Defense Technology: The Payoffs for Economic and Military Security
Historically, this Nation's policies to support the development of
advanced industrial technology were motivated primarily by national security
concerns. This linkage traces back to post-Revolutionary times, when the
government spurred the development of an interchangeable parts approach to
manufacturing to meet a pressing need for rifles. The government's impact on
manufacturing was significant then and it remained so, at least until recently.
During and after World War II, new high-technology industries were
driven and assisted by the government's push to strengthen national security.
Defense programs dominated the Federal Government's R&D portfolio. The
payoffs were substantial, with U.S. industry benefiting from defense-driven
investments.
But an increasingly inflexible defense acquisition process lengthened
production cycles and increased costs at the same time that commercial
enterprises began the drive to reduce costs and time to market. Defense
systems' development needs and benefits diverged from the industrial main-
stream, which was spurred by stiff overseas competition and dramatic tech-
nology advances.
Today, though defense continues to blaze the trail in key areas of
leading-edge research, the rate at which that innovation is actually moved into
production often lags well behind that of commercial industry in important
sectors such as computers and microelectronics.
Three Pillars of a 21st-Century Defense Technology Strategy
The Clinton Administration intends to reverse this trend and will pursue
more efficient and effective strategies for defense investments in technology.
The three pillars that will serve as the foundation for a 21st-century defense
technology strategy are:
- Reform the current Department of Defense (DOD) acquisition process, now
biased against the use of commercial processes and products within
defense systems.
- Focus more R&D within DOD on dual-use products and processes, empha-
sizing the need to achieve advances in high-tech defense systems that
are affordable.
- Reach out globally to our allies, to benefit from international
cooperation on a technology-by-technology basis.
These strategic thrusts are beginning to redirect this Nation's massive
defense investment so that it is both more effective and more supportive of our
broader industrial base.
Reform the current DOD acquisition process to encourage the use of
commercial processes and products within defense systems. By using compo-
nents, technologies, and subsystems developed by commercial industry when-
ever possible, defense should be able to attain three compatible objectives:
- Shorten development times, increasing the pace at which innovation is
incorporated into new defense systems in critical areas. Introduce the
commercial high-tech sector's continuous stream of improvements and
updates during both the development and deployment phase.
- Reduce costs for procuring leading technology to satisfy military needs.
Commercial components, technologies, and subsystems in many instances
can meet functional needs at lower costs than technology that is
military-driven and customized. Eliminate unnecessary military
specifications, testing requirements, and procurement procedures.
- Prepare for building back military capabilities. Close integration with
the private sector is imperative if the Nation is to be equipped to
quickly gear up its capabilities.
Focus more R&D within DOD on dual-use products and processes,
emphasizing affordable advances in high-tech defense systems. Investments in
technologies that are both critical to defense systems and vital to commercial
industries serve a dual use.
Dual-use technologies include manufacturing processes as well as
products. For example, the Microelectronics Manufacturing Science and Tech-
nology (MMST) Program supported by DOD was designed to develop fast,
flexible, cost-effective techniques for manufacturing semiconductors. The
primary goal was to meet military needs for relatively small batches of semi-
conductors at affordable cost, but the technology is valuable to commercial
production as well. In fact, it was developed in partnership with the commer-
cial division of Texas Instruments.
Reach out globally to our allies, to benefit from international cooper-
ation on a technology-by-technology basis. Technology today is global, flowing
with relative freedom across national boundaries. We need to ensure that the
flow of defense technology-related knowledge is not just one way. In the recent
past, we have shared considerable expertise and technology with our allies. A
part of our strategy now must be to strengthen our relationships with allies and
explore how they may be helpful to us in solving technology-based problems.
Progress to Date
The Administration has taken concrete steps to implement its new vision
for a defense strategy, which makes the most of our national investment in
technology by supporting both military and economic strength:
- DOD is explicitly emphasizing dual-use R&D to better integrate defense
technology development with commercial industry. This is a break from
past Administrations' unwillingness to address defense technology's
dual-use needs and opportunities. Application of critical technologies
will be accelerated in four focused "thrust areas": information
technology, manufacturing, materials, and advanced simulation and
training.
- President Clinton has changed the name of the Advanced Research Projects
Agency (ARPA) to reflect its new focus on dual-use technologies. ARPA is
rebalancing its advanced research portfolio while continuing its
emphasis on electronics and information processing; it is also strongly
supporting the High Performance Computing and Communications Initiative
and the National Information Infrastructure, two notable dual-use
efforts. ARPA also is seeking to transform manufacturing production
processes through advances in materials, equipment, design-process
integration, agile manufacturing, and enterprise integration. A key to
ARPA's strategy is its emphasis on partnerships and cost sharing.
