oversight

Federal Agencies' Contracting for Research and Development in the Private, Profitmaking Sector

Published by the Government Accountability Office on 1977-03-24.

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

                         LOCU0NET RESUME
01734 - [A10517953
Federal Agencies' Contracting for Research' and Development in
the Private, Profitmaking Sector. PSAD-77-66; B-164912. March
24, 1977. Released April 8, 1977. 1 pp. + appendices (18 pp.).
Report to Sen. Charles H. Percy, Ranking Minority Renter,   Senate
Committee on Governmental Affairs; by Elmer B. Staats,
Comptroller General.
Issue Area: Science and Technology: Federal Laboratories and
     Federally Supported Organizations Performing Research and
     Development (2003).
Contact.} Procurement and Systers Acquisition Div.
Budget Function: General Science, Space, and Technology: General
     Science and Basic Research (251).
Organization Concerned: National Science Foundation;
     Environmental Protection Agency; Department of
     Transportation; Department of Commerce.
Congressional Relevance: Senate Ccnmittee on Governmental
     Affairs.
Authority: Merchant Marine Act of 1936. Public Health Service
     Act. Federal Insecticide, Fungicide, and Rodenticide Act.
     Clean Air Act. Solid waste Disposal Act. Fedcral water
     pollution Control Act. Noise Control Act. Federal Aviation
     Act. High Speed Ground Transportation Act. Department of
     Transportation Act. Rational Traffic and Rotor VehiCle
     Safety Act. Federal Railroad Safety Act.
          Federal research and development contract awards to the
private, profitmaecing sector are increasing. These contract
awards have particular potential problems which should receive
attention. The autherity, practices 4, and procedures for awarding
research and development contracts to private, profitmaking
firms were investigated for the following agencies: the Maritime
Administration, the Environnental Protection Agency, the Federal
Aviation Administration, the National Highway Traffic Safety
Administration, the Federal Railroad Administration, and the
Office of the Secretary of Transportation Findings/Conclusions:
Er:amination of more than 100 contracts awarded by these agencies
in fiscal year 1975 to private, profitmaking firms indicated
that there are three potential problem areas: end-of-year
contract awards; contract modifications; and a lack of formal
procedures for evaluating the usefulness of contract work. In
addition, agencies were found to be furnishing inaccurate
research and development funding data to the National Science
Founuation. The Foundation uses this funding data to compile
annual comprehensive statistical reports on the magnitude and
composition of Federal research and development programs which
are used in planning for Government programs. Many of the
inaccuracies of the agencies' reports may occur because the
agencies have not issued firm instructions for supplying
accurate statistics. (Author/SC)
         o-.1*tC ''     '                       _
                            Iby   v   rd'   .                          i         >- >   >   >9s   3



                      REPORT OF THE
z;..i                 COMPTROLLER GENERAL
        %CCoU~,P      OF THE UNITED STATES                                                   L Ili;




                      Federal Agencies' Contracting
                      For Research And Development
                      In The Private, Profitmaking Sector
                      Potential problems in Federal agencies' award-
                      ing of research' and development contracts to
                      private, profitmaking firms are
                            --end-of-year contract awards,
                            --contract modifications,
                            --lack of procedures for evac,,.ting end
                              products, and
                            --inaccurate reporting of research and
                              development funding.




                      PSAD-77-66
                                                                           MAr',J 24., 1 9 7 7
/i                COMPTROLLER GeNEIAL OP THE UNKIATEDTAT'S
                             WASHINGTON. D.C. 20541




 B-164912




 The HonoLable Charles H. Percy
 Ranking Minority Member, Senate
   Governmental Affairs Committee
 United States Senate

 Dear Senator Percy:
      You requested that we obtain information on the private
 sector's involvement in Federal research and development
 (R&D) programs. In subseauent discussions with your office,
 we agreed to
      -- describe six agencies' authority, practices, and
         procedures for awarding R&D contracts to private,
         profitmaking firms;
      -- provide a list of contracts awarded by the
         selected agencies; and

      -- identify potential problems in awarding contracts.

      Agencies reviewed were the Maritime Administration; the
 Environmental Protection Agency; and in the Department of
 Transportation, the Federal Aviation Administration, National
 Highway Traffic Safety Administration, Federal Railroad
 Administration, and Office of the Secretary of Transportation.

      We examined more than 100 R&D contracts awarded by these
 agencies in fiscal year 1975 to private, profitmaking firms.
 We identified three potential problem areas--end-of-year
 contract awards; contract modifications; and a lack of formal
 procedures for evaluating the usefulness of contract work.
 Inordinate yearend contracting and contract modifying can
 indicate weaknesses in agency planning.

