oversight

Mission Budgeting: Discussion and Illustration of the Concept in Research and Development Programs

Published by the Government Accountability Office on 1977-07-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          DOCUMENT RESUME

02807 - [A2133235]

Mission Budgeting: Discussion and Illustration of the Concept in
Research and Development Programs. PSAD-77-124; B-160725. Juj7
27, 1977. 80 pp. + 4 appendices (7 pp.).

Report to the Congress; by Elmer B. Staats, Comptroller General.
Issue Area: Science and Technology (2000); Science and
     Technology: Management and Oversight of Programs (2004);
     Program Evaluation Systems (2600).
Contact: Procurement and Systems Acquisition Div.
Budget Function: National Defense: Department of Defense -
     Military (except procurement & contracts) (051); Natural
     Resources, Environment, and Energy: Energy (305); National
    Defense: Atomic Energy Defense Activities (053).
Organization Concerned: Congressional Budget Office; Department
    of Defense; Energy Research and Development Administration;
    National Aeronautics and Space Administration; Office of
     Management and Budget; Office cf Technology Assessment.
 o3ngressional Relevance: House Committee on Armed Services,
    Senate Committee on Armed Services; Congress.
Authority: Energy Reorganization Act of 1974 (P.L. 93-438).
    National Aeronautics and Space Act of 1958 (P.L. 85-568).
    Congressional Budget Act of 1974 (88 Stat. 297!. Sunshine
    Act of 1977; S. 2 (95th Cong.). Budget and Accounting
    Procedures Act of 1950. H. Rept. 94-1231. S. Rept. 95-164.
    S. Rept., 95-129. OMB Circular A-109. DOD Directive 5000.2.
          The mission budget concept offers significant potential
for alleviating problems with the way the Federal budget is
currently presented and the limitations it imposes on
congressional review. The common complaint with the present
system is that Congress gets L great mass oL detail but not a
coherent picture of what the money is for and why it is needed.
A mission budget structure links an agency's basic
responsibilities, or "missions," to its activities and their
proposed funding. Descending levels of the structure then focus
more sharply on specific purposes, needs, and programs to
satisfy them. Recommendations: Congress should begin to
experiment with mission budgeting in carrying out its budget
review, authorization, and appropriation functions because the
concept has significant potential for: helping the President and
Federal agencies formulate budgets according to end purposes,
needs, and priorities; strengthening congressional policy review
and program oversight; achieving greater public accountability
in the use of Federal funds; providing one budget system
oriented to both executive and congressional needs; clarifying
mission responsibilities of the Federal agencies and keeping
them relevant to national policies and needs; and serving as a
structural foundation for "zero-base" and "sunset" reviews as
well as for governmental reorganization. (Author/SC)
           REPORT TO THE CONGRESS
       -   K
           BY TH " COMPTROLLER GENERAL
C,
 ,OF              THE UNITED STATES


           Mission Budgeting: Discussion And
           Illustration Of The Concept In
           Researc,-, ^, ¢,evelopment Programs
           GAO is recommending that the Congress be-
           gin to experiment with a new concept called
            mission budgeting" in carrying out its bud-
           ?et review, authorization, and appropriation
            unctions because the concept has significant
           potential for:
                --Helping the President and Federal agen-
                  cies formulate budgets according to end
                  purposes, needs, and pr.orities.
                -Strengthening congressional policy re-
                 view and p.ogram over-sight.

                --Achieving greater public accountability
                  in the use of Federal funds.
                - Providing one budget system oriented
                  to both executive and congressional
                  needs.

                --Clarifying mission responsibilities of
                  the Federal agencies and keeping them
                  relevant to national police3 an neds.

                --Serving as a structural foundation for
                  "zero-base" ana "sunset" reviews as
                  well as governmental reorganization.

           Traditional budgeting focuses on hhot public
           monies are to be spent. Mission budgeting,
           first, answers the questions: i'lIha are the
           monies for? lt'lhi are they needed? And then,
           I,,iw are they to be spent?
           Three of the largest fiscal year 1978 research
           and development funding requests (energy,
           defense, and space) are used in the report to
           discuss the concept and illustrate how it
           works.

            PSAD-77-124                                     JULY 27, 1977
                 COMPTROLLER GENERAL OF THE UNITED STATEU
                            WASHINGTON. D.C.   Z4U




B-160725




To the President of the Senate and the
Speaker of the House of Representatives

     This report discusses and illustrates a new concept
called mission budgeting, using energy, lefense, and space
research and development budgets.  Tt also presents matters
for the Congress to consider in deciding whether the missior
concept should be used to review, authorize, and fund Federal
agency budget requests.

     Our review was made pursuant to the Budget and Account-
ing Act, 1921 (31 U.S.(C. 53), the Accounting and Auditing
Act of 1950 (31 U.S.C. 67), and the Congressional Budaet Act
of 1974 (88 stat. 297).

      The missioun concept, if adopted, will have an impact on
the formulation and presentation of the President's budget
and on budget justifications of the Federal agencies.     It
could also be a structural foundation for "zero-base" budget-
inc, congressional "sunset" revriews, and governmental re-
organizat:icn.   We are therefor   ending copies of this re-
port to the Director, Office v    ianagemen.: and Budget, and the
Secretary of the Treasury.

     Copies are also being sent to the Director, Congres-
sional Budget Office, and the heads of departments and
agencies whose budgets are used to illustrate the mission
concept.




                                  Comptroller General
                                  of the United States
 COMPTROLLER GENERAL'S          MISSION BUDGETING:  DISCUSSION AND
 REPORT TO THE CONGRESS         ILLUSTRATION OF THE CONCEPT IN
                                RESEARCH AND DEVELOPMENT PROGRAMS

            DIGEST

            There hds been growing concern in the Congress
            about the way the Federal budget is presented
            and the limitations it imposes on congres-
            sional review. The common complaint is that
            the Congress gets a great mass of detail,
            not a ccherent picture of what the money is
            for and why it is needed.  (See p. 1.)
            Similar concerns have been expressed elsewhere.
            Several distinguished groups have complained
            that purposes of funding requests are too ob-
            scure in the present budget.  (See p. 2.)
            To alleviate these problems, a congressional
            Commission on Government Procurement recom-
            mended a new concept called mission budget-
            ing.  (See p. 3.)
            At congressional request, GAO is following up
            on the Commission's recommendations.   Also,
            the 1974 Budget Act charges GAO to help the
            Congress meet its budgetary information needs.


           Fiscal year 1978 research and development (R&D)
           budget requests in three major national areas
           of need (energy, defense, and space) are
           converted to a mission approach to illustrate
           the impact of this rew concept on congressional
           budgeting.  (See pp. 29, 44, and 67.)
           THE MISSION CONCEPT

           A mission budget structure links an agency's
           basic responsibilities, or "missions," to its
           activities and their proposed funding. De-
           scending levels of the structure then focus
           more sharply on specific purposes, needs, and
           programs to satisfy them. Mission budgeting
           is both a top down and a bottom up approach.
           The first thing a mission budget does is to
           focus the congressional budget process on policy
           review; it then reinforces this policy review
           with a new approach to program oversight.

ConradW soulwed ber.*tI hmnt
                           ti                        PSAD-77-124
Congressional _l2cyx review
Policy decisions determine the broad thrust
of Federal actions and are made by executive
agency administrators, the President, and
the Congress.  (See p. 9.)
Traditional budge-s draw congressional
attention to unrelated agency activities
and their detailed management and funding
and away from the end purposes of the
activities and policy decisions.
Mission budgets direct congressional
attention to:
-- Agency end purposes and their consistency
   with national policy.

-- Agency roles, responsibilities, and
   approaches for carrying out the missions.
-- Agency current performance capabilities,
   needs, priorities, and other matters.
   (See pp. 10 and 26.)
Mission budgets also direct congressional
attention to the funding that is appropriate
for each mission. Funding of particular
missions can be raised or lowered in
accordance with congressional views of the
mission's relevance and importance to
national needs (their worth) and in accor-
dance with the agency's current capability
to perform the missions.   (See p. 11.)

Congressional judgments on mission funding
levels are then refined through oversight
of specific programs.

Conlressional _rooram oversight
When an R&D program first emerges into view as
a line item in the present budget, crucial
decisions have been made and the program is
well underway. The solution to the need has
been decided and development, procurement, and
downstream operating costs are predetermined.
The program already has momentum. At this



                    ii
           point, few decisions are open to the Congress.
           The revip'- of program management details thus
           becomes the principal oversight activity.
           (See pp. 1, 2, and 13 to 15.)
           In mission budgeting, linkage is established
           between an activity proposed for funding and
           an agency mission. This linkage is the "mis-
           sion need." When funding the need, the
           Congress authorizes the start of a new R&D
           program. By entering the picture this early,
           the Congress can assess the need and its pri-
           ority well before the program acquires momen-
           tum. (See pp. 11, 14, and 15.)
           Also, by funding a need expressed in mission
           terms rather than a specific activity, mis-
           sion budgeting stimulates exploration of
           differing and innovative solutions to Govern-
           ment problems.  It funds competition early
           when the cost is relatively small but,
           because of the magnitude and ultimate impact
           of early decisions, the benefits will be
           maximized.  (See p. 15.)
           When the most promising approach is chosen
           for development, it would represent a line
           item and be subject to the same congressional
           controls as today.  (See p. 19.)
           In mission budgeting, a base of new technologi-
           cal knowledge is funded separately from speci-
           fic programs. By clearly segregating the
           funding of these two, there can be sustained
           sul.ort for developing new knowledge fcr
           future innovation while guarding against the
           use of technology base funds to predoLermine
           solutions of new programs and lock-out com--
           petition. (See pp. 13 and 14.)
           Mission budgeting would also permit the
           Congress to focus on few critical decisions
           which are major turning points in the evolu-
           tion of any new program. The Congress could
           evaluate progress at these turning points
           as a basis for funding the program's next
           step.  (See p. 16.)
           In traditional budgets, programs with common
           purposes are scattered under various
           organizational, product, and technology

Tear Sba                      iii
groupings.  In mission budgeting, programs with
common purposes will be grouped together.

Program overlap--whether intentional or not--
would be more evident.  The new visibility would
extend down through the agency organization and
across to other Federal agencies having similar
missions.  (See pp. 10 and 11.)

OUTSIDE VIEWS

Executive branch views on the mission con-
cept, as well as those of some outside ob-
servers, both pro and con, are summarized
in appendix IV.

PRELIMINARY ACTIONS

Two congressional committee- have taken up
the mission idea; the Congressional Budget
Act calls for a presentation in the President's
budget of agency missions by national needs
starting next year; and Federal agencies are now
required to procure new major systems on a
mission basis.   (See p. 27.)

RECOMMENDATION TO THE CONGRESS

The mission budgeting concept offers signif-
icant possibilities.  GAO is recommending
that the Congress begin to experiment with
the concept in carrying out its budget re-
view, authorization, and appropriation func-
tions because:

-- Mission budgeting would help the President
   and Federal agencies formulate and present
   budgets according to their end-purpose
   responsibilities, priorities, and needs.


--Mission budgeting groups and would help to
  coordinate or reorganize Government agencies
  and functions according to major purposes.

-- Mission budgeting would strengthen congres-
   sional policy review and oversight of Fed-
   eral programs.




                      iv
           --With mission I;adgeting, agencies can be
             held accountable for end-results achieved,
             that is, for the level of mission performance
             funded by the Congress. (See p. 26.)

           -- Presently, some agencies use one budget
              system for management purposes and another
              for the Congress.  Mission budgeting can
              satisfy both executive and congressional
              needs.  (See p. 26.)

           -- Mission budgeting encourages periodic con-
              gressional reviews to clarify what agency
              mission responsibilities are or should" be,
              in view of changing national policies and
              needs.  (tee p. 26.)

           --The President has asked executive agencies
             to develop a "zero-base budgeting" system
             and the Congress is actively considering
             "sunset" legislation. These new initiatives
             are compatible with and could be reinforced
             by a mission budget structure.  (See pp. 23
             to 25.)

           A prudent course of action might be to test
           the concept's practical application and useful-
           ness initially on a small scale.   (See p. 28.)


           The Office of Management and Budget believes
           further exploration of the mission concept
           is desirable but is reserving official comment
           pending congressional action. (See p. 28.)




IarULStI                       v
                        Contents


DIGEST                                                    i

CHAPTER

   1      CONCERNS ABOUT FEDERAL BUDGETING                1
              Ccngressional                               1
              Executive/private sector                    2
              Procurement Commission                      3
              Past efforts                                4
              Organization of report                      5

          PART I - OVERVIEW OF THE MISSION CONCEPT        6

   2      THE MISSION BUDGETING CONCEPT                   6
              Current hudqet                              7
              A mission approach                          8
              Congressional policy role                   9
                  Clarifying agency missions             10
                  Mission roles and responsibilities     10
                  Mission funding                        11
                  fission needs                          11
              Congressional program oversight role       12
                  Separating technology base from
                    mission funding                      13
                  Linking new programs to mission
                    needs                                14
                  Fundirg exploration of alternatives,
                    introducing competition              15
                  Overseeing crucial program turning
                    points                               16
              Impact on budget process                   17
                  Agency budget justifications           J8
                  Reprograming                           19
                  Illustrations of mission budgeting     20

   3      MATTERS FOR THE ATTENTION OF THE CONGRESS      23
              Some overall implications                  23
                  Relationship co "zero-base
                    budgeting"                           23
                  Relationship to "sunset" legis-
                    lation                               25
                  Eliminating dual budget systems        26
                  Acccuntability for use of funds        26
                  Revicw of agency missions
                    essential                            26
              Actions taken and rem3ining                2b
              Recommendation to the Congress             28
CHAPTER
                                                            Pape
           PART Ii -   ILLUSTRATIVE AGENCY APPLICATIONS
                                                                29
     4     -ENERGY RESEARCH AND DEVELOPMENT ADMINISTRA-
             TION
               Current budget                                29
               A mission approach                            29
                                                            31
                    Policy review
                        Review of ERDA missions             32
                                                            32
                        Review of mission funding
                                                            35
                    Program oversight
                                                            35
                        Funding the technology base
                                                            37
                        New information category added--
                          mission need
                                                            37
                        Competitive exploration of al-
                          ternatives
                                                            38
                        Overseeing key program turning
                          points
                   Impact on congressional process          41
                                                            42
  5       DEPARTMENT OF DEFENSE
              Current budget                                44
              A mission approach                            45
                                                            48
                  Policy review
                                                            48
                      Review of DOD missions
                                                            49
                      Mission roles and Tesponsibil-
                          ities                             54
                       Mission funding
                                                            55
                   Program oversight
                                                            56
                       Funding the technology base
                                                            56
                       New information category added--
                         mission need
                                                            57
                       Competitive exploration of alter-
                         natives
                                                           58
                       Multiservice use of capabilities
                                                           62
                       Overseeing key program turning
                         points
                                                           63
                  Impact on congressional process
              Congressional/DOD actions                    65
                                                           66
 6        NATIONAL AERONAUTICS AND SPACE ADMINIS-.
            TRATION
              Current budget                               67
              A mission approach                           67
                                                           69
                  Policy review
                                                           69
                      Review of NASA missions
                                                           70
                      Review of mission funding
                                                           72
                  Program oversight
                                                           73
                      Funding the technology base
                                                           73
                      A new information category added--
                        mission need
                                                           74
                                                            Eage
           ERDA illustrations
  4·-1     Excerpt From President's FY 1978
                                            Budget              30
  4-2      Current And Mission Budget
                                      Structures
             Compared
                                                                31
  4-3      A Partial ERDA Mission Structure
                                                                33
  4-4      Converting To A Mission Approach
                                                                34
  4-5     Budget Approaches Compared
                                     (Traditional
            vs. Mission)
                                                            36
  4-6     R&D Project Missionized (Fluid
                                         Bed Gasifica-
            tion PDU)
                                                            38
 4-7      R&D Project Missionized (Megawatt
            Systems)                        Scale
                                                            40
 4-8      R&D Project Missionized (Fluidized-bed
            Combined Cycles Plant, 13
                                      MW)                   40
 4-9      R&D Project Missionized (Central
                                           Station)         42
          DOD illustrations
5-1      Department of Defense - Military
                                          Budget           45
5-2      Excerpt From President's Budgets
                                                           46
5-3      Breakdown of Congressional
                                    Budget Justification
           Data (FY 1377 vs. FY 1978)
                                                           47
5-4      DOD Mission Structures Compared
           Joint Chiefs of Staff, Army,   (DDR&E,
                                         Navy, Air
           Furce)
                                                           51
5-5      Converting To A Mission Approach
                                                           53
5-6      A Mission Approach (Linkup
                                    of
           Mission Areas, Mission Needs,Missions,
           and Candidate Solutions)       Programs,
                                                           57
5-7      R&D Project Missionized (Advanced
           Fighter)                        Tactical
                                                           58
                                                      Page
5-8    R&D Project Missionized (F-16 Air Combat
         Fighter)                                      59
5-9    R&D Project Missionized (Pershing II)           60
5-10   R&D Project Missionized (Aegis)                61
5-11   R&D Project Missionized   (Patriot (Sam-D))     62
5-12   R&D Project Missionized (F-18 Aircraft)        63
5-13   Agency Budget Justification (Traditional
         vs. Mission Data)                            64
       NASA illustrations

6-1    Excerpt From President's FY 1978 Budget        68
6-2    Converting To A Mission Approach               71
6-3    NASA Project Missionized (Space Station
         Conceptual Studies)                          74
6-4    NASA Project Missionized (Space Telescope'     76
6-5    NASA Project Missionized (Spacecraft Experi-
         ments)                                       77
6-6    NASA Project Missionized (HEAO Spacecraft
         Experiments)                                 79
                          GLOSSARY

Mission               A basic end purpose of an agency.

Mission area          Any subordinate purpose, sub-mission,
                      part, or segment of an agency's mission
                      expressed in end-purpose terms.

Mission need          A deficiency in or a better way of
                      achieving the desired level of
                      mission performance expressed in end-
                      purpose terms.

Program               Generally defined as an organized set
                      of activities directed toward a common
                      purpose, objective, or goal undertaken
                      or proposed by an agency in order to
                      carry out responsibilities assigned to
                      it.  In practice, however, the term
                      "program" has many usages and thus doe,s
                      not have a well-defined standardized
                      meaning in the legislative process.
                      "Frogram" has been used as a descrip-
                      tion for agency missions, "program,"
                      activities, services, projects, and
                      processes.

Acquisition or        An organized set of activities directed
research and de-      toward developing or acquiring a new
velopment program     capability to meet a mission need.

Acquisition or re-    Desired results of an acquisition
search and develop-   or research and development program ex-
melli program goals   pressed as a capability needed, time
                      required, and cost-worth within
                      which alternative solutions can be
                      explored to meet a mission need.


