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[H.A.S.C. No. 107–30]










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FEBRUARY 20, 21, 27, AND MARCH 12, 2002




DUNCAN HUNTER, California, Chairman
W. TODD AKIN, Missouri
JIM SAXTON, New Jersey
WALTER B. JONES, North Carolina
BOB RILEY, Alabama
ROBIN HAYES, North Carolina
KEN CALVERT, California
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MARTY MEEHAN, Massachusetts, Ranking Member
JOHN SPRATT, South Carolina
ADAM SMITH, Washington
JOHN B. LARSON, Connecticut (CT)

Stephen Ansley, Professional Staff Member
Jean D. Reed, Professional Staff Member
Robert Lautrup, Professional Staff Member
Harry Cartland, Professional Staff Member
Katherine Gordon, Staff Assistant

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    Thursday, March 12, Fiscal Year 2003 National Defense Authorization Act—Innovative Technologies

    Thursday, March 12, 2002



    Hunter, Hon. Duncan, a Representative from California, Chairman, Military Procurement Subcommittee


    Mulligan, Anthony C., President, Advanced Ceramics Research, Inc.
    Clark, Lawrence F., Chairman of the Board Sonalysts, Inc.
    Mottur, Peter A., CEO, LiveWave
    Gozani, Tsahi, President and CEO, Ancore Corporation
    Moldt, Vera, Vice President Corporate Development, Ambient Control System
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    Fine, David H., President, CEO, Cyterra Corporation
    Rausch, Carl W., Chairman and CEO, Bipure Corporation
    Hollis, Richard B., President and CEO, Ellis-Eden Pharmaceuticals


Clark, Lawrence F.
Fine, David H.
Gozani, Tsahi
Hollis, Richard B.
Hunter, Hon. Duncan
Moldt, Vera
Mottur, Peter A.
Mulligan, Anthony C.
Rausch, Carl W.

[There were no Documents submitted for the Record.]

[There were no Questions and Answers submitted for Record.]


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House of Representatives,
Committee on Armed Services,
Military Research and Development Subcommittee,
Washington, DC, Tuesday, March 12, 2002.

    The subcommittee met, pursuant to call, at 4:03 p.m., in room 2118, Rayburn House Office Building, Hon. Duncan Hunter (Chairman of the Subcommittee) presiding.


    Mr. HUNTER. The hearing will come to order.

    This afternoon the Military Research and Development Subcommittee will receive testimony from a series of innovative U.S. companies that are developing leading-edge technologies and proposing military applications of those technologies that address a variety of defense modernization needs.

    The work of these companies will demonstrate to members of the subcommittee that they are capable of producing vital defense products rapidly at potentially lower costs, and in some cases, providing new capabilities.

    In the new defense era it is become even more imperative to ensure that small innovative companies be afforded adequate opportunity to make their innovations available to the defense acquisition system.
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    The Department of Defense, in light of the events of 11 September, have elevated efforts to transform our armed services to meet the nation's needs in the century ahead. Many have concluded that this transformation will depend, in large part, on making better use of innovative technologies being generated throughout the private sector, including both defense and non-defense companies.

    Meanwhile, the defense industry has experienced its own transformation over the last decade and one of the unfortunate consequences of the numerous mergers and consolidations is a continued consolidation and disturbing shrinkage of the innovative research and development base within these remaining companies.

    Our witnesses today will demonstrate that small companies are often capable of producing leading-edge technologies that offer great advantages for defense programs. However, companies not already part of the recognized defense industrial base often experience difficulty in penetrating those defense markets and dealing with the complex regulations and procedures presently required by DOD.

    Each of you here today have experiences relating to this problem and we look forward to a discussion of your technologies and your suggestions that might make it simpler for non-defense companies to deal with the Department of Defense.

    Before we get started, I want to turn to my good friend, my ranking member of the subcommittee, Marty Meehan, for any comments he might wish to make.

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    Mr. MEEHAN. Thank you very much, Mr. Chairman, and thank you for scheduling this important hearing. And, thank you to all of those who are going to testify.

    Mr. Chairman, I want to personally welcome Dr. Fine here today. I know, and have known, of the work being done Cyterra Corporation since Dr. Fine founded the company in 2000. And, I have known of Dr. Fine's work even prior to that at Thermal Electron Corporation in Massachusetts.

    There and now, Dr. Fine has established an outstanding reputation in the counter-terrorism and counter-drug technologies field. I believe, that you, Mr. Chairman, have also had your own association with Dr. Fine sometime back exploring the use of trace detection for drug interdiction on U.S. borders.

    I also want to welcome Mr. Rausch of the BioPure Corporation. Mr. Rausch is a holder of 11 patents and that same ingenuity is evident in his company, which has pioneered the development of a new therapy to delivery oxygen to body tissues.

    And, other welcome guests, delighted to have all of you here. Big companies may provide the big-ticket items for the Department of Defense, but it is the small, forward-thinking companies like yours, that provide the vast majority of innovation within the Department of Defense. And, it is those innovations that are winning the war on terrorism.

    We in the Congress have worked with the Department of Defense over the years to provide small businesses with numerous mechanisms for bringing technology from the inventor to the war fighter and to transition technologies from defense to the private sector.
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    The small business innovation research program, the small business technology transfer program, the technical support working group, the advanced technology demonstrators and other programs all testified to the importance we place in churning the research and develop community, so that the best ideas have the opportunity to rise to the top.

    In 2001, Massachusetts received over $91 million in the small business innovative research funding with several hundred companies participating. Yet, I know that we still have a lot of room for improvement. Barriers still exist, particularly with regards to the accelerated procurement of critical technologies.

    I think, Mr. Chairman, we would all agree, that both government and industry would benefit if we could somehow institutionalize the kind of just do it attitude that is prevailing in our current war against terrorism.

    I am also concerned with the Missile Defense Agency's set aside for small businesses this year of less than half of the congressionally mandated 2.5 percent of the budget. It seems that just as the rest of DOD is reaching out to the best and brightest of America, that the MDA is reinforcing its tenure to the big defense companies and I cannot think of a more—an area more dependent on innovation than missile defense and I and other members of the House will be working with the Department of Defense on this set-aside issue.

    Again, Mr. Chairman, thank you for scheduling this hearing. Thank you to all of those who have come to testify and I look forward to a very interesting hearing.

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    Mr. HUNTER. I thank the distinguished gentleman and thank him for his always very important contribution to these hearings.

    And, folks, we have got a lot of folks to listen to today. And, we want you to talk to us directly if you feel free. We will take your written remarks into the record. But, I think the best way for you to let us know what you have got is tell us what you have got. I know some of you have got some brief demonstrations you want to show us, feel free to show and tell whatever you have got. And, summarize your written statements. And, what we will do is take five minutes or so with each presentation and let members ask questions for five or 10 minutes and then move to the next presenter.

    So, we have got a number of companies with us from around the country right now, which have development technological solutions. We have Mr. Anthony Mulligan, president at Advanced Ceramics Research; Mr. Lawrence Clark, chairman of the board, Sonalysts; Mr. Peter Mottur, president of LiveWave; Dr. Gozani, president and CEO of Ancore; Mrs. Moldt, VP corporate development, Ambient Control Systems; Dr. Fine, CEO, Cyterra Corporation; Carl Rausch, chairman of BioPure; and Mr. Hollis, Hollis Eden Pharmaceuticals.

    So, we have got a pretty good lineup here today. And, our first witness is Mr. Anthony Mulligan, he has done some very interesting work in developing state of the art composites that have increase performance while significantly reducing component cost. He has developed a very affordable unmanned aerial vehicle that has just completed a very successful week of testing so that is can be effectively used by our ground forces.

    So, Mr. Mulligan, thank you.
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    And, all of you thank you for being with us and giving us this opportunity to listen to you. And Mr. Mulligan, the floor is yours.


    Mr. MULLIGAN. Thank you, Mr. Chairman, and other congressman. I would first like to thank you for the opportunity to come here and testify today. I have prepared a written statement to submit to the record.

    Mr. HUNTER. Without objection, all written statements will be accepted into the record for all participants.

    Mr. MULLIGAN. My company, Advanced Ceramics Research, was founded 12 years ago with the award of a SBIR program, since that time we have grown to nearly 75 percent of our revenues have come from the commercial sector and 25 percent have come from the defense sector, half of which have been SBIR programs.

    Our company has also just recently formed a joint venture with the Tohono O'odham Reservation in southern Arizona and we have building a new manufacturing facility on the reservation across from the street from the entrance of the Raytheon facility in Tucson.

    This joint venture of 49 percent owned by ACR and 51 percent owned by the San Xavier Development Authority, which is part of the Tohono O'odham Reservation, is going to be our manufacturing arm for our ceramics technologies and other products that we produce.
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    Over the years, just to summarize some of the major accomplishments of our company, we have made the Inc. 500 list. For two years we had a perfect 100 commercialization, commercial optimization index rating by the Department of Defense. We have strived very hard to always have a commercial application primarily so that we could stay in business until we were able to sell to the government.

    We have developed a number of technologies and one of our flagship technologies is called fibrous monolith technology. This technology was initially funded by DARPA and ONR. And, it allows us to produce ceramic and specialty materials the way woods are produced. So, they have a woody, grainy texture.

    What this does it lets materials operate in the 5,000 to 7,000 Fahrenheit degree range or to be extremely tough. In one case, in the oil and gasoline industry, where we have made a major commercial in way we have demonstrated with the world's largest producer of diamond drill bits, Smith Bits Inc. that we have a performance increase of nearly three to one for oil drilling operations.

    We believe that this technology has a number of applications for components used in fighter aircraft, such as a flame holder component and flaps and seals and the afterburner components, two components to replace rhenium metals, which are used in the National Missile Defense Program, two components to be used for a new generation of earth penetrators and replacing depleted uranium.

    In these applications, we believe that this technology, which offers a higher performance and a much lower cost, could save nearly a billion dollars in acquisition costs over the next 10 years. We also believe that future applications of this technology, combined with similar metal technology, which is commonly used for water filtration, can also be used as a new way for building threads and cloth type materials that can kill bacteria and chemical, biological warfare combatant materials; i.e., you could have a cloth that could be resistant to anthrax or to e-coli or other biologicals, which could be the form of a handkerchief or a tent materials, or just even for filtering water.
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    We also have another technology we have developed a small, low-cost disposable drone. We called it a Smart War-fighter Array of Reconfigurable Modules or SWARM for short. One of the advantages of this drone is that it is basically—it costs $2,000 complete with camera and communications package. The drone primarily consists of off-the-shelf technology available and combining that with new technology to allow it to run off of diesel fuel, you can get 24-hours of endurance. It flies at 16 miles an hour, so you have approximately a 1,500-mile range. We started this program in the middle of the summer in July last year. And, we have very quickly come to speed where just the week we have been flying off the coast of Hawaii looking for whales.

    One of the primary initial uses for this drone technology is a low-cost way to look for whales in the water or other marine mammals before the Navy performs certain underwater testing. We believe this technology can have widespread application to many other areas.

    Even in the commercial sector this could be useful for protecting shipping, such as oil tankers to make sure that they do not crash into icebergs or other things.

    Mr. HUNTER. Mr. Mulligan, let me cut in on you for a minute, and let me just warn all my colleagues this is a free for all. So, we are not going to have any—if anybody wants to asks questions, I know nobody here is bashful, we will just jump in and just ask you questions. And, I have got one for you.

    Mr. Lautrup said you build this drone, this little unmanned aerial vehicle for 2,000 bucks?
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    Mr. MULLIGAN. Yes. The first one did not cost us $2,000, but the parts in the first one cost less than $2,000.

    Mr. HUNTER. So, you could turn it out for not much more than that, right?

    Mr. MULLIGAN. We believe that when we start producing them that it will actually be $2,000 or less.

    Mr. HUNTER. Okay. Well, we are all pretty hot on this, obviously, the unmanned aerial vehicle idea in the wake of the predator performance and global hawk coming online now. That is considered pretty transformational. And, you have got one that you have actually—you flew it last week?

    Mr. MULLIGAN. We have flown it last week. Since January we have flown it numerous times in Southern Arizona and then just recently off the coast of Hawaii.

    Mr. HUNTER. And, guys, jump in if you got a question, but how big is this thing?

    Mr. MULLIGAN. It is right here in front on the front table. It has a 48-inch wingspan.

    Mr. HUNTER. Okay. Let me take a look at that. Yes, pick that thing up and bring it over to us here. We are kind of slow.
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    Yes, we want to see this. That is remarkable, yes, go ahead, Mike, jump in here.

    Mr. THOMPSON. What is the flight time of this? How much fuel does that carry and how long can it fly?

    Mr. MULLIGAN. Right now it has about a minute and 10-minute flight time. The motor that we have been running in the lab will currently consume about four ounces per hour. So, a 24-hour flight will take in the neighborhood of—depending on what throttle settings you have, but should last somewhere between 24 and 30 hours.

    Mr. THOMPSON. You can fly that plane for 30 hours at a time without refueling?

    Mr. MULLIGAN. We should be able to. We have not done that yet. We only put in enough fuel for a 45-minute to an hour flight.

    Mr. THOMPSON. Do you think if you put a seat in that, the chairman could fly that?

    Mr. MULLIGAN. I am sure that I could not.

    Mr. HUNTER. He could not, trust me.

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    Mr. Mulligan, give us just your idea, using your imagination, of what ground commanders could use this for, say Marine or Army infantry commanders could use this for?

    Mr. MULLIGAN. Because of the low-cost of the drone, I believe that you can consider missions and concepts where hundreds of vehicles are sent up where these vehicles work in a collective behavior, i.e. because of its long endurance you might put 100 drones that are flying waiting in a holding cue and if you have a ground forces on the ground that are in a forward position, they could be constantly picking these drones off to use for doing a specific mission.

    And, if the drone is, say, on half of its flight capability, they might send a drone back and somebody else can use it for a mission, or, if you have a number of these drones in the air, if one drone is shot down or several or shot down, the rest of the drones would reconfigure to finish the mission.

    In other words, if you have 250 drones that were communicating to each other and using that communication link as a way to communicate to the farthest away drone, then you would have a better security system, better communication security system that would be simpler and easier. But, if drones were shot down in the middle, all the other drones would know where they were relative to each other. So, they could reconverge and reform that communication link.

    The communication link might be a way, where using technology from Sandia, such as our new chem lab on a chip, which can detect anthrax and other biological combatant materials, that mounted on these drones, then you could build an array that would be flying that could tell you where the transgression of a plume of biological warfare combatants or other things that are of concern.
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    Sandia has been working on a technology where they have this chemlab on a chip for $100. So, for under $2,000 you could have hundreds of these things that would be flying around for that type of application.

