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

    [[Page 43]]

                           5. RESEARCH AND DEVELOPMENT

      During the past five years the U.S. economy has shown remarkable
    resilience and vitality. Economic growth is now steady and strong.
    Incomes are rising, household net worth is at an all-time high, and
    unemployment is low and continues to decline. Meanwhile inflation
    remains in check, largely because of record sustained productivity
    growth--averaging a 3.4 percent annual rate for the past half-decade.
      Our prosperity is no accident. The U.S. economy owes its strength in
    large measure to its willingness to build innovation capacity through
    the creation and growth of a world-class science and technology research
    enterprise and a high-quality scientific and technical education
    infrastructure. The relationship between support for science and
    economic growth is well documented. Investments in basic research lead
    to knowledge breakthroughs that fuel innovation, drive productivity,
    grow the economy, and change the way we see the world. Economists
    estimate that approximately half of post-World War II economic growth is
    directly due to technological progress fueled by research and
    development (R&D).
      Economic payoffs to research come in the form of process and product
    innovations that reduce the costs of production, lower product prices,
    and result in new and better products and services. Consumers ultimately
    benefit from less expensive, higher quality and more useful products and
    services, and of course from earnings accruing to innovative companies.
    Today's transforming technologies and most popular consumer items have
    deep roots in basic and applied research.
      By nearly every relevant metric, the U.S. leads the world in science
    and technology. With only about five percent of the world's population,
    the U.S. employs nearly one-third of all scientists and engineers and
    accounts for approximately one-third of global R&D spending (more than
    the rest of the G-8 nations combined), and U.S. researchers publish 35
    percent of global science and engineering articles.
      To sustain the nation's economic competitiveness, the President has
    called for a long-term vision to strengthen Federal support for the
    Nation's innovation enterprise in an integrated package of investments
    and policies in the American Competitiveness Initiative.

    [[Page 44]]

                   I.  THE AMERICAN COMPETITIVENESS INITIATIVE

      The centerpiece of the American Competitiveness Initiative in the
    President's 2007 Budget is a strong commitment to invest in basic
    research areas that advance knowledge and technologies used by
    scientists in nearly every field. Through the American Competitiveness
    Initiative, President Bush plans to double, over 10 years, investment in
    innovation-enabling research at three Federal agencies--the National
    Science Foundation (NSF), the Department of Energy's (DOE's) Office of
    Science, and the Department of Commerce's National Institute of Science
    and Technology (NIST) laboratories.
      In 2007, the first year of the American Competitiveness Initiative,
    President Bush proposes $10.7 billion total for these agencies, an
    overall funding increase of $910 million, or 9.3 percent, above 2006. To
    reach doubling within ten years, overall annual increases will average
    roughly seven percent.
    ------------------------------------------------------------------------

                              Research Agencies in the American Competitiveness Initiative

    The National Science Foundation is the primary source of support for academic research in the physical sciences,
     funding potentially transformative basic research in areas such as nanotechnology, advanced networking and
     information technology, physics, chemistry, materials science, mathematics, and engineering. It is well
     regarded for management of funding through a competitive, peer-reviewed process. The increase in NSF funding is
     expected to support as many as 500 more research grants in 2007 and 6,400 additional researchers, students,
     post-doctoral fellows and technicians contributing to the innovation enterprise.

    The Department of Energy's Office of Science supports grants and infrastructure for a wide range of basic
     research related to economically significant innovations including nanotechnology, biotechnology, high-end
     computing and advanced networking, and energy technologies. In addition to supporting 2,600 (10 percent) more
     researchers in 2007 than in 2006, the initiative provides for the construction of a number of cutting-edge
     scientific research tools with direct implications for economically-relevant R&D, including the world's most
     powerful civilian supercomputer and an x-ray light source user facility with world-leading capabilities to
     study materials, chemicals, and biological matter at the scale of an individual atom.

    The Department of Commerce's National Institute of Standards and Technology is a high-leverage Federal research
     agency that supports economically significant innovations such as new materials and processes, electronics,
     computing and information technologies, advanced manufacturing integration, biotechnology, new energy sources
     such as hydrogen, and nanotechnology. NIST also plays a critical role in supporting standards development
     activities that are used by industry and government agencies.

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

                 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, every Federal R&D
    dollar must be invested as effectively as possible.

