Order Code RS22523
Updated December 14, 2006
Federal R&D Funding Under a Continuing
Resolution
Michael E. Davey
Specialist in Science and Technology
Resources, Science, and Industry Division
Summary
On December 9, 2006, President Bush signed a continuing resolution, or CR (P.L.
109-383, H.J.Res. 102) which provides spending at FY2006 levels (through February
15, 2007), for those agencies lacking enacted FY2007 appropriations bills. The House
has passed 10 of its 11 appropriations bills, and the Senate has passed 3 of its 12
appropriations bills (the Senate Appropriations Committee has passed its remaining 9
appropriation bills). Congress has passed two appropriations bills, the Department of
Defense (P.L. 109-289, H.Rept. 109-676) and the Department of Homeland Security
(P.L. 109-295, H.Rept. 109-699). The centerpiece of the President’s proposed FY2007
R&D budget is the American Competitiveness Initiative (ACI). Some Democratic
members of Congress have indicated that may attempt to extend a revised CR until the
end of the FY2007 fiscal year.
The Bush Administration requested $137.7 billion in federal research and
development (R&D) funding for FY2007. This sum represents a 2.4% increase over the
estimated $134.5 billion that was approved in FY2006. As in the recent past, the FY2007
increase over the FY2006 estimated funding levels is due to significant funding increases
for the Department of Defense (DOD) and the National Aeronautics and Space
Administration’s (NASA’s) space vehicles development program (see Table 1, below).
The centerpiece of the President’s proposed FY2007 R&D budget is the National
Research Council’s (NRC) report entitled Rising Above the Gathering Storm and
Energizing and Employing America for a Brighter Future. The report expresses growing
concerns about America’s ability to compete in the technological global market place.1
1 Rising Above The Gathering Storm and Energizing and Employing America for a Brighter
Economic Future, The National Academy of Sciences, the National Academy of Engineering,
and the Institute of Medicine, The National Academies, 500 Fifth Street, NW, Washington, DC
(continued...)

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In response to the NRC report, the President has requested the American Competitiveness
Initiative (ACI). As proposed, over the next 10 years, this $136 billion initiative would
commit $50 billion for research, science education, and the modernization of research
infrastructure. The remaining $86 billion would finance a revised permanent research and
experimentation (R&E) tax incentive over the next 10 years. The most recent federal
research tax credit expired on December 31, 2005 (see P.L. 108-311).
The Current Status of FY2007 R&D Appropriations
The 109th Congress has passed two appropriations bills, the Department of Defense
(P.L. 109-289, H.Rept. 109-289) and the Department of Homeland Security (P.L. 109-
295, H.Rept. 109-699). As stated above, action remains to be taken on the other FY2007
appropriations bills. Based on these current House and Senate actions, total federal R&D
could reach an estimated $140 billion for FY2007. This represents an estimated 4.4%
increase over FY2006 estimated federal R&D expenditures. Despite the ACI, most of this
increase can be attributed to large funding increases for development spending in defense
and for the National Aeronautics and Space Administration. CRS estimates that total
federal basic research funding for FY2007 will increase 2%, to $28.2 billion. Five
agencies account for 90% of all federal basic research expenditures. Total federal research
funding (the sum of basic and applied research) is projected to decline 1%, to an estimated
$56 billion.
The current CR funds agency programs at the lowest of House-passed, Senate-
passed, or FY2006 funding levels. Based on current congressional actions, most R&D
agencies would be funded at FY2006 budgetary levels. (See table)
American Competitiveness Initiative (ACI). As part of the $50 billion for
research initiatives, the President has called for doubling the federal R&D funding over
10 years. This increase would include the physical sciences and engineering research in
three agencies: the National Science Foundation (NSF), the Department of Energy’s
(DOE’s) Office of Science, and the National Institute of Standards and Technology
(NIST). Both the House and Senate FY2007 appropriations actions would fully fund the
President’s ACI request. Consequently, funding for NSF would increase 7.9% to $4.6
billion; DOE’s Office of Science budget would receive an 18% budget increase to $3.9
billion; and NIST’s laboratory funding would increase 21% to an estimated $382 million.
However, despite strong congressional support for the ACI, its implementation is on hold
because none of the three agencies have enacted FY2007 appropriations bills. Some
Democratic members of Congress have indicated that they may attempt to extend a
revised CR until the end of the FY2007 fiscal year.
Homeland Security. The Department of Homeland Security (DHS) requested
$1.552 billion for R&D in FY2007, an increase of 4.5% from FY2006. This total
included $1.002 billion for the Directorate of Science and Technology, $536 million for
the Domestic Nuclear Detection Office (DNDO), and $14 million for Research,
Development, Test, and Evaluation (RDT&E) in the U.S. Coast Guard. The request for
DNDO was a 70% increase. The request for the S&T Directorate was a 13% decrease.
1 (...continued)
20001, 2005.

