The recent plan by the Trump Administration to cap indirect costs for NIH academic research, which has been put on hold by a federal judge, as well as cuts to several other agencies that are major funders of R&D, has put the spotlight on federal R&D spending. This month, the National Science Foundation’s (NSF’s) National Center for Science and Engineering Statistics released its latest figures on federal R&D obligations, part of an annual survey conducted by the NSF.

Types of Federal Spending:

• Budget authority: The amount of money available to an agency for specific purposes, set by law.
• Obligations: A legally binding commitment for goods or services, with monies set aside to be paid out in the future, usually in the form of grants and contracts.
• Outlays: The disbursement of cash, checks, and electronic transfers to execute previous obligations.

The report includes final numbers for fiscal year 2023 (FY23) (ending September 30, 2023) and preliminary estimates for FY24 (ending September 30, 2024). The figures track federal obligations, which are defined by the NSF as: “A legally binding commitment for goods or services, with monies set aside to be paid out in the future, usually in the form of grants and contracts.” Consequently, they may represent multi-year funding and not an agency or department’s annual R&D budget or spending.

In FY24, R&D obligations (consisting of obligations for basic research, applied research, and experimental development) for federal agencies rose 5.0% to $195.7 billion. This follows a 2.1% decline in FY23. This included a 0.3% increase for basic research to $47.4 billion, a 5.8% decline for applied research to $51.1 billion and a 14.4% jump for development to $97.0 billion in obligations (see graph). Excluding development, research obligations declined 2.9%.

The increase in FY24 obligations for R&D was mainly due to increases for the Department of Defense (DoD) and Department of Commerce (DoC). The DoD’s R&D obligations rose 8.2% to $93.2 billion. The DoC’s R&D obligations climbed twofold to $9.5 billion. Consequently, the DoD and DoC accounted for 46% and 5% of all federal agencies’ R&D obligations last fiscal year, respectively (see graph).  

Within the DoD, the largest increase was for the Defense Advanced Research Projects Agency (DARPA), with a 25.4% expansion to make up 5% of all DoD R&D obligations and 2% of all federal R&D obligations in FY24. As for the DoC, the largest increase in FY24 R&D obligations was recorded by the National Institute of Standards and Technology (NIST), which saw its budget jump sixfold to $7.5 billion. This equates to 4% of all federal R&D obligations that fiscal year and 79% of all DoC R&D obligations. The rise in NIST R&D obligations was related to the CHIPS Act, according to the NSF.

Second only to the DoD as a percentage of the federal government’s total R&D obligations in FY24 was the Department of Health and Human Services (DHHS). In FY24, R&D obligations for this agency fell 5.6% to $50.1 billion, or 25% of all federal R&D obligations. The bulk of DHHS R&D obligations went to the National Institutes of Health (NIH), which received $44.6 billion, a 0.5% increase. Consequently, the NIH made up 89% of all DHHS and 22% of all federal R&D obligations that year, respectively.

By R&D performer, the increase in R&D obligations was led by non-US performers, up 67.9% to $1.3 billion, or 1% of FY24 R&D obligations. Sliding the fastest was state and local government R&D obligations, down 28.6% to account for less than 1%. The highest share of R&D obligations was for business at 39%, an increase of 10.8% (see graph).

By the nine categories of R&D field broken out by the NSF, the largest increase in FY24 R&D obligations was recorded by engineering, rising 14.4% to $77.1 billion, which was the largest share of R&D obligations among all nine fields. The second-largest percentage of R&D obligations in FY24, $46.3 billion, went to the life sciences for a 6.4% decline. The third-largest dollar amount went to “other fields” and totaled $30.2 billion for an 8.9% increase.