RDT&E budget activities, explained

Research, development, test, and evaluation (RDT&E) budget activities are the eight categories the Department of Defense (DoD) uses to sort RDT&E money by the kind of work it pays for. They run from Budget Activity 1, basic research, to Budget Activity 8, software and digital technology pilot programs, and are often written 6.1 through 6.8. The definitions are in Financial Management Regulation (FMR) Volume 2B, Chapter 5, dated September 2022, which was still the posted chapter as of April 29, 2026. Congress appropriates RDT&E by organization, and the budget activities appear in justification materials and committee reports, according to a Congressional Research Service (CRS) primer updated November 19, 2024.

Science and technology: budget activities 1 to 3

The FMR defines Budget Activity 1, Basic Research, as systematic study toward greater knowledge of the fundamental aspects of phenomena and observable facts, "without specific applications towards processes or products in mind." Program elements in this category involve pre-Milestone A efforts.

Budget Activity 2, Applied Research, is systematic study to understand the means to meet a recognized and specific need. The FMR says it is directed toward general military needs, precedes system-specific work, and is normally controlled by general level of effort. Program elements here involve pre-Milestone B efforts.

Budget Activity 3, Advanced Technology Development, covers subsystems and components and their integration into prototypes for field experiments or tests in a simulated environment. The results are proof of technological feasibility rather than hardware for service use. These program elements are pre-Milestone B and generally have Technology Readiness Levels of 4, 5, or 6.

CRS notes that DoD calls budget activities 1 to 3 the science and technology budget.

Development: budget activities 4, 5, and 7

Budget Activity 4, Advanced Component Development and Prototypes, funds the evaluation of integrated technologies or prototype systems in a high-fidelity, realistic operating environment, before Milestone B. Major programs should complete Technology Readiness Levels 6 and 7 here.

Budget Activity 5, System Development and Demonstration, covers programs that have passed Milestone B and are doing engineering and manufacturing development before full-rate production. Prototype performance is near or at planned operational levels, and the work supports Milestone C, live fire testing, and initial operational test and evaluation.

Budget Activity 7, Operational System Development, funds upgrades to systems already fielded or approved for full-rate production, with production funding expected in the current or next fiscal year.

CRS describes budget activities 4, 5, and 7 as applying existing scientific and technical knowledge to current or near-term operational needs. CRS's September 2022 report adds that the Office of Management and Budget (OMB) no longer counts 6.7 or 6.8 as research and development in federal totals.

Support and software: budget activities 6 and 8

Budget Activity 6, RDT&E Management Support, funds test ranges, military construction, maintenance of laboratories, operation of test aircraft and ships, and studies in support of the RDT&E program.

Budget Activity 8, Software and Digital Technology Pilot Programs, funds software, tools, services, process re-engineering, and related work for approved pilot programs, which may buy commercial off-the-shelf software. Pilots are nominated to the Under Secretary of Defense (Acquisition and Sustainment), and a project that fails the pilot criteria may be removed from Budget Activity 8. The September 2022 chapter added this definition and cancelled an interim policy dated June 4, 2020. CRS says DoD added the category in its FY2021 request. The September 7, 2022 CRS report said the FMR had not been updated to include 6.8; the chapter now posted, dated September 2022, includes it.

How a program element number shows the budget activity

The FMR calls the program element the primary data element in the Future Years Defense Program. Requests for new ones go to the Office of Cost Assessment and Program Evaluation for approval. "In general," the chapter says, program elements in budget activities 1 to 6 begin with 06, for Major Force Program 6, Research and Development. The third and fourth positions give the budget activity, so 0602 marks Budget Activity 2. Budget Activity 7 program elements instead carry the fielded system's Major Force Program, such as 01 for a strategic system.

The FY2027 RDT&E Programs exhibit, known as the R-1 and dated April 2026, shows the pattern and its limits. Program element (PE) 0601102A, Defense Research Sciences, is Budget Activity 1. PE 0101113F, B-52 Squadrons, is Budget Activity 7. PE 0607137A, the Chinook Product Improvement Program, is also Budget Activity 7 but begins 06, and PE 0603778A, MLRS Product Improvement Program, sits in Budget Activity 7 despite its 03. The Planning, Programming, Budgeting, and Execution (PPBE) Reform Commission's final report notes that the final letters mark the Component, such as A for Army. For any one program element, the activity column in the R-1 gives the assignment.

What the budget shows and proposals to change it

The FY2027 R-1 requests $2,144,720 thousand for basic research, $132,750,742 thousand for operational system development, and $1,986,055 thousand for software and digital technology pilot programs, within a $343,688,921 thousand total that combines discretionary and mandatory requests and includes activities unique to the Golden Dome for America Fund. Appropriations law still provides lump sums by account: the Consolidated Appropriations Act, 2026 gives Research, Development, Test and Evaluation, Army $16,705,760,000, available until September 30, 2027.

The commission's Recommendation 5, in March 2024, would consolidate the budget activities. The report notes that transition into a program of record generally occurs between budget activities 4 and 5, drops the separate software activity its interim report had included, and proposes implementation beginning with the FY2026 President's budget. The April 2026 R-1 still uses all eight.

What to check

• Which edition of FMR Volume 2B, Chapter 5 does a document quote? The September 2022 chapter is the first to define Budget Activity 8.
• Does a claim about a program's stage match the R-1 budget activity column, not just the program element digits?
• Is a figure from 6.1 to 6.3 alone (science and technology) or from all RDT&E?
• Does a federal research and development total include 6.7 and 6.8, which OMB no longer counts?
• Has a consolidation of budget activities been adopted in the FMR and the R-1, or only recommended?

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Sources

1. 1DoD 7000.14-R, Financial Management Regulation, Volume 2B, Chapter 5, Research, Development, Test, and Evaluation Appropriations (September 2022) · Office of the Under Secretary of Defense (Comptroller)
2. 2RDT&E Programs (R-1), Department of War Budget, Fiscal Year 2027, April 2026 · Office of the Under Secretary of War (Comptroller)
3. 3Defense Primer: Research, Development, Test, and Evaluation (IF10553), updated November 19, 2024 · Congressional Research Service
4. 4Department of Defense Research, Development, Test, and Evaluation (RDT&E): Appropriations Structure (R44711), updated September 7, 2022 · Congressional Research Service
5. 5Defense Resourcing for the Future: Final Report · Commission on Planning, Programming, Budgeting, and Execution Reform, March 6, 2024
6. 6Public Law 119-75, Consolidated Appropriations Act, 2026 · U.S. Government Publishing Office

Where this shows up in our work

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• ELLMENT, the offline LLM for E-2D crews answers a crew's question from the aircraft's own manuals and cites the page, with no network.
• TRACE, the offline S1000D and IETM viewer opens S1000D, MIL-STD-3001 and PDF technical manuals on a tablet with every marking intact.