[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
THE NATIONAL INSTITUTE OF
STANDARDS AND TECHNOLOGY'S ROLE IN
SUPPORTING ECONOMIC COMPETITIVENESS
IN THE 21ST CENTURY:
THE FISCAL YEAR 2008 BUDGET REQUEST
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON TECHNOLOGY AND INNOVATION
COMMITTEE ON SCIENCE AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 15, 2007
__________
Serial No. 110-6
__________
Printed for the use of the Committee on Science and Technology
Available via the World Wide Web: http://www.house.gov/science
______
U.S. GOVERNMENT PRINTING OFFICE
33-107 PDF WASHINGTON DC: 2007
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COMMITTEE ON SCIENCE AND TECHNOLOGY
HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas F. JAMES SENSENBRENNER JR.,
LYNN C. WOOLSEY, California Wisconsin
MARK UDALL, Colorado LAMAR S. SMITH, Texas
DAVID WU, Oregon DANA ROHRABACHER, California
BRIAN BAIRD, Washington KEN CALVERT, California
BRAD MILLER, North Carolina ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois VERNON J. EHLERS, Michigan
NICK LAMPSON, Texas FRANK D. LUCAS, Oklahoma
GABRIELLE GIFFORDS, Arizona JUDY BIGGERT, Illinois
JERRY MCNERNEY, California W. TODD AKIN, Missouri
PAUL KANJORSKI, Pennsylvania JO BONNER, Alabama
DARLENE HOOLEY, Oregon TOM FEENEY, Florida
STEVEN R. ROTHMAN, New Jersey RANDY NEUGEBAUER, Texas
MICHAEL M. HONDA, California BOB INGLIS, South Carolina
JIM MATHESON, Utah MICHAEL T. MCCAUL, Texas
MIKE ROSS, Arkansas MARIO DIAZ-BALART, Florida
BEN CHANDLER, Kentucky PHIL GINGREY, Georgia
RUSS CARNAHAN, Missouri BRIAN P. BILBRAY, California
CHARLIE MELANCON, Louisiana ADRIAN SMITH, Nebraska
BARON P. HILL, Indiana VACANCY
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
------
Subcommittee on Technology and Innovation
HON. DAVID WU, Oregon, Chairman
JIM MATHESON, Utah PHIL GINGREY, Georgia
HARRY E. MITCHELL, Arizona VERNON J. EHLERS, Michigan
CHARLIE A. WILSON, Ohio JUDY BIGGERT, Illinois
BEN CHANDLER, Kentucky JO BONNER, Alabama
MIKE ROSS, Arizona ADRIAN SMITH, Nebraska
MICHAEL M. HONDA, California
BART GORDON, Tennessee RALPH M. HALL, Texas
MIKE QUEAR Subcommittee Staff Director
RACHEL JAGODA BRUNETTE Democratic Professional Staff Member
COLIN MCCORMICK Democratic Professional Staff Member
TIND SHEPPER RYEN Republican Professional Staff Member
AMY CARROLL Republican Professional Staff Member
MEGHAN HOUSEWRIGHT Research Assistant
C O N T E N T S
February 15, 2007
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative David Wu, Chairman, Subcommittee on
Technology and Innovation, Committee on Science and Technology,
U.S. House of Representatives.................................. 8
Written Statement............................................ 9
Statement by Representative Phil Gingrey, Minority Ranking
Member, Subcommittee on Technology and Innovation, Committee on
Science and Technology, U.S. House of Representatives.......... 9
Written Statement............................................ 10
Prepared Statement by Representative Harry E. Mitchell, Member,
Subcommittee on Technology and Innovation, Committee on Science
and Technology, U.S. House of Representatives.................. 11
Prepared Statement by Representative Vernon J. Ehlers, Member,
Subcommittee on Technology and Innovation, Committee on Science
and Technology, U.S. House of Representatives.................. 12
Witnesses:
Dr. William Jeffrey, Director, National Institute of Standards
and Technology, Technology Administration, U.S. Department of
Commerce
Oral Statement............................................... 13
Written Statement............................................ 14
Biography.................................................... 20
Dr. R. Stanley Williams, Senior HP Fellow in Quantum Science
Research, Hewlett-Packard Corporation
Oral Statement............................................... 21
Written Statement............................................ 23
Biography.................................................... 40
Mr. Michael Borrus, General Partner, X/Seed Capital
Oral Statement............................................... 40
Written Statement............................................ 42
Biography.................................................... 44
Mr. Peter Murray, Vice President, Welch Allyn, Incorporated
Oral Statement............................................... 45
