TOKYO — Since the October 2015 establishment of the 1,800-strong Acquisition, Technology and Logistics Agency, Japan’s Ministry of Defense has been attempting to streamline its acquisition process and facilitate private-sector research and development. Results have been mixed.

In doing so, the MoD launched a new program to funnel more spending to Japanese scientists. The same year, ¥300 million (U.S. $2.7 million) was budgeted for the program. That doubled to ¥600 million (U.S. $5.4 million) in fiscal year 2016 and is set to rise to ¥11 billion (U.S. $98 million) in fiscal year 2017 as the MoD tries to build a research cadre in Japan’s academic sector that will benefit defense procurement later.

The establishment of the Acquisition, Technology and Logistics Agency, or ATLA, came on top of an April 2014 relaxation of defense export rules allowing cases that will contribute to global peace and serve Japan’s security interests, leading to the July 2014 sale of Patriot Advanced Capability-2 missile interceptors to the United States. ATLA’s new job is to try to better connect disparate R&D efforts to produce new outputs.

“We understand that China is very active, and we always want to stay ahead and secure technological superiority, and we are using this fund more actively to stimulate research in industry and academia,” said Takahiro Yoshida, director of ATLA’s Aircraft Project Management division.

Backers of the new strategy are banking ability or likelihood of success based on leveraging a series of Japanese civil technologies such as robotics, AI and machine learning and advanced materials, said Steven Ganyard, president of Avascent Global Advisors.

“The rise of a belligerent China and [North Korea] means that Japan can no longer afford a defense procurement process divorced from reality. Japan builds … products like C-2, P-1 and F-2 when they could be buying the best in the world for a fraction of the price. No other country in the world operates like this,” he said.

Bob Nugent, vice president of advisory at AMI International, a Washington state-based naval consultancy, said that he continues to see a focus on underwater technology, unmanned vessels, both underwater and surface and advanced technology in acoustics and C2.

Nugent said that all of these technologies lined up well with existing Japanese industrial and operational strengths in submarines and related systems, and contain these are R&D areas with considerable overlap in related commercial offshore oil and gas and clean energy applications.

Nugent said that if Japan’s increased R&D does focus on key areas like underwater platforms and systems, a similar result could be obtained in air and missile defense. Lastly, underwater warfare and air and missile defense are two areas of long and close collaboration between the U.S. and Japanese defense R&D organizations. The result could be to their mutual advantage in terms of gap filling and division of effort of partner countries, he said.

But while there is potential for spin-off from a host of technologies in Japanese basic research labs in the corporate sector, Ganyard called overall defense R&D budgets far too small to support any sustained and broad-based innovation, especially since much of it is focused on reproducing technology already perfected elsewhere, he said.

“Until Japan adopts requirements-based R&D and procurement that is focused on the best possible technology at the lowest price, there can’t be the kind of defense reform that the country so desperately needs,” Ganyard said.

A second issue is creating a pathway to get excellent technologies out of the labs by building an incentive system, he said. While Japan is relatively sophisticated in importing technologies, the Ministry of Economy, Trade and Industry, which controls export transfers, has yet to work out guidelines.

“Because METI continues to stifle defense exports, the Japanese defense industry is ossified, never able to get beyond the modest requirements of the MoD and dictates of the Ministry of Finance,” Ganyard said.

Masahiro Matsumura, professor of International Politics and National Security at St. Andrew’s University in Japan and a widely recognized expert on Japanese defense procurement, suggested that a fundamental disconnect between academia, corporate R&D funding and defense procurement remains that will be difficult for Japan to overcome.

“Post-war pacifist Japan lacks warfighting experience, battlefield data and feedbacks, except exercise and simulation, while it possesses good dual-use elements technologies and general dual-use system integration technologies,” said Matsumura.

As a result, the MoD has not taken full advantage of a range of technologies due to the lack of intermediating seed-finders. The Japanese private sector will, he said, remain passive until the MoD or the Self-Defense Forces side takes initiatives.

More In Top 100 Companies