SPEAKERS CONTENTS INSERTS
Page 1 TOP OF DOCNATIONAL SCIENCE POLICY STUDY, PART V: THE IRREPLACEABLE FEDERAL ROLE IN FUNDING BASIC SCIENTIFIC RESEARCH
WEDNESDAY, APRIL 22, 1998
U.S. House of Representatives,
Committee on Science,
The Committee met, pursuant to notice, at 10 a.m., in room 2318, Rayburn House Office Building, Hon. F. James Sensenbrenner, Jr., Chairman of the Committee, presiding.
Chairman SENSENBRENNER. The Committee will be in order. Today I would like to welcome you all to this, the fifth in the series of hearings to be conducted by the Committee on Science as a part of the National Science Policy Study. Today's topic on funding is an especially important one and I thank my good friend and colleague, Vern Ehlers, for organizing this hearing and for arranging such a distinguished panel of witnesses.
In previous science policy hearings, the Science Committee has looked at a number of issues that have a direct bearing on the success of federally-funded scientific programs. While we have tried to highlight the importance of these other areas, it is a fact of Congressional life that all too often the one measure by which our commitment to federally-funded science is gauged is by funding. I hope that our previous hearings on science policy have shown that the issue is much more complicated than being about money. Nevertheless, the issue of the Federal Government's role in funding science is and will remain central to a sound science policy.
I believe it is our responsibility to ensure that America's scientific, technical, and engineering base remains second to none, and as we prepare for the new millennium, with its new challenges and new opportunities, we must have a science policy in place that allows us to reap the benefits of scientific knowledge to improve the health and welfare of our citizens. The question is how best to do this.
Page 2 PREV PAGE TOP OF DOC As Chairman of the Committee on Science, I have made no secret of the criteria by which I believe scientific programs should be prioritized and funded. First, I believe that federal research and development must focus on essential programs that are long-term, high risk, non-commercial, well-managed and have great scientific potential. Second, federal R&D should be focused on agency missions. Third, the marketing or commercialization of a product should be left to the private sector, as should incremental improvements in the technology or process. Fourth, partnerships involving industry, universities, the States and foreign governments and institutions should be encouraged as ways to leverage the taxpayer's investment in R&D. And fifth, the infrastructure necessary for conducting essential R&D programs needs to be prioritized consistent with program requirements. In short, funding should be driven by policy and not the other way around.
These basic principles seem to me to be essential if we are to ensure that the taxpayer's money is being spent wisely and to good purpose. I hope our panel today will be able to address some of those principles and to give us the benefit of their insight and I look forward to hearing their testimony.
Now, as is the case at previous hearings of the Science Policy Study, it is always my honor to turn the gavel over to our Vice Chairman, the gentleman from Michigan, Mr. Ehlers, and while we have the shuffle into the big chair that's made in Grand Rapids from the little chair that's made in Grand Rapids, I recognize the gentlewoman from Texas, Ms. Johnson.
Ms. JOHNSON of Texas. Thank you very much, Mr. Chairman and thanks to both of you for making sure we had this hearing.
We've had numerous hearings on what researchers and policymakers believe the federal role in the funding basic research to be and I think we can agree that the Federal Government's support of good science is necessarily and, ultimately, beneficial to the country whether or not economic potential or marketability is evident at the outset.
Page 3 PREV PAGE TOP OF DOC It is my hope that we can use this hearing to go beyond the ''funding science is good'' mantra and address the return on our ''basic'' research investments. Often times, because the products aren't immediately or directly marketable, we discount the importance of performing ''basic'' science.
The changes taking place in government-industry-university relationships, the emergence of a global economy, the push for accountability and social relevance in research endeavors, and the search for ways to sustain our population and environment are all areas that involve basic research. They are also areas that provide strong arguments for the support of research within the Federal Government.
As we know, the nature of R&D funding is changing. Government research and development funding now comprises only about 35 percent of the national total. However, approximately one-third of those federal funds go toward basic research. In the overall picture, government funds about two-thirds of basic research.
While it is true that industry contributes less financially, they seem to truly understand the symbiotic relationship between knowledge-oriented and project-oriented research. The artificial labels of ''basic'' and ''applied'' placed on research, as well as those placed on various science and engineering fields, represent false divisions and create unnecessary conflicts.
The realistic model for research is a more complex one of parallel and interrelated developments with numerous feedback loops wherein research based on fundamental scientific principles aids technology and technological breakthroughs stimulate advances in what we term ''basic'' research.
So, with that, let me say that we are very interested in the views of our witnesses and hope that they will give their thoughts not only on what they believe the federal role to be and how it is distinct from the role of academe or industry but on how we might redefine all research in terms of important science that should not go unexplored.
Page 4 PREV PAGE TOP OF DOC Mr. Chairman, I do congratulate you again for calling this hearing and join you in welcoming our witnesses, and I look forward to the testimony.
Mr. EHLERS [presiding]. Thank you very much for your opening statement. If any other members of the Committee should later wish to enter their opening statements in the record, they may do so.
I also have an opening statement which I will abridge in the interest of getting to the meat of the hearing and that is the testimony of the witnesses.
I'm very pleased to welcome everyone to the fifth of our National Science Policy Study hearings. As you just heard, I was asked by the Speaker and Chairman Sensenbrenner to head up the Science Committee's effort to design a new science and technology policy that can be used to plan for the future, set priorities for research, and build sustainable support for scientific research.
And I would like to refer to the one sentence in the Chairman's opening statement, which I think encapsulizes the major reason for our workhis statement that, ''In short, funding should be driven by policy, not the other way around.'' And I'm afraid for the past several years it has been the other way around. As Ranking Member Brown has observed, this Congress does not have a science policy, it has a budget policy for science, and we are trying to reverse that.
Today we will examine the unique federal role in funding research that, owing to its risk and lack of clearly defined outcomes, industry is ill-prepared to support. We recognize the Federal Government has an irreplaceable role to play in generating new knowledge that is available for widespread dissemination. Without robust funding for basic research, many of these opportunities will not receive the attention they deserve. This hearing will explainwill explore, ratherthe nature of basic research today and the economic rationale for making it a priority of the Federal Government.
Page 5 PREV PAGE TOP OF DOC And I would emphasize when we use the term ''basic research,'' which is often used loosely, I think all of us should recognize that this is a very complex issue and it's very difficult to categorize certain types of research as ''basic'' and certain types as ''applied'' or ''non-basic.'' This is a complex issue which we will get into in our report. But I wanted to emphasize that at this point so that all those involved in reading the testimony later on will understand that we clearly understand this distinction and we will be making it in our final report.
Funding enough far-sighted, interdisciplinary research is a tension that is at the essence of the importance of renewing our Nation's commitment to science: the very role that the Federal Government is most needed and best positioned to fill is perhaps the hardest to explain to the American public. Articulating a compelling economic rationale to justify investments in research that by definition is furthest removed from direct, immediate economic benefit is perhaps one of science's chief challenges in the years ahead. Should we fail to do so, it is ultimately our children and grandchildren who will pay the price for our inability to retain our Nation's commitment to fundamental, basic, scientific research as a key component of our strategy to maintain long-term economic growth.
I look forward to receiving the testimony of our esteemed witnesses on this important topic and, without objection, my full statement will be entered into the record.
We're very pleased today to have some distinguished witnesses who will help us explore this topic of the irreplaceable federal role in funding basic scientific research and also who will help us understand more clearly what is meant by basic research and also not only the federal role but also the role of States, universities, and industry in their ancillary participation in this.
Let me begin my introducing all of our witnesses at one time, and then we will simply proceed down the row as we reach that stage of testimony.
Page 6 PREV PAGE TOP OF DOC Our first witness today is Dr. Claude Barfield, who is the Director of Science and Technology Policy Studies, American Enterprise Institute. Dr. Barfield recently directed the publication of a multi-author study on science entitled, ''Science for the 21st Century: The Bush Report Revisited.'' And, in 1996, he co-edited with Bruce Smith of the Brookings Institution, ''Technology, R&D, and the Economy.'' He has written extensively on regulatory, international trade, and U.S. competitiveness issues. Dr. Barfield has often testified before Congressional Committees and has also appeared on numerous television news programs. He previously taught at Yale University and the University of Munich after receiving his bachelor's degree from Johns Hopkins University and his doctorate from Northwestern University.
Next, we will hear from Mr. George Conrades, President of GTE Internetworking. Mr. Conrades has been the President of GTE Internetworking since July of last year, 1997, when GTE purchased the company he then headed, BBN Corporation. He had been with BBN since 1994, after having spent 31 years with IBM. Quite a few initials here.
Have you ever worked for a company that wasn't known by its initials?
Mr. Conrades is also a trustee of the Committee for Economic Development and, in that role, he is currently chairing a study of basic scientific research and the associated policy issues which is due to be released in early June. He graduated with a baccalaureate from Ohio-Wesleyan University and has also received an MBA from the University of Chicago, very noted, incidentally, for its economists.