Written Statement............................................ 47
Biography.................................................... 58
Mr. Michael J. Ryan, President and CEO, TUG Technologies
Corporation
Oral Statement............................................... 58
Written Statement............................................ 61
Biography.................................................... 75
Discussion
Manufacturing Extention Partnerships........................... 78
R&D at NIST.................................................... 81
Advanced Technology Program.................................... 82
Measurement Barriers to Innovation............................. 83
Manufacturing Extension Partnership; Advanced Technology
Program...................................................... 85
Availability of Venture Capital................................ 89
Joint University of Maryland-NIST Institute.................... 91
Appendix 1: Answers to Post-Hearing Questions
Dr. William Jeffrey, Director, National Institute of Standards
and Technology, Technology Administration, U.S. Department of
Commerce....................................................... 96
Dr. R. Stanley Williams, Senior HP Fellow in Quantum Science
Research, Hewlett-Packard Corporation.......................... 100
Mr. Michael Borrus, General Partner, X/Seed Capital.............. 101
Mr. Peter Murray, Vice President, Welch Allyn, Incorporated...... 102
Mr. Michael J. Ryan, President and CEO, TUG Technologies
Corporation.................................................... 103
Appendix 2: Additional Material for the Record
Message sent by Dr. William Jeffrey, Director, National Institute
of Standards and Technology, to the Hollings MEP Center
Directors, dated February 26, 2007............................. 106
Statement by Daryl G. Hatano, Vice President, Public Policy,
Semiconductor Industry Association............................. 107
THE NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY'S ROLE IN SUPPORTING
ECONOMIC COMPETITIVENESS IN THE 21ST CENTURY: THE FISCAL YEAR 2008
BUDGET REQUEST
----------
THURSDAY, FEBRUARY 15, 2007
House of Representatives,
Subcommittee on Technology and Innovation,
Committee on Science and Technology,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:10 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. David Wu
[Chairman of the Subcommittee] presiding.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
hearing charter
SUBCOMMITTEE ON TECHNOLOGY AND INNOVATION
COMMITTEE ON SCIENCE AND TECHNOLOGY
U.S. HOUSE OF REPRESENTATIVES
The National Institute of
Standards and Technology's Role in
Supporting Economic Competitiveness
in the 21st Century:
The Fiscal Year 2008 Budget Request
thursday, february 15, 2007
10:00 a.m.-12:00 p.m.
2318 rayburn house office building
1. Purpose
On Thursday, February 15, 2007, the Technology and Innovation
Subcommittee of the House Committee on Science and Technology will hold
a hearing to consider the President's fiscal year 2008 (FY08) budget
request for the National Institute of Standards and Technology (NIST).
An Administration witness will review the proposed budget in the
context of the President's overall priorities for NIST. In addition,
there will be four witnesses who will comment on the President's FY08
budget request and the future direction and requirements for NIST.
2. Witnesses
Dr. William Jeffrey, Director, National Institute of Standards and
Technology
Dr. Stan Williams, Senior HP Fellow in Quantum Science Research,
Hewlett-Packard Corp, Palo Alto, CA
Mr. Michael Borrus, General Partner, X/Seed Capital, Menlo Park, CA
Mr. Peter Murray, Vice President, Welch Allyn, Inc., Beaverton, OR
Mr. Michael Ryan, President and CEO, TUG Technologies Corporation,
Marietta, GA
3. NIST Overview
Founded in 1901, the National Institute of Standards and Technology
(NIST) has developed and promoted measurement, standards, and
technology to enhance productivity, facilitate trade, and improve
quality of life. NIST is a non-regulatory agency of the U.S. Commerce
Department's Technology Administration.
NIST operates in two primary locations: Gaithersburg, MD and
Boulder, CO. It also operates two institutes jointly with other
organizations: the Center for Advanced Research in Biotechnology in
Rockville, MD (with the University of Maryland) and JILA in Boulder, CO
(with the University of Colorado).
