How DoD Policy Affects Private Expenditure on Independent Research and Development: A Comparison of Empirical Studies
RAND CORP SANTA MONICA CA
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The Department of Defense DOD maintains a policy that is designed to reimburse defense contractors for a portion of their spending on Independent Research and Development IRD. DOD pays for a great deal of research and development directly through contracts. IRD is research and development that DOD does not contract for directly. IRD policy is designed to encourage defense contractors to invest in this form of research and development despite the lack of direct contracts for research and development. It is often associated with Bid and Proposal BP funds, which DOD provides to contractors in a similar way. Those who support maintaining the independence of IRD argue that it increases private spending on defense research and development, provides defense options that government officials may not think of, and enhances the transfer of technology from scientists to weapons developers by giving developers a direct stake in the scientists work. Section II presents a simple economic model of IRD. Section III uses this model to review the economic approach taken in each study. Section IV compares the studies estimates of the size of subsidy created by IRD policy and the effects of IRD policy on private spending on IRD. Section V concludes the comparison and suggests directions for future research.
- Administration and Management