Pentagon Aims to Grow the American Drone Industry

The Pentagon has announced that it is seeking to recruit investors to invest in American small drones to provide an alternative to Chinese models, as per reports from CNN. A first under a new Department of Defence (DoD) program aimed at linking “trusted” sources of private capital with “innovative companies critical to defense industrial base and national security.”

Ellen Lord, the Undersecretary of Defence for Acquisition and Sustainment, told reporters on Monday that the Trust Capital Marketplace, as the program is officially known, will focus first on investment for small drones because it is a technology that everyone can understand and Chinese companies currently dominate their manufacture.

The Trusted Capital Marketplace was initially conceptualized as a web-based platform to support connections between venture capital and emerging tech firms. But Lord said at the briefing that the “complicated expensive website” idea was discarded in favour of meetings on “very, very focused topics.”

With the aim of diversifying the small drone industrial base, DoD will convene acquisition match-making meet up in October. Lord said focusing on drones for the first marketplace meet-up will be significant in countering the reliance on China-made tech.

Lord added that officials would be traveling around the country to meet with potential investors as well as representatives from industry to help facilitate the process. In May, when the initiative was first launched, Lord said, “We can also vet different providers of capital. This is going to be a situation where we have individuals, family foundations, funds that are interested in our national defense, interested in making a return on their investments.”

Referring to Chinese drone-manufacturer DJI, Lord said that “essentially we don’t have much of a small UAS industrial base because DJI dumped so many low-price quad-copters on the market.”

While the military makes ample use of drones, most of those operated by US troops are of the larger and more technologically sophisticated variety, rendering them unlikely and expensive for mass production. These larger, more sophisticated drones operated by the US Air Force and Navy cost tens of millions of dollars, while commercially viable drones cost a few thousand.

As per Lord the proposed drone requirement is going to be for hobbyists and to be flown within sight of the operator, “People can understand what these small quad-copters are,” Lord said, describing small drones that are lifted and propelled by four small rotary blades, akin to a helicopter.

While the American military has increasingly explored giving small quad-copter type drones to troops in the field to bolster their ability to conduct quick surveillance and reconnaissance, Lord said that widely commercially available drones, such as those manufactured by the Chinese company DJI, cannot be used due to technology within them that send information to Beijing, a major US adversary.

At a June Senate hearing, Harry Wingo of National Defense University said DJI had a “near monopoly” on drone technology marketed in the U.S. and that its use of proprietary software networks makes it difficult for DOD to ascertain whether the data is safe. Wingo also indicated that security concerns didn’t just lay in the drones’ components, but in data storage practices. Echoing the testimony, Lord said, “We know that a lot of the information is sent back to China from those; so this is not something that we can use.”

DJI spokesman Michael Oldenburg said the accusations are “false and misleading” in a statement to FCW saying, “DJI drones do not automatically send data to the Chinese government or to any unauthorized party. An independent U.S. cyber security firm has debunked these claims and verified that DJI’s hardware and software systems give our customers full control over how their data is collected, stored, and transmitted.”

Oldenburg also disputed Lord’s assertion that DJI was dumping product to establish market dominance. “DJI has earned its market-leading position in the drone industry because we have continued to research, develop and deliver the most capable products to the market,” Oldenburg added.

Still, the Pentagon is hoping its “strong demand signal” will help boost domestic capacity in small drones. Lord said. “What we would like to have are U.S. designers and manufacturers of small UAS. Because not only do we have a need for that in the Department of Defense — we know it’s a very, very large commercial industry — so we think that we can catalyze that activity and have a safe and secure supply.”