America's Navstar GPS satellites. Soon to be superfluous? Photo: US Air Force.

Technically speaking, the Pentagon's top-secret weapons lab, "DARPA," stands for the Defense Advanced Research Projects Agency. You could just call it the Defense Department's office of "Wow!"

Since its inception in 1958, DARPA has played a role in the creation of such technological wonders as the Internet (once known as ARPAnet), humanoid and animal-form robots, unmanned aerial vehicles of all shapes and sizes, and even Global Positioning Satellites, or GPS. DARPA's latest project -- "C-SCAN" -- has the potential to improve and perhaps even replace GPS.

10 times more interesting than C-SPAN
Teaming up with Northrop Grumman (NYSE:NOC) as its primary contractor, DARPA is working today to integrate micro-electro-mechanical systems, called MEMS, and atomic inertial guidance technologies, forming a new "single inertial measurement unit" in a project designated the "Chip-Scale Combinatorial Atomic Navigator" -- C-SCAN.

Translated into plain English, what C-SCAN aims to accomplish is to create a chip that performs the functions today served by orbiting GPS satellites. The chip would constantly "know" where it is in space-time, and would have this knowledge without having to ping a satellite (and maintain line-of-sight communication with a satellite) to do it.

Micro Pnt
What C-SCAN might look like when complete. Source: DARPA.

Why do it?
If you've ever tried to access the GPS system on your car while parked in a garage, and been unable to do so while the device is "searching for satellites," you'll understand the usefulness of a device that can perform like GPS, without need for actual GPS. Elimination of the need to rely on satellites to determine one's location would similarly enable the use of "GPS-like" technology for getting directions within buildings and underground -- for example, in subway systems.

So C-SCAN has obvious civilian applications. Of course, DARPA's primary aim is enhancing the functioning of the nation's military. And C-SCAN would be invaluable for that purpose.

Why we need to do it
One of the primary vulnerabilities in today's hi-tech, ultra-accurate weapons systems, you see, is their dependence upon GPS signals to guide them to their destinations. American "smart bombs" and guided missiles all depend greatly on GPS to know where they are, and to get where they're going. American dominance in drone technology, similarly, depends on GPS.

Problem is, while we know this is a problem, the "bad guys" know it, too -- and can sometimes hack GPS signals so as to confuse, and even hijack, American weapons systems. Case in point: in 2011, Iran boasted that it had commandeered and captured a Lockheed Martin (NYSE:LMT) RQ-170 Sentinel -- one of our most advanced "stealth" surveillance drones -- in flight over Iranian territory. The Iranians didn't have to shoot the drone down, either. Instead, they forced it to land in Iran, and captured it intact. According to Iranian engineers, this was accomplished by first jamming communications with the Sentinel's remote controllers, then "spoofing" GPS signals, tricking the drone into landing at what it thought was its home base in Afghanistan -- but what was actually an Iranian airfield.

Drones equipped with a future C-SCAN technology would be less likely to fall victim to such a trap. While their communications might be cut off, forcing them to default to autopilot and return to base, they'd at least return to the right base, because an internal chip would tell them how to get there.

The future is now
Current weapons systems often include internal gyroscopes, granted, that perform some of the functions that C-SCAN aims to perfect. But as DARPA observes, present-day gyroscopes are "bulky" equipment, "expensive," and don't perform with the kind of accuracy that DARPA wants to see.

The objective, therefore, is to explore cutting edge technologies to put gyroscope-like functionality on a chip, resulting in "small size, low power consumption, high resolution of motion detection and a fast start up time" -- all loaded onto one small microchip.

What it means to investors
If DARPA succeeds with C-SCAN, it will have obvious benefits for the nation's bombs, missiles, and drones -- but it would also benefit Northrop Grumman as DARPA's primary collaborator on the project. Last quarter, Northrop saw its revenues decline 4% as the U.S. government increasingly tightened its belt on defense spending. Market researcher IBISWorld recently released a report projecting that total U.S. government spending on defense would shrink 2% annually, year after year, over the next five years. But by helping the U.S. government solve one of its most vexing defense problems, Northrop could help secure as big a piece as available, of the shrinking defense pie.

Indeed, it might help to grow that pie. Microchip-based guidance could be the solution the military is seeking to an oft-discussed problem with the nation's newest generation of Mach 7 railguns, whose great range, speed, power -- and cheapness -- make them an attractive weapons system... if we can only figure a way to guide their projectiles accurately.

Miniaturized, GPS-like guidance systems-without-satellites would be even more crucial for introducing this technology into civilian applications. While you could probably attach a gyroscope to your smartphone, you might have trouble getting it to fit in your pocket. But put the gyroscope on a chip?

Voila! Instant GPS functionality, indoors and out.

That's a future worth buying into, for defense investors, and tech investors alike.

Leaked: Apple's next smart device (warning, it may shock you)
When it comes to investing in hi-tech, Northrop's certainly one choice -- but Apple is usually the more obvious choice. Apple recently recruited a secret-development "dream team" to guarantee its newest smart device stayed hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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