Research and Development
● If the contract action is for research and experimental development (R&D) services, report an R&D code.
● The Office of Management and Budget defines R&D as (see Circular A-11, Section 84, Schedule C):
o Research and experimental development activities are defined as creative and systematic work
undertaken in order to increase the stock of knowledge —including knowledge of people, culture,
and society—and to devise new applications using available knowledge.
o R&D must have each of 5 characteristics: novel; creative; uncertain; systematic; and transferable
and/or reproducible.
● Do not assign an R&D code to products purchased in support of research and development work; such
products shall be coded using the appropriate PSC product code.
● The R&D code is composed of two alphabetic and two numeric digits. The first digit is always the letter
"A" to identify R&D, the second digit is alphabetic "A to Z" to identify the major area, the third digit is
numeric 1 to 6 to identify a sub-area within a major area, and the fourth digit is numeric 1 to 5, to identify
the appropriate stage of R&D shown below.
Codes for Stages of R&D (4th Position)—Code Meaning
(1) Basic Research
(2) Applied Research
(3) Experimental Development
(4) Administrative Expenses for R&D
(5) Expenses for R&D Facilities and Major Equipment
Procurement personnel responsible for R&D actions shall obtain sufficient information from requisitioning
personnel to permit accurate classification. When completing this item, the precise R&D Service being purchased
shall be coded.
Example: A contract for research on air pollution by aircraft shall be shown under “Natural Resources and
Environment (AH4*)” for “Pollution control and abatement,” and not under Aerospace Research.
Definitions of stages of R&D
1. Basic research . Experimental or theoretical work undertaken primarily to acquire new knowledge of the
underlying foundations of phenomena and observable facts. Basic research may include activities with
broad or general applications in mind, such as the study of how plant genomes change, but should exclude
research directed towards a specific application or requirement, such as the optimization of the genome of a
specific crop species.
2. Applied research . Original investigation undertaken in order to acquire knowledge. Applied research is,
however, directed primarily towards a specific practical aim or objective.
3. Experimental development . Creative and systematic work, drawing on knowledge gained from research
and practical experience, which is directed at producing new products or processes or improving existing
products or processes. Like research, experimental development will result in gaining additional
knowledge.
For reporting experimental development activities include the following:
● The production of materials, devices, and systems or methods, including the design, construction and
testing of experimental prototypes.
● Technology demonstration, in cases where a system of components is being demonstrated at scale for
the first time, and it is realistic to expect additional refinements to the design (feedback R&D)
following the demonstration. However, not all activities that are defined as “technology
demonstrations” are R&D.