The Effect of Defense-Sponsored Innovation Programs on the Military’s Industrial Base

Abstract

The Department of Defense (DoD) spends billions of dollars annually to fund innovation programs, rapid acquisition programs, and small business outreach programs (“innovation initiatives”) with the stated or implicit objective of attracting innovative commercial companies outside of the traditional defense industrial base. However, by analyzing publicly-available DoD contract award data from 2010 through 2019 and government records for thousands of participants in DoD innovation initiatives, this paper demonstrates that the majority of companies that participated in innovation initiatives over the last decade had existing ties to the defense market. In addition to quantitatively analyzing the types of companies that leveraged these programs, this paper also explores the history of the DoD’s innovation initiatives, how the department markets these programs, and why these programs have largely benefited firms already entrenched in the federal market. We also make a series of concrete recommendations for how the DoD can better market and structure these programs to attract and engage new, innovative companies.