Order Code IB10088
CRS Issue Brief for Congress
Received through the CRS Web
Federal Research and Development:
Budgeting and Priority-Setting Issues,
109th Congress
Updated March 22, 2005
Genevieve J. Knezo
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
R&D Budgets
FY2004 Budget
FY2005 Budget
FY2006 Budget Request
Priority-Setting Issues
Trends in R&D Support Patterns
Observations on the Role of the Federal Government in Supporting R&D
Priorities Among Fields of Federally Funded Research
Congressional Views About the Balance in Federal R&D Funding
Professional Groups’ Views About Balance
Legislative Proposals to Broaden Incentives for Private R&D
NSF Funding
Homeland Security R&D Funding
Federal R&D Priority-Setting Structures
Unified Federal Science and Technology (FS&T) Budget
Interagency R&D Initiatives
Proposals to Coordinate Federal R&D
Legislation on Technology Assessment
Earmarking
Government Performance and Results Act (GPRA) and Performance Assessment
Rating Tool (PART)

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Federal Research and Development:
Budgeting and Priority-Setting Issues, 109th Congress
SUMMARY
Federal research and development
R&D in the Departments of Commerce, Energy
(R&D) funding priorities change over time,
and Education and in NASA, NIH, NSF, and
reflecting Presidential policies and national
the Environmental Protection Agency.
needs. Defense R&D predominated in the
1980s, decreasing to about 50% of federal
Estimated FY2003 expenditures for over-
R&D in the 1990s. In non-defense R&D,
all national (public and private) R&D of $283.8
space R&D was important in the 1960s as the
billion continue to grow. Federal R&D expen-
nation sought to compete with the Soviet
ditures, at $85.2 billion, have grown, but de-
Union; energy R&D was a priority during the
clined to 30% of the total. Debates focus on
energy-short 1970s, and, since the 1980s,
which fields of federal R&D should be in-
health R&D has predominated in civilian
creased, how to set priorities, and how to
science. Defense R&D and homeland security
“balance” health and nonhealth fields. There
R&D funding are also priorities.
are proposals to increase incentives for indus-
trial R&D, including S. 14 and S. 387, which
The FY2006 R&D budget, requested at
would make permanent the R&D tax credit.
$132.3 billion of budget authority, proposes to
keep both defense and non-defense R&D
For the last few years, the Administration
funding about the same as last year, which
has included in its request a “Federal S&T”
would reduce funding in terms of constant
budget, which may presage a future unified
dollars, if inflation is considered. About 57%
science and technology (S&T) budget. The
of the request is for defense R&D and about
FY2006 budget requested funding for three
21% is for biomedical R&D at the National
interagency R&D initiatives: networking and
Institutes of Health (NIH). Increases were
information technology; climate change sci-
requested for R&D in the Department of
ence; and nanotechnology. There are proposals
Transportation (DOT), the National Aeronau-
to coordinate R&D, including a continuing
tics and Space Administration (NASA), the
priority-setting mechanism; a cabinet-level
Department of Homeland Security (DHS), the
S&T body; functional R&D budgeting; and
National Science Foundation (NSF), and NIH.
reestablishment of a technology assessment
After seven years of constant dollar growth,
function.
the Defense Department’s (DOD) R&D bud-
get would be increased by 0.1%, but reduced
The Administration opposes R&D
in terms of constant dollars.
earmarking, estimated at $2.4 billion in budget
authority for FY2005. OMB says such “re-
FY2005 R&D appropriations totaled
search performed at congressional direction,”
$131.8 billion, about 57% of which was for
distorts agency priorities. The Administration
defense R&D. Pressures on the discretionary
is using performance measures for R&D bud-
budget have increased; R&D funding was
geting, including tools of the Government
increased about 5% over FY2004; non-de-
Performance and Results Act and the Program
fense R&D increased about 0.3%. Final
Assessment Rating Tool. Some critics say
appropriations action increased R&D in DHS,
better data and concepts are needed to use
NIH, DOD, Agriculture, and DOT; smaller
performance budgeting for basic and applied
increases or flat funding was appropriated for
research.
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MOST RECENT DEVELOPMENTS
The President’s FY2006 research and development (R&D) budget request of $132.3
billion of budget authority proposes to keep both defense and non-defense R&D funding
about the same as last year, which basically reduces funding in terms of constant dollars, if
inflation is considered. About 57% of the request is for defense R&D (military and energy)
and about 21% is for biomedical R&D at the National Institutes of Health (NIH). Increases
were requested for R&D in the Department of Transportation (DOT), the National
Aeronautics and Space Administration (NASA), the Department of Homeland Security
(DHS), the National Science Foundation (NSF), and NIH. After seven years of real dollar
annual growth, the Defense Department’s (DOD) R&D budget would be increased by 0.1%,
but reduced in terms of constant dollars. Both House and Senate Budget resolutions have
been agreed to (H.Con.Res. 95 and S.Con.Res. 18) and recommend funding for function 250
(for NSF, NASA, and DOE science) at the requested level. S. 14 and S. 387 would make
permanent the R&D tax credit.
BACKGROUND AND ANALYSIS
Federal R&D funding priorities have shifted over time, reflecting Presidential
preferences, congressional appropriations, 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 non-defense R&D, space R&D was
important in the 1960s as the nation sought 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 and counterterrorism
R&D funding have been increased since the 9/11 terrorist attacks. Together, DOD and NIH
funding total about 76% of the FY2006 R&D request. (See also CRS Report RL30905,
Federal Research and Development: Budgeting and Priority-Setting, 1993-2000.)
