On the Topic of Offsetting...

DF-ST-87-06962	The Pentagon, headquarters of the Department of Defense.  DoD photo by Master Sgt. Ken Hammond, U.S. Air Force.

If ever there were a sphere of human activity designed to encourage the cynic and grind down the optimist it would be DoD acquisition reform. And maybe the Middle East peace process. But the Middle East has seen its share of reported miracles throughout history…the Pentagon, not so much.

I am an optimist by nature, however, and for that reason I’m watching with great interest the confluence of initiatives now churning the Potomac. The first is the Better Buying Power (BBP) effort launched in 2012. BBP seeks to get a handle on weapons lifecycle costs through smarter acquisition practices and greater cooperation with industry. Much has already been said about BBP and its variation memos / iterations, but the fact that it is the brainchild of Ash Carter—recently nominated by President Obama to be Secretary of Defense—is certainly a good sign.

The second major push for reform—known as “Offset 3.0,” or the DoD Innovation Initiative—has a more recent provenance. It was first announced in a recent speech by outgoing SecDef Chuck Hagel, but its conceptual foundations are sound and there is reason to continue to pick up steam despite his departure.

What is Offset 3.0 and why should the COTS world care?

In brief, the concept of “offsetting” refers to the need of Western militaries, and the U.S. in particular, to find innovative ways to compete with adversaries that possess quantitative superiority in manpower and material.

The first time we were called upon to offset the quantitative advantages of a determined adversary came early in the Cold War, when the enormous post-WWII Soviet military menaced the allies in Western Europe we had just fought so hard to defend.

The Eisenhower Administration looked then to the power of nuclear weapons, a technology in which we were still indisputably dominant, to offset the Soviet strength in numbers. Ike’s “New Look” strategy, one that may sound almost crazy to us today, called for the early and decisive use of tactical and strategic nuclear weapons to thwart any Soviet advance in Europe.

Later in the Cold War, when the Soviets had more than caught up in the nuclear sphere and became increasingly menacing in the Third World, the U.S. began investing in the suite of technologies (stealth, GPS, precision-guided munitions, etc.) that transformed the U.S. military into the lethal and highly digitized force that we saw most memorably in coverage of the first Gulf War on CNN.

Which brings us to today. China and other potential adversaries of the West are investing in technologies to both compete with us directly (aircraft carriers, fifth-generation fighters, diesel electric subs, etc.) and neutralize the advantages accrued during the second offset effort. These latter efforts are often called Anti-Access / Area Denial or A2AD, and they can come from relatively cheap technologies (anti-ship missiles, GPS jamming, computer viruses, etc.) that could either raise the costs of trying to enter a battlespace or render the tech-dependent U.S. forces deaf, dumb and blind once in the area.

Given that most of our potential adversaries are expecting to fight us close to their “home turf,” they can expect their quantitative superiority to tell once our technical prowess has been neutralized through A2AD.

So the search has begun for “Offset 3.0” and once again the focus is on technology and innovation.

But unlike in the 50s or even the 70s, defense and aerospace really isn’t the locus of innovation any longer. Most of the game-changing technologies we see today come from commercial provideDF-ST-87-06962rs, many of whom have no interest whatever in the DoD market.

When they look at serving military customers they see crushing bureaucracy, long sales cycles, IP conflicts and political / reputational risks, among other unappealing features. That’s why companies like Google, Apple and other tech leaders are often willing to sell commercial off the shelf (COTS) technology to governments but are rarely interested in partnering to create military-specific innovations.

One recent example that has often been cited is the acquisition by Google of Boston Dynamics, a robotics pioneer that was doing significant direct business with the Defense Department prior to being bought. Google has let the Pentagon know, however, that it has no interest in focusing on the military market beyond honoring current commitments.

So what can the Pentagon do? It basically has three choices:

  1. Make do with less innovative technology made specifically for the military by traditional defense companies.
  2. Leverage the same commercial technology available to everyone else on the global market and hope the U.S. can figure out more innovative and productive ways to employ it.
  3. Change the acquisition process sufficiently enough to enable real partnership with the commercial industry (vs. traditional defense companies)—including smaller, more innovative tech companies that typically don’t want to take on the overhead traditionally required to contract with DoD.

The fact is, DoD will have no option but to choose “all of the above.” However, the innovative potential inherent in “option” 3 is significantly greater than in the other two, and proponents of Offset 3.0 hope the Pentagon can make the necessary changes to bring non-traditional defense players into the mix.

All of this means COTS hardware and software providers must now play a more important role than ever. GE's Intelligent Platforms business provides a critical scouting and translation function for the military, finding the best of purely commercial technology in areas as diverse as HPEC, GPGPU and industrial analytics and bringing them to the Defense Department packaged for military use.

A robust COTS sector is one of the key means by which the Offset 3.0 strategy will become reality…IF the sector is supported by the right DoD policies and practices. That means giving COTS vendors early visibility into future requirements and engaging them to understand the roadmaps for the future. It also means encouraging acquisition and contracting practices that make COTS an easy choice for system integrators.

Maybe I’ll rile up the cynics here, but I think the combination of committed reform advocates at the top of the Pentagon bureaucracy with a clear need to compete through innovative “offsets” has created the most auspicious environment for real acquisition transformation in my memory.

Hang in there, optimists…I’m still with you.

Todd Stiefler

Todd joined GE from the world of Washington politics, and in no time at all has moved on to his second assignment, which sees him managing business development for the services GE is increasingly looking to offer to customers, including the Proficy SmartSignal predictive analytics software.

More Posts