The procurement of innovation by the U.S. government

The U.S. government invests more than $50 billion per year in R&D procurement but we know little about the outcomes of these investments. We have traced all the patents arising from government funding since the year 2000. About 1.5 percent of all R&D procurement contracts have led to at least one patent for a total of about 13,000 patents. However, contracts connected to patents account for 36 per cent of overall contract value. The gestation lag from the signing date of the contract to the patent filing is on average 33 months and does not depend on the type of R&D performed. Patents that are produced faster also seem to be more valuable. We find strong decreasing returns to contract size. Conditional on generating at least one patent, a 1-percent increase in the size of an R&D contract is associated with 0.12 percent more patents.