                             R&D Investment Criteria

      The Administration continues to improve 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.
      With this in mind, the Administration is improving methods for setting
    priorities based on expected results, and is asking agencies to apply
    specific criteria that programs or projects must meet to be started or
    continued and supply 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.

    [[Page 45]]

      As part of the President's Management Agenda's Budget and Performance
    Integration initiative, the Administration uses 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 four years, agencies completed 795 PART
    assessments, of which 102 were for R&D programs. The results of these
    PART assessments may be found on the web at www.whitehouse.gov/omb/
    part/.
      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.

      R&D agencies will continue to integrate the R&D Criteria more
    meaningfully into the budget formulation process in the coming year.
    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 2006, 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 maintains momentum,
     as more R&D agencies use the criteria to assess their programs. All of the top 13 R&D agencies are using the
     R&D PART to assess their programs this year.

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

    [[Page 46]]

                                Research Earmarks

      The Administration strongly supports awarding research funds based on
    merit review through a competitive process refereed by scientists. Such
    a system has the best prospects for ensuring that the top research is
    supported. Research earmarks--in general the assignment of money during
    the legislative process for use 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. Such an alternative can be an ineffective use of taxpayer
    funds.
      Unfortunately, the practice of earmarking funds 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
    $2.4 billion in 2006, an increase of 13 percent over the Association's
    2005 estimate. The AAAS uses a relatively narrow definition of an R&D
    earmark. Other organizations have estimated even higher levels of R&D
    earmarking.
      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 has reported 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.
      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 ``out-of-the-box''
    thinking. 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 NSF set aside a share of funding
    for higher-risk projects in which they see high potential.
      Earmarks that are outside of an agency's mission can detract from an
    efficient and effective Federal effort on behalf of taxpayers. For
    instance, the Congress directed DOD to fund research on a wide range of
    diseases including ovarian cancer, prostate cancer, diabetes, leukemia,
    and childhood cancer. Congressional adds in DOD's budget for medical
    research projects totals about $900 million in 2006 alone. While
    research on these diseases is very important, it is generally not unique
    to the U.S. military and can be better selected, 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.
      Earmarks that divert funding from a merit-based process will undermine
    America's research productivity. The Administration commends Congress
    for taking measures to protect NSF and the National Institutes of Health
    from this practice, which is a practice that should be followed
    throughout the R&D programs.

              III.  PRIORITIES FOR FEDERAL RESEARCH AND DEVELOPMENT

      The 2007 Budget requests $137 billion for Federal R&D funding, which
    targets key research investments within agencies such as NSF, the DOE's
    Office of Science, and the Department of Commerce's National Institute
    of Standards and Technology laboratories. (Table 5-1 provides details by
    agency).
      The ``Federal Science and Technology'' (FS&T) budget (shown in Table
    5-2) highlights the creation of new knowledge and technologies more
    consistently and accurately than overall 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 2007 Budget requests $60 billion for FS&T.

                           Multi-Agency R&D Priorities

      The 2007 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 improving cybersecurity. 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: Significant advances in securing the homeland
    and winning the war on terror have been made over the past few years
    through the focused application of the Nation's science and technology
    capability. Challenges remain, however, a number of which are being
    addressed through multi-agency research efforts that are coordinated
    through the National Science and Technology Council (NSTC) and other
    inter-agency fora.
      In 2005, multi-agency R&D funding efforts made significant progress
    towards increasing the security of the homeland. A key example is the
    formation of the Domestic Nuclear Detection Office (DNDO). DNDO has the
    primary responsibility for developing a comprehensive system to detect
    and mitigate any attempt to illicitly import, assemble or transport a
    nuclear explosive device or its components into the U.S. To accomplish
    this mission, DNDO coordinates and draws upon the R&D expertise of key
    departments and agencies. An interagency group led by the Office of
    Science and Technology Policy has continued to support these and other
    related efforts by generating a long-term nuclear secu

