Defense Department Takes Steps to Energize Cutting-Edge Research
“Our technological superiority is under some threat,” said Alan Shaffer, principal deputy assistant secretary of defense for research and engineering.
Leading-edge innovation at the Defense Department has been on a 20-year hiatus, Shaffer said in a recent interview. The sluggish pace of military research and technology development has sparked concern in the upper echelons of the Pentagon and prompted an examination of how it spends its $70 billion annual R&D budget.
“We’ve been looking at this for a couple of years,” said Shaffer. There was a realization that the Pentagon’s science efforts had become stagnant following the end of the Cold War and 13 years of counterinsurgency wars. “Now we’re starting to see other countries using advanced electronic warfare, missiles and other technologies that will stress us,” said Shaffer. “We are trying to really focus the R&D budget.”
An innovation deficit partly has been blamed on budget cuts and short-term funding measures that have slowed efforts down. But a lack of vision also has been a problem. Programs are hailed as “game changers” one day and canceled the next. Internal turf rivalries at the Pentagon have made it difficult to create cohesive technology investment plans as money invested in one program might come at the expense of another.
To regain its tech edge, the Pentagon is realigning research priorities, centralizing the oversight of R&D projects and looking for better ways to work with the private sector.
It has identified 17 technology portfolios — which Shaffer described as “communities of interest” because each includes representatives from the Pentagon’s laboratories, organizations like the Defense Advanced Research Projects Agency and from each branch of the military.
The 17 portfolios are data and analytics, engineering resilient systems, cyber technology, electronic warfare, countering weapons of mass destruction, autonomy, human systems, advanced electronics, air platforms, biomedical, countering improvised explosive devices, energy and power, ground and sea platforms, materials and manufacturing, sensors, space, and weapons.
Each portfolio is overseen by a senior defense official, Shaffer said. “We are trying to get a more coherent, integrated plan so industry can come to one place instead of having to chase down the Army, Navy and Air Force. This will reduce unintended duplication.” The idea, too, is to spend R&D dollars more wisely, he said. “We put people in charge who control the money in their service. They are looking for opportunities to use other people’s money.”
The Pentagon has seen its research budgets decline by about 20 percent over the past five years. The Defense Department is seeking to reverse that decline and plans to spend $69.8 billion on research, development, testing and engineering in 2016.
Defense contractors spend about $4 billion to $5 billion a year on R&D. The Pentagon needs to pay more attention to how corporate R&D is invested so it is not duplicating efforts, said Shaffer. His office would like to see more companies join virtual discussions that the Pentagon hosts on its DefenseInnovationMarketplace.mil portal. “If we can make industry aware of where we have our limitations, industry is pretty smart and will spend money to capture some market,” he said. Face-to-face exchanges also will occur at conferences hosted by industry groups. “There’s nothing I detest more than someone saying, ‘Go look at the web,’ but in an era when we cannot always be together, it’s a good way to exchange information.”
R&D investment plans are now the subject of a sweeping review led by Deputy Secretary Robert Work. He has called on the Pentagon to make big and bold investments to create technological “surprises.”
This was done during the Cold War, when U.S. planners figured out how to “offset” the Warsaw Pact’s much larger conventional forces with nuclear weapons. That advantage did not last, though, as the Soviet Union quickly moved to build its own nukes. The next wave of innovation came in the 1970s when Secretary of Defense Harold Brown and Undersecretary William Perry pushed a new offset strategy built around the use of digital microelectronics and information technology to counter conventional forces. The strategy unleashed a wave of innovation in smart weapons, sensors and command-and-control networks. Work credits the second offset for propelling the United States into unchallenged superpower status.
The Pentagon’s top weapons buyer Frank Kendall said China has developed advanced technology — most notably cruise and ballistic missiles — designed to attack U.S. aircraft carriers and overseas airfields.
“China’s modernization program is the most ambitious, but Russia and others such as Iran are also fielding precision missiles and other capabilities,” Kendall told the House Armed Services Committee.
“Even if our relationships with these states remain peaceful and military confrontation with them never occurs, the capabilities I am concerned about will inevitably proliferate to other states where the likelihood of conflict may be greater,” Kendall said.
Despite the sense of urgency conveyed by Kendall and others, it is still unclear what a third offset strategy might entail or how it would influence R&D spending. Observers speculate that incoming Defense Secretary Ashton Carter will want to put his own imprint on the offset strategy.
