[Senate Hearing 114-219]
[From the U.S. Government Publishing Office]



 
       DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2016

                              ----------                              


                       WEDNESDAY, APRIL 22, 2015

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 11:33 a.m. in 
room SD-192, Dirksen Senate Office Building, Hon. Thad Cochran 
(chairman) presiding.
    Present: Senators Cochran, Shelby, Moran, Durbin, and 
Udall.

                         DEPARTMENT OF DEFENSE

                    Defense Innovation and Research

STATEMENT OF HON. FRANK KENDALL, UNDER SECRETARY OF 
            DEFENSE FOR ACQUISITION TECHNOLOGY AND 
            LOGISTICS


               opening statement of senator thad cochran


    Senator Cochran. The Subcommittee on Defense Appropriations 
will please come to order.
    We are today having a hearing on the Defense appropriations 
request from the administration for fiscal year 2016, the 
Defense innovation and research request.
    We want to welcome our distinguished panel of witnesses and 
thank you for cooperating with our committee and being here 
today to discuss the budget request from the administration. We 
are specifically going to be reviewing the request for fiscal 
year 2016, as submitted by the administration, and specifically 
the Defense innovation and research title.
    We are pleased to welcome Mr. Frank Kendall, who is Under 
Secretary of Defense for Acquisition, Technology and Logistics; 
Mr. Alan Shaffer, Acting Assistant Secretary of Defense (ASD) 
for Development, Research and Engineering; and Dr. Steven 
Walker, Deputy Director of Defense Advanced Research Projects 
Agency, or DARPA.
    I want to commend Mr. Shaffer as he concludes his work with 
the Department of Defense. He will be departing the Department 
to serve as Director of the North Atlantic Treaty Organization, 
Science Office located in Paris. That is pretty good going.
    We appreciate your 38 years of distinguished service, and 
we wish you all the best in your future endeavors.
    Mr. Shaffer. Thank you, sir.


                           prepared statement


    Senator Cochran. Today we look forward to learning more 
about the science and technology investment proposed in the 
fiscal year 2016 budget. This subcommittee has been a strong 
advocate of science and technology investments and has helped 
provide funding to make certain our Nation can maintain its 
role as the leader in technology and innovation. We want to 
continue to receive the input of experts at the Department of 
Defense, as we do our work. We appreciate your joining us today 
to testify as our committee continues to evaluate the budget 
request.
    Your full statements have been received by the committee 
and they will be included in the record, printed in the record.
    [The statement follows:]
               Prepared Statement of Senator Thad Cochran
    Good morning, the subcommittee will come to order. Our hearing 
today focuses on the fiscal year 2016 budget request for Defense 
Innovation and Research. We are pleased to welcome: Mr. Frank Kendall, 
Under Secretary of Defense for Acquisition, Technology and Logistics; 
Mr. Alan Shaffer, Acting Assistant Secretary of Defense for 
Development, Research and Engineering; and Dr. Steven Walker, Deputy 
Director of Defense Advanced Research Projects Agency (DARPA).
    I commend Mr. Shaffer, as he concludes his work with the Department 
of Defense. Mr. Shaffer will be departing from the Department to serve 
as the Director of the North Atlantic Treaty Organization, Science 
Office located in Paris. We appreciate his 38 years of distinguished 
service, and we wish you the best of luck in your future endeavors.
    Today, we look forward to learning more about the science and 
technology investments proposed in the fiscal year 2016 budget. This 
subcommittee has been a strong advocate of science and technology 
investments and has helped provide funding to make certain our Nation 
can maintain its role as the leader in technology and innovation. We 
want to continue to receive the input of experts at the Department of 
Defense.
    Thank you for joining us today to testify as our committee 
continues to evaluate the budget request.
    Your full statements will be included in the record.
    Now I will turn to the Vice Chairman, Senator Durbin, for his 
opening remarks. Thank you.

    Senator Cochran. Let me now turn to the vice chairman of 
the committee, Senator Durbin, for any remarks he may want to 
make.

                 STATEMENT OF SENATOR RICHARD J. DURBIN

    Senator Durbin. Mr. Chairman, thank you very much.
    I want to thank Mr. Kendall, Dr. Walker, and Mr. Shaffer 
for coming today, and I would also like to echo the comments of 
the chairman about Mr. Shaffer's service to our country and 
congratulate him on his new position. Once you are settled in, 
we are going to come over and visit, of course, and talk about 
your perspective on NATO (North Atlantic Treaty Organization) 
and science for a long time to come.
    As I stated last year, I am concerned with the state of our 
Federal investment in research and development (R&D). I would 
ask my colleagues and those in the audience to take a look at 
this chart.
    [The chart follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    Senator Durbin. In the 1960s--the chart starts in 1976, but 
in the 1960s, the United States invested 17 percent of the 
discretionary budget on research and development. We were 
putting a man on the moon and doing a lot of things in that 
era. That number is down to 9 percent, 9 percent of our 
discretionary budget on R&D.
    Between 1960 and 1980, Federal R&D spending as a share of 
GDP averaged 1.52 percent per year. However, now it averages 
0.8 percent per year. This is a steady decline. This led to a 
cumulative $1.5 trillion research investment deficit.
    And the second chart I will show you how we compare to 
other nations.
    [The chart follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    Senator Durbin. While we are declining in our investment in 
research, many other nations are surging ahead. Our nearest 
competitor, China, has increased funding in R&D and is on track 
to surpass the United States in research and development in a 
little over 5 years.
    Well, I decided to introduce a couple bills to address 
these deficits directly: the American Cures Act, the American 
Innovation Act. The Cures Act would increase medical research 
for NIH (National Institutes of Health), CDC (Centers of 
Disease Control and Prevention), DOD (Department of Defense), 
and Department of Veterans Affairs at the rate of GDP (gross 
domestic product) inflation plus 5 percent. When I went to 
speak to Dr. Francis Collins at NIH, he said, ``Give us 5 
percent real growth for 10 straight years and we can make a 
difference in the lives of people around the world and save 
more than the money that you will put into medical research.'' 
I see my friend, Senator Moran, here from Kansas. He has always 
been an outspoken supporter of NIH research.
    The American Innovation Act complements this and would set 
science and technology funding at the rate of GDP indexed 
inflation plus 5 percent for the Department of Energy, the 
National Science Foundation, NASA (National Aeronautics and 
Space Administration), and NIST (National Institute of 
Standards and Technology). Last year, with the support of my 
colleagues on this subcommittee, we successfully increased 
basic research across DOD and the services by $260 million and 
added $1.26 billion for DOD medical research.
    I tried to demonstrate in this subcommittee that we could 
do 5 percent real growth as a challenge to the other agencies. 
This is a great effort, but the challenge continues. Other 
nations are catching us. Some are determined to pass us. If we 
live in the world of budget caps, we will find ourselves mired 
in a mess.
    What former Speaker Newt Gingrich said in the Washington 
Post this morning is the reality. The cost that we are going to 
incur for healthcare alone is going to far surpass the cost of 
research which might avoid some of these terrible outcomes.
    I am looking forward to hearing from our panel here on our 
technology deficits. You have a lot of successes to point to: 
DARPA's investment in cybersecurity, highlighted on ``60 
Minutes,'' DOD's investment in nano-satellites and investments 
undertaken by DOD's Strategic Capabilities Office. Even though 
we do not have a packed room here, I think this is one of the 
most important aspects of this appropriation. I thank you for 
being here.
    Senator Cochran. We can now proceed to hear from our panel, 
and I will call on first Frank Kendall, Under Secretary of 
Defense for Acquisition, Technology and Logistics.

                SUMMARY STATEMENT OF HON. FRANK KENDALL

    Mr. Kendall. Thank you, Mr. Chairman.
    Chairman Cochran, Ranking Member Durbin, distinguished 
members of the committee, thank you for the opportunity to 
discuss some of the measures that the Department of Defense is 
taking to support and encourage innovation, particularly 
actions the Department is taking to improve the productivity 
and performance of our Defense acquisition. Our written 
testimony has more detail.
    I would like to begin by expressing my appreciation for the 
work this committee has done to support the DOD science and 
technology program and specifically to preserve basic research, 
which is the foundation of all of our future capabilities.
    The leadership of the Department from Secretary Carter 
through Deputy Secretary Work, the Chairman and Vice Chairman 
of the Joint Chiefs, the service leadership, and my colleagues 
who are with me today, Acting Assistant Secretary Shaffer, 
Deputy Director for DARPA Dr. Steven Walker, who is sitting in 
for Director Arati Prabhakar, are all committed to preserving 
the technological military superiority of the Department.
    The Department faces two serious threats in that endeavor. 
The first is external and the second is internal.
    As many of you are aware, I have been expressing my 
concerns about eroding technological superiority in the 
modernization programs of potential adversaries for some time. 
Not too long ago, I briefed Senator Durbin at a highly 
classified level about the details of some of the foreign 
modernization programs that concern me. I offer the same 
opportunity to the other members of the subcommittee.
    The short and unclassified version of that briefing is that 
potential adversaries are aggressively acquiring technologies 
and weapons specifically designed to defeat the power 
projection capabilities of the United States. Potential 
adversaries have studied the American way of projecting power 
and identified perceived weaknesses, particularly our reliance 
on small numbers of high-value operational assets.
    The foreign systems that concern me include precision 
ballistic and cruise missiles intended to attack aircraft 
carriers, airfields, and other critical assets; advanced 
electronic warfare systems; air-to-air missiles; and space 
control systems. The United States cannot afford to be 
complacent about our technological superiority.
    The other threat to our military superiority is one of our 
own making. It is the threat of sequestration. In this year's 
budget request, the Department is asking for funding that is 
well above sequestration levels. We are trying to recover some 
of the readiness that was lost when sequestration was 
implemented in 2013. We are also trying to acquire some of the 
capability we need to remain competitive. We are requesting 
increases in our investment accounts, research and development 
and procurement of approximately $20 billion. Sequestration 
would force us to prioritize pressing near-term needs at the 
expense of these investments, preserving capability now but 
increasing our risk in the future.
    Uncertainties about future budgets also make effective 
planning almost impossible. The uncertainty we face encourages 
choices to retain forces that we cannot ultimately afford in 
the hopes of future higher budgets.
    The Department is committed to pursuing innovation in all 
its dimensions. Last fall, Secretary Hagel announced the 
Defense Innovation Initiative. Secretary Carter has endorsed 
this broad initiative and will be speaking tomorrow at Stanford 
about some specific steps the Department will be taking to 
foster innovation.
    My colleagues with me today will discuss what they are 
doing to strengthen the Department's research and engineering 
efforts, particularly the science and technology efforts that 
acting ASD Shaffer oversees and the cutting-edge innovative 
technology that Director Arati Prabhakar and Steve Walker 
pursue at DARPA. The name ``DARPA'' is synonymous with 
innovation, and one of the joys of my current position is the 
opportunity to support and work with this fine organization.
    My own efforts are focused on the broader DOD acquisition 
enterprise. Just 2 weeks ago, I announced the final details and 
implementation guidance for the most recent version of the 
Department's so-called Better Buying Power initiatives, Better 
Buying Power 3.0. The series of Better Buying Power versions 
started in 2010 when Under Secretary Carter and I promulgated 
what we now call Better Buying Power 1.0. Although there has 
been more continuity than change in this series of initiatives, 
the focus has shifted. The most recent version is focused on 
innovation, technical excellence, and technological 
superiority.

