How the Military Can Keep its Edge: Don’t Offset — Hedge

The current debate about how the U.S. military can maintain its technological superiority is dominated by offset strategies — use of an asymmetric advantage to mitigate an adversary’s advantage. The elegance and efficacy of prior offset strategies makes them attractive as a reference point. But given the United States’ current and future strategic circumstances might a hedging strategy be more effective?

Previous offset strategies focused on tightly defined threats, in a small range of locations, against one primary adversary. The Soviet threat was so significant that it required the majority of the attention and resources of the U.S. military, meaning that prior offset strategies, particularly the second one, were by necessity technological superiority strategies. This is not the case today. Additionally, while previous strategies were successful in overcoming their threat of focus, the Department of Defense’s inability to quickly adapt its capabilities to different threats like those in Vietnam or Iraq highlights the danger of concentrating attention and resources.

Today’s offset initiative is intended to address the advantages gained by adversaries employing precision munitions of their own, according to Deputy Secretary of Defense Bob Work. He also speaks of the need to develop multiple offset capabilities for multiple contexts, none providing long-lasting advantage. But other threats and risks from nuclear modernization to lone wolf terrorists, hybrid warfare tactics, violent non-state actors and myriad cyber capabilities can no longer be consigned to “lesser included” status as in previous offset eras. Nor can one claim to know the full scope of national security challenges the United States will face in the coming decades.

Rather than attempting to develop multiple offset strategies, DoD should consciously embrace a hedging technology strategy. A hedging strategy would emphasize an “eggs in many baskets” approach, with a spread of investments over a portfolio of concepts and capabilities useful against a range of threats. In parallel, DoD would prioritize investment in the institutional capacity to adapt, allowing DoD and the services to reallocate resources between capabilities and respond to a fluctuating 21st century threat landscape. This approach would allow DoD to increase its capability diversity by imposing a strategic management framework to do more without trying to do everything.

Capabilities

A hedging strategy would allow DoD to re-establish a high-low mix of capabilities as it did during the Second World War and Cold War. A force comprised of a range of systems from the exquisite, for certain high-end missions, to inexpensive, less advanced capabilities that are nonetheless fit for purpose provides a number of advantages to strategists, planners and commanders alike.

A high-low capability mix would provide greater potential for diverse and creative concepts of operation (CONOPs). A wider array of CONOPs would provide the United States greater scope to derive military advantage from the creativity and education of its personnel rather than the features of its hardware, creating additional uncertainty and confusion for future adversaries.

A greater variety of capability options would also allow planners more scope to tailor force packages for specific missions, balancing capability, cost and risk. These approaches would help avoid the increasingly common scenarios wherein U.S. adversaries know how and with what kit we will operate, allowing the easy development of asymmetric responses or offset strategies of their own. Better still, planners could avoid those scenarios in which we apply cost imposing strategies against ourselves by using exquisite platforms against technologically unsophisticated enemies.

A hedging strategy would still require investment in common, core enablers such as command and control (C2); communications; intelligence, surveillance and reconnaissance (ISR); and cyber. These capabilities would not only prove important regardless of the challenge faced, but provide the backbone for interoperability and a common operating picture that allows diverse force mixtures to continue to operate with cohesion and efficiency in a hedging strategy.

The principles of modularity and variety should also extend to the design of specific platforms. As Chief of Naval Operations Admiral Greenert identified, focusing development on payloads over platforms has the potential to extend the life and reduce the cost of major capital programs. When the characteristics of a platform do not themselves provide a critical capability, services should further embrace utility platforms, as the B-52 became, with long lifespans that can be easily modified and upgraded by swapping payloads to meet the demands of changing missions and technologies. Meanwhile, the flexible payload concept should extend to what are often thought of as smaller platforms, taking a system of systems approach, as DARPA’s System of Systems Integration Technology and Experimentation (SoSITE) program does for air systems. This allows for platforms with short lifespans that can be replaced frequently, incorporating new lessons, concepts and technology with each release. In this way, both platforms and payloads can be optimized for adaptability.

Development

Just as important for an effective hedging strategy is a focus on how capabilities are developed. Many criticisms of current defense acquisition processes gloss over the difficulty of dealing with the tension between developing systems quicker, cheaper or with greater capabilities. Because a hedging strategy prizes flexibility, it again seeks to spread investment, in this case among the approaches to capabilities. As a result, when choice is necessary, it goes for speed: the ability to rapidly design, prototype and especially evaluate and scale up potential systems. A hedging strategy prioritizes investments in those processes that enable the Department of Defense to delay full-scale production decisions until requirements gain greater fidelity, while at the same time learning from the small-scale batches of prototypes.

These investments begin with the workforce. A Department able to pivot from threat to threat while maintaining long-term flexibility needs employees and organizations that prize new skills. Substantial resources must be devoted to greater access to 21st-century tools and training, especially technologies and concepts that support rapid prototyping, such as additive manufacturing and makerspaces. DoD should also take advantage of the creative potential of its workforce through increased use of creative approaches to achieving objectives — especially for cutting-edge payload and small platform capability. This includes more “hackathons,” “X-prize”-type challenges and crowdsourcing. When designed and incentivized well, these further facilitate collaboration with non-traditional partners and an overall culture of innovation.

