Sharpening the U.S. Military’s Edge: Critical Steps for the Next Administration

The Bottom Line

• The United States is losing its military technological advantage vis-à-vis great power competitors such as China.
• Reversing this trend must be DoD leadership’s top priority.
• DoD has made progress in identifying and accessing innovative technologies; however, it has yet to consistently field these new capabilities quickly and at scale.
• The next administration must take bigger, bolder steps to accelerate the development and adoption of the new operational concepts and capabilities that are essential to keeping the U.S. military’s edge and underwriting the United States’ ability to deter great power conflict.
• Doing so will require focused and empowered leadership, increased investment in the development of new concepts and capabilities, new pathways and incentives for promising prototypes to bridge the “valley of death” into production, a willingness to make hard program and budget choices, the development of a more tech-savvy workforce, and greater partnership with Congress to pursue these goals together.

Introduction

The U.S. military is at a high-stakes inflection point: it must take a series of much bigger and bolder steps to keep its military-technological edge over great power competitors such as China, or it could lose that edge within the decade. If the Pentagon’s own reported wargames and analysis are to be believed, the planned force that is enshrined in the current Department of Defense (DoD) program and budget may well be insufficient to deter or defeat Chinese aggression in the future. It is difficult to overstate the catastrophic consequences of the altered balance of power that would result: a United States no longer able to credibly protect its interests, allies, and partners in the very region on which the future prosperity and security of Americans will most depend.¹

In their respective defense strategy documents, both the Obama and Trump administrations recognized the growing challenge posed by an increasingly powerful and assertive China, as well as a revanchist Russia—as well as the important role of DoD within a broader, whole-of-government approach to great power competition. However, this conceptual shift toward great power competition has not been matched by a requisite re-alignment of concepts, culture, and service programs and budgets. The DoD is talking a far better game than it is actually playing. The proverbial clock is ticking, and while the Pentagon and Congress continue to make changes largely at the margins, China is making serious investments to rapidly close the military-technological gap.²

Since the first Gulf War, the People’s Liberation Army (PLA) has gone to school on the American way of war and developed an expanding set of asymmetric approaches to undermine U.S. military strengths and exploit U.S. vulnerabilities. Of greatest concern is Beijing’s substantial and sustained investment in anti-access/area denial (A2/AD) capabilities, ranging from persistent precision munitions that could strike U.S. logistics, forces, and bases in the region to electronic, kinetic, and cyber weapons that could attack every digital connection and system inside U.S. battle networks.

As a result, the United States can no longer assume that it will have air, space, or maritime superiority early in a conflict, or the freedom of action that this domain superiority allows. The U.S. military will need to fight to gain advantage—and then to keep it—in the face of continuous PLA efforts to disrupt and degrade U.S. battle management networks, while accelerating its own decisionmaking cycle by leveraging artificial intelligence. China’s theory of victory increasingly relies on the notion of “system destruction warfare”: crippling an adversary’s networks at the outset of conflict by deploying sophisticated electronic warfare, counter-space, and cyber capabilities to disrupt critical C4ISR (command, control, communications, computers, intelligence, surveillance, and reconnaissance) networks, thwart U.S. power projection, and undermine American resolve.³

Thanks to China’s massive, systematic theft of Western intellectual property, its state-directed investment in key technologies, and its doctrine of “civil-military fusion,” which dictates that commercial or research-based technological advancements must be shared with the PLA, the Chinese military has made rapid advancements in a range of critical emerging technologies. Given the centrality of commercial technologies such as artificial intelligence (AI), robotics and autonomy, cloud computing, and cellular fifth-generation technology (5G) to ensuring that the U.S. military keeps its edge, the United States urgently needs a democratic response to civil-military fusion—one that harnesses the free market principles that have fueled the United States’ unparalleled private-sector innovation engine, and that unshackles the adaptivity and ingenuity of the U.S. armed forces.

Moving from talk to greater action will require dedicated leadership, backed by the political will to make the necessary but difficult tradeoffs that re-orient the force. In a post-pandemic environment, making these necessary investments and tradeoffs in the defense budget will be even more difficult. Because it accounts for more than 50 percent of the discretionary budget, the Defense Department will almost certainly experience downward pressure on its future topline—regardless of who wins the 2020 presidential election—as demands associated with recovery from the Coronavirus 2019 (COVID-19) pandemic, addressing systemic racism, getting Americans back to work, shoring up the social safety net, and strengthening the nation’s preparedness to handle future pandemics will all compete for federal dollars. Mounting deficits and debt will also curb the appetites of some lawmakers for higher defense spending. But this is not about spending more; it is about spending smarter. The DoD cannot continue to buy more of the same while expecting new results. It must invest in significantly new capabilities and concepts to reimagine how it fights.

This paper identifies a series of steps the next administration, whatever its political stripes, must take in order to sustain and extend the military-technological edge of the U.S. armed forces vis-à-vis great power competitors such as China and Russia. Recognizing the efforts that recent Secretaries of Defense have made to enhance DoD’s ability to identify and integrate cutting-edge technologies into new concepts, the paper begins by briefly evaluating what is working and where obstacles to success remain. It then explores a number of additional reforms that are essential to improving DoD’s ability to scale the most critical solutions, offering concrete, actionable recommendations to the department and Congress. While other issues are essential, from transforming the broader DoD enterprise to strengthening U.S. alliances, partnerships, and forward posture, this report focuses primarily on changes needed to accelerate the delivery of new operational concepts and capabilities at scale to ensure the U.S. military maintains its edge in an era of great power competition.

A New Strategy for Military-Technological Innovation: Some Progress, but Persistent Barriers

Innovation—in this case, the art of gaining competitive advantage by leveraging new concepts and technologies to transform how the U.S. military operates—has long been a hallmark of the U.S. armed forces. Indeed, innovation-driven technological superiority has been a key aspect of U.S. defense strategy since the end of World War II. In light of the growing military competition with China, however, it is now an urgent imperative.

