T his report provides an overview of the portion of Department of Defense (DOD) research, development, testing, and evaluation (RDT&E) funding referred to as Defense Science and Technology (Defense S&T). Defense Science and Technology is a subset of DOD RDT&E appropriations that includes funding for basic research (6.1), applied research (6.2), and advanced technology development (6.3)—the earliest stages of the RDT&E process. Perspectives on the Roles and Value of Defense S&T

Defense S&T is of particular interest and importance to Congress due to its perceived value in supporting military competitive advantage. Defense S&T is also of interest to key stakeholders in the private sector and academia. For example, advocates of strong and sustained Defense S&T funding assert that this funding plays important and unique roles in the DOD innovation system. Defense S&T supports both
medium -term, evolutionary technologies and incremental innovation s to help improve existing products and systems; and longer-term, revolutionary technologies to support U.S. technological dominance, deter conflict, and defeat adversaries. These technologies—both evolutionary and revolutionary—are seen by most warfighters and policymakers as central to U.S. national security as well as to the lives of those serving in uniform in the medium and long term. During the FY1978-FY2017 period, Defense S&T grew at a compound annual growth rate (CAGR) of 4.6%. Similar to overall Defense S&T, most of the growth in applied research occurred between FY1978 and FY2006 (4.8% CAGR); from FY2006 to FY2017 applied research grew at a slower pace of 0.3% CAGR. Advanced technology development funding nearly quadrupled in constant dollars from FY1978 to FY1993. The Navy accounted for the largest share (29.2%) of DOD basic research, followed by the Defense-Wide agencies (27.3%), the Air Force (23.4%), and the Army (20.1%). The Defense Advanced Research Projects Agency (DARPA) is the largest funder of basic research among the D-W agencies, accounting for 17.9% of total DOD RDT&E. Universities and colleges performed nearly half ($1.1 billion, 48.8%) of DOD basic research in FY2016. Approach: Defense S&T as a Share of Total DOD Funding

A 1998 Defense Science Board (DSB) report suggested two conceptual frameworks for Defense S&T funding. The first approach, using industrial practice as a guide, proposed setting Defense S&T funding at 3.4% of total DOD funding: 
The DOD S&T budget corresponds most closely to the research component of industrial R&D. Approach: DOD Science and Technology as a Share of DOD RDT&E

The DSB's second proposed framework, also based on industrial practice, was to use the metric of Defense S&T as a share of DOD RDT&E:
Another approach to this question is to note that the ratio of research funding to total R&D funding in high-technology industries, such as pharmaceuticals, is about 24%. In 2015, the Coalition for National Security Research, a coalition of industry, universities, and associations, asserted that Defense S&T funding should be 20% of DOD RDT&E. At the time of the DSB report (1998), S&T's share of DOD RDT&E was approximately 20.7%. After rising to 21.5% in FY2000, the share fell to 15.2% in FY2011, and then recovered to 17.9% in FY2017. Approach: DOD Basic Research as a Share of Defense S&T

In 2004, the Council on Competitiveness asserted that DOD basic research should be at least 20% of Defense S&T. As a share of Defense S&T, basic research declined from 14.6% in FY1996 to 11.0% in FY2006, then began a steady rise to 18.4% in FY2015, its highest level in two decades. Basic research's share of Defense S&T fell in 2016 to 17.4% and in 2017 to 16.2%.
Defense science and technology (Defense S&T) is a term that describes a subset of Department of Defense (DOD) research, development, testing, and evaluation (RDT&E) activities. The Defense S&T budget is the aggregate of funding provided for the three earliest stages of DOD RDT&E: basic research, applied research, and advanced technology development. Defense S&T is of particular interest to Congress due to its perceived value in supporting technological advantage and its importance to key private sector and academic stakeholders.
Advocates of strong and sustained Defense S&T funding assert that Defense S&T funding plays important and unique roles in the DOD innovation system, supporting medium-term, evolutionary technologies and incremental innovation that help improve existing products and systems, as well as longer-term, revolutionary technologies providing U.S. technological dominance, deterring conflict, and, when necessary, defeating adversaries. Both evolutionary and revolutionary technologies are viewed by most warfighters and policymakers as central to U.S. national security as well as to the lives of those serving in uniform.
In FY2017, Defense S&T was $13.4 billion, nearly six times the FY1978 level of $2.3 billion. Most growth occurred from FY1978 to FY2006, at a compound annual growth rate (CAGR) of 6.4%. From FY2006 to FY2017, growth was slower (0.1% CAGR). Most of the growth and volatility was in advanced technology development. In FY2017 constant dollars, Defense S&T funding peaked at $16.2 billion in FY2005 and declined by $2.8 billion through FY2017.
In FY2016, basic research accounted for $2.2 billion of the Defense S&T total. The Navy accounted for the largest share of DOD basic research (29.2%), followed by the Defense-Wide agencies (27.6%), Air Force (23.0%), and Army (20.3%). Universities and colleges performed nearly half ($1.1 billion, 48.8%) of DOD basic research in FY2016; DOD and other intramural federal laboratories performed 22.9%; industry, 18.2%; other nonprofits, 7.5%; federally funded research and development centers (FFRDCs), 0.7%; and others, 2.0%.
A number of recommendations have been put forth by various organizations regarding the appropriate level of funding for Defense S&T and DOD basic research, as well as the level of funding for investments in research supporting potentially revolutionary advancements.
A 1998 Defense Science Board (DSB) report recommended setting Defense S&T at 3.4% of total DOD funding. In 2001, the Quadrennial Defense Review recommended that 3.0% of total DOD funding be directed toward Defense S&T. In FY1996, Defense S&T was at the 3.0% level. It subsequently fell to 1.7% in FY2011 and has since risen to 2.2%. An alternative approach recommended by the DSB in 1998 was to set Defense S&T at a percentage of DOD RDT&E, similar to the industry ratio of research funding to total R&D funding (which it calculated for the pharmaceutical industry as 24%). In 2015, the Coalition for National Security Research (CNSR), a coalition of industry, universities, and associations, recommended a target of 20%. At the time of the DSB report, S&T's share of DOD RDT&E was approximately 21%. After rising to 21.5% in FY2000, Defense S&T's share fell to 15.2% in FY2011, and then rose to 17.9% in FY2016.
With respect to DOD basic research, the Council on Competitiveness (2004) and the CNSR (2015) recommended a target of at least 20% of Defense S&T. As a share of Defense S&T, basic research declined from 14.6% in FY1996 to 11.0% in FY2006, then began a steady rise to 18.4% in FY2015. In FY2016, basic research's share of Defense S&T was 17.4%. In its 1998 report, the DSB recommended that one-third of Defense S&T be devoted to research targeted toward revolutionary technological advancements. The Defense Advanced Research Projects Agency (DARPA) has been the lead DOD agency focused on revolutionary R&D. In FY2017, DARPA accounted for 21.6% of Defense S&T.