Democrats and Republicans on the Small Business committees in both the House and Senate convened a so-called four corners meeting this week to negotiate draft legislation, which is in its final stages.

Rep. Blaine Luetkemeyer, R-Mo., the ranking member on the House Small Business Committee, said Thursday that the committees hope to finish drafting legislation that reauthorizes the Small Business Administration’s Innovation Research and Technology Transfer awards — which are made jointly with 11 federal agencies — by the end of the week.

“We’ve got a general agreement already with the four corners on this, but the devil’s always in the details,” he told Defense News. “We want to make sure that what comes out in text is what we agreed to in concept.”

“We’re knocking out the text as we speak, so everyone can see it today or tomorrow,” Luetkemeyer added. “Hopefully next week we can our side of the bill firmed it up and get it through.”

Both Rep. Nydia Velazquez, D-N.Y., and Sen. Ben Cardin, D-Md., who chair the Small Business Committee in their respective chambers, noted that negotiators have made “a lot of progress” on the compromise reauthorization.

Velazquez told Defense News that she feels “optimistic” and that she expects final legislation “soon.”

Sen. Rand Paul, R-Ky., the ranking member on the Senate Small Business Committee, downplayed the negotiations on Wednesday and told Defense News that they have not assuaged his concerns.

Paul has argued that the program lacks protections against ties between program awardees and China, and that some companies rely entirely on SBIR grants to sustain themselves without spinning off new businesses or products.

“Dr. Paul will not reauthorize this program without reforms to strengthen research security and stop abusive behavior by bad actors lining their pockets with taxpayer dollars at the expense of new small businesses with emerging technologies being able to access SBIR awards,” a spokesperson for the senator told Defense News in June.

Reauthorization of the program was originally included in an earlier version of the CHIPS and Science bill, but the provision was not included in the final version of the legislation that passed in July.

The total budget for the 40-year-old program ballooned to nearly $3.3 billion in 2019, with the Department of Defense accounting for the majority of the awards. Individual grants range from tens of thousands of dollars to more than a million for a two-year grant.

SBIR provides funding in three phases, with grant amounts typically increasing throughout each stage. For defense SBIR awards, companies are eligible to submit multiple project ideas, which some say leads to companies applying for multiple Phase I awards without ever maturing the proposed technology.

“We’re trying to find ways to incentivize and do the work yet provide the oversight to continue to do the work ― not just ripping off the program to continue to get these grants and at the end of the day they’re just making money, but they’re not actually producing products,” said Luetkemeyer.

“For some entities, for some different departments, there aren’t that many alternatives to go to…to be able to produce or develop a particular product or service for the Defense Department‚” he added. “We’ve got to be very careful that we don’t preclude the ability of companies to be able to meet our defense needs by hamstringing this bill.”

Contrasting standards for large, small companies

Kea Matory, director of legislative policy at the National Defense Industrial Association trade group, said in an interview that criticisms of awarding companies too many Phase I grants signal contrasting standards for small and large companies.

“Lots of our bigs get multiple awards,” she said. “We would never tell one of our large primes ‘oh, you’ve had too many, you need to sit down.’”

Matory added that delays in reauthorizing the program are already impacting small businesses.

“A lot of them are already hearing that SBIR could go away,” she said. “It’s like a game of telephone as it gets passed along to each person; it sounds more doomsday.”

When it comes to innovation, small businesses frequently bring new ideas to the table that could help the Pentagon with its modernization goals, she said. Without SBIR, many of those companies would be disincentivized to want to do business in the government and defense sectors.

The Pentagon will not award new SBIR grants starting Oct. 1 if the legislators fail to reauthorize the program. Ongoing contracts may continue but will not receive further SBIR/STTR funding.

If the draft legislation wins over Paul, the House and Senate could reauthorize SBIR as stand-alone legislation by the end of the month.

And if that doesn’t work, Senate Armed Services Committee Chairman Jack Reed, D-R.I., told the Defense News conference that negotiations are also underway to include SBIR reauthorization in the continuing resolution that Congress needs to pass by the end of the month in order to fund the government and avoid a shutdown.

“I would prefer that we get reauthorization as a stand-alone bill versus just a straight reauthorization where we stick it into a [continuing resolution],” said Luetkemeyer. “That really doesn’t solve problems. It extends the same problems that we have now.”

As a last resort, Congress could reauthorize the program in the Fiscal 2023 National Defense Authorization Act — although Congress is unlikely to finalize that legislation until after the SBIR/STTR grants expire.

The House NDAA, which passed 329-101 in July, has a provision that reauthorizes the program without any changes. The Senate must still pass its version of the bill before both chambers agree on final legislation — a process that usually takes several weeks.

