Driven by Stimulus Funding, Federal R&D Obligations Increased 18% in 2020; Largest Year-to-Year Change since 1963

Of the $25.0 billion increase in FY 2020 federal R&D obligations, $19.5 billion came from stimulus funding (table 2). While the additional stimulus funds accounted for 78% of the total increase in federal R&D, these funds were highly concentrated within two Departments, namely HHS and DOD. Specifically, 91% ($17.8 billion) of stimulus funds obligated for R&D came from HHS, while DOD accounted for 8% ($1.5 billion) of total stimulus funds for R&D.

Within HHS, 81% ($14.3 billion) of stimulus funds obligated for R&D came from BARDA, with another 19% ($3.4 billion) of the HHS total coming from the National Institutes of Health (NIH). Within DOD, 65% ($998 million) of the DOD stimulus funding came from the Defense Health Agency (table 2). Although several other agencies received stimulus funds that were used for R&D, 99% of stimulus funding were obligated by HHS and DOD due to their roles in OWS. OWS was a partnership between the DOD and HHS—including from within HHS: BARDA, the Centers for Disease Control and Prevention (CDC), and NIH—for the purpose of accelerating the development and distribution of COVID-19 vaccines, therapeutics, and diagnostics.^{​See U.S. Department of Health and Human Services (HHS). 2020. Fact Sheet: Explaining Operation Warp Speed. Available at https://web.archive.org/web/20201219231756/https://www.hhs.gov/coronavirus/explaining-operation-warp-speed/index.html.} OWS was transitioned to the White House COVID-19 Response Team in early 2021.^{​See Congressional Research Service (CRS). 2021. Operation Warp Speed Contracts for COVID-19 Vaccines and Ancillary Vaccination Materials. CRS Insight IN11560. Available at https://crsreports.congress.gov/product/pdf/IN/IN11560.}

Federal agency obligations for research, including both basic research and applied research, accounted for 51% ($85.3 billion) of all federal R&D obligations ($167.4 billion), while obligations for experimental development accounted for 49% ($82.1 billion) in FY 2020. Although over half (52%, or $44.2 billion) of all research obligations are from HHS, the department’s share of experimental development is only 19% ($15.8 billion) (figure 2). Those shares contrast with DOD’s 10% share of research ($8.9 billion) and 70% share ($57.8 billion) of all federal experimental development. While federal obligations for research increased 5% from FY 2019, most of the growth in total R&D between FYs 2019 and 2020 came from experimental development, which increased 34% year to year (figure 3).

In FY 2020, federal obligations for experimental development increased $20.8 billion (34%), nearly five times that of research obligations ($4.8 billion, 5%).^{​Experimental development is creative and systematic work, drawing on knowledge gained from research and practical experience, which is directed at producing new products or processes or improving existing products or processes. Like research, experimental development will result in gaining additional knowledge.} Total FY 2020 obligations for experimental development totaled $82.1 billion, up from $61.3 billion in FY 2019 (figure 3). While DOD’s obligations for experimental development increased $7.3 billion between FYs 2019 and 2020, BARDA’s obligations for experimental development rose from $736 million in FY 2019 to $15.7 billion in FY 2020. These increases were largely the result of stimulus funds for COVID-19 vaccine development under OWS (table 3). As a result, HHS became the second-largest funder of experimental development in FY 2020 with $15.8 billion. NASA obligated the third-largest amount of experimental development at $4.1 billion in FY 2020, down from $5.5 billion in FY 2019. The Department of Energy’s (DOE’s) obligations for experimental development remained stable at $3.0 billion in FY 2020.

Federal R&D funds are obligated to a variety of different performers (table 4). Most (69%, or $115.9 billion) of the federally funded R&D in FY 2020 was obligated to extramural performers, of which the industry sector accounted for 31% ($51.4 billion) of total federal R&D obligations. Universities and colleges accounted for 23% ($38.5 billion), federally funded research and development centers (FFRDCs) were 8% ($13.2 billion), and nonprofits at 6% ($10.7 billion) of total federal R&D obligations. However, specific agencies fund different sectors disproportionately. For example, while the industry sector was the largest recipient of extramural federal R&D, nearly 69% ($35.2 billion) of all obligations to industry were from DOD. Similarly, 62% ($23.9 billion) of obligations to universities and colleges come from HHS, with most funds ($23.2 billion) obligated by NIH.

The federal sector itself (intramural R&D) received the largest amount of FY 2020 federal R&D obligations, with $51.5 billion (table 4). However, data users should note this amount includes not only obligations for the conduct of R&D within federal labs and facilities but also includes the transfer of R&D funds within the federal government from one federal agency to another. Specifically, agencies are instructed to include funds transferred to other agencies as federal intramural while agencies receiving funds are instructed to exclude those funds from their survey submission.^{​Survey instructions to federal departments and agencies specifically instruct: Include the full cost of R&D, both specific project costs and overhead costs. Include both intramural and extramural R&D programs: cost of planning and administering of R&D, laboratory overhead, pay of military personnel, and departmental administration, and include funds your agency transferred to other agencies for R&D. Do not include funds your agency received from another federal agency. The transferring agency will report those funds. See Non-DOD questionnaire, page vi at https://nsf.gov/statistics/srvyfedfunds/surveys/srvyfedfunds-2020-2021-non-dod.pdf and the DOD questionnaire page vi at https://nsf.gov/statistics/srvyfedfunds/surveys/srvyfedfunds-2020-2021-dod.pdf.} This practice is consistent with guidance provided to federal agencies by the Office of Management and Budget (OMB), Circular A-11, Section 20.^{​For additional information, see Office of Management and Budget (OMB). 2021. Preparation, Submission, and Execution of the Budget, Section 20(j)(4): Recording Transfers in the Budget: Expenditure Transfers. OMB Circular No. A-11. Washington, DC: OMB. Available at https://www.whitehouse.gov/wp-content/uploads/2018/06/a11.pdf.} Following this guidance, BARDA reported $9.9 billion in intramural R&D obligations, but most of this was a transfer to DOD under OWS to fund vaccine development, which DOD would later issue to extramural performers in the form of grants and contracts. As such, although the final disposition of these funds is determined by DOD, they are reported by the originating agency, BARDA, as federal intramural.