Defense industry would also benefit from hedging strategies. More programs would mean healthier competition, more research and development, compelling projects to attract talent, lower technical risk and more predictable revenues. If industry invested in new supporting production lines capable of manufacturing a variety of systems along with the ability to rapidly prototype, switch or scale platforms, it would reduce the risks of competing for government work by positioning it to quickly transition to commercial production as necessary.

To develop more effective acquisition models, industry and DoD could also experiment with responsibility for the development of designs and for systems integration, as well as who owns the means of production and the full design data rights. These could include Hardware as a Service for military platforms, building on existing trends in leasing military aircraft or for additive manufacturing machines and customizable chip foundries, allowing industry to focus on design development — with the design available for purchase outright or on a per use license — while securing critical production lines. A streamlined design-focused model could also open up participation in defense industry to a much wider array of participants.

Alternately, DoD might want to re-enter the businesses of designing systems itself, and of ensuring integration of those manufactured by industry. Whatever the innovation, there remains plenty of scope for industry to adapt to a hedging strategy in ways that make businesses more sustainable and get more systems into production.

Once systems are in production, the Department and industry should focus on building to schedule rather than delaying for optimal capability objectives. Here the Department can steal a page from industries from cars to computers, where products are delivered in year-model tranches — sometimes evolutionary, sometimes revolutionary, but always on time. Instead of meeting specifications of “spirals,” “builds” or “increments,” managers should ruthlessly adhere to cut-off dates to determine what makes it into that year’s model so as not to push back delivery.

This approach won’t work for every program — some systems are near worthless without achieving the specific requirements forgone in the year-model method, yet it’s ideal for platforms with long-running production cycles like aircraft or naval vessels. It also fits the needs of a hedging strategy because such a strategy acknowledges crisis response and the benefits of presence, and a large element of deterrence is derived from standing force structure. Therefore some capabilities — particularly the utility platforms — will be in a state of near constant recapitalization, or modernization, and a good match for the year-model method. Additionally, in applying this method to the development of new systems by bridging the difference between current and desired capabilities through iterative steps, the Department can minimize cost growth from schedule delays and technical risk.

While the United States may “go to war with the army it has,” a hedging strategy’s investments help ensure that its forces both more closely match what’s needed and better adapt as the war evolves.

Reality

As with any strategy, a hedging approach has weaknesses and carries risk. Increasing the breadth of capability options in the U.S. arsenal would mean taking some risk in capacity for each of those options. However, that risk would be mitigated through the use of CONOPs that combine different force packages. Further, the risk may not even materialize if recent studies on the lack of efficiencies for joint fighter programs hold true for other capabilities.

Another important point is that a hedging strategy might not reduce the price tag of any one particular system. Yet, in aggregate, it may save money by decreasing funds lost on systems that spend many years in the development pipeline only to be cancelled with few platforms delivered, like the $6.9 billion spent on the Army’s Comanche helicopter. Additionally, a capability is more cost-effective if it is available from the time it is needed. A hedging strategy therefore enables leaders to cut programs that stagger on, zombie-like, for lack of alternatives, and to turn to ready prototypes when faced with a new challenge.

In theory, DoD already hedges through portfolio management and capability-based analyses across the range of military operations. Increasingly though, DoD creates a capability monoculture arising from the belief that the Pentagon can only focus on one major effort at a time (incidentally the main argument for focusing primarily on an offset strategy). This has led to a paradigm where the Department makes huge bets on single multi-role platforms that are then expected to address an unrealistic breadth of contingencies. The F-35 currently represents 25 percent of the total DoD procurement budget, a huge opportunity cost in terms of alternative options that might have been developed over the past 20 years.

A true hedging strategy is likely unachievable today despite its technical and financial feasibility. Governance and organizational structures, planning and acquisition processes and institutional cultures all favor addressing well-defined, long-term initiatives. But overcoming such obstacles in support of national security objectives is not insurmountable and can be addressed with strong leadership. This means empowering people to make changes financially, bureaucratically and contractually.

Regardless of the specific framework, the United States must be able to actively pursue multiple military-technical strategies simultaneously if it wishes to maintain technical superiority deep into the 21st century. The variety of threats, technologies, operating environments and partners the United States must address demands it, not to mention the rate of change among those factors. Whether DoD pursues a hedging strategy or some other approach it must acknowledge its capacity to do more than one thing at a time and develop that ability as a matter of urgency.

 

Ben FitzGerald is the director of the Technology and National Security Program at the Center for a New American Security. He co-directs the “Beyond Offset” initiative at CNAS.

Scott Cheney-Peters is a surface warfare officer in the U.S. Navy Reserve, founder and president of the Center for International Maritime Security (CIMSEC), and a member of the Truman National Security Project’s Defense Council. The views above are the author’s alone and do not necessarily reflect those of the Department of Defense or Navy.