    Mr. MEEHAN. Mr. Mulligan, I was intrigued by your reference to ceramic for replacement for depleted uranium. Could you elaborate on that a little bit? Obviously, the health hazards and clean-up costs associated with depleting of uranium are well known and problematic and I would be interested in hearing any ideas about viable substitutes.

    Mr. MULLIGAN. We currently have an Air Force SBIR program with our joint venture company for developing fibrous monolith tungsten materials. In the case of depleting uranium, uranium has high-performance because it gets sharper as it is going through the materials it is going through. In the case of materials like tungsten, which do not create long-term environmental hazards, those materials tend to get duller as we are going through a target.

    What we believe with our fibrous monolith processing, similar to how we built the coatings for oil and gas drilling bits, that materials like tungsten can be controlled and fabricated in a fashion so they get the performance of the depleted uranium, but they do not have the long lasting impacts or just tungsten materials.

    We also think that this works very well or has the opportunity of working very well for deep earth penetrators to penetrate bunkers that are at a greater depth under the surface.
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    Mr. REYES. Can we use like C-4 in there to use it as a weapon as well?

    Mr. MULLIGAN. I think that you could put in like a five-inch shake charge or some other type of explosive and as you are approaching of your flight times, you could possibly pick out the best looking target and then you could fly down and dispose of the drone and the target at the same time.

    Mr. MEEHAN. You have referenced a few times, the SBIR Program and I hear just great things about this program all over my home state of Massachusetts and there are so many firms that have greatly benefited from this initiative. Are there any shortcomings with the SBIR Program that we should know about that perhaps we could improve?

    Mr. MULLIGAN. I believe very strongly in the SBIR Program. I think it is a great program. I have always felt that it separates our country from other countries where individuals who are willing to work hard and who have a good idea and are competitive that it does not matter whether they are rich or poor when they start their career, they can create a business. This is how we started our business.

    I think it is difficult for when there is a requirement for smaller companies to have large in cash matchings from other large companies because it requires them to sell their technology to the bigger players before they have had a chance to prove the value of that technology.

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    We really focused on, because of the difficulty of selling to the military, we focus on doing the programs that had a military impact, but also had a short-term commercial opportunity so that we could have product sales and stay in business until we could develop that product all the way through for the military application.

    Mr. MEEHAN. Thank you.

    Mr. HUNTER. Andrew, you just came in late, but this unmanned drone, this aircraft here can be built for not much over 2,000 bucks and therefore we have to get rid of it very quickly. This may threaten a lot of programs here. So, this will be out the door shortly.

    But, I am kidding I am hope. But, anyway, this is quite a feat and what are the legs on this thing, again, Mr. Mulligan?

    Mr. MULLIGAN. 24-hour duration. It will weigh 20-pounds when it is fully fueled. It will fly approximately 60 miles an hour, so you have about a 1,500-mile range. It is basically the—there are two paradigm shifts, one is that we are looking at producing a high-volume of low-cost drones instead of a low-volume of high-cost drones. And, we are also looking at the current ground stations we have been designing have the concept of one person operating 10 drones instead of 10 or 20 or 30 people operating one drone.

    This is possible because we are also operating on the concept that we are flying at 1,000 feet altitude. So, if we need better resolution we fly a little lower. This lets us use very low-cost, off-the-shelf camera and sensor equipment, which, also, because you are flying low, you have the lower resolution equipment. You are not required to have so much data that you have to transmit. So, your communication package is smaller.
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    So, everything gets exponentially smaller and simpler that way.

    [The prepared statement of Mr. Mulligan can be found in the Appendix on page ?.]

    Mr. HUNTER. Okay. Well, Mr. Mulligan, thank you so much, sir. And what we will do is we are going to go through our whole panel and all the members will have a chance to ask questions of all the panelists. But, thank you very much. And, you know what the committee is going to be interested in is your next step, which has been a real problem for innovators which is getting beyond the innovation stage and the prototype stage into production and finding a constituency in the uniformed services.

    So, we are really interested to see how that works.

    Mr. MULLIGAN. Thank you, Mr. Chairman and other congressmen.

    Mr. HUNTER. Thank you very much. And, stick around and listen to the rest of our stuff here because we are going to have some exciting stuff. Our next witness is Mr. Lawrence F. Clark, chairman of the board of Sonalysts. Sonalysts began as a small company doing very sophisticated sound analysis for the nuclear submarine force. They have now diversified to become a leader in simulation for training and education, as well as the development of sophisticated software for the military, including applications being used by special ops right now in Afghanistan.

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    Mr. Clark, the floor is yours, sir.


    Mr. CLARK. Thank you, Mr. Chairman. I appreciate the opportunity to appear before the committee today on behalf of the nearly 500 employee owners of Sonalysts. My testimony will focus on the extraordinary return on investment the taxpayers receive from military R&D expenditures that are placed through government contracts with small, agile, creative corporations.

    Much of this investment has already borne fruit and more of it will in the war against terrorism and the defense of our homeland.

    The name Sonalysts comes from the words sonar analysts. Our work is primarily in the applications end of the R&D spectrum. Our principles areas of expertise are modeling and simulation high technology training, software applications development, multi-media and nuclear engineering.

    Our sales last year were $55 million. In round figures, 60 percent were the Department of Defense, another 10 percent with other federal agencies and about 30 percent with commercial customers.

    We have operations in 10 states and employees who live in four more. Today, 100 percent of our corporation is owned by an employee stock ownership plan and we attribute much of the success over the last 25 years to the existence of that and the fact that the owners are the employees.
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    Several specific examples of our work may be of interests to the committee. The first example is the transformation of military modeling and simulation into computer games. I have got three games, which I will ask Ms. Gordon to circulate to the committee. We have been the primary support contractor to the Naval Underwater System Center for submarine combat simulation modeling for 25 years. Just the first three.

    In 1995 we realized that our expertise would enable us to make a compelling submarine game so we went to Electronic Arts, the world's largest game publisher. 688I, which is one of the three games there, was introduced in 1997 and it has been the best-selling submarine game yet with more than 400,000 copies sold commercially. It was the best combat simulation of the year for 1997 according to PC Gamer magazine and was named the world's most intellectually challenging game by the Guinness Book of Records.

    I particularly enjoy that as a former submariner, pointing that out to the aviators that they may be good hand-eye coordination guys, but when it comes to intellectual capacity the submarine force takes the case.

    Mr. HUNTER. I want to report you to Duke Cunningham. But, I think he will agree with you.

    Mr. CLARK. Without any plans to do so, this highly successful commercial game has also become a significant military value. Every submarine in the fleet has a retail copy and they cost less than $50 apiece when they were sold. And we paid a small amount—we were paid a small amount by the chief of naval education and training to develop a modified version for advanced training use. It did not cost the Navy nearly what it took to create that capability.
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    Our second game, Fleet Command, was introduced in 1999, that is also circulating. It sold more than 400,000 units. It is in use at the Naval Academy to teach tactical thinking to midshipmen. It is been taken to sea by a battle group staff for use as a planning tool. The chief of Naval Operations Strategic Studies Group paid us to make some classified adaptations to the game so that they could use it to evaluate network centered warfare concepts.

    Again, the Navy piggybacked on a seven-figure plus investment by Electronic Arts to obtain a valuable product and they adapted it to military uses directly, and in some cases, made small additional incremental investments to do more with it.

    Last year we won a Phase II SBIR working with another company to take Fleet Command and marry it with their Marine Corp game, a game they made for the Marine Corp to produce an integrated expeditionary warfare training and planning tool.

    Sub Command, the third game that is going around, also has training applications. It was just introduced last fall. My written testimony talks about that a little bit more.

    Quite a return on investment for the taxpayer I would say to take that modeling and simulation capability that have been built over those years, have it come to have a commercial application and the commercial application turns out to have military use.

    The second example for you is the transformation of military training work in general into commercial multi-media. As you all know, military life is filled with training day after day and year after year. The soldiers and airmen and sailors all hope they are not going to have to fight at the bottom line as they are trained to do it.
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    In the early years of our corporation, we had a number of training contracts involving course materials and instructor guides. As technology marched forward, those became increasingly sophisticated, including today training documentation like Tactical Memorandum and Operating Guidelines and other such things that are written with hypertext links and in multi-media formats accessible on classified computer networks remotely, perhaps, maybe with an artificial intelligence instructor in the game.

    We pushed hard over the years to advance those multi-media capabilities, including expanding our knowledge gained with working on Navy training to develop commercial programs for ESPN, the New England Sports Network. Congressman Meehan, we did the Bruins open with the puck spinning around that you may have seen a few times.

    And, we did 34 award-winning videos for Time-Life Medical, which I have and Ms. Gordon can circulate those. They are examples of the high-quality work that we have done and that has also come back to the military. It started out for military training, it turned into a commercial product and now we worked on the presentation materials for the QDR for the Navy. We worked for the Joint Staff on presentation materials and we make training videos and interactive products at various sorts using that high-quality capability that started out with the Navy, went to commercial and now is coming back.

    My prepared remarks contain more detail on multi-media and high technology training. I think the conclusion is clear, the taxpayers have received a handsome return on that investment that they have made over time.

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    The third example of a transformation from Command and Control software in this case to commercial airline dispatch is interesting. During the Cold War we supported Naval Undersea Warfare Center folks in the development of highly sophisticated command and control software applications, one of them in particular relating to anti-submarine search planning.

    And, one of our partners, who was a private pilot experimented with adding regular weather to this primarily command and control for submarines program. We took it to United Airlines and showed them and they became our first aviation customer. It is a very sophisticated command and control program they use in a very large network in Chicago. And, we are teamed with one of Boeing subsidiaries, the largest chart manufacturer in the world is a company named Jefferson Sanderson. We are teamed with them.

    And, we have customers, literally all over the world. Kuala Lumpur, Eurowings, Saudi Airlines, Korean Airlines, Southwest Airlines in the United States, a whole series of them. A particularly interesting example of a customer is the Joint Special Operations Command at Fort Bragg. Our weather station software is being used today to support Special Forces in the war in Afghanistan, a very interesting, it seems to me, return on investment for the taxpayer to have paid us over those years to build command and control software, have it turn into a commercial product, which turns out to be a utility to—

    Mr. HUNTER. Now, how are they using that in Afghanistan?

    Mr. CLARK. The Joint Special Operations Command at Fort Bragg has a weather detachment there. And, they use our—our weather software is on their network there for various planning purposes. We do not always see what they have done with it, putting it on laptops and taking it with them into the field.
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    But, from Fort Bragg they use it for planning and operational control. And, it is interesting, too, as with the airlines, we can a T–1 line and do maintenance and backup support for them. It is harder to do that for the Joint Special Operations Command because it is a classified fact that they are looking at the weather in some particular location.

    The fourth example I would give you is the transformation of naval nuclear propulsion experience, which is not really R&D, but it is of a similar ilk for commercial and other government uses. We have had over 200 former nuclear trained officers and enlisted people that work in our company.

    Customers for services that we provide today include the Department of Energy, the Nuclear Regulatory Commission, electric utilities, and the International Atomic Energy Agency.

    My written testimony provides more detail, but I would note here that we are particularly proud of the work we do to improve safety and reduce the danger of proliferation of nuclear materials from the Warsaw Pact nations and the Soviet Union.

    And, the final example I would give you of transformation is the Naval War College wargaming that we have done over the years turning into a program for working with corporations. For many years we have been the major wargaming support contract in Newport, which is probably the premier wargaming institution in the world. Our core team has supported more than 500 war games including every global war game for the last 20 years.

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    In recent times, a number of federal agencies that had participated at games in Newport and elsewhere have begun to use wargaming techniques for their own purposes. Our agency customers for non-traditional games have included the Federal Emergency Management Agency and the Federal Deposit Insurance Corporation.

    Just since September 11, we have work on a series of defense support games in connection with homeland security analysis in Newport, including work with the New York City Police Department and the State of Rhode Island.

    During the past several years before September 11, we also expanded our wargaming clientele to include a number of corporate customers and we recently entered into a strategic alliance with one of the largest risk management firms in the world, a firm, by the way that lost several hundred employees in New York City.

    Tomorrow, we will begin a corporate war game for a client, which operates a very large entertainment venue. All of the senior leaders of that client will be focused upon the potential terrorists threat with emphasis on chemical and biological agents for two full days.

    We think this is good business, but we also think it is a public service and a return on investment to the taxpayers who indirectly created this capability through many years of funding to the Naval War College.

    We believe that employee ownership has been a critical element in our success. And, I would be remiss if I did not mention that we think Enron does not apply to us. It has been dominating the headline with negative news about retirement plans, but there is another story about small, privately owned businesses where people's retirement security and the national interest has been advanced for many years.
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    I have expanded on my thoughts on that in written testimony. This really is not the place to go into it in detail. But, I hope that when you come to consider retirement reform, you think about small businesses as being different from big businesses in the same way that you do in the R&D field.

    We think that the military R&D expenditures, which you authorize on behalf of the taxpayers, represent a tremendously valuable investment. The war on terrorism and homeland defense are already benefiting from these efforts in ways that no one could have predicted when those expenses began to be made 20 and 30 years ago and more.

    We think that there are a number of things of great value to the taxpayer which large organizations are unlikely to be able to produce or to produce as effectively as small entrepreneurial businesses. We are a strong believer in the SPIR program. We have participated in a number of SPIR contracts and we have also, of course, won a lot of work competitively without the SPIR program. But, it is a terrific program and it ought to receive your support.

    Thank you for the opportunity to explain our work and to provide our view on what lessons might be extracted from our experience.

    [The prepared statement of Mr. Clark can be found in the Appendix on page ?.]

    Mr. HUNTER. Mr. Clark, thank you very much. We are open for questions here.
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    Yes, sir, go right ahead here, Mr. Larson.

    Mr. LARSON. Thank you, Mr. Chairman, it is always great to see another outstanding Connecticut company here before the committee. And, I am sure that Rob Simmons, whose district you are located in, is delighted that you are here to testify as well.

    My question has to deal with then looking at and being familiar with Sonalysts, one of the things that has intrigued the committee and we continue to look at is the issue of distance learning and education.

    And, clearly, with the multi-media approach that Sonalysts has developed in its unbelievable ability to graphically make things come alive, is there a role in the future with Sonalysts and learning capability, not only for our armed services people and families who are stationed abroad, but here at home, and perhaps something that we might even be able to package universally and take to our public schools so that we are producing the core competently trained people who, upon leaving high school would have completed competency in areas that would allow them to man the most sophisticated military assembled on the face of the earth?

