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                                                       Calendar No. 388
105th Congress                                                   Report

 2d Session                                                     105-196

                            1999, AND 2000


                              R E P O R T

                                 OF THE



                                S. 1325

                  May 22, 1998.--Ordered to be printed


                       one hundred fifth congress

                             second session

                     JOHN McCAIN, Arizona, Chairman

TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             WENDELL H. FORD, Kentucky
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas          Virginia
OLYMPIA SNOWE, Maine                 JOHN F. KERRY, Massachusetts
JOHN ASHCROFT, Missouri              JOHN B. BREAUX, Louisiana
BILL FRIST, Tennessee                RICHARD H. BRYAN, Nevada
SPENCER ABRAHAM, Michigan            BYRON L. DORGAN, North Dakota
SAM BROWNBACK, Kansas                RON WYDEN, Oregon

                       John Raidt, Staff Director

                       Mark Buse, Policy Director

     Ivan A. Schlager, Democratic Chief Counsel and Staff Director

             James S. W. Drewry, Democratic General Counsel

                                                       Calendar No. 388
105th Congress                                                   Report

 2d Session                                                     105-196

                             1999, AND 2000


                  May 22, 1998.--Ordered to be printed


       Mr. McCain, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                         [To accompany S. 1325]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 1325) to authorize 
appropriations for the Technology Administration of the 
Department of Commerce for fiscal years 1998 and 1999, and for 
other purposes, having considered the same, reports favorably 
thereon with amendments and an amendment to the title and 
recommends that the bill, as amended, do pass.

                          Purpose of the Bill

  The purpose of the bill, as reported, is to authorize 
appropriations to the Technology Administration (TA) of the 
Department of Commerce (DOC) for FY 1998, FY 1999, and FY 2000 
as follows:


                         [In millions of dollars]

                 Area of Consideration                        FY 1998            FY 1999            FY 2000     
Office of Under Secretary for Technology...............              8.500             10.807             11.132
Scientific and Technical Research and Services.........            271.900            287.658            296.287
Industrial Technology Services.........................            306.000            318.371            324.491
    Advanced Technology Program (ATP)..................          (192.500)          (204.000)          (210.120)
    Manufacturing Extension Program (MEP)..............          (113.500)          (114.371)          (114.371)
Construction and Maintenance...........................             95.000             67.000             56.700
      Total............................................            681.400            683.836            688.610

                          Background and Needs

  Under the leadership of the Under Secretary of Commerce for 
Technology, the TA provides advice on technology policy, 
supports technology development programs, and disseminates 
technology information. The Under Secretary oversees the three 
major components of the TA: (1) the Office of Technology 
Policy, (2) the National Institute of Standards and Technology 
(NIST), and (3) the National Technical Information Service 
(NTIS). The mission of the Office of Technology Policy is to 
evaluate, develop, and promote policies and programs that 
facilitate private sector innovation and U.S. industrial 
competitiveness. NIST (formerly the Bureau of Standards) is, by 
far, the largest of the three TA activities. NIST conducts in-
house research and development as well as standards activities 
in support of U.S. industry. In addition, through its 
Industrial Technology Services (ITS) account, NIST funds two 
external technology grant and assistance programs: the Advanced 
Technology Program (ATP), which provides grants to companies to 
undertake initial high risk high-tech research to develop 
promising technologies with economic potential (but does not 
support product development), and the Manufacturing Extension 
Partnership (MEP), which provides manufacturing assistance to 
small and medium-sized businesses through regional centers. 
NIST also manages the Malcolm Baldridge National Quality Award, 
which is given to U.S. companies that excel in quality 
achievement and total quality management. NTIS is a self-
financed agency that collects and sells to the public technical 
information generated by the U.S. government and foreign 
  In recent years, of all the TA activities, the greatest 
controversy has involved NIST's grant programs--ATP and MEP. 
Proponents of ATP argue that the program strengthens the U.S. 
economy by providing U.S. companies with a critical helping 
hand by funding peer reviewed, high risk, yet promising, 
commercially-relevant research ventures that private capital 
sources would be unlikely to finance because of the risk and 
unlikelihood of a quick return on investment. However, 
opponents of ATP view the program as ``corporate welfare'' and 
believe that the goal of increased U.S. competitiveness is 
better achieved through a combination of deregulation, tax 
reform, tort reform, and more vigorous enforcement of trade 
  MEP has been viewed by critics of NIST in a more favorable 
light. Through its 42 centers and smaller local activities, MEP 
provides assistance to the Nation's 381,000 small and medium-
sized firms seeking to modernize their plants. Proponents 
assert that this is precisely the kind of assistance that these 
firms need because it is difficult for owners and managers of 
small companies to find high-quality, unbiased information, 
advice, and assistance. In addition, many of these firms lag 
behind foreign competitors in technology and operations, 
leading larger firms to look increasingly for offshore 
suppliers. However, some believe that the MEP concept of using 
extension agents to visit industries to identify and to address 
their needs is not a cost-effective model and is particularly 
inefficient in rural states where the agents must travel great 
distances. Opponents also argue that the MEP makes insufficient 
use of advanced computer networking to deliver needed technical 
assistance to U.S. companies.

