REPORT OF

THE DEFENSE SCIENCE BOARD TASK FORCE ON

DEFENSE SCIENCE AND TECHNOLOGY 

BASE FOR THE 21ST CENTURY

30 June 1998

OFFICE OF THE UNDER SECRETARY OF DEFENSE

FOR ACQUISITION & TECHNOLOGY

WASHINGTON, D.C. 20301-3140


TABLE OF CONTENTS

EXECUTIVE SUMMARY

I. INTRODUCTION

A. Membership

B. Tasking

C. Briefings

II. BACKGROUND ON DEFENSE RESEARCH AND TECHNOLOGY

A. Twentieth Century Technology Developments and Their Impact 

B. Structure and Funding of the Defense Science and Technology Program

C. Funding of Specific Technical Areas

III. FINDINGS AND OBSERVATIONS

A. Determining DoD Science and Technology Funding

B. Management of the DoD Science and Technology Program

C. Execution of the DoD Science and Technology Program

D. Ability of DoD and Services to Obtain and Retain Competent 

Scientists and Engineers

E. High-Leverage Technology

IV. SUGGESTIONS AND RECOMMENDATIONS

V. APPENDICES

A. Terms of Reference

B. Briefings

C. A Formulation for Determining S&T and Other Defense Investments

D. Intergovernmental Personnel Act of 1970

E. Public Law 313 Legislation
- 3 -

EXECUTIVE SUMMARY

The Defense Science Board Task Force on the Defense Science and Technology Base 

for the 21st Century was formed in May 1997 to address issues involved in assuring that 

the United States has an adequate technology base to maintain military superiority into the 

21st Century. Specifically, the Task Force was asked to addressed five questions:

• How much DoD science and technology (6.1, 6.2, and 6.3) is needed to 

maintain continued U.S. supremacy considering U.S. and global civil 

technology?

• What is the best process for planning and managing DoD’s science and 

technology program including exploitation of other sources?

• What desirable changes should be made in the execution/performance of the 

DoD science and technology program?

• How can a continuing supply of competent engineers and scientists for DoD

research and acquisition be assured? 

• What new technical challenges should be addressed in the science and 

technology program?

The Task Force reviewed current science and technology management and execution 

practices within the DoD, other government agencies, and industry to draw from the best of 

each. In summary, the Task Force observations are:

• Past science and technology developments had a defining impact on military 

capabilities in the 20th Century. Current technology developments are therefore 

vital to future U.S. military capability and the maintenance of U.S. military

dominance.

• No formula was discovered for establishing the optimum level of DoD

investment in science and technology, but the most successful industries invest 

about 15% of sales in research and development with about 3.5% of sales 

invested in research (equivalent to the DoD S&T program). This would imply 

that, currently, DoD should invest at least $8 billion in S&T.

• DoD management of R&D involves a very complex organizational structure with 

conflicting lines of authority between Congress, OSD, and the Services. 

Successful industries on the other hand use much simpler R&D management 

organizations with clear lines of authority. 

• OSD’s portion, including DARPA, has steadily increased to 50% of the total 

S&T program because of Service reductions in their S&T funding and shifts of 
- 4 -

functions to OSD and defense agencies such as BMDO. Further reductions in 

the Service S&T funding could seriously effect their future capabilities since the 

OSD programs do not address the full range of Service needs.

• DARPA enjoys the greatest S&T management success in DoD because it is 

project oriented, has fewer constraints in program initiation, and because of the 

quality of its technical managers. More than 50% of the managers are engaged 

for limited terms from outside the Civil-Service system.

• The DoD and Service S&T Program is executed in universities (~10%),

university-affiliated research centers (~25%), industry (~45%), and Service

laboratories (~20%). While S&T program execution in universities and industry 

is viewed as generally satisfactory, there is serious concern about the execution 

in many of the Service laboratories.

• The effectiveness of the technical staff of the Service laboratories is significantly 

impaired compared with the private sector. The impact of Civil-Service 

personnel regulations is to blame. The regulations prevent the laboratories from 

offering new employees salaries competitive with the private sector, rewarding 

technical staff in proportion to performance, and removing non-performing staff.

• The transfer of technology among the Nation’s performers of the DoD R&D 

program is believed to be significantly impaired because of the wide

organizational and physical dispersal of DoD S&T performers. This is in sharp 

contrast to the practice of most successful industrial organizations.

• An insufficient proportion of the current S&T Program is focussed on

revolutionary technology offering five-to ten-fold improvements in military

capabilities. While the DARPA program focuses predominantly on such

improvements, the programs of the Services tend to focus more on incremental 

improvements.

The Task Force recommends several steps to provide an enhanced science and

technology program to support continued military superiority of the United States. 

Specifically, the Task Force makes five major recommendations:

1. Deputy Secretary of Defense should not allow a decrease in the science and 

technology program (6.1, 6.2, and 6.3) and should increase it to at least $8 

billion to insure continued technical superiority of U.S. military forces. 
- 5 -

2. Under Secretary of Defense (Acquisition & Technology) and the Services 

should strengthen the management and relevance of the science and

technology program by taking the following specific actions:

• Strengthen DDR&E by expanding his responsibility to cover 6.1, 6.2, 

6.3, 6.4 and 6.5 programs.

• Integrate science and technology management structure in each

Service, following the integrated Office of Naval Research structure 

using DARPA-like organizations.

• Use DARPA for revolutionary projects while enhancing the coupling of 

DARPA technologies to the Services.

• Encourage Services to focus one-third of the Service S&T programs 

on revolutionary programs.

• Fill key science and technology management positions with limitedterm (4-6 year), high-quality scientific personnel from the private

sector (universities, non-profits, and industry). By 2002 DoD should 

increase to the current 3.3% of key non-DARPA S&T positions filled 

from the private sector 50% or more.

3. The Services should revitalize execution of S&T programs by staffing up to 

50% of their scientific and engineering laboratory center positions over a 

five-year period with a combination of:

• Limited-term (4-6 year) scientific and engineering personnel (IPAs) 

provided by the private sector (from universities, non-profits, and 

industry). 

• A reinstatement of the 1947 Public Law 313 for high-level S&T

management positions (requires Congressional action).

4. DDR&E with the Services’ support should take the lead to enhance the 

productivity of the Service laboratories and centers by organizational and 

physical consolidation.

5. DDR&E should insure that approximately one-third of the science and

technology program elements are devoted to revolutionary technology 

initiatives. DARPA should play a major role in executing these efforts along 

with the Services. DDR&E should also insure that 6.4 funds are

programmed by the Services to implement successful revolutionary science 

and technology programs.
- 6 -

The Task Force believes that the implementation of these recommendations will provide 

the Department of Defense with a more effective and responsive Science and Technology 

Program that will ensure a healthy science and technology base vital to the future of U.S. 

military superiority.
- 7 -

I. INTRODUCTION

The Defense Science Board was tasked in April of 1997 by Dr. Anita Jones, who was at 

that time Director of Defense Research and Engineering, to carry out a study of the 

Department's science and technology program.

A. Membership

The membership and supporting staff of the Task Force consisted of the following 

individuals:

Chair: Professor Walter Morrow, MIT Lincoln Laboratory

Members: Dr. John D. Christie, Logistic Management Institute

Dr. Robert S. Cooper, Atlantic Aerospace

Dr. Delores M. Etter, U of Colorado

Dr. Randy Isaac, IBM

Dr. Bob Laudise, Bell Laboratories/Lucent Tech.

Prof. Paul L. Penfield, Jr., Massachusetts Institute of Technology

Mr. Vincent Vitto, Draper Lab

Executive Secretary: Col Alan Shaffer, USAF

DSB Secretariat: LTC T. VanHorn, USA

CDR Dave Norris, USN

B. Tasking

The Task Force was asked to study the following topics:

• How much DoD S&T (6.1, 6.2, and 6.3) is needed to maintain continued 

U.S. military capabilities considering U.S. and global civil technology?

• What is the best process for planning and managing DoD’s S&T program 

including exploitation of other sources?

• What desirable changes should be made in the execution/performance of 

the DoD S&T program?

• How can a continuing supply of competent engineers and scientists for 

DoD research and acquisition be assured?

• What new technical challenges should be addressed in the S&T program?
- 8 -

The complete tasking statement is provided as Appendix A. Note that the scope of 

the study was expanded by the acting DDR&E, George Singley, from consideration 

of only the Technology Base Program to that of the entire Science and Technology 

Program. 

C. Briefings

The Task Force met on eight occasions to hear briefings on both industrial and 

governmental experiences in the management and execution of research and

development. The sources of this experience include:

Industrial R&D Organizations: 

IBM, Lucent, 3M, Merck, Rockwell, Dupont, Raytheon, Bell

Labs/Lucent Technologies, NEC Research Institute, Lockheed Martin, 

SAIC, Boeing

Industrial Research Institute

OSD: 

DDR&E, DARPA, BMDO, Industrial College of the Armed Forces

Service Laboratories:

Army Research Laboratory, Naval Research Laboratory, Air Force 

Research Laboratory

U.S. Government R&E Funding Organizations:

NSF, DOE, NASA, DIA, CIA, NSB

Foreign Military R&D:

U.K. Defense Laboratories

Representative Sampling of Service Acquisition Offices

A complete listing of the briefings is provided as Appendix B.
- 9 -

II. BACKGROUND

A. Twentieth Century Technology Developments and Their Impact

The 20th Century has been the occasion for a number of very significant technology 

innovations that have had dramatic impacts on military capabilities. Figure 1 shows 

selected innovations together with the approximate dates of first demonstrations 

and also approximately when the first impact on military operations occurred. 

