The Defense Department began to roll out a series of initiatives Wednesday that it says will respond to a problem its leaders have been worried about for the past few years.

While U.S. troops still have the best technology in the world, that advantage is shrinking at a pace that is increasingly alarming to top military officials.

In addresses to industry audiences Wednesday, Defense officials gave only some rough outlines of their plans to deal with what they perceive as a narrowing technology gap between the U.S. and potential competitors.

They hinted at new acquisition approaches that emphasize the need to keep critical components of the domestic industrial base afloat, a new long-term strategy for research and development and, ideally, an “offset” plan that’s revolutionary enough to make it a moot point if other nations or non-state actors manage to catch up with what the U.S. military has in its arsenal right now.

“As the United States emerges from more than 13 years of grinding warfare and large-scale counterinsurgency operations, we’re seeing first-hand that the rest of the world has not stood still,” said Defense Secretary Chuck Hagel, outlining the problem before an industry audience in Newport, Rhode Island, Wednesday afternoon. “Disruptive technologies and destructive weapons once solely possessed by only advanced nations have proliferated widely and are being sought or acquired by unsophisticated militaries and terrorist groups. Meanwhile, China and Russia have been trying to close the technology gap by pursuing and funding long-term, comprehensive military modernization programs. All this suggests that we are entering an era where American dominance on the seas, in the skies, and in space — not to mention cyberspace — can no longer be taken for granted.”

The Pentagon’s response to that gap will be led mostly by Frank Kendall, the undersecretary for acquisition, technology and logistics, and the new Deputy Defense Secretary Robert Work.

Hagel has tasked Work with developing an “offset strategy” that echoes what the U.S. military did in the 1950s and 1970s, when it also faced both budget cutbacks and increasing threats. In essence, the Pentagon hopes to come up with strategies that allow it to define future warfare on its own terms, rather than just trying to run faster under the rules of an existing arms race.

Third strategy in the works

According to DoD’s view of prior such “offsets,” the first one birthed the U.S. philosophy of strategic deterrence through the creation of a stockpile of nuclear weapons.

For the second, the military launched a long-range strategy to build the networked, precise weapons systems that dominated the battlefield in the 1991 Gulf War, which it continues to rely on today.

“As we see those advantages begin to erode, I’ve asked [Work] to move forward with an initiative to develop a third, game-changing offset strategy,” Hagel said. “As a key part of this endeavor, Frank Kendall will soon convene a new long-range research and development planning program aimed at assuring our technological edge through the next several decades. Given the current budget environment, innovation will be critical. We must be innovative not only in developing the technologies we buy, but also how we buy them and how we use them in order to achieve our operational and strategic objectives.”

Kendall, speaking earlier in the day in Washington, said the Pentagon still is drafting guidance for the long-range R&D plan, but signaled that the strategy will focus on technologies that are likely to change the way the military fights wars, not just incremental upgrades to its existing systems.

“In a greater way than we have in the past, we are going to be trying to strategically focus our R&D investments into things that are going to matter,” he told the Common Defense conference, an annual gathering of industry and foreign military officials, at the National Press Club. “We want to ensure we’ve identified the technologies, whatever their source might be, toward things that are going to move us forward.”

Given the squeeze the department’s overall budget declines have put on the military’s research funding, Kendall said DoD also would like to start exercising more “supervision” over the projects that industry begins at its own behest but are later reimbursed by the Pentagon.

Those reimbursable dollars account for a relatively small piece of DoD’s overall R&D pie — $4 billion — compared to a government-funded R&D budget that still totals more than $60 billon despite recent cutbacks.

Kendall said those industry dollars are a significant factor in the overall innovation base that builds U.S. and allied military capabilities, and he wants to start examining them more closely, all the while balancing the need to make sure companies retain the flexibility to make their own decisions about where to invest.

“I started this actually just yesterday, looking with one company at the details of what they’re spending their money on,” Kendall said. “I’m interested in this partially out of curiosity and what bets they’re making, but I’m also interested in how near-or-long-term those investments are. We’ve already increased our desire for reporting, but I want to go a little bit deeper. We need to know how this is benefiting both the industry and the government, because as reimbursed investments, they should be benefiting us both.”

Version 3 on the way

Kendall’s dive into industry independent research and development (IR&D) will be one component of DoD’s latest update to its Better Buying Power initiative. The department is planning to formally unveil a “3.0” version next week.

The overall Better Buying Power effort is now 4-years-old and, thus far, has focused on pointing DoD’s internal acquisition community toward ways to get better outcomes from the acquisition system while spending less money.

Kendall said the latest round won’t upend any of the guidance the department gave the acquisition community in the first two versions, but it will represent a shift in emphasis. The round will zero-in on the need to generate new capabilities rather than focusing primarily on cost, keep the defense industrial base’s design teams up and running, and focus on Hagel’s goal of maintaining technological superiority.

“3.0 is going to get us back to our products and what we’re actually trying to deliver to our warfighters,” Kendall said, “It’s going to be about innovation. It’s going to be about technical excellence. It’s going to be about speed to market.”

In a brief preview of the new version of Better Buying Power, Hagel said some of its features will include an emphasis on prototyping systems before DoD launches them into production, giving industry more notice about planned procurements through draft RFPs, relying more on open systems architectures and cutting down DoD’s existing bureaucratic barriers to buying commercial systems.

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