                           PREPARED STATEMENT

    While we will continue all of our core efforts to improve 
efficiency and productivity throughout defense acquisition, 
this version of Better Buying Power focuses on the steps we can 
take to spur innovation and get the greatest value we can from 
each of our research and development efforts and from sources 
of innovation outside the Department's traditional sources. 
These efforts include our science and technology accounts, 
DARPA's budget, the work of the DOD laboratories, contracted 
research and development, reimbursable, independent R&D 
conducted by industry, the Small Business Innovative Research 
Program, and other efforts.
    We urge you to support all of this valuable work, but most 
of all, we urge you to permanently repeal the threat of 
sequestration. Removing this specter would do more than any 
other single act to spur innovation and preserve our military 
technological superiority.
    Thank you, Mr. Chairman.
    [The statement follows:]
                Prepared Statement of Hon. Frank Kendall
    Chairman Cochran, Vice Chairman Durbin and distinguished members of 
the subcommittee, we appreciate the opportunity to testify today. I am 
joined here with Mr. Alan Shaffer, Acting Assistant Secretary for 
Research and Engineering and Dr. Arati Prabhakar, Director of the 
Defense Advanced Research Projects Agency. Together, with the Research 
and Engineering enterprise, we work hard every day to advance our 
Nation's defense technologies. The Department's current and planned 
innovation initiatives reflect our belief that the future security of 
the United States and our allies depends upon maintaining our 
technological superiority. Our superiority directly correlates with a 
healthy and robust industrial base, stable and adequate budgets, and an 
effective defense acquisition system. We look forward to the 
opportunity to discuss the Department's progress in each of these 
areas, and our roles in supporting the Department of Defense (DOD) 
Defense Innovation Initiative.
    The following written testimony includes a summary of the actions 
being taken under the Department's Better Buying Power 3.0 set of 
initiatives, which are focused on innovation and technical excellence, 
other measures including the Research and Engineering Strategy and an 
overview of our Research, Development, Test and Evaluation (RDT&E) 
investments promulgated by the Assistant Secretary for Research and 
Engineering (ASD(R&E)), and the program being pursued by the Director, 
Defense Advanced Research Projects Agency (DARPA). All of these efforts 
are connected parts of a larger whole.
    We would like to begin, however, by discussing the reason it is so 
crucial for our acquisition system to be more productive; that is the 
clear risk the United States faces today of losing military 
technological superiority when compared to our Nation's potential 
adversaries. Controlling cost and increasing efficiency and 
productivity are always important, and the Department remains focused 
on improvements in these areas. Our first responsibility, however, is 
to ensure the United States has, and will continue to have, dominant 
military capabilities relative to any potential adversary. We are 
deeply concerned about the adverse trends in U.S. military 
technological superiority. The recently released Better Buying Power 
3.0 set of initiatives is focused on innovation, technical excellence 
and technological superiority largely because of these concerns. 
Secretary Carter will be speaking tomorrow about the importance of 
bringing advanced technology into the Department more effectively, and 
about some steps we can take to make that happen. However, nothing the 
Department, or any of us testifying today can do possibly overcome the 
negative impact of sequestration. Our budget request for fiscal year 
2016 includes a significant recovery in procurement and research and 
development investments. If sequestration is allowed by the Congress to 
occur in fiscal year 2016, the combined demands of global operations, a 
readiness deficiency caused by sequestration in fiscal year 2013, the 
expenses associated with force structure we are still in the process of 
reducing, and the Congress' refusal to accept recommended sources of 
savings will all combine to ensure a disproportionate and devastating 
impact on our modernization accounts.
         the risk of losing military technological superiority
    The U.S. and our allies have long enjoyed a military capability 
advantage over any potential adversary. The military capabilities of 
long-range precision strike weapons, stealth, wide area surveillance, 
and networked forces emerged from what Deputy Secretary Work describes 
as a ``technology offset strategy'' that had its origins in the 1970s. 
This mix of capabilities was originally designed to deal with the 
overwhelming number of Warsaw Pact mechanized forces. The First Gulf 
War in 1991 demonstrated the unprecedented impact of these technologies 
and marked the beginning of a period of unchallenged American military 
dominance that has lasted a quarter of a century and served us well in 
several conflicts. We used the same capabilities, with some notable 
enhancements, in Serbia, Afghanistan, Libya and Iraq. The U.S. has had 
a good run, but the contest is not one sided, and all military 
advantages that rely on a technology advantage are temporary. 
Globalization has leveled the technology field. Potential adversaries 
have taken good advantage of fast moving commercial technology, 
acquired technology through cyber theft and espionage, and carefully 
studied the American way of war to identify weaknesses and 
vulnerabilities.
    In the First Gulf War, the United States put a new suite of 
technologies and associated operational concepts on display for the 
world to observe and study. No nation paid more attention to the 
results of the First Gulf War than China. The intelligence estimates in 
the early 1990s suggested that, while China might be a concern in the 
future because of its accelerating economic growth, it would take 15 to 
20 years for China to become a peer competitor. It is now 20 years 
later and the intelligence estimates were accurate. China has developed 
and fielded a number of advanced weapons designed to defeat U.S. power 
projection forces. Many more are in development. These systems include 
a range of capabilities, but foremost among them are accurate and 
sophisticated cruise and ballistic missiles designed to attack high 
value assets, particularly the aircraft carriers and forward bases that 
we depend on for power projection. These missiles, fielded in large 
numbers, coupled with advanced electronic warfare (EW) systems, modern 
air-to-air missiles, extensive counter-space capabilities, improved 
undersea warfare capabilities, fifth generation fighters, and offensive 
cyber weapons pose a serious and growing threat to U.S. and allied 
forces.
    To be clear, we do not anticipate or foresee a military conflict 
with China. That would not be in any one's interest. However, we do not 
want the United States to be in a situation of inferiority or even 
parity with respect to military technology and capability. If this came 
to pass the United States would lose influence, regional rivalries and 
security dilemmas would compound, and the possibility of a conflict due 
to a miscalculation would increase.
    China is not the only nation of concern. Russia is fielding or 
developing advanced systems including unmanned air vehicles, highly 
effective air defense systems, fifth generation fighters, and state-of-
the art submarines. Russian doctrine, organization, and equipment while 
placing greater emphasis on conventional deterrence, continues to 
feature the possibility of a first strike with nuclear weapons in its 
doctrine.\1\ North Korea is increasing its nuclear and ballistic 
missile capabilities. Iran is acquiring precision missiles that 
threaten our forces in the Persian Gulf and our allies and friends in 
the region. Globally, the United States' technological superiority is 
being challenged today in ways not seen since the Cold War. As all of 
this is occurring, the Department lives under the debilitating threat 
of sequestration.
---------------------------------------------------------------------------
    \1\ See 2014 military doctrine, paragraphs 26 and 27.
---------------------------------------------------------------------------
    Taken together, the foreign modernization programs referred to here 
are clearly designed to counter American power projection forces. They 
are intended to ensure that the U.S. does not interfere in what Russia 
calls ``the near abroad'' and China refers to as inside ``the first 
island chain.'' Even if our relationships with these states remain 
peaceful and military confrontation with them never occurs, the 
capabilities we are concerned about will inevitably proliferate to 
other states where the likelihood of conflict may be greater.
         department of defense response to emergent challenges
    The Department is taking several steps to better respond to the 
emerging challenges--most notably through the Defense Innovation 
Initiative and the recently released Better Buying Power 3.0. Secretary 
Carter is also expected to discuss other steps the Department will 
taking when he speaks at Stanford later this week.
The Defense Innovation Initiative
    In November 2014, Secretary Hagel announced the Defense Innovation 
Initiative (DII) as an ambitious Department-wide effort to identify and 
invest in novel ways that sustain and advance the Department's military 
superiority and improve business operations throughout the Department. 
An ultimate aim is to help craft ``offset strategies'' that maximize 
our strengths and exploit the weaknesses of potential adversaries. The 
initiative also focuses on attracting, developing and retaining 
innovative leaders; improving internal business practices; 
reinvigorating wargaming across the Defense enterprise; developing new 
operational concepts and investing in leap-ahead technologies. Last 
fall the Department also announced the next version of the series of 
USD (AT&L) acquisition improvement initiatives, Better Buying Power 
3.0, which is focused on innovation and technical excellence. One 
shared aspect of DII and BBP 3.0 is the Long Range Research and 
Development Planning Program (LRRDPP), a focused effort to identify 
innovative and game changing technologies that can be matured over the 
next 3 to 5 years.
    Through LRRDPP, the Department has reached out to the broadest 
possible community to identify technologies that can shape future 
military systems and capabilities. The LRRDPP effort will help the 
RDT&E community prioritize its investments, identify the S&T 
investments with the highest potential impact, and prepare the 
Department for development of new innovative capabilities. To support 
the LRRDP effort, the Department released a Request For Information in 
December 2014 to solicit broad input on five focus areas: Space 
Technology, Undersea Technology, Air Dominance and Strike Technology, 
Air and Missile Defense Technology, and general ``Other'' Technology-
Driven Concepts. The LRRDPP will complete this summer in time to inform 
the fiscal year 2017 budget.
    Through the overall DII effort, the Department is investigating new 
technologies and operational concepts that will provide an enduring 
military advantage. One goal is to identify weapons and systems in the 
force today that can be used in more innovative ways. The Department 
will also look for promising technologies, including commercial 
technologies that can be accelerated into products. Finally, longer 
range science and technology investments that will have a high payoff 
in the future will be identified. The Department is also devising new 
ways of engaging the commercial sector. To be successful, the 
Department also has to attract and retain high quality scientists, 
engineers, and technical managers. This focus on achieving dominant 
capabilities through technical excellence and innovation is the new 
emphasis now being implemented in Better Buying Power 3.0.
Better Buying Power 3.0
    The Department's continuous improvement approach to obtaining 
better results from the defense acquisition system and in everything 
the Department obtains by contracting with industry, has been 
formulated in a series of initiatives originally called ``Better Buying 
Power'' by then Under Secretary Carter. The three versions of Better 
Buying Power to date are more about continuity than change. Efficiency 
and productivity are at the core of all three versions of Better Buying 
Power and many core initiatives appear in all three versions--and 
almost certainly would be in any future version. The evolution from BBP 
1.0 to 2.0 to 3.0 is based on the premise that emphasis should shift as 
initiatives are put in place, experience is accumulated, data is 
collected and analyzed, and conditions change. Each iteration of BBP is 
characterized by strong continuity with previous iterations. Areas of 
continuity include: an emphasis on competition and competitive 
environments, incentives linking profit to performance, cost 
consciousness demonstrated by active management including targets for 
cost reduction, improving the management of contracted services, 
utilization of small businesses, and strengthening the professionalism 
of the acquisition workforce. BBP 3.0, which was released in its final 
version with implementing instructions last week, maintains that 
approach, with an increased emphasis on achieving dominant capabilities 
through innovation and technical excellence.
    The draft of BBP 3.0 was released in the fall of 2014 when it was 
distributed for comments from the workforce, industry and other key 
stakeholders. Feedback was received from industry, think tanks and 
other institutions and the Department worked with the Congress on 
legislative portions of the initiatives. BP 3.0 does not reflect 
everything that the Department will do to increase innovation in 
industry and government, but it is a significant subset of the actions 
being taken to enhance innovation and technical excellence in the 
Department. The USD (AT&L) will utilize the Business Senior Integration 
Group, originally formed under then Under Secretary Carter, as the 
management forum to implement the BBP 3.0 initiatives, track them and 
identify new opportunities to improve acquisition outcomes. The 
Department's management approach remains one of continuous improvement, 
with the focus of this iteration of BBP on innovation and technical 
excellence.
    We have submitted the BBP 3.0 ``implementation instructions,'' 
which describes BBP 3.0 in more detail for the record.\2\ The following 
is a brief summary of key components in the Better Buying Power 3.0 
Initiatives that will have impact to the Department's ability to 
innovate.\3\ There are seven major areas of emphasis that have a number 
of individual initiatives associated with each area. For the purposes 
of this statement we will highlight examples of efforts focused on 
innovation and technological superiority.
---------------------------------------------------------------------------
    \2\ Frank Kendall, Better Buying Power 3.0: Implementation 
Guidance, Office of the Under Secretary of Defense, Acquisition, 
Technology and Logistics, April 9, 2015 http://www.acq.osd.mil/fo/docs/
betterBuyingPower3.0(9Apr15).pdf.
    \3\ Frank Kendall, Better Buying Power 3.0 Fact Sheet (9 April 
2015) http://www.acq.osd.mil/fo/docs/BBP3.0FactSheetFINAL.PDF.
---------------------------------------------------------------------------
    The Department is increasing its emphasis on responsiveness to 
threat changes through tighter integration of requirements, 
intelligence, and acquisition. When the Department introduces a system 
to the field, its capabilities cannot be assumed to remain adequate 
against advancing threats. The threat is dynamic, and the Department 
must stay ahead of the threat curve. The Department will increase the 
use of modular designs, open architectures, and competition to spur 
innovation and ensure that our designs can accommodate upgrades that 
keep us ahead of potential adversaries at affordable cost.
    BBP 3.0 adds a specific initiative on cybersecurity. Innovation 
that is stolen before it is fielded, and systems whose capabilities can 
be negated by cyber-attack offer no advantage to the United States. 
Cyber security is a pervasive problem for the Department. It is a 
concern for our programs from inception through retirement. The cyber-
security of the industrial base that supports the department, and the 
ability to protect even unclassified technical information, including 
design, supply chain, and logistics support systems for our weapons 
systems, will be addressed more effectively. Everything associated with 
a weapons system is a potential point of attack. The Department has 
taken steps to address these concerns, but more action is needed.
    The Department intends to make it easier for people to do business 
with the government. Under BBP 3.0, barriers to doing business with the 
department will be reduced so that we can engage new, innovative 
suppliers, especially small businesses. The Department is also working 
to find ways to transition commercial technology more effectively, so 
that we can leverage a vibrant, innovative commercial technology sector 
and get capability into the hands of warfighters more quickly. Outreach 
to commercial firms has already increased, as demonstrated in the 
LRRDPP initiative which will inform the fiscal year 2017 process.
    BBP 3.0 is also increasing the Department's focus on getting the 
most out of all of our various research and development investments 
leading up to actual product development. This includes the science and 
technology, advanced component, and early prototype investments. The 
productivity of our in house laboratories, external research efforts 
funded through contracts and grants, and the Independent Research and 
Development (IR&D) conducted as a reimbursable expense by private 
industry are all of concern. Each of these investments will be assessed 
and evaluated with a goal of getting as much from them as possible.
    BBP 3.0 includes several initiatives designed to encourage 
innovation in industry. One is the direction to provide industry with 
draft requirements earlier on in the process, allowing industry the 
opportunity to provide feedback and to make well informed investment 
decisions. The Department will also contract with industry for early 
concept definition work to better inform requirements decisions and 
analyses of alternatives. Finally the Department will expand the 
process of defining ``best value'' in monetary terms so that industry 
will know what the government is willing to pay for enhanced 
performance. This knowledge will spur innovation by giving industry a 
solid understanding of the competitive advantage available to firms 
offering innovative ways of achieving higher performance at acceptable 
costs.
    BBP 3.0 also continues to emphasize professionalism in the 
acquisition workforce, with a specific focus in this version on 
technical excellence. A strong engineering and scientific government 
acquisition workforce is a necessary for effective innovation and 
management of development programs. Technical risk management is at the 
core of cutting edge weapon system development programs, and the 
Department cannot just transfer this responsibility to industry. Well 
qualified technical managers, normally with relevant engineering 
backgrounds, should be running our development programs. The Department 
cannot be an intelligent customer who insists on high levels of 
performance and knows how to get the most out of industry, without well 
qualified technical managers. The Department would like to work with 
the Congress to create greater incentives to recruit, grow, and retain 
professionals with these capabilities.
    In summary, BBP 3.0 does not end the Department's focus on 
controlling costs, critical thinking and sound professional management. 
It shifts the emphasis toward the products the Department acquires for 
our customers: the warfighters who depend on us to give them dominant 
capabilities on the battlefields of the future. BBP 3.0 continues the 
effort to strengthen the Department's culture of cost consciousness, 
professionalism and technical excellence.
                 other initiatives impacting innovation
    In the spring of 2014, the Department released the Defense R&E 
Strategy, which described the technical priorities for the Department. 
The first R&E priority is to develop capabilities that mitigate 
existing and emergent threats. This effort includes innovation in 
electronic warfare, missile defense (both cruise and ballistic), cyber, 
preservation of space capabilities, and countering weapons of mass 
destruction. The Department is also committed to developing 
capabilities that build innovation into existing and future systems. 
This includes expanding the use of prototypes and demonstrations to 
reduce risk in early acquisition, expanded use of open systems, 
modeling and simulation, developmental planning, and systems 
engineering. Lastly, the R&E strategy includes a focus on developing 
capabilities that deliver technological surprise to potential 
adversaries. This includes research in subjects such as autonomy, human 
cognition, quantum sciences, and hypersonic flight.
Prototyping and Demonstration Efforts
    The Department has increased prototyping where possible within its 
budget constraints. This will help to preserve key capabilities in our 
industrial base by keeping our design teams healthy while advancing the 
state of the art to reduce development lead time and hedge against 
threat developments. The Department is focusing these efforts to 
support innovation, mitigate current and near future threats, enhance 
affordability and develop technological surprise whenever and wherever 
possible. The President's fiscal year 2016 budget includes an 
``Aerospace Innovation Initiative,'' a new joint program led by DARPA 
in partnership with the Navy and Air Force that is intended to develop 
the technologies and address the risks associated with the air 
dominance platforms that will follow the F-35. This initiative will 
culminate with the development of two ``X'' plane prototypes.
                              investments
    The Department's fiscal year 2016 budget request for Research, 
Development, Test, and Evaluation is $69.8 billion. This includes 
investments of Science and Technology (S&T) at $12.3 billion. The chart 
below shows the evolution of RDT&E budget lines over the past several 
decades. Briefly, the accounts ``Advanced Capabilities Development 
(6.4), and Engineering, Manufacture and Development (6.5) are the 
accounts that prepare the next force. These accounts have been in 
decline over the past decade. In Constant Year (fiscal year 2015) the 
overall RDT&E appropriations have declined from $89 billion in fiscal 
year 2009 to $64 billion in fiscal year 2015.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The fiscal year 2016 budget request has largely protected S&T, and 
has also preserved DARPA at $2.973 million. The table below shows the 
investment trends in the last 2 years. While this budget request is 
sufficient, the investment request for S&T in Constant Year fiscal year 
2015 dollars peaked in fiscal year 2012 at $12.9 billion.
                               s&t budget

