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November 2012


We also owe a special debt of thanks to Jared McKinney and Andrew Houston-Floyd. Throughout the process. Lastly. Charles Morrison. whose keen eyes and helpful edits immeasurably improved this paper. we are grateful for the support of the entire AEI family. James Cross. ii . and Alex Della Rocchetta. including Danielle Pletka. Lazar Berman. we have been indebted to numerous individuals. with- out whose help this paper would not have been possible. Acknowledgments This paper is the product of a true team effort. Arthur Herman.

As Washington itary that underpins global economic stability. who believe that government money could be better tions ended up playing key and sometimes revolution. many military innova. and operations technologies do much more than simply support accounts in their districts. respectively. iii . such as China. and precision munitions. Executive Summary D efense research and development (R&D) spend- ing has long been a cornerstone of American security. the defense a positive byproduct provides the resources for com- budget will likely face further cuts on top of the mercial technology. The reality is that defense R&D will continue to face a ware such as the jet engine. Development. such innovation would not be possible without or proposed. along with a a real decline of over 24 percent and will further drop budgetary commitment to continued R&D. real-time communica. or maximize security and economic benefits. itary personnel was cut by 6 percent from 2010 and safe. and as enters a period of deficit reduction. America’s men and women in uniform. Reform. and the multiple potential methods tion accounts bearing the largest burden of cuts. ensure the innovation that has made America great. procurement experienced the DoD to the private sector. ture defense research and development spending to tration and will decline by another 12 percent. spent elsewhere and that defense R&D “crowds out” ary roles throughout the broader civilian economy. cuts to tion of national security. and Evalua. Preamble. will by over 5 percent through 2017. the this. ital recruitment. Such opposition to Despite the benefits of military research spend. government involvement. After all. in real terms from 2013 to 2017. defense research. ignores the larger picture: ing. Although it may appear ineffi- close to $900 billion already being implemented cient. In comparison. however. In fact. whose R&D spending is pre- defense Research. of facilitating research and technology transfer from From 2010 through 2013. Test. reform of human cap- largely follows a sustained trend of the moderniza. This longer-term funding stability. mil. large share of the burden as legislators struggle to tions. personnel. dicted to surpass the United States’s by 2023. bringing important advances to military hard- 2017. these figures are 12 percent and 23 percent. is a constitutionally man- R&D provide immediate returns for a favorable dated public good as broadly articulated in the balance sheet. tion (RDT&E) account has declined by 17 percent There are many options available to further struc- in real terms since the start of the Obama adminis. Political pressure is mounting from lawmakers throughout the 20th century. It ensures a technologically dominant mil- vestment are not felt until years later. Other nations understand Including the pending FY 2013 budget. will continue to enjoy robust support into through 2013 and will fall another 9 percent through the future. including $8 billion. and the negative effects of underin. there tend to be powerful short-term incentives that military research and development. private-sector R&D efforts. For operations and maintenance. as a founda- to reduce defense R&D investment. Yet advanced preserve procurement.

it much more than simply guarantee the independ. defense R&D must be kept in The buildup in defense-related federal R&D perspective: it is not the end-all. avionics sys. affected economic growth. Spending is spread across through which defense spending has bolstered Amer. Spin. fewer companies. such as buyer determines the near total demand and suppli- electronic computers and the Internet. the when the Cold War and the space race were driving Internet. The point of defense innovation is not to build a strong Without a military with adequate and sufficient economy or promote economic growth. including jet engines. Defense resources. narrowly interpreted as scientific research and 1 . weather satellites. especially during the 20th century.” examples of defense innovation as evidence that In practice. and tioning system (GPS) facilities. defense spending does government spending built the modern economy. acted as an important driver of technological inno. “The strong do what they can and the weak suf. however. Others. Consequently. tems. really exist in any other market. only half as much as a percentage of GDP as it did offs such as these have been an important channel during the mid-1980s. and cell phones. ica’s larger technological advantage and positively and tied to more stringent requirements. When it comes to the defense industry. the United States still dominates the world many of the pivotal technological breakthroughs of of R&D. Some of these ently mean that the “market” is not a true market at innovations. and private sectors are mixed in a way that does not defense research and development (R&D) has pro. US Military Technological Supremacy under Threat A merica’s defense budget exists to fulfill the first responsibility of government under the Constitution—to provide for the common defense. but it spends far less as a percentage of the 20th century. would also be simplistic to say that defense spend- ence and autonomy of the United States. such as hairspray and plastic bags. have all but. defense. through the 1980s was responsible for propelling Today. today than during the first part of the 20th century. has that happened to spin off into commercial products. channeled toward narrower goals. This is not to say that the government built the modern economy through defense investment. computer software and graphics. just as it would be simplistic to cite fer what they must. tors between the 1940s and 1980s owes largely to the Throughout World War II and the beginning of the unique scale and structure of US defense research and Cold War. the public vation and commercial progress. The rapidity with which Moreover. The unique buying duced important and often-overlooked innovations conditions that exist in the defense industry inher- within the broader civilian economy. research and development spending was development investments during those years. R&D funds are calculated differently military technologies diffused to other economic sec. America would no longer be the master of investment has a simple and irrefutable constitu- its own fate. ences. rather. a complex arena in which a sole made our lives more convenient. As Thucydides observed so many years tionally mandated role: to provide for the common ago. have ers are entirely at the mercy of the customer’s prefer- changed our planet and economies. Defense ing had no role in promoting useful technologies spending. gross domestic product (GDP) than in the 1960s. America’s pursuit of technological supremacy. Increasingly. electronic computers. global posi. Yet. be-all of the mod- spending that began in the 1940s and persisted ern economy—but it has played an important role.

