Mr. SYMINGTON. The committee will recess until tomorrow at 9:30

a.m.

[Whereupon at 11,:15 a.m., the committee was recessed to reconvene again at 9:30 a.m., Tuesday, June 17, 1975.]

THE NATIONAL SCIENCE POLICY AND

ORGANIZATION ACT OF 1975

TUESDAY, JUNE 17, 1975

HOUSE OF REPRESENTATIVES,

COMMITTEE OF SCIENCE AND TECHNOLOGY,

Washington, D.C.

The committee met, pursuant to adjournment, at 10:06 a.m., in room 2318, Rayburn House Office Building, Washington, D.C., Hon. Olin E. Teague (chairman of the committee) presiding.

The CHAIRMAN. The committee is meeting this morning for further hearings on H.R. 4461 and H.R. 7830, the science policy and organization bills.

Today we have four witnesses. This means that we will have about a half hour for each, including questions. The witnesses are aware of the fact that we are pressed for time. We have asked them to summarize their main points so that we may go to the questions as soon as possible.

Our first witness this morning is the Honorable Elmer B. Staats, Comptroller General of the United States and former Deputy Director, Bureau of the Budget.

STATEMENT OF ELMER B. STAATS, COMPTROLLER GENERAL OF THE UNITED STATES, ACCOMPANIED BY MORTON A. MYERS, DEPUTY DIRECTOR, AND OSMUND FUNDINGSLAND, ASSISTANT DIRECTOR, PROCUREMENT AND SYSTEMS ACQUISITION DIVISION, GENERAL ACCOUNTING OFFICE

Mr. STAATS. Thank you very much, Mr. Chairman. I will attempt to abide by your time limit. Therefore, I will summarize and omit parts of my statement.

We are happy to be here and pleased that you are continuing these hearings. We appeared, as you know, last year. We think it is a very important and timely bill. First, I will comment on title I of the bill. The only recent effort on the part of the executive branch to submit. a statement on policy for science and technology was in President Nixon's special message of March 16, 1972. We found this to be a commendable effort. We made a study in which we attempted to follow up on the message to see what developed from it. We found, with few exceptions, that we could not identify any substantive changes since the message regarding funding or other actions.

Both the OMB and the science adviser, after considering the results of the study, indicated the 1972 science and technology message should

not be regarded as an adequate basis for measuring later actions on R. & D. budget priorities and overall strategy.

Dr. Stever, commenting on it, said:

The 1972 message and the events that inspired it, related to a number of policy and political conceptions that the passage of but three additional years have shown to be vastly off the mark as measured against the events that have had most influence in shaping new thrusts and initiatives in the Federal support of R. & D.

We point out that we do not today have anything from the executive branch representing a comprehensive science and technology policy. The thesis that has developed is that you cannot have such a science policy. It has to be part of the individual program legislation.

Except for a few large corporations and philanthropic foundations, the private sector generally does not support basic research and education unless it can identify a direct, timely, and adequate return on its investment. Instead, the Government must be the major sponsor of basic research and graduate education.

I do not believe that there is any best formula, in my experience, to determine the amount and the level of the basic research.

We have considered, from time to time, a percentage of the total R. & D. budget, a percentage of the GNP or the consensus of experts. The important point is that we need a rationale to establish continuity and stability of federally sponsored efforts, Mr. Chairman.

In reading title I, we did not attempt to examine the text for completeness, but rather to ascertain whether it is sufficiently definitive to provide meaningful guidance without becoming so structured that it would provide undue constraints on the executive branch's ability to cope with changing circumstances and priorities.

There are two points on the implementation (section 102 (b)) and procedure (section 102 (c)) which I believe warrant consideration for more explicit emphasis.

The first concerns the Federal responsibility for stimulating public technology innovation by:

(1) Fostering improved partnerships and institutional arrangements with State and local governments and the private sector; and (2) Eliminating barriers to public technology innovation.

I want to emphasize the responsibility of the Federal Government to minimize the disincentives, regulatory and otherwise, and to provide special incentives to enhance productivity in both the public and private sectors.

Now, Mr. Chairman, title I mentions various parts of these responsibilities. A somewhat more explicit statement of this would clarify the intent.

As to the patent policies and antitrust regulations, in items 4 and 5, they are only two of a number of factors affecting incentives for technology innovation in the public and private sector.

Some of the other factors that are involved are Federal and State regulations, special tax incentives, special Federal revenue sharing, Federal reimbursement to contractors for independent research and development, and pricing or other procurement considerations in Government acquisition of materiel and services.

I suggest, therefore, that to avoid a restrictive interpretation of the legislation's intent, additional items be included or items 4 and 5 be

combined into a more general statement encompassing all factors possibly inhibiting or enhancing private sector investment in technology innovation.