                       ABBREVIATIONS

DOD       Department of Defense

ERDA      Energy Research and Development Administration

GAO       General Accounting Office

NASA      National Aeronautics and Space Administration

OMB       Office of Management and    Budget

R&D       Research and Development
                            CHAPTER 1
                CONCERNS ABOUT FEDERAL BUDGETING
     In recent years, Senators and Representatives alike
have increasingly voiced concerns about the presentation and
congressional review of the Federal budget. Similar concerns
have also been expressed by others outside the Congress.
CONGRESSIONAL

     Some Members of Congress feel the budget is not a use-
ful document. They express frustration with the type of
information included and with the way it is presented. They
describe the budget as "mind boggling," "incredibly complex,"
and a "hodgepodge of unrelated elements."

     A common complaint is that the Congress does n-t get a
coherent picture of why expenditures are needed and :hat it
lacks the time, staff, and expertise to deal with tne thou-
sands of unrelated budget items. The budget, they say, is
too involved for Members of Congress and the public to read-
ily understand.
     Members have described the review process as "piecemeal"
and '"crisis oriented." They believe the mass of detail di-
verts the Congress from making informed decisions on ques-
tions of policy and from translating those decisions into
meaningful budget adjustments.

     Excerpts of comments made by individual Members of Con-
gress are shown in appendix I.
     Reports published by congressional committees expand on
these concerns. A House Science and Technology Subcommittee
concluded that research and development (R&D) continues
to be viewed "as a large number of unrelated projects
and programs." 1/
     A report of another committee contained a study of
congressional authorizing procedures for R&D expenditures.
It highlighted congressional preoccupation with detai±s
resolvable at the program-manager level in the agency
(see p. 48).


l/Special Oversight Report No. 1, House Science and Technol-
  ogy Subcommittee on Domestic and International Scientific
  Planning and Analysis, 94th Cong., 2d sess., April 1976,
  p. 3.


                               1
     In still another report covering the Defense Department
fiscal year 1978 budget, the Senate Armed Services Committee
identified as one of the reasons for reduced U.S. technolog-
ical lead:

     "The Congress is not without fault * * *. The
     temptation [is] to try to manage the details of
     a specific program rather than wrestle with the
     more complex issues of policy and direction for
     our national defense posture * * * the net result is
     not enough emphasis on the major policy issues and
     too much emphasis on detailed project management." 1/

EXECUTIVE/PRIVATE SECTOR

     Concerns from outside the Congress have been voiced for
three decades. The two Hoover Commissions, in the 1940s and
1950s, for example, urged that Federal budgets reveal the
purpose for which requested funds are needed. 2/ In the late
1960s a private group of 200 leading businessmen and
educators issued a statement on national policy saying:

     -- Basic purposes, as well as choices between alternative
        means to achieve those purposes, tend to get lost in a
        staggering mass of budget documentation.

     -- Emphasis has been placed on numbers of people, con-
        tracts to be let, grants or subsidies to be given,
        and things to be purchased instead of on serving pur-
        poses or gaining results.

     To have meaning and validity, the group said, budgets
must be reviewed in terms of basic purposes.  It concluded
that Federal budgeting allows agency activities to linger on
and even to expand when they are obsolete, duplicative of
others, or of declining importance.  In the early 1970s, the
same group issued additional national policy statements on
congressional budgeting and Federal programs. They included
such observations as:


1/Report No. 95-129, 95th Cong.,   1st sess.,   May 10,   1977, p. 76.
2/The Budget and Accounting Procedures Act of 1950 sought to
  carry out the Hoover Commission recommendation by requiring
  an executive budget based on governmental functions and ac-
  tivities. A problem with this legislation is that " * * *
  the terms 'program,' 'performance,' 'activity,' and 'func-
  tion' are all used more or less interchangeably."  Program
  Bugeting    Proram Analysis And The Federal Budget,
  David Novick, Editor, Harvard University Press, Cambridge,
  Mass., 1966, p. 34.
                             2
      -- The extent of overlaps of activities among Federal
         agencies is not visible .,n budgets traditionally
         submitted to the Congress.

      --The Congress cannot oversee tie entire Federal budget
        each year on an item-by-item/basis.
      -- The Congress is involved in/program details to the
         point of interfering with executive responsibility.
      -- There is a need to set program objectives, consider
         alternate courses of action, evaluate whether Federal
         programs are achieving their objectives, and increase
         accountability to the public. 1/
     More recently, .n authority described the current bud-
get process as weighted down by masses of detailed numbers
for every conceivable type of expenditure.   He said that the
process does not permit the Congress to react to changing
situations because the process does not ask:
      -- Are current activities in the budget efficient
         and effective?
      -- Should current activities be eliminated or reduced to
         fund higher priority new programs or to reduce the
         current budget? 2/
PROCUREMENT COMMISSIO'

     A bipartisan congressional Procurement Commission,
members from Government and business, expressed similar with
                                                        con-
cerns about the budget process. The Commission said that
is virtually impossible for the Congress to review R&D bud-it
getary requests effectively because:


l/See Statements on National Policy by the Research and
                                                        Pol-
  icy Committee of the Committee for Economic Development,
  "Budgeting for National Objectives, Exezutive and Congres-
  sional Roles in Program Planning and Performance," Jan.
  i966, p. 12; "Making Congress More Effective," Sept. 1970,
  pp. 32-33; "Improving Federal Program Performance," Sept.
  1971, pp. 7-11, 51-52.
2 /Testimony
            of Peter A. Phyrr, "The Zero-Base Approach to
  Government Budgeting," at Hearings Before the Subcommit-
  tee on Intergovernmental Relations of the Senate Govern-
  ment Operations Committee on Mar. 15, 1976, p. 326.



                             3
      -- Traditional budgetary information overburdens the
         Congress with detailed reviews of technical projects
         that obscure the overall pattern.
      -- There are too many projects for the Congress to review.
      -- Many projects are not related to needs and do not show
         the purpose for which the activity is being undertaken.
     -- Many projects forego alternatives and set the course
        for what later emerges as a noncompetitive major system
        development with a budget of several hundred million
        dollars.
     The Commission observed that, in attempting to under-
stand agency budget requests, the Congress had been demanding
more detailed information. The Commission believed this
                                                         route
would only intensify the problem, and to confront the execu-
tive branch on a technical plane dould not only require enor-
mous staffing on the legislative side but also deny latitude
to those responsible for executing programs.

     As a means of correcting the problem, the Commission
recommended a mission end-purpose approach to budgeting.
                                                           At
congressional request, we are charged with following up on
Procurement Commission recommendations. 1/
of the 1974 Congressional Budget Act, we also Under Title VIII
                                               hav? a respon-
sibility for improving congressional budget information.

PAST EFFORTS

      In noting these criticisms of the Federal budget proc-
ess, it must be recognized that the process has not remained
static. There have been a number of efforts to improve the
process, most of which have been aimed at providing more
visibility to the policy issues associated with end purposes
and avoiding drowning policy officials in a flood of micro-
scopic detail. These reforms have gone under many names:
program budgeting, Management by Objectives (MBO), and
Each effort represented a step forward. When the budget so on.
                                                          today
is viewed in its totality, there is more focus on end purposes
than was the case years back when the Federal budget was
sented almost exclusively on a line-item basis.           pre-


1/The Commission made 149 recommendations to the executive
  branch and the Congress. We have issued six overall pro-
  gress reports and several others on specific subjects to
  date.  The next overall progress report is planned for
  release in winter 1977.



                             4
     The essence of this report is that there is still room
for substantial improvement. There are still too many sit-
uations in which attention is focused on means, rather than
ends. The concept of mission budgeting appears to be one
way of overcoming that problem.
ORGANIZATION OF REPORT

     This report is divided into two parts. Part I offers
an overview of the mission budgeting concept and related mat-
ters for congressional consideration. Part II illustrates
application of the mission concept to fiscal year 1978 bud-
get requests of three agencies--Energy Research and Develop-
ment Administration (ERDA), Department of Defense (DOD), and
National Aeronautics and Space Administration (NASA).




                            5
                         PART I - OVERVIEW

                             ChAPTER 2

                   THE MISSION BUDGETING CONCEPT

     This chapter overviews the rmission budgeting
                                                   concept as
applied to Federal Research and Development.

     For fiscal years 1977 and 1978, the President
                                                   requested
from the Congress $24 billion and $2,.i billion
                                                in R&D budget
authority as shown in figure 2-1.

                            FIGURE 2-1

                  R&D BUDGET AUTHORITY REQUESTED

                    BY THE PRESIDENT   (nole a)

     Department or agency                          1977    1978

                                                    (billions)
     Department of Defense
                                                  $10.9   $12.0
     Energy Research and Development
       Administration                               4.6     5.4
     National Aeronautics and Space
       Administration                               2.8     3.0
     Department of Health, Education,
       and Welfare                                  2.5     3.0
     National Science Foundation
                                                    0.8     0.9
     All others
                                                    2.4     2.3
         Total                                    $24.0   $26.6

a/The amounts shown rep. sent the agency's
                                           principal appro-
  priation request for R6a activities.  They do not include
  pay and allowances for R&D personnel or the
                                              cost for con-
  struction of R&D facilities.

     Federal R&D spending exceeds all private
                                              industry R&D.
As in industry, Federal agencies undertake
                                           R&D to develop
new or improved capabilities.

     In the earliest phases of R&D, there is great
tainty about the potential of any particular       uncer-
                                             concept or

                                6
technical approach. Should a particular approach prove
feasible and also superior to others, there is still uncer-
tainty about the money necessary to develop and procure it
in the quantity needed.
     Due to these uncertainties and because commitments to a
particular design concept may involve hundreds of millions or
billions of dollars, considerable information must be
gathered in early R&D phases about potential =olutions.

      The basic structure used by the Federal agencies to pre-
sent R&D funding requests to the Congress is determined by
the agencies, the Office of Management and Budget (OMB), 1/
and by the particular congressional committees which review
them.

CURRENT BUDGET 2/
     Current agency budgets are presented on a "line item"
basis; that is, broken down and itemized by different kinds
of proposed R&D projects   Line-item budgets are input ori-
ented:  they direct attent on to the means or how money is
to be spent. They are usually categorized by th- kinds of
products and technical wozk involved. The projects are far
too numerous for the Congress to review individually. The
natural tendency is to look at higher dollar amounts and at
proposed increases in dollar expenditures from year to year.
The budget reviewer is more inclined to challenge a partic-
ular approach to an R&D project than its end purpose because
end purposes are not normally shown.

     Congressional reviews often result in either increasing,
reducing, denying, or deferring line-item expenditures.
Sometimes cuts are made on an overall basis with agencies con-
sulted about which line-item expenditures should be reduced,
eliminated, or deferred.
     Once the R&D budget is approved, agencies consult with
congressional committees if funds are to be utilized for pur-
poses other than those contemplated at the time of appropri-
ation. That is, if early technical projects do not proceed


1/OMB Circulars A-10, A-11, and A-34.

2/For a more detailed discussion of the current budget and of
  the congressional role in R&D budgeting, see "Research And
  Development In The Federal Budget: FY 1978," a report pre-
  pared for the American Association for the Advancement of
  Science, by Willis H. Shapely, Don I. Phillips, Herbert
  Roback, May 1977.


                             7
 as planned and agencies require more
                                      money than anticipated
 or have to add new projects, their congressional
 are consulted.                                   committees

 A MISSION APPRO)ACH

       A mission budget assembles
 expenditures accordJi-, to tneir and groups varicus kinds of
                                  end purposes. 'ission bud--
 gets focus initially on what thie money
 ieeded, and then on how t-re monry is to isbe
                                               for and wh it is
 at the highest level-in the budget structurespent. Missions
 end-purpose responsibilities assigned            represent basic
 ing levels in the budget structure      to  an  agency. Descend-
                                     give an increasingly
 closer look at the mission purpose
 the money. At the lowest levels areand at the need to spend
                                       the individual activi-
 ties--the means decided upon to satisfy
                                            the need.
 Figure 2-2 compares the line-item and
                                        mission approaches.

                          FIGURE 2-2

       BUDGET STRUCTURES COMPARED

     LINE ITEM APPROACH
       (INPUT-ORIENTED)                  MISSION APPROACH
                                        (OUTPUT-ORIENTED)
          AGENCY                             AGENCY
             I                                   I
             I
      KIND OF PRODUCT                  OPERATIONAL MISSION
                                         (BROAD PURPOSE)

   STAGE OF DEVELOPMENT
                    II~                   MISSION AREA
                                        ~~(MORE
                                             ~~ SPECIFIC)

      R&D PROGRAM                               I
            R&D    I
               RAM(SPECI
                    P~tG
                                         MISSION NEED
                                                    FIC)

     FUNDS REQUESTED                     R&D PROGRAM


                                       FUNDS REQUESTED
     Mission budgeting has two main
policy review--whet fund-- are for andthrusts: congressional
program oversight--how fi'nds are being why, and congressional
                                         spent. Each thrust has


                               8
several dimensions which are identified later     in expanded
versions of figure 2-3.



                              FIGURE 2-3
                           MISSION BUDGETING



                                                     CONGRESSIONAL
                                                     POLICY ROLE --
                                                     WHATFUNDS ARE
                                                      FOR AND WHY




      TWO
 MAJOR THRUSTS




                                                       CONGRESSIONAL
                                                       PROGRAM
                                                       OVERSIGHT ROLE - -
                                                        HOW FUNDS
                                                        ARE SPENT




CONGRESSIONAL POLICY ROLE

     Certain kinds of decisions determine the broad thrust of
Federal action and can or should be made only by the highest
authority. These are decisions made by executive agency
administrators, the President, and the Congress through
the legislative and budget processes.

     A mission budget initially directs congressional atten-
tion to an agency's basic responsibilities by displaying
them in the budget structure in end-purpose terms and by con-
necting these mission responsibilities to agency activities
and their proposed funding. This kind of a budget structure
directs congressional review to such policy matters as

      1.    Clarifying agency mission purpcr- s and deciding
            their relevancy to current national policy and needs.


                                 9
      2.   Assessing agency roles and responsibilitie:s
                                                        for the
           missions and approaches for carrying them out.

      3.   Raising or lowering mission funding based on

           -- Resources required for missions versus
              their "worth."

           -- The agency's current capability to perform
                                                         the
              missions.

           --Priority needs of each mission.

Clarifying agency missions
     The first step in congressional review is to
                                                   clarify
what agency mission purposes are, or should
                                             be, in terms of
current national policy. Without this clear
                                              understanding
of why activities are being conducted, there
individual programs and activities will becomeis danger that
                                                "missions"
unto themselves.  As a basis for this congressional review,
agencies would submit information on their
                                            missions and on
existing and needed capabilities to perform
                                             them.
      Presently, none of the agencies, whose budgets
for illustrative purposes in this report, are        are used
                                               sure about how
best to describe their missions in a mission
                                              budget struc-
ture.   (See pp. 26, 32, 49, and 70.)  The structure defines
the end purposes of all agency activities and
mine what issues and funding allocations are   helps to detpr-
                                              to be addressed
in budget reviews and which will be submerged.
                                                 Some diffi-
culty can therefore be expected in reaching
                                             a consensus on
the budget structure.

Mission roles and responsibilities

     As in the case of any agency with several operational
components, rivalry often exists for preeminence
missions.                                          in agency
           The tendency is for one component to assume
                                                         pri-
mary responsibility for a mission and undertake
                                                 development
of a mission capability based on its own operational
and preferences.                                       mode
                   (See p. 54, for example, about repeated
concerns of the Appropriations Committee over
                                               military
service duplication.)

     Mission budgeting would help to harness intra-agency
rivalry by exposing to reviewers programs serving
                                                   common
purposes and the same needs and by clarifying
                                               component
roles and resporsibilities at the very outset
                                               of programs.
Intra-agenc 7 competition could still be used,
                                               when desirable,



                             10
to solve critical needs. Overlaps in programs would be
purposeful and any imbalances in mission funding would
be exposed.

Mission funding

     With agency missions and responsibilities clarified,
congressional review would then begin to consider the fund-
ing appropriate for each mission.  Funding levels hinge on
the relative importance of each mission and the priority of
their needs.  With mission funding, the mission's potential
worth or contribution to meeting a pressing national need
would be considered as opposed to relying on past cost
trends. Assessing funding of an agency's missions includes
inquiry into such things as:

     -- Relevance of the missions--how do they respond to
        the Nation's most critical needs and how do they com-
        pare to congressional views of national policy?

     -- Assignment of agency roles and responsibilities--is
        there uncontrolled rivalry and unwarranted duplica-
        tion with too little funding of some missions and
        too much of others?

     -- Approaches to carry out missions--are there better
        ways?

     -- Relative value of missions--how do their contribu-
        tions compare wit'i past and future required resources?

     -- The agency's ability to execute its missions--in what
        missions are capabilities most needed?  Should re-
        lated prorams be accelerated or phased out?

Mission needs

     A major factcr influencing mission funding is the ex-
tent of additional capability needed to achieve desired mis-
sion performance, that is, a "mission need."  Tied to a
mission need is a program and related funding aimed at de-
veloping the additional capability.  When funding a mission
need for the first time, the Congress is authorizing, in
effect, the start of a program to acquire a new or improved
capability.  In this way, the Congress affirms that the need
for a capability is pressing enough to justify earmarking
relatively scarce R&D funds.

     If desirable, these mission capabilities may be multi-
purpose in nature, that is, serve more than one area of a
mission.


                             11
      Figure 2-4 summarizes various dimensions of the
 congressional policy role in mission budgeting.

                                         FIGURE 2-4
                                    MISSION BUDGETING

                                                                              MISSION
                                                                   ABILITY    NEEDy
                                                                     TO      PRIORITIES
                                                    MISSION COST   EXECUTE                CONGRESSIONAL
                                         APPROACH     woRTH                               POLICY ROLE - -

                RELEVANCY   ORC. ASSIGNX/ M                                                FOR AND WHY

                NEEAODLCY




     TWO
MAJOR THRUSTS




                                                                                            CONGRESSIONAL
                                                                                            PROGRAM
                                                                                            OVERSIGHT ROLE - -
                                                                                            nOW FUNDS
                                                                                            ARE SPENT

     Final congressional judgments as to whether funding of
missions should be raised, lowered, or left unchanged depend
also on the outcome of individual program reviews.

CONGRESSIONAL PROGRAM OVERSIGHT ROLE

     The second major thrust of mission budgeting
cerned with how funds are spent and recognizes thatis "front-
                                                       con-
end" decisions during a program's infancy are the most impor-
tant even though the funds involved are small.

     By stating needs in mission end-purpose terms, alter-
native ways of meeting the needs can be explored at the be-
ginning of new programs, before an agency makes a large in-
vestment and commits itself to any one design concept and
technical approach. At the very outset of any new program,
therefore, the exact means of accomplishing it would not be
shown.



                                              12
     The extent of congressional review of individual
programs under the mission approach would be entirely flex-
ible but would tend to focus cn:
     -- Clearly separating technology base funding to develop
        new knowledge from mission-oriented funding of new
        programs.
     -- Linking new programs to affirmed mission needs.

     -- Funding exploration of competing alternatives before
        programs become locked into single solutions.
     -- Reviewing progress at critical turning points common
        to all programs, as a basis for funding the next step.

Separating technology base
from mission funding
     The purpose of funding a "technology base" is to allow
new knowledge to be pursued as a source of future innovation,
not to design specific new capabilities.