so-called “across-the. smart the U. US government research expected to match or surpass ours by 2023. gram cuts and “efficiency” savings already imple. is mented throughout the Department of Defense or playing catch-up with China: while a small banked as savings regardless of outcome. that money directed to R&D adds an immediate adjusted) decline of more than 17 percent since the negative to a firm’s balance sheet and reduces prof- start of the Obama administration. the fifth decline its. This changed following the launch of under the administration’s proposed budget. less than one-tenth of RDT&E funds each year. and board” reductions will affect R&D and procurement the chasm between classes could be wider (together. The debt-ceiling ing to gain a technological edge in certain sectors.2 Another $492 billion in automatic budget to America’s economy: cuts are also scheduled to take effect through the sequestration measure. RDT&E spending will continue to ment as a short-term strategy to increase profits. At this rate. R&D spending is in real terms in as many years. including Russia and Israel.US MILITARY TECHNOLOGICAL SUPREMACY UNDER THREAT development. Development. How will reduction measures in November 2011. several years.65 billion. than ever. Test. profit. Today.6 agreement reached by Congress last summer—the In a New York Times op-ed titled “Will China Out- Budget Control Act of 2011—mandates $487 bil.4 tion (RDT&E) account in the defense budget. domes- Sputnik when public pressure for increased scientific tic agencies such as the Departments of Health and funding prompted the expansion of R&D funding to Human Services and Energy will receive a larger include testing and evaluation (T&E)—creating the share of R&D funding than the Department of modern Research. Our global competitiveness is based on being tee’s failure to come up with $1. we fare if those ideas originate somewhere These reductions come on top of numerous pro. In contrast with American military R&D trends.9 In decline by more than $8 billion in real terms other words.5 Other and development budgets are set to shrink further countries. disposed to value long-term success over short-term 2 . but politically sensitive and therefore more difficult to they are also thinking about the very idea of future cut.2 trillion in deficit the origin of the newest. are also start- amidst mounting fiscal pressures.3 As United States. In the decline by nearly 5 percent to $69. Nowhere is this more pro- 2013 budget. meaning that its cost is spread out over Obama administration’s five-year defense plan con. else? The answers range from scary to scarier.” Adam Davidson speculated on the lion in defense spending cuts over the coming threat China’s rising investments in R&D could pose decade.8 In Japan. meaning figure 1 illustrates. the Japanese accounting system is pre- between FY 2013 and FY 2017.7 tion accounts) disproportionately because other parts of the defense budget are buried more deeply Not only are other countries outpacing the across multiple accounts and organizations or more United States on research and development.?. At the same time. China’s R&D spending can be In the coming years. R&D spending is expensed. the defense RDT&E account would nounced than in simple accounting practices. what are commonly called the moderniza.S.1 15 years. Imagine a global economy in which the U. Under President Obama’s proposed fiscal year investment differently. Defense (DoD). this represents a real (inflation. reducing the incentive to cut invest- tinues this trend. The rest of the capitalized. as it has done consistently over the past go to basic and applied research. Because the new RDT&E category included many a study by the Battelle Memorial Institute forecasts items beyond basic and applied research.S. on the other hand. best ideas. most workers would earn far less. As many class of Americans would surely find a way to defense experts have noted. and Evalua. increased that China’s rate of spending on R&D will remain budgets made the overall R&D investment appear strong and continue to grow faster than 10 percent larger. a result of the super commit.

000 2009 2010 2011 2012 2013 Source: US Department of Defense. National Defense Budget Estimates for FY 2013. which senior Department of development and acquisition of the nation’s future Defense leaders and military officials have warned military hardware. Historical Table 6. gram supports a large share of university-based nomic growth. MACKENZIE EAGLEN AND JULIA POLLAK FIGURE 1 INFLATION-ADJUSTED US DEFENSE RDT&E SPENDING DECLINES FOR FIVE CONSECUTIVE YEARS 90. and foreign sales. Although they primarily support the spending reductions. This predisposition to think about Increases Economic Growth R&D spending as a burden and not as a source of strength only makes America’s challenge even Congress supports the modernization efforts of the greater going forward. referred to as the vide the best defense. US national security.000 60. but also to technological inno- vation and economic growth. RDT&E budget (nearly $12 billion in FY 2013) goes gress can ensure that the military continues to pro. toward basic and applied research. while its American counterpart does precisely How Federal Spending on Defense R&D the opposite. With the right level Human Capital and Research Infrastructure.000 $ Millions 70.000 50.8. and the right policy framework. particularly in fields such as 3 . members should these investments spill over into the wider economy review the indispensable contributions US defense through three main channels: the development of R&D and procurement spending have made human capital or research infrastructure. Con. as well as the maximum Science and Technology (S&T) program. IT. and composition of defense R&D and procurement Roughly 17 percent of the total federal defense spending. US military with appropriations for RDT&E and Before Congress signs off on further defense procurement. The pro- incentive to technological advancement and eco. gains. would have devastating effects. technology historically—and continue to make—not only to transfers or commercial spinoffs. and consumables. software. research and education.000 80.

This funds development. astronomers and mathematicians. The airframe design for the competitive global economy. which sampled 582 military patents trial base that have emerged as a result provide a from around the world registered between 1998 and means of acquiring new technology across a wide 2003 with both US and European protection.12 ment’s use of defense contractors with both military Defense-related jobs employ about one in ten of the and commercial divisions. have often been involved in military one in five of its physicists. In some cases. For instance. that the United States makes the greatest use of mil- tion and innovation.53 are in many ways “inadequate for favoring technol- million American jobs. US aerospace manufactur- nation’s computer software and electrical engineers. Each of these activities has yielded the training of scientists and engineers and develops scientific knowledge. The RDT&E budget supports seven budget tendency of defense companies to subcontract work activities: basic research. one in four of its and commercial aircraft production simultaneously. Grumman on the B-2 stealth bomber. ers. advanced to small and medium commercial enterprises. an extremely important asset in a within the same facility. but during Technology developed in the military can be World War II. at the height of way is through the patent system. off-the-shelf products. technology development. the that current intellectual property laws worldwide defense and aerospace industry supports some 3.US MILITARY TECHNOLOGICAL SUPREMACY UNDER THREAT mathematics and materials engineering. engineering and manufacturing development. and Boeing’s ability to design Technology Transfers and Commercial Spinoffs. the production of mil- human capital at all levels helps retain US scientific itary and commercial aircraft has even taken place competitiveness. large. recent study. advanced composite structures benefited from The second channel through which defense research the military R&D it did as a subcontractor to Northrop and development spending benefits the wider econ. Overall. found range of sectors and growing further industrializa. applied research. which was the Cold War. and technologies first used in military products that try and universities—rely upon. It notes. itary technology for civil purposes.13 R&D spending on learning curves. but it also creates an incentive technology by analyzing citations of military patents for young people to study science by providing in subsequent civilian patents.10 The cal knowledge embedded in military patents. about 70 percent of federal R&D designed to promote the disclosure of inventions. tion.14 The study measured the dual use of military training of scientists. in 1980.”15 and engineering jobs attract some of the nation’s best Another way military technologies have often fil- and brightest and pay commensurately high salaries. and indus. however. research infrastructure. weapons production largely shifted to transferred to other parts of the government or to private companies while basic research moved to the private sector in a number of different ways. demonstration and valida. Yet another source of technology diffusion is the offs. tered into commercial products is through the govern- with the median annual salary above $77. Today’s military purchases numerous commercial.11 Defense-related science ogy transfer. omy is technology transfers and commercial spin. thereby supporting high- management support. followed by Ger- Not only does defense-related spending fund the many. later found their way into civilian or commercial Federal spending on defense R&D was originally applications in the private sector. organizational innovations. Boeing 707 drew on that of Boeing’s KC-135 military tanker. the future expertise that the DoD—as well as indus.000. lucrative employment opportunities. and one in three allowing for rapid technology transfer and shorter of its aerospace engineers. concentrated in government arsenals. for example. A human capital. for example. and operational systems technology private-sector companies involved in 4 . spending was located in industrial laboratories and Various organizations take advantage of technologi- between 10 and 15 percent in universities. One universities.