NIST's staff includes approximately 2,700 scientist, engineers,
technicians, and support personnel. In addition, 1,800 associates
complement the staff, and NIST partners with about 1,500 manufacturing
specialists and staff at affiliated centers around the country. Three
NIST scientists have earned the Nobel Prize in the last 10 years.
NIST carries out its mission through four cooperative programs:
NIST laboratories--conduct research supporting U.S.
technology infrastructure by developing tools to measure,
evaluate and standardize, enabling U.S. companies to innovate
and remain competitive. NIST helps U.S. companies, workers, and
consumers by ensuring that standards are used to create a level
playing field--not a barrier to trade--in the global
marketplace.
Baldridge National Quality Program--promotes
excellence among U.S. manufacturers, service companies,
educational institutions, and health care providers; conducts
outreach programs and manages the annual Malcolm Baldridge
National Quality Award recognizing performance excellence and
quality.
Manufacturing Extension Partnership--offers technical
and business assistance services to improve the productivity
and competitiveness of small manufacturers through a nationwide
network of local centers. The centers are funded by a one-third
equal match from federal, state, and fees charged for services.
Advanced Technology Program--accelerates the
development of high-risk, innovative technologies that promise
broad benefits for the Nation by co-funding R&D partnerships
with the private sector, including universities.
NIST laboratories are comprised of seven labs and a technical
program, and are funded under the Scientific and Technical Research
Services (STRS) account.
Building and Fire Research Laboratory (BFRL)--works
to improve quality and productivity in the U.S. construction.
The lab also works to reduce human and economic loss due to
fires, earthquakes, wind, and other hazards.
Chemical Science and Technology Laboratory (CSTL)--
conducts research in measurement science and develops the
chemical, biochemical, and chemical engineering measurements,
data, models, and reference standards that are required to
enhance U.S. industrial competitiveness in the world market and
to improve public health, safety and environmental quality.
Electronics and Electrical Engineering Laboratory
(EEEL)--provides the fundamental basis for all electrical
measurements in the U.S. and advances standards for the
electronics and electrical industries.
Information Technology Laboratory (ITL)--conducts
research and develops test methods and standards for emerging
and rapidly changing information technologies. ITL focuses on
technologies to improve the usability, reliability, and
security of computers and computer networks for work and home.
Manufacturing Engineering Laboratory (MEL)--develops
measurement methods, standards, and technologies to improve
U.S. manufacturing capabilities. MEL researchers work with
industry to achieve greater efficiency and productivity with
improved measurements and standards, both dimensional and
mechanical. MEL also maintains the basic units for measuring
mass and length in the United States.
Materials Science and Engineering Laboratory (MSEL)--
anticipates and responds to industry material-science needs in
areas including microelectronics, automobiles, and health care.
MSEL houses the Nation's only fully equipped cold neutron
research facility.
Physics Laboratory (PL)--provides measurement
services and research for electronic, optical, and radiation
technology. Research on atomic clocks at PL has led to the
world's most accurate timing devices, critical for the Global
Positioning System (GPS), financial markets, and electrical
power grid testing. Over the last 10 years, three scientists
from PL have won the Nobel Prize.
Technology Services--provides technology products and
services including support for NIST calibrations, Standard
Reference Materials, Standard Reference Data, and Weights and
Measures; coordination of documentary standards activities;
training of foreign standards officials; laboratory
accreditations; facilitating partnerships between NIST
researchers and U.S. industry; and access to the NIST Research
Library.
In addition, NIST has two national research facilities.
NIST Center for Neutron Research (NCNR)--provides an
intense source of neutrons used to probe the molecular and
atomic structure and dynamics of a wide range of materials.
This facility is used heavily by industry. In 2006, researchers
from over 40 national labs, 140 U.S. universities, and 60 U.S.
companies conducted research at the facility in collaboration
with NIST scientists.
Center for Nanoscale Science and Technology (CNST)--
leverages the unique capabilities of the NIST Advanced
Measurement Laboratory complex, providing state-of-the-art
facilities for nanomanufacturing and nanometrology where
industry, universities and other federal laboratories can
collaborate in solving critical measurement and fabrication
issues necessary to convert nano-discoveries into products.
NIST also manages two programs that support small businesses.
