're so excited to have the honorable Katrina McFarland with us today. Katrina McFarland began her career in civil service as a general engineer in the US Marine Corps. So he has a technical background but pivoted to acquisition where she really wanted to get things done and served as Director of acquisition for the Missile Defense Agency was president of the Defense Acquisition University, and then worked her way to Assistant Secretary of Defense for Acquisition after serving as the Army's acquisition executive. Another interesting fact is Katrina served as a commissioner on the recent National Security Council on artificial intelligence, which we'll get into a bit here. So Katrina, thank you so much for joining us today.
Hondo Geurts 01:10
Yeah, Katrina. It's awesome to see and and have you here on the show, and as Lauren mentioned, you get quite an extraordinary career both in and out of government. But I want to understand how, what brought you to start as an engineer in the Marine Corps, maybe not the most traditional path? What got you interested in kind of what was your origin story, so to speak?
Kathrina McFarland 01:32
Oh, well, it's kind of simple. My mom escaped from East Germany at the end of World War Two, and was one of the few surviving members of her family. Originally, I was actually going to, and I had won a scholarship to work on the NASA space shuttle back in 1970s. And when it crashed, I was broke. And I interviewed with all the services in lab, but the one that was most interesting to me was the Marine Corps. And my whole goal had been, I think, my entire career is to be an engineer one, and then to serve national security in whatever form I could.
Hondo Geurts 02:13
And what were those early days like in the Marine Corps? As a young engineer, maybe? Probably not too many female engineers around you, well, what was it like breaking into that group?
Kathrina McFarland 02:23
Well, I have to confess, I grew up in a very small town, and we were dirt poor. And so the kids were split between the parents and I went with my dad, and he was a lumber man at the time cutting trees all over the United States and Canada, and also building buildings and stuff. And I was just another set of helping hands. So I didn't recognize the distance between guys and gals when I came to work. And so there were eight engineers, when I got there to the Marine Corps. And it really didn't strike me until several years later, that it was uncommon, because I had been so familiar with working with both predominantly guy area, so not much, really. And they were really great to work with, they'd let me do anything I wanted. Just wonderful.
Lauren Bedula 03:07
That's great Katrina. And it seems like you really leaned on your roots as an unapologetic engineer, even as Assistant Secretary of Defense for Acquisition. So could you tell our listeners maybe about some of the unique perspectives that your engineering background provided and leading large and complex organizations or projects?
Kathrina McFarland 03:25
To me? That's a really cool question. For a lot of people, I think they don't realize that you take the skills that you learn in other places, and they apply broadly to, to more places. And my job I felt was to make sure that the best products would get in the hands of the warfighters. And it doesn't matter what scale, it took the time to get to the scale, ie when you have 13,000 plus people work for you, you have to have a sense of scale, to be able to manage that and have an understanding of how you manage it. But knowing engineering and being technical in background allowed me to quickly consume what was being put in front of me. And I had that from gosh, the entry into the Marine Corps. And the other thing is I had some fabulous mentors, I didn't even know I was being mentored a lot of the time. One of my favorite quotes from one of the mentors I had was that the only thing in life that you can control is your reaction to it. And the second one was from my grandfather, which who always said the harder that you work, the luckier you get. And between the two of those as sort of founding principles in my life, I think that it seemed to work out okay. Yeah.
Hondo Geurts 04:35
Oh, I'll say it worked out. Alright. So as we think about the kind of future landscape we're all dealing with, you've been very outspoken and you and I used to talk about a lot in the building about supply chain and supply chain resilience. I think, you know, COVID in the aftermath of maybe brought that into the light which What's your sense on are we making The progress on understanding supply chains and where do we really need to go if we're going to, you know, continue to have the resilience we need with such a an adaptable world out there?
