Types of US DOD Funding – The Color of Money

The Department of Defense (DoD) budget uses specific funding categories to manage resources for different stages of capability development, acquisition, and sustainment. The three primary categories are Research, Development, Test, and Evaluation (RDT&E); Procurement; and Operations & Maintenance (O&M). These funding categories have specific authorization durations and align with the framework of budget activities (BAs) tied to the "6.X" classification.

1. Research, Development, Test, and Evaluation (RDT&E):

RDT&E supports the development of new technologies and systems, from basic research through operational testing.

Authorization Duration:
  • Two-Year Funding: RDT&E funds are typically authorized for obligation for two years.

Budget Activities and 6.X Framework:

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1. Basic Research (BA 1, 6.1):
  • Focuses on fundamental scientific knowledge.
  • Example: Foundational studies in materials science.

2. Applied Research (BA 2, 6.2):
  • Translates fundamental science into potential solutions.
  • Example: Investigating applications of new materials.

3. Advanced Technology Development (ATD) (BA 3, 6.3):
  • Demonstrates technology feasibility in a relevant environment.
  • Example: Laboratory prototype testing.

4. Advanced Component Development and Prototypes (ACD&P) (BA 4, 6.4):
  • Develops components and integrates them into system-level prototypes.
  • Example: Testing components on operational platforms.

5. System Development and Demonstration (SDD) (BA 5, 6.5):
  • Full system development and testing to validate designs.
  • Example: Pre-production system demonstrations.

6. RDT&E Management Support (BA 6, 6.6):
  • Funds test ranges, facilities, and other support infrastructure.

7. Operational Systems Development (BA 7, 6.7):
  • Supports updates or improvements to fielded systems.

Applications:
  • Developing early-stage technologies.
  • Bridging concepts to operational prototypes.
  • Transitioning systems to procurement readiness.

2. Procurement:

3. Operations and Maintenance (O&M):

Procurement funds are allocated for acquiring and deploying fully developed systems and equipment.

Authorization Duration:
  • Three-Year Funding: Procurement funds are available for obligation over three years.

Applications:
  • Purchasing major systems like vehicles, aircraft, and ships.
  • Funding spares and support equipment necessary for operational readiness.

Constraints:
  • Cannot be used for R&D efforts.
  • Primarily applied to systems that have reached TRL 7-9 and completed Milestone C (Production and Deployment phase).
O&M funds support the day-to-day operations, sustainment, and readiness of military forces.

Authorization Duration:
  • One-Year Funding: O&M funds must be obligated within the fiscal year they are appropriated.

Applications:
  • Equipment maintenance and sustainment.
  • Training and exercises for military personnel.
  • Base support, utilities, and administrative costs.

Constraints:
  • Cannot be used for development or procurement of new capabilities.
  • Focused on sustaining operational systems and infrastructure.

Summary of Authorization Durations:

Understanding the alignment between funding types, technology maturity (6.X), and authorization durations ensures efficient allocation and compliance with budgetary constraints, enabling the DoD to progress technologies from basic research to fielded systems.