they are technically. And we try to put as much money as we can into research.

We appreciate very much what has been done by NASA. In the mid-1970's the ACEE program was a real shot in the arm for the industry. It came at a very appropriate time. Our industry seems to be in about a 10-year cycle, and we were in kind of a low point in the early 1970's when the fuel crisis came along. NASA stepped up to the ACEE program and did such work as starting the composites program. They did a lot of work in some of the system in the cockpit.

All of these have been taken advantage of as seed money and we have gone on from there and incorporated the new technology in our production airplanes. Basically, we all try to work on these things, but it is not enough to do the job as fast as we should to stay ahead.

Mr. SCHAUFELE. I would like to reinforce those comments from our standpoint at Douglas Aircraft Co. We are also working in conjunction with the NASA programs in all of the areas that you mentioned above.

However, our priorities are pretty much near term and our resources are limited. The specific advantage of the NASA systems technology programs are that they provide a larger budget source and provide results which are shared with all of industry, and they get you to the point where you can do the necessary large-scale technology validation efforts that are not possible by industry efforts alone.

When we look at the potential benefits for the particular technology areas that you mentioned, but at the same time assess the overall risks associated with them, those are the kinds of programs where the NASA-industry cooperation with the kind of budget levels that are being talked about are really required.

So we continue to work with the problems, but we just are concerned that with the levels that are being identified, both from NASA and from industry, that we are in very grave danger of losing our technological leadership in these potentially high payoff areas. So it is a situation that we think is serious, and that is the primary reason why we have endorsed significantly greater effort on NASA's part in these areas.

Mr. SHANK. If I may address that same question relative to the propulsion business, Pratt & Whitney also invests a substantial amount of money propulsion technologies. However, as has been indicated, our customers, the airlines are under heavy financial pressures, and this has a very adverse affect on our business.

In view of our industry's near-term funding requirements in order to meet foreign competitive threats, it is unlikely that U.S. industry could commit funding for the high-risk, proof-of-concept work in a timely manner. And, of course, I do point out that once such proof-of-concept work is completed, private U.S. industry, in order to utilize this technology, at its own risk invests 10 times as much to design and develop a product and market it worldwide against foreign competition.

Mr. HOPPS. I would like to add from the Lockheed Corp., all of the technologies that you mentioned, even with the same financial problems that Bob Withington mentioned-we just lost $22 billion

in a commercial transport which I think is accepted as one of the most efficient transports and a technological leader. Still, we put tens of millions today into the technologies we are talking about, but such money is still not adequate to move ahead with a new airplane program.

In composites, propulsion systems, the propfan, we look at all these programs and technologies. A good example of what NASA has done with their funding is in the active controls program. As you know, the L1011-500 was the first jet transport to be able to expand its span without a structural weight increase. It almost sounds like it is beating the law of physics. It is possible due to the active control systems. We were funded by NASA in that program, and at a stage-I forget the exact number-where we probably had about $7 million of funding, we committed to a more fuel-efficient transport and put something on the order of $40 million into active controls on our own to increase the technology in our L1011-500 transport.

So it is a good example of NASA providing some of the seed money so that industry is able to move faster in certain technologies. And we in the industry just cannot do it alone in these technologies. But I am sure all the companies spend money, in the tens of millions, on these subjects that we are talking about today. But, we need help.

Senator TRIBLE. How does NASA go about transferring the results of its research to the industry? How is that done?

Mr. HOPPS. Broadly, through their documentation, through our advisory committees, through continual visits to the NASA facilities and their visits to our facilities. It is rather extensive.

Senator TRIBLE. Is this information, then, available to foreign nations and foreign competitors?

Mr. HOPPS. Yes, that has been discussed quite often in our advisory committees, and no one has been able to really figure out how to put a halt to it, or at least provide a slowdown. I think we have recommended that it not be completely halted, but that somehow, the U.S. industry be able to take advantage of it first. And so far as I know, we have not really found an acceptable solution to that problem.

Mr. SCHAUFELE. In addition to the avenues that Mr. Hopps has mentioned, there have been a number of NASA-sponsored industry meetings. All of those activities in the advanced technology area, especially in the systems technology, are protected by a mechanism called the FED laws for early domestic dissemination, which gives a lead or an advantage to U.S. industry in making use of the results of those specific system technology efforts.

Senator TRIBLE. How does that work?

Mr. SCHAUFELE. Well, you get kind of a mixed reaction, I guess. We are not in a total position to observe, but I think more of our technology efforts show up overseas than we would like to see. And I think one of the issues addressed in the OSTP policy was trying to develop a better means of protecting the results of research done in the United States for U.S. purposes.

Senator TRIBLE. In the day of increasing competition, is that a problem or a potential problem that should be addressed by the Congress or by the agency?

Dr. SHANK. I would like to go back to your earlier question first, and then talk about the transfer of information abroad.

Another technique by which NASA-Lewis Research Center, which has propulsion responsibility, disseminates its results to U.S. companies is through workshops, as well as documentation. The problem of NASA documentation going abroad is troublesome. Our United Technologies Hamilton Standard Division, which is where the advanced turboprop work is being done, has definitely established through personal contact that the NASA reports are responsible for the headway in this field made by the French at Aerospatiale. Their technology comes right out of the NASA reports.

