5. RESEARCH AND DEVELOPMENT
I. INTRODUCTION
U.S. investments in science and technology in past
decades have greatly enhanced the standard of living
and quality of life we enjoy today and have generated
significant economic growth in the United States. Advances
have been possible only with the support of both
public and private investment in research and development
(R&D).
The U.S. Government boasts the highest level of R&D
investment in the world: $132 billion. However, unlike
40 years ago, when Federal R&D expenditures were
double those of the private sector, industry R&D spending
now exceeds Federal Government R&D spending.
While the U.S. investment is, by a wide margin, the
largest in the world, we also strive to make sure it
is going to the highest priority and highest quality
work. The President’s 2006 Budget maintains a strong
focus on winning the war against terrorism, while moderating
the growth in overall spending, and this focus
is reflected in the R&D the Administration proposes
for 2006. In addition, recognizing that fundamental research
fuels future innovation and technology development,
the Administration has maintained high levels
of support for priority R&D areas such as
nanotechnology, information technology, hydrogen energy,
and space exploration.
The Federal Government funds many types of R&D.
First, the Government is the primary supporter of basic
research, which is directed toward greater understanding
of fundamental scientific phenomena. 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. The Government has
an important role in supporting applied research, which
is driven by more targeted scientific questions and specific
needs, and development, which applies scientific
knowledge and technology to specific needs. Together,
these R&D activities are critical for ensuring that agencies
effectively implement their missions.
In addition to direct R&D investments, the Federal
Government also helps stimulate private investment
and provide incentives for private sources to continue
to fuel the discovery and innovation of tomorrow. The
Administration proposes to do this, for instance, by permanently
extending the Research and Experimentation
Tax Credit.
The Administration continues to meet the President’s
charge to improve the management, performance, and
results of the Federal Government. By strengthening
effective programs and addressing lower performers
through reforms or reallocations to higher performers,
we will increase the productivity of the Federal R&D
portfolio and transcend the attention given to year-toyear
marginal increases or decreases. Additionally,
while it can be difficult to assess the outcomes of some
research programs, many of which may not fully pay
off for years, agencies can establish meaningful program
goals and measure annual progress and performance
in appropriate ways.
Towards that end, the Administration continues to
implement and improve investment criteria for R&D
programs across the Government as part of the President’s
Management Agenda. Further, the Government
will coordinate interrelated and complementary R&D
efforts among agencies, combining programs where appropriate
to improve effectiveness and eliminate redundancy,
to leverage these resources to the greatest effect.
This chapter discusses how the Administration will
improve the performance of R&D programs through investment
principles and other means that encourage
and reinforce quality research. Highlights of the coordination
of multi-agency R&D priority areas are also included.
The chapter concludes with details of R&D
funding across the Federal Government.
II. IMPROVING THE PERFORMANCE OF R&D PROGRAMS
R&D is critically important for keeping our Nation
economically competitive, and it will help solve the
challenges we face in health, defense, energy, and the
environment. Therefore, and consistent with the Government
Performance and Results Act, every Federal
R&D dollar must be invested as effectively as possible.
The discussion below will focus on the use of R&D
investment criteria and the effect on overall performance
of research earmarks on the Federal R&D portfolio.
R&D Investment Criteria
The Administration is improving the effectiveness of
the Federal Government’s investments in R&D by applying
transparent investment criteria in analyses that
inform recommendations for program funding and management.
R&D performance assessment must be done
with care. Research often leads scientists and engineers
down unpredictable pathways with unpredictable results.
This outcome can require special consideration
when measuring an R&D program’s performance
against its initial goals.
62 ANALYTICAL PERSPECTIVES
With this in mind, the Administration is improving
methods for setting priorities based on expected results,
including applying specific criteria that programs or
projects must meet to be started or continued, clear
milestones for gauging progress, and improved metrics
for assessing results.
As directed by the President’s Management Agenda,
the R&D Investment Criteria accommodate the wide
range of R&D activities, from basic research to development
and demonstration programs, by addressing three
fundamental aspects of R&D:
• Relevance—Programs must be able to articulate
why they are important, relevant, and appropriate
for Federal investment;
• Quality—Programs must justify how funds will be
allocated to ensure quality; and
• Performance—Programs must be able to monitor
and document how well the investments are performing.
In addition, R&D projects and programs relevant to
industry are expected to apply criteria to determine
the appropriateness of the public investment, enable
comparisons of proposed and demonstrated benefits,
and provide meaningful decision points for completing
or transitioning the activity to the private sector.
