Digital Transformation: A Key to Maintaining U.S. Technological Superiority

A series of posts from the former Deputy Under Secretary of Defense for Acquisition and Sustainment, Al Shaffer, looks at pathways to drive innovation and modernization for national defense. Read the first blog in the series.

As highlighted in the Pentagon’s rollout of the Transformation of the Warfighting Acquisition System, the most critical parameter in acquisition today is speed to operational capability. Achieving rapid fielding requires significant changes in how risk is managed and demands adoption of new tools, including Modular Open Systems Architecture and virtual replicas of real systems that can be tested in cyberspace. This digital transformation is reshaping both defense and commercial industries alike.

The first applications of digital engineering in the Pentagon emerged around 2010 under the leadership of Dr. Jeff Holland, who led the “Reliance 21” initiative known as “Engineered Resilient Systems.” Digital engineering leveraged computing power with ever increasing data models to analyze vast volumes of data. By the early 2010’s, Holland was able to create coarse digital representations of platforms – ships, planes, ground vehicles – and simulate a wide range of design variables. In this way, Holland was able to cycle through thousands of design options nearly instantaneously.  This expanded the design space and also helped identify non-viable concepts early. In several notable cases, Holland demonstrated that a major acquisition design was suboptimal, or worse, would not work.  This early use prompted the program office to collaborate with the vendor and revise the design before any physical production began.   This was 15 years ago. 

Since then, the U.S. has continued to advance digital engineering and model-based systems engineering through increasingly sophisticated digital twins and designs.  In December 2023, the Office of the Under Secretary of Defense for Research and Engineering, established policy and provided “procedures for implementing and using digital engineering in the development and sustainment of defense systems.” However, the United States was not alone in this effort.

Why does this matter for national security? As mentioned previously, the Pentagon’s effort to transform the Warfighter Acquisition System is built on the premise that the acquisition system was too risk averse and slow.  For too many years, the system had to deliver the “perfect”; fielding a perfect system takes a long time, and when fielded, is likely obsolete.  A key to the new direction is to use tools that allow the program manager to field what is ready now with new applications added as they mature.  The ability to rapidly modify and adapt systems provides a decisive advantage. Digital engineering and digital twinning enable that agility – making them essential tools for maintaining U.S. technological superiority in an era of accelerating global competition.

Current Challenge: Accelerate Technology Adoption

The defense enterprise is responding to the urgent need to accelerate technology adoption. The slow U.S. defense capability development and fielding timelines give rivals an advantage as the pace of technological change accelerates. Adversaries are ahead of the Pentagon in fielding other advanced capabilities, such as hypersonic missiles. These examples highlight the necessity for the U.S. to field new capabilities faster, with more cost-effectiveness and flexibility to modify systems once fielded. Digital engineering is really the confluence of large data, artificial intelligence, virtual reality and augmented reality.  This digital transformation allows the leader to do all design checks in virtual space for less money and greatly reduced timelines.

Reforms Already Undertaken

In 2020, the Pentagon rolled out the “Adaptive Acquisition Framework” to provide tailored acquisition pathways. The introduction of new pathways for capabilities such as Middle Tier of Acquisition, agile software development, and urgent acquisitions provides acquisition flexibility. The 2024 report of the Planning, Programming, Budgeting, and Execution (PPBE) Reform Commission following an earlier IBM Center report, “Three Reforms to Improve Defense Resource Management,” which, recommends sweeping changes to the defense budget process designed, in part, to allow more flexibility in execution. Restructuring budget accounts and providing greater leeway to reprogram funding will similarly increase flexibility available to the acquisition community. Most recently, the Trump Administration issued a new approach to defense acquisition.  These process reforms are key enablers for accelerating the pace at which we field new technology, but they don't accelerate modernization by themselves.

The Department as also introduced two innovation organizations, focused on digital transformation:

• The Defense Innovation Unit (DIU), which strengthens national security by accelerating the adoption of commercial technology throughout the military and bolstering our allied and national security innovation bases. DIU partners with organizations to rapidly prototype and field dual-use capabilities that solve operational challenges at speed and scale. https://www.diu.mil/about

• The Defense Digital Service, where people are enabled by technology. DDS hires hire technical talent from industry on limited two-year terms who focus on delivering high-impact solutions and advanced capabilities to protect national defense.