 Table 1.--Defense Budget for Science & Technology; Research & Engineering; and DOD Top Line Budget (Fiscal Year
                                         2015 Appropriated and PBR 2016)
----------------------------------------------------------------------------------------------------------------
                                                                                                  Percent real
                                                                                                  change from
                                                          Fiscal year 2015   PBR 2016 (fiscal   fiscal year 2015
                                      PBR 2015 (dollars     appropriated        year 2015         appropriated
                                         in millions)       (dollars in       constant year    (fiscal year 2015
                                                             millions)           dollars)        constant year
                                                                                                    dollars)
----------------------------------------------------------------------------------------------------------------
Basic Research (BA 1)...............              2,018              2,278      2,089 (2,049)            -10.05%
Applied Research (BA 2).............              4,457              4,648      4,713 (4,622)             -0.55%
Advanced Technology Development                   5,040              5,326      5,464 (5,359)              0.61%
  (BA 3)............................
DOD S&T.............................             11,515             12,252    12,266 (12,030)             -1.81%
Advanced Component Development and               12,334             12,491    14,402 (14,125)             13.08%
 Prototypes (BA 4)..................
DOD R&E (BAs 1-4)...................             23,849             24,743    26,668 (26,155)              5.71%
DOD Topline.........................            495,600            497,396  534,313 (524,029)              5.35%
----------------------------------------------------------------------------------------------------------------


             Table 2.--Service and Agencies S&T Budgets (Fiscal Year 2015 Appropriated and PBR 2016)
----------------------------------------------------------------------------------------------------------------
                                                                                                  Percent real
                                                                                                  change from
                                                          Fiscal year 2015   PBR 2016 (fiscal   fiscal year 2015
                                      PBR 2015 (dollars     appropriated        year 2015         appropriated
                                         in millions)       (dollars in       constant year    (fiscal year 2015
                                                             millions)           dollars)        constant year
                                                                                                    dollars)
----------------------------------------------------------------------------------------------------------------
Army................................              2,205              2,555      2,201 (2,159)            -15.51%
Navy................................              1,992              2,155      2,114 (2,073)             -3.80%
Air Force...........................              2,129              2,282      2,378 (2,332)              2.22%
DARPA...............................              2,843              2,845      2,901 (2,845)              0.00%
Missile Defense Agency (MDA)........                176                195          224 (220)             12.61%
Defense Threat Reduction Agency                     473                481          485 (476)             -1.09%
 (DTRA).............................
Chem Bio Defense Program (CBDP).....                407                430          394 (386)            -10.12%
Other Defense Agencies..............              1,289              1,310      1,569 (1,539)             17.47%
DOD S&T.............................             11,515             12,252    12,266 (12,030)             -1.81%
----------------------------------------------------------------------------------------------------------------

    Within the S&T accounts, roughly 50 percent is spent in DOD 
laboratories and universities, and roughly half ($6 billion) is 
invested in Industrial Contracted R&D (CRAD). Industry also spends 
roughly $4-5 billion in reimbursable Independent R&D (IRAD). Among 
DOD's investments in innovation, DARPA plays a unique role. DARPA's 
mission is to explore high risk high payoff technologies.
   defense advanced research projects agency's strategic investments
    DARPA's strategic priorities can be grouped within four areas, each 
one focused on developing and ensuring a family of key capabilities. 
The first priority, rethink complex military systems, includes goals 
like assuring dominance of the electromagnetic spectrum; improving 
position, navigation, and timing without GPS; maintaining air 
superiority in contested environments; and asserting a robust 
capability in space among others. Second, master the information 
explosion, aims to derive meaning from big data and build trust into 
information systems. Third, harness biology as technology, which 
includes accelerating progress in synthetic biology, outpacing 
infectious diseases, and mastering new neurotechnologies. Lastly, 
expand the technological frontier, which includes applying deep 
mathematics, inventing new chemistries, processes and materials, and 
harnessing quantum physics effectively.
    DARPA also continues to focus on the important work of 
transitioning its technologies to the Services or to other outlets in 
support of national security. One of the ways DARPA achieves this goal 
is through its Open Catalog--a publicly accessible database of 
published papers, open-source code and other resources generated by 
DARPA-funded research. Some months ago, for example, DARPA published 
the open-source code it developed through formal methods that can 
render complex software systems unhackable for given applications. That 
code is already being incorporated into a range of devices on the 
commercial market, including the automotive industry, changing the 
economics and incentives for those who might otherwise seek to disrupt 
critical cyber systems.
    Further details on each of these areas are available in the 
recently released ``Breakthrough Technologies for National Security'' 
\4\ report. However even through effective collaboration between the 
Office of the Secretary of Defense, the Services and Agencies, our 
strategic choices will only go so far without consistent funding.
---------------------------------------------------------------------------
    \4\ DARPA ``Breakthrough Technologies for National Security'' (25 
March 15) http://www.darpa.mil/WorkArea/
DownloadAsset.aspx?id=2147488951.
---------------------------------------------------------------------------
    As such, it is essential to remember three facts about research and 
development investments. First, our technological superiority is not 
assured. It takes active investments in both government and industry to 
keep our critical capabilities superior to those of potential 
adversaries. We have come to assume technological superiority is a 
given; it is not. Second, research and development is not a variable 
cost. The number of items we would like to procure or the size of our 
force has nothing to do with how much research and development we 
should fund. It takes as much research and development to buy one 
production asset as it does to buy 1000s. Despite this fact we have a 
tendency to cut research and development proportionately to other 
budget accounts that do represent variable costs. Third, time is not a 
recoverable asset. It takes a certain amount of time to develop a new 
weapon system. Once that time is lost it can never be recovered. Today 
the Department of Defense is being challenged for technological 
superiority in ways we have not seen for many years. Our ability within 
the Department to respond to that challenge is severely limited by the 
current budget situation. While we try to resolve the issue of the 
future size of the Department, so we can plan effectively and execute 
our budgets efficiently, we are losing time, a highly perishable asset.
    The combined impact of reduced budgets, even without sequestration, 
on-going combat operations, and our global commitments significantly 
impact U.S. investment in new technology and weapon systems. The rise 
of foreign capability, coupled with the overall decline in U.S. 
research and development investments, is jeopardizing our technological 
superiority. The Defense Department has to balance among many competing 
requirements and the President's Budget will, as it always has, reflect 
the best balance of force structure, readiness, and modernization 
available. Our responsibility is to use the available resources as 
efficiently and effectively as possible to deliver needed capability to 
our warfighters.
                               conclusion
    All of our efforts to increase innovation and improve acquisition 
outcomes are efforts to swim against the current of inefficiency caused 
by the threat of sequestration and constant budget uncertainty and 
turmoil. We must restore balance to the Department, but we cannot do so 
until our plans and future budgets are better aligned. Until that 
occurs, modernization investments, particularly research and 
development, will suffer. This means that development programs will be 
stretched out inefficiently and that production rates will be well 
below optimal for many programs. The uncertainty about whether or not 
sequestration will be imposed makes it impossible to determine where 
the optimal balance between force structure, readiness and 
modernization lies. In this environment the tendency is to hang on to 
assets that the Department may not ultimately be able to afford. We 
need a certain level of funding to sustain the force that is necessary 
to execute our national security strategy and we need to remove the 
threat of sequestration so that our planning can be on a sound basis.
    The Department continues to make the health of our industrial base 
a top priority; at the most senior level, the Deputy's Management 
Action Group continues to meet specifically to review industrial base 
budget implications and the Deputy Secretary and Secretary have taken 
action to ensure we are doing what we can to protect critical companies 
that make up this important part of what we consider our ``total force 
structure.'' The U.S. is well into the process of losing tens of 
thousands of engineers and skilled production workers from our 
industrial base--this community matched with our technical managers is 
essential to continued technological superiority of the Nation.
    Given the Department's 5-year plan through 2020, we can tell you 
right now what capabilities the Department will have in 2025. If a 
weapon system is not in our 5-year plan as a development program today, 
the Department will not have that capability in meaningful quantities 
within the next decade. It is possible to move a complex weapon system 
through development in those additional 5 years from 2021 to 2025, but 
we are unlikely to be able to also produce and field a useful inventory 
within that same period of time. Technological superiority is not a 
tomorrow problem; it is here today. The Department remains committed to 
working with the Congress on acquisition improvement, particularly to 
stimulate innovation, and we are confident that the initiatives being 
pursued under the Defense Innovation Initiative, Better Buying Power, 
the R&E Strategy, and DARPA's Strategic Plan will lead to improvements.
    Nothing we can do, however, will overcome the harm done through 
sequestration and the resulting lack of adequate research and 
development funding. We conclude with three truisms about research and 
development--the source of all our innovation. First, that 
technological superiority against competitive adversaries is not 
assured; it depends on a healthy and continuing pipeline of new product 
development. Second, that research and development is not a variable 
cost; foregoing research and development doesn't lower the quantity we 
will have in our inventory-it eliminates future products entirely. 
Third, time is not a recoverable asset; the time to develop a new 
product is not something we can purchase later, and technological 
superiority, once lost is almost impossible to recover.

    Senator Cochran. Thank you for your statement.
    We will now call on Mr. Alan Shaffer, Acting Assistant 
Secretary of Defense for Development, Research and Engineering 
for DOD. Mr. Shaffer.
STATEMENT OF ALAN SHAFFER, PRINCIPAL DEPUTY ASSISTANT 
            SECRETARY OF DEFENSE FOR RESEARCH AND 
            ENGINEERING
    Mr. Shaffer. Thank you, Chairman Cochran, Vice Chairman 
Durbin, and members of the committee. I am proud to be here 
once again to represent the 100,000-plus personnel in the 
Department of Defense research and engineering enterprise, the 
enterprise that has powered previous innovation cycles that has 
produced the world's most dominant military. The research and 
engineering enterprise has been challenged, however, in many 
ways over the last several years, but the people continue to 
perform remarkably well.
    I also want to thank this committee for the longstanding 
support of the Department's science and technology (S&T) 
program. With your help, we have maintained S&T funding at 
above $12 billion a year in fiscal year 2015 and ask that you 
support our fiscal year 2016 budget request of $12.2 billion. 
In my office, we have revised the way we plan and execute and 
S&T program through Reliance 21, an oversight construct that 
has created communities of interest to bring scientists working 
in specific technology areas together to jointly plan and 
execute their Department-wide program in a more effective way.
    But to be truly effective, we have to continue to enhance 
the connection of my S&T community to the broader Department. 
As mentioned by Secretary Kendall, the current national 
security environment forces the DOD to examine new ways of 
operating to enhance our innovation. My office is directly 
involved in both the Defense Innovation Initiative and a large 
number of the specific initiatives under Mr. Kendall's Better 
Buying Power 3.0.
    The Defense Innovation Initiative is a new Department-wide 
effort to identify and invest in novel ways to sustain and 
advance the Department's military superiority for the 21st 
century and to improve business operations throughout the 
Department. The initiative has five major lines of effort, 
including people, war-gaming, operational concepts, business 
practices, and a new long-range research and development 
planning program, an effort to reach out to the broadest 
possible community to identify technologies that can shape 
future military systems and capabilities. This effort will help 
the RDT&E (research, development, testing, and evaluation) 
community prioritize its investments, protect the S&T 
investments with the highest potential impact, and increase the 
return on our S&T investments. The effort will complete its 
initial review this summer.
    Under Better Buying Power, there are a number of specific 
initiatives that address the Department's ability to innovate. 
I will cite a few that are directly aligned with my office. 
Under Better Buying Power, we are more tightly coupling the 
acquisition requirements and intelligence community to more 
dynamically adjust the changes in potential threats.
    We are addressing barriers to the adoption of commercial 
technologies in our systems and capabilities.
    We are addressing the productivity of corporate independent 
research and development.
    We are increasing the use of prototypes and experimentation 
across the Department to burn down technical risk early in a 
program cycle and understand how systems will operate.
    We are emphasizing technology insertion and refresh in our 
program planning so that we can become much more agile.
    We are expanding the use of modular, open systems 
architecture to stimulate innovation and allow us to become 
more agile.
    We are improving the outreach for technology and products 
from a global market. As Mr. Durbin showed, technology now is 
global and R&D has become a global commodity. We have to go out 
and get the best possible for our forces. We are increasing the 
participation of small business.
    Taken together, these initiatives will enhance our ability 
to improve the systems and capabilities we design, develop, and 
field well into the future.
    In addition, as mentioned by Mr. Kendall, tomorrow 
Secretary Carter will be announcing some actions that he is 
directing to improve our outreach to and the use of some of the 
fasting growing commercial technologies and talent in the 
world. Meeting the national security needs for the future 
requires we have some urgency in implementing this multi-
faceted strategy. I am confident that with the continued 
support of this committee, the professionals who make up the 
research and engineering enterprise are up to the task.
    Senator Cochran. Thank you very much.
    We will now hear from Dr. Steven Walker, Deputy Director of 
DARPA.
STATEMENT OF DR. STEVEN WALKER, DEPUTY DIRECTOR, 
            DEFENSE ADVANCED RESEARCH PROJECTS AGENCY
    Dr. Walker. Thank you. Thank you, Mr. Chairman, Senator 
Durbin, members of the subcommittee. I appreciate the chance to 
participate and be here at this hearing today.
    DARPA is part of this broader DOD community and we are also 
part of a bigger national R&D ecosystem. Within these 
communities, DARPA has a very particular role. That role is the 
make the early pivotal investments that help develop 
breakthrough technologies. We do that to change what is 
possible for the future so we can take big steps forward in 
national security capability.
    I would like to give you just an example of how our work in 
DOD science and technology makes those advanced military 
capabilities possible. I want to do that by looking under the 
hood a little bit at a trio of new radar and jammer systems 
coming online today.
    So today our military services are building a new 
generation of radio frequency phased arrays to field in the 
coming years: The air and missile defense radar that will allow 
the Navy destroyers to handle more threat systems at once; a 
next gen jammer that will provide more precise jamming at 
greater ranges; and the space fence radar that will allow us to 
look at lots of objects in space from the ground. Each one is a 
big step forward in our military capability.
    So let us take a look under the hood at how we have enabled 
these capabilities to come to fruition.
    One thing you will see in each system is many commercial 
integrated circuits. So these are catalog parts. But you will 
also find some components you cannot find in any catalog. That 
is the unique technology that gives each one of these systems 
its power. And that technology is gallium nitride power 
amplifiers. These semiconductor components send and receive 
radio signals at higher power with much greater efficiency than 
chips that they replace.
    So where did the gallium nitride radio frequency technology 
come from? It actually started as a crazy idea over at one of 
our sister agencies, the Office of Naval Research, ONR. A 
creative program manager there in the 1990s had this idea for 
this new material called gallium nitride. But at the time, he 
could only build a very small crystal of material. So that is 
how the journey started.
    But with DOD basic research investment in new materials at 
universities and laboratories, then a big push by DARPA to 
demonstrate the first practical devices made with gallium 
nitride was done, followed by ManTech and service laboratory 
investment and industrial investment to mature the technology, 
ultimately building a tech base, an industrial base that 
actually could produce these devices. So that is how we can 
build the AMDR, next gen jammer, and space fence today. This is 
just one example of the impact of science and technology and 
how it helps develop and drive new products for DOD.
    Looking forward, if you look at our portfolio at DARPA 
today, you will see many variations on this theme. Whether it 
is platforms and weapons so we can prevail in a highly 
contested battle space or cybersecurity or new fields of 
research where we see the next seeds of technological surprise, 
this work that we do along with the rest of the Department's 
science and technology community is the foundation for our 
military technological superiority in the future.
    So I thank you for your support. The subcommittee's support 
over the years continues to be essential to what we do at 
DARPA. And I will be happy to take the questions along with Mr. 
Kendall and Mr. Shaffer. Thank you.
    Senator Cochran. Thank you very much.
    Mr. Kendall, let me start questioning by asking you about 
your recent paper, The Challenge to U.S. Technological 
Superiority. It seems to portray that other nations' advances 
in technologies are placing some of our security interests at 
risk. What specific recommendations would you make to the 
committee and the Senate to ensure that we are investing in the 
correct warfare domains to maintain our technology dominance?
    Mr. Kendall. Mr. Chairman, the paper you referenced lays 
out some of the threat developments, modernization programs 
that I alluded to in my opening remarks. It basically goes 
through with the unclassified level some of the very specific 
types of systems that are being built.
    The United States introduced a way of warfare for power 
projection, particularly conventional warfare, that was 
unprecedented in its efficiency and effectiveness. That was in 
the first gulf war in 1991. The prediction going into that 
fight was that we would have 10,000 or more casualties. In the 
event, we had less than 300 if I remember correctly.
    The reason that we are so dominant on the battlefield was a 
mix of technologies that included precision weapons, stealth, 
network forces, and wide-area sensors. That same suite of 
capabilities, which came out of technology investments of the 
1970s primarily, is the set of capabilities we continue to 
advance and enhance certainly but that we continue to rely on.
    Nobody watched more carefully what happened in the gulf 
war, wrote about it more, or reacted to it more than China and 
to a lesser extent Russia. It was right after the cold war had 
ended, of course. So Russia was not much of a threat at that 
time, and China was relatively poor at that time compared to 
where they are today. But they have had 25 years since then, 
roughly, to invest in capabilities that are designed to counter 
that set of capabilities that we demonstrated so dramatically 
in the first gulf war. And that is what they have done.
    I come in every morning and I get an intel brief when I 
come in and I tend to focus on technical intelligence because 
it is what I am concerned about. And I have been looking for 5 
years now at the weapon system developments that are taking 
place, again particularly in China. And it was quite clear to 
me 5 years ago that they are focused on investments which are 
designed to defeat our power projection capabilities. And many 
of those systems have been fielded. There are many more in 
their pipeline that will be fielded in the next few years, and 
the quantities, of course, are increasing. So that is the 
problem we face.
    The fundamental things we need to do about that. First of 
all, we need to invest adequately. And the reason I gave such a 
strong statement about sequestration and about the importance 
of preserving our longer term investments is because without 
resources nothing that we can do at the Department will make us 
adequately efficient or make up for the loss or lack of 
resources. That is number one.
    We think we have struck a fairly balanced approach to our 
investments. There is a lot of work ongoing right now to make 
sure we have got the right focus. We think we are in a 
reasonably good place but may want to make some adjustments. 
Secretary Work came in interested in a third offset strategy, 
as he calls it. It is the next generation, the next suite of 
capabilities that we would field to go to the next level of 
performance, if you will, compared to those that I talked about 
earlier. We are in the process of looking at that. Mr. Shaffer 
mentioned the long-range R&D planning activity that is ongoing. 
That is designed to inform the fiscal year 2017 budget, and we 
may make some investments based on that. Secretary Carter is 
very interested in making sure we make the right bets for the 
future, that the Department makes some conscious decisions 
about where we need to go. So that is all work in progress.
    We think right now with what we have requested we are in a 
reasonably good place. We do expect to make some adjustments in 
2017. What we would ask for more than anything else is adequate 
funding from the committee, from the Congress to do the things 
that we need to do.
    Senator Cochran. Thank you.