Title II concerns the scientific and technological advice in the Executive Office of the President. In summary, we believe the reestablishment of an Office of Science and Technology along the lines suggested by the President is a constructive move forward. It is in line with the testimony I presented last year.

I refer on page 8, Mr. Chairman, to two reports recently developed by the General Accounting Office. One of them deals with R. & D. programs to achieve water quality goals. The other concerns the need for a national weather modification research program. We included these in our testimony, particularly to point out the need and the value of having a point in Government that is concerned with establishment of priorities and monitoring the interagency efforts in this whole area.

As I mentioned earlier, we attempted to assess the impact of the President's 1972 message on science and technology as it concerned subsequent Federal budgets. We are attaching a portion of this study to our testimony.

There was some redirection of priorities. Except for the Space Shuttle, energy-related R. & D., and biomedical research, the amounts involved in the redirection of priorities have been relatively small. In the President's 1972 message, he proposed spending 46 percent more (210 million) in fiscal 1973 on a variety of projects to develop fast, safe, pollution-free transportation. Although noting that transportation affects all aspects of society and contributes almost 20 percent of the country's gross national product, the 1974 special analyses of the budget shows only a $64 million increase for fiscal year 1973 transportation R. & D. This is spelled out in some detail in the attachment.

The concept embodied in title III of the committee's proposal for a Cabinet-level post is somewhat different from previous proposals for the establishment of a science and technology department. My interpretation of the proposal is that the Secretary's role would be a mix of staff and line responsibilities.

One of the major arguments for this proposal appears to be the aggregation and closer coupling of interrelated broad-objective multidisciplinary science and technology activities that are not primarily or uniquely related to the mission of a single agency or department. At the same time it permits a high degree of freedom and independence for each of the major elements assigned to the administrative oversight of the Secretary.

Another argument for creating this Cabinet-level post is to identify in a primary point of advice to the President the principal advocacy role for Federal support of basic science and technology. In this sense, this officer's role would be similar to that of any Cabinet head. Except for enlarged jurisdiction, this person would operate under the same handicaps, however, as the Director of the National Science Foundation as the objective arbiter and disinterested adviser on Governmentwide science policies.

One can readily perceive some advantages to an arrangement which brings together the National Science Foundation, the National Bureau

of Standards, and possibly the research centers of the National Aeronautics and Space Administration. I have some reservations, however, with respect to including the Energy Research and Development Administration and the National Oceanic and Atmospheric Administration under this umbrella.

For the most part, ERDA's mission is closely coupled with the Federal Energy Administration and the Department of Interior. For this reason, I have previously testified on the high priority need to establish a new Department of Energy and Natural Resources. It is possible, however, that the high energy physics research and certain other long-range or basic research efforts currently included in ERDA might be more appropriately assigned to NSF. I understand that this matter is under consideration currently. The National Oceanic and Atmospheric Administration, on the other hand, comprises a mix of R. & D. and closely related services mission which would not seem to fit the concept of the suggested department. Perhaps further study would reveal that there are other basic research, education, or broad-based technology entities which should be included under the type of department proposed in this title.

Now, let us consider what is or should be the role of the Federal Government, especially civil agencies, and how the Federal partnerships with State and local governments, industry, and academic institutions can be improved to enhance public technology advancements.

Industrial growth and productivity and the economy can be stimulated by special tax incentives, enlightened patent policy, selective relaxation of adverse Government regulations, and in many other ways. Such assistance is important when market forces are inadequate or when the existence of externalities-benefits accruing to others than the primary investor-or high risk preclude adequate private investment. But such stimuli alone generally will not motivate industry to invest its own resources to meet the technological needs of public institutions.

This is especially true when the public market for technological products and services is latent, fragmented, or intractable because of political, parochial, and jurisdictional constraints. Such factors, as well as economic limitations, greatly impede the acceptance of technological innovations by public institutions.

The primary role of Federal civil agencies in technological leadership; therefore, can be one of leadership and providing incentives to others, including private industry. The Federal role involves :

(1) Identifying problems and potential solutions,

(2) Adapting existing technology or sponsoring R. & D.,

(3) Demonstrating the feasibility of technological improvements, (4) Establishing performance standards,

(5) Removing barriers to acceptance at State and local levels, (6) Employing regulatory authority, and

(7) Subsidizing the transition or providing special incentives until the potential for aggregated markets and economies of scale create sufficient motivation for the private sector to invest its own capital.

To be most effective, the Federal agencies must establish better working partnerships with State and local governments and the private sector. Since industrial resources are needed to produce goods for use by public institutions in improving the quality of their serv