The department laid the conceptual foundation of this new approach in its Third Offset Strategy. First articulated by Robert O. Work and Shawn Brimley in 2014, the Third Offset recognized that after 25 years of unrivaled military-technological superiority, U.S. advantage was rapidly eroding.⁴ As in the first two U.S. strategies to offset the Soviet Union—first through the fielding of thousands of tactical nuclear weapons and then through the proliferation of precision munitions and wide-area surveillance—the United States needed once again to reconfigure its organizational and operational concepts and accelerate technological investment to compete against rival great powers, particularly China.⁵ Unlike the first and second offsets, however, the U.S. edge would now come from developing, applying, and integrating largely commercially developed technologies and dual-use capabilities, making cooperation with commercial technology companies critical.

As Deputy Secretary of Defense, Work joined forces first with Secretary of Defense Chuck Hagel and then Secretary Ash Carter to put in place some of the building blocks of the innovation ecosystem necessary to support a third offset, including the Defense Innovation Unit-Experimental (DIU-X), a revamped Strategic Capabilities Office (SCO), the Defense Innovation Board, the Force of the Future Initiative, and the Defense Digital Service (DDS).⁶

In the years since, the number of self-described innovation hubs in DoD has grown substantially, ranging from long-standing organizations such as the Defense Advanced Research Projects Agency (DARPA) and the service research labs to newer organizations, for example Army Futures Command; the Air Force’s AFWERX, Kessel Run, and Platform One; Special Operations Command’s (SOCOM’s) SOFWERX; the National Security Innovation Network (NSIN); Naval-X’; and the Joint Artificial Intelligence Center (JAIC). Beyond creating a veritable alphabet soup of new organizations, this proliferation has increased DoD’s ability to survey the technology landscape, including non-traditional companies; to identify potentially promising solutions to priority problems; and then to rapidly develop prototypes of new capabilities. However, this expanding set of organizations has not yielded the results DoD so urgently needs—more rapid fielding, at scale, of the critical capabilities that will give U.S. operators the edge to deter and, if necessary, defeat aggression by another great power. The proliferation of innovation organizations suggests that DoD does not have an innovation problem; rather, it has an innovation adoption problem.⁷ The “supply” of innovation opportunities is increasing, but the demand is not keeping pace because of bureaucratic and cultural barriers to reducing investments in old technologies and concepts.

DoD is not keeping pace in several key areas. The following nine points detail these deficiencies.

1. Identifying and prioritizing the most critical problems that DoD must solve in an integrated plan to maintain its warfighting edge against great power competitors.

While there is a good deal of verbal buy-in among DoD leaders to the National Defense Strategy, with its emphasis on great power competition and the need for change, department leadership has not yet demonstrated the sustained political will to translate this into a shared, prioritized plan of action, nor has it made the necessary hard choices to reallocate resources within service programs and budgets. There are a few exceptions, such as the U.S. Air Force’s request to reallocate $3.2 billion in this year’s Future Years Defense Program (FYDP) to invest in a new battle management family of systems designed to ensure resilient C4ISR in a highly contested battlespace.⁸ However, these kinds of “big bets” remain exceptions, not the norm. It is also not clear that Congress is fully on board with the changes to the program of record required to implement this vision. If the U.S. military is to keep its edge, the next administration must provide leadership that can forge a stronger consensus with the services and Congress on the highest priority problems to be solved. Leadership is also essential to driving a coherent department-wide approach, and to ensuring that new technologies, lessons learned, and best practices are captured and shared across the department to accelerate progress.

2. Developing new joint and service operational concepts for deterring and defeating aggression by great powers with robust A2/AD capabilities.

Beyond deepening the consensus on priorities, creating decisive military advantage for the U.S. joint force will require developing and refining new ways of deterring and defeating adversary aggression in a far more contested and lethal future battlespace. The difficulty of doing so should not be underestimated, as it will require a fundamental shift in mindset among military leaders, planners, concept developers, and operators. For decades, the U.S. military has become accustomed to being the dominant power in any conventional military situation, able to rapidly gain domain superiority and freedom of action. In the future, the force cannot count on these assumptions holding. This means that U.S. commanders and concept developers will have to think more asymmetrically about how to undermine adversary advantages, which may include quantitative overmatch in fielded forces and the ability to persistently attack U.S. forces inside their A2/AD threat rings.

Today, all of the services, as well as the Joint Staff, are working on new concepts for deterring and, if necessary, fighting and prevailing in a highly contested A2/AD environment against a regional peer. Emerging concepts such as Multi-Domain Operations, the Air Force’s Future Operating Concept, the Navy’s Distributed Maritime Operations, the Marine Corps’ Expeditionary Advanced Base Operations, and the Army’s Concept for Multi-Domain Combined Arms Operations are all evidence of the intellectual bandwidth being applied to envision how the U.S. armed forces will fight differently in the future. However, these concepts are still nascent and, in some cases, only improve current warfighting approaches at the margins, rather than fundamentally rethinking how the United States will fight in a much more lethal environment. Being able to deter and prevail against a nuclear-armed, great power rival will require senior-level commitment to wholly new concepts of operations that leverage both legacy forces (which, like it or not, will comprise the bulk of the force for decades to come) and fundamentally new technologies and systems that are essential to making that force more survivable, relevant, lethal, and combat-effective.

3. Conducting robust joint and service experimentation and operational analysis to test and refine emerging concepts and capabilities.

As commendable and important as these concept development efforts are, they are not adequately supported with the necessary robust analysis, wargaming, and particularly field experimentation. These activities are essential for testing, refining, and integrating new concepts into the force, as well as for determining the key technological enablers that will be essential to operationalize the concepts over the next decade and beyond. The department’s analytic, simulation, and experimentation tools and activities are simply not keeping pace with the changing threat environment. Far more analysis, anchored by experimentation at scale, is desperately needed so that novel operational concepts can be analyzed and tested in realistic scenarios.

What is more, some congressional defense committees are not yet fully on board with the need to procure adequate numbers of new systems to enable robust field experimentation, further concept development, and refinement of requirements before moving prototypes to full-scale production. The recent decision not to approve one of two large unmanned surface vehicles (LUSVs) for concept development and experimentation due to concerns about the lack of a concept or defined requirements for these systems is a case in point.⁹ While the second LUSV was eventually reinstated in the defense appropriations bill, this instance illustrates the current Catch-22 for the military services:¹⁰ They need to buy a limited number of prototypes with which to experiment in order to flesh out operational concepts and refine capability requirements before the system goes into full production. But some in Congress do not want to buy these systems until the services can better articulate requirements and concepts of employment. Advancing DoD’s ability to develop new operational concepts and field the new capabilities necessary to implement them will require Congress to accept a small amount of risk to allow the services to acquire the prototypes needed for more robust experimentation.