Fig. 1: History of Military Critical Technology Developments

These innovations together with others have produced very large changes in military 

capabilities. Figure 2 indicates some of the changes that have occurred over the 

past century.

9

Past Technology Developments Have Had a

Defining Impact on Current Military Capabilities

Approximate Date of

 Approximate Date of First Significant

Technology First Demonstration Military Applications

 Radio 1901 1914

 Airplane 1903 1916

 Vacuum Tube 1906 1915

*Tank 1916 1916

 Liquid-Fueled Rockets 1922 1944

*Radar 1925 1939

*Gas Turbine 1935 1944

*Digital Computer 1943 1945

*Ballistic Missile 1944 1945

*Nuclear Weapons 1945 1945

Transistor 1948 1957

*Inertial Navigation 1950 1955

*Nuclear Propulsion 1950 1960

*Artificial Earth Satellites 1957 1960

*Integrated Circuit 1960 1970

* Laser 1961 1967

*Precision Weapons 1965 1967

* AI Expert System 1965 1990

*Stealth 1970 1990

* Modern Unmanned Air Vehicle (cruise missiles) 1980 1990

*Funding by military R&D

DSB Tech Base TF-26C

Some additional post 1970’s innovations are expected to

have impact: MEMS, UltraScale Computing, etc.
- 10 -

Fig. 2: Military Impact of 20th Century Technology Developments

B. Structure and Funding of the Defense Science and Technology Program

The current DoD Research, Development, Test and Evaluation Program is

managed under a number of budget categories totaling about $36 billion in FY98. 

The following tabulation indicates the names, budget categories, and funding of 

each of the categories:

BUDGET

CATEGORY TITLE FUNDING

S 6.1 Basic Research $ 1.2 billion

& 6.2 Applied Research $ 2.8 billion $7.4 B

T 6.3 Advanced Technology Development $ 3.4 billion

6.4 Demonstration & Validation $ 5.6 billion

6.5 Engineering & Manufacturing Development $ 8.5 billion

6.6 RDT&E Management Support $ 3.1 billion

6.7 Operational Systems Development $11.3 billion

TOTAL $35.9 billion

10

Impact of Technology on Selected

Military Capabilities in the 20th Century

DSB Tech Base TF-37

Approximate Capabilities

1900 1925 1950 1975 2000

Aircraft Range - 200 2,000 4,000 8,000 Miles

Aircraft Speed - 150 500 2,000 2,000 Miles/hr

Aircraft Payload - 500 20,000 80,000 100,000 Pounds

Ballistic Missile Range 1 10 200 6,000 12,000 Miles

Radar Range - 2 200 20,000 100,000 Miles

Radar Resolution - - 1,000 1 0.1 Feet

Navigation Precision 10 10 0.1 0.01 0.001 Miles

Radio Communication Range - 500 3,000 10,000 10,000 Miles

Radio Communication Capacity - 10 10,000 107109Bits/sec

Weapon Precision 100 100 100 10 1 Feet
- 11 -

This study is concerned only with the top three categories which total in funding 

about $7.4 billion in the FY98 DoD budget. 

The funding history of the DoD S&T program has fluctuated significantly over the 

past quarter century. A plot of the DoD S&T funding in 1997 constant dollars over 

this time period is shown in Figure 3. 

Fig. 3: DoD Science and Technology Funding History

Figure 3 indicates very large expenditures in the early 1960s when the Cold War 

was of major concern. By the 1970s the 6.1 and 6.2 funding had dropped from over 

$7 billion to a level of about $4 billion. The 6.3 category funding grew significantly 

during the 1980s with concerns about possible expansion of the USSR. After the 

breakup of the USSR, funding in this category declined significantly as well, again 

due to declines in the overall DoD funding. Recently, the funding in these two 

categories has continued to decrease significantly. The President’s DoD budget 

segment for FY99 indicates a further drop in the S&T funding to about $7.2 billion.

 

C. Funding of Specific Technical Areas 

The basic research funding of specific technical areas is shown in Figure 4. below. 

DSB Tech Base TF 12 315113-1B

DoD Science and Technology

Funding History and Projections

1 0

9

8

7

6

5

4

3

2

1

0

FY62

FY97 Constant Dollars

Science and Technology (6.1, 6.2, & 6.3)

FY98 FY02FY94FY90FY86FY82FY78FY74FY70FY66

6.3 Begins

Task Force Recommendation:

 Increase S&T to $8 Billion

S & T (6.1 & 6.2)

ESTIMATED

$ Billlions
- 12 -

Fig. 4: DoD Basic Research Program Categories

Note emphasis on science areas having a major impact on DoD future technical 

capabilities. In some areas such as cognitive science, the DoD is the major

national funding source. In others such as electronics, biology, and ocean sciences, 

the DoD supports the niche areas of these sciences which support primarily military 

applications. The DoD clearly benefits by basic scientific programs funded by other 

government agencies such as NSF, DOE, and NASA as well as private science 

funding and foreign basic science programs. However, the DoD 6.1 Basic Science

Program remains of great significance to future U.S. military capabilities since the 

emphasis of the 6.1 program tends to be focused on engineering sciences, which 

are the bridge between the pure basic science discoveries and future military

applications, which are the focus of the 6.2 and 6.3 programs.

The various technology areas funded under the 6.2 and 6.3 programs are shown in 

Figure 5 below. The emphasis in these programs is on technologies which support 

future DoD Systems.

DSB Tech Base TF 13

305243-5B

DoD Basic Research 

(6.1) by Discipline FY96

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150

Electronics

Mechanics

Ocean Sciences

Materials

Biological

Physics

Chemistry

Mathematics

Atmosphere & Space

Computer Sci

Cognitive & Neural

Chem Bio Def

Information Sci

Terrestrial

$ in Millions

Total = $1.20 Billion
- 13 -

Fig. 5: DoD Applied and Advanced Research Program Categories

These 6.2 and 6.3 programs are becoming of increased importance to the DoD 

since many of the industrial applied research programs have, in recent years, been 

increasingly focused on short-term (3-5 year) market opportunities involving

incremental technology improvements. The DoD applied research programs should 

focus on longer-term (10-20 year) major revolutionary changes in military

technology.

14

DoD Applied & Advanced

(6.2-3) Research FY97*

0 50 100 150 200 250 300 350 400 450 500 550 600 650 700

Electronics

Sensors

Info Mgt

Bio-Medical

Weapon Guidance

Computer/Software

Fixed Wing Air

Human System

Propulsion

Materials

Civil Eng/Env Quality

Modeling & Sim

Space & Launch

Decision Making

Manufacture Tech

$ in Millions

* Additional funding of approximately $1.2 Billion in unidentified programs.
- 14 -

III. FINDINGS AND OBSERVATIONS

A. Determining DoD Science and Technology Funding

The question of the proper level of DoD S&T investment is fundamental to

maintaining future U.S. military capabilities. The Task Force was asked to

determine whether there were any formulae in either industry or government that 

could be applied to answer the question of setting the level of investment. While the 

Task Force identified a number of indirect and subjective inferential methods used 

by industries to set the level of S&T investment, they found no formulas used in any 

of the 12 major corporations surveyed. Instead of an objective formula, there was a 

fairly universal subjective approach, where the Chief Executive Officer, Chief

Financial Officer, Chief Technology Officer, and one or two others set the corporate 

levels of research and development investment. While the “smoke-filled room” may 

physically be a thing of the past, the basic approach of a few leaders setting the 

corporate objectives, financial goals, and investment strategy to meet the goals 

appears to be a common method.

From a global perspective, the reason an organization invests in science and 

technology is to gain a long-term advantage. For industry, the long-term advantage 

is economic. For the federal government, the goal is to ensure the nation’s longterm economic prosperity and its national security. In the case of the Department of 

Defense, the additional goal is to gain an advantage in the balance of military power 

compared with potential adversaries. Figure 6 shows a model schematic diagram 

of the flow of technology base into military capability and ultimately combat

outcome. The depiction makes the problem seem fairly simple and linear. There is 

a flow from the technology base through demonstration to development and

production to military capability. This model demonstrates the investment in the 

technology base pays off in long-term military capability and balance of power. 

Unfortunately, expansion of this fairly simple schematic model into a mathematical 

representation requires the establishment of coefficients for multiple differential 

equations and their subsequent solution. The problem quickly becomes very

complex. Appendix 3C contains the basic mathematical framework, but

establishing the needed coefficients can prove to be a very difficult problem. 
- 15 -

Fig. 6: Model schematic of the transition from Technology Base through Military Capability.

While an exact solution to this problem would be difficult at best, the model does 

highlight some important factors. At the conceptual level, the model infers the 

technology base strongly influences the long-term military balance-of-power. Thus, 

future United States military superiority requires the availability of a sufficient level of 

internal Department of Defense technology base which can be protected from 

leakage to potential adversary defense forces at least over the medium term (10-20 

years). 