Kathrina McFarland 05:11
Well, we as a nation are reactive entity we we are not as I would like us to be when it comes to being ahead of the game prepared. I think right now we're still experiencing some of the ramifications of long term COVID in terms of supply chain. So I think we're still motivated. But even as I see some of the studies and some of the activities going on, they seem to have less energy. And that makes me very worried. We recognize two pieces about the supply chain challenge. One was our interdependencies and our dependencies. Some of the interdependencies with collaborative nations is a good thing. It creates a synergy. You know, what they say, friends are temporary interests are forever. And if we have the ability to have a good interdependency with like minded nations, that's helpful. But when we have a dependency on a not like minded nation or government, we have a problem. And we discovered those problems, right. So how do we get around that? I think it's a very, very top level issue. And it's national security isn't only in defense products, our economy needs to be strong. So it creates the resources so that we can afford a solid national security. And that is part of this whole strategy of how do you disrupt the supply chain? Because we've had very disturbing findings in this area. I'm sure you've spoken to, in fact that listen to some of your other efforts. And I know that you've talked about what does that do to us as a nation. And I think that is a piece that we need to strengthen our resolve on, put some real deliberate resourcing in place with people who have ownership and training to understand what it means.
Lauren Bedula 06:56
That's great Katrina, and I love how in the past, you've talked about how the economy and national security are so intertwined. So I'm glad you brought that up here with us today, because it's something we really like to zero in on as well. And so, as far as supply chain security, there's been a lot of focus on micro electronics, especially with the recent passage of the chips act. But I'm curious, what's your take? Are there other areas that are so critical to national security that we should be focused on? Beyond microelectronics?
Kathrina McFarland 07:23
Absolutely. So rare earths and areas such as emerging technology space, so we don't lose our edge when it comes to innovation of which this nation is so famous for rare earths are important because it's a strategic source and supply and leading edge and emerging technologies because they're the future and I consider AI one of the areas where we're at the precipice of losing the stretch of end game, in terms of winning the battle, if you would, or race to being the first to adapt or first use or so I'd say those are the two main areas that I'm personally concerned about.
Hondo Geurts 08:06
Yeah. Katrina, I think the other one, we've talked a lot about energetics. Oh, yeah. Which is, which was one I would add in and I know, you're very, you're very vocal on that. And, and again, not only just the raw material element of it, but as we're seeing, you know, as weapons are being depleted, we, you know, we don't have the capacity to rebuild that the scale and the speed we want. And so we've got to keep focused on that. You mentioned the talent aspect of supply chain. Talk a little bit more about that. What, how do we need to, you know, train our government acquisition folks, as well as potentially our industrial partners on supply chain?
Kathrina McFarland 08:45
Well, one of the things that I think is really important, too, is that our society has gone so global, that we have treated everybody as equals. And the real deciding factor between sourcing a friend or not a friend, in terms of the supply chain has been the almighty dollar. How much do we spend, we've been so focused on pressuring down the cost of items, we don't realize necessarily, where we're creating a golden handshake or more importantly, a golden bracelet. And I think that that is an issue for our people who engage in supply chain management at the program manager level to understand what really and fully has been a potential than something. We had a hearing on the supply chain about a year back. And that was one of my strongest comments and recommendations to Congress is we need to prevent this from happening again. First, yes, we need to do a cleanup of the current state of affairs when it comes to supply chain, that we need to do a thorough analysis of the supply chain with full disclosure by our suppliers on where they source their materials source their support so that we have the full list of understanding of where our dependencies are created and whether that is going to impact durability as it is showing today to create a vulnerability or even worse, a situation where we don't have what we need. That ties, unfortunately to one other aspects of supply chain. And that's lead time. So one is getting the materials, the second is the lead time to be able to take advantage of those materials. For example, if we continue to have missile inventory or energetics that have a lead time to develop to the point of usage five or more years, they basically chained ourselves to a problem that we as engineering people and technical people need to understand how to reduce that lead time so that as we require the asset, or the product, or the material is available to us, there's different ways and strategies of doing that hedging is one support from internal, those are strategies that we as a program management community, and as a nation, and it doesn't just extend into defense, this is national food supply. As you mentioned, energetic there's a whole gamut of things that as a nation, we need to take advantage of in terms of our intellect to make sure that we're protecting ourselves long term.