4. Efficiently transitioning successful prototypes to production and fielding at scale (a.k.a. bridging the valley of death).

One of the most critical shortfalls is the department’s still-pervasive inability to rapidly transition successful prototypes of essential capabilities to production and fielding at scale. Many if not most technology companies, be they startups or defense prime contractors, still encounter a “valley of death” between delivering successful technology demonstrations or prototypes and winning a contract to produce software or equipment at scale. New starts are exceedingly rare. This is the point in the DoD innovation cycle where critical, cutting-edge capabilities too often go to die. The question is: Why?

There are several contributing factors. First, many of the tech scouting organizations that get small tech companies through the DoD door for their first research and development (R&D) or prototype contracts generally cannot fund a follow-on production contract at scale or be a source of recurring revenue. These tech scouting organizations are rewarded for bringing new entrants into the department, and the program execution officers (PEOs), who oversee production contracts, are rewarded for maintaining stability in cost and schedule. Where one sees opportunity, the other sees risk. Moreover, program managers and PEOs rarely have the technical expertise to envision and evaluate new ways of solving problems and are subject to myriad pressures to stick with incumbents; they are not incentivized to leverage new technologies to disrupt existing programs, even if doing so would add capability and/or reduce cost. While there are some notable exceptions, most are best understood as mavericks or risk-takers who happen to find themselves in a position to make change, usually protected by a very senior leader, rather than the outcome of a deliberate process.

In addition, even when an emerging tech company achieves some success in one part of the department, in a particular branch within a service or command, that success often remains unknown to other potential DoD customers, making growth much harder and slower. Even if discovered, arcane contracting and cyber security rules often prevent any given solution from being “ported over” to a different system.

Perhaps most important, the department has not placed the necessary big bets to stimulate higher demand from the services in the most critical capability areas that could pull innovative solutions across the valley of death into the hands of the warfighter within the decade. Too often, successful prototypes are recognized but simply lose out to incumbents in the ruthless competition for a spot in the next defense program.

The final contributor to the valley of death problem is the lack of flexible funding to bridge the gap (often a year or more) between a successful prototype or demonstration and a production contract. For example, an artificial intelligence (AI) company that in 2019 delivered a successful prototype of a high priority capability to a very happy customer with an unmet need was told that, as eager as the customer was to proceed, it was not possible to allocate money for production until the fiscal year 2021 (FY2021) budget. For a small technology company focused on defense, such a 12–18 month gap can induce a fight for survival. Unfortunately, this experience is more typical than not. Unless and until the department figures out how to bridge this valley of death, investors will counsel many cutting-edge commercial tech companies, whose partnership the department needs to succeed, to stay away from DoD as a customer.

5. Adapting the requirements process for agile development.

Another obstacle to fielding critical capabilities at speed and scale is the requirements process. Designed to ensure that a DoD customer has fully specified its needs when purchasing large complex platforms and weapon systems, this often years-long process has certainly contributed to reducing technical, schedule, and cost risks in some major defense acquisition programs. But when it comes to developing urgently needed disruptive capabilities, this rigid, sequential process often runs counter to the sort of iterative, agile development that is more appropriate for emerging capabilities such as AI, autonomy, and other software-driven innovations. While the Joint Urgent Operational Need process enables the department to rapidly address urgent capability needs identified by combatant commanders, this process remains narrowly focused on meeting near-term needs in ongoing or anticipated operations; it is not designed to develop and integrate disruptive capabilities that can transform how the U.S. military fights in the future. DoD needs a differentiated approach—one that distinguishes between major programs of record and programs to develop and field the emerging capabilities that will underwrite fundamentally new concepts of operations. This new approach must also distinguish between hardware and software, building on and implementing Under Secretary Ellen M. Lord’s Adaptive Acquisition Framework, which is informed by the recommendations of the Defense Innovation Board’s Software Acquisition and Practices (SWAP) study.

In support of such a differentiated approach, Congress has helpfully granted the department a number of more flexible authorities to enable more agile and rapid acquisition of emerging technologies, including through Other Transaction Authorities, Middle Tier Acquisition, and Commercial Solutions Openings.While small pockets of the acquisition corps have become more comfortable and creative in using these and other authorities with positive results, this remains the exception rather than the rule. Most service and Office of the Secretary of Defense (OSD) acquisition personnel have not been adequately trained or incentivized to use these new authorities regularly and at scale.

If DoD is to be able to field in the coming decade the critical capabilities it will need to keep its edge, such as new AI-powered systems, those responsible for requirements, acquisition, contracting, technology development, and capability employment will need to work together more closely and seamlessly. Rather than setting requirements in stone up front, agile development processes require iterative design and testing, with ample opportunities for interaction and feedback between engineers, operators, and program managers. This kind of agile development is beginning to take place in pockets throughout the services, SOCOM, and the JAIC, but the department has yet to standardize and proliferate a set of best practices for accelerating the development and adoption of emerging technologies.

6. Recruiting and retaining the necessary tech talent to develop, test, procure, integrate, and deploy new technologies.

The shortage of tech talent in DoD is pervasive—senior and junior, civilian and military, active duty and reserve—and throughout all parts of the talent pipeline. Dr. Eric Schmidt and the Defense Innovation Board in a March 2020 report referred to this as a “digital readiness crisis.”¹¹

Existing programs to recruit recently graduated technologists are too small and narrowly defined, existing non-traditional hiring authorities are underutilized, and the service academies do not feed enough talent in science, technology, engineering, and math (STEM) directly into technical roles. A security clearance process that lags for years; opaque, antiquated, and painfully slow hiring processes that average 150 days; and limited internship opportunities are all additional barriers to recruiting top tech talent. Meanwhile, limited pay, professional development opportunities, promotion possibilities, and career paths for technologists further constrain the department’s ability to retain the small pool of tech talent it does manage to recruit. While most coding and engineering will continue to be done by industry, if the department is to be successful in transforming the force for the future, it is imperative that it increase its ability to upskill its existing workforce as well as attract and retain technologists as advisors, tech scouts, developers, evaluators and testers, program managers, and integrators.

