ON ALLOCATION OF FEDERAL FUNDS FOR SCIENCE AND TECHNOLOGY

Statement of

Frank Press, PhD
Chair of the Committee on Criteria for Federal Support of Research and Development National Academy of Sciences/National Academy of Engineering/Institute of Medicine and Cecil and Ida Green Senior Fellow, Carnegie Institution of Washington

Marye Anne Fox, PhD
Member, Committee on Criteria for Federal Support of Research and Development and Vice President for Research, University of Texas at Austin

Richard J. Mahoney
Member, Committee on Criteria for Federal Support of Research and Development and Former Chairman and Chief Executive Officer, Monsanto Company

before the Committee on Science U.S. House of Representatives FEBRUARY 28, 1996

Good Morning, Mr. Chairman and members of the Committee. My name is Frank Press. I am the Cecil and Ida Green Senior Fellow at the Carnegie Institution of Washington and served as chair of the Committee on Criteria for Federal Support of Research and Development of the National Academies of Sciences and Engineering and the Institute of Medicine. I am joined by my colleagues, Marye Anne Fox, vice president for research and the M. June and J. Virgil Waggoner Regents Chair in Chemistry at the University of Texas at Austin, and Richard J. Mahoney, former chairman and chief executive officer of the Monsanto Company and distinguished executive in residence at the Center for Study of American Business at Washington University. We are delighted and honored by the opportunity to discuss the recent report on Allocating Federal Funds for Science and Technology, which was prepared in response to an initial request from the Senate Appropriations Committee. The report was issued this past November, a month ahead of schedule, and since that time has had much discussion. It has been both praised and criticized; a mixed reaction that, as members of the Committee on Science will appreciate, is inevitable given that we offered judgments that potentially affect the many perspectives of the nation's research and innovation enterprise--from the agencies that fund it, to those who perform the work, and not least, to the Congress that must constantly assure that public funds are soundly invested.

The report speaks for itself, and we would like to focus on several specific aspects, including the context for the report, its key recommendations and conclusions, plans for continuing work, and the committee's views of the federal role in advancing commercial technologies and the role of federal laboratories vis--vis universities.

Context for the Committee's Work

Members of Congress need no instruction on the budget environment in which we worked. In fact, our committee accepted the reality that increased funding for the total science and technology enterprise was unlikely in the immediate future, but went on to apply that reality in a way that it believes offers guidance for support of the strong research and innovation enterprise that the American political system built and continues to maintain.

Another reality is the history of the enterprise. The contemporary research enterprise is a composite of responses to crises, exploitation of new opportunities, and creation of new agencies with new missions requiring fundamental scientific and technical competence. It is an opportunistic rather than planned history, and the United States is much richer for it, having gained an enormously productive research enterprise. At the same time, the structure is hardly simple; rather, it is a complexity of programs that weave through agencies or disciplines, such as computer science, which are substantially dependent for support on one agency but in fact benefit the missions of many agencies. Looking at the research enterprise agency by agency can offer a misleading picture of what is actually going on; rather, the enterprise needs to be viewed, and understood, in its totality.

Finally, our committee stipulated that whatever it proposed would not require major changes in procedures in the executive and legislative branches. To do so would have been obviously naive, and, more damagingly, have buried the substance of the committee's recommendations in arguments over process. Rather, we felt that we could be most effective by setting out our proposals as clearly as possible, offering guiding principles in realizing these proposals, and giving specific examples of how they might be implemented.

The Committee's Recommendations

The heart of our report is the proposal for a budget process that provides both a unitary view of the federal science and technology enterprise, in addition to the separate S&T agency budgets Congress has been used to receiving. In this way Congress will be able to gauge the overall health of the enterprise and understand the interrelationships and complexities among governmental programs.

As this committee knows well, while federal R&D spending totals are conventionally given as about $70 billion a year, nearly half of that involves initial production, maintenance, and upgrading of large-scale weapons and space systems at DOD, DOE, and NASA. Those activities are clearly of importance and in the national interest, but with some modest exceptions they are neither long-term investments in new knowledge nor investments in creating substantially new applications. If they were excluded, the R&D investment budget--called the FS&T budget in this report--would be between $35 billion and $40 billion annually.

