Defense Science and Technology:

Adopting Best Practices Can Improve Innovation Investments and Management

GAO-17-499: Published: Jun 29, 2017. Publicly Released: Jun 29, 2017.

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Defense Science and Technology: Adopting Best Practices Can Improve Innovation Investments and Management

DOD plans to invest $12.5 billion on innovative technology in fiscal year 2017. We compared DOD's approach with how leading technology companies like Amazon and Dow manage their science and technology investments.

We found that DOD's ability to innovate is limited by its funding policies, as projects are planned up to 2 years in advance, which can slow innovation and limit lab directors’ autonomy. Additionally, DOD’s culture prioritizes developing technologies only for programs that already have the needed funding.

We recommended that DOD define a science and technology management framework that uses leading commercial practices.

Department of Defense Technology Management Process

Graphic showing progression from technology investment, through development, then deployment.

Graphic showing progression from technology investment, through development, then deployment.

Additional Materials:

Contact:

Mike Sullivan
(202) 512-4841
sullivanm@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

The eight leading companies whose practices GAO assessed take a disciplined approach to organizing and executing their technology development activities by grouping them into two portfolios: incremental and disruptive, as shown in the figure. Incremental development improves product lines whereas disruptive development is for riskier innovative and potentially market-shifting technologies.

Commercial Model Ensures Investments in Incremental and Disruptive Innovation

Commercial Model Ensures Investments in Incremental and Disruptive Innovation

By separating these two portfolios, companies reported that they could promote existing product lines in the short term while exploring opportunities to remain competitive in the long term, and mitigate the financial risk associated with disruptive technology development. Moreover, GAO found that leading companies also ensure technologies will be relevant in the marketplace by engaging a wide range of internal stakeholders. These companies also reported that they gain leadership buy-in by prototyping technologies before committing to further development and product integration.

While some Department of Defense (DOD) practices closely mirror those of the companies GAO reviewed, DOD's ability to adopt leading commercial practices in its approach to managing science and technology (S&T) investments is limited by its funding policies and culture. Unlike the companies GAO reviewed, DOD leadership does not provide guidance on or assess the mix of incremental and disruptive innovation. As a result, officials reported that DOD labs struggle to find the right balance between these investment areas. Under DOD's budget policy, projects are planned up to 2 years in advance, which can slow innovation and limit lab directors' autonomy as compared to companies. Congress has provided a means for lab directors to initiate work outside of this lengthy process, but it has not been fully utilized. Additionally, responsibilities for technology versus product development also contribute to a culture that discourages collaboration and limits labs' ability to prototype. Yet these issues are not insurmountable, as pockets of each military department have demonstrated, such as through recent efforts to expand advanced prototyping in the labs. Further, Congress has required that by February 2018 DOD create a new Under Secretary of Defense for Research and Engineering (USD(R&E)), which will be charged with developing policies to improve innovation. This position creates an opportunity to develop policies that further promote adoption of leading commercial practices.

DOD relies on innovative technologies to ensure the superiority of its weapon systems and planned to invest about $12.5 billion in fiscal year 2017 to achieve this aim. Recently, DOD's leadership role in fostering innovation has been supplanted by the commercial sector. This has changed DOD's approach to technology development by relying more on commercial innovation.

Conference Report 112-329 included a provision for GAO to review DOD's S&T enterprise. This report assesses (1) the practices leading companies employ to manage technology development and (2) the extent to which DOD can incorporate these practices into its own. GAO interviewed eight large, profitable, leading technology companies (Amazon, Dow Chemical, Honeywell, General Motors, IBM, Qualcomm, Siemens AG, and Valvoline) to identify practices they used to manage, prioritize, and assess their technology portfolios. GAO also met with DOD organizations that manage and execute S&T funds to identify their practices.

What GAO Recommends

GAO recommends that DOD annually define and assess the mix of innovation investments and define, in policy or guidance, an S&T management framework that comprehensively employs leading commercial practices. DOD did not agree with the recommendations, citing its ongoing deliberations on the new USD R&E's role, but did identify some planned actions. GAO believes its recommendations are valid as discussed in the report.

For more information, contact Mike Sullivan at (202) 512-4841 or sullivanm@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Priority recommendation

    Comments: In July 2017, the Department of Defense disagreed with our recommendation, stating that it would be premature to get ahead of the Secretary of Defense's final decisions on the role of the new Under Secretary of Defense for Research and Engineering (USD(R&E)) until that position is established, as required by law. Although the Department issued a memorandum finalizing the organizational structures, and roles and responsibilities for USD(R&E) in July 2018, there is no requirement for that office to annually define the mix of incremental and disruptive innovation investments for each military department. A senior official with USD(R&E), in July 2018, reported that the military departments are currently reviewing and updating their Science & Technology strategies, and are expected to be finished by the end of the year. Those updates will likely include a breakdown of the investments being made in near-term capabilities and far-term capabilities. However, near-term and far-term capabilities are not necessarily synonymous with incremental and disruptive innovation, nor is it clear whether these updates will occur annually. In order to meet the intent of this recommendation, USD(R&E) needs to take an active role in assisting the military departments to annually define this mix.

    Recommendation: To ensure that DOD is positioned to counter both near and far term threats, consistent with its S&T framework, the Secretary of Defense should direct the new Under Secretary of Defense for Research and Engineering to annually define the mix of incremental and disruptive innovation investments for each military department.

