Pentagon revises plan to beef up oversight of industry R&D

[August 28, 2015]  By Andrea Shalal
 
 WASHINGTON (Reuters) - The Pentagon's chief arms buyer announced on Thursday he was revising his plan to increase oversight of weapons makers' internal research and development projects that could be billed as overhead, after sharp criticism from industry executives.

Frank Kendall, undersecretary of defense for acquisition, technology and logistics, said he no longer planned to require companies to seek a "technical sponsor" before beginning an internal research program but would instead propose they be required to brief an appropriate defense official before and after such work.

Ellen Lord, president of Textron Systems, a unit of Textron Inc and other key industry executives had challenged the proposed rule, arguing that micromanaging internal company investments would be counter-productive.

"This should not constrain industry's freedom in any way that current regulations and statute don't already require, and it will have the benefit of ensuring more frequent and effective communication between industry and government," Kendall said in prepared remarks for a conference in Rhode Island.

He added that his intent was never to impinge on companies' freedom to make their own decisions about research programs.

"I appreciate the value to industry and (the Department of Defense) in allowing industry to place its own bets on technology that might increase a firm's competitiveness," he said.

A copy of his prepared remarks were released by his office.

The proposed change is part of the latest revision to a set of guidelines aimed at improving the way the department buys weapons and services.

Kendall, who often cites his concern that the U.S. military is losing its competitive edge in the face of recent gains by Russia and China, has also criticized industry for focusing too much on share buybacks instead investing in new technologies.

Kendall told reporters in late July he thought industry executives had overreacted a bit, and that he was not going to make any fundamental changes to the proposal. He said the goal was to ensure that the research work done - and billed as overhead - was technically meaningful.

(Reporting by Andrea Shalal; Editing by Edwina Gibbs)

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