Defense & Aerospace Report DEFAERO Daily Pod [Aug 27, 25] Latest Aquisition and Industrial Policy Headlines w/ Bialos, McGinn & Clark
Aug 27, 2025
Joining the discussion are Bryan Clark, who leads the Center for Defense Concepts and Innovation at the Hudson Institute; Jeff Bialos, former deputy undersecretary of defense for industrial policy; and Jerry McGinn, who heads the Center for the Industrial Base at CSIS. They dive into the Pentagon's plans to acquire stakes in defense contractors for enhanced capabilities. The guests critique current acquisition strategies and emphasize the need for a more agile approach to improve military readiness. They also discuss the innovation landscape and the challenges faced by new firms in defense.
AI Snips
Chapters
Transcript
Episode notes
Ownership Stakes Are Unusual And Risky
- Government ownership stakes in defense firms are highly novel and offer limited extra leverage if passive.
- Ownership raises conflict-of-interest and ethics concerns without management control.
Equity Could Unlock Shared Infrastructure
- A government stake might let DoD influence a prime's IRAD or open their test infrastructure to other performers.
- That could lower barriers for startups to develop and demonstrate capabilities using shared infrastructure.
Use Incentives Before Equity
- The government already controls markets via regulation and contracting incentives, so ownership may be unnecessary.
- Tools like long-term offtake, loans, and procurement incentives can reshape private investment without equity.