The procurement of innovation by the U.S. government

What are the outcomes of U.S. government investments in R&D procurement, particularly regarding patent generation?

The U.S. government allocates over $50 billion annually for R&D procurement, which has significant implications for innovation and public policy. However, the actual innovation output from this massive investment—particularly in terms of patents—remains poorly understood. Gaining insights into the effectiveness of these expenditures is crucial for shaping future R&D policies, optimizing funding allocations, and enhancing the overall innovation landscape.

We constructed the 3PFL database, which categorizes all patents linked to federal R&D procurement contracts and grants from 2000 to 2013, using 20,229 records and multiple data sources, including USAspending.gov and the European Patent Office. This involved a multistep process of matching patents with corresponding funding identifiers and analyzing the characteristics of contracts and resulting innovations. We also analyzed 6,946 contract–patent pairs to investigate factors influencing the gestation lag of patent filings.

Of all R&D procurement contracts, only 1.5 percent led to patents, amounting to 13,330 patents associated with these contracts by 2013. Notably, a 1-percent increase in contract size correlates with a 0.12-percent increase in patent output. Additionally, patents filed more quickly tend to be more valuable, as reflected by their citation rates, indicating significant decreasing returns related to contract size.

• 20,229 records in the 3PFL database covering contracts and grants linked to patents between 2000-2013
• 6,946 contract–patent pairs used for regression analysis
• The data are derived from USAspending.gov, the U.S. Patent and Trademark Office, and the Clarivate Web of Science

• The gestation lag for patents is influenced by the type of R&D stage associated with the contracts
• Patents with shorter gestation lags have a higher probability of achieving greater citation counts
• Contract size has a positive but diminishing effect on the number of patents generated