     Under traditional budgeting, the design solution is fre-
quently advanced before the program itself is submitted to
the Congress for approval. This advance design work or be-
ginnings of new programs is not visible in congressional
appropriations. In line-item budgets, it is found in numer-
ous, seemingly minor technology base R&D projects whose tech-
nical descriptions obscure their purpose. (For examples,
see pp. 59, 60, 69, and 73 to 77.)




                              13
      Figure 2-5 illustrates how technology base funding is
 diffused and scattered in a line-item budget and how these
 same funds would be collected in a mission budget and treated
 as a separate category for funding purposes.

                                  FIGURE 2-5
                   SEPARATING TECHNOLOGY BASE FROM

                          MISSION-ORIENTED WORK
         Traditional approach       Mission approach
  (tec            a(technologytechnology
                              base              separately
             scattered)                 funded)
 1.      Science          $XX            1.     Technology base         $XX
 2.      Product "A"       XX2.                 Operational Missions
 3.      Product "B"      XX              ~--    sssionn "A"      $XX
                                              _ -Mission "B"       XX
 4.      Product "C"      XX                  'Mission "C"         XX   XX
 5.      Mgt. & support   XX             3.     Mgt. & support          XY


     The purpose of this separate category is to help insure
that technology base work is sufficiently funded but to guard
against extending the work into the design of predetermined
solutions. Until technology base and program funding are
clearly separated, executive administrators and congressional
committees will not be able to control the purposes of R&D
and the evolution of new programs. 1/

     Congressional review of the technology base
concerned with its size and nature and whether thewould  be
                                                    most prom-
ising technologies are being adequately funded.
might consider such criteria as how new or how oldThis  review
                                                    the tech-
nologies are, their potentials, and the prio ities of the
problems facing an agency such as in the case of the new
Department of Energy.
Linking new programs to mission needs

     Under traditional line-item budgeting, the beginnings
new R&D programs often escape top agency and congressional of
review (see pp. 59 and 75).  Thus, the formative decisions on

l/Report of the Commission on Government Procurement, Vol.
  2, Part C, ?p. 78 and 114 to 117.

                                    14
needs, priorities, and real alternatives are long past when
a program emerges into view.  Mission budgeting, however,
links funding of new programs to mission needs whose valid-
ity and priority have been affirmed by top agency administra-
tors and exposed to congressional review. This is done by
funding a mission need instead of a solution. And, an agency
need not commit itself prematurely to a solution in order to
gain congressional funding.

Funding exploration of alternatives,
introducing comepetition

     Funding needs, expressed as mission purposes, encourages
the creeaion and exploration of alternative concepts and
technical approaches before a new R&D program is locked into
a solution.  In mission budgeting, the Congress helps to
make sure this is done by explicitly funding competing
approaches having the greatest potential before commitments
are made to any single concept and technical approach.

     Alternative solutions would be created and explored in
the frontend of programs where it is the least expensive to
do so and where the most important decisions on concepts,
technical approaches, and costs are made.  After studies and
experiments are evaluated, less-promising alternative can-
didates and those that are too costly would fall out.

     This vide open approach at the beginning of new pro-
grams is expected to lead to less program advocacy and more
credible information being presented to the Congress.  If,
on the other hand, the agency wants to concentrate its re-
sources early on a single design, that desire would have to
be justified to the agency head and disclosed to the appro-
priate committees. 1/

     Congressional review of programs in their early stages
might inquire, for example, into:



1/OMB Circular A-109 (par. 15) on major system acquisitions
  already requires congressional disclosure of the basis for
  an agency decision to proceed with a single system design
  concept without competitive selection and demonstration.




                             15
      -- What level of innovation, new technology,
         are permitted to enter candidate systems and risk
                                                   and whether
         smaller firms are barred from participation?
      -- What is the extent to which candidate
                                               systems lose
         their identify (integrity) by allowing the
         tures of each to be merged (blended) into best fea-
         Government solution, thereby:              a single

        (1) creating.a reluctance on the part of
                                                 developers
            to promote their most innovative, competitive,
            and technically advanced ideas and
        (2) losing accountability for total system
                                                   design and
            performance?
      -- What criteria is used by the agency to
                                                select a de-
         sign solution for full development? Are
                                                   mission
         effectiveness, testing of critical hardware,
         mance reliability, and total cost (rather     perfor-
                                                    than initial
         price) included?
Overseeing crucial program
turning points

      Each R&D program is managed differently
success criteria (capability, time, and :ost and has its own
there are a few basic steps common to the     goals). But
                                           evaluation
programs. Present budget data is not oriented          of all
steps, nor does it disclose if one is being     to these basic
                                             bypassed.   (For
illustrations, see pp. 41, 63, and 78.)

     In mission budgeting, budget data is tailored
basic steps which are crucial turning points        to these
tion of a program.                           in the  evolu-

     First:    The mission need and goals which initiate
               program and shift it into the exploration the
               demonstration of alternative approaches. and
     Second:   The choice of a design concept for full
               development.
     Third:    The commitment of the program to production.
      Basic program steps represent a central
gressional review. Congressional committees focus for con-
sition to assess whether the next program     would be in po-
funded based on progress made in preceding step should be
                                            steps. The
intensity of congressional review would vary
agency's difficulty in accomplishing          with the
                                      particular program
steps.

                             16
     Figure 2-6 summarizes the various dimensions of mission
budgeting.

                                                 FIGURF 2-S
                                             MISSION l)Gr ING

                                                                                        MISSION
                                                                             ABILITY     NEEDS/
                                                                               TO      PRIORITIES
                                                              MISSIONCOST    EXECUTE                  CONGRESSIONAL
                                                APPROACH         ORT                                  POLICY ROLE -.
                                                   TO
                                     ASSlvr
                                 cORGC.         MISSIONS                                       _r''   1WHAT
                                                                                                          FUNDS ARE
                 RELEVANCY        ORO.APS                                                               O   AND WY
                TO NATICNAL       °
                NEEI+OLICY




     Two
MAJIR TNRUSTS



                 IEPNEED
                TECHNOLOGYR
                 B*ASE AND
                  MISSION
                 FUNDING      MSSIN FUNDSm
                                 LINKED TO
                                END ·PURPOSE
                                  NEEDS
                                               ALTERHATI VE
                                                 EXPLORED,
                                                COMPEITlION

                                                              PTRTCIPIDO .                              CONGRESSIONAL
                                                               CONSIDERED                               PROGRAM
                                                                                                        OVERSIGHT ROLE -.
                                                                               VISIBILITY AT            HOW FUNDS
                                                                               KEY PROGRAM              ARE SPENT
                                                                              TURNINWPOINTS


IMPACT ON BUDGET PROCESS
     The Congress makes three different kinds of budgetary
reviews. Initially, budget committees set total spending
levels for each broad national need or governmental func-
tion. More or less concurrently, Senate and House Authoriza-
tion Committees review activities of individual agencies to
determine if they should be funded. A third review, by
House and Senate Appropriations Committees, decides the ex-
tent of this funding.




                                                       17
      Figure 2-7 highlights this congressional budget
                                                      process
 and the impact of mission budgeting.


                                                                                     FIGURE 2-7
                                             IMPACT OF MISS1OH APPROACH ON CURRENT BUDGET PROCESS
                                                                                              (I)
                                                      f--                     -      ......               _       ........
                                                            Collers, Otgonel. Bud.,, A"c,v,r,                                 According .J
                                                            AI ncy EndP.poese. R.ep.nnsb.lt,,-                               (As.,ons),
                       r-,-       --                  I     Crg or..zs     RID Funds os f.
                           I   Ln.'s to       I                      (A) G*en.ml Trhn.t.Ovy Bose
                               ondMS.on                              (BJ E.Iplolnn       Alternative Sol/uton
                                N! d          hJ.° .                 Ci   FullcoI1.       DO-elopment


 EXECUTIVE   BUDGET FORMULATION

                                                      AGENCY
                                                           BUDGET                                                                                  PRESDENT
                                                                                                                                                   PRBUCOOROII*TES
                                                      SUBMITTED                                        BUDGET
                                                                                                    PORMULATION                                            TPPROVES
                                                                                                                                                   SUBMITS TO
                                                                                                                                                   CONGRESS


 CONGRESSIONAL BUDGET REVIEW

                  Bd.r                        I            BUDGET                                                   IARGE TS &5 CEILiNGS
                                                          REVIEWED                                                                       1
                                                                                                                      SET LY
                                                                                                                           FEDEIRAL|
                                                                                                                                 FUNCTIONS



                           ~Co.-iriroo                    BUDGET                              AU VHORIZA                     O                     HOlNSE
                                                       HEVIEWED                                     [ EGILATSON
                  vv   h
                       o   v .Z @.o                                        r3-                        D       ACT                                 SENATE

    8.gin.   dg., Pn-.dn.             by I
    Reiwong Ag.ncr     M        -s.,ns,      --   -              ,                                                                                                        A ,o, s, A
                                                                                                                                                                                   Ao ro
    |Copob.. s Nj-
                                                                                                              .       -                                               I     in          n.,e n
                                                                                                                                 _            ._.._dl            -_       FndI , A*Vn.,    .n

                                              Cue,'..,-~~ll"
                                                        BUDG:ET                                 LEGISLATION
                                                                                              APPAOP   IATION                        |
                                                                                                  DRAF                                   TE                 DC


 EXECUTIVE BUDGET EXECUTION

                                                           APPORTIONS
                                                          AMB                                 AGECES ALLOTI                                                  UN
                                                      MAGE
                                                       UNDS TO
                                                               4CIES
                                                                                                     TO
                                                                                                  FUNDS
                                                                                              OPERA;IN.               UNITSD                                NDS
                                                                                                     ''L-
                                                                               --                     _                         __
                                                                                                                             _.......
                                                                                  A*Iocoves Fuds u. M/s,,o.                                   I
                                                                                  Uses AMsson Needs owd


                                                                             i _A_
                                                                               ULsJ___i t_ _


Agency        budget justifications
     Figure 2-8 compares an agency budget justification
with the way that justification might be organized        book
sion budgeting. The new justification would give     for mis-
                                                    an over-
view of the mission, describe the need, and show
step in a program's evolution to meet that need. the basic
also keep technology base activities separate       It would
activities. The differences between the two    from  program
                                              approaches to
justification have major implications for overseeing
                                                       agency
programs.




                                                                                                     18
                                                                  FIGURE
                                                                      2-8
                                                    AGENCY BUrET JSTIFICATI

                          TRADITIONAL BUDGET                                                           MISSION BUDGET




                                                             1   NEED IWlTIA           1   B
       [ARLV TIECHf        CAL IIq                                 ROAiO

  T[CFNOLOGIESAND .OLUT:OM

                 6:0
                                         aCOI2
                                                                    ND
                                                          TECHNLOGIEAS
                                                                      D   tUTI
                                                                          SAUTION$
                                                                                   /
                                                                                                                    i



                                                                                                                           TECHNI)OLOGY
                                                                                                                                     UI




                                               U~IN060F                                                OF
                                                                                               "'lllo~~~~~~~~~"ns                MISSIONs




                                                                                                C~         PgOGRAM
                                                                                                               PR  $T5I5




  ·p.,~r ogr
          .,   *,vi.ng,




Reprograming
     After the Congress approves the budget, agencies would
continue to consult cognizant committees on any significant
changes in use of funds from that contemplated (reprograming).
However, for new programs, the primary focus would be in
terms of mission purposes and needs since the means for
accomplishing them would not as yet have been decided.
Whenever a particular R&D design concept has been chosen for
full development, it would represent a line-item expenditure
and be subject to the same congressional controls as today.
Reprograming actions are discussed in more detail in part II
illustrations of the mission concept.




                                                                               19
Illustrations of mission budgetin

      Figure 2-9 summarizes the rationale
mission approach in funding the technologyfor using the
development programs. It also displays       base and new
part II of this report to convert budget  a format  used in
agencies to a mission basis. This mission  requests  of three
guishes between portions applicable to       format  distin-
                                        policy
portions applicable to program oversight.       review  and
however, these congressional reviews would   In practice,
each other.                                  tend to reinforce




                            20
                                                                                                        FIGURE 2-9

                                                                                  MISSION BUDGETING
                                           RATIONALE                                                                                  ILLUSTRATIVE MISSION BUDGET IR&D)
       FUNDING TECHNOLOGY BASE                                   FUNDING DEVELOPMENT PROGRAMS

         TRADITIONAL APPROACH                          I             TRADITIONAL APPROACH
PROBLEMS:                                                  PROBLEMS:
  *   NECESSITY TO DEFEND A SPECIFIC SOLUTION                * AGENCY BUDGET REQUESTS GIVE FRAGMENTED.
      IN ORDER TO OBTAIN R&D Ftlt-DING                         YEAR BY YEAR GLIMPSES OF MANY TECHNICAL
                                                                 ACTIVITIES                                                                              PRESIDENTIAL SUWISSION
  *   LIMITED FUNDS FOR ACQUIRING NEW KNOW-
      LEDGE USED TO DESIGN PRECONCEIVED                      0   NEW PROGRAMS OBSCURE IN THEIR INITIAL
      SOLUTIONS FOR NEW PROGRAMS.                                YEARS, iE PRHVING CONGRESS OF POLICY REVIEW                                 I    TECHNOLOGY BASE                               SXX
                                                                 OF WHAT FUNDS ARE FOR AND PROGRAM OVER-
                                                                 SIGHT ON NEEDS. PRIORITIES. AND WHETHER                                     2    AGENCY OPERATIONAL MISSIONS
EFFECTS:                                                         ALi ERNATIVES EXPLORED.                                                          lEND-PURPOSE RESPONSIBILITIES)

  *   LOSS OF CONTROL OVER PURPOSE OF FUNDSEFFECTS:                                                                                               MISSION 'A'                 SXX
      I E WHETHER FUNDS ARE USED FOR ADVANC-                                                                                                        MISSION "B"                XX
      ING KNOWLED',E OR FOP STARTING NEW           A             BUDGET PRESENTATION CONFRONTS CONGRESS                                             MISSION "C"                XX
      PROGRAM                                                    IMMEDIATELY WITH TECHNICAL DETAILS
                                                                 INSTEAD OF PURPOSE OF THE PROGRAM AND                                              MISSION "D                 Xx
                                                                 WHY IT IS NEEDED.                                                                  MISSIONE"                  XX                XX
  *   SINGLE DESIGN APPROACHES INITIATING NEW
      PROGRAMS BYPASS NEED AND PRIORITY                      0· PROGRAM NED, SOLUTION. COST ARE LOCKED                                       3    MANAGEMENT AND SUPPORT                         XX
      DECISIONS AND CONSIDERATION OF COM.                       IN BEFORE CONGRESS CAN REVIEW THEM
      PETING CONCEPTS/TECHNICAL APPROACHES.                                                                                                                                                     c XX
                                                             ·   FOCLS Ot, TECHNICAL DETAILS CURTAILS
  *   TENDENCY TOWARD FAMILIAR SOLUTIONS OF                      EXECUTIVE FLEXIBILITY.
      WELL ESTABL ISHED FIRMS AND AWAY FROM
      THOSE OF INNOVATIVE FIRMS.
                                                                          MISSION APPROACH
  *   OLD TEChNOLOGIES SrRETCHED TOO FAR.
      LEADING TOJMARG;NA.,L !MPROVEMENTS AT                                                                                             CONGRESSIONAL BUDGET JUSTIFICATION DATA
      DISPROPOf.T IONATE COST.                             ACTIONS:
                                                             *   REQUIRE BUDGET REQUESTS BE ORGANIZED BY
                                                                 AGENCY END PURPOSE RESPONSIBILITIES.

                                                             *    LINK C:JNDING REQUESTS FOR NEW CAPABILIT!ES                  M'PIlON "A"-POLICY OVET VIEW
ACTION:                                                           To OR:&\NIZED REVIEW OF AGENCY MISSIONS

  *   CLEARLY SEPARATE FUNDING OF TECHNOLOAND                        MISI.N NEEDS.
      GY BASE FROM FUNDING OF NEW PROGRAMS                   *   AUTHORIZE APPROPRIATEI OVERSE    FUNDS BY
BENE FITS:                                                       AGENCY MISSION                                      2.   MISSION CAPABIL.ITIES. NEEDS

  *   FUNDS SPECIFICALLY EARMARKED FOR DE                  BENEFITS:                                                 3    PROGRAM FUNDS FOR DEVELOPING
      VELOPING NEW KNOWLEDGE                                                                                                WCAPABLTS
                                                             *    BUDGETS WILL REVEAL END PURPOSES THAT
  *   INNOVATION. NEW TECHNOLOGY ENCOUR                           ACTIVITIES ARE INTENDED TO SERVE AND THE                la) EXPLORING COMPETING
      AGED                                                        EVOLUTION OF NEW PROGRAMS                                   ALTERNATIVES                          sXX

  *   INCREASED POTENTIAL FOR MORE EFFECTiVE,                0 CONGRESS CAN LINK PRIORITY NEEDS TO R&DO                   Ib   FULL DEVELOPMENT                          xx
      SIMPLER. AND LESS EXPENSIVE SOLUTIONS                    FUNDING REQUESTS, DETECT VOIDS OR DUPt I
      TO FU rURE NEEDS                                         CATION. AND CONSIDER COST VS WORTH OF                                                                SXX
                                                               , 'CH MISSION.
                                                                                                                                                                                      PROGRAM OVERSIGHT
                                                             *   AGENCIES ENCOURAGED TO EXPLORE ALTEFNA
                                                                 TIVE SOLUTIONS COMPETITIVELY WITH FLEXIBI-
                                                                 LITY TO COPE WITH DYNAMIC, HIGHLY TECHNI-
                                                                 CAL ACTIVITIES
                                                                                                                                                                    2         PROGRAM COST TIME. CAPABILITY
                                                             *   PREMATURE COMMITMENT TO SINGLE APPROACH                                                                      GOALS
                                                                 AVCIDED AND PUBLIC ACCOUNTABILITY STRENG-
                                                                                         T:.:.NED BECAUSE                                                                 ~~~~~~~~~~~~~~WHETHER
                                                                                                                                                                                     EXPLORING ALTERNATIVES
                                                                                                                                                                           OR IN FULL DEVELOPMENT
                                                                 !) NSLWPROGRAM STARTS HIGHLY VISIBLE
                                                                 12) PROGRAM APPROACHES COMPETED, CRITICAL                                                          4.        KEY PROGRAM tURN.NG POINTS
                                                                     NEW FEATURES DEMONSTRA1 ED BEFORE EX-
                                                                     PENSIVE DEVFLOPMENT UNDERTAKEN.                                                                5,        PROGRESS. FUNDS REQUESTED            SXX




                                                                                                                                                                                                              21
                            CHAPTER 3
          MATTERS FOR THE ATTENTION OF THE CONGRESS
     In concluding part I of this report, this chapter is
intended to assist the Congress in further evaluating the
potential of the mission budgeting concept for budget review,
authorization, and appropriation functions. According to a
recent congressional study, "The true level of Congressional
interest in mission budgeting is as yet unknown." 1/
     A number of people in the R&D and budgetary fields were
asked to review material in this report (see app. III). Their
views--favorable and unfavorable--are outlined in appendix
IV.

