Opening Up Defense Acquisition: The 2015 National Defense Authorization Act (NDAA)

Nothing has been discussed more intensely this year in defense acquisition circles than the question of what intellectual property (IP) rights the Department of Defense needs to acquire for its many complex weapon and information systems, and whether its approach to doing so disadvantages industry. The government’s case is that it requires enough IP rights for its systems to allow it to compete the maintenance of these systems and to upgrade them over their decades-long lifecycles. Industry argues that intellectual property is the life blood of its product development and the foundation for its profits. Many companies have indicated that they may forego government business rather than concede critical IP rights. This year’s NDAA addresses a related topic that gets at the heart of this issue: the adoption of modular open systems approaches in acquisition programs. What remains to be seen is if modular open systems approaches provide a way to resolve this conflict or simply open a new front in the battle.

A modular open systems approach is a strategy for designing and developing a system, whether it’s a simple piece of software or a complex weapon system, so that it consists of clearly defined modules connected by interfaces built to consensus-based standards. Because these modules are designed to be readily modified or replaced, this approach can enable competition for upgrades and sustainment over time. Military weapon systems have traditionally been associated with proprietary design approaches, but open approaches have also been used successfully as demonstrated by the Navy’s Acoustic Rapid COTS Insertion (ARCI) effort. ARCI defined standardized interfaces within the Navy’s submarine sonar systems that allowed new COTS technologies to be rapidly incorporated into the systems to improve performance, and the Navy has shown it can extend this approach to other systems.

Section 801 of the recently passed NDAA promotes the adoption of modular open systems approaches by requiring a plan for the development of new consensus-based standards for systems in key mission areas where feasible and cost effective. The provision would also ensure that DoD enforces its existing policy preference for modular open systems approaches in the development of systems and require consideration of converting existing systems to open approaches. Because modular open systems approaches rely on consensus-based industry standards for the design of interfaces, a shift to these approaches could significantly reduce the Department’s need to acquire companies’ proprietary IP. Where standard interfaces exist, the government should be able to achieve its objectives of enabling upgrades and sustainment without the need for proprietary IP. Another potential advantage is that open approaches could facilitate international cooperative programs where a variety of international companies can contribute modules within a larger system design. The challenge, however, is that the work of developing new consensus-based industry standards where they don’t currently exist will be arduous, long, and potentially highly contentious. For this reason, Section 801 may simply lead to a partial shift of the debate from proprietary IP rights to how new standards are developed.

Andrew Hunter is a senior fellow with the International Security Program and director of the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies in Washington, D.C.

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