Intramural & Extramural Research & Development

The federal government supports intramural research to be conducted internally by federal agencies and federally funded research and development center (FFRDCs). It also supports extramural research to be completed by businesses, institutions of higher education, state and local governments, non-profits, and others. In recent years, the single biggest recipient of federal research funds are for-profit businesses across the United States – comprising 37% of all available federal funds for R&D in FY2023. Intramural researchers, including Department of Defense laboratory scientists and National Institutes of Health scientists, receive the second largest proportion of federal research funds (32%). Universities and colleges received approximately 24% of all federal R&D funds in FY2023. Specific recipients of federal research funding vary, including many scientists, engineers, computer scientists, as well as academic researchers and students in a variety of fields, including medical school students, biologists, engineers, chemists, and social scientists. But small businesses and millions of their employees across the country also benefit from federal investments in research. The SBIR/STTR programs, for example, provide billions in funds for small businesses to develop new technologies and identify pathways to commercialization.

Note: The federal government incurs an obligation when it enters into a legally binding financial agreement (through contracts, loans, grants, etc.), usually over a specified time period of one to three years (Congressional Budget Office, 2021).

Source: National Center for Science and Engineering Statistics, Survey of Federal Funds for Research and Development.

Legislators can set specific research and development (R&D) funding levels in individual appropriations bills – inclusive of both intramural and extramural research –, but they do not determine who receives individual research funds from the federal government. Instead, agency leadership, civil servants, and experts outside of government – including industry and business leaders – are part of the process of setting funding priorities, allocating funding, and reviewing and tracking awards. Applicants for R&D funding must meet a strict set of five criteria, including requirements that the activities be novel and creative in the concepts and hypotheses they test, uncertain in their likely outcome, systematic in its project design and management, and transferable and/or reproducible such that the ideas could be “freely transferred or traded in a marketplace.” Application review is competitive, rigorous, and meritocratic – regardless of whether the entity seeking funding is a business, university, hospital, non-profit, state government, or other research organization.

Activities Supported by R&D Spending

Extramurally funded research projects support a variety of research and research-related tasks inside and outside of government, including salary for researchers and support staff, technology and software purchase, workforce development and capacity building, relevant travel to access training and specialization opportunities, conference or meetings organization to facilitate the spread of ideas and collaboration between experts, and resource sharing initiatives between research centers and facilities, among others. Research & Development (R&D) is a subset of all federal research funds, including basic research, applied research, and experimental development. According to the NSF:

• 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.”
• Applied research is “original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific, practical aim or objective.”
• Experimental development is “systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.”

Federal funds also support R&D equipment and facilities, including acquisition, design, and/or production of equipment such as research vessels, DNA sequencers, and construction of facilities and ancillary infrastructure such as sewer lines and housing, if necessary. Facilities and administrative (F&A) costs – sometimes called indirect costs or overhead – fund activities necessary to facilitate the research, including construction of facilities – such as scientific laboratories – to undertake research as well as administration and management of the grant funding – promoting research transparency and ethics. These funds vary by recipient institution and federal agency, and often support manufacturing and construction industries across the country.