7. Building and upgrading the necessary digital and physical infrastructure.

The department needs to invest in the digital and physical infrastructure necessary to develop, test, and field the technologies that will define the future. DoD does not yet have the requisite digital infrastructure—such as the cloud computing environments and data labeling, storage, and management systems—to enable agile, secure development and testing of software and AI applications in direct support to the warfighter. The continued delay of the Joint Enterprise Defense Infrastructure (JEDI) procurement will further hamstring DoD’s ability to innovate. There is also a corresponding gap in physical science and technology (S&T) infrastructure spending, impeding the services’ ability to keep up with development and testing requirements. According to a 2017 Defense Science Board study, the average Army lab is 50 years old. The department should increase spending to modernize infrastructure that is deemed critical to keeping a U.S. edge in key technology areas.¹²

8. Increasing spending on the key drivers of innovation.

The department is not spending enough on the medium- to long-term S&T funding that will meaningfully advance defense innovation, or on the more near-term funding for fielding emerging capabilities. The Defense Science Board recommends that DoD should invest about 3.4 percent of its budget in S&T, keeping pace with high-tech industries that invest about 3.4 percent of sales revenue in research.¹³ DoD’s FY2021 and FY2020 budget requests for S&T were $14.1 billion, or approximately 2 percent of total spending—well below the 3.4 percent target. Meanwhile, the percentage of S&T spending as part of the overall Research, Development, Test, and Evaluation (RDT&E) budget has been steadily declining and is roughly 13 percent of the RDT&E budget, down from a ten-year high of 18.1 percent.¹⁴ Relatedly, funding for system development and demonstration in the R&D budget, which serves as a bridge for getting S&T prototypes into the force, fell to 15 percent of total R&D contract obligations, far below the historical average of 27 percent.¹⁵

9. Deepening the dialogue with industry.

Lastly, DoD leaders need to find ways to deepen their dialogues with current and potential partners in industry, both companies that are part of the traditional defense industrial base and non-traditional partners, for instance commercial technology companies in places such as Silicon Valley, Austin, and Boston. These in-depth and sustained dialogues should focus on increasing industry’s understanding of DoD’s highest priority problems, and on DoD’s understanding of the technological art of what is possible, which will inform how DoD defines its requirements. DoD also needs to increase industry buy-in to the hard program and budget trade-offs that will need to be made to safeguard U.S. national security. While care must be taken to avoid the sharing of information that could bias the awarding of competitive contracts, this should not be used as an excuse to keep such conversations from happening, because deepening the DoD-industry dialogue is essential to the U.S. military’s future success.

In sum, it is clear that important progress has been made, particularly in identifying the strategic threat, developing mechanisms to scout for cutting-edge technologies, providing opportunities for non-traditional companies to participate in tech demonstrations and capability prototyping, seeding some small digital innovation hubs across the department, and offering some much needed encouragement in documents such as the National Defense Strategy and public statements. But the department as a whole has fallen short in taking the more substantial steps needed to prepare for the high-tech competition and safeguard the U.S. military’s edge. Despite the genuine sense of urgency expressed by a number of DoD leaders, too little is being done too slowly, with inadequate results.

A new administration provides a unique opportunity to implement a number of additional reforms to build on the progress that has been made, and to address some of the challenges that continue to hamstring the department. DoD must move the needle farther and faster—including making significant tradeoffs in what the United States buys and how it fights—if U.S. armed forces are to be capable of deterring and, if necessary, prevailing against the great power threats that the nation will face in the coming decade and beyond.

Sharpening the U.S. Military’s Edge: Recommendations for DoD Leadership and Congress

In order to sustain and extend the U.S. military’s warfighting edge, the next Secretary of Defense must give the highest priority to galvanizing the DoD leadership to pursue a clear set of measurable goals. This will require sustained focus and action from key leaders; greater clarity on roles, responsibilities and accountabilities; more substantial investment in big bets; reshaping the workforce to be more tech-savvy and agile; and changing organizational cultures to reward the development and adoption of new concepts and capabilities that yield clear advantage. Ultimately, the department must be much more aggressive in pursuing this agenda, including being willing to take some short-term risks to invest in game-changing capabilities that will ultimately prevent far greater strategic risk in the longer term.

1. Make maintaining, and eventually extending, the U.S. military-technological edge the department’s highest investment priority.

The next Secretary of Defense should make accelerating the fielding of capabilities that will safeguard the U.S. military’s edge over the next decade and beyond the department’s top investment priority. The Secretary should begin by announcing a number of big bets that will drive investment and ultimately determine whether the U.S. military keeps its edge in the next decade. By way of example, this agenda could include (1) a secure, resilient C4ISR network of networks capable of supporting the joint force in an A2/AD environment; (2) AI-enabled decision support to ensure that commanders and operators can make decisions better and faster than the adversary; (3) fleets of integrated autonomous systems that can team with manned platforms to perform critical functions while reducing the need to put service members at risk in the most lethal environments; (4) dramatically increasing and diversifying long-range precision fires to complicate and overwhelm adversary attack planning; (4) manned and unmanned logistics solutions that support a more distributed force; and (5) defensive cyber, electronic, and kinetic capabilities that meaningfully improve the survivability and combat-effectiveness of legacy platforms in an A2/AD environment. Whether or not these are the right big bets can and should be debated. The important thing is for the department leadership to decide and coalesce around a set of big bets, and then to pursue them relentlessly and urgently in service programs and budgets.

The DoD leadership team should then develop an implementation plan to make these critical capabilities a reality. This plan should include a realistic set of measurable goals, implementation strategies and performance measures, and a clear delineation of associated roles and responsibilities. The Secretary should be clear on who is empowered to do what and on who is accountable, as well as on how incentives will be realigned to support the plan’s success. Empowered, accountable leadership focused on advancing a clearly defined DoD agenda will be essential to keeping and extending the U.S. military’s advantage against great power competitors.

