(updated
November 29 - updates in [ ] )
Highlights
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Congress has agreed on $77.8 billion for Department
of Defense (DOD) R&D programs in FY 2008, a cut of 0.5 percent or $414 million
from 2007 (see Table A). But Congress is likely to add $3.9 billion or more in supplemental development
funds in early 2008 to make the final 2008 total an increase.
- [Congress would add
$2.1 billion to the request for DOD’s future-oriented investments, almost entirely
for earmarked projects, but would still leave funding down from the 2007 funding
level.] DOD proposed to slash “Science and Technology” (S&T) spending 22 percent
or $3.1 billion down to $10.9 billion, erasing seven years of gains; Congress
would add back $2.1 billion for a total S&T investment of $13.0 billion, down
6.9 percent from last year (see Table C). S&T
funding, which includes basic research, applied research, medical research, and
technology development, would fall to 2.71 percent of the regular DOD budget.
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DOD’s support of basic research would gain 3.2 percent in 2008. Basic research
(“6.1”) would increase 3.2 percent or $50 million to $1.6 billion, keeping funding
roughly even in real terms with the last seven years (see Table A). Congress would
cap indirect costs on basic research grants at 35 percent, higher than a 20 percent
cap in an earlier version of the bill. [Applied research (“6.2”) would fall 6.3
percent to $5.0 billion, despite congressional additions of numerous earmarks.]
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The research-oriented Defense Advanced Research Projects Agency (DARPA) would
see its budget fall 9.6 percent to $2.8 billion (see Table
B) because of congressional frustration over DARPA’s
inability to spend past budgets.
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The Air Force would be the big winner in the
2008 budget. Air Force R&D would
climb 5.7 percent or $1.4 billion to $25.9 billion because of increases to various
weapons development programs, and is certain to climb even higher when supplemental
funds are added in early 2008 (see Table B).
DOD R&D in FY 2008 House-Senate Conference
Appropriations
On
November 6, House and Senate appropriators agreed on the conference report for
the FY 2008 Defense appropriations bill (HR 3222) providing funding for most of
the Department of Defense (DOD). [The House and Senate gave final approval to
the bill shortly therafter, and President Bush signed the bill into law on November
13 as the first and so far only 2008 appropriations bill to receive his signature.
The conference report] contains nearly $460 billion in 2008 discretionary
spending for most of DOD’s programs. A separate bill, also recently out of conference,
funds DOD military construction accounts, and a supplemental appropriations bill
in early 2008 could provide nearly $190 billion in supplemental funds for ongoing
war operations. So although the Defense conference report is usually the last
word on DOD spending, the enormous size of the future supplemental means that
2008 DOD totals, including R&D totals, will grow in coming months.
The final Defense bill appears to provide less
for DOD R&D in 2008 than the current year, the first time in more than a decade
that DOD R&D would decline (see Figure 1). But the primary reason DOD R&D
would decline $414 million or 0.5 percent to $77.8 billion in the conference appropriation
(see Table A) is that Congress has not yet considered
a whopping $3.9 billion for R&D (nearly all for development) requested as
part of a 2008 supplemental war funding package that now approaches $190 billion
for the DOD portion. Because Congress is expected to approve most of the supplemental
request intact in early 2008, the final DOD R&D total for 2008 is likely to
be another large increase when all is said and done, and will almost certainly
be another record high. Thus, the decline in defense R&D shown in Figure 1
for 2008 is likely to be only temporary. (All figures in this analysis exclude
the $3.9 billion supplemental request from the FY 2008 Request figures to facilitate
comparisons with FY 2008 Conference figures. FY 2007 figures include $1.1 billion
in 2007 supplemental R&D funding enacted in May.)