                         TECHNOLOGY TRANSITION

    Mr. Shaffer, what processes have you observed that enable 
technology transition from the laboratory to programs of 
record? Are there any recent examples of the transitioning of 
such technology?
    Mr. Shaffer. Yes, sir. So I think at the end of the day, 
technology transition is a contact sport. We have got to have 
demonstrations and prototypes that the users can then go out 
and use and see if they can break it, see how they use it, see 
how the capability can be employed. And we have seen a number 
of very successful smaller scale prototypes that have been 
developed and deployed. I will mention a couple that came out 
of our office because I think they are illustrative of the type 
of thing that we can do.
    About 6 years ago, the Johns Hopkins applied physics 
laboratory came to one of my program managers with a small-
scale laser radar that can be put on a UAV (unmanned aerial 
vehicle). This system can be used to map the terrain locally in 
Afghanistan at roughly the 1- to 2-inch resolution level. We 
put that system into a prototype in a UAV, had the Army go use 
it in theater, and they ended up finding a lot of caves that 
they did not know existed where some of the terrorists were 
hiding. The program was so successful it has transitioned into 
a program of record in the Army called tactical observing 
system, or TACOBS, and is being fielded for future Army 
systems.
    There are numerous other of those types of capabilities, 
but at the end of the day--and we have made a huge push in the 
Department to increase our level of prototyping and 
demonstrations, but it is actually building a capability, 
giving it to the operators so they see how it can be employed, 
and then going ahead and modifying the final production system. 
We find that we can go much more quickly through the system 
that way.
    Under Dr. Walker, we found that we needed a longer range 
air-to-surface ship missile, anti-ship missile. That program, 
known as LRASM (long range anti-ship missile), came out of a 
DARPA program. Mr. Kendall went ahead and sent in a transition 
plan for LRASM, managed jointly by DARPA and the Navy for a 
couple of years, transitioned to a Navy program of record, and 
we will actually field some long-range anti-ship missiles in 
about a 4-year period. Again, that is another success and it 
came about because it is a contact sport, sir.

                      LONG RANGE ANTI-SHIP MISSILE

    Senator Cochran. Well, thank you.
    I think I will ask Dr. Walker, since your name has been 
associated with that effort, to see what the long-range 
capability prospects are for our missile arsenal capabilities.
    Dr. Walker. Yes, sir. Mr. Shaffer mentioned the long-range 
anti-ship missile. DARPA had three key successful 
demonstrations of that capability, and that is moving out into 
a program of record. So that is a very big success.
    But I think the things I would like to highlight are two 
programs that we are actually working with the Air Force on, 
both in hypersonics. One is a boost-glide system. Basically you 
boost it with a rocket and glide the system to the target. And 
the other is a hypersonic air breathing weapons concept where 
you also boost that concept. You then take over with the air 
breathing scramjet engine on board, and that also hits its 
target as well. We are working both of these jointly with the 
Air Force.
    These are hypersonic speed, so at least five times the 
speed of sound. What that buys you is a strike capability for 
time-critical targets from long standoff ranges. And so we see 
these systems--if we can pull that hypersonics technology into 
a weapon system concept, we see that at the end of these 
programs the Air Force would be ready to go off into an 
acquisition program on those systems potentially if we are 
successful.
    That is really the future. If you could combine that 
capability with any of our platforms, we will have a capability 
that will provide us an advantage in a contested environment in 
the future.
    Senator Cochran. Thank you.
    Senator Durbin.

                             CYBERSECURITY

    Senator Durbin. Thanks a lot, Mr. Chairman.
    And let me commend to my colleagues here--I did spend an 
hour with Mr. Kendall talking about breakthroughs in technology 
on our side and the other side. It is well worth your time. It 
is an eye-opener in terms of what we are appropriating here.
    So we used to live in the world, the John le Carre world, 
of cloak and dagger spies, and we still hear of them popping up 
from time to time. But it appears that the real vulnerability 
now is in cybersecurity and cyber spying. So when we talk about 
the advances being made by our hard target enemies or others 
around the world, how much do you attribute to their invasion 
of our knowledge, theft of our knowledge?
    Mr. Kendall. I have to be careful what I say. But, Senator, 
cyber espionage, cyber theft is a huge concern. It is a 
pervasive problem. I think I can tell you that we protect our 
classified information reasonably well, but we have not done a 
good job of protecting unclassified information.
    About a year ago, we put in place a mechanism in our 
contracts to require people to protect unclassified technical 
information to a certain set of standards. They come out of the 
National Institute of Standards and Technology. That is a first 
step. And we have got about 200,000 contracts I think now which 
include that clause, and we are enforcing that so that people 
do a better job of protecting technical information. We are 
going to evaluate that over time, and we may have to put some 
more stringent controls in place.
    Getting access to that technology and, if you will, coming 
into somebody's computer and unloading their drawings and all 
their information is that you save an enormous amount of time 
and money in developing your own capability. You take something 
as benign as, say, the landing gear design for the F-35, which 
there is no real reason why that would have to be classified. 
And you can emulate that. You know that there is a successful 
design there. It saves you an enormous amount of cost and risk 
getting to a similar design. That is a mundane example, but 
there are lots of them.
    Our ship designs, for example, are basically unclassified, 
and they have to be handled that way for a variety of reasons. 
But we need to protect all that information much more 
effectively.
    We are under attack. We are under attack every day, and it 
is very depressing to see some of the successful attacks that 
have occurred, again unclassified technical information 
largely. So we are doing some things there.
    We are trying to increase our awareness of cyber threats 
and the necessity of doing something about them throughout a 
program's life cycle. It is a program manager's responsibility. 
It is a lot of people's responsibility to ensure we protect our 
information in all aspects by which we could be attacked with 
cyber attack. And it is your supply chain. It is your actual 
design work at your prime contractor's. It is the features of 
the logistics system that connect the weapon system to the 
world of suppliers that we have out there. It is the 
operational systems on the weapon system. It is everything. And 
in all those cases, we have to be worried about cyber 
vulnerabilities and take steps to mitigate them.
    So I think there is a growing awareness throughout the 
Department. Secretary Carter had a meeting on a Saturday just a 
week or so ago, brought in all the senior people of the 
Department involved in cyber to talk about just this issue and 
what our strategy is going to be to address it. We have just 
published--I am not sure if it is out today or tomorrow, but we 
have a cyber strategy, for example, that we are going to be 
publishing. So we are addressing this aggressively. It is not 
free to have cyber security. It is going to cost us money, but 
we have to do that. The return is there to protect our 
information.

                             BASIC RESEARCH

    Senator Durbin. Let me zero in on the budget request this 
year. The President's fiscal year 2016 budget request for RDT&E 
is $69.6 billion, $6.1 billion over fiscal year 2015 enacted. 
$3.5 billion of that requested $6.1 billion goes into more 
advanced research like building prototypes and evaluating their 
potential for mass production. Only $14 million--$14 million of 
that increase--is for science and technology research.
    Is there a risk to this approach where we are putting heavy 
investment in the basic technologies for the battlefield at the 
expense of neglecting our seed corn, the basic research that 
should be part of this as well?
    Mr. Kendall. Good question, sir.
    One of the things I am proud of this administration for 
having done is to protect our basic science and technology 
accounts. If you look back at the last several years, we have 
maintained, despite all the budget fluctuations, a fairly 
steady investment in science and technology. We have made a 
very minor adjustment, I think, this year in our request there 
to get back to more historical norms and to rebalance things a 
little bit. But we have worked very, very hard to protect that. 
It is about $10 billion to $12 billion out of our $60 billion 
to $70 billion of R&D, and that is a very stable part of our 
budget.
    The part of our budget that has been changing a lot has 
been the two accounts which are our pipeline of new products. 
It is the prototyping effort and the pre-full-scale development 
effort and the effort to actually get a product to where you 
are ready to produce it. Engineering, manufacturing, 
development it is called. Those two accounts have come down 
quite substantially.
    The other largest account in the portfolio of R&D 
investments is upgrades to new systems. It is called the 6.7 
account. That has grown over time substantially. As we have 
gone through cuts, everything has come down to some degree 
except the S&T accounts. But that shows that we are keeping 
things longer and we are putting money into upgrades instead of 
into new products in the pipeline. If I compare our new product 
pipeline to other countries that we are worried about, it is a 
lot of white space compared to a lot of very dense space. Let 
me put it that way. So I think if there is a concern, it is not 
in the S&T part of the budget. It is in the new product 
pipeline part of the budget, that part of the overall R&D 
investment.
    Senator Durbin. Thank you.
    Senator Cochran. The Senator's time has expired.
    The Senator from Alabama, Mr. Shelby.
    Senator Shelby. Thank you.