    [[Page 47]]

    rity R&D vision and roadmap. In another example, interagency research
    programs such as the Face Recognition Grand Challenge are advancing core
    biometrics technologies and enhancing our understanding of the critical
    nexus between technical and privacy considerations.
      The 2007 Budget provides continued support for these and many other
    homeland security related research areas, including R&D aimed at:
    finding and applying quick and cost-effective decontamination
    capabilities following a biological, chemical, nuclear or radiological
    incident; strengthening predictive modeling capabilities to augment our
    ability to assess the rate of geographic spread of infectious diseases
    or chemical agents or predict the impact of key policy decisions on
    factors affecting disease transmission; enhancing the safety of the
    Nation's food supply and agricultural systems through research directed
    at the epidemiology and ecology of emerging plant and animal diseases,
    and the development of more effective vaccine and diagnostic
    technologies; and enhancing cyber security through the Networking and
    Information Technology R&D program.
      Networking and Information Technology R&D: The Budget provides $3
    billion for the multi-agency Networking and Information Technology
    Research and Development (NITRD) Program, which plans and coordinates
    agency research efforts in high-end computing systems, large-scale
    networking, software development, high-confidence systems, information
    management, cyber security, and other information technologies. The
    agencies involved in this program coordinate efforts to accelerate
    research advancement in information technology, upon which every
    economic sector now depends.
      In 2005, agencies participating in high-end computing R&D continued to
    make significant progress in implementing the recommendations contained
    in the Federal Plan for High-End Computing. The 2007 Budget provides for
    substantially increased activities in Leadership Class Computing by both
    DOE and NSF, one of the priorities contained in the Federal Plan.
    Relevant agencies will continue to conduct research in scalable systems
    software and applications to ensure that Federal investments in high-end
    computing achieve maximal impact.
      Participating agencies will broaden their R&D activities in cyber
    security and information assurance, continuing to emphasize interagency
    coordination. For example, the Interagency Working Group (IWG) that
    coordinates R&D on information technology infrastructure protection was
    incorporated as part of the NITRD program in 2005, strengthening the
    connection between cyber security R&D and overall infrastructure
    protection. After completion of the Federal Plan for Cyber Security and
    Information Assurance R&D, the IWG will develop a roadmap for addressing
    any identified R&D gaps. Reports and general information about NITRD are
    available at www.nitrd.gov/.
      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 are
    already leading 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 scientific research community. 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. Reports and general
    information about the NNI are available at www.nano.gov/.
      Climate Change R&D: The 2007 Budget for the Climate Change Science
    Program (CCSP) continues to support the implementation of the CCSP
    Strategic Plan, which was released in July 2003. The 13 departments and
    agencies that participate in CCSP coordinate preparation of the budget
    and program implementation. During 2007, CCSP will continue research
    into important scientific uncertainties and preparation of a series of
    Synthesis and Assessment reports. The program expects to receive input
    from the National Research Council under the terms of a continuing
    advisory agreement. CCSP will continue to track 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 2007 edition of Our Changing Planet.
    Reports and general information about CCSP are available on the
    program's website: www.climatescience.gov/.
      The Climate Change Technology Program (CCTP) continues to provide
    strategic direction and planning to help coordinate and prioritize
    activities within 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 published a Vision and
    Framework for Strategy and Planning and released a draft Strategic Plan
    for review by the scientific community and the public. In 2006, the CCTP
    will address the nearly 300 comments received and publish a final
    Strategic Plan. The CCTP has also identified 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. Reports and general information
    about the CCTP are available on the program's website:
    www.climatetechnology.gov/.

    [[Page 48]]

      The CCSP and CCTP will coordinate implementation of relevant climate
    change provisions in the 2005 Energy Policy Act as appropriate.
      Hydrogen R&D: In 2005, the Hydrogen R&D Interagency Task Force led
    interagency coordination in hydrogen-related manufacturing and
    innovation, safety, codes and standards, and fundamental research on
    fuel cells, hydrogen production, and hydrogen storage. The Task Force
    established a web portal (www.hydrogen.gov) for hydrogen and fuel cell
    information. Additionally, the Task Force works with the International
    Partnership for the Hydrogen Economy, which coordinates 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 a 54-percent
    increase in targeted basic research investments in 2007, 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. To keep FreedomCAR on track, it will be
    essential that Congress refrain from earkmarking this program.

                         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. A long-standing credit that expired at the end of 2005
    provided a 20-percent tax credit for private research and
    experimentation expenditures above a certain base amount. The
    Administration proposes extending the Research and Experimentation tax
    credit starting 2006 and making it permanent. The proposed extension
    will cost $33.4 billion over the period from 2007 to 2011. 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.

                              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 the Office of Management and Budget
    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 5-1 shows
    agency-by-agency spending on basic and applied research, development,
    and R&D equipment and facilities.

