Salaries and Expenses $210,160,000

The FY 2003 Budget Request for Salaries and Expenses (S&E) is $210.16 million, an increase of $33.76 million, or 19.1 percent, over the FY 2002 Current Plan of $176.40 million. The strategic framework for this investment is discussed in greater detail in the discussion of NSF's A&M portfolio. Note that the Office of Inspector General is described in a separate section of the justification.

This increase will support a focused set of overdue investments that foster NSF's continuing commitment to outstanding customer service:

• $13.4 million will provide for NSF's first increase in full-time equivalent (FTE) levels in over a decade, (an additional 67 FTE). This responds to the NSF Inspector General's major management challenge - which specifically questioned "whether NSF can successfully manage future growth without adding staff." In addition, this investment covers the costs of the payroll increases resulting from the statutory pay raise. These salary-related items account for 40 percent of the total increase in S&E funding.

• $13.2 million will support investments in the development, implementation, operation, and upgrade of NSF's information infrastructure. This will enable the next generation e-Government capabilities and improvements to information security and physical security through the use of "smart" technologies. These IT investments account for 39 percent of the S&E increase.

• The remaining $7.2 million will support new investments in staff development and training, including the NSF Academy, planning activities related to the President's Management Agenda, increased rental costs for NSF's workspace, and increases for travel and general operating expenses associated with NSF's programmatic responsibilities. These additions account for the remaining 21 percent of the total S&E increase.

(Millions of Dollars)

Totals may not add due to rounding.
¹ Includes Pension and Health Costs as proposed by the Administration's Costs Integration Legislation requiring agencies to pay their full share of the accrued cost of retirement beginning in FY 2003.

The S&E appropriation includes funds for staff salaries, benefits, travel, training, rent, advisory and assistance services, communications and utilities expenses, supplies, equipment, and other operating expenses necessary for management of the agency's research and education activities. The FY 2003 S&E Budget Request provides support for the following activities:

• Personnel Compensation and Benefits (PC&B): Resources in this category provide funding for salaries and benefits of federal employees. PC&B costs are estimated to increase from $117.58 million in FY 2001 to $126.21 million in FY 2002, and these costs are expected to increase by $13.43 million, or 10.6 percent, totaling $139.64 million in FY 2003. Within the proposed increase, PC&B will provide the resources to support an FTE level of 1,217, including comparability and locality pay increases and higher benefits costs. The request also supports an increase of 67 FTE. This is the first increase in FTE in over a decade and is required to continue to provide adequate stewardship of agency programs. Of the additional 67 FTE requested, 17 are necessary to administer programs proposed to be transferred to NSF from other agencies.

• General Operating Expenses (GOE): Resources in this category constitute the remainder of the S&E appropriation. GOE funds the entire range of operating expenses and travel that are necessary for the agency to administer its programs and safeguard its assets. GOE costs will increase by $20.33 million, or 40.5 percent, totaling $70.52 million in FY 2003. Within the total increase are: $13.15 million for Information Infrastructure, $891,000 for Space Rental, $727,000 for Travel; and $5.56 million for Training and Other General Operating Expenses.

Within the proposed GOE increase, $13.15 million will provide the resources to improve the agency's information systems technology - enhance the information infrastructure, promote e-Government, enhance customer service, improve security of information and information technology assets, improve physical security with new smart technology, and provide for increasing IT contractor costs. During FY 2003, the initial phase of our next generation e-Government capabilities will be launched and will focus on analyzing and reengineering two core business processes: (1) Merit Review and (2) Award Management and Oversight. As part of the NSF Strategic Business Analysis and business process reengineering phases, NSF will define requirements and initiate acquisition of the next generation technology, applications, tools, and electronic capabilities needed to support improved processes - referred to as the Proposal, Review and Awards Management Integration System (PRAMIS). This increase also funds further development of the NSF Academy, rental payments to the General Services Administration, and other general operating expenses to administer the agency's programs. In addition, an increase in travel funds by $727,000 is necessary for program oversight and outreach.

Personnel Compensation and Benefits

Overall, PC&B is the single largest component of the S&E appropriation. PC&B costs for FY 2003 amount to $139.64 million, an increase of $13.43 million over the FY 2002 Current Plan.

(Millions of Dollars)

Totals may not add due to rounding.
¹ Includes Pension and Health Costs as proposed by the Administration's Costs Integration Legislation requiring agencies to pay their full share of the accrued cost of retirement beginning in FY 2003.

As part of the overall PC&B request, the components relating to the increase are shown below.

Personnel Compensation:

• $5.93 million to fund the requested 67 FTEs;
• $3.60 million for comparability and locality pay increases for existing staff; and
• $871,000 for within-grade increases, career ladder promotions, and Senior Executive Service and general workforce performance management system bonuses.

