Investing.com - A new report from a leading Washington think tank advises President-elect Trump and Department of Defense Secretary-Designate Mattis to "leverage" the nearly $1 trillion in commercial R&D that is undertaken in the U.S. each year as they devise the strategy and design parameters for new defense technology programs in the coming years.
Major defense contractors like General Dynamics Corporation (NYSE:GD), Lockheed Martin Corporation (NYSE:LMT)., and Boeing Company (NYSE:BA), as well as countless, small-and-midsize developers, shares of which are reflected in the S&P Aerospace & Defense Select Industry index, would be impacted by the new strategy and procurement policies of the Trump administration.
"The Department of Defense (DoD) could leverage the almost $2 trillion of global commercial research and development (R&D) more effectively, mitigate the risks of overruns and program cancellations - from $58 to $116 billion between 1997 and 2015 -- and better manage its operational and maintenance costs,” the authors from the think tank, The Center for a New American Security report. “Above all, this strategy will help the DoD avoid the incalculable costs of losing the nation’s military-technical advantage.”
According to the study, the Pentagon must "recognize" that its military-technical challenges are a matter of strategy, and that the fundamental approach the department takes to generating technological advantage is not simply an element of acquisition policy.
The study, entitled, Future Foundry: A New Strategic Approach to Military-Technical Advantage, concludes that the Trump transition to power gives American strategists "a special opportunity to pause and rethink" how the Pentagon can foster innovation and what is the the optimal way to integrate all the elements of the military R&D and the commercial R&D sectors.