Defense R&D Spending Rose 16 Percent in Fiscal 2025
Federal facility research trends shifted as defense outlays grew while civilian R&D spending declined.
Updated on Sept. 24, 2026 in Economic Indicators
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Research and development performance at Department of Defense facilities increased by 16% in fiscal year 2025. During the same period, civilian federal facilities reported a 14% decrease in research and development activity.
Why it matters
The divergent funding trends highlight shifting federal priorities that can influence long-term government procurement and research partnership opportunities for private sector contractors. These outlays reflect actual disbursements for R&D performance within federal facilities.
Defense R&D performance rose 16% in fiscal year 2025, while civilian federal facility performance fell 14% compared to the prior period. These figures are calculated based on actual outlays.
The players
Department of Defense
The federal department responsible for military operations and a major investor in defense-related research and technology development.
The details
Federal facilities measure performance based on outlays, which are the actual disbursements of cash, checks, or electronic transfers used to execute previous obligations. The reported data accounts for internal performance costs rather than transfers made between different federal agencies. This distinction focuses on where the actual development activity occurred, rather than the movement of funds between government entities.
Timeline
Fiscal year 2025 served as the measurement period for federal facility R&D performance.
Market Landscape
This performance split follows standard reporting methodologies set by the National Science Foundation federal R&D performance report. The shift reflects a wider trend of prioritizing specific mission-critical research areas within the federal facility landscape.
Contractors should monitor these R&D shifts when planning bids for federal research partnerships in the coming cycle. Evaluate whether your firm's technical capabilities align more closely with the growing defense sector or the contracting civilian facility budget.
The takeaway
The rise in defense-focused R&D spending signals a sustained shift in where federal research dollars are being deployed. Operators should track these agency-specific performance metrics to anticipate potential changes in government demand for external research support services.
Further reading
For more on federal spending trends, see Economic Indicators.
More information
Review the full NSF federal R&D performance report to examine the specific facility data.
Source note: This article includes information reported by Nsf.
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