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Calendar No. 388
105th Congress Report
SENATE
2d Session 105-196
_______________________________________________________________________
TECHNOLOGY ADMINISTRATION AUTHORIZATION ACT FOR FISCAL YEARS 1998,
1999, AND 2000
__________
R E P O R T
OF THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S. 1325
May 22, 1998.--Ordered to be printed
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
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
SENATE
2d Session 105-196
_______________________________________________________________________
TECHNOLOGY ADMINISTRATION AUTHORIZATION ACT FOR FISCAL YEARS 1998,
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:
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION TECHNOLOGY
ADMINISTRATION BUDGET SPREADSHEET FOR FISCAL YEARS 1998 AND 1999
[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
sources.
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
agreements.
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
reported.
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
Office:
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).
Sincerely,
Paul Van de Water
(For June E. O'Neill).
Enclosure.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
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
1999.
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
undertaken.
privacy
This legislation will not have an adverse impact on the
privacy of individuals.
paperwork
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
2000.
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
education.
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
locations.
Section 4. Authorization for the office of the Under Secretary for
Technology
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
services
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
amendments
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
(m).
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
reorganization.
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
Congress.
Section 13. Teacher Science and Technology Enhancement Institute
program
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
classroom.
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
commerce.
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
follows:
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.
MINORITY VIEWS OF SENATOR ABRAHAM AND SENATOR McCAIN
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
investments.
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
percent.
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
segment.
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.
ADDITIONAL VIEWS OF SENATOR HOLLINGS
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
competitors.
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.
industry.
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
application.
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
economy.
