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R&D in the FY 2002 Department
of Defense Budget (revised July '01)
Kei Koizumi, AAAS |
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Note: This chapter has been revised since the publication of the print AAAS Report XXVI to reflect the amended FY 2002 DOD budget request and the FY 2001 supplemental appropriations bill. The links on this page are to revised DOD funding tables. Highlights · The Department of Defense (DOD), the largest federal sponsor of R&D, finally submitted a full FY 2002 budget request in late June after a review of defense spending priorities. The amended FY 2002 request replaces a placeholder request submitted in April. The amended FY 2002 budget asks for multi-billion dollar increases in DOD programs: the total DOD budget would increase $27.0 billion to reach $328.9 billion in FY 2002, a 9.0 percent boost. · DOD R&D would receive an even larger percentage increase of 13.4 percent to reach $48.5 billion, $5.7 billion more than this year. There would be large increases to DOD's development accounts, but basic research and applied research funding would actually decline under the revised budget plan (see Table II-2). Basic research (the "6.1" category) would fall 1.0 percent to $1.3 billion, while applied research (the "6.2" category) would fall 0.5 percent to $3.7 billion.
Defense R&D: An Overview The Department of Defense (DOD) is by far the largest supporter of R&D in the federal government, accounting for nearly half the total. In the 1980s, DOD supported nearly two-thirds of total federal R&D. Because of defense cutbacks following the end of the Cold War, however, DOD's support for R&D declined by a third since its peak in FY 1987 but has begun to rebound in recent years. While most agencies break out R&D into the three categories of basic research, applied research, and development, DOD divides its RDT&E (Research, Development, Test, and Evaluation) account into seven categories, each with a numerical code: Basic Research (known as "6.1"), Applied Research ("6.2"), Advanced Technology Development ("6.3"), Demonstration and Validation ("6.4"), Engineering and Manufacturing Development ("6.5"), Management Support ("6.6"), and Operational Systems Development ("6.7"). DOD also funds some R&D and support costs in non-RDT&E accounts. DOD is responsible for a little over 10 percent of all
federal support of basic and applied research ("6.1" and "6.2"),
but is a key sponsor for several science and engineering (S&E) disciplines.
DOD supports 35 percent of all federal research in the computer sciences
and nearly a third of all engineering research, as well as significant
shares of research in mathematics and oceanography (see Figure 1). DOD's
impact is even greater in several engineering sub-disciplines such as
electrical engineering (see Chapter 24) and mechanical
engineering (see Chapter 25). DOD funds research
in these disciplines for their contributions to national defense, but
this research is also a key source for major innovations in the civilian
economy, most evident in DOD's early support for research that led to
the now-ubiquitous Internet. DOD is also a key supporter of social sciences
research (please see Chapter 21.) The "6.1," "6.2," and "6.3" categories are often grouped together as "Science and Technology" (S&T). This category includes basic research, applied research, and generic technology development. These programs contribute to a broad knowledge base with potential applications to a wide variety of military as well as civilian uses. S&T is separate from the "6.4" and higher categories, which are focused on the development and testing of specific weapons systems. Nearly all DOD support for R&D at colleges and universities comes from the S&T accounts. A majority of DOD's R&D (and nearly all the work in categories "6.4" and higher) is performed by industrial firms such as the large defense contractors Lockheed Martin and Boeing. FFRDCs (federally funded research and development centers), defense laboratories, and colleges and universities also perform R&D. If one excludes DOD development, which is nearly exclusively performed by industry, DOD basic and applied research ("6.1" and "6.2") are performed by a diverse group of institutions (see Figure 2). A third of DOD research is performed by DOD laboratories, while another third is performed by industry. 24 percent of DOD basic and applied research is performed by universities and colleges.
Priorities in DOD R&D Tables II-2 through II-6 show DOD's R&D in detail. Table II-2 shows DOD R&D by "6.x" category, Table II-3 by agency and department, and II-4 by character of work. Table II-5 shows DOD basic research, and Table II-6 looks at historical trends in DOD R&D. This year, with the Bush Administration new to office, DOD did not submit a full FY 2002 budget in April as the other federal agencies did; instead, the agency conducted a review of defense spending priorities led by Secretary of Defense Donald Rumsfeld that resulted in a full FY 2002 request in late June. The Defense Strategy Review, as it was called, was expected to result in a major reordering of DOD priorities for the next several years but the final FY 2002 request fell short of that expectation: although it adds billions of dollars in spending to the DOD budget and calls for some new initiatives, it falls short of proposing major realignments in defense strategy or overhauls in current DOD practices. Major policy decisions on DOD strategy have been deferred until the Quadrennial Defense Review later this year and the FY 2003 budget request next February, and the amended FY 2002 budget request has been packaged instead as a catch-up budget to address past funding shortfalls arising from DOD's current strategic needs. The FY 2002 figures in Tables II-2 through II-6 show the amended FY 2002 budget request which would add billions of dollars to the April placeholder request. The tables also reflect $5.6 billion in additional FY 2001 funds enacted in July as part of the FY 2001 supplemental appropriations bill, of which $486 million went to DOD R&D. The Bush Administration's revised budget proposes multi-billion dollar increases for DOD programs including R&D, in sharp contrast to the Clinton Administration's habit of requesting cuts each year. The total DOD budget would jump $27.0 billion or 9.0 percent to $328.9 billion, with substantial increases across the DOD budget for R&D, military personnel, operations and maintenance, family housing, and military construction. Of the major accounts, only procurement would fail to increase by 8 percent or more, and in fact would decline slightly. DOD R&D would increase $5.7 billion or 13.4 percent to $48.5 billion (see Table II-2). The big winner in the DOD R&D budget would be