                        ROCKET PROPULSION SYSTEM

    Secretary Kendall, a Reuters article from June 13th of last 
year quoted you discussing the Russian rocket engine 
replacement, stating--and I will quote--``We have not figured 
out exactly how to get there yet.'' Since then, Congress has 
appropriated, as you know, $220 million for the new rocket 
propulsion system. It is my understanding that 6 months into 
the year, nothing has been obligated yet.
    How does DOD plan to provide for national security launches 
in light of section 1608 restrictions in the law last year and 
the lack of a certified alternative launch provider to date? 
How do we avoid a gap there?
    Mr. Kendall. We are wrestling with that right now, Senator 
Shelby. It is a real problem for us. Let me start with the 
basics on this.
    What we need is assured access to space. Rocket engines are 
a part of that, but we do not necessarily go out and buy rocket 
engines. We buy launch services. We want somebody to get us 
into space reliably. So that is number one. We want to be sure 
that when we want to put a satellite up, that we are going to 
get it up successfully and not drop it in the ocean. So that is 
number one.
    We would like to have more than one way to do that. So we 
would like to have two sources of space launch in case 
something happens with one of them--we have a technical problem 
or whatever, somebody goes out of business. So that is next on 
our list.
    We would like to have competition. We would like to be able 
to drive cost down through competition.
    So you put those three things first. Then you look at how 
do rocket engines fit into all of that.
    We have got a problem with the lead time to replace the RD-
180. I think we are committed to getting off of the Russian 
source for this. It has been a dependency we have been nervous 
about for a long time. Recent current events have made that a 
much more significant concern of ours, obviously. So we would 
like to get off the RD-180.
    The most direct path to do that is to go finance an engine 
program somewhere and have somebody build an engine that we 
could then make available to whoever wants to provide space 
launch services to us. It is hard to do that and make an engine 
available that could work on anybody's rocket. They tend to be 
tailored very much to a specific platform. But that is one path 
we could go down.
    The more desirable path for us is to work with the 
commercial launch providers out there--and there are multiples 
of them. Some of them are very prominent--to have them provide 
launch services to us and guarantee that they will provide 
those launch services that we want and do so in a competitive 
environment. So what we are looking for is what we call public-
private partnerships, business arrangements where we work with 
the launch providers, provide them whatever is needed to close 
their business case so that they can assure us that they will 
be there for us and provide launches we can count on the 
reliability of a few years down the road. There is a lead time 
to getting there, and that is where 1608 comes in.
    Senator Shelby. But we do not want to have that gap. Do we? 
We do not want to create a gap.
    Mr. Kendall. We do not want a gap. Exactly. That is why 
lead time is important. It is going to take us a few years to 
either develop a new engine or have launch service providers 
that are ready for us and qualified. We have gone out and asked 
industry for their input on this. There was a lot of good 
input. The next step is another request for information. That 
will be followed by a request for proposals. We are proceeding 
with the money that the Congress appropriated to do some risk 
mitigation on the propulsion side, on the engine side at the 
same time. So we have that option available as fallback if the 
public-private partnership arrangement does not work out. But 
that arrangement I think is the best business deal for the 
Government. It is the best way for us to get to assured launch 
services that we can count on a few years down the road.
    The biggest problem in 1608 is the gap you mentioned. There 
is going to be a period of time where we would like to have the 
option possibly of using RD-180s if necessary. There are much 
more expensive options available to us, but we prefer not to go 
that way. So we are trying to manage our way through all this. 
It is a very, very complicated situation. I would be happy to 
go through it in much more detail with you. We are doing our 
best to get to where we need to be as efficiently and 
effectively as we can.
    Senator Shelby. Let me ask you this. For a launch provider 
whose engine is barred by section 1608 at the moment, how far 
in advance of a planned launch would they need to seek and 
obtain a waiver to 1608? Or we could do it here.
    Mr. Kendall. We are working that with that contractor. 
Obviously, if the law were changed, it would make things 
simpler for us, but the law is written in a way which has some 
pretty specific legal requirements that we have to follow. So 
we are working our way through that. A waiver exception--
nominally, I am told that there is a 5-year lead time from 
engine purchase to launch. I think that could be shortened. I 
think it could be shortened to as little as maybe 3 years. 
There is about a 2-year lead time from when we contract with 
someone for a launch to when we actually do the launch. So, 
obviously, if you are going to buy engines, you need to buy 
them well ahead of the launch schedule. That is part of the 
problem.
    Senator Shelby. Mr. Chairman, I have a number of questions 
for the record that I will submit in the interest of time, and 
I would hope they would respond to them.
    Senator Cochran. Thank you, Mr. Chairman. I am certain they 
will.
    Senator Udall was here next first, but he has agreed to 
defer to Senator Moran who has another commitment right now. 
With your permission, we appreciate that very much.
    Senator Moran. Tom, thank you very much. Mr. Chairman, 
thank you very much.
    Mr. Secretary, gentlemen, thank you for joining us.

                          BETTER BUYING POWER

    Secretary Kendall, I would like to take you up on your 
offer. I would love to hear what Senator Durbin heard and maybe 
more. So I would welcome that chance.
    I think this issue--I served as the ranking Republican on 
the Labor-H appropriations subcommittee where we spent a lot of 
effort trying to figure out how to increase the resources 
available for medical and scientific research on the human 
side. I am pleased to now be a member of this subcommittee and 
believe that the benefits that can come from the research that 
we are talking about today are tremendous. So I would tell the 
chairman and the ranking member I want to be an ally as we work 
together to try to figure out how we do more in regard to 
advancing the safety and security of our country but also 
creating opportunities for technological and scientific 
advances within our economy, which is important to our defense 
as well.
    This is, I suppose, a provincial issue to some degree. 
Wichita, Kansas is the air capital of the world. We manufacture 
lots of military and general aviation aircraft. Wichita State 
University in particular is working on an innovation 
university, trying to tie research and the private sector 
together for advancements using science and technology.
    And finally, Mr. Secretary, I wanted to thank you. I co-
chair with Senator Murray the Aerospace Caucus. You were our 
first guest the day I became a co-chairman, and I became very 
interested in what you had to say that evening in Better Buying 
Power.
    My question that I would take from the concept of Better 
Buying Power is, is it still a theoretical concept or are there 
ways that we are bringing the private sector and actual 
production, use of technology into the acquisition at the 
Department of Defense?
    Mr. Kendall. Thank you, Senator Moran.
    No. It is a very practical hands-on, as Mr. Shaffer alluded 
to. The Better Buying Power label originated when Dr. Carter 
was the Under Secretary for Acquisition, Technology and 
Logistics. And we have kept the label, which turns out to have 
been a pretty good decision in my mind I think. But it is 
really a collection of initiatives that has evolved over time, 
and they are all designed to give us incremental improvements 
in the performance of the acquisition system. And by the 
acquisition system, I mean not just our major programs but 
everything, all the things we contract out for, all the things 
that the Department acquires. Services are half of the things 
that we contract out for--more than that actually financially. 
It certainly includes our science and technology investments.
    In the most recent version, which is focused on innovation 
and technical excellence, it includes provisions for getting 
greater access to commercial technologies. It includes 
provisions for getting greater access to foreign technologies 
that can be contributing. It basically looks at all the 
possible sources of technology. It looks at all the different 
accounts where we spend money on R&D to mature and develop 
technology and all the overhead charges associated with that so 
that we can move money from nonproductive things to the things 
that actually provide technology for our soldiers. So it is all 
of those things.
    There is a 30-to-40-page document that I put out recently 
with all the actions we are taking in each of these different 
areas. And what I will be doing over the next 2 years is 
overseeing the implementation, managing the implementation of 
all these things. So while it does not name technology 
specifically, it really is going to get down to the very 
details of what we do in a lot of different areas.
    Senator Moran. Well, Mr. Secretary, how are you able to get 
to the point where the industry, the private sector is 
responding to this program and they are utilizing the 
opportunities that it provides to change the way they operate, 
to advance their technological willingness to invest in 
advancements, in a sense, maybe before the Department of 
Defense is acquiring something they might be building?
    Mr. Kendall. There are a number of provisions in Better 
Buying Power designed to incentivize industry. One of them, 
which I think is very important, is to tell industry how much 
we are willing to pay for enhanced performance. Normally when 
we ask for a weapon system proposal, we set a level of 
threshold performance, which is the minimum that we will 
accept. And we also set an objective, which is what we would 
desire. It is higher. Industry almost uniformly will bid to the 
threshold level and ignore the objective because the threshold 
level is always cheaper. It is less capable and that goes with 
cost.
    So what we are going to tell industry--we started to do 
this--is we are going to tell industry how much more we are 
willing to pay for that higher level of performance. So 
industry can then make an informed judgment about whether to 
invest in technology that will get to that level of performance 
or not. Without that information, there is really no incentive 
for industry. And then when we do source selection, we make an 
adjustment based on the parameters that we set out in the 
request for proposals.
    We are trying to involve industry earlier on in concept 
definition and requirements formulation so that we have an 
interaction with industry. We give industry a head start, if 
you will, to work on how they would satisfy our requirements, 
and we give industry a chance to interact with us earlier so 
that we can form our requirements based on their inputs, which 
can be beneficial competitively to companies that have better 
ideas. And then we ask industry to do analytical work again to 
bring in their technologies to help us make some decisions 
about requirements.
    In general, we are trying to align our incentive, our 
financial incentive structure, with the things that we want. In 
this case, what we want is innovation, more creative, more 
capable products that we can get to the warfighter.
    When Secretary Carter speaks tomorrow, he will be talking 
about another thing that is also included in Better Buying 
Power, which is the outreach and our ability to reach out to 
nontraditional sources. So he will be talking. He will be on 
the West Coast, one of the places where commercial technologies 
are blooming, and he will be addressing some of the things 
associated with getting access to those technologies.
    Senator Moran. We want to be helpful to this proof of 
concept. My time is expiring, and I will submit a couple 
questions for the record about proof of concept to demonstrate 
that the plan is working and can move to the private sector.
    Dr. Walker, one of the things that was said in a March 2015 
report by DARPA was future U.S. capabilities require an 
integrated system of intelligence, surveillance, and 
reconnaissance, ISR, weapons communication, electronic warfare, 
cyber, and other advanced technologies. I will submit a 
question for the record to you and perhaps to the Secretary as 
well about how we are altering the capabilities to meet those 
needs.
    And, Mr. Chairman, thank you and Senator Udall for your 
assistance.
    Senator Cochran. Thank you, Senator.
    The Senator from New Mexico.

