Federal Research and Development (R&D) Funding: FY2021

President Trump’s budget request for FY2021 includes approximately $142.2 billion for research and development (R&D) for FY2021, $13.8 billion (8.8%) below the FY2020 enacted level of $156.0 billion. In constant FY2020 dollars, the President’s FY2021 R&D request would result in a decrease of $16.6 billion (10.6%) from the FY2020 level. Federal Research and Development Funding, FY2019-FY2021 In billions of dollars / Source: CRS analysis of data from OMB, Analytical Perspectives, Budget of the United States Government, Fiscal Year 2021, Research and Development, February 10, 2020. In 2017, the Office of Management and Budget (OMB) adopted a change to the definition of development, applying a more narrow treatment that it describes as “experimental development.” This change was intended to harmonize the reporting of U.S. R&D funding data with the approach used by other nations. The new definition is used in this report. Funding for R&D is concentrated in a few departments and agencies. In FY2020, five federal agencies received 93.2% of total federal R&D funding, with the Department of Defense (DOD, 41.4%) and the Department of Health and Human Services (HHS, 26.2%) combined accounting for more than two-thirds of all federal R&D funding. In the FY2021 request, the top five R&D agencies would account for 93.8%, with DOD accounting for 42.1% and HHS for 26.6%. Under the President’s FY2021 budget request, nearly all federal agencies would see their R&D funding decline relative to FY2020. The only exception is the Department of Veterans Affairs, which would increase by $38 million (2.9%) in FY2021 to $1.351 billion. The largest dollar reductions in R&D funding would be made to the DOD (down $4.713 billion), the Department of Energy (down $3.168 billion), and HHS (down $2.843 billion). The largest percentage declines in R&D funding would be at the Department of Transportation (down 47.6%), the Environmental Protection Agency (down 35.4%), and Department of the Interior (down 25.5%) The President’s FY2021 budget request would reduce funding for basic research by $2.822 billion (6.5%), applied research by $5.125 billion (11.7%), development by $3.466 billion (5.5%), and facilities and equipment by $2.375 billion (39.6%). Several multiagency R&D initiatives continue under the President’s FY2021 budget. Some activities supporting these initiatives are discussed in agency budget justifications and are reported in the agency analyses in this report. However, comprehensive aggregate budget information on these initiatives will likely not be available until budget supplements for each are released later in the year. The request represents the President’s R&D priorities. Congress may opt to agree with none, part, or all of the request, and it may express different priorities through the appropriations process. As of the date of this report, the House has passed 10 of the 12 regular annual appropriations acts through the use of two consolidated bills, H.R. 7608 and H.R. 7617; the Department of Homeland Security Appropriations Act is the only appropriations act that includes R&D that the House has not yet passed. The Senate had not passed an appropriations act, but on November 11, 2020, the Senate Committee on Appropriations posted all 12 of the FY2021 appropriations acts on its webpage. Though not passed by the Senate, these bills were presented by the Senate Majority Leader as a basis for discussions and negotiation with the House. In recent years, Congress has completed the annual appropriations process after the start of the fiscal year. On September 30, 2020, Congress passed the Continuing Appropriations Act, 2021 and Other Extensions Act (P.L. 116-159) that, among other things, provides funding for most federal agencies through December 12, 2020. Completing the process after the start of the fiscal year and the accompanying use of continuing resolutions can affect agencies’ execution of their R&D budgets, including the delay or cancellation of planned R&D activities and acquisition of R&D-related equipment.