While Thomas Jefferson and John Quincy Adams were fluent in several languages, Biden, like most U.S. presidents, is only known to speak English.

The video was a piece of synthetic media, more commonly known as a “deepfake.” Created using a combination of machine learning and artificial intelligence, deepfakes are hyperrealistic videos that replace one person’s likeness with that of another, or appear to show them doing something they never did.

And as the technology improves, they get harder to detect.

The workshop, which featured DeepMedia, a synthetic media start-up, focused on providing airmen with an introduction to deepfakes and their relationship to military applications as well as the company’s AI technologies that could be used to combat the threat they can pose.

Earlier this year, a deepfake video of Ukraine President Volodymyr Zelenskyy showed him calling on his soldiers to lay down their arms and surrender amid the country’s conflict with Russia. Although the video was quickly debunked and taken down, the technology is increasingly being used in propaganda and disinformation campaigns.

Rijul Gupta, a co-founder of the Oakland, California-based DeepMedia, called deepfakes the “next frontier” of video technologies, citing their low production cost and relatively quick turnaround time.

“Everything will be able to be faked in real-time,” he said at the workshop.

The company created the Biden video to illustrate that not all deepfakes are harmful. DeepMedia’s AI-based universal translator tool, for example, can be used to facilitate diplomatic communications, it said.

The translator tool takes video of someone speaking one language and transforms it so the subject appears and sounds to be speaking a different language in real time. The technology could also be used to pinpoint the linguistic benchmarks that differentiate a deepfake from a real video.

Hollywood has been using some form of deepfake technology for years, to make older actors appear decades younger of even provide new “life” to actors who have died. Actor Peter Cushing appeared in “Rogue One: A Star Wars Story” in 2016, more than two decades after his death.

Still, unauthorized deepfakes of celebrities and other politicians have spread widely across social media video platforms, prompting concern about the potential use of synthetic media to spread disinformation.

According to a 2021 report from the U.S. Department of Homeland Security, the threat of deepfakes does not come from the technology used to create them but from people’s natural inclination to believe what they see. As a result, deepfakes do not need to be particularly advanced or believable in order to be effective in spreading misinformation, the report said.

DeepMedia focuses on both detecting and producing synthetic media. In April, the Air Force Research Laboratory announced a partnership with the company to study the detection of deepfakes.

One of the main ways to detect whether a video is a deepfake is via an analysis of the language being used, which can reveal dialect differences between the video’s subject and audio presented.

Analyzing videos for those differences takes time, money and effort, said Emma Brown, a co-founder of the company.

In many cases, the cryptologic linguist conducting the analysis must have a deep understanding of the language and its dialects as well as the country’s culture and history. Simply having a cursory knowledge of the language isn’t enough to pinpoint the flaws in deepfakes, she said.

As the military struggles with a major recruiting crisis, attracting the needed talent to fill cryptologic linguist positions poses yet another challenge. To substitute human talent, Brown and Gupta explained that DeepMedia has developed AI tools that take the place of linguists.

“There’s simply not enough people to do this without AI,” Gupta said.

CRs keep funding at the previous year’s levels with limited exceptions. A divided Congress has frequently relied on the practice in recent years to evade a government shutdown while lawmakers negotiate appropriations for the next fiscal year, and it’s increasingly likely that a CR will be required for fiscal 2023, the law firm Alston & Bird said in a note to clients on July 26.

While a CR keeps the lights on, its impacts can be detrimental to the Pentagon’s efforts to keep pace with rival nations in emerging technologies. Because funding is fixed at the previous year’s level, CRs delay the start of new programs and contracts, many of which fall under the sphere of defense tech.

“It pauses our modernization efforts and it gives China the advantage of continuing to innovate while we’re in that pause,” said Kea Matory, director of legislative policy at the National Defense Industrial Association trade group, in an interview. “It’s essentially a self-inflicted wound, but unfortunately, it’s kind of become the norm.”

“The government is not always the easiest customer and when you add on CRs, it’s not a business model that would work in the commercial sector,” she said.

As the Pentagon strives to incorporate artificial intelligence, machine learning and other cutting-edge innovations into warfighting, defense officials and lawmakers have sought to create programs and offices to oversee the modernization.

Under a CR, such “new starts” are denied the funding needed to hire a workforce and the cash to begin issuing contracts since the office didn’t exist in the previous year’s appropriations bill. They add uncertainty to the contracting timeline, and without consistent appropriations, many emerging technology initiatives may end up delayed or abandoned.

The impact is similarly felt on the industrial side, according to Elaine McCusker, a senior fellow at the American Enterprise Institute.

