Assessment of Department of Defense Basic Research

INTRODUCTION

The central issues addressed by the Committee on Department of Defense Basic Research are these: (1) determining if the content of the basic research portfolios managed by the Department of Defense (DOD) is consistent with the DOD definition of basic research and with the characteristics of basic research, (2) evaluating management challenges arising from the definition of basic research, and (3) identifying constraints on basic research in universities and laboratories arising from the definition and its implementation.

To address these issues, the committee engaged in discussions with leaders and managers across the DOD research enterprise and with others who have special interest in the subject. The discussions included two open plenary sessions. A list of the presentations made at these meetings is provided in Appendix B. In addition, to ensure a well-grounded understanding of DOD basic research management and its effect on researchers, the committee interviewed approximately 140 program managers and researchers located at 7 DOD organizations that manage and/or conduct basic research and 14 universities that are among those receiving the largest aggregate of DOD grants and contracts for research. These DOD organizations and universities are listed in Appendix C. Although the committee did not attempt a statistical analysis of the results of these contacts, consistent themes in the responses of interviewees make the anecdotal evidence credible and useful.

The committee held discussions in plenary sessions and at the DOD research organizations and at universities engaged in DOD-sponsored research and reviewed a large number of documents describing the basic research activities of



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Assessment of Department of Defense Basic Research INTRODUCTION The central issues addressed by the Committee on Department of Defense Basic Research are these: (1) determining if the content of the basic research portfolios managed by the Department of Defense (DOD) is consistent with the DOD definition of basic research and with the characteristics of basic research, (2) evaluating management challenges arising from the definition of basic research, and (3) identifying constraints on basic research in universities and labo- ratories arising from the definition and its implementation. To address these issues, the committee engaged in discussions with leaders and managers across the DOD research enterprise and with others who have special interest in the subject. The discussions included two open plenary sessions. A list of the presentations made at these meetings is provided in Appendix B. In addition, to ensure a well-grounded understanding of DOD basic research man- agement and its effect on researchers, the committee interviewed approximately 140 program managers and researchers located at 7 DOD organizations that manage and/or conduct basic research and 14 universities that are among those receiving the largest aggregate of DOD grants and contracts for research. These DOD organizations and universities are listed in Appendix C. Although the committee did not attempt a statistical analysis of the results of these contacts, consistent themes in the responses of interviewees make the anecdotal evidence credible and useful. The committee held discussions in plenary sessions and at the DOD research organizations and at universities engaged in DOD-sponsored research and reviewed a large number of documents describing the basic research activities of 7

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8 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH DOD organizations and DOD-sponsored research in industry and at universities. Even so, at best, this information covered only a sampling of the DOD 6.1 basic research portfolio. Based on that sampling, the committee found reason to ques- tion the appropriateness of the classification as 6.1 basic research for only a small percentage of the work. Even in those cases, the issue usually centers on the implication in the DOD definition of basic research (see the following section) that having specific applications in mind is inconsistent with the purposes of basic research. The committee concluded that discussion of that issue is not pro- ductive, just as the distinction itself is not useful. Hence, the committee’s conclu- sion is that, while some trends in basic research are undesirable, as discussed elsewhere in this report, there is no evidence of significant misapplication of basic research funding. In the course of the committee’s work, the following four themes emerged and are addressed in the sections below: • Definitions and Their Role in Managing Basic Research; • Basic Research in the Wider Cycle of Discovery and Technology Exploitation; • Multiple Missions, Motivations, and Management Approaches; and • The Demand Versus the Supply. DEFINITIONS AND THEIR ROLE IN MANAGING BASIC RESEARCH On the basis of its plenary sessions and contacts with program managers and researchers, the committee concludes that those responsible for directing and managing basic research in the DOD are well motivated and generally successful in directing basic research resources for purposes appropriate to the DOD defini- tion of basic research: that is, “systematic study directed toward greater knowl- edge or understanding of the fundamental aspects of phenomena and of observ- able facts without specific applications towards process or products in mind.”1 Research managers comply generally with the spirit of this definition, although if it was taken literally and researchers had specific applications in mind, their pro- grams would be disqualified from receiving basic research support. Research managers and the committee agree that such a practice would be inappropriate. Hence, although the military departments and defense agencies have the motiva- tion and processes to ensure that 6.1 funding is spent on basic research that has the potential for fundamental discovery, these bodies would not deny 6.1 support for research simply because it would also fund discovery intended for developing 1Department of Defense, Financial Management Regulation, DOD 7000.14-R, Vol. 2B, Ch. 5, June 2004. Available online at http://www.dtic.mil/descriptivesum/budget_activities.pdf. Last accessed on November 16, 2004.