     Mission budgeting, although originally proposed fo'r the
funding of Federal R&D, is not peculiar to any one type of
expenditure and may have general application. In evaluating
whether to proceed further with the concept, congressional
attention is invited first to some overall implications, and
then to actions already taken and remaining to put the concept
into effect.

SOME OVERALL IMPLICATIONS
Relationship to "zero-base budgeting"
     In February 1977 President Carter directed the heads
of executive departments and agencies to develop a zerc-base
budgeting system. Accordin, to the author of zero-base
budgeting, a mission-like budget structure that organizes
agency activities by end purposes, needs, and programs to
satisfy them, can serve as a "building block" or foundation
for the zero-base hudgeting system. (See app. IV.) Like
mission budgeting, zero-base budgeting is a relatively
new planning and budgeting technique. It has been adopted
in some form bf a number of business firms and State govern-
ments. The underlying idea is to examine the entire budget,
not just the amount above current spending levels. It asks
operational managers the following kinds of questions:

    -- What purpose does the operation serve?

    -- How can effectiveness of the operation be
       measured?


1/Lt. Peter John Henning, Navy-Congressional Interactions and
  the Response to Mission Budqeting (Naval Postgraduate School,
  Mar. 1977).

                               23
         -- What are the consequences of not performing the
            operation?

         -- Are there better ways of performing the operation?

         -- Using the best way, should spending levels be in-
            creased, decreased, or left as they are?

         -- What is the relative rank or importance of each
            operation so that those making the least contribution
            can be screened out?

     Figure 3-1 compares zero-base and mission budgeting and
shows their similarities and differences. The two most
striking differences are the requirements of zero-base
budgeting to:

         -- Analyze the effects of higher or lower funding levels
            of an operation.

         -- Formally rank the importance of each operation Lo that
            those with fewer benefits can be screened out.

                                              FIGURE 3-1

                           ZERO-BASE AND MISSION BUDGETING COMPARED


 ZERO-BASE BUDGETING                                   MISSION BUDGETING (R&D)

 ·   GROUPS ORGANIZATIONAL ACTIVITIES INTO             * GROUPS AGENCY ACTIVITIES INTO A MISSION
     OUTPUT ORIENTED TERMS ACCORDING TO                  END-PURPOSE STRUCTURE. THE STRUCTURE
     GOALS AND OBJECTIVES TO BE ACHIEVED                 IS TIED TO MISSION NEEDS THAT ARE EXPRESSED
                                                         IN TERMS INDEPENDENT OF ANY SOLUTION

 *   ENUMERATES ALTERNATIVE WAYS OF                    0 PROVIDES FUNDING TO CREATE AND EXPLORE
     ACHIEVING THE OBJECTIVES AND PROB-                  ALTERNATIVE SOLUTIONS ABLE TO COMPE,
     ABLE COSTS AND BENEFITS OF EACH                     WITHIN ESTABLISHED PROGRAM COST, TIM r ,
                                                         CAPABILITY GOALS

 ·   SELECTS BEST WAY USING COST/ BENEFIT              0 FUNDS A PREFERRED SOLUTION BASED ON
     ANALYSIS                                            MISSION BENEFIT/COST ANALYSIS AND
                                                         TEST DEMONSTRATIONS

 ·   PROVIDES DIFFERING FUNDING LEVEL                  0 (NOT CONTEMPLATED)
     OPTIONS, PROBABLE COSTS AND BENEFITS
     OF EACH LEVEL. AND CONSEQUENCES OF
     ELIMINATING THE ACTIVITY

·    RANKS ACTIVITIES ACCORDING TO THEIR               0 ELIMINATES AGENCY ACTIVITIES
     COST'BENEF IT VALUE, SCREENS OUT LOW                WHICH DO NOT HAVE AN APPROVED
     PRIORITY ITEMS                                      MISSION NEED OR SUFFICIENT PRIORITY

·    PROVIDES TOP MANAGEMENT APPROVAL                  0 EXPOSES MISSION PERFORMANCE FUNDED
     OF LEVEL OF PERFORMANCE. SUBSEQUENTLY,              IN BUDGET TO PUBLIC ACCOUNTABILITY
     OPERA'ING MANAGEMENT IS ACCOUNTABLE                 AND PROVIDES CONGRESSIONAL CHECKS
     FOR ACHIEVING THE EXPECTED PERFORMANCE              AT KEY PROGRAM TURNING POINTS




                                                  24
Relationshito "sunset" legislation
      During the current congressional session,
bills have been reintroduced calling for        a number of
                                          special reviews of
agency budget requests by authorization
                                         committees. These
bills have come to be known a;; "sunset bills,"
cause the sun would set on agency programs      so called be-
                                            with unfavorable
reviews. Unless specifically reauthorized,
expire.                                      a program would

     One of the bills reintroduced in January
                                                1977 (S-2)
requires House and Senate authorizing committees
tematic sunset reviews of virtually all            to make sys-
programs within their jurisdiction over  Federal  agency
                                         a 6-year period.
Agency programs would be grouped by their
reviews would be of a zero-base nature.    purpose and
                                          Each committee
would submit to the Senate and the House
                                          a report:
     -- Identifying needs to be satisfied by the
                                                  program.
     -- Showing objectives, anticipated accomplishments,
        any other programs with similar, conflicting,      and
                                                       or
        duplicative objectives.
     --Assessing consequences of eliminating the
       consolidating it with another program, or program,
                                                 funding
       it at higher or lower levels than requested.
     As indicated during recent sunset legislation
ings, a budget structured according                 hear-
                                     to an agency's mission
responsibilities would be useful in implementing
legislation and zero-base budgeting.              both sunset

    "I see them [sunset review, zero-base budgeting,
    and mission budgeting] as all being really
    separate entities at all, but all part of not
                                               the
    same kind of scope, and from our standpoint
    ing to help us be able to make our decisions try-
    a sounder, more rational basis and at a        on
                                            different
    level than in many instances we have been
                                              making




                            25
     those decisions in the past * * * I do not see
     how you zero-budget someone if you do not have a
     mission budget to start with." [A Department of
     Defense witness added] "* * * you simply cannot
     divorce them." 1/

Eliminating dual budget systems

     Presently, an agency may use one budget system
for the Congress and another for management purposes.
Mission budgeting can replace dual systems because it is
oriented to policy analysis, forward planning, program re-
view, and resource allocation.  In other words, it can be
used simultaneously for executive management purposes and
congressional budget deliberations.

Accountability for use of funds

     Under mission budgeting, agencies are accountable for
end results achieved in terms of the mission performance
level the Congress has funded.  This would meai a shift from
an input to an output orientation in public accountability.
It is possible that this shift in accountability to end
results achieved would also slow down the yearend rush in
Federal Government agencies to obligate funds of expiring
appropriations.

Review of agency missions essential

     Mission structures displayed in part II of this report
are used only for illustrative purposes.  In the agencies
visited, no consensus was found as to their missions or as
to how to best describe them in a mission budget structure.
Irrespective of whether the concept of mission budgeting is
adopted, we believe it is essential that the Congress period-
ically review agency missions to clarify what they are or
should be, and to keep them relevant to changing national
policies and needs.  Further discussion of this problem can
be found in part II of this report, pages 32, 49, and 70.

ACTIONS TAKEN AND REMAINING

     The executive branch and the Congress have taken some
initial steps to move in the direction of mission budgeting.



1/Senator Chiles at hearings on S.2, Sunset Act of 1977,
  before the Senate Governmental Affairs Subcommittee on
  Intergovernmental Relations, March 22 to 24, 28 to 30, 1977.



                              26
     A recent Office of Management and Budget Circular (A-109)
provides that Federal agencies are to acquire and budget new
major systems along mission lines. Also DOD has taken a
first step toward a mission approach in its fiscal year 1978
budget (see part II, p. 66).
      In addition, three actions have been taken by the Con-
gress:
     -- The Senate Armed Services Committee reoriented its fis-
        cal year 1978 budget hearing format toward a mission
        approach (see p. 66).

     -- The Senate Budget Committee is experimenting with a
        mission format as a basis for recommending spending
        ceilings for DOD and Health, Education, and Welfare
        (see p. 66.).

     -- The Congressional Budget Act provides that, starting
        in fiscal year 1979, a presentation is to be included
        in the President's budget of agency missions by na-
        tional needs. 1/


     Appendix II compares the Procurement Commission's recom-
mendations on mission budgeting with existing legislative/
executive branch requirements. If mission budgeting is
adopted, several additional steps will need to be taken.
Executive:
     -- Designing primary budget structures for agency fund-
        ing requests that correspond with their end-purpose
        mission responsibilities.

     -- Grouping agency activities according to this
        mission structure and linking them to mission
        needs as a basis for funding.

Congressional:
     -- Reviewing, authorizing, and appropriating funds
        by agency mission responsibilities.



l/Congressional Budget Act of 1974, sec. 601 (i).



                             27
     -- Securing accountability for agency use of Fed-
        eral funds based on the level of mission perform-
        ance funded by the Congress.

RECOMMENDATION TO THE CONGRESS

     Mission budgeting appears to offer significant
possibilities for (1) strengthening congressional policy re-
view and program oversight and (2) helping the executive
agencies to formulate budgets according to end purposes, to
be achieved with Federal funds; needs; and priorities.
We recommend that the Congress begin to experiment with
mission budgeting.  As it is untested, and adaptability
problems could arise, a prudent course of action might be to
test its practical application and usefulness.  This could be
done by using mission budgeting on u small scale, such as by
testing and phasing in the approach gradually by agency compo-
nent, budget activity, agency mission, or appropriation.

     Although only the Congress can decide whether it should
review, authorize, and appropriate agency funding requests
on a mission basis, we gave OMB an opportunity to have its
views included in this report.  OMB told us that mission
budgeting is worth further exploration; however, it is
reserving official comment pending congressional action.




                             28
                              PART II

                 ILLUSTRATIVE AGENCY APPLICATIONS

                            CHAPTER 4

       ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION

        (PLANNED TO BE PART OF DEPARTMENT OF ENERGY)

     As a direct outgrowth of the energy crisis, ERDA was
created by the Energy Reorganization Act of 1974 (Public
Law 93-438) for the specific purpose of solving the national
need for energy.   The agency is comprised of elements for-
merly under the Atomic Energy Commission, Department of the
Interior, National Science Foundation, and Environmental
Protection Agency.   ERDA became operational in early 1975
and in 1977 expects to be made part of a new Department of
Energy.

     ERDA has been referred to as a potential giant in the
Federal R&D community.  The agency's 1978 budget request
of $5.4 billion is already the second largest in the Federal
Government. 1/  This may be only a token amount compared to
the probable-resources that will be required to meet national
energy needs.  Since energy is one of the most important
domestic issues confronting the country, the purposes for
which R&D funds are requested and how the funds are spent by
this agency will be of increasing importance to the Nation
and the Congress in the years ahead.

CURRENT BUDGET

     ERDA's fiscal year 1978 budget request is broken down
into 22 budget activities.  Many of these activities describe
kinds of energy sources or products the agency plans to de-
velop or demonstrate.  For example, funds are requested to
develop energy sources such as fossil, solar, and geothermal.
Other activities describe basic research or technologies,
such as nuclear fusion, or products, such as the liquid metal
fast breeder reactor.




1/These funds are not exclusively for R&D; some,    for example,
  are for production of nuclear materials.


                                29
      Figure 4-1 displays the 1978 ERDA budget
 energy source and prodt'ct/technology-oriented and shows the
                                                nature of its
 budget activities. The amount of $5.44
 President Ford was subsequently modified billion proposed by
                                           by President Carter
 to $5.7 billion.

                                      FIGURE 4-1
                      EXCERPT FROM PRESIDENT'S FY 1978 BUDGET
                                        (millions)

      1. CONSERVATION RESEARCH AND DEVELOPMENT
                                                                 $ 136
     2. FOSSIL ENERGY DEVELOPMENT
                                                                   463
     3. SOLAR ENERGY DEVELOPMENT
                                                                    199
     4. GEOTHERMAL ENERGY DEVELOPMENT
                                                                     66
     5. FUSION POWER RESEARCH AND DEVELOPMENT
                                                                    294
     6. FUEL CYCLE RESEARCH AND DEVELOPMENT
                                                                    264
     7. LIQUID METAL FAST BREEDER REACTOR
                                                                    578
    8. NUCLEAR RESEARCH AND APPLICATION
                                                                    171
    9. NUCLEAR REGULATORY COMMISSION SAFETY FACILITIES
                                                                     22
   10. ENVIRONMENTAL RESEARCH AND DEVELOPMENT
                                                                    173
   11. LIFE SCIENCES RESEARCH AND BIOMEDICAL APPLICATIONS
                                                                     37
   12.    HIGH-ENERGY PHYSICS
                                                                    186
  13.     NUCLEAR PHYSICS
                                                                    66
  14.     BASIC ENERGY SCIENCES
                                                                   138
  15.     NUCLEAR MATERIALS SECURITY AND SAFEGUARDS
                                                                    33
  16.     NAVAL REACTOR DEVELOPMENT
                                                                   220
  17.    NUCLEAR EXPLOSIVES APPLICATION
                                                                     1
   18.   URANIUM ENRICHMENT
                                                                 1,005
  19.    NATIONAL SECURITY (NUCLEAR WEAPONS)
                                                                 1,511
  20.    PROGRAM MANAGEMENT AND SUPPORT
                                                                   329
  21.    COST OF WORK FOR OTHERS
                                                                    18
  22.    OTHER COSTS AND CREDITS
                                                                     0

             TOTAL
                                                                $5,910

  DEDUCT. NET COLLECTIONS/REIMBURSABLES
                                                                 -470


                                                                $5,440
     In addition to this initial budget breakdown
activities, ERDA submitted budget justificati     of
gressional committees in the form of          -..  a to con-
                                     "backup oooks."  ERDA's
backup books consist of several volumes.
                                          They have the sane
kind of energy source and product orientation
                                              as the budget


                                       30
request except that they are broken down in
Within this structure, data is provided     finer detail.
                                        on energy demonstra-
tion projects as to their (1) technical objectives,
accomplishments, and (3) requested funding.         (2)

A MISSION APPROACH
       In mission budgeting, ERDA's activities are
                                                    described
 in terms of the agency's end-purpose responsibilities
than in technical terms, such as the type of              rather
                                               energy source,
technology, or product. Defining budget activities
way represents a basic change from ERDA's               in this
                                            current
in that a mission budget does not, at the outset,    approach
                                                     endorse
any particular energy source, technology,
proach, or product. Mission budgeting also  engineering   ap-
budget activities according to the end purposegroups  related
                                                 they serve.
Each succeeding level in the mission budget
                                              structure then
takes a more specific look at ERDA's end purposes
                                                     and at the
needs to be met. Finally, the lowest part
                                             of the budget
structure reveals particular energy sources,
measures, or other means chosen to accomplish conservation
needs.                                          the end-purpose

     Figure 4-2 compares the two budget structures--the
used in ERDA's 1978 budget request and a mission-orientedone
one.

                            FIGURE 4-2
       CURRENT AND MISSION BUDGET STRUCTURES COMPARED
           ERDA'S CURRENT                   A MISSION
             STRUCTURE                      STRUCTURE
        KINDS OF ENERGY                  PRIMARY MISSIONS
      SOURCES AND PRODUCTS

                 I
     PRODUCTS AND TECHNOLOGIES
                                                 I
                                           MISSION AREAS
                 I
          R&D PROJECTS
                                                I
                                           MISSION NEEDS
                 I
              FUNDS
                                                I
                                             PROGRAMS


                                              FUNDS




                              31
      The grouping of ERDA's activities shown
 of figure 4-2 draws congressional attention on the left side
                                              to particular
 energy sources, products, or technology
                                         solutions--and to
 their funding and detailed management--before
                                                ERDA's end
 purposes and national energy policy can
                                         be considered.
      The grouping of ERDA's activities shown
 side of figure 4-2 draws congressional        on the right
                                         attention first, to
 ERDA's mission end purposes and related
                                          policy matters--a
 policy review role--and then to the means
                                            to accomplish
 these purposes--a program oversight role.

Policy review

     Policy review is directed at decisions
                                             that should
only be made at the highest level in the
                                          executive branch
or by the Congress.  In the case of ERDA, these policy
decisions are concerned about the consistency
end purposes with national energy policy,      of its mission
                                           the
of its organizational structure and approaches effectiveness
                                                in accomplish-
ing its missions, its current performance
                                           capabilities, and
the priorities and funding levels of its
                                          missions.
     Review of ERDA missions

     At the outset, congressional review would
                                                 consider
ERDA's missions in the context of national
This would focus debate on the critical     energy  policy.
                                         first step of what
is cr should be the Nation's energy policy.
                                             1/ Palating
ERDA's missions to national energy policy
vide overall direction to missions, the    would  also pro-
                                         degree of import-
ance or priority attached to each one,
                                        and thus, some idea
as to what the relative magnitude of funding
                                              should be.
     As in the case of other Federal agencies
in this effort, we received differing views      contacted
                                               from ERDA offi-
cials as to mission purposes.    In ERDA particulary, uncer-
tainty existed as to what its missions
                                          were and how its mis-
sion struc t ure might best be described.




1/For further discussion see our reports
                                          entitled:  "National
  Energy Policy:  An Agenda For Analysis" (EMD-77-16,
  Jan. 27, 1977); "Energy:   Issues Facing the 95th Congress"
  (EMD-77-34, Apr. 28, 1977); and "The National
  of 1977" (EMD-77-45, June 8, 1977).            Energy Act




                               32
     Whereas the mission structure in figure 4-3 below is
based on information obtained from ERDA, it does not repre-
sent a consensus within the rgency or our views.




                       FIGURE 4-3
           A PARTIAL ERDA MISSION STRUCTURE

        Missions                            Mission areas
     Energy sources              Expand supply of commonly
                                   used resources
                                 Develop new resources
                                 Use more abundant resources

                                 Convert resources to desirable
                                   forms

                                 Increase use of inexhaustible
                                   resources


     Conservation                (Not yet developed by ERDA)


     Special nuclear             Military
       applications
                                 Space

                                 Civilian




                            33
      Using the mission structure in figure 4-3 for
 illustrative purposes only, figure 4-4 shows
                                              how the first
 level in ERDA's 1978 budget request would be
                                              reconstructed
 on a mission basis.

