Defense

and transmit the information long distances without detection. The

warfighting uses of fiber sensors are limited only by imagination, and

their military impact, along with that of other NRL innovations in

fiber optics, has been profound.

These innovations also got the attention of the private sector for

potential commercial uses: NRL work in fiber optics has been applied

to medical care, seismology, communications, robotics, traffic control, and the safety monitoring of bridges, dams, and aircraft. It is no

surprise that NRL staff has been heavily recruited by industry.

Gone—in 18 Months

Industry began targeting NRL in 1999, but it was in 2000 that

losses became severe enough to affect the laboratory’s fiber optics

research mission. Twenty of 26 researchers were hired away that

year. Within 18 months, the collapse was complete.

The private sector offered salary increases from 50 to 100 percent, stock options, and new field offices for those unwilling to move.

Higher compensation is not always enough to lure Government scientists and engineers away from public service, but, in this case, it

was the biggest factor.

Over the years, NRL attracted talent despite industry ability to

offer superior financial compensation. This success was achieved by

maintaining sufficient tangible income and superior intangible benefits such as important work, reasonable autonomy, state-of-the-art

equipment, and high-quality colleagues. However, bureaucracy has

eroded these benefits (for example, long delays in facility modernization), and tangible income has become insufficient for attracting and

retaining enough of the best. This takes us to a couple of common

myths.

Myth: Average Is Good Enough. Hans Mark, former director for

Defense Research and Engineering, once observed, “The presence of a

few individuals of exceptional talent has been responsible for the success (and even the existence) of outstanding research and technology

development organizations.”

3 Some, however, do not believe that the

Defense Laboratories require that level of quality. This has been the

prevailing view among Government personnel specialists for some

Overview

Something important to the Nation’s defense has vanished,

yet the top Pentagon brass never noticed. Not the stuff of headlines, this loss would not arouse public concern, especially during

these times of terrorist massacres, anthrax attacks, corporate

scandal, and war. Nevertheless, like the miner’s canary that is first

to die with the rush of an ill wind, this loss is a warning.

In the span of 18 months, the Department of Defense (DOD)

lost a key part of its 25-year-old ability to perform fiber optics

research at the Naval Research Laboratory (NRL), the only site

with this world-class defense capability. It was not time for DOD

to exit this critical field. Urgent security needs not being met anywhere else were being addressed. Both the scale of the loss and

the speed with which it occurred reveal a growing problem: the

private sector’s increasingly successful recruitment of the best

scientists working for the DOD Defense Laboratories. While personnel losses are to be expected in any enterprise, public or private, this particular loss exposes the diminished DOD ability to

retain the technical talent necessary to accomplish its mission.

The death of this “canary” sends warning that an ill wind is

blowing for the Defense Laboratories.1 Without reform, their loss

of expertise will worsen, eventually to the point where it affects

good government and poses significant risks to national security.

Should this happen, the Nation will suffer what President Dwight

Eisenhower called “a disastrous rise of misplaced power.”

Before the Collapse

The Naval Research Laboratory (NRL) has been the Department of Defense (DOD) center of expertise for fiber optics research

and development (R&D) for more than 2 decades. In 1977, it caught

global interest with the world’s first fiber optic acoustic sensor, an

ultrasensitive device that can “hear with light.”

2 Since this NRL

breakthrough, these sensors can now also detect temperature variations, magnetic and electric fields, and vibration. For example, when

buried in the ground, fiber sensors can monitor foot or vehicle traffic

The Silence of the Labs

by Don J. DeYoung

A publication of the

Center for Technology and National Security Policy

National Defense University

JANUARY 2003

Number 21

Horizons

January 2003 Defense Horizons 1
time, and it is one reason why they have rejected most reforms. They

might say that the NRL loss of 26 fiber optics researchers in 18 months

is just the ebb and flow of normal business operations in a competitive

field. They might also dismiss the significance of these losses by arguing that only an average of 1.5 researchers per month were lost.

But statistical averages protect the status quo by obscuring

meaningful information. Peter Drucker, who has been called the

most important management thinker of our time, has this to say on

the subject: “Averages serve the purposes of the insurance company,

but they are meaningless, indeed misleading, for personnel management decisions.”

4 Averages hide the fact that NRL, and other Defense

Laboratories, struggle to compete for and retain talent representative of the top 10 percent of the Nation’s scientists and engineers.

Averages also minimize the enormous impact of a single exceptionally talented researcher. Thus, when evaluating the fiber optics

losses, it is best to consider a few key points.

■ Quality is more important than quantity. A former president of the

National Academy of Sciences noted, “In science, the best is vastly more

important than the next best.”

5 Among the NRL losses were five fellows of

the Optical Society of America. One researcher had won the prestigious

Institute of Navigation Thurlow Award for his work on the fiber optic gyroscope, now used on military platforms and in automobile navigation systems.

■ The losses had major impacts on the small teams that play a critical

role in innovation. The NRL losses took place within four research sections.

A section is the smallest creative unit within larger organizational units.

With a typical staff of four to eight researchers, attrition within the four sections ranged from 50 to 75 percent.

■ High-quality scientists and engineers are not easily replaced. Studies show that the one-size-fits-all Federal personnel system is antiquated,6

better suited to hire clerks than physicists. Replacing the NRL losses will not

be done quickly, even in an economic downturn, because high-quality scientists and engineers are key to the competitiveness of high-tech industries.

■ The losses leave a gap in a critical defense area. DOD lost a capability that now resides in industry, where it is used solely for commercial applications, which means that the Nation’s capability to perform world-class fiber

optics research for certain unique defense purposes no longer exists.