This FS&T, or Federal Science and Technology, budget defines federal investments in fundamental science and new technologies; it is these investments that in aggregate lead to new knowledge and enabling technologies, which over time improve government performance and enrich the nation. Put another way, the committee came to believe that the many arguments of support for basic versus applied research, of support for basic research in one agency versus another, of U.S. spending versus that of other nations, and even of how much we spend as a fraction of GNP missed the point. The key was to devise a process to formulate a FS&T budget that would maintain our world strength in science and technology. Concomitant with this proposed change in the structure of the federal budget for science and technology were proposals for using it to make real decisions--by both the executive and legislative branches.

The committee linked its arguments for a unified science and technology budget to several principles, to assure that the federal science and technology programs maintain their base within the federal departments, their excellence, and their historic ability to respond quickly to national needs and opportunities. These principles included:

Finally, the committee also addressed the federal role in development of commercial technologies as well as the role of federal laboratories vis--vis universities. However, we will return to these issues in a moment.

Next Steps

The fate of our recommendations depends on their reception and use in the political process. However, in preparing our report, it became obvious that further work by our committee could be useful in implementation. Specifically, we are now working on two extensions of our work. First, we are working with the AAAS and others to more tightly define the FS&T budget, especially for two agencies, DOE and NASA, where this definition is more problematic than it is for agencies such as the NSF. Secondly, we intend to move forward on "test-driving" our recommendation that the FS&T "budget should be sufficient to serve national priorities and foster a world-class scientific and technical enterprise." The committee set out a process for making the judgments on whether the nation's science and technology remains world-class, and we believe that it is now time to test it.

The Federal Role in Commercial Technology

The committee's views on this issue have already been the subject of considerable discussion, some of it penetrating and useful and some uninformed. The committee recommended that the federal government should encourage, but not directly fund, private-sector commercial technology development, with two limited exceptions:

This committee will immediately recognize that these "exceptions" are hardly restrictive, and in fact easily encompass virtually all of the great commercial achievements enabled by federal investments, whether the Internet, biotechnology, or the global positioning system. In all these instances, no company was willing to invest fully in their beginnings, and it took sustained federal investments to grow them to the point that their commercial potential became apparent and near-term. That, the committee believes, is an entirely appropriate federal role, and one that should be continued. The issue turns on whether the government should also invest in those potential technologies where private companies are also willing to do so, and the committee judged that it should not.

The committee believes that maintaining stability in current investment by the federal government in science and technology is vital to the U.S. ability to compete with other nations in advanced technologies. At the same time, the committee asserts that investments in federal science and technology, as essential as they are, are not the only determinants of successful economic competition. For example, if history is a reliable guide, then continual and very complex interplay between the patient capital of federal investments and entrepreneurial drive of industry is really the key. Indeed, the committee illustrated that through the histories of the development of the major elements of information technology, such as graphics and anti- hypertensive drugs. Those histories underline the critical role of federal investments in moving fundamental work and ideas to the point that they became the basis for billion-dollar industries and new companies. Overall, the committee strongly believes that its recommendations, both in this particular area, and more broadly taken, focus federal funds in the areas that in the long run best serve the national interest.

Role of Federal and Academic Laboratories

The misinterpretations of what the committee said about the federal role in developing commercial technologies are bookended by similar misunderstandings of its observations on the role of federal laboratories and universities in the federal science and technology enterprise. Again, the committee was careful in its recommendations. First, in regard to the federal laboratories, the committee argued that "research and development. . .should focus on the objectives of the sponsoring agency and not expand beyond the assigned missions of the laboratories. The size and activities of each laboratory should correspond to changes in mission requirements." This recommendation is congruent with the many examinations of federal laboratories conducted over the past year, such as the Galvin Commission that looked at the DOE national laboratories. What is important to note is that the committee was quite explicit on the great value to the country of much of what is done at the federal laboratories, both in support of the missions of their agencies and in providing the facilities and other services essential to a vigorous research enterprise. The committee believes that federal laboratories are an essential component of the national endeavor. In keeping with the Galvin Commission recommendations, a federal laboratory that meets its sponsoring agency needs and is well evaluated is an important part of the FS&T enterprise. However, at the same time, national needs have changed, and some of the reasons why federal laboratories were created no longer pertain. To ignore that is on first order not wise stewardship of public funds; on second order, it weakens the nation's science and technology base, because funds invested in anachronistic programs inevitably means less support for new high quality programs and exploitation of new opportunities, wherever they are done.

