Shake Off the Pentagon's Industrial-Age Bureaucracy

The greatest threat to America’s ability to win conflicts is its own defense bureaucracy. Archaic executive- and legislative-branch processes hinder the military’s ability to adapt to a dynamic array of threats powered largely by readily available commercial technologies in cyber, artificial intelligence, autonomy, hypersonics, and space.

If the Defense Department is to remain effective in this dynamic new Digital Age, it must shake off the remnants of its Industrial Age past. In a detailed whitepaper titled FIVE BY FIVE, we propose five new disciplines: sets of repeatable behaviors to be studied, practiced, and mastered with the goal of transforming DoD’s underlying structure and improving its effectiveness. These disciplines cover people, speed, flexibility, collaboration, and authorities. 

We also propose five strategic initiatives that apply the five disciplines to DoD’s major challenges and opportunities. These are:

Institute portfolio management. This initiative aims to move the focus away from individual acquisition programs and toward integrated portfolios of capabilities. This is important because DoD can no longer rely on single, large programs to meet the full range of operational needs it requires to be successful. Instead, DoD needs flexibility to pursue multiple smaller-scale efforts that promote adoption of current commercial technology advances and easier transition of lab innovations into an operational capability. This is the vision for moving DoD toward using Mission Area Portfolios (MAPs). To prove the effectiveness and viability of this approach, DoD should work with Congress to launch a pilot program of two portfolios within each military department and the defense agencies. Concurrently, the Office of the Secretary of Defense (OSD), Joint Staff, and Component leaders should also collaboratively shape DoD requirements and budget systems to align with the DoD’s new Adaptive Acquisition Framework (AAF). The Defense Acquisition Executive transformed the single-path Defense Acquisition System into a flexible set of six tailorable pathways for acquisition programs to navigate. Aligning requirements and budget systems provides integrated pathways to deliver capabilities from rapid prototypes, novel software, or a major weapon system. 

Transform budgeting. This would begin with a series of frank discussions between DoD leaders and Congress about how the Pentagon can more quickly and flexibly allocate resources for defense needs. Immediate areas to explore include adjusting rules that allow for new initiatives within certain thresholds to be started without delay; easing the rules that require full funding of programs that constrain budget choices of the Department; increasing reprogramming limits that reflect the current size of the budget so DoD can adjust internal funding without congressional approval (such as $10M for a budget line of potentially billions of dollars); and relax software rules that force suboptimal decision-making and limit digital transformation.  

DoD and Congressional defense committees should charter a Digital Age Defense Budget Reform Group to develop proposals for modernizing the defense budget system. The new administration should also push congressional leaders to consider moving to a biennial budget process that would improve agency planning and congressional collaboration. 

Build an innovative workforce. To do so:

• Increase digital literacy and training opportunities for personnel in all functional disciplines, such as requirements, budgets, and product support. 
• Expand the AAF. Update acquisition training to include new business models, best practices, and lessons from the field into the AAF curriculum. 
• Overhaul the acquisition education system by incorporating modern pedagogy methods for learning, increasing opportunities for experiments and exercises, and expanding the range of providers. 
• Create Innovation Aggressor Squadrons that would run innovation proposals through simulated assessments to identify and remedy any gaps, holes, or weaknesses before an acquisition. 
• Provide innovators on the front lines the resources to develop, deliver, and distribute dynamic training models. 

Scaling and streamlining for software. The deputy defense secretary, vice chairman of the Joint Chiefs of Staff, and service chiefs and secretaries should champion modernizing the DoD enterprise for software. They should hold senior leaders accountable for tailoring and streamlining requirements, cost estimating, budgeting, testing, and related processes to enable rapid and iterative deliveries of software capabilities. 

DoD should scale its stable of software factories (such as the award-winning Kessel Run), which provide programs a common set of enterprise software platforms, services, and cybersecurity. These enable faster deliveries, increased interoperability, and reduced risks. 

Strengthen the national security innovation ecosystem. Services should allocate more resources for training and mentoring opportunities that scale current successes and increase access to modern software development tools and additive manufacturing maker-spaces. 

DoD should also establish an independent Innovation Ecosystem Commission to analyze all available tools to support commercial scaling, understand barriers and industry pain points, and identify where DoD should act. 

The defense undersecretary for research and engineering should identify two of their top priority technology areas to work with the Service Acquisition Executives to identify and scale two nontraditional defense companies to serve as viable long-term providers. 

Modernize the current export-control system rules through legislation and expand the initial cohort of the National Technology Innovation Base to include key countries. 

Point person

Because of the nature and scope of these initiatives, we believe newly appointed Deputy Defense Secretary Kathleen Hicks, as chief operating officer for the DoD, is positioned to drive these reforms to digitize and modernize the Pentagon. This also lines up with comments she made in her confirmation hearing, where she said acquisitions of new technology should “increase warfighting effectiveness, enhance resilience, leverage commercial technology and innovation, and rapidly respond to future threats.”

The Pentagon has made significant progress toward transforming the way it does business in recent years. The new administration has a golden opportunity—and a critical responsibility—to build on that momentum and ensure the entire defense enterprise can operate with the speed, agility, and imagination necessary for the coming decades.