Although the resultant U.S. military capability cannot be mapped linearly from the 

technology-base investment, the basic assumption is that there is a correlation 

between the total S&T base investment and the ultimate military capability. As the 

S&T investment increases, military capability also rises providing sufficient

procurement investments are also made. But, as seen from the model, the

technology base available for future U.S. military capability is a function of both DoD 

investment in S&T and general civilian S&T investment. A key point is that the civilsector S&T investment by U.S. firms (and foreign firms) is becoming global — that 

is, there is leakage from the U.S. civil sector to assist foreign military capabilities. 

Thus, the primary investment applicable to providing unique U.S. military future 

capabilities comes from the DoD S&T component. A secondary contribution is 

made by the DoD S&T program through technology transfer to the U.S. civil

technology base and from there back to DoD procurement of military systems.

DSB Tech Base TF-1 B 1 16

DoD Science & Technology

- Impact on National Security Balance -

DoD Tech

 Base

U.S. Civil

Tech

Base

Foreign

Tech

Base

U.S.

Demonstration

Programs

U.S.

 Development

& Prod.

U.S.

Military

Capacity

Foreign

Demonstration

Programs

Foreign

Development

& Prod.

Foreign

Military

Capacity

Combat

Outcome

6.1 + 6.2 6.3

U.S.

Personnel,

Training,

& Logistics

Foreign

Personnel,

Training,

& Logistics

(leakage)
- 16 -

Figure 7 shows the evolution of the DoD technology base (6.1 and 6.2)* investment 

over the past 40 years together with U.S. civil and selected foreign investments. 

Shown in Figure 8, the DoD technology-base investment has decreased as a 

fraction of the total from approximately 20% of the non-Soviet block global

investment to approximately 5% of the global investment. Also shown is the 

decrease of DoD research relative to U.S. industrial research.

While much of the non-DoD research investment is not relevant to military capability, 

health care for instance, there is no denying that DoD has lost much of its research 

dominance since World War II. This implies that if the U.S. is to maintain a 

dominant military position in the future, it must continue to fund a strong military 

research program whose output level exceeds theirs, and is protected from leakage 

to potential adversaries.

 

Fig. 7: Evolution of Global S&T investments.

_______________

* Only 6.1 and 6.2 funding data is available back to 1955.

Year

Estimated Total

Billions of 87 $

0

10

20

30

40

50

60

70

80

90

100

1970196519601955 1975 1980 1985 1990 1995 2000

311556-1B

U.S. and Worldwide Research Base

has Increased Significantly since WWII

S&T Base

Ta sk Forc e

DSB

DoD

U.S. Gov Other than DoD

U.S. Civil

E.U. and Japan

Data taken from: -Statistical Abstracts of the U.S., 1997 and earlier years

 - Data provided by the Organization for Economic Cooperation and Development (OECD)
- 17 -

Fig. 8: Evolution of global S&T investment (percentage).

While the argument made above supports the concept that DoD research funding is 

critical to maintaining a strong national defense, there are still questions concerning 

how much funding is appropriate. The Task Force decided to look at industrial 

practices to obtain insight on this question. 

The first principal observation is that industry does not manage its research and 

development process in a linear fashion as does the Department of Defense. By 

linear, it is meant that the flow of technical information is initiated in a basic research 

program (6.1) then flows to an applied research program (6.2) and thence by

unidirectional flow to 6.3, 6.4, etc., finally resulting in a military capability. Instead, 

the model used by industry is a dynamic, non-linear model as depicted in Figure 9.

As can be seen from Figure 9, there is not a step-by-step transition from basic 

research to advanced research to advanced concept development to engineering 

and then manufacturing. 

Current industrial practice involves close interactions between research,

development, marketing (requirements) and production. While there may indeed be 

some “linear” flow from research to marketing, an equally likely flow might be for 

marketing to influence new directions for basic research.

Year

DoD

S

&T as % of Total World Research* 8 0

6 0

7 0

4 0

2 0

5 0

3 0

1 0

0

1975 1980

DoD Technology Base Funding

as % of U.S. Industrial Research Funding

DoD Technology Base Funding

as % of World Research Funding

1 9 7 01 9 6 5 1985 1990 1995 2000

* Excluding USSR

1 9 6 01 9 5 5

316793-1B

DoD Technology Base Funding Has

Decreased Significantly as a Fraction of Total

Worldwide and U.S. Industrial Research Funding
- 18 -

Fig. 9: Industrial practices for managing and setting funding for S&T and development.

As a result, the level of funding for industrial research is often set on the basis of 

potential market demand, and hence future profits for the organization.

Since potential new markets vary with the maturity of an industry, it would be 

expected that a wide variance would occur in the percentage of sales revenue 

devoted to research (S&T) and development in different industries. Such is the 

observed situation which will be discussed next. 

Figure 10 shows research and development of expenditures for a variety of

industries. The data was gathered by the Association of Industrial Research

Institute. The plot shows the percentage of sales devoted to total research and 

development for each industry with the maximum, minimum, and mean values

plotted. The percentage of revenue devoted to research and development ranges 

from near zero for coal and petroleum products to well over 15% for pharmaceutical 

firms. The percentage of revenue devoted to research only ranges from less than 

0.1% to about 3.4% for high-technology industries such as pharmaceuticals. For 

DoD, the FY98 R&D percentage is derived from R&D funding of about $36B out of 

a total T.O.A. of about $250B. The S&T funding of 2.9% of T.O.A. is derived from 

S&T funding of $7.4 B.

19

Determining S&T and Development Funding

in Industry

• Industry Manages S&T and Development as a whole

• Science & Technology is not managed as a separate effort --

 It is non-linear -- with feedback

• Wide variations by industry type

• S&T plus development funding / sales revenues range from 0% to

 20% depending upon the importance of technology to

 competitiveness

• S&T ranges from 10% to 30% of total R&D $; 20% is typical

S&T

Market Development

Production
- 19 -

Figure 10: Industrial sector investment in total R&D and research as a percent of total revenues.

The basic situation for industries who compete each day for markets is different 

from the military services who focus on national security and only very seldom are 

tested in combat. However, it is worthwhile trying to identify which industry group is 

most similar to DoD and its challenges. The success of most of the industries listed 

depends more on their ability to compete on price and marketing since they often 

have difficulty establishing intellectual property monopolies due to lapsed patents, 

circumvention of patents, and cross-licensing. 

However, in the case of pharmaceutical industries and leading computer technology 

industries the R&D funding as a percentage of revenue is considerably higher, 

about 15% (see Figure 11). For these firms, patents do provide absolute market 

protection for the life of the patent (20 years) and hence provide enormous

commercial advantages. This advantage is similar to that achieved by a military 

force which develops a unique technical capability which is protected over many 

years by a combination of secrecy, restricted publications, closed technical

exchange meetings, export laws, and other mechanisms.

20

305243-2B.1

Industrial R&D Levels Vary Widely by

Technology Area

0 5 10 15

Total R&D Expenditures/Sales Revenue — %

Instruments & Related Products

Electronic & Electrical Equipment

Industrial Machinery & Equipment

Primary Metal Products

Fabricated Polymer Products

Coal & Petroleum Products

Misc. Chemical Products

Agricultural Chemicals

Industrial Organic Chemicals

Soap, Cleaners & Toiletries

Drugs & Pharmaceuticals

Plastic Materials and Synthetics

Industrial Inorganic Chemicals

Wood, Paper & Allied Products

Food & Kindred Products

Oil & Gas Extraction

20 Median Min Max

10% 90%

Most like DoD

0.6

0.25

0.50

1.40

0.88

0.41

0.04

0.32

0.28

0.68

3.40

1.30

0.25

0.23

0.40

0.33

% Research of total revenues

Department of Defense 2.90

Note: Industrial “research” approximates DoD S&T Program
- 20 -

Fig. 11: R&D Funding of Leading U.S. Technology Industries

Using the pharmaceutical industry as a model, Figure 10 shows about 14% of 

revenue devoted to research and development. With current DoD funding of about 

$250 billion, a total DoD research and development funding level of about $35 

billion is indicated or close to the current DoD level. The DoD S&T budget

corresponds most closely to the research component of industrial R&D. Using 

3.4% of revenue (typical of high-tech industries shown in Figure 11), the DoD S&T 

funding should be about $8.4 billion, which is a billion dollars greater than the FY98 

S&T funding. 

Another approach to this question is to note that the ratio of research funding to total 

R&D funding in high-technology industries, such as pharmaceuticals, is about 24% 

(3.4%÷14%). When this percentage ratio is applied to the FY98 R&D funding of 

about $36B, the result is about $8.6B, well above the actual S&T funding.

These considerations lead to the conclusion that there should be no further

reductions in the level of S&T funding. In fact, there is some basis for an increased 

level to at least $8B in order to insure the continued long-term technical superiority 

of U.S. military forces in the 21st century.

