ALFA Field Notes

Simple Acts, Major Impact

You’ve heard it before: the way our government buys things is broken. It has been for decades. Which is why in the 90s, President Clinton signed the Federal Acquisition Streamlining Act (FASA), informing the federal government to give preference for commercially available items.

Since then though, agencies have been undermining its implementation — choosing the path of least resistance (i.e. doing things the way they’ve always been done).

But an over-reliance on customized contracts has left critical defense and infrastructure projects over budget and past the original delivery date.

While there are new companies that could (and have already proven to) build better and faster, custom contracts include burdensome government accounting processes and audit requirements not customary in commercial contracting — not to mention handing over to the government IP rights. Oftentimes, the commercial provider will simply pass on bidding for the project altogether.

This leads to taxpayer waste and leaves our government (oftentimes our warfighters) behind the innovation curve.

Three new executive orders from President Trump look to stamp out this inefficiency and puts the best products to work for our country.

• Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base, directs a comprehensive overhaul of the DOD’s acquisition processes including prioritizing commercial solutions, leveraging existing authorities like Other Transactions Authority, and rewarding risk taking.

• Restoring Common Sense to Federal Procurement, directs a comprehensive overhaul of the Federal Acquisition Regulation (FAR).

• Ensuring Commercial, Cost-Effective Solutions in Federal Contracts, mandates that federal agencies prioritize the procurement of commercially available products and services over custom, non-commercial alternatives to reduce costs and enhance efficiency.

Together these EO’s, including the Defense mandate to review contracts that are 15 percent over budget or 15 percent  behind schedule, will rejuvenate the way the government works and offer our country’s greatest builders renewed chances to work with the federal government.

Execution will be key - but this series of EOs has fundamentally shifted the burden back to the government to explain why they aren’t choosing an available commercial item - and opens the door wider to a New Golden Age of America.

Huawei’s Continued Ascent

Huawei has unveiled an AI supercomputing system that delivers nearly double the compute of Nvidia's top system – with 3.6x more aggregate memory capacity and 2.1x more memory bandwidth.

The trade-off is power efficiency. The system consumes almost four times the electricity of Nvidia's solution. But as we mention frequently, China has no problem with electricity generation. While we've spent a decade optimizing for power efficiency, China has spent that same decade building new power plants – adding an entire US grid worth of capacity since 2011.

China’s power-abundant model allows them to accept higher energy costs per compute operation – a luxury that plays to their weaknesses in manufacturing the highest-end chips.

The latest Huawei achievement also reveals critical failures of the last half decade’s containment strategy:

• TSMC 7nm wafers were routed through third-party companies like Sophgo Samsung

• HBM memory was stockpiled or acquired through "package-and-peel" schemes

• Domestic networking production was leveraged to create an all-optical system architecture

Huawei’s innovative design overcomes component-level disadvantages, demonstrating that chip-focused export controls are not a substitute for acceleration.

This development isn't cause for alarm – it's a call to action:

Energy dominance is technological dominance. Without baseload power expansion, we can lose the AI arms race regardless of our chip advantage. Every day of delay in building new energy infrastructure is a competitive advantage gifted to our adversaries.

Re-think our export control strategy. America and its allies must accelerate chip development, rack-scale architecture, and energy production to maintain our lead. We must also re-examine the export control and diffusion regime to optimize for the long term lead. China has proven they can compete at a high level in AI despite export controls and technological handicaps.

The fundamentals still heavily favor America and its allies: we have the best chip design, semiconductor manufacturing yields, research institutions, technology companies, capital markets, and natural resources. But these advantages only matter if we use them.

Shipyards of the Future are Now

AXIOS’ Colin Demarest scooped this week that defense startup Saronic has acquired Gulf Craft, securing a 100-acre Louisiana shipyard to build its groundbreaking 150-foot Marauder autonomous warship. The move perfectly aligns with President Trump's shipbuilding revival while demonstrating American companies' ability to outpace bureaucracy.

Saronic CEO Dino Mavrookas cuts to the chase: "We're investing private capital to build very, very quickly. We're not sitting around for three, four, five years waiting for requirements to be written." The result? A planned 12-month production timeline for a vessel with 40-ton payload capacity and 3,500-mile range.

With a $250 million plant investment, $4 billion valuation, and recent $600 million funding round, Saronic exemplifies the private sector driving America's military-industrial resurgence. The Navy needs a hybrid fleet combining sailors with autonomous systems – Saronic delivers ahead of schedule.