Mr. Mikepardon me, Dr. Michael Doyle, Vice President of Research Corporation. While Dr. Doyle has only been in his current position since August 1997, he was on the board of directors of the Research Corporation for 9 years and a member of their Advisory Committee for proposal review for 5 years. He has received numerous awards for his achievements in the field of chemistry, co-authoring 2 books, 2 monographs, and over 200 research publications with his students. After receiving his baccalaureate degree from the College of St. Thomas and his Doctorate from Iowa State University, he began his academic career at Hope College in 1968 and in 1984 he joined the faculty of Trinity University as a Distinguished Professor of Chemistry.
Page 7 PREV PAGE TOP OF DOC And, I should note, parenthetically, that Hope College is an outstanding liberal arts school in Michigan near my area. It's particularly noted for having a strong chemistry department and an excellent faculty there and I'd have to say it's probably second only to Calvert College as being the finest liberal arts college in the United States.
For those who aren't aware of it, I was a graduate and taught at Calvert College.
Mr. Bill Todd, President of Georgia Research Alliance, and he will bring a unique perspective here and a very valuable perspective. Mr. Todd is the founding President of the Georgia Research Alliance. Prior to taking its helm in 1990, he had spent his entire professional career with the Emory University system of health care, ending up as the Assistant Vice President for Medical Administration at the Robert Woodruff Health Sciences Center. Mr. Todd was appointed to the Southern Technology Council by Governor Zell Miller in 1991 and also serves on the board of directors of the Georgia Chamber of Commerce, Zoo AtlantaI believe Mr. Gingrich has some interest in that facility as wellthe Georgia Center for Advanced Telecommunications Technology, as well as many other distinguished local organizations. He's a graduate of the Georgia Institute of Technology and attended the Institute for Educational Management at Harvard University. In 1995, he managed to accomplish his goal of visiting each of Georgia's 159 counties and he has also been named as one of the ''100 Most Powerful and Influential People in Georgia'' for 3 years running.
We're very pleased to welcome all of you here and to have such a distinguished panel. We certainly look forward to hearing your testimony and asking you a number of questions.
We'll begin with Dr. Barfield.
And, incidentally, I will explain the rules. I don't need to explain them to you, Dr. Barfield; you've been here before. But we operate under the 5-minute rule. We ask each witness to limit their testimony to 5 minutes and then members of the panel will be given 5 minutes each to answer questions and, as time permits, we can go through several rounds of that.
Page 8 PREV PAGE TOP OF DOC Dr. Barfield.
STATEMENT OF CLAUDE BARFIELD, DIRECTOR, SCIENCE AND TECHNOLOGY POLICY STUDIES, AMERICAN ENTERPRISE INSTITUTE
Mr. BARFIELD. Thank you very much, Mr. Chairman, for inviting me to testify in this hearing. My oral testimony, as you say, will be limited to 5 minutes but I'd like to submit the entire statement for the record.
Mr. EHLERS. Yes, without objection
Mr. BARFIELD. Neither I nor my institution have received federal support on the subject matter on which I am testifying.
Mr. EHLERS. Thank you, and, without objection, all witnesses' written testimony will be entered into the record.
Mr. BARFIELD. Thank you very much.
In my testimony, I make the point initially that I think we still have to go back to the famous Bush Report for any discussion of the rolethe particular federal role, the unique federal role in basic research.
But, a first point I think we need to make that I make in my testimony is that, while there are some contradictions in the Bush Report, Bush realized that in order to sell what was a new role for the Federal Government, he had to, from the beginning, make this understandable, not only to Congress but to the American people. That is why he and his colleaguesthe 50 colleagues who wrote the report with himwere suggesting a new federal role in 1945, and he tied support for science to very practical things that generation could understand.
And, you realize, in 1945, we've just come out of a war, and before that there had been 10 years of depression. And so, he tied it to such things as progressthe need to support science because of the need to have progress in the war against disease. You support science because science is the capitalscientificand you need to renew your scientific capital so that down the road you will have a stream of new products and technologies that will produce new jobs and economic growth. And finally, in 1945, though he did not see the onset at this point of the Cold War, he directly tied support for science to support for our defense establishments. Now, these are very practical things that he put forward in defense of a new Federal Government role for science.
Page 9 PREV PAGE TOP OF DOC In my testimony, I'm not going to go into detail. One of the things I point out is that the report was flawedMs. Johnson talked about thisin a very limited view of the scienceof the innovation process and he saw a kind of straight line or linear process which you could define basic research and then you went to demonstration and then you went to development. We know that the process is much, much more complex today and that, indeed, as the Chairman said, it is notit isthe lines between basic research and applied research are sometimes blurred. You know that the innovation process sometimes has feedbacks and loops where you get far down into the development and you realize there's a science question that you don't understand.
The only point I want to make about this for the hearingfor the discussion lateris that this more complex view presents a much more difficult task for deciding what is truly the public role as opposed to what is the private role. And I want towe can come back to that in discussions.
The second point thatabout the Bush Report in terms of the historyis that, again, when he got into the report, he had a much too narrow view of why scientists conduct basic research. And the reason that he did was because he distrusted the political process and he talked about basic research as being wholly curiosity-driven and that is the kind of research that the government ought to fund.
Now, there has been a great deal of government-funded and privately-funded basic research that is purely curiosity-driven. But, when one looks back at the 4 decades since 1945, a great deal of what the government fundedcorrectly, in my viewwas what we would call today ''targeted basic research.'' And that is you went into areas in which you sawyou did not see a product, maybe, coming up but you knew that there would be some need.
And, indeed, when you look back on where the United States later reached technological preeminencein biotechnology, in aeronautics, in chemistry and in other areasit is those areasit is the areas in which you would have what would be called ''targeted basic research.'' Now, we can talk about other roles for the Federal Government beyond ''targeted basic research,'' that is, into demonstration or development, but Bush was flawed, I think, in his narrow view. And, as I say, the reason that he wasthat he did thiswas that he distrustedhe thought that if you opened up the process to, say, to some national goal that interest groups would get in and try to target the government in the direction of some particular interest of theirs.
Page 10 PREV PAGE TOP OF DOC Let me, with that as a background, discussgive you a contrast of three recent Science Policy reports, two of which I'm going to mention; a third will be mentioned here and it is very much on the line of one of the two that I will mention, and you may have had testimony about this before but I think they highlight different views about what the federal role should be.
The first is the so-called ''Press report'' from the National Academy of Sciences several years ago entitled, ''Allocating Federal Funds for Science and Technology.'' The Press panel argued that the future priorities for the Federal Government should be established pursuant to the following guidelines: Federal research funding should generally favor academic institutions because of the synergies obtained through education and training, of the quality control through a rigorous peer review, and of the rapidity with which new ideas can be disseminated through open publication.
In contrast, the report said, the Federal Government should encourage, but not directly fund, private commercial technology development with two limited exceptions: to accomplish mandated government missions or for broadly-applicable technologies where the government was the only funder available.
In relation to commercial technology, the report said that it asserted its belief that government policy, such as those related to taxation, regulation, intellectual property, and social mandates, are usually more important to commercial outcomes than is direct government support of industry. The report, then, was skeptical of going much beyond basic research in such programs that we can, again, discuss this at the Advanced Technology Program.
Let me then take a second report which also dealt with the federal role in R&D policy and that was a report published by the Council on Competitiveness which was guided by former NSF Director, Erich Bloch, entitled, ''Endless Frontiers and Limited Resources.'' It marks ait sets out, I think, quite contrasting priorities in roles for federal R&D programs. The Council report's ''central finding'' and this is a quotation, is that, ''R&D partnerships among government, business and universities hold the key to the challenge of transition that our Nation now faces.''
Page 11 PREV PAGE TOP OF DOC While concluding that there is a general government role to stimulate civilian research, the Council report argues that the core public mission for the Federal Government would be to target research required to keep the United States economically competitive, particularly in a group of selected critical technologies agreed upon by the government, business and academia. It, unlike the Press report, sets as models the Commerce Department ATP program and a government-automobile industry program.
Now, even though the Council on Competitiveness report does talk about universities and the role of universities, and says that it is particularly critical, it implicitly accepts the potential downsizing for the university research system because of a pressure for funds and says that maintaining the university strength does not necessarily mean increasing or preserving its size.
We can come back to this in discussion but I think these present two quite differing views of what the core federal role should be and where federal priorities should go at any time and most of themand even though we're in a period of euphoria right nowat most times, you're going to have a pinch on funds.
Mr. Conrades will speak for himself. I think that the CED report is more in the Press line than the other line but we can talk about this over the next several hoursoryes, 2 hours.