                          Legislative History

  On February 11, 1997, the Administration submitted its FY 
1998 budget request for TA to the Congress. On February 2, 
1998, the Administration submitted its FY 1999 budget request 
for TA to the Congress. On May 7, 1997, the Subcommittee on 
Science, Technology, and Space held an oversight hearing on 
TA's programs at which time testimony was heard from Dr. Mary 
Lowe Good, Under Secretary of Commerce for Technology. On May 
14, 1997, the Full Committee held a hearing on the Program 
Efficiencies at DOC at which time testimony was heard from 
Raymond Kammer, Acting Chief Financial Officer and Assistant 
Secretary for Administration.
  On October 28, 1997, Senator Frist, Chairman of the 
Subcommittee, introduced S. 1325, a bill to authorize 
appropriations for TA for FY 1998 and FY 1999. The bill was 
cosponsored by Senators Rockefeller, Burns and Hollings.
  During March and April of 1998, the following sixteen 
Senators were added as co-sponsors to the bill: Senator 
Thurmond, Senator Santorum, Senator Kerry, Senator Levin, 
Senator Roberts, Senator Lieberman, Senator Kennedy, Senator 
Snowe, Senator Jeffords, Senator Bingaman, Senator Moynihan, 
Senator Collins, Senator Wellstone, Senator Dodd, Senator 
Specter, and Senator D'Amato.
  On April 30, 1998, the Committee met in executive session 
and, on a roll call vote, ordered the bill, as amended, to be 

                         Summary of Provisions

  As reported, S. 1325 would authorize funding for TA through 
FY 2000 and make several changes to the programs of TA. Major 
provisions of S. 1325, as reported, include:
  1. Authorization of Appropriations. A total of $681.4 million 
would be authorized for the TA for FY 1998, $683.8 million for 
FY 1999, and $688.6 million for FY 2000. The authorized funding 
level for TA is allocated among its activities as indicated in 
the chart under Purpose of the Bill.
  2. National Institute of Standards and Technology Act 
Amendments. Substantial changes would be made to the manner in 
which ATP is administered. Specifically, the participation of 
large companies would be restricted to joint ventures or 
partnerships only; all competitions would be required to be 
general and open to all applicants; and a study by the National 
Academy of Science (NAS) of ATP also would be required.
  3. MEP Sunset Provision. The current six year sunset 
provision of the MEP program would be lifted subject to a bi-
annual review and a limitation of Federal funding to one-third 
of the total program costs.
  4. Teacher Science and Small State Competitiveness. The 
reported bill would establish two new programs within the TA: 
(1) the Teacher Science and Technology Enhancement Institute 
Program; and (2) the Experimental Program to Stimulate 
Competitive Technology (EPSCoT).
  5. Malcolm Baldridge Award. The reported bill would extend 
the Malcolm Baldridge Award to include categories for health 
care and education.
  6. Office of Air and Space Commercialization. To coordinate 
space-related issues, programs, and initiatives within the 
Department of Commerce (DOC), the reported bill would establish 
the Office of Air and Space Commercialization.

                            Estimated Costs

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 8, 1998.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1325, the Technology 
Administration Authorization Act for Fiscal Years 1998, 1999, 
and 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kathleen 
Gramp (for federal costs), and Pepper Santalucia (for the state 
and local impact).
                                          Paul Van de Water
                                             (For June E. O'Neill).


S.1325--Technology Administration Authorization Act for Fiscal Year 
        1998, 1999, and 2000

    S. 1325 would authorize appropriations for fiscal years 
1998 through 2000 for various technology programs in the 
Department of Commerce. Funds would be authorized for the 
National Institute of Standards and Technology (NIST), for the 
office of the Undersecretary for Technology, and for 
administrative support for the International Arctic Research 
Center. The bill would authorize several new initiatives at 
NIST, including a program for teacher enhancement in science 
and technology, and an experimental program to stimulate 
competitive technology. Other provisions would modify the terms 
of existing programs, including one that would authorize NIST 
to transfer title to tangible personal property to recipients 
of Advanced Technology Program (ATP) funding under certain 
conditions. NIST also would be allowed to extend the duration 
of financial support provide to regional centers for the 
transfer of manufacturing technology.
    Assuming appropriation of the authorized amounts, CBO 
estimates that implementing S. 1325 would result in additional 
discretionary spending totaling $1.3 billion over the 1999-2003 
period. Provisions regarding the transfer of title to personal 
property could affect direct spending; therefore, pay-as-you-go 
procedures would apply to the bill. CBO estimates, however, 
that the impact on direct spending would not be significant in 
any one year. S. 1325 contains no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
of 1995 (UMRA) and would impose no costs on state, local, or 
tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1325 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(commerce and housing credit). For the purposes of this 
estimate, CBO assumes that all amounts authorized will be 
appropriated near the beginning of each fiscal year and that 
outlays will follow the historical spending patterns for the 
affected programs. This bill could affect direct spending if 
NIST chose to transfer title to some of the personal property 
acquired under ATP that otherwise would have been sold as 
surplus property under current law. Based on information 
provided by NIST, however, CBO estimates that the potential 
loss in sale receipts would not be significant in any one year. 
Other provisions of the bill would have no significant 
budgetary impact.

                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                    [By fiscal year, in millions of dollars]                                    
                                                              1998     1998     2000     2001     2002     2003 
Spending Under Current Law:                                                                                     
    Budget Authority \1\..................................      681        0        0        0        0        0
    Estimated Outlays.....................................      627      376      237      120       19       11
Proposed Changes:                                                                                               
    Authorization Level...................................        0      689      694        0        0        0
    Estimated Outlays.....................................        0      268      427      298      246      110
Spending Under S. 1325:                                                                                         
    Authorization Level \1\...............................      681      689      694        0        0        0
    Estimated Outlays.....................................      627      644      664      418      265      121
\1\ The 1998 level is the amount appropriated for that year.                                                    

