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What is the U.S. Federal Government’s Role in Creating Innovation?

The following is a guest post by our friends at Bard College's MBA in Sustainability Program (a 3p sponsor) - for the business leaders of the future who recognize the importance of all business moving towards true sustainability—economic, environmental, and social.

By Brady McCartney

In light of Tesla Motors' May 2013 announcements that the company earned its first quarterly profits in its 10-year history and, subsequently, repaid its loan from the Department of Energy (DOE) nine years ahead of schedule, it seems like an appropriate time to revisit the question: Can Congress and federal agencies play a significant role in developing innovative solutions to the nation’s most intractable problems? In modern American history, one must look no further than the Defense Advanced Research Projects Agency (DARPA) to make the case that the federal government can play a role in creating and promoting innovation.

DARPA’s History of Innovation

DARPA was created in 1958 in the midst of the Cold War. ARPA (the agency's name until 1972) was the lead agency in space-related technology until the National Aeronautics and Space Administration (NASA) was founded in 1960 and ARPA’s civilian programs were transferred to NASA. With its space activity behind it, ARPA refocused its energies on cultivating military ideas that other agencies would not or could not develop such as ballistic missiles and nuclear test detection systems.

In 1973, Congress passed the Mansfield Amendment, which limited defense research through ARPA to projects with “direct military application” and ended ARPA’s focus on dual-use (military and civilian) technology. It was at this time that ARPA officially changed its name to DARPA. The timing of these changes coincided with the maturation of DARPA’s ARPAnet, the precursor network to the Internet. In hindsight, Congress seems shortsighted in enacting the Mansfield Amendment of 1973. After all, ARPAnet and the concepts behind it would go on to transform the U.S. economy when they were made available to the civilian population and the Internet was born.

When the Vietnam War ended, industrial competitiveness began to trump defense concerns as the primary driver of research. During the 1980s and 1990s, the U.S. government’s focus on international competitiveness grew and R&D funding for dual-use technologies returned. It was during this time that DARPA’s connection to the computer industry and Silicon Valley resurfaced. In particular, DARPA successfully made the argument that semiconductors were integral to defense technology and an important technology to produce in the U.S. rather than buy from Japanese semiconductor companies. Thus, 14 companies within the semiconductor industry received funding from a five year, $500 million DAPRA grant to pursue a technology now found in devices such as computers, radios, and solar photovoltaic panels.

When President Bush took office and appointed Tony Tether to head DARPA in June 2001, the agency’s focus on dual-use technologies once again came to an end. Though the agency’s mission has shifted, DARPA has continued to show Congress and other federal agencies how to successfully innovate within the federal government.

Keys to DARPA's long-term success

While it is difficult to break DARPA’s keys to success into bullet points, the following series attempts to highlight characteristics of DARPA that have contributed to its long-term success:

  • Series of visionary leaders: While their visions have differed, DARPA’s leaders have focused its efforts on innovation.

  • Stable Funding: Because it is connected to the DOD, DARPA’s funding is more stable than agencies under the umbrella of other federal agencies.

  • Utilization of pre-existing resources: DARPA does not own or operate any laboratories or facilities. Industry and universities perform the majority of DARPA-sponsored research. DARPA leverages technical, contracting, and administrative services of the DOD and branches of the military. This provides DARPA with the flexibility to delve in and out of an area of interest without hiring new staff with the added benefit of building cooperative alliances and creating a constituency outside of DARPA for technology adoption.

  • Agile agency: DARPA employs only 140 technical professionals. It has an exemption from Title V civilian personnel specifications, enabling leaders to quickly hire and fire outside the structure of the standard civil service process.

  • Project-based model: DARPA organizes its work around specific challenges and empowers it project managers to do whatever it takes to execute the mission. Although individual projects typically last three to five years, major technological challenges are addressed over longer time periods and broken into pieces, keeping funding consistent and teams together for ongoing collaboration.

  • Revolutionary breakthroughs: DARPA focuses on radical innovation. The agency is able to attract top talent because of the high concept work and length of service flexibility. DARPA has a culture of iteration, allowing for technical failure if the payoff from success will be great enough.

While one can argue about the value of its various advances, DARPA has “invented the future” as much as any one entity in the U.S. The current Congress would be wise to remember DARPA’s history as it continues to debate the 5 percen across-the-board cuts of the Sequester—already affecting agencies like Advanced Research Projects Agency-Energy (ARPA-e), an agency within the DOE that was intentionally designed to replicate the model and successes of DARPA—and considers the country’s future budgetary priorities.


The author, Brady McCartney, is currently a dual MBA/MS degree candidate at Bard College’s MBA Program in Sustainability and Center for Environmental Policy as well as a researcher at Resources for the Future. Follow Brady on Twitter.

[Image Credit: Wesley Fryer, Flickr]

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