How the Admiralty encouraged private aviation research

Did the semi-private studies behind early Hermes concepts misdirect Admiralty money?

No; the Admiralty bought legitimate yard products while making clear that it valued promising research the Treasury could not fund directly.

The Admiralty maintained an informal but purposeful relationship with its suppliers. Orders for useful ships, guns, or equipment could keep a capable firm working while it pursued a promising idea at its own nominal expense. Vickers, for example, developed a dive-bombing sight despite official Air Ministry hostility to dive bombers. The arrangement helped naval aviation retain technical options that a rigid project-by-project funding system might have lost.