[Senate Report 106-106]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 205
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-106
_______________________________________________________________________



                    FEDERAL RESEARCH INVESTMENT ACT

                               __________

                              R E P O R T

                                 OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                    on

                                 S. 296



                                     

                 July 12, 1999.--Ordered to be printed

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
69-010                     WASHINGTON : 1999


       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       one hundred sixth congress

                             first session

                     JOHN McCAIN, Arizona, Chairman

TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             JOHN D. ROCKEFELLER IV, West 
TRENT LOTT, Mississippi              Virginia
KAY BAILEY HUTCHISON, Texas          JOHN F. KERRY, Massachusetts
OLYMPIA SNOWE, Maine                 JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri              RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee                BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan            RON WYDEN, Oregon
SAM BROWNBACK, Kansas                MAX CLELAND, Georgia

                       Mark Buse, Staff Director

                  Martha P. Allbright, General Counsel

     Ivan A. Schlager, Democratic Chief Counsel and Staff Director

               Kevin D. Kayes, Democratic General Counsel

                                  (ii)
                                                       Calendar No. 205
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-106

======================================================================



 
                    FEDERAL RESEARCH INVESTMENT ACT

                                _______
                                

                 July 12, 1999.--Ordered to be printed

                                _______


       Mr. McCain, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                         [To accompany S. 296]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 296) ``A bill to provide for 
continuation of the Federal research investment in a fiscally 
sustainable way, and for other purposes'', having considered 
the same, reports favorably thereon with an amendments and 
recommends that the bill (as amended) do pass.

                          PURPOSE OF THE BILL

  The purpose of the bill, as reported, is to provide for the 
continuation of the Federal research investment in a fiscally 
sustainable way.

                          BACKGROUND AND NEEDS

  Technical innovation is a driving force behind the Nation's 
long-term economic growth and rising standards of living. 
Federal investments in research and development (R&D) have 
resulted in enormous financial and employment growth of the 
private and public sectors. Studies show that 50% of all post- 
World War II economic growth is a direct result of 
technological innovation.
  Contrary to popular belief, the R&D enterprise in the United 
States receives nearly two-thirds (65 percent) of its funding 
from private industry. The Federal government supports much of 
the balance, with the remainder comprised of funding from 
colleges and universities, other non-profit institutions, and 
state and local governments. The role of the Federal government 
is particularly pivotal in funding basic research, supporting 
nearly 60 percent of the national budget for such research at 
both public and private institutions. A comparable portion of 
the applied research performed
in U.S. colleges and universities also is funded Federally. 
Because private sector R&D investments are stimulated 
principally by individual company interests, the Federal 
government's impact on national R&D priorities is profound, 
particularly in areas such as health, space, and national 
defense.
  Since the 1960's, trends in R&D funding have paralleled those 
of overall discretionary spending. Thus, Federal investment in 
R&D has expanded by slow, steady growth. However, increasing 
mandatory spending levels have begun to constrain discretionary 
spending, and to decrease fiscal flexibility for those 
programs. As the discretionary portion of the budget declines 
and spending caps continue to be imposed, R&D programs will 
compete increasingly with funding for public infrastructure, 
housing, social services, education, transportation, and 
military operations. While Federal R&D funding has increased in 
constant dollars from a peak in 1968, outlays have decreased 
from about 11 percent of the total budget in 1966, during the 
buildup for the space program, to less than 3 percent today. As 
a proportion of discretionary spending, outlays have decreased 
from 16 percent in 1966 to about 13 percent today. Budget 
trends continue to demonstrate preferences for selective 
increases in the funding of the National Institutes of Health 
(NIH) and the National Science Foundation (NSF), with constant 
dollar decreases in many other areas.
  The Administration's fiscal year (FY) 2000 R&D budget request 
is $78 billion. Approximately 51 percent of that request is 
designated for civilian programs, with health consuming the 
largest portion and defense programs receiving about 41 
percent. As indicated above, these proposed R&D expenditures 
represent 4.3 percent of the total budget and 13 percent of the 
discretionary allocation. The FY 2000 request represents a 1.7 
percent overall decrease from FY 1999 and includes a 3.6 
percent increase for civilian R&D. The request reflects the 
Administration's priorities in health, energy, commerce, and 
general science, proposing a 6.5 percent increase for NSF, an 
8.3 percent increase for non-defense R&D within the Department 
of Energy (DOE), and a 2.1 percent increase for NIH. The 
proposed budget seeks increases of 0.6 percent for the National 
Aeronautics and Space Administration (NASA) and 38.7 percent 
for the Department of Transportation (DOT). The Environmental 
Protection Agency (EPA) would decrease by 3.5 percent and the 
National Oceanic and Atmospheric Administration would remain 
the same.
  While funding levels are one important consideration for 
Federal R&D programs, another issue is improving the 
effectiveness of such programs. On August 3, 1993, the 
Government Performance and Results Act (GPRA) was signed into 
law. GPRA requires that all Federal agencies move toward 
performance budgeting by the year 2001. The President submitted 
a government-wide performance plan with the FY 2000 budget, and 
individual agencies are submitting performance plans to 
Congress during the FY 2000 authorization and appropriations 
cycle. The General Accounting Office reports that research 
agencies have encountered difficulties in preparing strategic 
plans and in developing performance measures.

