er organizations. Still, it generally does not ap- 

 proach the degree of freedom enjoyed by American 

 businesses in extrafirm negotiations. All Soviet 

 middle-level management agencies still retain these 

 functional administrations with unchanged formal re- 

 sponsibilities. It may be expected that projects 

 and transactions of an all-union and branch signifi- 

 cance are carefully planned and negotiated in the 

 traditional fashion. 



Nonetheless, one of the important managerial in- 

 novations in recent years is the expansion of con- 

 tract R&D. While generally incorporated in plans for 

 formal approval, contract research may be arranged at 

 the initiative of the performing establishments large- 

 ly free of excessive restrictions or petty tutelage 

 of superior organs. The primary motivation behind 

 the change is the leadership's desire that indepen- 

 dent research facilities better serve the needs of 

 the economy. The motivation was imposed on many R&D 

 facilities. In 1962, independent industrial research 

 units began to be transferred to khozraschet operat- 

 ing principles, a transfer which, as previously noted, 

 implies that they must support themselves on the bas- 

 is of revenue earned from the sale of research. Of 

 course, the state and ministry are still major pur- 

 chasers, but the change means that budget grants are 

 no longer readily awarded to account for excess ca- 

 pacity. 



Several features of contract research merit atten- 

 tion. Though contract regulations usually contain 

 elaborate provisions regarding the costing of work, 

 there is room for maneuver. If during the course of 

 the work unanticipated expenditures arise, supple- 

 mentary arrangements may be negotiated to a total 

 value of up to 50 percent more than the originally 

 agreed sum. On the other hand, if an R&D organiza- 

 tion manages to complete a contract for less than the 

 fixed sum, it may retain the balance . l^-* This pros- 

 pect of acquiring extra discretionary funds, which 

 can be used to buy equipment and thus broaden their 

 own experimental facilities, acts as a strong incen- 

 tive for research establishments, especially in the 



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