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Supplement 3 



Current Processes for Allocating 



Federal R&D Funds 



The committee's recommendations argue for changes in how Congress and 

 the Executive Branch allocate funds for federal science and technolog)'. This supple- 

 ment describes the current process and gives some historical background. 



There Is Currently No Standard Process 

 for Allocating Federal R&D Funds 



Policymakers and the research community share control over the allocation of 

 federal funds to R«ScD. In practice, decisions to allocate federal R&D funds among 

 national goals and among federal departments and agencies are made by elected 

 officials, senior civil servants, and congressional staff in a political process. Alloca- 

 tion decisions among projects and performers at the program level within depart- 

 ments and agencies are made by technical experts in the agencies, often with advice 

 from the research community via formal competitive merit review or other approaches 

 to assessing scientific and technical merit. On occasion, nongovernment scientists 

 and engineers influence high-level strategic federal allocations to specific initiatives. 

 Political leaders sometimes seek to influence allocations at the working level. 



At all levels in the process of allocating R&D funds to various elements in the 

 federal portfolio, there is no substitute for human judgment, informed by specialized 

 knowledge, experience, and an understanding of the processes of research and 

 development. There is an inherent uncertainty in anticipating the outcomes of R&D 

 programs. Therefore, economic and fmancial investment models, such as cost/ 

 benefit analysis, are applicable only for those development programs for which 

 technical and fmancial uncertainties are fairly well understood. 



The overall federal R&D portfolio is determined in a bottom-up process. The 

 executive and legislative branches together establish R&D budgets for departments 

 and agencies. Historically, an "R&D budget" as such has been determined only after 

 the fact when budget analysts learn what the overall federal R&D budget is by 

 aggregating the results of the individual departmental and agency decisions. The 

 Bush and Clinton administrations have sought to impose greater order on the prepa- 

 ration of the overall R&D budget submission, as discussed below. 



Both the President and the Congress 

 Influence the Federal R&D Portfolio 



Presidents have used a varier\' of institutional arrangements to coordinate the 

 formulation of R&D budgets across the departments and agencies, sometimes in 

 hopes of orchestrating coordinated approaches to particular national problems, and 

 other times in hopes of reducing overlap and duplication among them. Since the 

 early 1960s, the White House Office of Science and Technology Policy and its prede- 

 cessors have set up formal coordinating bodies for R&D, sometimes at the encour- 



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