    Mr. CLARK. In the interest of staying within the five minutes, I did not go into distributed learning. But, it is an area that we work extensively in. You may be familiar with the fact that Aegis radar system is exceptionally complicated. You can put one of those ships; one of those Aegis cruisers in New York Harbor and you could run the air traffic control problem for all three airports there. That is the level of sophistication you have. And, you have 19 and 20 and 21 and 22-year old young people operating that radar.
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    After the initial experience in the Persian Gulf during Desert Storm and the high clutter environment, there was a lot of trouble and it was assessed a good deal of that was related to inadequate training, not enough time to train people on operating and maintenance and everything else within the allotted time.

    We build a PC simulation device using adaptive training techniques for the Aegis Training and Readiness Center at Doerun, Virginia. And, it produced more hands on instruction per student with no additional instructors. It saved—through an increase—it increased the throughput and it saved the Navy perhaps $60 million in equipment costs that otherwise would have been required.

    We have also used that technology with the Army Field Artillery School and through an SBIR, as a matter of fact with the Air Force for satellite operations training.

    Meanwhile, on the commercial side, we have worked with a series of commercial clients, Otis Elevator, being one of them. Several years ago we built an interactive web site for them called Planet Otis and intranet site for their training of their maintenance sales and support staff worldwide in various languages, very sophisticated tool. And, today we are working with submarine school in London in this very area with using interactive training and distributive learning techniques.

    We have experimented on several occasions with small programs to work with high schools and colleges and to back this further up.

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    Mr. LARSON. How has that gone with—especially I am very interested in the high schools?

    Mr. CLARK. For the most part, it is slower than we would have like. The military, you know, training is the bottom line in many respects for military and it has not gone as fast as we would have liked. I think for a couple reasons. One is, the school district budgets in many places are small and so they are very careful about where they invest their money.

    Second, a lot of the teachers are behind their students. My daughter, who is a senior in college, went to high school with a young man, when they had the graduation he had been running the whole network for the school and when he graduated the faculty at the high school was not sure what they were going to do to have somebody keep track of the network that they had in the school. That is a problem.

    The teachers are not as—

    Mr. LARSON. Huge problem.

    Mr. CLARK.—far as along as the students are in this area. So, between money and caution and, perhaps, some inexperience the schools are not as far along as they could be.

    Mr. LARSON. It is funny that sometimes on this committee we oftentimes, when we get to the floor, find that the issue of defense and the military is often chucked opposed against education. And, I happen to believe that the defense of the nation, its continued economic prosperity are permanently linked to public education.
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    I asked the Joint Chiefs, because we have been asked by a major corporations to pass legislation called H1-B visa so that we can import into the country people that are technologically prepared to deal with the plethora of commercial industries and also, quite frankly, to man our military. And, what is scary is that the private sector takes a lot of our best-trained military and pays them substantially better, and, thus, we have a subset of employees that ends up in the military.

    And, if we are not providing a pipeline of highly trained kids coming out of our school systems, at the public level, are we going to have to import in technological mercenaries to run our own military?

    And, this is a major question that we are going to have to face. So, I think that in the future, I know some may not believe me, but I think in the future this committee is going to be as critical a part of the future of education because of our need. The interlapping of technology, science and math and the need for us to make sure that we are turning out proficient people into the military, as well as the commercial side of things.

    Mr. CLARK. I think there is a substantial opportunity there. I think it will take help. The states, and with the recession right now, perhaps we are going to come out of it, but the state governments are strapped in their budgets and the local districts are squeezed for what they are going to spend money on. And it takes energy and to some degree when the civilian sector hires those people that the military has done a good job of training, we do benefit as a country from having those young people come back and go to work and do other things like the GI Bill did.
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    But, it is a problem. And the military, in my assessment, the military is ahead of most corporations in training. They are willing to innovate and work harder at it than most corporations are.

    Mr. LARSON. Thank you, Mr. Chairman, for your indulgence.

    Mr. HUNTER. Thank you very much.

    And, Mr. Langevin, they have got a presence in your district. Did you have a few choice words for our witness here?

    Mr. LANGEVIN. Not a question, Mr. Chairman. But, thank you, I do want to take an opportunity to welcome Mr. Clark to Washington. And I want to thank you for your testimony here today. We are very proud of the work that you are doing. Your company has an outstanding reputation and we certainly look forward to working with you.

    Mr. CLARK. Thank you.

    Mr. LANGEVIN. Thank you.

    Mr. CLARK. Thank you.

    Mr. HUNTER. Thank you.

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    And, Mr. Clark, incidentally, on the rest of the witnesses, I want to have a—if we could have an answer before this hearing over, Mr. Larson, very insightful in talking about education and its link to our prosperity. I just want you to think about this question.

    Does it make sense for us to start to weight our public assistance systems and the scholarships and the grants to the sciences? So, that if you are going to be a guy like me who was going to take basket weaving, I would not get as much money as the kid that is going to take math and physics.

    Mr. CLARK. I will give you some quick feedback on that just off the top of my head. We, as a federal contractor, of course, have affirmative action obligations in employment specifically for women, minorities, disadvantaged, disabled veterans and other disabled people and we spend quite a lot of energy making sure that we are being as fair as we can in expanding the work force to do that.

    And, one of the things we have done is work with the NAACP chapter in our local regions to sponsor scholarships that are directed at encouraging people to go at a college and study math, science, physics, chemistry and so forth. So, that when they—computer science.

    We have sponsored tours from high school students and church groups and others in the community to come in see what we can show them that is not classified and the things that we do to try to encourage them to think that way.

    Okay. And, I certainly think that the NROTC scholarships and the New Park Scholarships and the Navy Nuclear Power program in general and a whole series of educational efforts that the military makes are of value, not just to the military, but to the society as a whole over the long run.
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    The GI Bill may well have been the best investment America ever made.

    Mr. HUNTER. It worked for me. But, on that question, do you think that kids going into the sciences should maybe get bigger scholarships than the ones who are going to take other stuff? What do you think?

    Mr. CLARK. I could not even get my daughter to take one math course in college. She is a history major, so I probably should take the fifth on that.

    Mr. HUNTER. Okay. Well, thank you, sir.

    Our next witness is Ms. Vera Moldt, Vice President Corporate Development for Ambient Control Systems. Ambient Control Systems is dedicated to developing alternative power sources for remote sensing systems.

    And, Ms. Moldt, tell us about your company.


    Ms. MOLDT. Thank you. Mr. Chairman, and distinguished panel members, thank you for the opportunity to appear before the House Armed Services Subcommittee on Military Research and Development at this hearing on innovative technology on behalf of Ambient Control Systems.
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    Ambient is a research and development company dedicated to the development of alternative energy sources designed to power remote sensing systems. The current war on terrorism and the ongoing need for enhanced military readiness has provided increased emphasis on the need for a reliable remote sensor network for effective detection and monitoring of enemies within our borders and abroad.

    As co-chair of a recent joint industry university sensor network conference, it became increasingly clear that currently the major weaknesses in sensor networks are the batteries, a notoriously unreliable source of power, particularly under sever environmental conditions.

    Ambient Control Systems has developed an innovative battery-free, long-term power source that will support remote sensors under a wide range of rigorous environmental and operational conditions.

    This technology platform is scalable and configurable to specific application requirements. It can be interfaced with a variety of sensors and deployed in a wide range of environments where it will continue to operate for over 20 years requiring minimal maintenance.

    Each year it can be given its own IP address to provide for web-enable command and control. Also, the system incorporates GPS to provide position location coordinates.

    Applications of this technology include intrusion detection for international borders and critical facilities, early detection of wildfires to minimize loss of life and property, monitoring of water level and quality in reservoirs and waterways, passive detection of nuclear, biological and chemical agents, parameter defense for military teams and installations, surveillance systems and our jamming/anti-jamming capabilities.
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    Ambient's technology is extremely robust and can survive sever shock, as well as dramatic pressure changes. It is highly adaptable and can support a full spectrum of sensors.

    This is a patented technology that has been developed over 12 years at an estimated cost of over $20 million. The viability and the robustness of this technology have been proven in commercial irrigation systems and now is being applied to other sensor technology.

    The core of Ambient's solution is an energy collection, storage and management and distribution platform. It utilizes customized, mid-door, photovoltaic technology that can generate energy from extreme low light conditions to one sun light levels.

    So, it can convert light to energy over a wide range of light conditions. This assures maximum efficiency and extended life under a wide range of conditions. And, the energy is stored in high density, extremely efficient super capacitors rather than batteries.

    The system has, as a meantime between failures, an excess of 20 years; the original installations are still running efficiently after 12 years of operations demonstrating the long-term reliability of this technology.

    The platform includes a digital control system, consisting of ultra low-power microprocessor utilized for system control and data analysis. The core technology also incorporates fail-safe mechanisms designed to ensure continued functionality.

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    The platform integrates a high efficiency transceiver for data transmission to control centers either directly or through repeater or satellite links. And, can also be transmitted to a handheld device, as well as a central control center.

    Ambient's currently working with CAL IT Square in California to utilize the program's test bed and to provide an energy platform to communicate sensor data to CAL IT's visualization center, which represents a command and control center of the future.

    Ambient was recently successful in its proposal to scientists helping America program, which is a program, a joint program of DARPA, NRL and the United States Special Operations Command. As a company previously focused on the commercial sector, this represents our first opportunity to migrate our technology to the Defense Department.

    In summary, Ambient's technology, Ambient's energy platform, provides a robust, battery-free, cost-effective, minimal maintenance, long-term alternative power source that can support a wide range of remote operations.

    Our core technology can be a powerful national asset for a wide range of homeland and military defense systems. Like other small companies, we need additional funding to accelerate application developments. In this regard, we request your support for continued R&D funding for a small innovative companies like Ambient, which have the potential for providing cost effective, long-term reliable solutions to enhance our national defense.

    We have a demo unit available with us, which represents our fire alert system, the system for detecting forest fires, and that is this unit on the table that includes the photovoltaic energy collection unit, an onboard processing and radio communication system and the sensor that we developed to detect forest fires. And, that is significant, in terms of most forest fires cost in the millions and billions of dollars. And, the reason is that they are not detected for hours, or even days. And, our detection is basically within minutes. So, it is a very cost-effective—
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    Mr. HUNTER. You could strap that on to a tree, for example, in a remote area in the national forest and monitor how big an area?

    Ms. MOLDT. It has a range of a quarter of a mile. So, in both directions, we are talking about a half a mile of detection and it can be put on a post and also this unit, for the purpose of the Park Service, has an emergency call button with GPS coordinates so if you have a lost hiker, they can press the call button and you will have the location of the hiker in order to begin the rescue.

    Mr. HUNTER. That is very interesting. We may need a few of those in the Cleveland National Forest because I think we had something like 30 or 40 forest fires caused by campfires last year.

    Ms. MOLDT. Yes.

    Mr. HUNTER. A lot of them in the back country, yes.

    Ms. MOLDT. Yes, and if you had early detection, you would be able to extinguish those fires very rapidly before they go out of control

    Mr. HUNTER. Yes.

    Ms. MOLDT. And, so, in a sense what we are doing is we are bringing that same response time to the forest that now exists in the urban areas.
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    Mr. HUNTER. Ms. Sanchez, did you have a question.

    Ms. SANCHEZ. Not on this one.

    Mr. HUNTER. Okay.

    Mr. Chairman?

    Ms. MOLDT. Yes, sir?

    Mr. HUNTER. Is there a camera attached to this or it is just the sensor?

    Ms. MOLDT. This one is a sensor that will pick up the signature of the fire and it is designed in such a way that it continues to do the 360 degree view and comes back and re-checks in order to assure that it is a fire to minimize false alarms. So, it can distinguish a wildfire, for example, from a campfire, from sun or from some other source. So, it picks up the fire's signature in this particular case.

    Mr. HUNTER. Now, this also, you could utilize this to detect movement?

    Ms. MOLDT. Exactly.

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    Mr. HUNTER. In a—
    Ms. MOLDT. For border detection.

    Mr. HUNTER. And, this can last unrefueled, if you will, for how long?

    Ms. MOLDT. Over 20 years in excess of 20 years with no batteries and virtually no maintenance.

    Mr. HUNTER. You are going to make Maytag repairmen out of these maintenance guys on the sensor system.

    Ms. MOLDT. And, it is so clear from all the presentations that have made at various technical sessions on sensors systems that the weak point are the batteries. They are notoriously unreliable, and particularly under sever environmental conditions.

    So, this is the missing link and we have the solution. And, it is proven because we have used it in irrigation systems that are still operating. And, now we have basically taken that technology and we are ready to interface it with a variety of sensors for homeland defense and for defense readiness.

    Mr. HUNTER. Now, if you had these on a border, for example, to detect movement.

    Ms. MOLDT. Yes.
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    Mr. HUNTER. Or to detect people, how far apart would you put them?

    Ms. MOLDT. You would have them—

    Mr. HUNTER. In remote areas.

    Ms. MOLDT.—a half a mile apart. A half a mile apart across the bordes.

    Mr. HUNTER. What could they detect? Could they detect any movement, a person walking across?

    Ms. MOLDT. Yes, they can—well, you could set them up to detect any number of things. You could set them up to detect movement. You could set them up to get the heat signature from the body and with additional development in terms of some artificial intelligence and networks, you could have them do a more precise image to determine the, you know, specifically a human being and more characteristics of that particular human being.

    Mr. HUNTER. Okay. Very good. Any other questions, folks, for Ms. Moldt?

    Mr. LANGEVIN. Just one question, could you got into a little more detail on the power source and how it is able to operate for 20 years and a little more in-depth on the technology it uses?
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    Ms. MOLDT. Yes. What the power source does, it basically takes ambient light and it can take anything from as a very dim room light condition or to full sun and convert that light to energy. And, then that energy is stored is super capacitors where it is used to power the remote sensors.

    And, to give an example, if you have your handheld calculator, that calculator will operate in very dim room light. But, if you take that calculator outdoors in full sun, it will be destroyed. Whereas, the technology we use, which is a patented technology, which we call mid-door photovoltaic technology, can go that full range from a dim room light or moonlight virtually to full sunlight and continue to collect the energy and continue to store it in the super capacitors that then continue to power the remote operations.

    Mr. LANGEVIN. Thank you.

    Mr. HUNTER. How much is one of those units? What could you produce those for if you are producing a fairly good quantity?

    Ms. MOLDT. Well, we are looking at approximately $3,000 a unit.

    Mr. HUNTER. And, you could have a similar unit that would detect motion, for example, people crossing the border?

    Ms. MOLDT. Yes, but that unit we still need to get—we are in the preliminary design phase and there is where we need additional research and development funds in order to accelerate the development of that technology.
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    Mr. HUNTER. Okay.

    Ms. MOLDT. So, that was one of the reasons I was seeking your support for that.

    Ms. SANCHEZ. Mr. Chairman?

    Ms. MOLDT. Because it—yes?

