    [Analytical Perspectives]
    [Crosscutting Programs]
    [5. Research and Development]
    [From the U.S. Government Printing Office, www.gpo.gov]

    [[Page 47]]

                           5. RESEARCH AND DEVELOPMENT

                                I.  INTRODUCTION

      The eminent 19th Century American scientist Joseph Henry once
    asserted, ``Modern civilization depends on science.'' This still holds
    true. Indeed, investments in science and technology have resulted in
    much of the unparalleled economic growth in the United States over the
    last 50 years, as well as the standard of living and quality of life we
    now enjoy. Advances have been possible only with the support of both
    public and private investment in research and development (R&D).
      And we continue to invest. The R&D investments of the United States
    are unmatched. However, unlike 40 years ago, when Federal R&D
    expenditures doubled those of the private sector, industry R&D spending
    now exceeds that of the Federal Government. Still, by a wide margin, the
    U.S. Government continues to lead the world in R&D spending.
      Investments in technological advancement are vital to strengthening
    our capabilities to combat terrorism and defend our country. The
    President's 2005 Budget continues to focus R&D on winning the war
    against terrorism, while moderating the growth in overall spending. But
    the benefits of innovation and discovery are not limited to national
    security. They are just as critical to economic security. The
    Administration, recognizing that fundamental research is the fuel for
    future innovation and technology development, has maintained the highest
    levels of support for priority R&D areas such as nanotechnology,
    information technology, hydrogen energy, and space exploration. The non-
    defense R&D share of the discretionary budget is at a near-record high
    over the last 30 years.

      Author Aubrey Eben noted, ``Science is not a sacred cow. Science is a
    horse. Don't worship it. Feed it.'' To this we would add: the horse also
    needs to be kept in good shape. The focus should not be solely on
    spending but, just as importantly, on performance. The Administration
    will continue 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-to-

    [[Page 48]]

    year marginal increases or decreases. Additionally, while it can be
    difficult to assess the outcomes of some research programs--many of
    which may not have a measurable effect for decades--agencies can
    establish meaningful program goals and measure annual progress and
    performance in appropriate ways. Towards that end, the Administration is
    continuing to implement and improve investment criteria for R&D programs
    across the government. 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.
      The Federal Government funds R&D in many ways. The government is a
    strong supporter of basic research, which is directed toward greater
    understanding of fundamental 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 also has a vital role in
    supporting applied research, which is driven by more specific needs, and
    development, which applies scientific knowledge and technology to
    specific needs. Together, the R&D portfolio is critical to the missions
    of Federal agencies, particularly in priority areas that private sources
    are not motivated to support. For example, if the private sector cannot
    profit from the development of a particular technology, Federal funding
    may be appropriate if the technology in question addresses a national
    priority or otherwise provides significant societal benefits. A good
    indicator of the relevance of Federal development funding is the level
    at which industry is willing to share the costs. Also, the Federal
    Government should help stimulate private investment and provide the
    proper 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.
      This chapter discusses how the Administration will improve the
    performance of R&D programs through new investment principles and other
    means that encourage and reinforce quality research. The chapter also
    highlights the priority areas proposed for R&D agencies and the
    coordinated efforts among them. The chapter concludes with details of
    R&D funding across the Federal Government.

                   II.  IMPROVING 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. As a result, and consistent with
    the Government Performance and Results Act, every Federal R&D dollar
    must be invested as effectively as possible.

                             R&D Investment Criteria

      The Administration is improving the effectiveness of the Federal
    Government's investments in R&D by continuing to apply transparent
    investment criteria in making recommendations for program funding and
    management. R&D performance assessment requires special consideration.
    Research often leads scientists and engineers down unpredictable
    pathways with unpredictable results. This poses a difficult problem for
    measuring an R&D program's performance against its initial goals.
    Adopting ideas first laid out by the National Academy of Sciences, 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 were first applied in 2001 to selected applied R&D programs at
    the Department of Energy (DOE). Through the lessons learned from that
    DOE pilot, the criteria subsequently were broadened in scope to cover
    other types of R&D programs at DOE and other agencies. To accommodate
    the wide range of R&D activities from basic research to development and
    demonstration programs, a new framework was devised for the criteria to
    address 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 meet 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.

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    ------------------------------------------------------------------------

      Year Three in DOE Implementation of the Criteria. The Department of
     Energy continues to expand its use of the R&D criteria. For example, to
     ensure the relevance of the research it supports, DOE's basic research
     programs have incorporated the programs' long-term measures into
     requests for research proposals. The basic research programs have also
     expanded their use of Committees of Visitors, teams of independent
     experts that periodically assess the quality and performance of the
     research that the program has supported. Many of DOE's applied R&D
     programs have made similar improvements, and some have even
     incorporated the specific ``industry-related'' R&D criteria into
     evaluation forms used by peer reviewers to assess individual projects.
     While DOE's applied R&D programs still are faced with the challenge of
     generating comparable estimates of expected public benefits, they
     continue to work toward improving the consistency and quality of the
     data to better inform budget decisions.

    ------------------------------------------------------------------------
      The Administration has been studying R&D management strategies that
    some agencies use to operate particularly effective programs. The Office
    of Management and Budget (OMB) and the Office of Science and Technology
    Policy (OSTP) are continuing to assess the strengths and weaknesses of
    R&D programs across agencies, in order to identify and apply good R&D
    management practices throughout the government. For example, some
    agencies have a more deliberate project-prioritization process, while
    other agencies have more experience estimating the returns of R&D and
    assessing the impact of prior investments. Assessing and implementing
    new approaches is an iterative process, involving the research agencies
    and the science and technology community.
      As the investment criteria are implemented more broadly and more
    deeply, one lesson that is increasingly apparent is the importance of
    coordination and partnerships. First, partnerships are key in
    determining the proper Federal role. These include partnerships with
    industry (such as the Administration's FreedomCAR partnerships with U.S.
    automakers), partnerships with other countries (such as the
    Administration's International Partnership for a Hydrogen Economy), and
    partnerships with university researchers. Partnerships and coordination
    across agencies, through the National Science and Technology Council,
    for example, can also make the use of research resources more efficient
    and effective. More effective coordination and partnerships will be
    pursued in further implementation of the investment criteria.
    ------------------------------------------------------------------------

      Broader Application of the R&D Investment Criteria.  This was the
     second year of implementation of the investment criteria for most R&D
     agencies. The National Aeronautics and Space Administration is
     recasting its strategic plans and budget to tie directly to the R&D
     criteria. To reflect the criteria, the National Science Foundation
     changed the way it characterizes its budget, as well as the guidelines
     it uses to evaluate its research. Nearly all R&D agencies assessed some
     R&D programs using a tailored Program Assessment Rating Tool that was
     based on the R&D criteria. The R&D agencies have more work to do to
     integrate the R&D criteria more meaningfully into their management
     processes and budget decisions, and OMB will continue to improve
     guidance and standards for implementing the R&D Investment Criteria.