                          LEGISLATIVE HISTORY

  On April 16, 1997, April 28, 1998, and April 15, 1999, the 
Subcommittee on Science, Technology, and Space conducted 
hearings on Federal R&D funding. Witnesses included: Dr. Neal 
Lane, Advisor to the President, Office of Science and 
Technology Policy; Senators Phil Gramm, Joseph Lieberman, and 
Jeff Bingaman; Dr. Kerri-Ann Jones, Acting Director, Office of 
Science and Technology Policy; Dr. Judith Rodin, President of 
the University of Pennsylvania; Dr. Albert Teich, Director of 
Science and Policy Programs, American Association for the 
Advancement of Science; and Mr. Dan Peterson, President, DAP & 
Associates. On October 8, 1998, S. 2217, the Federal Research 
Investment Act of 1998 passed the Senate with an amendment by 
unanimous consent. S. 296 is the successor to S. 2217.
  On January 22, 1999, Senators Bill Frist and Jay Rockefeller, 
Chairman and Member of the Commerce Committee's Subcommittee on 
Science, Technology, and Space, introduced S. 296, the Federal 
Research Investment Act. The bill is cosponsored by Senators 
Domenici, Lieberman, Gramm, Bingaman, Burns, Breaux, Moynihan, 
Cleland, Kerry, Kerrey, Allard, Abraham, Boxer, DeWine, Snowe, 
Feinstein, Hutchison, Durbin, Dodd, Cochran, Landrieu, 
Ashcroft, Thompson, Akaka, Robb, Crapo, Sarbanes, Lott, Murray, 
Roberts, Levin, Santorum, Kennedy, Conrad, and Daschle.
  On May 5, 1999, the Committee met in open executive session 
and, by a voice vote, ordered S. 296 to be reported with an 
amendment. The amendment incorporates several suggested changes 
to the bill, makes a number of technical corrections, and 
provides an exclusion clause for any agencies covered by the 
Act that accelerate at a rate above 8 percent. Such an agency 
would be removed from the base calculation until the growth in 
its R&D budget dipped below an annualized goal of 5.5 percent, 
the aggregate annual authorization target for the Act.

                      SUMMARY OF MAJOR PROVISIONS

  Authorization of appropriations. S. 296, as reported, 
authorizes appropriations for the R&D programs of the following 
Federal departments and agencies: the Food and Drug 
Administration (FDA); NIH; NSF; the National Institute of 
Standards and Technology (NIST); NASA; NOAA; the Centers for 
Disease Control (CDC); DOE; DOT; the Smithsonian Institution; 
EPA; the United States Department of Agriculture (USDA); the 
United States Department of Education (USDE); the Department of 
the Interior (DOI); and the Department of Veteran Affairs (VA). 
A total of $39.8 billion is authorized to be appropriated in FY 
2000, increasing to almost $70 billion in FY 2010. The bill 
states that the increases called for are not intended to exceed 
discretionary budget caps.
  National R&D findings, principles, and policy. S. 296, as 
reported, outlines key findings regarding the value, impact, 
and status of R&D in the United States and the link between the 
research process and useful technology. Four major topics are 
identified: (1) the flow of science, engineering, and 
technology; (2) excellence in the American research 
infrastructure; (3) commitment to a broad

