Uptick in FY14 Federal R&D Obligations

In May, the NSF’s National Center for Science and Engineering Statistics published an InfoBrief with its figures on federal funding for R&D for fiscal 2012–14 (FY12–14). The data were collected from February to August of 2014 from the “NSF Survey of Federal Funds for Research and Development: FYs 2013–15,” which was sent to federal agencies.

The 2013 federal budget sequestration (see IBO 3/15/13) appears to have had a notable impact on total R&D obligations, evidenced, in most cases, by FY13 reductions and partial recovery in FY14, whether by performer (government, university, etc.) or agency (DOE, NSF, etc.). Of the agencies considered in this article, the exceptions were the DOE and USDA, whose FY14 recoveries exceeded FY13 cuts. Despite cuts across the board for all agencies in FY13 by character of work—basic research, applied research, development and R&D plant—in FY14, only federal obligations for development, in current dollars, fell below FY12 levels.

Total R&D obligation refers to obligations for basic and applied research, development, and R&D plant (facilities and fixed equipment). Data from FY12 and FY13 are actual amounts, whereas FY 2014 data are preliminary. Amounts are in current dollars unless otherwise indicated. The NSF defines obligations as “the amounts of orders placed, contracts awarded, services received and similar transactions during a given period, regard-less of when the funds were appropriated and when future payment of money is required.”

Total R&D

Total FY13 federal R&D obligations fell 9.5% overall to $127.3 billion and showed a 2.8% recovery in FY14. In constant currency, the changes were more dramatic, with a 10.8% drop in FY13 and an FY14 recovery of 1.2%. Excluding R&D plant, federal R&D obligations rose 2.6% in FY14 following a 9.5% decline in FY13. In constant currency, they declined 10.8% in FY13 and rose 1.0% in FY14. All figures that follow exclude R&D plant.

The same trend was evident for basic research, applied research and development when the Department of Defense (DOD) was excluded. The DOD’s FY14 obligations comprised 49% of overall R&D obligations, at $63.6 billion. Excluding defense, FY13 R&D obligations fell 4.4% (5.8% constant) but grew 5.1% (3.5% constant) in FY14.

Character of Work

Separation of R&D obligations by character of work revealed differences in funding priorities; not all types of research were affected in the same way by sequestration. In FY13, obligations for basic research, applied re-search and development accounted for 23%, 23% and 52% of total R&D obligations, at $29.8 billion, $29.4 billion and $66.2 billion, respectively. As shown in the graph above, overall R&D obligations fell in FY13 regard-less of character of work. However, development was hit the hardest, with a drop of 13.5%. Nonetheless, FY14 obligations for basic and applied research showed net gains over FY12.


The entities conducting R&D, or performers, were affected to differing degrees from FY12 to FY14. In each year, industry was the performer with the highest federal obligations for R&D. It also experienced the largest decline in obligations in FY13, followed by agencies (intramural R&D), and universities and colleges. In FY13, R&D obligations for these three categories of performers comprised 40%, 26% and 21% of total federal R&D obligations, at $49.5 billion, $33.0 billion and $25.8 billion, representing declines of 15.9%, 4.1% and 6.3%, respectively. Their increases in FY14 were 2.9%, 0.8% and 4.6%, respectively. In contrast, federally funded re-search and development centers (FFRDCs), which accounted for 8% of obligations in FY13, experienced an increase in obligations in FY13, albeit by only 0.2%, and an increase in FY14 of 2.0%.


R&D obligations for five major federal agencies conducting R&D were broken down by performer. Excluding the DOD and NASA, of the agencies for which data were compiled, the largest R&D obligations in FY14 were for the Department of Health and Human Services (DHHS), the DOE and the NSF, at $30.3 billion, $10.4 billion and $5.1 billion, respectively. The pie chart below indicates the percentages that each of the agencies represented of their combined FY14 R&D obligations of $45.8 billion.

Both the DHHS and its largest performer, universities and colleges, were affected similarly in FY13 and FY14. The agency’s R&D obligations fell 5.8% in FY13 but rose 3.1% in FY14. Universities and colleges accounted for 56% of the DHHS’s FY14 R&D obligations, at $17.1 billion. These obligations decreased 5.9% in FY13 before increasing 3.2% in FY14.

The DOE fared better than the DHHS, with a 1.1% FY13 drop and a 5.3% FY14 rise in R&D obligations. In fact, preliminary FY14 obligations for the agency were 4.1% higher than those in FY12. FFRDCs received the largest obligations from the DOE in FY14, representing 65% of total obligations, or $6.8 billion. Unlike other perform-ers for the agency, obligations for FFRDCs rose in both FY13 and FY14, increasing 6.5% and 1.0%, respectively.

Changes in obligations for the NSF disproportionately affected intramural performers. Overall, in FY13, the NSF’s R&D obligations declined 4.1% but increased 4.2% in FY14. Like the DHHS, the performer for the NSF in FY14 with the largest share of obligations was universities and colleges, at 82%, or $4.3 billion. Obligations for this performer dipped only 0.5% in FY13 but grew 3.9% in FY14 for a 3.7% net gain. In FY13, intramural obligations plummeted 80.0%, from $88 million to $18 million. FY14 obligations did not change.

Unlike for development, federal obligations for research increased in FY14 over FY12 levels, despite cuts in FY13. For research overall, as well as for applied and basic research each, FY14 obligations for the DOE and USDA surpassed FY12 levels. The USDA’s FY14 R&D obligations jumped 17.7% and 19.2% for basic and ap-plied research, respectively, the biggest increases compared to the DHHS, DOE and NSF. The DHHS and NSF both suffered overall research obligation declines in FY13 that were not fully recovered in FY14. However, for applied research, the NSF’s FY14 obligations increased over FY12 levels, rising 18.8%.

Field of Research

Research obligations for broad fields of science and engineering varied from FY12 to FY13. For the life and physical sciences, research obligations fell in FY13 by 5.3% and 2.0% to $29.3 billion and $6.3 billion, respectively. Defying this trend, FY13 obligations for the environmental sciences gained 4.0% to $4.0 billion. Life science research, which did not recover fully from FY13 cuts, accounted for 50% of the $62.7 billion in research obligations in FY14, and its net decrease in obligations from FY12 to FY14 was 1.4%.

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