As discussed throughout the 2006 Budget, the Office
of Management and Budget (OMB) and the agencies
are working on other initiatives as part of the President’s
Management Agenda. For the Budget and Performance
Integration initiative, the Administration developed
the Program Assessment Rating Tool (PART)
to consistently assess the effectiveness of programs. A
section of the PART specifically addresses the assessment
of R&D program management and performance
and is aligned with the R&D Investment criteria. In
the last three years, agencies have completed PART
assessments of 84 R&D programs. The results of these
PART assessments may be found on the web at http:/
/www.whitehouse.gov/omb/part/.
Chart 5-1. Scores of R&D PART Assessments
2005 2006
0
20
40
60
80
100
Effective
Moderately Effective
Adequate Ineffective Results Not
Demonstrated
Cumulative number of R&D PARTs
59 Total
84 Total
15 17
2
6 9
20
31
16
25
Performance assessments help policy makers identify
those programs that are the most effective and worthy
of funding; however, the Administration does not allocate
funding levels and initiate management reforms
strictly by formula or based solely on PART results.
For instance, funding may be reduced for ‘‘effective’’
programs that have achieved what they set out to do,
and ‘‘ineffective’’ programs might receive more money
if it is clear it would help them become more effective.
The PART provides information that leads to more informed
decisions. For example, as a result of the PART
review process, the Department of Veterans Affairs designed
new performance measures that will enable its
senior management to better assess the agency’s overall
research direction and its contributions to the health
of veterans and the general population. In another case,
the PART informed a decision in the 2006 Budget to
eliminate funds for the Department of Energy’s oil and
gas R&D programs, which were determined to often
duplicate private-sector R&D efforts and generate benefits
primarily for the private sector.
63 5. RESEARCH AND DEVELOPMENT
R&D agencies will continue to integrate the R&D
Criteria more meaningfully into the budget formulation
process in the coming year. Interagency R&D initiatives
use the R&D Criteria in developing plans and reports,
such as ‘‘A 21st Century Frontier for Discovery: The
Physics of the Universe.’’ Based on lessons learned and
other feedback from experts and stakeholders, the Administration
will continue to improve the R&D Investment
Criteria and their implementation to achieve
more effective management of R&D programs and better-
informed budget-allocation decisions.
President’s Management Agenda Initiative
Research and Development Investment Criteria
FY 2005, Quarter 1 Status: RED, Progress: YELLOW
The initiative’s red status score reflects the limited success many agencies have had in the Government-wide implementation
of the initiative. The yellow progress score indicates that the initiative has momentum, as some
agencies have made improvements this year, including the National Science Foundation and the Department of
Energy. More R&D agencies are using the criteria to assess their programs, due to the improved alignment of the
R&D Investment Criteria with the R&D PART for program-level assessments. All of the top 13 R&D agencies are
using the R&D PART to assess their programs this year. Most of the major R&D agencies submitted 2006 Budget
requests that, to varying degrees, observe the principles of the Investment Criteria. To achieve a yellow status
score, half of the R&D programs assessed for each agency using the R&D PART must receive at least a Moderately
Effective rating, which is proving to be a challenging requirement. Agencies must also integrate the R&D
Criteria framework into their budget proposals, including using detailed criteria-based assessments to justify specific
requests or allocation changes.
Research Earmarks
The Administration strongly supports awarding research
funds based on merit review through a competitive
process. Such a system generally ensures that the
best research is supported. Research earmarks—in general
the assignment of money during the legislative
process for use only by a specific organization or
project—are counter to a merit-based competitive selection
process. Earmarks signal to potential investigators
that there is an acceptable alternative to creating quality
research proposals for merit-based consideration, including
the use of political influence or appeals to parochial
interests. Such an alternative is seldom the most
effective use of taxpayer funds.
Unfortunately, the practice of earmarking to colleges,
universities and other entities for specific research
projects has expanded dramatically in recent years. The
American Association for the Advancement of Science
(AAAS) recently estimated that R&D earmarks total
$2.1 billion in 2005, an increase of nine percent over
the Association’s 2004 estimate.
Some argue that earmarks help spread the research
money to states or institutions that would receive less
research funding through other means. The Chronicle
of Higher Education reports that this is not the main
role earmarks play; often only a minor portion of academic
earmark funding goes to the states with the
smallest shares of Federal research funds. Meanwhile,
earmarks help some rich institutions become richer.
Some proponents of earmarking assert that earmarks
provide a means of funding unique projects that would
not be recognized by the conventional peer-review process.
To address this concern, a number of research
agencies have procedures and programs to reward ‘‘outof-
the-box’’ thinking. For example, within the Department
of Defense (DOD), the Defense Advanced Research
Projects Agency seeks out high risk, high payoff
scientific proposals, and program managers at the National
Science Foundation (NSF) set aside a share of
funding for higher-risk projects in which they see high
potential.