range of research initiatives; and (4) partnerships among 
industry, universities, and Federal laboratories. The bill also 
establishes principles for maintaining the Federal research 
effort, including ensuring good peer-reviewed science, 
demanding fiscal accountability, funding programs with 
measurable results, and selecting programs that adhere to 
established national priorities. In addition, S. 296 
establishes as a national policy the importance of Federal 
investments in research and technology development to the 
economy and the American standard of living.
  Annual budget report. S. 296, as reported, requires the 
President to submit, in coordination with his annual budget 
request, a report detailing the Federal R&D commitment. The 
report would include a focused strategy for meeting 
Congressional funding targets for civilian R&D and an analysis 
of the Administration's funding methodology.
  Accountability for R&D programs. As reported, the bill 
requires the Office of Science and Technology Policy (OSTP), in 
consultation with the Office of Management and Budget (OMB), to 
enter into a contract with the National Academy of Sciences 
(NAS) to complete a study containing recommendations for 
criteria to evaluate Federal R&D programs. In addition, S. 296 
amends GPRA to require that such criteria be used to set 
performance goals under that law and establishes a process to 
ensure that R&D programs meet those goals. If programs do not 
meet the goals, they must be brought into compliance, or may be 
terminated if such compliance efforts fail.

                            ESTIMATED COSTS

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

          [Insert CBO letter, attached as pages 4A through 4E]

                      REGULATORY IMPACT STATEMENT

  In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       NUMBER OF PERSONS COVERED

  The Committee believes that the bill will not subject any 
individuals or businesses affected by the legislation to any 
additional regulation.

                            ECONOMIC IMPACT

  This legislation will not have an adverse economic impact on 
the Nation. It authorizes funding to ensure sustained levels of 
Federally-funded scientific, medical and pre-competitive 
engineering research over an 11-year period. In addition, the 
bill requires the OMB Director to submit an annual report to 
Congress outlining Federally-funded program activities which do 
not meet acceptable GPRA criteria. This action will provide 
oversight of agency programs and promote more cost-effective 
use of Federal funds.

                                PRIVACY

  This legislation will not have a negative impact on the 
personal privacy of individuals.

                               PAPERWORK

  This legislation will not increase the paperwork requirement 
for private individuals or businesses. It contains four Federal 
reporting requirements: (1) the President is to include in his 
annual budget request to Congress a report detailing the total 
level of funding for R&D programs throughout all civilian 
agencies, and outlining the Administration's strategy for 
meeting Congressional funding targets through 2010; (2) the 
OSTP Director, in consultation with the OMB Director, is to 
contract with NAS for a comprehensive study to be submitted to 
OMB and the Congress on methods for evaluating Federally-funded 
R&D programs; (3) the OMB Director is to identify the civilian 
R&D program activities which do not meet the criteria defined 
in GPRA in an annual report to the President and to Congress; 
and (4) the head of an agency whose program activities do not 
meet the GPRA criteria for two years is to submit to Congress a 
strategic plan for bringing the program into compliance or 
terminating it, including any necessary legislative changes.

                      SECTION-BY-SECTION ANALYSIS

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS

  This section cites the short title of the reported bill as 
the ``Federal Research Investment Act.''

SECTION 2. GENERAL FINDINGS REGARDING FEDERAL INVESTMENT IN RESEARCH

  This section of the reported bill outlines key findings 
regarding the value of R&D to the United States and the status 
of the Federal R&D investment. The findings state that current 
projections for Federal research funding show a downward trend. 
This trend reflects the confluence of increased national 
dependency on technology, increased targets of opportunity, and 
decreased flexibility in apportioning dwindling discretionary 
funds. Indicators show that more funding for science, 
engineering, and technology is needed, but, even with increased 
funding, priorities must be established among different 
programs.

SECTION 3. SPECIAL FINDINGS REGARDING HEALTH-RELATED RESEARCH

  This section of the reported bill emphasizes specific 
observations regarding the economic benefits of health-related 
research. It recognizes the current Congressional support for 
increased funding in the near term and stresses potential 
difficulty in fully achieving this investment in health 
research if other fields of science and engineering are not 
properly preserved.

SECTION 4. ADDITIONAL FINDINGS REGARDING THE LINK BETWEEN THE RESEARCH 
                    PROCESS AND USEFUL TECHNOLOGY

  This section of the reported bill highlights four major 
observations: (1) the current flow of science, engineering, and 
technology from early stages of research through pre-
commercialization should be less discrete and better 
coordinated; (2) the relationship between Federal research and 
education should be expanded to include geographically-diverse 
states, primary and secondary educational institutions, and the 
community college system; (3) the United States should 
encourage research opportunities for interdisciplinary projects 
that foster collaboration among fields of research; and (4) 
partnerships among industry, universities, and Federal 
laboratories should be optimized.

