Exclusive: Darpa Gets a New Boss, and Solyndra Is in Her Past

New Darpa director Arati Prabhakar. Photo courtesy of SRI International

Until last year, Arati Prabhakar worked for the venture capitalists who backed Solyndra, the green-tech firm that imploded in a scandal described by Mitt Romney as an example of the White House's 'crony capitalism.' Now Prabhakar has a new job, this one in the Obama administration: running the Pentagon's most important research agency. But being the geek-in-chief requires investing billions on risky, high-tech bets that aren't so different from Solyndra.

Prabhakar, who starts in her new position at the Defense Advanced Research Projects Agency on July 30, will be Darpa's first Indian-American chief. And she boasts an impressive resume. Prabhakar came to this country at the age of 3, growing up in Lubbock, Texas. She earned a Ph.D. in applied physics from Caltech and founded Darpa's Microelectronics Technology Office. In 1993, at the age of 34, she was appointed as the head of the 3,000-person National Institute of Standards and Technology. From there, she left for Silicon Valley, where she became a top officer at a specialty materials company. She joined the venture capital firm U.S. Venture Partners in 2001, spending a decade investing in green tech and IT start-ups.

'Dr. Prabhakar's Department of Defense leadership, when coupled with her experience with technical communities in Silicon Valley and beyond, make her the ideal candidate to continue Darpa's impressive track record of success,' Undersecretary of Defense Frank Kendall wrote in a memo to Darpa employees that Danger Room obtained.

But that experience may also draw fire from the White House's political opponents. One of U.S. Venture Partner's most famous bets was in Solyndra, the solar firm that was championed by President Obama, backed by half a billion dollars in government loans ' and soon thereafter went bankrupt. According to the Wall Street Journal, it's 'unclear whether Prabhakar was directly involved with the firm's Solyndra stake.'

A senior defense official tells Danger Room that 'Dr. Prabakhar, who underwent extensive vetting, had no involvement in the federal loan guarantee for Solyndra and wasn't involved in the restructuring of the loan.'

But no matter what her connection to Solyndra ' direct or less so ' Prabhakar's appointment once again raises an issue the president's reelection campaign would rather forget.

First, the Department of Energy structured Solyndra's loans in a way that paid back private investors before taxpayers. And some of those investors were six-figure backers of Obama's 2008 presidential run. (For the record, U.S. Venture Partners wasn't among them.)

The Solyndra connection is also important because it's the Darpa director's job to invest in high-tech firms. Darpa spreads its approximately $3 billion annual budget among hundreds of start-ups, government contractors, and academic researchers, all of whom are looking for government grants. With so many grants spread among so many people, the potential for improper dealings is ever-present. It's crucial that the Darpa director be seen as beyond reproach.

That's what got the last Darpa chief, Regina Dugan, in trouble. Her family firm, RedXDefense, won $400,000 in contracts from Darpa while Dugan was director ' and while the company owed her a quarter of a million dollars. That spurred a wide-ranging inquiry from the Pentagon's inspector general into how Darpa awards its contracts.

The investigation was supposed to be over months ago, allowing the new Darpa director to oversee an agency that had put any perceived troubles behind it. But with Prabhakar arriving at the blue-sky research agency in the middle of election season, that report could prove to be the least of Darpa's concerns.