Recent research from the Center for Strategic and International Studies (CSIS) raises some important questions about the direction and focus of Defense Department research and development funding.
According to Andrew Hunter, head of CSIS’s Defense Industrial Initiatives Group, recent data documents a nearly 50 percent drop in spending on systems design and development (SDD) — a critical part of the R&D continuum — amounting to billions of dollars in reductions over the last four or five years. Over the same time, CSIS’s research shows an almost dollar-for-dollar increase in spending on alternative acquisition methods, especially Other Transactions Authority (OTA) contracts and, to a lesser extent, so-called “mid-tier” acquisitions. Hence, the question raised by CSIS: Are we short-circuiting long-term research and development in favor of more immediate opportunities for capability advancement?
The question is an important one and has real ramifications for the nation’s long-term battlefield dominance. And while the data itself certainly does not prove a correlation or the existence of a problem, it offers a good jumping off point for a more intensive examination. It also offers an important opportunity to assess traditional views of systems development against the intersection of commercial technology development as they relate to future war-fighting capabilities.
At its core, the question is really a contemporary version of that which drove many of the acquisition reforms of the 1990s. Those reforms were, in part, an effort to address the fact that while the research and development landscape had fundamentally shifted, the government’s approach to R&D and the marketplace had not. By the mid-1970s, private sector investments in research and development had, for the first time ever, surpassed the government’s; and the gap between the two had consistently widened. Studies also showed that just the 75 largest technology companies were spending more annually on R&D than the entire defense department; and about 75 percent of them would not do business with the government, especially in R&D.
The 1990s reforms opened the door for these companies to enter the government market and, in turn, greatly opened the government’s aperture. And the results have been real. Indeed, without the changes of the 1990s, the government today likely wouldn’t have the benefit of access to the market-leading capabilities of not only the major players, including but not limited to Microsoft, Cisco, Amazon, IBM and Google, but scores of smaller companies as well.
Today, we are again at a critical turning point. Not only does the “new” generation of technology continue to be principally driven by private sector investment, but never before has the nexus between our emergent military needs and the commercial technology base been so clear. Indeed, some of the most central tenets of our national security strategy are also central forces in the commercial sphere: cybersecurity, artificial intelligence, quantum computing, robotics, and more. Yet, despite that, over the last 15 years we have seen a significant dilution of the 1990s-era authorities that originally opened the government’s aperture to begin with.
As was documented by the recent report of the “Section 809 Panel,” over 160 government-unique clauses have been added back into the process for buying commercial items and services since its creation 20 years ago. Put another way, large portions of today’s innovation economy are, like their predecessors 20 years ago, shying away from the government market for many of the same reasons.
Which brings us back to the growth in the use of alternative acquisition strategies and the reductions in SDD spending. OTAs, by their very nature, are designed to help provide the government relatively unfettered access to the commercial technology base. And the more the Federal Acquisition Regulation or system inhibits, or appears to inhibit, that access, the more we will see the use of these and other alternative processes.
At the same time, the historically rapid pace of technology change, the private sector’s dominance in technology development, and the commonality of government and commercial technology interests together suggest it is worth considering whether SDD itself means something very different today than before.
Mitre Corporation defines systems design as the process of defining all of the components and elements of a system needed to “satisfy specified requirements.” What are those “specified requirements?” How relevant are those requirements we define today likely to be in 15 or 20 years? How many can be met, in whole or in part, by commercial technologies or near derivatives? To what extent does the increasingly rapid pace of technology development and change render our traditional, long-term approaches to development, including SDD, obsolete?
These questions are central to developing and executing a forward-leaning R&D strategy and to understanding how we should think about government R&D priorities and the ways in which the government engages with the marketplace. Old issues, yes. But with new twists ... and a new urgency.
There is no question that we need to robustly invest in long-term, over-the-horizon capabilities for which there is no evident commercial market. And, as recommended by the Section 809 Panel, the very nature of technology development and the future of warfare means we also need to take a hard, new look at the commercial-defense nexus and the barriers that have been erected between them. But even beyond that, it may as well be time to recognize that the alternative acquisition processes that are gaining steam are doing so because they are actually more relevant and responsive to the world as it is today. In that light, it could be that they should become far more the norm than exception. In that light, we ought to be thinking about them not as temporal workarounds, but as indicators of a critical path forward.
Stan Soloway is president and CEO of Celero Strategies. He was previously CEO of the Professional Services Council, and also served as deputy undersecretary of defense, focusing on acquisition reform, and concurrently as director of former Secretary of Defense William Cohen’s Defense Reform Initiative.