SECTION 5. MAINTENANCE OF FEDERAL RESEARCH EFFORT; GUIDING PRINCIPLES

  This section of the reported bill outlines four guiding 
principles for maintenance of Federal research efforts. First, 
Federal programs must be focused, peer-reviewed, merit-based, 
and not unnecessarily duplicative. They must address both 
knowledge-driven and mission-driven scientific requirements. 
The second principle guiding the maintenance of Federal 
research efforts requires programs to be fiscally accountable. 
Congress must exercise oversight to ensure that programs funded 
with scarce Federal dollars are properly managed. Third, 
government programs must have measurable results, and the 
effectiveness of these programs in achieving their goals must 
be evaluated. Fourth, selection of programs for Federal funding 
must balance the Nation's two traditional priorities: (1) basic 
scientific and technological research that represents an 
investment in the Nation's long-term scientific and 
technological capacity; and (2) mission-related research that 
derives from necessary public functions such as defense, 
health, education, and environmental protection. Because 
government investments should not compete nor displace short-
term, market-driven private-sector funding, they should be 
restricted to pre-competitive activities rather than commercial 
technologies.

SECTION 6. POLICY STATEMENT

  Subsection (a) of this section states the overall goal of the 
bill to assure a base level of Federal funding for basic, 
scientific, biomedical, and precompetitive engineering 
research, with this base level defined as a doubling of Federal 
basic research funding over the 11-year period following the 
date of enactment of this Act.
  Subsection (b) identifies the agencies covered by the 
authorizations in the bill as: NIH, NSF, NIST, NASA, NOAA, CDC, 
DOE, DOT, the Smithsonian Institution, EPA, USDA, USDE, DOI, 
FDA, and VA. The Committee intends that the programs of these 
agencies be covered only to the extent that such programs 
involve activities that support basic scientific, medical, or 
pre-competitive engineering research.
  Subsection (c) discusses historic investment trends and 
potential damage to the U.S. research infrastructure from 
continued inadequate funding levels.
  Subsection (d) authorizes the following aggregate 
appropriation levels for civilian R&D for FY 2000 through FY 
2010:
         $39.79 billion for FY 2000;
         $41.98 billion for FY 2001;
         $44.29 billion for FY 2002;
         $46.72 billion for FY 2003;
         $49.29 billion for FY 2004;
         $52.00 billion for FY 2005;
         $54.87 billion for FY 2006;
         $57.88 billion for FY 2007;
         $61.07 billion for FY 2008;
         $64.42 billion for FY 2009; and
         $67.97 billion for FY 2010.
  Subsection (d) creates an exclusionary clause whereby any 
agency included in this Act under subsection (b) which 
increases its R&D funding by more than 8 percent over the 
amount appropriated for its R&D in the preceding fiscal year 
shall be removed from the total fiscal year authorization in 
subsection (d) until that agency's annualized appropriation 
meets or falls below the aggregate 5.5 percent target for 
increased funding under the Act.
  Subsection (e) requires that no funds be made available under 
the bill in a manner that does not conform with the 
discretionary spending caps provided in the most recently 
adopted concurrent resolution on the budget.
  Subsection (f) calls for the aggregate funding levels 
authorized by section 5 to be balanced among various scientific 
and engineering disciplines and geographically dispersed 
throughout the states.

SECTION 7. PRESIDENT'S ANNUAL BUDGET REQUEST

  This section of the reported bill requires the President, as 
part of the annual budget request process, to submit a report 
on implementation of the commitment to support Federally-funded 
R&D. The report must provide: (1) a detailed summary of the 
total level of funding for R&D programs throughout civilian 
agencies; (2) a focused strategy reflecting annual funding 
projections for R&D through FY 2010; (3) an analysis of funding 
levels across Federal agencies by methodology of funding, 
including grant agreements, procurement contracts, and 
cooperative agreements; and (4) specific proposals to improve 
R&D infrastructure and capacity in States with less 
concentrated R&D resources in order to create a nationwide R&D 
community.