                                                               FIGURE 4-4
                                            CONVEPTING TO A MISSION APPROACH

                      CURRENT APPROACH (FY 197R)
                                                                                                 MISSION APPROACH


        1    CONSEHVATION RESEARCH AND DEVELOPMEN
                                                         S XX          I       TECHNOLOG     HBASE                       S XX
        2   FOSSIL ENERGY DEVELOPMENT
                                                           XX
        3   SOLAR ENERGY DEVELOPMENT
                                                           XX
                                                         --X X     =            E
        4   GEOTHERMAL ENFRGY DEVELOPMENT                  XX      =       .   ENERGY SOURCES                       XX
        5   FUSION POWER RESEARCH AND DEVELOPMENT          XX_-                CONSERVATION                         XX
        6   FUEL CYCLE RESEARCH AND DEVELOPMENT
                                                           X
                                                           XX
            LIQUID METAL FAST BREEDER REACTOR-
                                                           XX                  SPECAL   NTCLEt
        8   NUCLEAR RESEARCH AND APPLICATION
                                                           XX
        9   NUCLEAR REGULAIORY CO MMISSION SAFETY
                                                                                 MILITARY                 XX
            FACILITIES                                    XX                     SPACE                    XX
   10       ENVIRONMENTAL RESEATCH AND DEVELOPMCNT        XX                     CIVILIAN                 XX        XX
   11        IFE SCIENCES RESEARCH AND BIOMEDICAL
                                                                       3       MANAGEMENT S$UPPOI'T
            APPLICATIONS                                                                                                  XX
                                                          XX
   I.       HIGH ENERGY PHYSICS                           XX
   13       NUCLEAR PHYSICS
                                                          XX
   14       BAFIC FNERGY SCIENCES
                                                          XX
   15       NUCLEAR MATEHIALS SECURITY AND SAFEGUARDS     XX
   16       NAVAL REACTOR DEVELOPMENT
                                                          XX
   I)       NUCLEAR EXPLOSIVES APPLICATION
                                                          XX
   18       URANIUM ENRICHMENT
                                                          XX
   19       NATIONAL SECURITY
                            NUCLEAR WEAPONSI              XX
  20        PROGRAM MANAGEMENT ANDSUPPORT
              T                                           XX
  21        'OS OF WORK FOR OTHERS
                                                          kX
            OTHER COSTS AND CREOI IS
                                                          XX
                  TOTAL
                                                        $54




      Congressional review of ERDA's mission structure
                                                        de-
serves particular attention in view of the
                                            uncertainty  sur-
rounding it, the recent emergence of a national
                                                 energy pol-
icy, and ERDA's pending reorganization as part
                                                of a new De-
partment of Energy.   In further considering ERDA's missions,
it would seem desirable to define them in
                                           broad enough terms
to admit any feasible energy exploration
                                          or conservation
measure to be explored or developed in competition.
ening missions in this way would encourage            Broad-
                                            the new Department
to identify first, the Nation's most pressing
                                               needs, and then
to constantly look at differing approaches
                                            to reducing those
needs or to meeting them through developing
sources.
                                             additional energy

             In reporting out ltgi3lation on a new
Energy, the Senate Committee on GovernmentalDepartment of
                                              Affairs ex-
pressed an intent to obtain budget requests
                                             from the new
Department in terms of "* * * mission categories,
                                                   showing


                                                                 34
 how the funds requested will be applied to achieving
                                                        .gency
 end-purposes   * **." 1/

      Review of mission funding

     Once ERDA's missions are clarified, congressional
                                                        review
in mission budgeting would center on mission priorities
funding levels necessary to perform the missions.        and
                                                   Congres-
sional review might be concerned with such matters
                                                   as:
     -- What are ERDA's approaches to particular missions
        and are there better ways?

     -- How do ERDA's mission priorities match the Nation's
        most critical energy shortages in the near and far
        term?

     -- How does the potential contribution of each mission
        compare with its required resources?

     ---Is there an imbalance in funding among the missions?

     Congressional assessments of mission funding levels
are further reinforced with reviews of individual
                                                  energy
programs.

Program oversight

     A program is a level of activity directed toward
                                                       satis-
fying an energy need.   A fully defined need sets in motion a
program to be funded.   Fully defined needs are those which
are clearly related to legitimate mission end purposes
affirmed by the agency, and stated independently
                                                  of any
preconceived solutions.




1/Report No. 95-164 of the Senate Committee on Governmental
  Affairs to accompany the Department of Energy Organization
  Act, 95th Cong., 1st sess., May 14, 1977, p. 58.




                            35
      Figure 4-5 displays the linkage of missions, mission
 Qreas, mission needs and programs, and contrasts this struc-
 ture with the current ERDA budget structure.




                                   FIGURE 4-5
                           BUDGET APPROACHES COMPARED


                                         ERDA
                                         A MISSIONBUDGET
                                         ORIENTEI) TO ENDPUlRPOSES
                                        (OUTPUTSI




                                          I   DA




     ERDA
     A LINE ITEM PLJDGET
     ORIENTEDTO MEANS
    (INPUTS})                       .




     The linkage above provides the groundwork for the
second thrust of the mission approach--program oversight.


                                         36
The emphasis in congressional program oversight is on:

     -- Insuring the separation of Lunds for gain ng new
        knowledge from those financing new programs.
     -- Linking mission funding to affirmed needs.

     -- Insuring that competition is used to explore alter-
        native design concepts and technical approaches.
     -- Monitoring the progress of program development at key
        turning points as a basis for funding the next step.

     Fundingthe technology base
     For the reasons cited in part I, it is important that
new knowledge--the technology base--be funded separately.

     In view of the pressing national need, the Department
of Energy may need a large technology base as Compared to
that of some other agencies. The Congress provided the
initial impetus to begin developing a strong technology base
by requiring that activities be established for major energy
sources, such as fossil and solar (Energy Reorganization Act
of 1974, Public Law 93-438).

     The level of funding for the technology base is a
difficult value judgment. The Congress may wish to review
the Department's criteria for proposed funding and solicit
expert views about which technologies have the greatest po-
tential and about funding levels. Part I of this report
suggests other matters for congressional review of technol-
ogy base funding.  (See p. 14.)
    New information category
    added--mission need
     A mission approach requires that a mission need ap-
proved by top agency administrators precede the start of a
new program and be linked with funding requests.




                               37
Using an R&D project in ERDA's 1978 budget request, figure
4-6 compares the current budget presentation in technical
terms with one based on a mission approach. As shown, fund-
ing is tied, in the re'-ised budget structure, to (1) a mis-
sion (energy sources),   2) a mission area or function (con-
vert resources to desirable forms), (3) a mission need (re-
place diminishing natural gas supplies), and (4) a program
to meet that need.



                                          FIGURE 4-6
                                     ERDA ILLUSTRATION

             USING CURRENT APPROACH                           USING MISSION APPROACH
  BUDGET ACTIVITY:        FOSSIL ENERGY            MISSION:                ENERGY SOURCES
                          DEVELOPMENT


  BUDGET                        l                  MISSION AREA-       CONVERT RESOURCES TO
  SUBACTIVITY:                COAL                                        DESIRABLE FORMS


                                                   MISSION NEED:         REPLACE DIMINISHING
                                                                         NATURAL GAS SUPPLIES


  BUDGET                    LOW BTU                PROGRAM STEP:       EXPLORING ALTERNATIVES
  CATFGORY                GASIFIC7ATION


  R83, Pr1OJECT!S):     FLUID BED GASIFICA.        R&D PROJECT(S):       1. THREE STAGE
                      TIO!. PDU; CONVERTING                                 GASIFICATION
                            COAL TO GAS                                  2. TWO STAGE
                                                                            GASIFICATION
                                                                         3. FAST FLUIDIZED BED
                                                                            GASIFICATION

  FUNDS REQUESTED          $5 MILLION          FUNDS REQUESTED:               $




     With this kind of mission-oriented information,
congressional review can oversee whether funding of R&D
projects is tied to real needs of energy missions and
whether these needs have sufficient priority to justify
earmarking public funds to satisfy them.

       Competitive exploration of alternatives
     Exploring and demonstrating alternatives involves
the search for specific solutions having the greatest po-
tential to meet mission needs. Financing this effort with
mission funding helps Congress to insure that no program


                                              38
is allowed to evolve without first exploring alternative
solutions competitively.

     Much of ERDA's work ends with demonstration of a
technological process. Because of the large expenses in-
volved, funding of competing alternative solutions prior to
this demonstration may be restricted to developing and test-
ing elementary hardware. Beyond this elementary stage, for
example, a decision to fund a pilot demonstration might cost
about $60 million; a full demonstration plant might cost
between $200 million and $600 million depending on plant
size. 1/

     Investments of these magnitudes, however, justify in-
troducing competition early and evaluating competing design
concepts before commitment to any one. This promotes fair
competition in industry and avoids premature selection of
solutions, which may later prove to be enormously costly or
ineffective.

     Previous figure 4-6 illustrated how a need couched in
end-purpose terms opens the process to consideration of
alternatives. Under the current approach used in ERDA's
1978 budget, a single R&D project is submitted for funding;
under the mission approach several alternatives can actively
compete for funding until sufficient evidence is available
to justify a major investment in one.

     Figures 4-7 and 4-8 illustrate R&D projects that did
not openly compete with other design alternatives to enter
a demonstration stage. In mission budgeting, if R&D resources
are to be concentrated early on a particular solution, such
actions are specially justified to agency management and
disclosed to the cognizant congressional committees. 2/




1/Construction and operating costs of coal demonstration
  plants are shared by ERDA and industry on a 50/50 basis.
2/See also OMB Circular A-109, par. 15.


                             39
                                          FIGURE 4-7
                                     ERDA ILLUSTRATION

           USING CURRENT APPROACH                              USING MISSION APPROACH
 BUDGET ACTIVITY:      SOLAR ENERGY                 MISSION:                .NERGY SOURCES
                       DEVELOPMENT


BUDGET                       I                      MISSION AREA         INCREASE USE INEXHAUST-
SUBACTIVITY:         SOLAR ELECTRIC                                         IBLE RESOURCES


                                                    MISSION NEED:
                                                                                          I
                                                                        REDUCE DEPENDENCE ON
                                                                         SCARCE RESOURCES IN
                                                                          HIGH DEMAND AREA


BUDGET                 WIND ENERGY                 PROGRAM STEP:          FULL DEMONSTRATION
CATEGORY:           CONVERSION SYSTEMS                                  (NONCOMPETITIVE ENTRY)


R&D PROJECT(S):      MEGAWATT SCALE                R&D PROJECT(S):       MEGAWATT SCALE SYSTEMS
                        SYSTEMS


FUNDS REQUESTED:
                             I
                        $8 MILLION                 FUiNDS REQUESTED:              $
                                                                                          I



                                          FIGURE 4-8
                                     ERDA ILLUSTRATION

           USING CURRENT APPROACH                              USING MISSION APPROACH

BUDGET ACTIVITY:     FOSSIL ENERGY DEVELOP-        MISSION:               ENERGY SOURCES
                             MENT


BUDGET                      COAL                   MISSION AREA:        USE MORE ABUNDANT
SUBACTIVITY.
                                                                             RESOURCES


                                                   MISSION NEED:
                                                                                      I
                                                                        SUBSTITUTE FOR GAS IN
                                                                            POWER PLANTS

BUDGET
CATEGORY              DIRECT COMBUSTION
                                               J   PROGRAM STEP          PILOT DEMONSTRATIC,!
                                                                       INONCOMPETITIVE ENTRY)


R&D PROJECTIS):
                              I
                     FLUIDIZED.BED COMBINED        R&D PROJECT(S):
                                                                                      I
                                                                        FLUIDIZED-BED COMBINED
                       CYCLE PLANT, 13 MW                                    CYCLE PILOT
                              _                                                       _
FUNDS REQUESTED:         $7 MILLION                FUNDS REQUESTED:           $




                                              40
     Separate funding in mission budgeting for exploring
alternatives also involves a commitment on the part of
ERDA to maintain an open competitive environment and to
expend funds to seek truly innovative, wide-ranging alter-
natives. At the same time, any component in ERDA with an
attractive candidate solution for a particular need ought
to be able to compete for exploratory funding. Congres-
sional review of this activity could inquire into the level
of competition being sought and the criteria being used for
selecting energy solutions for pilot or full demonstration
(for additional matters of inquiry, see part I, p. 15 and
16).
     Overseeing key program turning points
     Program oversight in mission budgeting concentrates
on the end-purpose need for the program, the goals the
program is attempting to achieve, and key turning points
in evolution of the program. Because much of ERDA's work
ends with demonstrating the feasibility of various techno-
logical processes, the basic steps in program evolution are
somewhat different than those of agencies which produce a
product for their own use.

     As pointed out previously, ERDA may choose to limit
the program step of exploring alternatives to developing
and testing elementary hardware and small scale demonstra-
tions because decisions to proceed to advanced stages of
demonstration (pilot plants or full demonstration plants)
require enormous investments. ERDA's basic program steps
or key turning points would seem to be:

     -- Establishing a mission need which initiates the
        exploration of competing alternatives.

     -- Selecting a technical approach for investment in pilot
        plant demonstration.
     --Selecting a technical design for investment in full
       demonstration. 1/
     Congressional scrutiny of these program steps could
vary in intensity depending upon the circumstances. For
example, the progress made at each step above could form
the basis for funding the next one--which would be a major
turning point in evolution of the program.


1/If the new department sponsors industry development beyond
  full demonstration, such a decision would also be a key
  program turning point.


                             41
Figure 4-9 illustrates conversion of another ERDA project
to a mission approach, and its basic program step.




                                          FIGURE 4-9
                                   ERDA ILLUSTRATION

           USING CURRENT APPROACH                             USING MISSION APPROACH

   BUDGET ACTIVITY:   SOLAR ENERGY DEVELOP-        MISSION:               ENERGY SOURCES
                              MENT


  BUDGET                 SOLAR ELECTRIC            MISSION AREA:       INCREASE USE INEXHAUST-
  SUBACTIVITY:                                                            IBLE RESOURCES


                                                   MISSION NEED:       REDUCE DEPENDENCE ON
                                                                       SCARCE RESOURCES FOR
                                                                      GENERATING ELECTRICITY


  BUDGET                 SOLAR THERMAL         PROGRAM STEP:           PILOT DEMONSTRATION
  CATEGORY:           ELECTRIC CONVERSION


  R&D PROJECT(S):       CENTRAL STATION        R&D PROJECT(S):           CENTRAL STATION

  FUNDS REQUESTED:
                                I
                         $12.3 MILLION         FUNDS REQUESTED:               $
                                                                                  I




Impact on congressional process

     ERDA budget requests are submitted to four congressional
committees. The newly formed Senate Committee on Energy and
Natural Resources and the House Committee on Science and
Technology separately review ERDA's budget to determine if
appropriations should be authorized. The Senate and House
Appropriations Committees review the budget to decide if
such authorizations should be funded and to what extent.

     If ERDA wants to spend more money than contemplated or
for other purposes, it must consult with these committees.
The procedures for doing so vary with the particular commit-
tee, the type of activity, and the amount involved; and are
too complicated to discuss here.




                                              42
     As discussed in chapter 2, mission budgeting does
alter the current budget process. However,             not
                                            it does change
how congressional data is presented and reviewed,
                                                  and it
revises authorizations and appropriations to a mission
                                                       basis.
Committees are still consulted regarding significant
                                                     changes
in the use of funds except that the focus in new programs
on any change in the mission need since a particular       is
                                                     solution
would not normally have been decided.




                           43
                          Cx]APTER 5

                    DEPARTMENT OF DEFENSE

     DOD is charged with maintaining the Nation's defenses.
It fields several kinds of capabilities to deter and defend
against enemy attacks and to retaliate.

     Some of these capabilities serve strategic missions and
others serve tactical or general-purpose missions. The pur-
pose of strategic missions is to deter nuclear attack or use
of coercion. Tactical mission objectives are to deter or
counter a conventional attack, short of nuclear conflict in
areas vital to the United States. For example, typical tac-
tical objectives are to maintain open sea lanes to our allies
and to be able to engage in a high intensity land war in
central Europe.

     Military capabilities can be multipurpose in nature,
that is, serve in several mission areas or they may have
secondary uses.
     The seedbed of new and improved mission capabilities is
R&D work undertaken by the three military departments and
other defense agencies such as the Defense Advanced Research
Projects Agency. Their work is conducted under the overall
direction of the Director of Defense, Research and Engineer-
ing, who reports to the Secretary of Defense.




                            44
     Figu£? 5-1 shows the DOD budget authority requested of
the Congress for both fiscal years 1977 and 1978, including
R&D.

                            FIGURE 5-1

               DEPARTMENT OF DEFENSE -- MILITARY BUDGET

                                               FY 1977    FY 1978

                                                   (billions)
     Military personnel                        $ 25.4     $ 26.2
     Retired military personnel                   8.4        9.0
     Operation and maintenance                   31.9       34.2
     Procurement                                 29.3       35.1
      esearch, development, test
       and evaluation

     Military construction                        2.3        1.4
     Family housing                               1.2        1.3
     Revolving and management
       funds and other                            0.3        0.1
     Net allowances for pay raises                1.6        2.4
         Total                                 $111.3     $121.7
     Source:     President's FY 1977 and FY 1978 budgets.
CURRENT BUDGET

     The amounts of $10.9 and $12.0 billion requested for de-
fense R&D are the largest in the Federal Government. 1/
They are made up of individual requests from the Army, Navy,
Air Force, plus the Director of Test and Evaluation Director-
ate and defense agencies. Each receives a separate appro-
priation. The requests are broken down initially into a
number of major budget activities.

!/The $12 billion requested for fiscal year 1978 by President
  Ford was subsequently modified by President Carter to
  $11.7 billion.


                              45
     These budget activities represented different kinds of
2roducts in the 1977 budget. But in the 1978 budget-tey-
represent different kinds of missions. Note the contrast
in figure 5-2.



