Those program costs typically associated with research and development (R&D) efforts, including the development of a new or improved capability to the point where it is appropriate for operational use. These costs are generally funded under the Research, Development, Test and Evaluation (RDT&E) appropriation.
RDT&E is one of the five major appropriations used by the Department of Defense. RDT&E finances research, development, test and evaluation efforts performed by both contractors and government installations in the development of equipment, material, or computer application software. This includes services (including government civilian salaries), equipment, components, materials, end items and weapons used in such efforts.
RDT&E appropriations are generally used to finance the following efforts: Research, Development, Test and Evaluation Efforts (including the equipment, material or computer application software developed with RDT&E funds); Development Test and Evaluation (DT&E) and Operational Test and Evaluation (OT&E); R&D installations and activities (finances the operation of certain government R&D installations and activities engaged in the conduct of R&D programs, such as laboratories and test ranges). Note that Navy R&D activities are operated under the Navy working Capital Fund. Customers purchasing goods and services from these Navy R&D activities will generally use RDT&E funds to finance these purchases and certain industrial facilities, and R&D installation RDT&E finances the acquisition or construction of certain industrial facilities costing less that $750,000 at R&D installations. Further detail on the criteria for funding efforts with RDT&E appropriations can be found in the DoD Financial Management Regulation 7000.14-R, Volume 2A, Chapter 1, paragraph 010213.
Each RDT&E appropriation is subdivided into seven budget activities (BAs): BA-1 Basic Research, BA-2 Applied Research, BA-3 Advance Technology Development (ATD), BA-4 Advance Component Development and Prototype (ACD&P), BA-5 System Development and Demonstration (SDD), BA-6 RDT&E Management Support, and BA-7 Operational System Development. More detailed definitions for RDT&E Budget Activities are contained in DoD Financial Management Regulation 7000.14-R, Volume 2B, Chapter 5, paragraph 050105.