Federally funded, high-risk, capital-intensive research and development is critical to ensure the flow of innovation that provides the basis for a sustainable competitive advantage for U.S. vendors. The modern industry structure of aeronautics places a significant element of the vitality of the R&D enterprise with supply chain vendors. This issue paper describes changes in the commercial aircraft industry that have lead to an increased role of the supply chain in the R&D of aircraft components. It evaluates the allocation of federal R&D funding to the supply chain relative to the increased role of the supply chain in performing R&D. It also examines the roles that federal R&D agencies can play in overcoming inefficiencies in R&D that are inherent to a distributed supply chain.
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