R&D Budgets
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 the
White House’s Office of Management and Budget (OMB) and Office of Science and
Technology Policy (OSTP) guidance 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 is to pass a budget resolution, which sets spending levels
and recommends levels for each budget function that appropriations committees use in
setting discretionary (302b) spending allocations for each appropriations subcommittee. The
resolution also gives outyear projections based on budget and economic assumptions. Each
of the appropriations subcommittees is to report approved funding levels for agencies within
their jurisdiction; appropriations bills, which give agencies spending authority, are to be sent
to the floor, usually beginning in the summer.
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FY2004 Budget. The President’s FY2004 R&D request totaled about $122.3 billion
of budget authority, about 4% more than the FY2003 appropriated level. Similar to FY2003,
counter-terrorism spurred budget request increases in DOD R&D, at 7% more than FY2003,
and in DHS, at almost 50% more than FY2003. NIH’s requested increase was 3% over
FY2003; NSF’s budget request at 3% over FY2003 fell short of the 15% envisioned in 2002
legislation authorizing NSF’s budget to double over five years. In the Department of
Commerce (DOC), the President sought to eliminate the Advanced Technology Program
(ATP)and the (non-R&D) Manufacturing Extension Partnership (MEP). Appropriations
action increased R&D funding to $127.0 billion, or 8% over FY2003, with 93% of the
increase going to DOD, DHS, and NIH. NSF’s R&D budget increased by 5% and DOE’s
by 6%. Other agencies had modest increases or cuts.
FY2005 Budget. Except for DHS and DOD, which were funded via separate
appropriations bills, FY2005 R&D funding was appropriated in P.L. 108-447, an omnibus
bill. The President’s FY2005 R&D request was about $131.7 billion of budget authority,
almost 5% more than the FY2004 appropriated level. Pressures on the discretionary budget
increased; final R&D appropriations totaled about $131.8 billion of budget authority, about
54% for defense R&D. Non-defense R&D funding increased about 0.2%. The largest
increases went to R&D in NIH and DOD; smaller increases were made for R&D budget
authority in the Department of Agriculture Department (USDA), DHS, and DOT, NASA
and NIH. Legislation had been enacted in 2002 to double NSF’s budget over five years (as
had been done previously for NIH), but NSF’s budget request at about 4% over FY2004 fell
short of the amount envisioned in the authorizing legislation and for FY2005 congressional
action reduced NSF’s budget by 0.3% below the FY2004 level. Congress appropriated less
than the FY2004 level for R&D in the Department of Education and the Environmental
Protection Agency (EPA). In DOC, the President sought again to eliminate the ATP, whose
R&D component was funded at $134.0 million in FY2004. Congress increased DOC R&D
funding for NOAA, +10%, and funded ATP R&D at $114.0 million, about 15% less than in
FY2004. Funding projections for the next five years show reductions, in terms of constant
dollars, in all areas of R&D outside of the priority areas of defense, security, and space.
FY2006 Budget Request. The President’s FY2006 budget proposes flat funding for
non-defense discretionary programs. See the Appendix table. Federal R&D funding,
requested at $132.3 billion of budget authority, about 0.1% more than the FY2005 enacted
amount, would keep defense R&D funding flat and would increase non-defense R&D
funding by about 0.3%, which basically cuts these programs in terms of real dollars, if
inflation is considered. About 57% of the request is for defense R&D and about 22% is for
biomedical R&D at NIH. The largest increases would go to DOT, NASA, DHS, and NSF.
After seven years of real dollar annual growth, DOD’s R&D budget request was flat and
reduced in terms of real dollars. Federal funding for total research (basic and applied) would
be reduced by almost 2%, with basic research funding reduced by about 1%. NSF’s
requested R&D budget increase of almost 3% would go largely to facilities; and the average
size of NSF’s research grants is projected to decrease again this year. NIH projects a decline
in the number of research project grants. FY2006 requested R&D funding was decreased for
three major interagency R&D activities: networking and information technology; national
nanotechnology initiative, and climate change science program. Both House and Senate
Budget resolutions have been agreed to (H.Con.Res. 95 and S.Con.Res. 18) and recommend
funding for function 250 (for NSF, NASA, and DOE science) at the requested level.
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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 non-
defense R&D, especially between health and nonhealth R&D.
Trends in R&D Support Patterns. National (public/private) R&D expenditures
have been rising over time to $283.8 billion in 2003 (expressed in absolute (or nominal)
dollars), the latest year for which data are available.1 Federal R&D expenditures as a part of
the total have also risen, to $85.2 billion, but have declined significantly as a share, from
46% in 1983 to about 30% 1993. Specific funding patterns figure prominently in priority-
setting debates.
Industry is the largest supporter and performer of the nation’s R&D. Universities and
colleges are the second-largest performer of national R&D. Industry funded 63% of all U.S.
R&D performed in 2003 and conducted 68%; industry funded 91% of the R&D it conducted.