2. Choose and empower a team of leaders who are capable of and committed to delivering on this effort.

In order to accelerate the pace and scale of progress, it will be imperative for the next Secretary to appoint a team of senior officials who meet the following criteria: deep expertise and competence in their areas of responsibility; proven leadership in empowering teams, listening to diverse views, making tough decisions, and delivering results; mission-driven and able to work well in a team of strong peers (possibly applying President Barack Obama’s opening guidance to his transition team: “No ego, no drama, this is not about you”); and diverse backgrounds, experiences, and perspectives that will ultimately contribute to better decisionmaking and organizational performance.

This team will need to develop a shared understanding of role clarity and be fully empowered and resourced to deliver on its assigned responsibilities. In addition, given the difficulty of the task and the time needed for change management to take hold, the Secretary should ask senior civilian leaders to commit to longer tours of duty than the average 18–24 month stint of a political appointee, and should engage military leaders on whether longer tenure in some critical military positions should be considered (bearing in mind Admiral Hyman G. Rickover’s decades-long effort to create the nuclear Navy).

3. Devote considerable senior leader time and bandwidth to sharpening the U.S. military’s technological edge, and empower the Deputy Secretary and Vice Chairman to drive this agenda forward day to day.

Drawing on best practices from the past, the Secretary should empower the Deputy Secretary of Defense, in partnership with the Vice Chairman of the Joint Chiefs of Staff, to take point on driving forward the military-technological innovation agenda day to day and across the department. The Secretary should establish an Advanced Capabilities and Deterrence Board (ACDB), modeled on the Advanced Capabilities and Deterrence Panel established by Secretary Hagel in 2014 to provide oversight of technology development and operational and organization reform efforts focused on advancing the Third Offset Strategy.¹⁶

The ACDB, co-chaired by the Deputy Secretary and the Vice Chairman, should oversee multiple lines of effort, including strategy, operational concepts, wargaming and experimentation, information management, DoD-intelligence community integration, and a new long-range research and development planning program for sustaining the U.S. military’s technological superiority. The ACDB’s goal should be to align key civilian and military leaders on a shared agenda, develop a detailed implementation plan, build buy-in and ownership for their respective elements of the plan, and strengthen senior leader engagement, coordination, and accountability for delivering superior capabilities to the warfighter as quickly as possible.

This body will provide top-level oversight, coordination, and guidance on developing a competitive strategy to achieve and sustain U.S. technological superiority. It will accelerate the development of operational concepts through wargaming and experimentation, assess the performance of technology development and prototypes in big bet areas in order to make adjustments in investment portfolios, and review program and budget decisions to ensure their alignment with the overarching goal. This work will become even more important in a more budget-constrained post-COVID environment and as the department prepares for increasingly joint multi-domain operations.

The Secretary should also empower the Under Secretary of Defense for Research and Engineering (USD[R&E]) to establish an innovation council to align S&T, R&D, and other tech innovation efforts and develop a clear roadmap. This council should bring together the whole innovation ecosystem, including the service labs, the JAIC, DIU, DARPA, and others to ensure that the department’s various efforts are aligned to priority areas, have measurable goals and timelines, and have clarity on who is responsible and accountable for delivering what. This council could also be a forum to share best practices, gain focus and efficiencies in RDT&E spending, and drive greater jointness and interoperability. Importantly, the council’s goal should be collaboration, not consolidation. Having some “free radicals” in the system—for example DDS, Kessel Run, and JAIC—is important to creating the competition of ideas and approaches necessary to accelerate innovation.

As the department moves toward a more joint, multi-domain approach to warfighting, the Secretary should also empower the Vice Chairman, supported by the Director for Joint Exercise, Training, and Assessments (J7), to coordinate service efforts, identify areas of interdependency (such as Joint-All-Domain Command and Control and cross-domain fires), and bring this work to the ACDB for review. Secretary of Defense Mark T. Esper’s charge to the J7 to develop a joint warfighting concept that drives force experimentation, the Joint Requirements Oversight Council, and development of the defense program is an important start—as long as it is backed up by rigorous analysis and sustained senior leader commitment.

Lastly, the Deputy Secretary and Vice Chairman should set up a less formal working group of innovative, mid-career officials (05/06s and GS14–15s) from the services, combatant commands, acquisition, and other offices akin to the “Breakfast Club” established by Bob Work when he was Deputy Secretary. Their responsibility should be to look out across the DoD enterprise and raise new ideas and technologies with each other as well as with the Deputy Secretary and Vice Chairman. These individuals should be chosen for their ability to serve as advanced capability and concepts ambassadors for their respective organizations. They would also take back to their organizations new concepts and technology ideas, thus spreading a culture of innovation.

4. Double down on and strengthen the links between concept development, wargaming, prototyping, field experimentation, and requirements.

Once the Secretary sets the high-level priorities and creates mechanisms to keep sharpening-the-edge efforts on track, the most important thing the department can do is invest heavily in concept development, wargaming, and experimentation. This is a long pole in the tent to radically transforming the way the United States fights. If the services simply use new technology to enhance old concepts of operations, this will produce change only at the margins. Instead, the department must develop fundamentally new ways of fighting and use operational analysis and experimentation to refine these concepts, drive requirements and tech R&D, shorten development timelines, and buy down risk. Industry should be involved in this process, so that it understands, is aligned with, and is bought into the department’s future vision, priority mission areas, and new requirements.

DoD needs a much more integrated, mutually reinforcing, iterative approach to concept development, wargaming, prototyping, experimentation, and requirements definition. Robust concept development should drive experimentation to refine requirements and accelerate emerging capability development. Rapid prototyping of these technologies will, in turn, reduce risk, generate data to improve modeling and simulation, and provide essential tools for field experimentation to test the new concepts and capabilities. Finally, iterative wargaming will help refine operational concepts and develop operationally relevant requirements. Creating this virtuous cycle will sharpen requirements definition for Major Defense Acquisition Programs (MDAPs), accelerate the transition of promising prototypes to production by generating a clear demand signal, build buy-in from senior leadership to make difficult program and budget tradeoffs, and begin to shift service cultures and warfighting approaches.

Leveraging this approach will require greater coordination within and between the services, strategic direction and top cover from senior leadership, and greater investment in analysis, wargaming, and experimentation. It will also require robust funding from Congress.