    ------------------------------------------------------------------------
      DOE has started to use the results of the R&D investment criteria to
    help analyze its portfolio of investments on the basis of the potential
    public benefits. This approach helps DOE to analyze, for example,
    whether the expected fruits of its investments are balanced across time,
    as well as the types of benefits they may yield. As data analysis of the
    Department's applied R&D programs has shown, there is a greater need for
    consistent methods of analysis, including ways to present benefits
    estimates that make comparisons meaningful. DOE is continuing to improve
    the consistency and quality of its data.
      As discussed throughout the 2005 Budget, OMB and the agencies have
    been working on other initiatives as part of the President's Management
    Agenda. To support the Budget and Performance Integration initiative,
    OMB developed a tool to assess the effectiveness of programs
    consistently: the Program Assessment Rating Tool (PART). Last year the
    effort included a version of the PART to specifically assess R&D
    programs, but PART assessments were done in isolation of the R&D
    Investment Criteria initiative. This year, the R&D PART was modified to
    align with the R&D criteria. In the process, the R&D PART became the
    instrument for assessing management and performance at the program
    level. In preparation of the 2005 Budget, OMB and the agencies completed
    or updated PART assessments of 58 R&D programs.
      Some programs rated ``effective'' were provided added funding to
    further the work they do. For example, the Budget requests $305 million
    for the National Science Foundation's Nanoscale Science and Engineering,
    an increase of 20 percent from the 2004 likely enacted level. Other
    examples include: DOE's Basic Energy Science

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    Program, the National Aeronautics and Space Administration's Mars
    Exploration Program, and the Department of Commerce's laboratories at
    the National Institute of Standards and Technology. Other programs that
    were rated ``ineffective'' were cut, such as DOE's Oil Technology
    program. However, funding changes and management reforms are not made by
    formula or based solely on PART results. For example, funding may be
    reduced for ``effective'' programs that have achieved what they set out
    to, and ``ineffective'' programs might receive more money if it is clear
    it would help them become more effective. The PART provides information
    that permits informed decisions.

      OMB will continue to work with the R&D agencies and others to
    integrate the R&D criteria more meaningfully into the budget formulation
    process in the coming year, and to clarify expectations for using the
    R&D Investment Criteria across the agencies. 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 across the R&D agencies.

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    ------------------------------------------------------------------------

                                        President's Management Agenda Initiative

    Better Research and Development (R&D) Investment Criteria

    FY 2004, 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 retains momentum, as
     some agencies have made improvements this year, including the National Science Foundation, NASA, and DOE. 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. Twelve of the top 13 R&D agencies are
     using the R&D PART to assess their programs this year, up from seven last year. Most of the major R&D agencies
     submitted 2005 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 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 supports awarding research funds based on merit
    review through a competitive process. Such a system 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. The use of earmarks improperly signals to potential
    investigators that there is an alternative to creating quality research
    proposals for merit-based consideration, including the use of political
    influence or appeals to parochial interests.
      Moreover, the practice of earmarking funds directly to colleges and
    universities for specific research projects has expanded dramatically in
    recent years. Despite broad-based support for merit review, earmarks for
    specific projects at colleges and universities have yet again broken
    prior records. According to The Chronicle of Higher Education, academic
    earmarks have steadily increased from a level of $296 million in 1996 to
    over $2 billion in 2003. These funds now form a greater share of the
    total Federal funding to colleges and universities, and increasingly
    displace competitive research that is awarded by merit. For example, in
    2003, academic earmarks accounted for eight percent of all Federal
    funding to colleges and universities, which is quite high relative to
    the 1996 level of 2.5 percent.
      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 they 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. In
    2003, 17 of the 30 institutions receiving the most Federal earmarks were
    also among the 100 that received the most research funds from all
    sources.
      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 agencies have
    procedures and programs to reward out-of-the-box thinking in the
    research they award. 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 NSF set
    aside a share of funding for higher-risk projects in which they see high
    potential.

    [[Page 52]]

      Many earmarks have little to do with an agency's mission. For example,
    the Congress earmarked DOD's 2004 budget to fund research on a wide
    range of diseases, including breast cancer, ovarian cancer, prostate
    cancer, diabetes, leukemia, and polio. Funding at DOD for such research
    totals over two-thirds of a billion dollars in 2004 alone. 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 academic organizations,
    colleges and universities, and the Congress to discourage the practice
    of research earmarks and to achieve our common objectives.

              III.  PRIORITIES FOR FEDERAL RESEARCH AND DEVELOPMENT

      The 2005 Budget requests $132 billion for Federal R&D funding, a $41
    billion increase since the beginning of this Administration (Table 5-2
    provides details by agency). This is a 44-percent increase over four
    years. Even if military R&D is excluded, the Administration has raised
    civilian R&D investment 26 percent over this same period. The 2005
    Budget targets key basic research investments within agencies such as
    NSF, DOE's Office of Science, DOC's National Institute of Standards and
    Technology, and the National Institutes of Health (NIH), increasing
    basic research funding across all agencies by $6 billion (29 percent)
    since 2001.
      In a 1995 report from the National Academy of Sciences, the scientific
    community proposed a ``Federal Science and Technology'' (FS&T) budget to
    highlight the creation of new knowledge and technologies more
    consistently and accurately than the traditional R&D data collection.
    Also, because the FS&T budget emphasizes research, it does not include
    funding for defense development, testing, and evaluation, and totals
    less than half of Federal R&D spending. FS&T is readily tracked through
    the budget and appropriations process, so the effects of budget
    decisions are clearer more immediately. As shown in Table 5-3, the 2005
    Budget requests $60.4 billion for FS&T, a 27-percent increase since
    2001.
      Over the past year, OSTP 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
    combating terrorism R&D, address newly recognized needs. The discussion
    below identifies five multi-agency priority

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    areas, followed by highlights of agency-specific R&D priorities.