The amount of R&D supported by various industries varies; most industrial R&D is for near-
term applied work and product or prototype development. In 2003, industrial R&D
expenditures supported 81% of the nation’s development work; industry conducted 89% of
the nation’s development (the federal government supported 9% of the development industry
conducted). Industry allocated 5% of its R&D expenditures to the nation’s basic research and
supported 17% of the basic research total. Federal support for development, which totaled
about 35% of federal R&D, goes largely for defense R&D performed by industry. The federal
government is the largest supporter of the nation’s basic and applied research (i.e., research
per se), and supplied 46% of total research expenditures in 2003. Industry provided 40% of
national research expenditures (exclusive of development), largely for applied research. The
federal government was the single largest supporter of the nation’s basic research, funding
61% of national basic research expenditures, largely in universities, and, thus, is the largest
contributor to sustaining the nation’s scientific knowledge base. Universities and colleges
conducted 55% of nationally funded basic research; the federal government funded about
67% of this university-performed basic research. About 43% of total federal research dollars
go to universities and 23% to mission-oriented work in federal agency laboratories, largely
at DOD, NIH, and USDA.
OMB’s historical trend data indicate that in constant dollar terms, federal R&D funding
has declined from about 14% of total federal discretionary outlays in FY1965 to about 13%
today. In part because of economic pressures and budgetary caps, during the years FY1991
to FY2002, federal R&D funding was below the previous constant-dollar high of FY1990.
As a result of congressional action, constant-dollar R&D appropriations started to eclipse the
1 Data in this section are based largely on Brandon Shackelford, “U.S. R&D Projected to Have
Grown Marginally in 2003,” NSF InfoBrief, Feb. 2004, NSF 04-307 and NSF, Table 1B, National
Patterns of R&D Resources: 2002 Data Update (current to October 2002). Note: expenditure data,
rather than budget authority data, need to be used to compare federal and nonfederal funding levels.
Shackelford acknowledges that the expenditure data he uses “differ from Federal R&D funding totals
reported by the Federal agencies that provide those funds. The difference in the Federal R&D totals
appears to be concentrated in the funding of industry R&D by the Department of Defense.”
Expenditures do not equal outlays or budget authority. See also Elisa Eiseman, Kei Koizumi, and
Donna Fossum, Federal Investment in R&D, RAND, Sept. 2002, MR-1639.0-OSTP.
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FY1993 level beginning with FY2001. However, concerns that had been raised about the
declines in federal R&D funding have not abated because of a return to deficit spending,
which can foreshadow reductions in discretionary R&D spending. Another issue is that as
constrained federal R&D budgets focus more on defense, homeland security, and biomedical
R&D, fewer resources may be available for other areas of R&D.
Observations on the Role of the Federal Government in Supporting R&D.
As shown in funding data, federal government support for R&D serves primarily the
objectives of defense and homeland security, biomedical research, basic research knowledge
generation, and enhancement of academic research capacity (which some call the “seed corn”
of future scientific and technological development). Only a small percentage of federal non-
defense R&D supports industrial R&D and innovation directly. Some observers contend that
federal research support should be funded at increasingly higher levels as a public good to
enhance the U.S. ability to advance scientifically; to maintain the stature of U.S. academic
institutions and research capacity in an increasingly competitive global academic
environment; to train scientific and technical (S&T) personnel; and to broaden the
knowledge base that industry might use.
Although there is controversy about it, some observers theorize that innovation and
technological development are as important or more important than labor and capital as
macro-economic drivers of economic growth. They contend that industrial R&D and
innovation may benefit indirectly from federal investments in basic research and academic
science and that this funding should be increased. An example of support for this approach
appeared in President Bush’s FY2002 budget: “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). The President’s FY2006 budget reported, “Basic research
is the source of tomorrow’s discoveries and new capabilities and this long-term research will
fuel further gains in economic productivity, quality of life, and homeland and national
security” (Analytical Perspectives, p. 61). NSF’s National Science Board has discussed the
importance of R&D to U.S. economic growth in its series Science Indicators.2 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.”3
Others say that data are inadequate to support the notion that basic research knowledge
leads to technological innovation as a crucial determinant of economic growth. Because of
the lack of credible data and disagreement among experts, policymakers lack guidance to
determine if increased federal research support would enhance growth and which R&D fields
or programs warrant funding in order to promote technological innovation.4 As a result,
some say that federal policy for industrial innovation, and its possible byproduct, economic
2 See, for example, the 2004 report at p. O-4.
3 See also: 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.
4 William B. Bonvillian, “Meeting the New Challenge to U.S. Economic Competitiveness,” Issues
in Science and Technology, Oct. 1, 2004.
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growth, should focus more on improving the climate for industrial R&D, such as by tax
incentives, altered regulatory policies, and wider liability protections.
The benefits of federal R&D investments are likely to be discussed in the context of
long-term economic projections of deficits, decreasing outyear federal R&D budgets, and
reductions in domestic discretionary spending. Related issues are whether policies to
increase federal, state, and industrial support for academic research might overwhelm
academic research with pressure to conduct short-term applied studies.5 There is also the
issue of whether state-supported funding could supplant federal funding in some areas, as
evidenced by initiatives in California and other states to fund stem cell research and
biotechnology R&D.6 Other issues of debate focus on diversifying priorities for fields of
support since the R&D budget request stresses funding for defense, homeland security, and
health R&D spending and provides level or decreasing funding in most other areas of science
and R&D application. There are also issues of organization of the government to fund and
generate research knowledge, modifying funding mechanisms, and enhancing accountability
for federal R&D investments.
