New Budget Prioritizes Science, Technology

By Cari Shearer and Jacob Winn

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After a late budget request and multiple continuing resolutions, President Joe Biden signed into law a full-year omnibus appropriations act for the 2023 fiscal year — with increased funding for defense science and technology programs.

Science-and-technology programs received more than $22 billion in direct appropriations across the Defense Department — more than 18 percent above fiscal year 2022 funding, and nearly $6 billion more than what was requested for 2023.

These additions — commonly referred to as congressional earmarks — when informed by industry or university technical and defense market expertise, and aligned with transition opportunities, can represent an expedited path through the otherwise cumbersome traditional programming and budgeting process.

This can make the programs funded by this year’s increases more responsive to threats, technological opportunity or program realities. That said, earmarks are still no substitute for well-planned budget requests and consistent levels of funding.

This year’s science-and-technology appropriations gave well-deserved focus to emerging technologies, especially those recognized by the Defense Department as critical technology areas that range from seed areas like quantum science, to effective adoption sectors like artificial intelligence and microelectronics, as well as defense-specific technologies like hypersonic and directed energy systems.

Taken together, these funding increases may go a long way toward helping the department develop and procure more systems. To understand these trends, the Emerging Technologies Institute is developing a capability to track budget and appropriations data to allow the National Defense Industrial Association and its members to better monitor these critical investments and the opportunities they represent to develop and deliver new defense technologies.

The S&T budget includes the funding provided to the services and defense agencies, including the Defense Advanced Research Projects Agency and the Missile Defense Agency, to support basic research, applied research and advanced technology development activities.

These research-and-development programs fund scientific inquiry and breakthroughs as well as engineering and early prototyping activities intended to transition into formal acquisition efforts and operational use. Breakthroughs stemming from defense research and development are rooted in defense needs but can have far-reaching impacts for the commercial world when they advance academia and industry’s knowledge in domains like materials science, biology or renewable energy.

Measuring the percentage of the defense budget’s topline that goes toward science and technology is a popular metric for defense analysts trying to determine whether the Defense Department is over- or under-investing in its future capabilities. Many say 3 percent of topline funding is the ideal goal. In 2023, S&T received just under 2.8 percent of the topline. While this still falls short of the ideal, it represents the most significant year since the funding last met the 3 percent target in 2007 — and much higher than 2022’s 2.16 percent.

On top of that, Congress allocated more than $150 million for military construction to modernize military lab and test center infrastructure.

Basic research activities, typically performed at universities, received nearly $3 billion, a 5.7 percent increase over fiscal year 2022 levels. Much of this extra funding was provided through grants for university research on priorities like artificial intelligence and material science, fields that are crucial to maintaining a technological edge over peer competitors.

Applied research activities fared even better. These programs received nearly $8 billion, an almost 13 percent increase over 2022. This includes added investments for projects related to offensive hypersonics, operational energy, biotechnology and additive manufacturing.

Of the three categories of defense S&T, advanced technology development activities received almost $11 billion, nearly 26 percent more than 2022. These programs typically fund industry technology demonstrations and early prototypes. While Congress is on the right track by funding more of these projects, there are still perceived gaps in the Pentagon’s ability to establish a predictable pathway into formal acquisition programs. The requirements-based, funding, contracting, market, organizational and cultural barriers to technology transition are commonly captured under the simple term: “valley of death.”

To help the department overcome these challenges and be more responsive to emerging technology opportunities, Congress did set aside some additional funding outside the S&T budget activities to transition successful projects into production. That included an approval of the administration’s request for a major investment in the Rapid Defense Experimentation Reserve Fund of more than $300 million.

Additionally, Congress provided the Accelerate the Procurement and Fielding of Innovative Technologies program $150 million for procurement activities, a 50 percent increase over the request. This funding should be continued in future years as it will likely benefit contractors, especially small businesses, whose work on breakthrough technologies would otherwise not lead them to a military customer.

To maintain U.S. innovation, the Biden administration and Congress should continue to prioritize S&T funding next year. Additionally, the Defense Department should work to better plan the transition paths for high-priority science-and-technology efforts into prototyping and acquisition and build its budget accordingly.

Legislators should also consider making S&T goals and thresholds more explicit. They should explore the efficacy of requesting an annual list of underfunded areas from the department.

A regression to the mean in future years would lead to canceled or delayed research and development projects, fewer rapid developments, missed opportunities and more programs languishing in the valley of death.

Jacob Winn is an associate research fellow, and Cari Shearer is a research intern, at NDIA’s Emerging Technologies Institute.

Topics: Budget, Emerging Technologies

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