    Pay-as-you-go considerations: Section 252 of the Balanced 
Budget and Emergency Deficit Control Act of 1985 sets up pay-
as-you-go procedures for legislation affecting direct spending 
and receipts. Provisions in S. 1325 authorizing NIST to convey 
title to personal property could affect direct spending, but 
CBO estimates that the cost would not be significant in any 
single year.
    Estimated impact on State, local, and tribal governments: 
S. 1325 contains no intergovernmental mandates as defined in 
UMRA, but several sections of the bill would affect grant 
programs that benefit state and local governments. The bill 
would authorize appropriations totaling about $229 million for 
the 1999-2000 period for the Manufacturing Extension 
Partnership (MEP), a program jointly financed by the federal 
government and state or local agencies. The MEP is a program 
designed to enhance productivity and technological performance 
in the United States and is made up of the State Technology 
Extension Program (STEP) and the Manufacturing Extension 
Centers Program (MECP). STEP provides technical assistance and 
planning grants to states to develop or revitalize their 
technology programs. MECP involves cooperative agreements 
between the federal government and nonprofit institutions that 
are often funded by state or local development agencies or 
universities. The fiscal year 1998 funding for the entire MEP 
program was $114 million.
    The bill would extend the length of time that the 
manufacturing extension centers are eligible to receive federal 
funding. Under current law, cooperative agreements last as long 
as six years. Such agreements provide up to 50 percent funding 
for the centers in the first three years and a declining 
percentage in subsequent years. The bill would allow a center 
to continue receiving federal funding after the sixth year as 
long as it passed periodic reviews.
    S. 1325 would also authorize a new program to strengthen 
the technological competitiveness of states that have 
historically received less federal research and development 
funds than other states. Grants, which would require at least a 
25 percent match, would be available to consortia including 
state and local governments. The Congress appropriated $1.6 
million for this program for fiscal year 1998, and the bill 
would authorize appropriations of $3 million for fiscal year 
    Estimated impact on the private sector: This bill would 
impose no new private-sector mandates as defined in UMRA.
    Previous CBO estimate: On April 19, 1997, CBO transmitted a 
cost estimate for H.R. 1274, the National Institute of 
Standards and Technology Authorization Act of 1997, as ordered 
reported by the House Committee on Science on April 16, 1997. 
Differences between the estimates are attributable to 
differences in the two bills.
    Estimate prepared by: Federal costs: Kathleen Gramp. Impact 
on State, local, and tribal governments: Pepper Santalucia.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

  In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       number of persons covered

  S.1325, as reported, would reauthorize appropriations for 
DOC's TA for fiscal years 1998, 1999, and 2000. The TA conducts 
measurements and standards activities in support of U.S. 
industry and manages technology grant and assistance programs 
to increase U.S. competitiveness. The Committee believes that 
the bill will not subject any individuals or businesses 
affected by the bill to any additional regulation.

                            economic impact

  Providing for continual funding would allow NIST to continue 
its support of U.S. industries by conducting its standards and 
measurements setting functions. NIST's grants and assistance 
programs would continue to assist U.S. businesses to be more 
competitive in international markets and would continue to 
benefit the general public through contributing to the economic 
growth of the country from investments in new science and 
technology ventures that otherwise would not have been 


  This legislation will not have an adverse impact on the 
privacy of individuals.


  This legislation would not increase the paperwork requirement 
for private individuals or businesses. The legislation would 
require two reports: (1) the President would be required to 
submit to Congress a report of any educationally useful 
equipment that has been donated to schools; and (2) the 
Secretary of Commerce would be required to submit a report to 
the Senate Committee on Commerce, Science, and Transportation 
and the House Committee on Science concerning the status of the 
EPSCoT program.

                      Section-by-Section Analysis

Section 1. Short title

  This section would permit the bill to be cited as ``the 
Technology Administration Authorization Act for Fiscal Years 
1998, 1999, and 2000.''

Section 2. Definitions

  This section would provide the definitions of several key 
terms used throughout the bill.

Section 3. Authorization of appropriations for scientific and technical 
        research and development

  Section (a) would authorize $272 million for Scientific and 
Technical Research Services for FY 1998, $288 million for FY 
1999, and $296 million for FY 2000.
  The Committee recognizes NIST's important and legitimate role 
in promoting U.S. industrial competitiveness by working with 
industry to develop and apply measurements, standards, and 
technology. The basic research and standards work at NIST is an 
important function. Increasingly, standards are being used by 
foreign governments to close their markets to U.S. industries. 
There is little question that standards will become an 
increasingly potent trade weapon to hinder market entry by U.S. 
firms or retaliate against the United States. In recognition of 
this, the bill would provide adequate funds for NIST's 
laboratory and standards programs for FY 1998, FY 1999, and FY 
  The Committee recognizes the role of quality as an integral 
part of today's business management practices. The Committee 
commends NIST for its work in establishing the Malcolm 
Baldridge Quality Award criteria, which is used by thousands of 
organizations as a general performance and business excellence 
model. The award was established not only to recognize 
individual U.S. companies for their achievement, but also to 
promote quality performance and competitiveness strategies. Of 
the funds authorized by this subsection, $3 million would be 
authorized for the program for FY 1998 and $5.4 million for FY 
1999 and FY 2000. The increase in funding would result from the 
program expanding to include categories for health care and 
  In Subsection (b), NIST would be provided $95 million for FY 
1998, $67 million for FY 1999, and $56.7 million for FY 2000 
for the Construction and Maintenance account in order to fund 
needed new construction and renovations at NIST. As required in 
paragraph (2), the FY 1999 authorization level would be 
contingent upon the Secretary of Commerce submitting a plan for 
meeting the facility needs of NIST to the Senate Committee on 
Commerce, Science, and Transportation and the House Committee 
on Science. This plan should reflect the total needs of the 
laboratories at both the Gaithersburg, MD and Boulder, CO 

Section 4. Authorization for the office of the Under Secretary for 

  Section 4 of the reported bill would authorize $8,500,000 for 
FY 1998, $10,807,000 for FY 1999, and $11,132,000 for FY 2000 
for the activities of the Under Secretary for Technology and 
the Office of Technology Policy.