This last point merits emphasis. NRL performs work that no one

else is doing, will do, or can do. This fact raises a second popular myth.

Myth: Industry Can Do It All. Industry will not take on the full

range of necessary work because many areas hold limited opportunities for profit. Specialized defense technologies often have little or

no applicability to commercial products. Unlike the situation during

World War II, or even the Vietnam era, the DOD market is now often

too small to justify a significant investment of scarce capital. For

instance, Intel stopped making customized chips for the military

because it was expensive and the volumes were too small.7

In addition, R&D is expensive, the time to achieve success is

long, the work is often very risky, and the payoff (especially from

research) is usually not immediate. This is unappealing to chief

executive officers (CEOs) whose compensation is tied to the short

term (such as stock prices and quarterly dividends). To cut costs

and raise money, for example, Xerox sought co-owners for its Palo

Alto Research Center, which is famous for helping to spark the computer revolution with the Ethernet, the mouse, and the point-andclick computer interface. Echoing the corporate focus on the shortterm, Business Week stated that co-owners would demand that this

“dream factory” work on “more practical, short-term business problems . . . and that’s a good thing.”

8 In the end, Xerox divested itself of

the laboratory.

The record also does not support the notion that private laboratories by nature work faster, better, and cheaper than Government

Laboratories. Consider two examples:

■ In 1999, Lee Buchanan, then Assistant Secretary of the Navy for

Research, Development, and Acquisition, went before Congress and identified eight technologies that had emerged from private and public laboratories to play a major role on the battlefield. Of those eight, four were NRL

achievements, and a fifth received strong support from it.9

■ After a joint National Aeronautics and Space Administration

(NASA)/DOD study concluded that a collaborative space mission could test

missile defense technologies and provide a significant science return, NRL

was given responsibility for mission design, spacecraft engineering, test, and

flight operations. In 1994, NRL put the satellite Clementine into lunar orbit,

and the United States returned to the Moon for the first time since 1972.

Built in less than one-half the time and for one-fifth the cost of similar space

probes,10 it was so simple to operate that its mission control center comprised eight engineers working in a warehouse in Alexandria, Virginia.11

The combat superiority of the U.S. military is preserved in part

by long-term, defense-specific, high-risk work performed by NRL and

other Defense Laboratories. A way must be found for the U.S. Government to recruit and retain the world-class scientists and engineers who are critical to the success of that work.

Some will no doubt say that the NRL losses are appropriate

because Government talent is fair game to the highest bidder, as it is

elsewhere in a free market economy. If the Government cannot compete, it should get out of the field. However, Government is not a

business; its metrics and mission are different. Using the dynamics

of the marketplace to rationalize losses of expertise ignores the

enormous political and military costs that will result from the Government’s loss of technical competence.

Political Costs

To understand the political costs of inaction, one must understand why DOD has laboratories in the first place. To be sure, their

existence is not based on a unique ability to perform research and

development. Instead, it is based on their unique position as technical agents of the U.S. Government, knowledgeable of military requirements, and responsible for acting in the Nation’s interests. The

Defense Laboratory meets this responsibility by performing three

roles: performer of long-term, high-risk projects; quick responder in

crises; and yardstick,

12 a term referring to the standard that it sets by

providing authoritative, objective advice to governmental decisionmakers. This yardstick role is relevant to explaining political costs.

The Perry Report, endorsed by then Under Secretary of Defense

for Research and Engineering, William Perry, spoke to the yardstick

role by explaining that to be a smart buyer, the Federal Government

must be able to choose among competing options offered by industrial

producers. The need for profit makes each company an advocate of its

2 Defense Horizons January 2003

Don J. DeYoung is a senior research fellow in the Center for Technology and

National Security Policy at National Defense University. He is on detail to the

Center from the Naval Research Laboratory where he is the executive assistant

to the director of research.
own product, so, given those natural tendencies, the Government

“requires internal technical capability of sufficient breadth, depth,

and continuity to assure that the public interest is served.”

13

Conversely, deficient in-house expertise is what political scientist Harold Nieburg called “losing the yardstick.” This condition

becomes evident when the Government is forced to hire consultants

to judge the work of its contractors. In other words, with its source

of independent, objective technical expertise gone, the Federal Government is forced to rely on advice from sources not insulated from

commercial pressures to make a profit.

To be a yardstick, a laboratory must be a competent performer.

There is no “knowing” in the absence of “doing”; the two roles are

intimately related. The following example shows how technical

strength yields sound advice.

In 1993, after the Jet Propulsion Laboratory lost contact with

the Mars Observer, the NASA administrator asked the NRL Director

of Research to chair a panel to investigate the failure. The technical

teams were composed largely (78 percent) of NRL personnel. When

the laboratory delivered the findings to NASA, its report was lauded

by the scientific press for its insight, thoroughness, and technical

rigor. Though the report contained some criticism of the space

agency’s practices, it was strongly endorsed by NASA top management. Five days after its release, the NASA prime contractor for the

missing spacecraft voluntarily returned $17 million and renounced

claims for an additional $4 million in bonuses not yet received—a

testimony to the competent objectivity of the NRL work.14

This shows how a healthy in-house laboratory system facilitates

good government. On the other hand, an unhealthy system impairs

it. That was the view of the National Commission on the Public Service.15 Calling the growing problem in attracting and retaining highquality civil servants a “quiet crisis,” the commission warned that the

problem “undermines the ability of government to respond effectively to the needs and aspirations of the American people, and ultimately damages the democratic process itself.”

