Pentagon Rethinks Investments in Future Technology

By Sandra I. Erwin

Pentagon procurement chief Frank Kendall will soon review the military services’ budget proposals for fiscal year 2016. Most likely, he will challenge their funding choices.

Kendall said his staff has compiled a technology wish list with items that have not been funded but “ought to be in the services' budgets.” There will tough negotiations over the next several months as the office of the defense secretary seeks to redirect funding priorities and shape the services’ future investments.

This is part of a “long-range research and development planning program” aimed at protecting the military’s technological edge through the next several decades. The goal is to ensure the Defense Department is funding key technologies it will need to defeat new enemies, Kendall said Sept. 3 at the ComDef industry conference in Washington, D.C.

Squeezing new technology programs into a tight budget will not be easy, Kendall noted. If new items are added to the budget, they will be need to be offset by cuts elsewhere. These will be “painful times” for the Defense Department, Kendall said.

A priority in the coming budget drills is to prevent the Pentagon from wasting money on unneeded or unrealistic weapons programs at a time when budgets are shrinking and the military and its contractors are under growing political pressure to deliver weapon systems on budget and on schedule.

Kendall next week is expected to unveil new procurement guidelines, called “Better Buying Power 3.0” that will reflect new thinking in how the Pentagon invests in its future weaponry. “We have to change our reliance on a small number of expensive objects,” Kendall said. “We need to start looking at how to get quantities and lower risks.”

There will be much closer scrutiny of research-and-development spending, which peaked at $80 billion three years ago and is now headed to $60 billion. Deputy Defense Secretary Robert Work is leading “strategic portfolio reviews” in areas such as strategic deterrence, space, and power projection. The reviews will recommend what investments should be made and how to pay for them by cutting other programs. Work, Kendall said, is "starting to realize how big a problem we have trying to get to a budget that supports a capable force. ... We're going to go through a very, very painful process as we try to come together with a portfolio that is consistent with our strategy.”

The technologies that have made the U.S. military the world’s most advanced — nuclear weapons, precision guided munitions, stealth and aerial surveillance — are now accessible to potential enemies, and this could erode the United States’ advantage, Kendall warned. “These are the kind of capabilities that others have studied very carefully and tried to figure out how to defeat.” It is time for the Pentagon to get serious about developing the next generation of technologies that would not be easily countered by future foes. “We’ll institute a long range R&D process,” he said. “I'm deeply concerned about the risk that we're losing our technological superiority in certain areas of warfare.” Countries such as China and Russia are “building things that are aimed to be effective against the United States and its allies,” he said. “They're doing a particularly good job, especially China.”

The rise of the Islamic State as a threat to the security of the Middle East and of key U.S. allies has not yet resulted in any “special acquisition requirements,” said Kendall. But the Pentagon is becoming increasingly worried about failures in recent decades to field new weapons as programs were derailed by cost overruns and technological overreach.

While previous procurement reform efforts — Better Buying Power 1.0 and 2.0 — called for changes in business and contracting practices, BBP 3.0 will focus on “products, what we need to deliver to the war fighter, on innovation, technical excellence, and speed to market,” said Kendall.

The Pentagon’s innovation challenges also were discussed Sept 3 by Defense Secretary Chuck Hagel. In a speech to defense industry workers and lawmakers in Newport, Rhode Island, Hagel said he worries the U.S. military might lose its technological edge. “While we face a multitude of threats and sources of instability in the world, I am greatly concerned that our military’s technological superiority is being challenged in ways we’ve never experience before.”

Disruptive technologies and destructive weapons once possessed solely by advanced nations, he said, have “proliferated widely, and are being sought or acquired by unsophisticated militaries and terrorist groups.” Meanwhile, China and Russia have been trying to close the technology gap by pursuing and funding long-term, comprehensive military modernization programs, Hagel said.

Potential U.S. adversaries are developing anti-ship, anti-air, counter-space, cyber, electronic warfare, and special operations capabilities, Hagel said. “All this suggests that we are entering an era where American dominance on the seas, in the skies, and in space — not to mention cyberspace — can no longer be taken for granted.” Ensuring military superiority, he added, will require “active investment by both government and industry. … We must be innovative not only in developing the technologies we buy, but also how we buy them, and how we use them.”

Hagel noted that much of the groundbreaking technological gains — in areas such as robotics, advanced computing, miniaturization, and 3D printing — are coming from the commercial sector. “DoD must be able to assess which commercial innovations have military potential, rapidly adopt them, adapt them, and then test and refine them, including through war-gaming and demonstrations.”

There should be incentives for the private sector to develop technologies that will be relevant to the military.

The next round of procurement reforms will emphasize the need to capture commercial technology, Hagel said. “We all agree that DoD needs to be smarter in what we buy and how we buy it. We all want to reduce schedule slippages, curb cost growth, and get better performance to keep our military edge. The question is, how do we do that?” he asked. “Declining budgets won’t allow for repeating past mistakes.”

Hagel previewed some of the initiatives of Better Buying Power 3.0, such as greater use of modular and open systems architectures, efforts to provide industry with draft requirements earlier, remove obstacles to procuring commercial items and tap the global marketplace. BBP 3.0 will expand the use of prototyping, said Hagel. “This will be vital to preserving a robust, capable defense industrial base.”

Topics: Procurement, Acquisition Reform, Defense Department, Research and Development, Defense Contracting

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