Looking Ahead to FY 2004: OMB Directive and PCAST

The budget process can be confusing. The federal government is currently operating with FY 2002 funding. Congress is drafting the FY 2003 appropriations bills. And the Bush Administration is beginning work on the FY 2004 budget request.

Budget-forecasting often involves looking for clues in the pronouncements of key Members of Congress or senior Administration officials. Occasionally a document becomes available that makes the outlook clearer. That is the case with a May 30 White House memorandum from OSTP Director John Marburger and OMB Director Mitchell Daniels entitled “FY 2004 Interagency Research and Development Priorities.”

This 14-page memo to the heads of executive departments and agencies “provides guidance on the types of R&D programs the Administration will favor when making fiscal year 2004 investment decisions, identifies priority activities requiring significant interagency coordination, and sets forth R&D investment criteria that departments and agencies should observe and implement.” It lists the Administration’s six S&T priorities and later spells out three “tests” that R&D managers should apply to their programs. Notably, it does not provide the “guidance levels” that OMB gave these S&T managers about the parameters of the budget request they will submit to Congress in early 2003.

While the list may change, and is not necessarily all- inclusive, the six interagency R&D budget priorities listed in this memo are:

The major portion of the memo is devoted to Research and Development Investment Criteria. “One way the Administration intends to improve R&D program management and effectiveness is through the application of explicit R&D investment criteria, as directed by the President’s Management Agenda,” is how the memo introduces this concept. The focus is not to be on how much money an agency is spending, “but rather on what we are getting for our investment.” The memo provides considerable detail about three tests, initially described as follows:

“Relevance. R&D programs must be able to articulate why this investment is important, relevant, and appropriate. Programs must have well-conceived plans that identify program goals and priorities and identify linkages to national and ‘customer’ needs.”

“Quality. R&D programs must justify how funds will be allocated to ensure quality R&D. Programs allocating funds through means other than a competitive, merit-based process must justify these exceptions and document how quality is maintained.”

“Performance. R&D programs must have the plans and management processes in place to monitor and document how well this investment is performing. Program managers must define appropriate outcome measures and milestones that can be used to track progress towards goals, and assess whether funding should be enhanced or redirected.”

There has been considerable discussion how the investment criteria would be applied to basic research programs. The memo addresses these concerns, and states, “The Administration expects agencies to focus on improving the management of their research programs and adopting effective practices, and not on predicting the unpredictable.”

The entire text of this memorandum may be viewed at: http://www.ostp.gov/html/ombguidmemo.pdf

Federal investment in R&D was a topic of discussion at this week’s second open meeting of the President’s Council of Advisors on Science and Technology. Several PCAST members have formed a panel to examine the U.S. R&D portfolio over the last twenty-five years. This panel, chaired by G. Wayne Clough, President of the Georgia Institute of Technology, will examine both federal and non-federal investment in R&D, including changes in its size, composition, and trends. Workforce issues and the position of the U.S. as compared to other nations will also be examined. The panel wants its report to impact the FY 2004 budget request, and so will complete its work by November. The RAND Corporation has been contracted to write the actual report, with input to be provided through meetings and hearings with industry, universities, federal agencies, and other parties. AAAS will also be involved in the production of the reports. Other PCAST panels are working on broadband communications, energy efficiency, and counter-terrorism.