    [[Page 49]]

                                                          Table 5-1.  FEDERAL RESEARCH AND DEVELOPMENT
                                                         (Budget authority, dollar amounts in millions)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                   Dollar         Percent
                                                                                              2005        2006         2007        Change:     Change:  2006
                                                                                             Actual     Estimate     Proposed   2006 to 2007      to 2007
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    By Agency
      Defense............................................................................     69,743       71,946       74,234         2,288              3%
      Health and Human Services..........................................................     28,687       28,767       28,737           -30              0%
      NASA...............................................................................     10,197       11,394       12,245           851              7%
      Energy.............................................................................      8,596        8,563        9,158           595              7%
      National Science Foundation........................................................      4,138        4,199        4,548           349              8%
      Agriculture........................................................................      2,410        2,411        2,012          -399            -17%
      Homeland Security..................................................................      1,182        1,484        1,508            24              2%
      Commerce...........................................................................      1,133        1,079        1,065           -14             -1%
      Veteran Affairs....................................................................        742          765          765  ............  ..............
      Interior...........................................................................        622          637          600           -37             -6%
      Transportation.....................................................................        549          704          557          -147            -21%
      Environmental Protection Agency....................................................        640          600          557           -43             -7%
      Other..............................................................................      1,235        1,232        1,218           -14             -1%
                                                                                          ------------------------------------------------------------------
        Total............................................................................    129,874      133,781      137,204         3,423              3%

    Basic Research
      Defense............................................................................      1,485        1,470        1,422           -48             -3%
      Health and Human Services..........................................................     15,752       15,996       16,037            41              0%
      NASA...............................................................................      2,386        2,305        2,226           -79             -3%
      Energy.............................................................................      2,937        2,987        3,315           328             11%
      National Science Foundation........................................................      3,427        3,478        3,687           209              6%
      Agriculture........................................................................        838          846          771           -75             -9%
      Homeland Security..................................................................         55           95           49           -46            -48%
      Commerce...........................................................................         53           56           87            31             55%
      Veteran Affairs....................................................................        297          306          306  ............  ..............
      Interior...........................................................................         36           42           40            -2             -5%
      Transportation.....................................................................         33           39           39  ............  ..............
      Environmental Protection Agency....................................................        110          101           94            -7             -7%
      Other..............................................................................        155          169          174             5              3%
                                                                                          ------------------------------------------------------------------
        Subtotal.........................................................................     27,564       27,890       28,247           357              1%

    Applied Research
      Defense............................................................................      4,787        5,169        4,478          -691            -13%
      Health and Human Services..........................................................     12,573       12,605       12,540           -65             -1%
      NASA...............................................................................      1,957        1,759        1,118          -641            -36%
      Energy.............................................................................      2,770        2,730        2,723            -7              0%
      National Science Foundation........................................................        332          319          379            60             19%
      Agriculture........................................................................      1,124        1,157          974          -183            -16%
      Homeland Security..................................................................        842        1,093          943          -150            -14%
      Commerce...........................................................................        813          779          769           -10             -1%
      Veteran Affairs....................................................................        401          414          414  ............  ..............
      Interior...........................................................................        533          545          510           -35             -6%
      Transportation.....................................................................        304          392          305           -87            -22%
      Environmental Protection Agency....................................................        415          387          359           -28             -7%
      Other..............................................................................        587          591          594             3              1%
                                                                                          ------------------------------------------------------------------
        Subtotal.........................................................................     27,438       27,940       26,106        -1,834             -7%

    Development
      Defense............................................................................     63,336       65,221       68,315         3,094              5%
      Health and Human Services..........................................................         57           37           37  ............  ..............
      NASA...............................................................................      3,494        5,174        6,755         1,581             31%
      Energy.............................................................................      1,759        1,804        1,990           186             10%
      National Science Foundation........................................................  .........  ...........  ...........  ............             N/A
      Agriculture........................................................................        156          164          155            -9             -5%
      Homeland Security..................................................................        133          195          335           140             72%
      Commerce...........................................................................        148          118           94           -24            -20%
      Veteran Affairs....................................................................         44           45           45  ............  ..............
      Interior...........................................................................         50           47           47  ............  ..............
      Transportation.....................................................................        194          255          194           -61            -24%
      Environmental Protection Agency....................................................        115          112          104            -8             -7%
      Other..............................................................................        461          424          409           -15             -4%
                                                                                          ------------------------------------------------------------------
        Subtotal.........................................................................     69,947       73,596       78,480         4,884              7%

