Order Code IB10088
Issue Brief for Congress
Received through the CRS Web
Federal Research and Development:
Budgeting and Priority-Setting Issues,
107th Congress
Updated November 1, 2002
Genevieve J. Knezo
Resources, Science, and Industry
Congressional Research Service ˜ The Library of Congress

CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
FY2002 Budget Action
FY2003 Budget Request
Counterterrorism Funding
Congressional Budget Action, FY2003
Priority-Setting Issues
Role of the Federal Government in Supporting R&D
Trends in Federal R&D Support
Observations and Recent Legislative Initiatives
Priorities Among Fields of Federally Funded Research
NIH Funding Is Important to Congress
Congressional Views About the Balance in Federal R&D Funding
Professional Groups’ Views About Balance
Proposals to Increase NSF Funding
Federal R&D Priority-Setting Structures
Unified Science and Technology (S&T) Budget
Interagency R&D Initiatives
Proposals to Coordinate Federal R&D
Legislation Introduced to Fund the OTA
Earmarking
Government Performance and Results Act (GPRA)
LEGISLATION



IB10088
11-01-02
Federal Research and Development: Budgeting and Priority-Setting
Issues, 107th Congress
SUMMARY
Federal R&D funding priorities change
growth. Debates focus on whether federal
over time, reflecting Presidential and national
R&D should be increased across the board;
preferences. Defense R&D predominated in
how priorities should be set; and how to
the 1980s, decreasing to about 50% of federal
determine “balance” in funding between
R&D in the 1990s during the Clinton Admin-
health and nonhealth fields.
istration. In nondefense R&D, space R&D
was dominant in the 1960s as the nation
Legislative priority-setting initiatives
sought to compete with the Soviet Union;
include bills to double the NSF budget within
energy R&D became an additional priority
5 years (H.R. 4664 passed in the House); and
during the energy-short 1970s, and, since the
to make permanent the research and experi-
1980s, health R&D has predominated. De-
mentation tax credit, including credit for
fense R&D has started to dominate again as
industrial support of academic basic research
priorities have shifted to deal with the war
(H.R. 1137, H.R. 1329, S. 41, and S. 515).
against terrorism. The FY2003 budget request
seeks to increase R&D funding by about 8%
The Bush Administration included in its
overall, including increases for the Depart-
budget request a “Federal S&T” budget,
ment of Defense (DOD) and National Insti-
which may presage a future unified science
tutes of Health (NIH). R&D funding would
and technology (S&T) budget. The FY2003
increase also for the Departments of Educa-
budget requested funding for four interagency
tion and Veterans Affairs, and EPA, NASA
R&D initiatives. Other proposals made to
and NSF, although some of these latter in-
coordinate R&D include a continuing priority-
creases are due to program shifts and new
setting mechanism; a cabinet-level S&T body;
methods of counting programs that were not
functional R&D budgeting; and reestablish-
formerly counted as R&D. R&D funding
ment of the Office of Technology Assessment
would decrease in the Departments of Agri-
in Congress (H.R. 2148) or a Science and
culture, Commerce, Interior, Transportation,
Technology Assessment Service (H.R. 4, as
and other areas. If the 16% increase in NIH
passed the Senate on April 25, 2002). The
R&D funding were not counted, civilian R&D
Administration opposes earmarking for R&D,
funding would fall by 0.2%. Counter terror-
which it said totaled about $1.8 billion in
ism R&D funding is requested to double to
FY2002 and because the practice distorts
about $3 billion. Congressional appropria-
agency priorities. The Administration has
tions action, which is not complete, indicates
started to use some performance measures for
that FY2003 R&D funding will exceed the
R&D budgeting, inspired by the Government
requested levels.
Performance and Results Act. However, the
Administration and critics say better data and
National R&D funding continues to
concepts are needed to use performance bud-
grow, but the federal R&D share, while sur-
geting for basic and applied research. OMB
passing the previous peak of 1992 in constant
judged agencies that fund R&D using
dollars, has declined to 27% of the national
performance management measures, with NSF
total. Scholars and policymakers cite the
winning accolades for its financial manage-
importance of R&D funding to economic
ment procedures.
Congressional Research Service ˜ The Library of Congress

IB10088
11-01-02
MOST RECENT DEVELOPMENTS
The Government is being funded by a continuing resolution because appropriations
action has not been concluded, due largely to differences between the House and Senate on
discretionary spending levels. Two appropriations bills, that deal with defense, were signed,
increasing defense R&D by 18%. The other appropriations bills that deal with R&D have
not reached conference. Senate committee action was completed for all 13 appropriations
bills and would increase R&D funding by almost 14% over FY2002, and over 5% more than
the President’s request. Most of the increase would go to defense R&D and to NIH. House
appropriations committee action is not complete.

BACKGROUND AND ANALYSIS
Federal R&D funding priorities have shifted over time, reflecting Presidential
preferences and national priorities. Defense R&D predominated in the 1980s but decreased
to about 50% of total federal R&D in the 1990s, reflecting the Clinton Administration policy.
In nondefense R&D, space R&D was dominant in the 1960s as the nation sought to meet
Presidential pronouncements and to compete with the Soviet Union in the space race; energy
R&D joined space as a priority during the 1970s; and since the 1980s, health R&D funding
has grown as the cohort of aged population increases and the promise of life sciences and
biotechnology affects national expectations. Defense, health, and counterterrorism R&D
funding are projected to increase in this budget cycle. See Figure 1. (See also CRS Report
RL30905, Federal Research and Development: Budgeting and Priority-Setting, 1993-2000.)
FY2002 Budget Action
The FY2002 Bush Administration R&D budget request, at $96.5 billion, would have
increased R&D funding by 6.1% over the enacted FY2001 level. Funding increases were
proposed for the Department of Defense (DOD) and for the National Institutes of Health
(NIH), proposed to be increased to 52% of the nondefense R&D budget. R&D funding was
to be flat or decline for the Department of Agriculture; for the Department of Commerce, for
the Environmental Protection Agency (EPA); for the Department of the Interior, reducing the
U.S. Geological Survey and Biological Research; for the Department of Energy (DOE),
reducing energy R&D, energy conservation, and fossil energy and increasing the Office of
Science (funding for the Spallation Neutron Source and for the National Ignition Facilities);
and for the National Science Foundation (NSF).
Federal defense and nondefense R&D is funded from the discretionary (as opposed to
mandatory) portion of the budget and was subject to annual caps through 2002 that are based
inflation rates and other factors. (The budget request proposed to revise these caps and
extend them through 2006.) The discretionary budget was proposed to be increased 4.0%
over FY2001. Nondefense R&D would have increased by about 4.3%, mostly for NIH, so
that other nondefense R&D funding (excluding NIH) would have decreased by about 3.0%.
For FY2002, the request for budget function 250, “General science, space, and technology,”
which covers about 25% of federal R&D (for NSF, NASA’s space activities, and DOE’s
basic research),was $21.0 billion in budget authority. The conference report (H. Rept. 107-
55) on the budget resolution, H.Con.Res. 83, lowered funding for function 250 to $21.6
CRS-1

