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Optimizing Federal R&D

October 2, 1998
Contact: Allison Sayler
Te: 202-296-2237, ext. 14
Email: asayler@aaes.org

Introduction

The American Association of Engineering Societies (AAES) believes that sustained, merit-based investment in R&D must continue to be a core function of the federal government. Federal investments in science and engineering research have produced vast benefits for the nation's productivity and living standards. Such investments provide the fundamental technological base needed for our national security, energy resources, health, and environmental progress. The high social and private rates of return yielded by science and engineering R&D investment are generally higher than returns on other investments. Economists estimate that half of U.S. economic productivity since WWII is attributable to technical progress driven by science and engineering research.

Federal R&D has led to many unparalleled improvements in food, drugs, transportation, and environmental quality. New technologies resulting from these research efforts have led to entirely new industries such as microelectronics, biotechnology, and communications and information technology.

The Relationship of Science and Engineering

Engineering encompasses a distinct body of knowledge that complements, but does not mimic scientific knowledge. Engineering is the application of scientific principles to practical ends. Scientists discover new knowledge and principles; engineers harness this knowledge and conduct research on new systems and processes, which ultimately leads to new products and procedures. The two disciplines are intrinsically linked as essential components of the innovation process.

Economic and environmental benefits that flow from technological innovation require investing in both science and engineering research. Such investment will continue to produce breakthroughs and incremental gains in products and processes. While distinct, science and engineering go hand in hand in furthering the complex and changing innovation process. Weakness in either threatens technological progress and the nation's prosperity.

Expanding and Improving Federal R&D Investment

To sustain long-term economic growth and help produce the finest engineers and scientists for the 21st century, AAES supports efforts to increase the federal investment in research, such as the congressional initiative to double research funding within the next twelve years. These increased resources should be targeted to bolster those areas and programs that address critical national goals based on credible agency strategic plans.

As the cost of R&D increases and global competition intensifies, enhanced long-term federal investment in R&D will help make up for inflationary losses over the past decade, guard against the erosion of R&D buying power in the next decade, and allow for increased attention in areas of growing national need. Funding should depend on the program's ability to respond to critical needs that can only be met at the national level.

Principles to Guide Federal R&D Policy and Funding

Where should the federal government invest?

Strong federal support must continue for basic science and engineering research at universities. Such research provides the knowledge base for future technological advances and development of human resources that generally would not occur without federal support. Federal funding for academic research should support both individual investigators and multidisciplinary research. Merit review using expert peer-reviewers should be emphasized to ensure technical quality and performance.
Federal laboratories play a critical role in furthering research and development. Federal laboratories possess unique science and engineering capabilities and are best suited for research involving multidisciplinary teams, unique facilities, and industry-university-federal partnerships. Better focused laboratory missions, improved coordination, and elimination of unneeded redundancies would improve the effectiveness of the federal laboratory system.
Federal support of R&D programs that bring universities, industry, and federal laboratories together should be made a high priority. Cost sharing collaborative research arrangements should be encouraged as they can leverage limited resources, combine technical knowledge across sectors and disciplines and produce broader dissemination of technical advances. In conjunction with the peer-review process, these resources should be targeted to bolster those areas and programs that address critical national goals.
Federal support for short-term, lower-risk technology development and demonstration projects should be minimized, except when deemed in the national interest. Near-term benefits should motivate sufficient private sector investment and transfer to the economy more quickly.
Federal support is warranted for long-term, high-risk research and technology development that meets national needs and is unlikely to receive private support in a competitive, time-sensitive environment.
Federal policies to create an environment more conducive to private R&D investment should be encouraged, including a permanent Research and
Experimentation (R&E) tax credit and meaningful regulatory and product liability reform.

How can the federal government optimize R&D investment?

Research and development priorities should be based on program quality and results, consistent with national goals and agency missions, and the likelihood that such R&D would not be conducted in the absence of federal support. Long-term economic growth, quality jobs, environmental protection, energy security, national security, and export potential should be primary considerations.
To maximize public investment, sufficient private cost-sharing on applied research and technology development and demonstration projects should be encouraged. While agencies must have flexibility to set the cost-sharing percentage by program area, industry should increase its share as R&D efforts move closer to commercialization.
Congressional earmarks should be minimized, as they restrict cost-effective program planning and competitive selection of research projects. Support should be based on program quality and consistency with national and agency goals.