The Mil & Aero Blog
Wednesday, April 27, 2011
  Are we on the verge of a new era of technological innovation?

When it comes to military technology development, everyone knows it's been tough for the past year or so. Research money from the Pentagon has slowed to a trickle, contracting has been stretched out or cancelled altogether, and uncertainty in defense budgets has encouraged companies to hold on to their cash for as long as they can.

Still, there are encouraging signs that the culture of military technology development may be changing. Don't get me wrong, it's more in the realm of tough-love than it is in prospects for more government funding, but if the defense industry plays its cards right, we may be on the verge of a new era in technological innovation, with the added benefit of tossing out some of the old, inefficient business practices in the bargain.

First, there are indications that defense technology companies aren't waiting anymore for internal research and development (IRAD) money from the Pentagon. Instead, they may be more inclined to fund crucial research themselves without government help. Second, Pentagon officials -- at least in their rhetoric -- appear to be favoring fixed-price contracting these days, rather than older contract vehicles that inadvertently encouraged low-ball bidding and cost overruns.

Together, these two trends have the potential to shake the defense industry out of its old way of doing business, and perhaps spark a new and efficient way of developing aerospace and defense technology.

Companies that fund their own IRAD are betting on their own success with their own money. Those who do so are more than likely to pick the strongest and most promising technologies. Second, an emphasis on fixed-price contracting rewards the most nimble and efficient companies, and those that are good at fixed-price contracting will be the winners in any upcoming industry shakeout.

This is no guarantee that such a transformation is in the works. Even if it is, this process will take a long time -- five to ten years, most likely. No one -- in industry or in the Pentagon -- is comfortable with a new way of doing business. Left to their own devices, all concerned would rather remain what they've been comfortable with for years.

Still, if pressure is applied long enough and strongly enough, we might be seeing the start of something big. After all, history shows us that the dinosaurs eventually die out, and the mammals take over.
 
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