Section 5. Authorization of appropriation for industrial technology 

  This section would authorize $306.00 million for ITS for FY 
1998, $318.371 million for FY 1999, and $324.491 for FY 2000. 
The ITS account funds NIST's ATP and MEP.
  There would be authorized to be appropriated for ATP, $192.5 
million for FY 1998, $204 million for FY 1999, and $210.12 
million for FY 2000. There would be authorized to be 
appropriated for the MEP program, $113.5 million for FY 1998, 
$114.37 million for FY 1999, and $114.37 million for FY 2000.

Section 6. National Institute of Standards and Technology Act 

  Section 6 of the reported bill would make several amendments 
to the NIST Act.
  Subsection (a) would amend the NIST Act, making changes to 
the process by which ATP operates.
  Specifically under subsection (a), paragraph (1) would 
require the reviewers, as part of the current technical merit 
review process, to make a determination that the research 
projects in question would not go forward in a timely manner 
without federal assistance. In addition, each program applicant 
would be required to certify that an unsuccessful attempt has 
been made to secure private market funding for the research 
project involved. In providing the certification, each 
applicant would be required to include a written narrative 
description of the efforts made to secure the funding. 
Paragraph (1) also would restrict a large business' 
participation to joint ventures only, and the joint ventures 
would have to include one or more small businesses.
  In paragraph (2), the term ``large business'' would be 
defined as a business with gross annual revenues greater than 
$2.5 billion. A small business would be defined in accordance 
with section 3(a)(1) of the Small Business Act. A medium 
business would be a business that is neither a small business 
nor a large business.
  Paragraph (3) would make a technical correction to the Act to 
redesignate subsection (j) of the existing code as subsection 
  Paragraph (4) would authorize the Director to grant an 
extension beyond the 5 year deadline for completing a project 
provided that the extension would result in no additional costs 
to the federal government and is in the federal government's 
interest. Paragraph (4) also would allow the Secretary to vest 
title to tangible personal property in ATP grant recipients as 
long as (a) the property is purchased as part of the ATP grant, 
and (b) the Secretary determines that the vesting furthers the 
objectives of NIST. The vesting made under this subsection 
would be made only if subject to the limitations prescribed by 
the Secretary and only if made with no additional cost to the 
federal government.
  Subsection (b) would amend the NIST Act provisions which 
govern ATP to allow non-industry joint venture participants 
such as universities and non-profits participating as ATP 
awardees and subawardees the option of retaining title to the 
intellectual property generated under ATP programs where the 
non-government parties to the ATP project agree it will serve 
the interests of the participants in the project. This change 
will provide a greater opportunity for industry to work 
together with universities and other nonprofit organizations. 
The amendment language removes any restriction requiring patent 
title be held by nonprofit companies and permit the 
participants to agree among themselves as to where patent title 
will vest. The amendment also provides a preemption of the 
requirements of chapter 18 of title 35 of the U.S. Code as 
required by that chapter. It furthers stipulates that these 
provisions are not retroactive.
  Subsection (b) of the reported bill would eliminate all focus 
program competitions. Specifically, this subsection would 
require all awards to be based on general open competitions.
  Furthermore, the Committee commends the Secretary and 
Director on the ATP Action Plan dated July 1997 which was 
issued after a 60 day public review of the ATP process. 
Specifically, the Committee encourages the Secretary to 
continue efforts to address the recommendations of the 
Inspector General's office relating to management improvements. 
They include:
  (a) ATP projects should be multi-year funded projects with 
scopes of work containing clearly defined milestones which are 
severable into annual increments of meaningful work; and
  (b) the value of contributions of equipment and other 
necessary resources counted toward cost sharing of projects 
should be costed as prescribed by the Office of Management and 
Budget (OMB) Circular A-110.

Section 7. Manufacturing extension partnership program center extension

  This section of the reported bill would amend the NIST Act to 
extend the period in which MEP centers may receive federal 
funding. The period would be extended beyond six years if the 
MEP center receives a positive evaluation through a review of 
procedures and criteria established by NIST. The review would 
take place within two years after the sixth year of operation 
and every two years thereafter. The federal proportion of 
funding received by each center after the sixth year shall not 
exceed one-third of the total funding for capital and annual 
operating expenses and maintenance costs.

Section 8. Malcolm Baldridge quality award

  This section of the reported bill would amend the Stevenson- 
Wydler Technology Innovation Act by adding two categories for 
the Malcolm Baldridge Quality Award, health care providers and 
education providers.

Section 9. Next generation internet

  This section of the reported bill would ensure that, unless 
authorized elsewhere, no new funds may be used for work on the 
Next Generation Internet. The section would allow for the 
continuation of programs and activities that have been funded 
with FY 1997 funds.

Section 10. Notice

  Subsection (a) would require that any notice of reprogramming 
which would be given to the Appropriations Committees of the 
House of Representatives and the Senate, also would be 
concurrently provided to the Senate Committee on Commerce, 
Science, and Transportation and the House Committee on Science. 
Subsection (b) also would require that the Director provide 
notice to the Senate Committee on Commerce, Science, and 
Transportation and the House Committee on Science of any major 
reorganization no later than 15 days prior to such 

Section 11. Sense of Congress on the year 2000 problem

  This section expresses the sense of the Congress that NIST 
should give high priority to correcting the Year 2000 problem 
in all computer systems to ensure effective operation in the 
year 2000 and beyond. The Director of NIST should assess 
immediately the potential risk to NIST's systems by the problem 
and develop a plan and a budget to correct the problem for its 
mission-critical programs. The Director should also begin 
consideration of contingency plans in the event that certain 
systems are unable to be corrected in time.