Personnel Benefits:

• $1.23 million for anticipated increased costs related to employee benefits;
• $951,000 for benefits increases that include higher agency contributions to the Federal Employee Retirement System (FERS), because a higher percentage of the NSF workforce is covered by FERS than the Civil Service Retirement System plan; and
• $849,000 for increased pension and health costs for funding of the requested 67 additional FTEs.

Staffing

The FY 2003 Request includes 67 additional FTE including 50 FTE to support existing NSF programs and 17 FTE to support additional programs proposed to be transferred to NSF from other agencies. The additional positions will be allocated based on an agency-wide review of critical human capital needs that is part of the comprehensive Strategic Business Analysis scheduled to begin in FY 2002, as described in the chapter on Administrative and Management.

General Operating Expenses

General Operating Expenses (GOE) fund a broad range of operations necessary for the Foundation to administer its programs. The FY 2003 request for GOE is $70.52 million, an increase of $20.33 million from the FY 2002 level of $50.19 million.

The request funds Information Technology initiatives to enhance staff productivity, improve proposal and award processing, promote next generation e-Government capabilities, and enhance physical and cyber security. The request also provides for the management and maintenance of the operational components of NSF's administrative and programmatic applications, including FastLane.

Space rental will increase to $17.49 million based on GSA's negotiated leasing cost for FY 2003.

The increase in Travel funds will foster a more comprehensive approach to program oversight, monitoring and outreach - especially for large facility projects and other large NSF awards.

The increase in Training and Other General Operating Expenses will expand development of the NSF Academy to facilitate employee development and training, fund a Strategic Business Analysis to help design the NSF of the future, promote next-generation video-conferencing, and renovate office space.

(Millions of Dollars)

Totals may not add due to rounding.

Information Infrastructure

Information infrastructure costs are budgeted at $26.12 million in FY 2003, increasing by $13.15 million from the FY 2002 Current Plan level of $12.97 million. This request continues the Foundation's major investment in new technology to support improved business operations and to keep pace with an increasingly complex workload. Reengineering activities throughout NSF are focused on changing business practices to streamline operations and improve efficiency. This investment has produced significant results, including successful efforts to automate proposal and award processes and the development of improved financial systems.

The increase of $13.15 million consists of the following:

• $3.50 million for NSF's first phase of implementing next-generation e-Government capabilities. This initiative, called the Proposal, Review, and Awards Management Integration System (PRAMIS), will focus on two core business processes: Merit Review and Award Management and Oversight. Requirements will be defined as part of the NSF Strategic Business Analysis with a focus on improving internal NSF processing as a complement and extension to the Government-wide e-Grants initiative and Federal Commons. As part of this initiative, NSF will also enhance its overall e-Government infrastructure, by providing a robust, web-based architecture that will efficiently support optimized business processes and technical performance.

• $2.95 million for improving productivity of common functions. In the knowledge management area, key projects to promote the dissemination, integration, and application of new knowledge are planned. In the area of customer relationship management, NSF will continue implementation of a new "Customer Care" initiative, which includes consolidating the Fastlane and internal NSF Help Desks to provide a central point of resolution for computer problems or questions to all customers and acquisition of a commercial call tracking software to improve support for over 200,000 external customers from research institutions. In FY 2003, NSF will also evolve legacy administrative systems into more robust and consistent Government-wide and commercial enterprise solutions. In addition, NSF will continue to advance the application of current and emerging technologies such as wireless and videoconferencing to support evolving telecommuting and remote access needs.

• $4.2 million for improved information and physical security. In FY 2003, NSF will initiate a major project to implement the use of "smart" technology to restrict and monitor employee and visitor access and entry into NSF facilities, and to improve access controls to e-business applications and capabilities. Other improvements include enhancements to network, telephone, and corporate infrastructure, and additional investments in risk assessments, security plans and controls, and penetration testing. These investments will assure the risk of unauthorized access to facilities, systems and information using various manual and automated checkpoints and controls is appropriately mitigated.

• $2.50 million for other information infrastructure costs. This includes operation of a central computing facility; maintenance of hardware and software; management of the NSF intranet and local area network; software development services to enhance and maintain current applications; and electronic mail.

Space Rental

Budgeted at $16.60 million in FY 2002, physical infrastructure costs increase by $891,000 in FY 2003 to a total of $17.49 million. These costs include charges by GSA for the Foundation's headquarters location in Arlington, Virginia, and two floors of space in an adjacent building.

