A16Z: Policy Is Now 'Long Pole in the Tent' for AI
In a new podcast, Andreessen Horowitz's top policy strategists argued that for AI companies, "policy has become the long pole in the tent." They stressed that tech and defense innovators must now build "technical policy infrastructure" as a core business function, noting, "Politics is interested in you, whether you’re interested in it or not."
A16Z's policy framework advocates for regulating the harmful *uses* of AI rather than the development of the technology itself, a position designed to prevent stifling startups ("Little Tech") with compliance burdens that favor large incumbents. The firm’s Head of Government Affairs, Collin McCune, a former Deputy Staff Director of the House Financial Services Committee, is central to this effort, which includes significant lobbying expenditures—$1.8 million in 2024 and $1.49 million by August 2025. This push for "permissionless innovation" intersects with the Pentagon's own evolving approach to AI adoption. The Department of Defense (DoD) established five core ethical principles for AI in February 2020: Responsible, Equitable, Traceable, Reliable, and Governable. These principles are being operationalized through guidelines from the Defense Innovation Unit (DIU) to provide a step-by-step framework for AI companies, ensuring fairness and transparency at each stage of development for DoD programs. The DoD's Chief Digital and Artificial Intelligence Office (CDAO) is driving an AI Adoption Strategy to accelerate the integration of these capabilities and provide a decision advantage. This strategy includes the Tradewinds Solutions Marketplace, launched in November 2022, to speed up the acquisition of AI/ML and data analytics tools. The goal is to use AI to make data-informed decisions, shorten acquisition cycle times, and deliver greater value to the warfighter. For tech startups, the primary pathway into the defense marketplace, the SBIR/STTR programs, faced a critical lapse in authority after expiring on September 30, 2025. After a nearly four-month delay that halted new solicitations and awards, a bipartisan agreement was reached in February 2026 to reinstate the programs. Just this week, the Senate passed a bill to reauthorize SBIR/STTR through September 30, 2031, which now heads to the House. A proposed reauthorization bill, the Small Business Innovation and Economic Security Act, would not only extend the programs but also introduce "strategic breakthrough" awards of up to $30 million. This represents a significant increase from the typical Phase II award ceiling of around $1 million and is designed to help small businesses scale their innovations for defense needs. This policy environment is further shaped by a major "Revolutionary FAR Overhaul" initiated by an executive order in April 2025. The overhaul aims to simplify the complex Federal Acquisition Regulation to reduce burdens on contractors, with significant changes to FAR Part 19 strengthening the "Rule of Two," which requires contracts to be set aside for small businesses if at least two are expected to bid competitively. For contracts awarded after June 30, 2026, the threshold for requiring certified cost or pricing data will increase from $2 million to $10 million, significantly reducing compliance burdens for many contractors.
