Each Tuesday BFAD features a guest blogger- these are experts from a variety of backgrounds writing about what they know best. This week features Patrick J Clemins, Director of AAAS R&D Budget and Policy Program.
Research and Development in the FY 2010 Defense Budget
by Patrick J Clemins
Historically, between 50 and 60 percent of the federal R&D investment is made in defense. Most of this investment (93.6 percent in FY 2010) is made in the Research, Development, Test and Evaluation (RTD&E) account in the Department of Defense (DOD) with smaller amounts coming from Atomic Energy Defense Activities at the Department of Energy and other programs within the DOD. The only other agency with greater than a ten percent share of the federal R&D investment is the Department of Health and Human Services (21.0 percent in FY 2010) which includes the National Institutes of Health. Therefore, the DOD is the most influential contributor to the federal R&D portfolio.
FY 2010 Budget Overview
The FY 2010 budget request proposes $3.6 trillion in spending and a $1.3 trillion unified debt. In contrast to the budget request in past years, this includes military costs in Iraq and Afghanistan. With the new administration comes a shift in discretionary spending. According to projections in the FY 2010 budget proposal, the federal government will spend almost as much on non-defense as defense in FY 2009, due in large part to the American Reinvestment and Recovery Act (ARRA), and the gap between defense and non-defense spending will continue to be much smaller through 2014, averaging $6 billion, than it has been in the last 5-6 years when defense spending outpaced non-defense spending by as much as $90 billion in FY 2008.
This shift in discretionary spending is reflected in the R&D portfolio. While total federal R&D spending will remain relatively flat between FY 2009 and FY 2010 (not including ARRA), there is change in priority as the proposed budget contains a decrease in defense R&D spending of $1.7 billion, but an offsetting increase of $2.2 billion in non-defense R&D spending. The increase in non-defense spending focuses on four R&D investment priorities outlined by the Obama administration including (1) investing in the sciences for a prosperous America, (2) a clean energy future, (3) healthy lives for all Americans, and (4) a safe and secure America. These priorities are reflected in a plan for doubling the basic research budgets of the National Science Foundation, the Department of Energy’s Office of Science and the National Institute of Standards and Technology’s Science and Technology Research and Services (STRS) program; an increase in the Department of Energy’s energy programs (5.4%); and an increase in Homeland Security funding (23.8%) across various agencies. However, despite this shift in R&D investment priorities, defense R&D spending continues to outpace non-defense R&D spending by $20 billion.
Breakdown of the Defense R&D Investment
Currently, the defense R&D investment consists of programs at the Department of Defense and the Department of Energy. The Department of Homeland Security used to house defense R&D programs, but these were transferred out by FY 2007. The Research, Development, Test and Evaluation (RDT&E) account in the Department of Defense contains the great majority of defense R&D spending with $78.6 billion in the FY 2010 budget request. Atomic Energy Defense Activities in the Department of Energy add $4.0 billion in FY 2010 to the defense R&D portfolio and other R&D investments in medical research, personnel, and construction at the DOD contribute $1.4 billion in FY 2010.
In the RDT&E account, the R&D investment is divided into eight types of investment. The first, denoted 6.1, is basic research and is comparable to other investments in the federal government categorized as basic research. The second, 6.2, is applied research and is equivalent to other investments categorized as applied research. The third, 6.3, is advanced technology development and is analogous to development activities in other agencies. Four of the other DOD categorizations, 6.4 – 6.7, are advanced stages of development, manufacturing, testing, and management and together is referred to as weapons development. The last type of RDT&E investment is classified programs, denoted 6.9. The first three types of investment, 6.1 – 6.3 are collectively labeled science and technology (S&T) and represent the initial stages of the innovation cycle that are typically performed in a university or lab, while the last four stages, 6.4 – 6.7 represent the final stages of the innovation cycle that are commonly referred to as product development.