    Ms. SANCHEZ. Just hypothetically, if you were able to create this and put it every half mile at the border, the chairman and I have the same—we come from the same area. So, could you give us an estimate of what you think, once in production, that unit cost might be, a ballpark? And, more importantly what would be the behind the scenes in order to analyze that information on time, on—

    Ms. MOLDT. To incorporate the more sophisticated sensors we might be looking at somewhere about $5,000 a unit. And, this is a ballparking it at this point because we need to really go through the costing of the various sensors and the integration of those sensors.

    We are talking about the individual sensing, $5,000 a unit, but the individual units that would be placed at approximately every half mile. And, that—

    Ms. SANCHEZ. And, that would not necessarily be motion, it might be thermal, or—
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    Ms. MOLDT. We would maybe be looking at multi-level security in order to make a full detection, first of all you sense something has come across the border, then you distinguish it is a human rather than—

    Ms. SANCHEZ. An animal.

    Ms. MOLDT. —an animal. And, so you would have various sensing levels. So, you would be talking about multi-level security that would be integrated. And, then—

    Ms. SANCHEZ. How would you envision these units taking that information and getting it back to somebody who could do something about it fairly quickly?

    Ms. MOLDT. Yes. Then the unit has an onboard radio communication system that then would transmit that information through repeaters either directly to a command station or it could be up-linked to a satellite and then could be received either at a central command station or to a handheld device for field personnel.

    And, so you would have the GPS coordinates of the intrusion and you would be able to then intervene at that intrusion point very efficiently. And, to give you—we do not have the figures on the current intrusion systems at the border, but to give you a general idea in terms of the use of this in the forest.

    At the present time there are proposals to increase underbrush clearance. That is thousands of dollars an acre. And, then for the cost per burned acre is approximately $1,600 per burned acre based on historical estimates.
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    And, we are talking about $10 an acre fully installed as our alternative. So, it is very cost effective. Because when you are doing underbrush clearance at thousands of dollars an acre you have to continue to have that recurring clearance, as opposed to putting out—installing systems are $10 an acre and it is out there for over 20 years and continues to operate.

    And, then when you look at border issues, you are looking at very costly manpower that is utilized for intrusion detection. And, you do not have full coverage when you are talking about costly manpower to do patrols. So, with this system you have a more complete detection system, more cost effectively.

    Mr. REYES. One of the issues with border enforcement is the remoteness which makes it susceptible to sabotage and the—not so much the elements, but people getting a hold—how high does that—can it be mounted and would it reduce its effectiveness?

    Ms. MOLDT. It can be mounted because the angle at which it has a field of view would be adequate for coverage. But, let me mention that in this particular case, the system is tamper proof. It picks up vandalism. So, if someone tries to take out the system, you in a sense, have detected an intrusion and you have the coordinates of that intrusion, and so that you can deploy your staff to that intrusion point.

    Mr. REYES. But, because you are on the border, there is such as plinking and they can come along and shoot it with a rifle and will that neutralize it?

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    Ms. MOLDT. And, that would then show that that system has experience vandalism and that would come in to the command center and that would indicate an intrusion. Through any, whether it is shooting at it or trying to knock it down or whatever, all of that would indicate a vandalism incident and would be reported in.

    So, you would have an intrusion point right there, a detection.

    [The prepared statement of Ms. Moldt can be found in the Appendix on page ?.]

    Mr. HUNTER. That validates your—that invalidates your 20-year warranty.

    Mr. REYES. I think so.

    Mr. HUNTER. Once it has been shot.

    Well, Ms. Moldt, thank you very much. Greatly appreciate your presentation and please hang around and listen to the rest of our presentations today.

    And, coming up we have—

    Ms. MOLDT. Thank you very much for the opportunity.

    Mr. HUNTER. Well, thank you.
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    And, coming up we have Mr. Peter Mottur, president of LiveWave and Mr. Langevin is going to introduce him.

    Mr. LANGEVIN. Thank you, Mr. Chairman, and I would like to take this opportunity to welcome Peter Mottur from LiveWave Corporation here today before the House Armed Services Committee. Peter and I had an opportunity to speak earlier today, but the reputation of his company precedes him.

    I think, Mr. Chairman, you are going to see some very interesting things today, in particular LiveWave produces a multi-media accessibility to building security, as well as providing support for—potentially support for first responders in real-time video using unique software to tie a number of different technology in together.

    It is an outstanding Rhode Island company. We may be a small state, but we have big ideas and a big presence in the technology field and certainly LiveWave is a unique demonstration of that.

    So, Peter, I want to welcome you here today and look forward to hearing from your testimony. Thank you.


    Mr. MOTTUR. Thank you, and thank you, Mr. Chairman, and members of the committee. It is a great honor to be asked to testify here today to talk about innovative technologies can be used to support our country's effort in the war on terrorism and in homeland defense. So, I appreciate the opportunity.
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    LiveWave has developed and is marketing and selling a product called VirtualPerimeter. And, after my remarks I will give a hands-on demonstration of VirtualPerimeter. I have brought a camera, for example, and you can see from the projector here I have been able to display a demonstration of how our technologies are used.

    What is VirtualPerimeter? VirtualPerimeter enables government, military and enterprise level customers the ability to monitor and protect multiple, critical assets over wide area networks. We have been able to develop technologies to control robotic camera systems and be able to transmit video from those cameras over networks and virtually any type of network. So, in effect, people can access video over standard infrastructure that we are all familiar with here today, the Internet, for example, intranet, private networks, wireless devices and so on.

    The ability to access and control these cameras is critical, especially when monitoring assets that are spread out. We then take our core technology, being the software to control cameras and we coupled those third party complimentary hardware and software, in particular we are working with a company in Tewksbury, Massachusetts called Avid Technology, and Avid has developed—they are actually the pioneer in digital video, editing and video enhancement. They have been around for quite some time. And, taking their core technology for back-end video management and analysis and tying it into our front-end for controlling cameras and distributing video in real-time has created a very compelling system that we are calling VirtualPerimeter.

    With VirtualPerimeter, critical surveillance can be operational based or it can be deployed to emerging hot spots. We also support a wide range of cameras for indoor, outdoor or extreme environments. So, we can support things like standard outdoor cameras or hardened explosion proof cameras, radioactive harden housing, thermal imaging cameras, night vision cameras, even submersible packages.
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    So, we have a wide range of diversity in what we can support. We also support cameras from pretty much all the top camera manufacturers on the market today, which gives us a lot of versatility and the ability to tap our system into legacy infrastructure, which we know is very important when dealing in large scale surveillance operations. It is to be able to have our system compatible with the existing infrastructure that is in place today in many locations.

    With our system remote users can then gain access to that video and control as I mentioned previously over any type of network allowing authorized personnel to have secure access. And, then be able to handoff the control-end video to multiple levels of jurisdictions.

    In other words, the idea behind our control system is we have developed a cueing system and with that cueing system we have different security levels that authorized personnel can get into control based on their security level or their level of authorization. So, in a military application, for example, different, you know, different ranks could override control in the event of an incident or crisis to ensure timely response and be able to make decisions very quickly and rapidly.

    In a homeland defense scenario that would be a little different, it might be first responders coming to a scene being able to, again, hand off control to the proper jurisdiction, whether it is the local police, the state police, the FBI even, if it is an airport, the FAA, the NTSB and so on. So, that anyone with a network access can tap into the system in a matter of seconds, get control and get video, and something I will demonstrate momentarily.
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    Today, there are several uses for VirtualPerimeter and LiveWave's technologies. Just a couple months ago LiveWave was selected by NBC News to put a camera, a broadcast camera system at Ground Zero in New York, our cameras being fed via fiber back to MSNBC and from there it is offered as a pool camera to several other cable networks and broadcast networks.

    We are also working with several municipal police departments, port authority, transit systems, military bases, that have requested pilot programs and other types of implementations to demonstrate the technology and work towards a large full-scale implementations.

    One example of this is the Massachusetts Bay Transportation Authority in Boston. We are working specifically with the group that runs the subway system and we have deployed a pilot system in their subways to monitor the platforms. And, in particular, they are working with a DOD-funded program, actually developed by the DOE called PROTECT. And, PROTECT has developed chemical sensors specifically by Argon National Labs and Sandia National Labs. And, they have asked LiveWave to participate in that program to work with them to tie video into their chemical sensors.

    One thing they have realized is the sensor data is very critical, but without a visual type of representation you can get a lot of false positives. So, having a live video and control tied in with sensor data is a critical component.

    And, as I listened to the previous witness from Ambient I thought of many applications that we could tie her company's sensors into VirtualPerimeter. Essentially VirtualPerimeter is divided into five components. The first component the robotic camera systems themselves, and as I mentioned, we support lots of cameras. The second being different sensors. And, in addition to smoke and fire sensors, as we have heard about, or heat signature sensors, thermal sensors, there is also, you know radioactive sensors, motion sensors, chemical and biological sensors. There is a wide range of commercially available or commercial off the shelf products that can be tied into VirtualPerimeter.
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    The third component is the network side of it and being able to, as I mentioned, distribute the video and the sensor data over a wide area network. And, the fourth component is being able to tie that into an emergency response system. So, that when a perimeter is breached or a sensor detects unusual activity that information can be relayed instantly to the proper personnel or proper authorized people to respond to the incident in very real time.

    And, finally, the fifth component is the video analysis tools, storage, the retrieval and the analysis. And, as I mentioned, Avid Technology is a leader in high resolution, digital video storage, real-time analysis and the ability to really support literally thousands of cameras in real-time.

    Mr. HUNTER. Mr. Mottur, let me run a live scenario past you here. The border between the United States and Mexico, large expanses of desert with not enough personnel to man those expanses, how would you suit up a system, obviously, we are suiting up some systems. We have some camera towers going in. But, would you do to establish a perimeter and what kind of cost would you expect to incur?

    Mr. MOTTUR. That is a good question, VirtualPerimeter is actually not—that is an ideal application for VirtualPerimeter and really the best way to do it is to couple it with sensor technologies we heard of earlier, and other types of sensors that can detect motion, can detect thermal or seismic or whatever type of variables are required, tie those into cameras, robotic camera that can be spread out over this great area that you are talking about.

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    So, that when a sensor is triggered or it goes off, the proximate cameras that are near that sensor will automatically track to that location and then track the object or the moving object, let's say, within that location.

    So, let me just describe how that scenario works. The alert goes out, the cameras track the object.

    Mr. HUNTER. Well, what do you mean the alert goes out?

    Mr. MOTTUR. Excuse me, the sensor goes off.

    Mr. HUNTER. Okay.

    Mr. MOTTUR. The cameras track to the location, an alert goes out to both local and remote operators that can access that video and determine whether it is a false alarm or if it is a potentially threat. And, then, meanwhile, the back-end storage is going on where after the fact they can go back in and analyze that video to determine what occurred and provide other forensic analysis tools on that video such as digitally enhancing the image to extract evidence out of it.

    Mr. HUNTER. Okay. Let me ask the greatest border patrol in history here, the great Silver Reyes, Silver, they are doing—we have a system.

    Mr. REYES. We have that system now.

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    Mr. HUNTER. But, does it operate off of sensor?

    Mr. REYES. It does operation—well, what happens is the sensors are embedded in the ground, the alert then the nearest camera is slaved to the sensor and it goes to it, and it alerts the counsel back where somebody monitoring it and then they take over from there manually to either zoom in or zoom out or look around.

    You know, that is how we find out if it is a cow or goat or people or if they are coming in with weapons or anything like that. So, the key to that is the low light level camera because without that then all you have got is an alert and you have got the similar situation then the previous person testified.

    So, we have that today on the Southern border.

    Mr. MOTTUR. Right. And, one of the big differences between your current system and what we have is not only the ability to do what you described, but also to then be able to transmit that data both the sensor data, the video data and the control capabilities offsite to a remote operator. And, then being able to provide a real sophisticated back-end analysis package so that in real-time high resolution recording can be retrieved or images can be retrieved and analyzed in real-time.

    So, it is similar and one thing I would like to note on that is that our, as I mentioned earlier, because we support a lot of legacy type of systems in different camera, we would be able to tap in to a system like that very readily and that is what we were able to at MBTA in Boston was tap into their current camera infrastructure and fiber infrastructure immediately.
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    Mr. HUNTER. Well, now, Silver, the cameras that we have got some places on the border, once a sensor goes off, you say the camera is slaved to the sensor tip-off area.

    Mr. REYES. Right.

    Mr. HUNTER. You actually have a border patrolman sit in the station at that point who can see the video picture of what is happening, right?

    Mr. REYES. Right.
    Mr. HUNTER. He sees in real-time the picture.

    Mr. REYES. Right. It is either a border patrolman or a—the dispatchers are the ones that we use for that because of the cost factor. And, it also has the capability to remote it anywhere you have got a need. You know, they can be working the border right now and if we had a feed here you could see it real-time. But, it does not have, that I know of, and I do not know that we would need, I do not know how much it adds to the cost, the analysis portion of it.

    It does have a recording capability and we do take it to court to prove the entry and the number of people and identity and all of that.

    Mr. HUNTER. So, you take the video to court?

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    Mr. REYES. Right.

    Mr. MOTTUR. I would be interested in hearing more and to answer your previous question, Mr. Chairman, about the cost. The costs do vary depending on the type of camera and the specific application. But, it typically will range anywhere from $6,000 to say $12,000 per unit. Of course, on a larger scale, you know, a larger scale deployment, this cost would be driven down.

    Mr. HUNTER. Okay.

    Mr. Meehan?
    Mr. MEEHAN. Mr. Mottur, I apologize I was at another meeting I got in and you discussed Avid Technologies, which is in my district. Could you very briefly recap how Avid fits into the VirtualPerimeter?

    Mr. MOTTUR. Right. We partnered with Avid Technologies. We actually began discussions with them last summer, I think is was about July. And, what we realized at that time is that Avid, as we were building out the components of VirtualPerimeter, we needed an intelligent back-end system that could manage large amounts of data in real-time. And, video, as we all know, is very data intensive, requires a lot of storage, especially at a high resolution.

    Avid, as you know, being in their district, they have pioneered the industry for digital video, editing and storage. And, they have been able to offer a lot of tools to LiveWave that really compliments our front-end, being the live cameras and control.
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    They have also added other components for video enhancement tools for like analyzing video. Like, say there is a dark video that you need to extract a license plate off of or an image or a face. They have some very sophisticated alga rhythms to extract material off of videotape that might be, you know, somewhat unclear in its normal state.

    And, Avid has also has created a lot of components that—or patents, I should say, that also are applicable to VirtualPerimeter. And, one of them being something they call RetroLoop, which is a continuous recording loop, which allows you to basically record video continually all the time and then be able to only just extract the information that is critical.

    One thing I would like to state that I think is really important when understanding really the large scale application for VirtualPerimeter is everyone is talking about thousands of cameras and, you know, we need thousands of cameras to help protect our country and be able to monitor potential hot spots abroad.

