"I wish you had a security clearance so I could tell you what's really going on." It's what those of us working on cutting-edge defense and intelligence technologies hear regularly, and it captures the problem of America's outdated security clearance system.
Born out of the post-World War II era, the U.S. security clearance system was designed for a different time — one of monolithic, slow-moving threats and a government monopoly on foundational research. However, in today's world of rapid technological change, this once-effective system has become a major roadblock. It hinders the creative potential of our brightest minds and leaves investors in the dark, unable to direct resources towards critical national challenges.
The contemporary clearance system has four main levels: Top Secret/Sensitive Compartmented Information (TS/SCI), Top Secret (TS), Secret (S), and Confidential (C). Each level grants access to increasingly sensitive information, with TS/SCI being the highest. Obtaining a clearance involves a lengthy background investigation process that can take months or even years.
The problem? Modern technological advancements often occur in weeks, even days. Today's entrepreneurs succeed by rapidly testing product ideas with users, iterating until they achieve product-market fit. But product-market fit is unattainable when the core customer is prohibited from articulating their true needs.
Because of the slow-moving clearance process, tech entrepreneurs and investors are often shut out of substantive discussions with defense and intelligence leaders. They are forced to make crucial product decisions without access to specific, timely insights into the government's actual problems and pain points.
The outdated security clearance process compels public servants to communicate in frustratingly vague terms to the uncleared. "I can’t read you in” becomes a conversation stopper. Government officials, too, find themselves constrained by this setup, unable to effectively signal where private sector innovations could be most impactful. As a former senior CIA executive confided to me, the clearance quagmire suffocates collaboration between government agencies and commercial enterprises, leaving even top leaders hamstrung.
The system also creates a bias towards established incumbents with existing clearances. The large prime contractors with security credentials effectively have a monopoly on defense and intelligence innovation.
The problem is compounded when working with allies. Since classification systems differ across countries, we cannot easily share requirements with even our closest partners for joint technology development. This hampers our ability to collaborate effectively with key partners like Japan and the U.K. on critical national security innovations.
Some targeted disclosure mechanisms — like ad hoc "executive briefings" — do exist. In these settings, officials can verbally share classified details with company leaders in secure rooms. But these mechanisms are underutilized and insufficient for aligning mission needs with external innovation.
The Pentagon claims to desire the private sector's agility and innovation, yet it maintains internal systems that stifle the very communication required to tap into that dynamism. The result is diffuse investment, solution-starved agencies, and a failure to run faster than our adversaries. The situation is untenable, and if unresolved, will harm America’s national security.
It's time for a fresh approach. The White House and Congress should overhaul the clearance system for the 21st century. Establish expedited paths for pre-vetted entrepreneurs and investors to gain access to specific, less sensitive problem sets. Enable cleared founders to swiftly test product concepts with warfighters and intelligence officers. Create agile feedback loops to guide private-sector innovation.
Through targeted transparency, we can ignite a free exchange of ideas between our most innovative minds and our most important missions. Founders can achieve genuine product-market fit, delivering immense value. Empowered investors can channel more capital to startups addressing government needs. And our nation can leverage its greatest strength: the creativity of free citizens driven to safeguard our future.
Evan Loomis is a co-founder of ICON Technology and an early-stage venture investor at Overmatch, with a focus on critical technology, space, and defense.
