Appendix B 



0MB Memorandum to the Heads of Executive 

 Departments and Agencies on Funding of 

 Basic Research, August 15, 1977 



The President has expressed his interest in having 

 Federal departments and agencies examine their 

 research and development programs to assure an 

 appropriate balance between basic or long-term 

 research and shorter-term applied research and 

 development. The President is particularly con- 

 cerned with the identification of critical problems 

 currently or potentially faced by the Federal Gov- 

 ernment where basic or long-term research could 

 assist in carrying out Federal responsibilities more 

 effectively or where such research would provide 

 a better basis for decision-making. 



An example would be the recent efforts to 

 strengthen the basic research program of the 

 Department of Agriculture which could lead to 

 breakthroughs in a number of problem areas, in- 

 cluding reducing the vulnerability of crops to in- 

 sects and diseases through genetic engineering. 

 Another example would be research to improve 

 our understanding of scientific phenomena that 

 underlie various regulatory decisions of the Fed- 

 eral Government (e.g., the setting of air quality 

 standards). 



We are asking that in the context of developing 

 your 1979 budget you identify whether there are 

 specific problems in your area of responsibility 

 that might be better addressed through basic re- 

 search and then use the results of your review to 

 determine whether available resources can be bet- 

 ter applied to basic or long-term research associat- 

 ed with those problems. In so doing, you are 

 urged to look carefully at your existing R&D pro- 

 grams to see whether there are areas where 

 tradeoffs can be made, taking into account, for 



example, the effectiveness of current R&D efforts, 

 and the need to avoid research, development and 

 demonstration activities that might more appropri- 

 ately be left to the private sector. 



There is a tendency to defer needed basic or long- 

 term research to meet more pressing near-term 

 problems. We urge that in developing budget pro- 

 posals for your agency you take a balanced view 

 in dealing with your R&D programs and be sensi- 

 tive to this tendency. Of course, we expect that 

 you will apply the same rigorous zero-base budget 

 review to basic research programs that you are 

 applying to other programs in your agency. 



The results of your review should be reported 

 along with the information about R&D and basic 

 research programs which is submitted as a routine 

 part of your agency's budget preparation (section 

 44 of OMB Circular A-11). The data in that sec- 

 tion should be supplemented with a narrative de- 

 scription of the problem areas identified as outlined 

 above, and should identify any changes proposed 

 in your agency's R&D programs to focus agency 

 resources on long-term research related to these 

 problem areas. This approach should obviate the 

 need to make any changes in your current ZBB 

 structure. 



Your review should be completed in time to be 

 reflected in your agency's initial budget submis- 

 sion. A report on your review should be submit- 

 ted to OMB not later than September 30. Your 

 budget submission is expected to be consistent 

 with the amounts and general guidance provided 

 in the policy letter sent to you previously. 



Bert Lance 

 Director 



APPENDIX B 371 