Section 12. Enhancement of science and mathematics programs

  This section expresses the sense of the Congress that the 
Director should donate educationally useful material to schools 
such that they may be used to enhance the science and 
mathematics programs at those schools. School is defined as a 
public or private educational institution that serves any of 
the grades from kindergarten through grade 12. Furthermore, the 
Director would report to the President any donations of federal 
equipment made to schools. The President would be required to 
include this report as part of his annual budget request to 

Section 13. Teacher Science and Technology Enhancement Institute 

  This section of the reported bill would require the Director 
to establish a Teacher Science and Technology Enhancement 
Institute Program for NIST. The purpose of the program would be 
to provide for the professional development of elementary, 
middle, and secondary (K-12) mathematics and science teachers 
and their improvement in teaching strategies, self-confidence 
in teaching science, and understanding of science and its 
impact on commerce.
  The Director would be required to focus the program on 
scientific measurements, test and standards development, 
industrial competitiveness, quality, manufacturing, technology 
transfer, and any other area of expertise of the Institute.
  The Director would be required to develop the procedures and 
selection criteria of those teachers who are participating in 
the program. The Enhancement Institute would be conducted 
annually during the summer months while the elementary, middle, 
and secondary schools are not in session to allow for maximum 
participation of teachers. The program would be required to 
provide for the teachers participation which may include any 
stipends and/or travel costs.
  The program would provide teachers with an opportunity to get 
``hands-on'' experience in NIST's laboratory facilities. The 
Director should allow scientists and technologists from NIST to 
be available to participate in the enhancement program when 
possible. The Committee intents for this ``hands-on'' 
experience to assist teachers in more effectively explaining 
science topics to their students upon their return to the 
  Subsection (b) would require that $1.5 million for FY 1998 
and $2.5 million for FY 1999 be made available for the 
enhancement program from the funds authorized for laboratory 
activities in section 3(a). No specific funding level has been 
specified for FY 2000.

Section 14. Joint study by the National Academy of Science and the 
        National Academy of Engineering

  This section would require the Secretary of Commerce to enter 
into a contract with the NAS and the National Academy of 
Engineering (NAE), within 90 days, to conduct a joint study of 
ATP. The NAS and NAE would be required to establish a study 
panel consisting of members who are: (1) industry and labor 
leaders; (2) entrepreneurs; (3) individuals who have previously 
served as government officials and have recognized expertise 
and experience in civilian research and technology; and (4) 
individuals with recognized expertise and experience with 
respect to science and technology, including individuals who 
have had experience working with or for a Federal laboratory.
  The NAS and NAE would be required to include in the contents 
of the study: (1) a thorough review of the effectiveness of 
ATP; (2) a root cause analysis to determine which aspects of 
ATP have been effective in stimulating the development of 
technology and what strategies, if any, have failed; and (3) an 
examination of alternative approaches, if any, that would 
accomplish the purposes of ATP. Subsection (d) would require 
that the study be completed within one year after the 
initiation of the contract between the Secretary of Commerce 
and NAS and NAE and that the Secretary then would forward the 
report to the President and the Congress.

Section 15. Office of Air and Space Commercialization

  This section would establish the Office of Air and Space 
Commercialization within DOC. The office would serve as the 
principal unit for coordination of space-related issues, 
programs, and initiatives within the Department. Subsection (b) 
would require that the Office be headed by a Director, 
compensated at the Senior Executive Service level. The Director 
would be responsible for: (1) promoting commercial provider 
investment in space activities by collecting, analyzing, and 
disseminating information on space markets, and conducting 
workshops and seminars to increase awareness of commercial 
space opportunities; (2) assisting U.S. commercial providers in 
their efforts to conduct business with the government; (3) 
acting as an industry advocate within the executive branch of 
the Federal government to ensure that the Federal government 
meets its own space-related requirements, to the fullest extent 
feasible, with respect to commercially available space goods 
and services; (4) ensuring that the U.S. government does not 
compete with U.S. commercial providers in the provision of 
space hardware and services otherwise available from U.S. 
commercial providers; (5) promoting the export of space-related 
goods and services; (6) representing the DOC in the development 
of U.S. policies and in negotiations with foreign countries to 
ensure free and fair trade internationally in the area of space 
commerce; and (7) seeking the removal of legal, policy, and 
institutional impediments necessary to enhance reasonable space 