Lauren Bedula 11:12
Katrina, you mentioned artificial intelligence as a critical technology when it comes to supply chain issues and vulnerabilities. And we talked about earlier how you served as a commissioner on the National Security Commission on artificial intelligence, which was really the most comprehensive look at how AI will impact our national security. So and you also talked about the opportunity of getting this right, or our general outlook around supply chain vulnerabilities. What does winning in the age of AI look like?
Kathrina McFarland 11:40
So for us as a nation, in my experience, from this period of time that we looked at the technology space of artificial intelligence, what we as a condition, thought was that AI is like electricity from the 1800s. And it's going to be everywhere in the future. And if we really take a look at the history of AI, it started all over the globe. But the United States based on its approach and innovation, as the skills for our people, we saw that we are losing that competitive edge that other nations have recognized in our harnessing the technology factors. And we are some of that related to the fact that we as a nation have learned over time that we have to adapt and utilize technology safely. And we have protocols in place. And we have a risk tolerance that is focused on successful outcomes, that sometimes slows us down. And governments that don't have that risk tolerance adapt really quickly, and sometimes to their peril come the commission to we need to regain that edge, that competitive edge, that future edge, because artificial intelligence is no longer just in computing, it's in biology. It's in computing, it's in material science, and they're all in this convergence path. And for us, as a nation to have what we consider in our value system with like minded nations, we need to propagate this technology safely and within the roles of what we believe are freedom conserving, so no surveillance of the population, no constraints and control of people or things or etc. So, right now, we're at a precipice where we don't move out quickly, in terms of broad technologies to include artificial intelligence, we will lose, and we recommended a technology competitors consoles, that it would be at the cabinet level so that we would have a national artificial intelligence strategy in place that the nation could embrace and act on because we're good when we're galvanized with a common purpose.
Hondo Geurts 13:59
And Katrina, have you what's your sense since the commission has, have those recommendations been acted on? Are we still in the fiction to stage? Which What's your sense of progress since the commission finished up?
Kathrina McFarland 14:13
Well, fortunately, there were other areas that people were working on similar AI agenda items. And I believe, between the condition and these other places like cyber solarium, et cetera, et cetera, pull together some very, I'd say, appropriate legislation and associated resources, one of which I think Laura mentioned, which is the chipset So money is starting to come into play, which will help seed the ability to adapt and adopt and create new innovations in this area. But we have a far we have a long way to go. We're not where we should be right now. And we finished up the report we said we needed to be aI ready by 2025. And I don't think we're going to make that goal. Not at the time, the seats that were acting. And I think it was the Winston Churchill said that the Americans always do the right thing after they've tried everything else. And I think we're taking a little of that on right now. I believe that we need to be more strategic in our approach to this new world, this next generation of innovation and evolution, if you would, and we need those highest levels of intellect to engage in talent to grow, and people in positions of authority and responsibility to have a common purpose. And so those are the things that I think will change the future to better but we're working on it.
Hondo Geurts 15:41
So we've talked, you know, technology and supply chain and AI. But when you and I were in the building, we talked a lot about people, and many of the meetings we had on an acquisition was about the people side of things, not just the process side of things. And, you know, given your experience as a prisoner of diu. And in the building and looking a little bit now from the outside in a Where do you assess our, and we'd say readiness to lead this new age of technology, whether it's aI ready by 2025, or software, embedded systems. Where do you see the DoD acquisition workforce right now in terms of talent? And where are the biggest gaps? And how would you recommend we work together to close those gaps?