[DOD basic research funding (the “6.1” category)
would gain 3.2 percent or $50 million to $1.6 billion, compared to a $136 million
requested cut after Congress added $165 million in "6.1" earmarks and
some small program increases.] Since
2001, basic research has remained stable at just over $1.5 billion in today’s
dollars (see Figure 2), a trend Congress would continue in 2008. The Pentagon
has proposed steep cuts to “6.1” funding every year in recent years, primarily
from the proposed elimination of congressional earmarks of the year before,
but every year Congress adds them back in. In 2008, basic research in the Army,
Navy and the Defense Agencies would all increase, with only Air Force basic research
showing a slight decline. Funding for the three-service University Research Initiatives,
which awards basic research grants competitively to university performers, would
receive a combined $302 million, up 5.0 percent from 2007. The Defense Research
Sciences program, funded in the three services and in DARPA, would receive a combined
$990 million, up 0.9 percent instead of a 6 percent requested cut. Among the increases
is $18 million (up from $10 million) for the Focus Center Research Program, a
joint DOD-semiconductor industry program to support university research in semiconductor
technology. The largest increase among basic research programs would go to the
fledgling National Defense Education program (NDEP), more than doubling from $19
million last year to $44 million in 2008. (For details of DOD R&D in the FY
2008 budget request, see Chapter 5 of AAAS
Report XXXII: R&D FY 2008 or the February 21
AAAS R&D Funding Update on DOD. For details of Senate appropriations for
DOD R&D, see the September 19 AAAS R&D Funding Update;
for House appropriations, see the July 31 AAAS R&D Funding
Update.)
Figure 1. (Click on the image for PDF)
The
final Defense bill contains a provision that would limit indirect cost reimbursements
on basic research grants to 35 percent, up from a 20 percent limit in the earlier
House version of the bill. Currently, university and other external research performers
are reimbursed for indirect costs associated with the performance of research
at rates negotiated through a government-wide process overseen by the Office of
Management and Budget (OMB). Leading research universities usually receive indirect
cost reimbursements exceeding 50 percent of direct costs, so the provision could
dramatically reduce “6.1” research awards, but because the provision caps indirect
costs at 35 percent of the ‘total cost’ rather than direct costs there is some
ambiguity as to what the limit will be in practice.
Applied research (the “6.2” category) would
fall 6.3 percent to $5.0 billion instead of an even steeper requested cut. But Congress would, as usual, restore funding to medical applied research
programs the Pentagon proposes to cut. The final Defense bill would give medical
research in the Defense Health Program $536 million (see Table A), down from $680
million last year but four times the request, including
$228 million (up from $218 million in 2007) for breast, ovarian, and prostate
cancer research through peer-reviewed, competitively awarded grants. Over the
years, the DOD peer-reviewed program has become a major force in cancer research;
by comparison, NIH spending on these three cancers totals $1.2 billion this year.
In addition to these congressionally initiated but peer reviewed research programs,
there are several earmarked medical research projects in this account and hundreds
of millions of dollars in earmarked medical research programs in Army accounts.
In addition, there would also be $50 million for peer reviewed medical research
on other topics.
Figure 2. (Click on the image for PDF)
DOD funding of “S&T” (the “6.1” through
“6.3” categories plus medical research) would fall to $13.0 billion in FY 2008,
a cut of nearly $1 billion or 6.9 percent that would be concentrated in the “6.3”
programs (see Table C and Figure 2). [Despite Congress adding $2.1 billion
to the request for S&T, nearly all of which would go to earmarked projects,
the additional dollars would not be enough to reverse the $3.0 billion or 22 percent
cut in the 2008 request.] For every year this decade, Congress has been far more
supportive of S&T funding than the Pentagon. In what has now become an annual
ritual, the Pentagon proposes sharp cuts and Congress adds billions of dollars
in the appropriations process. Last year,
the Pentagon requested a 19 percent cut in S&T, but Congress ended up appropriating
just a 1 percent cut, primarily but not entirely through the addition of earmarks.
The 2008 appropriations look the same, though the Pentagon’s requested cut was
so steep that Congress, earmarking less than in previous years, is unable to bring
S&T funding back to 2007 funding levels.
Over
the past decade, 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. But the Pentagon has never fully endorsed this goal: although the
2001 Quadrennial Defense Review, DOD’s military strategy document, included the
3 percent goal, the 2005 QDR does not contain it, and the annual DOD budget request
has never met the 3 percent figure. It has been up to Congress to boost S&T
funding so that the last six budgets have met that goal (after taking out Iraq
and Afghanistan
war spending). In 2007, DOD S&T equaled 3.2 percent of the regular DOD budget
(excluding emergency war funding), but the 2008 appropriations fall short with
a ratio of 2.71 percent.