IB10088
11-01-02
billion, decreasing budget authority below both the House and Senate-approved levels for
FY2001, but still more than the requested amount.
Appropriations action raised FY2002 federal R&D funding above the requested levels
for all agencies and raised total R&D funding to about $103.7 billion. Pressures to double
the NIH budget and new priorities and funding to combat terrorism affected R&D
appropriations levels. OMB’s FY2001 Annual Report to Congress on Combating Terrorism,
indicated that for FY2002, the Administration requested about $555 million for
counterterrorism R&D in several different agencies before the terrorist attacks of September
11. The largest agency supporters are the DOD and the Department of and Health and
Human Services. Congress appropriated about $1.5 billion for FY2002 counterterrorism
R&D, with about one-half from regular appropriations, and one-half from emergency
appropriations1 in P.L. 107-38. (For additional details, see Federal Research and
Development for Counter Terrorism,
CRS report RL31202.)
FY2003 Budget Request
The President’s R&D request totals about $112 billion, about 8% more than the
appropriated level for FY2002. Similar to the patterns of funding increases for FY2002, the
increases for DOD R&D, at $5.4 billion, or 11% more than last year, and for NIH, at $26.5
billion, or about 16% more than last year, account for most of the total funding increase,
leaving all the other R&D funding agencies combined with less money than in FY2002.2
Total defense R&D funding (for DOD and the Department of Energy’s military/nuclear
programs) would increase by almost 10%. As a result, while overall discretionary spending
(from which most all R&D is funded) would rise almost 7% over FY2002, total non-defense,
non-NIH R&D funding would decline or be flat. DOD R&D funding, spurred in part by anti-
terrorist priorities, would rise to 52.4% of the federal R&D budget, up from 52.1% in
FY2002. Most DOD R&D funding would go to the development/testing end of the funding
spectrum, and DOD basic and applied research (called S&T funding in DOD terms,
including funding categories 6.1, 6.2, 6.3, and medical R&D), would actually decline by
about 4% from the FY2002 level. The increase in funding for NIH, would raise NIH R&D
funding to about $26.5 billion, making its funding total about the same as the rest of all other
non-DOD agencies’ R&D funding combined, at about $26.7 billion. The rise in NIH is
attributable to this being the fifth and final year of the congressional policy to double NIH’s
funding by 2003 and in part to increased counterterrorism funding. See Table 1.
The budget request would increase funding for the Department of Veterans Affairs by
6.3%; the Environmental Protection Agency, 5.9%; NASA, 4.3% (with most NASA
increases, according to AAAS, due to OMB including as R&D some non-R&D support
costs which formerly were not counted as R&D); and NSF, 3.5% (with almost 60% of the
“increases” largely attributable to transfer of programs from other agencies, including the
National Sea Grant Program from Commerce, hydrological sciences from Interior and
environmental education from EPA). Decreases were requested in R&D for the Commerce
Department, -0.3%, reducing funding for the Advanced Technology Program (ATP) by over
40% and the Manufacturing Extension Program by almost 90%, offset by increased funding
1 “Federal R&D Climbs to Record High of $103.7 Billion,” AAAS R&D Update, Dec. 28, 2001.
2 AAAS, “Bush Proposes Large Increase for DOD, NIH R&D: Mix of Cuts and Increases for Other
R&D Programs,” Feb. 8, 2002.
CRS-2

IB10088
11-01-02
for NIST intramural R&D and for some R&D in National Oceanic and Atmospheric.
Administration. Decreases were proposed also for the Interior Department, - 4.8 % with cuts
to the U.S. Geological Survey, and for water resources R&D; the Department of Energy, -
0.5%, with a reduction for earmarks, Spallation Neutron Source construction, and for R&D
on natural gas and petroleum technologies, with offsetting increases for coal R&D; and for
the Department of Agriculture, -9.3%, due to reducing programs that can be earmarked and
the loss of emergency anti-terrorism funds, combined with increases for competitive research
grants in the National Research Initiative. AAAS projections show that nondefense R&D
would increase by 8.2% from FY2002 to FY2007 after adjusting for inflation. If NIH
nondefense R&D were excluded, nondefense R&D would rise 1.6% in inflation-adjusted
terms. Defense R&D would rise 8.1% by 2007. The Administration identified a subset of
the R&D budget, called a “Federal S&T budget,” totaling $57 billion, that focuses on basic
and applied research leading to the creation of new knowledge. It includes some education
and training funding and excludes most development funding. This conceptualization is
similar, but not identical, to a 1995 proposal made by the National Academy of Sciences.
Some cuts have been attributed to the Administration’s attempt to eliminate
congressional R&D earmarks and others to decreased R&D funding levels that had been
increased in 2002 because of counterterrorism funding. Increases are planned for
counterterrorism, laboratory security, and basic research (to be increased by about 9% to $25
billion, the highest level ever reached). OMB has proposed deficit funding, after four years
of surplus spending since 1998, for a budget which seeks to increase such spending to about
$767 billion. Congressional debates have focused on discretionary spending priorities for
R&D versus other areas, including tax cuts, domestic programs, and homeland defense.
Counterterrorism Funding
Counterterrorism R&D funding was requested to be increased about $1.5 billion in
FY2002 to about $3 billion for FY2003. Notable increases were for the National Institute
CRS-3