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9 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH technology for military needs. If there were such constraints, there would be much less support for basic research. Furthermore, if a literal interpretation of the DOD definition was applied, the specifics of what the researcher had in mind could be regarded as a key discrimi- nator in determining whether a program was basic research or applied research. Fortunately, the committee found that research managers apply consistent and reasonable judgment on the level of specificity that is appropriate to the purposes of basic research. The committee concludes that, although managers are able to apply the current definition of basic research effectively to achieve the purposes of basic research, the phrase “without specific applications towards process or products in mind” is not useful either to furthering the purposes of basic research or to help- ing ensure that 6.1 funding is properly directed.2 Various motivations for this distinction may exist. However, the view presented to the committee by several senior managers, and strongly reinforced by members of the committee with extensive experience in senior DOD positions, was that this distinction primarily serves the need for a uniform budget and fiscal accounting classification. The committee concludes that this distinction is not a useful research management tool. Ideally it should be possible to convey the purposes of basic research in such a way as to discriminate basic from applied research on the basis of well- understood and accepted principles. The committee devoted significant time to creating a reasonably simple, straightforward description of basic research and concluded that the combination of slight change in the current DOD definition and a description of characteristics would best serve the needs of effective management of basic research. Accord- ingly, the first change that the committee suggests is that the opening statement in the DOD definition (see Appendix D for the current definition) be changed to read as follows: Basic research is systematic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena and has the potential for broad, rather than specific, application. It is important to note here that this revised opening statement does not suggest that basic research ends when a specific application or set of specific applications is identified. The committee is aware of many instances in which work on a specific application led to expanded basic research that provided fur- ther fundamental discoveries with far broader application than what the researcher 2This assertion is consistent with the concept of use-inspired basic research proposed by Stokes. Donald E. Stokes, Pasteur’s Quadrant: Basic Science and Technological Innovation, Washington, D.C.: Brookings Institution Press, 1997, pp. 58-89.

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10 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH had in mind, even as the potential of specific applications emerged. The current definition, however, precludes basic research when specific applications have been identified.3 Regarding characteristics of basic research, the committee found that, while there may be differences in detail, there is a fairly strong consensus on a set of characteristics of basic research that help guide research management. The committee found it useful to assemble a list of the most commonly accepted characteristics. The following is such a list—not a set of criteria. Basic research in universities, for example, should accommodate the following: • A spirit that seeks first and foremost to discover new fundamental under- standing, • Flexibility to modify goals or approaches in the near term based on discovery, • Freedom to pursue unexpected paths opened by new insights, • High-risk research questions with the potential for high payoff in future developments, • Minimum requirements for detailed reporting, • Open communications with other researchers and external peers, • Freedom to publish in journals and present at meetings without restriction and permission, • Unrestricted involvement of students and postdoctoral candidates, • No restrictions on the nationality of researchers, and • Stable funding for an agreed timetable to carry out the research. Some characteristics that are not consistent with the purposes of basic research include the following: • Inquiry directed to addressing only specified applications, • Restricted dissemination of results, • Specific capabilities as research deliverables, • Short time horizons for reporting, and • Contractually restricted direction, method, research staff, and problem statement. 3The complete proposed definition, included in Recommendation 1 in this section, is the current DOD definition of basic research, slightly revised to address what the committee believes is the most serious problem with the current definition. Rather than propose an entirely new definition that might have its own shortcomings, the committee decided that it would be better to recommend the minimum change necessary to the current definition.

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11 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH Findings Finding 1. Department of Defense basic research funds under 6.1 have not been directed in significant amounts to support projects typical of 6.2 or 6.3 funding. Finding 2. Research managers are well motivated and generally successful in focusing 6.1 funding on the discovery of fundamental knowledge in support of the range of Department of Defense needs. Finding 3. Having specific applications in mind is not a useful criterion for dis- criminating between basic and applied research. Finding 4. The set of attributes and desirable characteristics of basic research widely shared among experienced basic research managers can be beneficial in distinguishing between basic and applied research. Recommendations Recommendation 1. The Department of Defense should change its definition of basic research to the following: Basic research is systematic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena and has the potential for broad, rather than specific, application. It includes all scientific study and experimentation directed toward increasing funda- mental knowledge and understanding in those fields of the physical, engineering, environmental, social, and life sciences related to long- term national security needs. It is farsighted high-payoff research that provides the bases for technological progress. Basic research may lead to (a) subsequent applied research and advance technology develop- ments in Defense-related technologies, (b) new and improved military functional capabilities, or (c) the discovery of new knowledge that may later lead to more focused advances in areas relevant to the Department of Defense. Recommendation 2. The Department of Defense should include the following attributes in its guidance to basic research managers and direct that these attributes be used to characterize 6.1-funded research: a spirit that seeks first and foremost to discover new fundamental understanding, flexibility to modify goals or approaches in the near term based on discovery, freedom to pursue unexpected paths opened by new insights, high-risk research questions with the potential for high payoff in future developments, minimum requirements for detailed report- ing, open communications with other researchers and external peers, freedom to

