The Pentagon's chief technology officer says large contractors "are not largely the innovators you seek," but big defense companies and those representing them say they are adopting practices like agile development and helping DOD realize innovative technologies.
"Most of the disruption that occurs in our technology ecosystem comes from small- and medium-sized businesses," Griffin said during an April 17 House Armed Services Committee hearing. As the under secretary of defense for research and engineering, Griffin is tasked with guiding the Pentagon's investments in the research and development phase of DOD's modernization efforts.
Asked by Chairman Mac Thornberry (R-TX) about "small, disruptive businesses" and what DOD is doing to work with them, Griffin agreed they are the companies the Pentagon needs to spur innovation.
"I am not one to say that we don't need our large contractor industrial base," he said. "That is how we produce things at scale. But they are not largely the innovators that you seek." He suggested cutting down on DOD's accounting rules that force businesses to take on a lot of corporate overhead, as well as working with smaller companies on more of a "commercial-transaction basis."
Wesley Hallman, senior vice president of policy for the National Defense Industrial Association, told Inside Defense, "Griffin is right." Hallman said smaller companies are incentivized to take risks so they can either grow or get bought out by a larger company. But he said larger companies underpin the business environment that allows smaller companies to take those risks.
"Innovation can and does come out of larger companies through their research and development investments," Hallman said. "Crucially, the larger companies are necessary to the innovation of the smaller companies by establishing the ecosystem and providing a market and capital so creative entrepreneurs can realize their vision."
But critics of the Pentagon's reliance on big defense contractors point to DOD's software problems. Testifying alongside Griffin was Defense Innovation Board Chairman Eric Schmidt, the former chairman of Google parent company Alphabet Inc., who took DOD to task over its "crazy" software development processes.
Schmidt said DOD needs to develop software iteratively, learning from mistakes through continuous updates and testing as part of the process referred to as "agile development." But DOD develops software the same way it does hardware, he said, by writing requirements and then taking years to develop the software so it meets all the specifications before integrating it into the weapon system. The practice is referred to as the "waterfall" method of developing software.
As a result of these processes, DOD's network and computer resources are "out of the dark ages," as some systems date back to the 1970s, according to Schmidt.
"The model that the military uses where they outsource everything to large contractors has served us maybe well for these large weapons programs, but doesn't work at all for the kinds of stuff I'm talking about," he said. "You need a completely different model."
But the defense marketplace is a "complex ecosystem" where large and small companies partner together to deliver capabilities to warfighters, according to John Luddy, vice president for national security policy at the Aerospace Industries Association. He says defense companies have set up their processes to work within the DOD system.
"As in any market, our industry reflects our customer," Luddy wrote in an email to Inside Defense. "Obstacles to innovation are much less about the size of a particular company, and much more about the business and regulatory environment for doing business with DOD."
A recent Defense Science Board study urging DOD to "immediately" shift to agile software development echoed Luddy's assessment, as it found defense contractors have yet to adopt agile development because DOD's acquisition system holds them back.
Todd Probert, vice president of mission support and modernization for Raytheon's intelligence, information and services business, said his company is leading the defense industry in instituting agile development. For example, Raytheon is teamed up with Pivotal Software Inc., the Defense Innovation Unit Experimental and the Defense Digital Service to turn around the troubled OCX program, which was highlighted by Pentagon acquisition chief Ellen Lord last week.
Over the past decade, Probert said Raytheon has implemented agile software development in its sustainment of fielded weapon systems. Now, he said Pentagon leaders are demanding companies use agile processes as they develop software for weapon systems early in their development.
"That's a hard thing for the defense industry, but I think Raytheon is well out in front," Probert told Inside Defense.
For the first time in his career, Probert said he is seeing "the entirety of the DOD leadership line up" on the agile development push.
"The speed of software ties to speed of the relevance ties to the National Defense Strategy and mandates we do something different," he said.
But Luddy said barriers remain if DOD wants to achieve its innovation goals.
"Working with Congress, DOD must provide robust and stable funding; reduce audit and reporting burdens; respect our companies' intellectual property; and reduce the barriers 'defense' companies face when they try to integrate commercial sources of supply," he said. "Without those conditions, neither our largest companies nor non-traditional new entrants will be able to support [Defense] Secretary [Jim] Mattis' mandate to 'deliver performance at the speed of relevance.'"
During the House hearing, Griffin discussed DOD's impediments as a "general culture of process, risk avoidance, fear of failure." Along with implementing agile development processes for both software and hardware, he said he wants to eliminate bureaucracy.
"What I want to cut out is layers of bureaucratic decision-making where way too many people think that their opinion matters in the decision process," Griffin said. "I don't want to cut out engineering tests. I want to cut out the number of people that think they have the right to an opinion, because that's how we're going to shorten the process. And if that sounds cruel, I'm sorry, but that is what needs to go."