    Agency Affected: Department of Defense

  2. Status: Open

    Priority recommendation

    Comments: In July 2017, the Department of Defense disagreed with our recommendation, stating that it would be premature to get ahead of the Secretary of Defense's final decisions on the role of the new Under Secretary of Defense for Research and Engineering (USD(R&E)) until that position is established, as required by law. Although the Department issued a memorandum finalizing the organizational structures, and roles and responsibilities for USD(R&E) in July 2018, there is no requirement for that office to annually define the mix of incremental and disruptive innovation investments for each military department nor to annually assess whether that mix is achieved.. A senior official with USD(R&E), in July 2018, reported the Department's Reliance 21 process, and its related Communities of Interest, may provide an opportunity to do this annual assessment. USD(R&E), in order to meet the intent of this recommendation, needs to take a role in assessing whether the military departments are achieving the mix of incremental and disruptive innovation investments as defined in their Science and Technology strategies.

    Recommendation: To ensure that DOD is positioned to counter both near and far term threats, consistent with its S&T framework, the Secretary of Defense should direct the new Under Secretary of Defense for Research and Engineering to annually assess whether that mix is achieved.

    Agency Affected: Department of Defense

  3. Status: Open

    Priority recommendation

    Comments: In July 2017, the Department of Defense disagreed with our recommendation, stating that it would be premature to get ahead of the Secretary of Defense's final decisions on the role of the new Under Secretary of Defense for Research and Engineering (USD(R&E)) until that position is established, as required by law. Although the Department issued a memorandum finalizing the organizational structures, and roles and responsibilities for USD(R&E) in July 2018, there is no requirement for that office to define a science and technology management framework that includes a process for discontinuing projects. A senior official with USD(R&E), in July 2018, reported that the military departments need to better define this process, especially those projects receiving advanced technology development funds. This process could include a percentage of projects that should be canceled annually; however, the appropriate percentage of projects to cancel each year would have to be determined by the defense labs. USD(R&E), in order to meet the intent of this recommendation, needs to develop guidance for the military departments to better determine how and when to discontinue science and technology projects.

    Recommendation: To ensure that DOD is positioned to more comprehensively implement leading practices for managing science and technology programs, the Secretary of Defense should direct the new Under Secretary of Defense for Research and Engineering to define, in policy or guidance, an S&T management framework that includes emphasizing greater use of existing flexibilities to more quickly initiate and discontinue projects to respond to the rapid pace of innovation.

    Agency Affected: Department of Defense

  4. Status: Open

    Priority recommendation

    Comments: In July 2017, the Department of Defense disagreed with our recommendation, stating that it would be premature to get ahead of the Secretary of Defense's final decisions on the role of the new Under Secretary of Defense for Research and Engineering (USD(R&E)) until that position is established, as required by law. Although the Department issued a memorandum finalizing the organizational structures, and roles and responsibilities for USD(R&E) in July 2018, there is no requirement for that office to define, in policy or guidance, a science and technology framework that includes incorporating acquisition stakeholders into technology development programs. A senior official with USD(R&E), in July 2018, acknowledged that the defense labs are integral to the military departments' acquisition process, and the need for the labs to work more closely with the acquisition community to develop relevant technologies, including developing technologies that can be used by each of the military departments, regardless of the domain in which they operate. However, there is no plan to define, in policy or guidance, an S&T management framework that includes incorporating acquisition stakeholders into technology development programs to ensure they are relevant to customers. In order to meet the intent of this recommendation, USD(R&E) needs to define a framework that includes guidance for how acquisition stakeholders can be incorporated into technology development programs.

    Recommendation: To ensure that DOD is positioned to more comprehensively implement leading practices for managing science and technology programs, the Secretary of Defense should direct the new Under Secretary of Defense for Research and Engineering to define, in policy or guidance, an S&T management framework that includes incorporating acquisition stakeholders into technology development programs to ensure they are relevant to customers.

    Agency Affected: Department of Defense

  5. Status: Open

    Priority recommendation

    Comments: In July 2017, the Department of Defense disagreed with our recommendation, stating that it would be premature to get ahead of the Secretary of Defense's final decisions on the role of the new Under Secretary of Defense for Research and Engineering (USD(R&E)) until that position is established, as required by law. Although the Department issued a memorandum finalizing the organizational structures, and roles and responsibilities for USD(R&E) in July 2018, there is no requirement for that office to define, in policy or guidance, a science and technology framework that includes promoting advanced prototyping of disruptive technologies within the labs. A senior official at USD(R&E), in July 2018, reported that the Department continues to invest in science & technology projects that cut across the military departments and are focused on disruptive technologies, such as quantum computing and synthetic biology. This official stated that the purpose of these projects, funded as part of the Office of the Secretary of Defense's Applied Research for the Advancement of Science and Technology Priorities (ARAP) program, is to enable the early launch of applied research programs to shape the military departments' science and technology investments. USD(R&E), in order to meet the intent of this recommendation, needs to define how advanced prototyping of disruptive technologies, such as those funded under the ARAP program, can be used to generate demand from future acquisition programs.

    Recommendation: To ensure that DOD is positioned to more comprehensively implement leading practices for managing science and technology programs, the Secretary of Defense should direct the new Under Secretary of Defense for Research and Engineering to define, in policy or guidance, an S&T management framework that includes promoting advanced prototyping of disruptive technologies within the labs so the S&T community can prove these technologies work to generate demand from future acquisition programs.

    Agency Affected: Department of Defense

 

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