Two final points, one related to intellectual property, and you've gotten my testimony so I'm not going to go into this in detail. It seems to me that one of the challenges that you face, and that we all face in terms of a federal role and how this relates to intellectual property, is that there is a great deal of concern that in recent years we have moved to privatize and give intellectual property rights to scientific fundings that should be in the public domain. And this does go to some programs that you havethat Congress has funded recently.
Page 12 PREV PAGE TOP OF DOC In particular, let's say the ATP program. The main argument for that program by its supportersparticularly industry supportersis that the government will be funding in an area of so-called ''generic research,'' beyond basic research but before you get to development. Now, the argument alsofurther is that the reason that the private sector will not do this is because these are actually ''public goods.'' I explained in detail what a ''public good'' is in my testimony and we can talk about this, but these are goods that the industry will not fund on its own but that societythe American economy and the American societyhave a real need for.
The problem and the contradiction, it seems to me, in that program and other programs that come out of, for instance, the Bayh-Dole Act is that you grantwe have allowedthe Congress has allowed and the Administrations have gone alongthe granting of intellectual propertyin other words, for one company or group of companies to have intellectual propertyeither a patent or copyrightfrom this. Now, there's a contradiction there; if these are public goods that require public funds, and wide dissemination, there should be some thinking about the fact that we are now granting to one company or a company, then, to license and privatizing, actually, what arewe have initially said were public goods.
I think I want to end there because I've gone through my 5 minutes. We can come back to the discussion of other things later. I had something to say and will speak to that but othersabout the role of the Statesbut let me just end theremy initial statement.
[The prepared statement and attachments of Mr. Barfield follow:]
Insert offset folios 125-133
Mr. EHLERS. Thank you very much and I do want to simply comment that the issue of intellectual property rights is, in my mind, proving to be one of the more troublesome issues that we have to deal with. I think we are developing quite a clear vision on many other issues but that remains a very troublesome one, partially because it spills over national boundaries as well.
Page 13 PREV PAGE TOP OF DOC Mr. Conrades.
STATEMENT OF GEORGE CONRADES, PRESIDENT, GTE INTERNETWORKING
Mr. CONRADES. Thank you, Mr. Ehlers, for the opportunity to appear before your Committee today and also your kind introduction.
As background, my former company, BBN, has had a long history in the development of the Internet, including winning in 1969 a federal research contract to create the DARPANET, the forerunner of today's Internet. BBN Technologies, which is now a division of GTE, continues to compete for federal research contracts, predominantly from DARPA, part of the Department of Defense.
I'm here today, however, in my capacity as a trustee for the Committee for Economic Development, the CED, a research and policy organization, whose trustees are 210 national business and academic leaders. At CED, I have served as a Chairman of a group of trustees that spent the past year plus studying basic research and related policy issues. In fact, we started out studying American R&D overall and quickly recognized the unique, important, and highly-leveraged role of basic research.
This group of trustees and the advisors to the project were impressive, not only for the companies and organizations that they representedincluding Merck and IBM, Procter & Gamble, Rand, Harvard and Columbia Universitiesbut also for the depth of knowledge and the insights each brought to the deliberations and I include my fellow panelist, Claude Barfield, in that manner.
The group has completed its work and, upon a vote of the trustees, CED will release its findings and recommendations on June 4 in a report entitled, ''America's Basic Research: Prosperity through Discovery.''
The goals of the report are two-fold; one is to set forth the compelling case for basic research and its benefits to society, and the second is to make recommendations for policymakers and practitioners.
Page 14 PREV PAGE TOP OF DOC The CED report is an expansive one, covering many aspects of basic research and I will confine my remarks today on issues related to funding sources for research. I'll also submit in my written testimony a complete summary of CED's findings and recommendations and we'll be happy to make copies of the entire report available to members of this Committee when it's available in early June.
Let me begin my affirming our finding that, indeed, America's long-standing endowment of basic research has been overwhelmingly successful, providing American society with not only new knowledge but also the practical benefits of economic growth and improvements in the welfare of its citizens. CED believes, however, that the success of American basic research is not simply a matter of money; rather, as we argue in our report, our successAmerica's successhas grown from a uniquely American organization of the basic research enterprise. And, as such, we believe it's essential to uphold the integral role of government in supporting basic research, as industry continues to focus on R&D with specific product-directed goals.
Of the nearly $63 billion government spends annually on R&D, $18 billion goes to basic research while just $8 billion of industry's total R&D annual spending over $133 billion does so. The large economic returns from investments in basic research show it to be an extremely productive use of the taxpayer's money. In fact, basic research conducted in academic institutions, particularly, but also in federal laboratories, private companies, and non-profit research institutions, has provided the intellectual and technological foundation for innumerable practical inventions that are fundamental to American technological and economic leadership.
Industries as diverse as pharmaceuticals, defense, electronics, aerospace have relied on basic discoveries fueled by government grants. There are scores of historic examples demonstrating the tremendous commercial and social benefits from basic research. Many are highlighted in our report and our Committee members have submitted examples from their own experience which, in my judgment, provide some of the most insightful reading on this whole subject.
Page 15 PREV PAGE TOP OF DOC A critical factor in the translation of basic research into functional applications has been America's unique entrepreneurial spirit. From small startups to large multi-national corporations, American ingenuity has excelled in converting new knowledge into practical and profitable products. A common misconception is that fundamental research is conducted in an ''ivory tower'' with no regard for practical benefits. On the contrary, a consistent virtue of U.S. basic research has been the pursuit of fundamental knowledge with a sharp eye out for downstream applications.
In addition, American entrepreneurs have been distinguished by their ability to capitalize effectively on new knowledge wherever it arises. A recent study found that 73 percent of research publications cited by industrial patents were derived from government-funded research.
In short, the roles of industry and government are different; they are complimentary. Industrial basic research should not be viewed as a substitute for federal research, federal support. At the same time, with few exceptions, we do not think the government should be in the business of directly funding what we view to be a mission of the private sector, development and commercialization of technologies, and we do make the distinctions between ''basic research'' versus ''applied'' and ''development research'' activities, although we heartily agree that this is an area of synergism. It is non-linear, as you pointed out in your testimony, Ms. Johnson, and it's important to think of the entire process.
We also take the long view, although a few scientific breakthroughs do find immediate applications. Yields on basic research are typically realized far into the future. Frequently, the greatest benefits are the least anticipated. The virus research initiated by the war on cancer in the 1970's delivered its most significant benefits, both unintended and unexpected, in the treatment of AIDS in the 1990's. Only now is this research yielding new drugs that will transform clinical oncology in the 2000's and, as I pointed out in the overall R&D process, it's a non-linear as well as synergistic process and development activities can conspire and contribute to basic research.
Page 16 PREV PAGE TOP OF DOC Because federal support is essential for a thriving basic research enterprise, the long-term federal budget outlook is critical. Basic research should be a high priority in federal budget in the decades to come. This will require reforms, we believe, of the federal entitlement programs that otherwise will grow explosively in response to demographic pressures a few years hence.
Policymakers in Congress and the Administration informed by a national policy debate should set broad, national priorities for basic research that reflect the needs of society at large. Scientists have an important role to play in informing the debate but such priorities are appropriately set, we believe, by our accountable elected political leaders.
Federal support for basic research should continue to be diverse in its sources and in its funding mechanisms. Efforts to impose central control or to concentrate resources in a single research area should be resisted. We should remember that health research, for example, has benefited immeasurably from advances in computer science, behavioral and social sciences, mathematics and physics; yet these disciplines receive most of their federal support from non-health-related missions.
Within the broad priorities established by policymakers, the primary mechanisms for allocation of basic research funds in all agencies and to all institutions should be based on scientific merit and rigorous peer review. In that regard, we revere the important role of the individual investigator, particularly the academic researcher who, we believe, to be at the core strength of the U.S. research enterprise as they compete for federal monies. In contrast, we believe that political earmarks for basic research are an unproductive use of scarce resources and should be halted.
Finally, CED is concerned about a society that is increasingly isolated from the world of science and discovery. A lack of public understanding of basic research and its benefits threatens to undermine the public support for science and engineering research. If society becomes less enthusiastic about scientific research and more suspicious or simply indifferent, the case for research support will become much more difficult to make in the halls of Congress.
Page 17 PREV PAGE TOP OF DOC Beyond an expanded, informed national policy debate, remedies for this problem begin fundamentally, we believe, in our Nation's schools. As CED has recommended in previous reports, the United States must raise academic achievement in math and science in grades K12. In doing so, we will help to achieve a better informed citizenrylet alone ensure our supply of outstanding scientistswhile encouraging, we hope, more women and minorities to pursue careers in basic research.
In conclusion, Mr. Chairman, the list of potential outcomes from today's research is endless. But, in considering the opportunities and the challenges of the future, one way to think about funding for basic research is low-cost insurance. Currently, basic research uses about four-tenths of one percent of GDP to create a very significant, long-term economic and social gain. We have only the slightest understanding of what lies ahead. But our greatest hope for capitalizing on unknown opportunities and avoiding unknown calamities is investing in the science and engineering knowledge that will meet these unknowns in the decades ahead. Thank you very much for the opportunity to be here.