- The Administration successfully launched the Technology Reinvestment
Project (TRP), the largest multiagency technology program ever conducted
by the Federal Government. President Clinton introduced this top-
priority dual-use effort in March 1993 as a cornerstone of his $1.7
billion Defense Reinvestment and Conversion Initiative. The TRP stresses
partnering among industry, government, and universities; it has drawn a
powerful show of interest, especially from industry.
- TRP funds are available for three key areas: technology development,
to create new technologies with the potential for commercialization
within 5 years; technology deployment, to disseminate existing
technology for near-term commercial and defense products and to
support improved use of technologies in small businesses; and
manufacturing education and training, to strengthen engineering and
workforce capabilities necessary for a competitive industrial base.
- Six Federal agencies jointly manage and implement the TRP. Led by
the Defense Department's ARPA, the other participating agencies are
the Commerce Department's National Institute of Standards and
Technology, the Departments of Energy and Transportation, the
National Aeronautics and Space Administration, and the National
Science Foundation.
- Project managers sought broad participation through an "800" hotline
and a series of regional briefings sponsored by the White House. The
hotline received 35,000 calls and 55,000 information packages were
distributed, reflecting an extraordinary level of interest.
- More than 2,800 proposals, requesting $8.5 billion, were submitted
in response to the offer of $472 million in merit-based, matching
Federal grants from the TRP. Proposals were received from
organizations in all 50 states and the District of Columbia.
- The President on October 22 announced the first successful
applicants: 41 projects accounting for $140 million in requested
Federal matching funds. The remainder of the awards will be
announced in November.
- Planning is under way for an expected follow-up round of
competitions for the TRP.
- Technology application efforts and acquisition are beginning to reflect the new strategy for integrating defense and commercial technologies.
Advanced Technology Demonstrations (ATD) in DoD are increasing the focus
on manufacturing and speeding the rate at which new technology is
fielded by our military. For example, the Technology for Affordability
"thrust" is now seeking major advances in design tools, process
integration and control, and production management.
- DOD is emphasizing technology in the acquisition process to improve
efficiency. An example is a greatly enhanced Continuous Acquisition
Life- Cycle Support (CALS) program, which aims to automate much of the
routine work associated with logistics support. Another element is
automation of the procurement process, with pilot programs being
launched to electronically advertise and respond to procurement
requests. DOD intends to take an active part in the expected large-
scale movement of business information into the National Information
Infrastructure.
- To encourage defense firms to participate in dual-use cooperative R&D,
the Administration has clarified regulations regarding the use of
independent research and development (IR&D) funding as part of a firm's
contribution to a cost-sharing proposal. Use of IR&D monies as part of
industry matching funds is permitted in certain kinds of cooperative
arrangements involving contractors working jointly with others (e.g.,
joint ventures, teaming arrangements, and consortia).
- DOD has launched a major new initiative with Japan to gain access to its
commercial technologies, manufacturing know-how, components, and sub-
systems. This effort seeks to better balance the significant amounts of
U.S. defense technology that flow to Japan, with a compensating flow of
dual-use technologies obtained from commercial firms in Japan for use in
defense applications. The emphasis is on fostering company-to-company
linkages that gain access for our defense industrial base to Japanese
expertise and information.
- DOD has proposed significant new initiatives in jointly developing
military systems with our NATO allies. Joint development programs can
lead to additional expense since language, cultural, and institutional
differences typically must be overcome. But this Administration is
firmly convinced that gains from splitting development costs with
partners and from interoperability of systems can greatly exceed the
incremental costs of taking the trouble to work with allies.
A dual-use strategy as discussed above offers clear advantages to
the military. Defense planners know that the way to get the most out of
shrinking dollars is to buy as much as possible from commercial manufacturers
who, under the discipline of the market, must give their customers good
value high quality, reliable products embodying the latest and best tech-
nologies at competitive prices. While the dual-use approach is not as central to
the interests of commercial companies, they too will benefit. Defense spending
for dual-use R&D and procurement has a more than proportionate effect on
advancement of technology, because investments will be heavily weighted to
leading-edge technologies with potentially broad application.
Nevertheless, defense spending makes up a small and declining share
of a $5.5 trillion to $6 trillion economy. Civil-military integration is just
one part, though an important part, of successful conversion to a post-Cold War
economy. The best and broadest conversion strategy must also include govern-
ment investments that lift the performance of the whole economy. This means:
- investing in first-class education and training of all our workers;
- forming R&D partnerships with industry on promising technologies that
are primarily commercial as well as dual use; and
- developing new national initiatives that meet widely agreed public needs
while also fostering the advance of technology, the growth of knowledge-
intensive, wealth-generating industries, and the creation of high-
quality jobs.
Other sections of this progress report deal with these broader
strategies for transition to a post-Cold War world.
Energy and Environment:
New Technologies for Growth