Focusing on the elements of the federal budget process involved in setting policies and priorities for resource allocations that affect the science and engineering base, this report serves to help facilitate a dialogue within the congressional and executive branches of the United States government on science policy. Emphasis is directed to the treatment of research and development in the federal budget and the roles of key federal offices and advisory groups in national policy formulation. The primary objective of this study is to address the question of how science policy advice can be more effectively integrated with the political decision process in setting federal policies and budget priorities for the United States' science and engineering base. Contents include: (1) an overview of the objectives, scope, and methodology of the study; (2) a discussion of the federal role in research and development; (3) a review of the budgeting process and opportunities for change; and (4) an explanation of the organizational framework for developing federal policy for the science and engineering base. Appendices contain information on policy issues, funding considerations, and the proposed creation of a department of science and technology. An 11-page bibliography is included as well as a list of the major contributors to the study. (ML)