Last week we explained the different types of money that comprise the Pentagon’s research, development, test, and evaluation (RDT&E) budget—vital intel for anyone in the defense tech sector.
That said…
Policymakers, appointees, and politicians like to use the top-line figure of the Pentagon’s RDT&E budget ($131B this year) as a proxy for measuring technology development and innovation for the military…
…but it’s a dumb proxy for 2 reasons.
Reason 1: Not Inclusive
This mental shortcut assumes all technology the military uses comes from military-funded RDT&E accounts. Wrong.
R&D is also done in procurement, modernization, and some O&M accounts. Take the $10.9 billion advanced F-22 Raptor upgrade. Lots of bleeding-edge tech is going into that, and it's not coming from the labs…probably (see Reason 2).
Then there is something called IRAD. This subsidized R&D is an arrangement where large private companies (ahem, primes) do R&D and then bill the government for their work. That’s ~$5B a year in government funding that tech startups don’t have access to, btw.
Finally, the blinding flash of the obvious is that most R&D happens in the commercial sector, not the government. In fact, commercial R&D has outpaced government R&D investments every year for the past 30 years, and continues to grow further apart each year.
The government should be chasing the outcomes of what commercial R&D is producing, which is why you’ve likely heard all the screaming about commercial innovation and government stagnation.
In fact, 6.1 basic research is the only segment
of RDT&E where the federal government still provides a majority of funding, though half
of this military appropriation goes to universities—not government research labs.
Despite these facts, the Pentagon is still pushing hard to get Congress to help with the $5.7B of upgrades it says it needs for aging defense-focused labs and testing facilities.
Steve Blank says it best: “the government has world class labs and organizations…for a world that no longer exists.”
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