Cuts in defense spending impacts Silicon Valley

April 6, 2009 7:52:18 PM PDT
The Pentagon is changing the way it does business. Defense Secretary Robert Gates Monday announced major cuts in spending and a shift in priorities. Some in the Silicon Valley will feel the effects.

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BAE Systems in Santa Clara has one of the biggest stakes in military next-generation technology research. Its 1,800 employees and 500 contractors are working on five Pentagon projects, such as hybrid electric engines, reinforced armored vehicles and the Valanx, a replacement for the Humvee.

However, Gates is setting budget priorities.

"Every defense dollar spent to over-insure against a remote or diminishing risk is a dollar not available to take care of our people, reset the force, win the wars we are in," Gates said.

Peninsula Congresswoman Jackie Speier thinks it is time to look at the Pentagon budget closely.

"There's a lot of waste in the Defense Department, has been, probably will be, but it's time for us to start taking a fine-tooth comb and going through it," Speier said.

Many sacred cows are being sacrificed, pet projects for the Air Force, Army, Navy and Marine Corps.

Thomas Henriksen, a senior fellow at the Hoover Institution and a military affairs expert, worries that cutting edge technology in Silicon Valley may be lost.

"When you bet on certain technologies and not on others, you in fact could leave yourself open for something unexpected, and we know that the world is a very unexpected place; we can't envision what world might be five years now, or 10 years certainly," Henriksen said.

The military has been counting on Silicon Valley to modernize and integrate its systems.

While Gates has laid out his priorities, it is likely that elected officials will step in to protect hometown companies with jobs on the line.

The military has long argued that its research and development projects lead to technology breakthroughs for the civilian sector.

"Anything that short-changes research and development in technology is a bad thing for America, not just is it a bad thing for the military forces, but it's a bad thing because many of the spin-offs for civilian use, the Internet for example, come out of military research," Henriksen said.

But the money will not be draining out of Silicon Valley all at once. Just two weeks ago SRI in Menlo Park received a $9.8 million contract to analyze chemicals.

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