R&D Funding by High-Technology Firms

Averages Over 15%

Pfizer 13.8%

Abbot Laboratories 10.5

Lilly 15.7

Scherring-Pough 13.3

Phone-Poulenc Rorer 14.6

Microsoft 13.1

Upjohn 18.2

Marion Merril Dow 15.1

Novell 17.4

Amgen 19.6

Genetech 40.8

Tandem Computers 14.5

Advanced Micro Devices 13.1

National Semiconductor 11.2%

Lotus 26.3

Oracle Systems 11.8

Computer Associates 10.5

Amdahl 12.4

Applied Materials 11.4

Silicon Graphics 12.0

Storage Technology 10.5

Chiron 44.7

Meditronic 11.2

Tektronic 11.6

DSC Communications 14.6

Cray 15.3

Intergraph 13.2

(1994 data from Science & Engineering Indicators)

Overall Average 16.3% of Revenue
- 21 -

While the pharmaceutical and other high-technology industrial models suggests a 

level of S&T funding higher than current DoD funding, there are other important 

lessons from industry that need discussion. Perhaps foremost, the industrial

representatives that addressed the Task Force were nearly unanimous in stating 

that maintaining the productivity of S&T programs requires stability in funding. 

For the most part, industry sets S&T investment by starting with the previous year’s 

funding level, then adjusting the amount incrementally, depending upon the

identification of new technical and marketing opportunities for the firm. This

suggests DoD S&T funding should move incrementally up or down from the

previous year’s funding, based on new military challenges and on new technical 

opportunities. Industry sets this level of investment by having the industrial

executives look at factors such as market opportunity, level of potential economic 

payoff, and ability to keep from losing a major market segment if the industry does 

not keep pace with a major change. 

History is full of examples where firms lost their market dominance by failing to 

invest in change. For instance, steam locomotive manufacturers all went out of 

business within one or two decades of the time that diesel locomotives were 

introduced by other industries having expertise in electric drives and diesel prime 

movers. A more recent example is that of electronic cash registers which drove 

mechanical calculator industries out of business. Thus, DoD needs to ensure an 

adequate S&T investment to minimize the risk of an adversary developing a

capability that puts the U.S. at a national security disadvantage.

Another important industry practice noted by the Task Force was that of allocating 

about 1/3 of the total available research funding to exploratory or potentially

revolutionary projects. The other 2/3 of the effort is typically focused on identified 

product needs in the form of evolutionary improvements in current product lines.

Summary Observations

The observations concerning the topic of S&T funding level and its determination 

can be summarized as follows:

• DoD S&T is vital to future of U.S. military balance of power. Over the 

past century, technical developments funded by the military have had an 

enormous impact on military capabilities and have been decisive in the 

outcome of conflicts.

• No formulas for establishing S&T funding have been discovered either in 

government agencies or in industry. An analytic framework for

establishing R&D funding can be formulated, but the coefficients of the 

equation terms are not known at this time.
- 22 -

• Industrial R&D funding (including the research or S&T component) tends 

to be set in meetings of the CEO, CFO, CTO, and senior vice presidents.

• Industrial decisions on S&T funding are influenced by potential return on 

investment, competitiveness, and strategic objectives.

• Industrial R&D is growing relative to DoD but it is predominantly shortterm in focus.

• Current DoD science & technology funding (about 2.9% of total DoD 

funding) is somewhat less than the practice of those high-technology 

industries which are dependent on technology supremacy or patent

monopolies for commercial success.

• Lower levels of DoD S&T funding could threaten future (20 years and 

beyond) dominance of U.S. military forces.

• Continuity of science and technology funding level is thought important in 

most industries (to prevent disruption of programs and research teams).

• One-third of industry research is typically exploratory and focused on

revolutionary technologies whereas two-thirds is focused on evolutionary 

improvements in identified product needs.

B. Management of the DoD Science and Technology Program

1. Organizational Structure

To address this question, the Task Force looked at both current DoD 

management and industrial models. Figure 12 is a simplified schematic of 

the current DoD management structure, indicating separately the flow of

funding, policy and command. Not shown are the separate Service (6.1) 

organizations, ONR, AFOSR, and the ASO, which manage university

defense research programs. To call the current structure complex is an 

understatement. Compounding this complexity is the geographic separation 

of the laboratories from the management and each other. The executing 

laboratories are displayed as ovals under the Central Service 
- 23 -

laboratory management organizations. Thus, even though the Air Force has 

recently restructured to a single Lab structure, the Air Force Research Lab, it 

still maintains nine geographically dispersed structures.

Fig. 12: DoD Laboratory Management Structure.

Comparing the complexity of the DoD labs with a sample industrial laboratory

management structure, shown in Figure 13, it is fairly easy to see the contrasting 

simplicity of the civilian management structure. In the civilian research management 

structure, it can be seen that there are far fewer layers of management from the 

Chief Executive Officer to the laboratory workers. The example used here is

Dupont, although other companies with major R&D investment have similar

structures.

26

DoD S&T Management is Multi-Level

and Physically Dispersed*

Congress

SecDef

USD(A&T)

DDR&E

(DoD S&T

Exec)

DARPA

Other DoD Agencies

Army Mat

Com

SA CSA SecNav CNO

Army Air Force Navy

S&T Exec

Navy Sys

Com

5 R&D Centers

4 Labs, 4 Corps Labs

9 Dispersed Facilities Dispersed Service

Laboratories and Ctrs.

Policy

Command

Money

S&T Exec

Army Resch

Lab

S&T Exec

SecAF CSAF

AFMC

AF Resch

Lab

*Excludes Medical R&D

Navy

Resch

Lab
- 24 -

Fig. 13: Sample industrial lab.

2. Quality of S&T Management Personnel

The productivity of the DoD S&T program is greatly dependent on the quality 

of the OSD and Service S&T management. In the more distant past, Public 

Law 313 allowed the recruitment for limited terms of extremely capable 

scientists and engineers from universities and industry. As a result, very

significant innovative military capabilities were pursued under the S&T

program. With the cancellation of P.L. 313 in 1978, the Department was no 

longer able to recruit scientific and engineering personnel from industry for 

non-presidential appointment positions.

3. Funding Balance

There is another significant change in DoD S&T management that has 

emerged over the past 10 years. During this period, the Service S&T

budgets have eroded while the budget of the Office of the Secretary of 

Defense and Defense agencies has grown, see Figure 14.

A major reason that Service S&T budgets have declined is because the 

Services have chosen to emphasize current operations. The Defense-wide 

growth is a result of the evolution of DARPA’s programs as well as growth of 

other Defense programs such as ballistic missile defense and

chemical/biological warfare defense S&T programs. This shift in funding to 

24

Typical Industrial R&D Organization*

Office of the Chief Executive

Chief Technical Officer

Senior Vice President

SBU Gen

Mgr;

Tech

Director

18 Business Groups

Central Research

and Development

VP

Corporate R&D

Planning Director;

Corporate

Technology Council

(SBU: Separate Business Unit)

1/3 R&D 2/3 R&D

* DUPONT CO.

Money Research Lab(s)
- 25 -

OSD and defense agencies raises issues of whether the Services have 

sufficient funding to properly address their long-term technology needs.

Fig. 14: Distribution of S&T Funding

4. Transition Issues

One final observation that the Task Force made concerns the difficulty of 

transitioning OSD and DARPA programs to acquisition programs. Under 

Title 10, United States Code, the military Services are responsible for

system acquisition and are more likely to develop a transition path from their 

laboratory programs into acquisition. Such an acquisition path does not 

exist for DARPA and OSD S&T programs. Consequently, there is an

increasing portion of the S&T budget that does not have a clear transition 

path from research to fielding of military systems. This trend means that a 

number of successful programs developed by DARPA may never end up 

transitioning to warfighting systems. The Task Force suggests that the 

DDR&E be given an expanded authority over 6.4 and 6.5 programs to insure 

that the Services fund the development of successful S&T programs

developed under both OSD and Service oversight.

2 2

Defense-Wide and Service Funding

of Science and Technology*

306948-1B

10

9

8

7

6

5

4

3

2

1

0

1978 1982 1986 1990 1994 1998

Fiscal Year

OSD/PA&E

 AIR FORCE

NAVY

ARMY

OSD / DARPA / Other Agencies

* Note: OSD &

Agencies NOT

“taking” Service

S&T funding;

instead the

Services are

cutting S&T

funding.

FY97 $B
- 26 -

Summary Observations

The observations concerning the management of defense S&T funding can be 

summarized as follows:

• Successful industries manage research and development with efficient

organizations involving a minimum of levels of administration.

• DoD S&T management is highly complex involving many levels of

administration.

• OSD’s portion (including DARPA) has steadily increased to 50% of the total 

S&T program raising questions about the adequacy of the Service S&T 

programs.

• Within DoD, DARPA particularly enjoys success in research management 

because they can initiate new research relatively easily and employ

innovative research managers through the use of limited-term personnel 

drawn from the private sector. However, DARPA often has difficulty

transitioning successful programs because of the lack of follow-on 

acquisition programs in the Services or OSD. 

C. Execution of the DoD Science and Technology Program

1. Industrial Research Laboratory Practices

The Task Force reviewed in some detail the practices of the industrial sector 

firms interviewed with respect to scientific research and technology

development.

Their practices can be summarized as follows:

• hire and nurture very high-quality technical staff from graduates of 

world-class research universities;

• compensate quality technical staff performance and terminate low

performers;

• provide up-to-date laboratory facilities;
- 27 -

• provide adequate supporting personnel, both technical and

administrative;

• consolidate research and development programs in the same

physical location to enhance technology transfer.