IB10088
11-01-02
Table 2. Research and Development to Combat Terrorism, By Agency,
FY2000-FY2003 (Request), Dollars in Millions3
Agency
FY2000
FY2001
FY2002
Emergency
FY2003 Request
Actual
Actual
Enacted
Response Fund
Agriculture
$37.3
$51.7
$83.9
$91.3
$48.4
Commerce
9.6
0
6.3
0
20.0
Energy
59.7
66.2
64.9
19.0
99.8
EPA
not available
0
2.8
1.5
75.0
DHHS
109.7
102.8
119.1
180.0
1,770.9
(NIH, $1.75B;
CDC, $40M; and
FDA, $50M).
Justice
45.2
11.4
66.1
0
36.1
NSF
not available
7.0
7.0
0
27.0
National Security
190.0
298.9
385.5
11.0
767.2
Transportation
50.7
50.2
58.3
64.0
59.3
Treasury
2.1
1.2
1.1
0
1.1
Total
$511.3
$589.4
$795.2
$366.8
$2,905.23
of Allergy and Infectious Diseases, at $1.7 billion for bioterrorism R&D and for construction
of containment facilities; for the Agriculture Department, increased $34 million to $406
million; for NIST, $5 million; for DOD, for anti-terrorism technologies; and for
cybersecurity R&D in the Bureau of Export Administration, Department of Commerce, at
an additional $20 million. The President requested a reported $176 million for R&D related
to anti-terrorism in the FY2002 emergency supplemental appropriation. After the legislation
was signed, the President announced that he would not release all funds appropriated,
limiting counterterrorism R&D supplemental funding to about $128 million. See also CRS
Report RL31576.
Congressional Budget Action, FY2003
R&D budgets are developed over an 18-month period before a fiscal year begins. Often
advisory committees, influenced by professional scientific groups, recommend R&D
priorities to agencies, which use this information, internally generated information, and
guidance from the Office of Management and Budget (OMB) and the OSTP to determine
priorities. Agencies and OMB negotiate funding request levels during the preparation of the
budget before it is sent to Congress. After standing committees recommend budget levels
for matters within their jurisdiction to the budget committees, Congress passes a budget
resolution, which sets spending levels and recommends levels for each budget function that
appropriations committees use in setting discretionary spending allocations (called 302b
allocations) for each appropriations subcommittee. The resolution also gives outyear
projections based on budget and economic assumptions. Each of the 13 appropriations
committees report approved funding levels for agencies within their jurisdiction;
appropriations bills, which give agencies spending authority, are sent to the floor, usually
beginning in the summer. The House Budget Resolution, H. Con. Res. 353, passed on
3 OMB, Annual Report to Congress on Combating Terrorism, FY2002, p. 27 for column labeled
FY2000. The rest of the data is from: OMB, Annual Report to Congress on Combating Terrorism,
J u n e 2 4 , 2 0 0 2 ,
p . 2 6 . T h e 2 0 0 2 r e p o r t i s a v a i l a b l e a t
[http://www.whitehouse.gov/omb/legislative/combating_terrorism06-2002.pdf].
CRS-4

IB10088
11-01-02
March 21, 2002, and the Senate Budget Resolution, S. Con. Res. 100, reported on March 22,
2002, proposed FY2003 discretionary budget authority function totals for Defense and
General Science, Space and Technology that were higher than proposed by the President.
The resolutions also adopts the President’s recommendation to complete the doubling of the
NIH budget in FY2003. The House Science Committee’s Views and Estimates of the request
is posted at http://www.house.gov/science/press/107/107-192views03.pdf.
The Government is being funded by a continuing resolution because appropriations
action has not been concluded, due largely to differences between the House and Senate on
discretionary spending levels. Two appropriations bills, that deal with defense, were signed,
increasing defense R&D by 18%. The other appropriations bills that deal with R&D have
not reached conference. Senate committee action was completed for all 13 appropriations
bills and would increase R&D funding by almost 14% over FY2002, and over 5% more than
the President’s request. Most of the increase would go to defense R&D and to NIH, with
smaller increases for R&D in all other agencies except the departments of Transportation and
Agriculture. House appropriations committee action is not complete. House-approved
defense appropriations would increase DOD R&D funding by 8.1% over the President’s
requested level. Action in both houses would start action to double NSF’s funding over the
next five years.
Priority-Setting Issues
Current priority-setting debates focus on the functions and size of federal R&D funding
as a part of national R&D and on how to balance priorities in the portfolio of federal
nondefense R&D, especially between health and nonhealth R&D.
Role of the Federal Government in Supporting R&D
A core issue is to reconcile the benefits of R&D – the projected high rates of return to
the economy and society from investments in R&D – with a FY2003 R&D budget request
that emphasizes defense and health R&D spending and flat or modest increases in other areas
of R&D and likely long-term economic and budget projections of decreasing outyear federal
R&D budgets.4 President George W. Bush’s FY2002 budget said, “More than half of the
Nation’s economic productivity growth in the last 50 years is attributable to technological
innovation and the science that supported it” (p. 29). In Spring 2000, President Clinton’s
Committee of Advisors on Science and Technology (PCAST), in Wellspring of Prosperity,
described some of the payoffs from federal investments in R&D, which it said “underscores
the need for sustained and cooperative support in the 21st century to avoid the dangers and
seize the opportunities” (p. 2). The report described how Federal Reserve Chairman Alan
Greenspan in 1999 “repeatedly cited an unexpected leap in technology as primarily
responsible for the nation’s record breaking economic performance. In particular, a
technology-based surge in productivity appears to be contributing substantially to our
economic success” (pp. 1-2).
4 See Steven Parson and John Jankowski, “Sixth Year of Unprecedented R&D Growth Expected in
2000,” NSF Data Brief, Nov. 29, 2000, p. 1. NSF 01-310.
CRS-5