                           Multi-Agency R&D Priorities

      The 2005 Budget targets investments in important research and
    innovation that benefits from specialization and improved coordination
    across multiple agencies. Three of these multi-agency initiatives--
    nanotechnology, information technology R&D, and climate change science--
    have dedicated separate coordination 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: With the creation of the Department of
    Homeland Security (DHS), 2003 marked a fundamental change to the
    management of the Nation's investment in combating terrorism R&D.
    Research programs from across the Federal Government were brought
    together and focused with the specific goal to develop systems to help
    prevent future terrorist activities, minimize our Nation's vulnerability
    to terrorist acts, and respond and recover if an attack should occur. In
    addition to the DHS R&D funding (about $1 billion in 2005), substantial
    combating terrorism programs exist in the Departments of Health and
    Human Services (HHS--over $1.7 billion in 2005), Energy, Defense,
    Commerce, and Justice, as well as the National Science Foundation and
    Environmental Protection Agency (EPA).
      In 2003, there was significant progress in multi-agency efforts,
    including:
        BioWatch, a collaborative effort of DHS, HHS, and EPA, which
              employs environmental sampling devices in 31 cities across the
              Nation to quickly detect hazardous biological releases in time
              to distribute life-saving pharmaceuticals to affected persons.
        Project BioShield--A Presidential initiative that will speed
              development and procurement of new medical countermeasures
              against current and future terrorist threats. The
              Administration is coordinating research agendas and generating
              requirements and acquisition plans for the next generation of
              medical countermeasures to biological, chemical, and
              radiological/nuclear threat agents.
        Atmospheric plume modeling and validation was enhanced by a
              joint effort of DHS, DOD, and DOE in a month-long atmospheric
              aerosol dispersion study in Oklahoma City. The resulting data
              and models will help emergency management, law enforcement,
              and other personnel to train for and respond to potential
              chemical, biological, or radiological events.
        Demonstration of radiological and nuclear detection was
              deployed in the New York City metropolitan area (tunnels,
              bridges, ports, and airports). This demonstration used state-
              of-the-art detectors from DOE with operations support by DHS
              and the City of New York, and serves as a model for deploying
              these technologies in other urban settings.
        DHS initiated a development program for protection of
              commercial aircraft against surface-to-air missles (Man-
              Portable Air Defense Systems), following an interagency effort
              that included the Departments of Defense, Transportation,
              Justice, and State, and the intelligence community. DHS has
              solicited and selected projects to address this research
              effort.
      The National Science and Technology Council's (NSTC) Committee on
    Homeland and National Security is working with the Homeland Security
    Council and the National Security Council to identify priorities for and
    facilitate planning among Federal departments and agencies involved in
    homeland security R&D. The coordinated Federal effort is developing:
    strategies to combat weapons of mass destruction; radiological and
    nuclear countermeasures; biological agent detection, diagnostics,
    therapeutics, and forensics; social, behavioral, and economic aspects of
    combating terrorism; and border entry/exit technologies.

      Networking and Information Technology R&D: The budget provides $2.0
    billion for the multi-agency Networking and Information Technology
    Research and Development (NITRD) program. Networking and information
    technologies enable advances in other fields and provide capabilities
    that are utilized by virtually every sector of the economy, generating
    not only new products and tools but also significant improvements in
    productivity. Agencies with NITRD investments work together to
    coordinate their programs and leverage each others' resources, which
    enables more rapid advancement than they could achieve working on their
    own. Recent accomplishments of the NITRD program are helping to support
    progress towards some of the Nation's highest priorities, including
    defense and homeland security. For example, research on the
    incorporation of microsensors into wireless networks has implications
    not only for battlefield reconnaissance but also for environmental
    monitoring, and may also be used to improve the tools that first
    responders depend upon for communication in the field. The development
    of grid computing for accessing and managing distributed information
    technology resources is another example where NITRD research is
    influencing the information technology industry.
      High-end computing continues to be a major focus of interagency
    coordination efforts. In 2003, agencies with responsibilities for high-
    end computing formed the High-End Computing Revitalization Task Force
    and have worked to develop an interagency R&D roadmap for high-end
    computing core technologies, a Federal high-end computing capacity and
    accessibility improvement plan, and recommendations relating to Federal
    procurement of high-end computing systems. The NITRD interagency working
    group has taken the first

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    steps toward implementing task force recommendations, and it will
    continue to leverage the work of the Task Force in improving interagency
    coordination of high-end computing activities and investments.

      Nanotechnology R&D: The budget provides $886 million for the multi-
    agency National Nanotechnology Initiative (NNI), a three-percent
    increase over likely enacted funding in 2004. The NNI focuses on R&D
    that is directed toward understanding and creating 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, environmental monitoring and
    protection, energy production and storage, and electronic devices with
    even greater capabilities than those available today.
      Last year the President signed the 21st Century Nanotechnology
    Research and Development Act, which codified programs and activities
    supported by the NNI. Consistent with this legislation, in 2005, the
    Initiative 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 scientific research
    community. In addition to supporting advancement of scientific and
    technical knowledge and understanding, as well as development of useful
    applications, the NNI will continue to promote activities aimed at
    assessing the societal implications of nanotechnology, including
    ethical, legal, environmental, and workforce-related issues.
      Last year the President's Council of Advisors on Science and
    Technology (PCAST) was tasked with reviewing the multi-agency
    nanotechnology R&D program, articulating a strategic plan for the
    program, defining specific grand challenges to guide the program, and
    identifying metrics for measuring progress toward those grand
    challenges. In response, PCAST examined the status of nanotechnology R&D
    generally and the NNI in particular. PCAST will deliver an initial
    report in 2004 providing recommendations to further strengthen the
    Initiative.