SECTION 8. COMPREHENSIVE ACCOUNTABILITY STUDY FOR FEDERALLY-FUNDED 
                    RESEARCH

  Subsection (a) of this section of the reported bill requires 
the Director of OSTP, in consultation with the Director of OMB, 
to contract with NAS for a comprehensive study. The goal of the 
study is to develop methods for evaluating Federally-funded R&D 
programs by: (1) describing the research process in various 
scientific and engineering disciplines; (2) examining the 
measures and criteria employed by each discipline to evaluate 
the success or failure of a program both for exploratory long-
range work and short-term goals; and (3) recommending how these 
measures may be adapted for use by Federally-funded R&D 
programs.
  This subsection also calls for the study to assess the extent 
to which agencies incorporate independent merit-based review 
into the formulation of strategic plans, as well as the 
quantity and quality of this type of input. NAS would evaluate 
mechanisms for identifying poorly performing programs and the 
extent to which an independent merit-based review would 
contribute to addressing those problems. In addition, NAS is 
required to report on the validity of using quantitative 
performance goals for administrative aspects of a program 
including: paperwork requirements for contractors, grant 
recipients and external reviewers; cost and schedule controls 
for any associated construction projects; the ratio of overhead 
costs relative to other program costs; and responsiveness to 
requests for funding, participation, or equipment use. Finally, 
the study would examine the extent to which Federal funding 
decisions support the Nation's historical R&D priorities.
  Subsection (b) of this section provides for integration of 
the results of the NAS study into GPRA requirements. Within six 
months of study completion, the Director of OMB is required to 
promulgate one or more alternative forms for performance goals 
under GPRA (31 U.S.C. 1115(b)(10)(B)) based upon the study 
recommendations. In the development of such alternatives the 
OMB Director is required to provide for public notice and 
comment, obtain the approval of the Director of OSTP, and 
consult with the National Science and Technology Council. The 
goal of this subsection is to offer the head of each agency 
that conducts R&D activities alternative and more appropriate 
mechanisms to successfully comply with GPRA.
  Subsection (c) of this section requires each agency that 
carries out R&D activities, upon updating or revising their 
strategic plan under subsection 306(b) of title 5, United 
States Code, to describe its current and future use of the 
alternative performance goals consistent with the NAS study. 
Subsection (d) provides definitions for several terms used in 
this section of the reported bill, including ``Director,'' 
``program activity,'' and ``independent merit-based 
evaluation.'' Finally, subsection (e) authorizes appropriations 
of $600,000 for carrying out the NAS study.

SECTION 9. EFFECTIVE PERFORMANCE ASSESSMENT PROGRAM FOR FEDERALLY-
                    FUNDED RESEARCH

  Section 9(a) of the reported bill amends GPRA to add a new 
section 1120 dealing with accountability for R&D programs. 
Subsection (a) of new section 1120 of GPRA requires the 
Director of OMB, based upon annual performance reports 
submitted by the President to Congress under GPRA, to identify 
civilian R&D program activities or components of such 
activities that do not meet an acceptable level of success as 
defined by alternative performance goals developed under 
section 8 of the reported bill. The OMB Director is required to 
submit a report to the President and Congress that lists 
program activities or components identified under this 
subsection within 30 days after each agency submits its annual 
GPRA report to the President.
  Subsection (b) of new section 1120 of GPRA establishes a 
process for addressing programs that have failed to meet 
performance goals. When a program is identified as being below 
acceptable success levels in two consecutive OMB reports, the 
head of the responsible agency is required to submit a 
statement to the Congressional committees of jurisdiction 
outlining steps that will be taken to (1) bring the program 
into compliance with applicable performance goals; or (2) to 
terminate the program if compliance efforts have failed. A 
submission under this subsection also is required to identify 
any legislative changes needed for its implementation or 
termination. In establishing the process under this subsection, 
the Committee intends to improve accountability for R&D 
spending and to encourage cost-efficiencies in Federally-funded 
R&D programs. However, this process should not be used to 
impose substantial new paperwork burdens on R&D programs that 
are not required of other Federal programs. Nor does the 
Committee intend that the process be used to target Federal R&D 
programs for which the funding reflects Congressional rather 
than Administration priorities.
  Section 9(b) of the reported bill makes two technical and 
conforming amendments to GPRA.