Manufacturing Extension Program (MEP) is a proven
public/private partnership in all 50 states and Puerto Rico
with the mission of improving the competitiveness of small and
medium-sized manufacturers. In FY05, MEP, a network of 59
centers, assisted more than 16,000 small manufacturers,
providing a ten to one return on federal investment. In a
survey of approximately 25 percent of MEP clients, they
reported over $1.3 billion in cost savings directly attributed
to the program's assistance as well as creating $6.25 billion
in new or retained sales. The program also helped create/retain
more than 53,000 jobs and increased investment by $2.25 billion
returned to the economy.
The Advanced Technology Program (ATP) was created to
foster economic growth through the development of innovative
technologies. Through private/public partnerships, ATP's early
stage investment is accelerating the development of high-risk,
broadly enabling technologies and helping bridge the gap
between the laboratory and the market place. Through May 2004,
ATP co-funded 736 projects with 1,468 participants. Sixty-six
percent of ATP projects are led by small businesses, while more
than 160 different colleges and universities have participated
in ATP projects. Benefit-cost studies from approximately 40
projects indicate an eight to one return on investment.
NIST Budget Summary
NIST's FY08 budget request is summarized in the table below.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
4. NIST Budget Highlights
NIST's Laboratory Programs
The FY08 budget requests $492 million for scientific research. The
request is $68 million (17 percent) above the FY07 level of $417
million appropriated in the continuing resolution, H.J. Res. 20 (which
passed the House on January 31, 2007) and is $41 million above the FY06
request. The request also includes $94 million for construction and
renovation of NIST's scientific facilities, $35 million (60 percent)
above the FY07 appropriated level and $80 million (46 percent) below
the FY06 appropriation.
The increase in laboratory programs (STRS) for FY08 includes new
research initiatives plus those requested in FY07 as summarized below.
Enabling Nanotechnology from Discovery to Manufacture
(requested increase of $26 million) aims to improve the basic
scientific understanding of artificial materials on the
nanoscale as well as aid US industry in developing
manufacturing technologies for these materials. (Includes $6
million in FY08 request and $20 million from FY07.)
Measurements and Standards for the Climate Change
Science Program (requested increase of $5 million) will expand
the NIST component of the multi-agency U.S. Climate Change
Science Program (CCSP) to study the impact of aerosols on
global warming, and to carry out precise calibration of
satellite light sensors to monitor the amount of sunlight
striking the Earth.
Enabling Innovation through Quantum Science
(requested increase of $13 million) will pursue the development
of devices governed by quantum physics to develop next-
generation cryptography and computing technologies. (Includes
$4 million in FY08 request and $9 million from FY07 ``Quantum
Information Science'' initiative.)
Disaster Resilient Structures and Communities
(requested increase of $6 million) will improve the scientific
basis for building codes and best practices that make buildings
more resistant to damage during natural disasters such as
hurricanes, fires, and tsunamis. (Includes $4 million in FY08
request and $2 million from FY07 ``Structural Safety in
Hurricanes, Fires, and Earthquakes'' initiative.)
National Earthquake Hazards Reduction Program
Initiative (requested increase of $3.25 million) will fund
research into technologies for retrofitting or otherwise
protecting buildings against earthquake damage. NIST is the
lead agency for this interagency initiative. (Combined $3.25M
new initiative with $2M increase for similar FY07 initiative.)
NIST Center for Neutron Research Expansion and
Reliability Improvements: A National Need (requested increase
of $10 million) will upgrade and expand the NCNR neutron
source, which is used for research into superconductors,
nanostructured materials, biomaterials, microelectronics, and
hydrogen fuel cells. U.S. neutron research facilities are
currently oversubscribed.
Enabling the Hydrogen Economy (requested increase of
$10 million) will fund research into fuel-cell design and high-
volume manufacturing through development of measurement tools,
material characterization, theory, and models allowing real-
time diagnostics of hydrogen fuel cell performance, as well as
hydrogen transportation and point-of-sale technical
requirements.
Manufacturing Innovation through Supply Chain
Integration (requested increase of $2 million) to advance
industry towards seamless global supply chains by developing
manufacturing standards, measurements, and testing tools.
Synchrotron Measurement Science and Technology:
Enabling Next Generation Materials Innovation (requested
increase of $5 million) will fund the creation of a Center for
Synchrotron Measurement Science and Technology to provide
state-of-the-art measurement tools for characterizing the
chemical and structural state of materials and devices through
close collaborations with researchers from industry, academia,
and other government agencies.