Each service should empower a cross-functional team that brings together strategy and concept developers, technologists, operators, and acquisition officials to design and execute an integrated plan to leverage analysis, wargaming, and field experimentation at scale.

The services and OSD should also put more resources—both funding and brainpower—into the development, testing, and refinement of new deterrence and warfighting concepts. This will require a strong push from the top, while at the same time empowering creative work inside and between the services from the bottom up. Senior leaders must make wargaming and analysis a priority, as exemplified by Marine Corps Commandant General David H. Berger in the “Force Design 2030” report.¹⁷ Every service chief should send a similarly strong signal to encourage conceptual innovation and begin making the necessary investments, supplemented by leveraging the Warfighting Lab Incentive Fund.¹⁸

The department should also expand the use of operational analysis, including virtual and mixed-reality simulations, to test concepts and technologies at lower cost. Finally, DoD should take advantage of cutting-edge industry assets. Many of the leading defense companies have state of the art simulation and wargaming centers that can play any system and can help the department test experimental capabilities and refine operational concepts.

5. Embrace the imperative to make hard choices.

After the DoD leadership determines what it needs to buy to keep and extend the joint force’s edge, it must make the difficult tradeoffs to create room in the program and budget, including by undertaking a fundamental scrub of MDAPs.

Currently, the United States is under-investing in the new technologies and capabilities that will ultimately determine success in the future security environment, and it is over-investing in legacy platforms and weapon systems, many of which lack the range, survivability, resilience, and lethality to be combat-effective in an A2/AD environment. Even if some 70 percent of the force in 2030 will comprise legacy systems, the department’s ability to leverage and integrate critical emerging technologies in the coming decade will determine whether or not the force is able to maintain its edge against great power competitors in a much more contested and lethal environment.

In order to make the tradeoffs necessary to position the United States military to compete, deter, and win, department and service leadership must answer four fundamental questions.

First, for every major acquisition program, where is the “knee in the curve”? At what point does it make more sense to forgo the n+1 major weapons platform in order to invest those resources in the cutting-edge technologies and capabilities that will keep the existing n platforms survivable, combat-relevant, and effective? How does the United States strike the right balance between buying more platforms to build capacity and ensuring that it invests enough in developing and integrating the new capabilities the military will need to maintain its edge and buy down risk in the future? For example, if the cost of a single additional aircraft carrier could cover the cost of electric weapons for ship defense, unmanned aerial vehicles (UAVs) for ISR, refueling and electronic warfare, and new longer-range penetrating weapons that would buy back range for the tactical air wing to strike distant and heavily defended targets, would it be smarter to trade that extra carrier for a slightly smaller, but much more capable and survivable fleet? The same question can be used to frame the tradeoffs associated with buying more amphibious ships for the Marine Corps, fighter aircraft for the Air Force, and helicopters for the Army, in addition to any number of other platforms.

Second, the DoD leadership must scrub even top priorities, such as modernization plans for the U.S. strategic nuclear deterrent and force readiness, to identify opportunities for meeting priority objectives at lower cost. In 2017, the Congressional Budget Office estimated that fully modernizing the U.S. nuclear triad will cost more than $1 trillion over 30 years.¹⁹ Can the United States modernize its nuclear arsenal to maintain a safe, secure, and effective nuclear deterrent at a lower price tag? Similarly, are there new ways to enhance force readiness, such as widespread use of AI-enabled predictive maintenance, at substantially reduced cost? No stone should be left unturned in identifying additional resources for this urgent task.

Third, the Secretary should consider working with each Service Secretary and Chief to define a set of actionable goals to drive more rapid adoption of transformative technologies. For example, the Marine Corps could decide it needs to field, by the end of the FYDP, a newly conceived Special Purpose Marine Air-Ground Task Force built around human-machine teaming, leveraging AI and unmanned systems to the maximum extent possible. Or the Navy could aim to reimagine the future naval battle group to integrate new classes of unmanned underwater vehicles (UUVs), USVs, and UAVs alongside a new mix of large and small surface combatants and submarines. Or the Secretary could announce that each service must field by the end of the decade an integrated, cross-domain fires solution—critical to driving joint command and control. These illustrative examples may or may not be the right answers, but setting well-defined goals with clear milestones and leaders who are accountable for results can be a powerful way to focus bandwidth and resources so that desired outcomes are achieved faster.

Fourth, given the near-certainty of tighter budget constraints, in what domains and geographies should the United States choose to accept and manage an additional degree of risk? And in what parts of the force structure, and in what time frames? Historically, the desired defense program is always larger than what the actual budget can support. Setting priorities is far easier than deciding where and how to manage risk when resource constraints restrict strategic appetite. The Secretary should task the Chairman and the Joint Chiefs of Staff to provide concrete recommendations on where and how the United States should be willing to accept and manage more risk in a given domain or geography, based on thorough wargaming and analysis, in order to shift resources toward new capabilities that will sharpen the U.S. edge.

6. Increase and incentivize funding for innovation.

Once the department determines which bets to place and how to make space in the budget to pay for them, it must then channel and stimulate funding for acquiring and fielding innovative technologies. It is past time for the department to signal to industry, U.S. allies, and adversaries that it is serious about its innovation agenda.

The Department should start by increasing S&T spending (budget activities 6.1–6.3 in the RDT&E budget), which is critical to ensuring long-term military-technical superiority. The Secretary should implement the Defense Science Board recommendation that DoD invest at least 3.4 percent of the total budget in S&T.²⁰ In addition, funding for the 6.5 (systems development and demonstration) account in the R&D budget, which provides a critical bridge from prototype to production, should also be increased to at least the historical average of 27 percent of the R&D budget.²¹ More robust S&T and R&D funding, aligned with department’s highest priorities, is essential to accelerating DoD’s ability to leverage cutting-edge technologies developed by universities, research labs, commercial tech companies, and traditional defense firms.

In order to attract the best of Silicon Valley and other tech hubs across the country, however, the department must also generate a clear demand signal and create more substantial recurring revenue opportunities for these companies. One approach is to announce the department’s big bets and put substantial funding behind each one, teeing up a series of opportunities for companies to compete for development, prototype, and ultimately production contracts. This approach would also enable companies to engage their ultimate customers earlier and more strategically, and it would send a strong signal of future DoD funding and sponsorship, which is critical to securing private sector capital.

