Federal Obligations for R&D Increased Nearly 14% in FY 2021, Supported by COVID-19 Pandemic-Related Funding

Federal agency obligations for R&D from COVID-19 pandemic-related stimulus funds increased 83.1% between FY 2020 and FY 2021, from $19.5 billion to $35.6 billion (table 1). At the same time, obligations from non-stimulus funds (namely, regular congressional appropriations) increased by 4.4%, from $147.9 billion in FY 2020 to $154.5 billion in FY 2021. Obligations from stimulus funds are estimated to decrease 23.0% in FY 2022 to $27.4 billion.

Although pandemic-related stimulus funds accounted for 18.7% ($35.6 billion) of all federal R&D obligations in FY 2021, these funds were highly concentrated within the Department of Health and Human Services (HHS). In FY 2021, HHS accounted for 94.5% ($33.7 billion) of all stimulus funds for R&D, whereas the Department of Defense (DOD) accounted for 4.6% ($1.6 billion). Within HHS, the Biomedical Advanced Research and Development Authority (BARDA) alone accounted for 98.6% of the entire department’s stimulus funds for R&D, with the balance coming from the Centers for Disease Control and Prevention ($279 million) and the National Institutes of Health ($187 million). BARDA’s R&D obligations from stimulus funds accounted for 93.2% ($33.2 billion) of all federal stimulus funds for R&D.

Federal agency obligations for basic research totaled $42.5 billion in FY 2021. HHS obligations accounted for 50.6% ($21.5 billion) of all federal government obligations for basic research (table 2). NSF and the Department of Energy (DOE) accounted for 13.6% ($5.8 billion) and 12.9% ($5.5 billion), respectively, of all federal obligations for basic research. However, stimulus funds only accounted for 0.9% ($371 million) of basic research in FY 2021.

Similar to basic research, HHS was the largest funder of applied research with $21.2 billion, or 48.5% of all applied research obligations in FY 2021 (table 3). However, although DOD accounted for 6.7% ($2.8 billion) of basic research, it was the second-largest funder of applied research with 15.8% ($6.9 billion) in FY 2021. DOE and the National Aeronautics and Space Administration (NASA) accounted for 12.1% ($5.3 billion) and 6.2% ($2.7 billion), respectively, of applied research obligations. All other federal departments and agencies combined totaled $6.7 billion of applied research obligations in FY 2021. Similar to basic research, stimulus funding accounted for 1.0% ($420 million) of all applied research obligations ($43.8 billion) in FY 2021.

Although federal obligations for research (both basic research and applied research) increased 1.1% ($939 million) between FY 2020 and FY 2021, from $85.3 billion to $86.2 billion, obligations for experimental development increased 26.6% ($21.8 billion).^{​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 2021 obligations for experimental development totaled $103.9 billion, increasing from $82.1 billion in FY 2020 (figure 3). DOD’s obligations for experimental development increased $3.2 billion between FY 2020 and FY 2021 and accounted for 58.7% of all federal experimental development in FY 2021. HHS’s obligations for experimental development, driven by an increase in pandemic-related stimulus funds, rose from $15.8 billion in FY 2020 to $33.9 billion in FY 2021 and accounted for 32.7% of all federal obligations for experimental development in FY 2021. NASA’s obligations for experimental development totaled $4.6 billion in FY 2021, increasing from $4.1 billion in FY 2020, whereas DOE’s obligations declined 8.6%, from $2.9 billion in FY 2020 to $2.7 billion in FY 2021. All other federal departments and agencies combined accounted for 1.6% of all other funding for experimental development in FY 2021.

The addition of pandemic-related stimulus funds through HHS have had an impact on the federal government’s composition of experimental development. For instance, without the additional stimulus funding to HHS, its share of experimental development would be 1.1%, or $729 million out of $69.1 billion in FY 2021. At the same time DOD’s share would be 86.0%, or $59.4 billion out of $69.1 billion. So, the additional funds to HHS increase its share of experimental development to $33.9 billion out of $103.9 billion. Excluding the stimulus funds, NASA and DOE accounted for 6.7% ($4.6 billion) and 3.9% ($2.7 billion), respectively, of federal experimental development obligations in FY 2021.

Federal R&D funds are obligated to a variety of different performers classified as either intramural, which are those performers that are part of the federal government sector (i.e., federal departments and agencies, as well as the federally funded research and development centers, or FFRDCs), or extramural, which are those who perform R&D outside the federal government (e.g., businesses, higher education institutions, and nonprofit organizations). In FY 2021, $103.7 billion (54.5%) of the $190.2 billion in federal R&D was obligated to extramural performers, whereas intramural performers accounted for $86.5 billion in obligations, or 45.5% of all R&D (figure 4).

