DOD SCIENCE AND TECHNOLOGY

STRATEGY FOR THE POST-COLD WAR ERA

5. KINKS IN THE STRATEGY

THE PROMISE OF THE

COMMERCIAL MARKETPLACE

U.S. national security is dependent not only on the strength of our military forces, but also of our economy.¹ As such, it can be argued that our economic growth and strength have been somewhat restrained because of the past expenditures on military systems, diverting resources from commercial industry to the military. For example, in 1988 over 65 percent of federal R&D outlays were allocated to defense-capital, personnel, materials-compared to less than 0.2 percent for industrial development.²

However, it can also be argued that through spinoffs, R&D investments, re-investment, and infrastructure building, the effects of diverting resources to military needs have not been as bad as some critics claim.³ Whatever forces shaped our country's economic growth in the past, however, we must live with less defense spending than in the past and draw on the commercial marketplace to generate key technologies.⁴

It is the belief of some that the majority of R&D should be conducted in the private sector rather than in government laboratories. They argue that this will exploit the efficiencies brought about by the competitive nature of the marketplace. In addition, a close coupling exists between commercial R&D and the marketplace, which further drives these efficiencies.⁵

The technological superiority of high performance military systems must be obtained at a reasonable cost. It is the administration's policy to "use the same technology and the same industrial base, where appropriate, to build military and commercial products."⁶ Chapter 3 detailed several strategies to strengthen the commercial-military industrial base. These strategies included developing dual use technologies and processes, sustaining investment in high priority technologies, exploiting commercial technologies, strengthening technology transfer, and fielding Advanced Concept Technology Demonstrations. It is through these strategies that the U.S. government intends to support the foundation for future weapon systems. Perhaps the quintessential example of such a strategy is that of what was done with military specifications.

In 1994 when the Department of Defense reversed it's long-standing policy of using only military specifications ("milspecs") for weapon systems, over 31,000 detailed specification standards were changed overnight.⁷ The military services were directed to use commercial (or performance based) specifications in lieu of milspecs "unless no practical alternative exists." This change has dramatically changed the way defense acquisition is being performed. For example, the number of milspecs for the Air Force's SBIR (Space Based InfraRed) system has been slashed from 150 to 2; the Navy's SLAM missile decreased from 104 to 6; and the Army's BCIS Phase 1 antifracticide digital system dropped from 467 to 194.⁸

However, it remains to be seen what savings are to be found from the Federal Acquisition Streamlining Act of 1994. Estimates of 50 percent savings are envisioned by some. If this is true, and if defense readiness is not compromised by the changes, then indeed the commercial marketplace's influence cannot be denied. But the fair skies painted by some when exploiting the commercial marketplace should not construed as being universally accepted or even desirable. The flow of defense conversion is turbulent, and care must be taken when sailing into uncharted waters.

THE FAILURE OF THE

COMMERCIAL MARKETPLACE

The commercial marketplace exists to make a profit⁹-not to be "nice," or to support a lofty, ethereal goal, but for one reason alone: to make a profit. The bottom line of the commercial marketplace is "what is the ROI?"-the return on investment.¹⁰ When a potential for profit is discovered, the resources of the marketplace are thrown on maximizing the ROI. This is precisely why the Department of Defense should exploit the commercial marketplace: there is no better way to leverage the most efficient economic system in the world than by taking advantage of technology spinoffs for "free."

But note that the operative word is exploit. For with the alluring promise of a "free" infrastructure, DOD must learn yet a deeper lesson-that the commercial marketplace won"t do something for nothing. This is illustrated in the boxed example.

THE FAILURE TO EFFECTIVELY EXPLOIT

DEFENSE LABS

Innovative ideas-concepts that may be destined to ignite a Revolution in Military Affairs (RMA)-provide the winning edge in a future war. In a perfect world, the best solution for a warfighter is to instantly deploy weapons that cause an RMA. These weapons would overwhelm an adversary by striking the enemy quickly, without warning, and with unparalleled force.

Truly revolutionary weapons would forever change the face of warfare. New weapons result in new strategies, new goals, and even a new definition of what it means to "win" a war: Is bombing a command and control center considered more or less of a success than incapacitating an adversary's entire financial system? Such is the power of raw, new ideas that can mature into an RMA. And it is in our nation's best interest to bring them rapidly to the field and into the hands of the warfighter.