IB10088
11-01-02
Trends in Federal R&D Support. Given these assessments of the importance of
federal R&D, a key priority-setting issue is how large should the federal R&D budget be in
relation to its functions and the funding provided by such other R&D supporters as industry?
Federal R&D funding, while rising in terms of absolute (or nominal) dollars, is
declining as a part of the national R&D total, which has grown overall to $264 billion in
FY2000. In constant 1996 dollars, total national R&D increased 40% between the years
1990 and 2000, with industrial support for R&D increasing 88% but federal government
support decreasing by 10%. Federal R&D has also declined from about 17% of total federal
discretionary outlays in FY1965 to about 12% today.5 In part because of economic pressures
and budgetary caps, during the years FY1993 to FY1999, federal R&D funding was below
the previous constant-dollar high of FY1992. As a result of Congressional action, constant-
dollar R&D appropriations started to eclipse the FY1992 level beginning with FY2000.
However, concerns that had been raised about the declines in federal R&D funding between
1992 and 1999 have not abated because of current projections of economic slowdown,
spending to combat terrorism, and a return to deficit spending, which could raise
congressional objections to proposals to increase discretionary spending.
Industry is the largest supporter and performer of national R&D, funding 68% of total
R&D (the government’s share is 27%), and conducting 75% of the total. Most industrial
R&D is for near-term applied work and product or prototype development. The government
funds 10% of R&D performed by industry. Federal support for all development, which totals
about 55% of federal R&D, goes largely to industry and to defense R&D.6
The federal government, in contrast to industry, focuses more on supporting basic
research and academic R&D. In FY2000, 31% of federal R&D expenditures went to basic
research, that is long-term research, compared with 8% of industry-funded R&D. The federal
government funded half of all national expenditures for long-term basic research (largely in
universities and federal laboratories), while industry funded 31%.7 Universities and colleges
are the second-largest performer of national R&D, funded mostly by the federal government
(58% of university research). About half of federal research dollars go to universities and
25% to mission-oriented work in federal laboratories, largely at DOD (44%) and NIH (20%).
Observations and Recent Legislative Initiatives. The federal government is the
major supporter of the nation’s basic research, which generates much of the knowledge that
industry uses for innovative R&D, and of university research that enriches the knowledge
base. As a result, some observers argue that federal support for research should be funded
at increasingly higher levels as a public good to enhance the U.S. ability to advance
scientifically, technologically, and economically; to broaden the knowledge base that
industry uses; and to train science and technology (S&T) personnel. Related issues are
5 Tables 5.4 and 9.7 in OMB, Historical Tables, Budget of the U.S. Government, FY2001. AAAS
data show that the previous constant-dollar high in R&D budget authority was in 1992 (not 1990 as
OMB reports, using outlay data).
6 Data on R&D funding by sector based primarily on NSF, National Patterns of R&D Resources:
2000 Data Update.
See also, Ronald L. Meeks, “Federal Survey Shows Defense Funding of Industry
Is Largest Share of Federal R&D in FY2000,” NSF Data Brief, February 11, 2000, NSF 00-309.
7 Expenditures do not equal outlays or budget authority. NSF, National Patterns, 1998, pp. 2-3. See
also NSF, Federal Funds for Research and Development: Fiscal Years 1999, 2000, and 2001.
CRS-6

IB10088
11-01-02
whether incentives should be increased for states8 and industry to augment support of basic
and academic research, or whether too much support from these sources would overwhelm
academic research with pressure to conduct short-term applied studies.9 Among the
legislative options in this area10 is to make permanent the Research and Experimentation
(R&E) tax credit that provides tax benefits and credits for industrially funded basic research
in universities and is due to expire on June 30, 2004.11 It would have been made permanent
in the President’s and the Senate’s version of tax law revisions, but was not included in the
conference report or final version of the Tax Relief Reconciliation Act, P.L. 107-16. The
Administration seeks to have it made permanent. Pending bills to make it permanent include
H.R. 1137, H.R. 1329, H.R. 1340, H.R. 41, S. 41, and S. 515. Legislation was introduced
to allow qualified corporations to obtain economic benefit from research-related tax
incentives, similar to some state laws (H.R. 2153 and S. 1049).
Priorities Among Fields of Federally Funded Research
An important question is what should be the balance among fields of federally
supported research, and specifically, since health/life sciences research has consistently
received priority in the non-defense area, should more funding go to support other fields of
science?12 Some are concerned that the emphasis on health R&D may presage a scarcity of
knowledge and personnel in physical sciences, math, and engineering. Some observers
maintain that funding should be increased for all R&D fields, and others cite the need to
assess reallocating federal funding from health to nonhealth R&D. As shown in Figure 1,
health sciences R&D has grown as a priority for about 20 years. Over the period FY1993
to FY2001, R&D funding at NIH increased almost 60% in constant dollars compared to
NSF, 35%; the Department of Commerce and EPA, about 20% each; and the Agriculture
Department, about 15%. R&D funding decreased in constant dollars for NASA, DOE, and
DOD. NIH received about 70% of the $5 billion increase in federal basic research funding
between FY1993 and FY2001. For FY2003, federally funded health-related R&D, primarily
at NIH, would receive over half of the civilian R&D budget. In terms of funding by field,
life sciences increased from $9.6 billion in 1991 to $18.2 billion in 2001 estimated, or 90%,
while at the same time, between those years funding for physical sciences increased 5%;
mathematics and computer sciences, 140%; and engineering, 32%.
NIH Funding Is Important to Congress. In 1998, the Senate passed S.Amdt. 2272
to S.Con.Res. 86, the approved Senate budget resolution. The amendment expressed the
sense of the Senate that the NIH budget should double within the next five years. Beginning
with FY1999, Congress started appropriating NIH funding at levels that would accomplish
this task by 2003, and the budget request reflects this goal.
8 The NAS held “Planning Meeting on the Role of State Funding of Research,” July 13, 2001. See
RAND/OSTP, Discovery and Innovation: Federal R&D Activities in the Fifty States, June 2000.
9 NSTC, Implementation of the NSTC Presidential Review Directive-4: Renewing the Federal
Government-University Research Partnership....,
Jan. 2001.
10 See CRS Report 95-50 SPR, The Federal Role in Technology Development, by Wendy Schacht.
11 CRS Report RL30479, The Research and Experimentation Tax Credit: Current Law and Selected
Policy Issues for the 106th Congress
, by Gary Guenther.
12 See also CRS Report RL31031, The Changing Composition of the Federal Research and
Development Portfolio
, by Michael E. Davey and Richard E. Rowberg.
CRS-7


