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ACT OF 1990-H.R. 4659



Washington, DC.

The committee met, pursuant to call, at 10 a.m., in room 2359, Rayburn House Office Building, Hon. John LaFalce (chairman of the committee) presiding.

Chairman LAFALCE. The Small Business Committee will come to order. This morning we consider legislation to create a Technology Access Program [TAP], which is designed to bring American small business to the technological frontier, and to improve the productivity and competitiveness of American industry. This bill, H.R. 4659, proposes something which is unique in the field of technology transfer and economic development; it proposes a system which would give businesses instant and easy access to the very best technical expertise in the world. It is hard to imagine a more userfriendly system. Recognizing the potential of this bill for American economic competitiveness, the House leadership recently adopted it as a lead item in its package of high-technology initiatives.

[The bill referred to above may be found in the appendix.]

My involvement with the issue of technology and economic competitiveness extends back several years. As chairman of the House Banking Subcommittee on Economic Stabilization in the mid1980's, I held an exhaustive series of hearings on American economic competitiveness. As a result of those hearings, I introduced two major pieces of legislation: One to create a Competitiveness Policy Council, and the second, a bill to establish an Advanced Technology Foundation which would have funded research on generic technologies and collaborative R&D, and would have created a Federal industrial extension service. I was pleased that the Competitiveness Policy Council, which will help to bring together representatives from industry, academia, and Government to identify profitable areas for Government-industry partnerships in developing new technologies and new industries, was enacted into law in the 1988 Trade Act, and has now received initial funding.

I took an interest in this subject area-technology and economic competitiveness-because I recognized that it was one in which Government policy can have a truly profound effect on the quality of life. U.S. Government policy has played a central role in some of the most important technological events in history, including development of the computer industry, the semiconductor industry, and


the commercial aircraft industry. But perhaps the most striking example is the U.S. agricultural research and extension system, which for a century has funded agricultural research and disseminated new technology to farmers. The system has generated a rate of return far higher than that of typical private investments. Indeed, it is a major reason why agricultural productivity growth has been higher over the past 50 years than in any other sector of the American economy, and why the United States has long been the undisputed world leader in agriculture.

The bill we consider today to create a Technology Access Program would replicate important features of the agricultural system on an economy-wide scale, using the latest computer and telecommunications technology. It is modeled on a Minnesota State program, Minnesota Project Outreach. It proposes what I regard as a unique form of technology transfer, unique in the degree to which it is user-friendly. Under TAP, a business in need of technical assistance does not have to call 14 people and wait 3 weeks in order to get help; it does not have to know the 10 different protocols needed to access 10 different data bases; and it does not need to hire a staff of information-retrieval experts. Technology transfer systems which operate that way-and many do-will never reach or help most of their potential customers. Under TAP, by contrast, all a business needs is access to a personal computer and a telephone in order to have the very best technical expertise in the country-indeed the world-at its fingertips. I will leave it to our witnesses to elaborate on how the system works.

Anything can be made to sound nice in theory, however; the proof is in the pudding. To test whether this form of technology transfer actually works in practice, my staff surveyed a random sample of businesses that use the Minnesota program. The results were impressive and were the motivation for my introducing this bill. The businesses reported that their payoff in increased annual profits was more than 15 times their annual cost. These numbers suggest that a national Technology Access Program could make a real difference in the competitiveness and productivity of American industry.

[Mr. LaFalce's statement may be found in the appendix.]

Chairman LAFALCE. Some members of the panel today have been leaders in the effort to promote the improvement and dissemination of technology to the small business community, Congressmen Wyden and Sisisky. I wonder if either have an opening statement they wish to make.

Mr. WYDEN. Thank you, Mr. Chairman. I want to commend you for the outstanding job you and your staff have done on this issue, one of enormous importance to small business. I am very pleased and proud to be associated with you in this effort. Mr. Chairman, the Subcommittee on Regulation of our committee, and which I chair, has been digging into this issue for 2 years now. It is disturbing to see the Federal Government's inability to get this technology treasure trove out of our Federal labs and into the hands of small business.

For example, the General Accounting Office found in 1988 that royalties on commercialization of $60 billion worth of Federal research totaled only $3 million. This is a rate of return on invest

ment of .00005 percent. It is quite obvious to me that the Federal Government has simply got to, as an editorial in the Portland Oregonian said, get the lead out of the labs. Fifty cents of every research dollar invested in this country is spent at a Federal or federally supported lab and I think it is worth noting that politicians are constantly talking about job programs.

