This report analyzes what the Office of Technology Assessment (OTA) identifies as four pressing challenges for the Federal Research System in resource allocation and funding for research in the 1990s: (1) setting priorities in funding; (2) understanding trends in research expenditures; (3) preparing human resources for the future research work force; and (4) supplying appropriate data for ongoing research decisionmaking. Additionally, the report examines the Federal Research System: the executive and legislative branches and the research agencies. Also discussed are the value of science and the changing research economy. The report contains several appendices which include the following: major legislation enacted since 1975 affecting U.S. research and development; the top 100 institutions ranked by amount of Federal research and development funding received for fiscal year 1989; the top 100 U.S. academic institutions ranked by Citation Impact, 1981-88; and academic and basic research decisionmaking in other countries. A list of OTA workshop participants, reviewers, and contributors is provided. Contains an index and 604 references. (GLR)