      Moreover, agencies were furnishing inaccurate R&D fund-
 ing data Zto the National Science Foundation. Using agency
 funding data, the Foundation compiles annual comprehensive
 statistical reports on the magnitude and composition of
 Federal R&D programs. These reports should be as accurate
B-164912


as is reasonable, because
                          they influence planning and
sionmaking for Government                             deci-
                          programs.
     The results of our review
in the summary which follows.   are set forth in more detail
did not obtain written comments As your office requested, we
                                 from the departments and
agencies. However, we discussed
with responsible officials        the matters in the report
                           and considered their comments
where appropriate.

     We agreed with your office
would examine in detail the     that either you or our
a later date. We plan to    causes of potential problemsoffice
                          be in touch with you in the     at
future in this regard.                                 near


                                     y your


                             Comptroller General
                             of the United States




                            2
APPENDIX I                                           APPENDIX I


                   SUMMARY CF THE hEVIEW BY

               THE GENERAL ACCOUNTING OFFICE OF

               FEDERAL RESEARCH AND DEVELOPMENT

                 CONTRACTS AWARDED TO THE

                PRIVATE, PROFITMAKING     SECTOR


INTRODUCTION

     Federal   research and development    (R&D) contract awards
to the private, profitmaking rector are increasilni.  Accord-
ing to the National Science Foundation (NSF), Federal
research and development obligations 1/ in fisca. year 1975
totaled over S19 billion. Of this amount, $9.1 billion, or
48 percent, was awarded to the private, profitmakinq sector.
NSF expects R&D obligations to this sector to increase to
50 percent in fiscal year 1976 and to 52 percent ill 1977.
The Office of Management and Budget has recently revised its
Circular A-76 describing the Government's policy cf relying
on private enterprise to supply its needs. An Office of
Management and Budget official expects this revision to
expand the amount of Government functions that are
contracted out.

     The Ranking Minority Member, Senate Governmental
Affairs Committee, requested information on R&D awards to
private, profitmaking firms by the Maritime Administration
(MarAd); the Environmental Protection Agency (EPA); and the
following components within the Department of Transporta-
tion: Federal Aviation Administration (FAA); National
Highway Traffic Safety Administration (NHTSA); Federal
Railroad Administration (FRA); and the Office of the
Secretary of Transportation (OST).




l/Obligations are actions which legally bind the Government
  to disburse funds, including placing orders, awarding
 contracts, or receiving goods or services.
APPENDIX I                                                     APPENDIX I


     The table below taken from an NSF Publication shows the
distribution of R&D obligations by type of performer for the
selected agencies.

             Distribution of Federal R&D Obliaations

               by Performers and Selected Agencies

                              Fiscal Year 1975


                                                 Agencies
  Performers        KarA         T
                                 EPA       FAA      NHTSA    FRA    OST    Total

                    -----------------
                       …(millions)                          -----------------
In-house           $ 2.6      $141.5 $ 23.0         $ 1.7   $ 9.8 $11.1 $189.7
Profitmaking
  organizations     18.7         51.9      68.4      15.5    18.8   16.4    3.83.7
Educational
  institutions           .5      33.9       3.2       2.0      .7    6.0     46.3
State and local
  governments            .3     14.2         .0      12.2      .8    2.1     29.6
Nonprofit
  organizations          .8     13.4         .0       2.6      .5     .8     18.1
Other (note a)      -    .0      2.8       10.9        .0     1.8     .9     16.4
    Total          $22.9      $257.7 $105.5        $34.0    $32.4 $31.3 $483.8
Profitmaking
  organizations'
  share as per-
  centages of
  the total             82%      20%       65%       46%      58%   33%       38%


a/Includes amounts awarded to Federally Funded Research and
  Development Centers and foreign countries.




                                       2
APPENDIX I                                       APPENDIX I

LEGISLATIVE AUTHORITY TO
AWARD CONTRACTS

MarAd
     One of MarAd's objectives under the Merchant Marine
Act of 1936 is to develop and promote the operation of the
U.S. Merchant Marine.  Its R&D goal is to improve the com-
petitive position of the Merchant Marine through practical
applications of technical advances. Specifically, its
goals are to reduce life-cycle costs, decrease subsidies,
and increase productivity of commercial ship systems. To
aid in the transfer of R&D results to the U.S. Merchant
Marine, MarAd awards contracts to concerns in the merchant
marine industry.
EPA

     EPA was created in 1970 to permit coordinated and
effective governmental action on behalf of the environment.
The agency's mission requires an in-house expertise capable
of responding quickly to emergency environmental crises.
EPA's activities have been directed toward identifying
environmental problems, surveying polluting industries,
developing standards, and exploring control technologies.
Most of EPA's R&D is performed in-house. Its authority to
contract for R&D is stipulated under the followirn legis-
lation:

      -- Public Health Service Act.
      -- Federal Insecticide, Fungicide, and
           Rodenticide Act.
      -- Clean Air Act.
      -- Solid Waste Disposal Act.