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The House provided $956 million for the Directorate of Science and Technology; $500
million for DNDO; and $14 million for Coast Guard RDT&E. The Senate provided $818
million for the S&T Directorate (less a rescission of $200 million in unobligated prior-
year funds); $442 million for DNDO; $18 million for Coast Guard RDT&E; and $92
million for R&D in the Transportation Security Administration (transferred from S&T).
The final bill provided $973 million for S&T (less $125 million in rescinded prior-year
funds); $481 million for DNDO, and $17 million for Coast Guard RDT&E. The final
total of $1.371 billion (excluding the rescission of unobligated funds) was an overall 9%
reduction from FY2006, made up of a 16% decrease for S&T, a 53% increase for DNDO,
and a 6% decrease for Coast Guard RDT&E.2 (See P.L. 109-295, H.Rept. 109-699)
Labor/HHS/ED. The primary R&D agency under this appropriations bill is the
National Institutes of Health (NIH). For the second fiscal year in a row, NIH is likely to
see its budget decline in real dollars. The President requested a program level budget of
$28.487 billion for NIH for FY2007, essentially equal to the FY2006 final budget and
$66.8 million (0.2%) lower than the FY2005 level of $28.553 billion. The FY2006
amount was the first decrease in NIH’s appropriation since 1970. (NIH lost an additional
$19.5 million in FY2006 funds in June 2006 when the HHS Secretary exercised his
transfer authority to give the Centers for Medicare and Medicaid a total of $40 million
from other HHS discretionary accounts, dropping the NIH program level to $28.468
billion.)
The House and Senate Appropriations Committees have reported separate FY2007
Labor-HHS-Education Appropriations bills (H.R. 5647, H.Rept. 109-515 and S. 3708,
S.Rept. 109-287), but neither chamber has scheduled floor action. The House committee
recommended funding most of the NIH accounts at the same level as the request. The
Senate bill would provide a program level of $28.688 billion, an increase of about $220
million (0.8%) over the revised FY2006 amount and $200 million above the request and
the House amount. The Senate committee gave every NIH account a modest increase
over FY2006, reversing the cuts to institute and center budgets proposed in the request.
Reauthorization legislation for NIH, last enacted in 1993, has received recent
congressional action in the House. After holding a hearings over the past several years,
the Energy and Commerce Committee marked up a draft bill, the NIH Reform Act of
2006. It proposes managerial and organizational changes for NIH, focusing on enhancing
the authority of the central NIH Director’s Office for strategic planning, especially to
facilitate and fund cross-institute research initiatives. It requires detailed tracking of the
research portfolio and periodic review of NIH’s organizational structure. The measure
authorizes, for the first time, overall funding levels for NIH, although not for the
individual institutes and centers, and establishes a “common fund” for trans-NIH
research. H.R. 6164 was passed with amendments.
Science-State-Justice-Commerce. The House and Senate appropriations
committees oversees the activities of four major R&D agencies. They include NSF and
NIST (who are participating in the ACI), NASA, and the National Oceanic and
2 DNDO was funded within the S&T Directorate in FY2006. The percentage increases given here
for DNDO are relative to its FY2006 funding within S&T. The percentage decreases for S&T are
relative to its FY2006 funding exclusive of DNDO.