to high-income countries. the industry with the second-highest financing. It is of these new technologies. ing to a trade surplus of $43. the economy is international defense trade. the US military has sometimes sparked ment. The leading sectors supplying the defense ities that were previously in doubt. Private-sector aerospace product and that military technology was widely diffused to parts manufacturers design and construct many other sectors and that military R&D had an espe- component systems of military aircraft. the Pentagon Foreign Sales. and the air. and many other digital States produces the most advanced and sought-after devices possible. for example. sonar. military most US defense exports are concentrated in a few 5 . and other tracking systems. communications equip- tions. spurred related ventures in the private sector.2 million more than agricul- new industry. semi.16 navigation equipment manufacturers supply the military with many of its radar. continues today.8 billion while imports totaled $34 billion. attracted new companies. and electronics equipment—ranged from significant technological transformations as other about $19 billion to $22 billion annually each year organizations. there are also less-direct sources of tech. Sim. environment for cooperation and various joint efforts at two-way technology transfer. military aircraft.19 US exports of defense products—including ply by introducing or demonstrating new inven. Defense programs are frequently 2011 was a “record-breaking year” for foreign military on the cutting edge of scientific advancement. mobile phones. By providing a steady stream of tural products. During the Cold War. it market are the scientific research and development has lowered the risks other investors perceived and industry. High military demand for which is one of the largest positive contributors to semiconductor components during the Cold War the US trade balance. and search and be harnessed and commercialized. to replicate or improve on them.8 billion. The DoD acted as a lead purchaser defense and aerospace products in the world.18 This trend Finally. the telecommunications industry. study of 67 countries between 2000 and 2005 finds craft industry. Defense companies create demand CHINA’S R&D SPENDING CAN BE for high-technology commercial products. defense contracts helped to fund risky positive net balance. the engineering and architectural indus. MACKENZIE EAGLEN AND JULIA POLLAK production of goods and services not related to R&D has often demonstrated technological possibil- defense. have raced between 2005 and 2009.17 R&D for unproven systems and supported further In 2010. which created new markets and exporter—in the aerospace and defense industry. making early acquisitions the top global exporter—and an overall net in large quantities. nology diffusion. US exports of aerospace products totaled development and commercialization by allowing $77. As figure 2 demonstrates. of the complex electronics and guidance systems where technological innovations were more likely to used in military rockets and missiles. The third channel through which provided significant funding to electronics compa. In so doing. lead- firms to achieve economies of scale. Historically. sales. satellites. federal investments in defense technology improve nies for R&D relating to integrated circuits. and even other countries. navigational cially positive and substantial impact on economic and measuring device manufacturers develop many growth in medium. enjoying a net export/import was largely responsible for the rapid growth of this balance of almost $8. in 2010. One tries. According to the State Department. and this EXPECTED TO MATCH OR SURPASS “spin-on” (the flow of technology from the commer- cial sector to the defense sector) creates a favorable OURS BY 2023. and transistors—technologies because of the level of federal investment in cutting- that have since revolutionized electronics and made edge defense research and development. the United computers. Largely conductor materials.

and a wider market Defense R&D Investments That Have Spurred for American products. South Korea.20 minded nations. night vision. 2005–09 14 12 10 8 $ billions 6 4 2 0 Japan UK Israel South Korea Australia Egypt UAE Source: GAO. even during times of defense spending reduc. developing remotely piloted or unmanned aerial ity with allies and partner states have also enabled vehicles. gies that would otherwise take far longer to filter capital. accelerated innovation as a into the US economy. and several of the technologies involved are 6 . and partnerships and pool scarce resources with like- the United Arab Emirates. with about half going to Japan. employment for tens of thou- sands of American workers by export-driven defense companies and subcontractors. digital photography. the military has made significant strides in US government efforts to promote interoperabil. These partnerships sometimes Some of the benefits of international defense trade allow US firms to obtain advanced foreign technolo- include increased access to overseas technologies. Report to Foreign Affairs Committee on Defense Exports (September 2010). More tions and uncertainty at home. which generates economies Commercial Innovation of scale and drives production costs down. high- production lines open longer than their government powered batteries. figure 3. customer would support and sustain employment radar. result of competition. computer software.US MILITARY TECHNOLOGICAL SUPREMACY UNDER THREAT FIGURE 2 TOP SEVEN COUNTRIES FOR EXPORTS OF DEFENSE ARTICLES. Access to international markets provides defense companies Some examples of technologies that emerged largely with the opportunity to make additional sales. avionics systems. recently. the United defense companies to build important international Kingdom. electronic computers. and skilled labor. Internet. and GPS facilities. Australia. Israel. Egypt. which as a result of defense R&D investments but have can sometimes enable them to keep their US-based since become ubiquitous are atomic energy. the levels. countries.

Integrated Circuits. manufacturers for R&D relating to integrated cir- puter). which supported the broader diffusion of the new calculator. artillery. military R&D on since 1945. semiconductor materials. such as the US Air Force’s Boeing B-29 Super- fortress. The sys- such as firefighting and mineral exploration. with Massachusetts Institute of Technology’s (MIT’s) Lincoln Laboratories to finalize the design of a digi. and transistors. so we will focus here on only some illustrative exam- ples from the information technology sector. was developed during World War II by the cuits. tary’s “second source” policy (which required sup- ment projects throughout the 1950s. integrated video passenger airliners. 7 . digital transmission Indeed. The first general-purpose Department of Defense and Atomic Energy Com- electronic digital computer in the United States. which facilitated exploiting the new technologies would require a commercial demand. among many others. agricultural planes. encouraged competition and birthed many small.53 MILLION of the military inventions and technological develop- AMERICAN JOBS. they curement contracts to new companies. Federal defense R&D funding has accounted gained access to in building its later commercial for well over half of total aerospace R&D investments computer hardware. traffic helicop. mobile phones.21 and countless examples exist of military SAGE produced technologies such as magnetic core technologies that have made their way into memory. entrepreneurial firms. THE DEFENSE AND AEROSPACE craft. passenger and cargo transport after World War II began largely with the conversion of ex-military air- OVERALL. large operating systems. noteworthy legacy of civil spinoffs from military IBM used much of the pioneering research it R&D. During the Cold War. Military the development of additional computers in the demand for semiconductor components supported 1940s and 1950s that soon gained a wide range of the commercialization of integrated circuit technolo- applications. ments that have filtered into the commercial sector. the International Busi. fostering rapid growth and competitive strength in ness Machines Corporation (IBM) began working the industry. light guns. pliers to develop additional domestic producers One such project was the SAGE (Semi-Automatic capable of producing identical products) led to con- Ground Environment) interceptor early detection siderable technology transfer between companies. the military funded and many other digital devices possible. and other civil aircraft in use all around the world. It would take several volumes to mention all INDUSTRY SUPPORTS SOME 3. The military also awarded pro- substantial industrial infrastructure. MACKENZIE EAGLEN AND JULIA POLLAK appearing in a growing number of civil applications. After initial successes. the mili- supported further computer technology develop. The US armed forces believed that fully gies by generating price reductions. In addition. In 1952. analog-to- ters. The US software industry also benefited tal computer and radar system designed to defend substantially from defense R&D and procurement. the Electronic Computers. computer technologies to researchers and firms and nimble. the mission provided significant funding to electronics ENIAC (Electronic Numerical Integrator and Com. digital conversion techniques. As a result. tem was seminal to the development of the com- The commercial aircraft sector—one of the puter and opened the doors to many military and nation’s largest net exporters—is perhaps the most civilian spinoffs. In particular. display. the rapid growth of commercial aircraft for over telephone lines. Software. air defense system. the United States against missile attacks. Inte- US Army Ordnance Corps for the purpose of grated circuit technology has since revolutionized quickly calculating trajectories and firing tables for electronics and made computers. algebraic computer languages.