I have personally verified that, in past years much of the technology of the fan section utilized by Rolls Royce in its high bypass engine came directly from NASA documentation available through our National Technical Information Service.

We have had many discussions on the problem of technology transfer abroad, both in the NASA advisory committees and with NASA officials.

We must keep in mind that there is no simplistic solution. In the field of aeronautics, if the very fine interaction between the U.S. academic world, industry and the Government is to continue functioning, there are many people within the United States in the universities and industry who must have to have access to NASA reports. One cannot just classify them, for example. I think that would probably do greater harm than leaving it the way it is, although I am very troubled by the way the present system works. I think some careful examination and discussion will have to be brought to bear before a solution is developed for this problem.

Senator TRIBLE. Thank you, Mr. Chairman, I have no further questions. I thank the gentleman.

Senator GORTON. I would like to thank the panel. We do have a few additional questions which we will submit through Mr. Hopps in writing, and would appreciate your comment on.

[The information referred to follows:]

Senator GORTON. We very much appreciate your being here.
Mr. HOPPS. Thank you from the whole panel.

[The statements follow:]

STATEMENT OF RUSSELL H. HOPPS, VICE PRESIDENT AND GENERAL MANAGER,
ENGINEERING AND DEVELOPMENT, LOCKHEED-CALIFORNIA CO.

Mr. Chairman, members of the subcommittee, ladies and gentlemen, my name is Russell Hopps. I am Vice President and General Manager of Engineering and Development for the Lockheed-California Company. I have been intimately involved in aeronautical research, technology and aircraft development for 27 years. I have been asked to be the industry spokesman by those you requested to testify. They have also accompanied me and represent the airframe and engine manufacturing industry in both the military and civil aviation field. They are: Mr. H. W. (Bob) Withington, Vice President, Boeing Commercial Airplane Co.; Mr. Roger Schaufele, Vice President, Engineering, Douglas Aircraft, McDonnell Douglas Corp.; Mr. Robert Hawkins, Manager, Advanced Technology Operation, Aircraft Engine Group, General Electric Co.; and Dr. M. E. (Bud) Shank, Director, Engineering-Technical, Commercial Engineering, Pratt & Whitney Group, United Technologies Corp.

We welcome the opportunity to speak to you on the subject of the adequacy of the NASA fiscal year 1984 aeronautics budget.

When asked to be the spokesman, I believed it might be difficult to combine all the possible diverse views of members of our industry into a statement that had unanimous support. Each of us views the NASA programs from a different perspec

tive and, yet, the extent of our agreement is substantial. These common agreements regard the general nature of the industry itself, the need for a strong aeronautical research and technology (R&T) base, the government's role in technology development and many of the specific NASA programs. I will make the consensus statement which includes the views of my company. Each of my colleagues will then make a short statement on any of their company's views which were not contained within the consensus statement. Afterwards, we would be pleased to answer any questions you may have.

First, we believe it is necessary to give a brief description of our industry to illustrate its large overall impact on the U.S. economy. Employment in the aerospace industry, which includes aviation, space, missiles and some non-aero space products, totals nearly 1.2 million, a sum exceeded only by the auto manufacturing industry. About 600,000 jobs can be attributed to development and production of aircraft, engines and parts. Some 10,000 companies in all 50 states contribute to this nation's aircraft production. Overall sales in the aircraft sector in 1982 were approximately $34 billion. Aerospace exports amounted to $15.2 billion for 1982. The vast majority of this amount, $14.4 billion, is due to the aeronautics side of our industry, i.e., aircraft, engines and parts. In recent years aviation products have been the biggest single contributor of any manufacturing industry to this nation's net balance of trade. The aviation industry has, we are proud to say, produced military and civil aircraft and equipment that are second to none. Aviation is also a prime ingredient to our nation's security; indeed, about one third of the defense budget is now spent on aeronautical products and their support. The vast majority of aeronautical R&T supports both civil and military applications. Continued progress in aviation is vital to our national security, international policies, and to an efficient and reliable air transportation system. A healthy aviation industry is a major contributor to the economy and welfare of the United States.

Last November, the White House Office of Science and Technology Policy (OSTP) released its report on national aeronautics. Among its findings it concluded, contrary to a sometimes expressed view, that aeronautics is not a mature industry-it is not a sunset industry-and that significant future advances are possible that have potentially high payoffs. We in the industry never believed that we were a sunset industry. Further, the report stated that the government should take a major role in aeronautical R&T.

Integrating advanced aeronautical technologies, the report stated, could provide more than a 50 percent increase in fuel efficiency for large military and civil transport aircraft and more than a 30 percent reduction in direct operating costs. Even if only a part of this were to be realized, the benefits would be enormous. If, for example, the U.S. airline industry's fuel consumption were reduced by only 5 percent it would save about $500 million annually. This figure exceeds the annual profit of the U.S. airlines in 12 of the past 15 years.