                                                                                        FIGURE 5-2

                                                                     eXCERFPT FROM PRESIDENT'S BUDGET
                                                                                    (BILLIONS OF DOLLARS)
                                                            (FY 1977)
                                                                                                                                              _FY 1978)
                     DIRECTOR, TEST AND EVALUATION
                                                                                                                       DIRECTOR         TEST AND FVALUATION

                   DEFENSE AGENCI'_
                                                                                                                      DEFENSE AGENCIES
             DEPARTMENT OF 1HE AIR FORCE
                                                  DEPARTMENT.
                                                  THE_ NAVY            .OF                                       DEPARTMENT OF THE AiR FORCE
         DEPARTMENT OF THE NAVY

      DEPARTMENT OF THE ARMY
                _K~~~~  I-,~~~~~                                                       ~DEPARTMENT                             OF THE ARMY


                            li       FENSFWiL_                                                      _
                                                                                                                         I)   F E NSEi£\I[:
      R&t) BUDGET ACTIVITIFS
                                                                                                     R&D BUDGET ACTIVITIES
 I        I IAKh    SNVI.
                       NI I S)                                      S 0i
      ' AtR(L' dFA\
                 -AN?X
      AI~ii~i4R~i~                   11 I3'A'l                                                 ?R ~)  N lt) tID T}V
                                                                                                     AATf         ICi INO
                                                                                                                 IG
                                                                                                                T1     N(/                          S    I.
          0,IP
          I        i FN T                                             7j                       2 AIV ANI! I II iN                  IN
  , 'iS~li       5ANi) [iLif                 i
                                            [Al iiiP'M                .                                           LIIF'IINT

 4I      TAR.
         I1     ASTtNAITi
                   ?TATI(         S1                                                            3                     H TA[                             24N
        1HF ASTI
              fFll l)     1MI N1T                                    II,                       I4      A li      AL PHILlOUAMS                          ,4
 5 SlIPS SMAI i CiRAFI ANI) R I Ali                                                                  INII I IItII          ANI)
                                                                                                                       NCl A       IDCOMMINICATIOINS      2
      IN RtAI, 'NI                                                    IUPE(T
      R14,11NAN54
              !(COMFAT
                   i       Vi 111(1 I C                                                        L. PHI)THAkIWltID        MANAtLIMENI
                 T
       AND R iA A i: )EL)IPNIlf Nl                                   O-                                 ANI      SUtPPORT                                I S

      i II 1RI       II'         :    I
                                                                                                              2iOTAI                                    }2 I
 1. PN,(;R; AM.
             A +                 M[l
                                 .\NA[;          t V   NT   ,\N',
      S        ''.IF
                 1
                 T,                                                   1F
                                                                                                    IF1-IV T i   TN    I CI   I FITIIONS




                   Ill     IM l.'lNAilI I:_l


                   There                     are             10      large     RD    voues                    of          congressional                        backup




     There are 10 large R&D voiumes of congressional backup
or justification data. These "backup books" list product- or
technology-oriented subactivities which in budget jargon are
called "line items" and which DOD calls program elements.
These subactivities snd related R&D projects are categorized
by their stage of dtvelopment--exploratory, advanced, and



                                                                                     46
engineering development.                      Those over a certain dollar amount
are summarized. 1/

     For fiscal year 1978 the DOD budget submission and
backup books do not follow a consistent pattern. The ini-
tial breakdown is by mission category, but succeeding break-
downs are still product oriented in much the same way as the
previous year, as shown in figure 5-3. As discussed later,
a DOD mission structure beyond the initial breakdown is still
unresolved.

                                       FIGURE 5-3
                   BREAKDOWN OF CONGRESSIONAL BUDGET JUSTIFICATION DATA

                                                A MILITARY
                                                 BUDGET
                                                 REQUEST




                                FY 1977                        FY 1978




      RAFRAFIPNT     MISSIRES                                                  MISSION




                              AIRCRAFT
                              PROPULSION
                                                AIRCkAFT
                                                AVIONICS
                                                                NEW
                                                             AIRCRAFT      7
                                                             ACTIVITIES CATEGORIZED
             R&D          l      R &D         R&D    I       AS TO EXPLORATORY,
           PROJECT             PROJECT     PROJECT           ADVANCED OR ENGINEERING
                                                             DEVELOPMENT




     A product-oriented budget structure stresses product so-
lutions and oversight of their development. In this connec-
tion, during fiscal year 1978 budget reviews, Secretary of

1/The summaries include, depending on the stage of product
  development, brief description, basis for fiscal year re-
  quest, basis for increase over previous fiscal year, per-
  sonnel impact, detailed background and description, re-
  lated activities, work performed where and by whom, pro-
  gram accomplishments and future programs, and test and
  evaluation data.


                                                     47
Defense Brown complained that adjustment of a large number
of R&D line items--often without rationale--involved the
Congress in detailed management of individual programs.   He
said this constrains effective management, consideration of
technological and engineering options, and cost-control
efforts.  His predecessor observed during the fiscal year
1977 budget review that detailed and numercus committee
line-item adjustments require modification Lc existing con-
tractual arrangements and programs at considerable cost and

     "*  * * divert the continuing discussion between
     the Department and the Congress from the consider-
     ably more important fundamental and substantive
     issues."

A congressional study following the DOD 1977 budget cycle
concluded that congressional review is occupied with details
that should normally be resolved in DOD at the level of the
program manager. 1/

A MISSION APPROACH

     In mission budgeting, upper levels in the budget struc-
ture show DOD basic responsibilities expressed as end
purposes.  Mission budgeting groups all DOD activities serv-
ing common purposes regardless of the type of Eroduct or
organization involved.   Lower tiers in the budget structure
take a closer look at the end purposes to be served and at
the needs to be met.  The lowest level then shows the types
of activity or means to accomplish end purposes and the
progress being made on specific programs.

     The mission focus enhances congressional policy review
and program oversight in several respects.

Policy review

     Policy review concerns decisions of executive branch
administrators and the Congress.  In the case of DOD, such
policy review covers:




1/"Senate Procedures For Authorizing Military Research and
  Development," Louis Fisher, Congressional Research Service,
  A Compendium of Papers on Priorities and Efficiency in Fed-
  eral Research and Development, submitted to the Subcomnit-
  tee on Priorities and Economy in Government, Joint Economic
  Committee, Oct. 29, 1976, pp. 42 and 43.



                              48
     -- DOD's mission purposes and their consistency with
        congressional and executive views of defense and for-
        eign policy.

     -- Mission responsibilities within DOD and approaches
        to executing missions.

     -- Kinds and levels of mission capabilities to be main-
        tained and degree of readiness.

     -- Important capabilities that should be developed,
        their mode of use, and the extent of their overseas
        deployment.

     Although the use and level of specific mission capabil-
ities concern both defense and foreign policy, the selection
of individual product solutions (specific weapons) to provide
such-capabilities is rarely a matter of policy. 1/

     To make way for the kind of mission policy review out-
lined above, congressional committees must first get an over-
view of DOD missions, capabilities, deficiencies, and needs
for new programs reconciled with total resources available
for each mission. Annual posture statements of the Secretary
of Defense and the Director, Defense Reserarch and Engineer-
ing, could be retailored to serve this purpose.

     Review of DOD missions

     The first step in congressional policy review under mis-
sion budgeting would be to get clear and consistent s',  ?-
ments of what are, or should be, DOD mission end purpuces.
Presently, there are several mission structures in DOD, each
one different.  The Director, Defense Research and Engineer-
ing, for instance, uses one mission structure to oversee
military service R&D programs. The Joint Chiefs of Staff
use another, and the three military services have their own
variants.  See figure 5-4.




1/For further discussion of policy review, see "Incentives
  and Information, Quality in Defense Management," J.A.
  Stockfisch, R-1827--Defense Advanced Research Projects
  Agency, Rand, Santa Monica, Cal., August 1976, p. 52.




                              49
                                                                                                        FIGURE 5-4
                                                                 DOD MISSION STRUCTURES COMPARED
                             DIRECTCR OF DEFENSE,
                           RESEARCH AND ENGINEERING                           JOINT CHIEFS OF STAFF                                ARMY                                    NAVY (NOTE:)                               AIR FORCE
MISSION
CATEGORIES             MISSIONS           MISSION AFEAS      .    MISSIONS              MISSION AREAS      MISSIONS                   MISSION AREAS       MISSIONS             MISSION AREAS           MISSIONS           MISSION AREAS
STRATEGIC             OFF-ENS       SIAND-BASED STRIKE           OFFENSE           LAND-BASEDMISSILES                                                     PROJEC-     ISEA-BASED STRATEGIC            OFFENSE     I LANDBASEDSTRIKE
                                    SEA-BASED STRIKE                               SEA-BASFD MISSILES                                                     TIN             PROECTION                                 AIRBORNE STRIKE
                                  I AIRBORNE STRIKFE                               STRATEGIC AIRCRAFT                                                                                                                 AND PEN AIDS
                                       AND PEN AIDS
                      DEFENSE     I  ALLISTIC MISSILE            DEFENSE          BALLISTIC MISSILE       DEFENSE              BALLISTIC MISSILE          SUPPORT
                                      DEFENSE                                    I DEFENSE                                       DEFENSE                                                              DEFENSE     I ATMOSPHERIC DEFENSE
                                  I STRATEGIC AIR                                 AIR DEFENSE
                                      DEFENSE                                  I SPACE DEFENSE                                DEFENSE                                                                                 MISSILE DEFENSE
                                                                                                                                                                                                                      SPACE DEFENSE
                                    SPACE DEFENSE

                      -eONTROL- I-ST-RAT-EUIlc-
                                       T                                                                                                                                                              STRATEG:C
                                I    ARNING AND ATTACK                                                                :                                                                                 C'
                                     ASSESSMENT                                I
                      THEATER     I BATTLEFIELD
                      NUCLEAR         SEA DENIAL
                      FORCES          THEATER

TACTICAL              LAND        I BATTLE SIIRVEILLANCE         LAND            AREA DENIAL AND          LAND            I    CLOSE SUPPORT
                      WARFARE     I CLOSE COMBAT                 WARFARE       I   BARRIERS               WARFARE              FIRE SUPPORT
                                    FIRE SUPPORT                                 ARMORED OPERATIONS                            AIR DEFENSE
                                    FIELD ARMY AIR                             I FIRE SUPPORT
                                  I    DEFENSE                                 J AIR DEFENSE
                                    AMPHIBIOUS AND SPECIAL
                                  I WARFARE
                                    LAND MINE WARFARE
                      OCEAN         MULTIMISSION NAVAL           NAVAL         I AMPHIBIOUS OPERA                         I                           SEA             I ANTI-AIR WAR
                      CONTROL     '   SYSTEMS                    WARFARE            TIOa,                                 I                           CONTROL                FARE
                                  I SURF OCEAN SURVEIL                             FT OFFENSE                                                                                       AANTI-SUBMARINE
                                      LANCh                                    I FLEET AIR DEFENSE                                                                   I.      WARFARE
                                  I UNDERSEA SURVEILLANCE                        ANTI-SUBMARINE WAR                                                                        ANTI-SURFACE WAR
                                    ANTI-SURFACE WARFARE                       I   FARE                                                    I                          I      FARE
                                    ANTI AIR WARFARE AND                         AREA DENIAL
                                  I EW
                                    ANTI SUBMARINF WAR
                                      FARE
                                  | NAVAL MINE WARFARE

                                                                                                                                                      SEA-BASED   AMPHIBIOUS WAR
                                                                                                                                                      POWER PRO     FARE
                                                                                                                                                      JECTION   I TACTICAL AIR
                                                                                                                                                                    WARFARE
                                                                                                                          ;I   I                                           SHORE BOMBARDMENT



                      AIR F      AIR SUPERIu.'ITY                AIR             COUNTERAIR                                                                                                           AIR           COUNTERAIR
                      WARFARE I INTERDICTION                     Wt     ARE    I INTERDICTION                             I                                                                           WARFARE     I INTERDICTION
                                 AIR DEFENSE SUP                                 DEFENSE SUPPRESSION                                                                                                                CLOSE AIR
                                    PRESSION                                     CLOSE AI SUPPORT                                                                                                                     SUPPORT
                              I |T'ACAIR
                                 7ACAIR RECON
                                         RECON~                                tCLOSE AIR SUPPORT                                                                                                                   CLOSE AIR
                                    NAISSANCE

                                                                                                                          I                                                                                       I
                      COMBAT      I AIR IFT MOBIL ITY            COMBAT          MOBILITY                 OTHER                                       COMBAT           FLEET SUPPORT AND              RECUNNAIS
                      SUPPORT     I LOGISTICS;GENERAL            SUPPORT         LOGISTICS                COMBAT          |                           SUPPORT            MOBILITY                       SANCE     I
                                       COMBAT SUPPORT                          I ELECTRONIC WARFARE       SUPPORT                                                    I GENERAL SUPPORY                AIRLIFT
                                    ITACTICAL COMMUNICA                          SEARCH AND RESCUE                                                                       AND LOGISTICS
                                                                       TA   ~~~~~~~~~~~~~~~~~~~   TIONS                                                                COMMAND CONTROL                TACTICAL
                                                                                                                                                                                                         3
                                      TAC71CAL COMBAT INTE                                                                                            A                     AND COMMUNICA                C
                                      GRATION                                                                                                                               TIONS
                                  I ELECTRONIC WArFARE;
                                                 3
                                                                                                                                                                             I
                                      COUNTER C
                                    NAVIG, POSITIONING
                                   IPHYSICAL SECURITY
                                    AIRCRAFT SURVIVABILITY
                                    CHEMICAL BIOLOGICAL
                                      DEFENSriCHEM WFRE.




MANAGEEN   ET   NTD                                     .I
                                                                                                                                                                     li_

                                                                                                          NOTE   THE NAVY'S INTERNAL BREAKDOWN o)FMISSION AREAS               $     (URCE: OFFICE OF DIRECTOR, DEFENSE RESEARCIHAND ENGINEERING
                                                                                                                 IS NOT SEGREGiATED AS TO STRATEGIC -NO TACTICAL
                                                                                                                 CATEGlORIES




                                                                                                                                                                                                                           51
     In mission budgeting, the executive branch and the Con-
gress would insist on a commonly understood mission struc-
ture, one that could be reviewed annually in the light of
current defense and foreign policy. 1/ More rapid responses
to defense policy changes and to new needs and priorities in
the funding process should be possible.
     Figure 5-5 shows conversion of the usual DOD congres-
sional budget to a mission format. To illustrate the mis-
sion approach, the structure presently used internally by
the Director, Defense Research and Engineering, is shown;
one mission (tactical air warfare) has been extended to show
how it links with funding requests.



                                                        FIGURE 5-5

                                     CONVERTING TO A MISSION APPROACH
                                         DEPAHTMENT OF DEFENSE

                 CURRENT APPROACH (NOTE:)                                              MISSION APPROACH
                                            (BILLIONS                                    I                   BILLIONS)
 MILITARY SCIENCES                              SXX                 1 TECHNOLOGY BASE                         SXX
 AIRCRAFT AND RELATED EOUIPMENT                  XX                2 MISSIONS
 MISSILES AND RELATED EOUIPMENT         \        XX                     a. STRATEGIC
                                                                            OFFENSE                    $XX
 MILITARY ASTRONAUTICS AND                                                  DEFENSE                     XX
   RELATED EQUIPMENT                             XX                         CONTROL                     XX
 SHIPS, SMALL CRAFT, AND                                                     THEATER NUCLEAR            XX
    RELATED EQUIPMENT                            X                      b. TACTICAL
                                                                             LAND WARFARE              SXX
 ORDNANCE, COMBAT VEHICLES AND                                               AiR WARFARE                XX
   RELATED EQUIPMENT                             XX                         OCEAN CONTROL              XX
 OTHER EOUIPMENT           -                     X                          COMBAT SUPPORT             XX      XX
                                                                     c.   DEFENSEWIDE MISSION
 PROGRAMWIDE MANAGEMENT                                                     SUPPORT                            XX
   AND SUPPORT                                   XX                3. MANAGEMENT AND SUPPORT                   XX
                      TOTAL                     SXX                                            TOTAL          SXX

 NOTE SEE EARLIER DISCUSSION ABOUT FY 1978
 INITIAL MISSION BREAKDOWN WHICH WAS NOT
 ACCOMPANIED BY A MISSION STRUCTURE.



                      MISSION AREAS -       *         AIR SUPFRIORITI                        INTERDICTION
                      MISSION NEEDS -                      NEFDA                                NEED B
                      R&D PROGRAMS      -               PROGRAM A                             PROGRAM r
                      REQUESTED                              I                                    I
                        FUNDS                                $                                    S




1/New policy requires the Secretary of Defense and the mili-
  tary services to establish a mission structure " * * * to
 reflect the several operating categories essential to
 accomplish the Defense mission." DOD Directive 5000.2,
 Jan. 1977, p. 4.


                                                             53
     As figure 5-5 shows, some parts of four different
product activities in the current approach on the left side
(aircraft, missiles, ordnance and other equipment) belong in
the air warfare mission on the right side.  Similarly, these
and other product development endeavors on the left side have
activities that belong to other missions on the right side.

     As noted previously, DOD classified budget activities
in its fiscal year 1978 budget initially by strategic and
tactical mission categories but, at levels below this,
shifted back to the usual product-oriented budget structure.
The top categorization, therefore, was not accompanied by a
mission structure or tied to mission needs.  Other actions
that need to be taken to missionize the DOD budget are iden-
tified at the end of this chapter.

     Mission roles and   reasonsibilities

     Historically, R&D solutions and new programs have been
shaped by the individual military Department's own particular
views of their defense missions and priorities.  Interservice
rivalry tends to play a major role in shaping defense needs
and capabilities and either can be useful or destructive.
By starting a new weapon development, for example, respon-
sibility for the mission is assumed.  Rushing its development
will help insure or expand the service's role or obtain for
it a share of the other service's role (and budget). 1/

     DOD has been making greater use of multiservice capa-
bilities, such as air-to-air missiles.  The House Appropria-
tions Committee, however, is dissatisfied with the progress.
In its report on the DOD fiscal year 1977 budget, the Commit-
tee said:

     "This year's hearings identified * * * developing hard-
     ware that duplicates equipment already in the inven-
     tory or under development by another service.  The
     Committee has admonished the Department [of Defense]
     in the past * * * yet duplication continues to occur."

The Committee said that existing mechanisms in the Office of
the Secretary of Defense to review and eliminate duplication
are not working effectively.  As a result, the Committee


1/The problem of mission rivalry and overlap is discussed dt
  length in the Procurement Commission Report; see, for ex-
  ample, part II of that report, pp. 76 to 77, 101, and 105.
  Also, see "Incentives and Information, Quality in Defense
  Management," J. A. Stockfisch, R-1827--Defense Advanced Re-
  search Projects Agency, Rand, Santa Monica, Cal., August
  1976, p. 64.

                              54
asked for much additional detail in future budgets of the
military services. 1/

     The mission approach is intended to help agency admin-
istrators and the Congress use interagency rivalry produc-
tively.  First, it would make mission responsibilities
explicit and assignments visible at the inception of new
agency programs and, second, interservice competitions would
be purposeful and controlled.  As all R&D funding of new
capabTitltes is tied to DOD mission responsibilities, con-
gressional committees would be in better position to surface
unwarranted duplications or voids in capabilities.

     Mission funding
     After congressional policy review of DOD missions and
responsibilities for them, deciding the level of funding for
each mission is the crucial next step.  Inquiry is made, for
example, into:

     --DOD approaches and plans for carrying out missions
       and whether there are better ways.

     -- DOD's ability to execute the missions and priority
        needs for new capabilities.

     -- Situations in which the new DOD capabilities will be
        used, and how this usage relates to mission respon-
        sibilities and foreign policy.

     -- What other DOD components and programs share the same
        missions and contribute to the same capabilities.

     -- How +he "worth" of particular mission or multimission
        capabilities compare to their required funding.

     Such inquiries are intended to help congressional com-
mittees decide whether mission end purpoLes and needs to be
funded in the DOD budget are compatible with congressional
views of defense policy and priorities, whether funding is
being earmarked for the most pressing needs, and whether
overall funding for each mission is appropriate.  Individual
program reviews will then help to refine these judgments.




1/H.R. 94-1231, U.S. Congress, House Committee on Appropri-
  ations, Department of Defense Appropriation Bill, 1977
 Reiot, 94th Cong., 2d sess., p. 120.