International Standards and Innovation: Opening
Markets for American Workers and Exporters (requested increase
of $2 million) will support NIST assuming a more proactive role
as a convener, facilitator, and catalyst in ensuring that the
necessary underpinnings for product and process standards are
in place to support full U.S. participation in global markets.
Innovations in Measurement Science (requested
increase of $4 million) will be used to advance NIST's
capabilities in the core measurement science areas underpinning
technology innovation.
Bioimaging: A 21st-Century Toolbox for Medical
Technology (requested increase of $4 million) will fund NIST
utilizing its expertise in the physical and information
sciences to provide the necessary measurements and standards to
pave the way for innovative diagnostics, in partnership with
the National Institutes of Health (NIH) and the bioimaging
industry.
Cyber Security: Innovative Technologies for National
Security (requested increase of $2 million) will fund NIST
collaboration with industry and academia to develop metrics and
measurement techniques for characterizing known and unknown
vulnerabilities of computer systems.
Biometrics: Identifying Friend or Foe (requested
increase of $2 million) will fund NIST to develop measurements
and standards to support testing and evaluation of enhanced
biometric systems, in partnership with DHS, the FBI, and the
State Department.
The FY08 construction and renovation (CRF) request includes two
major new projects:
Boulder Building 1 Extension (requesting $28 million)
will begin construction of a new laboratory building on the
Boulder campus with high-performance facilities. Total
construction is estimated at $76.2 million with $28.0 budgeted
in FY08.
Center for Neutron Research Expansion and Reliability
Improvements (requesting $31 million) will fund expansion and
complete new construction at the neutron research facility on
the Gaithersburg campus, which is used to probe the atomic and
molecular structure of plastics, biological materials, and thin
magnetic films. As a national user facility, researchers from
academia, industry, and government conduct research at the
center. (Includes $19 million in FY08 request and $12 million
from FY07 ``NIST Center for Neutron Research Expansion and
Reliability Improvements: A National Need.'')
Advanced Technology Program (ATP): The FY08 budget request proposes to
eliminate ATP (funded at $79 million in FY07).
Manufacturing Extension Partnership (MEP) Program: The FY08 request for
MEP is $46.3 million, which represents a 58 percent cut from the FY07
enacted level of $104.6 million.
5. Issues
Does the FY08 budget request set the appropriate
priorities to achieve the stated goals of improving U.S.
competitiveness?
What are the criteria used by the Administration in
determining the priorities for NIST funding and activities?
As a part of the American Competitiveness Initiative
(ACI), the Administration proposes doubling NIST's Scientific &
Technical Research Services and Construction budgets. What
should NIST's mandate and activities include under this
proposed funding scenario?
Can the Manufacturing Extension Partnership (MEP)
program function effectively with the Administration's proposed
budget request of $46.3 million (56 percent reduction from H.J.
Res. 20). What would be the impact of this funding amount on
the level of MEP services provided to small manufacturers and
what would be the impact on the small- and medium-sized
manufacturing community?
Given the current focus on developing programs and
policies to support an innovation-based economy, should the
Advanced Technology Program (ATP) be eliminated as proposed in
the Administration's FY08 budget request?
Chairman Wu. The Subcommittee now stands in order.
I want to welcome everybody to the first hearing of the
Technology and Innovation Subcommittee. It is only fitting that
with the Subcommittee's focus on technology, competitiveness,
and innovation that our first hearing is on the National
Institute of Standards and Technology, NIST. For over 100
years, NIST has done outstanding work to promote the public
welfare and support industrial growth: from setting standards
for uniform pipe threads on fire hydrants to the time
measurements that make electronic financial transactions and
the Global Positioning System, or GPS, work, NIST has always
been responsive to industry's and the public's needs.
NIST's development of uniform pipe thread standards for
fire hydrants was one of NIST's first success stories. Three
years after NIST's creation, a fire in Baltimore largely
destroyed the city, because when adjacent fire companies within
a 100-mile radius came to the assistance of Baltimore, they
found that their hoses and the fire hydrants in Baltimore
didn't have a uniform standard and didn't work together. NIST
solved the problem over time.