    Facilities and Equipment
      Defense............................................................................        135           86           19           -67            -78%
      Health and Human Services..........................................................        305          129          123            -6             -5%

    [[Page 50]]

      NASA...............................................................................      2,360        2,156        2,146           -10              0%
      Energy.............................................................................      1,130        1,042        1,130            88              8%
      National Science Foundation........................................................        379          402          482            80             20%
      Agriculture........................................................................        292          244          112          -132            -54%
      Homeland Security..................................................................        152          101          181            80             79%
      Commerce...........................................................................        119          126          115           -11             -9%
      Transportation.....................................................................  .........  ...........  ...........  ............             N/A
      Veterans Affairs...................................................................          3            3            3  ............             N/A
      Interior...........................................................................         18           18           19             1              6%
      Environmental Protection Agency....................................................  .........  ...........  ...........  ............             N/A
      Other..............................................................................         32           48           41            -7            -15%
                                                                                          ------------------------------------------------------------------
        Subtotal.........................................................................      4,925        4,355        4,371            16              0%
    --------------------------------------------------------------------------------------------------------------------------------------------------------

    [[Page 51]]

                                    Table 5-2.  FEDERAL SCIENCE AND TECHNOLOGY BUDGET
                                     (Budget authority, dollar amounts in millions)
    ----------------------------------------------------------------------------------------------------------------
                                                                                              Dollar
                                                           2005       2006        2007       Change:       Percent
                                                          Actual    Estimate    Proposed     2006 to       Change:
                                                                                               2007     2006 to 2007
    ----------------------------------------------------------------------------------------------------------------
    By Agency
    National Institutes of Health \1\.................     28,444     28,410       28,428           18            0%
    NASA..............................................      8,128      7,680        7,073         -607           -8%
      Science.........................................      5,502      5,254        5,330           76            1%
      Aeronautics.....................................        962        884          724         -160          -18%
      Exploration Systems \2\.........................      1,664      1,542        1,019         -523          -34%
    Energy \3\........................................      5,642      5,636        6,155          519            9%
      Science Programs................................      3,600      3,596        4,102          506           14%
      Electricity Transmission & Distribution.........        101        136           96          -40          -29%
      Nuclear Energy..................................        393        416          559          143           34%
      Energy Efficiency and Renewable Energy Resources        976        896          933           37            4%
       \4\............................................
      Fossil Energy \5\...............................        572        592          465         -127          -21%
    National Science Foundation.......................      5,472      5,581        6,020          439            8%
    Defense...........................................      6,273      6,628        5,900         -728          -11%
      Basic Research..................................      1,485      1,470        1,422          -48           -3%
      Applied Research................................      4,788      5,158        4,478         -680          -13%
    Agriculture.......................................      2,111      2,160        1,921         -239          -11%
      CSREES Research and Education \6\...............        659        675          569         -106          -16%
      Economic Research Service.......................         74         75           83            8           11%
      Agricultural Research Service \7\...............      1,102      1,131        1,001         -130          -11%
      Forest Service: Forest and Rangeland Research...        276        279          268          -11           -4%
    Interior (USGS)...................................        935        962          945          -17           -2%
    Commerce..........................................        855        938          873          -65           -7%
      NOAA: Oceanic & Atmospheric Research............        404        370          338          -32           -9%
      NIST Intramural Research and Facilities.........        451        568          535          -33           -6%
    Environmental Protection Agency \8\...............        780        761          816           55            7%
    Veterans Affairs \9\..............................        743        765          765  ...........  ............
    Transportation....................................        542        567          598           31            5%
      Highway research: Federal Highway Administration        411        430          468           38            9%
      Federal Aviation Administration: Research,              131        137          130           -7           -5%
       Engineering, and Development...................
    Education.........................................        355        342          342  ...........  ............
      Special Education Research and Innovation.......         83         72           72  ...........  ............
      National Institute on Disability and                    108        107          107  ...........  ............
       Rehabilitation Research........................
      Research, Development, and Dissemination \10\...        164        163          163  ...........  ............
                                                       -------------------------------------------------------------
    Total.............................................     60,280     60,430       59,836         -594           -1%
    ----------------------------------------------------------------------------------------------------------------
    \1\ In 2006, the Department of Health and Human Services will allocate an additional $18 million to NIH for
      Pandemic Influenza research from the Department of Defense Emergency Supplemental Appropriations to Address
      Hurricanes in the Gulf of Mexico, and Pandemic Influenza Act, 2006.
    \2\ Includes Exploration Systems Research and Technology, Human Systems Research and Technology, Innovative
      Partnerships, and Prometheus Nuclear Systems and Technology.
    \3\ 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.
    \4\ In 2006, Congress merged the Energy Supply and Energy Conservation accounts. The amount reported under the
      new Energy Efficiency and Renewable Energy Resources line within this account reflects a combination of the
      former Energy Conservation line item (excluding Weatherization and State grants) and the Renewables line item.
    \5\ Excludes funding for the Alaska Natural Gas Pipeline project.
    \6\ Includes the appropriation of earnings from the Native American Endowment Fund, but not the appropriation to
      the Endowment's principal.
    \7\ Excludes building and facilities. Also excludes the transfer of $6 million from the account.
    \8\ Science and Technology, plus superfund transfer.
    \9\ Includes the medical care and prosthetic research appropriation and VA medical care support transfer to
      research.
    \10\ Does not include funding for Regional Educational Labs.