Large companies have learned to deal with the disruptions caused by CRs and adjust for the government’s episodic funding. But many emerging technologies come from smaller companies that do not have the same level of resources or expertise in navigating the disjointed timeline, she said.

“They just don’t have the same kind of breadth and depth to be able to absorb those types of changes,” McCusker said in an interview.

What happens to government contractors in a CR?

For companies dependent on federal dollars, the cost of the delay is borne out by the small business owner, said ML Mackey, CEO and co-founder of Beacon Interactive Systems, a maker of information management software for the U.S. military.

When a CR is issued and a contract put on pause, companies are still responsible for payroll and other expenses, Mackey said. In many cases, companies have to find ways to make up for the lack of cash flow.

Mackey said small business owners regularly have to resort to personally financing, whether it be through a loan or by putting expenses on a credit card.

Although a contract will ultimately come through when Congress issues an appropriations bill, a business owner carries the financial burden created during the delay.

For small tech companies looking to get into the defense sector, the prospect of taking on that financial burden could dissuade owners from doing business with the government.

In June, the House Appropriations Committee reported 12 pieces of funding legislation, including the defense appropriations bill, and said it will attempt to pass them on the House floor by the end of July. The federal fiscal year ends on Sept. 30.

In recent years, Pentagon officials have faulted lawmakers for their frequent use of CRs as a funding measure, citing their heavy costs and damaging impact.

At a hearing in January, Commandant of the Marine Corps Gen. David Berger testified to a House Appropriations subcommittee that CRs negatively impact the Pentagon because no amount of resources in the future can bring back lost time.

“We actually stand to be outpaced by China, not because of their speed but because of our failure to comply with our own budgetary processes,” he said.

WASHINGTON — Torch.AI, a data infrastructure artificial intelligence company, said it won a multi-million dollar contract to support the Pentagon’s efforts to combat insider threats.

The Pentagon will use the company’s NEXUS software to implement the capability, called the System for Insider Threat Hindrance, or SITH, an apparent Pentagon reference to the “Star Wars” film franchise. SITH aims to track insider threat risks and bring awareness to them before they become detrimental to the department.

The exact value of the contract was not disclosed, however, representatives from the Leawood, Kansas-based company valued the contract at “multiple millions” of dollars. A Pentagon spokesperson did not immediately respond to requests for information.

“There are few situations where the quality and availability of data is more important than cyber and insider threat,” said Brian Weaver, the CEO of Torch.AI, in an Aug. 10 statement. “It’s a huge problem. It’s getting worse every day.”

Insider threats within public and private sector organizations pose a particular threat amid rising cyber crimes against companies and organizations. Insiders are responsible for around 22% of security incidents, according to the Verizon 2021 Data Breach Investigations Report.

Using machine learning and AI, NEXUS combines government and commercial datasets and makes the data machine-readable without human intervention.

David Kervin, the company’s chief solutions officer, said in an interview with C4ISRNET that the process aids the defense department in terms of speed, costs and accuracy. Not only does AI sort data at a faster rate than other technologies, but data sorted via AI is also more accurate, he said.

“An AI can actually perform above 100%,” he said, adding that “as long as the electricity is on, that machine is working for you.”

The NEXUS software also “objectizes” data, which reduces the size of the data to make it more usable. Rather than having a 10-gigabyte PDF, Kervin explained that AI can reduce the file size and extract all the relevant knowledge from the document.

Once NEXUS makes the information usable, the data sets exist in a data mesh, or “data ecosystem” that’s intelligent, meaning that the software knows where there are duplicates and what is the easiest pathway to get to the information the user needs.

Australia is investing millions of dollars into research and development to close gaps in the country’s cyber defense apparatus, they told the Australian Defence Science, Technology and Research Summit in Sydney on June 20.

And while the talent pool for workers with for AI and machine learning in Australia is deep, Anton van den Hengel, director of the Centre for Augmented Reasoning at the Australian Institute for Machine Learning, said their are simply not enough jobs and career opportunities in the country to keep them at home.

“We’ve made very little — very little — progress towards artificial intelligence,” he said.

The U.S. faces a critical cyber labor shortage, with some 700,000 cybersecurity positions open nationwide, according to estimates from the White House. More than 35,000 job openings are currently posted on the Indeed hiring wesbite using the search term “Artificial Intelligence.”

Van den Hengel, who also works as a director of applied science at Amazon, and other industry leaders at the summit pointed to the government’s inability to compete with tech companies as a major issue when expanding the country’s AI abilities. In both the U.S. and Australia, governments come up against the draw of private industry, creating high salary costs and other the hurdles to attracting and retaining talent.

