The U.S. Defense Department’s investments in research, development, testing and evaluation (RDT&E) include a number of shortcomings in aligning with the nation’s defense strategy when it comes to China, including the need for more spending on next-generation technologies and broadening the contractor base receiving R&D investments, according to a new report from the data analytics firm Govini.

The report points out that the 2018 National Defense Strategy (NDS) highlights key emerging technologies necessary to win future wars, citing the strategy’s focus on advanced computing, big data analytics, artificial intelligence, autonomy, robotics, directed energy, hypersonics, and biotechnology. Yet, it says, spending on traditional weapons outpaced that on the emerging technologies between fiscal years 2015 to 2019.

“For example, manned platforms received almost four times as much RDT&E funding ($19.5B) as unmanned platforms ($5.4B),” Govini says in America’s Eroding Technological Advantage: National Defense Strategy RDT&E Priorities in an Era of Great-Power Competition with China.

The report doesn’t find all investments out of alignment between traditional and emerging needs. In another example, Govini reports that investments in munitions and long-range fires, which are emphasized in the NDS and military service operational concepts, increased nearly 34 percent from FY ’15 to FY ’19.

Still, the report highlights another area where it believes DoD RDT&E investments are probably out of balance. It says most of U.S. spending on air and missile defense is to defend against ICBMs targeted at the homeland while China is spending on long-range ballistic and cruise missiles that threaten U.S. and allied forces in the Western Pacific and Europe.

Govini says “the threat from massed cruise missiles salvo attacks also presents a significant challenge for friendly forces and bases operating within combat theaters.”

Over the five-year investment period analyzed by Govini, the report shows that 59 percent of awarded RDT&E contracts that align with the priorities of the NDS in emerging technologies went to 10 defense contractors led by Lockheed Martin [LMT] with $26.1 billion, and followed by Raytheon [RTN] at $13.6 billion, Northrop Grumman [NOC] with $13.5 billion, Boeing [BA] $12.3 billion, General Dynamics [GD] $5.6 billion, Bechtel $5.4 billion, Massachusetts Institute of Technology $4.8 billion, Analytic Services Inc. $4.5 billion, BAE Systems $2.7 billion, and MITRE $2.6 billion.

“Expanding the vendor base will enable DoD to capitalize on the nation’s top sources of innovation across the NSIB (National Security Industrial Base), such as small businesses conducting specialized R&D or those in key tech hubs,” Govini says. “DoD is making strides diversifying its vendor base as use of nontraditional contracting mechanisms that target more innovative companies grew by 67% for FY15-19.”

The report highlights that in the areas of advanced autonomous systems, which also includes artificial intelligence, unmanned platforms, and high-powered computing, only 41 percent of RD&TE spending went to the top 10 vendors over the five-year period. However, in the areas of ballistic missile defense and upgrades to legacy systems, the report says 90 percent and 70 percent of investments respectively when to the top 10 vendors.

“These trends demonstrate that not only does DoD have to properly balance spending on emerging and traditional technologies but it also has to develop new key vendor relationships in emerging fields,” the 26-page report says.

The report says that over the five-year period DoD’s RDT&E investments grew by 40 percent and were expected to eclipse $100 billion in FY ’20, which ended last Sept. 30. But, it says, expected increases in spending in other DoD accounts will pressure RDT&E spending, which is projected to be the same in FY ’33 as it was in FY ’17.

“As overall RDT&E funding levels decline in real terms, DoD will be forced into harder tradeoffs that challenge sacred cows,” Govini says. “As this occurs, needed modernization of traditional weapons must not crowd out investment in emerging technology or DoD will struggle to maintain a technological advantage in the future.”