Carter unveiled the new Defense Innovation Advisory Board with Schmidt during the annual RSA cyber-security conference in San Francisco, saying it would give the Pentagon access to "the brightest technical minds focussed on innovation."
Schmidt, now the executive chairman of Alphabet Inc, the parent company of Google, said the board would help bridge what he called a clear gap between how the US military and the technology industry operate.
Schmidt also said he saw the group looking for ways to use new technologies to solve new and emerging problems.
The board is Carter's latest effort to kick-start innovation across the US military by building bridges to the technology industry. The US defence chief announced the board's creation on Wednesday during his third trip to Silicon Valley since taking office just over a year ago.
It had been 20 years since the last US defence secretary visited Silicon Valley.
"If we don't innovate and be competitive, we're not going to be the military that the country needs and deserves," Carter told reporters. "We should have done it a while ago."
Carter has argued forcefully for spending more on science and technology to maintain the US military's competitive edge over Russia and China as they expand their militaries.Carter and Schmidt said they would choose up to l2 individuals to serve on the board, focussing on people who have led large private and public organizations, and excelled at identifying and adopting new technology concepts.
Schmidt told reporters he had a list of possible members, but had not yet contacted them. The Pentagon said a first meeting could take place as early as April.
Modelled on the Defense Business Board, which provides advice on best business practices from the private sector, the new panel is intended to help the Pentagon become more innovative and adaptive in developing technology and doing business.
Members will draw on their experience in Silicon Valley to advise on rapid prototyping, iterative product development, complex data analysis, the use of mobile and cloud applications and organizational information sharing, the Pentagon said.
"The secretary is always looking at ways to ... keep the department thinking fresh, bringing in new ideas, bringing in new voices, and he sees this as another opportunity to do that," said a senior defence official.
© Thomson Reuters 2016