Kathrina McFarland 16:29
Thank you, Kondo course, you know me well enough to ask that question. Because it's one of my personal high level of interest. One thing I learned working with the Marine Corps, for many I learned was that every person no matter what they are, has some golden nugget of talent that you need to find. And when you find it, you can motivate them to produce way above expectations, their own included in our society, our people, our ability to bring that to the surface is our one of our strongest talents. And our skills as a nation is to allow everybody to have their freedoms independently and tolerate it. But then take the strength that all of that does and bring it to the surface and Diu is no different. They're very much engaged in using new technologies to try to raise the game. So far, already talented and already frankly, overworked acquisition workforce. And when I talk acquisition, it's the big A, it's not just program management, its requirements generation, it's the Comptroller's, it's everybody. And I think that that, to me, is where the university needs some help. They need to be recognized, they need to be helped to bring up that game. And they need to have access to a broader number of workforce, people to be able to get into the technology, space and help people understand where this technology needs to be and how it needs to be managed. And I think that is, where they're heading. But anything we can do to foster support and bringing some real resources to bear would be helpful.
Lauren Bedula 18:08
Katrina, I went back and listen to some remarks you gave in 2016, at the Army's big conference, a USA and one of the questions you received was about all of the different innovation hubs, and specifically the Army's rapid Capabilities Office. And so much of our country's security and prosperity today are linked to the industrial base that grew out of World War Two. And we're at this pivoting moment here where we know the high tech sector plays a critical role in national security and defense. I'm curious, here we are six years later, from the time you gave those remarks. How do you see DoD doing in terms of bringing in the high tech sector or non traditional players from an acquisition perspective?
Kathrina McFarland 18:49
Wow, I wish I had something better to say we're not doing good. In fact, I would say we're doing worse than six years ago, because when we stumble and fall and stretch to try to reach for new ways, or innovative ways of doing things, without thinking through the consequences, we actually damaged them. I will say some of the labs and in particularly, the service lab, are are definitely amping up their game, which I believe if you go back to your thoughts about World War two per post World War Two, there was a bunch of engineers who've worked on things that you can imagine like the Manhattan Project, etcetera, because the nations need to be able to succeed in the war, those engineers were standing around. And the goal that came out of that from the cabinet was let's stand them up to support the federal government so that they have access to that high end academic talent. And they turned into the FFRDC fees and all of these entities that support but unfortunately over time, that support eroded into people who made themselves more and more like the governor which was not the intent, the intent was to be able to access on a revolving basis, the top end talent to support the government who had to the process burdens. The government is the balance between public and nation's good. So public and national security are always in the balance. And in order to take care of the public, you have to do things like competition and free and open and national security sometimes need you to go directly and in between the government, which was supposed to have the support of this high end technology. And I'm not saying that these people aren't skilled, it's just that we need to reinvigorate the access to an intermediary, which would be these engineering houses, high end skilled, and we need to create vehicles in a new technology era that couldn't even it didn't imagined post World War Two, to be able to access and utilize and harness that industrial base talent that's out there. So we need the smart government people like our last question that are talented, no have all the skills if you want to be good customers, you need them to be able to have that knowledge about the technology amplified and accelerated by the SF RT C's and these people who are supposed to be intermediaries between the government and industry and you need to give access to industry that's quick democratize so everybody can get that talent and access quickly. And you need to think about restructuring. And this is me doing Dawn pod at the windmills. But I'll put it out there because there is a budget condition going on, need to restructure how the resources that is the budget is formulated and distributed so that we can actually keep pace with the technologies that we need.
