This article examines how the Defense Advanced Research Projects Agency (DARPA) has evolved from one of the most imaginative and important technology development institutions in the United States to one constrained by political sensitivity, industrial decline, and bureaucratic inertia. By contrasting that golden age marked by ARPANET, stealth, GPS, and breakthrough computing with the current era of wild prototypes and abandoned systems, we explore what has changed in DARPA’s environment and why it no longer produces world-changing capabilities. The analysis focuses on three structural flaws: political interference, industrial risk aversion, and perverse incentives that reward programs that never reach completion.
DARPA was founded in 1958 after the Soviet Union launched the Sputnik satellite. DARPA’s mission was to restore U.S. technological leadership and ensure that the United States defined the frontiers of defense innovation. Operating outside the traditional military bureaucracy empowered them to take risky bets on long-term research with the aim of inventing entirely new categories of military capabilities rather than improving existing systems.
DARPA’s Golden Age
DARPA’s early decades, from the 1960s to the 1990s, were defined by its extraordinary ability to translate theoretical research concepts into working, world-changing systems. At the height of the Cold War, the United States maintained a dense cluster of industrial research labs, elite universities, and brilliant technology factories that could absorb DARPA’s experimental vision and turn it into practical infrastructure.
ARPANET, the ancestor of the modern Internet, remains the clearest example. It was a long-term bet on networked, packet-switched communications that matured over the next few decades into the public Internet, the backbone of the world’s digital economy. DARPA’s fundamental advantage in this era was not its talent, money, or secrecy, but its tight ties to an industrial ecosystem that could absorb radical ideas and turn them into deployed military assets. It is a capability that the United States no longer possesses.
ARPANET IMP – The beginning of something big
With a blue prototype – the predecessor of the F117
political restrictions
DARPA’s mission changed dramatically in the early 1990s, when Director Craig Fields was fired as he expanded DARPA’s work into dual-use, commercially relevant technologies, particularly semiconductors. His firing sent a chilling message: DARPA can innovate, but not in a way that reshapes the trajectory of American industry. The change reflects the mainstream neoliberal belief that governments should avoid “picking winners and losers,” and effectively prevented DARPA from pursuing ecosystem-shaping projects that once spawned new industries.
These constraints deepened throughout the 1990s, reducing DARPA’s freedom to explore politically sensitive and industry-disrupting technologies. When the Integrated Information Awareness counterterrorism research program emerged in the early 2000s, political backlash reinforced the restrictions already in place. DARPA managed TIA’s lab and funded advanced prototype data analysis tools, but it did not operate any surveillance systems or collect actual personal data. However, this debate made clear that crossing political boundaries now comes with institutional implications. By the mid-2000s, DARPA was no longer allowed to serve as a driver of national technological progress.
industrial decline
The collapse of America’s diversified industrial base and the consolidation of defense contractors has fundamentally changed what DARPA can accomplish. In the 1970s and 1980s, DARPA could hand over radically unconventional designs to companies like Northrop, Lockheed, and Hughes and expect them to iterate quickly by engineers empowered to take risks. Currently, five Mega Primes rule the world. Their financial model rewards predictability, long contract cycles, and incremental improvements to traditional platforms. Innovative DARPA prototypes now threaten, rather than complement, the remaining mega-prime revenue streams. As a result, many of DARPA’s breakthroughs disappear not because of technical failure, but because of industry’s lack of appetite to develop them into field systems. This is the second structural flaw.
perverse incentives
DARPA can still produce amazing prototypes, but modern defense acquisition systems no longer provide a pathway to move them to current capabilities. Programs that produce successful demonstrations, such as autonomous air transport aircraft, hypersonic gliders, and autonomous surface ships, often stall because procurement requires interservice agreements, stable funding over multiple years, and a willingness to disrupt existing doctrine. The system now rewards starting programs instead of exiting them. Extending the schedule, not field ability. And instead of increasing military strength, they will commission research. This is the third and final structural failure. In other words, the emergence of a perverse incentive system where success is risky and failure is profitable.
valley of death
Defense analysts refer to the dangerous gap between a successful prototype and a fully funded military program as the “valley of death.” In theory, DARPA would hand over promising technologies to the service for adoption. In practice, handoffs have become nearly impossible. Modern acquisition rules require multi-year budgeting, rigorous requirements processes, and alignment of service principles, all of which strongly favor established platforms over disruptive new features. As a result, DARPA projects that have shown clear technical success in recent years often stall in the absence of services to sponsor acquisitions or restructure existing force programs. The Valley of Death has now grown to the point where it acts as a structural barrier. A place where groundbreaking work is celebrated, explained, studied, and then quietly set aside.
Case study: UCAV at work
DARPA’s X-47 unmanned combat aircraft program demonstrated that a stealthy, autonomous attack aircraft can operate from an aircraft carrier deck. Execute coordinated missions. And in a competitive environment, they fill the role traditionally assigned to manned aircraft. Despite these remarkable technical successes, the program ended the moment it reached a transition point requiring a service sponsor. The Navy restructured its mission to emphasize surveillance rather than attack, protecting the budgetary and institutional advantages of manned tactical aviation. Without services to support procurement, the project fell into the valley of death. The Air Force’s parallel X-45 program also demonstrated success in autonomous attack operations, but suffered the same fate for similar reasons. Both Russia and China are moving toward fielding high-performance stealth UCAVs such as the S-70 Okhotnik and GJ-11 Sharpsword. This is exactly the category that the US pioneered with its X-45 and X-47 programs before they were canceled.
X-47 UCAV – rejected by naval aviators
Russian Sukhoi S-70 Okhotnik UCAV – Notes similarities to X-47
conclusion
DARPA’s decline is not the result of internal failures. It is the result of a deteriorating defense ecosystem. During the ARPANET era, the United States had the political confidence, industrial depth, and bureaucratic flexibility to absorb and exploit DARPA’s boldest ideas. Today, DARPA continues to dream big, but those dreams are now colliding with political caution, industrial risk aversion, and perverse incentives that punish success and reward stagnation. DARPA’s innovative imagination remains intact. It is the surrounding countries that have failed, no longer having the institutional capacity to turn breakthrough ideas into national capabilities.