Here we have an opportunity to promote jobs, promote economic development and we can do this simply by making sure that we see the fruits of our research transferred from the Federal labs. I am of the view that in an increasingly competitive global economy, the question of improved technology transfer is literally the key to the competitive kingdom. I am very pleased that you are moving forward with this legislation. I think it is high time. I would also like to note, Mr. Chairman, that Dr. Allan Bromley who is the President's science adviser testified on the question of the technology transfer before our Subcommittee on Regulation last October. The President's science adviser assured us then that he understands the problems stalling commercialization and that enhanced technology transfer would be a key piece of the President's overall science policy.

But those assurances are now almost a year old and we have seen essentially nothing on paper to back up the promises of the President's science adviser. So I think that we need a process to force these changes. This legislation allows us to do this, to do it in a sensible and cost-effective way. It is a real pleasure to be able to associate myself with your efforts. Thank you for all of your support.

[Mr. Wyden's statement may be found in the appendix.]

Chairman LAFALCE. Thank you very much. Without objection, I would like to insert the opening statement of the ranking minority member immediately after my opening remarks.

[Mr. McDade's statement may be found in the appendix.] Chairman LAFALCE. Mr. Sisisky.

Mr. SISISKY. I too congratulate you, Mr. Chairman, on this important piece of legislation. I would never attempt to stop getting the lead out of the lab of my colleague here. Thank you.

Chairman LAFALCE. We will go to the witnesses now. We have today Mr. Raymond Kammer, Deputy Director of the National Institute of Standards and Technology, Department of Commerce; Joseph Shuster, chief executive officer of Teltech, in Minneapolis, Minnesota; Leo Reddy, president, National Coalition for Advanced Manufacturing; Lloyd Anderson, director, Center For Industrial Research and Service, Iowa State University.

Gentlemen, we are delighted to have you with us today. We will put your statements in the record. You may read them or summarize them. Mr. Kammer.


Mr. KAMMER. Thank you, sir. I am Ray Kammer, Deputy Director of the National Institute of Standards and Technology. I am here to discuss the proposed legislation for improved access to tech

nical information and expertise within the Federal Government. I think it is a well known story that compared to foreign competitors many U.S. labs have been slow to commercialize new technology. It is not enough for the United States to be first in developing the new technology if we are unable to bring it to the commercial market. The problem of applying and commercializing new technology is complex and there are no easy solutions. Limited access to Federal technology and expertise, particularly by small and medium size businesses, is certainly part of this problem. We commend this committee's continuing efforts to improve that access.

The bill currently before us. H.R. 4659, seeks to improve the technology transfer process by providing single point, interactive access to a database of federally funded research and development activities, as well as technology transfer personnel. In my view the activities outlined in the bill present excellent tools for dissemination and access of information: It is our view that we do not need additional authorization to pursue these ideas.

In fact many of the ideas are on-going at some level under existing authorization. There are already numerous on-line databases of federally funded technology within the Department of Commerce. The Technology Administration's National Technical Information Service currently has two on-line databases of Federal research and development activities. The Federal Research In-Progress Database, available through Dialogue, provides access to information about on-going federally funded research activities in the fields of physical sciences, engineering and life sciences. The Federal Applied Technology Database allows industry access to more than 8,000 Government-owned inventions issued since 1981. The Department of Defense, NASA, and DOE also have their own on-line databases and will provide direct access to responsible personnel.

Interactive assistance with these and other existing databases is already being provided through NASA Industrial Application Centers. The Industrial Applications Centers [IAC], program was established in 1970 specifically to provide technical solutions for industry problems. NASA IAC's have access to over 500 on-line databases, including 60 to 70 Federal databases and will provide contacts with technical experts in both the Federal Government and private industry.

Small Business Development Centers are also providing single point, interactive, access to a number of information databases and Federal technology transfer agents. There is also access to expertise through Federal laboratories through the Federal lab consortium. The number of programs relative to the objectives of this legislation were also created under the Technology Competitiveness Act of 1988. Included was the Boehlert-Rockefeller Program to provide technical assistance to State technology programs throughout the United States to enable those programs to help local businesses and increase competitiveness. The program works through and with State and local outreach programs to help small and medium size businesses identify, access and apply appropriate Federal technology to their technical problems. Technology agents work through existing programs, such as the Small Business Development Centers or the NASA IAC's, and depend heavily on Federal

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