A review was conducted to assess early initiatives by Comprehensive Employment and Training Act (CETA) prime sponsors in knowledge development under the Youth Employment and Demonstration Projects Act of 1977. The review was based on two waves of site visits to a total of 19 prime sponsors, in May-June, 1979, and in November-January, 1979-80. From the data gathered, most of the knowledge development activity was found to be at an early stage of development, or else it was not developed at all. In many cases, the evaluators found that sponsors lacked any clear conception of what knowledge development was supposed to be; activity of one sort or another was aimed at satisfying what seemed to both regional staff and state and local prime sponsors an extremely nebulous goal. Despite limited progress, however, the average prime sponsor was found to be interested in learning more about its youth programs so that they could be improved, and would welcome advice, examples, and technical assistance in any form in which it might be offered. It was recommended that (1) some firm definition of knowledge development as applicable to youth programs at the state and local level be provided; (2) that prime sponsors be given help in designing evaluation plans that are within the realm of accomplishment and that may reasonably be expected to provide knowledge useful to them; and (3) that technical assistance be provided to the prime sponsors. (KC)