Frank Kendall, Under Secretary of Defense for Acquisition, Technology, and Logistics, introduces Better Buying Power 3.0, the next step in the Pentagon’s efforts to keep America’s technological edge, September 19, 2014, in Washington. (J. Lawler Duggan/For Capital Business)

The Pentagon formally rolled out an updated acquisition strategy Thursday that streamlines how the department buys technology and allows greater room for experimentation by defense contractors.

The program, known as “Better Buying Power 3.0,” emphasizes the role of research and development to spur innovation and outlines steps for the Pentagon to better harness commercial technology in order to cut costs. It is part of a multi-year effort to help the nation maintain its technological advantage at a time when defense budgets are shrinking.

Pentagon officials including former defense secretary Chuck Hagel and acquisition chief Frank Kendall have stressed the need for the department to tap into emerging technology trends and encourage innovation by the commercial sector, citing the renewed investments being made by its foreign rivals.

“The technological superiority of the United States is now being challenged by potential adversaries in ways not seen since the Cold War,” Kendall wrote Thursday in a memo about the new program.

Companies that do business with the Pentagon can expect more incentives to innovate but also increased scrutiny of their internal research and development projects. For example, the Pentagon plans to release guidelines next month that increase the role the government will play in reviewing companies’ internal research decisions.

The program also includes a new section dedicated to cyber­security, an area of concern for government agencies and contractors that have been the target of increased cyberattacks.

“All our efforts to improve technological superiority will be in vain if we do not provide effective cybersecurity throughout the product lifecycle,” the Pentagon said in its release.

As part of its cyber strategy, the department plans to review its current security design processes, identify areas for improvement and work with law enforcement, intelligence agencies and other parts of government to protect classified and unclassified information. The results of the initial review and recommendations are expected in the fall.

Better Buying Power 3.0 also reiterates the Pentagon’s goal to promote competition and use a carrot-and-stick approach to reward high-performing contractors. The program expands the Pentagon’s “superior supplier incentive program,” which recognizes companies that perform well on cost and on schedule.

Industry members had mixed reactions to the program.

The guidelines place too many hurdles on the use of commercial technology, said Stan Soloway, president and chief executive of the Professional Services Council, an Arlington, Va.-based contracting trade group, whose members include technology companies.

Defense company Boeing welcomed the initiative. “A more open and deliberate dialogue . . . is critical for industry to understand the military’s requirements and future modernization priorities,” Boeing said in a statement.