Section 16. Experimental program to stimulate competitive technology

  The goal of the EPSCoT program, which will include a merit 
review process, is to use the successful model of the National 
Science Foundation's (NSF) Experimental Program to Stimulate 
Competitive Research (EPSCoR) to promote technology transfer 
and the development of new technologies in an effort to 
encourage partnerships to advance technology transfer and 
development between the DOC's TA, EPSCoR state committees, 
State science and technology councils, small business 
representatives, and other appropriate technology-based 
businesses in eligible states. Governors traditionally play a 
key role in appointing members of state EPSCoR committees and 
State science and technology councils, and therefore, Governors 
and their economic development offices, and science and 
technology offices should be consulted as part of the EPSCoT 
program to ensure that the technology transfer initiatives 
support and promote the economic development strategy of 
eligible states.
  Specifically, subsection (a) would require the Secretary of 
Commerce to establish a program to be known as EPSCoT. The 
purpose of the program would be to strengthen the technological 
competitiveness of those States that have historically received 
less Federal research and development funds than those received 
by a majority of the states.
  The Secretary would be required to enter into such agreements 
as necessary to provide for coordination of the program with 
the NSF's EPSCoR and small businesses, as well as other 
technology-based businesses.
  The Secretary would be authorized to make grants or enter 
into cooperative agreements to provide for technology research 
and development, technology transfer from university research, 
technology deployment and diffusion, and the strengthening of 
technological capabilities through consortia comprised of: (1) 
technology-based small business firms; (2) industries and 
emerging companies; (3) universities; and (4) state and local 
development agencies and entities.
  The Secretary would be required to ensure that the awards to 
the program are given on a competitive basis including a review 
of the merits of the activities. The awards are required to be 
given on a cost-shared basis with the non-federal portion of 
the funding accounting for not less than 25 percent of the cost 
of the project's activities.
  The Secretary would be required to establish criteria for 
achievement by each state that participates in the program. 
Upon achieving this criteria, states would be no longer 
eligible to participate in the program.
  The Secretary would be required to coordinate the program 
with other existing programs within DOC.
  Within 90 days after enactment of this legislation, the Under 
Secretary of Commerce would be required to prepare and submit 
to the Secretary a report on the program which then would be 
transmitted to the Senate Committee on Commerce, Science, and 
Transportation and the House Committee on Science. The report 
would include: (1) a description of the structure and 
procedures of the program; (2) a management plan for the 
program; (3) a description of the merit-based review process to 
be used in the program; (4) milestones for the evaluation of 
activities to be assisted under the program in each of fiscal 
years 1998 and 1999; (5) an assessment of the eligibility of 
each State that participates in the NSF's EPSCoR to participate 
in the program under this subsection; and (6) the evaluation 
criteria by which the overall management effectiveness of the 
program will be measured pursuant to an evaluation. The 
evaluation, required of the Secretary, would be due 4 years 
after the date the program is enacted and in accordance with 
the established criteria.
  Subsection (b) would provide for $1.65 million in funding for 
FY 1998 and $3 million for FY 1999 out of the funds authorized 
in section 4 for the Office of the Under Secretary for 
Technology. No specific funding level has been authorized for 
FY 2000.

Section 17. Federal Aviation Administration as alternative authority

  This section of the reported bill would certify that any 
fastener used on an aircraft of component, subassembly, or part 
of an aircraft that has been manufactured or altered by, or 
under the direction and control of, the holder of a Type 
Certificate, Production Certificate, parts Manufacturer 
Approval, or Technical Standard Order Authorization issued by 
the Federal Aviation Administration, or manufactured or altered 
subject to a quality assurance program approved by the Federal 
Aviation Administration, is considered to be in compliance with 
the Fastener Quality Act. This provision would prevent 
duplication by Federal agencies in product quality 
certification from the Federal Quality Assurances programs.

Section 18. International Arctic Research Center

  This section of the reported bill would authorize to be 
appropriated $5 million for the International Arctic Research 
Center for fiscal years 1999 and 2000.
  The International Arctic Research Center provides common 
facilities, administration, and logistical support used by the 
international scientific community to investigate and enhance 
our understanding of: (1) climate change; (2) the geophysical, 
natural sciences, and life sciences; (3) the environmental 
impacts of human activities in the northern hemisphere; and (4) 
other new horizons of scientific inquiry that are of critical 
importance to understanding the Arctic. The data gathered at 
the research center providesinsight of critical importance to 
global health, economy, and policy formulation.

                      Rollcall Votes in Committee

  In accordance with paragraph 7(c) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following description of the record votes during its 
consideration of S. 1325:
    After agreeing to amendments, the Committee voted to report 
the bill as amended, by rollcall vote of 14 yeas and 3 nays as 
        YEAS--14--                    NAYS--3
Mr. Stevens\1\ -                    Mr. McCain
Mr. Gorton--                        Mr. Abraham
Mr. Lott\1\--                       Mr. Brownback
Ms. Snowe --
Mr. Frist--
Mr. Hollings-
Mr. Inouye--
Mr. Ford
Mr. Rockefeller
Mr. Kerry
Mr. Breaux
Mr. Bryan
Mr. Dorgan
Mr. Wyden\1\
    \1\By proxy

                        Changes in Existing Law

  In the opinion of the Committee, it is necessary to dispense 
with the requirements of paragraph 12 of rule XXVI of the 
Standing Rules of the Senate in order to expedite the business 
of the Senate.