    [[Page 52]]

                                                  Table 5-3.  AGENCY DETAIL OF SELECTED INTERAGENCY R&D EFFORTS
                                                         (Budget authority, dollar amounts in millions)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                   Dollar         Percent
                                                                                              2005        2006         2007        Change:     Change:  2006
                                                                                             Actual     Estimate     Proposed   2006 to 2007      to 2007
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Networking and Information Technology R&D
      Defense \1\........................................................................        775        1,128        1,018          -110            -10%
      National Science Foundation........................................................        811          810          904            94             12%
      Health and Human Services \2\......................................................        571          551          541           -10             -2%
      Energy.............................................................................        377          384          473            89             23%
      National Aeronautics and Space Administration......................................        163           78           82             4              5%
      Commerce...........................................................................         60           60           65             5              8%
      Environmental Protection Agency....................................................          4            6            6  ............  ..............
                                                                                          ------------------------------------------------------------------
        Total............................................................................      2,761        3,017        3,089            72              2%

    National Nanotechnology Initiative
      National Science Foundation........................................................        335          344          373            29              8%
      Defense \1\........................................................................        352          435          345           -90            -21%
      Energy.............................................................................        208          207          258            51             25%
      Health and Human Services \3\......................................................        168          175          173            -2             -1%
      Commerce (NIST)....................................................................         79           76           86            10             13%
      National Aeronautics and Space Administration......................................         45           50           25           -25            -50%
      Environmental Protection Agency....................................................          7            5            9             4             80%
      Agriculture........................................................................          3            5            5  ............  ..............
      Justice............................................................................          2            1            1             0              0%
      Homeland Security..................................................................          1            1  ...........            -1           -100%
                                                                                          ------------------------------------------------------------------
        Total............................................................................      1,200        1,299        1,275           -24             -2%

    Climate Change Science Program
      National Aeronautics and Space Administration......................................      1,237        1,043        1,025           -18             -2%
      National Science Foundation........................................................        198          197          205             8              4%
      Commerce (NOAA)....................................................................        124          163          186            23             14%
      Energy.............................................................................        127          131          126            -5             -4%
      Agriculture........................................................................         62           62           61            -1             -2%
      National Institutes of Health......................................................         57           57           57  ............  ..............
      Interior (USGS)....................................................................         27           27           26            -1             -4%
      Environmental Protection Agency....................................................         20           19           17            -2            -11%
      Smithsonian........................................................................          6            6            6  ............  ..............
      U.S. Agency for International Development..........................................          6            6            6  ............  ..............
      Transportation.....................................................................          3            2            2  ............  ..............
      State..............................................................................          1  ...........  ...........  ............  ..............
                                                                                          ------------------------------------------------------------------
        Total............................................................................      1,868        1,713        1,717             4              0%
                                                                                          ------------------------------------------------------------------
        Subtotal, CCRI (included in CCSP total)..........................................        211          200          200             0              0%
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ In 2005, DOD reviewed its contributions to NITRD and NNI and produced a more comprehensive and accurate accounting of the Department's funding of
      those activities. Accordingly, the funding levels shown in this table are larger than those shown in previous years.
    \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.