However, as discussed in chapter 2, these creative ideas may percolate in a research laboratory for decades until they are brought to fruition. Further, it is seldom the invention of the weapon that causes an RMA; rather, it is the consequence of the infrastructure, or the strategy and application of using a new weapon. Recall that it was the infrastructure associated with ballistic missile technology, and not the invention of the atomic bomb, that caused an RMA. Thus, a laboratory that efficiently transitions ideas out of a basic research stage to an application is key to having a successful R&D program. And that should be the strength of maintaining a defense laboratory system.

DEFENSE LABORATORIES

In 1980, Director of Defense Research and Engineering (DDR&E) Dr. William J. Perry emphasized that the government must control its research and development effort. Because the growing complexity of defense systems requires understanding the technical issues, in-house technical organizations provide a means to ensure competent leadership. Dr. Perry's goal was to "take maximum advantage of all government, industry, and academic sources to develop the best possible systems and equipment to support our Defense needs. Our in-house technical organizations perform a special role which can be best described as providing the leadership in carrying out these programs."¹¹

The DOD laboratory system has evolved over the past two centuries to exploit science and technology fundamental to the unique needs of the services. S&T has been assimilated throughout the services to address operational needs, and DOD labs have accomplished this by successfully communicating with users, collaborating with outside agencies, building (and applying) the technical base, and by developing technically experienced leaders.¹²

It is the White House's National Policy to use the DOD laboratories to:

• Identify the connections between warfighters' needs and technological opportunity;
• Rapidly respond with high-quality technical solutions to warfighters' needs as they develop; and,
• Provide continuity and direct support to acquisition commands-the Program Executive Officers and program managers-through technical expertise, contract management, work force training, and staff support.¹³

One way the laboratories accomplish this is by sending technical people out to the field and by rotating warfighters into the R&D structure to provide cross-feed into the development process. This provides a means to keep in close touch with Aoperators,' and to solve problems encountered by the warfighter. This is absolutely crucial as the whole purpose of having an R&D structure is to ultimately support the warfighter.

However, in recent years DOD labs have been criticized for being unresponsive to warfighter needs. One of the major reasons for this unresponsiveness was a lack of efficiency. In a 1992 S&T strategy discussion between DDR&E and the military services, the issue of using alternate management options was presented as a way to enhance laboratory efficiency. The services identified three "limiting factors" that determined if a laboratory was inefficient: 1) an unclear corporate purpose; 2) unproductive people; and, 3) unrecognized value.¹⁴ Thus, one strategy for increasing laboratory efficiency is to get rid of the limiting factors.

CRITICAL SUCCESS FACTORS

The Need for a Clear Corporate Purpose. Conducting research can be an enthralling, satisfying experience for scientists and engineers. Often, an individual immersed in an intricate aspect of research literally can spend years following a thread through previously uncharted ground. When this happens, too often the connection between the initial purpose of research and the final goal is lost. The individual may get caught up in the details, and the relationship between research and purpose becomes murky.

In the same manner, a laboratory's "macroscopic" research thrust may become unfocused, just as an individual researcher may become unfocused in a "microscopic" sense. Unless a clear sense of mission is understood throughout the organization, a laboratory may lose its sense of corporate purpose. The mission and end-product of a laboratory must be clearly defined at every level. The individual researchers must know where they fit in and how the laboratory accomplishes its S&T goals. For example, NASA's Jet Propulsion lab has a clearly defined corporate purpose of excellence in satellites and space technology; the Department of Commerce's National Institute for Standards and Technology (NIST) is a center of excellence for technology, measurements, and standards for industry. In the same manner, the DOD laboratories must continuously reinforce their S&T purpose as being preeminent for land, naval, air and space forces.

The Need for Productive People. World-class research is accomplished by world-class people, and excellence in research depends upon the quality of people. Facilities are also important for conducting world-class research-laboratories, material, supplies and equipment-but unless the right people are involved, the best facilities in the world will not enable second-rate researchers to perform as well as first-rate people.

Research supporting U.S. national security goals demands the very best talent. The stakes are high, and the science is complex, so the nation must employ only the very best people in advancing national security S&T. As discussed in an earlier chapter, some of this talent is tapped by exploiting university, commercial and industry researchers. However, defense laboratories must also attract and retain world-class talent. To compete with nondefense laboratories for top-quality researchers, defense labs must go outside the normal civil service rules for hiring (and firing) people.

A recent study concluded that turnover of scientific talent in a research laboratory is a key indicator of success.¹⁵ A high-quality research lab typically turns over 6 percent of its personnel a year. A large fraction of this 6 percent comes from the low performers-those who are not contributing to the lab's corporate purpose and either quit or are fired for their poor performance. A smaller fraction of the 6 percent turnover comes from the high performers, those who contribute greatly to the lab's corporate purpose, but who leave the lab to pursue loftier goals. The vacuum at the top is filled by attracting new talent, identifying and promoting in-house talent, and investing in future prospects.