16

Military Costs

President Harry Truman put it bluntly: “No aspect of military

preparedness is more important than scientific research.” He also

warned, “No government adequately meets its responsibilities unless

it generously and intelligently supports and encourages the work of

science in university, industry, and in its own laboratories.”

17 His

remarks suggest that the success of tomorrow’s military operations

depend, in part, on the research and development performed today

by the Defense Laboratories.

To test the validity of Truman’s view, consider the consequences if NRL had not been able to attract exceptional personnel in

past years. Key technologies would have been unavailable at the

moment when the country needed them most. Three of them transformed the military by changing the way wars are fought. They also

tipped the balance of power.

Decisive Technologies. The first modern U.S. radar was developed and fielded in time for duty in the great Pacific naval battles of

World War II, contributing to victories at Coral Sea, Midway, and

Guadalcanal.18 The world’s first intelligence satellite was launched at

the height of the Cold War, reestablishing surveillance of the Soviet

Union less than 2 months after the U–2, piloted by Air Force Captain

Francis Gary Powers, was shot down.19 NRL pioneered what became

the global positioning system (GPS), the revolutionary navigation

system that played a pivotal role in the Gulf War, by inventing key

concepts and developing in partnership with industry and others the

four satellite prototypes and first operational GPS satellite.20

Support for the warfighter continues. Among several new NRL

innovations that saw action in Kosovo was Specific Emitter Identification technology,21 which identifies any radar by its unique characteristics with such accuracy as to “fingerprint” it. In fact, it can distinguish between identical models produced off the same assembly

line. The National Security Agency selected it as the national standard. Moreover, Coast Guard vessels, naval warships, and aircraft use

it to support drug interdiction, enforce treaties, and monitor the

movement of materials used in weapons of mass destruction.

Among the most classified NRL programs, there very likely are

new capabilities to bring to bear in the war on terrorism. Hints of

this are seen in the emergence of unclassified technologies such as

Dragon Eye. Carried by U.S. marines in a backpack, it is a handlaunched, four-pound miniature surveillance plane with the radar

signature of a bird. It was featured in a Popular Science article about

new antiterrorism tools. 

Of course, NRL does not have a monopoly on success. For

instance, CL–20, described as the world’s most powerful nonnuclear

explosive, was invented by the Navy’s China Lake Laboratory.22 But to

better dramatize the importance of the other Defense Laboratories,

consider their joint impact on Operation Desert Storm. In the first

hours of the Gulf War, antiradiation missiles—a type of missile

invented by the China Lake Laboratory—took out Iraqi air defense

batteries to help establish American air superiority. In the war’s last

days, the arrival of the GBU–28 bomb put the formerly secure command bunkers of Iraq, and probably Saddam Hussein himself, at risk.

The Air Force Research Laboratory (AFRL) and the Army’s Watervliet Arsenal developed this bunker buster with contractor support.23

The Army’s Night Vision Laboratory developed dazzling nightvision technologies, and the Army Research Laboratory (ARL) led

development of the world’s most effective tank ammunition, the Silver Bullet. ARL got key contributions from the Navy’s Indian Head

Laboratory and the Department of Energy Laboratories. Night vision

devices and the Silver Bullet were fielded on the most lethal

weapon of Operation Desert Storm—the M1A1 main battle tank.

Any doubt about that is dispelled by the testimony of a captured

Iraqi commander: “On 17 January, I started with 39 tanks. After 38

days of aerial attacks, I had 32, but in less than 20 minutes with the

M1A1, I had zero.”

24

More recently there is the success of the Indian Head Laboratory in developing the thermobaric bomb. This is a classic example

of how the Defense Laboratory’s strength as a performer enables it to

satisfy its role as a quick responder in crises. In fact, the Perry

Report found that “a cadre of highly skilled in-house specialists can

best respond to situations of this nature.”

Crisis Response. After September 11, 2001, the thermobaric

bomb was rushed into development for use against al Qaeda and

Taliban forces holed up in Afghanistan’s mountain caves and tunnels. The weapon was ready in only 67 days. When detonated, it generates extremely high, sustained blast pressures and temperatures

January 2003 Defense Horizons 3
in confined spaces. According to a former Government official, “The

capability to produce the explosive for those weapons existed only

at the Indian Head facility. . . . No private firm had the ability to produce thermobaric weapons.”

25

Defense Laboratories have helped make the U.S. military the

most formidable fighting force in the world, proving President Truman right for placing high value on the Government’s own laboratories. But the status quo imperils their future. Something must be

done—but what?

Reinvention Was Not the Answer . . .

Instead of pursuing reform, the National Performance Review

(NPR) encouraged incremental improvements, commonly called

reinvention. But the Defense Laboratories lost ground on the big

goal of the NPR: decentralization of authority. Throughout the reinvention years, DOD and Navy policies designed to save money

through centralization were the norm. The Defense Laboratories

lost authority and are less able to manage their resources than at any

time prior to NPR.

For example, after decades of on-site operation, NRL no longer

has its own personnel office. This function is now performed 140

miles away at a regional site serving many Navy organizations, most

of which have nothing to do with research and development. This

change has been roundly criticized. In Civilian Workforce 2020, the

National Academy of Public Administration called the Navy “a victim

of a failed strategy to achieve staff savings” by restructuring its personnel operations in a “dysfunctional” manner.

The results of reinvention were disappointing, which prompted

Peter Drucker to say, “In any institution other than the federal government, the changes being trumpeted as reinventions would not

even be announced . . . they are the kinds of things a hospital expects

floor nurses to do on their own... without getting much praise, let

alone extra rewards.”

26

Three realities led to the meager results: bureaucratic power is

jealously guarded and not freely distributed; accountability is diffused, such that no one office or person may be held responsible for

inaction; and making government work was less desirable than outsourcing government work.