  Now that the Commerce Committee has voted out S. 1325, the 
Technology Administration Authorization Act, we wanted to take 
this opportunity to discuss further our concerns regarding this 
legislation. While our opposition to the bill is widespread, we 
will focus these remarks on just one program within NIST, the 
Advanced Technology Program.
  Over the past ten years, the ATP has given over $1 billion to 
some of America's largest corporations to research and develop 
new production technologies. We do not support taking money 
from hardworking American families, money they would otherwise 
save and invest, pay for an education, buy a better house, and 
giving it to the richest and largest businesses in America. 
Providing such unwarranted subsidies is simply not the proper 
role of the federal government. The ATP is flawed in concept, 
design and practice, and it should be abolished.
  Flawed in Concept. Supporters of ATP claim that without the 
government's guidance and assistance, America's businesses 
would fail to prepare properly for tomorrow's challenges. They 
claim American businesses are too short-sighted and too focused 
on the bottom line to invest properly for the future. This 
argument may have carried some weight ten years ago when ATP 
was created, largely in response to concerns that the so-called 
``Asian Tiger'' was threatening US economic supremacy. Today, 
however, it is a tough sell.
  A more current view is that American corporations, unlike 
many of their foreign counterparts, do an excellent job of 
balancing the need to invest in the future with the demands of 
stockholders. In fact, there is much research to suggest that 
stockholders are more far-sighted than many here in Washington 
would like to believe. As the GAO recently reported:
          If investors are motivated only by short-term 
        returns, announcements of longer-term R&D projects 
        would lead to a decrease in stock prices. Various 
        authors have used these studies as an indication of 
        investors' interest in stacks that make additional R&D 
        expenditures.... Results from these studies have 
        typically shown that firms that announce increases in 
        R&D spending experience an increase in stock prices, 
        suggesting that the investors value these long-term 
  The market provides evidence to the contrary as well. The ATP 
was conceived, at least in part, in reaction to the ``managed 
trade'' model of Japan. In the past ten years, however, the 
Japanese stock market has lost 60 percent of its value. At the 
same time, the ``unmanaged'' US stock market has grown over 300 
  Still further support is provided by the McCain amendment. 
This amendment strikes at the very heart of the ATP program by 
ensuring that future ATP grants are not ``focused'' on 
particular technologies, but competitively offered to the broad 
spectrum of possible projects instead. The ATP was created to 
provide both subsidy and direction to US production 
development. The McCain amendment leaves the subsidy but it 
takes away the direction. In that respect, it represents an 
improvement and we supported it. Even with this modest 
improvement, however, the ATP is still flawed in its design.
  Flawed in Design. The ATP's goal is to fund projects that 
would not be funded by private capital but that would still 
provide positive social benefits. Neither NIST nor the 
participating companies, however, have any incentive to target 
unfunded projects. Instead, they have just the opposite 
incentive, that is, to fund projects that would have proceeded 
without ATP grants.
  As the American Enterprise Institute observed, ``To meet the 
ATP's goals, program managers need to succeed at two things: 
selecting projects with large returns to the nation and funding 
only those projects that would not otherwise find private 
financing.'' AEI goes on to conclude, ``Unfortunately, there is 
no reason to believe that firms will propose only projects with 
low profits and large social benefits to the ATP.''
  For businesses, a NIST grant carries fewer strings and less 
oversight than an equity investment from the capital markets. 
For NIST, picking projects that would have been funded anyway 
increases the chance that the project will be successful. These 
successful projects, in turn, can be used to sell the program 
to Congress and future taxpayers.
  Either way, hardworking families unnecessarily subsidize big 
business. This is perhaps the reason the GAO found that over 
half the ATP grant applicants in its survey did not look 
elsewhere for funding before applying to ATP. Worse, some firms 
even turned down offers of private funding prior to applying 
for ATP grants.
  During the markup, Senator Brownback discussed the need to 
strengthen the requirement that applicants first seek private 
funding options. While Senator Frist has added some improved 
language regarding this issue, we are concerned that the 
protections are not strong enough and we intend to support the 
Brownback amendment on the Senate floor.
  Flawed in Practice. Finally, the ATP does a poor job of 
executing its mission. Most ATP projects are multi-year 
affairs. Many ATP grants, however, are awarded on a year-to-
year basis, apparently in violation of existing rules.
  To be eligible for year-to-year funding, a project must be 
severable into annual segments that have defined work products 
that represent tangible accomplishments. An IG analysis of 1995 
awards found that NIST ``inappropriately used incremental 
funding for research awards that were not severable.'' 
According to the IG:
  The OIG conducted an audit to assess NIST's use of multi-year 
funding for ATP projects, and the adequacy of management 
controls over NIST's FY 1995 ATP final award process. Our audit 
disclosed that NIST inappropriately use incremental funding for 
research awards that were not severable. NIST also failed to 
comply with departmental requirements for multi-year funding 
because the grants officer did not certify that project 
activities for FY 1995 awards were severable.
  For supporters and opponents of the ATP alike, the use of 
incremental funding by the ATP poses two major concerns. First, 
it makes existing projects dependent on new appropriations to 
be completed if future ATP funding is cut, then projects 
already approved by the ATP may fail to receive their total 
grants. Second, it opens the door for micro-management of 
projects by ATP officials. Since grantee must come back for 
each year's funding, ATP officials have an increased say in how 
grants are used.
  In other words, multi-year funding allows the ATP to stretch 
its funds farther, but only at the cost of increased 
micromanagement and increased risk to the potential success of 
existing projects.
  Senator Abraham's proposed reform would address these 
concerns by writing into statute the recommendations of the 
Inspector General with respect to funding of ATP grants. 
Specifically, the amendment requires the Secretary of Commerce 
to:(1) review all prior year ATP awards not funded for the 
entire project period and ensure that required certifications 
of severability are prepared for awards that are severable; (2) 
fully fund the remaining awards that are not severable prior to 
obligating funds for new ATP awards; and (3) require that 
future ATP projects approved by the Commerce Department receive 
full funding at the time of their approval and not in year-to-
year increments unless they are accompanied by a certification 
by the grants officer that the particular award is severable 
and what the defined work-products should be for the funded 
  While we hope this reform and others are adopted, they do not 
change our opposition to the ATP. There is little value to 
improving something that shouldn't be done in the first place. 
The ATP should be abolished, not reauthorized, and we intend to 
continue working to see that happen. We thank Senator Frist for 
his hard work.


