	Background and Analysis

This report summarizes current research and development priority-setting issues—in terms of spending priorities, topical or field-specific priorities, and organizational arrangements to determine priorities. Defense R&D predominated in the 1980s but decreased to about 50% of total federal R&D in the 1990s, reflecting Clinton Administration policies. In non-defense R&D, space was important in the 1960s as the nation sought to compete with the Soviet Union in the space race; energy R&D joined space as a priority during the 1970s; and since the 1980s, health R&D funding has grown as the cohort of aged population increases and the promise of life sciences and biotechnology affects national expectations. FY2007 Budget Request

For FY2007, R&D was requested at almost $137 billion of budget authority, about 1.8% more than enacted in FY2006. The request sought to double funding over 10 years (for a total of about $50 billion) for three key federal agencies that support basic research in physical sciences and engineering, that is for NSF, the Department of Energy's (DOE) Office of Science (for advanced energy research), and for the NIST laboratories, as part of the American Competitiveness Initiative (ACI) introduced in the 2006 State of the Union address to enhance U.S. innovation. Also, funding for NASA R&D would have been increased by about 8% largely for a development program called Constellation Systems to develop human space vehicles to replace the Space Shuttle. For FY2007, two appropriations bills were signed before adjournment—for DOD and DHS. The rest of the government is operating on a continuing resolution through February 2007, but which incoming Appropriations Committee chairmen say they will seek to continue throughout FY2007, thereby funding all other R&D activities at FY2006 levels. FY2007 appropriations action increased support for defense development and decreased homeland security R&D funding. Only a small percentage of federal non-defense R&D spending supports industrial R&D and innovation directly. H.R. H.R. H.R. 5970 , a tripartite tax bill which passed in the House, included the R&D tax credit. 6111 , which extended the credit for two years and widened eligibility for the credit. The FY2007 request would have increased NSF's R&D budget by 8.3% over the FY2006 level. OMB's term "combating terrorism" R&D includes homeland security R&D and overseas combating terrorism R&D. Federal R&D Priority-Setting Structures

Some observers recommend more centralized R&D priority-setting in Congress and in the executive branch. The FY2007 budget presented agency funding for two interagency R&D initiatives whose reporting is required by statute, "Networking and Information Technology R&D," requested at $3.1 billion, a 2% decrease from the estimated FY2006 amount, and "Climate Change Science Program," requested at $1.7 billion, a level flat with the FY2006 estimate. Other FY2007 interagency R&D initiatives included combating terrorism R&D and hydrogen R&D. Government Performance and Results Act (GPRA) and Performance Assessment Rating Tool (PART)

The Government Performance and Results Act of 1993 (GPRA), P.L.
This report summarizes current research and development (R&D) priority-setting issues—in terms of expenditures; agency, topical, or field-specific priorities; and organizational arrangements to determine priorities. Federal R&D funding priorities reflect presidential policies and national needs. Defense R&D predominated in the 1980s, decreasing to about 50% of federal R&D in the 1990s. In non-defense R&D, space R&D was important in the 1960s as the nation sought to compete with the Soviet Union; energy R&D was a priority during the energy-short 1970s, and, since the 1980s, health R&D has predominated in non-defense science. This Administration's R&D priorities include weapons development, homeland security, space launch vehicles, and, beginning in 2006, more support for physical sciences and engineering. For FY2007, R&D was requested at almost $137 billion of budget authority, about 1.8% more than enacted in FY2006. The request would have increased funding for physical sciences and engineering programs in the National Science Foundation, the Department of Energy's Office of Science, and National Institute of Standards and Technology laboratories as part of the President's American Competitiveness Initiative (ACI) to enhance innovation. Funding for the National Aeronautics and Space Administration's R&D would have increased by about 8% largely to develop human space vehicles. For FY2007, two appropriations bills were signed; the rest of the government is operating on a continuing resolution through February 2007, but likely to continue throughout FY2007, funding domestic agencies at FY2006 levels. Appropriations action increased support for defense development and decreases homeland security R&D funding.
The latest estimated expenditure for national (public and private) R&D is $312.1 billion for FY2004. Federal R&D expenditures, at $93.4 billion, have grown, but have declined to 30% of total national R&D spending. During the 109th Congress, some proposals to increase incentives for industrial R&D included H.R. 1454, H.R. 1736, S. 14, S. 627, S. 2199, and S. 2720. H.R. 6111, passed in both Houses, extended the R&D tax credit for two years and widened eligibility for the credit. The FY2007 budget would have emphasized three interagency R&D initiatives: networking and information technology; climate change science; and nanotechnology. Proposals to coordinate R&D include a continuing priority-setting mechanism; a cabinet-level S&T body; functional R&D budgeting; and reestablishment of a technology assessment function. The Administration opposes R&D earmarking, estimated at $2.4 billion in budget authority for FY2006. Although the Administration is using the Government Performance and Results Act and the Program Assessment Rating Tool for R&D budgeting, some critics say better data and concepts are needed before performance budgeting can be used to identify R&D priorities.