Europe envies how the U.S. procures tech, but it may lack the military might to mimic it


(Saul Loeb/AFP/Getty Images)

"Governments have always been the lead financier of technological development," says Veiko Lember, the director of the Ragnar Nurske School of Innovation and Governance at Estonia's Tallinn University of Technology. "And since World War II, one of their main tools has been procurement."

Boring as it sounds, procurement -- in short, what a government buys -- has been a hot topic in the United States since the flawed rollout of the HealthCare.gov Web site last fall and what it revealed about how the federal government works with technology vendors. Lember is co-editor with colleagues Rainer Kattle and Tarmo Klavet of a new 309-page book from the publisher Springer called "Public Procurement, Innovation, and Policy: International Perspectives." And in putting together the survey work, Lember reports by phone from Germany, where he is attending a conference, he realized that no matter the failings in how the United States builds and buys technology, it is both the envy of the world and largely impossible to copy.

In large part, both are due to the role that the military and intelligence communities have played in developing new technologies. The American experience is detailed in a chapter in the book authored by Linda Weiss, a political science professor at the University of Sydney. In particular since the Cold War, writes Weiss, the United States has developed a unique model driven by its "national security state," one that "uses more resources, takes higher risks, and produces more extensive ('radical' or revolutionary) innovations than any of its competitors."

This is "procurement activism," says Weiss, pointing to the fact that such iconic American companies as IBM, Boeing and Texas Instruments had defense industry bodies as their first big customers. Defense and intelligence dollars, Weiss details, fertilized the creation of everything from the Internet to Silicon Valley to the U.S. semi-conductor industry.

That history is fairly well known. Less known, says Lember, are some of the reasons why other countries, European nations in particular, have struggled to match that success. And while the budget (today) for defense and intelligence in the United States tops $1 trillion, it isn't just a question of spending. Lember says of his colleagues in Europe who study innovation, "No one is satisfied with the way procurement works here today."

In the United States, for example, there has long been a focus on highly-permeable boundaries between the various sectors involved in innovation, such as between the public sector, including the military, and the private sector, as well as between organizations devoted to research and those focused on products. But that free flow is supported by formal structures for information-sharing, and those are far more lacking in Europe, says Lember. He points to a case study on Denmark included in the book. That country, he says, practices "very informalized cooperation" that has made it difficult to foster those more structured exchanges.

Meanwhile, as other countries rush to learn from the United States, this country has evolved. The historic examples of government-funded innovation, says Lember, involved "developing technology for some sort of mission: putting a man on the moon, or creating the Internet." But that approach led to the flourishing of all sorts of accidental, tangential innovations -- the online economy, telemedicine, the Space Pen. The focus now in innovation circles is, he says, on "how we can redesign our institutions so that these spillovers are intentional."

There, too, the United States is ahead, says Lember. In recent years a pack of venture capital-like firms have spun off from the defense and intelligence sectors, such as the CIA's In-Q-Tel, the U.S. Army's OnPoint Technologies and the Department of Defense's Rosettex Venture Fund. Those entities serve as a first customer for new innovations and also help push them into the broader market. Keyhole, for example, started as an In-Q-Tel-funded company and later formed the basis for Google Earth.

The "CIA model," says Lember, "may be the answer" to Europe's procurement challenges. But if so, it's a complicated one. Software and hardware flowing from an intelligence industry pipeline look different in light of the Edward Snowden revelations, he points out, especially in Europe, where many have recoiled from those National Security Agency disclosures.

And Lember suggests an additional wrinkle. Despite the focus on opening the process here in the United States post-HealthCare.gov, innovation procurement has seemed to flourish in secrecy, he argues. One reason? "We tend to think the government doesn't have the right to fail, but innovation is all about failures," he says. "That's one reason why success cases have emerged from the security and defense sectors: a lot of their procurement happens out of public sight."

Procurement is a difficult job, Lember says his research has taught him. In governments all over the world, people are forced to learn it on the job. "People aren't trained to do it," he says -- except, that is, "in the military colleges in the United States."

Nancy Scola is a reporter who covers the intersections of technology and public policy, politics, and governance.
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