. . . Neither Was Defense Reform

Large-scale corporate corruption led President John Kennedy

to launch his Commission on Government R&D Contracting, which

featured some of Government’s heaviest hitters.27 This Commission

endorsed the importance of the in-house Laboratories and with firm

words warned that “No matter how heavily the government relies on

private contracting, it should never lose a strong internal competence in research and development.”

28

But since the mid-1990s, preserving that strong internal competence has taken a back seat to outsourcing government jobs. By

1998, the goal was to offer up 229,000 jobs for competition—three

times the number studied in the previous 17 years. The Defense

Reform Initiative (DRI) was that plan’s champion. Although DRI was

disbanded after the change in administration in 2000, the last 6 years

have seen about 220,000 job competitions—and more are planned.

The Army has announced plans for over 210,000 competitions, many

of them technology jobs. The former DRI director, now president of

an association of Federal contractors whose web site advertises its

“direct access”

29 to DOD decisionmakers, praised the initiative.30

The push to outsource has been strong, partly because opportunities for savings do exist. But the General Accounting Office

(GAO) and others caution that savings are gained by outsourcing

functions in highly competitive markets, such as property maintenance. The case for outsourcing research and development, on the

other hand, is weak and appears to be founded on two more myths.

Myth: Outsourcing Guarantees Savings of 30 to 40 Percent. Two

Defense Science Board (DSB) reports made this claim in 1996, and

it became the touchstone for outsourcing advocates. But there are

three reasons why the claim is dubious. First, the private sector has

experienced mixed results. Coopers and Lybrand reported that only

half of the firms surveyed achieved savings.31 Second, the GAO and

DOD Program Analysis and Evaluation (PA&E) Office found the DSB

estimate of $6 billion in annual savings to be overstated by as much

as $4 billion.32 Third, academic experts have very different conclusions. Ann Markusen, of the University of Minnesota and also a senior fellow at the Council on Foreign Relations and chair of the AAAS

Committee on Science, Engineering, and Public Policy, testified to

GAO that “there is no solid evidence that outsourcing has lowered

costs in the longer term... advocates have not buttressed their case

with hard evidence.”

33

Myth: Laboratory Outsourcing Lags behind Force Cuts. Advocates of outsourcing argue that cuts in Defense Laboratory infrastructure since 1990 have not matched cuts in force structure. They

claim one way to redress this perceived imbalance is to outsource

more work. But using 1990 as the baseline ignores the fact that the

laboratories began contracting more of their work long before force

cuts began. DOD data34 show Navy Laboratories outsourced 50 percent of research, development, testing, and evaluation (RDT&E) in

2000, up from 26 percent in 1969. Army Laboratories outsourced 65

percent, up from 38 percent. Actual levels are higher because these

data do not include operating functions, such as automated data processing support.

What explains the persistent appeal of a coin-operated government? One reason is that a great deal of money is at issue. DOD

already outsources more money to contractors than the combined

military spending of Russia, China, and the seven “rogues” (North

Korea, Iraq, Iran, Libya, Sudan, Syria, and Cuba).35 Dollars can

affect thinking. Upton Sinclair, author of The Jungle, expressed

this well: “It is difficult to get a man to understand something when

his salary depends upon his not understanding it.”

. . . But Solutions Exist

Solutions will vary among Defense Laboratories because of

their different missions, but four reforms could improve things significantly, three of which can be implemented today.

Problem: There is a perception that DOD does not have the

authority to fix its personnel systems. However, with Section 1114 of

the National Defense Authorization Act (NDAA) for Fiscal Year

(FY) 2001, Congress gave DOD the authority of the Office of

Personnel Management in matters affecting its personnel demonstration projects. Two years later, it remains unimplemented.

4 Defense Horizons January 2003
Solution: Use Section 1114 to waive the limit on the number of

scientists and engineers within the highest pay bands of the Defense

Laboratories and permit their parent commands to establish such

positions. This would improve the retention of outstanding talent by

permitting the management of these positions according to project

needs and funding.

Problem: There is great resistance to personnel reforms that are

not “cost neutral.” However, sometimes it is necessary to pay more for

excellence. Perhaps the investment that society is willing to make on

entertainment can lend a useful perspective. The payroll for the New

York Yankees 40-man roster is 5 percent greater than that for the

1,575 scientists and engineers at NRL. This is not to suggest that Government scientists be offered million-dollar contracts, but paying a

more competitive salary to a small number of exceptionally talented

individuals would serve the Nation’s defense interests.

Solution: Raise the top salary of the Laboratories’ highest pay

bands to that of Executive Level II. The best Defense Laboratories

need the ability to fix basic pay of up to 10 percent of their scientists

and engineers at levels more comparable to the private sector. This

can be done with the authority granted by Section 1114. There is also

a precedent: The Internal Revenue Service can pay up to 40 employees as much as that earned by the Vice President, which is still

$40,000 more than what is suggested under this proposal.

Problem: Some perceive that hiring delays are avoided only by

sacrificing merit principles. This cannot be true because 28 agencies

are exempt from the competitive examining process of Title 5. In fact,

by using “special hiring authorities,” half of all new Federal employees did not go through the competitive process in FY97.

Solution: Grant the three corporate Defense Laboratories

“direct appointment authority without competition.” This would let

NRL, ARL, and AFRL make immediate offers for positions for which

candidates are few and in high demand, cutting the process by as

much as 5 weeks. Because these laboratories recruit for such highly

specialized skills, there are not the large numbers of applicants for

which competitive recruitment rules make sense. And it can be done

in a way that ensures the best people are selected.