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12 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH publish in journals and present at meetings without restriction and permission, unrestricted involvement of students and postdoctoral candidates, no restrictions on the nationality of researchers, and stable funding for an agreed timetable to carry out the research. BASIC RESEARCH IN THE WIDER CYCLE OF DISCOVERY AND TECHNOLOGY EXPLOITATION On the basis of anecdotal evidence received during its briefings and discus- sions, the committee notes that there would be a significant difference in the basic research program of the Department of Defense if a literal interpretation of the current definition of basic research in the DOD regulations were followed, rather than the actual practices common to successful multiple levels of research in the DOD and elsewhere. A literal interpretation could lead to the perception that the levels of research in 6.1, 6.2, 6.3, and so on, are sequential—that is, it could lead to the erroneous view that basic research (funded as 6.1) provides fundamental knowledge that, when it is to be directed at specific applications, transitions to applied research (funded by 6.2), which, when appropriate, transitions to system development (funded by 6.3, 6.4, and so on). This erroneous sequential vision of research is illustrated in Figure 1. The linear process and sharp lines of demarcation illustrated in Figure 1 may have correctly described the innovation process in the past and may serve some perceived accounting and other important needs in the present. However, that vision is inconsistent with the best practices in the process of discovery and inno- vation that support the development of new capabilities to meet national security needs. The sequential-and-separate description projects the understanding that technology pushes system development, whereas in practice, system develop- ment often pulls science and technology. A more accurate depiction of effective research activity is shown in Figure 2. As basic research, applied research, and system development proceed in par- allel, continuous communication and interaction take place among the levels of 6.1 6.2 6.3, 6.4 Broadly Defined Technology Specific Ready for Application System Identified Development FIGURE 1 Erroneous sequential and separate vision of research.

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13 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH Continued Basic Work Multiple Fundamental Research Efforts in Support of Applications Multiple 6.2 Efforts System Development with Continued Fundamental Research Support FIGURE 2 A more accurate vision: parallel fundamental research. research. Basic research enables the potential for broadly defined specific appli- cations and continues to contribute until basic and applied research together bring the technology to system development. There is no formal or symbolic handover from basic research to applied research to system development. Even in late stages of system development and testing, issues arise requiring continued or renewed fundamental discovery and applied research. This occurrence is common in the management of industrial product development as well. Product development processes are recognized to involve both reentrant loops to earlier stages and cyclic performance of multiple stages until the product requirements are fully met.4 Hence, Figure 2 is consistent with current best practices in industrial research and development (R&D). Findings Finding 5. The basic research needs of the Department of Defense are complex and do not end when specific applications are identified. Finding 6. The need for ongoing discovery from basic research can, and usually does, continue through the applied research, system development, and system operation phases. Recommendation Recommendation 3. The Department of Defense should abandon its view of basic research as being part of a sequential or linear process of research and development (in this view, the results of basic research are handed off to applied 4Steven C. Wheelright and Kim B. Clark, Revolutionizing Product Development: Quantum Leaps in Speed, Efficiency, and Quality, New York: Free Press, 1992, Ch. 7 (see especially Exhibit 7-4) and Ch. 9 (see especially Exhibit 9-3).