Often Congressional direction has little to do with
an agency’s mission. In addition to earmarked funding
noted above, the Congress also directed DOD to fund
research on a wide range of diseases, including breast
cancer, ovarian cancer, prostate cancer, diabetes, leukemia,
and muscular dystrophy. Funding at DOD for
such research totals about $900 million in 2005 alone,
an increase of about $200 million in just one year.
While research on these diseases is very important,
it is generally not unique to the U.S. military and can
be better carried out and coordinated within civil medical
research agencies, without disruption to the military
mission. At the same time, intrusion of earmarks
into the peer-review processes of civilian medical research
agencies would have a significant detrimental
impact on funding the most important and promising
research.
The Administration will continue to work with the
Congress, academic organizations, colleges and universities
to discourage the practice of research earmarks
and to achieve our common objectives.
64 ANALYTICAL PERSPECTIVES
III. PRIORITIES FOR FEDERAL RESEARCH AND DEVELOPMENT
The 2006 Budget requests $132 billion for Federal
R&D funding, which targets key research investments
within agencies such as NSF, the National Aeronautics
and Space Administration, the Department of Commerce’s
National Institute of Standards and Technology,
and the National Institutes of Health (Table
5–2 provides details by agency).
The ‘‘Federal Science and Technology’’ (FS&T) budget
(shown in Table 5–3) highlights the creation of new
knowledge and technologies more consistently and accurately
than the traditional R&D data collection. The
FS&T budget emphasizes research, does not count funding
for defense development, testing, and evaluation,
and totals less than half of Federal R&D spending.
The 2006 Budget requests $61 billion for FS&T.
Over the last year, the Office of Science and Technology
Policy and OMB have worked with the Federal
agencies and the science community to identify top priorities
for Federal R&D. These are in areas critical
to the Nation, such as information technologies, and
in emerging fields, such as nanotechnology, that will
provide new breakthroughs across many fields. Some
priorities, such as hydrogen R&D, address newly recognized
needs. The discussion below focuses on five multiagency
priority areas and concludes with how the Federal
Government stimulates private R&D investment.
Multi-Agency R&D Priorities
The 2006 Budget targets important research investments
that must be coordinated across multiple agencies.
Three of these multi-agency initiatives—
nanotechnology, information technology R&D, and climate
change science—are coordinated by three separate
dedicated offices to ensure unified strategic planning
and implementation. The Administration is strengthening
interagency coordination for other priority
areas—such as combating bioterrorism. The Administration
will continue to analyze other areas of critical
need that could benefit in the future from improved
focus and coordination among agencies.
Combating Terrorism R&D: Since September 2001,
the Administration increased its focus on R&D that
aids in securing the homeland. Research programs
across the Federal Government are being coordinated
to develop systems to help prevent future terrorist attacks,
minimize our Nation’s vulnerability to terrorist
acts, and respond and recover if an attack should occur.
The President issued 12 Homeland Security Presidential
Directives (HSPD) that call for, among other
things, increased interagency coordination of R&D to
defend against biological threats to our people, economy,
agriculture, food and water supplies. For example,
one HSPD, Defense of United States Agriculture and
Food, establishes a national policy to provide protection
against an attack on the agriculture and food systems.
In 2004, multi-agency efforts made significant
progress. For example, the Department of Homeland
Security established both the National Biodefense Analysis
and Countermeasures Center to study biological
agents and the National Bioforensic Analysis Center
to provide a world class forensics center. These centers
join other DOD, U.S. Department of Agriculture, and
National Institutes of Health facilities at Fort Detrick
to create a National Interagency Biodefense Campus
that will become a focal point for countermeasures research.
Together, these agencies will establish research
priorities to reduce the threat of biological terrorism.
Networking and Information Technology R&D:
The budget provides $2 billion for the multi-agency Networking
and Information Technology Research and Development
(NITRD) program, which focuses and coordinates
agency research efforts in advanced computing
systems, networks, software, and information-management
technologies. The agencies involved in this program
work together enabling more rapid advancement
than they could achieve working on their own. These
advances have an impact on virtually every sector of
the economy.
In 2004, agencies with responsibilities for high-end
computing—ultra-powerful supercomputers, components
and software—made significant progress in implementing
the recommendations of the interagency High-
End Computing Revitalization Task Force. For example,
new supercomputing activities at both NASA and
the Department of Energy (DOE) were begun and will
be managed in accord with the Federal Plan for High-
End Computing.
To enable a better understanding of the potential
scientific impact of high-end capability computing, the
NITRD National Coordination Office will commission
a National Academy of Sciences study that identifies
and categorizes important scientific questions and technological
problems for which an extraordinary advancement
in our understanding is difficult or impossible
without leading-edge scientific simulation capabilities.
