Private Sector Outspends Defense Contractors in R&D

Compared to Silicon Valley natives and the heavy hitters in the tech industry, top U.S. defense contractors spend far less on research and development creating potential weaknesses within U.S. defense infrastructure.

Last year Amazon spent over $22 billion company-wide on R&D. That’s almost ten times more than longtime government contractor Boeing, which allocated just over $3 billion to research and nearly twenty times more than Lockheed Martin. A recent paper from the Council on Foreign Relations partially attributes this wide discrepancy in spending to the long-winded procurement systems that the government uses to obtain software development contracts.

To secure a contractor, the relevant bureau must create a specified set of requirements, take bids, select contractors, and then execute programs so that they meet the original set of needs. The CFR report estimates that it can take two years to secure a contract and then additional time to test, approve, and prototype work. When the bureau finally uses the finished product, it may no longer match what the government needs, particularly for fast-moving fields and industries like software development.

As tech innovates, the federal government is trying to as well. In 2015, the U.S. government funded less than half of all basic research in the country for the first time since World War II. That same year the Department of Defense started testing out the Defense Innovation Unit to help streamline procurement processes in major tech hubs like Austin, Boston, and Silicon Valley.