Priorities Among Fields of Federally Funded Research
Important questions are what should be the balance among fields of federally supported
research, and specifically, since health/life sciences research has in recent years consistently
received priority in the non-defense area, should more non-defense R&D funding go to
support other fields of science? Some critics are concerned that the emphasis on health R&D
may presage a scarcity of knowledge in physical sciences, math, and engineering.7 They
maintain that funding should be increased for all R&D fields, and others cite the need to
reallocate more federal funding from health R&D to nonhealth R&D. As shown in Figure
1, health sciences R&D has grown as a priority for about the last 20 years. Over the period
FY1995 to FY2006, requested R&D funding at NIH increased 112% in constant dollars
compared to DOD, 64%; NSF, 42%; USDA, 13%; DOE, 1%; and NASA, -0.2%. R&D
funding decreased in constant dollars for EPA and the Departments of the Interior,
Transportation and Commerce. For FY2006, it is estimated that federally funded health-
related R&D, primarily at NIH, would receive over 51% of the non-defense R&D budget.
In terms of funding by field, federal obligations for life sciences increased from $9.9 billion
in FY1992 to an estimated $22.2 billion in FY2002, or about 125%, while at the same time,
between those years funding for physical sciences increased 16%; mathematics and computer
sciences, 125%; and engineering, 41%. (Based on NSF data and AAAS data.)
Congressional Views About the Balance in Federal R&D Funding. There
are various perspectives on the issue of balance, focusing on both types and fields of R&D
supported. As already noted, funding for biomedical research has been a priority in recent
years. In 1998, the Senate S.Con.Res. 86, the FY1999 Senate budget resolution. The
5 NSTC, Implementation of the NSTC Presidential Review Directive-4: Renewing the Federal
Government-University Research Partnership...., Jan. 2001.
6 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.
7 In 2003, the National Science Board released a related report, The Science and Engineering
Workforce/Realizing American’s Potential, NSB-03-69.
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amendment expressed the sense of the Senate that the NIH budget should double within the
next five years, which occurred by FY2004. (The doubling is not complete in constant dollar
terms.) Critics allege that other fields of science have received inadequate federal attention
as a result of the health science emphasis. Partially in reaction, P.L. 107-368, the NSF
authorization bill for FY2003, authorized increases for NSF (which supports all areas of
research) that would double its budget by 2008. NSF funding has not been appropriated at
a rate to meet this target since and its FY2006 R&D funding request is less than 1% greater
than in FY2003.
Figure 1. AAAS Data on Trends in Non-defense R&D by Function, FY1953 -
2006
Trends in Nondefense R&D by Function, FY 1953-2006
outlays for the conduct of R&D, billions of constant FY 2005 dollars
Health
50
Space
40
Energy
30
20
Other
10
=
Nat. Res.
0
/Env.
1953
1960
1967
1974
1981
1988
1995
2002
Gen. Science
Source: AAAS, based on OMB Historical Tables in Budget of the United States
Government FY 2006. Constant dollar conversions based on GDP deflators. FY
2006 is the President's request.
Note: Some Energy programs shifted to General Science beginning in FY 1998.
FEB. '05 © 2005 AAAS
(AAAS granted CRS permission to use Figure 1.)
House Science Committee Chairman Boehlert in a statement on February 16, 2005
recognized the need for austerity in the FY2006 R&D budget, but questioned the wisdom of
reduced funding for NSF’s science education activities and DOE’s science activities. A
bipartisan “Views and Estimates” analysis released by the House Science Committee on
March 7, 2005, noted,
...The proposed funding for basic research is insufficient. Funding short-term
development at the expense of longer-term basic and applied research is not advisable,
and neglects those portions of R&D where government support is most crucial. The ...
budget must fully consider appropriate balances between defense and non-defense R&D
spending and between biomedical and non-biomedical spending. ... The R&D budgets of
DOD and ... NIH account for more than 75 percent of the total R&D budget. Further, the
increase for defense development ... amounts to almost twice the overall increase in
R&D. While fully acknowledging the important constrictions of defense and biomedical
R&D, the Committee urges that similar attention be given to other important R&D
agencies, such as NSF, DOE, and NIST” (p. 2).
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Professional Groups’ Views About Balance. While some professional groups
argue for increased federal health sciences funding,8 others contend that more balance or
support for other fields is needed. For instance, 32 Nobel laureates and industrialists wrote
to President Bush in April 2003, urging more balance and increased funding for physical
sciences, mathematics, and engineering in the 2005 budget. In response to language in
appropriations reports, in November 2004, the NIH and NSF held a conference on “Research
at the Interface of the Life and Physical Sciences: Bridging the Sciences,” to identify
opportunities, challenges, and issues at the interface of the life and physical sciences that
could result in major advances and to develop approaches for bridging the separate fields.
Nongovernmental scientists attending the meeting recommended more funding for this
interdisciplinary work and are preparing a follow-up report for the government.9 The
President’s Council of Advisors on Science and Technology (PCAST) released Assessing the
U.S. R&D Investment, January 2003. The draft of this report, which was issued in August
2002, called for doubling federal budgets for physical sciences and electrical, mechanical,
chemical, and metallurgical and materials engineering, and endorsed doubling the NSF
budget. Reportedly, the OSTP director objected to singling out any agency or field for
doubling,10 so the report recommended targeting physical sciences and engineering to bring
“them collectively to parity with the life sciences over the next 4 budget cycles” in order to
better balance budget allocations. The U.S. Commission on National Security 21st Century,
in Road Map for National Security: Imperative for Change, The Phase III Report, 2001
concluded that threats to the nation’s scientific and educational base endanger U.S. national
security. It recommended doubling the federal R&D budget by 2010 and improving the
competitiveness of less capable U.S. academic R&D institutions. The Alliance for Science
and Technology Research in America supports increased R&D funding for all fields.11
Arguments have also been made to give more attention to industrial R&D. The Council
on Competitiveness, in a December 2004 report, Innovate America, included proposals to
increase to an average of 3% the amount of federal agency budgets for basic research, to
improve the regulatory climate for corporations, to increase federal investment in selected
areas of applied research, and to improve science and engineering education. 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 research funding by field, assess implications for knowledge generation and industrial
growth, and increase budgets for underfunded disciplines. Similar recommendations were
made in New Foundations for Growth: The U.S. Innovation System Today and Tomorrow,
released by the National Science and Technology Council on January 10, 2001.
