[I may be on vacation in soggy LA, but computing research policy waits for no one! So here’s an update from the road…]
The National Academies have released their long-awaited report, Assessment of Department of Defense Basic Research. This is the study that was requested by the Senate Armed Services Committee in the FY 2004 Defense Authorization Act after they raised questions about the state of DOD basic research (“6.1” research in defense parlance) as part of the hearings leading up to the bill.
The NAS panel’s recommendations mirror a lot of things we’ve been saying about the DOD research — mainly that it’s become less basic and it’s declining in both absolute dollars and as a percentage of the overall DOD science and technology budget. The full report doesn’t seem to be online (I get an error at the NAS link above), but here’s a copy of the summary (pdf, ~740k). I haven’t read the full report so far, but from the executive summary the recommendations are worth reading:

Recommendations
Recommendation 1. The Department of Defense should change its definition of basic research to the following:

Basic research is systematic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena and has the potential for broad, rather than specific, application. It includes all scientific study and experimentation directed toward increasing fundamental knowledge and understanding in those fields of the physical, engineering, environmental, social, and life sciences related to longterm national security needs. It is farsighted high-payoff research that provides the bases for technological progress. Basic research may lead to (a) subsequent applied research and advance technology developments in Defense-related technologies, (b) new and improved military functional capabilities, or (c) the discovery of new knowledge that may later lead to more focused advances in areas relevant to the Department of Defense.

Recommendation 2. The Department of Defense should include the following attributes in its guidance to basic research managers and direct that these attributes be used to characterize 6.1-funded research: a spirit that seeks first and foremost to discover new fundamental understanding, flexibility to modify goals or approaches in the near term based on discovery, freedom to pursue unexpected paths opened by new insights, high-risk research questions with the potential for high payoff in future developments, minimum requirements for detailed reporting, open communications with other researchers and external peers, freedom to publish in journals and present at meetings without restriction and permission, unrestricted involvement of students and postdoctoral candidates, no restrictions on the nationality of researchers, and stable funding for an agreed timetable to carry out the research.
Recommendation 3. The Department of Defense should abandon its view of basic research as being part of a sequential or linear process of research and development (in this view, the results of basic research are handed off to applied research, the results of applied research are handed off to advanced technology development, and so forth). Instead, the DOD should view basic research, applied research, and the other phases of research and development as continuing activities that occur in parallel, with numerous supporting connections among them.
Recommendation 4. The Department of Defense should set the balance of support within 6.1 basic research more in favor of unfettered exploration than of research related to short-term needs.
Recommendation 5. Senior Department of Defense leadership should clearly communicate to research managers its understanding of the need for long-term exploration and discovery.
Recommendation 6. Personnel policies should provide for the needed continuity of research management in order to ensure a cadre of experienced managers capable of exercising the level of authority needed to effectively direct research resources. Further, in light of the reductions in positions reported to the Committee on Department of Defense Basic Research, the Department of Defense should carefully examine the adequacy of the number of basic research management positions.
Recommendation 7. The Department of Defense should redress the imbalance between its current basic research allocation, which has declined critically over the past decade, and its need to better support the expanded areas of technology, the need for increased unfettered basic research, and the support of new researchers.
Recommendation 8. The Department of Defense should, through its funding and policies for university research, encourage increased participation by younger researchers as principal investigators.
Recommendation 9. To avoid weakening the long and fruitful partnership between universities and Department of Defense agencies, DOD agreements and subagreements with universities for basic research should recognize National Security Decision Directive 189, the fundamental research exclusion providing for the open and unrestricted character of basic research. DOD program managers should also explicitly retain the authority to negotiate export compliance clauses out of basic research grants to universities, on the basis of both the program’s specific technologies and its objectives.