[The prepared statement of Mr. Conrades follows:]
Insert offset folios 134-140
Mr. EHLERS. Thank you very much for your testimony.
STATEMENT OF MICHAEL DOYLE, VICE PRESIDENT, RESEARCH CORPORATION
Mr. DOYLE. Mr. Chairman, I am very grateful for this opportunity to speak with you this morning.
In my role as Professor of Chemistry, I have received funding from the Federal Government for the support of basic research, and I'm grateful to the Federal Government for that honor and support. But, today I'm here to talk to you about Research Corporation, some of the lessons that we've learned, and the role of private foundations in the support of science.
Page 18 PREV PAGE TOP OF DOC Research Corporation is a small foundation, founded in 1912 through the generosity of Frederick Gardner Cottrell who was an inventor extraordinaire. The foundation began as an enterprise that was built upon the proceeds of the electrostatic precipitator and one of the firstand at that time, the onlyfoundation solely dedicated to the advancement of science. In its early history, some of the grants that were provided from Research Corporation to academic scientists included the magnet for the Lawrence Cyclotron, the first experiments that Goddard did in rocketry, and Dandergraff's early experiments, so that the history of Research Corporation has been with basic science and with innovation in the process.
Over the years, the amounts of funding that have been provided to colleges and university faculty have been directed towards that aspect of research that we would call ''basic'' and currently its interests are in physics, chemistry, and astronomy.
Looking at the recent history of Research Corporationand I must parenthetically add here that we neither conduct our research ourselves nor are we a corporation in that sensebut as a private foundation, programs are initiated that are to take on an element of innovation in fitting into a characteristic need in the community of scientists.
One of those was introduced last year, termed the ''Research Innovation Awards.'' This program was instituted to encourage young faculty entering Ph.D.-granting universities to enter into projects that were significant for our society but that were not necessarily the product of their prior training. We were concerned that innovation today was not being promulgated in the same sense as it was 50 years ago and that, in fact, we were developing an arena of training rather than of the force of innovation that comes from taking and distilling disparate parts of our knowledge base into new and unexpected discoveries.
Although we had set out to fund 60 such awards in the physical sciences, in fact we found only 48 that were viable, and this alarmed us. And on analysis of this, we were discouraged to have the sense that perhaps what we were finding is that as funding is restricted in the sciences, and particularly in the physical sciences, that the opportunity to do what is the sure thingwhat you're trained to do, what you have experienced before to dois, in fact, what is accomplished. And, in fact, I think that's one of the problems with a tightening of funding for basic research is that we find that we're going only with the sure things and not experimenting, not taking risks in the development. And that'sit's not the fault of the funding agency, it's the funding community as a whole.
Page 19 PREV PAGE TOP OF DOC Another thing we actuallythat we discovered in the process of investigating the role of Research Corporation as a private foundation in funding basic research in the physical sciences is that we are one of a very few number of foundations that provided such support.
In our analysis, one can identify only a limited number of foundations and that limited amount of money that one could associate with physical sciencesphysics, chemistry and astronomyis only approximately $85 million on an annual basis from foundations that are as large as having proceeds well over $2 billion.
In looking at this and investigating the amount of funding that if one subtracts fellowships and awards and deals with the actual support of basic research, that number really comes down to about $45 million on an annual basis and $20 million of that amount is spent in the great State of Texas by the Robert A. Welch Foundation.
So, the amount of support that private foundations provided is minuscule. It's targeted to programs and opportunities that are not met by the federal support of science and, thus, fills a valuable niche. But, its support is not viable in terms of the overall growth and development of the basic scientific enterprise.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Doyle follows:]
Insert offset folios 141-149
Mr. EHLERS. Thank you very much, Mr. Doyle.
STATEMENT OF WILLIAM J. TODD, PRESIDENT, GEORGIA RESEARCH ALLIANCE, ATLANTA, GEORGIA
Mr. TODD. Thank you, Mr. Chairman. I appreciate the opportunity to be with you today.
Page 20 PREV PAGE TOP OF DOC My perspective is from the State of Georgia where the business, research universities, and state government have come together in a robust strategic initiative to grow and develop the technology industry. We are doing so by building a research enterprise upon the foundation of our universities.
In Georgia, the architect and manager of this effort is the Georgia Research Alliance, a 501(c)(3) corporation funded and governed by the private sector. Our efforts are one of the best examples of effective public-private partnerships. Some of our universities are public and some are private. The business leadership in Georgia created the Alliance and then reached out to state government in 1990.
My message to you this morning, Mr. Chairman, is simple: the Georgia model is working and it is dependent upon continued and significant investment by the Federal Government in early-stage research.
There are three reasons why the model is effective. One, we manage the investment by state government and private philanthropy as a portfolio. Two, we include a commercialization center in each of the major initiatives that we develop. And three, we have been able to count on the Federal Government to fully participate in early-stage research through competitively-awarded grants to our universities.
In Georgia, we manage the investments by state government and the philanthropic sector as a portfolio. In this analogy to a venture capitalist, we must constantly be reassuring ourselves that we are keeping the pipeline of innovation and discovery full and flowing. We must ensure that there is early-stage work that will be the basis of new discoveries and innovation years from now. In Georgia, we view this as a process which needs balance at all points along the continuum. This should not favor one point along the way as better than another, for they are all necessary for the process.
This is why we typically avoid words like basic and applied, favoring instead early-stage and later-stage.
Page 21 PREV PAGE TOP OF DOC One indication to us that the Georgia model is working comes from the American Electronics Association and its seminal report entitled, ''Cyberstates: A State-by-State Overview of the High-Tech Industry.''
This report states that Georgia led the Nation in the number of high-tech jobs created from 1990 through 1996 and included in the analysis that Georgia has benefited from its substantial investment in the high-tech infrastructure since 1990.
Indeed, since 1990, the state government has invested nearly $200 million into the universities through the Georgia Research Alliance, and this has been matched by nearly $50 million from the private sector.
The portfolio is now comprised of funding for 27 new endowed chairs for eminent research scholars, nearly one million square feet of new laboratory space, and a huge infusion of new scientific equipment and instrumentation.
Some of this investment is very early-stage, some mid-stage, and others very near commercialization. It is critical, we think, that the portfolio be balanced so that the pipeline is full and fast-flowing. It is essential that the early-stage be well covered.
There are many factors that are in play to cause the portfolio to move forward toward commercialization. The interest of the government, business, and the university must be balanced. The university must have a culture that values and promotes industry-oriented research. In Georgia we have learned that an important factor is the organization of talent to be brought to bear on the process itself. We are fortunate in Georgia to have the Nation's oldest and most successful university-based incubator at Georgia Tech, the Advanced Technology Development Center.
We've learned many lessons from this center and have made a commitment to including a franchise branch of this center in each of our major initiatives that we launch. For example, we have begun construction on a new $20 million plant and animal biotechnology facility at the University of Georgia and will include a commercialization center in this building.
Page 22 PREV PAGE TOP OF DOC Staff from the ATDC will be present to help researchers with the process of realizing commercial application of discoveries from their laboratories.
Without a strong foundation of early-stage research, the commercial outcomes that we all seek in the name of national competitiveness will not occur. Innovation and commercialization is clearly a process. That process cannot be successful without the solid foundation of a robust early-stage research engine. We believe that the Federal Government should renew its commitment to being the primary sponsor of early-stage, or basic, research, and to compare itself with the other nations around the world with whom we compete to determine the proper level of resource commitment.
The States are ready to partner with the Federal Government and build a robust research engine for the purpose of driving our economy. In Georgia, this is the cornerstone of our economic strategy. An excellent example is the Engineering Research Center, sponsored by the National Science Foundation. We have one of these prestigious centers at Georgia Tech and we are competing for a second. These are true collaboratives, with strong industry participation and guidance, and a full continuum of activities from early-stage to commercial.
In summary, Mr. Chairman, the Georgia model is working because of the partnership with the Federal Government, and we are committed to commercialization of this portfolio. I believe that there are significant opportunities to maintain our strong tradition of merit-based, peer-reviewed research awards, while giving credit to those States that show creativity and commitment to commercialization of the research portfolio that they have carefully constructed.
I look forward to working with you and the Committee to develop these ideas in the future.
Page 23 PREV PAGE TOP OF DOC [The prepared statement of Mr. Todd follows:]
Insert offset folios 150-152
Mr. EHLERS. Thank you very much. We will now turn to questions and I will launch the questions by asking a question of each of you on one particular topic, and I'm looking for your expertise.
I'm very interested in the role of the States in this, and so I'll start out by asking Dr. Barfield to comment on that. You can basically cover the part of your testimony that you didn't get into, but then the other issues I want to touch are as follows, and I'm not sure in just what order I'll call on you, but I'll give all the questions at once, so you can be prepared.