Management must continuously remain proactive in identifying and moving out low performers, or else the quality of research suffers. Because of restrictive government service rules, DOD labs may evolve from the 6 percent turnover model found in quality institutions to one that allows low performers to remain. This means that the percentage of top performers will decrease. A fraction of these top performers will continue to leave DOD labs-opportunity abounds for top talent-but unless a mechanism is present to deal with low performers in the government service system, the number of low performers will increase and mediocrity will set in.

The following chart illustrates this phenomenon, assuming a 6 percent turnover rate concentrated on the bottom performers (left) and on the top performers (right). Note that the percentage of top performers increases if the 6 percent turnover is concentrated on the bottom performers.

The percentage of top performers are increasing on the left, when the 6 percent turnover rate is concentrated on the bottom performers (i.e. every year 6 percent of the bottom performers leave the organization). When the 6 percent turnover rate is concentrated on the top performers (right), the percentage of bottom performers increases and the organization becomes mediocre.

Source: Air Force Chief Scientist

Efforts such as the National Performance Review (NPR) are currently underway to alleviate these problems inherent in the civil service system. One NPR result was the passage of legislation designed to target personnel issues by designating organizations as "reinvention laboratories." NPR recommendations also include allowing DOD labs to conduct their own recruiting, dramatically simplifying the classification system, design their own performance management system, and reduce the time to terminate low- performing employees. Other efforts pioneered at the China Lake Naval Weapons Center and NIST include establishing career paths in competitive areas, establishing pay bands, allowing for the use of local classification standards and for classification to be performed by managers, paying for performance, having flexible entry salaries, and establishing recruiting salaries.¹⁶ Additional personnel initiatives that should be instituted are currently used at NIST, but not yet in the DOD lab structure, including total compensation comparability, agency-based staffing, local direct hiring for high grades, retention allowances, extended probation, modified qualification standards, new occupational series, paid advertising and recruiting services, linkage of promotion to performance, supervisory pay differential, cash payouts, sabbaticals, and evaluation by contractor.¹⁷

In addition, management techniques such as putting service agencies under laboratory director control (such as procurement, contracting, civilian hire/classification, and other support services) are absolutely essential. Laboratory Directors need responsive support. When these services are "matrixed out" from other line agencies-no matter how efficient it may look on paper-matrixed functions simply will not be as responsive as when the service agency is directly accountable to a laboratory director.

The Need for Recognized Value. The final critical success factor is the need for DOD laboratories to have a clearly recognized value throughout their service, especially at the highest levels of defense R&D. This value is diminished when the lab has multiple distinct reporting lines; that is, when the lab is not responsible to a single chain of command but to several different authorities. Some real-world examples include being simultaneously responsible to:

• A higher funding authority (that distributes money)
• A higher command authority (that gives policy guidance)
• A higher technical requirements authority (that gives technical guidance as to what kind and what mix of research needs to be accomplished-basic, applied, or advanced development)
• A higher personnel authority (that determines what type of personnel is needed at the lab-e.g. how many physicists, engineers, etc.).

Although multiple reporting lines have the perceived advantage of making the labs responsive, in reality the lab is forced to fight against a constant barrage of outside demands, some of which are not in line with the lab's corporate purpose.

Therefore, just as internally the Laboratory Director must be able to exercise a direct line of control, externally the laboratory must have a clear, direct reporting line to a relatively high-level of authority. For example, the following table shows the reporting level and technical reputation of several highly successful non-DOD laboratories:

Table 4. Importance of Reporting Level (Recognized Value) as a Success Factor

All DOD laboratories are currently constrained by Office of Personnel Management regulations, in effect, a "separate" reporting line that determines laboratory demographics. Commandwise, the Naval Research Lab (NRL) reports directly to the Assistant Secretary of the Navy through the Chief of Naval Research-a clear, single reporting line-and has a national reputation of excellence. The Army's Research Lab (ARL) reports directly to the Assistant Secretary of the Army. Although it does not have the national reputation as NRL, it is improving. The four Air Force "superlabs" (Armstrong, Phillips, Rome, and Wright) report to their respective Air Force Material Command (AFMC) center commanders for personnel concerns and report to the AFMC director of S&T and the AF deputy assistant secretary (acquisition) for program direction and budget; the AF labs have made nationally significant contributions (some for which they have not received credit) but have less of an in-house national reputation than NRL, focusing instead on leading industry teams to develop technology for Air Force needs.¹⁸

DOD laboratories must continue to ensure their value is recognized by both "owners" and Acustomers." Executive leadership can help and can greatly add to the lab's national reputation by ensuring the labs have a clear, direct line of authority (both externally and internally), and by having the labs report to the highest level possible. Only then can a laboratory be free to full-fill its true corporate purpose: supporting the warfighter.