Nanotechnology R&D: The budget provides $1 billion
for the multi-agency National Nanotechnology Initiative
(NNI). The NNI focuses on R&D that creates
materials, devices, and systems that exploit the fundamentally
distinct properties of matter as it is manipulated
at the atomic and molecular levels. The results
of NNI-supported R&D could lead to breakthroughs in
disease detection and treatment, manufacturing at the
nanoscale level, environmental monitoring and protection,
energy production and storage, and creating electronic
devices that have even greater capabilities than
those available today.
Guided by the NNI, participating agencies will continue
to focus on fundamental and applied research
through investigator-led activities, multidisciplinary
centers of excellence, education and training of
nanotechnology workers, and infrastructure development,
including user facilities and networks that are
broadly available to researchers from across the sci65
5. RESEARCH AND DEVELOPMENT
entific research community. For example, the 2006
Budget provides funding for DOE to complete construction
on four new major nanoscale science research centers
located around the country. In addition, agencies
continue to maintain a focus on the responsible development
of nanotechnology, with attention to the human
and environmental health impacts, as well as ethical,
legal, and other societal issues.
Climate Change R&D: The 2006 Budget for the
Climate Change Science Program (CCSP) continues to
support the goals outlined in the CCSP Strategic Plan,
which was released in July 2003. The Budget reflects
the coordinated planning efforts of the 13 departments
and agencies that participate in CCSP. Beginning in
FY 2006, CCSP will formally track the expected actions,
deliverables, and milestones for each of its programs
in order to assess overall performance. Additional detail
on individual agency activities will be provided in the
Administration’s FY 2006 edition of Our Changing
Planet.
The Climate Change Technology Program (CCTP)
continues to prioritize the portfolio of Federally funded
climate change technology R&D consistent with the
President’s National Climate Change Technology Initiative
(NCCTI). In 2005, the CCTP will publish a draft
Strategic Plan and solicit comments from the scientific
community and the public. The CCTP will also identify
within its portfolio a subset of NCCTI priority activities,
defined as discrete R&D activities that address
technological challenges, which, if solved, could advance
technologies with the potential to dramatically reduce,
avoid, or sequester greenhouse gas emissions.
Hydrogen R&D: In 2004, the Hydrogen R&D Interagency
Task Force, established by the Office of Science
and Technology Policy, initiated a plan to coordinate
agency efforts in key research areas, such as novel materials
for fuel cells and hydrogen storage, inexpensive
and durable catalysts, and hydrogen production from
alternative sources. In 2005, the task force will implement
this plan and expand public outreach and collaboration
with the private sector, state agencies, and other
stakeholders. The U.S., through the Department of Energy,
will continue to lead the International Partnership
for the Hydrogen Economy, established in 2003
to coordinate hydrogen research among 15 nations representing
two thirds of global energy consumption.
DOE will continue the President’s Hydrogen Fuel Initiative
to accelerate the worldwide availability and affordability
of hydrogen-powered fuel cell vehicles. The
initiative, which includes an 11-percent increase in targeted
basic research investments in 2006, focuses on
research to advance hydrogen production, storage, and
infrastructure. The Initiative complements the Department’s
FreedomCAR Partnership with the auto industry,
which is aimed at developing viable hydrogen fuel
cell vehicle technology.
Stimulating Private Investment
Along with direct spending on R&D, the Federal Government
has sought to stimulate private R&D investment
through incentives in the Internal Revenue Code.
Current law provides a 20-percent tax credit for private
research and experimentation expenditures above a certain
base amount. The credit, which expired in June
2004, was extended again for another 18 months,
through 2005, in the Working Families Tax Relief Act
of 2004. The budget proposes to make the Research
and Experimentation (R&E) tax credit permanent. The
proposed extension will cost nearly $30 billion over the
period from 2006 to 2010. In addition, a permanent
tax provision lets companies deduct, up front, the costs
of certain kinds of research and experimentation, rather
than capitalize these costs. Also, equipment used for
research benefits from relatively rapid tax depreciation
allowance. Table 5–1 shows a forecast of the costs of
the tax credit.
Table 5–1. PERMANENT EXTENSION OF THE RESEARCH AND
EXPERIMENTATION TAX CREDIT
(Revenue loss, dollar amounts in millions)
2005 2006 2007 2008 2009 2010 2006–10
Current Law ................................. 5,080 2,100 910 390 180 50 3,630
Proposed Extension .................... ............ 2,097 4,601 5,944 6,889 7,669 27,200
Total ........................................ 5,080 4,197 5,511 6,334 7,069 7,719 30,830
66 ANALYTICAL PERSPECTIVES
IV. FEDERAL R&D DATA
Federal R&D Funding
R&D is the collection of efforts directed towards gaining
greater knowledge or understanding and applying
knowledge toward the production of useful materials,
devices, and methods. R&D investments can be characterized
as basic research, applied research, development,
R&D equipment, or R&D facilities, and OMB
has used those or similar categories in its collection
of R&D data since 1949.
