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FY23 Budget Outcomes: Department of Defense

FEB 24, 2023
Funding for Defense Department R&D, prototyping, and testing activities has continued along its recent steep upward trend and is now double its level six years ago. This year, budgets have significantly expanded for special innovation initiatives as well as priority R&D areas such as microelectronics and biomanufacturing.
Will Thomas
Spencer R. Weart Director of Research in History, Policy, and Culture

The budget for the Department of Defense’s Research, Development, Test, and Evaluation (RDT&E) accounts increased 17% in fiscal year 2023 to $144 billion. The appropriation extends a trend of rapid growth that has now led to a doubling of RDT&E spending over the past six years.

RDT&E encompasses activities ranging from foundational scientific research to the prototyping and testing of military weapons and equipment. Funding for the earlier-stage accounts — Basic Research, Applied Research, and Advanced Technology Development — increased 18% to $22.3 billion, decisively turning back the 13% cut the Biden administration requested. The scale of this year’s increase stems from the overall boost to defense spending that Republicans negotiated in the deal they struck with Democrats to pass spending legislation for the year.

Congress provided detailed direction for DOD in an explanatory statement accompanying its appropriations legislation and in a report prepared by House appropriators. Summary figures are collected in FYI’s Federal Science Budget Tracker .

FY23 Appropriations: Department of Defense RDT&E (chart)

Congressional add-ons

Congress commonly funds certain elements of DOD’s budget at levels well above those requested. Such add-ons are the primary source of funding for certain efforts, such as the Defense Established Program to Stimulate Competitive Research (DEPSCoR) and a program that supports Historically Black Colleges and Universities and other minority-serving institutions (MSIs). Echoing the scenario that played out last year, the final appropriations deal created extensive room in DOD’s budget for lawmakers to also channel funding into favored R&D efforts.

For instance, the Army’s Ground Advanced Technology account tends to attract large numbers of add-ons and received $416 million this year, significantly exceeding the $281 million provided last year and especially the $33 million requested. The account generally funds R&D related to ground maneuvers and the additional funding is spread across 55 items bearing descriptions such as “clean modular hydropower technology,” “ruggedized deployable solar generators,” and “graphene applications for military engineering.”

Basic research and education programs

Basic research. Funding across basic research accounts increased 6% to $2.92 billion, defying the cuts the administration and the House proposed, but falling well short of the 22% increase sought by Senate appropriators.

Space Force basic research. Congress provided $25 million for the Space Force to support basic research, the first time the service branch has received funds for that purpose in its short history. The Space Force is also allocated $30 million to contribute to the Defense Universities Research Instrumentation Program (DURIP), which draws on budgets from across service branches to provide universities with grants to acquire research instruments.

DURIP and MURI. Across all service branches, DURIP is receiving $163 million, $31 million more than last year and $120 million more than requested. Funding for the Multidisciplinary University Research Initiative (MURI), which awards multiyear grants to university-based teams, declined $10 million to $213 million, in line with the request.

Capacity-building programs. The budget for DOD’s HBCU and MSI program increased marginally to $101 million. Funding similarly edged upward to $20 million for DEPSCoR, which funds research capacity-building activities in states and territories that have traditionally received low levels of research funding.

National Defense Education Program. The budget for NDEP increased from $145 million to $174 million, continuing a run of funding increases. Much of NDEP’s budget is for the SMART scholarship-for-service program, but Congress also allocated funds to other initiatives, including $15 million for the Manufacturing Engineering Education Program. MEEP is funded entirely as a congressional add-on but did not receive an allocation last year.

Selected innovation initiatives

DARPA. The budget for the Defense Advanced Research Projects Agency rose 5% to just over $4 billion. Of the total, $481 million is from DOD’s basic research accounts, representing a $40 million drop.

Defense Innovation Unit. DIU is one of a number of mechanisms DOD employs to build contracting relationships with innovative companies that work primarily outside the defense sector and its budget leapt upward this year from $43 million to $112 million. Congress had until now been reluctant to increase its funding, prompting its director to publicly criticize the situation and DOD’s commitment to the unit just before he stepped down.

National Security Innovation Network. Working in conjunction with DIU, NSIN is charged with building networks of innovators in academia and startup companies. Congress provided it with $79 million, more than doubling its budget, and within that allocated $50 million to establishing “mission accelerator centers,” which are regional hubs for facilitating engagement between DOD, venture capital firms, and startups. NSIN established the first such center in Seattle in 2021.