Although French and British scien. ner of the Internet. Tomlinson was working SRI International. The first computer mouse ects in many different universities and private R&D was invented in 1963 by researcher Douglas Engel. DoD demand for custom software also facilitated the The Internet’s core technological innovations dif- growth in custom software firms between 1969 and fused widely through the US research and industrial 1980. the Internet was primarily invented The Global Positioning System (GPS). the personal assistant Siri began as a send messages between users on different hosts. growing dramatically until supporting technologies. resulting in the wide. Initially. Military-funded technologies and funding. and commercialized in the United States. In 1971. market entry by new firms. mail system—the idea arose in the course of his other munication with the private sector and expedite the research. the DoD was partly responsible field of packet switching. and adapted the technology for on other programming required for ARPANET and the iPhone. engineers. The US Internet industry it was finally outstripped by commercial industry in soon became a place of rapid innovation. By 1975. The world’s first electronic computer network. which it achieved by using the @ sign to separate nel long before Apple bought its parent company. research facilities were linked to it. ment of packet-switching and computer-networking technologies. DoD funding accounted for the bulk infrastructure and led to the development of many of the software industry. DoD required that all computers purchased by the ARPANET. users from their machines. In 1973. but the technology remained rela- tively obscure until it was exploited by Apple Mac. DARPA-funded initiative to support military person. Email. and the RAND Corporation. DARPA saw the potential for funding and overseeing the development of for military applications in the technology and COBOL (common business-oriented language). made significant developments in the with 24 satellites and proved capable of supplying 8 . programmer Raymond Tomlinson patents often sit on the shelf for many years before invented a system for sending electronic mail over the private sector takes advantage of them. it had grown to more spread diffusion of COBOL as a programming lan. funded by the DoD’s ments are ubiquitous today in numerous Web-based Advanced Research Projects Agency (now DARPA).US MILITARY TECHNOLOGICAL SUPREMACY UNDER THREAT Beginning in 1959. than 100 nodes. largely because of DARPA’s willingness to fund proj- The Computer Mouse. GPS was originally run institutions. with the the DoD developed a space-based satellite naviga- DoD playing a critical role. laboratories and to buy products from numerous bart at the Stanford Research Institute’s Augmenta. igation systems such as the US Navy’s 1960s Transit tute. During the 1960s. Email was an accidental spinoff of DoD R&D intosh in 1984. technologies and applications and represent a major The mouse enjoys widespread use with personal portion of the US economy. sev. as it was named. and computer programmers on pioneering research tists made important contributions to the develop. the Stanford Research Insti. Email is a perfect example of innovations military-civil technology transfer process. as universities and other defense guage in both military and civilian applications. It was the first system able to example. computers today. and intense competition. among other satellite navigation system. The Internet. projects using new systems and materials. The spinoffs of these invest- tion Research Center. tion system in an attempt to improve on earlier nav- eral researchers at MIT. was the earliest forerun- military support the language. different companies. one funded the development and deployment of the of the oldest computer programming languages. constant the 1990s.22 It has long been a matter of concern was not specifically assigned to develop an electronic inside the Pentagon to find ways to improve com. For the DoD’s ARPANET. that can transpire when federal defense R&D brings together the nation’s brightest scientists.

000 60.5 percent cut As figure 3 illustrates. but its military and commercial RDT&E account will have to compete with other impact has since exceeded anything the initial priorities in the shrinking defense budget. location and time information anywhere on earth in R&D is projected to decline in the coming years all weather conditions. grams when their benefits are delayed. but of defense cuts because it is often easier for short- it also has applications in everyday products such as sighted politicians to get away with cutting pro- television and radio. GPS ious procurement programs may manage to halt has revolutionized the global air traffic control sys.000 68. Congress 9 . Amidst tightening defense budgets and a steadily shrinking RDT&E account. cars. even traditionally popu- lar accounts such as Science and Technology (S&T) Current Trends in US Defense R&D Spending funding are coming up short. ing systems. Whereas var- such as highly accurate clock synchronization. Through features rising personnel and operations costs. The system initially and development sponsored by the DoD is expected gave the military critical new navigation and surveil. table 6-8. It has many advanced scientific uses.000 62. to see the steepest decline.000 2013 2014 2015 2016 2017 Source: US Department of Defense.000 70.23 More than ever.000 58. the RDT&E account is likely to absorb the brunt functions. given an unobstructed line of because of significant budget reductions.and nondefense-related spending began to decline in the late 1980s. the lance capabilities. Fiscal Year 2013 Green Book. mobile phones. Research sight to four or more satellites. The Obama administra- tion’s FY 2013 request represents a 2.000 66. cellular telephony. such as researchers could have envisioned. overall federal government from 2012 S&T funding levels.24 When defense spending on both defense.000 $ Millions 64. or at least delay them temporar- tem. funding reductions. MACKENZIE EAGLEN AND JULIA POLLAK FIGURE 3 RDT&E SPENDING CONTINUES FREEFALL 72. and bank.000 56. and numerous other civil ily.