Legislative Proposals to Broaden Incentives for Private R&D. Legislation
has been introduced again in the 109th Congress to make permanent the Research and
Experimentation (R&E) tax credit that provides credits for industrially funded R&D support
8 For instance, see Federation of American Societies for Experimental Biology, Federal Funding for
Biomedical and Related Life Sciences Research, FY2006, 27 p.
9 Jeffrey Mervis, “What Can NIH Do for Physicists?” Science, Nov. 26, 2004, p. 1463.
10 “PCAST Releases Report on U.S. R&D Investment,” CFR Weekly ‘Wrapup, Feb. 14, 2003.
11 See [http://www.aboutastra.org/_images/pdfs/astrabriefs205.pdf] and David Malakoff, “Perfecting
the Art of the Science Deal,” Science, May 4, 2001, pp. 830-835.
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in industry and universities that was due to expire on June 30, 2004.12 The Administration
sought to have it made permanent and estimated it would cost about $30.0 billion over the
period 2005-2009. P.L. 108-311, enacted in 2004 extended the research tax credit through
December 31, 2005. In the 109th Congress, S. 14, the “Fair Wage, Competition and
Investment Act,” introduced January 24, 2005, and S. 387, the “Climate Change Technology
Tax Incentives Act,” would make the credit permanent. S. 3, “Protecting America in the War
on Terror Act of 2005,” would allow tax credits for vaccine and countermeasures research
and manufacturing. Proposals to provide incentives for pharmaceutical research focusing
on liability protection and/or tax incentives include H.R. 417 and S. 95.
NSF Funding. NSF funds research across all disciplines and is the main federal
source for most non-health related academic research. P.L. 107-368, the NSF authorization
bill for FY2003, authorized increases in NSF’s budget by 15% for each of FY2003, FY2004,
and FY2005, which according to the sponsors, would “put the NSF on the track to double
its budget within five years” (FY2008), similar to the NIH doubling track. Another objective
is to increase federal support for science fields which in recent years have not experienced
the larger percentage increases which have gone to biomedical R&D. The law also required
increased oversight of NSF facilities programs.13 Congress appropriated about $4.1 billion
in budget authority for NSF’s FY2004 R&D funding, almost 5% more than FY2003, and
about $1.0 billion less than envisioned in the authorization act. For FY2005, congressional
action reduced NSF’s budget authority below the FY2004 level. The FY2006 requested
R&D budget increase of almost 3% would go largely to facilities. P.L. 107-368 required the
National Science Board, which governs NSF together with the Director, to report on how
NSF’s increased funding should be used. In a 2003 report, Fulfilling the Promise: A Report
to Congress on the Budgetary and Programmatic Expansion of the National Science
Foundation (NSB-2004-15), the Board recommended meeting unmet needs by funding NSF
annually at $18.7 billion, including about $12.5 billion for R&D, and outlined priorities for
support. Prominent among groups which recommended increased funding for NSF is the
Coalition for National Science Funding (CNSF), which represents many universities and
professional science associations, and recommended for FY2006, a 15% increase for NSF
over the FY2004 level in order to fund all the “very good to excellent”and “excellent”
proposals that NSF receives.14
Homeland Security R&D Funding. Homeland security R&D funding is becoming
an increasingly larger component of the federal non-defense R&D budget and is a significant
issue in priority-setting for R&D. It grew from 3.7% of the non-defense R&D budget in
FY2003 to 6.5% of the FY2006 requested non-defense R&D budget. OMB’s term
“combating terrorism” R&D includes homeland security R&D and overseas combating
terrorism R&D.15 An appendix to OMB’s FY2006 Analytical Perspectives budget request
volume includes data on homeland security funding, but these data do not clearly identify
12 See CRS Report RL31181, Research Tax Credit: Policy Issues for the 108th Congress, by G.
Guenther.
13 The draft NSB report is at [http://www.nsf.gov/nsb/documents/2005/large_facilities_draft.pdf].
14 See [http://www.cnsfweb.org/FY2006BudgetStatement.pdf].
15 For additional information on homeland security R&D data availability and quality, see CRS
Report RL32481 and CRS Report RL32482.