Each of these topics is discussed in the following sections in more detail:

a. Hiring Technical Staff (See Section D, page 32).

b. Evaluation and Compensation (See Section D, page 32).

c. Laboratory Facilities

The staff are provided with up-to-date research facilities in successful

industrial laboratories. Funding for this purpose is typically provided directly 

to the staff and their leaders thus enabling them to decide for themselves 

what equipment will best enhance their research.

d. Supporting Personnel

The technical staff of successful industrial research laboratories are typically 

supported by both a technical assistant in the form of a technician or

software specialist and the equivalent of another person in administrative 

services, i.e., library, purchasing, publications, building maintenance, etc.

e. Location of Laboratory Facilities

In order to enhance the transfer of technology from the research laboratory to 

product developments, successful industries very often physically place their 

research laboratories adjacent to product development organizations. This 

enables easy communication between the two organizations, and, where 

desirable, allows the research workers to take their innovations into the 

development stage and even production. Figure 15 shows the physical 

integration of both research and development employed by Dupont. Similar 

arrangements exist for many other successful industrial organizations such 

as Pfizer, 3M, and Merck.
- 28 -

Fig 15: Dupont Consolidated Research and Development Facility

2. Current Execution of the DoD S&T Program

a. Performing Organizations

Figure 16 indicates that currently, the DoD S&T Program is executed by a 

variety of performers. The 6.1 Basic Research Program is primarily

executed by the universities. The 6.2 Applied Research Program is primarily 

executed by the DoD/Service laboratories with lesser amounts going to 

industries. The 6.3, Advanced Technology Development Program is

primarily executed in industries with lesser amounts going to university

research centers and FFRDCs.

25

Successful Technology Organizations

Often Locate Research with 

Development & Production Operations

DuPont Experimental Station, 150 acre R&D Site, founded ca.1903

• All key activities collocated
- 29 -

Fig. 16: Execution of the DoD Science & Technology Program is 

 Carried out by Different Classes of Organizations

While perhaps only 20% of the S&T Program is executed by DoD/Service 

laboratories, the management and placement of the 6.2 and 6.3 programs is 

handled by the DoD/Service laboratories, hence they play an important role 

in the S&T program.

The Task Force discovered that there is general satisfaction with the quality 

of execution in both the universities and in industry. However, many prior 

studies have indicated significant concern about the quality of execution in 

many of the Service laboratories. The Task Force believes that several 

factors lie behind this problem.

Physically, DoD/Service laboratories are dispersed across the continental 

U.S. in a variety of locations, which are mostly the result of World War II and 

even World War I needs (see Figure 17).

In many cases, the Service development/product centers are located in still 

other locations and are often separated by hundreds if not thousands of 

miles from the Service research laboratories. These physical separations 

make the transfer of technology much more difficult than in the case of

successful industrial organizations, which employ consolidated R&D

facilities.

32

Execution of the DoD Science & Technology

Program is Carried out by Different Classes of

Organizations

Industry

10% 20% 45%

Service Laboratories

– Technology Management

– Contracting

Service Labs

 Execution Universities

University Research

Other Gov’t Labs

FFRDC’s

Approximate 25%

percentage

of program

execution

Also 

Direct 

Funds to 

Each 

Executor

Also 

Direct 

Funds to 

Each 

Executor

DARPA

and

OSD

Service 6.2

Programs

Service 6.3

Programs

Service 6.1

Program

Service

Research

Offices
- 30 -

Fig. 17: Major DoD Laboratory Facilities

b. Personnel System

Because of limitations imposed by civil service personnel regulations those it 

has become increasingly difficult to hire and maintain high-quality technical 

staff for the Service laboratories. 

The Department has commissioned several dozen studies of this problem 

extending over several decades. All these studies have reached the same 

conclusion, namely that there are severe difficulties in maintaining technical 

staff quality in the Service laboratories under the current Civil-Service 

system. 

The following section (III-D) of this report discusses the details of this very 

serious problem.

In addition to the problem discussed above, there are also two more

problems that inhibit the effectiveness of DoD/Service laboratories. The first 

deals with the issue of research facilities.

2

- Army

- AF

- Navy

Major Research Laboratory Centers*

of the Military Services

*Laboratory Centers &

Product Centers
- 31 -

d. Facilities

Many of the Service laboratories were built several decades ago in the 

period after World War II. While many have been rehabilitated in recent 

years, many remain unattractive as places of employment for the more 

capable technical graduates of leading universities. In addition, the technical 

facilities and instrumentation of many of these laboratories have become 

outdated as compared with industrial or university laboratories.

e. Supporting Personnel

Another serious problem is the lack of supporting technical personnel. 

During the recent reductions-in-force, the tendency has been to retain as 

many research technical staff as possible. Thus, the burden of the personnel 

reductions initially fell upon the support staff with the result that the

productivity of the remaining technical staff has been greatly impacted.

Summary Observations

• The DoD S&T Program is executed by a variety of organizations: 

universities, university research centers (FFRDCs/non-profits), military 

Service laboratories, other government laboratories, and industry.

• While the program execution by private sector organizations is generally 

satisfactory, the performance of many of the Service laboratories is a 

matter of serious concern.

• Effective execution of the S&T program by the Service laboratories is 

severely impacted by the constraints of the Civil-Service regulations on the 

professional staff of these laboratories.

• The Service laboratories and other executors of the S&T program are 

physically widely dispersed and are often separated from government 

development centers as well as defense industrial developers, thus 

making technology transfer difficult.

• In addition, the Service laboratories’ effectiveness is also significantly 

impacted in many cases by outdated facilities and technical equipment as 

well as by lack of adequate technical support staff.
- 32 -

D. Ability of DoD and Services to Obtain and Retain Scientists and Engineers

The previous sections have referred to the impact of Civil-Service regulations on the 

professional staff of DoD/Service S&T management and execution organizations 

(laboratories). In this section of the report, private-sector industrial laboratory

personnel practices will first be examined followed by a review of the government 

Civil-Service personnel practices and their impact on the ability to attract competent 

engineers and scientists to DoD laboratories and S&T management. Finally,

several alternative personnel systems will be examined.

1. Industrial Scientific/Technical Personnel Practices

The Task Force found that most industrial research and development

organizations employed similar personnel practices which could be

summarized as follows:

a. Hiring

Successful technical industrial firms use their technical staff to recruit 

intensively at leading technical universities each year. 

The most promising students are promptly made salary offers

competitive with the current market for scientific/engineering staff.

b. Evaluation and Compensation

The performance of industrial scientific and technical employees is 

typically evaluated once per year. Feedback in the form of evaluation 

ratings, letters and discussions is quite often provided. Often scientific 

personnel are ranked in order with the best performers at the top and 

the poorest at the bottom.

Annual salary increases are awarded with the increases roughly in 

proportion to the ranking; that is, those at the top of the ranking 

receive perhaps twice the average and those at the bottom much less 

than the average. 

c. Terminations
- 33 -

Poor performing staff are advised of the need for improvement if they 

are to have successful careers. Those that do not respond are then 

asked to leave. 

2. Civil Service Personnel Practices

DoD/Services technical personnel involved with the management and

carrying out of the DoD S&T Program labor under the regulations of the Civil 

Service Reform Act of 1978 (PL 95-454). This Act replaced prior legislation, 

including the 1947 Public Law 313, which permitted the Service Secretaries:

• to establish certain positions for important DoD R&D functions,

• to make such appointments without competitive examination,

• to pay market rates for these positions.

The 1978 Act set up the Senior Executive Service (SES) positions in a 

fashion that severely limited the ability of OSD and the Services to

temporarily hire very capable scientists and engineers from the private

sector including both industries and universities. 

This change in the Civil Service legislation has had a significant impact on 

the S&T management structure of OSD and the Services.

An exception has been DARPA, which has made extensive use of the 

Interagency Personnel Act of 1971 (IPA), which allows non-profit 

organizations such as universities, to temporarily loan scientific/ engineering 

personnel to DoD agencies and the Services. The IPA Act, however, does 

not permit temporary loan of personnel from private sector profit-making 

organizations.

In spite of this limitation, DARPA has been able to maintain a vital and 

vibrant S&T management environment using IPAs to staff over half of their 

technical organization.

The rest of the Department depends, for the most part, on the Civil Service 

Personnel System to staff its S&T management and execution positions. 

This system fails to adequately service Civil-Service scientific and

engineering employees and the Department of Defense in several important 

ways, which can be summarized as follows:

• It fails to allow salary offers to be made at market salary rates and in a 

prompt fashion.
- 34 -

• It fails to permit evaluation of scientific personnel properly and to award 

salary increases in proportion to employee contributions.

• It fails to provide timely and workable mechanisms to terminate

unsatisfactory employees.

Each of these points are discussed in more detail below.

a. Hiring

Figure 18 plots the current salary levels of the Civil Service GS-9, -11, 

-14, and -15 grades as a function of years-of-service after obtaining 

MS or PhD degrees as compared with the current private sector 

average salary levels for MS and PhD graduates. Typically, Civil 

Service salary offers for MS graduates are made at the GS-9 or GS11 levels. It can be seen that the Civil Service offerings are at least 

$10,000 below the market. For PhD graduates, the GS-13 offer is 

$15,000 below the market. Furthermore, a long competitive process 

is typically employed before an offer is made by the government. By 

that time an offer from the private sector has usually been accepted by 

most potential applicants. 