Dr. Doyle, I'm interested in your distribution of funding throughout the States because there are some States that complain that they are left out of federal funding because it tends to be bicoastal and the high-tech States, the major universities, which always get more money, tend to get yet more, etc.
So, I'd be interested whether your pattern of contributions matches the federal in terms of distribution or whether it's different.
Mr. Todd, Georgia has obviously has done a wonderful job with your Research Alliance. My question is States that don't have the capability that Georgia has, both in terms of a very good university or two and a business sector that is willing to contribute. I wonder if you think your model will work for other States that are lower down in terms of overall fundamental research and whether that can be used to bootstrapwhether they could use that to bootstrap themselves up to your level, or a higher level, even though they have very limited resources at this point?
Mr. Conrades, I note in your testimony a comment that the tremendous benefits some States have received. You mentioned Massachusetts, for example, from MIT, and Silicon Valley, and Research Triangle in North Carolina. My question, since the States get so much economic benefit, should they, in fact, be contributing more to the overall basic research effort than they do? Should we look at establishing partnerships for federal grants, perhaps a matching requirement, perhaps requiring the States to pay more of the cost of universities and not recover as much overhead.
Page 24 PREV PAGE TOP OF DOC So each of you have a question to deal with on this broad issue of State participation. I realize I'll be exceeding my time limit here in your responses, but we'll try to compensate later on in the question period.
Mr. BARFIELD. Let me start by saying, I think one of the great strengths of our system is its federal nature and the way that it is operated, not just in science and policy, but all across the spectrum of public policy. And the result there is the ability of States, and local governmentsbut in this case Statesto experiment and to adopt diverse means of getting to particular ends. Having said that, let me go back to the question.
We're starting with the Federal Government and I thinkI'll come to the States in a minutewhatever the citizens of Georgia, or the citizens of Pennsylvania, or the citizens of Massachusetts decide that they want to fund in the area of innovation, I think the federal, I would argue, should remain the same, or have the same guidelines or the same criteria that I outlined, that I, and I think most other economists, would be more comfortable with, and that is whether you call it basic research or early-stage research.
That is the fundamental, it seems to me, sine qua non, for federal priorities. And let me clear about this, it is not that the Federal Government should not ever do anything. This is a question of priorities. But what must be protected first, I think, in federal funding, whether it is directed at universities or whether the federal agencies work with the States, is the basic research area.
Now the States, on the other hand, may decide that they want to go beyond this. It seems to me that a lotand I'll defer and throw this out for discussion with Mr. Todd and othersseems to be a lot of incubator programs, which are in some ways science programs but they are also economic development programs, do aim more to produce results closer to the market.
Page 25 PREV PAGE TOP OF DOC I might have reservations about that, but I think that is the ability actually of States to produce that, but I think it isthe genius of our system is that if the State of Georgia, the State of Massachusetts, the State of Pennsylvania want to get into those kinds of programs, that's fine.
But I would argue, on the federal level, we should stick to the kinds of guidelines and criteria that I've outlined here. At least that's my particular view.
Mr. EHLERS. Thank you very much. It may be logical to jump from there to Mr. Conrades to talk about whether the States should be required in some way to work with the Federal Government or contribute more to the Federal Government research effort, or whether there should be some other way in which they can contribute more to the overall national scientific effort.
Mr. CONRADES. I appreciate the question and I think I should qualify my remarks by saying that in our Committee deliberations, which were extensive, we did not focus a great deal on the role of the States. We were principally focused on the role of the individual investigator, particularly in the environment of the American research university, some 200 activities, wherever they may be, and the concept that grants should be made on the basis of scientific merit and peer review, wherever they may be in the pursuit of whatever part of research seem to pass the screen of the peer review.
It's true that we cite the case in Massachusetts where, because of the caliber of the research universities there, and both the students and researchers that they attract, that there is a particular density, if you will, of research and development activity.
And as a result, the surrounding industrial community is comprised of people who are particularly adept at understanding research, the fruits of research, and capitalizing on them to provide innovative and, I mentioned, profitable products.
That certainly is of benefit to Massachusetts in that example. I tend to agree with Claude's remarks, that I think that the emphasis would be more on the federal fundingI really haven't thought through the ways in which the States might be required, in your words, to participate in this. Certainly you would think it would be in the interest of the States to participate to the extent they recognize the economic advantage.
Page 26 PREV PAGE TOP OF DOC Mr. EHLERS. Thank you. Let me just add at that point, not a vendetta against the States, but when you look at the history of it, States provided substantial funding for research before World War II. After World War II the pattern is they provide no funding and, in fact, they work very hard to recover the overhead, as it's called, from the federal research grants or other research grants. Sometimes this is very substantial.
I have received complaints from faculty members that they are required often to go out after the grant money that has the highest overhead percentage in an effort to help fund the university.
So, I'm trying to put this full issue in historical perspective and say, what happened in World War II? Why did the States pull back and the Federal Government greatly increase and can we somehow get some combination?
Mr. CONRADES. If I could offer. I think prior to the war, it was largely an agricultural research enterprise and, perhaps, that is why the States were more involved.
Mr. EHLERS. It still is. States still have involvement in that.
Mr. CONRADES. Correct
Mr. BARFIELD. It is not quite to the States. I think you do have the Statesthe States are very much involved in funding their public universities, that is the infrastructure around that. And, obviously, the contract system comes on top of that and sometimes it is quite large. But they still are in the businessI mean, in the United States science and education are linked together and they are linked right at the focus of the universities, and so the States do spend a great deal, more money than they have before, about the university system, but not in the grant system.
Mr. EHLERS. All right. I just wanted to counter that by saying, the way overhead is calculated and the way other expenses are attributed to it, very frequently faculty salaries, a substantial part of the salary comes out of the federal grant; machine shop expenses out of the federal grant; square footage charges, which the universities used to assume.
Page 27 PREV PAGE TOP OF DOC It's a complex issue and we won't resolve it in these few minutes.
Dr. Doyle, just on the distribution question.
Mr. DOYLE. The Research Corporation and a few other of the other foundations that provide support for basic research in the physical sciences do not discriminate on the basis of region or State. But there is a natural inclination to suggest that the funding patterns do reflect the number of institutions and the number of faculties that are involved.
For example, we will have at Research Corporation more grants funded in the State of California than the State of Arizona where I reside. This is a natural consequence.
One other comment I can make about this is that in our experience, where in grants provided by Research Corporation, we do ask for significant amounts of matching costs from institutions. There is a great disparity in the willingness of individual institutions, sometimes dependent upon the State, to provide that. Those that are ready and willing to invest in science do so, but increasingly we see difficulties in the willingness of institutions to provide those matching costs that you suggest are from funds so readily available.
Mr. EHLERS. Thank you. Mr. Todd?
Mr. TODD. Mr. Chairman, next week I will be spending a day in Jackson, Mississippi, at the request of the National Science Foundation. This will be my second visit. I was there a month ago to meet with the Presidents of the four universities; next week will be with the top business leadership, giving them the benefit of the model that we have developed in our success story.
We all have great friends in Mississippi, but I would suggest to you, if it can work there, it can work anywhere. Mississippi has some special challenges of traditionally being fiftieth in many rankings. The challenge that I've shared with them so far, and I will again next week, is that it requires focus. They have got to decide on a few things that they want to do extremely well and that is a significant challenge in any political environment because when one focuses, one leaves others out.
Page 28 PREV PAGE TOP OF DOC It's been well received at the university level and we'll see next week whether it is received well at the business level. I think it will be and I think that model is exportable to any State, including Mississippi.
Mr. EHLERS. And do you expect this will happen naturally or do you see a federal role in providing seed money for this propagation.
Mr. TODD. I don't see a seed role. I see the underpinning, and that is what I was attempting to illustrate, that any State can be successful if it has a traditional partnership with the Federal Government where it can count on the Federal Government to be an active and full partner at the early-stage level, where the State can come in and set some focus and do as my colleagues have said, be more involved in the intersection of economic development and science, much more on the later-stage, applied area. And in this case, the citizens of Mississippi, through their elected officials and through their partners in the private sector, will, presumably, choose a couple of areas to focus on and come to the Federal Government and say, we want to participate in a competitive, peer-reviewed process and try to do what it takes to be world class in a couple of areas.
Mr. EHLERS. Thank you all very much. I think we've exhausted that issue pretty well.
Ms. JOHNSON of Texas. Thank you very much. You alluded to Congress understanding and funding as well as the general public. About 3 years ago, there was a research project in my area called the Supercollider. And there was difficulty in understanding, andeven with scientists attempting to explain what it was going to do. Many good, basic-research projects don't show any obvious marketability. Is it the primary role of government as promoters of the general welfare to promote basic research that shows promise for stimulating the economy, or do we simply trust that good science will lead to societal benefits?