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R&D funding. Unpublished OMB data on all agencies’ homeland security R&D funding
show a 15% increase from the estimate of the enacted FY2005 level to $4.0 billion of budget
authority requested for FY2006. See Table 1. The largest FY2006 programs are in NIH
largely for bioterrorism R&D and for containment facilities. This is followed in size by the
requests for DHS, DOD, NSF, and the Department of Justice. Other programs are in USDA,
DOC’s National Institute of Standards and Technology (NIST), DOE, EPA, Treasury, and
DOT. P.L. 107-296, the Homeland Security Act of 2002, mandated DHS to coordinate these
programs. The law also consolidated some federal homeland security R&D programs in
DHS. The OMB data in Table 1 show that DHS’s FY2006 R&D budget request is about $1.2
billion, almost 4% more than the enacted FY2005 level. DHS’s R&D funding has about
quintupled since FY2002 and is the largest percentage increase for any non-defense federal
agency R&D mission since FY2002. About 35% of DHS’s FY2006 R&D budget would be
for basic and applied research, up 30% from FY2004. For additional details, see CRS
Report RS21270; on homeland security R&D funding data quality issues, see CRS Report
RL32481 and CRS Report RL32482,
Table 1. Non-published OMB Data on Homeland Security (HS)R&D
Funding by Agency, Budget Authority, Supplemented by AAAS Data
(dollars in millions)
Agency
2003 Enacted 2004 Estimate 2005 Estimate 2006 Request
AAAS Estimate,
Includes Facilities
USDA
$12
$22
$31
$67
$172
DOC
16
17
59
62
82
DOD
212
267
362
394
394
DOE
19
19
32
52
81
DHHS
834
1,643
1,608
1,766
1,802
DHS
619
816
1,017
1,227
1,287
DOJ
161 + 25
49
61
109
–
supplemental
DOT
4
– 0
1
0
Treasury
– 3
3
3
–
EPA
53
30
25
40
94
NSF
269
318
324
328
329
All
other
– – – –
92
Total R&D
2,223
3,185
3,522
4,048
$4,425
Total Non-defense
$2,011
$2, 918
$3,160
$3,654
–
HS R&D
Note: Totals may not add due to rounding. All columns except the last are based on data provided by OMB.
FY2003 data provided Jan. 2004; other years’ data provided Feb. 2005. In 2004, OMB characterized these data
as “discretionary budgetary resources,” which, according to OMB staff, is “budget authority.” Data exclude
facilities, construction, and overseas combating terrorism R&D funding. American Association for the
Advancement of Science (AAAS) data in the last column include facilities. The symbol – means not available.
AAAS data are at [http://www.aaas.org/spp/rd/hs06.htm].
Federal R&D Priority-Setting Structures
Some observers recommend more centralized R&D priority-setting in Congress and in
the executive branch. 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. But opponents see value in a
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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.
Other issues center on interagency initiatives, R&D policy coordination, developing a
technology assessment capacity, earmarking, and R&D funding accountability.
Unified Federal Science and Technology (FS&T) Budget. In a 1995 report,
Allocating Federal Funds for Science and Technology, the National Academies (NAS)
recommended that the President use, 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 recommended that R&D budget request data be reconfigured
as an S&T budget, excluding defense development, testing and evaluation activities, to
denote basic and applied R&D and the creation of new knowledge. Since the FY2002 budget
request, OMB has used a modified version of this format and has identified a “Federal
Science and Technology (FS&T) budget table,” which, for FY2006, includes less than half
of total federal R&D spending and some non-R&D funding, such as education and
dissemination of information.16 According to OMB’ s table, FS&T funding would decrease
about 1% from FY2005 to FY2006 as requested. Continued use of this alternative format
may pave 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. In 2004, Senator Jeff Bingaman said: “It would be
valuable to have joint hearings across the relevant committees in the Senate on the overall
shape of our S&T spending. It might be worth considering whether the functional nature of
the budget itself should be revised to put the entire federal S&T budget in one place, so that
there is much more transparency as to what the real trends are....”17
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 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
identified interagency R&D budget priorities. The FY2006 budget identified agency funding
for two interagency R&D initiatives whose reporting is required by statute, “Networking and
Information Technology R&D,” requested at $2.1 billion, a 7% decrease from the estimated
FY2005 amount, and “Climate Change Science Program,” which incorporated the U.S.
Global Change Research Program, totaling $1.9 billion, a 1% decrease from the estimated
FY2005 amount. Another priority interagency initiative is for nanotechnology, requested at
$1.1 billion, a 2% decrease from the FY2005 amount. Other FY2006 interagency R&D
initiatives include combating terrorism R&D and hydrogen R&D.
Proposals to Coordinate Federal R&D. The 2001 National Science Board (NSB)
report, Federal Research Resources: A Process for Setting Priorities, (NSB 01-160)
recommended a “continuing advisory mechanism” in Congress and the executive branch and
16 Sec. 5, FY2006 Budget, Analytical Perspectives.
17 ”Bingaman: A Revitalized Science and Technology Policy Badly Needed," Press Release, Feb.
11, 2004, Office of Sen. Bingaman.
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strengthening the OMB/OSTP relationship to coordinate R&D priorities. It said that federal
R&D funding should be viewed 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.18 The aforementioned Commission on National
Security recommended empowering the President’s science advisor to establish “functional
budgeting,” to identify non-defense R&D objectives that meet national needs, strengthen the
OSTP, NSTC and PCAST, and improve 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 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. ...[I]n large, complex technical
programs, ... committees should ... consider holding joint hearings and perhaps even writing
joint authorization bills” (p. 7).
Legislation on Technology Assessment. The aforementioned NSB report also
recommended that Congress 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 congressional support agency. It prepared in-depth
reports and discussed policy options about the consequences of applying technology.
