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"Unfunded" does not mean "Unsolved"

k. austin delorme Apr 08, 2024

I’ve had an alarming number of conversations with folks looking at unfunded requirements (UFR) lists in order to find problem sets they can get after with their technology. 

I believe there are two reasons driving this behavior. The first that’s been expressed to me is the logic that generally these are defined problems with existing requirements that have not been solved, and therefore represent an open opportunity. 

While these are published by law for Congressional review and do occasionally get funded, they aren’t necessarily the best place to look for opportunity. The Congressional Research Service has a great primer on defense unfunded priorities that can be read here

“Unfunded” is “Unprioritized” 

When a project is put on an unfunded list, that means it was assessed, put on a priority list, and fell beneath the funding line.  If it’s a requirement, that means it’s a reasonably well understood problem (or at least one in which the government believes they understand well). So let’s think about this for a minute: 

If the government has thought about a requirement and consciously decided not to prioritize it, is that really a requirement you want to tether yourself to? 

If it is an unfunded requirement that you do happen to authentically solve, consider reframing it as something new, or as a subset of a funding requirement. Yes, resources are constrained and there are often things on unfunded lists that are true needs and would get funding if additional resources became available. You definitely CAN make this work leveraging congressional inserts. You may also have a novel enough solution to bump the requirement up the priority list, but in general you’re going to find yourself battling against a decision that’s already been made. 

“Unfunded” is not always “Unsolved”

Occasionally a project or requirement is unfunded because we don’t have a viable or timely solution available or we don’t see something out there that would make enough of an impact on a problem. In most cases, however, “unfunded requirements” are not “unsolved problems”. Often there is a solution or project under consideration, and they have decided not to prioritize it anyway.  

“Fallout” Money

The second driver of searching for opportunity in unfunded priority lists is a misunderstanding of the fallout funding process. Fallout funding is often referred to as “UFR” money because it can be applied to unfunded requirements at the end of the fiscal year.  

Near the end of the fiscal year, funding that has not been obligated and spent as projected is often pooled at various levels and allocated to projects that are over budget, new opportunities, or unfunded.  

Consistently not spending the money an organization has been authorized is believed to put that organization at risk of not receiving their full request in future years. As a result, being under budget is actually considered being “in the red'' for federal program managers, and there is incentive to spend all of the money you have, regardless of cost savings in your program. 

To smartly spend all remaining funding in an organization, there are various exercises at different levels in which “unfunded requests” can be pushed up to funding authorities at various levels to drive this unspent money towards a project that requires more funding. We often refer to this as an “unfunded requirements” list as well, and in this context, it can be a great exercise to be pushed onto these lists by your government partner. 

Your offering does not need to be associated with a formal, reported unfunded requirement to get this funding! It is actually more likely that you’ll achieve success through this process if you are pushing a new opportunity to affect high priority needs. 

While aligning to unfunded requirements is not generally a helpful exercise in receiving fallout funds, there are some things you can do to increase your odds of success in this approach to year of funding. Next week I’ll walk through some things you can do to increase your odds of success at securing these current year funding opportunities.

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