Page 29 PREV PAGE TOP OF DOC Mr. CONRADES. I would advocate the latter view. Again, there are the creative intellect of our scientists and engineers is such that, especially those in the university setting, have a tremendous inquiry and curiosity and desire to pursue particular fields. And given the fact that those outcomes may take years, or that it may even be a dry well, so to speak, is not something that can be predicted very well, but rather encouraged.
And it is the cross of disciplines and the nature of research today that helps to yield productive outcome as well as wide dissemination of that research in the spirit of others seeing something that someone else didn't see, and, therefore, producing an innovative and productive result that is most important.
So, in that sense I think, we have a history of the value of this kind of investment in basic research where the outcomes are not predictable or known, but it has demonstrated such tremendous payback that it would seem obvious to continue.
Mr. BARFIELD. I'd like tono, go ahead.
Mr. DOYLE. A number of years ago, in fact, in 1968, an attempt to answer that question was made and a study that was funded at Illinois Institute of Technology brought together four then-recent technologies that were really on the forefront of discovery and practicality, among which was the transistor, and traced its underpinnings: where did it come from; how did it get there?
And the answer was basic research and it traced it over a long period of time and actually asked the question, would you have predicted the transistor to have arisen from this point of discovery? And the answer was no.
Perhaps we need such a study again to renew our own confidence that, in fact, the elements of basic research come to us in a multivaried way. I mean, who was to say when the first discovery of a new form of carbon took place a few years ago, where that was going to lead and yet, today where it is going to? And we're making significant investments thatwith the confidencethat something like that can be made commercial.
Page 30 PREV PAGE TOP OF DOC Mr. EHLERS. Dr. Barfield? You wanted to add something?
Mr. BARFIELD. Yes, just quickly. I think it's not either/or, and I want to go back to the exact example that you used and correct me if I didn't listen to you.
On the one hand, you said in your District or around your District you had the Supercollider, which went down, a large-scale project. And then you talked about other research which had closer payoff, if I understood you correctly, and how does one distinguish between those two areas?
I think you have to be very careful. In the examples that were given here, are often examples that you couldn't have seen at the time. They fit not the Supercollider because it was so expensive, but at the time you were funding you didn't know what would come out of it.
This does not mean that scientists or science policy types like myself are asking the American public, or the Congress, to take all this on faith. There is a history, we can see the areas over the last half century or century where you have hadcertainly the last half centurywhere you have had substantial public funding that has paid off. You might not be able to tie a particular project to a particular outcome, but it is the multiplicity of projects.
And I'll just take the obvious place to look, and I may have reservations about the future, but to look at the whole area of biotechnology, biomedical research. We have poured a lot of money in the NIH and that has stimulated money in the private sector over the last half century and that is certainly paying off.
But there is one thing I want to end on. Without getting into details about the Supercollider and the disagreements among scientists there, we should also not walk away from large-scale projects in the United States. Even if we have to sometimes fund them with others, I think there is a tendency to think that we will no longer do that, and that is unfortunate.
Page 31 PREV PAGE TOP OF DOC Again, I don't want to get into the details of the Supercollider, but there are some projects that are large, that are expensive, and we are still the largest economy in the world and can afford this if we will, without talking about individual projects.
Mr. EHLERS. Thank you, the gentlewoman's time has expired.
Mr. Gutknecht? Mr. Gutknecht has to leave. Mr. Weldon. Congressman Weldon.
Mr. WELDON. Mr. Chairman, I just got here. I am not prepared to ask questions yet.
Mr. EHLERS. We'll give you a little time then; thank you. Let's see, we have next in line, I believe, Ms. Rivers, the distinguished woman from the great State of Michigan.
Ms. RIVERS. Thank you, Mr. Chairman. I have questions. I apologize that I was late, I was at another meeting that I couldn't leave.
I have two areas of questioning and maybe we can get through one this time, and, if there is a second round, I'll go to the second.
I want to go back to the issue of States' involvement. Because one of the things that I get concerned when I hear people from various places arguing that this State or that State is not getting their fair share of funding. And if we move to a larger role for States, where we begin to view research funding as a sort of entitlement that each State should get a fair share of, are we going to move away from the issue of peer review, away from a meritocracy into simply cutting up a research dollar pie and distributing it evenly across the 50 States and let the quality of the research fall where it may.
I'd like to hear from each of you on that.
Mr. CONRADES. Yes, that was very well said. I would be concerned if it were to follow that line, that direction. We do believe in scientific merit, meritocracy, and rigorous peer review, wherever that may be. In fact, there was a discussion in our Committee once about what number of universities, even, wherever they might be, should really be funded. And this quickly came to a discussion about the fact that there are some 200 that conduct research today and that some, perhaps, should not be in research because they do not have the wherewithal to do both research and teaching, which is also important.
Page 32 PREV PAGE TOP OF DOC But the individual investigator also has the capability to move and to be involved with other colleagues in other places, which may or may not be in a particular State, or a particular university.
Ms. RIVERS. Dr. Doyle?
Mr. DOYLE. The National Science Foundation has run an experiment over the last 20 years or so, and it's called the EPSCoR program and it has been to provide basic funding for States that do not currently receive a certain amount of federal support and it is used, basically, to provide the seed money and stimulus to bring individuals who are in universities and colleges in a State to a level where they can be competitive on a federal basis without such seed money.
It has proved to be an essential program. And I would submit that, looking at the history and development of that, actually gives you the answer to the question.
There is concern that in a free-enterprise system in which we live and work that in fact the academic institutions that look at federal support for researchfederal and private support for researchare working on the same basis. In fact, you are going to find yourself with successes, those schools and those institutions that are willing to invest in themselves to become preeminent in those fields and those that are not, and of course there is the discrepancy.
Ms. RIVERS. Mr. Todd, did you have a comment?
Mr. TODD. We definitely believe in peer review sponsored research. I think it is the right way to go to achieve the level of quality that the taxpayers deserve. The ultimate question, I think, in the economic analysis, comes in what level of commercialization takes place from this big national portfolio-sponsored research, and I doubt it would divide itself up into fiftieths.
Ms. RIVERS. Mr. Barfield? Dr. Barfield?
Page 33 PREV PAGE TOP OF DOC Mr. BARFIELD. I think in the main, the direct line, basically what we have between the Federal Government and individual universities and individual investigators within those universities, based on peer review is where we should focus our resources. EPSCoR program and others I'm happy with as long as they don'tit is a fairly small portion of the larger portion that is to even the balance. Because I think the bulk of funding, it seems to me, from the federal level ought to go on the basis of merit.
Ms. RIVERS. Great.
Mr. BARFIELD. I understand that we elect on the merit, but we elect on local merit. But I think the Congress has accepted that and I hope it will continue to do so.
Ms. RIVERS. So do I. Thank you. Thank you, Mr. Chairman.
Mr. EHLERS. Thank you.
Mr. WELDON. Thank you, Mr. Chairman.
Mr. Conrades, your Committee has concluded in its report that the Federal Government should retain its lead role in funding basic research. Could you explain how your Committee arrived at that conclusion and what you believe the consequences would be if the Federal Government were to allow its investment in basic research to atrophy?
Mr. CONRADES. Well, you may not have been here when I mentioned that we, our Committee originally started with the charter, the concern about sustaining the United States' science and technology base, in essence, all of R&D. And as we began to investigate what we meant by research and development, we began to understand the elements of R&D and particularly the important role of basic research and that it has a different nature than applied and development research activity, including its sources of funding, where the Federal Government today is the largest sponsor of basic research and that, predominantly in the American university system, research enterprise system, and so we thought that was rather special and important. And as we began to understand and debate more about that with the experts in the Committee, we recognized that there was a somewhat division of role where the industry was providing most of the applied technology, most of the development technology, and driven by marketplace and process goals were quick to commercialize, and, in fact, cited in the majority of patent applications the basis for their work is federally-funded, public-good research.
Page 34 PREV PAGE TOP OF DOC So, after we thought through that, we then quickly realized the importance of the source in federal funding and also the economic payoff from this that represented then again the complete R&D process, in other words, basic research was essential but also the capitalization of that basic research by industry and the unique roles that each played, although there is a great deal of synergism and it's a nonlinear activity and the development activities can spur further advancements in basic research and vice verse.
We felt that industry would notbeing the other major partner, industry only funds today about 7 percent of the basic research and they do that predominantly to fill gaps, if you will, against a more product-directed activity as opposed to, within the university environment, more of a discipline activity.
And we thought the synergy of that and the difference in that were important that they work together and that it would be improbable that industry could fill the role of government, either from its mission or from the amount of funds available to fund that level of basic research.
And so, in its absence, we think it would be a disaster for the economic well-being of this country.
Mr. WELDON. Dr. Doyle, could you explain in more detail what happened with your research innovation award program? And why you believe you were unable to find even 60 awards worthy of being granted.