see its manufacturing sources diminish. end of the decade. After 1993. Moreover. and a Navy unmanned aircraft) defense strategy documents. smaller pro- a casualty of falling toplines. as some of the examples we large-scale programs. depth. the congressional objective . time when the private-sector industrial research several other trends have emerged over the past 10 . the if aerospace competitor Lockheed Martin were to DoD S&T program is struggling to keep pace with rely on a strategy of selling the F-22 jet to foreign the expanding challenges of the evolving security partners (which it cannot).”26 The stark reality is that there is just not enough busi- The S&T program is widely believed to be imper. the DoD will struggle to keep of a falling topline and competing internal budget. . Although successive Pentagon strategy documents have pledged to maintain a robust and capable defense industry that can thrive and compete in the IN 2010. such as a next-generation have given illustrate. ness to go around. relatively robust levels of investment. these cuts can be expected to hit at a In addition to firm closures and consolidations. President Bill Clinton’s steep defense reduc.25 Although S&T spending initially continued purposeful and structured program decisions are to increase under the Obama administration. LEADING congressional language requires “that the United TO A TRADE SURPLUS OF $43. downward trend and made it official policy in the defense R&DTE funding is almost as important as 2001 Quadrennial Defense Review to stabilize S&T procurement contracts if a defense contractor is to funding at 3 percent of the overall defense budget. Aside from the optionally ative to maintaining technological superiority. the US military has no new manned air- each outlay because the time between initial craft under design. pro- duce and support military aircraft in the future. but it manned long-range strike bomber.29 This same study cautioned that “unless very mark. bomber and sixth-generation fighter. In the absence port for S&T spending is likely to wane in the face of such programs. This is in spite of the grams as currently planned (a combination of train- warnings contained in the administration’s own ing aircraft. may not defense cuts have made even this bipartisan priority be achieved. IMPORTS TOTALED $34 BILLION.8 BILLION WHILE trends raise doubts. the 30 major defense firms to consolidate into 5 and mately driving it back down to FY 1987 levels by the saw many companies exit the business altogether. As a result. congressional sup. among other things. tankers. defense industrial base is under strain and lacks however. In the defense aerospace industry.”28 The George W. After FY 1993.8 BILLION. Bush administration reversed the As a recent RAND Corporation study illustrates.US MILITARY TECHNOLOGICAL SUPREMACY UNDER THREAT initially defended S&T funding and continued to base is least able to make up the shortfall.”30 According to RAND. engineer. States must ensure. recent made soon. US EXPORTS OF AEROSPACE global marketplace. suppliers in a low-rate delivery status and will likely ary demands. for the first time is difficult to calculate the return on investment of in history. craft. for example. and even current. which state.32 Keeping two prime firms research and resulting new operational systems is healthy and competitive past 2025 would require often long and technological developments often substantial R&D and procurement investments in follow an indirect path. Clinton-era defense cuts forced tions started to cut into S&T funding as well.31 global technology development. ulti. that more than one aircraft company can design.27 recent studies and emerging PRODUCTS TOTALED $77. “Even at would sustain only one company (Boeing). Today’s authorize increases for several years. international sales would environment and the increasing speed and cost of sustain the company for only four years (2016–19). . retain the capabilities to produce fixed-wing air- although it never actually achieved that bench.

They economic trends. MACKENZIE EAGLEN AND JULIA POLLAK 20 years as a result of funding strains. they also face mounting political also invest in small start-up companies that are more opposition from those who argue that the govern- technologically cutting-edge and whose investors are ment’s money is better spent on other priorities. develop strategies to deal with new budgetary and vation networks of smaller external suppliers. encouraging public statements.36 Nevertheless. despite some private-sector R&D. both for. large defense companies have moved away from in.2 million individuals directly. rather. and purpose of defense programs to prioritize. In this sense. In mid-March. old model was “a successful model for a corporation in a stable environment. common refrain is that defense R&D “crowds out” RAND defense analysts worry that. One notable trend is that unmanned underwater vehicles. This is especially true in the normal economy. kets. defense R&D to small firms as a way to encourage innovation. the Navy which hurts the warfighter and our national deter- opened a cutting-edge laboratory devoted to research rence and global presence. A technologically dominant military guarantees ket changes so quickly that only highly specialized US companies undisrupted access to global mar- firms have the agility and personnel to stay on top. conducted in industrial laboratories or challenge for the DoD to sustain the scale. it will be a house R&D. such as lence. there are some promising but.34 Pol.35 more efficient private market for national defense Even amid cutbacks. Instead of managing internal research divisions and staff. is a public good that cannot be considered part of progress. defense spending operates on a According to Frank Kendall. market turbu. The study will seek to identify technolo. The assessment could influence the budget like the DoD. The RAND Corporation says that the funding remains robust. developments. the alternative allocation of R&D spending as soon as the fiscal year to federal investment in national defense is not a 2014 budget is made public in February. firefighting robots. on robotics and autonomous systems. 11 . toward greater competitive quality of research projects such as these unless outsourcing. larger companies in both While Pentagon leaders and pro-defense members the defense and nondefense sectors increasingly find of Congress try to navigate these challenges and themselves managing and organizing complex inno. for example. or ability to sponsor the kinds of research resources in the face of declining budgets. and other factors. and most important responsibility of government icymakers should consider expanding R&D funds under the Constitution. to conduct a study to determine which technologies The scale. the DoD currently However. no investment in national defense at all. defense is the first work for what such a policy should look like. and in R&D subdivisions. scope. and innovation necessary for an organization that the Pentagon has directed the Defense Science Board employs more than 2. but no the sustainment of innovation and superior warfight. One more prepared to bear the risks of innovation. To that end. other public-sector organization could exist and ing capability. length. where the mar. No civilian corporation has the resources. DoD plans to become more selective with its R&D reach. defense is supported by four principles appears to have no policy for increasing innovation that make it an exception to normal patterns of that acknowledges these changes and has no frame. government spending. areas like software and cyberwarfare. much of what companies produced is Obstacles to the Development of a Sound now outsourced to lower-tier contractors. and logistics.”33 but because of greater uncertainty. Moreover. In this context. technology. For one. under secretary of scale that is simply unknown to the civilian econ- defense for acquisition. makes them unique to the public sector—defense gies that will be pivotal over the next two decades to cannot exist outside of the public sector. the omy. Defense R&D Strategy eign and domestic. and sensor networks. and efficiency.

Defense exports can help reduce September 11 attacks all followed periods of inade- unit costs and spread the burden. and the changing locus of technology can take many years to specify. test. coherent defense program 12 . the Cold War. quate defense investment. It is true that a new piece of defense defense corporations. and the control restrictions. Provide Adequate and Stable Funding for sive. World War II. and the transfer or sale of technology observation. the prominent role A final argument in favor of redirecting defense played by research universities and industry. and among sectors and countries. and innovation all present new challenges. There was Of course. export controls. Here are some acquire. The following section lays to fulfill urgent warfighting needs. specialized. communications. and in the United States than in other countries because quixotic today could become commonplace within of the sheer magnitude of US defense-related R&D the coming decades. lic and private sectors while still maintaining the nologies are becoming increasingly specialized and security of critical defense technologies. let alone civil. most of which was often requires that US systems have unique features.US MILITARY TECHNOLOGICAL SUPREMACY UNDER THREAT Another common argument against the eco. no more hollow buildup in military spending than ments. and the R&D funding toward other priorities or abandoning DoD’s willingness to work with small. and other regulatory policy) affect- ful and far-fetched at first. the Vietnam War. as do pitfalls with defense R&D investments— the growth following 2001—which. Similarly. This argument. the ing the training of scientists. start-up com- them altogether is that defense programs are too slow panies. Including RDT&E. use. His- supply their products in only the limited—and often. directed toward funding the technological and man- which drive costs back up. Multisector Benefits lishment once believed that harnessing flight and developing aircraft would be too complex and risky The success of defense R&D investments and their a proposition ever to have a military. therefore less relevant to commercial industry and the civil sector. as well as technology. but this is largely because defense contractors Defense Modernization. requirements that Congress has established. the military’s aging inventories. of course. and procurement spending. a shrinking number of prime and expensive. did little to renew out some recommendations for how the govern. technolo. some truth exists in all of these argu. the wider markets abroad due to congressional export Korean War. civil technology transfer has been far more successful gies deemed excessively complex. The first studies suggesting that humans and structure of funding. spillover benefits are strongly influenced by the level ian. surveillance purposes were deemed similarly fanci. the development of influence of airplanes and helicopters. Today. but different coun. while being prevented from exploring intervening periods of peace. power requirements of the war of the day. It is also true that defense systems can be excessively expen. as well as by the policy might be able to send cameras into orbit for military environment (such as intellectual property rights. The US defense estab. Historically. but this is largely due to the onerous ways the DoD can address them. defense budgets have experienced event- changing—quantities that the government customer driven booms but then been raided during procures. Falling budgets.37 ment can improve the effectiveness of defense R&D This spending pattern has undermined the devel- and procurement and create an environment more opment of a stable. which has been repeated throughout history. torically. simply manifests a lack How to Structure Defense R&D to Maximize of foresight and imagination. conducive to technology transfer between the pub- nomic benefit of military R&D is that defense tech. navigation. defense- weather satellites is ubiquitous. while necessary as with any undertaking. Each event prompted tries demand different specifications and Congress sharp increases in spending.