      -- Federal Water Pollution Control Act.
      -- Noise Control Act.

Department of Transportation
     The components of the Departmer     Transportation--FAA,
NHTSA, FRA, and OST--are responsible ior improving and pro-
moting air, rail, and motor vehicular transportation. Their
R&D efforts include testing and developing new vehicles and
related equipment and improving transportation safety and



                               3
  APPENDIX I
                                                     APPENDIX I

  efficiency. The agencies perform
                                    in-house research in
  addition to contracting with the
                                   private
  following legislation provides contractingsector. The
                                              authority:
       -- Federal Aviation Act.

      -- High Speed Ground Transportation
                                           Act.
      -- Department of Transportation Act.
      -- National Traffic and Motor Vehicle
                                            Safety Act.
      -- Federal Railroad Safety Act.
 CONThACT AWARD PROCEDURES

      The agencies reviewed use
 Regulations (FPRs) in awarding the Federal Procurement
                                R&D contracts to private,
 profitmaking firms. The FPIs provide
 executive agencies on the procurement guidance to civilian
 services. The agencies supplement      of supplies and
                                    and implement the FPRs
 with internal procurement regulations.

     We reviewed the agencies' application
and regulations for a limited number         of these policies
found they generally were being        (13) of  contracts and
                                implemented
Under the FPRs, agencies' practices            as prescribed.
managing contracts in most instances and  procedures  for
                                      should be as follows.
Decision to contract

      In the first phase, the agency decides
and how it is to be obtained, considering    what is required
dates and agency mission statements.       legislative man-
ments are the basis for developing     These broad reauire-
projects.                           and initiating individual

      An agency can accomplish R&D projects
ways:                                         in one of three
        the work may be performed in-house,
Government agency, or through a              by another
                                 contract or grant. In
deciding how the work will be performed,
first consider its own capabilities        the agency should
                                     and
Government agencies. If these alternativesthose  of other
the decision can be made to contract           are not feasible,
Government.                           the  work  outside  the

     An agency should not restrict a
on the basis of its status as a       prospective contractor
institution. Eligibility should profitmaking  or nonprofit
                                 be based
ability to perform the work required.      primarily on
cases where profitmaking firms competed We found several
                                         against educational

                             4
 APPENDIX I                                       APPENDIX I

 institutions and other nonprofit organizations for the
                                                        same
 contract.
     After the decision to contract has been made, the
program office reviews and approves the contract request
and supporting documentation before submitting them to
                                                        the
procurement office for award. The supporting documentation
generally includes a statement of work, a list of potential
bidders, and, if necessary, a sole-source justification.
The approval level varies with the dollar amount of
proposed contract.                                  the

Awarding contracts

     The second part of the procurement process involves
the steps leading to the actual contract award. Each agen-
cy reviewed had its own procurement office except for
                                                      MarAd,
whose contracts were awarded by the Department of Commerce.

     When the procurement office receives the contract
request, it initiates award procedures. These procedures
vary according to whether the contract is to be awarded
a competitive or sole-source basis. In the competitive on
process, interested contractors submit proposals to the
agency in response to an advertised solicitation for pro-
posals. A contractor should be selected on the basis
the best combination of cost and technical competence of
according to established source selection criteria.
Although competition is preferred, contracts can be
on a sole-source basis when there is only one source awarded
when competition is impractical.                      or

Monitoring contracts

     Once a contract is awarded, a project officer in the
program office is usually assigned responsibility for
monitoring its progress. Reviewing mont ly progress
ports is the most common method of monitoring. Other re-
include onsite visits and periodic briefings.         methods

R&D GRANT POLICY

     Of the agencies reviewed, only EPA awards R&D grants
to private, profitmaking firms. The grants result primarily
from proposals submitted to the Government without
solicitation. Grants are awarded in areas relating prior
pollution, solid waste, radiation, and public health.to water
                                                        In
fiscal year 1975, EPA awarded 13 grants totaling $1,340,000
to private, profitmaking firms.



                            5
APPENDIX I                                         APPENDIX I


     EPA's procedures for awarding these grants are the same
as for awarding grants to educational, governmental, or
other nonprofit organizations. When evaluating the prospec-
tive grantees, however, EPA makes a cost analysis regardless
of dollar amount for all proposals received from profitmaking
firms. Cost analyses are made on proposals from other organ-
izations only if the value of the grant is over $i00,000.
PATENT AND COPYRIGHT POLICIES

     Agencies have adopted the FPRs' patent and copyright
policies, which implement the 1971 Presidential Statement on
Government Patent Policy. The goals are to promote for the
public benefit the development, use, and availability of
inventions made under Government R&D contracts.