Mr. DOYLE. Let me address this specifically. We had set a goal to look at innovation, and can we actually define innovation was the first question that we needed to answer. In our reviewing process we go to the external community and we have our own internal reviews in addition to that, basically a three-tier system. We were confident at the end of that time that the reviewing community understood innovation and we were also confident that their conclusion about that was that there was only a limited number of individuals who were describing innovative research. The process then is this: Why would that would be so? Why wouldn'twhen you actually set out a goal to award individuals for an innovative programwhy wouldn't they actually pull that together? And the conclusion that we were able to draw by extensive discussions with a number of influential people, as well as ourselves in the foundation community, is that the system itself is, as funding contracts, one moves to those programs and opportunities that are sure things.
Page 35 PREV PAGE TOP OF DOC That you actually try to move away from, as much as possible, those that are chancy. Those that involve risks. And one can see it in the reviewing systems that we now employ in the federal agencies, and foundations, and the process is a complaint that when it gets tight, innovation is the loss.
Mr. WELDON. Thank you, Mr. Chairman.
Mr. EHLERS. The gentleman's time has expired. Next, Ms. Jackson Lee.
Ms. JACKSON LEE. Thank you, very much. Mr. Chairman, I ask unanimous consent that my opening statement be submitted in the record.
Mr. EHLERS. Without objection.
Ms. JACKSON LEE. Thank you. Let me thank the Chairman, Ms. Johnson as well, for the holding of these hearings and acknowledge some points that I think, for me, are extremely important and that is how basic research ultimately impacts the quality of life.
In particular, I join Congresswoman Johnson, though I was not in Congress, in finding great consternation in the lack of pursuit of the superconductivity laboratory in Texas and that is because Dr. Paul Chu is a resident of my community, at the University of Houston, and does a great deal of work in the superconductivity lab there.
Dr. Joshua Hill is at Texas Southern University and has done a great deal of work on solar energy. I know that has been a long-standing area of research, but he has been pursuing it in developing nations and particularly in Africa.
So, with that, I find the need for basic research really at a high level and I will be posturing questions along those lines, in particular, can I have you gentlemen comment on the fact whether or not if basic research suffers, science will suffer, and, thereby, the quality of life will suffer?
Would you entertain that question? And I have a series of others.
Page 36 PREV PAGE TOP OF DOC Mr. CONRADES. I would start by saying I think that's so. We cite in our report the ways in which basic research was conducted in lasers, X-rays, semiconductors, global positioning systems, into HIV and AIDS, geography, the Internet, and then all the ways in which just those types of technologies now which are bought in a variety of ways or are piece parts in an activity that helps humans work and learn and play together.
And so I think basic research is at the core of it. The Internet today, benefits today from work in the late 1890's on boolean algebra. Nobody would have guessed in the 1890's that the kids would be banging away on the Internet like they are today globally. Some might debate the quality of life that is introducing, but these activities certainly enhance the advancement of science and also the development ofas I mentioned earlier, the products themselves can stimulate additional research.
One comment I would like to make on this role of funding, federal funding, of basic research that is so critical to all of this is that the results of that funding, that research funding, be widely disseminated. That is a very key point.
Industry, because of their proprietary application, and seeking profit goals will want to protect their particular implementation and that is a different subject, but it is important that research be widely disseminated for this whole process to be effective and advance science in unknown ways in the future.
Ms. JACKSON LEE. Let me do this: Let me ask a series of questions and then you can answer that. The first one I have, along with these others, because I do have a point to make and I know my time is running.
I would say this to you, Doctor: Try to take the Internet away from anyone and I don't know how many of us we'd have committed for reasons that you've taken it away. So, I think it does impact the quality of life, so I would think it is a very important aspect of our life at this point.
Page 37 PREV PAGE TOP OF DOC But, I would like to pursue just another area that some of my colleagues have already pursued, and that is, of course, the sense of urgency of basic research because it doesn't initially sound attractive or doesn't have as overall an angle to marketability.
Who would have known, the Department of Defense investigating and fooling around would have come about with the Internet if you will. So that's a problem. I'd like your comment on that, along with the earlier comment, and then, gentlemen if you would, I mentioned Texas Southern University which is a traditionally black institution, but this covers Hispanic-serving institutions, and how we can engage those institutions more in the issue of basic research and, lastly, what can you sort of envision or vision, if you will, about resources for funding narrowly, basic research. For example, extra assessment on patents, and I'm sort of not fishing, but I'm throwing out ideas because, obviously, we have a concern about where these funds come from and I'd appreciate a quick andI hear the bell but I would ask the Chairman his indulgence to allow the panelists to answer that question and I'm particularly interested in suggestions of reaching out to find additional funds for basic research.
Dr. Doyle, why don't you jump in?
Mr. DOYLE. I can quickly state that our interests and those of a few foundations have been, in fact, to try to stimulate basic research in environments and communities where it is normally difficult. And, thus, the role that we played in Historically-Black colleges and in a number of the predominately minority-based institutions have been reasonably large. Not in terms of number of dollars but in terms of knowing the individuals. And that is one of the things that must be made clear here, is that you really must know who you are talking with and in doing soI mean, in stimulating science in different environmentsnot all institutions can be among the elite. And so one must provide the resources and wherewithal to engage specific individuals within the context of the environment in which they live. This is part of the problem that exists in shrinking funding for which we've paid significant attention.
Page 38 PREV PAGE TOP OF DOC I might answer the first part of the question series that you had answered that when you look at the percent of the GDP applied to basic research in individual countries you get a sense over a number of years of the quality of living and the impact that it has.
If countries as different as, after the Second World War, Japan and Germany, with a terrible straits of recovery, could invest as heavily as they did, we can see the results now, 40, 50 years later.
Ms. JACKSON LEE. Dr. Barfield.
Mr. BARFIELD. Two points. One to your original questions, in various studies of growth accounting, as to why economic growth occurs, over the last several decades, economists have comethere's no consensusbut they would attribute a half to two-thirds of the source of economic growth in advanced countries, as well as now developing countries that have come along, to the technology factor.
Now under that, though you cannot always see the connection, is a solid basic research effort. Now, often, it is also true, that we have always been on the front line and ahead and so you've had a kind of catch-up.
Increasingly today, I think you are going to find, it's not so muchwe're still ahead in some things but others will be ahead in other things so there will be play back and forth.
Ms. JACKSON LEE. Mr. Todd?
Mr. TODD. I can best answer that by way of an example. We have a very active program in vaccines and virology, primarily because of the good fortune of having the Centers for Disease Control in our backyard in Atlanta. And the basis for that contribution to this workwhich is increasingly being organized around emerging diseases, Ebola virus, Hong Kong avian flu, this sort of thing, understanding these rapidly-moving viruses around the worldthe basis of that comes from molecular biology work that was done at Emery University and Clark Atlanta University and HBCU, University of Georgia years ago. So it's paying off some handsome dividends. I think the quality of life contributions are clear in dealing with emerging diseases and we are very enthusiastic about this whole process.
Page 39 PREV PAGE TOP OF DOC Ms. JACKSON LEE. And that was basic research, risky research, I would imagine.
Mr. TODD. That's correct.
Ms. JACKSON LEE. Anybody want to take a stab in closing at the money angle, where we might look for additional funding?
Mr. BARFIELD. I'd like to make a dissenting point a little bit about the premise of that. I don't have the numbers here with me, I'd be happy to submit them, but through thick and thin, over the last several decades, certainly since the late 1970's, basic research has done quite well in the United States and it comes from a consensus in both parties that there is a substantial government role here and it's not in every year, but if you look at what the universities in the 1980's and early 1990's got, and even through the slight recession under President Bush, still basic research was a protected, relatively protected, entity in the budget. And I think that it will remain. You may disagree about other things beyond basic research, but I think that will be the case.
You know the scientific community occasionally gets hysterical about these things and a couple of years ago they did and for good reason. I think it will come back if we don't do something about entitlements. But so far we've done very well in this country in terms of basic research.
Ms. JACKSON LEE. That is good news. I thank you of relieving us of that burden.
Mr. BARFIELD. I'm vigilant.
Mr. EHLERS. The gentlewoman's time has more than expired.
Ms. JACKSON LEE. Thank you, Mr. Chairman.
Mr. EHLERS. Well, I'm lenient because I took more than my share initially.
Page 40 PREV PAGE TOP OF DOC Starting the second round of questioning, we talked a lot here about economic rationale for basic research. I do want to, first of all, get into the record my belief that our current efforts at what we cause basic research, fundamental science, whatever term you may use, I think is an expression of our innate curiosity and is a strong part of what has made as what we are as individuals and as nations.
And so I think it is important that we not forget that. Having said that, I would just comment on Dr. Barfield's earlier statement which is entirely correct that much of Vannevar Bush's argument for supporting research was related to the military aspects and the fact that we lived in an era of strong military competition, perhaps strong military danger at various times.