Problem: Construction funding for the Defense Laboratories

has declined steadily over the last 30 years. Again, by way of comparison, both Yankee Stadium and NRL opened their gates in 1923.

In 1973, Yankee Stadium underwent a 3-year, $160-million renovation. By contrast, over the last 30 years, NRL received a total of $25

million (in 1973 dollars)—less than one-sixth of the investment in

Yankee Stadium over a period 10 times longer. Military construction

funding has not always been so limited. In the 1960s, NRL received

$33.3 million, an amount equivalent to $111 million in current dollars. That sum would be impossible to get today. Meanwhile, New

York City has considered spending $800 million for a new stadium.

Solution: Allow NRL and other working capital fund laboratories to manage their Capital Purchases Program (CPP) for infrastructure revitalization. The CPP gives them the ability to invest in

capital assets using overhead funds. But the Navy Comptroller considers the dollar amount and year of availability as statutory limitations. Legislation is required to change this, but there are precedents. The Postal Service and St. Lawrence Seaway Development

Corporation use overhead funds generated from sales to acquire,

construct, and maintain their own facilities and property.

The basic point is that the problems have solutions, which begs

the question, why has so little been done?

An Ill Wind Is Blowing

In 1915, Thomas Edison urged the U.S. Government to “maintain a great research laboratory.” Later, as Assistant Secretary of the

Navy, Franklin Roosevelt helped make that idea, and NRL, a reality.

Both Edison and Roosevelt believed that strong government competence in research and development was important, as did President

Truman after science helped win World War II.

For over 40 years after that war, scores of studies continually

affirmed the importance of the Laboratories. Among those conducting

or endorsing these studies were two Secretaries of Defense (Harold

Brown and William Perry), two giants of industry (David Packard and

Robert Galvin), and two Nobel laureates (John Bardeen [co-inventor

of the transistor] and Charles Townes [inventor of the laser]).

Over the years, problem areas were increasingly noted by studies, but the goal was always to fix them. The value of the Laboratories was never in question. For example, the 1987 DSB stated, “This

nation has long been well served by defense laboratories in innovative research and in support of national emergencies... the quality

of the laboratories and their technical leadership are of supreme

importance to DOD.”

36

Unfortunately, Edison’s idea is under assault. In 1996, a negative view emerged abruptly in a DSB report that advocated outsourcing Defense Laboratory work to universities and industry. This

report—the same one that the GAO and DOD PA&E found had overstated potential savings by $4 billion—proposed that “those DOD

laboratory facilities which are still required after their programs

move to university/industry locations, could be privatized . . . it is

quite likely that private industry would compete heavily to obtain

the DOD laboratories, particularly if they come fully equipped.”

37

So in 9 years time, the Laboratories went from being considered

of “supreme importance” to being proposed for sale, “fully equipped,”

to the highest bidder. Not long after the 1996 study, an industry CEO

(and member of the Defense Reform Task Force) made a case to

Congress that savings could be realized through personnel cuts. He

said, “DOD should be more ruthless about cutting defense labs.”

38

Given that DOD has cut 36 percent of its Laboratory personnel since

1990, with Navy Laboratories down by 43 percent,39 one can only

wonder what a more ruthless approach would produce.

What explains this negative view? Markusen offers a clue by

stating in her GAO testimony that the DSB study was “heavily populated by large defense contractors.” She concludes that the evidence

supporting the DSB claims is inadequate and that the “enthusiasm

for privatizing national security is premature and largely driven by

commercial concerns and lobbying.” But, why did the negative viewpoint appear when it did?

Follow the Money

The change occurred after the Soviet Union collapsed. Without

a clear and present danger to enforce restraint, irresistible political

and economic urges were unleashed on a shrinking Pentagon

budget. At the same time, few production lines were closed despite

industry mergers.40 Remaining excess capacity created an incentive

January 2003 Defense Horizons 5
to pull funding from the public sector, an incentive that increases as

dependency on Defense dollars grows. Some contractors are very

dependent—according to Defense News, General Dynamics’ dependence has reached 100 percent. Current security threats are unlikely

to restore a restraining influence on the budget. With a shapeless

terror threat, the gold rush may be relentless.

As Defense Laboratories transfer their innovations to industry

for production, they help to increase the profitability of the contractors. When ARL transferred the Silver Bullet, General Dynamics produced more than 250,000 of them,41 which it sold back to the Army

for a profit. That was an example of healthy public-private cooperation that capitalized on the strengths of each while providing for the

common defense. There are many other examples, including NRL

transfer of GPS technology, which helped create a commercial market exceeding $15 billion. Some innovations have gone straight into

the nondefense economy, such as the NRL discovery of the excimer

laser, the tool that made LASIK eye surgery possible and helped create a billion-dollar industry.42

Despite their value to industry profitability while performing

only 12 percent of DOD research and development, the Laboratories

have become a target. Cost efficiency is the pretext to move their work

into the private sector, which may explain the name given to a fifth

round of base closures: the Efficient Facilities Initiative. This round in

2005 could be large. In a recent speech, a DOD official indicated that

up to 25 percent of military infrastructure could be considered excess

to its needs.43 His audience was an attentive National Association of

Installation Developers. Now, how does DOD measure excess?

Closure by Arithmetic

Excess capacity is a simple concept when applied to most installations, such as naval stations, air bases, hospitals, and test centers.

