Taxpayer Funded R&D
$120.6 Billion and Counting...
The FedInvent team is getting its data ready for prime time. In the meantime, we are reporting on the basics of how the federal innovation ecosphere works. Today’s post is about the money, the federal R&D sending that enables taxpayer-funded patents.
IT STARTS WITH FUNDING
The United States spent over $548 billion on R&D in 2017 according to the 2020 report by the National Science Foundation, the most recent data available. Twenty two percent (22%) — $120.6B — of that spending came from US taxpayers.
Federal funding supported half (51%) of all academic R&D; thirty five percent (35%) of R&D performed by nonprofits — research institutes, foundations, non-governmental organizations, and others ; and six percent (6%) of R&D performed by business.
Taxpayer funding for the HERD, NSF’s name for Higher Education R&D entities, was over $32B in federal funding. The top ten HERD recipients received $7.2B. Johns Hopkins University, the top recipient of taxpayer funding for R&D, received $1.753B, yes, that’s a B.
The numbers on how much the federal government spends on R&D are fluid. Different constituents need different perspectives. National Science Foundation (NSF) says there is $548B in US R&D and $120.6B in federally funded R&D. Congressional Research Service using NSF’s numbers, says that there is $580B in US R&D and $127B in federally funded R&D. The numbers are epic no matter whose numbers you use.
THE BIG EIGHT
Eight federal departments and agencies together account for most of the federal R&D spending. Defense has long been a federal R&D budget priority, accounting for 44% of federal R&D spending in 2017. Over half, 56% of the federal R&D budget, is devoted to non-defense work.
Department of Defense
Health and Human Services
Department of Energy
National Science Foundation
Department of Commerce
Department of Agriculture
Department of Transportation
National Aeronautics and Space Administration
Health and environment research account for slightly more than one-half (56%) of federal non-defense R&D budget. The other federal agencies with large R&D portfolios—the Department of Health and Human Services (HHS), Department of Energy (DOE), National Science Foundation (NSF), Department of Agriculture (USDA), Department of Commerce (DOC), and Department of Transportation (DOT) — focus primarily on basic and applied research. The National Aeronautics and Space Administration (NASA) distributes its budget more evenly across the different types of R&D, with about half going to basic and applied research and half to experimental development.
R&D DEFINED
Forty two percent (42%) of all basic research in the US was funded by the US taxpayer. Eighty percent (80%) was focused on applied research. The balance was spent on development. The three categories are defined as:
Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view. Basic research is aimed at gaining a better understanding of a subject, phenomenon or basic law of nature. Basic research is an essential element of scientific and technical discovery.
Applied research is original investigation undertaken to acquire new knowledge; directed primarily toward a specific, practical aim or objective. Applied research is designed to answer specific questions aimed at solving problems. New knowledge acquired from applied research has specific commercial objectives with the focus on how to create products, procedures or services.
Development (or experimental development) is the systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing and operationalizing new products or processes or to improving existing products or processes.
FUNDING VEHICLES
We’ll close this post with a look at the funding vehicles the federal government uses to move money from its R&D budget to the scientists, researchers, and technologists that invent things.
The Government enters into different types of agreements when it funds R&D. There are four basic types of contract vehicles that may result in a taxpayer funded patent. Any of these contracts or a combination of them might result in a novel, useful, and non-obvious invention that is patent worthy.
Procurement Contracts — The government is exchanging money for deliverables. The contractor building a new fighter jet for the Department of Defense makes a discovery that leads to an invention which leads to a patent.
Research Grants — The government funds Investigators, scientists, and technologists to undertake research of importance to the funding agency or that is part of US science and technology policy goals. Investigators conducting the research make a discovery, file an invention disclosure and a patent application that leads to a patent.
Cooperative Agreements — Cooperative Agreements, also called Cooperative Research And Development Agreements (CRADA or CRDA), are agreements between a government agency and a private company or university to work together on research and development. This may include performance of experimental, developmental or research work. This work may be funded in part or in whole by the federal government.
Other Transactions (OTs) — The newest contract category, called "Other Transactions" covers a broad swath of mechanisms to accelerate getting things done. This type of funding vehicle is the newest, the most interesting and the most dynamic. Following are a few examples of OTs.
Section 804 — DOD initiated rapid prototype and rapid fielding programs, known as Section 804 authorities,” This type of program is named for Section 804 of the 2016 National Defense Authorization Act. The law enabled DOD to build prototypes that can be produced and fielded within two to five years. Broadly it sought to make sure that DOD is not buying yesterday’s technology with today’s money to deploy tomorrow.
Pitch Days — On pitch days government agencies invite small businesses to come in and give a pitch on how they would solve an agency need. Fifteen slides, a 15 page proposal, and a fifteen minute pitch to convince the evaluators that the firm’s solution to the government’s problem is worth funding. Successful pitchers get an immediate Small Business Innovative Research (SBIR) award paid on the spot via government credit card.
MAY THE FORCE BE WITH YOU
The US Air Force conducted Pitch Days to support its Kessel Run program, its effort to deliver new software capabilities faster. The program’s name is a shout out to Han Solo whose Millennium Falcon made the infamous Kessel Run in just over 12 parsecs. He was delivering pretty fast. The Air Force wants to do the same.
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Next Up: The Bayh-Dole Act — The framework for turning federal innovation into economic growth.
About FedInvent
FedInvent reports on on federally funded research and development; taxpayer-funded inventions and patents; and the science and technology priorities and policies that set the national innovation agenda. And…we follow the money.