AFWERX sign

AFWERX is one of a number of special innovation initiatives associated with the U.S. military that received significant funding boosts this year. (Image credit – U.S. Air Force)

AFWERX. Another mechanism for cultivating connections with innovative companies is AFWERX, an arm of the Air Force Research Laboratory. Congress increased its budget from $140 million to $212 million. Those figures do not account for AFWERX’s role in administering the Air Force’s Small Business Innovation Research and Small Business Technology Transfer programs, which bring its total budget to more than $1 billion. Congress has encouraged continued expansion of AFWERX, stating it regards the program as a “novel acquisition approach to accelerate development of emerging technology.”

RDER. Still another mechanism for technology acceleration is the relatively new Rapid Defense Experimentation Reserve, an initiative championed by Under Secretary of Defense for Research and Engineering Heidi Shyu. The administration sought $358 million for RDER’s first year of full funding, but Congress only provided about three-quarters of that, reiterating concerns it expressed last year about how the program will be administered and how it will complement similar technology acceleration initiatives.

Selected technology initiatives

Microelectronics. The annual budget for the second phase of DARPA’s Electronics Resurgence Initiative increased from $411 million to $709 million, in line with the administration’s request. Funding for DOD’s Trusted and Assured Microelectronics accounts, which support related initiatives, increased from $818 million to $897 million.

In addition, DOD has received the first of five $400 million appropriations the CHIPS and Science Act is providing to establish what the department calls a “microelectronics commons.” The initiative aims to seed a series of regional technology hubs that will help develop microelectronics prototypes and transition R&D projects into production. The $2 billion DOD will receive in total for the commons complements the $50 billion the Commerce Department is receiving to promote domestic semiconductor manufacturing and R&D on a larger scale.

Quantum information science. DOD supports QIS through a number of programs, but Congress has taken a particular interest in expanding efforts centered on the Air Force Research Laboratory. It provided $52 million in add-on funding last year and it provided $90 million this year, comprising $30 million for ion trap quantum computing, $10 million for a quantum network testbed, $20 million for a secure quantum computing facility, and $30 million for university-based quantum materials applied research.

An experimental setup employed by the Air Force Research Laboratory’s Quantum Sensing and Timing group.

An experimental setup employed by the Air Force Research Laboratory’s Quantum Sensing and Timing group. (Image credit – AFRL)

High-performance computing. The budget for the High-Performance Computing Modernization Program, which serves the supercomputing needs of DOD scientists and engineers, increased from $229 million to $302 million, $50 million more than requested.

Biomanufacturing. Congress added $300 million for DOD to establish new biotechnology manufacturing institutes. Last September, the Biden administration launched a National Biotechnology and Biomanufacturing Initiative , which includes plans for DOD to spend a total of $1 billion over five years to bolster domestic biomanufacturing infrastructure. DOD already supports two biomanufacturing innovation institutes, BioFabUSA and BioMADE, which in fiscal year 2022 respectively drew $16 million and $17 million in funding from the department.

Mobile nuclear power. Funding for Project Pele is increasing from $117 million to $168 million, with most of the money going to a transportable nuclear reactor prototype that the company BWXT is building with the aim of beginning testing in 2024. However, $20 million is allocated to supporting prototype development by a second contractor. The runner-up in the original Project Pele contract competition was the company X-energy and Westinghouse was awarded funds during an earlier phase of the project. Congress has also provided DOD with $10 million to support the fabrication of TRISO fuel, which all the reactors in the Pele competition are designed to employ.

Nuclear propulsion. The administration proposed to increase funding for DARPA’s DRACO (Demonstration Rocket for Agile Cislunar Operations) effort from $37 million to $58 million. Congress did not provide the full requested amount for the account that funds DRACO, but appropriators did express general support for developing flight capabilities for cislunar space, suggesting DRACO itself is unlikely to receive less than requested. Last month, NASA and DARPA agreed to collaborate on an in-space demonstration of nuclear propulsion technology that will employ the DRACO spacecraft and a nuclear thermal rocket engine developed through NASA.

Missile early warning. Congress has increased funding for the development of a new satellite-based missile detection and tracking system known as Next-Generation Overhead Persistent Infrared (Next Gen OPIR) by $1 billion to $3.35 billion. The size of the project’s budget reflects the fact that DOD and Congress have sought to move it quickly toward launch with the aim of placing three satellites in geosynchronous orbit by 2028 and then two more satellites in polar orbits by 2030.

However, the head of DOD’s Space Development Agency recently announced that after Next Gen OPIR DOD will abandon the use of “big, exquisite, expensive satellites” operating in geosynchronous orbit in favor of large constellations of smaller satellites operating in lower orbits. Congress states that it supports the shift in missile warning architecture, though it also directs DOD to provide additional information about what the more proliferated system is expected to cost.

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