Basic research is defined as systematic study directed
toward greater knowledge or understanding of
the fundamental aspects of phenomena and of observable
facts without specific applications towards processes
or products in mind.
Applied research is systematic study to gain knowledge
or understanding necessary to determine the
means by which a recognized and specific need may
be met.
Development is systematic application of knowledge
toward the production of useful materials, devices, and
systems or methods, including design, development, and
improvement of prototypes and new processes to meet
specific requirements.
Research and development equipment includes acquisition
or design and production of movable equipment,
such as spectrometers, microscopes, detectors,
and other instruments.
Research and development facilities include the acquisition,
design, and construction of, or major repairs
or alterations to, all physical facilities for use in R&D
activities. Facilities include land, buildings, and fixed
capital equipment, regardless of whether the facilities
are to be used by the Government or by a private
organization, and regardless of where title to the property
may rest. This category includes such fixed facilities
as reactors, wind tunnels, and particle accelerators.
There are over twenty Federal agencies that fund
R&D in the U.S. The nature of the R&D that these
agencies fund depends on the mission of each agency
and on the role of R&D in accomplishing it. Table 5–2
shows agency-by-agency spending on basic and applied
research, development, and R&D equipment and facilities.
Table 5–2. FEDERAL RESEARCH AND DEVELOPMENT SPENDING
(Budget authority, dollar amounts in millions)
2004
Actual
2005
Estimate
2006
Proposed
Dollar Change:
2005 to 2006
Percent Change:
2005 to 2006
By Agency
Defense ...................................................................................................................... 65,462 70,422 70,839 417 1%
Health and Human Services ..................................................................................... 28,047 28,752 28,807 55 ........................
NASA ......................................................................................................................... 10,574 10,990 11,527 537 5%
Energy ........................................................................................................................ 8,779 8,629 8,528 –101 –1%
National Science Foundation .................................................................................... 4,160 4,082 4,194 112 3%
Agriculture .................................................................................................................. 2,222 2,415 2,039 –376 –16%
Homeland Security .................................................................................................... 1,053 1,185 1,467 282 24%
Commerce ................................................................................................................. 1,137 1,134 1,013 –121 –11%
Transportation ............................................................................................................ 661 748 808 60 8%
Veterans Affairs ......................................................................................................... 866 784 786 2 ........................
Interior ........................................................................................................................ 627 615 582 –33 –5%
Environmental Protection Agency ............................................................................. 661 572 569 –3 –1%
Other .......................................................................................................................... 1,089 1,243 1,145 –98 –8%
Total ...................................................................................................................... 125,338 131,571 132,304 733 1%
Basic Research
Defense ...................................................................................................................... 1,358 1,513 1,319 –194 –13%
Health and Human Services ..................................................................................... 14,780 15,124 15,246 122 1%
NASA ......................................................................................................................... 2,473 2,368 2,199 –169 –7%
Energy ........................................................................................................................ 2,847 2,887 2,762 –125 –4%
National Science Foundation .................................................................................... 3,524 3,432 3,480 48 1%
Agriculture .................................................................................................................. 829 851 788 –63 –7%
Homeland Security .................................................................................................... 68 85 112 27 32%
Commerce ................................................................................................................. 43 58 71 13 22%
Transportation ............................................................................................................ 20 38 41 3 8%
Veterans Affairs ......................................................................................................... 347 315 315 ...................... ........................
Interior ........................................................................................................................ 37 36 30 –6 –17%
Environmental Protection Agency ............................................................................. 113 66 70 4 6%
Other .......................................................................................................................... 149 155 175 20 13%
Subtotal ................................................................................................................ 26,588 26,928 26,608 –320 –1%
67 5. RESEARCH AND DEVELOPMENT
Table 5–2. FEDERAL RESEARCH AND DEVELOPMENT SPENDING—Continued
(Budget authority, dollar amounts in millions)
2004
Actual
2005
Estimate
2006
Proposed
Dollar Change:
2005 to 2006
Percent Change:
2005 to 2006
Applied Research
Defense ...................................................................................................................... 4,351 4,851 4,139 –712 –15%
Health and Human Services ..................................................................................... 13,007 13,274 13,410 136 1%
NASA ......................................................................................................................... 3,006 2,497 3,233 736 29%
Energy ........................................................................................................................ 2,693 2,760 2,709 –51 –2%
National Science Foundation .................................................................................... 266 279 276 –3 –1%
Agriculture .................................................................................................................. 1,055 1,093 942 –151 –14%
Homeland Security .................................................................................................... 247 346 399 53 15%
Commerce ................................................................................................................. 828 825 763 –62 –8%
Transportation ............................................................................................................ 349 423 494 71 17%
Veterans Affairs ......................................................................................................... 476 430 433 3 1%
Interior ........................................................................................................................ 538 530 495 –35 –7%
Environmental Protection Agency ............................................................................. 423 365 386 21 6%
Other .......................................................................................................................... 599 562 553 –9 –2%
Subtotal ................................................................................................................ 27,838 28,235 28,232 –3 ........................