    But, in reality with thousands of cameras, under most scenarios, as we just heard, you need then hundreds of people, or perhaps more, to then look at all this video. So, we found it very important to create an intelligent surveillance solution that only alerts operators of a potential incident. And, be able—and can automatically track objects that are moving and automatically track the information so that we eliminate the need to have thousands and thousands of people looking at a bank of monitors, for example. And, that is one thing that LiveWave and Avid have addressed in developing VirtualPerimeter and something we look forward to continuing continual R&D on.

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    Mr. HUNTER. Mr. Langevin?

    Mr. LANGEVIN. If I could, just to help me to understand a little more, does the software technology allow the computer to identify the type of object that it is actually looking at? Or, does it still take a human being to look at the video to determine that?

    Mr. MOTTUR. That is a good question. The current software right now does not necessarily distinguish a lot of sensitivity between objects. But, there are some other components that we are adding into VirtualPerimeter that have a greater degree of sensitivity. And, those are not quite commercially available. But, there are known alga rhythms for doing things like anti-loitering alga rhythms. I know of one, for example, they are using in Japanese subway systems to determine when someone has been sitting on the platform for too long.

    That could be used in an anti-terrorist initiative as well when a suspicious suspect enters a location and they are just hanging out for, let's say, a period of time. Again, when you have thousands of cameras, it is not likely your security officer that is monitoring these cameras can actually notice that that person has not moved for 10 minutes or 20 minutes. So, once again, integrating sophisticated alga rhythms like that one to alert the operator that, you know, this object has been static for X period of time is another way to build a more intelligent or smart surveillance solution and something we are working towards.

    And, we are looking forward to partnering with other companies that can add value to what we are doing.

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    Mr. LANGEVIN. Thank you.
    Mr. MOTTUR. Well, I would love to give a demonstration if we have another couple of minutes, unless there are—

    Mr. HUNTER. Go right ahead, but we do need to move along as we have got some folks behind you here.

    Mr. MOTTUR. Fantastic. I have a camera set up—

    Mr. HUNTER. I did not think that was all you had. I was wondering is that the only thing he is going to show us. Is that the Eagle?

    Mr. MOTTUR. Yes, you like the Eagle? I did set that up because I wanted to have some sort of image there. But, basically what I have, as you can see on the screen over here is I have camera control through just the standard web browser and that is another thing to keep in mind that is important in our system is we use open standards, so that people can get access to this.

    Of course, with security and encryption, but the ability to use a standard web browser means that the client or the end-user does not need any special software to download.

    One other thing we have developed is a precision type of control system. For example, we have a camera across from Logan airport. It is about a mile and a half away from the runway. And, our control is so precise in the latency is so low, that you can actually track planes taking off and landing in real-time, from, you know, a mile and a half way zoomed in all the way.
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    So, this is like a virtual joystick, if you will. If you are very close to the center you can move slowly. If you are further from center, you can move faster. And, the ability to of course, zoom in and zoom out. And, that is basically, I wanted to show how that worked.

    The second thing I wanted to demonstrate is our application software, which allows you to set up things like user accounts where you can put in authorized personnel and assign them a security level. And, then what we have also developed is something we call hierarchical control, as I mentioned, the security level. And, with our hierarchical control you can have different levels of users and assign them different types of perimeters for what they can do and cannot do. And, that is what this system does right here.

    And, the final thing that I wanted to show is we have just recently added camera control and video to handheld wireless devices like this one. And, basically what I am going to show you right now is the ability to take control of this camera right over here and just loading right. And, the idea behind this application is that first responders to a scene can actually see what is going on before they go into a potential threatening environment.

    This can be used in a military application, or, as I mentioned, the first responders to a potential crisis, let's say, in a subway or in a building. Last week when I was demonstrating again to the MBTA in Boston, we met with the Boston City Police, Fire, EMT, EFTA, as well as the folks from Argon and Sandia who are all working very hard to develop an emergency response system that can, again, reduce threat to both their personnel and then ensure public safety.

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    So, what I have got here is the ability to move this camera around in real-time. I just go to load it up here real quick. And, essentially, this ability, we feel, will help officers in the field reduce any potential threats. So, that I am doing here is just dragging the stylist in real-time across the screen and able to move it much like I did on the browser that I had up there before.

    And, again, I have got fluid control and I can basically be without wires and walk anywhere. And, as wireless technology expands in our country and elsewhere, the ability to use this in real practical applications becomes more and more prevalent.

    Mr. LANGEVIN. If I could, I just had a question for you, Peter, you do a myriad of surveillance systems out there right there, their own hardware and software use across the country, with each of these systems, there may be more than one type of camera system, for example, used currently for different purposes. And, I guess I see a bit of a dilemma.

    Should we replace these systems, particularly as we enter this, you know, expand this war on terrorism and engaging in new technologies. Should we replace the systems entirely and used a new more advance system or is there a way to make or use what is already in place and kind of augment it and make it sufficiently effective to combat, you know, current threats?

    Mr. MOTTUR. I think it is very important to be able to support the current infrastructure and it is already in place. Most of the customers we are dealing with have already invested a tremendous amount of money in their infrastructure, their camera networks. They typically do not want to throw that away. They may want to improve it. And, so with our system, the ability to have a phased in approach to swap out old cameras but continue to support those old cameras in the infrastructure or in our system, we thinks very compelling, and, also very practical.
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    So, that the investment that these different customers have made, both government and private, can be maximized.

    [The prepared statement of Mr. Mottur can be found in the Appendix on page ?.]

    Mr. LANGEVIN. Excellent.

    Mr. HUNTER. Mr. Mottur, thank you very much, sir. And, I appreciate it and I recommend that you hang around and listen to the rest of our presenters.

    Mr. MOTTUR. Thank you, Mr. Chairman.

    Mr. HUNTER. Appreciate you.

    Mr. MOTTUR. I thank the members of the committee.

    Mr. HUNTER. And, ladies and gentlemen, we have Dr. David Fine, president and CEO of Cyterra Corporation. They have developed several technologies to detect mines, chemical and biological agents, obviously, a hot item on our R&D plate.

    So, Dr. Fine, please begin. And, your written statement is obviously included in the record; so do not feel like you have to read it. Just let us know what you got and show us what you got.
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    Dr. FINE. Mr. Chairman, Congressman Meehan, members of the subcommittee, I really appreciate being here. Cyterra is a company that we formed in July 2000 to focus on developing technology to combat terrorism, very appropriate in hindsight.

    On December 17, last year Corporal Chris Chandler, in Kandahar stepped on a landmine and as a result lost his leg. The area had been swept for mines using standard metal detectors. Unfortunately, the metal detectors do not detect plastic mines. What happened to Corporal Chandler in Kandahar need not happen again. It need not happen to U.S. and allied servicemen and the children who may play in those fields in Kandahar, which Corporal Chandler helped liberate.

    The reason is that the Army has developed a mine detector. I have mark up of it here. It weighs about eight pounds. It is called HSTAMIDS. It folds up and it differs from any other mine detector previously used.

    Mr. HUNTER. That is a mine detector that is actually in inventory in the Army now?

    Dr. FINE. It is going into production as an emergency buy the Army, going into production. There are about 200 units being acquired right now for use in Operation Enduring Freedom
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    Mr. HUNTER. Okay.

    Dr. FINE. This system combines both metal detection, which is the standard mine detector with ground penetrating radar. It fuses the two technologies and in tests performed by the Army it has been shown that we can find virtually 100 percent of the mines, both metallic and non-metallic, anti-personnel and anti-tank. And, the false alarm rate is extremely low.

    Because of the success this is why they are being used. And, one of the things I wanted to ask of this committee and the Army is to try and accelerate the HSTAMIDS production. The 200 units are really not enough. We would ask that the committee authorize an additional $10 million next year's appropriation to buy another 800 of these units. Those 800 would represent only 70 percent of the Army's inventory of 14,000 carrying metal detectors, which are about to be made obsolete.

    This same technology, if I could stand up for a moment, has other applications. The same head, sweep head, is used to sweep a person. Would determine whether that person had explosives strapped to them as a potential suicide bomber.

    Mr. HUNTER. When you are talking, you are going to have to pick that mike up so we can hear you. I am sorry, Dr. Fine, but let me ask you—

    Dr. FINE. The same—

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    Mr. HUNTER. You can sweep a person.

    Dr. FINE. You can sweep a person with some modifications to the system. And, you could determine whether that person had plastic explosives on them such as—or any explosives such as a would-be suicide bomber or non-metallic weapons. This is an application directly from this with very little modification to the system, just form factor.

    In the written testimony I listed many different technologies, which Cyterra is working on in the anti-terrorism field. I wanted to mention just one more. I know it is late and the hour is—everyone is tired. And that is the detection of biological warfare agents, as we learnt last year the present time, the only way we know whether we have been under a biological warfare attack is when, everybody here, someone gets sick, a lot of people get sick and they start dropping.

    It need not be that way. We have just finished a contract with the U.S. Marine Corp which we developed capability. I have got some of these little disks here. They are very small made of manifest carbon. This material can be—these little disks can be wore on a person, put in a ventilation duct and the analyses to go with them can analyze up to 700 of these disks a day. It takes about two minutes to do an analysis.

    And, what it does is it tells you what chemical agents and what biological agents you have been exposed not, not just the specific anthrax, but the whole spread of biological warfare agents.

    Mr. HUNTER. Now, that can tell you—that little button tells you what you have been exposed to?
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    Dr. FINE. It tells you that you have been exposed to a spore that looks like anthrax or a virus or a chemical warfare agent.

    Mr. HUNTER. How does it do that?

    Dr. FINE. The disk absorbs the compound or the biological agent. It is very absorbent material. It is brought to the analyzer. The analyzer heats it up, and we do a chemical analysis and other analyses on the fragments and from that we can determine if it is a chemical agent or if it a biological
agent and which type of biological agent.

    We have done as we get at which type of spore it was in terms of which strain, but we can tell you something has happened here. There is an exposure and it looks like anthrax.

    Mr. HUNTER. And, how much time does it take?

    Dr. FINE. The analysis itself takes two minutes. The collection if you wear it, there is enough sensitivity for a 24-hour period. If you put it in a ventilation duct or you put a little blower behind it, five, 10 minutes is enough to tell you if it is a large exposure.

    Mr. HUNTER. So, how much are those little acorns?

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    Dr. FINE. They are about a dollar each. They are reusable.

    Mr. HUNTER. You could plant one of those in this little UAV that was presented to us early on and fly it around—

    Dr. FINE. Bring it back and—

    Mr. HUNTER. Yes, fly it over your lines and into the area of operations and bring it back and analyze the little acorns, right?

    Dr. FINE. Yes, very much so.

    Mr. HUNTER. That is remarkable. Now, those are ready to go?

    Dr. FINE. We have built two of the readers. This is ready to go. We are able to do demonstrations of this technology. One of the systems is at the Bethesda Naval Hospital under evaluation right now in Washington.

    Mr. HUNTER. If you wanted it to produce a lot of those for deployment, how long would it take you to produce a thousand, couple thousand of them?

    Dr. FINE. It would be the order of six months at standard commercial equipment. Most of it comes from other manufacturers. We would put it together in the right way.

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    Mr. HUNTER. Has that been validated by the services?

    Dr. FINE. The program was funded by the Marine Corp. It has not formally been validated, no. It was funded and supported in the contract, and funded, as I said, by the U.S. Marines.

    Mr. HUNTER. Which entity, and this is a question, I think we all have, as we have coming up with more products for homeland defense or for chembio et cetera and lots of folks are coming forward with products, which entity in the Marine Corp will validate the effectiveness of this system?

    Dr. FINE. It is probably not the Marine Corp. It is probably the Army labs north of Washington, the Army biological warfare labs.

    Mr. HUNTER. Okay.

    Dr. FINE. It has been validated on stimulants to validate it on actual agents there are very few facilities in the country that would take that on.

    Mr. HUNTER. Okay. Very interesting. That has great potential for us. Dr. Fine, is that the conclusion of your testimony?

    Dr. FINE. I just wanted to say that we, the women and men of Cyterra we do the best we can in supplying technology for our war on terrorism.

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    Mr. HUNTER. Well, thank you very much. And, it is lucky for our country, fortunate for us that you had kind of a head start on the terrorism problem and issue. And, any folks have any questions for Dr. Fine?

    Yes, sir, Mr. Meehan?

    Mr. MEEHAN. Dr. Fine, I understand that the HSTAMIDS production is halted in this year's budget, but it is scheduled to restart in fiscal year 2004? Is that true?

    Dr. FINE. What happened was the original production was due to start in 2004. As a result of additional funds from the Army, we have been able to accelerate the development with emergency funds the Army is buying about 200 units. That means there is no money left that no money has been appropriated for 2003 and the budget that stands is 2004.

    So, we are setting up the production and we will be in a position to produce 100 of these units a month within about six months. And, at the present time, there are no additional funds available. It is come about because of the acceleration.

    So, if we were not to increase—well, actually we have not funded it, you have an emergency request, if there is a hiatus between fiscal year 2 and fiscal year 2004, what will that cost the government in terms of our efforts?

    Dr. FINE. A good part of the start-up costs of training people; it is a very sophisticated instrument. It is got 140 different frequencies in the radar bands; it is got to be very well calibrated. You still have the equipment there, but the people to set up that production who have to be well-trained and to produce a reliable piece of gear for the Army. You would have to start again. It will put you back six months and probably cost $3 million or $4 million to get you going again.
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    Mr. MEEHAN. Dr. Fine, could you tell me a little more, I do not know whether I did not follow you, but the HSTAMIDS, why is an improvement on what they are presently using as a mine detector now in the Army inventory?

    Dr. FINE. At the present time the Army uses metal detectors. They were developed in 1944. There has been various improvements to them, but they detect only metal. What Corporal Chandler stood on was a plastic mine, which is very difficult to detect. It is very small and the amount of metal in it is about the size of a pinhead. This system has radar in it as well. So, we can pick up the shape and using the various frequencies we have in the system, we can differentiate a stone from the target.

    And, we are able to tell if it is plastic mine, a metallic mine, the size of the mine. We can tell whether the area has been booby-trapped. Is there a lot of metal, for example, and a plastic mine next to it? At the present time, someone sweeps over that, they will see the metal, the metal detector will go off, what it will not realize there is a plastic mine in this vicinity.

    We get a very good feel of what is around. It operates as a tone in the air and the computer does all the decision-making. And, the operator, as he scans over the ground it goes beep for one tone for the metal detector, another tone for the radar. And, it is able to make all those decisions be itself.