                             55
 Program oversight
      The final link in the mission-oriented
 is a mission need. Its emergence sets       budget structure
                                        in motion a program
 and funding. Like the budget structure
                                         itself, the need is
 expressed in DOD _.A-purpose responsibility
 stated apart from any solution. In          terms and Is
                                     missi3n
 gressional oversight of individual R&D      budgeting, kon-
 concentrate on:                        programs tends to

      -- Keeping the funding of new knowledge
                                              separate from
         program funding.
      -- Linking program funding to affirmed
                                              mission needs.
      -- Investing early program funding in
                                             industry competi-
         tion to explore alternative design concepts
         nical approaches.                            and tech-

     -- Loeaing at a few key turning points
                                            in
        of programs as a basis for funding the the evolution
                                               next step.
     Funding the techno
                    ljq_base
      In the current DOD budget,
such things as materials, optics,obtaining
                                   and
                                            new knowledge about
through work done in the basic sciences electronics  is funded
product-oriented budget activity (see     and as part  of eacl
                                        figs. 2-5 and 5-2).
As discussed in part I of this report,
base work should be clearly separate     funding of technology
                                       from mission-oriented
work. This is intended to provide
future but, at the same itme, avoid a knowledge base for the
                                     any diversion of these
funds to sponsor preconceived designs
t -n.                                   that lock out competi-

     The magnitude of technology base funding
judgmental. Levels of funding may vary         is essentially
and promising or how old and strained    depending on how new
logy is and how pressing DOD's problemsthe particular techno-
may wish to hear a spectrum of views     are.  The Congress
                                      on the particular tech--
nologies being proposed and their
                                  funding.




                              56
     New information cateo2y
     adued-'mislon need
     In mission budgeting, new programs are triggered by
needs affirmed by agency top management. Figure 5-6 illus-
trates the direct linkup between a DOD mission, a mission
area, a mission need, a program to satisfy that need, and
several R&D candidate solutions to be explored. With this
information, Congress can assess mission needs and their
priorities as well as oversee evolution of new programs to
satisfy the needs.


                                        FIGURE 5-6
                                    AMISSION APPROACH

                                                                  A MILITARY
                                                                    BUDGET
                                                                   REQUEST




                                                 AIR               MISSON      MISSION




                                               MISSION             MISSION
                          INTERDICTION          AREA                AREA




             WEATHER          MISSION          MISSION
              STRIKE           NEED             NEED
            CAPABILITY




                   &                          EXPLORING
            R    __       CDR& D              ALTERNATIVE
  PROJECT       PROJECT   PROJECT             APPROACHES      I
                                              APPROACHES
                                              (COMPETITIVE)   I
                  A PROGRAM                                   I




                                         57
     Figure 5-7 presents an actual R&D project taken from
DOD's current budget.  Presentation of that project is con-
verted to a mission approach to illustrate the linkage
between a mission, a mission area, a mission need, and R&D
funding.


                                             FIGURE 5-7
                                        DOD ILLUSTRATION

                   USING CURRENT APPROACH                       USING MISSION APPROACH
                           1977              1978
    BUDGET             AIRCRAFT ANP     TACTICAL PRO-    MISSION:        TACTICAL AIR WARFARE
    ACTIVITY:         R LATED EQUIP-       GRAMS
                           MENT


    BUDGET           ADVANCED TACTI-    COMBAT AIR-      MISSION AREA:        INTERDICTION
    SUBACTIVITY:       CAL FIGHTER      CRAFT TECH-
                                          NOLOGY
                                                         MISSION NEED:   a ALL WEATHER STRIKE
                                                                               CAPABILITY


    BUDGET               ADVANCED         ADVANCED       PROGRAM STEP:   EXPLORING ALTERNATIVE
    CATEGORY:          DEVELOPMENT      DEVELOPMENT                           SOLUTION.


    R&D
                             I
                      ADVANCED TACTI-
                                              I
                                        COMBAT AIR.      R&D             1.
                                                                                     I
                                                                              ALTERNATIVE MANNED
    PROJECT(S):        CAL FIGHTER      CRAFT TECH-      PROJECT(S):          FIGHTER DESIGNS
                                          NOLOGY                         2.   REMOTE PILOTLESS
                                                                              VEHICLES
                                                                         3.   MISSILES
                                                                         4.   OTHER COMPETING
                                                                              CANDIDATES


    FUNDS                                                FUNDS
    REQUESTED:         S 1 MILLION      S 2.5 MILLION    REQUESTED:              S

                                                              a BUDGET NARRATIVE REFERS TO MIC-
                                                                SION NEED BUT IS BIASED TOWARD
                                                                MANNED AIRCRAFT SOLUTION.




     Comeetitive exElocation of alternatives

     By funding exploration of an end-purpose mission need
rather than a specific solution, mission budgeting should
stimulate differing and innovative responses and ideas. The
most promising alternatives are explored with mission funding
under competitive arrangements.  This competitive exploration
occurs early in the program when small design teams are lim-
ited to building and demonstrating elemental hardware, the
funding itself is fixed, and the cost is relatively small.

     Figure 5-7 above shows an R&D project for combat air-
craft technology in the DOD 1978 budget and how a statement
of need couched in mission end-purpose terms opens up a


                                                    58
number of interesting alternatives that are not limited to
aircraft. Figure 5-8 presents another R&D project in the
1978 budget--the F-16 air combat fighter. Here, DOD sub-
jected alternative designs to competitive demonstration
before it chose one for full-scale development.




                                           FIGURE 5-8
                                      DOD ILLUSTRATION

                 USING CURRENT APPROACH                        USING MISSION APPROACH
                         1977              1978
  BUDGET            AIRCRAFT AND      TACTICAL PRO-     MISSION:        TACTICAL AIR WARFARE
  ACTIVITY:         RELATED EQUIP-        GRAMS
                        MENT


  BUDGET            F-16 AIR COMBAT   F-16 AIR COMBAT   MISSION AREA:       AIR SUPERIORITY
  SUBACTIV;TY:          FIGHTER           FIGHTER

                                                        MIFION NEED:    HIGH MANEUVERABILITY.
                                                                        WITH STRIKE CAPABILITY


  BUDGET            ENGINEERING       ENGINEERING       PROGRAM         FULLSCALE DEVELOPMENT
  CATEGORY:         DEVELOPMENT       DEVELOPMENT       STEP:             (COMPETITIVE ENTRY)


  R&D
                           I
                    F-16 AIR COMBAT
                                             I
                                      F-16 AIR COMBAT   R&D
                                                                                   I
                                                                           F-16 AIR COMBAT
  PROJECI(S):           FIGHTER           FIGHTER       PROJECT(S):             FIGHTER


  FUNDS                     I                 I         FUNDS
  REQUESTED:        $259 MILLION      $192.8 MILLION    REQUESTED:             $




     Illustrations of R&D projects in the 1978 budget that
did not compete to enter full-scale development are shown
in figures 5-9, 5-10, and 5-11.

     The first one is the Pershing II missile system. Its
design was pursued for about 3 years, in a technology base
activity entitled "Radar Area Correlation." It was a part
of a budget line item called "Terminal Homing Systems." 1/
Following this period of relatively obscure development, the
missile surfaced as a separate line item in 1975 for large-
scale funding. Under a mission approach, such a project

1/See our report on the Pershing II (PSAD-77-51, Jan. 24,
  1977, pp. 17 and 23).

                                                  59
 would compete openly from the start with other design
 concepts, including those of other military services. Con-
 versely, if a decision is made to concentrate R&D resources
 early on a single design concept, special agency justifica-
 tion and congressional disclosure are made in advance. 1/




                                          FIGURE 5-9
                                     DOD ILLUSTRATION

                 USING CURRENT APPROACH                       USING MISSION APPROACH
                         1977             1978
   BUDGET         MISSILES AND RE-    TACTICAL        MISSION:         TACTICAL AIR WARFARE
   ACTIVITY:      LATED EQUIPMENT     PROGRAMSI


   BUDGET                                             MISSION AREA:        INTERDICTION
   SUBACTIVITY       PERSHING II      PERSHING II

                                                      MISSION NEED:    LONG-RANGE QUICK RE-
                                                                        ACTION ALL WEATHER
                                                                         STRIKE CAPABILITY
                                                                          AGAINST HIGHLY
                                                                         DEFENDED TARGETS

  BUDGET            ADVANCED          ADVANCED        PROGRAM
                                                                                 I
                                                                        TEST DEMO.NSTRATION
  CATEGORY         DEVELOPMENT       DEVELOPMENT      STEP.           (NONCOMPETITIVE ENTRY)

  R&D                    I                            R&D
  PROJECT (SI:       PERSHING II     PERSHING II      PROJECT(S):           PESHING II

  FUNDS                  I                            FUNDS
  REQUESTED         $36 MILLION      $30 MILLION      REQUESTED:             $




1/This is now required for new major systems; see OMB Circu-
  lar A-109, par. 15.


                                                 60
     Figures 5-10 and 5-11 depict two additional R&D projects
in the DOD 1978 budget that are in full-scale development--
the Aegis and Patriot missile systems. Neither of these
projects competed with other possible design concepts for
meeting the mission need. The two systems, if deployed, are
expected to cost several billion dollars. 1/
     Investments of such magnitude justify creation and
evaluation of competing design concepts before commitment to
any single one. Under a mission approach, the mission need
opens up the process to exploring competing alternative can-
didates and test demonstrations as a qualification for full-
scale development.  Additional matters for congressional
inquiry in this budget activity are outlined in part I. (See
pp. 15 and 16.)




                                          FIGURE 5-10
                                    DOD ILLUSTRATION

                 USING CURRENT APPROACH                     USING MISSION APPROACH

                          1977           1978
  BUDGET            MISSILES AND     TACTICAL        MISSION:          TACTICAL OCEAN CONTROL
  ACTIVITY:           RELATED        PROGRAMS
                     EQUIPMENT


  BUDGET                                             MISSION AREA:     ANTI AIR AND ELECTRONIC
  SUBACTIVITY:         AEGIS           AEGIS                                   WARFARE


                                                     MISSION NEED:       COUNTER ANTI-SHIP
                                                                         MISSILES/AIRCRAFT


  BUDGET            ENGINEERING     ENGINEERING      PROGRAM           FULLSCALE DEVELOPMENT
  CATEGORY:         DEVELOPMENT     DEVELOPMENT      STEP:


  R&D PROJECT(S):      AEGIS           AEGIS         R&D PROJECT(S):           AEGIS


  FUNDS                  I                I          FUNDS
  REQUESTED:        $26 MILLION    $27.2 MILLION     REQUESTED:               $




1/For analysis of Aegis system, see our report entitled, "In-
  formation on Fleet Air Defense," classified "Secret,"
  (PSAD-77-82, Apr. 25, 1977).

                                                61
                                           FIGURE 5-11
                                        DOD ILLUSTRATION

                 USING CURRENT APPROACH                         USING MISSION APPROACH
                         1977               1978
   BUDGET           MISSILES AND RE-      TACTICAL       MISSION:        TACTICAL LAND WARFARE
   ACTIVITY        LATED EQUIPMENT       PROGRAMS


   BUDGET           SURFACE-TO AIR     PATRIOT (SAM-D)   MISSION AREA:   FIELD ARMY AIR DEFENSE
   SUBACTIVITY      MISSILE DEVEL-
                    OPMENT (SAM-D)

                                                         MISSION NEED:       MEDIUM{TO-HIG-
                                                                          ALTITUDE AIR DEFENSE


  BUDGET            ENGINEERING         ENGINEERING      PROGRAM         FULLSCALE DEVELOPMENT
  CATEGORY          DEVELOPMENT         DEVELOPMENT      STEP:           (NONCOMPETITIVE ENTRY)


  R&D               SURFACE-TO-AIR     PATRIOT (SAM-D)   R&D                PATRIOT (SAM D)
  PROJECTIS)         MISSILE DEVE-                       PROJECT(S)
                   LOPMENT (SAM-D)


  FUNDS                     I                            FUINDS
  REQUESTED        S180O MILLION        $215 MILLION     REQUESTED:              S




      Multiservice              use of capabilities

     In the past, separate military programs for developing
similar products and capabilities have brought into question
whether common (multiservice) solutions were possible if the
programs had started from ground zero differently.  This
question has haunted several major aircraft and missile pro-
grams in the past, and rarely has the answer been conclusive.




                                               62
A recent example Is the Navy F-18 aircraft (see fig. 5-12)
which prompted congressional hearings because of a similar
aircraft (F-16) already under development by the Air Force
(see fig. 5-8).



                                             FIGURE 5-12
                                         DOD ILLUSTRATION

                 USING CURRENT APPROACH                          USING MISSION APPROACH
                           1977               1978
  BUDGET            AIRCRAFT AND         TACTICAL PRO.    MISSION:        TACTICAL AIR WARFARE
  ACTIVITY:        RELATED EQUIP-           GRAMS
                        MENT


  BUDGET                  MENT     l                      MISSION AREA:       AIR SUPERIORITY
  SUBACTIVITY.      F.8
                      A    IRCRAFT       F-18 AIRCRAFT

                                                          MISSION NEED:    SEA BASED AIR SUPERI-
                                                                               ORITY/STRIKE


  BUDGET            ENGINEERING          EMGINEERiNG      PROGRAM
                                                                                      I
                                                                          FULLSCALE DEVELOPMENT
  CATEGORY:         DEVELOPMENT          DEVELOPMENT      STEP:           (NONCOhlPET'TIVE ENTRY)


  R&D                                           I         R
                                                          R&D                          I
  PROJECTIS):       F-18 AIRCRAFT        F-t8 AInCRAFT    PROJECT(S):          F-18 AIRCRAFT


  FUNDS                   I                     I         FUNDS
  REQUESTED:        $347 MILLION         $627 MILLION     REQUESTED:              $




     Using common mission language allows the military serv-
ices to state their needs in common terms.  Design capabil-
ities can be created and explored for both inter- and intra-
service use.  Combining the efforts of the military services
in this way increases the span of knowledge and creative de-
sign work that can be applied to a given defense need.

        Overseein2gkey                 pro2 ram turnin eoints

     In mission budgeting, the central focus of program over-
sight is the mission need and the basic step of, or next turn-
ing point, in the program to be funded.  These steps are the:

        -- Exploration of competing alternatives.

        --Design choice which commits the program to its
          development.

        -- Commitment to full production.


                                                     63
     Previous illustrations converting R&D projects in the
DOD 1978 budget to a mission approach show these basic pro-
gram steps.  Progress made in each basic step of the
program would signal whether the next step or program turn-
ing point should be funded.  More intensive congressional
review could vary with the difficulty experienced by DOD in
accomplishing a particular program step.

     As to current backup data, committees could retain
whatever features seem useful, as well as ask for breakdowns
of data other than by missions.  Conversion of the DOD con-
gressional backup book to a mission approach is illustrated
in figure 5-13.  The figure highlights major implications
for congressional oversight of R&D programs.




                                                         FItURf 5-13

                                          AGENCY BUDGET JUSTIFICATION

              TRADITIONAI BUDGET                                                          MISSION BUGCET




                                               tl$flOlr/It'   iltCr. 1$Tb/



         Ac   ~XPINI(
               ~~~~t XL¥1tll~             $~            c     rl~ll LI            I




     P                                                                   0GOUP        $ERAR&TEt¥




                          '           7                                          KI"SIOS     MONS
     X           Y4 T s       s,, ,                                      S

                          pOG14M.S 19711
                          TA                                             7



                                                i"al~~~~~~~~~~                   -,,1~RAM.                 I!




                                                                    64
     DOD budget requests and backup data are submitted to
four congressional committees. The House and Senate Armed
Services Authorization Committees separately review the
data to determine if appropriations should be authorized to
support defense activities. 1/ Similarly, the House and
Senate Appropriations Committees review the same data to
decide if authorized activities should be funded and at what
level. The end result of these congressional reviews is an
R&D appropriation of a lump sum for each DOD component.

     The most frequent question;asked by DOD officials is
whether or not mission budgeting requires one appropriation
as opposed to separate appropriations for the military serv-
ices. The number of appropriations for DOD is for the Con-
gress to decide.  !f individual appropriations for each DOD
component continue to be used, then it would be important
to assign lead responsibilities to DOD components for mission
areas shared with others.
     As discussed more fully in part I, mission budgeting
complements rather than alters congressional budget proc,-
dures. It recasts DOD's product-oriented presentation in
mission-oriented terms; it focuses congressional attention
on mission end purposes, needs, and mission funding levels;
and it anchors congressional authorization and funding
to agency missions.
     Following budget approval, DOD would be accountable
for the level of mission performance funded by the Congress.
Committees would continue to be consulted on significant
changes in the funding of missions or on changes that alter
the purposes for which the funding was approved. Early in
new programs, such consultations iould focus on changes in
purposes of expenditures, since the means of satisfying a
particular need would not as yet have been decided.




1/The current Armed Services' authorization process actually
  stewo from concerns in the late 1950s over the purpose, or
  "mission," of various Army, Navy, and Air Force missiles
  (the missile rivalry). Although the concerns involved
  overlapping purposes, or missions, the legislated funding
  categories were based instead on particular kinds of
  products. ReEort of the Commission on Government Procure-
  ment, Voi. 277  arf7.-'-

                             65
CONGRESSIONAL/DOD ACTIONS


      For fiscal year 1978 the Senate Armed Services Commit-
tee revised its hearing format so that some DOD mission
areas could be covered.   Its authorization report includes
a brief analysis by mission category. 1/   As noted previ-
ously, DOD's 1978 budget contained only an initial break-
down of mission categories, not a true mission structure.
(See pp. 46 and 47.)   Also, several other actions remain to be
taken before that budget would qualify for a mission approach.
These include:

     -- Incorporating the remaining portions of the mission
        structure. including mission areas that have DOD-
        wide acceptance.

     -- Linking to this mission structure the mission needs
        and stating them in end-purpose terms as a basis for
        funding of R&D activities.

     -- Eliminating the advanced technology development
        budget category (see fig. 5-2) by transferring
        nonmission work to the technology base category
        and mission work to the appropriate mission
        category.  Rationale for this segregation is
        in part I, see page 13.

     The Senate Budget Committee in recent years has been
attempting to set ceilings on national defense with mission-
oriented budgets.  In spring 1977 hearings, Secretary of
Defense Brown pledged to that Conmmittee some form of a
mission budget for fiscal year 1979.   He said:

     "* * * whatever the reasons, [DOD] simply has not
     done enough homework on the substantive issues
     to produce what I would regard as an acceptable
     format * * * I would like to make sure that when
     we do it [producx a mission budget], we do it
     right."




1/Senate Report No. 95-129 or "Authorizing Appropriations
  For Fiscal Year 1978 for Military Procurement, Research and
  Development, Active Duty, Selected Reserve, and Civilian
  Personnel Strengths, Civil Defense, and for Other Pur-
  poses," Committee on Armed Services, 95th Cong., 1st sess.
  May 10, 1977.




                            66
                          CHAPTER 6
        NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

     NASA was created by the National Aeronautics and Space
Act of 1958 (Public Law 85-568).  Its purpose was to engage
in civilian-related aeronautical and space activities. In
aeronautics, NASA is responsible for contributing to the
usefulness, performance, speed, safety, and efficiency of
civilian and military aircraft. The agency's responsibil-
ities in space include acquiring scientific knowledge,
developing space vehicles and other equipment for conducting
scientific investigations, and demonstrating technology
applications for civilian and military needs.