While DoD should avoid trying to pick winners and losers among tech startups as an investor, it should do all it can to wield its influence as a major customer. Every dollar DoD provides in prototype awards can attract up to 10 dollars in equity capital.²² As the economic impact of COVID-19 restricts private capital flows, DoD has a unique opportunity to use its purchasing power to attract additional U.S. private capital investment and block adversarial investments in critical dual-use capabilities.

The department should also double down on proven innovation efforts by increasing funding for organizations such as DIU, DDS, Kessel Run, and the JAIC, and in some cases by seeking to replicate them more broadly across the services and the department. For example, DDS should be substantially expanded to be a disruptive force of software coders that can be leveraged across the entire department, and the JAIC should be grown into a true AI Center of Excellence for the department as a whole. DoD needs to more rapidly scale what works through a combination of growing and proliferating proven models, particularly in digital innovation.

In addition, the department should incentivize the prime contractors to spend more of their own money on R&D, to invest in innovative startups that are aligned with their mission focus, and to serve as channel partners to help smaller tech companies navigate to find and serve DoD customers. The annual free cash flow of defense prime contractors is around $20 billion,²³ and many have set up venture or technology scouting platforms to invest in cutting-edge dual-use capabilities. Many have also strengthened their own competitive positions and offerings by bringing in smaller tech companies as partners or suppliers on DoD contracts. These strategic partnerships between the primes and smaller tech companies can be important, mutually beneficial relationships. While startups can provide the primes with tech talent and cutting-edge capabilities to keep their platforms and systems relevant, the primes can provide a critical bridge across the valley of death and a source of recurring revenue to keep these non-traditional suppliers in the defense game.

Finally, the department and Congress may want to consider a new type of funding authority that supports both the development and testing of new digital technologies. For many emerging software-defined technologies, the distinction between research and development, operations and maintenance, and testing and evaluation (T&E) is artificial. Many emerging capabilities, particularly software, will require continuous, iterative testing. Meanwhile, for certain capabilities such as deep learning, DoD does not yet have well-established methods of testing and will, therefore, be developing the capability and the ability to test it in parallel. This will require S&T dollars for research on new T&E approaches. If left unaddressed, testing will become a critical barrier to fielding emerging capabilities in an operationally relevant time frame.

7. Bridge the valley of death.

Crossing the valley of death—the gap between delivering a successful prototype and winning a production contract—has long been the biggest barrier to fielding emerging capabilities at scale. Addressing this challenge will require new types of funding to help companies transition from a successful prototype that best meets a high priority need to an established program. It will also require stimulating demand from end-users in the military services in order to secure the necessary funding to produce and field the capability at scale.

The department should work with Congress to increase the availability of bridge funds to rapidly scale the best prototypes into full-fledged programs. One potential approach would be to ask Congress to authorize funds, managed and allocated by OSD R&E, for which each service could compete in order to sustain capability development in the highest priority areas. This funding would enable companies to conduct further iterative development and experimentation while refining requirements with operator input, which would almost certainly accelerate the fielding of capabilities that actually meet the needs of the warfighter on day one.

Each service should also consider establishing a cross-functional team responsible for reviewing the performance of its various emerging technology investments in order to identify failing or underperforming initiatives from which to divest, as well as high-performing, high-priority efforts to accelerate with additional funding. Adopting such a portfolio management approach is a private sector best practice that would ensure more effective resource allocation and faster progress. That said, it would also require Congress to provide greater flexibility for reprogramming within a portfolio. This should be a legislative priority for the next administration.

8. Recruit, train, and retain a tech-savvy workforce.

The “secret sauce” of the U.S. military and the DoD more broadly has long been its people. In an era of profound technological disruption, the department urgently needs to recruit, train, and retain a more technologically literate workforce, both military and civilian. Critically, the department needs skilled subject matter experts—from computer scientists and engineers to software stack developers, AI application coders, product managers, data scientists, and data management experts. But it also needs program managers, contracting officers, operators, human resources professionals, lawyers, strategists, and concept developers who all know enough about technology to acquire, test, field, and trust it.

For technologists specifically, the department should conduct a thorough review of what types of technology talent are needed throughout the innovation network (service research labs, new innovation organizations, etc.) and throughout the product lifecycle, and of where different types of individuals will have the most impact—based on mission set, current talent shortages, and ability of managers to effectively leverage new personnel. DoD should then start to fill these gaps by more fully utilizing the authorities Congress has already provided. To do this, DoD should use incentives such as scholarships and debt forgiveness, and vehicles such as highly qualified expert (HQE) appointing authority and the Intergovernmental Personnel Act (IPA). For this to occur, DoD must also train and incentivize its human resource professionals to use these more flexible hiring authorities more frequently and at scale, and to streamline the hiring process for tech personnel as much as possible.

DoD also needs to create new career paths to allow science, technology, engineering, and math (STEM) graduates from the service academies and Reserve Officer Training Corps (ROTC) programs to serve their country as technologists, rather than being directed only into line officer billets. For military members, this may include a secondary specialty in innovation or S&T that can be tracked throughout their careers as the next generations of military leadership are groomed. The fastest way to bolster the technical expertise of the military is to stop squandering the talent already in uniform and take immediate steps to permit those with demonstrated technical skills to remain and get promoted in technical roles.

To retain and grow the tech talent pool, the department should consider partnering with nongovernmental entities to source highly skilled personnel willing to do a tour of duty in the national security space. In addition, OSD and the services should seek to increase the exchange and fellowship opportunities for career civilian and military technical talent to spend time in leading private sector companies. Their expertise will then be brought back to the department, while bridges are built between the two communities.

More broadly, the department should expand in-person and virtual technical training across OSD, the services, and other components to bolster tech literacy. The department ought not to reinvent this curriculum in-house; there is an extensive repertoire of inexpensive and excellent technical education now available on online commercial platforms and from leading academic institutions. These resources can help align the department with commercial practices for modern software and ensure it keeps pace with the industry as it rapidly evolves.

