Defense Department Reorganization Aims to Foster ‘Culture of Innovation’

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Publication date: 
10 August 2017
Number: 
111

In a new report, the Defense Department outlines its plan to reform the organizational structure of its research and engineering activities, in compliance with the fiscal year 2017 National Defense Authorization Act. A principal aim of the reorganization is to foster a more risk-tolerant culture of innovation.

On Aug. 1, the Defense Department submitted a report to Congress detailing its plans for splitting up its massive acquisition, technology, and logistics organization.

Currently, the under secretary of defense for acquisition, technology, and logistics (USD(AT&L)) oversees the department’s $72 billion in Research, Development, Test, and Evaluation programs, alongside other critical activities such as weapons systems procurement. An assistant secretary of defense dedicated to research and engineering activities reports to the USD(AT&L).

Last year, as part of its annual National Defense Authorization Act (NDAA) legislation, Congress directed DOD to create a separate under secretary for research and engineering (USD(R&E)). The existing USD(AT&L) position would then become the under secretary for acquisition and sustainment (USD(A&S)). The new report, which Congress must approve, is a key milestone toward fulfilling that directive.

The ultimate objective of the reorganization is to free DOD’s scientific research and technology development from the bureaucratic strictures of the defense procurement process, and to endow them with a more risk-tolerant, innovation-focused culture.

Reorganization to focus on R&D, innovation

dod-usd-reorg-chart.jpg

Proposed organization chart for the under secretary of defense for research and engineering

Click to enlarge

(Image credit – DOD)

Public domain

The report envisions that the office of the USD(R&E) will be “a lean organization staffed by subject matter experts uniquely qualified to simplify and govern the myriad processes (traditional and non-traditional) associated with identifying, selecting, resourcing, designing, developing, and demonstrating the high-end architectures and associated technologies critical to our warfighting effectiveness.”

To assist it, the office will call on the advice of the existing Defense Science Board and an entirely new organization, the Strategic Intelligence Analysis Cell. The cell will be responsible for tracking enemy capabilities and vulnerabilities as well as monitoring global technology trends to identify emerging threats and opportunities for investment.

Reporting to the USD(R&E) will be the director of the Missile Defense Agency and two new ASDs, dedicated respectively to “research and technology” and to “advanced capabilities.”

The report lists DOD’s labs and the Defense Advanced Research Projects Agency (DARPA) as reporting to the research and technology ASD, though it notes that USD(R&E) will have discretion to alter reporting relationships. The report only briefly discusses the future governance of DARPA and the DOD labs, noting,

The [ASD] for Research and Technology will set the strategic technical direction and subsequent investment strategy for the Department that will ensure technical dominance on the battlefield. The ASD will be responsible for integrating the DOD laboratory infrastructure and stewardship of the technical community that focuses on research to ensure Warfighter dominance.

More attention is devoted to advanced capabilities, a category encompassing the development and deployment of game-changing battlefield technologies. The report explains,

The current pace at which we develop advanced warfighting capability is being eclipsed by those nations that pose the greatest threat to our security. … To outpace the threat and seize on technological opportunities, the development of advanced capabilities must be a top strategic objective for the DOD. A culture of innovation that is rooted at the highest levels of DOD is required and each echelon of the Department must be structured to rapidly adapt and field capabilities that leverage the advances that are occurring at an ever increasing pace in the commercial and defense technology sectors.

This language reflects the thinking behind DOD’s Third Offset Strategy. While the report never uses the term “Third Offset,” it does place two key Third Offset initiatives — the Defense Innovation Unit Experimental (DIUx) and the Strategic Capabilities Office (SCO) — under the ASD for advanced capabilities. That ASD will also be in charge of prototyping and technological experimentation, which aim “to increase understanding of technology and its impact on warfighting capability.”

Currently, DIUx and SCO report directly to the defense secretary and deputy secretary, respectively, in recognition of their novelty and DOD’s strong interest in advancing their work. The organizations’ new placement under an ASD suggests that the department now regards them as more firmly established.

DOD seeks to foster more risk-tolerant innovation culture

dod usd(a&s) org.jpg

Proposed organization chart for the under secretary for acquisition and sustainment

Click to enlarge

(Image credit – DOD)

Public domain

Following the reorganization, the under secretary for acquisition and sustainment will retain most of the other responsibilities of the current USD(AT&L), including authority over DOD’s nuclear, chemical, and biological defense programs.

According to the report, a principal priority following the separation of the R&E and A&S bureaucracies is to “foster distinct technology and acquisition cultures.” The cultures are to be marked by differing attitudes toward risk. The A&S organization, the report notes, will continue to work to minimize risk in contracting. The R&E organization, by contrast, “will take risks while pushing the technology ‘envelope,’ testing and experimenting, and being willing and allowed to fail when appropriate.”

Liberating research and innovation from the constraints of administrative systems designed to minimize risk has become a DOD priority in recent years. The department has developed a number of initiatives, including DIUx, in order to establish contracting and administrative procedures that better accommodate R&D practices and the demands of fast-paced technology companies. This year, the Senate’s fiscal year 2018 NDAA bill also contains provisions to make it easier for DOD to alter administrative practices that hamper research and innovation.

However, last year, prior to the enactment of the fiscal year 2017 NDAA, DOD strongly opposed placing R&E activities under a separate under secretary. In its statement on the proposal, the Obama administration warned it “would create dysfunctional partitions across DOD’s research, engineering, procurement, and sustainment systems.”

In an interview last week, Frank Kendall, who stepped down as USD(AT&L) in January, reiterated the earlier criticisms. He asserted there is a danger of the reorganization “breaking up the life cycle of [DOD’s] products between different authorities so the technology and risk reduction at the earlier phases are under a different person than is responsible for putting them into production.” He suggested that only good leadership would prevent the “almost inevitable” outcome of the military services receiving conflicting direction from the two new under secretaries.

DOD’s report also recognizes that sound administration will be needed to bridge the cultural and procedural divisions the reorganization will create. It observes,

The fact that the two organizations most integral to the delivery of effective and sustainable systems and services approach risk from such different perspectives reinforces special challenges. USD(R&E) and USD(A&S) will minimize this challenge through improved process and planning, communication, and effective leadership and management.

The Trump administration is currently assembling the leadership that will carry out the reorganization. On a voice vote on Aug. 1, the Senate confirmed Ellen Lord, who is stepping down as CEO of defense contractor Textron, as the new USD(AT&L). She is expected to transition into the new USD(A&S) role. DefenseNews reports that DOD officials believe they are close to finding a nominee who will ultimately take on the USD(R&E) position.

DOD has until Feb. 1 to implement its reorganization, though its report notes that the process will continue to unfold after the organizational switch takes place.

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