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Atmospheric Administration (NOAA) in the Department of Commerce. The House-
passed bill, H.R. 5672, would cut NOAA funding from $610 million in FY2006, to $510
million in FY2007. Concomitantly, the Senate Appropriations Committee reported H.R.
5672 (amended in the nature of a substitute), which included a recommendation of $779
million for NOAA R&D funding in FY2007. The Administration’s FY2007 budget
includes $581.3 million for NIST, almost 22.7% below the current fiscal year. Support
for internal R&D activities under the Scientific and Technology Research and Services
(STRS) account would increase 18.3% to $467 million, most of which is related to the
ACI. The House-passed FY2007 appropriations bill, H.R. 5672, provides NIST with
$627 million, a decrease of almost 16.6% from the current fiscal year. The version of
H.R. 5672 reported from the Senate Committee on Appropriations would fund NIST at
$764 million, 1.6% above the current fiscal year. For the first time, both the House and
Senate bills would not provide any funding for NIST’s Advanced Technology Program.
Other Budget-related Issues. The absence of an early House and Senate
agreement on the FY2007 Budget Resolution (S.Con.Res. 83) and (H.Con.Res. 376)
played a major role in delaying the passage of the remaining FY2007 appropriations bills.
How the House and Senate resolve their differences regarding R&D funding remains to
be seen. One approach that legislators have traditionally used is for the House and Senate
to split the difference in their funding proposals. However, as indicated in Table 1 below,
this approach would result in some agencies receiving no increases or significant funding
reductions in FY2007.
In an article in the Washington Post, Representative David Obey, incoming
Chairman of the House Appropriations Committee, and Senator Robert Byrd, incoming
Chairman of the Senate Appropriations Committee, indicated that they intend to extend
the current CR until end of the FY2007 fiscal year. If Congress approves extending the
current CR to September 30, 2007, most agencies would see their FY2007 R&D budget
remain at FY2006 funding levels. Further, because agencies are usually not allowed to
initiate new programs under a CR, the President’s ACI may not be implemented in
FY2007. 3
However, Jennifer Reed, a spokeswoman for Senator Byrd said the details of how
the CR will play out are still being determined. Reed indicated that the resolution would
not rely on formulas like those used in the current CR, but will “evaluate broad priorities
and look at areas of desperate need. ” As indicated above, agencies can not start new
programs under a CR, unless they are explicitly allowed, but Reed said that such level
of detail is yet to be addressed.4

Limitations on R&D Activities. The current CR allows agencies without enacted
FY2007 appropriations, to fund existing R&D programs and activities at FY2006 funding
levels. In general, under the continuing resolution, no new projects or initiatives that had
been planned for FY2007 can be funded. Consequently, this means that the President’s
3 Shailagh Murray and Jonathan Weismam,“Democrats Freeze Earmarks for Now,” The
Washington Post, December 12, 2006, p. A3.
4 Jenny Mandel, Year Long Funding Measure Won’t Rely on Current Formula, govexec.com,
December 13, 2006.