Digital Transformation: Current State of Use

Digital transformation is reshaping industries and is crucial for maintaining US overmatch against adversaries. In development, it allows faster and more flexible design iterations— shortening the process while improving alignment to mission need—by the use of a “digital twin.” This virtual representation of the product allows rapid simulation for “understanding  before you build” and “flying before you buy” to reduce risk and accelerate time from design to fielding. Digitizing into the virtual world also accelerates training and adoption of technologies, but digitalization can even be started in the planning and requirements stages of gap analysis and extend through the sustainment phase of a systems.

Digitally engineered designs can then move more quickly through prototyping, testing, and production as the digital twin provides the data for printing initial parts, incorporating modifications, and feeding robotic and additive manufacturing processes. Testing can be enhanced and risk reduced as thousands of “digital tests” are conducted to complement physical tests. An updated digital twin matching the physical product then supports operations and sustainment.

Parts of the Pentagon are also climbing on board. The Air Force's Research Lab is seeking to do more with digital manufacturing, while its ICBM-replacement already relies extensively on digital engineering. The Army is making digital twins to improve Black Hawk maintenance, working on battlefield 3D-printing of parts, and plans to choose among bidders for the Future Long-Range Assault Aircraft based on a digital design.

In addition, digital engineering is entering new areas, such as microelectronics design. There is a very promising effort to use digital tools for F-35 microelectronics design, an approach encouraged by Congress because of the reduction in design costs and potential for more rapid sustainment enhancements.

While very promising, the former Secretary of the Air Force said in March 2023 that digital engineering was overhyped initially. Then he went on to say the estimate of cost savings using digital engineers would be 20%. As tools become more reliable, this estimate is likely to rise. Considering the Pentagon’s procurement budget of about $200B, digital engineering could reduce costs by about $40B per year. These savings can be plowed into buying more platforms.

Policy Recommendations to Expand Digital Transformation

To accelerate modernization, the Pentagon needs to harness digitization's benefits in reducing time, cost, and risk throughout a product's life cycle. The question becomes: How can leaders encourage faster transformation within the government and with the industrial base?

First, expand digitization into more capability and technology areas, including new development efforts and sustainment of current forces. Organizations like Research and Engineering, Acquisition and Sustainment, and Cost Assessment and Program Evaluation could provide priorities for expansion while the Military Departments identify specific programs. The next steps after the PPBE Commission could focus on expanding business practice innovation like digital transformation in its reform recommendations.

Second, incentivize industry by valuing advanced practices when writing proposal requests, making award selections, and issuing contracts. Program offices will need more experts in evaluating and using digital twins and the digital thread from development through sustainment. The cost-estimating community should look at the commercial industry to learn what is possible, and how this might realistically change defense programs.

Third, smooth industry's path by standardizing material requirements and accelerating certification of printed parts. The government could also establish intellectual property policies that protect the department while incentivizing industry investment. This will be a learning process with missteps along the way. But today's world requires the implementation of digital transformation at scale and the only way to accomplish that is to do it.

Fourth, evaluate how to bring the Digital Transformation into both Developmental and Operational Test and Evaluation. While the Pentagon will still require physical tests, the opportunity to use Digital Tools and Digitization in could substantially reduce development time.

Fifth, every Portfolio Acquisition Executive (PAE) and major program manager could prioritize the position of Chief Data Officer on their staff. The Chief Data Officer would have responsibilities similar to those of the Chief Engineer for data and digitization.

The challenges faced by the Pentagon, such as slow capability development and fielding timelines, mirror broader public sector issues where bureaucratic processes hinder rapid technology adoption. The reforms undertaken, including the Adaptive Acquisition Framework and PPBE recommendations, showcase how public sector entities can implement tailored pathways and flexible budgeting to accelerate modernization. The lessons from the defense digital transformation efforts, such as incentivizing industry participation and standardizing material requirements, can be applied across various government to enhance efficiency and responsiveness to evolving technological landscapes.