Development
Defense ...................................................................................................................... 59,701 63,903 65,331 1,428 2%
Health and Human Services ..................................................................................... 41 54 28 –26 –48%
NASA ......................................................................................................................... 3,189 3,727 3,511 –216 –6%
Energy ........................................................................................................................ 1,992 1,846 1,959 113 6%
National Science Foundation .................................................................................... ................ .................... .................... ...................... ........................
Agriculture .................................................................................................................. 159 157 146 –11 –7%
Homeland Security .................................................................................................... 481 599 746 147 25%
Commerce ................................................................................................................. 152 149 90 –59 –40%
Transportation ............................................................................................................ 279 269 254 –15 –6%
Veterans Affairs ......................................................................................................... 43 39 38 –1 –3%
Interior ........................................................................................................................ 49 46 54 8 17%
Environmental Protection Agency ............................................................................. 125 141 113 –28 –20%
Other .......................................................................................................................... 324 495 396 –99 –20%
Subtotal ................................................................................................................ 66,535 71,425 72,666 1,241 2%
Facilities and Equipment
Defense ...................................................................................................................... 52 155 50 –105 –68%
Health and Human Services ..................................................................................... 219 300 123 –177 –59%
NASA ......................................................................................................................... 1,906 2,398 2,584 186 8%
Energy ........................................................................................................................ 1,247 1,136 1,098 –38 –3%
National Science Foundation .................................................................................... 370 371 438 67 18%
Agriculture .................................................................................................................. 179 314 163 –151 –48%
Homeland Security .................................................................................................... 257 155 210 55 35%
Commerce ................................................................................................................. 114 102 89 –13 –13%
Transportation ............................................................................................................ 13 18 19 1 ........................
Veterans Affairs ......................................................................................................... ................ .................... .................... ...................... N/A
Interior ........................................................................................................................ 3 3 3 ...................... ........................
Environmental Protection Agency ............................................................................. ................ .................... .................... ...................... N/A
Other .......................................................................................................................... 17 31 21 –10 –32%
Subtotal ................................................................................................................ 4,377 4,983 4,798 –185 –4%
68 ANALYTICAL PERSPECTIVES
Table 5–3. FEDERAL SCIENCE AND TECHNOLOGY BUDGET
(Budget authority, dollar amounts in millions)
2004
Actual
2005
Estimate
2006
Proposed
Dollar
Change:
2005 to 2006
Percent
Change:
2005 to 2006
By Agency
National Institutes of Health ...................................................................................... 27,878 28,444 28,607 163 1%
NASA ............................................................................................................................. 9,231 9,116 9,493 377 4%
Science ...................................................................................................................... 5,600 5,527 5,476 –51 –1%
Aeronautics ................................................................................................................ 1,057 906 852 –54 –6%
Exploration Systems .................................................................................................. 2,574 2,683 3,165 482 18%
National Science Foundation ..................................................................................... 5,578 5,473 5,605 132 2%
Defense ......................................................................................................................... 5,709 6,363 5,458 –905 –14%
Basic Research ......................................................................................................... 1,358 1,513 1,319 –194 –13%
Applied Research ...................................................................................................... 4,351 4,850 4,139 –711 –15%
Energy 1 ......................................................................................................................... 5,494 5,635 5,357 –278 –5%
Science Programs ..................................................................................................... 3,484 3,600 3,463 –137 –4%
Energy Supply: Renewables ..................................................................................... 357 380 354 –26 –7%
Energy Supply: Electricity Transmission & Distribution ........................................... 81 101 84 –17 –17%
Energy Supply: Nuclear Energy ............................................................................... 292 386 390 4 1%
Energy Conservation 2 ............................................................................................... 607 596 576 –20 –3%
Fossil Energy ............................................................................................................. 673 572 491 –81 –14%
Agriculture .................................................................................................................... 2,047 2,127 1,922 –205 –10%
CSREES Research and Education 3 ........................................................................ 629 670 560 –110 –16%
Economic Research Service ..................................................................................... 71 74 81 7 9%
Agricultural Research Service 4 ................................................................................ 1,081 1,102 996 –106 –10%
Forest Service: Forest and Rangeland Research .................................................... 266 276 285 9 3%
Interior (USGS) ............................................................................................................. 938 935 934 –1 ......................