However, when I mention NIST to my colleagues, most don't
recognize that name as a federal agency. Perhaps the
Manufacturing Extension Program, or MEP, perhaps the Advanced
Technology Program have a little visibility in the Congress and
among my constituents. But when I meet with industry
representatives, while their technical staff may know about
NIST, frequently, the business executives and line folks do
not.
During the next two years, I hope to educate my colleagues
in Congress and the broader public about the great importance
of NIST. I know that Dr. Jeffrey shares this goal as well.
Now, on to the issue at hand: the Administration's fiscal
year 2008 budget request for NIST. I am glad that the
Administration has recognized the importance of at least a
portion of NIST's work as outlined in the American
Competitiveness Initiative. Congress and the prior
Administration have long been supportive of the NIST lab
programs. During the past 15 years, NIST's lab budget has
increased by 130 percent. When President Clinton took office,
the NIST lab budget was $163 million. Eight years later, it was
$313 million. In addition, Congress had also provided more than
$310 million for the construction of new lab facilities. There
are few federal agencies that have grown so rapidly over the
past decade. The Science and Technology Committee has always
been NIST's strongest supporter.
I am concerned that this Administration follows a strategy
of paying for increases in the lab programs and construction by
cutting funding for the MEP and proposing repeatedly to
eliminate ATP. Both of these programs are successful public/
private partnerships, which have contributed to American
innovation and competitiveness. I hope that we can break this
cycle where every year the Administration proposes either
eliminating or cutting these two programs and then Congress has
to restore the funding.
NIST has not had an authorization for all its programs
since 1992, and I intend to break this cycle, also. I want to
move a complete NIST authorization bill through Congress. I am
hoping that the Administration will work with me on this
effort. We need to move an authorization bill which sets NIST
on a path to broadly support innovation and competitiveness in
the United States and with our friends and competitors around
the world. We are in a global race for economic competitiveness
and we can't afford to stand idly by and watch our economy burn
to the ground as happened to Baltimore 100 years go.
Now, I would like to recognize the Ranking Member of the
Subcommittee, the gentleman from Georgia, Dr. Gingrey, for his
opening remarks.
[The prepared statement of Chairman Wu follows:]
Prepared Statement of Chairman David Wu
I want to welcome everyone to the first hearing of the Technology
and Innovation Subcommittee. It seems only fitting that with the
Subcommittee's focus on technology, competitiveness, and innovation our
first hearing is on the National Institute of Standards and
Technology--NIST. For over 100 years, NIST has done outstanding work to
promote the public welfare and support industrial growth: from setting
standards for uniform pipe threads on fire hydrants to the time
measurements that make electronic financial transactions and the Global
Positioning System (GPS) functional. NIST has always been responsive to
industry's and the public's needs.
NIST's development of uniform pipe thread standards for fire
hydrants was one of NIST's first success stories. Three years after
NIST's creation, a fire in Baltimore largely destroyed the city. Why?
Because when the fire companies from within a 100 miles radius showed
up, none of their hoses would fit Baltimore's fire hydrants because
there was no uniform standard. NIST solved the problem.
Now, on to the issue at hand--the Administration's FY08 budget
request for NIST. I am glad that the Administration has recognized the
importance of at least a portion of NIST work as outlined in the
American Competitiveness Initiative (ACI). Congress and the prior
Administration have long been supportive of the NIST lab programs.
During the past 15 years, NIST's lab budget has increased by 130
percent. When President Clinton took office the NIST lab budget was
$163 million; eight years later it was $313 million. In addition,
Congress had also provided more than $310 million for the construction
of new lab facilities. There are few federal agencies that have grown
so rapidly over the past decade. The Science and Technology Committee
has always been one of NIST's strongest supporters.
I am concerned that the Bush Administration continues to follow a
strategy of paying for increases in the lab programs and construction
by cutting funding for the MEP and eliminating the ATP. Both of these
programs are successful public/private partnerships which have
contributed to American innovation and competitiveness. I hope that we
can break this cycle where every year the Administration proposes
either eliminating or cutting these two programs and then Congress
restores the funding.
NIST has not had an authorization for all its programs since 1992
and I intend to break this drought. I want to move a complete NIST
authorization bill through Congress. I'm hoping that the Administration
will work with me on this effort. We need to move an authorization bill
which sets NIST on a path to broadly support innovation and
competitiveness in the United States. We are in a global race for
economic competitiveness--we can't afford to stand idly by and watch
our economy burn to the ground as happened in Baltimore, 100 years ago.