Although obligations to federal agencies for intramural R&D totaled $71.7 billion in FY 2021, data users should note this amount includes not only obligations for the conduct of R&D within federal labs and facilities but also 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, whereas agencies receiving funds are instructed to exclude those funds from their survey submission.^{​Survey instructions to federal departments and agencies specifically note agencies should 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 standard questionnaire, page 6 https://ncses.nsf.gov/400/assets/0/files/srvyfedfunds-2021-2022-standard.pdf and the DOD questionnaire page 6 at https://ncses.nsf.gov/400/assets/0/files/srvyfedfunds-2021-2022-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 $31.4 billion in intramural R&D obligations, but most of this was a transfer to DOD to fund vaccine development, which DOD would later issue to extramural performers in the form of grants and contracts.^{​For details on agency obligations by type of performer, see data table 7, Federal obligations for research and experimental development, by agency and performer: FY 2021, and data table 13, Federal agency interagency fund transfers for R&D: FY 2021; both are available at https://ncses.nsf.gov/surveys/federal-funds-research-development/.} As such, although the final disposition of these funds is determined by DOD, they are reported by the originating agency, BARDA, as federal intramural. Based on new data collected in volume 71 of the Federal Funds Survey, HHS transferred a total of $31.3 billion of intramural obligations to DOD in FY 2021 (table 4).^{​Volume 71 refers to the 71st survey cycle and covers both federal FYs 2021 and 2022. See survey technical notes, technical table A-4 for a list of all volumes and fiscal years covered at https://ncses.nsf.gov/surveys/federal-funds-research-development/2022#methodology.}

Between 2018 and 2021, NCSES engaged in a redesign of the Federal Funds Survey and the Survey of Federal Science and Engineering Support to Universities, Colleges, and Nonprofit Institutions (Federal S&E Support Survey). The goals of the redesign were to (1) update the survey instrument to reflect best practices in survey design principles and transform the survey from a series of tables to a series of questions that would integrate definitions and instructions with each question and (2) expand the current survey items to collect additional detail most often requested by data users. As part of the redesign effort, NCSES held a data user workshop and assembled an expert panel for consultation, worked with survey methodology experts, visited multiple federal agency respondents to receive and test input on changes to the survey, held a series of cognitive interviews with agency respondents, and conducted usability testing on the new survey design. The redesigned survey was fielded in May 2022 for volume 71 of the Federal Funds Survey, canvassing federal FYs 2021 and 2022.

Changes associated with the volume 71 redesign include the integration of the Federal S&E Support Survey as a module within the Federal Funds Survey. (NCSES will continue to publish the Federal S&E Support Survey data separately at https://ncses.nsf.gov/surveys/federal-support-survey/.) Four other new questions were added to the standard and the DOD versions of the questionnaire. These new questions covered the following for the fiscal year just completed (FY 2021):

• R&D deobligation
• Nonfederal R&D obligations by type of agreement (e.g., grants and contracts)
• R&D obligations provided to other federal agencies in the form of intergovernmental transfers
• R&D and R&D plant obligations to university affiliated research centers

One new question added solely to the DOD questionnaire was for obligations associated with Small Business Innovation Research and Small Business Technology Transfer programs for the fiscal year just completed and the current fiscal year at the time of collection (FYs 2021–22). Many of the other survey questions were reorganized and revised.

Some changes were made within the questions for consistency with other NCSES surveys. For example, among the performer categories, FFRDCs were included among the extramural performers in previous volumes but were categorized as an intramural performer with the redesign. Other changes include retitling certain performer categories, where industry was changed to businesses and where universities and colleges was changed to higher education. The fields of R&D were used instead of the former “fields of science and engineering.” The survey started collecting field of R&D information for experimental development obligations; previously, field of science and engineering data were collected only for basic and applied research obligations. With the redesign, data were gathered from all agencies on federal obligations for research performed at higher education institutions, by detailed field of R&D. Previously these data had been collected only from the Departments of Agriculture, Defense, Energy, Health and Human Services, and Homeland Security; NASA; and NSF. Similarly, geographic distribution of R&D obligations was asked of all agencies with the redesign. Previously these data had only been collected from the Departments of Agriculture, Commerce, Defense, Energy, Health and Human Services, Homeland Security; NASA; and NSF.

The Federal Funds 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 2023.^{​See chapter 18, Research and Development, Analytical Perspectives, Budget of the United States Government, Fiscal Year 2023. Available at https://www.govinfo.gov/content/pkg/BUDGET-2023-PER/pdf/BUDGET-2023-PER-6-5.pdf.} Data were obtained from 33 federal agencies (14 federal departments and 19 independent agencies) that had obligations for R&D during FY 2021 or FY 2022. Because multiple subdivisions of some federal departments completed the survey, there were 74 agency-level responses: 6 federal departments, 49 agencies (within another 8 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 suboffices are included, there were 730 total respondents: 74 agencies, 98 program offices, 173 field offices, and 385 branch offices.

Volume 71 of the Federal Funds Survey collected final FY 2021 data and preliminary FY 2022 totals. FY 2022 data are subject to revision when collected under next year’s survey, volume 72 (FY 2022 data and preliminary FY 2023 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/.} Although this survey is a census of federal agencies that fund R&D and there is no sampling error, survey data are still subject to some degree of unmeasurable nonsampling error which may include errors in classification or measurement of certain aspects of an agencies R&D. For additional information see the Survey Quality Measures within the technical notes of the survey.^{​Survey technical notes are available at https://ncses.nsf.gov/surveys/federal-funds-research-development/2022#methodology​.}

The full set of data tables for FYs 2021 and 2022 will be available at https://ncses.nsf.gov/surveys/federal-funds-research-development/. 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). 2023. Federal Obligations for R&D Increased Nearly 14% in FY 2021, Supported by COVID-19 Pandemic-Related Funding. NSF 23-352. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf23352.

Christopher V. Pece
Survey Manager
NCSES
Tel: 703-292-7788
E-mail: cpece@nsf.gov

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