     The Government normally acquires or reserves the right
to acquire principal or exclusive rights to any invention
developed under an R&D contract. An exception arises when
the work under contract is in an area where the contractor
has acquired technical competence (including prior patents)
and has an established commercial interest. In such cases
either the contractor retains the rights to the invention
or the agency allocates such rights after the invention is
identified.

     Regarding copyrights, the Department of Transportation
procurement regulations state that all subject data first
produced in the performance of the contract shall be the
sole property of the Government. The contractor must also
agree to grant to the Government a royalty-free, nonexclu-
sive, and irrevocable license to all data not first produced
or composed in the performance of the contract but which is
incorporated in the work furnished under the contract.
POTENTIAL PROBLEMS IN
AWARDING CONTRACTS
     In fiscal year 1975, the agencies reviewed awarded 475
R&D contracts totaling $82.2 million to profitmaking firms.
In accordance with the Minority Member's request, we examined
contracts with obligations (including modifications) totaling
$100,000 or more as of June 1976.  (See list of contracts
beginning on page 15.) These 111 contracts totaled $35.8
million.

    We identified three potential problem areas:

     -- End-of-year contract awards.


                            6
 APPENDIX I
                                                           APPENDIX I

      -- Contract modifications.
      --A lack of formal procedures for evaluating
         use is made of contract work.             what

 End-of-year contract awards

     The agencies awarded two-thirds of their
profitmaking firms in the last month of        contracts to
                                         the fiscal year.
In fact, MarAd awarded 42 percent of its
fiscal year's last 2 working days. The    contracts in the
                                         statistics by agency
are presented below.

                  Schedule of Contracts Awarded
              Durin- Last Month of Fisca-i Year 1975


                   Total    MarAd   EPA    NHTSA   FAA        FRA   OST
Total number of
  contracts         111       26     38     30         7       8        2
Awarded June
  1975               72       19     26     19         3       5        0
Percent of
  total              65%      73%    68%    63%    43%        63%       0%
     Awarding a large number of contracts
fiscal year suggests improper planning       at the end of the
                                         and
funds are obligated to prevent the authorityimplies that
to avoid reductions in future appropriations. from lapsing or
have issued policies discouraging peak buying EPA and FAA
the fiscal year. These policies recognize        at the end of
                                              that
ning would enable the distribution of contract proper plan-
out the year and minimize bottleneck conditions awards through-
According to the policies, peaks in procurement at year's end.
                                                   can cause:
     -- Inadequate review of projects, inexact
                                                 work state-
        ments, and/or incomplete proposal evaluations.

    -- Awarding of unnecessary contracts.
    -- Lower quality proposals because of peaks
                                                in
       contractor workload when most solicitations
                                                   are
       issued about the same time.
    -- Increased cost to the Government due to
                                               overtime
       in the procurement office.




                              7
APPENDIX I                                      APPENDIX I


     Agency officials believe they are expected to obligate
R&D funds in the fiscal year in which they are appropriated,
even if the funds remain available for obligation in the
following year; otherwise they will be vulnerable to
criticism and congressional action reducing funding in
subsequent years if appropriations are carried over to
the next fiscal year. If subsequent appropriations are
reduced, agencies may be undble to fund needed projects.

     There are varying perceptions among agency officials
as to why award concentrations occur at the year's end.
Some believe it is caused by delays in the procurement
offices and others, by poor planning in the R&D program
offices. Still other officials attribute this problem to
R&D funds not being appropriated before the start of the
fiscal year.

Contract modifications

     Modifications incorporate new and unanticipated reauire-
ments into contracts. They range from minor administrative
changes to major redirections. Modifications can increase
the contract dollar value and/or extend the completion date.
     Because R&D work deals with unknown and variable
factors, there are often valid reasons for modifying R&D
contracts. However, a high incidence of modifications can
indicate poor planning.

     Sixty-nine of the 111 contracts reviewed had modifica-
tions resulting in dollar increases and/or time extensions.
Contracts with dollar modifications increased in value by
an average of 72 percent, whereas contracts with time modi-
fications extended the contract completion date by an average
of 9 months. Many contracts with dollar increases also had
time extensions. The statistics by agency follow.

                  Total   MarAd   EPA   NHTSA   FAA   FRA    OST
Total number of
  contracts        111      26     38     30      7     8       2
Contracts with
  dollar/time
  increases         69      17     21     15      6     8       2
Average dollar
  increase
  (percent)         72      40     33     42     20   111      41


                             8
APPENDIX I                                        APPENDIX I

Average time
  increase
  (months)           9         7    8      7     11       17   7
     Increasing contract time and/or dollar values may
affect R&D program management and cost in several ways.
     -- Modifying contracts lessens cost competition
        since modifications are essentially sole-source
        awards.
     -- Extending completion dates may result in pro-
        viding outdated information and conclusions to
        management.
     -- Providing funds for unanticipated modifications
        may cause other planned projects to be deferred
        or eliminated.