Lauren Bedula 21:50
It's interesting, Katrina, I haven't heard many folks, especially those as expert as you are in acquisition and defense, in particular, talk about how we may be actually losing traction or in worse shape today than we were, say five years ago. And I think one thing that's changed is you've seen a lot more companies in the past five years step up with interest, and maybe as a result noise on both sides. But I agree, I think in some ways, it's more difficult on the private sector side to navigate acquisition because you don't know where to start. There are so many innovation hubs in one controversial vehicle, you talked about the need for more vehicles for this effort, or sybers. And these are the small business and innovation and research vehicles. We're curious for your take on sybers. What do you think? Are they effective? Or could they use some improvements
Kathrina McFarland 22:42
have been highly effective in the past, highly, highly effective, we wouldn't have telecommunications if it hadn't been for sippers and DARPA, Defense Acquisition research, you know, those folks that are out there who've used supers in the past have recognized the skill but what happens similar to attacks form every year is that people start to figure out the tax form to their advantage. Because, again, resources and profit are what motivates people and certain sometimes that motivation overcomes the objectives of this original design of the system. And what we need to do is make sure that the sybers is working to the intent and revisit how those slippers are being done and ensure because it's a very low dollar figure, but it's the only funds that have no defined place where they're going to be used. I'm not saying again, as an engineer, my English isn't perfect. But sybers is a tax on money that was appropriated for an AI, let's say the ship, and a certain percentage goes to whatever research can be done by a small business that would help the government. So in the year of execution, you can use that dollars for something that you haven't done an appropriation review, for specific end item. That's the only monies that are out there that can do that. That is panacea for a good program manager. So when I'm out there, and I'm trying to build something, and I have a weak link, or I see some innovative technology out there, I can actually buy it in the US execution. Again, no other funds do that to me or planning periods to get money. So for me ciphers is a fabulous tool. We can always improve upon things but the worst thing we can do is ever take that away from the toolkit because it is primo important to a program manager when they see breakthrough technologies that create vulnerability to their systems or their capability. Yeah, Katrina
Hondo Geurts 24:46
you know, program managers, effective program managers and counterparts in on the industrial side, understand all the different tools that are out there and act like a like a conductor bring all these different pulls together to create music, whether that's shippers or foreign comparative testing, and we talked about supply chain vulnerabilities, you know, I've seen creative program managers use sybers as a way to see where there's new technologies where they've got a supply chain weakness. I've also seen program managers do the same with allies and partners and weave them in to their programs to create resilience and depth and breadth. How do you see are working with allies and partners changing over the next coming years as as we try and take on these industrial challenges we have, you know, we I don't think we can afford to have an industrial base solely in America that will be built deep enough and wide enough and effective in this kind of these new global competitions. But you spend a lot of time into building wrestling with know the trade off between technology and security and resilience. How do you see that changing over the coming years?
Kathrina McFarland 25:59
Well, I think there's some really interestingly positive changes that are going on. And they're, of course, complemented in a different direction on some other areas that are negative. So I'll start with the positive. I think one of the things that we as like minded nations, in recognition of our independence and freedom to have done is realize that we need to work together common purpose, understanding common issues and threads. I've never seen more activity on interoperability and common equipment and work on how do we look at the strategy of development of AI and infrastructure 5g, for example, we're actually thinking strategically, as well. But we're thinking strategically and not areas when we met as a commission with the international consortium is one of the pillars that we worked with, we had 72 nations actually work with us to understand the ethics as well as the stresses technology of this nature would bring, and how do we work together. So I think there is a common energy against the common enemy, however, we've created entanglements, by buying and selling, that can be sad, causing a fragile relationship and also can damage other countries as well as ourselves. And we have to be very thoughtful about it. Going back to your earlier premise on educating the workforce, we need to be thoughtful about, we have to make sure that our partners that, you know, sadly, most of them smaller than us, as far as the fiscal engines have the ability to have their sovereignty and the strength of their economic engine. And preserving that strength. Because if we ever have, God forbid, a conflict, we want them to stand beside us and contribute, and so do they. And so I think the material sciences, rare earth, elemental science and technology, we need to be able to share at some level, and we need to embrace what what they can develop. And, and we need to be thoughtful about how we interoperate. And so our equipment or our skills, or our town, that's me can be a negative, it's not done appropriately.
Lauren Bedula 28:26
And shifting gears a little bit. Katrina, you've been out of the US government for several years now and work with a lot of interesting tech companies, including as an advisor and sitting on boards. I'm curious, has anything surprised you about your time in the private sector? And is there anything that the private sector can be doing to help with this issue?