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14 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH research, the results of applied research are handed off to advanced technology development, and so forth). Instead, the DOD should view basic research, applied research, and the other phases of research as continuing activities that occur in parallel, with numerous supporting connections among them. MULTIPLE MISSIONS, MOTIVATIONS, AND MANAGEMENT APPROACHES Department of Defense 6.1-funded research consists of multiple types of activities, and the mix varies over time in response to multiple missions and motivations. The DOD’s needs for the fundamental discovery expected of 6.1- funded research are complex and variable, and they will not fit a simple, one- dimensional mold. One type of research need seeks the unfettered5 exploration of a fundamentally new frontier of knowledge, which, if developed, could have pro- found influence on military capabilities. Examples of such research include that in nuclear physics in the 1930s and 1940s, in solid-state electronics in the 1950s and 1960s, in photonics in the 1960s to 1980s, and the concept and creation of the ARPAnet as an exploratory, robust communications system in the 1970s. Such high-risk research, although enormously valuable, cannot be the only basic research, even though some part of it leads to new military capabilities that have historically been major sources of U.S. military superiority. Another type of basic research is the development of standard reference data, such as the properties of materials and their relationship to materials processing. Although this purpose may sound somewhat routine, such information is manda- tory for engineering design in the development process and for the assessment of the technical feasibility and cost assessment of incorporating a material in weapons and support systems. Still another type of basic research constructs exploratory systems or devices that enhance functionality or performance without regard to the design of a robust, cost-effective version. This basic research is usually focused on a well-defined, often near-term technology need that can be relevant to a range of applications. A consistent and important observation of this committee, based on its inter- views, was the current de-emphasis on the first type of basic research described above—the high-risk, high-payoff discovery—and an increased focus on the second and third types. R&D managers find the latter two types of research easier to “justify,” given the range of well-defined current needs, whereas the benefits of the first type are more uncertain in the early stages of research. Yet, as noted, 5The term “unfettered” as used by the committee does not mean unfocused or totally unconstrained. It does mean not being tied to short-term goals or specific applications. It is the kind of research that is truly exploratory and that may or may not, by itself, produce exploitable results. Still, in those cases in which it does not, it is likely to advance knowledge in areas that will have a longer-term payoff.

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15 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH projects exhibiting the attributes of the first type create the breakthrough benefits for military capabilities. As is the case in private industry,6 the abnormally large payoffs of a few “big hits” make defense basic research a productive investment overall. DOD resources committed to basic research create and deliver a portfolio of future valuable returns. It is useful to think of these investments as resulting in options which, if exercised, will lead to solutions for future military challenges as they emerge.7 The outputs of basic research are not the options themselves, but rather the raw materials used to construct the options in 6.2 and 6.3 research. Three classes of key research participants generate these raw materials of basic research: universities (receiving about 60 percent of 6.1 funds), government laboratories (receiving about 30 percent), and commercial firms (about 10 per- cent). Each class has its role in developing the resulting options. Universities create raw materials in the form of new knowledge and human competencies across broad areas of science and engineering. DOD laboratories create new knowledge, but normally in focused areas of importance to DOD applications. Both DOD laboratories and commercial firms have the responsibility of convert- ing the raw materials from basic research into particular technology investment options. The value created by activities conducted by each of these classes can be categorized into several (somewhat overlapping) types that include the following: • Expansion of the base of technical knowledge underlying the DOD’s needs, • Creation of new technology options, • Creation of a cadre of technical experts to provide expert advice when needed, • Recruitment of skilled technical people into the DOD for key positions, and • Insight into future technology potential and military applications. These are the values expected from 6.1 investments in basic research. At every level of the R&D chain of command, the values expected should be com- municated, so that the sponsors of 6.1 research have a clear and explicit under- standing of the value delivered by their investment. The characteristics, which determine the value of the returns on investment, depend on the broad mission of the investing organization (e.g., the Army, Air 6Lewis M. Branscomb and Philip E. Auerswald, 2001, Taking Technical Risks: How Innovators, Executives and Investors Manage High-Tech Risks, Cambridge, Mass.: MIT Press (see, especially, Ch. 4); and F.M. Scherer and Dietmar Harhoff, 2000, “Technology Policy for a World of Skew- Distributed Outcomes,” Research Policy 29 (4-5): 559-566. Available online at http://dx.doi.org/ doi:10.1016/S0048-7333(99)00089-X. Last accessed on November 16, 2004. 7Peter Boer, The Valuation of Technology: Business and Financial Issues in R&D, New York, N.Y.: Wiley, 1999; Johnathan Mun, Real Options Analysis: Tools and Techniques for Valuing Strategic Investments and Decisions, New York, N.Y.: Wiley, 2002.