THE FAILURE TO USE COMMON SENSE

WHEN CONDUCTING R&D

IMPROVING R&D EFFECTIVENESS

Although the evolutionary process of going from a creative idea to the application of a weapon system has been laid out in a sterilized format (in the form of 6.1 through 6.5 programs), in reality the procedure is much more complex. The process is not seamless. There is no one person who oversees a weapon system from idea to Initial Operating Capability (IOC), or in the vernacular, from "criteria to killer." Having continual, seamless oversight is one way to field a weapon system and ensure that every development phase is adequately mature, but because of the enormity of the problem, it is impossible in practice to do such a task.

Although much has been said about how the various elements of Program 6 overlap, there exist distinct "cultures" or "tribes" that rule over each stage of the development process-basic research, exploratory development, advanced development, acquisition, and procurement. Although there are no hard and fast rules about the qualifications of the people who may participate at each stage, for the most part the cultures are "stovepiped" in the sense that very little crossflow exists among the cultures.

For example, in the past, scientists-physicists, chemists, biologists, and applied scientists (who may be defined as engineers performing at the basic research level)-typically dominated the 6.1 (basic research) and 6.2 (exploratory development) research phase. Engineers, particularly mechanical and electrical engineers, populated the 6.2, 6.3 and some of the 6.4 phase. Acquisition specialists with some technical background are involved starting at the 6.3 level. The "operators," or warfighters, generally do not get involved until the very last phase, when a technology demonstration of the weapon system is being performed.

Such segregation may result in a perception of "hobby shopping" or "playing in a sand box" at the 6.1 or 6.2 level, because communication with the end-user-the warfighter, usually the one with the funds-is nonexistent. The S&T process may be entirely misrepresented to the warfighter because the huge investment of laboratory infrastructure may not be commensurate with the final product that the warfighter uses. This is realized at the national level in a statement from the National Science and Technology Council:

A balance of investments is needed at every phase of development to ensure that basic research results are exploited for military applications in a timely manner through technology demonstrations and transition. Further, since there are many performers, we must carefully manage our investments to make sure that we capitalize on all their strengths.¹⁹

A problem exists if a direct link cannot be shown from the creative echelons of a weapon system development phase (6.1 and 6.2) to the final product. Tis is not a new problem; Winston Churchill also recognized the essence of the conflict that existed between the basic researcher and the warfighter:

A hiatus exists between the inventor who knows what they could invent, if they only knew what was wanted, and the soldiers who know, or ought to know, what they want and would ask for it if they only knew how much science could do for them. You have never really bridged that gap yet.²⁰

Some concrete metrics have been used in the past to quantify the effectiveness of laboratories, including the number of PhDs at a lab, the budget, the total number of people, the unique facilities, the number and quality of universities near to the lab, the number of CRDAs (Cooperative Research and Development Agreements with industry), tallying the number of peer-reviewed papers, the number of citations the papers have received by other papers, the number of patents, and the number of awards given to the laboratory.²¹

The commercial world uses these metrics, plus another, to test the ultimate effectiveness of a lab: "The creation of new businesses or competitive advantage for quantum business growth [that] justifies the existence of a corporate R&D center, especially in these days of close scrutiny from corporate headquarters."²² The situation is no different in the Department of Defense. But instead of creating new commercial businesses, the DOD laboratories should be in the business of creating new breakthroughs for advanced weapons-weapons that will produce the next Revolution in Military Affairs. Thus the effectiveness for a defense laboratory should be measured by the success of the technological weapons in the field, success measured by winning the war.

Certainly DOD laboratories must contribute to other, less lofty goals than continually striving for creating an RMA. DOD laboratories have a place in identifying and exploiting those areas that the commercial market has ignored, and by optimizing and refining current weapon systems while advancing the state-of-the-art. This is akin to having a mix of ball players on a team, some who are solid base hitters, while others go for the home run; both are needed to win a game.