IB10088
11-01-02
Figure 1. Trends in Nondefense R&D Funding by Budget Function,
FY1953-FY2003
Congressional Views About the Balance in Federal R&D Funding. There
are various perspectives in Congress on the issue of balance. In the House, the Science
Committee, in Views and Estimates, Fiscal Year 2002, said progress in biomedicine
“depends on advances in a wide variety of disciplines.” Members were concerned about the
“minuscule” increase for NSF, and sought more funding to modernize DOE user and
research facilities, more funding for NASA aeronautics, and increased investment in FAA
R&D. The minority staff of the Science Committee criticized what it called the “misplaced”
trend toward parity between defense and nondefense R&D; the imbalance between
biomedical and physical sciences R&D; and the Administration’s opposition to doubling the
NSF budget and to cooperative federal-industry R&D programs, such as ATP.13 Regarding
the FY2003 R&D budget request, Science Committee Chairman Boehlert reasoned that
increases in “NIH alone cannot undergird our economic health or even improve human
health. Yet the NIH budget is now larger than that of the rest of civilian since agencies put
together, and just the increase in the NIH budget is larger than the research budget of NSF.”14
13 President’s FY2002 Budget for R&D Analysis, by Minority Staff of the Science Committee, Apr.
10, 2001.
14 “Members Raise Concern Over Balance of Federal R&D Budget,” House Science Committee
Press Release, Feb. 13, 2002.
CRS-8

IB10088
11-01-02
Senate Appropriations Committee report 107-43 requested that OSTP “assess the
impact of reduced federal funding in nonhealth research fields and ... develop an action plan
to address these issues in the fiscal year 2003 budget request” (p. 88). Former Senate Budget
Committee Chairman Domenici was reported to have said during a Senate Budget
Committee hearing, “[W]e’re very proud that we’re increasing the National Institutes of
Health ... but ... you can’t increase one piece of science ... and leave the other kinds of
research in the doldrums.... In about five years, you’re going to have the medical scientists
clamoring for where are the physical scientists, ... the people that work on the newest physics
of machinery and engineers and nano-engines and the like?”15
Professional Groups’ Views About Balance. Professional groups have
recommended increasing both funding and balance in support among federally funded
research fields. For instance, the U.S. Commission on National Security 21st Century, in
Road Map for National Security: Imperative for Change, The Phase III Report of the U.S.
Commission on National Security 21st Century,
2001 concluded that threats to the nation’s
scientific and educational base are distinct new dangers to U.S. national security. It
recommended doubling the federal R&D budget by 2010 to about $160 billion and
improving the competitiveness of the less capable R&D institutions. A National Academy
of Engineering report, Trends in Federal Support of Research and Graduate Education,
2001, recommended that the Administration and Congress should evaluate federal funding
for research by field and assess its implications for knowledge generation and industrial
growth, and increase budgets for underfunded disciplines. New Foundations for Growth:
The U.S. Innovation System Today and Tomorrow,
released by the National Science and
Technology Council on January 10, 2001, recommended funding across the portfolio because
“[I]t’s not possible to anticipate where exciting new developments will arise. Increased
funding across a carefully constructed ‘portfolio’ of investments will help ensure the health
of the national innovation system” (pp. 12-13). The Alliance for Science and Technology
Research in America (ASTRA), reportedly modeled after Research! America, an advocacy
group for medical research, focuses on physical sciences. Its goals are: “To provide a strong,
collaborative, political voice for math, physical sciences and engineering before the federal
government that results in substantial and sustained investment; to promote strong,
compelling, and mutually reinforcing messages across all groups lobbying for improved
vitality of the U.S. research enterprise for those fields; and to nurture support for research for
those fields among the voting public.”16
An applications-oriented approach to setting federal R&D priorities was recommended
in Science for Society, Cutting-Edge Basic Research in the Service of Public Objectives, May
2001, sponsored by the Packard and Sloan Foundations. It recommended that federal R&D
support should include “basic science that is targeted in an area of important societal
objectives, or ‘Jeffersonian Science.’” This applications-oriented science would “speed
societal progress”and enhance public support for science because it would more clearly link
basic research and public objectives (pp. 69-70). Related to this theme, the Center for
15 Richard M. Jones, “Reaction to the FY2002 Bush Administration S&T Request,” AIP Bulletin of
Science Policy News
, FYI #26, Mar. 7, 2001.
16 John T. Softcheck, “New Advocacy Organization Will Promote Funding for Research in the Non-
biological Sciences,” Washington Fax, Feb. 26, 2001. See also David Malakoff, “Perfecting the Art
of the Science Deal,” Science, May 4, 2001, pp. 830-835.
CRS-9

IB10088
11-01-02
Science Policy and Outcomes has started to identify areas of federally supported research that
warrant priority setting in order to achieve socially beneficial outcomes in health, earth
systems, prediction in public policy, preparation for extreme events, and nanotechnology.17
Proposals to Increase NSF Funding. The National Science Foundation funds
research across all disciplines and is the main federal source for much nonhealth-related
academic research. The FY2003 budget proposed to increase NSF R&D funding by 3.6%
over FY2002, which some say was inflated since it represents largely transfer of R&D
programs from other agencies. Pleas have been made to double the NSF budget , for instance
by the Coalition for National Science Funding (CNSF), which represents many universities
and professional science associations, in a February 7, 2002 press release, when it
recommended a 15% increase for NSF and doubling of its budget by FY2006. The
Federation of American Societies for Experimental Biology endorsed doubling of the NSF
budget as critical to biomedical research advances.18 H.R. 4664, passed in the House on June
5, 2002, the NSF authorization bill for FY2003, would increase NSF’s budget by 15% for
each of FY2003, FY2004, and FY2005, which according to the bill’s sponsors, would “put
the NSF on the track to double its budget within five years,” similar to the NIH doubling
track, and thus would increase federal support for non-medical R&D in areas which have not
seen increases in recent years like the larger percentage increases which have gone to
biomedical R&D. The bill would also increase oversight of NSF facilities programs. H.R.
1472, from the first session, was a similar bill. FY2003 Appropriations action in both
houses has set NSF on a course to double its budget over the next five years.
Federal R&D Priority-Setting Structures
Some observers recommend more centralized priority-setting for R&D in Congress and
in the executive branch. Some cite a need for an executive branch mechanism to determine
a unified R&D budget and to evaluate the total government R&D portfolio in terms of
progress toward meeting national objectives. Others say that congressional jurisdiction for
R&D is split among a number of committees and subcommittees, preventing examination
of the R&D budget as a whole. This means that R&D funding can serve particular local or
program interests, but may not be appropriate for a national R&D agenda. Opponents see
value in a decentralized system in which budgets are developed, authorized, and appropriated
separately by those most familiar with the needs of specific fields of R&D – the department
or agency head and the authorizing and appropriations subcommittees with jurisdiction.
Unified Science and Technology (S&T) Budget
In a 1995 report, Allocating Federal Funds for Science and Technology, the NAS
recommended that the President present to Congress and that the Congress consider the R&D
budget as a unified whole before its separate parts for each agency are considered by
individual congressional committees. It also recommended that R&D requested in the
budget be reconfigured as a S&T budget, excluding defense development, testing and
17 See [http://www.cspo.org/whoweare/twentyyear.html]; David H. Guston, E. J. Woodhouse, and
Daniel Sarewitz, “A Science and Technology Policy Focus for the Bush Administration,” Issues in
Science and Technology,
Spring 2001, pp. 1-4; and Michael M. Crow, “Harnessing Science to
Benefit Society,” Chronicle of Higher Education, Mar. 9, 2001, p. B20.
18 See Federal Funding for Biomedical and Related Life Sciences Research FY2002.
CRS-10

