Mystery $2 Billion in the 2009 Homeland Security R&D budget

By Gerald Epstein, Ph.D.

Overall funding for Research & Development in last year’s final budget–the FY2008 Omnibus bill–increased only by 1.2%, less than the rate of inflation. Indeed, major increases that the President had requested and various parts of Congress had provided early in the budget process disappeared in the endgame. But there was a glimmer of light for science in the President’s State of the Union address, when he urged congress to “double federal support for critical basic research in the physical sciences” to support his American Competitiveness Initiative. With this context, science and technology policy wonks across Washington tore into the President’s FY2009 budget (pdf) request as soon as it was released, looking for how research and development fared.

What they found was a federal R&D budget that increased by a modest 3%, or only 1% when correcting for inflation (Table S-10). Within this total, the National Science Foundation and the Department of Energy — two agencies that form key parts of the American Competitiveness Initiative — fared rather well, receiving 16% and 8% increases, respectively. (See Table 5-1 on p. 52).

Oh, that 2 billion dollars:
But by far the largest single agency R&D budget increase was that of the Department of Homeland Security, which received a whopping $2.144 billion increase. Not bad for an agency whose entire R&D spending in the previous year was estimated at about half that, or $1.143 billion.

When looked at in detail, the story gets even more curious. This increase comes not in basic research, applied research, or development — but rather in “facilities and equipment,” which shows DHS with a $2.102 billion increase.

The detailed DHS budget, however, indicates none of that. The only facility included in the FY2009 budget request is the National Biodefense Analysis and Countermeasures Centers (NBACC), which is almost completely built at Ft. Detrick, in Frederick, MD, and which is budgeted for an increase of $43 million in FY2009 (pdf, page 107).

Whence the rest? Here, the trail runs cold until one recognizes another mysterious — and curiously similar — budget item elsewhere in the DHS budget. Table 3-1 on p. 20 of the White House budget document breaks down Homeland Security funding by agency. At the bottom is a line in the FY2009 budget labeled “Plus Bioshield” that adds $2,175 million to the federal budget, but apparently outside any agency.

Bioshield?
Project Bioshield, funded in the FY2004 DHS Appropriations bill, set aside a pot of $5.593 billion to be reserved for the procurement of medical countermeasures such as therapeutics and vaccines that could be purchased by the United States government and placed in the Strategic National Stockpile for use in event of a bioterrorist attack or other national medical emergency.

When Congress established this fund, it only permitted $3.418 billion to be used in the first four fiscal years, FY2004 - FY2008. The FY2009 budget is the first one that does not face this restriction, with the consequence that the remaining $2,175 million are freed up for possible use. Although these funds have already been appropriated, they count against the spending ceiling of the Department in whose budget they appear - which in this case is DHS. Disbursing funds from this account is a complicated process involving the Department of Health and Human Services, the Department of Homeland Security, and the White House, but DHS is the banker, and it can’t release the funds unless they appear in its budget.

Now the only remaining mystery is why these funds are called “research and development”. By offering a procurement market, these funds are intended to stimulate private sector R&D by firms seeking to develop medical countermeasures that the government needs. And provisions do exist for Bioshield funds to be disbursed to fund R&D in advance of product delivery. But the funds can also go towards purchase of products that have already been developed, and which would not incur any additional R&D. So attributing the entire amount to R&D is an overestimate. And attributing them to “facilities and equipment” is just plain wrong, unless that category is taken to mean “none of the above” - i.e., not basic research, applied research, or development.

At any rate, since these funds have already been appropriated, since they can be spent over a multi-year period, and since only some unknown fraction of them will pay for R&D at all (and only indirectly, at that), they can’t be considered part of the federal governments FY2009 R&D budget.

Sorry about that.

Gerald Epstein is a senior fellow in the Homeland Security Program at the Center for Strategic and International Studies.