America swapped innovation for stagnation. Defense R&D—a cornerstone of American industrial policy—is synonymous with declining state capacity.

Key Takeaways

  • Modernizing the defense industrial base will require streamlining the acquisitions process and removing perverse incentives that discourage innovation.
  • In a recent report, Anduril Industries, a defense tech startup, outlines various policy recommendations.
  • Suggestions include modernizing the procurement system and attracting top software talent.
  • Enabling DoD to manage a nimble, innovative defense-industrial base is critical to restoring American state capacity more broadly.


The history of industrial policy in the United States is inseparable from the history of the U.S. defense budget. From GPS and the internet to the interstate highway system, innumerable technologies and infrastructure projects that reshaped the American economy can trace their origins to defense-related investments.

Unfortunately, the era of dynamic and farsighted defense procurement seems increasingly far behind us. The decline of defense innovation is bad for U.S. national security and military readiness. More generally, it does not bode well for our industrial prowess and state capacity.

In a recent report, Rebooting the Arsenal, Anduril Industries, a defense tech startup, calls for a renewal of the defense industrial base. Anduril is known for manufacturing unmanned vehicles and developing operating systems for military technology. That experience with hardware and software contracting provides the firm with unique insight into the military acquisitions process. Citing the Pentagon’s historic role in funding R&D and commercialization, the report outlines deficiencies in the federal innovation and acquisitions process and proposes several structural reforms. Anduril elevates several strategies to eliminate bureaucracy, attract top talent, and incentivize innovation. While the devil is always in the details, it is encouraging to see private industry commit to restoring state capacity.

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