Fewer ships need less berthing, fewer aircraft need less hangar space,

fewer personnel need fewer hospital beds, and reduced weapons procurement equals less test range use. But unlike conventional bases,

there is no direct relationship between size of the force and that of

Laboratory infrastructure (for example, buildings, roads, and utilities). If there were such a relationship, the Navy would not have

resorted to a surrogate metric (that is, work-years) for capacity during the 1995 Base Realignment and Closure (BRAC) round.

In the Navy process, each Laboratory’s maximum capacity

equaled its peak number of work-years performed in any single year

from 1986 to 1994, years chosen because they spanned the Reagan

buildup and the Gulf War. Individual Laboratory peaks were then

summed to yield the full capacity of Navy Laboratory infrastructure.

Next, the sum of their projected work-years for FY97 was subtracted

from full capacity. The difference was excess capacity. Evidence indicates that the methodology was flawed.

First, it unrealistically treated scientists and engineers as

interchangeable, conveyable, replicable items—such as hospital

beds and hangar space—regardless of their position, education, and

professional accomplishment. Literally unable to distinguish

between a technician and a Nobel laureate, the computer model

moved scientists and engineers from one Laboratory to another,

much the way guests are assigned to hotel rooms.

Second, the surrogate metric counted only in-house workyears, which means contractor work-years were excluded. This was

not an oversight. Contractor numbers are notoriously hard to verify.

With the high stakes of a BRAC, this raises the risk of fraud or,

almost as bad, of rumors of it. Nevertheless, contractors perform

about half of Navy RDT&E, and a great many of them work at the

Laboratories and use their infrastructure. Therefore, the metric provided an incomplete picture, yielding inaccurate conclusions. Using

the above hotel analogy, this is like counting only guests who occupy

even-numbered rooms.

Third, Laboratories considered for closure were determined by

coupling the surrogate metric with military value, a metric heavily

weighted in favor of sites with test ranges. Test ranges are critical

assets, some irreplaceable, but the weights militated against those

Laboratories performing high levels of basic and applied research,

the work that creates tomorrow’s warfighting capabilities.

In one case, the three flaws combined to yield what would have

been a grave mistake. The process led to considering closure of the

Indian Head Laboratory, an East coast site, to move its workload to a

West coast site with a test range. Since most scientists and engineers

do not relocate with the work, closing it would have devastated a center of critical expertise. That would have cost lives. Only Indian Head

had the ability to develop the thermobaric warhead, sparing U.S.

troops the bloody prospect of tunnel-to-tunnel combat in Afghanistan.

Closure by arithmetic does not work well for Laboratories.

Performance Is Everything

Robert Frosch, former vice president of GM Research Laboratories, observed that in research and development “you cannot measure the future; the only thing you can measure is past performance.”

44 From this comment and from the lesson of the near-blunder

on Indian Head, we should conclude that the only viable metric for

evaluating a Laboratory is track record (that is, mission success both

in terms of warfighting impact and contributions to science and

technology). Demonstrated effectiveness in meeting national security interests is even more critical with our country at war. So why

not judge Laboratory performance during BRAC–05? We judge professional sports teams by their records. Why treat national security

less seriously than athletic competition?

BRAC is like a scalpel. In the hands of a surgeon, it can bring

health. Ensuring that it does will be important not only for the Laboratories but for the private sector as well. There is a high level of

productive collaboration between the Laboratories and industry,

which is in the Nation’s interest. Mutual respect exists in this key

relationship. For instance, in a 1998 letter supporting the NRL nomination for the National Medal of Technology, Norman Augustine

(CEO of Lockheed Martin), said, “I know from experience that there

are few other institutions—public or private—which have had a

greater impact on American life in the 20th century, both in terms of

military needs and civilian uses.”

45

Unfortunately, after the Cold War, the Laboratories have been

increasingly viewed as illegitimate competition, not as necessary

partners to industry and academia.

6 Defense Horizons January 2003
Breaking the Yardstick

One of the latest expressions against preserving a strong internal technical competence was a DSB report issued in October 2000.

It proposed the services hire scientists and engineers from the private sector under contract “from universities, industry and non-profits for a majority of the professional staffs of the defense laboratories.”

46 This solution is dangerous for three reasons.

First, it breaks the yardstick. To be a smart buyer, the Government requires objective technical advice. Relying on advice from those

not insulated from commercial interests is a disturbing prospect, especially in light of the Wall Street ethics meltdown. The potential for corruption and capture of public interests are two reasons why independent analysts have not shared DSB enthusiasm for privatization.

Second, it will degrade the ability of the Defense Laboratory as a

performer. The reason for this is simple and best summed up by Timothy Coffey, the former NRL Director of Research: “You cannot run a

world-class laboratory with someone else’s workforce.” It is doubtful

that top nongovernmental laboratories, such as Lucent and the MIT

Lincoln Laboratory, would choose to operate as the DSB proposed.

Third, as shown above, solutions exist that do not require one to

destroy the Defense Laboratory to save it. The terrorist attack on the

Pentagon offers a symbolically compelling case in point. Battling fires

only a couple of corridors from the DSB office, firefighters smothered

the flames with firefighting foam, an agent used on Navy carriers and

by airports worldwide. NRL invented it after fires claimed more than

160 lives aboard the USS Forrestal and USS Enterprise.

47

Stifling Innovation

Working together, American technical creativity and bureaucratic skill have achieved great things. They took the world to the

Moon, tamed infectious diseases, and helped win the Cold War. Now

they must rise to meet the challenge of terrorism.