     Our review of 13 completed contracts showed that in
some instances, modifications were valid and necessary to
incorporate new developments identified during the course
of the work. For example, an EPA contract involved a pilot
scale evaluation of combustion control techniques for fossil
and waste fuels. During the course of the contract, new
technological developments were identified that affected the
work being performed. By modifying the contract, the agency
was able to provide for additional tests using the most
up-to-date technology. According to an official, the
research results will be more meaningful.

     On the other hand, modifications were sometimes used
to remedy poor agency planning in the initial stages of the
contract. Two examples are presented below:

    1.   An OST contract was awarded for an analysis of
         the Department of Transportation's R&D program
         to be used for presenting the Department's
         budget to the Congress. The contract was
         modified several months later, reauiring the
         contractor to produce a comprehensive report
         on automotive energy efficiency. This modifi-
         cation, in response to the energy crisis, was
         unrelated to the contract's original scope of
         work. Some months later the office requesting
         the automotive energy efficiency report became
         busy in other areas and told the contractor to
         stop work on the report. A final report was
         never provided to OST.



                           9
 APPENDIX I
                                                          APPENDIX I

        2.    FRA contracted for a comprehensive analysis of
              its safety inspection program. During
              performance of the contract, the agency the
              nized that a deadline was approaching forrecoq-
                                                          a'
              report tc the Congress on a related subject.

              The report was added to the original contract
              as a modification, which greatly increased
              the value of the contract. The requirement
              for the report to the Congress was identified
              several months before action was taken to
              procure the services. An agency official said
              that if action had been taken when the need
              was initially identified, the project could
              have been awarded on a competitive basis rather
              than as a sole-source modification.
Evaluation of end products

     We were requested to evaluate the results or
                                                   conclusions
of internal agency evaluations of project performance
results. Of the 111 contracts reviewed, only           and
completed because                             13  had been

        -- many efforts were initially planned as multiyear
           (some were scheduled for 36 months or more) and
        -- modifications extended the completion dates
           average extension was 9 months), as follows. (the


                                    Number of contracts
                                                             With
                  Reviewed   Completed     Multiyear   time extensions
MarAd                26          3             3              15
EPA                  38          3            10              11
NHTSA                30         5              3              10
FAA                   7         1              1               3
FRA                   8         1             0                5
OST                   2         0             1                2
      Total        111         13            18               46



                                    10
APPENDIX I                                          APPENDIX I

     Because of the short timespan between the completion of
the contracts and our review, we cannot comment on the use
made of the end products. However, we noted that four of
the agencies--MarAd, NHTSA, FRA, and OST--did not have
formal systematic procedures for evaluating the usefulness
of contracted R&D end products.

OBSERVATIONS

     As arranged with the Ranking Minority Member's office,
we did not identify the causes for the agencies' numerous
yearend awards and contract modifications. Nor did we
determine the impact of the lack of formal agency procedures
for evaluating the usefulness of R&D contract results.
However, we believe it important to discuss further investi-
gation of these potential problem areas with representatives
of the Ranking Minority Member.

REPORTING OF R&D STATISTICS

     The National Science Foundation promotes scientific
research and education. Specific activities include collect-
ing, disseminating, and analyzing scientific information to
facilitate decisions on national research. NSF compiles
annual comprehensive statistical reports, which provide
information on the magnitude and composition of Federal R&D
programs.

     "Federal Funds for Research, Development and Other
Scientific Activities" is one such report, providing RF5D
data based on the President's Federal budget submitted to
the CongLess. The report analyzes funds given by supporting
agencies to the performing sector by character of work, such
as basic or applied research or development; by field of
science; and by distribution by State. Information is based
on an annual survey questionnaire to 93 agencies and agency
subdivisions.

     The accuracy of the statistics is important because
the statistics are used by:

    --The Congress, committee staffs, and science
      advisory groups to evaluate Federal R&D
      program emphasis and establish scientific
      policy for the Nation.
    -- Private industry and research institutes to
       make planning decisions on the basis of the
       direction of Federal spending.



