The National Optical Astronomy Observatories (NOAO) are the only federally funded research and development center (FFRDC) in Arizona. FFRDCs are government-owned facilities which, unlike government labs, are operated and managed under contract either by universities, industrial firms, or nonprofit organizations to conduct R&D for the federal government. 

NOAO is run by the Association of Universities for Research in Astronomy Inc. (AURA) and is funded by NSF, receiving $29 million for R&D in FY 1995, and an additional $41 million for facilities support. NOAO, although headquartered in Tucson, includes observation sites in several different places, both in the United States and abroad. One of these sites, the Kitt Peak National Observatory, is in Arizona. NOAO also operates the Cerro Tololo Interamerican Observatory in Chile.