WASHINGTON — Flat defense budgets may be looming. The military’s focus is shifting away from the Middle East to China and Russia. And bills on everything from modernization to AI to the nuclear enterprise are coming due.

With that combination of high-stakes missions and financial pressures on the horizon, the Pentagon has never been in greater need of the Defense Business Board’s advice, new chairwoman Deborah Lee James said.

“Sometimes in the government, you can’t see the forest for the trees, and you don’t know what you don’t know,” said James, who served as President Barack Obama’s Air Force secretary from 2013 to 2017 and previously was a top executive at SAIC. “So bringing in outside advisers can be a helpful new perspective.”

The board is made up of executives from the private sector — some, though not all, with military experience — who advise top Defense Department leaders on ways to help the department learn some lessons from how business operates, such as how to cut costs or make it run more smoothly.

Since 2002, the board has produced about 80 reports on topics ranging from a look at the military’s retirement program that helped lead to the creation of the blended retirement system to a recommendation to eliminate the DoD’s office of the chief management officer.

If DoD doesn’t keep up with innovation and remain willing to take prudent risks, James said, it could fall behind its competitors and lose its advantage. She hopes the board can help.

James was sworn in to lead the board Sept. 14, becoming its first female chair in its nearly two-decade history. With the 17 people nominated to be members, including seven women and nine people of color, James believes it will be the most diverse board to date — and she plans to use that to her advantage.

James spoke with Defense News Oct. 15. The interview has been edited for space and clarity.

How do the members of the Defense Business Board study issues and find ways to recommend they better operate?

We will be doing studies and looking into different matters specifically at [Defense Secretary Lloyd Austin and Deputy Secretary of Defense Kathleen Hicks’] request. Studies will fall into three basic buckets.

One bucket is what I’ll call transformations. This would be ideas and areas that could really move the needle in some important way. Another bucket or topic area is business processes in general. There’s obviously the war fighters, and then there is everyone else who is supporting the war fighters, and there are different ways of organizing those. And then the third area is talent. So there we have our civilian personnel, our military personnel, sometimes there’s mismatches in skills. There’s a variety of topics centered on talent.

Right out of the chute, one study that Congress asked the Defense Business Board to do is the mentor-protégé program. Is the program working as it is intended, is it delivering results or not, and how should we change it?

The mentor-protégé program is a program in which large companies — think your Lockheed [Martin]s, think your SAICs — are given financial incentives to work with small, disadvantaged businesses. The idea is to help mentor them in certain ways, and to help give them a boost so that they can be thriving businesses going forward.

A small disadvantaged business might say, we would like help and learning world-class business development processes, or how do you put together a proposal process which is repeatable as you go through multiple proposals over the course of the year? And large companies who have been there, done that and learned these things through the years can help teach them.

What’s your strategy going to be going forward as the chair of the board?

I would like to leverage the talents of what I think is the most diverse board ever. We have a variety of backgrounds and expertise, [and] I want to leverage each and every one of them and make sure that we’re capturing their perspective.

The other thing I hope to do is emphasize that this will be a working board. The worst thing to do is just be people who show up four times a year and have a meeting, and then they go away to do nothing. The idea is, you come to the core meetings, but you’re working on your assignments in between … to review literature and written studies that have been done about particular matters so that we don’t just reinvent the wheel.

It also will require us to conduct interviews with senior people in government [and] the private sector so that we get a sense of how things are done in government versus the private sector. Once we have done the literature review, done the interviews, [the board will decide] which way do we want to go in terms of recommendations?

Why is it important to have a diverse Defense Business Board?

There’s all kinds of data that tells us that diverse teams of people will come up with more innovative solutions than non-diverse groups. If all you had was retired individuals who had been in the military … you don’t have a window into the rest of the world. By having different people from different perspectives, you’re going to come up with more innovative recommendations and have ideas on the table for discussion that you otherwise would not have.

Why does the possibility of tighter budgets in the future make the board’s work more important?

When you’re overflowing with more money, you’re going to be less likely to focus on efficiencies, because rising budgets float all boats. In more scarce times, where lots of bills for procurement are coming due when you need to invest more in R&D for some of the new technologies like AI and robotics and hypersonics, and so on, when the cost of people continues to go up. All of these are bills that must be paid. And if [future] budgets are flat, as I think many are predicting, you’re going to have to do some efficiencies, if you’re going to continue to do the things that you want to do.

Where do you think the Pentagon is most ripe to look for more efficiencies or areas for improvement?

It’s too early to say. At our first meeting, we’re going to get a number of briefings, that will update some of us and others of us will be hearing these themes for the first time. It’s not always an efficiency as in saving money. We need to have more technically savvy people in both the military and the civilian workforce, and yet technically savvy people are in the highest demand in the private sector. So what do we do about that? It’s a crucial thing for innovation, and to not have our military fall behind in terms of a military competitive advantage.

How can the DBB help the Pentagon as its focus shifts to potential major adversaries such as China and Russia?

We have had, over the decades, certain military competitive advantages. We’ve also spent more money on defense than many, many other countries combined. I believe we’re going to continue to have healthy defense budgets, but they’re likely to flatten out. So when you have a finite amount of money, and yet you’ve got lots of bills coming due — [as with] the nuclear enterprise — you’ve got to tighten your belt somewhere, so that some of the savings can come from within.

Furthermore, we have members who have a lot of experience operating as business people in China. So there may be insights that can come from them as well. Again, this is pure speculation on my part, because we haven’t yet got our taskings from the deputy. But in this time of great power competition, where we’re worried about certain countries, businesspeople who have years of experience doing business with those countries — that’s another way that we can contribute.

Stephen Losey is the air warfare reporter for Defense News. He previously covered leadership and personnel issues at Air Force Times, and the Pentagon, special operations and air warfare at Military.com. He has traveled to the Middle East to cover U.S. Air Force operations.

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