By Sandra I. Erwin

SIMI VALLEY, Calif. – Defense Secretary Chuck Hagel has ordered a sweeping review of military research programs as the Pentagon becomes increasingly worried about losing its technological edge.

The new defense innovation initiative could over time reshape how the Pentagon spends its annual $150 billion to $160 billion weapons modernization budget. 

Hagel is seeking to recreate the strategy that the Pentagon adopted during the Cold War, when the Eisenhower administration figured out how to "offset" the Warsaw Pact's much larger conventional forces with nuclear weapons. In the 1970s, Secretary of Defense Harold Brown and Undersecretary William Perry pushed a second offset initiative to use of digital microelectronics and information technology to counter conventional force.

The Pentagon will attempt a third offset strategy in order to face the “rise of new technologies, national powers, and non-state actors; sophisticated, deadly, and often asymmetric emerging threats,” Hagel said Nov. 15 at the Reagan Defense Forum held at the Ronald Reagan Presidential Library.

The U.S. military's overwhelming technological advantage, he said, “has never been guaranteed, and today it is being increasingly challenged. Technologies and weapons that were once the exclusive province of advanced nations have become available to a broad range of militaries and non-state actors.”

The Pentagon worries that countries like Russia and China have steadily invested in advanced technology over the past decade while the U.S. military was busy fighting grinding counterinsurgency wars. Potential adversaries, said Hagel, are fielding advanced aircraft, submarines, long-range precision-guided missiles, undersea and electronic warfare technologies.

Hagel said the new defense innovation initiative should help the Pentagon produce “game-changing” technologies. Among the likely candidates for future investments are technologies in the fields of robotics, autonomous systems, miniaturization, big data, and advanced manufacturing such as 3-D printing. “This program will look toward the next decade and beyond,” he said. “It will invite some of the brightest minds from inside and outside government to start with a clean sheet of paper and assess what technologies and systems DoD ought to develop over the next three to five years.”

Deputy Secretary of Defense Bob Work will lead the innovation initiative. He will oversee an “advanced capability and deterrence panel” made up of senior leaders from the policy and intelligence communities, the armed services, the Joint Chiefs of Staff, and research and acquisition agencies.

“I expect the panel to propose important changes to the way DoD diagnoses and plans for challenges to our military’s competitive edge, and I also expect it to break with many of our usual ways of doing business – encouraging fresh thinking … not simply adapting what is on the books today.”

The Pentagon will seek proposals from the private sector, including from firms and academic institutions outside DoD’s traditional orbit, said Hagel. He noted that the investment initiative will get underway as budgets are shrinking. Under the funding profile set by Congress in the Budget Control Act of 2011, defense R&D funding would drop by about $23 billion over the next five years. 

How this new attempt at a technology offset strategy plays out could make or break many defense programs, industry analysts said. 

“I think this is a significant push, depending on how they do it,” said Roman Schweizer, defense industry analyst at Guggenheim Securities. There is a risk, he said, that the Pentagon might throw a lot of money at gee-whiz projects that do not materialize. A more likely approach is that investments will go into technologies that show relative promise and need a little push. There is also a chance that this it becomes a sloganeering campaign, and “everything becomes part of the offset,” the way “transformation” became a catchall label during the Bush administration, Schweizer said. The risk is that “offset” could get hijacked for the wrong reasons.

Experts have cautioned that the Defense Department's plodding bureaucracy and byzantine ways of doing business are anathema to innovation. Hagel noted in his speech at the Reagan forum that business reforms are in order as the Pentagon plans future tech investments. 

That will be an uphill battle. The Defense Business Board, an advisory panel of private sector executives warned in a report this summer that the Pentagon is not positioned for technological success for several reasons. One is a shortage of talent, the panel said. The defense workforce is aging and skills are outdated. Also, the sprawling web of military laboratories is “large, complex and uncoordinated,” the DBB said. There are 67 labs across 22 states and 39,000 scientists and engineers working on $30 billion worth of projects per year. One problem is that each branch of the military has its own investment strategy and cross-service projects are not coordinated, the panel noted. The Defense Business Board also criticized the Pentagon for poor oversight of private sector independent research and development. The Defense Department reimburses contractors about $4.5 billion worth of IRAD. This investment, the panel said, “is not managed by the department or coordinated with key technology needs.”

Photo: Chuck Hagel (Defense Dept.)