      Climate Change R&D: In July 2003, the Administration released the
    Strategic Plan for the Climate Change Science Program (CCSP). The Plan
    provides a 10-year strategy and establishes near-term priorities
    consistent with the President's Climate Change Research Initiative,
    which focuses on reducing significant uncertainties in climate science,
    improving global climate observing systems, and developing resources to
    support policymaking and resource management.
      To achieve the goals outlined in the Strategic Plan, the 2005 Budget
    includes $57 million of the $103 million in targeted funding committed
    over two years to accelerate efforts to advance understanding of the
    role of aerosols in climate science, better quantify carbon sources and
    sinks, and improve the technology and infrastructure used to observe and
    model climate variations. These investments will help address critical
    knowledge gaps in climate change science.
      In November 2003, the Administration's Climate Change Technology
    Program (CCTP) released two reports. The first, CCTP's Research and
    Current Activities report, highlights several Administration initiatives
    and other areas of ongoing technology R&D that can help reduce
    greenhouse gas emissions. The CCTP's more comprehensive Technology
    Options for the Near and Long Term is a compendium of technology
    profiles and ongoing R&D at participating Federal agencies.
      The CCTP continues to examine the portfolio of federally funded
    climate change technology R&D and to develop a strategic plan to
    coordinate and prioritize these activities, consistent with the
    President's National Climate Change Technology Initiative (NCCTI). The
    2005 Budget continues support for a NCCTI Competitive Solicitation
    program, a unique approach to selecting and funding innovative research
    ideas based on their potential to reduce, avoid, or sequester greenhouse
    gases. The program will enhance and complement the ongoing base of
    climate change technology R&D.

      Hydrogen R&D: The Hydrogen R&D Interagency Task Force, established by
    OSTP shortly after the President's announcement of the Hydrogen Fuel
    Initiative, serves as the mechanism for collaboration among the nine
    Federal agencies that fund hydrogen-related R&D. In 2003, the task force
    gathered information and provided guidance for agency research
    directions. In 2004, the task force will complete an interagency 10-year
    plan that will improve coordination of agency efforts, accelerate
    progress toward the goals of the initiative, and foster collaboration
    between the Federal Government and the private sector, state agencies,
    and other stakeholders. The DOE-led International Partnership for the
    Hydrogen Economy coordinates hydrogen research between the U.S. and
    other participating governments.

                              Agency R&D Highlights

      Each Federal agency conducts R&D in the context of that agency's
    unique mission, structure, and statutory requirements. Below are
    highlights of key programs in selected agencies in the 2005 Budget.
    Table 5-3 shows the FS&T budget. As shown in Table 5-2, these programs
    and those of other agencies are part of the larger Federal R&D
    portfolio.

      National Institutes of Health (NIH): The 2005 Budget provides $28.6
    billion for NIH, a 2.6-percent increase over the 2004 likely enacted
    level. This level is an $8.2 billion (40.5-percent) increase since 2001.
        The Administration has demonstrated its strong commitment to
              biomedical research by completing a five-year doubling of the
              NIH budget.
        NIH continues to play a key role in addressing pressing
              health research issues, such as access

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              to state-of-the-art instrumentation and biomedical
              technologies; development of specialized animal and non-animal
              research models; and emphasis on ``smart'' network-connected
              technologies, computer-aided drug design, gene and molecular
              therapy development, and bioengineering approaches to
              decreased health care costs.
        In addition, the NIH budget continues support for biodefense
              research by providing $1.74 billion for NIH to accelerate
              clinical trials, target the development of new therapeutic and
              vaccine products for agents of bioterrorism, and establish
              Regional Centers of Excellence in Biodefense and Emerging
              Infectious Diseases.

      National Aeronautics and Space Administration (NASA): The 2005 Budget
    provides $9.4 billion for FS&T programs at NASA, a 1.3-percent increase
    over the 2004 likely enacted level. This is a 35-percent increase since
    2001.
        The 2005 Budget supports the President's new vision of
              sustained solar system exploration involving both humans and
              robots. NASA's FS&T programs will increasingly focus on this
              vision, which includes:
         --a new program of lunar exploration;
         --further robotic exploration of the solar system;
         --focused exploration of Mars to accelerate the search for water
             and life and to prepare for future human exploration;
         --development of technologies to support human and robotic space
             exploration; and
         --refocused Space Station research on activities that support
             space-exploration goals.
        The budget also supports increased NASA investments in the
              President's Climate Change Research Initiative, including
              investment in a critical satellite to help determine the
              impact of aerosols such as soot and dust on global climate
              change.
        The budget supports several new major initiatives in
              aeronautics R&D, including a five-year $600 million program to
              improve the efficiency of aircraft propulsion systems.
        PART assessments found NASA's Mars and Solar System
              exploration programs to be effective and the agency's
              crosscutting technology R&D to be moderately effective. The
              PART determined that the Space Station Program, Space Station
              R&D, and the Space Shuttle Program need to develop better
              performance goals and demonstrate results.

      National Science Foundation (NSF): To further promote research and
    education across the fields of science and engineering, the 2005 Budget
    provides $5.7 billion for NSF, a three-percent increase over the 2004
    likely enacted level. This level is a 30-percent increase since 2001.
        The budget provides: $761 million for NSF's lead role in
              NITRD, focusing on long-term computer science research and
              applications; $305 million for NSF's lead role in the National
              Nanotechnology Initiative; and $210 million for climate change
              science.
        The budget provides $1.1 billion for NSF programs that
              emphasize the mathematical and physical sciences, including
              physics, chemistry, and astronomy. This represents a 31-
              percent increase ($261 million) for these programs since 2001.
        To attract the most promising students into the sciences,
              the 2005 Budget provides funds for 5,500 graduate research
              fellowships and traineeships, an increase of 1,800 since 2001.
              Annual stipends in these programs have increased to a
              projected $30,000, compared with $18,000 in 2001.
        To enhance science infrastructure capabilities, the Budget
              initiates construction of the National Ecological Observatory
              Network, the Scientific Ocean Drilling Vessel, and the Rare
              Symmetry Violating Processes (RSVP) facility.
        PART assessments found all four of the NSF programs assessed
              to be effective: Facilities, Individuals, Nanoscale Science
              and Engineering, and Information Technology Research.

      Department of Energy (DOE): The 2005 Budget provides $5.4 billion for
    FS&T at DOE, a $492 million (or 10-percent) increase since 2001.
        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
              will now include targeted basic research investments, 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.
        The 2005 Budget provides $3.4 billion for the Office of
              Science, including funding to ensure its continuing leadership
              in physical science research and its unique research in
              genomics, climate change, and supercomputing. The fifth and
              final nanoscience research center will begin construction as a
              part of the Office's $211 million investment in the National
              Nanotechnology Initiative.
        The budget dedicates $447 million to the President's Coal
              Research Initiative on clean coal technologies, including $237
              million for FutureGen which will be the world's first zero-
              emissions electricity-producing power plant. This 10-year, $1
              billion project will be cost-shared by the private sector and
              international participants.
        DOE will continue its support for R&D to improve energy
              efficiency and reliability in buildings, industry,
              transportation, and the Federal Government ($544 million), and
              to reduce the cost of renewable energy technologies, such as
              wind, solar, geothermal, and biomass ($375 million).
        The budget provides $34 million for the Generation IV
              Nuclear Energy Systems Initiative and $46 million for the
              Advanced Fuel Cycle Initiative to develop next-generation
              nuclear reactor and fuel

    [[Page 56]]

              cycle technologies that are sustainable, proliferation-
              resistant, and economical.
        The budget includes $91 million for electricity transmission
              and distribution reliability R&D activities, a 12-percent
              increase over 2004. These funds include $45 million for high
              temperature superconductivity, $6 million for the new
              Gridworks program to support research that will enable power
              lines to carry more power and better control the flow of
              electricity to prevent blackouts, and $5 million for the
              Gridwise program to improve the communications and control
              system for the electricity grid.