                        CHANGES IN EXISTING LAW

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new material is printed 
in italic, existing law in which no change is proposed is shown 
in roman):

                      TITLE 31. MONEY AND FINANCE

                    SUBTITLE II. THE BUDGET PROCESS

   CHAPTER 11. THE BUDGET AND FISCAL, BUDGET, AND PROGRAM INFORMATION

                             * * * * * * *

Sec.  . 1115. Performance plans

  (a) In carrying out the provisions of section 1105(a)(29), 
the Director of the Office of Management and Budget shall 
require each agency to prepare an annual performance plan 
covering each program activity set forth in the budget of such 
agency. Such plan shall--
          (1) establish performance goals to define the level 
        of performance to be achieved by a program activity;
          (2) express such goals in an objective, quantifiable, 
        and measurable form unless authorized to be in an 
        alternative form under subsection (b);
          (3) briefly describe the operational processes, 
        skills and technology, and the human, capital, 
        information, or other resources required to meet the 
        performance goals;
          (4) establish performance indicators to be used in 
        measuring or assessing the relevant outputs, service 
        levels, and outcomes of each program activity;
          (5) provide a basis for comparing actual program 
        results with the established performance goals; and
          (6) describe the means to be used to verify and 
        validate measured values.
  (b) If an agency, in consultation with the Director of the 
Office of Management and Budget, determines that it is not 
feasible to express the performance goals for a particular 
program activity in an objective, quantifiable, and measurable 
form, the Director of the Office of Management and Budget may 
authorize an alternative form. Such alternative form shall--
          (1) include separate descriptive statements of--
                  (A)(i) a minimally effective program, and
                  (ii) a successful program, or
                  (B) such alternative as authorized by the 
                Director of the Office of Management and 
                Budget,
        with sufficient precision and in such terms that would 
        allow for an accurate, independent determination of 
        whether the program activity's performance meets the 
        criteria of the description; or
          (2) state why it is infeasible or impractical to 
        express a performance goal in any form for the program 
        activity.
  (c) For the purpose of complying with this section, an agency 
may aggregate, disaggregate, or consolidate program activities, 
except that any aggregation or consolidation may not omit or 
minimize the significance of any program activity constituting 
a major function or operation for the agency.
  (d) An agency may submit with its annual performance plan an 
appendix covering any portion of the plan that--
          (1) is specifically authorized under criteria 
        established by an Executive order to be kept secret in 
        the interest of national defense or foreign policy; and
          (2) is properly classified pursuant to such Executive 
        order.
  (e) The functions and activities of this section shall be 
considered to be inherently Governmental functions. The 
drafting of performance plans under this section shall be 
performed only by Federal employees.
  (f) For purposes of this section and sections 1116 [through 
1119,] through 1120 and sections 9703 and 9704 the term--
          (1) ``agency'' has the same meaning as such term is 
        defined under section 306(f) of title 5;
          (2) ``outcome measure'' means an assessment of the 
        results of a program activity compared to its intended 
        purpose;
          (3) ``output measure'' means the tabulation, 
        calculation, or recording of activity or effort and can 
        be expressed in a quantitative or qualitative manner;
          (4) ``performance goal'' means a target level of 
        performance expressed as a tangible, measurable 
        objective, against which actual achievement can be 
        compared, including a goal expressed as a quantitative 
        standard, value, or rate;
          (5) ``performance indicator'' means a particular 
        value or characteristic used to measure output or 
        outcome;
          (6) ``program activity'' means a specific activity or 
        project as listed in the program and financing 
        schedules of the annual budget of the United States 
        Government; and
          (7) ``program evaluation'' means an assessment, 
        through objective measurement and systematic analysis, 
        of the manner and extent to which Federal programs 
        achieve intended objectives.

                             * * * * * * *

Sec.  1120. Accountability for research and development programs

  (a) Identification of Unsuccessful Programs.--Based upon 
program performance reports for each fiscal year submitted to 
the President under section 1116, the Director of the Office of 
Management and Budget shall identify the civilian research and 
development program activities, or components thereof, which do 
not meet an acceptable level of success as defined in section 
1115(b)(1)(B). Not later than 30 days after the submission of 
the reports under section 1116, the Director shall furnish a 
copy of a report listing the program activities or component 
identified under this subsection to the President and the 
Congress.
  (b) Accountability if No Improvement Shown.--For each program 
activity or component that is identified by the Director under 
subsection (a) as being below the acceptable level of success 
for 2 fiscal years in a row, the head of the agency shall no 
later than 30 days after the Director submits the second report 
so identifying the program, submit to the appropriate 
congressional committees of jurisdiction:
          (1) a concise statement of the steps necessary to--
                  (A) bring such program into compliance with 
                performance goals; or
                  (B) terminate such program should compliance 
                efforts fail; and
          (2) any legislative changes needed to put the steps 
        contained in such statement into effect.

                                  
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