The terms competitive grants and peer review mean different things to different people under different circumstances. The broad philosophy of these funding concepts is to fund research (or other projects) according to merit rather than some other criterion—for example, dividing resources equally among qualified applicants or constituencies. The challenge is to define and evaluate merit. Ideally, the organization providing the resources defines merit, and qualified reviewers who have been screened to minimize or eliminate vested interest (usually termed "peers," though they may not be peers technically), evaluate proposals. With this system, the best-qualified and most capable people and organizations usually obtain funding for research, so, in theory, the return on investment is optimized.
A problem, however, is defining what research is to be done. At the "basic" end of the research spectrum, the more limiting the criteria, the higher the probability of excluding a good idea that no one thought of previously but that might revolutionize a field. Therefore, to cast as wide a net as possible for good ideas, delimiters are minimized. For example, one might ask for proposals concerning biology of plants of agricultural importance. At the "applied'' end of the spectrum, there might be a solicitation for research on methods of decreasing nitrate levels in the Chesapeake Bay; to be more specific, one could stipulate "nitrates originating from hog manure." Very specific criteria often limit eligibility, and this may or may not be appropriate. Most nongovernment agencies, foundations, and businesses use competitive grants mechanisms, although they may have other names like "requests for proposals." If absolute criteria are set, the process equates with competitive bidding on contracts.
The National Institutes of Health (NIH) uses a two-tier review system to guarantee both the scientific merit and public benefits of competitively selected research proposals. The first-tier review is by a group of scientific peers. The second-tier review is by a council of scientists and nonscientists that may take program and public priorities into account in making adjustments in funding decisions. In practice, the NIH councils have their impact largely at the margin of funding decisions, although they have the authority for more significant intervention (National Institutes of Health, 1992).
recommendations of two recent reports from the National Research Council and the National Academy of Sciences.
In Investing in the National Research Initiative (National Research Council, 1994a), the National Research Council's Board on Agriculture reaffirms its earlier (National Research Council, 1989) support for a much expanded competitive grants program for agricultural research. This committee concurs with the board's belief that competitive grants are the mechanism best suited to stimulate new fundamental research activities in specific areas of science and that they have unique advantages for food and agricultural systems research in relation to formula funds, special grants, and intramural research2: they are responsive and flexible, they attract a broad range of scientists from public and private institutions, and they cast a wide net—that is, they capture proposals that produce new alliances, new initiatives, and new approaches.