I think that has changed, I think, even though there is a good argument for maintaining a strong defense posture, I don't believe our major competition today is military today, so much as economic.
And, it seems to me that there is a strong rationale today, pragmatic rationale I should say, beyond the philosophical one I advanced earlier, the strong pragmatic rationale for supporting basic research today is largely economic.
We have looked at quantifying that and find that is all over the map in the work that has been done ranging from projected rates of return on investments in basic research ranging from 5 or 10 percent per year, up to 4,000 percent.
I'm interested in any comments you might have on that, any information you might have that might lead us to be able to pin that down somewhat better, whether you are aware of some of the recent work that really does a thorough job of looking at the actual rate of return on investment of money that is expended on basic science.
Anyone wish to tackle that one?
Page 41 PREV PAGE TOP OF DOC Mr. BARFIELD. There is no one answer there and there is no one study. You have got a variety of studies and they are still coming out as economists and science policy types have attempted to quantify the work by Ed Mansfield, among others. And it has varied because it is a very difficult thing to measure, to measure the input on one hand and the output on the other. So you are going to get, I think, you get widely different numbers and I think that is going to remain the same.
But what you do haveand it goes back to the point I made about growth accounting and the role of technologyyou do have a consensus among economists that the payoff is substantial, it is large. They don't know exactly what it is but there are very few studies that show that it is either low or that it wasn't worth the effort.
So you will continue to get, I think, a range. Either I or the CED people who have just gone through this exercise could probably give you studies, there are studies on the background of the CED study, and that's right up-to-date, but there is no one answer there.
Mr. EHLERS. Thank you. I happen to agree with you. I'm glad this came out.
Mr. CONRADES. Well, I agree with Claude. One of the problems we had was the lack of definity here but, and as a result of what we did is we went to illustrative examples and asked for case studies. And this report has some marvelous studies in it of the individual corporations and how the benefits that were received from basic research in unpredictable ways.
But one of our members, Ishaq Nadiri, in a working paper, ''Innovations and Technological Spillovers,'' has done some work on showing that there are some consensus estimates from 63 rate-of-return studies that showed social returns on R&D investments, that is returns to society as a whole, are substantially higher than private returns.
Page 42 PREV PAGE TOP OF DOC So he has done some work in this area to try to bring a number of these studies together.
Mr. EHLERS. Thank you. We look forward to receiving that report. Any other comments in response to that? Mr. Todd?
Mr. TODD. Mr. Chairman, we've worked very hard with a number of people to try to come up with a reasonable way to describe this portfolio concept: DRI, McGraw-Hill, McKenzie, Boston Consulting, our own Federal Reserve District, and it is very difficult, I agree with my colleagues. Most people thinkI like the statement nobody thinks it's low or not worth the effort. How high it is, it's hard to tell.
The portfolio concept is appealing but it does have its limitations as an analogy. We can't figure how to go public or cash out.
But it does help us to understand that risk has to be taken at the early stage, that not every idea is going to pan out, just like a venture capitalist hopes that most of his or her investments will become the next Netscape, or Genentech. He or she knows if he doesn't have some failures, he is not trying hard enough.
And that seems to work and the anecdotal evidence is compelling that these investments are worthwhile for the taxpayers.
Mr. EHLERS. Thank you very much. My time has expired. Ms. Rivers, do you have any further questions?
Ms. RIVERS. I do, thank you, Mr. Chairman. I want to go to talk a little about a view that I happen to think is largely wishful thinking that we can erode the federal role in basic research and that will be picked up by corporate entities. Essentially that the free market will fund those activities which are valuable and that we will really lose nothing by moving all of this into the private sector.
Before I so that I just want to make a comment. There was a comment made earlier that occasionally the scientists get hysterical about potential cuts in their funding for basic education and my recollection is the first year I was here, which was in 1995, we did have a budget before us that would have made around 30 percent cuts in applied research and about 20 percent cuts in basic research. Also, the numbers that I have looked at show a continuous and real erosion for funding for basic research in this country over the last 10 or 15 years, so I don't think that people's concerns are misplaced. There are data to support the concern that we are not funding to the degree that we used to.
Page 43 PREV PAGE TOP OF DOC But the question that I have is about the financial ability that someone talked about a few minutes ago, as well as the inclination for the free market to replace the federal role and I'm particularly interested in views about the idea, views of how industry is currently structured. For example, we don't seem to have Bell Labs anymore, we have a different kind of standard. We have a time-driven standard that looks, to me at least, like R&D is mostly ''D'' when it comes to industry itself, and I'm concerned that this is actually a realistic view that is being proposed, even though I hear it repeatedly here in Washington.
I'd be happy to hear comments from you on that. Any of you. Dr. Doyle, why don't you start?
Mr. DOYLE. Developmental aspects can be separated out in a variety of ways. I mean, when you look at some of our leading pharmaceutical companies their project is very target oriented to a particular drug, involves the creation of some basic research in the process. And that can't be denied; but that's done in-house.
If one looks at the pattern over the last 30 years or so of funding for what one would consider to be the baseline, the advancement in areas that allowed discoveries to be made that could be made commercial, there has been a withdrawal of funding overall, not only at the federal level, where the actual real dollars have actually decreased, but if you look at the amount of support that industry has provided it is untargeted projects, the vast majority of funding there.
If you look at the number of foundations that have been created for basic research, for the support of basic research over the past 20 years, one deals with a precious few, a precious few compared to all of the number of private foundations that have been created to look at specific problems that are related to the way we live.
So basic research, because it is hidden behind so many important aspects of what we do, is usually the one which is easiest to discard and disregard and that is of great concern.
Page 44 PREV PAGE TOP OF DOC Ms. RIVERS. Other comments?
Mr. BARFIELD. It's a complicated question and I don't know the answer. But the other side of that is, it may be just where industry is putting its money because the other number to bring out, which I'm sure is in a note in the CED Report and other places, is in the last decade the amountI think it's the last decadethe percentage of university basic research funded by industry has gone from 3 to 6 or 7 percent, so it's doubled. It's still a very small amount but they are putting money there, and it may very well be, if you tie that to the increased university/industry relationships that in some areas or some sectors, I'd defer to my colleagues who may have some opinions about this, that is where the industry is putting its money because it sees the universities as a
Ms. RIVERS. Isn't that funding targeted, as Dr. Doyle said, where there is a desire to work in a particular area as opposed toI would give the example of MRI, the MRI technology which was developed 30 years ago, long before anybody knew how it was going to be applied. What is the likelihood of industry having underwritten that year after year after year without any understanding of how, ultimately, that may prove to be profitable.
Mr. BARFIELD. Well, it goes for various things, but I would suspect that they are betting on the long term to the degree that they are giving money to universities. Now some of that obviously is for a shorter term, but these are going to physics departments or to chemistry departments or to biology departments. So you are getting some of that
Ms. RIVERS. Are they undirected or are they for a specific
Mr. BARFIELD. I don't disagree with the premises that you are saying
Ms. RIVERS. Are those, the support that you are talking about, are those directed for specific research on a specific topic, or are they simply dollars that are then divided by the university into worthy projects?
Page 45 PREV PAGE TOP OF DOC Mr. CONRADES. No, most often it is specific, it is directed, and it is highly unlikely that industry would fund the kind of basic research that government funds, predominantly through the research universities.
That's why in our report we said it isn't just the amount of money that goes into this, but it is also this unique American enterprise, this synergism, if you will, among the participants, and the idea that the federally-funded research conducted predominantly through the university research system is in a context of a discipline or the pursuit of an individual for just a scientific breakthrough. They may have a thought in mind about the downstream application, but it's in their particular discipline or area, and the results of that are widely distributed to be leveraged and capitalized by unknown others.
The industrial side can't find everything in the basic research from this process, but most, as evidenced in the patents
Ms. RIVERS. Isn't the number on that like 71 percent of the patents?
Mr. CONRADES. Seventy-three percent.
Ms. RIVERS. Yes, exactly. Thank you.
Mr. CONRADES. And yet they will fund in universities because the answer isn't complete yet, and so it's highly directed and in collaboration with the university where they think the researchers have a particular expertise that will help them solve, in their context a particular problem.
And if it doesn't solve that, they'll get off it. Actually the results of that might be of great benefit to somebody over here who says well I wasn't looking for that problem but that is very helpful to me.
Ms. RIVERS. Exactly. Thank you. Thank you, Mr. Chairman.
Mr. EHLERS. Do you have any other questions you wish to ask?
Page 46 PREV PAGE TOP OF DOC I have no other questions, and, therefore I want to thank the panel very much for your time, your knowledge, and your willingness to share it with us and the rest of the world. It's been a very, very helpful hearing and I appreciate your coming. Thank you very much.
The hearing is adjourned.
[Whereupon, at 11:40 a.m., the Committee was adjourned, to reconvene at the call of the Chair.]