Defense Secretary Chuck Hagel announced a new Defense Innovation Initiative on Saturday as a way to counter a shrinking technological superiority even as congressional unwillingness to allow certain cost-saving measures may put the Pentagon in a $70 billion hole over the next five years.

Defense Secretary Chuck Hagel

The idea behind the initiative, which includes a Long-Range Research and Development Planning Program, is to “account for today’s fiscal realities by focusing on investments that will sharpen our military edge even as we contend with fewer resources,” Hagel said Saturday at the Reagan National Defense Forum in California. “Continued fiscal pressure will likely limit our military’s ability to respond to long-term challenges by increasing the size of our force or simply outspending potential adversaries on current systems, so to overcome challenges to our military superiority, we must change the way we innovate, operate, and do business.”

Hagel said the R&D roadmap highlights key to focus resources, including “robotics, autonomous systems, miniaturization, big data, and advanced manufacturing, including 3D printing.” He added that experts from within and outside of government will be asked to help decide on a starting point for this research by developing a plan for which systems and technologies the Defense Department should pursue over the next three to five years.

The Defense Innovation Initiative also calls for an assessment of operational concepts and the development of new approaches to warfighting where needed. That discussion will include how to balance investments in platforms versus payloads–an area of significant debate already in the Navy–new approaches to wargaming, and personnel issues such as professional military education and leadership development.

An “Advanced Capability and Deterrent Panel,” headed by Deputy Secretary Bob Work, will oversee the development and implementation of this effort.

“I expect the panel to propose important changes to the way DoD diagnoses and plans for challenges to our military’s competitive edge, and I also expected to break with many of our usual ways of doing business, encouraging fresh thinking that is focused on threats and challenges to our military superiority, not simply adapting what is on the books today,” Hagel said.

Among the changes Hagel expects to see is a reliance on nontraditional sources of technology and innovation. He acknowledged in his speech that the Pentagon is not the exclusive source of defense-relevant technologies, but rather the private sector and academia should be leveraged when possible.

Hagel said DoD is doing everything it can to reduce administrative costs and free up money to support the Defense Innovation Initiative. He referenced acquisition chief Frank Kendall’s Better Buying Power and an effort Work previewed earlier in the week to identify opportunities for vertical integration and inter-office efficiencies (Defense Daily, Nov. 12). ( Hagel made clear the reviews had already started, with his office being the first to undergo scrutiny by the deputy chief management officer and the Defense Business Board.

“DoD must embrace better business practices, better business practices that are core to any modern enterprise, private or public,” Hagel said. “This means upgrading our business and information technology systems and processes, striking the right balance between civil service and contractor support, and avoiding duplication of support functions in OSD and the services.”

However, as Work also noted earlier in the week, Hagel said the Pentagon can only do so much on its own. The department needs Congress to act as a partner in cutting costs where possible, such as approving changes to pay and benefits, allowing base closures and allowing the retirement of aging platforms.

“Without the ability to make programmatic adjustments like retiring aging aircraft, and without base realignment and closure, the department will face a bill of about $30 billion over Fiscal Years 2016 to 2020,” Hagel said. “Denying DoD the flexibility to make modest adjustments to military compensation is expected to cost tens of billions of dollars more. Factor in new bills arising from urgent investments including our new effort to renew our nuclear enterprise, space infrastructure, and technological modernization and the hole in our budget could grow to more than $70 billion over the 2016-2020 Future Years Defense Program. That is the equivalent of what our Navy will spend to buy all its battle force ships over the next five years. Or more than what the Air Force will spend to buy all of its aircraft over the next five years.”