Tried technology... Funny, but I think you just nailed the problem. And it's more within the scope of philosophy of science than anything else. The point is: our civilisation still has no idea how to fund applied science.
There are three main areas of science. Two are well understood and funding for them is well organized. The third one, perhaps most interesting, is a big unknown from the management side.
Disclaimer: I'm looking at this from the other side of the pond and applying my local experience. I wish to do applied science but have no funding mechanisms available for that.
We know how to deal with basic science. You have an idea, a hypothesis, whatever, you want to research it. You have no idea whether it's useful for anything - it's not really important to you. OK! Show that it will expand our general knowledge in a meaningful way. Funding is generally civilian (through the government in most cases). The results are judged using your publications. If you can get published and others cite you, you have increased our knowledge, congrats. Someday someone may build something useful that would be impossible without your work. Cool. The hypothesis is the core.
We know how to deal with R&D. You have an idea how to do something well known better using new technology. Or something new, using known technology. Show that you have a good chance of succeeding, then you get the funding. You might get some funding from the government, from the military, commercial R&D also fit here. If it seems to be a likely success, you get the money. The funding is based on weighing ROI (or other metrics) against the risk of the project - higher, if the technology is new. You may fail, that's accepted, but the risk should be relatively low - you know what you are doing. The application is the core.
Then we have the applied science. You have an idea that some well grounded scientific theory might be useful for a certain application. There's nothing out there proving that yet. You want to find out whether your idea is right. The application is clear, the theoretical side is clear (you need a theory here, not just a hypothesis, otherwise it's basic science), but neither is the core. The risk of failure is very high - if you knew it will work it would be R&D - but you focus on the application, not just gathering knowledge, it might not be very publishable, it might not increase general knowledge much - so, not basic science either.
We have no idea how to fund and manage something like this. Even though this is the road towards real breakthroughs. R&D is only incremental. Basic science has no direct application. Applied science is what moves us ahead. The risktakers mostly lose, but the ones who succeed move us forward to the next era of technology.
In this case the Pentagon seems to have decided that R&D is unlikely to provide the required advantage. R&D is predictable. It is a part of the race between armor and weapon. Protection gets better, but threats develop as well. The only thing that could jump ahead is a radical new idea. Something new that would be very hard to counter. Applied science. But the Pentagon had no management tools, procedures, etc. to handle something like that. So, procedures aimed at R&D were used. A prototype was required from the start - wrong. The decision on whether to continue funding the project was delayed until a prototype could be tested - wrong again.
It is a far more general problem. We need to learn how to conduct applied science in a responsible way. How to create research milestones that make sense and that allow the project to be halted (without prejudice - as a sunk cost) as soon as it becomes obvious that the proposed approach does not show a good chance of success. There are counterexamples, but in general this is something we don't seem to be able to do in a consistent way.
That's the only reason the money could be called "wasted". It made perfect sense to try these approaches. But letting them go this far and generate such costs - that's a proof that management of this type of projects is an art we simply haven't grasped yet.