Although fuel prices have decreased recently there is a real danger in becoming complacent in assuming that this trend will continue-and that further advances in technologies that save fuel will become less important. Our nation will continue to be dependent on oil for many years and much of it will have to be imported from politically unstable areas. We must continue our efforts to reduce fuel consumption in both military and commercial aircraft.

Further, the OSTP report pointed out that military aircraft can incorporate improved survivability features and achieve substantially greater mission effectiveness. In addition, civil and military rotorcraft are possible with 100 percent speed and range increases. The list of potential gains goes on and on. Never have we in the industry been more confident in future possibilities.

Therefore, aeronautics is a fine example of the high technology that the government seeks to encourage-and should encourage. To move a proposed vehicle from concept to fruition is costly and often requires a long period of time. Development of a new commercial engine or airplane costs billions, often more than the net worth of a company. The company, with this large an investment, must employ technologies that entail relatively modest risk, even to the extent of forsaking some technologies with potentially greater benefits. Development of technologies of high risk and long development time spans is an area where the government can and should take the lead if this country is to retain its prominent position vis a vis foreign competition involving various forms of government support. All companies can benefit from work that NASA and DoD perform. One of the greatest problems in the industry today is the need to slow the tremendous increase in both the development cost and the recurring cost of aircraft and engines. Work done by NASA will mitigate this rise in costs by assuring technology readiness through proof of concept work.

It is also necessary for us to state that ever since NACA, NASA's predecessor, was founded in 1915 there has been an excellent government laboratory/industry relationship that resulted in aeronautical technology development that has produced outstanding aerospace products and provided many national benefits. We in the industry have a great respect for NASA, its programs and its personnel. We believe that it is one of the best run agencies in the government. NASA requests industry recommendations on R&T development through several advisory committees and these are largely reflected in the NASA programs we are discussing today. Now, with respect to our specific comments:

First, we wholeheartedly endorse the OSTP Aeronautical Research and Technology Policy. This panel considers it an excellent and comprehensive report and commend the members of the working group for their recognition of the high value of aeronautical research.

Basically, we support the general thrust of programs NASA has proposed. We would prefer to see a higher level aeronautical budget, although we recognize that in government, as in industry, resources are limited. However, it does not appear that funding is consistent with the goals of the OSTP aeronautical R&T policy. There is almost total abandonment of some Systems Technology Research Programs particularly in the areas of subsonic aircraft and advanced propulsion. We feel that the systems programs are vital to provide the focus and guidance for an aggressive R&T base and should not be sacrificed. In both 1981 and 1982 the Congress did provide needed additional augmentation. (It is interesting to note that just a sliver of the space budget could do wonders for aeronautics research!)

We, the industry, are disappointed in the support given to the Structures and Materials area. Enhanced funding should be considered for primary_composite structures-a technology that offers the possibility of reducing both fuel consumption and unit costs.

Laminar flow control is an excellent example of a technology offering great promise but one which the industry cannot pursue adequately on its own because of the large risk. It is a natural role for NASA to perform research in such a high risk technology but this has, unfortunately, been zeroed in the 1984 budget.

The advanced turboprop or propfan offers good potential in both the military and civil sectors. NASA should continue its work out but it appears that funding is inadequate to maintain the pace required to capture many of its potential markets. It is believed by the airframe manufacturers that the speed for the aircraft could, however, be reduced to Mach-.70. Such a speed is sufficient for military aircraft that would probably employ this powerplant and it would also satisfy the needs of shorthaul commercial transports. Most of our commercial aircraft fuel is consumed at the very short ranges and a higher speed is not required or desired.

Advanced turbofan propulsion system technology work must be enhanced. The powerplant is the key to new aircraft development. Without it, it is highly unlikely that any company will commit to new civil aircraft or the military to new tactical aircraft. Many of the improvements in today's aircraft have been the result of advancements in the powerplant technology.

Further, some members of our panel believe that if NASA is unable to obtain additional funds, some change in the distribution of funds could occur. They believe that the Numerical Aerodynamic Simulation research is very important and will eventually provide needed understanding of complex flow fields but also believe that the 1984 expenditure may be slightly too aggressive. A more conservative level may be prudent and might allow some support to the previously mentioned underfunded programs. We all hope, of course, that the additional funds can be provided without this reduction.

These, then, were the areas of agreement and it is obvious that we, the industry, have very common concerns and views.

In summary, never before in our industry have we been more confident that our nation's future in aeronautics has the possibility of moving ahead at an even more rapid pace. But, the industry cannot do it alone. Government and industry must each play a role in this necessary partnership. Aeronautics must not become another industry that suffers decay because of foreign competition. We cannot change the rest of the world-we must accept the fact that in virtually all other industrial nations a marriage has taken place between government and aerospace industry. We must take stronger measures to enhance the aeronautical research base of our nation.

We in the industry note that the OSTP report made a clear call for increased aeronautical R&T. But, this country's investment in aeronautical R&D as a percent of sales has been dropping steadily over the past decade. In the meantime, foreign aeronautical development, both friendly and hostile, has been steadily increasing.