Sometimes congressional committees used these reports to set R&D priorities in
authorizations and appropriations processes. OTA was eliminated as part of the reductions
Congress made in a FY1996 appropriations bill. Several meetings have been held to assess
ways to “resurrect” OTA or variants of it. Advocates cite the need for better congressional
support for S&T analysis.19 The OTA is still authorized, but funds would have to be
appropriated for it. The pros and cons of reviving OTA or re-creating a similar body have
been examined since its termination. During the 107th Congress, H.R. 2148, a bipartisan bill,
would have authorized OTA funding at $20.0 million annually for five years. Since 2002,
at congressional direction, the Government Accountability Office (GAO; formerly the
General Accounting Office) has conducted two pilot technology assessments, Technology
Assessment: Using Biometrics for Border Security, GAO-03-174, 2002, and Cybersecurity
for Critical Infrastructure Protection, GAO-04-321, and has two others underway, on port
security and on protecting buildings from forest fire. Legislative action in the 108th Congress
included proposals to restore OTA’s funding (H.R. 125); to create a Science and Technology
Assessment Service to conduct assessments for Congress (H.R. 6 as passed in the Senate);
to conduct technology assessments in GAO (report language on H.R. 2657 and on H.R.
4755); and to create a technology assessment capability in GAO (S. 2556) or under its
direction (H.R. 4670, which would create a Center for Scientific and Technical Assessment).
18 Rebecca Spieler, “AAAS President Concerned About Imbalances in Nation’s R&D Portfolio...,”
Washington Fax, Feb. 21, 2001.
19 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; M. Granger Morgan and John M. Peha, Science
and Technology Advice for Congress, Washington, Resources for the Future, 2003, pp. 208-227.
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In FY2005 Legislative Branch Appropriations action, Representative Holt offered
H.Amdt. 667 to H.R. 4755, to add $30 million to GAO’s account for a Center for S&T
Assessment; the House rejected the amendment on July 12, 2004. The House Legislative
Branch Appropriations report (H.Rept. 108-577) encouraged GAO to retain its core
capability to conduct technology assessments. S.Rept. 108-307, to accompany S. 2666,
indicated that while the Senate Appropriations Committee supported GAO doing technology
assessments, it did not intend to appropriate specific funding for this purpose and that GAO
should conduct assessments that are supported by both House and Senate leadership and that
address issues of national scope. The report instructed GAO to consult with the committee
regarding definitions and procedures to conduct technology assessment. Issues under debate
have included the need for assessments, funding, utility of GAO’s reports, and options for
institutional arrangements. See also CRS Report RS21586, Technology Assessment in
Congress: History and Legislative Options,
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. OMB’s earmarking data (called
“research performed at congressional direction”), show that $2.4 billion was appropriated for
FY2005, 4% of total federal research funding. According to OMB, 24% of DHS’s research
was performed at congressional direction, the largest percentage of any federal agency
(Analytical Perspectives, FY2006, p. 71). AAAS, reported that for FY2005 R&D earmarks
were mainly for projects in DOD, DOE, USDA, and NASA in that order.20 The
Administration seeks to discourage earmarking, saying that it distorts agency priorities and
seldom is an effective use of taxpayer funds.
Government Performance and Results Act (GPRA) and Performance
Assessment Rating Tool (PART). The Government Performance and Results Act of
1993 (GPRA), P.L. 103-62, is intended to produce greater efficiency, effectiveness, and
accountability in federal spending and to ensure that an agency’s programs and priorities
meet its goals. It also requires agencies to use performance measures for management and,
ultimately, for budgeting. Recent actions have required agencies to identify more precisely
R&D goals and measures of outcomes. As underscored in The President’s Management
Agenda, beginning in FY2001 and in each year thereafter, the Bush Administration has
emphasized the importance of performance measurement, including for R&D. In a
memorandum dated June 5, 2003, signed jointly by the OSTP Director and the OMB
Director regarding planning for the FY2005 R&D budget requests, the Administration
announced that its effort to base budget decisions on program performance would continue
and be expanded (OMB M-03-15). OMB referred to this memo again in the FY2006 R&D
budget guidance, which reiterated the importance of performance assessment for R&D
20 AAAS, “R&D Funding Update,” Nov. 29, 2004 [http://www.aaas.org/spp/rd/upd1104.htm].
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programs (OMB M-04-23). According to section 5 of Analytical Perspectives, FY2006,
agencies were required to use OMB criteria to measure research outcomes, focusing on
relevance, quality, and performance. R&D performed by industry is to meet additional
criteria relating to the appropriateness of public investment and to identification of decision
points to transition the activity to the private sector. The Administration has assessed some
R&D programs by use of a new Program Assessment Rating Tool (PART) which uses the
OMB R&D criteria and other measures. PART results for 84 R&D programs were used
when making FY2006 budget decisions. OMB’s Analytical Perspectives volume reports that
25 programs were effective, 31 were moderately effective and the other 28 programs ranked
below these levels, with 19 ranked ineffective or results not demonstrated. Commentators
have pointed out that it is particularly difficult to define priorities for most research and to
measure the results quantitatively, since research outcomes cannot be defined well in
advance and often take a long time to demonstrate, precluding use of performance measures
to recommend budget levels for most R&D. Some observers say that many congressional
staff are not yet comfortable with using performance measurement data to make budget
decisions and prefer to use traditionally formatted budget information, which focuses on
inputs, rather than outputs.21 Congress may increase attention to the use of R&D performance
measures in authorization and appropriations actions especially as constraints grow on
discretionary spending.
The NAS’s most recent report advising on use of performance measures for research
is Implementing the Government Performance and Results Act for Research: A Status
Report, 2001. As for congressional interest, the House Science Committee’s science policy
report, Unlocking Our Future, 1998, commonly called the Ehlers report, recommended that
a “portfolio” approach be used when applying GPRA to basic research. P.L. 106-531
mandated that an agency head 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 (106th
Congress) 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.”(See CRS Report RS20257, Government Performance and Results Act:
Brief History and Implementation Activities and CRS Report RL32164, Performance
Management and Budgeting in the Federal Government: Brief History and Recent
Developments.)