Fig. 18: U.S. Civil Service vs. Industrial Salary Levels

3 9

Civil Service vs Industry Average

Total Cash Compensation

Government Pay Scales Do Not Encourage New Hires

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

1 2 3 4 5 6 7 8 9 10

GS-14

GS-13

GS-9

GS-11

M S

Industry

Average*

New MS Hire pay

gap--$10-20K/year

competitive later

Years after MS

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

1 2 3 4 5 6 7 8 9 1 0

GS-15

New PhD Hire pay

gap--$15-20K/year

competitive later if 

GS 14, 15 or SES 

slots available

Years after PhD

Short Term Pay Gap

Master’s Degree PhD Degree

PhD

Industry

Average*

GS-13

Pay Gap * Best performers are typically paid 50% more than average
- 35 -

The result is that Service laboratories can hire virtually no advanced 

degree graduates. Some BS-degree recruitment is possible because 

GS-9 salaries are competitive with the private sector, but such

graduates usually are not as competitive as advanced degree

graduates are and are not often sought by private sector laboratories 

except for supporting positions.

Further examination of the GS-14, GS-15, and SES salary levels 

indicates that even these grades are not competitive with the private 

sector salaries paid to scientists and engineers with managerial

responsibilities.

b. Evaluation and Compensation

Under the traditional Civil Service evaluation systems, most

employees are rated either excellent or good in order to allow the 

customary step salary and inflationary increases to be given and to 

avoid controversy. The result is that the really excellent employees 

are not rewarded sufficiently while poor performing personnel are 

usually rewarded with nominal salary increases because of the

complexity of Civil-Service processes required to justify low or zerosalary increases.

c. Termination of Poor Performers

As a result of the typical evaluation systems employed, combined with 

automatic salary increases, those employees who are not performing 

satisfactorily are retained. This is especially the case since

termination proceedings are very difficult to successfully undertake 

because of the lengthily bureaucratic proceedings.

3. Impact of the Civil Service System

Figure 19 shows the results of a demographic model illustrating the impact of 

retaining poor performers in contrast to a personnel system in which good 

performers are retained and the poor ones terminated. Not unexpectedly, a 

steady accumulation of poor performers occurs with time in an organization 

in which it is difficult to terminate poor performers. In addition, the number of 

top performers tends to steadily decrease because they become

discouraged about the future of the organization. 
- 36 -

Fig. 19: Turnover Policy Impact on Organizational Demographics 

4. Impact of Downsizing

Added to the effects of the poor Civil-Service personnel policies described 

above, has been the impact of downsizing DoD laboratories in recent years. 

If annual downsizing equal to or greater than normal retirement is forced on a 

laboratory, it is not possible to do any hiring at all. Even worse, the

reductions fall entirely on the youngest employees because of seniority rules. 

The result is a steady increase in the average age. Ultimately, the

organization heads towards collapse when the increasingly older employees 

retire.

Figure 20 shows a plot of the number of employees and average age with 

time for one of the leading Service laboratories. The recently forced rapid 

decrease in number of employees has had a dramatic rapid increase in 

average age, particularly in the last year. 

DSB Tech Base TF 43

307033-2B.1

Turnover Influence on Personnel

Demographics

0 5 10 15 20 25 30 35

10%

0

90%

100%

Years

10%

0

90%

100% Top

Performers

Top 

Performers

Bottom

Performers

Bottom

Performers

Percent Percent

0 5 10 15 20 25 30 35

Years

Assumption of 6.0%

Turnover Concentrated

on Bottom Performers

(Industrial Case)

Assumption of 6.0%

Turnover Concentrated

on Top Performers

(Government Case)
- 37 -

Fig. 20: Impact of DoD Personnel Policies on a DoD Laboratory

5. Possible Solutions

The Task Force has identified three possible solutions to these

problems:

• Modification of the current Civil Service System,

• Transition of the laboratories to government-owned/civilianoperated (GOCO) status,

• Transition to mixed organizations with government leadership but 

staffed primarily with private-sector employees on a rotational

basis.

Figure 21 shows the pros and cons of these three alternatives. Each of 

these options are discussed further below.

AT “ONE SPECIFIC DoD LAB”AVERAGE AGE

OF RESEARCH DEPT FTP PERSONNEL 

(PROFESSIONALS ONLY) 

38

39

40

41

42

43

44

45

46

72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97

FISCAL YEAR SOURCE: CODE 1006.3 EOY LABSTATUS 

FY97 AVERAGE AGE = 45.7

• Workforce growing older at rate greater than 1 year average age per year

• Reduced new hires

• Younger workforce leaving at greater rate than older force

Impact => Sustaining Base of Young Scientists & Engineers Eroding

2600

2800

3000

3200

3400

3600

3800

4000

FTE Employees
- 38 -

Fig. 21: Options for Improving the Quality of DoD/Service Laboratories

a. Modified Civil Service System

In recent years, Congress has authorized experimental modifications 

to the Civil Service System. These have been implemented in some, 

but not all, DoD/Service laboratories. The details differ from case to 

case, but generally encompass the following:

• Banding of the GS grades to permit easier hiring of bachelordegree graduates,

• Onsite (laboratory) authorization to hire without a

competition throughout the government,

• The use of personnel evaluations based on performance 

including the use of ranking,

• Salary increases related to performance,

• Negligible relaxation of personnel termination proceedings.

44

Maintain Current

Structure

Government Owned,

Private-Sector

Operated (DoE Mode)

Government lead,

Private-Sector Aided

(Rotational Postings)

PRO

CON

• Minimal Disruptions

• High quality 

technical staff

• Retains Military coupling

• Incremental 

improvement only

• Politically Difficult

• Decouples Military

from Lab

• Implementation 

Slow

• High quality 

technical staff

• Improved facilities

• There are at least 3 different options to improve effectiveness of DoD labs:

– Keep current structure but modify civil service personnel policies and other DoD

regulations.

– Convert the DoD laboratories into university or contractor-operated organizations.

– Transform a major portion of Service-laboratory personnel to non-Civil-Service

personnel such as IPAs, university visiting faculty, and industrial scientists.

Options for DoD Laboratories
- 39 -

These modifications are certainly an improvement over the previous 

system. The wider salary bands are helpful, but because of the cap 

on the numbers of GS-14s , GS-15s, and SES positions, the resulting 

hiring salaries (GS-13 and below) are still not competitive with those 

offered by industry at the graduate-degree level. Finally, the difficulty in 

terminating poor performers remains. The Task Force believes that 

these changes, while helpful, are simply not sufficient to solve the 

problem of providing adequate numbers of capable scientists and 

engineers to the DoD and the Services.

b. GOCO Option

Under this option, the provision of OSD/Service S&T management 

and laboratory personnel would be turned over to private

organizations, either universities or industrial. While this option would 

certainly solve the problem of Civil Service constraints on salaries, 

employee compensation, and termination, it would not provide a

satisfactory solution to the S&T high-level management function since 

this function should remain with the government. 

In addition, experience has indicated that serious political difficulties 

can arise from a forced change of laboratory employees from CivilService status to private employment because of pension and other 

benefit issues. 

c. Government Leadership – Private Sector Staffing

The third option combines military/civil servant leadership with

extensive (>50%) use of private sector scientists and engineers

supplied on a rotational basis from universities as IPAs as well as 

from industry on a contract basis. This option is already successfully 

used by DARPA as shown in Figure 22, but it is not unique with 

DARPA. It has been used for the operation of the Kwajalein Missile 

Range, the Tullahoma wind tunnel facility, as well as a joint-battle-staff 

training facility that ACOM operates.
- 40 -

Fig. 22: DARPA Organization and Staffing

5. Task Force Views

After considering the three options described, the Task Force strongly

supports the third option.

Summary Observations

• The private sector is able to hire very competent scientific and

engineering personnel by offering market salaries, using effective

evaluation and compensation systems as well as promptly terminating 

unsatisfactory employees.

• With the current Civil Service regulations, the DoD and the Services 

cannot hire highly competent scientific and engineering staffs for 

management and laboratory operations. Further, it is still very difficult to 

terminate unsatisfactory employees.

• As a result, serious deterioration of the capabilities of DoD/Service S&T 

operations has occurred.

45

Tactical

Technology

Office

Sensor

Technology

Office

Information

Systems

Office

DARPA Organization & Staffing

A Model for Service S&T Organizations

• Small, non-permanent staff essential to avoid bureaucratic tendencies

• 48 of 90 Program Managers are IPAs (53%)

• Remaining staff, temporary duty military assignee’s and civil

service personnel

• Flat organization

• “Semi-privatized” R&D

Science and Technology Systems

Defense

Sciences

Office

Electronics

Technology

Office

Director,

Deputy Director,

Deputy Director

for Management

Information

Technology

Office
- 41 -

• Of the three options for solving this problem, the Task Force believes that 

only the last option involving government leadership with private sector 

staffing of most of the professional positions is viable.

E. High-Leverage Technology

The final question asked of the Task Force is fundamental to maintaining military 

superiority. Even if the Department of Defense was to implement all the personnel 

and organizational changes the Task Force recommended in the earlier sections of 

the report, there is still the issue of balancing the S&T program between short-term 

evolutionary improvements in current systems and longer-term investments in

revolutionary technology.