     Explorations in space provide new knowledge of tnh
universe. Satellites launched into orbit have opened new
roads in communications and weather forecasting. For the
future, NASA has identified possible endeavors, such as con-
verting sunlight to electrical power and transporting people
to live and work in space.

     Considering the potential impact of NASA's R&D activ-
ities on the Nation's economic advancement and well being,
the Congress is expected to have a continuing interest in
the purposes for which NASA requests R&D funding.
CURRENT BUDGET

     President Ford requested nearly $2.8 billion in fiscal
year 1977 and $3 billion in fiscal year 1978 budget authority
tj directly support NASA's R&D activities. NASA is the third
largest user of R&D funds.




                             67
      Figure 6-1 depicts the 1978 request
 budget structlre. The amount shown,        using NASA's current
                                        requested by President
 Ford, was su'bsequerntly modified by President
 billion.                                       Carter to $3.026

                            FIGURE 6-1
                      EXCERPT FROM PRESIDENT'S
                  FISCAL YEAR 1978 BUDGET (note a)

                            (millions)

                                                       FY 1978
      1.   Space flight:
               (a) Space shuttle
               (b) Space flight operations              $1,349
               (c) Expendable launch vehicle               268
                     development and support
                                                             82
      2.   Scientific investigations in space:
               (a) Physics and astronomy
               (b) Lunar and planetary exploration          251
                                                            162
               (c) Life sciences
                                                             33
      3.   Space applications                               243
      4.   Space research and technology
                                                             98
     5.    Aeronautical research and technology
                                                            231
     6.    Energy technology applications
                                                              4
     7.    Supporting activities:
               (a) Tracking and data acquisition
               (b) Technology utilization                   282
                                                              8
                  Total                                $3

a/Although the President's and NASA's
                                      budgets agree in total,
  the individual amounts differ for items
  and 3.                                  1 (c), 2 (a), (b),

     NASA provides the Congress with backup
data in support of its budget requests.       or justification
NASA's budget structure, to some extent,  The  initial part of
approach. Succeeding levels, however,     follows  a mission
                                        begin
well-defined system products and activities.   to focus on
products typically emerge for funding           These system
                                      when the executive


                                68
branch chooses to identify them as "new starts." The new
starts may already be well beyond the program steps of
defining needs and exploring alternatives. They are usually
at the point where NASA is seeking funds for final design and
hardware development.

     During the several preceding years when program needs
and solutions are being defined and preliminary design work
is being colnducted, this NASA activity is neither visible as
new programs in its budget presentation nor funded as such.
Rather, the early funding is provided under other budget ac--
tivities such as supporting activities.
A MISSION APPROACH

     The mission approach invites earlier and more manage-
able congressional attention to matters of policy review and
program oversight than has been the case with traditional
budgeting.

     Mission budgeting would relate each level of the budget
structure to NASA missions defined in terms of end-purpose
responsibilities. The first or highest level in the struc-
ture would show NASA's broad responsibilities for meeting
specified national needs oz goals. Upper levels of the mis-
sion budget structure, for example, would not contain refer-
ences to specific system products such as NASA's space
shuttle. Descending levels of the budget structure would
provide a sharper focus on the end purposes to be served and
specific needs to be met. The lowest levels of the budget
structure would then indicate the type of activity being
funded or means to accomplish the end purposes and the prog-
ress being made on specific programs.

Policyreview

     Policy reviews are the basis for decisions which should
be made by the highest authorities in the executive branch
and by the Cong:ess. In NASA's case, policy reviews would
consider:

    -- What are NASA's mission end purposes?

    -- What are NASA's approaches to and organizational re-
       sponsibilities for executing its missions?

    ---What are the important capabilities that should be
       developed within each NASA mission?
    -- Within what time frame should those capabilities be
       developed?


                            69
     -- How much of the national budget should be allocated
        to NASA missions within this time frame to meet those
        needs?

To make way for such policy reviews, an overview of NASA's
missions, capabilities, deficiencies, and needs for new
programs would accompany the mission budget presentation.

     Review of NASA missions

     NASA enjoyed wide public support for a definite goal
(a man on the moon) during its first decade of existence.
In recent years, the direction in which NASA is headed has
been less precise with some questioning as to how its ac-
tivities relate to national needs. As in the case of other
agencies contacted in converting traditional budgets to a
mission approach, some uncertainty exists in NASA about how
best to describe its end purposes in a mission structure.
It would be useful to the agency and to the Congress to
clarify any ambiguity or lack of agreement that might exist
about what NASA's missions are, or should be, as well as to
make every effort to have them described in the clearest
possible terms. The result would be a better understanding
of what requested funds are for and whL they are needed.

     As previously noted, NASA's current budget already pro-
vides some degree of mission orientation.   Figure 6-2 com-
pares NASA's major R&D activities as they were shown in the
President's 1978 budget presentation with how they might be
shown using a mission approac:h.  The missions shown are for
illustrative purposes only.   A formal statement of NASA mis-
sions would require NASA, OMB, and congressional review and
approval. 1/




l/The illustrated mission   proach uses NASA's 1978 budget
  request which includes activities in direct support of
  its R&D efforts.  There are two other NASA appropriations
  directly related to R&D.  They involve funds for salaries,
  tra  ', construction of facilities, and general operation
  and maintenance.  If the Congress decides co further ex-
  plore the mission approach, one of the alternatives to be
  considered would be merging the three appropriations into
  one.


                               70
                                                    P.-GURE 6-2

                                         CONVERTING TO A MISSION APPROACH

                                                        NASA


              CURRENT APPROACH                                                    MISSION APPROACH    (note a)

                                          (billions)                                                             (billionu)
1.   Space flight:                                      1.' Technology base                      $                    XX
           (a) Space s uttl_                 $ XX
           (b) Space flight o-tration          XX       2.     Missions:
           (c) Expendable launch vehi                               (a) Space science/exploration         SXX
                  cle development and                                b) Demonstrating technology
                 support                       XX                         applications                     XX
2.   Sci..~ntiflc investigations in                                  c) Multimission operational
      S2.
      cintific investigations in                                          c   bilities                     XX
        space:                                                     (/d) Improving air transporta-
         (a) Physics and astronomy             XX                          tion                            XX
         (b) Lunar and planetary ex-                                e) Technology transfer to
               ploration                                            e)   commercial use                    XX         XX
         (c) L fe                               sciences/


                                                                           sition                /XX

5.   Aeronautical recarch and    tech-                             (b)   Launch support                    XX         XX
       nology                                                            Total                                      $3.0
6.   Energy technology applications            XX
7.   Supporting activities:
         (a) Tracking and data acqui-
               sition                          XX
         (b) Technology utilization            XX
             Total                           53.0




         Several categories cited under                                  the illustradd                   mission
approach require some explanation to show how they we-e de-
rived from NASA's current budget,                                    The first ca.e9ry of
space science/exploration is comparable to the second one in
NASA's current budget and is one (f                                      the reasons,                if   lot the
primary one, why NASA was established, The second mission
category merely combines at the first level the separate
space and energy applications shown in NASA's budget.

     The third cztegory of multimission operational capabil-
ities iF a categcry recognizing the need for space transpor-
tation and other operational capabilities in spa.e serving
more than one mission. Their cost cannot be readily assigned
to individual missions during development because che extent
of their use for particular missions, such as the first two
discussed above, is not yet known. Much of this multi-
mission activity is now funded under Space Flight in NASA's
current budget. At the next level in the mission budge-
structure, the multimission category would distinguish be-
tween capabilities being developed to (1) transport differ-
ing patloads to spacc and (2) conduct operations in space.



                                                       71
       Another mission, improving air transportation,
 recognizes NASA's role in improving the civil
                                                and military
 usefulness of aircraft. As a mission beyond basic
                                                      technol-
 , Jy, it reflects efforts to demonstrate and test
                                                   solutions
 to civilian and military aircraft problems, such
                                                   as the need
 for quieter, less polluting, and more fuel-efficient
                                                        engines.
      What is now called "technology utilization" under
                                                        a
supporting activity, is, under the mission approach,
                                                      shown
as a separate mission--"technology transfer to
                                                commercial
use."   It is cited as a mission because it is an end
required by NASA's basic statute.                     purpose

      As noted earlier, the missions cited are
tive purposes only and are intended to show an for illustra-
                                                end-purpose
orientat;on for congressional policy review under
                                                   mission
budgeti:2q.

     Review of mission fundin2

     After overviewing NASA's mission purposes and
are carried out, congressional policy review shifts how they
                                                     to
mission performance capabilities, needs, priorities,
funding levels.                                       and

      Here, mission budgeting stresses needs affirmed
                                                       by top
agency management and initial funding to explore
Whenever solutions are being explored or developedsolutions.
                                                    to
achieve NASA's end purposes, the corresponding
                                                design or de-
velopment work Is funded under the appropriate
gcry.                                           mission  cate-
        Also stressed is the early recognition of emerging
acquisition programs in response to needs or problems,
than waiting until larger funding is nteded for          rather
                                                 development
of specific solutions.

     In reviewina funding levels for NASA's
gressional review would explore such matters missions, con-
                                              as:
     -- How requested new cipabilities fit in with NASA's
        mission responsibilities and existing capabilities.

    -- Whether   there are better ways to perform the missions.

    -- How funding levels of each mission compare with
       their contributions to national needs and (2)    (1)
                                                      con-
       gressional views of NASA's mission priorities.
    -- ow the worth of a particular mission capability
                                                       com-
      pares to its requested I -nding.




                              72
     At each level of the budget structure, funding requests
are related to NASA mission purposes, needs, and priorities.
Any voids or overlaps in mission responsibilities and activ-
ities should become visible. Ultimately, it should also
become clear whether R&D funding is being earmarked for the
most pressing needs of the missions and whether their end
purposes are compatible with congressional views of national
policy and priorities. Congressicnal judgments that are be-
ginning to form about appropriate magnitude of each mission's
funding are then examined further through reviews of specific
NASA programs.

Program oversight
      A critical link in program oversight under a mission-
oriented budget structure is the mission need. It is the
basis upon which program funds are requested and results are
measured. The need, like the mission it serves, is expressed
in end-purpose terms independent of any solution. As indi-
cated in part I, this provides a framework for considering
various alternative solutions and encouraging innovation on
the part of industrial competitors. More effective implemen-
tation of this approach is possible and congressional over-
sight is enhanced through congressional review to insure
that:
     -- Funding of new knowledge (technology base) is sepa-
        rated from program funding.
     -- Program or mission-oriented funding is linked to
        affirmed needs.

     -- Competition is used to explore alternative design
        concepts and technical approaches.
     -- Progress is examined at key turning points in a prc-
        gram before funding the next one.

     Fundingthe technology base
     The current budget categories of space research and
technology and of aeronautical research and technology con-
tain some, but not all, of NASA's technology base efforts.
Other technology base efforts are within and a part of in-
dividual budget activities, such as space flight and scien-
tific investigations (see fig. 6-1). Under a mission
approach, all technology base activities are grouped to-
gether as a separate category for funding purposes.

     As discussed in part I, technology base funding under a
mission approach is intended to provide a wide base of knowl--
edge for future needs and, at the same time, avoid using

                             73
tnese resources on design work that predetermines new program
hardware solutions. Early concentration uf resources on a
single approach tends to lock out alternatives and conmpeti-
tion.

     The funding level of this technology base would be
highly subjective in nature. Congressional review might con-
sider, for example, NASA's selection of technologies, its
criteria for funding levels, and the current level of na-
tional needs and problems being addressed by the agency.

        A new information categor
        aaae--miss on neeJ
     Once a mission need is approved by NASA's top manage-
ment, a direct link should then evolve ir the budget presen-
tation between a mission and a specific operational need for
an R&D program. Figure 6-3 below illustrates the flow from
a NASA mission, a related mission area, a mission need, a
program to satisfy the need, and activity being pursued as a
solution to the need.          budget information would
spell out the basis fo        .ssion need and why it exists.



                                         FIGURE 6-3
                                 NASA ILLUSTRATION

            USING CURRENT APPROACH                         USING MISSION APPROACH

 BUDGET ACTIVITY       SPACE FLIGHT              MISSION             MULTI-MISSION OPERA
                        PROGRAMS                                      TIONAL CAPABILITIES

 BUDGET                SPACE FLIGHT              MISSION AREA         SPACE OPERATIONS
 SUBACTIVITY           OPERATIONS

                                                 MISSION NEED       BASE TO OPERATE FROM
                                                                           IN SPACE

 BUDGET             ADVANCED PROGRAMS            PROGRAM STEP       EXPLORING ALTERNATIVES
 CATEGORY


 R&D PROJE:T(3SI      SPACE STATION              R&D PROJECT(S):    SPACE STATION DESIGN AL
                    CONCEPTUAL STUDIES                             TERNATIVES (NONCOMPETI
                                                                      TIVE I2XPLORATION)

 FUNDS REoUESTFI)    NOT BROKEN OUT           FUNDS REQUESTED        $
                       BY PROJECT




                                            74
     With the information on mission needs, the Congress
would have the opportunity to assess validity and priority
of mission needs and oversee the evolution of each need
into a solution. That evolution is reflected on the mission
budget format beside the caption called "Program Step."   It
initially reflects the step of exploring alternatives and
ultimately "full-scale development" once a preferred solu-
tion has been found.

     Com!etitive exeloration of alternatives

     By funding an end-purpose mission need rather than a
solution, mission budgeting is intended to stimulate differ-
ing and innovative responses from which the most promising
ones can be explored competitively end a final design choice
ultimately made. A program would not wait several years to
be recognized as a new acquisition.  Early design work and
the exploration of alternatives is performed with mission
funds based on an affirmed need as opposed to using basic
technology funds.

     Previous figure 6-3 depicts activity presented to the
Congress in the fiscal year 1978 budget as an advanced sys-
tems study. This activity is not yet recognized by NASA as
being a "new start project," although one study task under-
way as early as fiscal year 1976 involved indepth definition
of selected space station concepts and subsystem analy-
sis. 1/

     Under a mission approach, such system activity is
accomplished in the program step of exploring alternatives
competitively--and within the constraints of a mission need
and )rogram capability, time, and cost-worth goals.


     F.cure 6-4 illustrates what NASA in its fiscal year
1977 budget considered to be a future development. project--a
large space telescope.  In recent yeaLs, NASA has funded
various contractor design studies associated with the proj-
ect.  This early activity involved definition of the proj-
ect, preliminary design, and advanced technological devel-
opment. The request for proposal for final development will
integrate the results of these early industry design efforts.
The Congress had an earlier awareness of this project and
asked NASA to look at lower cost options.



1/In hearings before the Senate Committee on Aeronautical
  and Space Sciences in 1976, NASA said its planning is di-
  rected toward a space station "new start" in fiscal year
  1979.

                            75
     Under a mission approach, such a project would
                                                     proceed
first through the program step of exploring
didates and demonstrating critical hardware alternative can-
                                            elements. This
would be done as a prelude to choosing a preferred
                                                    system
for full-scale development.
     As shown in figure 6-4, NASA has requested
                                                 funding in
its fiscal year 1978 budget for developing the
                                                space tele-
scope.  In the budget justification data, it is described
as a "new initiative."




                                           FIGURE 6-4
                                     NASA ILLUSTRATION

                  USING CURRENT APPROACH                         USING MISSION APPROACH
                            1077           1978
    BUDGET          SPACE SCIENCE     SPACE SCIENCE    MISSION               SPACE SCIENCE;
    ACTIVITY          PROGRAMS          PROGRAMS                              EXPLORATION

    'JUDGET
                            I
                     PHYSICS AND
                                             I
                                       PHYS :(S AND    MISSION AREA
                                                                                     i
                                                                        PHYSICS AND ASTRONOM'.-
    SUBACTIVITY      ASTRONOMY         ASTRONOMY

                                                       MISSION NEED:    ASTRONOMICAL OBSERVA-
                                                                        TIONS NOT DEGRADED BY
                                                                        ATMOSPHERIC CONDITIONS

   BUDGE T           SUPPORTING          SPACE         PROGRAM
   CATEGORY          ACTIVITIES        TELESCOPE       STEP            FULL SCALE DEVELOPMENT


   R&D            SPACE TELESCOPE    ST SPACECRAF r    R&D                  SPACE TELESCOPE
   PROJECT(S)      ADVANCED TECH     ST EXPERIMENTS    PROJECT(S)       INONCOMPEHTIVE ENTRY
                  NOLOGICAL DEVE     MISSION OPERA
                      LOPMENT        TIONS AND DATA
                                        ANALYSIS


   FUNDS
                                                       FUNDS
   REQUEST ED           a              36 MIt LION     HEOLUESTED:              $-

      DUE TO BUDGET CONSTRAINTS FY 1977 FUNDIN(G
                                                 FOR
   THIS PHOJECT WAS NEITHER REQUESTED NOR PROVIDED.
   HOWE VER. CONGRESSIONAL APPROVAL WAS PROVIDED
   FOH NASA 10 PROCEED WITH SELECTION OF THE
                                              CON
   i RACTORS FOH FINAL DESiGN/DEVELOPMENT




                                                  76
      Figure 6-5 shows an acquisition recognized by NASA as a
"new start project" in the fiscal year 1977 budget ready for
final design and development. At that time, it Fad been
evolving in-house for 8 years. This project, liKe the one
illustrated in figure 6-4, evolved without significant com-
petitive exploration and demonstration of alternatives as a
prelude to choosing the optimum approach for full-scale de-
velopment.   Under the mission approach, focus'ng agency re-
sources early on a single system solution requires agency
head approval and congressional disclosure. 1/




                                           FIGURE 6-5
                                    NASA ILLUST RATION

              USING CURRENT APPROACH                           USING MISSION APPROACH
  BUDGET ACTIVITY:     SPACE SCIENCE PROGRAMS       MISSION.                  SPACE SCIENCE
                                                                              EXPL()RATION

  BUDGET                                            MISS'UN AREA         PHYSICS AND ASTRONOMY
  SUBACTIVITY          PHYSICS AND ASTRONOMY

                                                    MISSION N. _D:       TO UJODERSTAND RELEASC
                                                                           OF ENERGY N SOLAR
                                                                              FLARF PROCESS

  BUDGET                          i                 PROGRAM STEP:       FULl SCALE DEVELOPMENT
  CATEGORY:            SOLAR MAXIMUM MISS'ON                            (NOtNCOMPETITIVE ENTHY)

  R&D PROJECT(S)      SPACECRAFT EXPERIMENTS        R&D PROJECT(S)          SOLAR MAXIMUM
                       MISSION OPERATION AND
                           DATA ANALYSIS


  FUNDS REQUESTED          $30.6 MILLION            FUNDS REGUESTED              S




     Congressional reviews of acquisition prcgrams in their
early stages under mission budgeting consider the extent to
which alternatives are being explored and denmonstrated, and
the criteria for choice of a preferred system for full scale
development.  Additional matters for review are outlined in
part I of this report (see pp. 15 and 16).



1/See also OMB Circular A-109, par. 15.


                                               77