Now, I would like to recognize the Ranking Member of the
Subcommittee, Dr. Gingrey, for his opening remarks.
Mr. Gingrey. And I thank you, Mr. Chairman.
Good morning. I am very excited for our subcommittee's
first hearing of the 110th Congress, and I want to thank my
friend from Oregon, Mr. Wu, for organizing this hearing. And I
look forward to working with him over the next two years on
technology and innovation, issues that are vital to our
economic competitiveness.
It is quite important that this first hearing in the
Technology and Innovation Subcommittee is about one of our
nation's scientific stars, the National Institute of Standards
and Technology, or NIST.
Almost every federal agency and United States industry
sector uses the standards, measurements, and certification
services that NIST laboratories provide. The breadth of NIST's
applications stretches from guidelines on the accuracy and
reliability of electronic voting machines to research into the
causes of building and structural failures and to making health
care information technology inter-operability a reality in a
health care delivery system. A must-do, in my opinion, to
deliver the kind of radical reforms needed to improve the
quality and lower the cost of delivering health care in this
country.
The future of many cutting-edge technologies also depends
on the research and technical expertise of NIST laboratories.
Emerging fields, such as nanotechnology and bioengineering,
will not become mature industries and markets without the
existence of scientifically-based industrial measurements and
standards. Beginning last year, the President recognized the
important role that NIST plays in our nation's economic
security and started NIST on a path to double its core research
and facilities budget by 2017. I fully support the President's
American Competitiveness Initiative and the Office of Science
at the Department of Energy. I look forward to hearing more
details today about the role NIST will play in the President's
American Competitiveness Initiative.
And I am interested to hear the Administration's rationale
in requesting only $46 million for the Manufacturing Extension
Partnership, the MEP program. The MEP program helps small and
medium-sized United States manufacturers optimize their
operations and remain competitive in the global economy. And it
is a critical program that is worthy of taxpayer dollars. It
deserves the $106 million that Congress had provided in recent
years, and I intend to work with my colleagues to see that it
once again receives an adequate appropriation for fiscal year
2008.
Chairman Wu, I am pleased to have Mike Ryan, President and
CEO of TUG Technologies, a company that is located in my
district, in Marietta, Georgia, with us today to discuss the
importance of the MEP program. He has vast experience with a
variety of MEP programs in different states of this great
country and has some exciting success stories to share with
this subcommittee.
I thank all of the witnesses for taking the time to be here
today. I only wish that I could stay to hear what will be, I
know, a fruitful and productive debate. However, as you know, a
good friend and colleague, our own Dr. Charlie Norwood, passed
away this week, and his funeral is this afternoon in Augusta,
Georgia. And in order to offer my condolences to his wife and
family, I will be joining many of my colleagues as we leave
here in just a few minutes to fly back to his services. So
please keep his family and friends in your thoughts and
prayers.
And, Mr. Chairman, I yield back the balance of my time, and
I thank you.
[The prepared statement of Mr. Gingrey follows:]
Prepared Statement of Representative Phil Gingrey
Good morning. I am very excited for our subcommittee's first
hearing of the 110th Congress. I thank my friend from Oregon, Mr. Wu,
for organizing this hearing and look forward to working with him over
the next two years on technology and innovation issues that are vital
to our economic competitiveness.
It is quite appropriate that the first hearing of the Technology
and Innovation Subcommittee is about one of our nation's scientific
stars--the National Institute of Standards and Technology (NIST).
Almost every federal agency and U.S. industry sector uses the
standards, measurements, and certification services that NIST labs
provide. The breadth of NIST's applications stretch from guidelines to
the accuracy and reliability of electronic voting machines to research
into the causes of building and structural failures, and to making
health care information technology inter-operability a reality in our
health care delivery system. A must do, in my opinion, to deliver the
kind of radical reforms needed to improve the quality and lower the
cost of delivering health care in this country.
The future of many cutting-edge technologies also depends on the
research and technical expertise of NIST's laboratories. Emerging
fields such as nanotechnology and bio-engineering will not become
mature industries and markets without the existence of scientifically-
based industrial measurements and standards.