Current military strategists believe there is a Revolution in Military Affairs ongoing, 

and that the world may be entering a period of fundamental change in the nature and 

requirements of warfare. As detailed in Joint Vision 2010, the Department of 

Defense is no longer preparing to fight a conventional ground war on the European 

continent. The concepts that emerged for future United States’ military operations 

are:

• Information superiority – by this is meant the ability to know the location and 

intent of all enemy forces while being able to conceal U.S. forces from enemy 

observation.

• Precision engagement – by this is mean the ability of U.S. forces to deliver 

massive fires against enemy forces with high-precision any time of day and in 

any weather.

• Dominant maneuver – by this is meant the ability of U.S. forces to rapidly deploy 

massive military forces from CONUS and overseas bases upon an outbreak of 

hostilities. Dominant maneuver also means the ability to more rapidly maneuver 

those forces in a theater than is possible for an enemy.

The science and technology program for the Department should reflect and respond 

to these concepts and should guide the Department’s investment strategy. In fact, 

the Task Force used these concepts to recommend new military capabilities the 

Department of Defense will need in the 21st Century as follows:

• long-range surveillance and identification of concealed targets under foliage, 

in buildings, and in underground facilities;

• stand-off detection of biological, chemical, nuclear, and high-explosive 

weapons including mines;

• high-energy density fuels/propellants/explosives for increased mobility;
- 42 -

• low-cost, adverse-weather, precision weapons;

• defensive kinetic-kill and directed-energy systems, together with advanced 

counter-targeting techniques to maximize the survivability of U.S. forces.

In pursuing these new capabilities, a number of supporting revolutionary 

technologies are likely to be needed. The following lists some of these

technologies:

• biological/chemical technologies for BW/CW defense,

• quantum physics approaches to computation and cryptography,

• MEMS (micro-electromechanical systems) for robots and sensors,

• micro-, mini-, and full-sized robots for remote sensing,

• Nano-technology for computation and sensing devices,

• Intelligent systems for recognition of objects,

• high-energy density fuels, propellants, and explosives.

Having described conceptually new capabilities and some suggested new

technologies that the Department should address, the Task Force then examined 

the current program. The Task Force observed the current science and technology 

program provides largely incremental improvements in current military systems. 

With the current planning process, approximately 50% of the Department of

Defense science and technology program focuses on short-term (3-5 year)

objectives, called Defense Technology Objectives. The remaining 50 percent of the 

science and technology program funds basic research and supporting or enabling 

technology. It is out of this 50% that revolutionary ideas must be funded.

In the mid-1990s, the Director, Basic Research, established the Strategic Research 

Objectives as a small set of significant problems to focus the basic research

investment. The Task Force believes this is a positive approach, and should 

continue. However, its scope is limited with the funding set at about $80 million. 

The more relevant issue is: How much of the science and technology program 

should the Department invest in revolutionary capability? Recall the current

technology-base program is about $4B and the total science and technology is 

about $7.5B. The funding for the Strategic Research Objectives is only about 2% of 

the technology base and 1% of the DoD Science and Technology program.
- 43 -

Ten to twenty years ago, the DoD S&T program addressed a number of

revolutionary projects such as the development of radar stealth for a variety of 

military weapon platforms; the Global Positioning System, airborne radar detection 

of moving ground targets, laser weapons, etc. The question is what revolutionary 

developments are incorporated in the S&T program today?

Various industry research leaders indicated that typically about two-thirds of their 

science and technology efforts support improvements in current products, while the 

remaining one-third is devoted to revolutionary research aimed at completely new 

product lines. The Task Force believes that the Department should follow this 

practice as well and devote one-third of the DoD Science and Technology Program 

to revolutionary military technology research. This would suggest that at least $2.5B 

of the current S&T funding be devoted to revolutionary technology. While much of 

this effort should be focused in DARPA, the Task Force believes that a portion of 

the Service S&T programs should also be focused on revolutionary technology.

Summary Observations

The observations concerning the topic of high-leverage technology can be

summarized as follows:

• A high percentage of the current Defense Science and Technology Program is 

devoted to incremental improvements in current U.S. military systems. The 

principal exceptions are portions of the OSD and DARPA S&T programs, which 

do focus on new directions for defense systems.

• A significantly greater portion of the S&T programs should be focused on new 

technical directions which could produce revolutionary improvements in future 

U.S. military capability.

• Allocating as much as one-third of the science and technology program to highpayoff S&T initiatives is needed to sustain long-term U.S. military supremacy. 

Incremental improvements alone are not sufficient.
- 44 -

VI. SUGGESTIONS AND RECOMMENDATIONS

1. Deputy Secretary of Defense should not allow the science and

technology program funding (6.1, 6.2, and 6.3) to decrease. 

Increasing the science and technology funding to at least $8 billion 

is indicated if the long-term technical superiority of U.S. military 

forces is to be ensured. 

The capability of U.S. military forces ten to twenty years in the future depends 

on maintaining a strong DoD Science and Technology program at or above 

its current level. Civil, domestic, and foreign R&D programs tend to focus on 

short-term objectives and in any case do not address many important military 

technologies covered under DoD’s Science and Technology program. 

Industrial experience indicates that the current DoD S&T funding level should 

be increased to about $8 billion/year to maintain technical supremacy of 

future U.S. military forces.

2. Under Secretary of Defense (A&T) and the Services should

strengthen the management and relevance of the S&T program by 

taking the following actions: 

(a) strengthen DDR&E by expanding his/her responsibility to 

cover at a minimum 6.1, 6.2, 6.3, 6.4 and 6.5 programs; 

(b) integrate S&T management structure in each Service,

following the integrated Office of Naval Research structure 

and using DARPA-like organizations; 

(c) use DARPA for the majority of revolutionary projects while 

enhancing the coupling of DARPA technologies to the

Services; 

(d) Instruct the Services to focus one-third of their S&T

programs on revolutionary Programs; 

(e) fill key S&T management positions in the Services with 

limited-term (4-6 year), high-quality scientific personnel

from the private sector (universities, non-profits, and

industry). The current 3.3% of key non-DARPA S&T

positions filled from the private sector should be increased 

to 50% or more by 2002 to match the practice in DARPA. 

The management and direction of DoD’s S&T program require greater

coherence and improved technology transfer between the 6.1, 6.2 and 6.3 
- 45 -

components as well as the later engineering programs (6.4, 6.5, 6.6, etc.). 

This can best be achieved by making DDR&E responsible for the entire 

suite of programs through engineering development as was the case in the 

1960s.

In addition, in each of the Services, the 6.1, 6.2 and 6.3 programs should be 

managed as a cohesive whole.

Finally, rotation of the S&T management scientists should be sought in order 

to bring new ideas to the DoD S&T program. A major part of the

revolutionary portion of the S&T program should be placed with DARPA 

because of its proven research management capabilities. 

3. The Services should staff their scientific and engineering

laboratory/center positions by replacing over a five-year period up to 

50% of the federal civil-service staff with a combination of: (a)

limited-term (4-6 year) scientific and engineering personnel (IPAs) 

provided by the private sector (from universities, non-profits, and 

industry); (b) a reinstatement of the 1947 Public Law 313 for highlevel S&T management positions. This latter action will require

Congressional action.

While the execution of the DoD S&T program at universities and in other 

private sector organizations is generally satisfactory, there is general

agreement that the S&T program execution in Service laboratories and 

centers is significantly damaged by the impact of civil-service regulations on 

the technical staff. The introduction of significant numbers of limited-term, 

highly qualified scientific/technical personnel from the private sector would 

greatly improve the capability of the DoD laboratories/centers to execute 

their contributions to the DoD/Service S&T Program.

4. OSD and the Services should enhance the productivity of the Service 

laboratories and centers by organizational and especially physical 

consolidation.

Unlike many successful industrial research and development efforts, the 

executors of the Service S&T Program are often physically and

organizationally separated from Service development organizations

including defense industries. All available means, including continuing

requests for Congressional approval where required, should be used to 

enhance DoD S&T productivity through organizational and physical

consolidation of DoD S&T organizations.

5. DDR&E should insure that approximately 1/3 of the S&T program 

elements are devoted to revolutionary technology initiatives. DARPA 
- 46 -

should play a major role in executing these efforts along with the 

Services. DDR&E should also insure that 6.4 and 6.5 funds are 

programmed by the Services to implement successful revolutionary 

S&T programs.

A great deal of the current DoD S&T program is devoted to worthwhile but 

incremental technological improvements in current military capabilities. 

However, revolutionary technical improvements are the foundation for future 

U.S. military superiority as they have been in the past. Focusing 1/3 of the 

DoD S&T Program and follow-on 6.4 and 6.5 efforts on such revolutionary 

improvements will help insure continued U.S. military dominance over the 

long term.
APPENDIX A 

THE UNDER SECRETARY OF DEFENSE 

3010 DEFENSE PENTAGON 

WASHINGTON. D.C. 20301-3010 

ACOUlHTlON AND 

TECHNOLOGY 

MAY 0 5 1997 

MEMORANDUM FOR CHAIRMAN, DEFENSE SCIENCE BOARD 

SUBJECT: Terms of Reference-Defense Science Board Task 

Force on the Defense Technology Base of the 21st 

Century 

U.S. military strategy calls for the use of superior 

technology as one critical enabling component of military 

strategy; You are requested to establish a Defense Science Board 

(DSB) Task Force to address the issues involved in assuring that 

the U.S. has adequate technology base from which to develop 

sustained military superiority for the 21st century; such a base 

includes technology developed by DoD. but also access to 

technology developed elsewhere, as well as an assured stream of 

scientists and engineers that will develop technology and build 

military materiel. Many internal and external changes influence 

DoD's options. 