the Ballistic Missile Defense Organization (BMDO). BMDO received a substantial boost from $3.5 billion in FY 2000 to $4.2 billion in FY 2001, but the revised request would send its FY 2002 budget soaring to $7.0 billion, a 67.4 percent increase in one year and a doubling of funding over two years (see Table II-3). The Bush Administration has repeatedly affirmed that missile defense is a top priority in U.S. defense strategy. There would be no funds for research and only $133 million for generic technology development in BMDO's FY 2002 budget; nearly all BMDO funds would go to advanced development, testing, manufacturing development, and evaluation of missile defense systems. In the FY 2002 budget, currently separate programs for national missile defense and theater missile defense would be merged into a more integrated program for ballistic missile defense. The Bush Administration's goal is to deploy a small-scale national missile defense system as early as 2004. In sharp contrast to the substantial increases in most areas of the DOD budget, DOD support of basic and applied research would actually decline in FY 2002. Basic research funding (the "6.1" category) would fall 1.0 percent to $1.3 billion after a nearly 16 percent increase last year. Table II-5 shows that there would be increases for basic research in the three services (Army, up 5.7 percent; Navy, 3.1 percent; and Air Force, up 3.8 percent) but there would be a steep 9.1 percent drop in basic research sponsored by the Defense Agencies, a reversal of the pattern of the past few years when the services' basic research programs shrank in relation to the Defense Agencies. The overall decline in DOD "6.1" funding is due to a proposed $52 million cut in University Research Initiatives in the Office of the Secretary of Defense (OSD); although much of this cut is due to the deletion of FY 2001 congressionally designated projects, there would be cuts to core funding for many research areas. Defense Research Sciences, the basic research program of the Defense Advanced Research Projects Agency (DARPA), would increase by 11.2 percent to $121 million. Applied research funding (the "6.2" category) would decline by 0.5 percent or $17 million to $3.7 billion in FY 2002 after an eight percent increase last year. There would be cuts to most "6.2" programs in the Army, Navy, BMDO, and OSD, partially offset by a boost in Air Force funding for aerospace-related research and increases for DARPA research in information technology, materials, and electronics. DOD funding of "S&T" (the "6.1" through "6.3" categories) would stall at $8.8 billion, down 2.6 percent from FY 2001 (see Table II-2). Adding in medical research outside the RDT&E account (see next paragraph), S&T would also total $8.8 billion, but the decline would be 6.1 percent. Advocates of DOD S&T investments pushed last year for $9.0 billion in FY 2001 S&T funds, a goal Congress granted, and are pushing for an investment of $10.0 billion in FY 2002. The requested decline will make this goal much harder to reach, although Congress has tended to be more supportive of S&T funding than the Pentagon. Advocates of DOD S&T in the science and engineering community argue that DOD S&T funding is essential for building the knowledge and technology base for future DOD needs, and have successfully argued that post-Cold War cutbacks over the past decade eroded this base. In the past year, there has been growing support inside and outside the Pentagon for setting 3 percent of the DOD budget as a goal for the proper level of S&T investment, which led to hopes that the amended FY 2002 budget would propose a large boost for S&T. The revised FY 2002 budget, while affirming 3 percent as a worthwhile goal, allocates only 2.7 percent of the DOD budget for S&T. Beginning in the early 1990s, Congress has appropriated funds for congressionally designated medical research programs in the DOD budget. In the past, nearly all of these funds were appropriated in the Army, but in FY 2000 Congress appropriated nearly all of them outside the RDT&E accounts in Defense Health Programs (see Table II-2). The FY 2001 total of $412 million for medical research includes $175 million for breast cancer research, $100 million for prostate cancer, $12 million for ovarian cancer, and additional funds for peer-reviewed research on other medical topics. DOD's policy is not to request continuing funds for most congressionally designated projects; the FY 2002 request is for $65 million for other medical projects, but Congress is sure to add on funds for the cancer programs. Outlook for Defense R&D Although Congress has finally received the DOD budget, its fate on Capitol Hill is still on hold because of its staggering price tag. When Congress established its spending plan for FY 2002 in May, it worked with a placeholder request for DOD of $310 billion, already a large increase over FY 2001. Because the revised request would add an additional $18 billion to that amount, there is serious disagreement as to where the extra funds might come from, with a number of options including offsetting cuts in DOD, offsetting cuts in domestic programs, or drawing down budget surpluses being considered. Adding to the political difficulty are complaints from some defense observers that even the $329 billion revised request may be too small: procurement funding would actually decline in the budget despite near-universal agreement in the Pentagon and Congress that it needs to be boosted substantially. The budget also relies on some cost-cutting measures, such as removing B-1 fighter planes in three states and initiating a new round of military base closings, that have already received scathing criticism from Congress. There is increasing fear that approving the DOD request might increase federal spending enough to force the government tap into the politically sacred Social Security surplus, especially in the outyears. This dilemma could force Congress to make a difficult choice between holding back DOD spending or tapping Social Security funds. To delay the unpleasant choice as long as possible, Congress has put off initial consideration of the Defense appropriations bill until at least September, and it may be November or even December before a final FY 2002 DOD budget is approved. In such an environment, the fate of the DOD budget is by no means assured, and especially vulnerable are the basic and applied research programs; already slated for a cut, they will face tremendous fiscal pressure from other programs in a competition for scarce resources, especially if higher defense priorities such as procurement or higher budget priorities such as keeping the budget in balance begin to crowd out the funds available for defense R&D.
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