Federal R&D Obligations Increased 0.4% in FY 2022; Estimated to Decline in FY 2023

In FY 2022, six federal agencies obligated $181.8 billion for R&D, or 95% of the total federal share (figure 2). The Department of Health and Human Services (HHS) and the Department of Defense (DOD) accounted for $74.1 billion (39%) and $72.4 billion (38%), respectively. The Department of Energy (DOE) and the National Aeronautics and Space Administration (NASA) accounted for $13.7 billion (7%) and $11.6 billion (6%), respectively. These were followed by NSF ($6.9 billion, or 4%) and the Department of Agriculture (USDA) ($3.1 billion, or 2%).

In FY 2023, although the total R&D obligations are expected to decrease, the total share of federal R&D is expected to remain virtually unchanged for these six federal agencies, totaling 95% of all federal obligations ($176.3 billion out of $186.4 billion). However, the relative shares of R&D between HHS and DOD have changed considerably between FY 2022 and FY 2023. Specifically, HHS’s share of R&D is expected to decrease to 26% ($49.3 billion), as BARDA’s COVID-19 pandemic-related infusion of funding for R&D decreased from $28.4 billion in FY 2022 to an expected $818 million in FY 2023, a decrease of 97.1%.^{​For specific obligations by the Biomedical Advanced Research Development Authority in FY 2022 and FY 2023, see tables 5 and 6, respectively, in the full set of data tables at https://ncses.nsf.gov/surveys/federal-funds-research-development/2022-2023#data.} At the same time, DOD’s R&D obligations increased from $72.4 billion in FY 2022 to an estimated $88.9 billion in FY 2023, increasing DOD’s share of the federal R&D portfolio to 48%. This increase in DOD’s R&D obligations between FY 2022 and FY 2023 is consistent with an increase in R&D budget authority for national defense functions.^{​Budget authority is the primary source of legal authorization to enter into obligations that will result in outlays. See https://ncses.nsf.gov/pubs/ncses24204 for more details.}

Federal agency obligations for basic research totaled $45.4 billion in FY 2022 (table 2).^{​Basic research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts. Basic research may include activities with broad or general applications in mind, such as the study of how plant genomes change, but should exclude research directed toward a specific application or requirement, such as the optimization of the genome of a specific crop species.} HHS basic research obligations accounted for $22.4 billion, or 49% of all federal government obligations for basic research. DOE and NSF accounted for approximately $6.1 billion and $5.9 billion, respectively (13% each). NASA accounted for $5.1 billion (11%), followed by DOD with $3.1 billion (7%) and USDA with $1.4 billion (3%). Obligations for basic research are estimated to increase 6.8% to $48.5 billion in FY 2023.

Similar to basic research, HHS was the largest funder of applied research, with 53% of all applied research obligations in FY 2022 ($25.9 billion).^{​Applied research is defined as original investigation undertaken in order to acquire new knowledge. Applied research is, however, directed primarily toward a specific practical aim or objective.} Although DOD accounted for $3.1 billion of basic research, it was the second-largest funder of applied research with $7.0 billion (14%) in FY 2022. DOE and NASA reported $5.0 billion (10%) and $2.2 billion (5%), respectively, for applied research obligations. All other federal departments and agencies combined totaled $8.3 billion of applied research obligations in FY 2022. Obligations for applied research are estimated to increase 5.4% to $51.0 billion in FY 2023.

Although federal obligations for research (both basic research and applied research) increased 9.2% between FY 2021 and FY 2022, obligations for experimental development decreased 6.8% during the same period (figure 3 and table 1).^{​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 2022 obligations for experimental development totaled $96.6 billion, decreasing from $103.7 billion in FY 2021. DOD’s obligations for experimental development increased $1.2 billion between FY 2021 and FY 2022, from $61.0 billion to $62.2 billion. However, with decreased obligations from COVID-19 pandemic-related stimulus funds, HHS’s obligations for experimental development declined by $8.2 billion between FY 2021 and FY 2022, from $34.0 billion to $25.8 billion.

In FY 2023, obligations for experimental development are estimated to decline further to a total of $87.0 billion. HHS obligations for experimental development are expected to decline even further in FY 2023 to a total of $56 million, which would be similar to pre-pandemic funding levels. However, DOD’s obligations are estimated to increase $14.7 billion to a total of $76.9 billion, accounting for 88% of total experimental development and about double the amount obligated in FY 2016 ($37.6 billion in current dollars).