Some federal agencies’ R&D obligations are almost exclusively for activities within their own labs and facilities; for example, in FY 2020, 96% ($1.5 billion) of the U.S. Department of Veteran Affairs’ R&D was intramural and 100% of the Smithsonian’s R&D ($210 million) was intramural (table 4).

Sources of obligations to FFRDCs are highly concentrated, with 58% ($7.6 billion) from DOE in FY 2020. The second largest funder of FFRDCs in FY 2020 was NASA with a 17% share ($2.3 billion), followed by DOD at 14% ($1.8 billion). Universities and colleges received 62% ($23.9 billion) of R&D obligations from HHS, 14% ($5.2 billion) from NSF, and 12% ($4.5 billion) from DOD.

In FY 2020, federal obligations for COVID-19 R&D totaled $23.3 billion, or 14%, of total federal R&D obligations (table 5).^{​Not all stimulus funds were obligated for COVID-19 R&D in FY 2020, and some agencies obligated R&D related to COVID-19 from FY 2020 initial appropriations.} With $21.5 billion in obligations for COVID-19 R&D, HHS accounted for nearly 93% of all COVID-19 R&D funding, which included $15.4 billion in obligations from BARDA, $6.0 billion from NIH, and $93 million from CDC. DOD contributed just under 6% with $1.4 billion directed toward COVID-19 R&D. NSF’s COVID-related obligations totaled $192 million compared to all other agencies’ combined COVID-19–related R&D obligations of $108 million.

The survey is a census of all federal agencies that fund R&D programs, as identified from information in the president’s budget submission to Congress, excluding the Central Intelligence Agency. Federal agencies that fund R&D are identified in the Analytical Perspectives, Budget of the United States Government, Fiscal Year 2022.^{​The chapter on R&D in Analytical Perspectives, Budget of the United States Government, Fiscal Year 2022 available at https://www.whitehouse.gov/wp-content/uploads/2021/05/ap_14_research_fy22.pdf.} Data were obtained from 33 federal agencies (14 federal departments and 19 independent agencies) that had obligations for R&D during FY 2020 or FY 2021. Because multiple subdivisions of some federal departments completed the survey, there were 77 agency-level responses: 5 federal departments, 53 agencies (within another 9 federal departments), and 19 independent agencies. However, lower offices could also be authorized to enter data: in Federal Funds Survey nomenclature, agency-level offices could authorize program offices, program offices could authorize field offices, and field offices could authorize branch offices. When these sub-offices are included, there were 737 total respondents: 77 agencies, 170 program offices, 105 field offices, and 385 branch offices.

The survey collects data by department and agency on outlays for total R&D and R&D plant: obligations by type of R&D, type of R&D by type of performer, type of performer by state-area and country, and fields of science and engineering by basic and applied research.

Volume 70 of the Survey of Federal Funds for Research and Development collected final FY 2020 data and preliminary FY 2021 totals. FY 2021 data are subject to revision when collected under next year’s survey, volume 71 (FY 2021 data and preliminary FY 2022 totals).

Beginning with volume 66 of the survey (FYs 2016 and 2017), the totals reported for development obligations and outlays represent a refinement to this category by more narrowly defining it to be “experimental development” to align with federal R&D budget formulation as per the OMB’s Circular A-11, Section 84. As a result, totals for experimental development from FY 2016 and on do not include the DOD Budget Activity 7 (Operational Systems Development) obligations and outlays. Those funds, previously included in DOD’s development totals, support the development efforts to upgrade systems that have been fielded or have received approval for full-rate production and anticipate production funding in the current or subsequent fiscal year. Therefore, the development data and total R&D data are not directly comparable with totals reported prior to FY 2016.^{​For additional information see: Pece C, Jankowski J; National Center for Science and Engineering Statistics (NCSES). 2021. Statistical Definition of Development Clarified: Effect on R&D Totals. NSF 21-326. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf21326/.}

The full set of data tables for FYs 2020 and 2021 will be available at https://www.nsf.gov/statistics/srvyfedfunds/#tabs-2. Individual tables may be available in advance of the full report. For more information, please contact the author.

Pece CV; National Center for Science and Engineering Statistics (NCSES). 2022. Driven by Stimulus Funding, Federal R&D Obligations Increased 18% in 2020; Largest Year-to-Year Change since 1963. NSF 22-324. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf22324.

Christopher V. Pece
Survey Manager
Research and Development Statistics Program, NCSES
Tel: 703-292-7788
E-mail: cpece@nsf.gov

National Center for Science and Engineering Statistics
Directorate for Social, Behavioral and Economic Sciences
National Science Foundation
2415 Eisenhower Avenue, Suite W14200
Alexandria, VA 22314
Tel: (703) 292-8780
FIRS: (800) 877-8339
TDD: (800) 281-8749
E-mail: ncsesweb@nsf.gov