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DoD Reshapes R&D, Betting on Future Technology

Apr. 20, 2014 - 03:45AM   |  
By ZACHARY FRYER-BIGGS   |   Comments
The 2015 budget request includes an extra $113 million for the Army's WIN-T battlefield network systems, part of DoD leaders' effort to finish work on large systems near the end of the Pentagon's developmental pipeline.
The 2015 budget request includes an extra $113 million for the Army's WIN-T battlefield network systems, part of DoD leaders' effort to finish work on large systems near the end of the Pentagon's developmental pipeline. (US Army)
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WASHINGTON — Defense budgets had been in decline for a decade when soon-to-be-president George W. Bush laid out his vision for the US military. In a 1999 speech, Bush argued that it was time for military research and development efforts to pursue big leaps, not incremental improvements.

“We will modernize some existing weapons and equipment, necessary for the current task,” he said in a speech at The Citadel. “But our relative peace allows us to do this selectively. The real goal is to move beyond marginal improvements — to replace existing programs with new technologies and strategies. To use this window of opportunity to skip a generation of technology.”

That era of relative austerity ended two years later, when the Bush administration launched two wars and shifted spending to more immediate battlefield needs. But with defense budgets once again in decline, there are remarkable parallels between Bush’s 1999 vision, outlined at the military college In Charleston, S.C., and Pentagon leaders’ R&D plan for the next few years.

Overall, DoD wants to keep spending on RDT&E — research, development, test and evaluation — relatively close to the $63 billion the department will spend in 2014. That’s about $36 billion less than the amount that will be spent on procurement in 2014. But under the president’s 2015 budget proposal, that gap would close to about $26 billion next year, according to data compiled by VisualDoD.com. As pressure increases on defense spending, leaders are trying to protect research and development funding.

But look closer. Within that flat RDT&E budget, a radical shift is underway. Under the 2015 Future Years Defense Plan, DoD would halve spending on System Development and Demonstration, taking it from about $20 billion in 2009 to below $10 billion by 2018.

SDD is one of the seven categories of RDT&E spending, which move in rough order from basic scientific research to operational testing. SDD is Category Five, which funds efforts to turn ideas and prototypes into produceable, deployable weapons and gear.

The goal is to ensure that funding keeps flowing to basic research, which yields technology breakthroughs, and to early-stage development, which proves concepts with prototypes, the Pentagon’s R&D chief explained in an interview last fall.

The trade-off is that DoD will likely mothball many promising new technologies.

“We’re going to be asked to create more prototypes, but then not field them, to put them on a shelf,” said Al Shaffer, acting assistant secretary of defense for research and engineering.

The 2015 budget also keeps money in Categories Six and Seven, allowing the military to finalize the near-term advances that will tide the military over until a new wave of funding allows DoD to field technologies now in embryo.

New Lines

To see how new money is flowing to these last-stage categories, look at the new lines for RDT&E in the 2015 budget request. Much of the $3.2 billion in these new lines would go to help test major ongoing programs: $874 million for the US Navy’s replacement for its Ohio-class ballistic-missile submarines, $197 million for Littoral Combat Ship mission modules, $214 million for the US Air Force’s Space Fence, $113 million for the US Army’s WIN-T battlefield network, $145 million for the Advanced Missile Defense Radar.

The new-line total is double the $1.6 billion approved by Congress for 2014, which added more than $300 million to DoD’s request, largely in ballistic missile defense.

“That sounds like an attempt to finish off some programs to get the right marginal return out of the additional dollars you’ve got to invest,” said James Hasik, a senior fellow with the Atlantic Council. “It looks like you think you’re not going to undo sequestration, and you’re preparing for that enforced peace dividend. You’re going to cap a couple of things off, and then you’re going to wait to see when you have money.”

Once the current batch of systems has emerged from development, there aren’t a whole lot of big programs on the horizon. The Long Range Bomber program is being protected, largely as a boon to aircraft design teams who might otherwise atrophy, but much of the next era of R&D will likely take the shape Shaffer described: development of technologies that will be shelved.

But in the Pentagon’s model for future spending is an effort to push for leap-ahead technology, the type that Bush envisioned in 1999. That type of technology requires taking a bit more risk, something to which acquisition officers are notoriously averse.

DoD leaders are trying to change that, especially in the service branches.