The 2008 DOD appropriation marks a continuing
retreat from DOD S&T’s record-high 2005 funding
level in real terms (see Figure 1). DOD S&T increased in the first half
of this decade after hitting post-Cold War lows in the late 1990s; since 2005,
most of the cuts have been in the “6.3” programs (see Figure 2), while applied
research “6.2” has declined less and “6.1” and medical research have held steady.
Figure 3. (Click on the image for PDF)
Air
Force weapons development programs would be big winners in the 2008 budget. DOD
weapons development (the non-S&T portion of DOD R&D) would increase $559
million or 0.9 percent to $64.8 billion, but there would be an enormous $1.4 billion
increase in Air Force R&D to an unprecedented $25.9 billion (up 5.7 percent),
a total likely to go as much as $1.6 billion higher when 2008 supplemental appropriations
are added (see Table B and Figure 3). The Air Force
increase would go to programs in the “6.4” and higher categories for engineering,
development, and testing work on specific weapons systems. Army R&D would
also increase significantly, by 8.9 percent to $12.0 billion. By contrast, Navy
R&D would fall sharply [despite nearly $800 million in earmarks, mostly for
development (see Figure 3). Earmarks in the "6.4" and higher categories
total $1.3 billion, meaning there would be net cuts to core DOD development programs.
All told, R&D earmarks in the 2008 DOD budget are $3.5 billion, $2.2 billion
for "S&T" earmarks and $1.3 billion for advanced development earmarks.]
R&D
in the Defense Agencies would fall $1.4 billion or 6.4 percent to $20.5 billion
(see Table B). The research-oriented Defense
Advanced Research Projects Agency (DARPA) would see its budget fall $299 million
or 9.6 percent to $2.8 billion, from a combination of program cuts and rescissions
of previously appropriated funds. Slightly more than half of DARPA’s budget goes
to “6.1” and “6.2” activities, with the remainder devoted to “6.3” technology
development. Its broad research portfolio is aimed at expanding the frontiers
of knowledge and military technology to provide future solutions to DOD’s
technology needs. DARPA’s basic research funding would
increase 15 percent to $166 million, but funding for its applied research programs
would fall steeply, due partly to congressional frustration that DARPA has been
unable to spend all of its past budgets. Congress would also cut funding for the
research-oriented Defense Threat Reduction Agency (DTRA) with a 0.2 percent cut
to $455 million. The Chemical and Biological Defense Program (CBDP) is another
relatively research-oriented agency, devoting a third of its resources to research.
CBDP would receive a $1.0 billion total appropriation (up 3.6 percent).
Among other Defense Agencies, the Missile Defense
Agency (MDA) remains the largest with a congressional appropriation of $8.6 billion,
down $831 million or 8.9 percent from 2007 because of congressional concerns about
unrealistic missile defenses deployment schedules (see Table B). MDA no longer
funds research and is a development-oriented agency with almost all of its funding
in the “6.4” category; its budget has grown dramatically in recent years (see
Figure 3) and would remain high by recent historical standards even after the
2008 cuts.
Outlook for Defense
R&D
[The
final Defense bill, signed into law on November 13, makes DOD the only federal
agency to have its final 2008 budget.] The Defense bill contains a second continuing
resolution extending temporary funding for programs in unsigned appropriations
bills through December 14, and also contains special provisions giving DOD enough
temporary spending authority for war operations to tide it over until a full 2008
war supplemental can be enacted in early 2008. That forthcoming 2008 supplemental,
which could exceed $190 billion, will almost certainly boost 2008 DOD R&D
totals as well and turn what is now a slight cut into a large increase to a record
high exceeding $80 billion.
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November 7, 2007 (updated November 29)
AAAS R&D Budget and Policy Program
1200
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Washington, DC 20005
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AAAS R&D
Web site: http://www.aaas.org/spp/rd