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16 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH Force, Navy, DARPA, and so on). The values expected from a particular invest- ment reflect strongly the mission of the organization performing the research (e.g., a university, government laboratory, or commercial firm). The mix of values created is different for a university than it is for a government laboratory. For a university, the discovery and acquisition of knowledge and the development of skilled personnel are primary values, and they are the values delivered to the DOD for its investment. Research internal to the Service laboratories is focused on exploiting knowledge and human assets to meet military needs. In some cases this work satisfies the “pull” from gaps in the knowledge of science where the DOD has interests that have not attracted the attention of universities and private firms. To serve the needs of the DOD, the overall values expected from 6.1 invest- ments must be acquired on multiple levels for each Service, laboratory, and investing organization. And the values expected evolve continuously, reflecting the dynamic character of the need for military capabilities. Strategic planning, investment decisions, and retrospective evaluation of the results achieved based on the values expected are the core of an effective management system. Done well, this leads to strong and sustained support for basic research at all levels of the DOD because the investments are well aimed and managed to provide valued returns. Although the committee believes that the variety of missions, motivations, and management approaches is essential to the range of basic research needs, it is concerned about the clear trend toward increasing short-timescale research in support of near-term applications at the expense of long-term, unfettered explora- tion of high-risk but potentially large-payoff areas. In one instance among many, the relevance of the proposed work includes potential application to “land vehicle control, sensor networks, control of networks of smart mines and weapon platforms. . . .”8 Other indicators of this trend toward sharply focused research are illustrated by DARPA’s intent in ensuring a direct connection between 6.1 funding and the specifics of funded projects9 and by the comment of senior leadership in the Office of Naval Research that “much if not all” of the 6.1 efforts will transition to 6.2 programs.10 At the same time, the committee found in its site visits and discussions that many research managers and researchers at universities do not know whether 6.1 or 6.2 funds support a particular research effort. This latter fact supports the argument that the ambiguity has not been a serious impediment to attracting university talent and managing their basic research. In any case, given 8U.S. Army Research Laboratory (ARL), “Funding by Organization During FY 2003,” e-mail provided by Carolyn Nash to James Garcia, June 15, 2004. 9Committee visit to the Defense Advanced Research Projects Agency, June 15, 2004, Arlington, Va. 10Committee visit to the Office of Naval Research, June 21, 2004, Arlington, Va.

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17 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH the current research limitations discussed in the next section of this report, the reasons for the trend described here are understood but, if it is continued over the long term, it will not serve national security interests. The committee also observed that there are other sources of funding for basic research in which the mission does not drive specific focus as strongly as in the DOD. The National Science Foundation is one of the more notable such sources. The existence of significant differences in research management approaches within the military departments and defense agencies is consistent with the range of needs. The Air Force, for example, through its Air Force Office of Scientific Research, manages all 6.1 funding in the Air Force, while the Army, Navy, and DARPA manage 6.1 and 6.2 in the same organizations. Furthermore, the Navy manages 6.1 funding centrally in the Office of Naval Research (ONR), while the Army manages 6.1 funding across a number of research organizations. Each of these approaches has strengths and weaknesses, and the committee found no reason to recommend one approach over another. Instead, the committee con- cludes that the key to effective management of basic research lies in having a cadre of experienced, empowered, and respected 6.1 program managers, sup- ported by uniformly understanding senior leadership deeply committed to basic research. From presentations by DOD research managers, the committee has some concerns relative to the degree of emphasis on maintaining a strong cadre of program managers. In some of the Services, particularly at ONR, substantial numbers of positions have not been refilled when senior people have left. Further- more, on the basis of the extensive experience of committee members with research in the DOD, the committee feels strongly that an enduring and genuine commitment to basic research needs to be authentic and visible at the Service acquisition executive and senior military levels. Findings Finding 7. Included in the range of values expected from basic research in the Department of Defense are (1) discovery arising from unfettered exploration, (2) focused research in response to identified DOD technology needs, and (3) assessment of technical feasibility. Finding 8. A recent trend in basic research emphasis within the Department of Defense has led to a reduced effort in unfettered exploration, which historically has been a critical enabler of the most important breakthroughs in military capabilities. Finding 9. Generated by important near-term Department of Defense needs and by limitations in available resources, there is significant pressure to focus DOD basic research more narrowly in support of more specific needs.