THE SKUNK WORKS APPROACH

The defense research establishment is controlled by legislative and regulatory constraints, some of which even seem to work against the purpose of having a laboratory system. There is much to be learned from studying commercial research organizations, and applying their ways of conducting research. One of the most successful advanced technology establishments in the world for rapidly evolving new concepts into engineering systems is the Lockheed "Skunk Works," located in Palmdale, CA. Skunk Works has come to be associated with an aggressive management style, characterized by the extremely efficient use of time by a small, dedicated group of highly skilled and creative scientists and engineers.

Skunk Works' efficiency is accomplished by having lucid, clearcut goals, which are derived from several focused, immutable strategies:²³

• Planned contacts-in the sense of being regularly scheduled and limited by "contract" with upper management-with market research teams and potential customers
• An optimized, custom-designed workplace located near-but physically separate from-company facilities
• A permeating sense of urgency, attention to detail, and quality
• A complete absence of "red tape"
• A short managerial chain-of-command, which not only allows the team to remain focused and decline urgent but unrelated projects, but also "flies top cover"-provides support at the application phase of the innovation process.

One criticism of Skunk Works is that it can thrive only in industries "subsidized" by the government, where high-risk endeavors are actually "only" pushing the state-of-the-art. But the Skunk Works philosophy of business is not limited to the aircraft industry or to pushing the state of the art. Several highly successful Skunk Works have been established in various major corporations, including in such unlikely places as automobile manufacturers and the Ballistic Missile Defense Organization's Clementine small-satellite group.²⁴

The Lockheed Skunk Works lives and dies by 14 operating rules, written over 50 years ago by Skunk Works founder Kelly Johnson, that govern the way they do business:²⁵

1. The Skunk Works program manager must be delegated practically complete control of his/her program in all aspects and should have authority to make quick decisions regarding technical, financial, or operational matters.

2. Strong but small project offices must be provided by the military and the industry.

3. The number of people having any connection with the project must be restricted in almost a vicious manner. Use a small number of good people.

4. Very simple drawings with great flexibility for making changes must be provided in order to make schedule recovery in the face of failures.

5. There must be a minimum number of reports required, but important work must be recorded thoroughly.

6. There must be a monthly cost review covering not only what has been spent and committed, but also projected costs to the conclusion of the program. Don't have the books 90 days late and don't surprise the customer with sudden overruns.

7. The contractor must be delegated and must assume more than normal responsibility to get good vendor bids for subcontract on the project. Commercial bid procedures are often better than military ones.

8. The inspection system as currently used by the Skunk Works, which has been approved by both the Air Force and the Navy, meets the intent if existing military requirements and should be used on new projects. Push basic inspection responsibility back to the subcontractors and vendors. Don't duplicate so much inspection.

9. The contractor must be delegated the authority to test his final product in flight. He can and must test it in the initial stages.

10. The specifications applying to the hardware must be agreed to in advance of contracting.

11. Funding a program must be timely so that the contractor doesn't have to keep running to the bank to support government projects.

12. There must be absolute trust between the military project organization and the contractor with very close cooperation and liaison on a day-to-day basis. This cuts down misunderstanding and correspondence to an absolute minimum.

13. Access by outsiders to the project and its personnel must be strictly controlled.

14. Because only a few people will be used in engineering and most other areas, ways must be provided to reward good performance by pay and not based on the number of personnel supervised.

The government has proved that it can use the Skunk Works philosophy in day-to-day operations. The success of the Ballistic Missile Defense Organization's Clementine program showed that a small team could send a satellite to the Moon and do so with a minimum of cost and oversight. In the same manner, DOD labs could become even more efficient if a Skunk Works mentality permeated their culture.

SUMMARY

This chapter has identified three "kinks" in the national S&T security strategy that may overwhelm even the best laid plans to employ a robust R&D program:

• Failure of the commercial marketplace to step up and fill a void left by the dismantled defense R&D establishment
• Failure to exploit the defense labs effectively
• General failure to use common sense when conducting R&D.

These observations are by no means all inclusive; they are merely the most apparent after analyzing the turbulent changes going through defense R&D. Along with identifying some "kinks" in the strategy, several suggestions were presented to smooth the kinks, including realizing that 2) Defense technology needs cannot always be filled by exploiting the commercial marketplace; 2) three critical factors determine the success of a lab: a clear corporate purpose, productive people, and recognized value; and 3) the effectiveness for a defense laboratory should be measured by the success of the technological weapons in the field, success measured by winning the war.

The next chapter discusses specific recommendations for policy makers and lab directors if they are really serious about optimizing S&T.

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Last Update:  September 30, 2002