                             SEQUESTRATION

    Senator Udall. Thank you, Chairman Cochran.
    And, Mr. Shaffer, congratulations and thank you for your 
service. NATO is a good place to be right now. A lot happening. 
And so I agree with Senator Durbin. I think we may see you over 
there.
    And thank you to the panel for being here today and meeting 
with the subcommittee.
    As you know, New Mexico plays a very important role in 
research and development throughout the Department of Defense. 
At Kirtland Air Force Base, directed energy and the development 
of new space technologies is a key part of the mission of the 
Air Force research lab. The Army research lab in New Mexico 
also plays a key role in assessing the durability of new 
technologies before they are deployed, as well as the testing 
of air defense missile systems at White Sands Missile Range.
    White Sands Missile Range is the premier testing range of 
the Department of Defense, as you all well know. And while its 
mission is to test many of the technologies developed through 
R&D, I think we can agree that the future health of White Sands 
Missile Range is tied to the continued development of new 
technologies, which give our troops the tools they need to keep 
their strategic advantage.
    And, Mr. Chairman, I pointed out in previous hearings, but 
I think it is worth pointing out again, White Sands Missile 
Range is currently dealing with a major multimillion dollar 
maintenance shortfall, which has been caused by budgeting 
shortfalls, including sequestration. This shortfall is a 
possible weak spot in the R&D chain if left unaddressed, and it 
may take time to rebuild capabilities at White Sands and could 
negatively impact testing and the progress for all the military 
branches working on developing missile technologies.
    I am hopeful that all of you will help communicate this 
long-term problem to your counterparts in the Pentagon so that 
we can help ensure that our testing capabilities are still able 
to support your research and development priorities. And I see 
you are nodding. Just reflect that for the record. Thank you.
    A question on tech transfer. I believe that technology 
transfer is one of the most important priorities in New Mexico 
and the Nation. Tech transfer can help the development of 
businesses and create new markets for technologies being 
developed by the Department of Defense.
    How will this budget support technology transfer, and would 
an increase in the applicable budget lines help improve the 
development of commercial military applications through 
cooperative research and development agreements?
    Mr. Kendall. Senator Udall, if I could comment on your 
comment about the ranges. We are concerned about installations 
in general and test ranges in specific. The Department has been 
forced, because of budget levels, to take some risk in those 
areas. It is not just a White Sands problem. It is a larger 
problem than that. So I appreciate your calling our attention 
to it.
    I will turn to Mr. Shaffer to talk about the tech transfer 
and contracted R&D, which is one of his areas.
    Mr. Shaffer. Sir, actually we have seen an increase in the 
last couple of years in cooperative research and development 
agreements (CRDAs) between private industry and our Government 
laboratories. We have somewhere in the order of 4,000 
individuals CRDAs right now with small companies, and we are 
looking to do more.
    We have seen an increase in applications of small business 
innovative research. And thank you. The ceiling for that 
program has gone up. But we have taken management processes to 
more tightly couple SBIR with our acquisition program managers. 
Mr. Kendall mentioned Better Buying Power 3.0. Some of the 
pilots are to actually go ahead and derive requirements from 
PEO's and program managers to the Small Business Innovative 
Research program specifically to bring technology across the 
finish line. We have been very successful. That is a model that 
was employed by the Department of the Navy at the Naval 
Undersea Warfare Center in Newport, Rhode Island for 
predominantly their submarines, and I do not have the exact 
number. I remember being shocked by it, but some 70 to 80 
percent of the individual components in some of our submarines 
emerged from the Small Business Innovative Research program.
    So thank you. You are increasing the ceiling on that by a 
tenth of a percent per year, and we are getting good payoff 
from that.
    We are also trying to expand our use of novel contract 
mechanisms to allow us to reach out to some of these smaller 
companies. They are called other transaction authorities. The 
key point with those types of contract arrangements are that we 
can get money out to the small businesses much more quickly. 
Our standard process of having a competitive bid and award 
going out is a very slow and laborious bureaucratic process. So 
anything we can do to fund some of these companies in advance, 
we do.
    We also have extensive ties to small innovative companies 
out in Silicon Valley, in Boston, in Austin, Texas from our 
defense laboratories and are effectively using those 
capabilities. In fact, we have the Laboratory Scientist of the 
Quarter Award. We have awarded five of those right now. These 
are all young, first-rate scientists and all of them are very 
tightly coupled to academia and small businesses, as well as 
large businesses, in their field. Mr. Kendall awarded one 
yesterday to someone working in superconducting quantum 
devices. Tremendous outreach into industry, and we are taking 
and bringing that in transition to technology to systems that 
we field.
    Senator Udall. Thank you very much for that answer, and 
thank you for your hard work in that area.
    I have a couple of other questions, one on the long-range 
research and development plan and also the CHAMP project, but I 
will submit those for the record. Thank you very much.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Cochran. Thank you, Senator.
    Let me express our deep appreciation to the panel for your 
attendance today and your good assistance as we begin to look 
more carefully at a lot of our programs that are being funded 
because we do not have an unlimited supply of money to 
appropriate. And you know that. We know that. Having your 
guidance and professional experiences can be very helpful to 
this committee as we try to identify what the highest 
priorities are and be sure that we are putting money where they 
ought to be in research and development of new capacities to 
protect our country and our economic interests around the world 
as well. So we are in your debt, and we are grateful to you for 
your leadership.
    Mr. Kendall. Thank you, Mr. Chairman.
    Senator Cochran. Our hearing will be adjourned now, and we 
ask that any additional written questions be submitted--and the 
answers thereto--in a reasonable time.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
               Questions Submitted to Hon. Frank Kendall
              Questions Submitted by Senator Thad Cochran
    Question. Secretary Kendall, have you considered creating a program 
for the R&D non-profit community akin to the University Affiliated 
Research Center (UARC) program? If not, why not?''
    Answer. I have not considered creating a non-profit community akin 
to UARC's, primarily because I do not believe it is necessary. We have 
the flexibility needed to work with not-for-profits. Multiple effective 
and efficient avenues for procuring technical expertise from non-profit 
research organizations, regardless of affiliation with a university, 
are in common use.
    I believe creation of a new program for non-profit research 
organizations would add management burden and, without a specific, 
essential, and long-term research and development need, would be 
contrary to the Better Buying Power 3.0 objective of eliminating 
unproductive processes and bureaucracy.
                      technology domain awareness
    Question. In 2014 the National Defense Industrial Association 
(NDIA) conducted a study on steps that the Department of Defense can 
take to improve the acquisition system. One of the key findings of 
NDIA's ``Pathway to Transformation'' report (pg 62) is to develop 
Department of Defense Technology Domain Awareness in order to better 
identify and exploit technology opportunities and threats derived from 
the commercial and other non-traditional sources. What is the Under 
Secretary of Defense for Acquisition, Technology, and Logistics' plan 
to make sure that the DOD Information Analysis Centers' Technology 
Domain Awareness initiative is appropriately resourced and supported?
    Answer. The Department of Defense Information Analysis Centers' 
Technology Domain Awareness (TDA) initiative is currently being 
conducted as a limited pilot project. In October 2015, once the pilot 
is completed, I will assess the results and determine whether to 
continue TDA beyond the initial pilot. If I decide to continue the TDA 
programs, I note that the model is customer-funded and would not 
require extensive core funds.
                     prototyping and demonstrations
    Question. The Department of Defense is requesting additional 
funding in the fiscal year 2016 President's Budget for prototyping and 
demonstrations. This emphasis on prototyping weapons before starting 
large acquisition programs is a way to decrease the risk of technology 
not being ready. How do you ensure prototyping does not lead to 
increasing the time to deliver new capabilities to the warfighter by 
stretching out technology maturation? Should the U.S. continue to 
invest in virtual prototyping using the DOD's high performance 
computing assets?
    How do you ensure prototyping does not lead to increasing the time 
to deliver new capabilities to the Warfighter by stretching out 
technology maturation?
    Answer. Office of the Under Secretary of Defense for Acquisition, 
Technology, and Logistics guidance ensures prototyping does not lead to 
increasing the time to deliver new capabilities by stretching out 
technology maturation and risk reduction phase of the acquisition 
cycle. The Department of Defense (DOD) Directive 5000.02 directs a 
draft Capability Development Document (CDD) at Milestone A to inform 
the Technology Maturation and Risk Reduction (TMRR) phase. The draft 
CDD is a living document driving prototyping and other risk reduction 
activities. Should the results of prototyping activities suggest that 
technology maturation required to meet the existing need will ``stretch 
out'' the TMRR phase, the sponsor can adjust the requirements in the 
CDD to reflect the current state of technology, provided the change 
still meets the warfighting need.
    Additionally, DOD Directive 5000.02's increasing emphasis on 
tailoring the acquisition process encourages program managers to work 
with the contractor to focus TMRR activities primarily on obtaining key 
knowledge points (i.e., employing prototyping and analysis to capture 
key weapon system's behaviors in order to advance the system design and 
make necessary programmatic decisions). Depending on the knowledge 
point, full system prototyping may not be needed, reducing the cost and 
the length of the TMRR phase.
    Question. Should the U.S. continue to invest in virtual prototyping 
using the DOD's high performance computing assets?
    The U.S. should continue to invest in virtual prototyping using the 
Department's High Performance Computing (HPC) assets. Virtual 
prototyping's physics-based high performance computing tools have been 
proven effective in many industry and Federal agency applications, 
reducing ``time-to-market'' and product development costs. The 
Department's HPC tools can virtually prototype military ships, air 
vehicles, and radio frequency antennas, accurately predicting the 
performance of these weapons systems. HPC tools help engineers identify 
design flaws and performance shortfalls and fix them early in the 
acquisition process, well before live tests are possible and ``metal 
has been cut''.
    HPC tools are an integral part of the Department's Engineered 
Resilient Systems (ERS) initiative, a concerted Modeling and Simulation 
effort to leverage HPC throughout the acquisition process. Through ERS, 
HPC tools are enabling the Department to explore larger solution spaces 
to address capability needs. These tools have created a virtual common 
area for an industry/program office/Warfighter sponsor collaboration to 
identify better performance/cost trades, leading to selection of more 
efficient and effective solutions that still meet demanding Warfighter 
requirements.
                           railgun technology
    Question. Beyond ship-to-shore bombardment and Integrated Air/
Missile Defense (IAMD) missions, what other missions is the 
electromagnetic rail gun currently being considered to perform? Aside 
from the Navy, what other services have shown an interest in adopting 
railgun technologies, and for what mission sets? Is the Navy 
considering integrating the railgun onto other vessels beyond the DDG-
1000? If yes, which class of ships? Is a fixed-based/land-based system 
being considered for any of the services? How does the DOD intend to 
preserve competition and innovation within the limited industrial base 
for rail gun technologies? Are there risks associated with providing 
railgun weapon system capabilities to our warfighters? Please describe 
these risks, and identify which risks are the highest or most 
concerning.
              missions, additional services, fixed basing
    Answer. Beyond the ship-to-shore bombardment (i.e.; Naval Surface 
Fire Support (NSFS)) and Integrated Air/Missile Defense (IAMD) missions 
for electromagnetic railgun, Anti-Surface Warfare is also being 
analyzed. This mission leverages both the strike warheads being 
developed by the Navy for NSFS and the closed-loop fire control against 
moving targets being developed by the Strategic Capabilities Office 
(SCO).
    Aside from the Navy, the Army has recently shown interest in the 
hypervelocity projectiles that enable both offensive and defensive 
missions simultaneously. For 2 years, SCO and the Navy have been 
analyzing the mission effectiveness of firing the same projectile being 
developed for the electromagnetic railgun and Navy 5'' powder gun from 
the Army's current Paladin, future Extended Range Cannon Artillery 
(ERCA), as well as future land-based railguns. This year, the Chief of 
Staff of the Army signed a memorandum partnering the Army with SCO in 
demonstrating both land-to-land bombardment and IAMD with projectiles, 
sensors, and fire control that are common with the Navy. The initial 
focus will be on the over 900 Paladin and ERCA guns, which are expected 
to achieve 1 km/s and 1.3 km/s muzzle velocities, respectively, 
equivalent to 9.7MJ and 13.5MJ railguns. This would provide an offense/
defense capable system in the near term whose projectile, sensor, and 
fire control architecture would enable future deployments of land-based 
railguns at much higher velocities (e.g.; 2km/s at 32MJ). The SCO is 
funded to prototype and conduct a series of live-fire demonstrations 
with Navy and Army powder guns in the fiscal year 2018 timeframe and a 
land-based railgun in the fiscal year 2019 timeframe. Assuming success, 
transition of these capabilities to Services would occur subsequently. 
The SCO, Office of Naval Research, Naval Sea Systems Command, and Army 
have been working with Missile Defense Agency to assess the technology 
maturation required to transition land-based railguns. In December 
2014, MDA provided to Congress, a report on ``Missile Defense 
Applications for Electromagnetic Railgun Technology.'' The report 
identifies the technical achievements and tests required to validate 
the suitability of the land-based railguns for missile defense 
applications and enable transition. The SCO expects these tests to be 
completed in fiscal year 2018.
    For sea-based railgun, the Navy has studied several hulls currently 
in service and is investigating the feasibility of integrating a 
Railgun onto a DDG1000-class ship. In response to the current National 
Defense Authorization Act, the Navy has initiated a broader study to 
examine other Navy hulls. This study is due March 1, 2016.
             preserving competition and the industrial base
    All the major components of the system have been developed using 
competitive means. The Navy competed both the railgun barrel and 
projectile, which were awarded separately to BAE in 2014. Prior to 
this, pulse power was competed and awarded to three vendors (i.e., 
Raytheon, General Atomics, and BAE). The Navy and SCO are also 
prototyping the fire-control sensor for railguns and powder guns 
leveraging existing Department sensors, including ground-based fighter 
radars. A Request for Information was released with a subsequent 
Industry Day in 2015, and 11 vendors requested follow-up sessions with 
the government team. As their submitted papers are evaluated, follow-on 
efforts may be awarded in fiscal year 2016. Additionally, as a major 
performance driver across all missions and guns, SCO has released a 
call for papers this month for an Advanced Projectile to reduce 
component risk, explore advanced technologies, and broaden the industry 
base participating in hypervelocity gun initiatives. Award is expected 
to occur in the first quarter of fiscal year 2016.
    Should these prototyping efforts be successful, Milestone B will 
initiate another full-and-open competition for the electromagnetic 
railgun system and major subsystems.
                          risks and challenges
    Fielding electromagnetic railguns does come with unique risks and 
challenges associated with high voltage and magnetic fields induced by 
large currents during firings. These high voltages present the 
potential for electrical shock hazards, which can be mitigated using 
existing personnel protection, safety procedures, and electrical 
grounding techniques for naval vessels. The magnetic fields created 
during railgun firings can be mitigated by creating 15 ft keep-out 
zones for humans around the gun mount during firings. This distance is 
consistent with existing weapons and sensor keep-out zones. The impact 
of the shot blast has also been analyzed and found to be equivalent to 
the Navy's existing 5'' gun. Given this, rigorous safety standards and 
procedures developed during over the past decade should translate to 
Warfighter use of electromagnetic guns.
                          emerging technology
    Question. How important is it for the DOD to have private firms 
making independent Research and Development (R&D) investments to 
advance technology? How does the DOD let industry know what its 
priorities are, and where industry should make those independent 
investments? What role do you see for industry in advanced R&D? Do you 
envision industry as a partner or competitor to advanced R&D?
    How important is it for the DOD to have private firms making 
independent Research and Development (R&D) investments to advance 
technology?
    Answer. Industrial independent Research and Development is an 
important component of technology maturation. Maintaining superior 
military capabilities for the Department of Defense (DOD) requires some 
pluralism in the development of advanced technologies to ensure we 
always have the best technologies for the Warfighter. The Department 
has a strong science and technology (S&T) program. It has served the 
Nation well. However, the ability for private firms to perform 
independent R&D that address either existing military capability gaps 
from a different perspective or to create new military capabilities not 
yet defined is an important element to guard against technology 
surprise on the battlefield, creating technology surprise for our 
adversaries, and reduce risk and cost to our acquisition programs.
    Question. How does the DOD let industry know what its priorities 
are, and where industry should make those independent investments?
    Answer. All of our outreach is meant to meet the complementary 
goals of providing industry an opportunity to exercise independent 
judgement on investments in promising technologies that will provide 
competitive advantage, while at the same time pursuing technologies 
that advance the state of the art in U.S. Military capability. That 
said, the Department is constantly making improvements in its outreach. 
For example, to better communicate our needs, the Department launched 
the Defense Innovation Marketplace (the ``Marketplace'') website in 
2013. The Marketplace is a source of information for industry as to the 
Department's S&T and R&D priorities and it provides ideas on where 
industry might consider investing its research and development dollars. 
For DOD R&D personnel, the Marketplace is the place where they can 
review the Independent Research and Development (IR&D) projects being 
performed by government contractors. IR&D conducted by industry is an 
important source of innovation for both industry and the Department. 
Additionally, the S&T community hosts Technical Interchange Meetings 
(TIMs) with industry. The TIMs are focused on specific technology areas 
and companies are invited to submit their IR&D projects that are 
responsive to the TIM focus area. All projects are reviewed by subject 
matter experts and a significant number of projects are selected for 
in-person briefings by the submitting company to the TIM's government 
hosts and subject matter experts. Companies participating in these 
briefings receive substantive feedback on their projects from the DOD 
subject matter experts at the end of the briefing. To date, the 
Department has conducted six TIMs, and we plan to increase the number. 
For general outreach regarding R&D/S&T, the Department uses fora such 
as the National Defense Industrial Association S&T Conferences, as well 
as other industry associations and specific briefings to industry 
regarding hard technical problems.
    Question. What role do you see for industry in advanced R&D?
    Answer. While industry's Independent Research and Development is a 
fundamental pillar of our advanced R&D work, I would like to see 
industry put more of its own money at risk in advancing the state of 
the art in R&D. Industry spending on IR&D is a recoverable cost to 
industry through its negotiated overhead rates. I believe that if 
industry invested more of its own money in advanced R&D coupled that 
with ``reimbursable'' IR&D, DOD-funded contractor research and 
development, and the work conducted by our DOD laboratories; we could 
buy down technology risks in our programs, create new military 
capabilities, and surprise any adversary.
    Question. Do you envision industry as a partner or competitor to 
advanced R&D?
    Answer. In a world where technological superiority can no longer be 
assumed, it is imperative that the Department work cooperatively with 
industry, academia, and our foreign allies and partners to ensure that 
our Warfighters will be dominant.
                                 ______
                                 