      Department of Defense (DOD): DOD funds a wide range of R&D to ensure
    that our military forces have the tools to protect the Nation's
    security. In 2005, DOD's budget includes $5.2 billion that appears in
    the FS&T budget. This level is a $225 million (4.6-percent) increase
    since 2001.
        The 2005 Budget funds ``Science and Technology'' programs to
              explore and develop technical options for new defense systems
              and to avoid being surprised by new technologies in the hands
              of adversaries. Areas of emphasis include computing and
              communications, sensors, nanotechnology, and hypersonic
              propulsion systems. DOD's S&T includes the research counted in
              the FS&T budget, plus advanced technology development.
        The Missile Defense Agency continues to develop technologies
              for intercepting ballistic missiles in multiple phases of
              flight. The budget provides funding for missile defense R&D,
              which includes new efforts for high-speed, boost-phase
              interceptors, sea-based radars, directed energy technology and
              advanced battle management systems.
        The Army continues development efforts in support of the
              Future Combat System as a major part of its transformation to
              a lighter, more mobile, and more effective fighting force.
        Development continues on the Joint Strike Fighter, the next
              generation affordable multi-role fighter aircraft, which will
              use innovative technologies to keep costs low.
        The Navy continues development of the next generation DD(X)
              destroyer, the Littoral Combat Ship and associated shipboard
              technologies. These platforms will provide advanced
              capabilities that will ensure U.S. naval superiority continues
              into the future.
        R&D to address terrorist and other unconventional threats
              continue to be a high priority. Systems and technologies under
              development to address defense against chemical or biological
              agents include: improved detectors of chemical and biological
              threats; troop protective gear for use under chemical and
              biological attack that is both more effective and more
              comfortable; and vaccines to protect against biological
              agents.

      Department of Agriculture (USDA): The 2005 Budget provides $1.9
    billion for FS&T at USDA.
        Funding for the Agricultural Research Service includes
              increases in high priority areas, such as homeland security
              (food safety and emerging and exotic diseases), genomics and
              genetics, human nutrition, and the establishment of a National
              Plant Disease Recovery System.
        The Cooperative State Research, Education, and Extension
              Service funding for research and education grants includes
              $180 million for the National Research Initiative, an increase
              of $16 million (10 percent) over 2004, and $30 million for the
              network of university-based diagnostic laboratories. The
              budgets for both in-house research and research grants do not
              continue funding for unrequested earmarks.
        The Economic Research Service budget includes increases
              totaling $7 million to study consumer behavior, particularly
              dietary attitudes, food consumption, and health awareness.
        The budget includes an emphasis on putting forestry research
              to work, providing a significant increase to optimize the
              delivery of research findings by improving Forest Service
              management of investments in research, development, and
              technology applications. Funds are also provided for research
              on rapid management responses to address threats against
              forest and rangeland health and agriculture by invasive
              species.

      Department of the Interior (DOI): Within the Department of the
    Interior, the 2005 Budget provides $920 million for the United States
    Geological Survey (USGS). USGS provides science and information for DOI
    bureaus and local communities to make informed decisions regarding land
    and resource management. In 2005 some areas of focus for USGS include:
        Work with at-risk jurisdictions to increase the number that
              have adopted hazard mitigation measures based on USGS geologic
              hazard information, and coordination with Federal partners to
              determine the effectiveness of Federal efforts to reduce the
              loss of life and property due to geologic hazards.
        Expansion of USGS capabilities to monitor ground
              deformations with remote sensing technology, InSAR, to assist
              in predicting volcanic activity.
        Additional water availability and aquifer characterization
              studies to support DOI's Water 2025, and an additional $2
              million to provide critical information about water quality
              and quantity and fish ecology that is necessary for management
              of the Klamath River Basin.
        Consistent with 2004 PART findings, USGS is restructuring
              the Geography program in order to migrate from its traditional
              role as the primary data collector and producer of topographic
              maps to one that focuses on data sharing and partnerships.
              Workforce restructuring will provide savings in 2004 and 2005
              to fund partnerships to

    [[Page 57]]

              develop needed science and applications to promote geographic
              integration and analyses.

      Department of Commerce (DOC): The 2005 Budget provides $832 million
    for FS&T at the Department of Commerce.
        For the National Institute of Standards and Technology
              (NIST), the budget provides $482 million for research and
              physical improvements at NIST's Measurement and Standards
              Laboratories. The budget also supports NIST facilities,
              including equipment for the Advanced Measurement Laboratory in
              Maryland and renovations of facilities in Boulder, Colorado.
        The 2005 Budget proposes to terminate the Advanced
              Technology Program (ATP). The Administration believes that
              other NIST research and development programs are much more
              effective and necessary in supporting the fundamental
              scientific understanding and technological needs of U.S.-based
              businesses, American workers, and the domestic economy.
              Further, large shares of ATP funding have gone to major
              corporations, and projects often have been similar to those
              being carried out by firms not receiving such subsidies.
        For the National Oceanic and Atmospheric Administration
              (NOAA) the 2005 Budget provides $350 million for ongoing
              research on climate, weather, air quality, and ocean
              processes. This funding level includes $19 million for NOAA to
              expand climate observing capabilities in support of the
              Administration's recently released Climate Change Science
              Program (CCSP) Strategic Plan.

