Defense companies make calculated bets on new technologies.

• Author: Magnuson, Stew

The road to long-term economic recovery lies in the nation's ability to create innovative technologies that will result in tomorrow's jobs.

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That was the philosophy behind President Obama's call to make permanent for U.S. corporations a research and development tax credit that has been extended yearly since 1981.

"I ... believe that government should do for the people what they cannot do better for themselves," Obama said in a September speech. "And that means making the long-term investments in this country's future that individuals and corporations can't make on their own: investments in education and clean energy, in basic research and technology and infrastructure."

The private sector needs incentives because companies don't do "long-term" very well, said one industry technologist. Short-term pressures to make profits often force companies to be more risk averse.

"It's something corporations struggle with because nobody wants to invest in the long term anymore," said Ed Campbell, executive vice president of Raytheon BBN Technologies.

"Certainly in the country there is a lack of patience for letting technology develop," he added. "You look around for some of the corporate labs that used to exist. Many of them don't exist anymore."

Three companies that work in the defense sector and have a reputation for coming up with innovative technologies--BBN, Rockwell Collins and FLIR--were asked how they invest in long-term projects that may or may not lead to new products.

Company representatives all said they did not rely solely on government contracts from service laboratories or other agencies to lead their research and development efforts. And all said they plowed portions of their profits back into long-term R&D projects. However, none were willing to go into blind alleys. At the end of the day, there has to be something they can sell.

John Miller, director of the Army Research Laboratory, explained how the synergies between industry and the military work, and how they have benefited both sectors, and society at large.

Many ubiquitous technologies widely used today were originally funded by Defense Department investments in basic research that came out of Defense Advanced Research Projects Agency or the service laboratories. Specialized materials found in personal electronics such as cell phones are examples. The private sector--after seeing that the developmental risk had been reduced--adapted the technology for...