                              11
 APPENDIX I
                                                  APPENDIX I

      -- Universities and colleges to plan staffpower
         requirements and make budgetary and research
         policy decisions.
      -- The scientific community and science histo-
         rians to trace trends in Government R&D
         program funding and to analyze the effects
         of this funding.
      -- The press and general public to increase their
         knowledge and understanding of Federal R&D
         programs.
      -- Scienre administrators in the executive branch
         of one Government to assist them in evaluating
         the status of past and current Federal R&D activi-
         ties.
Agencies sometimes submitted inaccurate information
                                                    to NSF.
Inaccuracies noted in
reporting-satii cs-
     NSF instructions request that agencies use the
ing definition in reporting R&D funding data:       follow-

     "all direct, indirect, incidental, or related
     costs resulting from or necessary to performance
     of research and development * * * regardless
     when the funds were originally authorized or of
     received, and regardless of whether they were
     appropriated, received, or identified in the
     agency's budget specifically for research and
     development * * *."
      Agencies did not always follow this definition
mitting their data reports; therefore, they were      in sub-
                                                  not report-
ing all funding for R&D activities to NSF.
EPA reported $52 million in R&D obligations For  example,
                                             to profitmakinQ
firms in fiscal year 1975. However, this amount
only on obligations from EPA's R&D appropriations.was based
additional $22 million was identified at the         An
                                              agency's
curement office as obligations for R&D activities       pro-
                                                   financed
from other appropriations. Similarly, a major
                                                portion of
the $43 million budget of a NHTSA division should
reported but was not because the funds were not    have'been
                                                 R&D appro-
priations.




                            12
 APPENDIX I                                        APPENDIX I

      In addition, MarAd and EPA assigned a low priority to
the reporting of R&D statistics, especially when the statis-
tics were not readily available.   Their information systems
did not categorize R&D by basic or applied research or
development, although NSF requires such data. A MarAd
official said he had not analyzed the agency's R&D efforts
but had developed statistics based on prior year data
missions. EPA did not have complete records to supportsub-
                                                         its
data submissions.

OBSERVATIONS

     We did not perform an indepth analysis of the NSF
report nor of the agencies' procedures for reporting R&D
funding data. However, for the agencies reviewed, the
procedural deficiencies merit comment.

     NSF officials are concerned about agencies' inaccurate
reporting because the NSF data influences policy decisions.
These officials believe that many of the inaccuracies occur
because agencies have not issued firm instructions for
supplying accurate R&D statistics.

     Because the NSF publications are the
and detailed reports on Governmentwide R&D most comprehensive
                                            funding and are
used as a reference in decisionmaking, we believe the com-
pilation of these statistics should not be taken lightly by
agency officials and should be made as accurate as is
reasonable.
SCOPE OF REVIEW

     Our work was performed at the Washington, D.C., head-
guarters of the agencies previously named and EPA's labora-
tory facilities at Research Triangle Park, Durham, North
Carolina.

     We reviewed the agencies' procurement regulations and
other documenation prescribing procedures for awarding R&D
contracts to private, profitmaking firms. We discussed
these procedures with officials of procurement and R&D
offices.

     We analyzed data on all R&D contracts awarded to
private, profitmaking firms in fiscal year 1975, except
those (1) under $100,000, (2) for developing an item of
hardware, (3) for buying R&D plant or equipment, or (4) for
a purpose other than research, study, analysis, or similar




                           13
APPENDIX I
                                                 APPENDIX I

service. We examined in detail
                                the procedures used in award-
ing and managing 13 of these contracts
prescribed procedures. We made         for comparison with
                                a limited review of the
agencies' procedures for evaluating
                                    the usefulness of the
results of completed contracts.
     We also evaluated the accuracy of
information on R&D expenditures        the statistical
                                furnished
to the National Science Foundation.       by those agencies




                         14
 APPENDIX II                                       APPENDIX II

           LIST OF SELECTED CONTRACTS AWARDED TO

               PRIVATE, PROFITMAKING FIRMS IN
                      FISCAL YEAR 1975


                  MARITIME ADMINISTRATION

Contract                                 Date of       Initial
 number           Contractor              award      award amount