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18 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH Finding 10. Universities, government laboratories, and industry have overlapping roles in basic research: Universities primarily address the creation of broad new knowledge and human competencies, and Department of Defense laboratories and industry are more sharply focused on discovery tied more directly to identi- fied DOD needs. Finding 11. A clear understanding of the value expected from basic research across its full range provides the most reliable assurance of long-term Depart- ment of Defense leadership support for the basic research. Finding 12. A variety of management approaches in the Department of Defense is appropriate to the widely diverse missions and motivations for basic research. Finding 13. The key to effective management of basic research lies in having experienced and empowered program managers. Current assignment policies and priorities (such as leaving substantial numbers of program manager positions unfilled) are not always consistent with this need, which might result in negative consequences for the effectiveness of basic research management in the long term. Recommendations Recommendation 4. The Department of Defense should set the balance of sup- port within 6.1 basic research more in favor of unfettered exploration than of research related to short-term needs. Recommendation 5. Senior Department of Defense leadership should clearly communicate to research managers its understanding of the need for long-term exploration and discovery. Recommendation 6. Personnel policies should provide for the needed continuity of research management in order to ensure a cadre of experienced managers capable of exercising the level of authority needed to effectively direct research resources. Further, in light of the reductions in positions reported to the Com- mittee on Department of Defense Basic Research, the Department of Defense should carefully examine the adequacy of the number of basic research manage- ment positions. THE DEMAND VERSUS THE SUPPLY The reason for the pressure for more focused basic research at the present time is the intense pressure on all science and technology resources throughout the DOD. Over the past decade, the expectations of military forces have grown to include a far wider range of technologies in far greater depth. The U.S. national

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19 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH military strategy no longer calls for incrementally better capabilities than those of a known adversary. Instead it calls for dominance over a wide range of adversaries in a wide range of circumstances. Innovation is central to underwriting the con- cepts and supporting the transformation needed to meet these objectives.11 The expansion of the range and depth of the DOD’s needs should expand the range of researchers and research relevant to those needs. For many reasons, the DOD needs to attract the best and brightest university researchers. The demand for innovation across a wide range of disciplines places a premium on attracting a broad range of research talent. University programs provide proven access to new research vistas, offering new options for meeting challenges. The university pro- grams also give the DOD ready access to eminent scientists and engineers whose talents are needed to address scientific and technical challenges. To meet these expectations, the expanding range of technologies essential to the DOD mission includes new levels of interest in biological sciences, social sciences, environmental sciences, nanotechnology, robotics, and information technologies. Innovations in these and other areas are as essential to the success of future operations as past innovations in technology were to the success of earlier weapons systems.12 This circumstance places much greater demand on both basic and applied research. At the same time, pressures on the defense budget are intense with the added costs of transformation and current operations. Figure 3 shows the change in annual DOD 6.1 funding in real terms (constant dollars) from the 1993 level. The graph shows three lines corresponding to three different sets of inflation indexes (used to convert then-year dollar amounts to base-year, constant-dollar amounts). The figure shows that DOD basic research funding decreased in real terms from 1993 to 1998, then started to increase until 2002, when it began to level out. As shown in Figure 3, in the face of competing pressures, the 6.1 funding decrease in 2004 from what it was in 1993 was about 10 percent in real terms according to the inflation indexes used by the DOD. The decrease in 2004 was significantly more in real terms if it is calculated using the Consumer Price Index (CPI) or Higher Education Price Index (HEPI) instead of the indexes used by the DOD. Using the CPI, the decrease was about 18 percent. Using the higher educa- tion inflation index, it was about 27 percent. The most common concern expressed by the university community is its perception of shrinking support for university research (corresponding to 11Office of the Joint Chiefs of Staff, Joint Vision 2020, Washington, D.C.: U.S. Government Printing Office, June 2000. Available online at http://www.dtic.mil/jointvision/jvpub2.htm. Last accessed on November 16, 2004. 12Defense Science Board, Defense Science Board Letter Report on DoD Science and Technology Program, Washington, D.C., August 2000; and DSB, Report of the Defense Science Board Task Force on Future Strategic Strike Forces, Washington, D.C., February 2004.

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20 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH 0 Department of Defense (DOD) Higher Education Price Index (HEPI) Ð5 Consumer Price Index (CPI) Ð10 Percent Change Ð15 Ð20 Ð25 Ð30 Ð35 Ð40 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year FIGURE 3 Constant-dollar change in annual Department of Defense 6.1 funding (as percentage change from 1993 value). decreases in DOD 6.1 funding shown in Figure 3). This is broader than the 6.1 funding issue. As noted above, many researchers do not know whether they are funded by 6.1 or by 6.2, and some see an advantage in seeking 6.2 research to attract more substantial funding. University interest in 6.2 should also be wel- comed by the DOD and brings many of the same benefits to the DOD as univer- sity involvement in 6.1. However, DOD sponsors of 6.2 work are more likely to seek restrictions—such as those on the foreign researcher involvement, the requirement of prepublication review, short time horizons and frequent reporting, and demands for specific findings—that are inconsistent with basic research, and especially with basic research conducted in universities. University research is also affected by reductions in basic research funding by the states and industry, resulting in more reliance by universities on federal funds. Industry also competes for these funds. A number of the committee’s dis- cussions and interviews described the aggregate effects of this environment. While the committee was unable to compile statistically significant data, it found the described effects to be credible. They include the following:

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21 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH • The funding reduction in 6.1 research is particularly difficult for univer- sity engineering and for mathematical and computer sciences. NSF and the DOD are the largest funders of engineering, with the DOD funding about 40 percent, with major concentrations in electrical and mechanical engineering. In these two fields, the DOD provides over half of the federal funding. Regarding computer science and mathematics basic research investment, the DOD funds 17 percent and the Department of Energy funds 3 percent, while NSF funds 75 percent.13 • The historical increases in the costs of supporting a graduate student, with no increase in research funding in real terms, results in shorter performance periods and/or fewer graduate students involved in support for DOD needs. • University research managers indicated that the shrinking support for uni- versity research makes it difficult for younger faculty members interested in working on DOD research to get started in DOD research.14 Con- sequently, they turn their research attention elsewhere. • With the increased reporting requirements, principal investigators and graduate students spend more time preparing reports and less time on research. • The DOD is funding larger grants with industry personnel as the principal investigators. • Industry funding for basic research has decreased sharply, and many high- tech firms are shifting basic research offshore. An additional limitation on attracting the best and the brightest to the basic research needs of the United States and the Department of Defense could be the limitation of access to foreign students and scholars. Issues identified during com- mittee discussions and interviews that may have an adverse effect on attracting the best research talent include the following: • Visa problems that limit the number of foreign students and postdoctoral candidates who are admitted, or who even apply for graduate study in the 13All percentages are calculated for 2001 based on data found in National Science Foundation, Division of Science Resources Statistics, Federal Funds for Research and Development, Research to Universities and Colleges by Agency and Field of Science: Fiscal Years 1973-2003, NSF 04-332, Arlington, Va., 2004. Available online at http://www.nsf.gov/sbe/srs/nsf04332/start.htm. Last accessed on December 2, 2004. 14All researchers are affected by funding shortages. During periods of shrinking funding, younger researchers who want to get started in DOD research are at a particular disadvantage relative to those who already have established, ongoing support relationships with DOD research sponsors. With shrinking funds, DOD sponsors’ first priority is to continue and complete ongoing research. There is little funding to start new research. Limited funding also means that younger researchers must attract DOD research sponsor support at the expense of support that would have otherwise been given to more established researchers who have already been “proven.”

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22 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH first place (the number of international graduate student applications across the nation has decreased by about one-third from fall 2003 to fall 2004);15 • Contracts that prohibit foreign student and postdoctoral candidate participation; • Recent threats to the exemption of basic research from export controls under National Security Decision Directive (NSDD) 189; • Possible restrictions placed on the use in research of equipment under export control by foreign students and scholars; and • Restrictions on foreign student and scholar participation in subcontracts by industry to universities for basic research. The issue of limitations of access to foreign students and scholars is particu- larly critical to engineering and the physical, mathematical, and computer sciences. In 1999, 49 percent of all engineering Ph.D. graduates and 47 percent of the mathematics and computer science graduates were foreign nationals (not perma- nent residents).16 Those numbers have increased since 1999, and today more than 50 percent of the Ph.D.’s in these areas are on temporary visas. The positive aspect of this problem is that more than 50 percent of these Ph.D.’s remain in the United States. Recognizing the important contributions of foreign nationals in basic research, President Reagan signed NSDD-189 in 1985, stating that the products of fundamental research should remain unrestricted to the maximum extent pos- sible, and that classification (rather than regulation such as export controls) is the mechanism for control of information.17 The current Bush administration affirmed that the policy in NSDD-189 “shall remain in effect, and we will ensure that this policy is followed.”18 15Heath A. Brown and Peter D. Syverson, Findings from U.S. Graduate Schools on International Graduate Student Admissions Trends, Washington, D.C.: Council of Graduate Schools, 2004. Avail- able online at http://www.cgsnet.org/pdf/Sept04FinalIntlAdmissionsSurveyReport.pdf. Last accessed on November 16, 2004. 16National Science Board, Science and Engineering Indicators–2002, Arlington, Va: National Science Foundation, 2002, NSB-02-1. Available online at http://www.nsf.gov/sbe/srs/seind02/ start.htm. Last accessed on November 16, 2004. 17National Security Decision Directive 189 was a response to the 1982 report Scientific Communi- cation and National Security. The recommendations of the Panel on Scientific Communication and National Security, chaired by Dale Corson, of the Committee on Science, Engineering, and Public Policy, concluded that there is no practical way to restrict international scientific communication without also disrupting domestic scientific information (Scientific Communication and National Security, Washington D.C.: National Academy Press, 1982). 18Letter from National Security Advisor Condoleeza Rice to Harold Brown, Council on the Future of Technology and Public Policy, November 1, 2001.