“I think we have to be a little bit more risk-tolerant,” Shaffer said in a March 4 speech, the day the White House sent its 2015 budget request to Congress. “How we get there, I don’t know. One of the ways that we can get there a little bit is by, and we’ve seen a trend in this direction, protecting the investment in the places that tolerate more risk and failure, DARPA [Defense Advanced Research Projects Agency], at the expense of the service programs.”

The 2015 budget request for DARPA was roughly 5 percent over 2014 enacted levels.

“If the services don’t begin to do more high risk, then I think we will continue to see greater investment percentage in DARPA,” he said.

That emphasis on taking more risk isn’t limited to DoD funds. Pentagon leaders have been pressing the defense industry to invest more of its own dollars for a couple of years now.

That’s a message that hasn’t always been well received.

“If you’re only thinking about your quarterly report, which unfortunately our system tends to encourage people to do, you’re not going to think about this,” acquisition chief Frank Kendall said in a January interview. “I was at a company [in the 1990s] that understood the importance of R&D for its long-term health, and despite the drawdown — and we did take some cuts — there will still be an emphasis on internal research and development and preparing for the next generation. I would hope that there’ll be a number of CEOs who feel that way.”

So far, there’s not much evidence of that. From 1999 to 2012, top defense contractors cut their company R&D spending by roughly one-third, according to an analysis by Defense News last year. While there have been a couple of signs that companies are starting to reconsider, broad reversal of the trend has yet to surface.

Making Testing Easier

So DoD has been trying to make it easier for companies to test technologies in realistic settings. For example, the Defense Department has turned the Stiletto craft, previously used by Special Operation's Command, into a testbed. Run by Naval Sea Systems Command, Stiletto offers a very fast-moving (nearly 50 knots) floating box, a platform on which companies can plug in different systems and test them out at sea.

The ship, which its program manager described as the largest composite-material vessel ever built at the time of its construction in 2005, has a UAV flight deck, a small boat launch ramp, and an array of ports and connections for testing different sensors and other gear.

In 2013, 56 different systems were tested on the ship, some of them brought on board as little as two weeks after a company contacted the program office. Roughly two dozen ended up advancing to the point of procurement. It’s a platform that DoD hopes can offer a lower-risk test bed for companies.

“This is a chance to get their things in the field, and if they fail, the companies can go back to the drawing board and improve them,” said Glen Fogg, director of the Rapid Technology Office in Shaffer’s office. “If you put something on a regular Navy ship and it fails, that’s the end of it. Here, they can use that information to improve the product.”

Several products that failed have returned to the ship improved, and have gone on to further success, Fogg said.

But riding with reporters during a recent outing on the Potomac River here, Fogg offered a reminder of the endeavor’s fragility.

Not long after a standard safety briefing before departure, he said that because there aren’t enormous funds for the program, if any significant damage occurred, even on a calm day, they likely didn’t have the money to fix the boat.

“This is a one-off; there is no Stiletto 2,” he said. “If there’s a major incident or funding cuts, we’re going to have to figure out what to do.”

That logic could be applied to the larger R&D plan, as it — like the total DoD budget — rests on targets that may not be attainable. The Pentagon is looking to save nearly $100 billion over the next five years by trimming various costs. In addition, its vision of flat R&D spending over the coming years requires that Congress raise the hard-fought spending caps by $115 billion.

Kendall and Shaffer have repeatedly argued that R&D needs to be treated as a fixed cost, a steady investment that can be leveraged when greater funds are available to field equipment during buildups, but can’t be abandoned in lean times. During the sequester, when accounts were uniformly cut by a certain percentage, it wasn’t possible to protect R&D at the expense of other areas. In future years, their ability to make trade-offs may be tested by worsening budget math.

The notion of keeping R&D flat isn’t new; the 1990s defense downturn saw a similar effort. In 1992, procurement outpaced R&D by $41 billion, but the following year, that difference dropped to $22 billion.

Just protecting R&D funding isn’t enough, Hasik said.

“There’s a difference between spending money and spending money smartly,” he said. “There are folks out in the world who make the argument that you have to spread money around the world wildly, because money spent on research is just good because it just leads to development. This is not a compelling argument because there are dead ends against which you can continue to apply money and not get very far.”

Making the right bets will be critical if the Pentagon is looking for leap-ahead technology.

There’s one major difference between what Bush wanted for defense and what the Pentagon is facing in its restricted fiscal future: Bush wanted to skip a generation of defense technology, but he was willing to increase spending to do it. Current leaders are unlikely, given the financial pressures in Congress, to have that luxury.

Email: zbiggs@defensenews.com.

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