Defining Dual-Use Tech

Good evening and welcome to those of you joining this week! Moving on from a concept like last week’s contested logistics (for now), this week we move back to defense tech basics: what exactly is “dual-use,” anyway? If you’re finding AoT useful, please consider sharing with your network!

This week’s post:

• 💻🔬 A solo-definition for dual-use tech

• 🔐 China’s pursuit of dual-use tech

• 💰 Term Sheet

• 🚩 Red Team Update

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A solo-definition for dual-use tech

What the NDS describes here is leveraging commercial technology for military applications - so-called “dual-use” technologies. In one sense, these are technologies that are originally developed for commercial purposes but are also adapted (later or sometimes concurrently) for military applications (e.g., AI/ML). In another sense, they could be the inverse - technologies that start out for military applications but later find widespread commercial adoption (e.g., GPS).

The term pops up everywhere in DoD force development circles, mostly always referring to the former usage of the word - adopting commercial tech for military purposes. Usually it’s invoked as a way to mitigate technological obsolescence by quickly short-circuiting the byzantine defense value creation process. Mostly it’s a response to the commercial sector far outpacing the government in R&D for some key technology areas, which we previously wrote about here.

Dual-use, single-definition

A word of caution: often the government thinks about dual-use from the inverse perspective, concerned with mitigating proliferation of sensitive military technology to the broader civilian market. This is reflected in federal regulations: “A ‘dual-use’ item is one that has civil applications as well as terrorism and military or weapons of mass destruction (WMD)-related applications.”

Owing to this more legal interpretation of dual-use, there is a specific list of technology (in the military to commercial sense) that is codified by the Wassenaar Agreement. The specifics of this agreement aren’t overly important except to say that it’s a multinational export control agreement from 1996.

But because of the symmetry implied by the very term, it’s still instructive to consider what is on this list. In theory at least, this list implies that the link between commercial and military adoption of these technologies is so strong that it becomes difficult to disentangle:

Within each of these nine categories, there are five types of controlled items:

1. physical goods and components

2. plant, test equipment, etc. for the production of the goods

3. materials typically from which the goods can be created

4. software used typically for the development, production or use of the goods

5. technology used typically for the development, production or use of the goods

We’ve said a lot previously about the DoD CTO’s 14 critical technology areas, but it’s worth noting that half of them are explicitly labeled dual-use (effective adoption areas) in the commercial to military sense:

• Trusted AI and Autonomy

• Integrated Network System-of-Systems

• Microelectronics

• Space Technology

• Renewable Energy Generation and Storage

• Advanced Computing and Software

• Human-Machine Interfaces

All that being said, dual-use to the defense tech space simply means this:

the commercial sector leads the innovation in the area, and the military must find ways to adopt said innovation for its own unique and specific purposes

How to successfully do this is an area ripe for defense tech entrepreneurship.

…but no magic bullets

The appeal of dual-use technology mostly comes back to speed and offloaded development costs. The pace of technological change in these dual-use areas is often so fast that the usual defense development cycle almost guarantees obsolescence by the time the capability is fielded. It’s also nice that most of the development has already been completed by the commercial sector, and all that’s remaining is adapting the core technology for defense purposes (not trivial!).

There are problems with this approach, not the least of which is an alignment problem which creates technology for different contexts and use cases and then needs to be adapted for often radically different considerations (see a great overview here). At the same time, the Ukrainians have been successful at leveraging commercial technology to offset “traditional” capability gaps: the rapid adoption of commercial space imagery, telecommunications networks, first-person racing drones as smart munitions, etc.

Clearly, there’s a major opportunity here for the defense tech entrepreneur.

There’s a real need to translate commercial success in these dual-use areas (or others!) to a successful military application, which is not an insignificant amount of work. All of the same business fundamentals apply, but helping the DoD actually become a fast follower in one of these technologies is a stated demand signal and unmet need.

At the same time, the inherent dual-use nature of the technology de-risks your technology because your market is not specifically tied to defense-only (dilution of effort notwithstanding).

It’s worth noting that this dual-use concept isn’t new, and this language from 1995, which could have been written in 2023, shows how little progress has been made:

Clearly, there’s work to do.

The dual-use dilemma: NATO’s collaborative approach vs. China's state-led model

As the global tech landscape continues to evolve, dual-use technologies have emerged as a critical strategic frontier during an era of great power competition. US, NATO and China - all have taken decisive steps to harness these technologies for military and civil applications, albeit with varying approaches and methodologies.

NATO’s Collaborative, Market-Driven Approach

In its pursuit of dual-use technologies, NATO has launched two efforts aimed at leveraging the innovation capacity of the commercial sector. The first is the NATO Innovation Fund, a €1 billion investment vehicle designed to stimulate technology development among startups. The second is the Defense Innovation Accelerator for the North Atlantic (DIANA), which aims to support the brightest innovators to develop dual-use technologies that solve critical security and defense problems.

Under DIANA, which will become fully operational soon, 30 startups will be supported annually across three key portfolios: energy and resilience, sensing and surveillance, and secure information sharing. Each startup will receive a starting grant of €100,000, which could then be followed by a larger €300,000 investment after six months.

Beyond financing, NATO is also establishing a supportive infrastructure for these startups, with accelerator sites in Seattle and Boston, 10 deep tech accelerations sites, and nearly 90 test centers across the alliance. This initiative highlights NATO’s commitment to creating a fertile environment for innovation, even encouraging startups to venture into failure as a route to success.

