Pentagon R&D spending would drop by about one-third under the White House’s 2027 defense-spending proposal—but the impact of that $4.5 billion reduction might be cushioned by the tech industry’s willingness to fund its own research.
The proposed drop, which echoes a similar cut in the first Trump administration’s 2020 proposal, was outlined in Friday’s record-breaking $1.5 trillion defense-spending request.
Basic research spending would fall $3.7 billion from this year’s appropriated amount. Most of that—$2.6 billion—would be borne by the Space Force, but reductions would also hit the Army ($173 million), Navy ($529 million), Air Force ($150 million), and the Defense Department-wide account ($202 million).
Applied research funding would drop by about $1.3 billion. The Army’s pool would drop by $1.312 billion while the Navy and Air Force would each lose $150 million. But the DOD-wide account would gain nearly $600 million and Space Force would edge up $56 million, both buoyed by Golden Dome missile-defense work.
The documents released on Friday don’t provide any real explanation for decreasing research spending, although one alludes cryptically to “unnecessary spending and excessive bureaucracy” and “woke frivolities.”The new proposal comes as the White House has already worked to reduce non-defense spending on science and technology research —for example, by 22 percent in the fiscal year 2026 budget.
“While the United States is dismantling the very foundations that have sustained our STEM and innovation leadership for generations, Beijing has announced its plans to continue accelerating its investments in science, technology, and innovation,” says a Nov. 5 letter from Rep. Raja Krishnamoorthi, D-Ill., ranking member of the House Select Committee on the CCP.
China is increasing its spending on basic and applied research in a wide number of areas in what could be called dual-use technology. Its government says it allocated $569 billion for research and engineering last year. The number is in line with a broader trend of year-over-year increases that have boosted government-funded science spending to 23 times its 2000 level.
Decreases in U.S. government funding for military research and development don’t necessarily mean less basic and applied research funding overall—not when you factor in private-sector spending. Venture capital funding for new defense startups–which largely goes to R&D–is steadily rising.
New and established technology companies that specialize in dual-use products spend more of their own money on R&D than do traditional defense contractors, KPMG reported in January.
Ukraine provides an excellent example of what a newly re-wired industrial base can look like. By some estimates, the country boasts more than a thousand defense startups that are finding customers across continents—and all with very limited government help. The Ukrainian government has allocated about $20 billion for military R&D this year. Ukrainian companies have leaned into information technology, rapid innovation, and continuous experimentation to produce new weapons on short timelines.
Kurt Freshley, a former Marine who leads growth for technology company Valinor, says his company is “encouraged by signals that the Department wants to open the industrial base to new entrants.”
But Freshley said a larger topline for DOD doesn’t necessarily mean more money for new competitors.
“The rewiring question will be answered not by the overall number, but by whether new entrants can compete and deliver,” he said. “If the procurement architecture actually creates room for new companies to compete, if this budget delivers on that, it’s genuinely significant.”
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