Department Of Defense Agency Financial Report 2007 - Section 2: Financial Information Page 75
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82Section 2: Financial Information
Department of Defense Agency Financial Report 2007
7
The Department changed its methodology for reporting Yearly Investments in Research and Development during FY 2007.
Investment values included in this report are based on Research and Development (R &D) outlays (expenditures). Outlays
are used because current Department accounting systems are unable to capture and summarize costs in accordance with
Federal accounting standards. The R&D programs are classified in three categories: Basic Research, Applied Research and
Development. The definition for each type of R&D Category and the Development Subcategories are explained below:
• Basic Research is the systematic study to gain knowledge or understanding of the fundamental aspects of phenomena
and of observable facts without specific applications, processes, or products in mind. Basic Research involves gathering
a fuller knowledge or understanding of the subject under study. Major outputs are scientific studies and research papers.
• Applied Research is the systematic study to gain knowledge or understanding necessary for determining the means by
which a recognized and specific need may be met. It is the practical application of such knowledge or understanding
for the purpose of meeting a recognized need. This research points toward specific military needs with a view toward
developing and evaluating the feasibility and practicability of proposed solutions and determining their parameters.
Major outputs are scientific studies, investigations, research papers, hardware components, software codes, and limited
construction of, or part of, a weapon system to include nonsystem-specific development efforts.
• Development takes what has been discovered or learned from basic and applied research and uses it to establish
technological feasibility and to assess operability, and production capability. Development is comprised of five stages
defined below:
• Advanced Technology Development is the systematic use of the knowledge or understanding gained from research
directed toward proof of technological feasibility and assessment of operational and productibility aspects rather than
the development of hardware for service use. It employs demonstration activities intended to prove or test a technology
or method.
• Advanced Component Development and Prototypes evaluates integrated technologies in as realistic an operating
environment as possible to assess the performance or cost reduction potential of advanced technology. Programs in
this phase are generally system specific. Major outputs of hardware and software components, or complete weapon
systems, ready for operational and developmental testing and field use.
• System Development and Demonstration concludes the program or project and prepares it for production. It consists
primarily of preproduction efforts, such as logistics and repair studies. Major outputs are weapons systems finalized for
complete operational and developmental testing.
• Research, Development, Test and Evaluation Management Support is support for installations and operations for
general research and development use. This category includes costs associated with test ranges, military construction
maintenance support for laboratories, operation and maintenance of test aircraft and ships, and studies and analyses in
support of the R&D program.
• Operational Systems Development is concerned with development projects in support of programs or upgrades still in
engineering and manufacturing development, which have received approval for production, for which production funds
have been budgeted in subsequent fiscal years.
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