            Questions Submitted by Senator Richard C. Shelby
    Question. I understand that there may be a six-year gap in 
guaranteed access to space, under the fiscal year 2015 NDAA Section 
1608 restrictions. How, then, does DOD plan to carry out its national 
security launches? Will a legislative fix beyond DOD's current proposal 
be required?
    Answer. To support our national security launches, the Department 
of Defense submitted a legislative proposal requesting a modification 
of Section 1608 of the Carl Levin and Howard P. ``Buck'' McKeon 
National Defense Authorization Act for fiscal year 2015, Public Law 
113-291. If enacted, it would allow use of Russian rocket engines that 
had been contracted for prior to February 1, 2014. If these changes are 
made and with the addition of a certified New Entrant launch service 
provider, the Department believes it can minimize impacts to its 
launches while industry transitions fully to domestically produced 
propulsion systems.
    Legislative proposals beyond the recently submitted fiscal year 
2016 proposals are not anticipated at this time.
    Question. During the hearing, I asked about how DOD plans to 
provide for national security launches in light of fiscal year 2015 
NDAA Section 1608 restrictions and the lack of a certified alternative 
launch provider to date. Could you please clearly outline DOD's 
acquisition strategy for a new rocket propulsion system, for which 
Congress appropriated $220 million last year?
    Answer. The Air Force is spending the $220 million appropriated for 
engine development to reduce the risk of a new engine; however, a new 
engine development by itself is not the Department's preferred path. 
Based on interaction with industry and the Department's experience, we 
do not believe that a dedicated engine development program is the best 
approach to developing a launch capability that meets the Department's 
goal of two commercially viable, domestic launch service providers 
capable of supporting the entire National Security Space manifest. The 
Department's preferred approach is to enter into public-private 
partnerships with commercial launch service providers for reliable 
launch capability solutions. This approach is more likely to enable at 
least two launch service providers and maintain our assured access to 
space while promoting competition to control cost.
    The Air Force's strategy is a four step approach to transitioning 
to domestic propulsion while assuring access to space. Step 1, started 
last year, is to mature the technology to reduce engine development 
technical risk. The Air Force has obligated about $50 million toward 
this effort and will invest an additional $45-50 million in the next 6 
months. Step 2 is to initiate investment in Rocket Propulsion Systems, 
in compliance with the fiscal year 2015 National Defense Authorization 
Act. The Air Force will partner with propulsion system or launch system 
providers by awarding multiple contracts that co-invest in ongoing 
domestic propulsion system development efforts. In Step 3, the Air 
Force will continue the public-private partnership approach by entering 
into agreements with launch system providers to provide domestically 
powered launch capabilities. In step 4, the Air Force will compete and 
award contracts with certified launch providers for launch services for 
2018 and beyond.
    Question. Do you believe that 2019 is a realistic date for 
development and certification of a replacement rocket engine or should 
the deadline be extended?
    Answer. The schedule for availability of a replacement rocket 
engine depends upon the maturity of the technology that is proposed, 
including its ability to meet performance requirements, and time needed 
to conduct testing and certification flights. Based on our knowledge of 
the conventional domestic defense industrial base suppliers, 2019 is 
not a realistic date for development and certification of a replacement 
engine. In addition, the Department must plan for at least 2 additional 
years from completion of the engine development for the engine to be 
integrated into a new launch vehicle and then certified to fly National 
Security Space payloads.
    The Department recommends the deadline not only be extended to 2022 
but that proposed H.R. 1735 section 1603 language be revised to focus 
on the availability of launch capability rather than the certification 
of only a new rocket engine.
    Question. In executing the acquisition strategy for a Russian 
rocket engine replacement, how important is the risk reduction'' phase 
to those efforts? Do you believe there is value in in leveraging NASA's 
decades of risk reduction and rocket propulsion research development in 
developing an American rocket engine replacement? If so, to what degree 
is DOD leveraging the existing expertise of the National Institute for 
Rocket Propulsion Systems in conducting risk reduction for a U.S.-
developed rocket propulsion system?
    Answer. The risk reduction phase is very important. As the U.S. has 
very limited experience with oxygen-rich staged combustion (ORSC) 
engines, developing a domestic ORSC engine, without first having 
independent American technologies, may present significant technical 
and schedule risks. The ``Risk Reduction'' phase will help mitigate 
these risks by acquiring full-scale combustion experience data and 
ensuring availability of design and analytical tools to inform future 
development and designs. Among the propulsion community, combustion 
instability has been identified as the foremost technical risk to 
development of an ORSC engine.
    The Department is leveraging NASA's and the Air Force's decades of 
experience in rocket propulsion. In particular, NASA's rocket 
propulsion test facilities and capabilities are making near-term 
critical component demonstration possible, thus allowing the burn down 
of engine development risks using existing NASA and Air Force Research 
Laboratory (AFRL) hardware.
    The Department is leveraging the National Institute for Rocket 
Propulsion Systems (NIRPS) by working with NASA to fully utilize their 
expertise and capabilities in mitigating the risks associated with ORSC 
engine development. For example, the Department is providing funding to 
NASA's Advanced Booster Engineering Demonstration and Risk Reduction 
program for the combustion stability demonstration of a 500k-lbf thrust 
ORSC combustion chamber, integrated with AFRL's Hydrocarbon Boost 
preburners. This integrated demonstration will be performed in late 
2016 or early 2017 at NASA's Stennis Space Center in Mississippi. 
Additionally, the Department is partnering with NASA, AFRL, academia, 
all NIRPS partners, and industry for the development of combustion 
stability tools.
    Question. Secretary Kendall, earlier this year, you underscored 
China's military capabilities that are aimed at defeating, and I quote, 
``the American way of doing power projection...when we fight in an 
expeditionary manner far from the United States.'' Given China's 
reported testing of its hypersonic weapon last year, how important is 
it that we develop our own hypersonic weapon in order to deter the 
Chinese threat and maintain our forward power projection? Shouldn't we 
be keeping pace with China's hypersonic development?
    Answer. Hypersonic development is a high priority for our Science 
and Technology (S&T) programs, and we believe our program will allow us 
to keep pace with any other nation. The Air Force and DARPA are teaming 
for two hypersonic demonstration programs: the Hypersonic Advanced 
Weapons concept and the Tactical Boost Glide Demonstration. 
Additionally, we are continuing development of the Conventional Prompt 
Global Strike hypersonic program ($71 million in fiscal year 2015 and 
$79 million in fiscal year 2016). The Air Force also has a base S&T 
development program to address technical risk. The Department has 
allocated $321 million in our fiscal year 2016 budget request and 
nearly $2 billion across the Future Year Defense Program to mature 
hypersonics. These efforts not only increase our capabilities to better 
prepare for any future relevant acquisition, but also to better 
understand what other nations, for example China, are doing in 
hypersonics.
    Question. The Long-Range Anti-Ship Missile (LRASM) completed a 
successful flight test on February 4th of this year. In describing the 
flight test, a DARPA press release notes that the LRASM procurement 
resulted from recent initiatives under DOD's Better Buying Power 3.0. 
Could you please describe how DOD's new acquisition strategy stimulates 
rapid prototyping and innovative acquisition, with respect to LRASM?
    Answer. The new Department of Defense (DOD) Instruction 5000.02 
allows the ability to tailor the acquisition process under the new 
``Model 4.'' When USD(AT&L) established LRASM as the solution to the 
Navy's Offensive Anti-Surface Warfare (OASuW) Increment 1 requirement, 
the program was designated as the pilot for using Model 4 to leverage 
the success of the DARPA LRASM demonstration to deliver the LRASM as an 
early operational capability to the Air Force (2018) and the Navy 
(2019). This rare opportunity to transition a DARPA-Office of Naval 
Research demonstration program directly to the Warfighter is reflective 
of Better Buying Power Focus Area 3: Incentivize Productivity in 
Industry and Government. Specifically, the demonstration program not 
only improved the return on investment in DOD laboratories by 
leveraging government science and technology efforts from the 
demonstration program, but also increased the productivity of 
Independent Research and Development (IRAD) by utilizing existing 
Lockheed Martin IRAD efforts.
    The LRASM Deployment Office (LDO) was established in February 2014 
at DARPA as the jointly manned (DARPA, Navy, and Air Force) 
organization responsible for implementing the accelerated acquisition 
approach. The LDO understood that critical thinking was necessary for 
program success and required a commitment to challenging the norm, both 
technically and programmatically. The LDO immediately began efforts to 
continue technical development, capitalizing on the opportunity to 
tailor the program to remove processes, reviews, and documentation that 
did not provide a `value added' contribution to providing capability on 
time, while maintaining compliance with statutory, regulatory and 
milestone requirements. This initiative is directly related to the 
Better Buying Power Focus Area 5: Eliminate Unproductive Processes and 
Bureaucracy.
    Furthering the connection to the Better Buying Power initiatives, 
the LDO is closely aligned with both the Intelligence and the 
Requirements communities as delineated in Focus Area 1: Achieve 
Dominant Capabilities While Controlling Lifecycle Costs. Within weeks 
of program initiation, the program received a Joint Requirements 
Oversight Council-validated requirements memo and a threat baseline, 
providing extremely stable requirements to begin technology maturation 
efforts while the Capability Development Document proceeded through the 
normal process. Additionally, the LDO has maintained continual 
coordination with the resource sponsor to make adjustments to the 
program's funding profile as the work required was better understood, 
ensuring stability that would minimize development costs while fielding 
as rapidly as possible.
    The LDO team developed an Acquisition Strategy that tailored the 
systems engineering process and technical maturation schedule to feed 
Knowledge Points that would serve as intermediate decision events for 
specific program needs. The LDO also utilizes a lean governance, 
direct-report approach with an Executive Steering Board (ESB) with the 
Assistant Secretary of the Navy for Research, Development, and 
Acquisition and the DARPA Deputy Director as co-chairs. Monthly ESB 
meetings are the central core for LRASM senior leadership to quickly 
affect outcomes and critical decisions.
    Additionally, rapidly fielding a warfighting capability requires 
close management of risk and potential acceptance of risk appropriate 
to the capability gap. The LDO uses a single integrated master schedule 
that merges both contractor and government activities and is tightly 
coupled with the risk process. This information is reviewed at each ESB 
in order to ensure that the program is closely managed toward fielding 
the required capability at the time specified by the Warfighter.
    Improving the professionalism of the total acquisition workforce is 
a specific theme of Focus Area 8. The Department is addressing this in 
two particular ways from different ends of the spectrum: ensure that 
our current acquisition and science and technology leaders are top in 
their field and current investments in the workforce will pay dividends 
in the future. When the LDO was created Under Secretary Kendall 
personally reviewed resumes to ensure the team leadership possessed the 
critical traits to execute the accelerated acquisition of an advanced 
technology program. In order to sustain this level of expertise in the 
Government and recognition of today's investments aiding in future 
endeavors, the LDO has implemented an extensive modeling and simulation 
effort that will allow the OASuW Inc 1 to field on time yet provide a 
much needed capability for future systems. LDO team is serving as the 
system integrator for the modeling and simulation facility that will 
provide the validation venue for the program, and the LDO team will 
execute the associated testing. As a result, there will be an enduring 
capability available for future efforts to leverage along with 
competent, proficient government expertise in executing this cost-
effective, efficient methodology for system performance validation.
    In all, this program is on track to fill a critical warfighting 
capability in under 5 years, compared to an estimated eight-to-ten 
years for a standard program, and should serve as an example of how 
prototypes can successfully transition to fill immediate warfighting 
requirements.
    Question. Mr. Shaffer, when you testified before the House Armed 
Services Committee last month, you underscored the Army's high energy 
laser-mobile demonstrator as a ``low cost capability for counter 
rockets, artillery and mortars.'' I understand that DOD's current plans 
seek to make the high energy laser a program of record in the 2020's. 
If additional funding were provided in the interim, how might we 
accelerate the design and development of this leap-ahead technology? Is 
there an immediate need for this technology?
    Answer. The Department has a well-funded ($300 million in fiscal 
year 2016) cross-service high-energy laser (HEL) science and technology 
program. This investment is aimed at demonstrations of the technology 
and technical risk reduction. The first HEL system is targeted at a 
laser as a component of the Army's Integrated Fire Protection 
Capability (IFPC Increment II), for fielding in the mid-2020 decade. In 
discussion with our scientists, the consensus is that additional 
funding won't substantially accelerate the capability--basic 
engineering to mature the technology is funded and moving forward well. 
Additional funding could allow competing concepts to reduce risk and 
improve the likelihood of success, but would not substantially 
accelerate the delivery of the capability.
    Question. Mr. Shaffer, when you testified before the House Armed 
Services Committee last month, you affirmed SMDC's Nanosatellite and 
Kestrel Eye programs as ``pushing back the boundaries of disaggregated 
space.'' It is my understanding that a launch date for the 
Nanosatellites has been set for August of this year; and, Kestrel Eye 
is set to be launched in December of this year. In light of the 
constrained budget environment we face, how important is sustained 
funding for these programs in order to achieve their anticipated launch 
dates?
    Answer. For the first two launches, funds appropriated for fiscal 
year 2015 will support the launches. Where sustained funding is 
required is to support planned subsequent launches later in fiscal year 
2016.
                                 ______
                                 
                Questions Submitted by Senator Roy Blunt
    Question. Secretary Kendall, the subcommittee is aware of the 
Department of Defense's recent March 13 Memo citing the value and 
special contracting authorities of the R&D non-profit institutions. 
While I applaud this as a positive step, what is the Department doing 
to better utilize the non-profit community's special role, 
capabilities, and skill sets?''
    Answer. The Department of Defense (DOD) is well aware of and fully 
agrees with the need to seek subject matter expertise not resident 
within the Department to keep pace with global technology developments 
and evolution. Accordingly, the Department uses existing authorities 
and several initiatives to obtain these technical sources of non-profit 
organizations that play a central role in providing this expertise.
    The Department has a long history of working closely with federally 
Funded Research and Development Centers, University Affiliated Research 
Centers, and other non-profit research institutions that serve as our 
``trusted agents'' on research and development (R&D) issues. My March 
13, 2015, memorandum (subject: Utilization of Non-Profit Research 
Institutions) emphasized that the following avenues of engagement could 
be specifically applied to non-profit organizations:

  --One of the most important ways the Department contracts directly 
        with non-profit institutions is by Title 10, United States 
        Code, Section 2304 (c)(3)(B), implemented through Federal 
        Acquisition Regulation 6.302-3. The statute provides authority 
        to directly contract without the need for ``full and open 
        competition'' when it is necessary, among other purposes, to 
        award work to a particular source, ``to establish or maintain 
        essential engineering, research, or development capability to 
        be provided by an educational or other nonprofit institution or 
        a federally funded research and development center.'' The 
        direct authority enables significant efficiency gains and is 
        one of the primary ways for the Department to ensure vibrant 
        interaction with non-profit research organizations.
  --The Defense Innovation Marketplace (http://
        www.defenseinnovationmarket
        place.mil/) is a website that organizes the Department's 
        Science and Technology planning, acquisition, funding, and 
        financial information to guide the focus and interactions with 
        numerous DOD contracts, including non-profit research 
        organizations. The platform provides notification of broad 
        agency announcements, requests for information, and requests 
        for proposals that collectively offer a picture of DOD 
        priorities. The Defense Innovation Marketplace can serve as a 
        baseline for the non-profit research community to identify 
        capability alignment with DOD requirements. The Marketplace 
        also provides a connection to the Reliance 21 process through 
        which the Department manages the Science and Technology 
        portfolio and research priorities.
  --The Defense Acquisition University's Service Acquisition Mall (SAM) 
        provides information regarding the full lifecycle of Research, 
        Development, Testing, and Evaluation efforts and includes 
        support to any Service's (R&D) labs. SAM helps the Department's 
        organizations understand the approaches (e.g., market research) 
        for acquiring R&D services such as Operational Systems 
        Development, Commercialization, and Advisory and Assistance.
    Military Services and Defense Agencies engaged in R&D are making 
use of the Other Transaction Authority provided under Section 845 of 
the fiscal year 1994 National Defense Authorization Act, Public Law 
103-160 (as amended) codified as a note in 10 USC 2371, to facilitate 
innovation and technology transfer between DOD and industry including 
companies that qualify as non-traditional defense contractors under the 
requirements of Section 845. For example, the U.S. Army Medical 
Research and Materiel Command is soliciting proposals from a Not for 
Profit 501(c)(3) to form and manage a self-sustaining Medical 
Technology Enterprise Consortium. The consortium will be comprised of 
industrial and academic organizations to engage in biomedical research 
and prototyping, capitalization of private sector technology 
opportunities, technology transfer, commercialization of Government 
intellectual property, and follow-on production for the U.S. Army 
Medical Research Acquisition Activity.
    Question. Secretary Kendall, how do you envision non-profits 
playing a role in the new Better Buying Power Initiative, specifically 
moving innovation to commercialization?''
    Answer. I believe that non-profit Research and Development 
organizations are part of the total Research, Development, Test, and 
Evaluation support structure of the Department of Defense (DOD), and, 
as such, can contribute to attain the goals of Better Buying Power 
(BBP) 3.0. A key element of BBP 3.0 is removing barriers to commercial 
technology utilization. Non-profit research organizations with 
commercializable innovations can benefit from this initiative. The 
Deputy Assistant Secretary of Defense for Manufacturing and Industrial 
Base Policy, with support from the Director of Defense Procurement and 
Acquisition Policy and the Assistant Secretary of Defense for Research 
and Engineering, is developing a handbook of methods and best 
practices, which we anticipate will be completed by August 2015, that 
informs DOD managers on effective engagement with commercial technology 
companies, including non-profit organizations.
    Another key element of BBP 3.0 is to incentivize innovation in 
industry and the Government. Technology insertion and refresh are 
critical components to keep pace with shortening technology cycle 
times. For instance, the technology cycle for information technology 
systems is often as short as 18 months. As part of BBP 3.0, the Service 
Acquisition Executives and the Acquisition, Technology, and Logistics 
staff will focus on opportunities for technology insertion and refresh 
to develop more opportunities for non-profit research organizations to 
provide the Department with novel technologies
    Question. Secretary Kendall, what steps are you taking to harness 
the expertise being developed at non-profits?
    Answer. The Department of Defense is already harnessing the 
expertise being developed at non-profit organizations with a wide 
breadth of multidisciplinary programs. In fiscal year 2012, the 
Department awarded approximately $4.9- billion in contracts to non-
profit institutions. Non-profit academic institutions were awarded an 
additional $2.5 billion in fiscal year 2012 for basic and applied 
research studies across the spectrum of science and engineering 
disciplines. The Department will continue to use the unique expertise 
non-profit organizations provide, while also leveraging expertise from 
industry and government laboratories.
                                 ______
                                 