Although the end of COVID-19 pandemic-related stimulus funds in FY 2023 contributes to the overall decline in federal obligations for experimental development between FY 2022 and the expected obligations in FY 2023, FY 2022 saw the passage of three bills that are estimated to contribute to additional R&D obligations in FY 2023 and succeeding years. Specifically, the Infrastructure Investment and Jobs Act (IIJA) (P.L. 117-58) was signed into law 15 November 2021; Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, (P.L. 117-167) was signed on 9 August 2022; and the Inflation Reduction Act (IRA) (P.L. 117-169), was signed on 16 August 2022. Although the legislation for IIJA, CHIPS, and IRA contains science, technology, and innovation provisions that extend well beyond appropriations and obligations for R&D, supplemental data collected from specific agencies subject to R&D provisions in the legislation, namely, NSF, DOE, the National Oceanic and Atmospheric Administration, and the National Institutes of Standards and Technology, show preliminary obligations for R&D from IIJA, CHIPS, and IRA are $180 million, $410 million, and $56 million, respectively (table 3).^{​Based on provisions in the respective legislation and in consultation with staff at the Office of Management and Budget and the Office of Science and Technology Policy, the supplemental request was sent to those agencies where R&D spending was authorized. No agencies reported obligations for R&D from these laws in FY 2022 as they were passed within that same fiscal year. However, they did report estimated obligations to be made in FY 2023. This request will be formalized in future survey cycles across all agencies to ensure complete coverage in the FY 2023 actuals collected under volume 73.}

Federal R&D funds are obligated to a variety of different fields of R&D. In FY 2022, life sciences was the largest field of R&D supported by federal funds with $41.6 billion, increasing from $38.2 billion in FY 2021 and estimated to increase to $42.3 billion in FY 2023 (figure 4). Obligations for engineering research increased from $14.7 billion in FY 2021 to $15.5 billion in FY 2022 and are estimated to reach $16.8 billion in FY 2023. Similarly, physical sciences obligations increased from $10.0 billion in FY 2021 to $12.1 billion in FY 2022 and are estimated to total $12.7 billion in FY 2023. Most of the nine broad fields of R&D show some degree of increased obligations in FY 2022 and FY 2023.

Federal obligations for experimental development by field of R&D are much more concentrated than they are for research obligations. For example, in FY 2022, engineering accounted for 46% of all experimental development across all fields compared with 17% of research obligations. Engineering obligations for experimental development increased from $44.3 billion in FY 2021 to $44.4 billion in FY 2022 and are estimated to increase further in FY 2023 to $54.1 billion (figure 5). Life sciences also received considerable funds for experimental development in FY 2021 and FY 2022, with $39.4 billion and $30.4 billion, respectively. However, with the end of pandemic-related stimulus funds, FY 2023 obligations to life sciences are expected to decrease to $5.8 billion.

Federal Funds R&D 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 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 2024. Available at https://www.whitehouse.gov/wp-content/uploads/2023/03/ap_6_research_fy2024.pdf.} Data were obtained from 32 federal agencies (14 federal departments and 18 independent agencies) that had obligations for R&D during FY 2022 or FY 2023. Because multiple subdivisions of some federal departments completed the survey, there were agency-level responses from 6 federal departments, 48 agencies (within another 8 federal departments), and 18 independent agencies. However, lower offices could also be authorized to enter data. In Federal Funds for R&D 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 725 total respondents: 72 agencies, 95 program offices, 178 field offices, and 380 branch offices.

Volume 72 of Federal Funds for R&D collected final FY 2022 data and preliminary FY 2023 totals. FY 2023 data are subject to revision when collected under next year’s survey, volume 73 (FY 2023 data and preliminary FY 2024 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 Office of Management and Budget’s Circular A-11, Section 84. As a result, totals for experimental development from FY 2016 and on do not include DOD Budget Activity 7 (Operational System 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 section “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/2022-2023#technical-notes.}

The full set of data tables for FYs 2022 and 2023 are available at https://ncses.nsf.gov/surveys/federal-funds-research-development/. For more information, please contact the author.

Pece CV; National Center for Science and Engineering Statistics (NCSES). 2024. Federal R&D Obligations Increased 0.4% in FY 2022; Estimated to Decline in FY 2023. NSF 24-322. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf24322.

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

National Center for Science and Engineering Statistics
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