    Mr. MEEHAN. What is the footprint on this baby? If you are an infantryman walking straight ahead, what kind of a path will it examine for you?
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    Dr. FINE. It is about a meter, about three, four feet on either side. You have to standoff—you are sweeping with this with a broad sweep in front of you.

    Mr. MEEHAN. Okay.

    Dr. FINE. The rate of advance is about a slow walking pace. It has to meet the Army's requirements. The soldiers may be using this under fire. It cannot be done very slowly. It is got to be done at a rate that you can actually advance through a field.

    Mr. MEEHAN. Okay.

    Dr. FINE. It is also designed to fold up. It drops with the soldier in the parachute drop. It is got all of those requirements, obviously, are put on it by the Army.

    Mr. MEEHAN. You mentioned that since we developed the metal detecting capability with the—in the 1940s to respond to all of the metal mines. And, we basically have not done much except enhance that metal detection capability until this thing came along. Is the reason all these countries went to the plastic mine is just to do just that, to avoid our metal detection capability?

    Dr. FINE. That is part of the reason. The other reason is just low-cost, some of the mines are wood. It is both, some of them are very cheap mines, are just very cheap materials. The mines typically cost $3, $4 to make.
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    Mr. MEEHAN. Okay.

    Mr. LANGEVIN. Dr. Fine, you mentioned a number of other proposals that are kind of floating out there. What are their status? I mean where are you with those?

    Dr. FINE. Could you say that again? I am not quite sure what the question is.

    Mr. LANGEVIN. You talked about some other proposals, some other technology that you have. I am just wondering how do you find dealing with the Department of Defense on the various technologies that you have?

    Dr. FINE. I think dealing with the Department of Defense, as you can see from our mine detector, the Department of Defense has been proactive in accelerating this program and helping us develop it to the point where you can now start to produce it and deploy it.

    It has been a very close working relationship. We have worked very closely with the folks at Fort Belvoir. And, it has been very fruitful.

    Mr. LANGEVIN. In six months you will be able to produce a 100 of those a month?

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    Dr. FINE. In six months we will be at that production rate. Our delivery is in about three months we will produce the first 10 units and then very rapidly scale that up. There is a lot of test equipment that has to go to support that piece of gear.

    Mr. LANGEVIN. Thank you, Dr. Fine.

    Mr. HUNTER. Okay. Mr. Saxton?

    Mr. SAXTON. Dr. Fine, with regard to your biological sensor device, a Russian scientist told me the other day that they have something that sounds similar but they claim that they are developing the capability to make the detection in real-time and identify the weaponize strain in some detail. It sounds to me like your technology is the same type of technology if you had the equipment to evaluate what is on the little bug at the site where it would be collected, is that—

    Dr. FINE. The ability to detect it in real-time, if you are talking a bio capability, bio does not injure you or kill you immediately. It takes four or five days.

    Mr. SAXTON. But, it would be nice to know you were breathing it before you—

    Dr. FINE. It would be nice if you were breathing it, but 24-hours is probably enough to get you on the right antibiotics as well. I am talking of technology, which is developed; it is ready to go. It uses existing commercial and auto instrumentation made by major manufacturers, put together in the right way that can detect it.
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    There is a lot of research, obviously, going on to try and do better. And, I am sure most good scientists in this field are working on it. But, I do not think they are available today, not to my knowledge.

    Mr. SAXTON. Do you think we are near a real-time evaluator? Are you doing work along that line? I mean if the capital were equipped with this type of real-time equipment and an attack occurred in the Capital it would be nice for visitors who are standing in line to have that knowledge so they would not go in the Capital. I mean, it is great to be able to save people and I think your technology sounds like it will do that after the attack has occurred and after everybody has been infected.

    Dr. FINE. That is correct.

    Mr. SAXTON. But, it would be nice, also, for us to have real-time evaluation. And, I know you agree with that, and my question is, have you heard about the Russian advances along these lines? And, are we working on the same thing?

    Dr. FINE. This is what you are describing to me is new, I am aware of technology which could give you a sensing capability in 5, 10 minutes at considerable costs. And, that is going to be a matter of balancing that cost for all the different locations you are at.

    To my knowledge, none of those are working systems. They are all going through evaluation. They are allowing antibodies. You also have a situation where you need to know what you are looking for. If you know what strain you are looking for, they will work fine, if you know what you are looking at.
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    What we have developed is intentionally to be blind. You do not know what the attack is. Is it chemical? Is it bio? Which bio, which chemical, which strain? We do not care. We know you have been under attack so that other people with that technology can now come in and focus and tell you what have you been exposed to.

    Mr. SAXTON. Okay.

    Mr. HUNTER. Well, thank you very much, Dr. Fine, greatly appreciate and hang around and listen to the rest of our stuff here.

    Dr. FINE. Thank you.

    [The prepared statement of Dr. Fine can be found in the Appendix on page ?.]

    Mr. HUNTER. Our next witness is Dr. Tsahi—is it Gozani? Close enough for government work?

    Dr. GOZANI. Absolutely.

    Mr. HUNTER. Okay. Well, thank you, sir. He is the president and CEO of Ancore, a company at the leading edge of two key technologies: one, pulsed fast neutron analysis; and thermal neutron analysis. And, so Dr. Gozani, please tell us about how these technologies can help homeland security.

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    Dr. GOZANI. Mr. Chairman, Representative Meehan, and distinguished members of the committee, I thank you for the opportunity to testify before you this afternoon. In addition to describing new and maturing technology, I also bring a different accent to these presentations. I hope you will not deter from—

    Mr. HUNTER. Just, pull that microphone a little close to you there.

    Dr. GOZANI. Okay.

    Mr. HUNTER. And, we are in good shape here.

    Dr. GOZANI. Okay. I commend the committee's bipartisan focus on military research and development and recognizing their key role in our homeland security, especially now as the very definition of warfare and security are being challenged.

    Previous military research efforts are already bearing fruit and have created the newest weapon in our war on terrorism. The Ancore Corporation, through a public private partnership, including over $18 million of federal funding, has developed, over the last decade, an array of many tools of inspection system that can automatically detect all explosive, chemical weapons, illegal drugs and nuclear devices without the need for human interpretation.

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    Ancore has since adapted this technology for airport, seaport, border crossing to inspect a range of object from tractor-trailer truck to cell phones.

    This technologies, the Pulsed Fast Neutron Analysis, or PFNA, and Thermal Neutron Analysis, TNA, a test with an important role of the defense research and development effort in conjunction with the private sector can have on improving homeland security.

    Current, deployed technologies, X-ray and trace detector are no match for modern terrorists weapons, especially in the post-September 11 era. X-ray based technology, which is shown on the, in this case, on the right, on the left of this poster, rely on users interpretation of the shape and densities of object in containers. With objects like guns, knifes and standard munitions, this form of inspection can be useful.

    X-ray screening is helpful in preventing armed airline hijacking when guns and knifes are the primary weapons.
    However, terrorists have developed more advanced and more deadly threats using liquid and plastic explosives that do not have recognizable shapes or densities. These explosives can be poured into shampoo or wine bottles, molded into briefcase walls, made like shoe soles or fashioned to look like computer batteries. Sarin nerve agent has a density no different from water or many other benign materials.

    Most alarming are the weapons of mass destruction. Chemical weapons and nuclear devices in cluttered cargo container or trucks can easily slip through the X-ray inspection system and cause widespread death and destruction.

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    Mr. HUNTER. Okay, Dr. Gozani, let me ask you a problem, because you have got right to the heart of a big problem we have got. We have got, for example, at the Otay Mesa border crossing in California; we have got 2,300 trucks a day that go through. We have a couple of X-ray machines, as we have at other locations around the border. We X-ray maybe 10 percent of the cargo. So, I mean, with respect to the quality of the surveillance even with the X-ray we are only doing about 10 percent. So, we have got two problems.

    One is a qualitative problem you have described here in terms of how good the examination is, but the second one is simply coverage. What does this machine look like that you have got? How expensive is it? And, is it possible to survey a lot of trucks going through at a fairly high rate?

    Dr. GOZANI. Yes, I mean, its excellent question, because you are really touching the issue of how you do inspection security, 100 percent security does not require 100 percent inspection. It requires intelligent inspection, which means that you have to do some selection. You must perform some selection which trucks you are going to inspect.

    Those who are coming from the Mali Honduras that are well recognized, they have done some test and some, so you reduce the number. You really want to concentrate on the several percent, whatever it is, 10, 20 percent of less that really have concern, while the 80 percent you want to move as quickly as possible.

    Mr. HUNTER. Well, I have heard that. But, you know, when we get on airplanes with our carry-on luggage, they X-ray all of it and nobody says we are only going to X-ray the carry-on luggage of every 10 customers because we want to move quickly.
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    Now, all those trucks come through one chute. They all come through one gate. So, presumably if you had a detection device that was fast, you could shoot them all as they come through, just like you shoot all of your carry-on luggage that is on the rack that goes through when you get on the airplane. They do not one out of 10. They do all of it.

    Dr. GOZANI. Well, the difference between—

    Mr. HUNTER. And—

    Dr. GOZANI.—passengers who can come from every—and, in fact, even there we can do some more intelligent.

    Mr. HUNTER. Yes, but my question is, how fast can you examine, if you will, these trucks?

    Dr. GOZANI. Well, the inspection can be from a few seconds to five, six, seven second a truck.

    Mr. HUNTER. That is all?

    Dr. GOZANI. Yes.

    Mr. HUNTER. Now, let me tell you, that would be, if you could do that, that is a magnificent breakthrough because the big detectors that I have seen, the X-ray detectors, one of them looks like a big carwash, and they bring the truck slowly through it. It takes; in fact, it takes about as long as a car wash. It takes three to five minutes.
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    Dr. GOZANI. Yes.

    Mr. HUNTER. It seems to me. If you can knock out these trucks in a few seconds.

    Dr. GOZANI. No, I am sorry, minutes. It is minutes. You cannot convey trucks, which are big entity, we are much faster than few, you know, a couple minutes a truck. So, I think we are talking about, I mean, I am mistaken. We are talking about three minutes to five, six minutes a truck, depending on the contents.

    Mr. HUNTER. Okay. So, you are still saying it is going to take—it is going to take about as long as the X-ray—

    Dr. GOZANI. Yes.

    Mr. HUNTER. —machines we have now.

    Dr. GOZANI. Well, there are X-ray systems that run 20 trucks an hour. Usually we measure the by units by the hour.

    Mr. HUNTER. Okay.

    Dr. GOZANI. So, 20 trucks and hour, 15, 20 trucks an hour. The key issue what is your—the result of this inspection? It is fully automatic. There is no human interpretation. And, then we detect what you are looking for.
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    Mr. HUNTER. Now, have you got these machines up and running right now?

    Dr. GOZANI. We have one working prototype in Santa Clara.

    Mr. HUNTER. In where?

    Dr. GOZANI. In Santa Clara in our facility.

    Mr. HUNTER. Okay. How fast could you get a demonstrator out to the border if we wanted to take a demonstrator out?

    Dr. GOZANI. Well, we are trying to do that in the last couple of years. We hope this year it will happen in El Paso.

    Mr. HUNTER. How much are they? What do you expect you can sell these for?

    Dr. GOZANI. One unit at a time, it is $10 million. In multiple units we think the price will come down to about five.

    Mr. HUNTER. Okay.

    Mr. REYES. One of the things that—if I can—because I have been to the facility out in Santa Clara and I have seen this system work. One of the things that is impressive is that you can link these things together and do three, four, five trucks at a time. And, then move them out. The other thing that is most impressive is, first of all, it is non-intrusive, so you stopped the truck, it sweeps it and then it instantly comes up on a computer and it is able to detect a number of different things.
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    And, the second thing is that it does not take interpretive skills by the inspector. It comes up on a computer. Whatever you program into the computer that you are looking for, everything from sarin gas, to cocaine, to dirty nuke bombs, whatever this thing has the capability of detecting it.

    Mr. HUNTER. Well, see, Silver, that is why I think the ideal thing, just like the fact that we survey all the carry-on luggage, because people would not ride airplanes if you did not look at all the carry-on luggage. If you could this—we could get these systems up at the border where you can servile all these trucks coming in, if you could do them all, that would be ideal. Because they are all coming through one gate and if you could literally drive them through almost at their regular rate without a prejudiced to the time schedules, that is the time to check them.

    Because it actually takes, I think it is going to—if you really do a pre-check, if you say we are going to do a pre-check at the factory where this stuff is loaded, that is going to take more time and more manpower than if you are able to look at this stuff as it comes across. If you are able to look on a screen

    Dr. GOZANI. It is a different application. When you do it at the site, the originator at the macadam Honduras, so it is the shipping company, they are responsible. They look for the items that goes in the sign and in addition they do random checks. You do not rely on them. But, you basically say you will do a random check to see that they are honest.

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    The one that you want to concentrate are those who are coming from unknown shipper, things of that nature.

    Mr. HUNTER. Well, why would you say, when you have got millions of dollars involved in the drug trade, for example, and Silver is I think our best teacher on that. And, he probably has more knowledge than anybody else in Congress. Literally where high-governmental officials who were charged with some countries in stopping the drug trade end up being found with millions of dollars in their bank accounts.

    The idea that if you want to move some stuff, you are not going to be able to get a $10 a day foreman at a factory to allow you to put your bundle of stuff in the truck is not reasonable. I mean the people want to move this stuff, I think the first thing they are going to do is go to the cleared factories, because they know if they got to a cleared factory, one of the places where they do not check them, that is the truck that gets the free ride. That is where I would put my stuff if I was going to try to come into the country surreptitiously.

    So, I have been around, like Silver has, we have been on the border for a long time. So, we kind have to be from Missouri, you know, you kind have to show us. And, so, I hear all these happy stories about pre-checking and I think they are happy stories.

    Dr. GOZANI. Well, first of all, there should not be a free—every shipper has to be tested. I have—

    Mr. HUNTER. We just want to buy a couple billion dollars worth of these from you; you will not hold that against us will you?
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    Dr. GOZANI. No, absolutely not.

    Mr. HUNTER. Okay.

    Dr. GOZANI. However, I am also practical and I know the limitation even of the U.S. Treasury because they are fighting even the simple system. So, I think that that is why I am trying to put some sense of realism.

    The optimal system would be a combination of the X-ray, the gamma rays that are really for empty cargo containers. 40 percent of cargos are empty. So, let's concentrate on the 40 percent.

    Mr. HUNTER. Okay. Do you have a short demo you wanted to show us on this thing?

    Dr. GOZANI. There is a basically a brief video.

    Mr. HUNTER. Well, let me tell you, I like what you got. Silver, I take it you were impressed with the factory visit?

