The Mistake that Decapitated Pentagon Innovation — and How to Fix It

I joined the staff of the Senate Armed Services Committee in May of 1984. I didn’t appreciate what a remarkable period that was. While there is always a flood of issues that comes to the Armed Services Committees, this was a time when we entertained substantial changes in the structure of the Department of Defense (DoD). There were two major reform agendas. One led to the now famous Goldwater-Nichols Act that transformed the war-fighting side of the Defense Department. The other was the Packard Commission reforms that transformed the acquisition side of DoD — and made one crucial mistake that now needs fixing.

At the time, there was a great deal of controversy in the Congress about acquisition. Candidly, much of it was driven by a reaction against the so-called Reagan buildup. When President Ronald Reagan was elected, he promised to rebuild America’s defense establishment, having won election in part on the perceived weakness created by the Jimmy Carter administration. Part of that buildup was a significant increase in defense budgets. Suddenly we were buying B-1 bombers, new-production C-5 aircraft, and a host of ships and combat vehicles. By 1984, there were growing antibodies to defense spending. Congress was worried about deficits (which seems quaint now). I recall that in 1985 we debated the famous KGB amendment, named for Sens. Nancy Kassebaum, Phil Gramm, and Rudy Boschwitz. The KGB amendment was designed to put a cap on spending, effectively ending the Reagan defense buildup.

The growing antibodies against the Reagan defense spending increase found a release in dramatic “horror stories” about abuse of the DoD procurement system. We saw dramatic stories in the press about $600 toilet seats and $147 hammers, suggesting that the Defense Department had no discipline and was badly abused by rapacious defense contractors. After the public controversy over the toilet seats, the famous Washington Post cartoonist Herblock never presented a political cartoon of then-Secretary of Defense Caspar Weinberger without a conventional toilet seat, complete with price tag, around his neck. (The truth is that the P-3 aircraft had a commercial toilet like the ones you use on regular jet aircraft, and the price reflected the entire cover assembly, not just the “toilet seat.”)

Such horror stories were used by Democrats to create political momentum against the Reagan administration. Republicans felt vulnerable. This is the perfect dynamic for legislation. Enter the Packard Commission.

For as long as we have had a Defense Department, we have had controversy over defense procurement. If you go back to the Congressional Record during the Civil War, it is filled with hearings about procurement abuse, contractors selling flawed equipment to the government. Sadly, wars do bring out profiteers. But Congress is great at entering the battlefield after the war and shooting the wounded on the battlefield.

To deal with the widely held belief that the Defense Department was poor at buying things and negotiating with contractors, the Packard Commission called for elevating the stature of the procurement function and pulling much of it away from the military departments. The result was the creation of the under secretary for acquisition, and the decision to make it the third most-important civilian job in the department, after the secretary and the deputy secretary.

By fiat, the Congress said that the most important function in the department was buying weapons more effectively. Up to that point, the third most-powerful position in the Defense Department had been the director of defense engineering and research (DDR&E). This was an iconic position, often populated by preeminent scientists who also had business moxie—men like Bill Perry or Harold Brown, both of whom later became secretaries of defense. These were men of such talent and maturity that they could change the direction of the Defense Department for strategic purposes. These were men who said “we could transform warfare if we could put a microcomputer on the front end of a missile,” or “we could transform warfare if we could develop an aircraft that is invisible to radar.” And they did transform warfare.

The DDR&E represented the apex of a powerful innovation ecosystem. We didn’t win the Cold War because we had larger forces than the Warsaw Pact. Our strategy was to counterbalance the Warsaw Pact’s numerical advantage with superior technical capabilities. We won the Cold War because we harnessed the creativity of American science and business to produce weapons that could defeat numerically superior Soviet forces.

Sadly, though we didn’t intend it, the DDR&E was greatly diminished by the Packard Commission recommendations that were adopted in the Defense Authorization Act of 1986. We didn’t appreciate it at the time, but we effectively decapitated DOD’s innovation ecosystem by elevating the mechanics of defense procurement over the imperative of defense innovation. In essence, we made gunsmithing superior to marksmanship. The DDR&E was focused on marksmanship—hitting a strategic target to make America’s military successful against the Soviet Union. The under secretary for acquisition was dedicated to gunsmithing—perfecting the mechanism for buying kit over the process of developing strategic capabilities designed to transform power on the battlefield.

We are now squarely back in this debate. Defense Secretary Ash Carter has championed trying to restore a culture of innovation to the Defense Department. Deputy Secretary Robert Work has championed the so-called third offset, which is shorthand for the next technical revolution that will sidestep the enormous momentum of China and Russia and change the dynamic of warfare on the battlefield through technology innovation.

The problem is that the Packard Commission decapitated the department’s innovation ecosystem. This is not a critique of the people who have served as undersecretaries of acquisition. Each of them has heroically tried to be an innovator. But the Congress has handcuffed them to a legal framework that was (maybe) relevant in 1986 but is counterproductive in 2016.

We desperately need to restore the innovation ecosystem that propelled the Defense Department through the Cold War. The starting point is restoring the prominence of the DDR&E.