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Determining Principles for 

 Allocating Federal Funds 



The federal goNernment lias played a pivotal role in developing the world's 

 most successful system of research and development. Over the past 5 decades the 

 L'.S. scientific and technical enterprise has expanded dramatically, and the federal 

 investments in it ha\ e produced enormous benefits for the nation's economy, na- 

 tional defense, health, and social well-being. Science and technology will be at least 

 as important for our nation s future as they have been for our past, but further 

 expansion of federal funding for research and development is unrealistic in the next 

 sexeral \ears. Both the current administration s lO-year budget plan and the "-year 

 plans passed by the House and Senate propose significant reductions in federal dis- 

 cretionar\' spending. Maintaining the vigor of research and development is impor- 

 tant — indeed essential — to the nation s future and will require the ability' to increase 

 funding for new opportunities .selectively, even while reducing the overall budget. 



The Committee on Oiteria for Federal Support of Research and Development 

 believes that it will be possible to sustain this country s scientific and technological 

 preeminence and the strong federal role within current fiscal constraints if the 

 recommendations in this report are adopted. Ensuring the nation s future health. 

 howe\ cr. ma\ well require augmented in\estments later — after the current period of 

 reorganization and consolidation has helped control costs and sharpen focus. 



As we consitler how to restructure federalh' funded research and development 

 to meet toda\ s budget realitievS. it is important to recognize the considerable 

 strengths of the current system (see Supplement 1 for historical background). 

 Those strengths should not be lost. Top-down" mission-oriented management and 

 bottom-up' investigator-initiated research projects have combined to create a 

 powerful research and de\elopment engine that is the envA' of the world. Computer 

 science, surface science, molecular biology, and other fields have emerged in re- 

 spon.se to new opportunities, and widely disparate fields have been combined to 

 create entirely new applications. Competitively funded research and development 

 projects subject to national merit review and conducted in every state of our nation 

 have proven particularly effective. Federally funded university science and engi- 

 neering, in addition to yielding new discoveries, has produced new generations of 

 scientists and engineers who ser\e in academia. industry, and government and also 

 fill critical management positions there. Investments in science have dramaticalh' 

 expanded our know ledge of ourselves and our universe, and new technologies have 

 improved our daily li\es. The fruits of federalh- funded research and development 

 have been applied effectively by L'.S. industry Drawing on the support provided by 

 man\ sponsoring agencies and the results from a wide range of performing institu- 

 tions, the American entrepreneurial spirit has tapped federally funded research and 

 development to form entirely new industries in areas such as microelectronics, 

 biotechnology, and communications and information technology, among others. 



The federal government invests in a portfolio of highly diversified activities in 

 research and de\ elopment in man% disciplines — but there has not been an actively 

 managed federal budget. With the exception of selected recent initiatives, the 



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