This study examines the potential application of educational technology to vocational training and retraining. Its purpose is to assist program planners in the U.S. Department of Education to make more informed decisions concerning the federal role in the use of educational technology. Five questions are addressed. General findings include the following: (1) technology producers and the public are leading the movement for educational technology, but no coherent federal policy exists regarding educational technology; (2) educational technology, particularly software, is not at present cost-effective; (3) educational technology is not necessarily more effective than conventional educational techniques; (4) educational technology is used more for "value-added" instruction that has a positive effect on students; although it is difficult to measure, its future use may best be to extend instruction to groups who are underserved now; and (5) vocational education uses mainly simple technology; computer applications to training and retraining are limited. Given the uncertain role of the federal government, restrictions on budgets, and limitations on the effective use of educational technology, any policy initiative probably should be modest. (Seven policy recommendations are offered in the report.) (KC)