Commerce ..................................................................................................................... 965 992 858 –134 –14%
NOAA: Oceanic & Atmospheric Research ............................................................... 393 404 361 –43 –11%
NIST: Intramural Research and Facilities ................................................................ 401 451 485 34 8%
NIST: Advanced Technology Program ..................................................................... 171 137 .................... –137 –100%
Environmental Protection Agency 5 .......................................................................... 826 780 792 12 2%
Veterans Affairs 6 ......................................................................................................... 866 784 786 2 ......................
Transportation .............................................................................................................. 683 694 673 –21 –3%
Highway research 7 ................................................................................................... 564 566 543 –23 –4%
Federal Aviation Administration: Research, Engineering, and Development .......... 119 131 130 –1 –1%
Education ...................................................................................................................... 350 355 345 –10 –3%
Special Education Research and Innovation ........................................................... 78 83 73 –10 –12%
National Institute on Disability and Rehabilitation Research ................................... 107 108 108 .................... ......................
Research, Development, and Dissemination 8 ......................................................... 165 164 164 .................... ......................
Total .......................................................................................................................... 60,565 61,696 60,819 –877 –1%
1 Data do not reflect actual transfers to Science Programs from other Department of Energy R&D programs to support the Small Business Innovation Research and
the Small Business Technology Transfer programs.
2 Excludes weatherization and state grant programs.
3 Includes receipts and interest for Native American Endowment: $11 million in 2004; $14 million in 2005; $15 million in 2006.
4 Excludes buildings and facilities.
5 Includes the medical care and prosthetic research appropriation and VA medical care support transfer to research.
6 Science and Technology, plus Superfund transfer.
7 Includes research and development funding for the Federal Highway Administration, the Federal Motor Carrier Safety Administration, and the National Highway
Traffic Safety Administration.
8 Does not include funding for Regional Educational Labs.
69 5. RESEARCH AND DEVELOPMENT
Table 5–4. AGENCY DETAIL OF SELECTED INTERAGENCY R&D EFFORTS
(Budget authority, dollar amounts in millions)
2004
Actual
2005
Estimate
2006
Proposed
Dollar Change:
2005 to 2006
Percent Change:
2005 to 2006
Networking and Information Technology R&D
Defense 1 ................................................................................................................... 241 277 294 17 6%
National Science Foundation .................................................................................... 773 795 803 8 1%
Health and Human Services 2 ................................................................................... 542 573 551 –22 –4%
Energy ........................................................................................................................ 343 383 355 –28 –7%
Commerce ................................................................................................................. 47 58 61 3 5%
National Aeronautics and Space Administration ...................................................... 258 192 57 –135 –70%
Environmental Protection Agency ............................................................................. 2 4 6 2 50%
Total ...................................................................................................................... 2,206 2,282 2,127 –155 –7%
National Nanotechnology Initiative
National Science Foundation .................................................................................... 256 338 344 6 2%
Defense ...................................................................................................................... 291 257 230 –27 –11%
Energy ........................................................................................................................ 202 210 207 –3 –1%
Health and Human Services 3 ................................................................................... 108 145 147 2 1%
Commerce (NIST) ..................................................................................................... 77 75 75 ...................... ........................
National Aeronautics and Space Administration ...................................................... 47 45 35 –10 –22%
Agriculture .................................................................................................................. 2 3 8 5 167%
Environmental Protection Agency ............................................................................. 5 5 5 ...................... ........................
Justice ........................................................................................................................ 2 2 2 ...................... ........................
Homeland Security .................................................................................................... 1 1 1 ...................... ........................
Total ...................................................................................................................... 991 1,081 1,054 –27 –2%
Climate Change Science Program
National Aeronautics and Space Administration ...................................................... 1,321 1,264 1,162 –102 –8%
National Science Foundation .................................................................................... 215 198 197 –1 –1%
Commerce (NOAA) ................................................................................................... 116 124 181 57 46%
Energy ........................................................................................................................ 133 129 132 3 2%
Agriculture .................................................................................................................. 70 73 88 15 21%
National Institutes of Health ...................................................................................... 61 65 65 ...................... ........................
Interior (USGS) .......................................................................................................... 28 24 24 ...................... ........................
Environmental Protection Agency ............................................................................. 22 20 21 1 5%
Smithsonian ............................................................................................................... 6 6 6 ...................... ........................
U.S. Agency for International Development ............................................................. 6 6 6 ...................... ........................
Transportation ............................................................................................................ 1 3 3 ...................... N/A
State ........................................................................................................................... 1 1 1 ...................... ........................
Total .................................................................................................................. 1,975 1,913 1,886 –27 –1%
Subtotal, CCRI (included in CCSP total) ..................................................... 168 221 183 –38 –17%
1 In 2006, DOD will reassess which of its IT R&D programs are appropriate to count as part of the NITRD program, and any changes will be reported in subsequent
NITRD publications.
