Frank Kendall, under secretary for acquisition, technology and logistics, testifies in Washington at a hearing in June. (Staff file photo)
WASHINGTON — The Pentagon’s acquisition chief is calling for defense companies to maintain self-funded research-and-development initiatives, particularly as US Defense Department investment in these technology programs declines.
But with defense spending contracting and fewer major procurement programs on the horizon, firms are becoming more hesitant to fund these independent research-and-development (IRAD) research projects.
“As companies try to manage their bottom lines in a time of downturn, there’s temptation to cut that [IRAD funding],” Frank Kendall told Defense News. “I have not interacted probably enough with the CEOs on this [to] try to encourage them to protect it.”
Kendall — who at one time was vice president of engineering at Raytheon — said that during prior downturns, there was “a lot of pressure on those [IRAD] accounts.”
“It’s a difficult environment out there for industry, and they do have freedom to make some choices about that,” he said. “That’s the whole idea of IRAD.”
Mica Endsley, the US Air Force chief scientist, said the service is compiling a prioritized list of “emerging risks” that could inform companies on where to invest.
“[Industry] are having to cut back their portfolios as well with budget cuts, so they want to be very strategic about where they invest,” Endsley said in a July 29 interview.
Speed is also key.
“I think we do have to look at what the avenues are for getting the technologies we need in a reasonable time frame at a reasonable cost and how we need to be laying out our requirements such as that happens,” she said.
While there have been several administration officials who have voiced concern about industry investment in R&D, and industry executives who have described the difficulty of trying to justify greater investment to shareholders focused on short-term profitability, there hadn’t appeared to be major consequences for cutting IRAD investment.
Most of the new technology reaching maturity is the product of investments at least a decade ago, and the consequences of poor investment now likely won’t fully manifest for another decade, experts say.
But the beginning signs of tectonic shift are starting to appear, driven by the same force that fundamentally altered the landscape of US business: Silicon Valley and the Internet age.
For decades, DoD has leaned on a relatively small cadre of contractors to provide most of its technology, but, in certain areas, that group has been surpassed by larger commercial companies that have been pouring dollars into R&D. Communications serves as a prime example, with cell phone and computer capabilities being driven by large consumer-focused entities, an area where the intelligence community has increasingly been leaning on technology players rather than traditional contractors.
And in many ways, just as in Silicon Valley, the buzzword is disruption, as in disrupting the defense market and bringing in new solutions.
Part of that push to leverage technology is coming from the service members themselves, exposed to technology from commercial companies that, at times, far exceeds that from defense contractors.
“It’s Braveheart vs. Star Wars,” said A.J. Clark, president of Thermopylae. “Every soldier joining the military today in a volunteer force, they’re not going to work on abacuses and counting rocks. They are going to want the tools that they have, or it’s going to become a recruitment issue, and it’s going to become a staffing issue.”
Thermopylae, like others pushing the primes, works to integrate commercial solutions for defense customers. Largely leveraging Google products, the company has created a variety of systems that use commercial-grade solutions such as Google Earth and integrates ISR data to visualize operations.
In the case of Google Earth, the technology isn’t unique, but it works better than most other solutions, required major investment that has already been made by Google and can easily be leveraged.
But in the past, systems like Google Earth that already had user familiarity and approval would have been simply copied by defense primes, who would have won hefty development contracts for what is essentially duplication, Thermopylae chief innovation officer John-Isaac Clark said.
“All the users want it, but that would be very disruptive to the defense contractors,” he said. “The question started to be asked by the government: duplicate or innovate?”
The new funding outlook means government wants new technologies cheaper, defense companies are being cautious about R&D spending and commercial solutions are being brought in to help fill the gap.
“I think the environment is changing because it’s being forced to change,” John-Isaac Clark said. “I think we had a lot of resources over the last decade, and so we went to a lot of the standard large defense contractors who were building the ISR assets or network communications, and we overlooked some of the commercial stuff that was out there because we had a lot of resources.”
DoD has been slower to pick up the trend than parts of the intelligence community, largely driven by an acquisition system that is not easy for smaller firms to navigate. The intelligence community, always more focused on communications capabilities as opposed to larger systems, has instead focused on connecting with the tech world.
For example, Dawn Meyerriecks, former assistant director of national intelligence for acquisition, technology & facilities, spent her last week on the job leading a tour of Silicon Valley tech companies for senior intelligence community leaders.
Aaron Mehta contributed to this report.