    Mr. REYES. Right. And, we have been trying to get this thing field tested and—

    Mr. HUNTER. Yes, lets it out to the border.
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    Dr. GOZANI. Well, we obviously would like very much to get the help of the—

    Mr. HUNTER. Let me ask you this question, could we get the one that you have got at your location, could you—is there anything that would keep that if we have cooperation of Customs of getting that to the border?

    Dr. GOZANI. That is the plan.

    Mr. HUNTER. Lord knows we have got enough trucks each day to run through.

    Dr. GOZANI. Right.

    Mr. HUNTER. Right?

    Dr. GOZANI. That is the plan.

    Mr. HUNTER. Okay. Let's work on that, Silver.

    Dr. GOZANI. All right.

    Mr. REYES. Okay.

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    Dr. GOZANI. Before you show this, let me just make—we have another technology theory and the reason its important because it is much less expensive and it has an application for car bomb and truck bomb detection, the kind that costs of many hundreds of Marine lives in the Beirut barracks and also in Khobar Towers. It is a mobile system. It can put in a location where there is a checkpoint and you can check trucks and car for presence of a car bomb and truck bomb.

    It was developed after the Oklahoma City event, but if you are looking for large bomb and it has enormous applications, especially after the 9/11 where we are concerned about car bomb and truck bombs in various location.

    All these technologies can be including also detection of nuclear weapons and nuclear material, SNM. It is the same technologies, the same—a different signature but the same technologies. So, all this equipment can be added on an ability to detect nuclear weapons.


    Dr. GOZANI. Thank you very much.

    [The prepared statement of Dr. Gozani can be found in the Appendix on page ?.]

    Mr. REYES. Mr. Chairman, the technology is—well, what I would like to tell people is that this is 21st Century technology. We have been relying on 20th Century technology will X-rays and the stakes are very high today.
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    Mr. HUNTER. And, we have got maybe earlier technology with that. The biggest checker of trucks at Otay Mesa in California is a German Shepard.

    Mr. REYES. Right.

    Mr. HUNTER. One dog. And, he is a great dog and they trot him along a line of 150 trucks and if he does not stop and bark. And, they trot him along that line. They wave them all through.

    Mr. REYES. And, the limitation to him is that he is looking for narcotics.

    Mr. HUNTER. Yes.

    Mr. REYES. This technology looks for all of these things simultaneously.

    Mr. HUNTER. Yes. See, I think, Silver, I think we ought to have the ability to challenge our port masters at our various entry locations and have a system where doggonit you can drive these trucks through and scan them through and handle all of them, or almost all of them. Maybe have some that come from a secure environment, but again, the old pre-checking plan I can already see the guy starting to operate.

    But, right now, we are only checking, what, 5 percent of the cargo coming in?
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    Mr. REYES. Three percent, less.

    Mr. HUNTER. Three percent. Yes.

    Mr. REYES. Three percent, when they do enhanced it is 6 percent.

    Mr. HUNTER. Yes. Well, thank you for a very effective presentation, sir, we appreciate it. And, Jimmy Saxton has got a question.

    Dr. GOZANI. Thank you very much.

    Mr. HUNTER. Mr. Saxton?

    Mr. SAXTON. In the briefing material that we have here it says that you are technology has the capability of detecting a certain type of nuclear devices, is that right?

    Dr. GOZANI. Yes.

    Mr. SAXTON. We had our government researchers in the other day in this hearing, before this subcommittee and we asked them about that question. And, they apparently need to know about what you have done, because when I asked the question that is very similar, they said, well, if anything was being transported it would be shielded with whatever material you need to shield nuclear material with.
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    And, so one question is can you see through the shield? The second thing they said was that you could not transport it without a shield because the transporter would be dead and would not be able to do the transporting.

    So, I guess my question is how does your technology differ from the assumptions that the people who told us that have?

    Dr. GOZANI. I think that the people who you talked to was talking what is called is passage protection. It means that you are looking for the radiation, which is animating from mostly plutonium-based weapons. Your enemy is highly detectable even in unshielded form.

    So, when you have unshielded detectors, unshielded devices or special nuclear material you can detect them with them with this passage guided counter or the most sophisticated, a radiation monitors.

    Once you put the nuclear material or the device in a leaded container, none of the existing techniques will detect it because it is shielded, exactly what you are saying. The point is that our system, first of all, if there is a shielding, it detects the presence of shielding because we detect all material.

    We detect the conventional explosive, which you have in a nuclear device. We will detect also the nuclear material because it has different way of neutrons that create fusions where, therefore, we see the signature of nuclear material.
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    That is what makes our system very unique. That not only can we detect the presence of the special nuclear material, we can detect the other attributes or any attempts to conceal it. And, I think that what makes it unique because you are not no longer going to ship in a container, a large cask of lead, which would be a very effective shielding, because we will detect it.

    So, I am sorry, there is a difference. This is an active, what we call active detection of special nuclear material and devices. So, in fact, we have been talking now for a few months both with Las Alamos and other places to talk so we can train to have a kind of effort together where they use some of our technology, with the ability of PFNA, because we have the facility.

    Also, we have published, we have a published, we have done feasibility of nuclear material detection and we publish it. It is available. It has been peer reviewed, so it is not anything which was not—

    Mr. SAXTON. That is neat. Let me just go on and ask one further question on the same topic. If you can detect nuclear material with this technology, how far—what kind of standoff capability to detect nuclear material do you have?

    Dr. GOZANI. Well, here I will have to disappoint you, because the detection that is implemented is done part of what we do for drug and explosive, it is inside the inspection channel. The truck goes through an inspection channel, so the extend of our one, two, feet. It is not a—if it is a shielded nuclear material, you cannot detect it from distance. It has to go through the inspection.
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    So, why you are in the border, while you are looking for all the other contrabands, whether it is drug, explosive, chemical weapons, you also look for nuclear weapon. And, I think that is what makes it—this multi-facet approach makes it very effective.

    Mr. HUNTER. Okay. I thank the gentleman. I thank the gentleman as the terrorism panel and thank him for his very insightful statements.

    And, thank you, Dr. Gozani, that was very good. And, I look forward to working with Silver and Customs to make sure we get this thing on the border for some on-site work. Let's get that done.

    Right now we are going to hear the testimony from Mr. Carl Rausch, chairman and CEO of BioPure. His company has developed an oxygen therapeutic product, Homopure.

    So, Mr. Rausch, tell us about your blood substitute and there maybe a number of Congressmen who would like to use that to extend their careers. And, so, tell us about that. Tell us how that can aid in combat. And, I think I have seen—Mr. Spratt has brought it, was that Mr. Spratt that brought a sample of the BioPure—


    Mr. RAUSCH. Congressman Spratt is a very good supporter and has been very supportive of the company. He knows the company well.
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    Mr. HUNTER. Well, I want you to know, I had that sample on my desk for about three weeks. It is great looking stuff. And, you could put that, literally, you can put that in your combat pack.

    Mr. RAUSCH. That is what this is.

    Mr. HUNTER. And, you could carry that in the field and when you get fired up you get some blood loss, your medic or your colleagues there in your fire team or your squad, can give you some blood. And, it does not have any of these preservation requirements that regular blood has.

    Mr. RAUSCH. You want to give this for me? It is great?

    Mr. HUNTER. I am with you. Now, do you have anything else to add?

    Mr. RAUSCH. No, not really. I am Carl Rausch. I am chairman, CEO and co-founder of BioPure Corporation. I thank you for having me here at this late hour. Our product is very different. You have seen a lot of techniques today that are prevention oriented.

    Our product in many ways, we hope you never have to use it. But, unfortunately, every year, as you well know, in this country, 14 million units are donated in the world 75 million units of blood are donated. From our perspective, or in the perspective of this committee, as you know, the vast majority and the percentages of battlefield fatalities result from blood loss.
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    What we are talking about, what I am sharing with you, is the prospect or the problem of that is the inability to bring blood to the front line. The soldier cannot have it in the front line. Now, I will give you some examples.

    We think we have a solution to that problem. This is real product. This is product that is registered for approval in South Africa. This is real product. As compared to what they carry now, which is saline solution. I will tell you this does not carry oxygen. If I pump you up with this, you will die.

    We have a product called Hemopure. The laymen call it a blood substitute. This solution unequivocally can improve our readiness, both here and abroad and can improve medical care to critically injured victims.

    Let me tell you this has not been easy. We have taken almost 18 years and have spent hundreds of millions of dollars in developing Hemopure so that today it can provide an effective oxygen delivery from patients who suffer acute blood loss. And, in situations where red blood cells really cannot be immediately available.

    This can be done without the limitations and complications associated with current conventional blood cell supplies. Unlike blood which requires specific typing and cross matching, refrigeration, storage, and only has a 42-day shelf life before it expires and you have to throw it out.

    Mr. HUNTER. Now, you are saying you can give this to people that have these real rare blood types where they have to run around, you know, and check a thousand people before they find a donor who fits?
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    Mr. RAUSCH. Not only can we do that, we have done that with patients that we cannot find matching blood.

    Mr. HUNTER. What is your shelf life for this stuff?

    Mr. RAUSCH. This is three years at a 32-degree to 90 degree Fahrenheit temperature for storage.

    Mr. HUNTER. So, you could literally keep in your house unless you live in some rare areas, you could keep this in your house for three years?

    Mr. RAUSCH. Yes, it is—

    Mr. HUNTER. So, you can keep it in the barracks. You could keep it in an Army depot.

    Mr. RAUSCH. It can be stockpiled. You cannot stockpile blood.

    Mr. HUNTER. That is great. So, how many decades is it going take us for us to acquire this now?

    Mr. RAUSCH. Well, let me take you through two examples—

    Mr. HUNTER. But, first, tell us how much it costs. How much does this cost?
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    Mr. RAUSCH. We have not determined a pricing strategy for it yet because we are just in the process of scaling out production. But, it is anywhere in the vicinity of $500 to $1,000, which is equivalent because on an equivalency basis, this has a three to one ratio compared to blood.

    Mr. HUNTER. This is 500 to a grand for each of these?

    Mr. RAUSCH. Yes. It is more efficient than blood.

    Mr. HUNTER. You are going to want these samples back?

    Mr. RAUSCH. Yes. Well, let me share with you the cost of blood, or the cost of—

    Mr. HUNTER. Now I am worried, I think I have lost the one that was in my desk.

    Mr. RAUSCH. Let me share with you some interesting information. Hemopure can be stockpiled locally. What happens when we had this outpouring of good cause during the tragedy in New York and in Washington here is people went to give blood and tens of thousands of units of blood were given. But, most people did not realize that the blood was not any good for the crisis. That blood would not be good for 24 to 48 hours.

    In fact, immediately after that whole incident, they actually threw out over the three to six week period, about 50,000 units of that blood that was collected. And, it is not because it was not needed. It is because they collected it and the stuff you collect is not what you can use today.
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    And, in this case, the packet here, blood is needed what you need to have is for use today. Hemopure can be stockpiled locally, along with other emergency supplies. It can meet immediate needs of victims and disaster areas and terrorist's attacks. Consider for the moment, another problem that you have, what if people here are exposed to a bioterrorist agent? The potential for you to a blood donor is now eliminated.

    So, now if we need blood, you cannot be a blood donor anymore because you could be contaminated. And just think of what could happen if you have that contamination in the blood supply. And, if you do not think this is possible, you hear about recalls and problems with the blood all the time.

    Not only that, it causes panic. Look what happened over the anthrax when people started to say I got to get my Cipro and everybody is out trying to stockpile their own thing to protect themselves.

    It is a panic of the health care system. Because of regulatory processes and lack of development funding, there is no alternative today for red blood cells in this country. On the front lines of a battlefield there are no blood transfusions and the injured must wait to be helicopter lifted to a field hospital.

    Nine out of 10 combatants who die from battlefield injuries die before reaching the major hospital. And, a single major cause of battlefield death is hemorrhage. It is blood loss.

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    For example, Special Forces Medics who carry bags like this do not carry anything; this is not an oxygen carrier, to provide immediate oxygen therapy. Critically injured soldiers must wait until they can be transported to a field hospital.

    You may read in the New York Times this last weekend, that depicted what happened to those troops that were downed by hospital, what happened in Black Hawk Down, the movie where the troops were actually not able to be removed for 12 to 14 hours or more and what happens during that time period if they are slowly bleeding if they will succumb to the blood loss.

    Hemopure provides the potential for the military to have a readily available oxygen-carrying product to treat the critically injured.

    Mr. HUNTER. Yes. Is the military—where does the saga of the military buying this sit right now? Have they—have the Army made any purchases?

    Mr. RAUSCH. They are extremely interested and we have done work with the military, but we are also trying to get funding to do a clinical development specifically with the military's use.

    Mr. HUNTER. Well, let me ask—

    Mr. RAUSCH. They cannot buy it.

    Mr. HUNTER.—a question.

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    Mr. RAUSCH. They cannot buy it because it is not FDA approved yet.

    Mr. HUNTER. They cannot buy it yet.

    Mr. RAUSCH. That is right. Not in this country.

    Mr. HUNTER. How extensively is it used in South Africa?

    Mr. RAUSCH. We are just launching the product this year. It was approved last year and we have now gone and started to ship thousands of units to South Africa.

    Mr. HUNTER. Well, it looks to me like if a guy is dying from a loss of blood, he does not have a lot to loss to put something in there, right?

    Mr. RAUSCH. Well, it is not that desperation. It really does work. In fact, we have done most of our clinical—

    Mr. HUNTER. No, but I mean—

    Mr. RAUSCH. —in surgery, so—

    Mr. HUNTER. —I am looking at it from the Army's point of view. If you have got an oxygenated product here, that, in an extreme situation, your combat medic can pull that out and fill her up, right?
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    Mr. RAUSCH. That is right.

    Mr. HUNTER. Right now he does not have anything.

    Mr. RAUSCH. That is right.

    Mr. HUNTER. So, if he calculates that the person is going to die from a loss of blood in a matter of 20 or 30 minutes, it would make sense to me that they move this thing fairly quickly.

    Mr. RAUSCH. We certainly hope so.

    Mr. HUNTER. Okay. Well, I think we need to work on that.

    Mr. MEEHAN. Would they take the body of information from South Africa and use—will the FDA look at that and help move this along?

    Mr. RAUSCH. The FDA will look at bonafide clinical trials, which we have done and are submitting to the FDA as part and parcel to our submission, which we made this year. We are making an FDA submission in July of this year.

    Mr. MEEHAN. I want to be clear on this, are you saying that the military does not or cannot bring this blood to the front lines? They cannot do this now?

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    Mr. RAUSCH. They cannot do this now on the EDIC is that they cannot use anything that is not FDA approved.

    Mr. HUNTER. The FDA extends to Afghanistan, right?

    Mr. RAUSCH. Not in my territory.

    Mr. HUNTER. Well, this is quite interesting. Marty, what do you think?