IB10088
11-01-02
evaluation activities, to denote the functions of creating new knowledge. The FY2002 and
FY2003 budget used a modified version of the format proposed by the Academy, and
identified a “Federal Science and Technology (FS&T) budget table,” which, for FY2003,
includes less than half of total federal R&D spending and some non-R&D funding, such as
education and dissemination of information.19 The table shows that FS&T funding increased
9% from FY2001 to FY2002. It is possible that the OMB will continue to use this alternative
format, paving the way for congressional consideration of a realigned and unified S&T
budget. S.Amdt. 2235 to the Senate budget resolution (S.Con.Res. 86) for FY1999
expressed the sense of the Senate that for FY2000-2004, all federal civilian S&T spending
should be classified under budget function 250. This has not occurred.
Interagency R&D Initiatives
Executive Order 12881, issued by President Clinton, established the National Science
and Technology Council (NSTC) with cabinet-level status. Located in the Executive Office
of the President, it is the successor to the Federal Coordinating Council for Science,
Engineering, and Technology. It recommends agency R&D budgets to help accomplish
national objectives, advises OMB on agency R&D budgets, and coordinates presidential
interagency R&D initiatives. Beginning with the FY1996 budget request, NSTC started to
identify interagency R&D priorities in the budget. The FY2003 budget identified agency
funding for two interagency R&D initiatives whose reporting is required by statute. They
are “Networking and Information Technology R&D,” at level funding with FY2001, and
“U.S. Global Change Research Program,” increased 2% over FY2001. The Administration
included two other interagency initiatives it considers significant. These are the National
Nanotechnology Initiative, with funding increased 11% over FY2002, and a Climate Change
Research Initiative, which is new for FY2003. FY2004 interagency R&D initiatives are:
homeland security and antiterrorism R&D, networking and information technology R&D,
national nanotechnology initiative, molecular-level understanding of life processes; climate
change S&T, and education research.20
Proposals to Coordinate Federal R&D
The National Science Board (NSB) report, Federal Research Resources: A Process for
Setting Priorities, October 11, 2001, (NSB 01-160) recommended a “continuing advisory
mechanism”
in the Congress and in the executive branch and a strengthened OMB/OSTP
relationship to coordinate R&D priorities. It said that federal R&D funding should be looked
at as a five-year planned portfolio, rather than as the sum of the requirements and programs
of departments. AAAS President Mary Good, recommended creating a cabinet-level post
for S&T
to help achieve balance in R&D and coordinate federal R&D and handle research
policy issues.21 The Commission on National Security recommended empowering the
President’s science advisor to establish “functional budgeting,” to identify nondefense R&D
objectives that meet national needs, strengthen the OSTP, NSTC and PCAST, and improve
19 Sec. 8, FY2003 Budget, Analytical Perspectives.
20 FY2004 Interagency R&D Priorities, Memorandum, from Director, OSTP and Director, OMB,
May 30, 2002.
21 Rebecca Spieler, “AAAS President Concerned About Imbalances in Nation’s R&D Portfolio...,”
Washington Fax, Feb. 21, 2001.
CRS-11

IB10088
11-01-02
coordination with OMB to enhance stewardship of national R&D. The congressional science
policy report, Unlocking Our Future, 1998, spearheaded by Representative Vernon Ehlers,
called for more balance in the federal research portfolio and said that while OMB can fulfill
the coordination function in the executive branch, “no such mechanism exists in the
Congress. ... [When] ... committees have joint jurisdiction over or significant interest in
large, complex technical program, the ... committees should ... coordinate their efforts [and]
... consider holding joint hearings and perhaps even writing joint authorization bills” (p. 7).
Legislation Introduced to Fund the OTA
The aforementioned NSB report also recommended that Congress should develop “an
appropriate mechanism to provide it with independent expert S&T review, evaluation, and
advice” (p. 16). Some believe that this could pertain to reestablishing the Office of
Technology Assessment (OTA), which was active between 1972 and 1995 as a $22 million
congressional support agency. It prepared in-depth reports and policy options about the
consequences of S&T and was eliminated as part of the reductions Congress made in a
FY1996 appropriations bill. In June 2001, a conference was held to assess ways to
“resurrect” OTA or variants of it. Advocates cited the need for better congressional support
for S&T analysis.22 The OTA is still authorized, but funds would have to be appropriated
for it. H.R. 2148, a bipartisan bill, would authorize OTA funding at $20 million annually for
FY2002-FY2007. Title XVI of H.R. 4, an energy bill as passed by the Senate on April 25,
2002, would create a Science and Technology Assessment Service within the legislative
branch. It would have a congressional Board and a Director and would interact with the
National Research Council to select experts to work on assessments. This language is not
in the version of the bill passed in House (on August 2, 2001). The proposals are in
conference. In other legislation, a conference report, H. Rept. 107-259 that accompanied
H.R. 2647, which was signed as P.L. 107-68, appropriated $500,000 to GAO for a
technology assessment pilot project and report due June 15, 2002.
Earmarking
There is controversy about congressional designation of R&D funding for specific
projects, also called earmarking. When using this practice, Congress, in report language or
law, directs that appropriated funds go to a specific performer or designates awards for
certain types of performers or geographic locations. Typically an agency has not included
these awards in its budget request and often such awards may be made without prior
competitive peer review. Critics say that earmarking undermines the authorization process
and distorts agency R&D priorities. Supporters believe the practice helps to develop R&D
capability in a wide variety of institutions, that it compensates for reduced federal programs
for instrumentation and facilities renewal, and that it generates economic benefits in targeted
regions since R&D capacity may generate industrial growth. Section 8 of Analytical
Perspectives, FY2003 Budget
reported that R&D funded at congressional direction for
FY2002 totaled $1.824 billion, up almost 4% over FY2001. The Chronicle of Higher
Education
, September 27, 2002, reported that for FY2002, Congress earmarked $1.8 billion
22 Wil Lepkowski, “The Mummy Blinks,” Science and Policy Perspectives, June 25, 2001; D.
Malakoff, “Memo to Congress: Get Better Advice,” Science, June 22, 2001: 2229-2230; and M.
Davis, “A Reinvented Office of Technology Assessment May Not Suit Congressional Information
Requirement...,” Washington Fax, June 18, 2001.
CRS-12