5-37039     Magnavox Research
              Laboratories               6/27/75      $     436,195
5-37043     Prudential Lines, Inc.       4/24/75            190,560
5-37045     NUS Corporation              2/06/75            147,088
5-38000     Exxon Research and
              Engineering Co.            5/14/75            108,000
5-38003     Grumman Data Systems
              Corporation                6/30/75          1,049,964
5-38014     Combustion Engineering,
              Inc.                       3/13/75          a/96,187
5-38019     John J. McMullen
              Associates, Inc.           6/24/75            138,638
5-38021     RCA Global Communications    6/10/'              83,265
5-38022     Newport News Shipbuild-
              ing and Dry Dock, Co.      4/21/75           418,078
5-38023     Hydrodynamics, Inc.          5/12/75            48,451
5-38024     BDM Corporation              6/24/75           164,892
5-38032     Prairie Shipping Co.         6/26//5           150,000
5-38034     Peat, Marwick, Mitchell
              and Co.                    6/24/75           132,814
5-38036     J.J. Henry Co., Inc.         6/30/75           151,225
5-38037     Moore-McCormack Lines,
              Inc.                       6/30/75             99,000
5-38040     Lykes Brothers Steamship
              Company, Inc.              6/24/75           370,160
5-38042     Pyramid Marine Co.           6/30/75           144,739
5-38045     Raytheon Company             6/30/75           133,000
5-38046     Pacific Far East Line,
              Inc.                       6/18/75           350,000
5-38347     Comsat General Corp.         6/19/75           116,400
5-38048     Sperry Rand Corp.            6/30/75           360,000
5-38051     Waterway Communications
              Systems, Inc.              6/27/75           500,000
5-38060     ECON, Inc.                   6/30/75           102,844
5-38071     Avondale Shipyards, Inc.     6/30/75           102,156
5-38074       Hydronautics, Inc.         6/13/75           255,000
5-38075     Delta Steamship Lines,
              Inc.                       6/30/75           105,224




                               15
APPENDIX II                                            APPENDIX II
              ENVIRONMENTAL PROTECTION AGENCY
 Contract                                Date of         Initial
  number             Contractor           award        award amount
68-01-2959     Mathematica, Inc.        11/11/74       $   111,537
68-01-3228     National Planning
                 Association             6/19/75           135,522
68-01-3299     Urban Systems Research    6/27/75           127,314
68-02-1182     Englehard Mineral and
                 Chemical Corporation 10/18/74             117,368
68-02-1712     Copley International      9/01/74            64,671
68-02-1863     KVB, Inc.                 2/13/75           675,400
68-02-1869     Air Pollution
                 Technology, Inc.        3/06/,            106,400
68-02-1873     United Aircraft Research
                 Laboratories            3/ 31
                                                 /.,       343,765
68-02-1874      Monsanto Research
                   Corporation           4/14/75        4,006,656
68-02-1881      TRW, Inc.                6/17/75        1,065,000
68-02-1885      Acurex Corporation       6/06//5          497,638
68-02-1887     Westinghouse Research
                  Laboratories           6/30/75           245,200
68-02-2075     DeBell & Richardson,
                   Inc.                  6/28/75           285,818
68-02-2101     Ralph M. Parsons Co.      6/25/75           220,617
68-02-2102     Radian Corporation        6/06/75           187,000
68-02-2105     PEDCCO Environmental
                  Specialists            6/30/75           281,920
68-02-2116     Aerotherm Division,
                  Acurex Corp.           6/30/75           594,933
68-02-2232     Olson Laboratories        6/27/75           351,000
68-02-2245     Meterology Research,
                  Inc.                   6/30/75           187,251
68-03-2153     Lockheed Electronics
                  Co.                   11/12/74           317,696
68-03-2173     Matrecon, Inc.            2/03/75            88,075
68-03-2186     Cltin Water
                  Consultants            4/28/75            75,000
68-03-2190     Lockheed Aircraft
                  Corporation            4/07/75           108,000
68-03-2193     Geraghty and Miller,
                  Inc.                  4/22/75             66,000
68-03-2198     Arthur D. Little, Inc.   6/09/75            783,400
68-03-2202     United Engineers :nd
                  Construction, Inc.    6/18/75            159,970
68-03-2207     Water Purification
                  Association           6/10/75            224,778
68-03-2213     Hittman Associates       6/10/75            128,100
68-03-2216     HRB Singer, Inc.         6/10/75            144,000



                            16
APPENDIX II                                       APPENDIX II

              ENVIRONMENTAL PROTECTION AGENCY   (con't)

   Contract                                  Date of      Initial
    number             Contractor             award     award amount

68-03-2223       Gannet Fleming              6/25/75      $ 249,997
68-03-2226       Mathematica, Inc.           6/30/75        173,000
68-03-2228       Metcalf and Eddy, Irc.      6/26/75        117,300
68-03-2334       Arthur D. Little, Inc.      6/25/75        298,300
68-03-2336       Texas Instruments, Inc.     6/30/75        366,773
68-03-2337       Exxon Research & Engi-
                   neering Co.               6/30/75        965,500
68-03-2338       E. D'Appolonia Consulting
                   Engineers                 6/27/75        239,547
68-03-2339       Radian Corporation          6/30/75        197,257
68-03-2340       Energy Resource Co., Inc.   6/30/75        319,800

       NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION

DOT-HS-5-01026   South Texas Tire Test
                    Fleet, Inc.              8/14/74         65,923
DOT-HS-5-01036   Computer Sciences Cor-
                   poration, Systems
                   Division                  11/04/74       711,9,9
DOT-HS-5-01037   AVCO Corporation            11/04/74       808,304
DOT-HS-5-01039   Opinion Research Cor-
                    poration                  9/25/74        99,635
DOT-HS-5-01045   Informatics, Inc.           10/01/74        83,136
DOT-HS-5-01075   Agbabian Associates          1/06/75         b/BOA
DOT-HS-5-01093   Rockwell International
                    Corporation               3/20/75       166,230
DOT-HS-5-01099   Calspan Corporation          2/20/75         b/BOA
DOT-HS-5-01142   Human Factors Researcllr,
                    Inc.                      5/27/75       324,990
DOT-HS-5-01144   Dunlap and Associates,
                    Inc.                      6/07/75       128r687
DOT-HS-5-01154   Opinion Research Cor-
                    poration                  5/30/75        93,755
DOT-HS-5-01159   AVCO Systems Division        6/20/75       152,393
DOT-HS-5-01163   Appilied Science Associ-
                    ates, Inc.                6/20/75       149,990
DOT-HS-5-01178   AVCO Systems Division        6/26/75       122,416
DOT-HS-5-01179   Calspan Corporation          6/23/75       150,810
DOT-HS-5-01181   AMF Advanced Systems
                     Laboratory               6/30/75       117,253
DOT-HS-5-01183   Control Data Corporation     6/30/75       136,175
DOT-HS-5-01188   AVCO Systems Division        4/25/75       169,510
DOT-HS-5-01191   Systems Technology, Inc.     6/25/75       188,967
DOT-HS-5-01223    Systems Technology, Inc.    6/30/75       178,444
DOT-HS-5-01224   Compliance Testing, Inc.     6/30/75       193,200




                               17
APPENDIX II                                        APPENDIX II

       NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION (con't)

   Contract                                     Date of     Initial
    number                  Contractor           award    award amount
DOT-HS-5-01228     Essex Corporation            6/30/75   $     117,692
DOT-HS-5-01230     Calspan Corporation          6/30/75         117,490
DOT-HS-5-01242     Southern California
                     Research Institute         6/30/75         110,185
DOT-HS-5-01249     Grey Advertising, Inc.       6/30/75         112,966
DOT-HS-5-01251     Systems Technology, Ino.     6/30/75         284,705
DOT-HS-5-01254     Calspan Corporation          6/30/75         527,838
DOT-HS-5-01256     Grey Advertising, Inc.       6/30/75         235,831
DOT-HS-5-01260     Calspan Corporation          6/30/75         127,840
DOT-HS-5-01261     Buda Company                 6/30/75         133,490
                  FEDERAL    AVIATION ADMINISTRATION
DOT-FA75WA-3613    Grumman Aerospace
                     Corporation                6/30/75       1,329,317
DOT-FA75WA-3614    Peat, Marwick, Mitchell
                     and Co.                    4/01/75          22,200
DOT-FA75WA-3634    Sierra Research
                     Corporation                3/14/75      669,466
DOT-FA75WA-3662    Systems Control, Inc.        5/02/75    1,244,382
DOT-FA75WA-3663    United Aircraft Corpo-
                     ration                    12/12/74        302,760
DOT-FA75WA-3707    Lockheed Aircraft
                     Corporation                6/27/75        509,300
DOT-FA75WA-3718    Wyle Laboratories            6/20/75         71,636
                   FEDERAL RAILROAD ADMINISTRATION
DOT-FR-53060      Arthur Young and Co.          2/17/75      98,931
DOT-FR-54089      Rohr Industries, Inc.         5/01/75     550,000
DOT-FR-54174      ENSCO, Inc.                   6/30/75   2,087,681
DOT-FR-55055      Peat, Marwick, Mitchell
                    and Co.                     6/30/75        485,021
DOT-FR-56003      Peat, Marwick, Mitchell
                    and Co.                   12/02/74         129,903
DOT-FR-56007      Dynatrend, Inc.              6/19/75         420,890
DOT-FR-56010      Richardson Associates        6/30/75          91,300
DOT-FR-56014      Harry Weese and Asso-
                    ciates, Ltd.               6/30/75         607,120
           OFFICE OF THE SECRETARY OF TRANSPORATION
DOT-FR-50134      Peat, Marwick, Mitchell
                    and Co.                    4/01/75         106,151
DOT-FR-50256      Wyle Laboratories            5/20/75         147,000



                                 18
APPENDIX II                                     APPENDIX II

a/Althouqh the initial award amounts for this and other con-
  tracts were under $100,000, subsequent modifications
  increased the contracts to $100,000 or more.
b/F    c Order Agreements (BOA) have no initial obligation
       ie time of award, but rather funds are obligated for
  e._.i assigned task.




                            19