Travel

The Foundation's science and engineering, education and research programs continue to emphasize more complex, interrelated sets of activities. These activities require NSF staff to interact and engage a broader and often new range of participants. These communities and constituencies often require assistance from and coordination with NSF staff in order to ensure compliance with the Foundation's administrative and programmatic requirements in proposing and carrying out their awards. This interaction and coordination takes many forms. It includes increasing pre-award outreach to inform new communities of the NSF role in supporting research and education; providing pre-proposal advice; completing complex pre-award negotiations; and participating in relevant society meetings, site visits, and workshops.

Budgeted at $5.73 million in FY 2003, Travel increases by $727,000 from the FY 2002 level of $5.0 million. This includes funding to continue to support the merit review process and for increased oversight activities, especially for new grantees and large facilities, and for enhanced outreach activities associated with FastLane. Good management is critical to the success of the research and education activities that we support, and proper and sufficient oversight is vital to the process. This requested amount also would assist in assuring both a reliable merit review process and the oversight recommended by the agency's Inspector General.

Training and Other General Operating Expenses

Budgeted at $21.18 million in FY 2003, training and other GOE increases by $5.56 million from the FY 2002 level of $15.62 million. Funds in this category cover charges for telephone services and postage, employee learning and development activities, equipment repair and maintenance, mail handling, printing and reproduction, office supplies, and other administrative expenses. The increase will cover anticipated contractual increases and other expenses for administrative equipment, the NSF Strategic Business Analysis and further development of the NSF Academy to enhance workforce skills.

The table below shows the planned distribution of general operating expenses by object class and is followed by brief detailed explanations of each category.

(Thousands of Dollars)

Totals may not add due to rounding.

Description of categories:

• Travel and Transportation of Persons is discussed at the beginning of the GOE section.

• Transportation of Things consists of household moves associated with bringing new scientists and engineers on board.

• Rental Payments to GSA includes the rent charged by GSA for NSF's facility in Arlington, Virginia, and two floors in an adjacent building. The FY 2003 increase is required to fund GSA's estimate of an increase in real estate taxes paid by NSF for currently occupied space.

• Communications, Utilities, and Miscellaneous Charges include all costs for telephone lines and services, both local and long distance, postage, and rental charges for leased copiers. The increase will support enhanced infrastructure security, and permit additional investments in wireless and video-conferencing capabilities.

• Printing and Reproduction include contract costs of composition and printing of NSF's publications, announcements and forms; and printing of stationery and specialty items.

• Advisory and Assistance Services include development, learning and career enhancement opportunities for all Foundation staff, and contracts for position classifications, security investigations, and related services. These costs increase by $3.40 million in FY 2003 to 1) augment the NSF Academy, including electronic tutorials, distance learning, curricula development and certification programs; and 2) initiate a human capital analysis (as part of NSF's Strategic Business Analysis) to help identify the competencies and skills required for NSF's workforce of the future, and to increase the efficiency and effectiveness of recruiting.

• Other Services include warehousing and supply services, mail handling, equipment repair and maintenance, renovation costs, furniture repair, contract support for conference room services, and miscellaneous administrative contracts. These costs increase by $857,000 in FY 2003 to fund development of a robust Intranet site, next-generation video-conferencing, electronic reviewer packets and renovation of office space to accommodate additional staff.

• Purchases of Goods and Services from Government Accounts include reimbursable services purchased from GSA. These costs primarily include guard services and off-hours heating and air conditioning support.

• Medical Care includes costs associated with the health services contract, providing limited on-site medical services to the agency's staff. This includes performing physical examinations for the NSF staff on assignment at the South Pole.

• Operations and Maintenance of Equipment includes management and operation of the central computer facility 24 hours/day, 365 days/year; operation of the customer service center and FastLane help desk; maintenance of database server hardware and related peripherals; software licensing fees; data communications infrastructure and network systems support; electronic mail support; and remote access (e.g., Internet and World Wide Web). The increase of $7.40 million planned for FY 2003 includes $4.0 million for enhancement of computer security and implementation of smart technology capability. The remaining balance will provide for expanded customer relationship management and help desk operations and anticipated increases for corporate data center operational costs.

• Supplies and Materials include office supplies, library supplies, paper and supplies for the NSF central computer facility, and miscellaneous supplies.

• Equipment costs include new and replacement computing equipment, desktop computers, data communications equipment, video-teleconferencing equipment, office furniture, file cabinets, and support equipment such as copiers and audio-visual equipment. Also included are software development costs associated with developing and maintaining central application systems that support proposal, award, financial, and administrative activities. These costs increase in FY 2003 by approximately $5.70 million to support the following activities: definition of Integrated NSF Enterprise Architecture, Phase I of the next-generation e-grants capability, Knowledge Management pilots, continued implementation and evolution of new Customer Relationship Management capability, and initial planning and migration of legacy administrative systems into more comprehensive commercial Enterprise Resource Management Framework.

• Reception and Representation expenses do not increase over the FY 2002 level.