IB10088
11-01-02
for universities and colleges, most of it for R&D. According to AAAS, congressional
FY2002, R&D earmarks totaled $1.5 billion, with most for USDA, DOD, the Department
of Energy, and NASA, in that order. So far for FY2003, AAAS estimated Senate R&D
earmarks at $975 million.23 The Administration seeks to discourage such earmarking on the
grounds that it distorts agency priorities and is parochial. It sought to rescind many FY2001
earmarks in the supplemental appropriations process. The resulting law, P.L. 107-20
included some rescissions, but not as much as the President sought.24 A conference on the
pros and cons of earmarking was held on October 3, 200125
Government Performance and Results Act (GPRA)
P.L. 103-62, requires agencies to define goals, set specific annual performance targets,
and report annually on performance. The law is intended to ensure accountability for federal
investments and that an agency’s programs and priorities meet its goals. It is difficult to
define priorities for most research and to measure the results quantitatively, since research
outcomes can not be defined well in advance and take a long time to demonstrate. Recent
actions could force agencies to identify more precisely goals for research and measures of
research outcomes. The Bush Administration emphasizes the importance of performance
measurement, including for R&D, as announced in The President’s Management Agenda,
FY2002
and in the FY2003 budget request. Most say that more work is needed before
performance measures can be used to recommend budgets for research. OMB used
performance measures for management processes and gave passing marks “green or yellow
lights”(to NSF) or “red lights” or failing marks (e.g. DOD and NIH).26 As a pilot test, six
performance criteria were used to evaluate the Energy Department’s applied R&D programs.
OMB said not enough data were available for a valid assessment, but that measures showed
where funding should be increased – for research to control greenhouse gases – and
decreased – for oil drilling technology and high wind-speed power research (FY2003 Budget,
Analytical Perspectives,
Sec. 8). OMB has instructed agencies on performance-related
investment criteria to use for preparing FY2004 R&D budget requests.27 It is developing
performance criteria for basic research. The Ehlers report recommended that a “portfolio”
approach be used when applying GPRA to basic research. P.L. 106-531 required an agency
head to assess the completeness and reliability of performance data used in reports to
Congress and the House adopted a rule with the passage of H.Res. 5 requiring all “committee
reports [to] include a statement of general performance goals and objectives, including
outcome-related goals and objectives for which the measure authorizes funding.”28
23 AAAS, “Senate Earmarks Approach $1 Billion in FY2003 Budget,” Aug. 26, 2002.
24 Daily Report for Executives, June 6, 2001, p. A-21, and July 13, 2001, p. A-1.
25 See Jeffrey Brainard, “Supporters an Criticism of Congressional Earmarks Meet to Seek
Consensus,” Chronicle of Higher Education, Oct. 4, 2001, and David Malakoff, “White House Asks
Community to Oppose Earmark Projects,” Science, Sept. 28, 2001, p. 2364.
26 On this point see “The President’s FY03 Budget for Research and Development; An Analysis by
the Minority Staff of the Science Committee,” Feb. 6, 2002.
27 FY2004 Interagency R&D Priorities, May 30, 2002, op. cit.
28 See CRS Report RL30905, op. cit., and CRS Report RS20257, Government Performance and
Results Act: Brief History and Implementation Activities,
by Genevieve J. Knezo.
CRS-13

IB10088
11-01-02
LEGISLATION
H.R. 4. (Tauzin)
The Senate version incorporates the Energy Security Policy bill, S. 517, which was
introduced Mar. 12, 2001, by Senator Bingaman and passed the Senate on Apr. 25, 2002.
Among other things, Title XVI would create a congressional Science and Technology
Assessment Service. The House version, passed on Aug. 2, 2001, does not contain this
provision. The conference committee is meeting.
S. 1172 (Durbin)
Legislative Branch Appropriations Act, 2002. Introduced July 2, 2001; passed Senate
with amendments on July 19, 2001. S.Amdt. 1026 allocated $1 million to GAO to conduct
a technology assessment pilot project and to report on it by June 15, 2002. The Senate
vitiated passage of S. 1172 and passed H.R. 2647 with the Senate-passed language. The
House-passed bill did not contain the referenced language. The conference report contained
language to fund the study at $500,000. The bill became P.L. 107-68, Nov. 12, 2001.
H.R. 64 (Ehlers)
To provide for the establishment of the position of Deputy Administrator for S&T of
the EPA, and for other purposes. Introduced Jan. 3, 2001; referred to Subcommittee on
Environment, Technology and Standards, Science Committee; subcommittee; favorably
reported by full committee on Oct. 3, R. Rept. 107-311. House preparation for floor; placed
on the Union Calendar, Calendar No. 187, Nov. 30, 2001.
H.R. 1472 (Johnson, Eddie Bernice)
To authorize appropriations for fiscal years 2002, 2003, 2004, and 2005 for the National
Science Foundation, and for other purposes. Introduced Apr. 4, 2001; referred to
Subcommittee on Research, Science Committee. For further action see H.R. 1858.
H.R. 2148 (Holt)
To re-establish the Office of Technology Assessment. Introduced June 20, 2001;
referred to subcommittees of the Science Committee.
H.R. 4664 (Smith, Nick)
To authorize appropriations for fiscal years 2003, 2004, and 2005 for the National
Science Foundation, and for other purposes. Passed the House June 5, 2002.
H.Res. 72 (Gekas)
To express the sense of the House of Representatives that the federal investment in
biomedical research should be increased by $3,400,000,000 in FY2002. Introduced Feb. 28,
2001; referred to Subcommittee on Health of the Committee on Energy and Commerce.
CRS-14

