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This report presents an analysis of the pay competitiveness, and quality of employees recruited and retained, for civilian scientific and engineering positions in Department of Defense (DoD) laboratories. This study uses pay, promotion, performance, and demographic data drawn from personnel records on scientists and engineers (S/Es) employed in DoD labs from 1982 through 1996. This report examines whether returns to skills (increases in pay due to investments in worker skills, such as higher education or on-the-job training that increases productivity) rose in the DoD labs during 1982 through 1996 as they did in the private sector. The report also analyzes whether there were changes in the quality of S/E lab employees the DoD was able to attract and retain during that period. For DoD lab scientists and engineers, the report finds little evidence of changes in returns to skills or the quality of the workforce.