Fifth in a series of annual reports, this study provides observations on the Administration s FY 2003 budget proposal for federal science and technology (FS&T) programs. The first section of the report outlines the development during the 1990s of national goals for science and technology (S&T), re-iterating the importance of U.S. leadership in these fields. It also comments on development of approach to tabulating and analyzing the federal S&T investment. The second section of the report summarizes the President s FY 2003 budget proposal, including proposals for spending on research for countering terrorism. The third section provides observations on the President s proposal, noting differences in funding trends by agency and outlining an approach to FS&T budgeting that focuses on both priority-driven and discovery-oriented research. The final section provides recommendations for ensuring that federally-funded S&T programs provide high-quality research outcomes that are relevant to agency missions and provide the U.S. with global leadership in S&T.