as Steven Hayward and colleagues able on the open market. fewer projects than they might have in the past and therefore find the defense sector a less appealing Accept More Risk to Develop Novel Systems. may need to develop a different set of metrics for tech- ance requirements. as have numerous links between the DoD and the Department of independent defense analysts. even after current operations wind meant to keep sensitive technologies from falling into down. MACKENZIE EAGLEN AND JULIA POLLAK designed with sufficient regard for long-term goals. scientists are likely to work on reduce unit costs for the US military and taxpayer. work environment than high-technology firms such Many defense companies report that a major hin- as Apple or Google. The Penta. defense firms struggle to recruit uncertainty. but they often prohibit our defense might be roughly $73 billion in FY 2013 dollars— contractors from sharing technologies with allied and just about halfway between the peak of 2008 spend. Congress should also encourage the sale ing in population and rising in average age. Japan. programs. With a third of all science and engineer.39 Export control lists Energy and between research and procurement. moted sales to countries like Israel. increase the number of H1-B visas for highly skilled such as well-balanced modernization. with a of F-35 fighter aircraft to India. but the DoD will need to introduce cost overruns. and often the full benefits of cutting-edge eligible graduates. of increasing the R&D budget of the Department of The administration has proposed a number of Energy. preventing schedule slippages. ured against strict performance measures. The administration can military is so reliant. Congress should have pro- force is critical for continued innovation. Congress should consider the benefits loss of business and opportunity as a result. A reasonable benchmark for RDT&E spending the wrong hands. A skilled and highly trained work. minimizing coming years. and Canada. ers from selling products that are already widely avail- In addition. Export regulations are defense RDT&E. Congress should take steps to research are realized only decades after the initial 13 . With fewer would not only strengthen the United States strategi- defense programs and a smaller number of new cally by making our allies more capable but also program starts. and additional programs to maintain its stated goal of penalizing companies for poor performance. the defense industry’s workforce is declin.38 Congress should also establish closer reforms to address this problem. and the DoD should make an effort to most important reform that would encourage innova. new technolo- Current developments in unmanned aircraft sys. reduce the backlog for security background checks. tion and support a vibrant military R&D workforce and infrastructure would be for Congress to ensure Reform Export Controls and Promote Defense that adequate and stable funding is provided for Exports to Friends and Allies. The single workers. to should be consolidated and reviewed frequently so drive the successful commercialization and that items can be promptly “de-listed” once they no improvement of energy technology on which the longer need to be restricted. Instead of shuttering the F- and Engineers. Such foreign sales large percentage nearing retirement. such as lower performance standards or ing doctoral degrees from US universities awarded investment return thresholds. partner states. also explore closer partnerships with our friends and allies on the joint development of weapons systems Improve the Recruitment of Skilled Scientists and through foreign sales. The DoD gon and Congress should also review security clear. however. which pose a significant nological innovations than those used for ordinary challenge. Currently. drance to undertaking R&D on risky. Novel systems involve to foreign students. They also prevent defense manufactur- ing and the low point of the current drawdown. as meas- attracting the nation’s best and brightest. Australia. 22 fighter production line. gies is the government’s growing emphasis on tems are likely to sustain some excitement in the maximizing the return on investment. American workers suffer this have argued.

broaden. The Heritage Foundation has long been calling on Ensure Intellectual Property Laws Are Adequate Congress to “revitalize. and early test the development of computer software. In risks. For example. the DoD to the Private Sector and to State and opment Centers (FFRDCs). easy and quick termination of programs addition. rocket propulsion. the technology transfer process and the dual use of terterrorism technologies. a willingness to accept creation of ARPANET and ultimately the Internet. space acquisition strategy that is less tied to achiev. and internationalize and Favorable to Technology Transfer. ment restrictions for FFRDC researchers. the Department of Defense. According to Heritage’s military technology. too risk averse to enable the effective develop. and performance eras. Their studies study on weapon system acquisition: have played a central role in the development of numerous critical technologies. testing. The new strategy should include a largely responsible for developing packet switching focus on unique integrations of existing and and digital networks. DoD needs a separate nologies such as infrared detection sensors. RAND was also outcomes. agreements. and electronic transmission.42 Improve Incentives for Technology Transfer from Preserve Federally Funded Research and Devel. In a May 2011 memorandum. 14 . The Pentagon should ideas can promote the advance of technologies with consider restoring the original intent of research and the power to change the life of an entire culture. Consequently.”43 development funding by making it distinct from test. Congress should work with James Carafano.” a piece of legislation that encourages ture of a country’s patent laws strongly influences innovation by providing liability protection for coun. and eval. and the administration should encourage ing intellectual property while also publicizing other countries to establish comparable regimes to inventions and fostering the use of military knowl- promote global innovation and open new security edge in other applications. He also released new els spent on research and exploratory development as guidelines covering areas such as nondisclosure opposed to industrial development. This would allow the Pentagon to more read.40 paper summarizing RAND’s contributions con- cluded. reconnaissance and prompting investments in tech- tems. RAND made significant contributions to not yielding expected benefits. As a recent and demonstration of military utility. information access. technology markets. Congress ily prioritize potential breakthrough research while should ensure that these restrictions are targeted and controlling testing and evaluation costs. orbiting television cam- ing precise cost. the Pentagon value and unique capabilities that FFRDCs provide could provide increased transparency for funding lev. For the past 25 years or so. “[these advances] make a persuasive case that an organization whose sole job is to generate Keep R&D Funding Honest. then-Under Secre- ing and evaluation. the Current acquisition policies and processes are RAND Corporation. According to a recent RAND Corporation sponsored by the US government exist. played a central role in researching satellites for space ment and timely employment of novel sys. Congress should broaden the act to defense researchers to ensure that the US patent sys- apply to cybersecurity and other security technology tem is modern and adequate for the task of protect- needs. and postemploy- uation. The struc- the Safety Act.US MILITARY TECHNOLOGICAL SUPREMACY UNDER THREAT research. Nearly 40 FFRDCs Local Governments.41 do not unnecessarily impede the flow of nonsensitive technologies between the DoD and the private sector. Modernize and Internationalize the Safety Act. schedule. the original US think tank. By establishing a separate budget tary of Defense Ashton Carter emphasized the high category for testing and evaluation. vehicles. the technologies that led to the emerging technologies.

