OMB requires agencies to submit data on R&D programs as part of their annual budget submissions. Specifically, agencies are to provide data on investments for basic research, applied research, development, R&D facilities construction, and major equipment for R&D. OMB provides one definition of R&D that all federal agencies are to use to prepare budget estimates (see app. II for a list of federal R&D definitions). According to OMB, R&D activities comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture, and society, and the use of this stock of knowledge to devise new applications. R&D is further broken down into the following three stages, as defined by OMB. Basic research is a systematic study directed toward a fuller knowledge or understanding of the fundamental aspects of phenomena and of observable facts without specific applications towards processes or products in mind. Applied research is a systematic study to gain knowledge or understanding to determine the means by which a recognized and specific need may be met. Development is a systematic application of knowledge or understanding, directed toward the production of useful materials, devices, and systems or methods, including design, development, and improvement of prototypes and new processes to meet specific requirements. There are several mechanisms by which agencies such as DHS are required to report their investments in R&D, and investments can be described in the following ways: Budget authority is the legal authorization to obligate funds. Obligations are binding agreements for the government to make a payment (outlay) for goods and services ordered or received. Outlays are payments to liquidate obligations and represent the amount actually expended. For R&D activities, OMB directs agencies to submit information on budget authority and outlays for each year. Because the executive branch and Congress generally make budget decisions in terms of budget authority, budget authority can provide insight into relative priorities within the annual budget process and changes in budget policies. Agencies report obligation data to OMB by object classification. Object classes are categories that present obligations for items or services purchased according to their initial purpose. For R&D-related obligations, OMB has a separate category for R&D contracts (object class 25.5). OMB also includes some advisory and assistance services for R&D in a separate object class category (object class 25.1). The other agencies conducting homeland security R&D included the Departments of Agriculture, Commerce, Defense, Energy, and Health and Human Services; the National Aeronautical and Space Administration; the Environmental Protection Agency; and the National Science Foundation. being the largest R&D entity. DHS reported $512 million in budget authority and $752 million in outlays for R&D in fiscal year 2011. The Homeland Security Act of 2002 established S&T within DHS and provided it with responsibility for, among other things: conducting basic and applied research, development, demonstration, and testing and evaluation activities relevant to any or all elements of DHS; establishing and administering the primary R&D activities of the department, including the long-term research and development needs and capabilities for all elements of the department; and coordinating and integrating all research, development, demonstration, testing, and evaluation activities of the department. S&T has six technical divisions responsible for managing S&T’s R&D portfolio and coordinating with other DHS components to identify R&D priorities and needs. As of September 2012, S&T had approximately 79 active R&D projects. Most of S&T’s R&D portfolio consists of applied and development R&D projects for its DHS customers. It also conducts other projects for additional customers, including other federal agencies, first responders, and industry, among others. These divisions are the Borders and Maritime Division, Chemical/Biological Defense Division, Cyber Security Division, Explosives Division, Human Factors/ Behavioral Sciences Division, and the Infrastructure Protection and Disaster Management Division. In addition, S&T’s First Responder Group (FRG) identifies, validates, and facilitates the fulfillment of first responder requirements through the use of existing and emerging technologies, knowledge products, and the development of technical standards, according to S&T FRG officials. In addition to S&T, DNDO and the Coast Guard conduct R&D activities. After its establishment in 2005, DNDO assumed responsibility from S&T for certain nuclear and radiological R&D activities. DNDO is the primary federal organization responsible for developing, acquiring, and supporting the deployment of an enhanced domestic system to detect and report on attempts to import, possess, store, transport, develop, or use an unauthorized nuclear explosive device, fissile material, or radiological material in the United States.estimated that they have 30 R&D projects and plan to obligate $75.9 million for R&D in fiscal year 2012. According to Coast Guard officials, the Coast Guard R&D Center conducts R&D projects to support the Coast Guard’s priorities, primarily focusing on maritime safety-related projects. As of August 2012, Coast Guard officials estimated that they have 60-70 applied research projects and have spent about $30 million on R&D in fiscal year 2012 so far. In 2010, Congress directed us to identify programs, agencies, offices, and initiatives with duplicative goals and activities within departments and government-wide and report annually to Congress. In March 2011 and February 2012, we issued our first two annual reports to Congress in response to this requirement. The annual reports describe areas in which we found evidence of fragmentation, overlap, or duplication among federal programs. Using the framework established in our prior work on addressing fragmentation, overlap, and duplication, we use the following definitions for the purpose of assessing DHS’s R&D efforts: Fragmentation occurs when more than one federal agency (or more than one organization within an agency) is involved in the same broad area of national interest. Overlap occurs when multiple programs have similar goals, engage in similar activities or strategies to achieve those goals, or target similar beneficiaries. Overlap may result from statutory or other limitations beyond the agency’s control. Duplication occurs when two or more agencies or programs are engaging in the same activities or providing the same services to the same beneficiaries. DHS does not know how much all of its components invest in R&D, making it difficult to oversee R&D efforts across the department. According to DHS budget officials, S&T, DNDO, and the Coast Guard are the only components that conduct R&D and, according to our analysis, they are the only components that report budget authority, obligations, or outlays for R&D activities to OMB as part of the budget process. However, we identified an additional $255 million in R&D obligations by other DHS components. Further, we found that DNDO did not report certain R&D budget data to OMB, and R&D budget accounts include a mix of R&D and non-R&D spending, further complicating DHS’s ability to identify its total investment in R&D. Our analysis of the data that DHS submitted to OMB found that DHS’s R&D obligations were underreported because other DHS components obligated money for R&D contracts that were not reported to OMB as R&D. Specifically, for fiscal year 2011, our analysis identified $255 million in obligations for R&D that DHS did not report as R&D contracts in the object classification tables. These obligations included DHS components providing S&T with funding to conduct R&D on their behalf and components obligating funds through contracts directly to industry, universities, or with DOE’s national laboratories for R&D. Specifically: S&T reported receiving $50 million in reimbursements from other DHS components, such as U.S. Citizenship and Immigration Services, the Secret Service, the Office of Health Affairs, Customs and Border Protection (CBP), and the Transportation Security Administration (TSA) to conduct R&D projects. These obligations were not identified as R&D in these components’ budgets. Our analysis identified 10 components, including CBP, TSA, U.S. Immigration and Customs Enforcement (ICE), and the Federal Emergency Management Agency (FEMA), that obligated approximately $55 million for R&D contracts that were not reported as R&D. Our analysis identified that DHS components, outside of S&T, DNDO, and the Coast Guard, obligated $151 million to DOE national laboratories for R&D-related projects (44 percent of total DHS spending at the national laboratories in fiscal year 2011). For example, the National Protection and Programs Directorate (NPPD) obligated $83 million to DOE national laboratories in fiscal year 2011 (see app. III for R&D obligations by component). Our analysis of the data that DHS submitted to OMB also showed that DHS’s R&D budget authority and outlays were underreported because DNDO did not properly report its R&D budget authority and outlays to OMB for fiscal years 2010 through 2013. Specifically, for fiscal years 2010 through 2013, DHS underreported its total R&D budget authority by at least $293 million and outlays for R&D by at least $282 million because DNDO did not accurately report the data. In fiscal year 2011, S&T and the Coast Guard reported $512 million in R&D budget authority and $752 million in outlays, but DNDO did not report $56 million in R&D budget authority or $80 million in outlays. DNDO officials gave us the data for the missing years as depicted in figure 1 along with S&T and Coast Guard data. DNDO budget officials told us that they are aware of the omission and confirmed that the OMB submission will be corrected in fiscal year 2013.