NCPA - National Center for Policy Analysis

Tech Firms Abandoning Military R&D

October 22, 1999

A military contract used to be cause for instant jubilation within top corporations. But today more and more top-notch high-tech companies are saying "no thanks" to Pentagon research and development offers.

Observers say that in a surging economy characterized by a voracious consumer appetite for new high-tech products, firms would rather serve that market than fight the red tape attached to Pentagon contracts.

  • Leading companies such as Intel, IBM, DuPont and General Electric have sold or shut down their defense research-and-development businesses in recent years.
  • Pentagon officials report that three-quarters of the country's top 75 or so information-technology companies will no longer do research for the military.

These developments are reflected in statistics on patents awarded.

  • The U. S. Patent Office awarded 1,271 patents to the armed services in 1971 -- or 1.6 percent of total patents issued.
  • Last year the figure dropped to 585 -- just 0.4 percent of total patents issued .
  • By contrast, U.S. companies received 66,062 patents last year -- 45 percent of the total and a 50 percent increase over 1971.

The closing of the Cold War and reduced military budgets have played a part. Military R&D spending is expected to total $38 billion in fiscal 2000 -- down 30 percent from its inflation-adjusted peak in 1989.

Private sector sources say the Pentagon's R&D requirements are a bureaucratic morass. One company reports being confronted with a 60-page contract just for one job worth $100,000.

Source: Kathy Chen, "Pentagon Finds Fewer Firms Want to Do Military R&D," Wall Street Journal, October 22, 1999.


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