the Pentagon should compile a common ers are intimidated by mountains of red tape. Some of these rules include “revolving effectively leverage its resources by utilizing tech- door” restrictions and checks on conflicts of interest. DoD. often at a antitrust laws that facilitate cooperative research and cheaper price point than if the DoD were to issue a joint manufacturing. is the DoD should send representatives to major research law allowing government-operated laboratories to hubs and survey existing civilian technologies that enter into cooperative research and development may have a dual-use role. the DoD can more ventures.000 gon but have not been able to gain access. the federal government. This would have the effect of department-wide. conduct an internal review that determines which tives to encourage collaborative ventures and tech. All too often. A third solution is on the civilian side. THE private sector also invests through venture capital US MILITARY HAS NO NEW MANNED and private equity. index of all existing dual-use technologies within its and unpredictability when it comes to working with purview. The idea is to gather an exhaus. the commercial world. the Pentagon should encouraging outside ideas while forcing the DoD to 15 . requirement for that part to be constructed from One important incentive for the transfer and scratch. defense RDT&E account is not the only source of funding for defense innovation. Congress should explore ways to update these laws to facilitate rapid THE STARK REALITY IS THAT THERE IS technology transfer and commercialization. projects. potential suppli- For one. This can range from GPS satellites to the government. The MANNED LONG-RANGE STRIKE BOMBER. allow government and industry to communicate more easily about future needs.44 Approximately 2. which should be pur.45 A CRADA is a legal document defin. nologies that have already been developed for com- Some may need to be modernized and relaxed to mercial applications. MACKENZIE EAGLEN AND JULIA POLLAK Congress has established numerous legislative initia. according to the Department of but never had it occur to them to pitch the idea to the Commerce.600 to 3. hassle. For example. By being proactive and surveying what already ing the rules and regulations governing collaborative exists in the civilian economy. 2004 and 2008. One solution is for the DoD to com- switches in cockpits. The Pentagon can also improve its marketing to sued on a number of levels. pile a list of potential projects that the private sector tive list that illustrates how many programs—and can contribute—and then market it as an open com- how much money—goes into dual-use technologies petition to industry. Although many pro- industry. JUST NOT ENOUGH BUSINESS TO GO Develop a Comprehensive Strategy for Private AROUND. especially with regard to dual-use technologies. and state or local government grams will not have an obvious civilian counterpart. Many companies have a agreements (CRADAs) with universities and private. The commercialization of technology. vision to market dual-use technologies to the Penta- sector companies. ASIDE FROM THE OPTIONALLY Sector Investment in Defense Innovation. the FOR THE FIRST TIME IN HISTORY. for example. while oth- DoD CRADAs were active each fiscal year between ers may have perfectly usable dual-use technologies. academia. existing requirements could be met by dual-use nology transfers between federal R&D programs. products that are not already. These have included tax credits for indus. components of even sophisticated platforms may trial payments to universities for research and exist elsewhere in the civilian economy. Second. One way to deepen coopera- tion is through transparency. Yet the private sector often faces severe obstacles when it comes to cooperating with AIRCRAFT UNDER DESIGN.

coupled with the measures above. But defense R&D defense industry and its long-term R&D invest. meeting with firms involved to get an all. defense R&D help drive inno- Develop a Strategy for Mitigating the Negative vation and results in economic growth. and capital access as they to planes to GPS systems. Cutting R&D now may have kets affects its innovation strategy. or will it concern Amazon. However. Nonethe- other international experiences with monopsony. It underpins Effects of Monopsony. quences would not show up for years down the line. many of R&D funding.US MILITARY TECHNOLOGICAL SUPREMACY UNDER THREAT streamline the process through which commercial Conclusions technology is adapted to military use. the Ameri- private sector. Defense research and development spending is a would be a more efficient—and more effective— vital component of military modernization that can dual-use strategy. the DoD the information revolution. less. pay tremendous dividends through spinoffs and The Pentagon is not the only stakeholder with the applications throughout the broader civilian econ- ability to encourage closer cooperation with the omy. breakthroughs of the 20th century. tive conditions for domestic and foreign investment. itself only with the troubles of the present? 16 . From computers formance. Congress should collect data on can way of thinking about R&D provides powerful defense investment through venture capital and short-term incentives to reduce investment—after private equity. and keeps America safe. Military R&D spending has been after all. investment in defense confront procurement cancellations and delays and R&D has produced things we use every day and reduced federal spending on RDT&E. tremendous economic and social dividends. The choice before Congress is simple: will it make private sector “monopsonists. profitability. Despite these positive externalities. The end result of this. As a monopsony. Congress should also develop a better defense are charged with thinking beyond the pass- understanding of how a defense company’s stock ing concerns of today with an eye towards the salient market performance and treatment in capital mar. vitalizes the American has a unique opportunity to shape the future of the economy. As we have argued. private companies with shareholders—will responsible for many of the great technological be able to sustain R&D and maintain financial per. investment now will help Congress should also encourage the DoD to explore ensure the long-term safety and prosperity of Amer- the management lessons it can learn from other ica. Though this may squeeze other which have exhibited reductions in innovation. those responsible for the national Second. problems of tomorrow. Congress should beware of the lessons from the private sector is least able to take the hit. dire consequences. Congress should short-term benefits but in the long run may lead to investigate whether defense contractors—which are. accounts in the short term.” such as Walmart and a strategic investment in the future. there are options: first among these is to stabilize such as single-payer health care systems. cuts to R&D provide immediate returns for a overall sense of the defense R&D environment and of favorable balance sheet and any potential conse- the ways in which Congress could create more attrac. spending is declining precipitously—at a time when