      Department of Veterans Affairs (VA): The 2005 Budget provides $770
    million for FS&T at the Department of Veterans Affairs. This level is a
    seven-percent increase since 2001. This will provide level funding to
    the VA R&D program after taking into consideration the significant
    funding the Department receives from other governmental agencies and
    private entities to support VA-conducted research. The total VA R&D
    program resources are $1.7 billion.
        VA will soon begin to use increased funding from private
              companies for the indirect administration costs of conducting
              research in VA facilities.
        The 2005 Budget provides for clinical, epidemiological, and
              behavioral studies across a broad spectrum of medical research
              disciplines. Among the agency's top research priorities are
              improving the translation of research results into patient
              care, special populations (those afflicted with spinal cord
              injury, visual and hearing impairments, and serious mental
              illness), geriatrics, diseases of the brain (e.g., Alzheimer's
              and Parkinson's), treatment of chronic progressive multiple
              sclerosis, and chronic disease management.
        The 2005 Budget reflects a restructuring of total resources
              in the Research Business Line as first shown in the 2004
              Budget.

      Environmental Protection Agency (EPA): The budget provides $725
    million for FS&T for the Environmental Protection Agency to ensure that
    its efforts to safeguard human health and the environment are based on
    the best available scientific and technical information.
        EPA's homeland security research will result in more
              efficient and effective cleanup of contaminated buildings and
              faster threat detection and response for water systems.
              Additionally, EPA will develop practices and procedures that
              provide elected officials and other decision makers, the
              public, and first responders with rapid risk assessment
              protocols for chemical and biological threats.
        As part of its Water Quality Monitoring initiative, EPA will
              address the integration of different scales and types of
              monitoring to target effective water quality management
              actions and document effectiveness of water quality management
              programs.

      Department of Transportation (DOT): The 2005 Budget provides $659
    million for FS&T at DOT, a $138 million (26.5-percent) increase since
    2001.
        The Federal Highway Administration ($429 million in 2005)
              supports research, technology, and education to improve the
              quality and safety of the Nation's transportation
              infrastructure, such as increasing the quality and longevity
              of roadways, identifying safety improvements, and promoting
              congestion mitigation through the use of Intelligent
              Transportation Systems.
        The budget of the National Highway Traffic Safety
              Administration provides $103 million for R&D in crash-
              worthiness, crash avoidance, and data analysis to help reduce
              highway fatalities and injuries. The budget also includes
              funding for a crash causation survey.
        In 2005, R&D at the Federal Motor Carrier Safety
              Administration focuses on issues including driver safety
              performance, commercial vehicle safety performance, carrier
              compliance and safety, and other studies toward the goal of
              achieving a substantial reduction in crashes and fatalities.
        The 2005 Budget provides $117 million for the Federal
              Aviation Administration to continue critical safety and
              capacity research. The PART assessment found this program to
              be effective; it is well-managed and results-oriented, with a
              strategic plan that sets forth clear long-term goals that are
              tied to program performance measures.

      Department of Education: The 2005 Budget provides $370 million for
    research activities at the Department of Education, a $20 million
    increase over the 2004 likely enacted level.
        The Institute of Education Sciences (IES) has the lead
              responsibility for the Department's strategic goal of
              transforming education into an evidence-based field. Research,
              development, and dissemination ($185 million in 2005) supports
              research

    [[Page 58]]

              to advance our understanding of how students learn and
              identify effective approaches and interventions to improve
              education.
        Research and innovation in special education activities ($78
              million in 2005) yield new knowledge and help translate
              scientifically valid information into applied strategies. The
              2005 PART showed that the program does not have specific long-
              term outcome goals against which its impact can be measured.
              The program is working to articulate long-term research
              objectives that have measurable outcomes. Pending legislation
              would transfer this program from the Office of Special
              Education Programs to IES to promote better coordination.
        The National Institute for Disability Rehabilitation and
              Research (NIDRR--$107 million in 2005) conducts research,
              demonstration and training activities that advance independent
              living for people with disabilities. Consistent with the
              President's New Freedom Initiative, NIDRR's activities promote
              community integration and employment outcomes. The 2005 PART
              showed that NIDRR cannot demonstrate the results of its
              investments without long term performance measures. In
              response to this finding, NIDRR is developing long-term
              research goals that have measurable outcomes.

      Department of Homeland Security (DHS): The 2005 Budget requests just
    over one billion dollars for DHS R&D. Within DHS, the Directorate of
    Science and Technology (S&T) serves as a centralized R&D arm that
    consolidates piecemeal R&D efforts into one agency. Its sole focus is to
    harness revolutionary technology, which can be used by law enforcement
    and emergency response personnel in carrying out their mission to
    protect the Nation. S&T works to solicit proposals and seeks to engage
    our Nation's well-established R&D community in the fight against
    terrorism. S&T has separate offices dedicated to addressing the threat
    posed by each major category of weapons of mass destruction, such as
    chemical, biological, radiological, nuclear, and high-explosives.

                         Stimulating Private Investment

      Along with direct spending on R&D, the Federal Government has sought
    to stimulate private R&D investment through tax preferences. Current law
    provides a 20-percent tax credit for private research and
    experimentation expenditures above a certain base amount. The credit,
    which expired in 1999, was retroactively reinstated for five years,
    through 2004, in the Tax Relief Extension Act of 1999. 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 2005 to 2009. 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 cost recovery. 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
                                     (Budget authority, dollar amounts in millions)
    ----------------------------------------------------------------------------------------------------------------
                                                         2004     2005     2006     2007     2008     2009   2005-09
    ----------------------------------------------------------------------------------------------------------------
    Current Law......................................    4,400    2,550    1,090      460      150       60    4,310
    Proposed Extension...............................      672    3,610    5,187    6,291    7,129    7,775   29,992
                                                      --------------------------------------------------------------
      Total..........................................    5,072    6,160    6,277    6,751    7,279    7,835   34,302
    ----------------------------------------------------------------------------------------------------------------

                              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.