When used inappropriately, however, administrative rules can

stifle innovation. Over time, the Laboratories have been increasingly

burdened with counterproductive policies and procedures. Whenever Congress authorizes reform, such as Section 1114, which gives

DOD unprecedented personnel authorities, action is stymied. The

same is true for Section 245 of the FY00 NDAA and Section 246 of the

FY99 NDAA, both of which granted authorities to waive burdensome

regulations. All three initiatives were blocked, prompting seven senators from the Senate Armed Services Committee to write a letter to

the Secretary of Defense voicing their dissatisfaction with the DOD

and its “apparent absence of intention or commitment . . . to take full

advantage of the authorities.”

48

Efforts to respond to terrorism have also produced counterproductive rules. After the September attacks, a draft directive for

a new research protection regime was issued. It met criticism from

Congress, academia, industry, the Defense Advanced Research Projects Agency, and the services that the directive would stifle

defense research and thereby weaken national security; conflict

with long-standing national policy; go beyond measures used

throughout the Cold War; and wastefully duplicate an existing

intelligence database.49 After that reaction, DOD narrowed the

directive’s scope to protect only information already protected by

existing mechanisms, such as classification and export controls.

DOD also exempted universities and industry, where most defense

research is performed, from the redundant rules.50 Predictably,

plans call for afflicting the Laboratories with them.

It is tempting to blame bureaucracy alone, but doing so would

miss the real problem. Bureaucracy cannot stymie Congress for

years. And alone, it cannot thwart the proposals of national leaders,

such as Brown, Perry, Packard, Galvin, Bardeen, and Townes—leaders who built industries, invented devices that revolutionized the

way we live, and made decisions of world-shaping importance. Something stronger gives it a free hand to smother the Laboratories. It is

something that we were warned about more than 4 decades ago.

Eisenhower’s Warning

A Chinese proverb holds that the possibility of progress begins

when one calls a problem by its right name. Evidence suggests that

“unwarranted influence” is the right name of this problem. In his

farewell address, President Eisenhower warned us to “guard against

the acquisition of unwarranted influence” and “the disastrous rise of

misplaced power.” But we have let down our guard. Economic and

political interests have come together in a way that is eroding the

Government’s will to support its Defense Laboratories. This union is

what makes retaining high-quality talent, building new facilities, and

eliminating burdensome bureaucracy so hard to achieve. This union

is eating at the heart of the in-house system. And this union promises a slow death for it.

The goal of unwarranted influence is misplaced power—that

is, power pulled away from the Pentagon acquisition commands and

into corporate boardrooms. Historically, the commands have held

the power, ensuring that decisionmaking remained an inherently

governmental function. But that depends on an in-house yardstick

that enables the commands to choose intelligently among competing

technologies offered by contractors. An eroded Laboratory system

breaks the yardstick. Without it, the commands will cede de facto

decisionmaking authority to the private sector. When the commands

are forced to hire private consultants to judge the work of private

contractors, unwarranted influence achieves its aim.

To succeed, unwarranted influence requires only indifference

toward the Defense Laboratory’s plight. President Eisenhower seems

to alert us to such apathy by insisting in his farewell to “take nothing

for granted.”

A Darkening Future

Should present trends continue, the Defense Laboratory will

lose its competence as a performer of long-term, high-risk work.

When that happens, the risks to future military operations will grow

because its abilities to provide for America’s defense and respond

quickly to crises will have passed quietly into history. Lost competence will also still the Pentagon’s strongest voice for independent,

authoritative technical advice. The yardstick will be broken. The

Nation’s interests will have been traded for corporate interests, with

public service sold for private gain.

From that moment on, to use Hamlet’s final words... the rest is

silence. Our country’s future takes a darker path, one marked by the

silence of the labs.

January 2003 Defense Horizons 7
Notes1 Laboratories is used as a generic term for organizations performing research

and development. While the subject is the Defense Laboratories, the focus is on the

Naval Research Laboratory, with which the author has substantial personal knowledge. 2 U.S. Patent No. 4,162,397 to J.A. Bucaro, H.D. Dardy, and E.F. Carome, “Fiber

Optic Acoustic Sensor” (July 1979). 3 Hans Mark and Arnold Levine, The Management of Research Institutions

(Washington, DC: Scientific and Technical Information Branch, National Aeronautics

and Space Administration, 1984). 4 Peter F. Drucker, The Effective Executive (London: Heinemann, 1967). 5 The top 10 to 15 percent of scientists contribute about half the papers published; see Paul D. Allison, J. Scott Long, and Tad K. Krauze, “Cumulative Advantage

and Inequality in Science,” American Sociological Review 47, no. 5 (October 1982),

615–625.

6 Naval Personnel Task Force (July 2000); Acquisition 2005 Task Force, “Shaping the Civilian Acquisition Workforce of the Future,” (October 2000); Wexford Group,

“DoD Laboratory S&E Workforce Framework of HR Features for the Alternative Personnel System,” (September 2002). 7 Kathy Chen, “Pentagon Finds Fewer Firms Want to Do Military R&D,” Wall

Street Journal, October 22, 1999, A20. 8 P. Coy, “Research Labs Get Real . . . It’s About Time,” Business Week, November

6, 2000.9 Testimony before the Subcommittee on Emerging Threats and Capabilities of

the Senate Armed Services Committee, April 20, 1999. 10 Excerpt from certificate accompanying the 1995 Stellar Award given to the

Clementine development team. 11 Excerpt from Discover Magazine Award for Technological Innovation (1995). 12 Harold L. Nieburg, In the Name of Science (Chicago: Quadrangle Books, 1966). 13 William J. Perry, Required In-House Capabilities for Department of Defense

Research, Development, Test and Evaluation (Washington, DC: Department of

Defense, 1980). 14 Cited in justification for the 1994 Presidential Rank of Distinguished Executive Award to Timothy Coffey. 15 Among the distinguished public servants on the commission were former President Gerald R. Ford, former Secretaries of Defense Robert S. McNamara and Elliot

