76 



52 / SUPPLEMENT 2 



Box n.3 

 The Federal Science and Technology (FS&T) Budget Concept 



For policymaking purposes, the key feature of research and development activities is their 

 investment nature. Increasing the stock of knowledge and devising new ways to apply that 

 knowledge are major sources of future growth and security. Research and development in the 

 federal budget are not current-consumption items; decisions on federal support for research 

 and development should take into account their future contributions to better health, greater 

 militar>' and economic security, quality of life, and human knowledge. It is especially impor- 

 tant to factor in the future investment nature of research and development when budgets are 

 being determined. Federal policymakers will want to sustain future economic growth, in pan 

 because it is an important way to address budget deficits in the long term. 



The committee understands fully that there is great uncertainty in research and develop)- 

 ment investments. The processes leading to commercially viable and socially useful technolo- 

 gies are complex and involve substantial non-R&D factors. That makes investments in research 

 and development necessary but not sufficient for technological progress. The imcertaint)' of 

 where discoveries will be made and which of them will have practical uses underlies the 

 committee's recommendation that the United States perform at the world-class level, if not 

 lead the world outright, in all areas of science and technology (see Recommendation 4 in Part 

 1 of this report).' 



As currently reported, federal spending for research and development totals approximately 

 $70 billion a year. However, nearly half of traditional federal research and development spend- 

 ing involves initial production, maintenance, and upgrading of large-scale ivyjcapons and space 

 systems at the Department of Defense, Department of Energ>', and National Aeronautics and 

 Space Administration. Those activities are neither long-term investments in new knowledge 

 nor investments in creating substantially new applications. If they were excluded, the re- 

 search and development investment budget— called xhe federal science and technology (FS&T) 

 budget in this repon— would be between $35 billion and $40 billion annually. 



The Department of Defense, which has by far the largest budget for research and develop- 

 ment (nearly half of the $69.6 billion obligated by all federal agencies for research and develop- 

 ment in Fiscal Year 1994), has already begun to distinguish between "science and technology" 

 and "systems development" in its research and development budget (see Table D.l). The De- 

 partment of Defense's definition of science and technology, which is essentially the same as 

 that used for FS&T in this report, includes the first three of the seven research and develop- 

 ment categories that the Department of Defense uses; systems development corresponds to 

 the other four Department of Defense categories for research and development (see Table II. 1). 

 In Fiscal Year 1994, approximately $24.6 billion in research and development activities sup- 

 ported by the Department of Defense fell outside what this repon identifies as federal science 

 and technology (FS&T).- 



Unlikc the Depanment of Defense, the Department of Energy and the National Aeronau- 

 tics and Space Administration do not break out the development ponions of their research and 

 development budgets by subcategories, and it is more difficult to determine how much of the 

 research and development at those agencies should be classified as FS&T and how much ex- 

 cluded.' The Office of the Director of Defense Research and Engineering at the Depanment of 

 Defense estimated that in Fiscal Year 1993, about $5.1 billion of NASA's research and develop- 

 ment budget of $8.0 billion— and about $5.0 billion of DOE's research and development bud- 

 get of $6.3 billion— was equivalent to DOD R&D categories 6. 1 through 6.3A and thus should 

 be included in FS&T.'' 