The key challenge lies in the bureaucratic procedures that slow down the defense acquisition process. The Pentagon's slow process, with its perceived impenetrability, has been a deterrent for tech companies, preventing the operation at the much-needed "speed of relevance." In the face of commercial sector's fast-paced R&D, such sluggishness further exacerbates the technological obsolescence.

China’s Top-Down, State-Led Approach

China, on the other hand, is taking a 'whole-of-government' approach towards developing advanced dual-use technologies as part of its broader civil-military integration (CMI) strategy. With its goal to become a global 'science and tech superpower,' China aims to leapfrog the US and Europe to achieve dominance in these technologies.

To achieve this, China has adopted a top-down strategy characterized by industrial reforms and ambitious plans to drive domestic scientific and technological innovation. In the process, commercial innovation is increasingly spilling over into military applications, with the expectation that such technologies will aid the People’s Liberation Army (PLA).

Central to this strategy are Five-Year Plans and sector-specific industrial plans at both national and local government levels. The Chinese government is also fostering national champions through state funding, domestic market protectionist policies, selective foreign investment, and technology and talent acquisition through mergers, acquisitions, or joint ventures with Western firms.

The Dual-Use Opportunity for Defense Tech Entrepreneurs

Navigating the dual-use technology landscape does offer an opportunity for defense tech entrepreneurs. The appeal lies in the speed of commercial sector innovation and the offloaded development costs. NATO’s DIANA initiative has a competitive call for proposals targeting three strategic focus areas:

Yet, the opportunity is not without its challenges. Alignment issues can arise, where technology designed for one context requires adaptation for radically different military purposes. Despite these obstacles, examples like Ukraine's successful leveraging of commercial technology demonstrate the significant potential that lies in these types of technologies.

Red Team Update

North Korea’s Satellite Launch Attempt Fails

• Failed Satellite Launch: North Korea's recent attempt to launch a spy satellite ended in failure, marking what North Korean officials have deemed as "the most serious" shortcoming this year. The rocket, which was intended to carry a military reconnaissance satellite into space, crashed soon after liftoff. This setback has been identified as a major blow to leader Kim Jong Un's efforts to establish a space-based surveillance system to more effectively monitor the United States and South Korea

• Plans for Future Attempts and Weapon Development: Despite the failure, North Korean officials have pledged to learn from their mistakes and are already planning a second launch. The timeline for this is currently unclear, but it is expected to take more than several weeks. In addition to the satellite, North Korea has been actively working to acquire a range of high-tech military assets, including a multi-warhead missile, a nuclear submarine, a solid-propellant intercontinental ballistic missile, and a hypersonic missile. Since the beginning of 2022, the country has conducted more than 100 missile tests, many of which are associated with these development efforts

• Geopolitical Dynamics and Domestic Situation: North Korea continues to navigate an increasingly complex geopolitical environment, maintaining and strengthening ties with Russia and China, who have repeatedly blocked efforts to increase UN sanctions against North Korea. Domestically, the country is working to improve its struggling economy, which has been further strained by pandemic-related border closures. Despite these hardships, the North Korean government claims progress in several sectors, including agriculture, metal and chemical industries, and construction

Russia is importing Western Weapons Technology

• Despite Western sanctions, Russia continues to access sensitive electronic components and chips used for weapons development by rerouting them through other countries, such as Armenia and Kazakhstan. As a result, the technology of the United States and the European Union is being used against Ukraine in Russia's attacks

• Direct sales of such components from Western countries to Russia have plummeted due to sanctions, pushing Russia to use lower-quality parts or resort to other countries

• Russia's chip imports, particularly from China, have been increasing despite the restrictions. Despite these ongoing issues, American and European officials argue that the sanctions have significantly impacted Russia's military capacity by making it harder for them to procure necessary parts. They are also attempting to strengthen their efforts by increasing sanctions, expanding trade restrictions, and investigating illicit activities. However, the global ubiquity and complexity of supply chains are challenging to control

How Advanced Is China’s Third Commissioned Aircraft Carrier?

• China's third aircraft carrier, the Fujian, is significantly more advanced than its predecessors, the Shandong and the Liaoning. Launched on June 17, 2022, it is currently being fitted at Shanghai’s Jiangnan Shipyard and is expected to undergo multiple rounds of sea trials in the coming months before its commission into the People’s Liberation Army Navy

• One of the key advancements of the Fujian is the inclusion of a "catapult assisted take-off but arrested recovery" (CATOBAR) launch system, which will enable it to launch heavier and larger fixed-wing aircraft. This system is powered by an electromagnetic system, similar to that of the U.S. Navy’s new Gerald R. Ford-class carriers, representing a leap over more conventional steam-powered catapults

• The Fujian is larger than its predecessors and many international counterparts, displacing roughly 80,000 tons compared to the Liaoning’s 60,000 ton and the Shandong’s 66,000 tons. This larger size allows it to support a more robust airwing. However, unlike all U.S. carriers and France’s Charles de Gaulle, the Fujian will still be conventionally powered rather than nuclear-powered

About Us

Our team has 30+ years of combined experience as military officers using the end products. We’ve worked in both government and industry. From MIT to Wharton, Wall Street to biotech, and DARPA to the flightline, we offer you a unique perspective on how to navigate America’s defense tech industry.

The opinions expressed in this newsletter are solely those of the authors and do not necessarily reflect the views of DoD, our employers or any affiliated organization. This newsletter is for informational purposes only and is not intended to provide legal, financial or professional advice.OustedOut