“Defense no longer has the best tech,” he said, noting that private companies have committed billions of dollars to develop technologies and have the open positions to attract workers in the AI field.

The Defence Science and Technology Group, a part of the Australian defense department aimed at providing science and technology support to national security interests, hosted the summit.

Private-sector competition intensifies for AI talent

With high salaries and access to breaking-edge technologies, the private AI field has become increasingly lucrative. In recent years, many western counties, including the U.S., have turned to the private sector to compete with investments made by China.

Van den Hengel said outsourcing to the private sector only goes so far. Governments have to try and keep track of the technologies coming out of companies while also trying to understand them deeply enough to figure out their defense applications, he said.

In November, the Australian government said it would invest $10 million in innovative AI tech. The move followed the September announcement that Australia would partner with Britain and U.S. in a new working group, known by the acronym AUKUS, to share advanced technologies, including AI.

Kate Devitt, the chief scientist of Trusted Autonomous Systems, said Australia specifically needs experts in the field of deep learning and natural language processing compared to companies such as Google and Meta as well as specialists in reinforcement learning.

“We lack the digital infrastructure and investment required to enable the human capital with these skills to flourish in universities,” she said. “These gaps make Australia vulnerable and dependent on the choices of our allies and our rivals.”

Trusted Autonomous Systems is Australia’s first defense cooperative research center. It partners the country’s defense industry and research organizations with Australia’s defense department to develop autonomous and robotic technology.

While Devitt said the “obvious” answer is more investment in technical AI capabilities and infrastructure, she said that Australia needs to be decisive in its investments. As a medium-sized country, the government must use its limited resources to make “scrappy” decisions that yield outsized impacts, she said.

Unmanned aircraft systems have become a regular feature of American life over the past decade. As the cost of production decreased, many industries, from food delivery to outdoor recreation, have sought to capitalize on the technology.

The rise of drones has also raised concerns about safety. Congress should give local and state law enforcement power to counter drone threats and expand the existing authority given to federal agencies, which is poised to expire this fall, the officials said.

“Like many advances in technology, drones also bring serious risks to the public when they’re misused,” said Brad Wiegmann, deputy assistant attorney general for DOJ’s National Security Division, told the Senate Homeland Security and Governmental Affairs Committee hearing.

The Federal Aviation Administration estimates that by 2024, about 2.3 million unmanned aircraft systems, including 1.5 million recreational drones and about 800,000 commercial systems, will be registered to fly in U.S. airspace.

Wiegmann said that DOJ has seen an increase in drone usage across a wide spectrum of criminal activities. The drones can be used to smuggle items into prisons, disrupt flights and have the potential to be armed with weapons. Drones equipped with makeshift explosives pose a particular threat to large gatherings of people, he said.

Under its current authority, the FBI conducted 70 counter drone operations at large public events ranging from the Super Bowl to the New Year’s Eve celebration in Times Square, Wiegmann said.

However, demand for counter-drone support outstrips the federal government’s limited resources, he said.

“We need to empower others to help us take on this responsibility,” Wiegmann said, pointing toward the potential capabilities of state and local officials.

Wiegmann said he supports a pilot program that would enable a number of state and local law enforcement entities each year to engage in drone detection and mitigation activities. The program would enable more gatherings, including large-scale sporting events, to be protected through counter-drone technology.

Acting DHS Assistant Secretary for Counterterrorism and Threat Prevention Samantha Vinograd said that the existing power provided to federal agencies contains gaps that need to be closed as Congress moves to reauthorize the authorities given to federal law enforcement officials.

For example, although the Transportation Security Administration is tasked with airport security, it lacks authority to proactively protect transportation infrastructure from drone threats, she said.

Can TSA mitigate cases of drones near airports?

The increase of domestic drones poses a specific hurdle for airports, which need to keep track of everything in nearby air space to avoid collisions with planes. In 2019, air traffic at Newark Liberty International Airport in New Jersey was temporarily halted after a drone sighting in nearby air space.

Vinograd asked lawmakers to expand TSA’s power to mitigate drones when they’re detected in nearby skies. The extension would not only protect human life but also minimize the economic impact on airports forced to shut down due to drone sightings, she said.

In April, the White House released a whole-of-government plan to address domestic drone threats. The plan seeks to expand where the government can protect against drone activity, who is authorized to take action and how it can be accomplished lawfully.

As part of the plan, the Biden administration called on Congress to close many of the gaps highlighted by Vinograd and Wiegmann during the Thursday hearing.

Democratic Sen. Gary Peters of Michigan, chair of the committee, said he plans to introduce bipartisan legislation in the coming weeks to reauthorize and strengthen counter-drone authorities.