  The ATP is an important investment in American economic 
competitiveness. It supports American industry's own efforts to 
develop new cutting-edge, next-generation technologies, 
technologies that will create the new industries and jobs of 
the 21st century. The ATP does not fund the development of 
commercial products. Instead, it provides matching funds to 
both individual companies and joint ventures for ``pre-
product'' research on these high-risk, potentially high-payoff 
technologies. These technologies include promising new ideas in 
manufacturing, advanced electronics, and new materials.
  Why do we need the ATP? The answer is simple: to keep America 
competitive and create jobs. Long-term technology has become 
the key to future U.S. prosperity at precisely the time that 
global competition, downsizing, and shareholder pressures now 
force American companies to focus scarce research dollars on 
short-term projects. The Commerce Department estimates that 
these market pressures now push companies to spend up to 90 
percent of their research funding on projects that will pay off 
in one to five years. As a result, U.S. companies, small and 
large, now have serious trouble funding long-term, next-
generation technologies that will build new industries but will 
not pay for 10-15 years. Moreover, historically the U.S. 
Government has supported long-term research in only a few key 
sectors, an approach very different from our foreign 
  The ATP's sole aim is to develop new basic technologies that 
would not be pursued ever, or pursued soon, because of 
technical risks and other obstacles that discourage private-
sector investment. The ATP does not support product 
development, and is modeled on similar Federal research 
programs which have long helped a few sectors such as 
agriculture, the aircraft industry, and energy technology. The 
program particularly helps small technology companies. To date, 
the ATP has made 352 cost-sharing awards, involving 842 
companies and research partners in 40 States.
  Although ATP competitions have been in existence for only 
seven years, already a real difference can be seen from the 
early awards that have been completed. The November 1997 Case 
Study on Printed Wire Board Research Joint Venture is just one 
example of the successes we are seeing. The case study 
indicated that 62 tasks were completed in the joint venture in 
which half would not have been undertaken in the absence of ATP 
funding. In addition, sharing in the joint venture saved over 
$35 million for industry by preventing duplication of work, 
testing materials, and machine time. Most importantly, the ATP 
sponsored project saved over 200,000 U.S. jobs.
  The Secretary of Commerce also released another study in 
February 1998, the Development, Commercialization, and 
Diffusion Study, which showed that so far: (1) there have been 
210 projects with more than 1000 applications; (2) over 100 new 
patents have been filed; (3) 35% of the applications are 
considered to be ``new-to-the-world;'' and (4) 
commercialization plans have been provided by companies for 
nearly 800 applications.
   These studies show that ATP does not benefit one company 
over another. Rather, this program benefits industry in 
general, the American public, and the U.S. economy.
  I want to mention three other points about the ATP. First, 
the ATP is part of a long American tradition of supporting 
industry efforts to develop new technologies. To date, most of 
those efforts have been in defense or a few key civilian areas. 
But those older U.S. investments have been substantial and 
effective. The Department of Agriculture helped create modern 
agriculture; the government has supported aeronautical research 
since 1915; and the National Institutes of Health helped create 
biotechnology. The ATP simply extends this proven model of 
long-term investments in technology to the rest of U.S. 
  Second, this is not interfering with the marketplace or 
having the government pick winners and losers. The ATP is 
without doubt the most market-driven technology program 
supported by the government. Industry, not government, proposes 
the specific projects to focus on. Industry, not government, 
runs the projects and contributes the majority of the funds. As 
mentioned, the ATP supports only long-term pre-product 
research, never product development, and awards are made by 
peer-review panels of technical experts and retired business 
executives, not by the White House, not by the Secretary of 
Commerce, and not by Congress.
  Third, the ATP has enjoyed strong bipartisan support. The 
Bush Administration wrote the regulations for the ATP, and in 
his FY 1993 budget President Bush requested substantial 
increases for the program. In addition, on June 25, 1992, 
Senate Republicans, through the Senate Republican Task Force on 
Adjusting the Defense Base, endorsed both the ATP and the NIST 
manufacturing extension program.
  This program has had strong bipartisan support in the past, 
and Senators Frist, Rockefeller, and others should be commended 
for their bipartisan efforts to continue and strengthen the 
program. First, this bill will prohibit large companies from 
participating as single applicants. I do not agree necessarily 
with this approach, but I understand the Senators' efforts to 
move this debate past partisan politics and arguments about 
``corporate welfare'' for large companies. Attempts by certain 
members to exclude large companies from participating at all in 
the program are counterintuitive in that such an approach would 
potentially prevent the best technology proposals from being 
considered and would in fact turn the program into a small 
business assistance program that ``picks winners and losers'' 
as opposed to a program that picks the best technology 
proposal. This provision is a good balanced approach in that it 
allows large companies to continue to participate, but it 
requires them to include small companies in their efforts.
  To address concerns that applicants are not seeking funding 
from the venture capitalists, the bill contains a provision 
that the applicants must certify that private market funding 
for the project was sought. The provision in the bill does not 
require them to list proprietary information about why they 
were denied private funding nor does it require them to produce 
large amounts of additional paperwork as part of the 
  Finally, the bill would require the National Academy of 
Sciences to conduct a thorough review of the program to 
determine which aspects of the program have been successful and 
which have not been successful. This program was established as 
a result of an Academy study, and such a review is healthy in 
keeping the program on target.
  For the past two years, projects that received funding at the 
beginning of the program have reached completion, and the 
studies of these completed projects are showing that this 
program is a huge success. Whether it is the 200,000 jobs saved 
in the wire print board industry or the hundred plus new patent 
applications, this program has already made a significant 
impact on the U.S. economy and in the lives of many Americans. 
As more projects are completed, and studies are conducted, the 
facts will show that this program not only works, but it works 
well. Hopefully, this bill will help Congress move past 
partisanship and provide support for sound national policy that 
is saving hundreds of thousands of American jobs and 
contributing hundreds of millions of dollars to the national