The department could also consider standing up a technological training center that could provide tech literacy courses on key topics including AI/machine learning, cybersecurity, and software development. Organizations such as DDS and the JAIC could be leveraged to consult on standing up the center and could help scout and supplement the training curriculum.²⁴

It will be particularly important to train the acquisition workforce on how best to manage emerging technology programs. DoD must do a better job of upholding its responsibility to prevent waste, fraud, and abuse in major acquisition programs, as it also meets the pressing need to field critical, emerging technologies fast enough to compete with and prevail against future great power rivals. To do so, DoD could create a sub-cadre of acquisition professionals—called DoD product managers—focused on software-driven systems and emerging technologies, and trained to leverage best practices from commercial sector technology development and program management. This cadre would receive tailored training, performance metrics, incentives, promotion criteria, and career paths to create a culture that would prioritize agility, speed, risk-taking, and accountability. Over time, these product managers would become the “green berets” of the new software-defined acquisition landscape.

Finally, the department must create a culture of innovation that helps retain tech talent and rewards the workforce for embracing new technologies and approaches. The DoD 2019 Office of Personnel Management Employee Survey clearly shows a need to address challenges in recognition of performance, merit based promotion, pay raises, and lack of dealing with poor performers.²⁵ If the department wants to be able to recruit and keep the best talent, DoD has to offer a 21st century work environment that is more in tune with innovation and human capital best practices from the private sector.

9. Build greater trust and support in Congress.

It is essential to reimagine the relationship between DoD and Congress in a way that respects and protects the latter’s prerogatives while also enabling DoD to adopt critical emerging capabilities with greater flexibility and speed.

Defense appropriators and authorizers must be willing to let the department accept more risk in the short term, support the Pentagon when it makes hard but necessary choices to reduce or kill lower priority programs, and help accelerate the development and fielding of new capabilities critical to maintaining the U.S. military edge.

More specifically, Congress should provide the services with robust funding to field small numbers of prototypes for early stage concept development and experimentation without requiring precise clarity on how these systems will ultimately be used or what their final requirements will be.

In addition, DoD should also seek an authority and funding to initiate design for production without new start authorization as long as funding is capped, competition is sustained, and no long-term commitment is made. Early flexible funding would provide the ability to develop emerging technologies in a manner that allows for iterative feedback from operators and robust field experimentation—all of which will help ensure DoD get the requirements right before moving to full-scale production.

Congress should substantially increase reprogramming ceilings to enable the services and OSD to do better portfolio management and drive value based on evolving operational needs and technological performance rather than out-of-date metrics.

Finally, Congress should signal that it will not reverse the Middle Tier of Acquisition (MTA) or Other Transaction Authority (OTA). Some in the acquisition workforce do not believe these new authorities will survive and fear that their programs will be stuck in the middle and lose significant time. These personnel are, therefore, using less flexible authorities because they believe doing so will lower risk over the course of the program.

Building trust is a two-way street, and there are also a number of steps the department should take to increase transparency and build buy-in with members of Congress. First, the Secretary of Defense should engage key members of the defense committees and congressional leadership on the importance and urgency of sharpening the U.S. military’s edge, the stakes involved, and DoD’s proposed plan of action. These members should be treated as critical partners in the department’s efforts to develop cutting-edge concepts and capabilities.

In addition, the services should regularly invite relevant committee members and leadership to observe wargames, technology demonstrations, and field experiments. This will bring members into the process earlier and equip them with the conceptual framework to understand and hopefully support not only new investments in critical emerging capabilities but also difficult divestment decisions.

Finally, the services should strive for greater alignment in explaining to Congress how their respective decisions on planning, concepts, requirements, technology development, and acquisition support the overall effort to sharpen the edge of the joint force. DoD leadership, for its part, should strive to present an integrated plan for how it is advancing critical capabilities, including how risks are being managed over time and what organizations and individuals are responsible for executing specific elements of its integrated plan. This will give Congress greater ability to hold DoD accountable for results, as well as greater confidence in the department’s vision, its ability to execute on its priorities, and ultimately its ability to deliver promised capabilities to safeguard the U.S. military’s edge well into the future.

Conclusion

The Department of Defense must reimagine how it fights and make the technological and operational investments necessary to secure its military-technological edge for the coming decades.

In the post-pandemic environment, mounting budget pressures will make the necessity of focused leadership and urgent tradeoffs all the more stark. Unless the next administration gives greater priority and urgency to reallocating both leadership bandwidth and resources within the DoD program and budget to this end—and makes Congress much more of a partner—it will fall short on this essential endeavor.

The stakes could not be higher, yet opportunities abound. After all, the most important thing the United States can do to compete effectively against China is to invest in the drivers of U.S. competitiveness. If it makes smart investment choices, the department can play an important role in this whole-of-nation effort by: investing robustly in critical areas of science and technology, and research and development, including 21st century infrastructure such as 5G; supporting higher education in critical STEM fields; fueling the creation of high-paying jobs in the defense industrial base; backing smart immigration policies that attract and keep the best and brightest from around the world; and stimulating job growth in the emerging technology areas that will define the future. This is a moonshot moment for the United States, which needs the national leadership, whole-of-government approach, and smart investment plans to inspire and enable America to compete and win globally.

The next administration has a unique opportunity to harness the current crisis to make a down payment on a fundamentally new future—one that ensures the United States maintains and extends its military-technological edge and can protect its citizens, interests, democracy, and allies and partners from authoritarian great power rivals.

About the Authors

Michèle A. Flournoy is Co-Founder and Managing Partner of WestExec Advisors, a strategic advisory firm. She served as Under Secretary of Defense for Policy from 2009 to 2012 and was a Co-Founder and CEO of CNAS, where she now serves on the Board of Directors.

Gabrielle Chefitz is a Senior Associate at WestExec Advisors. She previously worked as a research assistant at the Washington Institute for Near East Policy and earned her master’s degree in public policy from the Harvard Kennedy School of Government.

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From July to December 2020, CNAS will release new papers every week on the tough issues the next NDS should tackle. The goal of this project is to provide intellectual capital to the drafters of the 2022 NDS, focusing specifically on unfinished business from the past several defense strategies and areas where change is necessary but difficult.