This is the final report on future directions for Federal support of research and development (R&D) for information technology. This report adds detail to the findings and recommendations in the interim report dated August 1998, and strengthens previous recommendations regarding the importance of social and economic research on the impacts of information technology to inform key policy decisions. The report is divided into five main sections. The first section identifies and discusses 10 critical information technology transformations that will affect how citizens: communicate; store and access information; become healthier and receive proper medical care; learn; conduct business; work; design and build things; conduct research; sustain a livable environment; and manage government in the next millennium. A table showing the 10 transformations with their challenges and benefits concludes the section. The second section focuses on setting Federal R&D priorities and presents these findings, followed by recommendations: total Federal information technology R&D investment is inadequate; Federal information technology R&D is excessively focused on near-term problems; and the Federal information technology R&D funding profile is incomplete. Four areas of overall research agenda particularly need attention and must be a major part of a strategic initiative in long-term R&D: software, scalable information infrastructure, high end computing, and socioeconomic impact. These areas are detailed in the third and fourth sections, with findings and recommendations provided for each area. The last section focuses on creating an effective management structure for Federal information technology R&D and discusses: agency roles; policy and coordination of information technology R&D; support and implementation; annual review; and funding. A sidebar addresses the question "Can the proposed increases be invested effectively?" A sidebar that follows the Executive Summary presents a rationale for Government support of long term, fundamental research. (AEF)