    [[Page 59]]

      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)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                   Dollar         Percent
                                                                                              2003        2004         2005        Change:     Change:  2004
                                                                                             Actual     Estimate     Proposed   2004 to 2005      to 2005
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    By Agency
      Defense............................................................................     58,838       65,484       69,856         4,372              7%
      Health and Human Services..........................................................     27,411       28,275       29,381         1,106              4%
      NASA...............................................................................     10,681       10,893       11,308           415              4%
      Energy.............................................................................      8,312        8,835        8,893            58              1%
      National Science Foundation........................................................      3,972        4,115        4,252           137              3%
      Agriculture........................................................................      2,334        2,308        2,105          -203             -9%
      Homeland Security..................................................................        737        1,053        1,216           163             15%
      Commerce...........................................................................      1,200        1,126        1,075           -51             -5%
      Veterans Affairs...................................................................        819          824          772           -52             -6%
      Transportation.....................................................................        701          701          749            48              7%
      Interior...........................................................................        643          675          648           -27             -4%
      Environmental Protection Agency....................................................        568          575          577             2              0%
      Other..............................................................................      1,223        1,092        1,034           -58             -5%
                                                                                          ------------------------------------------------------------------
        Total............................................................................    117,439      125,956      131,866         5,910              5%

    Basic Research
      Defense............................................................................      1,369        1,404        1,341           -63             -4%
      Health and Human Services..........................................................     14,120       14,732       15,198           466              3%
      NASA...............................................................................      2,213        2,584        2,324          -260            -10%
      Energy.............................................................................      2,556        2,750        2,664           -86             -3%
      National Science Foundation........................................................      3,422        3,551        3,642            91              3%
      Agriculture........................................................................        867          914          783          -131            -14%
      Homeland Security..................................................................         47           47          153           106            226%
      Commerce...........................................................................         54           57           83            26             46%
      Veterans Affairs...................................................................        327          332          308           -24             -7%
      Transportation.....................................................................         23           20           40            20            100%
      Interior...........................................................................         41           40           38            -2             -5%
      Environmental Protection Agency....................................................         97           79           91            12             15%
      Other..............................................................................        170          165          182            17             10%
                                                                                          ------------------------------------------------------------------
        Subtotal.........................................................................     25,306       26,675       26,847           172            0.6%

    Applied Research
      Defense............................................................................      4,252        4,425        3,828          -597            -13%
      Health and Human Services..........................................................     11,982       13,174       13,522           348              3%
      NASA...............................................................................      3,192        3,052        3,122            70              2%
      Energy.............................................................................      2,656        3,020        3,395           375             12%
      National Science Foundation........................................................        218          211          220             9              4%
      Agriculture........................................................................        974        1,049          888          -161            -15%
      Homeland Security..................................................................         92          124          278           154            124%
      Commerce...........................................................................        910          891          838           -53             -6%
      Veterans Affairs...................................................................        451          450          425           -25             -6%
      Transportation.....................................................................        405          398          455            57             14%
      Interior...........................................................................        547          584          560           -24             -4%
      Environmental Protection Agency....................................................        366          361          346           -15             -4%
      Other..............................................................................        579          609          617             8              1%
                                                                                          ------------------------------------------------------------------
        Subtotal.........................................................................     26,624       28,348       28,494           146            0.5%

    [[Page 60]]

    Development
      Defense............................................................................     53,172       59,603       64,622         5,019              8%
      Health and Human Services..........................................................        160          140          386           246            176%
      NASA...............................................................................      2,963        2,994        3,247           253              8%
      Energy.............................................................................      1,946        1,956        1,840          -116             -6%
      National Science Foundation........................................................  .........  ...........  ...........  ............             N/A
      Agriculture........................................................................        145          152          142           -10             -7%
      Homeland Security..................................................................        549          794          750           -44             -6%
      Commerce...........................................................................        135          128           53           -75            -59%
      Veterans Affairs...................................................................         41           42           39            -3             -7%
      Transportation.....................................................................        254          270          235           -35            -13%
      Interior...........................................................................         53           48           47            -1             -2%
      Environmental Protection Agency....................................................        105          135          140             5              4%
      Other..............................................................................        460          311          228           -83            -27%
                                                                                          ------------------------------------------------------------------
        Subtotal.........................................................................     59,983       66,573       71,729         5,156              8%

    Facilities and Equipment
      Defense............................................................................         45           52           65            13             25%
      Health and Human Services..........................................................      1,149          229          275            46             20%
      NASA...............................................................................      2,313        2,263        2,615           352             16%
      Energy.............................................................................      1,154        1,109          994          -115            -10%
      National Science Foundation........................................................        332          353          390            37             10%
      Agriculture........................................................................        348          193          292            99             51%
      Homeland Security..................................................................         49           88           35           -53            -60%
      Commerce...........................................................................        101           50          101            51            102%
      Veterans Affairs...................................................................  .........  ...........  ...........  ............             N/A
      Transportation.....................................................................         19           13           19             6             46%
      Interior...........................................................................          2            3            3  ............  ..............
      Environmental Protection Agency....................................................  .........  ...........  ...........  ............             N/A
      Other..............................................................................         14            7            7  ............  ..............
                                                                                          ------------------------------------------------------------------
        Subtotal.........................................................................      5,526        4,360        4,796           436             10%
    --------------------------------------------------------------------------------------------------------------------------------------------------------

    [[Page 61]]

                                                        Table 5-3.  FEDERAL SCIENCE AND TECHNOLOGY BUDGET
                                                         (Budget authority, dollar amounts in millions)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                   Dollar         Percent
                                                                                   2001       2003        2004         2005        Change:     Change:  2004
                                                                                  Actual     Actual     Estimate     Proposed   2004 to 2005      to 2005
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    By Agency

    National Institutes of Health.............................................     20,361     27,066       27,878       28,607           729              3%
    NASA \1\..................................................................      6,945      7,276        9,249        9,373           124              1%
      Space Science...........................................................      2,609      3,531        3,971        4,068            97              2%
      Earth Science...........................................................      1,762      1,717        1,613        1,485          -128             -8%
      Biological & Physical Research..........................................        362        883          985        1,049            64              6%
      Aeronautics Technology..................................................        975      1,145        1,034          919          -115            -11%
      Exploration Systems and Crosscutting Technology  \2\....................      1,237      1,741        1,646        1,852           206             13%

    National Science Foundation...............................................      4,431      5,323        5,578        5,745           167              3%

    Energy \3\................................................................      4,886      5,208        5,494        5,378          -116             -2%
      Science Programs........................................................      3,218      3,307        3,484        3,432           -52             -1%
      Energy Supply: Renewables...............................................        312        322          357          375            18              5%
      Energy Supply: Electricity Transmission & Distribution \4\..............         56         88           81           91            10             12%
      Energy Supply: Nuclear Energy...........................................        238        258          292          300             8              3%
      Energy Conservation \5\.................................................        619        612          607          544           -63            -10%
      Fossil Energy \6\.......................................................        443        621          673          636           -37             -5%

    Defense...................................................................      4,944      5,621        5,829        5,169          -660            -11%
      Basic Research..........................................................      1,271      1,369        1,404        1,341           -63             -4%
      Applied Research........................................................      3,673      4,252        4,425        3,828          -597            -13%