You are to recommend a strategy to assure an appropriate 

technology base. within that strategy, recommend a proper 

formula for, or level-of-investment, and the characteristics of 

an investment program by which DoD can complement that which will 

be done by other federal agencies, other governments, and 

industry. Also recommend any desirable changes in the process 

and procedures for monitoring, accessing, and exploiting the most 

effective technology. Recommend any desirable changes in the 

organizations that manage and perform the DoD technology base 

program. 

In developing its findings and recommendations, the Task 

Force should consider: 

0 erosion of DoD science and technology 

reduction of IR&D in both defense and

industry, 

0 change in the balance of DoD reliance 

and dual-use technology, 

non-DoD technology base investment in 

technologies, 

globalization of science, 

0 globalization of some industry, 

budget, as well as 

commercial 

on defense-unique 

military-relevant 

0 strategies and procedures to rapidly translate technology 

in the laboratory to fielded products, 
0 DOD science and technology planning process, 

0 any changes in the balance of sciences and technologies 

on which DoD will rely in the future, and 

0 assurance of a pipeline of scientists and engineers to 

satisfy research and acquisition needs. 

The study will be sponsored by the Director of Defense 

Research and Engineering. Mr. Walter E. Morrow, Jr., will serve

as the Chairman of the Task Force. Col Al Shaffer, USAF, will 

serve as the Executive Secretary, and LTC T. Van Horn, USA, will 

serve as the DSB Secretariat Representative. 

The Task Force will be operated in accordance with the 

provision of P.L. 92-463, the "Federal Advisory Committee Act;

and DoD Directive 5105.4, the "DoD Federal Advisory Committee 

Management Program." It is not anticipated that this Task Force 

will need to go into any "particular matters" within the meaning 

of Section 208 of Title 18, U.S. Code, nor will it cause any

member to be placed in the position of acting as a procurement 

official . 

Paul G. Kaminski 


APPENDIX C 

A Mathematical Approach to Determining DoD Science and Technology 

Investments 

INTRODUCTION 

It is possible to formulate a mathematical approach to determine the optimum 

fraction of total DoD funding that should be applied to funding of its science and 

technology programs. As will be seen, while it is possible to structure a workable 

formulation, it is very difficult at this time to establish the correct coefficients to use 

in the formulation. In spite of that limitation, this formulation may be of use at some 

point in the future when these coefficients can be established, at least in an 

approximate form. 

BAS IC FORM U LATI0 N 

The starting point for the formulation consists of the two equations shown in Fig. C1 below. The first equation sets a bound on the total DoD expenditures in any one 

year which is equal to the sum of the funds for a number of DoD/Service functions 

which support its ability to project military power. Some of these, such as logistic 

support cover current operations. Others such as the Technology Base and 

Demonstration programs impact capabilities a number of years in the future. These 

latter two areas comprise in total the Science and Technology Program of the 

Department, the subject of this study. 

Finding an Optimum Distribution of Defense 

Investments Including Technology Base 

- Expenditure constraint for current and future years: 

Total DoD 

Tech Personnel/ Logistic 

= Base + + Engineering + "zm + Expenditure + Support

year(N)

- U.S. military capability for current and future years: 

Rate of 

I 

(Assumes 

sufficient 

munitions 

stocks) 

WlYTknlF~S 

Figure C-1: Basic Equations 

Expenditure in
The other equation, in a very general way, relates the various components of 

military capability to the ability of the forces to destroy potential enemy forces in 

terms of a kill rate. This assumes, of course, that munitions stocks are unlimited. If 

such is not the case, a reformulation can be used in which the capability is related 

to the total number of enemy elements that can be destroyed. 

The second equation can be quantified in terms of a number of parameters as 

shown in Fig. C-2.

Military Capability Functional Relations 

& % 4?8 

Force Structure Factor Personnel Factor Logistics Factor 

Additions Retirements 

over lifetime over lifetime 

in Year N 

Pros = Production Lr P+nmnsetby Logmaxsetby life of 

engineering equipment force structure force structure 

plus costs Pen includes 

training costs 

Figure C-2: Expansion of Military Capability Equation 

DETAILED EQUATIONS 

Figure C-2 breaks the second equation into two parts, the first relating to the overall 

capability at a given year in the future (N). The second part develops a formulation 

for the quality of the force structure at a year (N) in the future. In this equation P is 

the number of years required for the engineering and production of the equipment 

demonstrated under the Science and Technology Program. 

The first equation in this figure evaluates military capability as the product of the 

quantity and quality of the force structure, military personnel strength and logistics 

support. The force-structure component is augmented by current and past 

procurement and is depreciated as equipment reaches the end of its life. 
MAXIMIZATION PROCESS 

Figure C-3 shows the process of optimization. After the total cost constraint is 

introduced into the capability equation for each year over the next few decades, a 

set of differential equations can be derived for each year which involve taking the 

partial derivatives with respect to each class of funding (S&T, engineering and 

procurement, personnel, logistics, etc.). Each of these differentials is then set equal 

to zero to produce a set of simultaneous equations for each year in the future and 

in each year for the separate classes of funding. 

Maximization of Long-Term Military Capability 

With an Expenditure Constraint 

Substitute cost constraint into the military capability relations for each future 

year of interest (perhaps up to 25 years) 

Take the partial derivatives of the military capabilities relations for each year 

with respect to the expenditure categories and setting them equal to zero, i.e. 

d(military capability,

d(techbase expenditures)= 

d(devel/demo expenditures J 

. etc 

Solve the resulting set of several simultaneous equations to get: 

Ontimum Tech _. ~_. Base I 

For each year up to 

25 in the future 

Expenditures for: Development/Demonstration

Engineering Procurement 

Personnel 

Logistics J 

CAVEAT The functions relating military capabilities to expenditures are very 

poorly understood 

OYSLT lu Tf BaVp 11 

Figure C-3: Maximization Process 

The equations are then solved for the optimum distribution of funding for each year 

involved. Since the equations are likely to be non-linear, the standard-matrix 

algebra-solution approach will probably not be applicable. Instead, an iterative 

optimization is a more appropriate approach to a solution. A useful starting point for 

use an iterative approach would be to use the current funding structure. 

ISSUES 

The most significant problem in using this approach to determine optimum funding 

of DoD programs is the determination of the coefficients to be used in the 

equations. 
Another problem is that of getting agreement on the proper parameter to evaluate 

military capability. Depending on the nature of the contingency to be faced, 

different measures of military capability will probably be appropriate. 

Finally, there is the matter of division of funding among the Services. Here again, 

the nature of the contingencies will be all-important. Most probably, a mixture of 

possible contingencies will have to be used to get useful results. 







APPENDIX E 

Public Law 31 3 (from 1947) 

Ch 432 

Pub. 312 

Aug. 1 

LAWS OF 80TJ1 CONGRESS-1ST SESSION 

WAR AND NAVY DEPARTMENTS-PROFESSIONAL 

AND SC IENTIFIC SERVICE 

See Congressional Comment, P. 1533 

CHAPTER 433 -PUBLIC LAW 313 

[H. R. 4 0841 

An Act to authorize the creation of additional positions in the professional and scientific service in the War and Navy Departments. 

Be it enacted by the Senate and House of Representatives of the United 

The Secretary of War is authorized to establish and fix the compensation for, within the War 

Department, not more than thirty positions, and the Secretary of the Navy is authorized to 

establish and fix the compensation for, within the Naval Establishment, not more than fifteen 

positions in the professional and scientific service, each such position being established to 

effectuate those research and development functions, relating to the national defense, military and 

naval medicine, and any and all other activities of the War Department or Naval Establishment 

which require the services of specially qualified scientific or professional personnel: Provided, 

That the rates of compensation for positions established pursuant to the provisions of this Act 

shall not be less than $10, 000 per annuni nor more than $15,000 per annum, and shall be subject 

to the approval of the Civil Service Commission. 

See. 2 Positions created pursuant to this Act shall be included in the classified civil service of 

the United States, but appointments to such positions shall be made without competitive 

examination upon approval of the proposed appointee's qualifications by the Civil Service 

Commission or such officers or agents as it may designate for this purpose. 

See. 3. The Secretary of War and the Secretary of the Navy, respectively, shall submit to the 

Congress, not later than December 31 of each year, a report setting forth the number of Positions 

established pursuant to this Act in their respective departments during that calendar year, and the 

name, rate of compensation, and description of the qualifications of each incumbent, together with 

a statement of the functions performed by each. In any instance where the Secretary of War or the 

Secretary of the Navy may consider full public report of these items detrimental to the national 

security, he is authorized to omit such items from his annual report and, in lieu thereof, to present 

such information in executive sessions of such committees of the Senate and House of 

Representatives as the presiding officers of those bodies shall designate. 

States of America in Congress assembled, That: 

Approved August 1,1947.