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the entire federal homeland security R&D budget to support increased investments in basic and applied research.

  • On the applied R&D side, search for technologies that can reduce costs or provide ancillary benefits to civil society to ensure a sustainable effort against terrorist threats.


Traditionally, US government programs were the primary driver for research into new defense-related technologies. DOD relied on a dedicated domestic industrial base, supported largely by the results of generous DOD-funded R&D in the commercial sector and universities.

That Cold War model no longer exists because of the deep cuts in US defense research investment already discussed and the dramatic increases in private-sector R&D investment, particularly in the high-technology areas such as information and communications technologies essential to transformation. The US government has attempted to come to terms with this new situation through a variety of initiatives to enable it to take advantage of innovation from the commercial sector that could “spin on” to enhance military capabilities.

The dramatic consolidation and increasing globalization of many sectors of the traditional defense industrial base also have encouraged US efforts to find ways to enhance technology cooperation with close friends and allies. In the decade following the end of the Cold War, the 15 major US defense contractors shrank to four huge firms (see Figure NHS-4).11 Many US defense firms have embraced a global business model, and non-US firms, primarily from Europe, have gained access to the US defense market on their own or in cooperation with US companies.12

These fundamental changes in the sources and structures of innovation for national security have also made it easier for US adversaries to gain access to knowledge and technology that could improve their capabilities.13 Policies to draw on innovation from firms in the commercial sector with global mar-


A. R. Markusen and S. S. Costigan. The Military Industrial Challenge. In A. R. Markusen and S. S. Costigan, eds. Arming the Future: A Defense Industry for the 21st Century. New York: Council on Foreign Relations, 1999. P. 8.


“Transformed? A Survey of the Defence Industry.” The Economist, July 20, 2002; K. Hayward. “The Globalization of Defence Industries.” Survival (Summer 2001).


See, for example, National Intelligence Council. Mapping the Global Future: Report of the National Intelligence Council’s 2020 Project. Washington, DC: National Intelligence Council, December 2004; Defense Science Board Task Force on Globalization and Security. Final Report. Washington, DC: Office of the Under Secretary of Defense for Acquisition and Technology, 1999.

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