WASHINGTON – After spending 13 years fighting non-state actors in Iraq, Afghanistan and Syria, the US Defense Department is shifting its institutional weight toward developing a new acquisition and technology development strategy that focuses more on major state competitors, the Pentagon’s No. 2 told Defense News on Nov. 21.

Deputy Defense Secretary Bob Work said that at the top of the agenda are powers like China and Russia, both of whom have "regional and global aspirations, so that's going to increasingly take a lot of our attention."

Next come regional states that want to become nuclear powers, such as Iran and North Korea, and finally are transnational terrorist groups and their myriad offshoots.

"Layered on top of all three are technological advancements that are happening at a very rapid pace," Work said, which has given rise to a global competition for the latest in stealth, precision strike, communications and surveillance capabilities over which the United States no longer holds a monopoly.

The new Defense Innovation Initiative that Defense Secretary Chuck Hagel recently announced is "really focused on state actors," Work said, "and looking at the capabilities that could potentially hurt our nation the most and how [the Pentagon can] prepare to address those capabilities and deter their use."

A major part of this push is the new "offset" strategy, which is looking to identify new technologies that the United States can use in order to deter or defeat those threats.

But whereas previous offset initiatives in the 1950s and 1970s focused on nuclear, stealth and precision technologies with the Soviets, the threats of today are more diffuse.

It's not only state actors this time. The past decade has shown that fighting groups like the Islamic State, al-Qaida, Hezbollah and Hamas doesn't come cheaply. "It costs more to shoot down incoming missiles than it does to [launch] them," Work said. "So we're looking at things like directed energy weapons, railguns."

Those previous offset initiatives saw the Pentagon develop "military technologies to offset Soviet advantages, so you're taking military technology and trying to use it to offset a qualitative military advantage, and I'm not sure you can use that same playbook here," former Deputy Defense Secretary William Lynn, now the CEO of Finmeccanica North America, told Defense News on Nov. 19.

"I think the strategy is going to look more to commercial technologies, and I think the challenge here is to identify those technologies that are most critical," Lynn said. "It's not obvious what those technologies are. The challenge of identification is probably larger than it was in the first two [offsets]."

Lynn is acting as co-chair along with Michèle Flournoy, former undersecretary of defense for policy and now CEO of the Center for a New American Security, on a "Beyond Offset" research program at CNAS, where Work was chief financial officer before heading back to the Pentagon this year.

One of the issues for Pentagon leaders as they try to push the latest offset plan is that the Obama administration has two years left in its tenure, and Congress likely isn't in the mood to lavish more funds on the Pentagon.

But Work said the second offset started in 1975 and carried across multiple administrations, and "what we can do in the next two years is to set the course. Once you get the strategy right, they generally go across administrations."

He added that the plan is also simply part of a multiyear modernization effort that the department has to undertake, and one that will have to be constantly re-evaluated in light of the democratization of technology across the globe. In the past, the US could be confident that adversaries would be unable to copy American military innovations. But given the current ramp-up in Chinese capabilities, this is no longer the case.

"We're looking at what we can do in the next 10 years to deter our adversaries, and what do we need to start building for the next 10 years to retain that advantage. And what do we need to be doing to start [laying] the technological groundwork" for the 10 years after that, Work said.

"The focus of innovation today is really in the commercial sector, biotechnology, nanotechnology, robotics, autonomy, we have to be able to get that innovation. We want to work with industry" and the commercial sector to push the envelope on what can be accomplished, he said.

Commercial technology companies would likely work with the Pentagon if asked, Lynn said, but the harder question is, "how do you get companies like that to do business with you? I think we need to expand our acquisition focus to lower the barriers to entry" for smaller software and IT companies, so that they don't get frustrated with the bureaucratic red tape for which the Pentagon is infamous.

The rapid acquisition programs of the past decade show that "it can be done," Lynn said. "The challenge is we proved it can work, but how do we institutionalize it? That's the leap."

The issue of the commercial tech industry's role in defense was raised in a tart exchange between former Pentagon Comp­troller Dov Zakheim and Frank Kendall, the Pentagon's chief weapons buyer, at the Reagan National Defense Forum on Nov. 15.

Zakheim charged that the Pentagon was not only indifferent to the fact that companies want to make profits, but that the government also expects them to give up some of their intellectual property (IP) rights to technologies they spent their own research and development (R&D) money to design.

"Industry invests in its own R&D, then the government tells you that you can't make more than 8 or 9 percent profit margin, and they want your IP. Why in God's name would Google hand over their IP to a bunch of civil servants who haven't taken a [tech] course in over 25 years?" Zakheim said.

Kendall said that while he understands that companies want to make profits, the IP issue is one area in which he's trying to drive change, along with changes in how the Pentagon does both accounting and contracting. "We are working this hard."

The offset strategy, once it begins to be implemented, is most likely going to be "more about choices and how you manage the portfolio than it is about new investments in spending," said Robert Martinage, a senior fellow at the Center for Strategic and Budgetary Assessments. "You can cut back in one area and shift resources into another, and that's hard. That creates losers bureaucratically in the Pentagon, and they'll resist that. It's going to be a challenge." ■

Email: pmcleary@defensenews.com.

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