Basic research is systematic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena and of observable facts without specific applications towards processes or products in mind. It includes all scientific study and experimentation directed toward increasing fundamental knowledge and understanding in those fields of the physical, engineering, environmental, and life sciences related to long-term national security needs. It is farsighted high payoff research that provides the basis for technological progress.  Basic research may lead to: (a) subsequent applied research and advanced technology developments in Defense-related technologies, and (b) new and improved military functional capabilities in areas such as communications, detection, tracking, surveillance, propulsion, mobility, guidance and control, navigation, energy conversion, materials and structures, and personnel support. Program elements in this category involve pre-Milestone A efforts.

Applied research is systematic study to understand the means to meet a recognized and specific need. It is a systematic expansion and application of knowledge to develop useful materials, devices, and systems or methods.  It may be oriented, ultimately, toward the design, development, and improvement of prototypes and new processes to meet general mission area requirements.  Applied research may translate promising basic research into solutions for broadly defined military needs, short of system development.  This type of effort may vary from systematic mission-directed research beyond that in Budget Activity 1 to sophisticated breadboard hardware, study, programming and planning efforts that establish the initial feasibility and practicality of proposed solutions to technological challenges.  It includes studies, investigations, and non-system specific technology efforts. The dominant characteristic is that applied research is directed toward general military needs with a view toward developing and evaluating the feasibility and practicality of proposed solutions and determining their parameters.  Applied research precedes system specific technology investigations or development.  Program control of the Applied Research program element is normally exercised by general level of effort.  Program elements in this category involve pre-Milestone B efforts, also known as Concept and Technology Development phase tasks, such as concept exploration efforts and paper studies of alternative concepts for meeting a mission need.

This budget activity includes development of subsystems and components and efforts to integrate subsystems and components into system prototypes for field experiments and/or tests in a simulated environment.  ATD includes concept and technology demonstrations of components and subsystems or system models.  The models may be form, fit and function prototypes or scaled models that serve the same demonstration purpose.  The results of this type of effort are proof of technological feasibility and assessment of subsystem and component operability and producibility rather than the development of hardware for service use.  Projects in this category have a direct relevance to identified military needs. [ATD] demonstrates the general military utility or cost reduction potential of technology when applied to different types of military equipment or techniques.  Program elements in this category involve pre-Milestone B efforts, such as system concept demonstration, joint and Service-specific experiments or Technology Demonstrations and generally have Technology Readiness Levels of 4, 5, or 6.  Projects in this category do not necessarily lead to subsequent development or procurement phases, but should have the goal of moving out of Science and Technology (S&T) and into the acquisition process within the future years defense program (FYDP).  Upon successful completion of projects that have military utility, the technology should be available for transition.

Efforts necessary to evaluate integrated technologies, representative modes or prototype systems in a high fidelity and realistic operating environment are funded in this budget activity.  The ACD&P phase includes system specific efforts that help expedite technology transition from the laboratory to operational use.  Emphasis is on proving component and subsystem maturity prior to integration in major and complex systems and may involve risk reduction initiatives.  Program elements in this category involve efforts prior to Milestone B and are referred to as advanced component development activities and include technology demonstrations.  Completion of Technology Readiness Levels 6 and 7 should be achieved for major programs.  Program control is exercised at the program and project level.  A logical progression of program phases and development and/or production funding must be evident in the FYDP.

SDD programs have passed Milestone B approval and are conducting engineering and manufacturing development tasks aimed at meeting validated requirements prior to full-rate production.  This budget activity is characterized by major line item projects and program control is exercised by review of individual programs and projects.  Prototype performance is near or at planned operational system levels.  Characteristics of this budget activity involve mature system development, integration and demonstration to support Milestone C decisions, and conducting live fire test and evaluation (LFT&E) and initial operational test and evaluation (IOT&E) of production representative articles.  A logical progression of program phases and development and production funding must be evident in the FYDP consistent with the Department’s full funding policy

This budget activity includes [RDT&E] efforts and funds to sustain and/or modernize the installations or operations required for general research, development, test and evaluation.  Test ranges, military construction, maintenance support of laboratories, operation and maintenance of test aircraft and ships, and studies and analyses in support of the RDT&E program are funded in this budget activity.  Costs of laboratory personnel, either in-house or contractor operated, would be assigned to appropriate projects or as a line item in the Basic Research, Applied Research, or Advanced Technology Development program areas, as appropriate.  Military construction costs directly related to major development programs are included.

This budget activity includes development efforts to upgrade systems that have been fielded or have received approval for full rate production and anticipate production funding in the current or subsequent fiscal year.  All items are major line item projects that appear as RDT&E Costs of Weapon System Elements in other programs.  Program control is exercised by review of individual projects.  Programs in this category involve systems that have received Milestone C approval.  A logical progression of program phases and development and production funding must be evident in the FYDP, consistent with the Department’s full funding policy

From Section 8061 of the Presidential Budget Request for Fiscal Year 2021 (PB21) Department of Defense (DoD) Programs,

(a) Amounts provided in appropriations for research, development, test and evaluation appropriations provided in titles IV and VI of this Act for designated Software and Digital Technology Pilot Programs may be used for expenses necessary for agile development, test and evaluation, procurement, production and modification, and the operation and maintenance of Software and Digital Technology Pilot Programs.

(b) In addition to use for research, development, test and evaluation activities, programs designated as Software and Digital Technology Pilot Programs by the Secretary of Defense or the explanatory statement accompanying this Act may use research, development, test and evaluation appropriations for expenses necessary for agile procurement, production and modification, and the operation and maintenance of Pilot Program requirements.

(c) Software and Digital Technology Pilot Program requirements eligible for funding under this provision include software, electronic tools, systems, applications, resources, acquisition of services, business process re-engineering activities, functional requirements development, technical evaluations, and other activities in direct support of acquiring, developing, deploying, sustaining, enhancing, and modernizing Software and Digital Technology Pilot Programs.

(d) Additional Software and Digital Technology Pilot Programs may be initiated with prior notification to the congressional defense committees.

(e) Removal of Pilot Programs.—A system project participating in the Pilot Program may be removed from the Program if the project has not been successful in meeting criteria established for the Pilot Program by the Secretary of Defense. (White House 2020, p. 97)