2 Includes funds from offsetting collections for the Agency for Healthcare Research and Quality.
3 Includes funds from both the National Institutes of Health and National Institute of Occupational Safety and Health.
70 ANALYTICAL PERSPECTIVES
V. ALLOCATION OF RESEARCH FUNDING
Federal funds appropriated to Executive Branch
agencies may be used in different ways, ranging from
grants awarded to university researchers to supporting
research at Federal laboratories. The Administration
strongly supports the competitive, merit review process
for funding research in most cases. However, there are
appropriate roles for other modes of allocating research
funding in some circumstances, such as funding research
at specific facilities that have unique capabilities.
In such cases, however, the proposed allocation
should be reviewed by scientific or technological experts,
as well as mangement and program experts.
In order to better understand and characterize the
methods agencies use to allocate their research funding,
agencies reported how research funds are allocated by
the following five categories:
Research performed at congressional direction
consists of intramural and extramural research programs
where funded activities are awarded to a single
performer or collection of performers with limited or
no competitive selection or with competitive selection
but outside of the agency’s primary mission, based on
direction from the Congress in law, in report language,
or by other direction.
Inherently unique research is intramural and extramural
research programs where funded activities are
awarded to a single performer or team of performers
without competitive selection. The award may be based
on the provision of unique capabilities, concern for timeliness,
or prior record of performance (e.g., facility operations
support for a unique facility, such as an electronpositron
linear collider; research grants for rapid-response
studies to address an emergency).
Merit-reviewed research with limited competitive
selection is intramural and extramural research programs
where funded activities are competitively awarded
from a pool of qualified applicants that are limited
to organizations that were created to largely serve Federal
missions and continue to receive most of their annual
research revenue from Federal sources. The limited
competition may be for reasons of stewardship,
agency mission constraints, or retention of unique technical
capabilities (e.g., funding set aside for researchers
at laboratories or centers of DOD, NASA, EPA, NOAA,
and NIH; Federally Funded Research and Development
Centers; formula funds for USDA).
Merit-reviewed research with competitive selection
and internal (program) evaluation is intramural
and extramural research programs where funded
activities are competitively awarded following review
for scientific or technical merit. The review is conducted
by the program manager or other qualified individuals
from within the agency program, without additional
independent evaluation (e.g., merit-reviewed research
at DOD).
Merit-reviewed research with competitive selection
and external (peer) evaluation is intramural
and extramural research programs where funded activities
are competitively awarded following review by a
set of external scientific or technical reviewers (often
called peers) for merit. The review is conducted by appropriately
qualified scientists, engineers, or other technically-
qualified individuals who are apart from the
people or groups making the award decisions, and
serves to inform the program manager or other qualified
individual who makes the award (e.g., NSF’s single-
investigator research; NASA’s research and analysis
funds).
Table 5–5 lists how Federal R&D agencies report allocating
research funding among these categories.
71 5. RESEARCH AND DEVELOPMENT
Table 5–5. ALLOCATION OF FEDERAL RESEARCH FUNDING, 2004 AND 2005
(Percent of Agency Research)
Research Performed at
Congressional Direction
Inherently Unique
Research
Merit Reviewed
Research with Limited
Competitive Selection
Merit Reviewed
Research with Competitive
Selection and
Internal Evaluation
Merit Reviewed
Research with Competitive
Selection and
External Evaluation
2004 2005 2004 2005 2004 2005 2004 2005 2004 2005
By Agency
Health & Human Services ................. .................. 1% 1% 1% 12% 12% .................. .................. 86% 86%
Defense .............................................. 17% 12% 9% 8% 6% 6% 65% 72% 3% 3%
Energy ................................................ 5% 4% 23% 23% 51% 52% 4% 4% 18% 17%
NASA .................................................. 4% 9% 1% 2% 10% 11% 35% 26% 51% 52%
National Science Foundation ............. .................. .................. .................. .................. 6% 6% 21% 21% 73% 73%
Agriculture ........................................... 17% 17% 55% 52% 14% 14% .................. .................. 13% 17%
Commerce .......................................... 6% 6% 41% 44% 15% 14% 18% 18% 22% 18%
Veterans Affairs .................................. .................. .................. .................. .................. .................. .................. .................. .................. 100% 100%
Interior ................................................. 7% 7% 30% 30% 33% 33% 27% 27% 2% 2%
Transportation ..................................... 13% 15% 17% 23% 1% 1% 69% 61% .................. ..................
Homeland Security ............................. .................. 24% .................. .................. 30% 23% 48% 36% 22% 16%
Environmental Protection Agency ...... 8% .................. 3% 7% 44% 50% 12% 15% 32% 28%
Research Funding (dollars in
millions) .................................... 2,312 2,427 3,965 4,101 8,174 8,414 7,587 7,888 32,398 32,549
Percentage of Federal Research 4% 4% 7% 7% 15% 15% 14% 14% 60% 59%