The committee's recommendation on the role of universities stated that "FS&T funding should generally favor academic institutions because of their flexibility and inherent quality control, and because they directly link research to education and training in science and engineering." The committee also stated that it "does not presume that academic research is always of higher quality than that conducted in industry, federal laboratories, and other non-academic institutions." Indeed, in some areas the work at a federal laboratory is superior. The committee was simply saying that if one integrates the many special features of research done at academic institutions with the purposes of federal investments in science and technology, then the conclusion of a bias toward supporting academic institutions is inescapable. That bias may indeed result in increased funding for academic institutions vis--vis other research performers. If that happens because the committee's guidance has been followed, including its affirmation of the major contributions of the highest quality made by many federal laboratories, then the consequence will be the strongest possible science and technology within static or even declining overall federal budgets

Finally, in summing up, we want to cite the last paragraph of our report,

A robust national system of innovation lies at the heart of our economy, our health, and our national security. That system of innovation depends on federal investments. The committee believes that its recommendations address a crucial need: maintaining the strength and vigor of U.S. research and development despite the prospect of declining federal discretionary spending over the next several years. Seeing the science and technology enterprise through the lens of a unified FS&T budget can help leaders in government and the American public to gauge its fiscal health. A carefully constructed comprehensive budget offers a unitary view, not artificially balkanized into agency budgets, but sensitive to the complexities and relationships among government programs vital to maintaining the United States at the forefront of world-class science and technology. The corollary proposals provide the basis for continuing excellence--emphasizing programs and people rather than institutions, subjecting all federal science and technology activities to competitive merit review, linking science and engineering research to education, and maintaining a pluralistic system of research and development tied to public missions. The committee's recommendations are designed to help root out obsolete or noncompetitive activities, allowing good programs to be replaced by even better ones.

Mr. Chairman and members of the committee, this concludes our testimony. We would be pleased to respond to your questions.


Biographies of Witnesses

FRANK PRESS is the Cecil and Ida Green Senior Fellow at the Carnegie Institution. He served as president of the National Academy of Sciences from 1981 to 1993 and as the president's science adviser during the Carter administration. A geophysicist, he has served on the faculties of Columbia University, California Institute of Technology, and Massachusetts Institute of Technology. He served on the president's Science Advisory Committee during the Kennedy administration and on the presidential Advisory Committee during the Ford administration. He was appointed by president Nixon to the National Science Board of the National Science Foundation and also served on the Lunar and Planetary Missions Board of the National Aeronautics and Space Administration. Among his many honors, Dr. Press received the Japan Prize and the Vannevar Bush Award in 1993 and the National Medal of Science in 1994.

MARYE ANNE FOX is the vice chair of the National Science Board. She is vice president for research at the University of Texas and the M. June and J. Virgil Waggoner Regents Chair in Chemistry. Dr. Fox was the recipient of the Garvan Medal and the Arthur C. Cope Scholar Award from the American Chemical Society. She is a member of the National Academy of Sciences and of the American Academy of Arts and Sciences, and a former member of the National Research Council's Commission on Physical Sciences, Mathematics, and Applications.

RICHARD J. MAHONEY recently retired as the chairman and chief executive officer of Monsanto Company. He joined Monsanto in 1962 as a product development specialist and subsequently held various marketing, technical service, and new product development positions in Plastic Products, Agriculture, and International Operations. He was elected president in 1979 and named chief executive officer in 1983. He is a director of the Metropolitan Life Insurance Company and of the Union Pacific Corporation, as well as a member of the advisory committee and/or board of numerous philanthropic, educational, and business associations.