    Agriculture...............................................................      1,885      1,988        2,048        1,865          -183             -9%
      CSREES Research & Education \7\.........................................        514        626          629          516          -113            -18%
      Economic Research Service...............................................         69         69           71           80             9             13%
      Agricultural Research Service \8\.......................................        936      1,043        1,082          988           -94             -9%
      Mandatory IFAFS \9\.....................................................        120  .........  ...........  ...........  ............             N/A
      Forest Service \10\.....................................................        246        250          266          281            15              6%

    Interior (USGS)...........................................................        884        919          938          920           -18             -2%

    Commerce..................................................................        817        974          965          832          -133            -14%
      NOAA (Oceanic & Atmospheric Research)...................................        325        372          393          350           -43            -11%
      NIST Intramural Research and Facilities.................................        347        423          401          482            81             20%
      NIST Advanced Technology Program........................................        145        179          171  ...........          -171           -100%

    Veterans Affairs \11\.....................................................        719        818          820          770           -50             -6%

    Environmental Protection Agency \12\......................................        746        801          826          725          -101            -12%

    Transportation............................................................        521        655          683          659           -24             -4%
      Highway research \13\...................................................        387        508          564          542           -22             -4%
      Aviation research \14\..................................................        134        147          119          117            -2             -2%

    Education.................................................................        363        325          350          370            20              6%
      Special Education Research and Innovation...............................         77         77           78           78  ............  ..............
      NIDRR \15\..............................................................        100        109          107          107  ............  ..............
      Research, Development, and Dissemination \16\...........................        186        139          165          185            20             12%
                                                                               -----------------------------------------------------------------------------
      Total...................................................................     47,502     56,974       60,658       60,413          -245           -0.4%
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ All years normalized to reflect 2003 transfers of funding for Space Station research facilities, space communications activities, and associated
      institutional support from human space flight.
    \2\ Includes Integrated Technology Transfer Partnerships, Mission and Science Measurement Technology, and the Space Launch Initiative.
    \3\ 2001 and 2003 data reflect transfers to Science Programs from other Department of Energy R&D programs to support the Small Business Innovation
      Research program and the Small Business Technology Transfer program.
    \4\ This office was created in 2004. Data for 2001 and 2003 reflect funding for these activities from within the Renewable budget, which has been
      adjusted accordingly.
    \5\ Excludes weatherization and state grant programs.
    \6\ Enacted and requested levels exclude balances transferred from the Clean Coal Technology program for activities in 2003 ($40 million), and 2004 ($14
      million). No transfers in 2005.
    \7\ Includes Receipts for Native American Endowment: $7 million in 2003; $9 million in 2004; $12 million in 2005.
    \8\ Excludes buildings and facilities.
    \9\ Initiative for Future Agriculture and Food Systems.
    \10\ Forest and Rangeland Research.
    \11\ The VA research program budget has been restructured to include the research appropriation and VA medical care support transfer to research. This
      table shows resources under the revised budget structure.
    \12\ Science and Technology, plus superfund transfer. The 2003 superfund transfer includes homeland resources for building decontamination research.
    \13\ Includes research and development funding for the Federal Highway Administration, the Federal Motor Carrier Safety Administration, and the National
      Highway Traffic Safety Administration.
    \14\ Includes Federal Aviation Administration Research, Engineering, and Development.
    \15\ National Institute on Disability and Rehabilitation Research.
    \16\ Does not include funding for Regional Educational Labs.

    [[Page 62]]

                                                  Table 5-4.  AGENCY DETAIL OF SELECTED INTERAGENCY R&D EFFORTS
                                                         (Budget authority, dollar amounts in millions)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                   Dollar         Percent
                                                                                              2003        2004         2005        Change:     Change:  2004
                                                                                             Actual     Estimate     Proposed   2004 to 2005      to 2005
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Networking and Information Technology R&D
      National Science Foundation........................................................        743          754          761             7              1%
      Health and Human Services \1\......................................................        376          368          371             3              1%
      Energy.............................................................................        308          344          354            10              3%
      National Aeronautics and Space Administration......................................        213          275          259           -16             -6%
      Defense............................................................................        296          252          226           -26            -10%
      Commerce...........................................................................         26           26           33             7             27%
      Environmental Protection Agency....................................................          2            4            4  ............  ..............
                                                                                          ------------------------------------------------------------------
      Total..............................................................................      1,964        2,023        2,008           -15             -1%

    National Nanotechnology Initiative
      National Science Foundation........................................................        221          254          305            51             20%
      Energy.............................................................................        134          203          211             8              4%
      Defense............................................................................        220          218          180           -38            -17%
      National Institutes of Health......................................................         78           80           89             9             11%
      Commerce (NIST)....................................................................         64           63           53           -10            -16%
      National Aeronautics and Space Administration......................................         36           37           35            -2             -5%
      Agriculture........................................................................  .........            1            5             4            400%
      Environmental Protection Agency....................................................          5            5            5  ............  ..............
      Justice............................................................................          1            2            2  ............  ..............
      Homeland Security (TSA)............................................................          1            1            1  ............  ..............
                                                                                          ------------------------------------------------------------------
      Total..............................................................................        760          864          886            22              3%

    Climate Change Science Program
      National Aeronautics and Space Administration......................................      1,146        1,334        1,271           -63             -5%
      National Science Foundation........................................................        202          213          210            -3             -1%
      Commerce (NOAA)....................................................................        117          130          142            12              9%
      Energy.............................................................................        120          133          134             1              1%
      Agriculture........................................................................         68           67           74             7             10%
      National Institutes of Health......................................................         59           61           61  ............  ..............
      Interior (USGS)....................................................................         26           28           29             1              4%
      Environmental Protection Agency....................................................         19           22           21            -1             -5%
      Smithsonian........................................................................          6            6            6  ............  ..............
      U.S. Agency for International Development..........................................          6            6            6  ............  ..............
      Transportation.....................................................................  .........  ...........            3             3             N/A
      State..............................................................................  .........            1            1  ............  ..............
                                                                                          ------------------------------------------------------------------
      Total..............................................................................      1,769        2,001        1,958           -43             -2%
                                                                                          ------------------------------------------------------------------
      Subtotal, CCRI \2\ (included in CCSP total)........................................         41          168          238            70             42%
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ Includes funds from offsetting collections for the Agency for Healthcare Research and Quality.
    \2\ Climate Change Research Initiative.