Kathrina McFarland 28:45
Wow. So first of all, I am always impressed by the depth and skill of the town that I walk and talk with. Just amazing to me. But I'm also totally amazed about the lack of understanding of the government, their customers, one of the things that I find myself mostly engaged in is explaining things about why does the government do this? Or how does this government think? Or how do I get to work with the government better, and that's even more prevalent in the small and I decided, for the most part, I was going to work in some areas of research and engineering, hence, my National Academies and army science course. And I was going to work with small so that I can help as much as I could, where I found innovative technologies, help them access the government, so I kind of understood it, it's a small, but what is amazing is it also is this thirst for understanding reaches all the way up to larger companies, who have a lot in terms of depths and resources to offer to the government. The second thing, which may not fit the premise of this conversation, but I'm gonna throw it out there anyway, is that I was all It's cold in the government that we had the lousiest HR system ever. And it would take years for anybody to get employed. Well, I'd like to say that I've discovered in this industry, it's not that much better, which is a surprise to me, because I felt that they could just tap somebody on the shoulder and bring somebody in. And they could get rid of people, if you would very caustic Lee stated, but simply put that if the person wasn't producing or working, they could easily remove them. And it is the same, if not worse than the government. That's just a sidebar. But to me, that's an issue for us as a nation if we do not know how to adapt quickly, and resource quickly and move quickly. Because this is all about a competition, competition to preserve our, you know, national security, but more importantly, our way of life. So we need to think that through as a nation,
Hondo Geurts 30:54
yeah, I think, you know, there was there's always this fear of the revolving door. But I think to some degree that's hampered both sides from being able to have a fluid workforce that can understand and appreciate both sides. Because, you know, the government is a is a tough customer, but an important one. And, and I think over the last couple years, many companies have learned can be a reliable one when things are going bad. And so there was, you know, we have to figure out both the people side of this, and we'd say, the business side that allows things to be much more fluid, if we're going to compete in that. How do you see talent? You know, there's everybody's struggling for talent, I think, to some degree right now, I have been somewhat buoyed by the number of up and comers who are interested in joining national security, maybe not in a way, or at the level they that was five years ago, or eight years ago. Are you seeing the same thing when you talk to and mentor young folks? Are you seeing folks interested in national security? Or do we need to be doing more to make pathways for them to get involved in in whatever way they think is important to them? Well, I
Kathrina McFarland 32:13
think, to comment, in general, the last couple of years with COVID, and now with Ukraine, has created more energy in our people to realize that we aren't, you know, living in a world of like minded nations or governments. And that does bring out patriotism, and then young people who strive to have something meaningful to do for their life. And I'm thrilled by that. But I know it's a numbers game. And I think we can improve. And in fact, one of the efforts of the commission was talking about an education Renaissance, we still are operating in X decades old fashion of education, and only with television, as they open up to realize that virtual training is a tool that could actually improve and raise the gain in our people. And we have a large number of people that are in this situation where they're somewhere, having maybe gotten a high school degree, maybe not, not being able to reach and attain a college degree. And there are a skill in a workforce that we should tap into. And we should think about certification and other means of getting these people productively into a higher skill set, where they could work and earn certificates so they can get themselves hired, if you would in skills over time. And that's a large workforce that we should take on. And that includes in the government, we need to revisit what we value and how we value it, because we've created impediments, that maybe a couple of decades ago made sense. But in today's environment with what we can do online, similar to today, with all of its pain points, and learning and rough edges, we can really reach out to a larger population of all varying degrees of intellect and tap into that resource. Katrina,
Lauren Bedula 34:17
one thing you've made clear throughout really all your answers is the importance of workforce issues in talent. So thank thank you for all you're doing on that front. And I think just your your points about adapting resourcing and moving quickly at such an pivotal and competitive time are spot on to what we're looking for. So thank you so much, Katrina, for joining us today. A lot of great ideas.
Kathrina McFarland 34:39
Thanks so much. It's been great. I appreciate it.