            Questions Submitted by Senator Dianne Feinstein
                  non-profit research and development
    Question. Non-profit research institutions, like the Stanford 
Research Institute, have unique capabilities and expertise that can 
provide great value to the research and development portfolios of the 
Department of Defense.
    Undersecretary Kendall, the Department's recent March 13 Memo cites 
the value and special contracting authorities of non-profit communities 
for Research and Development. What specific action is the Department 
considering to better utilize these communities' special role and 
capabilities?
    Answer. The Department of Defense (DOD) is well aware of and fully 
agrees with the need to seek subject matter expertise not resident 
within the Department to keep pace with global technology developments 
and evolution. Accordingly, the Department uses existing authorities 
and several initiatives to obtain these technical sources of non-profit 
organizations that play a central role in providing this expertise.
    The Department has a long history of working closely with federally 
Funded Research and Development Centers, University Affiliated Research 
Centers, and other non-profit research institutions that serve as our 
``trusted agents'' on research and development (R&D) issues. My March 
13, 2015, memorandum (subject: Utilization of Non-Profit Research 
Institutions) emphasized that the following avenues of engagement could 
be specifically applied to non-profit organizations:

  --One of the most important ways the Department contracts directly 
        with non-profit institutions is by Title 10, United States 
        Code, Section 2304 (c)(3)(B), implemented through Federal 
        Acquisition Regulation 6.302-3. The statute provides authority 
        to directly contract without the need for ``full and open 
        competition'' when it is necessary, among other purposes, to 
        award work to a particular source, ``to establish or maintain 
        essential engineering, research, or development capability to 
        be provided by an educational or other nonprofit institution or 
        a federally funded research and development center.'' The 
        direct authority enables significant efficiency gains and is 
        one of the primary ways for the Department to ensure vibrant 
        interaction with non-profit research organizations.
  --The Defense Innovation Marketplace (http://
        www.defenseinnovationmarket
        place.mil/) is a website that organizes the Department's 
        Science and Technology planning, acquisition, funding, and 
        financial information to guide the focus and interactions with 
        numerous DOD contracts, including non-profit research 
        organizations. The platform provides notification of broad 
        agency announcements, requests for information, and requests 
        for proposals that collectively offer a picture of DOD 
        priorities. The Defense Innovation Marketplace can serve as a 
        baseline for the non-profit research community to identify 
        capability alignment with DOD requirements. The Marketplace 
        also provides a connection to the Reliance 21 process through 
        which the Department manages the Science and Technology 
        portfolio and research priorities.
  --The Defense Acquisition University's Service Acquisition Mall (SAM) 
        provides information regarding the full lifecycle of Research, 
        Development, Testing, and Evaluation efforts and includes 
        support to any Service's (R&D) labs. SAM helps the Department's 
        organizations understand the approaches (e.g., market research) 
        for acquiring R&D services such as Operational Systems 
        Development, Commercialization, and Advisory and Assistance.
    Military Services and Defense Agencies engaged in R&D are making 
use of the Other Transaction Authority provided under Section 845 of 
the fiscal year 1994 National Defense Authorization Act, Public Law 
103-160 (as amended) codified as a note in 10 USC 2371, to facilitate 
innovation and technology transfer between DOD and industry including 
companies that qualify as non-traditional defense contractors under the 
requirements of Section 845. For example, the U.S. Army Medical 
Research and Materiel Command is soliciting proposals from a Not for 
Profit 501(c)(3) to form and manage a self-sustaining Medical 
Technology Enterprise Consortium. The consortium will be comprised of 
industrial and academic organizations to engage in biomedical research 
and prototyping, capitalization of private sector technology 
opportunities, technology transfer, commercialization of Government 
intellectual property, and follow-on production for the U.S. Army 
Medical Research Acquisition Activity.
    Question. Undersecretary Kendall, the Research and Development non-
profit communities' specific skill set--moving innovation to 
commercialization--could play a unique role in the recently released 
Better Buying Power 3.0 initiative. Does the Department believe that 
non-profit Research and Development communities can contribute to the 
goals of the Better Buying Power 3.0 initiative? What specific steps is 
the Department taking to utilize the non-profit Research and 
Development communities towards this end?
    Answer. I believe that non-profit Research and Development 
organizations are part of the total Research, Development, Test, and 
Evaluation support structure of the Department of Defense (DOD), and, 
as such, can contribute to attain the goals of Better Buying Power 
(BBP) 3.0. A key element of BBP 3.0 is removing barriers to commercial 
technology utilization. Non-profit research organizations with 
commercializable innovations can benefit from this initiative. The 
Deputy Assistant Secretary of Defense for Manufacturing and Industrial 
Base Policy, with support from the Director of Defense Procurement and 
Acquisition Policy and the Assistant Secretary of Defense for Research 
and Engineering, is developing a handbook of methods and best 
practices, which we anticipate will be completed by August 2015, that 
informs DOD managers on effective engagement with commercial technology 
companies, including non-profit organizations.
    Another key element of BBP 3.0 is to incentivize innovation in 
industry and the Government. Technology insertion and refresh are 
critical components to keep pace with shortening technology cycle 
times. For instance, the technology cycle for information technology 
systems is often as short as 18 months. As part of BBP 3.0, the Service 
Acquisition Executives and the Acquisition, Technology, and Logistics 
staff will focus on opportunities for technology insertion and refresh 
to develop more opportunities for non-profit research organizations to 
provide the Department with novel technologies.
                                 ______
                                 
              Questions Submitted by Senator Brian Schatz
                           energy initiatives
    Question. In fiscal year 2013, the Defense Logistics Agency spent 
more than $15 billion to procure energy for the Department of Defense, 
representing almost 5 percent of DOD contract spending for that 
year.But energy is more than just an issue of cost. The Defense Science 
Board has noted that moving and protecting fuel during military 
operations not only adds to the cost of operations, but also 
``divert[s] and endanger[s] in-theatre force capability.''I know DOD is 
pursuing a number of initiatives to reduce the amount of fuel it needs 
and to change the mix of fuels that it uses. Perhaps one area ripe for 
reform is getting energy efficiency adopted as a key performance 
parameter for all weapons systems that the Department procures so that 
we are requiring efforts to reduce the energy footprint of a weapons 
system given that its energy footprint has direct implications for our 
warfighters.
    Can you please discuss the extent to which energy efficiency is 
being incorporated into the requirements of acquisition programs? And 
given the lessons learned about fuel dependency broadly, is there any 
reason why energy efficiency should not be required as a key 
performance parameter on all systems?
    Answer. By statute, energy is considered in all new weapon system 
acquisitions. Program Managers (PMs) define an Energy Key Performance 
Parameter (eKPP) to ensure the weapon system characteristic is fully 
considered across the entire acquisition program cycle. The eKPP serves 
as the foundation and PMs are tasked to complete Energy Supportability 
Analysis (ESA) to support the decisionmaking process. The ESA 
identifies operational energy shortfalls and informs decisions on risk 
mitigation, such as changes in an eKPP, the Concept of Operations, 
force structure, and/or procuring additional logistics assets
    The role of ESA in informing the eKPP is a recent development and 
is maturing. Several programs are using ESA to evaluate program 
requirements. The Marine Corps is currently conducting an ESA for 
several land vehicle platforms. In addition, the Air Force is preparing 
to conduct an ESA on the KC-46 aerial tanker and the F-35 Follow-on 
Development variant.
    While Energy is a KPP, Energy Efficiency should not be made a KPP. 
Energy efficiency is just one of many important considerations in 
weapons system acquisition programs, and PMs should be afforded the 
ability to use their best judgement in balancing KPPs and other 
considerations to ensure the Warfighter is provided the best capability 
at the most affordable price.
                                 ______
                                 
                Questions Submitted to Dr. Steven Walker
    Question. Dr. Walker, when Dr. Prabhakar testified before this 
Committee last year, she noted how our embedded military systems are 
vulnerable to cyberattacks and how DARPA is working to counter the 
cyber threats of today, as well as those of the future. Could you 
please update the Committee on DARPA's research to counter cyber 
threats, just as our military would counter kinetic warfare? How 
important is sustained funding for DARPA's cybersecurity efforts?
    Answer. DARPA's research to counter cyber threats is intended to 
provide a diverse set of capabilities as this is not an area where a 
``silver bullet'' will address all of the challenges. The following 
ongoing DARPA cyber projects are making good progress towards achieving 
their goals:

  --Active Authentication is developing novel ways of validating the 
        identity of the person at the console to ensure only authorized 
        users obtain access to critical resources.
  --Active Cyber Defense will enable U.S. cyber defenders to exploit 
        their ``home field advantage.''
  --Automated Program Analysis for Cybersecurity is developing formal 
        methods based techniques for keeping malicious code out of 
        application marketplaces.
  --Clean-slate design of Resilient Adaptive Secure Hosts is using the 
        immune system as a model to create computing technologies 
        resistant to cyber attack.
  --Cyber Grand Challenge is stimulating the creation of automated 
        cyber-defenses capable of responding to attacks at speeds and 
        scales beyond what is humanly possible.
  --High-Assurance Cyber Military Systems is using a clean-slate, 
        formal methods-based approach to enable semi-automated code 
        synthesis from executable, formal specifications with the goal 
        of making ground and air vehicles hack-proof for specified 
        security properties.
  --Integrated Cyber Analysis System is developing techniques to 
        integrate information technology (IT) system information to 
        provide cyber defenders with enterprise situational awareness.
  --Mining and Understanding Software Enclaves will use huge libraries 
        of open source software to assure correctness of newly 
        developed programs.
  --Mission-oriented Resilient Clouds is developing technologies to 
        detect, diagnose, and respond to attacks in the cloud.
  --Network Defense is developing technologies to detect network 
        attacks by analyzing network summary data across a wide array 
        of networks.
  --Plan X is a foundational cyberwarfare program developing platforms 
        for the Department of Defense to plan for, conduct, and assess 
        cyberwarfare in a manner similar to kinetic warfare.
  --PROgramming Computation on EncryptEd Data is developing techniques 
        for computing with encrypted data without first decrypting it, 
        enhancing its confidentiality.
  --The Rapid Software Development using Binary Components program is 
        developing a system to identify and extract software components 
        for reuse in new applications.
  --SAFER Warfighter Communications is developing technology to enable 
        secure and resilient communications over the Internet, 
        particularly in adversarial situations.
  --Vetting Commodity IT Software and Firmware is developing methods to 
        ensure that commercial software and firmware is free of 
        malware.
    In addition, since last year DARPA has initiated the following new 
cyber projects:

  --Building Resource Adaptive Software Systems will enable us to build 
        software systems that are long-lived, survivable, and robust to 
        changes in physical and logical resources.
  --Cyber Fault-tolerant Attack Recovery will develop diversity-based 
        architectures for protecting systems without requiring changes 
        to their concept of operations.
  --Edge-Directed Cyber Technologies for Reliable Mission Communication 
        will bolster the resilience of communication over wide area 
        networks through new edge capabilities.
  --SafeWare will provide provably-secure protection of sensitive 
        information in software that is vulnerable to capture and 
        dissection.
  --Space/Time Analysis for Cybersecurity will develop new program 
        analysis techniques and tools for identifying vulnerabilities 
        to algorithmic complexity and side channel attacks.
  --Transparent Computing will make currently opaque computing systems 
        transparent by providing high-fidelity visibility into 
        component interactions during system operation.
    Sustained funding for DARPA's cybersecurity portfolio is of 
critical importance. The cyber domain is one where we see our 
adversaries making tremendous technical strides and acting with 
increasing boldness. Cyber is likely to be the preferred avenue of 
attack for all actors, large and small, given the kinetic advantages we 
currently enjoy.
    Question. During last year's Defense Innovation hearing, Dr. 
Prabhakar noted how both DARPA and the Navy were trying to get the 
Long-Range Anti-Ship Missile to operational capability as quickly as 
possible. I understand that the Long-Range Anti-Ship Missile is 
scheduled for fielding in 2018. Could you please discuss the importance 
of continuing to adequately fund these efforts?
    Answer. The Warfighter has clearly communicated a need to provide 
additional Offensive Anti-surface Warfare (OASuW) capability to address 
emerging threats no later than 2018. This message began with a U.S. 
Pacific Fleet Urgent Operational Needs Statement released in 2008, and 
subsequently revalidated in 2014. United States Pacific Command has 
articulated a developing capability gap that will result in increased 
risk in the operational environment beginning in that timeframe and 
increasing thereafter.
    The Department is addressing this emerging threat through an 
incremental approach, beginning with the OASuW Increment 1 program, 
which will field an early operational capability with the Long-Range 
Anti-Ship Missile (LRASM) to meet the 2018 need until a follow on 
capability can be fielded (OASuW Increment 2). LRASM development/
fielding is funded to focus on meeting the time-critical requirements, 
while accepting manageable levels of technical risk, and is utilizing 
the Department of Defense Instruction 5000.02 Model 4 Accelerated 
Acquisition process to achieve ``speed to the fleet.'' The program's 
funding profile was developed to enable fielding at the time required 
by the Warfighter. Due to the accelerated nature of the program's 
acquisition strategy, volatility in the funding profile has an 
intensified impact on the program's ability to meet the early 
operational requirements, and any reduction in funding will increase 
risk to fielding the required capability at the specified time.

                          SUBCOMMITTEE RECESS

    Senator Cochran. We are very grateful for your cooperation, 
along with that of our distinguished staff member team, which 
is the best in the Senate.
    So until then, the subcommittee stands in recess.
    [Whereupon, at 12:29 p.m., Wednesday, April 22, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]