Richardson, and Secretary of Defense Donald H. Rumsfeld. 16 National Commission on the Public Service, “Rebuilding the Public Service”

(1989). 17 President Harry S. Truman, Message to Congress on December 19, 1945, and

September 6, 1945. 18 Ernest J. King, U.S. Navy at War: 1941–1945 (Washington, DC: Department of

the Navy, 1946). 19 The NRL GRAB I was launched on June 22, 1960. 20 U.S. Patent No. 3,789,409, “Navigation System Using Satellites and Passive

Ranging Techniques” (January 1974), was awarded to Roger Easton of NRL for the key

concept. For its pioneering contributions, NRL was named to the Space Technology

Hall of Fame and awarded the Collier Trophy. 21 SEI was featured in Buchanan’s testimony to Congress. 22 Cordant Technologies News Release, “Thiokol to Turn Powerful Explosives

Material into Production Material,” June 13, 1999. 23 Federation of American Scientists Web Site, accessed at <http://www.fas.org/

man/dod-101/sys/smart/gbu-28.htm>. 24 Comment by Iraqi Battalion Commander captured by U.S. 2d Armored Cavalry

Regiment on April 16, 1991. 25 James Colvard, “The Numbers Game,” GovExec.com, “Federal Focus,” May 13,

2002, accessed at <http://207.27.3.29/dailyfed/0502/051302ff.htm>. 26 Peter F. Drucker, “Really Reinventing Government,” The Atlantic Monthly

(February 1995). 27 Panel members included the Secretary of Defense, the NASA administrator,

the President’s science adviser, and the director of the Bureau of the Budget. 28 Report to the President of the United States on Government R&D Contracting,

April 1962. 29 Professional Services Council Web site, accessed at <http://www.pscouncil.

org/2day/aboutpsc.htm>. 30 Jason Peckenpaugh, “Hundreds of Thousands of Army Employees Could Face

Outsourcing,” GovExec.com, “Daily Briefing,” October 4, 2002, accessed at <http://

207.27.3.29/dailyfed/1002/100402p1.htm>.

31 Michael L. Marshall and J. Eric Hazell, “Outsourcing R&D—Panacea or Pipe

Dream?” U.S. Naval Institute Proceedings 126, no. 10 (October 2000). 32 United States General Accounting Office, Outsourcing DOD Logistics (1997). 33 Ann R. Markusen, “The Case Against Privatizing National Security,” June 2001,

accessed online at <http://www.gao.gov/a76panel/fortherecord/amarkusenpaper.pdf >. 34 DOD In-House RDT&E Activities Reports.

35 From the Center for Defense Information.

36 Defense Science Board, Technology Base Management (Washington, DC:

DTIC no. ADA 188560, 1987). 37 Defense Science Board, Achieving an Innovative Support Structure for 21st

Century Military Superiority (Washington, DC: 1996), accessed at <http://www.acq.

osd.mil/dsb/achievinganinnovative.pdf>. 38 Testimony before the House National Security Committee on Defense Reform

and H.R. 1778, June 17, 1997. 39 Defense Manpower Data Center.

40 Harvey M. Sapolsky and Eugene Gholz, “Private Arsenals: America’s Post-Cold

War Burden,” in Arming the Future: A Defense Industry for the 21st Century, ed. Ann

R. Markusen and Sean S. Costigan (Washington, DC: Council on Foreign Relations

Press, 1999). 41 General Dynamics Web site, accessed at <http://www.rocket.com/lca.html>.

42 Stuart Searles and George Hart of NRL received the prestigious Rank Prize for

Opto-electronics for this achievement in 1992. 43 Terry Joyce, “Many Base Closures Anticipated in 2005,” The Post and Courier

(Charleston, SC), August 7, 2002, 1B. 44 Robert A. Frosch, “The Customer for R&D Is Always Wrong!” Research Technology Management (November/December 1996). 45 Another letter came from Robert Galvin (chair of the Executive Committee of

Motorola, Inc.) saying, “NRL is the equivalent of the most significant technology jewel

in our country.” However, the Department of Commerce, administrator of the award,

rejected the NRL nomination because it considers Government Laboratories ineligible for the national medal. 46 Defense Science Board, Efficient Utilization of Defense Laboratories (October

2000).47 The Society of Fire Protection Engineers awarded (posthumously) its prestigious Guise Medal to NRL’s Edwin Jablonski. 48 United States Senate, letter dated August 1, 2002.

49 David Malakoff, “Pentagon Proposal Worries Researchers,” Science 296 (May 3,

2002); Mary Leonard, “Pentagon Drops Attempt to Keep Research Quiet,” Boston Globe,

May 9, 2002, A3; and Don J. DeYoung, “Proposed Security Controls on Defense

Research,” April 2, 2002, accessed at <http://www.fas.org/sgp/othergov/deyoung.html>. 50 DOD Directive 5200.39, “Research and Technology Protection within the

Department of Defense” (Draft, November 22, 2002).

8 Defense Horizons January 2003

Defense Horizons is published by the Center for Technology and National Security Policy through the

Publication Directorate of the Institute for National Strategic Studies, National Defense University.

Defense Horizons and other National Defense University publications are available online at

http://www.ndu.edu/inss/press/nduphp.html.

The opinions, conclusions, and recommendations expressed or implied within are those of the

contributors and do not necessarily reflect the views of the Department of Defense or any other

department or agency of the Federal Government.

Center for Technology and National Security Policy

Hans Binnendijk

Director