“It is still in gestation,” said former Pentagon comptroller Robert Hale, speaking about the Defense Department’s long-term R&D investment plan. “The process of going through the thinking of where to invest R&D is healthy. But I’m not sure you can mandate innovation,” he said at a Brookings Institution conference. “The Defense Department needs to look for ways to be more agile. It needs to interact with startups. I don’t know where it’s headed but I’m glad we’re going down that road.”
Ryan Crotty, defense budget analyst at the Center for Strategic and International Studies, said the offset strategy is not likely to be funded like traditional programs. “I think it’s about a reformulating inside of the budget and having a strategy to what you’re doing with the dollars that you already had, not necessarily adding,” he said. “I don’t see huge budget impacts from it.”
It is too soon to expect “hard programmatics,” said Andrew P. Hunter, director of defense industry initiatives at CSIS. “A lot of that homework is still being done as we speak.”
The third offset strategy so far seems “nebulous,” said aerospace industry analyst Richard Aboulafia, of The Teal Group. The last time this was tried in the 1980s and 1990s, the world was much different, he noted. “We knew what we were working against.” Back then, companies knew they were getting more money for precision-guided munitions or radars. “Now it’s, ‘maybe more money for robotics, maybe for connectivity,’ for stuff made by companies that are not even in this market,” Aboulafia said. For traditional defense contractors, there are not yet enough clues to guide their R&D spending.
Tech-industry investors, meanwhile, argue that there is plenty of innovation in the private sector the Pentagon could grab immediately, but many companies do not want to sell their products to the Defense Department.
“Without contracting innovations it’s going to be hard for the Defense Department to succeed,” said Jonathan Aberman, managing director of Amplifier Ventures, an investor in government-related, technology-driven companies. “They’re making progress, but they have to be innovative in who they work with.”
Aberman said fast-track contracting already is widely used by DARPA, U.S. Special Operations Command and the military services. “There are vehicles available to do rapid innovation under existing law.” The Pentagon knows how to work with its traditional contractors, but to succeed in this new offset strategy, it will need to reach outside its comfort zone, he said. “To reach nontraditional vendors, they have to change their approach.” Showing up at conferences and announcing things through the media is not enough, he said. “I’m skeptical they will succeed in reaching nontraditional performers. They have to use direct communications with entrepreneurs.”
The conventional wisdom is that nontraditional firms don’t want to work with the Defense Department, but that is far from a universal truth, said Aberman. A survey of 3,000 executives in the Washington, D.C., tech industry revealed that three-quarters want to work with the federal government given the right financial incentives. Contractors also value government work because it gives them recognition in the broader technology world. A frequent complaint among entrepreneurs, however, is that they fear that once they enter the Pentagon contracting world, traditional defense contractors will steal their intellectual property. “I was surprised how often I heard that,” Aberman said. “It is fair to say there is distrust.”
The government has to understand that companies are profit-making operations. “It needs to provide for rapid payments, rapid activity to reward innovators.”
Shaffer said the private sector’s gripes are legitimate. “Is the process too hard for industry? Is it too hard for non-U.S. firms? There’s some validity to that,” he said. “We are a bureaucracy. People like to do what they’re comfortable doing.”
The high-level attention that has been poured on defense innovation, though, might propel the bureaucracy to change, Shaffer said. “There is real leadership focus on reducing technology cycle times. This will get people thinking about how to do it better,” he added. “What I think is important is the endorsement by senior Defense Department leaders. When you have the deputy secretary of defense leading an effort, people get much more serious about it.”
Shaffer insists the Defense Department “will be open to new solutions.” The idea that the Pentagon could lose its technological advantages is compelling, he said. “We are faced with conditions we haven’t seen since the Cold War. We have some nations developing high technology. ... I am hopeful you’ll see an openness in the department that may not have been there in the last couple of decades. We simply have to be more open to what is in industry.”
The Pentagon, despite its best efforts, cannot change some fundamental realities, Shaffer noted. “In some areas, we the government just don’t move fast enough to be a viable customer. … We the department can be a difficult customer. But we really need industry’s help in fielding new capabilities. At the end of the day we’re spending $70 billion a year on technology. That’s a lot of money, although maybe not compared to Microsoft and Intel.”