In this episode recorded live from the 2025 Reagan National Defense Forum in Simi Valley, hosts Lauren Bedula and Hondo Geurts welcome back Ranking Member Adam Smith of the House Armed Services Committee for the second year in a row. Following his morning keynote address, Rep. Smith discusses the current state of defense innovation and acquisition reform, which he characterizes as a "good news, bad news situation" with significant progress on technology and industrial base transformation occurring alongside political challenges at the Pentagon. The conversation addresses the growth of the defense startup ecosystem, changes in congressional approach to defense programs, concerns about tariff impacts on supply chains, and differing views on foreign policy realism emerging from the forum's discussions.

Five Key Takeaways:

1. The defense startup ecosystem has grown substantially: Companies including Shield AI, Palantir, C3 AI, and various drone manufacturers are now developing capabilities like collaborative combat aircraft with private investment. Rep. Smith notes that approximately two-thirds of the companies sponsoring the Reagan Forum didn't exist when the forum began.
2. Traditional defense contractors are adapting to increased competition: Rep. Smith observes that major defense primes historically preferred long-term, stable contracts with established subcontracting relationships but have demonstrated capacity to innovate when faced with competitive pressure from new entrants in the market.
3. Congressional priorities on defense programs have evolved: Under bipartisan leadership, the House Armed Services Committee has moved away from a focus on district-specific funding toward emphasizing innovation and new technology development.
4. Current tariff policy may complicate supply chain diversification efforts: Rep. Smith expresses concern that tariffs on countries like Vietnam, Malaysia, Thailand, and Mexico could hinder efforts to reduce dependence on Chinese manufacturing. He indicates that some companies reconsidering moves out of China have paused plans due to tariff considerations affecting alternative locations.
5. Debate continues over the definition of foreign policy realism: Rep. Smith distinguishes between what he considers "genuine realism," maintaining commitments to democratic values while making practical compromises, and approaches he views as reverting to great power competition without values-based considerations. He argues the latter approach carries risks based on historical precedents from earlier eras of international relations.