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ACI proposal cannot be implemented until the participating agencies have enacted
FY2007 appropriation bills.
The CR could force some agencies to put off construction of new facilities or stop
construction until their respective FY2007 appropriations bills are passed. Construction
can move forward with those programs that have been fully funded, but not others. For
example, a representative from NSF stated that to keep major research and facilities
construction on track, NSF might have to request a formal reprogramming to cover
increasing costs for some ongoing projects.5 Further, while most civilian R&D agencies
will continue their request for research proposal activities, many will have to delay or
restrict the number of awards given until they know the fate of their FY2007 budget
request. For some agencies, like the NSF, if the CR were extended until late in the
calendar year, this might affect its ability to recruit top graduate students for their
fellowship programs. This could force some universities to initiate new competitions for
graduate students, if some fellowship candidates decide to pursue other employment
opportunities.
The Ratio of Civilian and Defense R&D. When President Bush took office in
2001, the ratio of defense to civilian R&D was 52% to 48%. If the FY2007 House passed
appropriations legislation becomes law, defense related R&D would reach $81.2 billion,
or 58% of federal R&D, while civilian R&D would decline to $58.8 billion, or to 42% of
total federal R&D spending.6 This represents the largest discrepancy between defense and
civilian R&D spending since the early 1990s. Some argue that defense R&D has little
impact on the discovery of new knowledge and the transfer of technological innovation
to the commercial market place. This issue was raised during the Reagan Administration
when defense research reached 68% of total federal R&D spending in the late 1980s. One
of the major recommendations in the NRC’s report, Rising Above the Gathering Storm,
calls for an increase in federal investment in long-term basic research, ideally through
reallocation of existing funds, but also if necessary via new funds by consenting to an
increase of 10% annually over the next seven years. The report noted that special attention
should go to the physical sciences, engineering, mathematics, and information sciences
and to DOD basic research funding. According to the report, this special attention does
not mean that there should be a disinvestment in such important fields as the life sciences
or the social sciences. Instead, the report contends a balanced research portfolio in all
fields of science and engineering research is critical to U.S. prosperity.7
5 Based on a phone discussions with an NSF official, October 12, 2006.
6 This CRS estimate is based on Defense R&D as the sum of DOD’s RDT&E programs, the
Department of Energy’s defense related R&D activities, and an estimated $400 million in
homeland security R&D.
7 Rising Above The Gathering Storm and Energizing and Employing America for a Brighter
Economic Future, The National Academy of Sciences, the National Academy of Engineering,
and the Institute of Medicine, The National Academies, 500 Fifth Street, NW Washington, DC
20001, 2005, p.5.

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Table 1. Estimated Federal R&D Appropriations
in the 109th Congress
(millions $)
Agency
FY2006
FY2007
FY2007
FY2007
Approp.
Est.
Request
House
Senate
2007 Est.
Department of Defense
71,152
73,157
75,337
72,998
75,435a
Homeland Security
1,505
1,552
1,470
1,370
1,371b
Nat. Institutes of Health
28,468
28,487
28,489
28,688c
NASA
11,475
12,336
12,260
12,300d
Nat. Science Foundation
5,581
6,020
6,020
5,992d
NIST
552
581
627
764d
NOAA
546
533
510
779d
Dept. Of Interior
634
598
630
643e
EPA
730
788
808
793e
Dept. Energy
8,848
9,153
9,394
9,891f
Dept. of Transportation
752
581
627
764g
Dept. Of Agriculture
2451
2,108
2,388
2,433h
Other
1,840
1,831
1,855
1,865i
Total
134,451
137,725
140,415
139,280
a. P.L. 109-289, H.Rept. 109-676.
b. P.L. 109-295, H.Rept. 109-699.
c. Labor-HHS-Education, H.Rept. 109- 485; S.Rept. 109-287.
d. Science-State-Justice-Commerce, H.Rept. 109-520; S. Commerce-Justice-Science, S.Rept. 109-280.
e. Interior-Environment, H.Rept. 109-465; S.Rept. 109-275.
f. Energy-Water, H.Rept. 109-474; S.Rept. 109-274.
g. Transportation-Treasury-HUD-Judiciary-D.C., H.Rept. 109-495; S.Rept. 109-293.
h. Agriculture, H.Rept. 109-463, Part 1&2; S.Rept. 109-266.
i. “Other” includes Education, Veterans, Agency for International Development, Nuclear Regulatory
Commission, Smithsonian, Justice, Treasury, TVA, and the U.S. Postal Service.

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