Table 1. R&D in the Budget and Outyear Budget Projections, By Agency, Based Largely on AAAS Data
(Budget authority in millions of dollars)
FY2000
FY2001
FY2002
FY2003
%
House
Senate
Conf. FY2004 FY2005 FY2006 FY2007
% Change
act.
est.
est.
req.
Change,
Apps.
Apps.
Comm. proj.(by proj.(by proj. (by proj.(by FY02toFY07
prelim. FY02-03
Floor*
Floor*
or Final
AAAS)
AAAS)
AAAS)
AAAS)
Constant
Comm#
Comm.#
Dollars
SELECTED AGENCIES &
PROGRAMS

Dept. of Agr. Total
$1776
$2181
$2334
$2118
-9.3%
$2145#
$2262#
$2286
$2273
$2319
$2373
-7.1%
(Agr. Res. Service)

(1012)
(1234)
(1132)#
(1197)#
(CSREES)

(594)
(532)

(485)#
(529)#
(Forest Service)

(245)
(265)

(302)#
(298)#
Dept. of Commerce Total
1174
1030
1096
1100
-0.3
1201#
1122
1147
1172
1199
-0.1
(NOAA)
(643)
(561)
(611)
(605)
(-1.1)
(682)#
(NIST)
(471)
(413)
(460)
(483)
(5.0)
(498)#
(ATP) (Within NIST)
(116)
(118)
(150)
(107)
(-28.5)
(159)#
Dept. of Defense Total
39959
42740
49492
54460
10.0
58845*
57663#
58764
58066
61789
60009
59065
8.7
(S&T (6.1-6.3+ medical))
(8632)
(9365)
(10298)
(9707)
(-5.7)
11708* (11117)#
(11692)
(All Other DOD R&D)
(31327)
(33375)
(39194)
(44753)
14.2
47137* (46546)#
(47072)
Dept. of Education
238
264
268
311
16.0
279#
Dept. of Energy Total
6956
7733
8361
8323
-0.5
8532#
8740#
8470
8627
9798
8974
-1.9
(Atomic/Defense)/(NNSA+
(3201)
(3462)
(3839)
(3947)
(2.8) (3910)#
(4058)#
(4003)
(4062)
(4127)
(4192)
(-0.2)
Defense)
(Energy & Science)
(3755)
(4271)
(4522)
(4376)
(-3.2) (4622)#
(4682)#
(4468)
(4565)
(4671)
(4782)
(-3.4)
Dept. of HHS Total
18182
21045
24141
27551
14.1
27578#
28136
28761
29431
30104
13.9
(NIH)
(17234)
(19807)
(22795)
(26452)
(16.0)
(26385)#
(27009) (27610) (28254) (28916)
(15.9)
Dept. of Interior Total
618
621
660
628
-4.8
681#
684#
641
654
668
682
-5.5
(U.S. Geological Survey)
566
583
542
-7.0
(598)#
(595)#
Dept. of Transportation Total
607
718
778
736
-5.4
815#
697#
750
763
779
797
-6.4
(FAA)
(220)
(301)
(359)
(222)

(248)#
(223)#
(FHA)
(261)
(294)
(275)
(266)

(291)#
(293)#
(NHTSA)
(51)
(58)
(59)
(59)

(60)#
(59)#
(TSA)
new
agency
(14)
(130)
(130)#
(25)#
CRS-15

FY2000
FY2001
FY2002
FY2003
%
House
Senate
Conf. FY2004 FY2005 FY2006 FY2007
% Change
act.
est.
est.
req.
Change,
Apps.
Apps.
Comm. proj.(by proj.(by proj. (by proj.(by FY02toFY07
prelim. FY02-03
Floor*
Floor*
or Final
AAAS)
AAAS)
AAAS)
AAAS)
Constant
Comm#
Comm.#
Dollars
Dept. of Veterans Affairs
645
719
761 810
6.5
786#
826
844
863
883
6.1
Environmental Protection Agency
558
574
592
627
5.9
628#
624#
640
653
669
685
5.7
NASA Total
9494
9887
10232
10676
4.3
10856#
10798#
11144
11370
11815
12240
9.3
(Human Space Flight)
(3014)
(2901)
(2461)
(1878)#
(1878)#
(Science, Aeronautics,
(6481)
(7024)
(7840(
(8900)
(9145)#
(9045)#
Technology)
National Science Foundation
2931
3320
3526
3651
3.5%
4036#
3947#
3728
3811
3900
3991
-7.1
All other R&D
630
702
7631
689
-9.7%
1503#
TOTAL
83769
91534
103150
112047
8.6%
115977#
116824
121726
121476
122065
8.1
NonDefense 40609
45332
49672
53273
7.2%
54256#
54755
55874
57340
58808
8.2
NonDefense Minus NIH
23374
25525
26877
26821
-0.2%
27871#
27746
28264
29086
29892
1.6
Defense
43160
46202
53478
58774
9.9%
61722#
62069
65851
64136
63257
8.1
Source: Based largely on American Association for the Advancement of Science, with tables appearing at [http://www.aaas.org/spp/dspp/rd/fy03.htm]. AAAS bases its tables on OMB data, agency budget
justifications, information from agency budget offices, and appropriations action. Data in italics in parentheses are parts of the total and have been included in agency totals. Final figures for FY2002 are AAAS
estimates of congressional appropriations including emergency appropriations for counterterrorism and national security. See also CRS Issue Brief 10083, “Research and Development Funding: Fiscal Year 2002,”
for detailed information about agency budget requests and congressional action for FY2002.
CRS-16