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23 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH However, recent reports from the inspectors general of the DOD19 and the Department of Commerce20 appear to restrict foreign student and scholar partici- pation in university basic research. As a result, the joint Association of American Universities (AAU)/Council on Governmental Relations (COGR) Task Force on Restrictions on Research Awards and Troublesome Research Clauses found in April 2004 that “despite affirmations of NSDD-189 by the Administration . . . , troublesome clauses restricting publication and participation by foreign nationals in research awards continue to be a significant problem for universities.”21 If this trend continues or expands, inadequate access to engineering talent will be a strategic problem. The solution to the problem will, at best, cost the United States dearly; at worst the problem could cost the nation preeminence in vital areas of technical competence. The net effect of the pressures on resources and the DOD responses to those pressures is that the increase in research resources is not keeping pace with infla- tion, let alone with the expanded demand for innovation across a broader set of disciplines. It is not surprising, then, that the DOD seeks increased focus in 6.1 research that will support identified capability shortfalls. This emphasis may serve the DOD in the near term, but it certainly will not accommodate the long-term view that is essential to meeting the needs of the department. In short, we are eating our proverbial seed corn. An additional concern to the committee is the lack of visibility on what happens to 6.1 funding during budget year execution. The committee could find no source of comprehensive information on this subject. Findings Finding 14. The breadth and depth of the sciences and technologies essential to the Department of Defense mission have greatly expanded over the past decade. 19Department of Defense Inspector General, Report of the Department of Defense Inspector General, Export-Controlled Technology at Contractor, University, and Federally Funded Research and Development Center Facilities, D-2004-061, Washington, D.C., March 25, 2004. Available online at http://www.dodig.osd.mil/audit/reports/fy04/04-061.pdf. Last accessed on December 2, 2004. 20Department of Commerce Inspector General, Report of the Department of Commerce Inspector General, Deemed Export Controls May Not Stop the Transfer of Sensitive Technology to Foreign Nationals in the U.S., IPE-16176, Washington, D.C., March 31, 2004. Available online at http:// www.oig.doc.gov/oig/reports/2004/BIS-IPE-16176-03-2004.pdf. Last accessed on December 2, 2004. 21Association of American Universities, Council on Government Relations, Restrictions on Research Awards: Troublesome Clauses: A Report of the AAU/COGR Task Force, Julie T. Norris, chair. Available online at http://206.151.87.67/docs/Troublesomeclauses.doc. Last accessed on November 16, 2004.

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24 ASSESSMENT OF DEPARTMENT OF DEFENSE BASIC RESEARCH Finding 15. In real terms the resources provided for Department of Defense basic research have declined substantially over the past decade. Finding 16. The demand for new discovery argues for significantly increased involvement of university researchers. Yet some younger university researchers in the expanded fields of interest to the Department of Defense are often discour- aged by the difficulty in acquiring research support from the department. Finding 17. Recent pressures to apply restrictions on participation and publica- tion through export controls on Department of Defense-sponsored research funded in 6.1 both disqualify it from being considered basic research as defined by National Security Decision Directive 189 and threaten to change fundamentally the open and public character of basic university research. This finding does not apply to research funded in 6.2. Recommendations Recommendation 7. The Department of Defense should redress the imbalance between its current basic research allocation, which has declined critically over the past decade, and its need to better support the expanded areas of technology, the need for increased unfettered basic research, and the support of new researchers. Recommendation 8. The Department of Defense should, through its funding and policies for university research, encourage increased participation by younger researchers as principal investigators. Recommendation 9. To avoid weakening the long and fruitful partnership between universities and Department of Defense agencies, DOD agreements and subagreements with universities for basic research should recognize National Security Decision Directive 189, the fundamental research exclusion providing for the open and unrestricted character of basic research. DOD program managers should also explicitly retain the authority to negotiate export compliance clauses out of basic research grants to universities, on the basis of both the program’s specific technologies and its objectives.