Congressional Action on the Defense R&D Investment
Currently, we are waiting for the House and Senate to conference their individual versions of the Defense appropriations bill. Each year, as the Defense appropriations bill makes its way through Congress, programs get cut and created, and budgets get increased or decreased. The appropriations process for the defense budget is unique from the twelve other spending bills in that each year an authorization bill is passed which authorizes the maximum amount that can be appropriated to each account. Most other authorization bills authorize a specific agency or program for multiple years at a time. The Defense authorization bill was signed into law by President Obama on October 28, 2009. The authorization bill will be referred to when appropriate in the following breakdown of FY 2010 defense R&D spending.
Research, Development, Test and Evaluation (RDT&E)
The House version of the Defense appropriations bill has provided $80.2 billion for the RDT&E account, a $1.6 billion (2.0 percent) increase over the President’s request ($78.6 billion) and a small increase of $216.1 million over FY 2009. The Senate version of the bill would provide less for RDT&E programs, $78.5 billion. The two programs that have been the center of debate in this year’s defense appropriations are the VH-71 Executive Helicopter and the F-35 Joint Strike Fighter’s alternative engine. The President’s budget cut both programs and President Obama has threatened a veto of the Defense appropriations bill if the VH-71 program is funded. The House appropriations bill funds both programs, while the Senate appropriations bill funds neither. In the authorization bill, which has been conferenced by both houses and signed by the President, the F-35 Joint Strike Fighter alternative propulsion system program was authorized in the amount of $430 million for RDT&E and $180 million for procurement and the President’s request for the VH-71 Presidential helicopter was agreed to, effectively canceling the program, but Congress “strongly encourage(s) the Department of Defense and the Executive Branch to consider a complete range of alternatives” for the President’s transportation requirements. The appropriations bill could still cut funding for the F-35 alternative engine, but since this program has received a large amount of attention already, the authorization’s conference decision to authorize funding will probably be respected unless there is a strong push to reduce the cost of the overall bill.
While the President’s request proposed a large decrease in Army S&T, 39.4% compared to FY 2009, both the House and Senate greatly reduce that decrease. The House version of the bill provides $1.0 billion more than the President’s request of $1.85 billion. This would reduce the decrease from FY 2009 to 6.2%. The Senate version of the bill provides $635 million more than the President’s request, an 18.6% decrease over FY 2009. Programs seeing big increases over the President’s request were medical technologies, combat vehicle technologies, and weapons and munitions technology.
The Navy portion of the RDT&E account was the source of the most discrepancy between the House and Senate bills. The House Navy RDT&E total was $20.2 billion, $1.0 billion more than the Senate figure. The Navy RDT&E account is home to the VH-51 Executive Helicopter Program and approximately half of the F-35 Joint Strike Fighter program, the two most contentious programs in the RDT&E account, thus the large difference in appropriation amounts.
Air Force RDT&E
While the total budget numbers are nearly equal for Air Force RDT&E between the House and Senate bills ($28.0 billion; 6.1% increase over FY 2009), the distribution of the budget between the programs varies greatly. The Air Force RDT&E account contains approximately half of the F-35 Joint Strike Fighter program of which the House funded more generously ($293 million more than the Senate) to support the development of the alternative propulsion system. The Senate version funds the next generation aerial refueling aircraft at $410 million, while the House bill funds the program at $440 million, but transfers the program out of RDT&E.
Defense Wide RDT&E
The House bill provides $20.7 billion for defense-wide RDT&E, while the Senate bill funds defense wide projects at $20.4 billion. DARPA is singled out for scrutiny in both bills with the House bill containing a $200 million undistributed reduction while the Senate adjusted the funding levels of a number of DARPA programs significantly. The Senate bill also differs from the House bill in that it reduces the ballistic missile defense testing program by $188 million and reorganizes the AEGIS ballistic missile defense program program, taking $222 million from the core program to create a related $257 million program with the purpose of developing the SM-3 missile further.
Department of Energy
The Energy and Water appropriations bill was signed into law by the President on October 28. Defense R&D spending in the law totals $3.9 million, $182 million (4.8%) more than in FY 2009, but $72 million (1.8%) less than the President’s request. The Naval Reactors program (14.6% increase over FY 2009; $116 million) and the Defense Environmental Cleanup program (118.8% increase over FY 2009, $38 million) were the big increases for Department of Energy defense R&D spending.