US Government Accountability Office.defense. /how-israels-defense-industry-can-help-save-america/.S.nytimes. 14. 7.aia-aerospace. December 28. 141–2. October 4. Bill McMorris. 13. 142. 21.defense.” R&D Magazine. “Briefing on Department of December 2011. and Rosario Marín.” August 29. project-s-powering-new-iphone-4s/43315/. http://freebeacon 2445. 5 (October 2009): Reporting on Exported Articles and Services Needs to Be State Efforts to Expand Defense Trade. Arthur Herman. “Will China Outsmart the U. Defense Trade: Keeping 25. 63. http:// 18. March 2012. Yi-Chung Hsu and Chein-Chiang Lee.” 462. “The DARPA Project That’s Power- 9.defense. September 2010. 3 (October 2010): 335–49 (quote from 3. Overview—Fiscal Year U. 2011. US Chamber of Commerce. /groups/public/@trade/@mas/@man/@aai/documents/web 6. “National Security and National Innovation Battle among Japan. Ibid.pdf. “2012 Global R&D Fund. 19 (2012): Washington Free Beacon. “National Security and National Innovation Systems.gao. and America (New York: Systems. 139–40. Patents Shed Light on this Process?” Defense and Peace Eco- 112th Cong.. 2007.” 20. International Trade §365. . 8. 12. Adam .com/the-one-thing-he-wants-to-cut/.8 of US Department 347).html.pdf. April 17. AEI Calculations based on table 6.S. U.pdf. 3. “2012 Global R&D.: A Financial and Economic Impact Study.” national Evidence. Manuel Acosta. Daniel Coronado.pdf . Public Law 112-25.xlsx. “The Impact of . 17 . Defense Industry Can Help Save America. Head to Head: The Coming Economic 21.pdf. National Defense Budget Estimates for FY2013 org/assets/deloitte_study_2012.” Commentary. Aero- battelle. comptroller. February 2012. Test. Battelle Memorial Adam Clark Estes. Ibid. David Mowery. www. 2012. www. 2011. Military Technology Transfer on Economic Growth: Inter- 4. The Aerospace and Defense Industry in the 5. Budget_Request_Overview_Book. US Department of Defense. http:// Industries Association. 4–11. 1992). “The One Thing He Wants to Cut.?. Quadrennial Defense America Secure and Competitive. September 30. ing Forecast.” February 2012. of Defense. US Department of State. Defense Exports: New York Times. “Research. March 2012. Europe.” The Atlantic Wire. www. no. 2011). “Potential Dual-Use of Military Technology: Does Citing 2. The Aerospace and Defense Industry in the 24. Aerospace 2013 Budget Request.defense. See.commentarymagazine. space http://trade. 22. United States Department of _forecast. 23. for example.” 11. at http://comptroller. Development.uschamber Review Report. ing the New iPhone 4S.state. (Green Book). Mowery. no. US Department of Defense.” Journal of Technology Transfer 34. Deloitte. Deloitte. “How Israel’s _content/aero_stat_keyqtr. Lester Thurow.” June 2012.S.pdf. www. December 2011. 10.” Applied Economics 44. /pubs/qdr2001. Notes 1. Budget Control Act of 2011. http://comptroller 16. (August 2. Battelle Memorial Institute. 2001. and Evaluation Programs. nomics 22. 14. “Key U. William Morrow and Company. 2012/01/01/magazine/adam-davidson-china-threat. 2011. 29..htm. Ibid. 17. www. www. www. 338.S.

xxiv. Hayward et al.” American Enterprise Institute. Military 40. www. 42.” Inside 96-480. xvii. 2010).rand . tion Web Memo. 41. 2011). 1986). Public Law Technologies to Ensure Superiority in 2030. for example. 2011. Whose Future May 43. March 20. 30. 50. www. www. can Enterprise Institute.heritage. 81–82.” Base: A Crucial Asset of the United States.” White House Office Transfer. March 2010. (October 21. 2012. US Department of Defense.pdf. Ibid. Ibid. Ameri- /fdsys/pkg/CRPT-111hrpt166/pdf/CRPT-111hrpt166. Schultz. 380. www. Committee on Armed /defense/the-past-decade-of-military-spending-what-we- Services.rand. “Navy Opens Cutting-Edge Lab for Standards and Technology.. Meaningful Change: Rethinking Weapon System Acquisi- trial Base (RAND 96th Cong. 2012.pdf. February 2010. Virginia Campbell. “How RAND Invented the Post- Be in Jeopardy. 94. Mackenzie Eaglen. “Kendall Commissions Study of the Stevenson-Wydler Technology Innovation Act. 2002.pdf. James Jay Carafano. /tpo/publications/upload/Fed_Lab_Tech_Transfer_Report www. 27. Public Law 28. Department of /papers/energy-and-the-environment/post-partisan-power. MG1133. February 2011. National Institute of /2/defense%20ohanlon/02_defense_ohanlon. 45.pdf. Defense. What We Wasted. Michael O’Hanlon. and What /qdr/images/ /reports/2011/06/5-steps-to-save-americas-defense- /pdf/PLAW-107publ117. “From Marginal Adjustments to Aircraft Industry Aloft: Findings from an Analysis of the Indus. . National Defense Authorization Act for Fiscal Year spent-what-we-wasted-and-what-we-need. (October 20.whitehouse..defense. Steven F.nist. The Brookings Institution.” Invention & Technology 20.pdf.gpo. 31. 18 .pdf. See House of Representatives.US MILITARY TECHNOLOGICAL SUPREMACY UNDER THREAT 26. 29. Keeping a Competitive U. and US House of Representatives. 2012. Fiscal Year 2008. We Need. /2009/RAND_RP1396.aei. John Birkler et al. email to authors. John Birkler et al. June 20. Alan C. www. 1980).. www. MG1020. March 16.gpo. Public Law 107-117 (January 10. 99th Cong. Defense and Emergency Supplemental Appropriations for of Science and Technology Policy.” Heritage Founda- States Act. 2012. See. The National Security Industrial Industrial Base. 2002). 57. cutting-edge-lab-robotics-and-autonomous-systems. 8. Federal Laboratory Technology Robotics and Autonomous Systems. See the Federal Technology Transfer Act. www. industrial-base. Arthur Herman. www. xxix..brookings. “The Past Decade of Military Review Report. www. US Department of Commerce. October 2009).gov Spending: What We Spent. war World. January section 8162. Carafano. _Congress_FY08_3-8-2010. which amends 35. no. “Five Steps to Recovery from and Response to Terrorist Attacks on the United Save America’s Defense Industrial Base. 2010.aei. 2010 (Report 111-166. Ibid. 2004): 59. 1 (Summer 14.S. 44. “Five Steps to Save America’s Defense 32.. October 13. xiv–xv. 33. 99-502. Ibid. Post-Partisan Power. Jason Sherman.rand tion” (The RAND Corporation. Quadrennial Defense 37. June 9.

both House and Senate. blue-ribbon commission established to assess the Pentagon’s major defense strategy. where she studied defense strategy and military budgets. Eaglen served as a staff member of the congressionally man- dated Quadrennial Defense Review Independent Panel. budget. In 2010. Julia Pollak is a PhD student in policy analysis at the Pardee RAND Graduate School. and counter-WMD intelligence. and the defense industrial base. She specializes in defense strategy. Her research interests include military intelligence and defense manpower. About the Authors Mackenzie Eaglen is a resident fellow in the Marilyn Ware Center for Security Studies at AEI. Army intelligence organizational design. military readiness. Her most recent work includes studies of compen- sation design in the military. She has also worked as a research assis- tant for defense studies at the Heritage Foundation. and at the Pentagon in the Office of the Secretary of Defense and on the Joint Staff. A prolific writer on defense related issues. she has also testified before Congress. a bipartisan. 19 . She has worked on defense issues in the US Congress.

5800 | Cover: US Army Photo . DC 20036 202.aei.862. NW Washington.AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH 1150 Seventeenth Street.