Prizes incentivize major contractors to develop emerging tech like AI

The NDS contained a powerful signal for industry as well — DoD is seeking to institutionalize technological innovation, going so far as to say “We [DoD] will be a fast-follower where market forces are driving commercialization of militarily-relevant capabilities … and speed their delivery to the warfighter.” The NDS goes on to state that DoD must transform the foundation of the future by “incorporating emerging technologies in the commercial and military sectors that solve our key operational challenges.”

The 2022 NDS language follows work that has been going on for several years. In 2021, federal agencies obligated $3.8 billion to nearly 7,000 companies under Small Business Innovation Research (SIBR) programs, which test technologies for feasibility for US Government applications. Of that, DoD alone awarded $1.6 billion. While this is positive, accelerating technological dynamism is not simply about making federal dollars flow to startups — it’s about making sure those startups evolve into sustainable businesses and their technology transitions into DoD programs.

There’s an easy, clear path for that to happen: by turning to the biggest defense contractors and providing them the right incentives to invest their cash towards non-traditional defense firms, especially those making big bets with little safety net.

In 2021 alone, the top six Defense Primes received over $120 billion in defense contracts. Those same six companies invested over $6 billion of Independent Research and Development (IRAD) funding — just five percent of their massive collective income. Even a small portion of that could money move mountains for tech startups if it was applied externally.