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Innovation must not be lost in DoD efficiency push

Nov. 7, 2010 - 03:53PM   |  
By MAREN LEED   |   Comments

The Defense Department recently released its latest salvos in the battle to retain excellence through more efficient resource management. While changes to how DoD acquires goods and services are a crucial part of this effort, officials should also focus on ensuring that industry remains incentivized to produce what the department needs to successfully prosecute future missions.

This may seem like an obvious task, but in practice it has proved vexing. DoD has frequently struggled with how to best tap innovative market forces, and the imperative for doing so is only becoming stronger. This is in part because tightening budgets will drive DoD to maximize its leverage in commercial investments.

It is also because the private markets for many of the technologies upon which DoD is increasingly reliant are expanding at rates that are dwarfing DoD's buying power.

Finally, the continuing proliferation of commercial technologies that can be readily adapted to military use demands that DoD tap the creativity that thrives in the private sector if it hopes to counter growing threats affordably.

However, numerous factors indicate that DoD runs the risk of inadvertently making it more difficult for U.S. forces to use commercial innovation. A quick review of a few seemingly disparate policy decisions, all being pursued for legitimate but separate reasons, illustrate this point:

There is increased attention to defending DoD and other key national networks. DoD has taken multiple steps to reduce gaping cyber vulnerabilities, most visibly in the establishment of U.S. Cyber Command. DoD's efforts rightly acknowledge that effectively shoring up networks must extend to the private-sector companies that are key part-icipants in the national security enterprise. But these steps will create two secondary effects.

First, they will increase the cost of doing business with DoD, to include costs associated with ensuring the integrity of key components.

Second, they will necessitate new partnerships and information sharing between DoD and the private sector, which practically must focus on the major defense companies.

Smaller and nondefense companies, among the most robust sources of innovation, may be disadvantaged by both developments: They are less able to absorb higher costs, and they will be challenged to meet DoD standards unless they partner with, or are absorbed by, the larger traditional defense suppliers.

Defense Secretary Robert Gates' drive to increase efficiencies has led to more scrutiny of military requirements, both qualitatively and quantitatively. The Army vice chief of staff, for example, has introduced a new process to revisit major requirements at least annually.

While this is a necessary and probably overdue step, particularly given the pace of technological change, it introduces greater uncertainty for potential DoD suppliers. This uncertainty will be reflected in increased costs (and higher barriers to entry for smaller companies), and may result in greater aversion to developmental risk.

A third factor is the apparent shift toward shorter planning horizons. DoD and Army leaders have argued that the pace of change and the range of uncertainty about the future is so great that planning, concepts and acquisition must focus on the near term five to seven years. This may be the right response to the evolving strategic environment, but uncertain demand can only decrease the willingness of companies to develop technologies that may take a decade or longer to mature.

The political environment on Capitol Hill has weakened and may eliminate a backstop that protects innovative ideas against the bureaucratic "not-invented-here" syndrome.

The advantages of constraining congressional earmarks may outweigh their benefits, but that is a broader debate. Still, the fact remains that congressional direction has led to significant breakthroughs in unmanned systems, electronic warfare and other capabilities that initially met with stiff resistance from the Defense Department.

When used responsibly, earmarks have created opportunities for new technologies, especially those from nontraditional sources, to prove themselves. Earmarks, for whatever their downside, have helped inject new ideas into a sclerotic system.

These changes are in pursuit of noble aims: improved defenses against new threats, greater fiscal responsibility, increased resilience against uncertainty, and greater pre-eminence of national over local needs. Taken together, though, their unintended consequences may foster conditions that are unfavorable to the creativity the private sector has to offer, especially from smaller companies.

DoD must be mindful that absent dedicated attention, the innovation that is critical to the success of the U.S. military may pass it by.

Maren Leed is a senior fellow at the Center for Strategic and International Studies, where she directs the New Defense Approaches Project.

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