Trump Budget Cuts Defense S&T by 5.8% While Funding Third Offset Priorities

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Publication date: 
1 June 2017
Number: 
71

President Trump’s fiscal year 2018 budget requests a 5.8 cut to Department of Defense S&T accounts below currently enacted levels, but still above fiscal year 2016 levels. Funding for late-stage development, prototyping, and demonstration receives a substantial increase in line with DOD’s priorities under its Third Offset Strategy.

While President Trump’s fiscal year 2018 budget request increases defense spending by $54 billion, its funding proposal for the Defense Department’s S&T accounts is 5.8 percent below currently enacted levels. However, the budget request was formulated prior to a 7.8 percent increase in S&T funding enacted in fiscal year 2017 appropriations on May 5. The budget’s S&T proposal is 1.6 percent above the fiscal year 2016 level.

DOD S&T comprises three of the seven defense Research, Development, Test, and Evaluation (RDT&E) accounts: basic research, applied research, and advanced technology development. Under the Trump budget, spending on RDT&E as a whole would increase by about 14 percent, dominated by multi-billion-dollar boosts to late-stage development, prototyping, and demonstration activities. That increase would return those activities closer to the funding levels that prevailed between 2005 and 2010. This emphasis on late-stage work is consistent with DOD’s Third Offset Strategy, which stresses the need for near-term technological agility to maintain superiority in combat over increasingly sophisticated adversaries.

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Funding for RDT&E activities, 2000–2015

Funding for RDT&E activities, 2000–2015, from a Sept. 2016 presentation by then-Assistant Secretary of Defense for Research and Engineering Stephen Welby. BA 1=Basic Research, BA 2=Applied Research, BA 3=Advanced Technology Development, BA 4=Advanced Component Development & Prototypes, BA 5=System Development & Demonstration, BA 7=Operational System Development. Click to enlarge.

(Image credit – courtesy of DOD)

The chart below summarizes the changes the Trump administration is proposing for DOD’s S&T accounts. More details are available in FYI’s Federal Science Budget Tracker. DOD’s official budget documents can be accessed here.

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DOD S&T FY18 Budget Request

Click to enlarge

Proposed S&T funding by military service

The Trump administration’s proposed funding adjustments for DOD S&T are unevenly distributed among programs administered by the Army, Navy, and Air Force, and Defense-wide agencies such as the Defense Advanced Research Projects Agency, as illustrated in the following chart:

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DOD S&T FY18 Budget Request by Service

Click to enlarge

In recent years, Army S&T has been subject to a tug-of-war between the White House and Congress, with congressional appropriators driving spending upward against the administration’s more modest ambitions. Following suit, the Trump request maintains funding levels that are relatively close to those last requested by the Obama administration but are over 20 percent below those enacted in fiscal year 2017 appropriations.

Similarly, the Trump request would provide funding for Navy S&T programs that is close to the Obama administration’s most recent request but 8.4 percent below the currently enacted level. However, the budget would restore about one third of the 16 percent cut that Congress agreed to impose on basic research spending for fiscal year 2017.

The Air Force S&T budget would be cut back by a comparatively small 3.6 percent versus currently enacted levels. Basic research would receive a disproportionate 7.3 percent decrease to a level slightly above the Obama administration’s most recent request.

Under the Trump request, DOD-wide S&T programs would continue a recent growth trend, with a spending increase of 3.1 percent. The largest percentage increase, 8 percent, would be directed toward applied research. Spending on the Defense Advanced Research Projects Agency, which draws from all three S&T accounts, would increase to $3.17 billion from the $2.87 billion fiscal year 2016 level, the most recent period for which figures are publicly available.

Third Offset initiatives continue to find support

The Trump request’s support for DOD’s Third Offset Strategy is reflected not only in proposed spending increases for late-stage RDT&E activities, but also in its continued support for initiatives that DOD has promoted as elemental to the strategy.

Strategic Capabilities Office (SCO)

The SCO’s budget would increase from about $900 million to over $1.2 billion. DOD regards the office, which develops new tactical uses for existing military technologies, as elemental to its ability to remain technologically nimble. The office is directed by William Roper, a physicist and one of DOD’s standard bearers for the Third Offset Strategy.

Defense Innovation Unit Experimental (DIUx)

The Trump budget requests $29.6 million for DIUx through the DOD-wide advanced technology development account. In fiscal year 2017 appropriations, Congress provided only $10 million, or one-third of the Obama administration’s request, reflecting some skepticism of DOD’s vision for the unit. DIUx’s objective is to set up contracts with universities and fast-moving, innovation-focused companies that do not traditionally engage with DOD. Although small, DOD has continually promoted the unit as part of its Third Offset efforts. (In addition to its RDT&E funding, DIUx also currently receives about $15 million per year through DOD’s operations and maintenance budget. [UPDATE: The Trump budget for fiscal year 2018 seeks over $24 million in funding for DIUx through the operations and maintenance budget.])

Rapid Prototyping Program

The fiscal year 2017 appropriations law created a special $100 million account for rapid prototyping activities. The Trump budget requests the same level for fiscal year 2018.

Note on federal R&D funding measures

Following tradition, the Trump budget request includes an “Analytical Perspectives” document, which offers quantitative insights into the budget’s design, including government-wide figures for federal R&D funding. According to one measure, the document suggests that under the Trump budget federal expenditure on R&D would decrease by 21 percent, and, according to a second, it would increase by 2 percent. Both figures are potentially misleading for reasons that the document explains.

The 21 percent decrease is an artifact of a recategorization beginning in fiscal year 2018 of certain activities previously classified as technology development, but that are now not classified as R&D at all. This change was implemented to bring the White House’s figures into closer alignment with those used in the National Science Foundation’s Science and Engineering Indicators. According to the new definition, DOD operational system development, which the Trump administration proposes to fund at almost $32 billion, no longer counts as R&D so its contribution simply disappears from the record.

Employing the old definition of R&D, the increase in federal R&D spending in the Trump budget is accounted for by the increase in DOD’s operational system development spending alone. However, excluding this account from currently enacted levels and the Trump budget request, the deep cuts the budget request makes to other federal R&D spending significantly outweigh the spending increases proposed for other late-stage defense programs and for R&D in the National Nuclear Security Administration.

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