21 Amelia Gruber, “Lawmakers Remain Skeptical of Linking Budget, Performance,” GovExec.com,
Jan. 13, 2004, and GAO, Performance Budgeting: Observations on the Use of OMB’s Program
Assessment Rating Tool for the Fiscal Year 2004 Budget, GAO-04-174, Jan. 2004.
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Appendix Table. R&D in the Budget, by Agency, Based Largely on AAAS Data
(Budget authority in millions of dollars)
SELECTED AGENCIES &
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
PROGRAMS
actual
actual
actual
actual
actual
estimate
request
Dept. of Agr. Total
$1,776
$2,181
$2,112
$2,334
$2,222
$2,403
$2,051
(Agr. Res. Service)
—
(1,012)
(1,234)
(1,294)
(1,165)
(1,306)
1,079
(CSREES)
—
(594)
(532)
(608)
(616)
(650)
(520)
(Forest Service)
—
(245)
(265)
(265)
(312)
(314)
(318)
Dept. of Commerce Total
1,174
1,030
1,328
1,200
1,137
1,134
1,013
(NOAA)
(643)
(561)
(611)
(666)
(640)
(636)
(565)
(NIST)
(471)
(413)
(460)
(491)
(457)
(461)
(416)
(ATP) ((Within NIST))
(116)
(118)
(150)
(153)
((134))
((114))
((0))
Dept. of Defense Total
39,959
42,740
49,877
59,296
65,948
70,929
71,009
(S&T (6.1-6.3+ medical))
(8,632)
(9,365)
(10,337)
(11,186)
(12,377)
(13,578)
(10,691)
Dept. of Education
238
264
265
282
299
297
261
Dept. of Energy Total
6,956
7,733
8,078
8,312
8,763
8,614
8,393
(Atomic/Defense)/(NNSA+Defense)
(3,201)
(3,462)
(3,855)
(4,049)
(4,198)
(4,138)
(4,031)
(Energy & Science)
(3,755)
(4,271)
(4,224)
(4,263
(4,565)
(4,476)
(4,363)
Dept. of HHS Total
18,182
21,045
23,696
27,411
28,521
29,084
29,139
(NIH)
(17,234)
(19,807)
(22,714)
(26,398)
(27,248)
(27,784)
(27,925)
Dept. of Homeland Security*
—
—
266
737
1,028
1,243
1,287
Dept. of the Interior Total
618
621
641
643
627
615
581
(U.S. Geological Survey)
—
(566)
(583)
(550)
(553)
(541)
(515)
Dept. of Transportation Total
607
718
778
700
665
744
807
(FAA)
(220)
(301)
(359)
(271)
(248
(263
(233)
(FHA)
(261)
(294)
(275)
(291)
(332)
(337)
(445)
(NHTSA)
(51)
(58)
(59)
(61)
(7)
(61)
(62)
Dept. of Veterans Affairs
645
719
756 819
866
784
786
Environmental Protection Agency
558
574
592
567
662
572
568
NASA Total
9,494
9,887
10,224
10,681
10,803
10,990
11,497
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SELECTED AGENCIES &
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
PROGRAMS
actual
actual
actual
actual
actual
estimate
request
(Space Flight)
(3,014)
(2,901)
(2,461)
(3,613)
–
– –
(Science, Aeronautics, Tech.)
(6,481)
(7,024)
(7,840)
(7,386)
–
–
–
(Exploration Capabilities)**
– – – –
(1,829)
(2,161)
(2,232)
(Science, Aeronautics, Exploration)**
–
–
–
–
(8,974)
(8,829)
(9,264)
National Science Foundation
2,931
3,320
3,525
3,926
4,123
4,057
4,170
All other R&D
630
702
912
391
724
727
713
TOTAL
83,769
91,534
102,899
117,439
126,389
132,193
132,276
Non-Defense 40,609
45,332
49,167
54,552
56,046
56,798
56,898
Non-Defense Minus NIH
23,374
25,525
26,453
28,243
28,798
29,014
28,973
Defense/Energy Defense
43,160
46,202
53,731
62,887
70,344
75,395
75,379
Notes: Totals may not add due to rounding. Data include conduct of R&D and R&D facilities. Not all subagency R&D data is given, therefore the sums may not equal the agency
total. Based largely on data in tables prepared by the American Association for the Advancement of Science, including data from “R&D Programs Face Another Rough Year in 2006:
Cuts for Many, Gains for Space and Homeland Security, AAAS Preliminary Analysis of R&D in the FY2006 Budget,” updated Mar. 22, 2005 and previous issues dated Feb. 10, 2005
and March 9, 2005 [http://www.aaas.org/spp/rd/pre106p.htm] and associated articles and tables for separate agencies, and on data from previous years’ tables appearing at
[http://www.aaas.org/spp/rd/]. 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. See also CRS Issue Brief IB10129: Federal Research and Development Funding. The final FY2005 figures
include adjustments to reflect across-the-board reductions in the FY2005 omnibus bill.
*FY2002 data for comparison purposes only. DHS begin operations in FY2003. DHS figures include programs that were transferred from other agencies. DHS figures are based on
revised AAAS estimates made Feb. 24, 2005 at [http://www.aaas.org/spp/rd/dhs06p.htm].
**Categories were changed after FY2003.
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