    Mr. MEEHAN. Do you bring any blood to the front—what goes to the frontline?

    Mr. RAUSCH. What happens, let me give you two examples what happens. There are hospitals that are set back from the front line.

    Mr. HUNTER. Yes.

    Mr. RAUSCH. That is in every conflict that we have, specifically, and I think it is in my material, we ship blood during the Bosnia intervention, we shipped blood over every two to three weeks to Bosnia. Now, it is not used, thank God, it is not used most of the time, but every once in a while there is a time when it is used.

    Well, that cost of shipping blood over and keeping it maintained cost us on the order of about $11,000 per unit.
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    For the Gulf War it cost us on the order of $50,000 per unit used. I do not know what it is going to cost in Afghanistan. But, certainly, they are shipping blood over. And, by the way, all the blood that the United States' military uses has to come from this country. It cannot come from any other country, because it does not meet the requirements of the FDA.

    Mr. MEEHAN. But, as you were saying, if you lose your LZ, the only communication you have with the field hospital in the rear is your choppers, you lose your LZ and you are isolated. The only thing you can have is what you came with.

    And, so it makes sense to me that we could get this stuff approved on an emergency basis that is under—and the medics got directions. If you make the combat medic decision that you do not have enough time to get him back to the field hospital, you can use this stuff.

    Mr. RAUSCH. Yes. But, it is also very important because it is not blood, it is bloodlike and it is an oxygen solution, but it is got to be developed for that application and the trauma application. And, that is what we are appealing to for having the military develop it for their special use.

    We have spent hundreds of millions to develop this—

    Mr. HUNTER. Well, what is the difference?

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    Mr. RAUSCH.—for surgical use.

    Mr. HUNTER. If you put it them, blood is blood, right?

    Mr. RAUSCH. No, blood is not alike.

    Mr. HUNTER. You mean there is a different type of product you would give them for a trauma?

    Mr. RAUSCH. Well, you give it differently. This is a fine molecular oxygenator, this not a large bulky red blood cell.

    Mr. HUNTER. Yes.
    Mr. RAUSCH. This has some properties coagulataral in nature, fluid balancing in nature that are different than blood. So, you do not use as much as you would in the case of blood. And, they have to learn how to do that. That is exactly what we are doing.

    Mr. HUNTER. But, this is a system's thing? In other words, you would use the same package you got there, right?

    Mr. RAUSCH. Yes, yes.

    Mr. HUNTER. But, you would put your medic's through these courses where they could use it—

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    Mr. RAUSCH. That is correct.

    Mr. HUNTER. But, they would be competent to use it?

    Mr. RAUSCH. That is correct.

    Mr. HUNTER. And, you could teach them in a fairly quick period of time?

    Mr. RAUSCH. Yes, we believe we could.

    Mr. HUNTER. Okay. Mr. Rausch, you have got a great presentation. I do not want to cut you off, but we have got a chance to get our last witness in before we vote. So, we are going to vote here in just a little bit.

    So, I mean, you have made a great presentation and we will take the rest of your presentation for the record.

    Mr. RAUSCH. Okay.

    [The prepared statement of Mr. Rausch can be found in the Appendix on page ?.]

    Mr. HUNTER. If we could unhorse you there from the podium we will have Mr. Hollis testify and then we will have any questions for the entire panel. So, hang with us if you could.
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    Mr. RAUSCH. I just—

    Mr. HUNTER. One last thing you would like to say?

    Mr. RAUSCH. One last thing—

    Mr. HUNTER. You ought to run for Congress.

    Mr. RAUSCH. I would like to thank you for this and our 200 employees that we have that have been working on this for 18 years, like to thank you for giving us this opportunity.

    Mr. HUNTER. Tell them if they—

    Mr. RAUSCH. Thank you.

    Mr. HUNTER. —live long enough they will see it in the Army. No, we are here to help.

    Okay, we now have Mr. Richard Hollis, president and CEO of Hollis-Eden Pharmaceuticals. They have been a world leader in developing immune regulating hormones for treatment of infectious diseases.

    So, Mr. Hollis, thank you for being with us, sir.
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    Mr. HOLLIS. Thank you. I want to thank you, the chairman, and the members of the committee for this opportunity. We are working with the Department of Defense in developing a radio protectant.
    Just last month we entered a cooperative research development agreement, which is called a CRDA with the Armed Forces Radiation Biology Research Institute, which is called AFRBRI, to begin animal and human testing of our product, HE2100, as a potential protectant and treatment against acts of terrorism or radiation is released.

    We are developing a series of gene regulating hormones that control immune function. The immune system can be disregulated when challenged by trauma, stress, infectious diseases, for instance, viruses, parasited, bacteria and also from exposure to radiation.

    Mr. HUNTER. Now, when we talked about thing last night, you told me, and I was quite surprised, you said this thing could have mitigated some of the radiation effects Hiroshima, for example?

    Mr. HOLLIS. Well, depending on what the levels of radiation exposure are.

    Mr. HUNTER. How does it do that?

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    Mr. HOLLIS. Well, the immune system is deregulated, genes and the human body are either over expressed or under expressed and this is the result of most human diseases that cause autoimmune disorders, inflammation, immunosuppressive conditions and cancer.

    So, our technology's goal is to correct this deregulation and allow the body's immune system to respond properly.

    So, with today's testimony, what I am really trying to concentrate on is radiation exposure in the event of a terrorist act, whether it is a dirty bomb or a nuclear explosion. So, we have been working with the Department of Defense for the past couple of years in developing this product and AFRBRI has done clinical studies in animals where we have been able to demonstrate complete protection of lethal doses of radiation to these animals where the untreated there was almost complete mortality.

    And, this published data that was published in the years 2000 and also last year, 2001, is the data that allowed AFRBRI to get very excited about our compound and we signed an agreement with them to develop this compound, HE2100, as a radio protectant.

    Mr. HUNTER. Now, does this, Mr. Hollis, is this product ready to go?

    Mr. HOLLIS. Yes, this product, we have been a public company since 1997, and we have been researching this since 1994, these are human products found in the body, minor metabolites, and hormones in the body and it is formulated and ready to be put to the clinical test.
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    Mr. HUNTER. If you were going to produce it, how would you inoculate people? Let's say you had a nuclear explosion, you had a lot of radiation exposure, let's take real exposures, let's take Hiroshima for example, a real exposure. How would you have treated those victims and, obviously, some of them there were close to the ground zero were—I do not think you could hold out much hope for. But, you talked about last night about there being hope and fairly effective treatment for some of them?

    Mr. HOLLIS. Yes, we believe this can be used both as a prophylactics, which is basically preventative so soldiers or civilians are entering a hot zone it will provide immune protection and will also work therapeutically immediately after exposure to radiation.

    Mr. HUNTER. Is it an inoculation?

    Mr. HOLLIS. We deliver it in a couple formulations. It is an injectable and also an oral tablet, which we call a bupple, which is something you just put between your cheek and gum and it dissolves.

    Mr. HUNTER. Just a pinch between cheek and gum and you are okay with a nuclear attack. Okay.

    Mr. HOLLIS. We would like to believe that.

    Mr. HUNTER. But, now how much does a dose cost? What do you think you could make it work for?
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    Mr. HOLLIS. We believe we will be able to price it about the average price of today's antibiotics, so you are probably looking in the area of around $50.

    Mr. HUNTER. How far are we from being able to distribute this in a fairly wide scale?

    Mr. HOLLIS. Well, that is one of the reasons I appreciate being here because we are working cooperatively with the DOD and the FDA to rapidly develop this product. There was a ruling at the FDA where it is unethical to conduct too many clinical trials by exposing like in this case to lethal doses of radiation. That if you can establish its efficacy in animal models and it proves to be safe in humans, they will approve the drug without having to do large extensive Phase III clinical trials.

    So, we believe this drug, with everyone's cooperation, can be developed in a one to three year time period.

    Mr. HUNTER. Okay. If you had this, once again, if you had this—if you have a bomb go off, and you have, obviously, very severe radiation exposure in some areas, lighter in the other. Let's take another example at Chernobyl, could you—a lot of people died as a result of exposure at Chernobyl and were adversely affected in their health, how would you have treat that population?

    Mr. HOLLIS. It is a very good question, the AFRBRI, which is the Armed Forces Radio Biology Institute has been looking since the Cold War for a product that can protect against radiation exposure. So, the way we would see that happening is if it was stockpiled in that area, made it immediately available to civilians or soldiers who were exposed to radiation. And, Chernobyl, if the product was available I think within a certain radius all people that were potentially exposed to it should be taking the drug.
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    Mr. HUNTER. But, what affect would that have had on the casualty rates?

    Mr. HOLLIS. Well, we are doing studies now and we have shown protection in lethal doses. So, it is a matter of how lethal the doses are over a given span or given geography whether the winds blowing or whatever the situation may be if it blows for several miles, and how much radiation leaks out to the population.

    Mr. HUNTER. Yes, but I am saying, assuming exposure as did occur.

    Mr. HOLLIS. Yes.

    Mr. HUNTER. The exposure that did occur and I do not if—are you familiar of the circumstances?

    Mr. HOLLIS. Yes.

    Mr. HUNTER. How many thousands of people were exposed, some severely, some more lightly. If they had the opportunity to take your product, shortly after exposure, what would be the effect or the dampening effect, if you will, on the casualty roles?

    Mr. HOLLIS. Well, we believe we will significantly be able to decrease the mortality rates in a situation like that. That is the purpose of developing this drug is to provide, whether it is soldiers or rescue workers or civilians, protection against radiation exposure.
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    Mr. HUNTER. Okay. But, my question is, I am trying to get a handle on about how much, what kind of treatment, or what kind of mitigation of the health damage this would bring about? Would you say you are going to have—and, can you ballpark that you would have 50 percent less mortality or are you able to make an estimate?

    Mr. HOLLIS. Well, I think that is what we are going to be determining in our clinical studies. But, what we have shown is in that very lethal doses that are given to animals there is complete and rapid death. Whereas, the animals that were given a single injection of the HE2100, either before or after the exposure, all completely survived. So, we would have to determine what the levels of radiation are that would protect.

    But, we believe it would add significantly the homeland defense and our national security to be able to have this compound available in the event that there was a nuclear or a dirty bomb and radiation exposure.

    Mr. HUNTER. With sufficient funding, how fast could you get it a field? You say you have already the product now.

    Mr. HOLLIS. Yes.

    Mr. HUNTER. You have been testing it on animals.

    Mr. HOLLIS. Yes, we are working on several products in this area; we are also working with the military on a product called HE2000 where we have demonstrated complete removal of malaria parasites. And, so we have got a history with these compounds. And, this particular compound, HE2100 is a molecule in the human body. So, we do not believe it is toxic. It is very safe and it is a ready product that is manufactured and that has been given to animals. We are trying to get this approved under this new FDA proposed law.
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    And, with the funding that we have and working cooperatively with AFRBRI, we believe this product, if everyone is cooperating to be approved rapidly in a one to three year period.

    Mr. HUNTER. Okay. Mr. Hollis, thank you very much for being our clean up hitter this afternoon here. We appreciate you. It is interesting I have got two colleagues here; both of them are on the phone. They are talking about your product. They want to buy stock immediately.

    Mr. HOLLIS. Tell them they are more than welcome. Thank you.

    Mr. HUNTER. Yes, we want to thank everybody for helping out here and for being supportive here too.

    I asked all you guys a question earlier and gals when we started up, this was provoked by Mr. Larson is talking about education. Looking at the dearth of young people that we have in the sciences, I mean I have been to some of our science departments in our universities and all of the kids are from other countries, literally some of the departments do not have a single American citizen in the department.

    Would you weight scholarships to the sciences where guys like me that want to take the liberal arts and things like that do not get as much money as the folks that want to be serious? What would you do?

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    Mr. HOLLIS. Well, I think, all areas are vitally important in education.

    Mr. HUNTER. Really?

    Mr. HOLLIS. But, I think—

    Mr. HUNTER. Okay. You are the kind of guy I want speaking up for me.

    Mr. HOLLIS. But, I think from the scientific standpoint, I think if America wants to keep its advantage and its innovations, I think there should be some preference to people who are majoring in the sciences because it is an area that we need to beef up and continue to innovate.

    Mr. HUNTER. I was just thinking, you know, when people sit down at the breakfast table with their kids and they are talking about what they are going to major in. I mean if they got extra bucks for being in the sciences I think they would have some pressure from mom and dad. Plus, I think they would have a little incentive, they would think it was special.

    Mr. HOLLIS. Well, I think it is absolute and noble cause and I think this is the century where there is going to be a lot of discoveries with the human genome project and so forth. There is going to be a lot of breakthroughs for health care.

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    [The prepared statement of Mr. Hollis can be found in the Appendix on page ?.]

    Mr. HUNTER. I had another—yes, sir?

    Mr. CLARK. I agree with that. I mean I was—I did not mean to—I agree with that, I just think it would be—I think there are—our whole business depends on technology input and it is hard to find people. It is a little easier now than it was when the dot.com business was at its peak. But, I think over the long haul the country needs that kind of a stimulus.

    Dr. GOZANI. I think it is quite legitimate that during crisis time when we do not get enough scientists, that the government would say we would like to encourage people to go into sciences. I think, then the pendulum can change. But, it is a time of crisis. If you look, and I know the physics situation and the nuclear engineering, we just do not have Americans now, very few. And, so it is not unreasonable for the nation as a nation to make decisions for the good of science and then I think liberal sciences are very important. We need some historians. I have a daughter who is a historian also.

    They need to teach us what we have done in the past we should not do in the future. But, I think it is not unreasonable that during the certainty of the science, when we look at the situation and say we need to encourage America young people to go to engineering and sciences.

    Mr. MULLIGAN. I think it would be very—if it is not possible to increase the amount of the scholarships to give to individuals, to at least have more scholarships available in that field. You think a lot of engineering classes, a lot of engineering classes have a number of students who do not actually have the funds or the sacrifices very greatly to go into engineering and sciences and, of course, scholarships are available for the various—
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    Ms. MOLDT. I think that it has to start very early because if there is not a single United States citizen in some classrooms, that defiantly does not say very much for the educational system that brought them to that point. So, I think you need to start cultural changes, educational changes early on to get people to get children really interested in following an educational process that is going to bring them into the sciences and in order to be a global technology leader for the United States to continue its technology leadership, is going to be essential that our young people from early on be brought up and incentivized to excel in the sciences.

    Mr. HUNTER. Thank you very much. Thanks a lot, folks. Thanks for your presentations and we look forward to working with you on trying to help you get through this bureaucracy.

    Mr. MEEHAN. Thanks, Mr. Chairman.

    Mr. HUNTER. The meeting is adjourned.

    [Whereupon, at 6:45 p.m., the subcommittee was adjourned.]