Beginning last year, the President recognized the important role
NIST plays in our nation's economic security and started NIST on a path
to double its core research and facilities budget by 2017. I fully
support the President's American Competitiveness Initiative to double
not only NIST's budget but also those of the National Science
Foundation and the Office of Science at the Department of Energy. I
look forward to hearing more details today about the role NIST will
play in the President's American Competitiveness Initiative.
I am interested to hear the Administration's rationale in
requesting only $46 million for the Manufacturing Extension Partnership
(MEP) program. The MEP program helps small and medium-sized U.S.
manufacturers optimize their operations and remain competitive in the
global economy and it is a critical program that is worthy of taxpayer
dollars. It deserves the $106 million Congress has provided in recent
years and I intend to work with my colleagues to see that it once again
receives an adequate appropriation for FY 2008.
Chairman Wu, I am pleased to have Mike Ryan, President and CEO of
TUG Technologies, a company that is located in my district in Marietta,
Georgia, with us today to discuss the importance of the MEP program. He
has vast experience with a variety of MEP programs in different states
of this great country and has some exciting success stories to share
with this subcommittee.
I thank all the witnesses for taking the time to be here today and
wish I could stay to hear what I know will be a fruitful and productive
debate. However, a good friend and colleague, Dr. Charlie Norwood,
passed away this week and his funeral is this afternoon in Augusta, GA.
In order to offer my condolences to his wife and family, I need to
leave to fly back for the services. Please keep his family and friends
in your thoughts and prayers and I yield back the balance of my time.
Chairman Wu. Thank you, Dr. Gingrey.
And it is my understanding that the timeline for meeting
downstairs for our friend Charlie is in about 12 minutes. And I
just want to recognize that, while many of us are going, many
of us would like to be there. Charlie was a gentleman and a
principled fellow. I enjoyed working with him on the Education
Committee. And I also went toe-to-toe with him on occasion, and
he did each of those equally well. And I think, as the
President would say, he was a good man.
Mr. Gingrey. Thank you, Mr. Chairman.
Chairman Wu. Thank you.
I ask unanimous consent that all additional statements be
submitted by Committee Members to be included in the record.
Without objection, so ordered.
[The prepared statement of Mr. Mitchell follows:]
Prepared Statement of Representative Harry E. Mitchell
Thank you, Mr. Chairman.
To compete in the global economy, America needs technological
innovation. Innovation is often expensive, however, and not always
immediately profitable. This can be especially problematic for small
businesses. For me, the question isn't WHETHER we should help small
businesses get the technology and training they need, it's HOW we
should do so.
Today, we will hear about two such programs: the Manufacturing
Extension Partnership and Advance Technology Program.
The President's budget proposes drastic cuts to these programs. I
am eager to hear from today's witnesses about this. . . not only about
whether they agree with these cuts, but also what kind of alternative
ideas they have for assisting small businesses' technological
innovation and training.
I yield back the balance of my time.
[The prepared statement of Mr. Ehlers follows:]
Prepared Statement of Representative Vernon J. Ehlers
NIST is extremely important to U.S. competitiveness. With three
Nobel prizes awarded in less than a decade, I don't think anyone would
disagree that the research environment fostered at NIST is enviable or
that NIST's mastery of cultivating innovation is truly remarkable.
I am glad the witnesses today will highlight some of the outreach
endeavors NIST is engaged in. I look forward to determining with my
colleagues how programs like the Manufacturing Extension Partnership
(MEP) and Advanced Technology Program (ATP) can be strengthened. I
believe there are opportunities for improvement, though we must make
sure we resist changes based purely on ideological grounds.
I am very pleased that the President's requests includes funding
($28 million) to begin much needed repairs and improvements to the NIST
facilities in Boulder, CO. I've worked at these facilities and have
seen first-hand some of their limitations. They were built more than 50
years ago and cannot provide the stable environment required for
today's precision's measurements. For example, the scientists must use
duct tape and plastic sheeting to protect their experiments from the
unpredictable air flow in the buildings' ventilation systems. I applaud
Dr. Jeffrey for undertaking a comprehensive review of the needs of the
lab and assessing the most cost-effective way to upgrade the
facilities.
Chairman Wu. We have a very distinguished panel of
witnesses, and I want to thank them for taking the time to
travel the distance, whether it is 2,500 miles or a dangerous
12 miles to Capitol Hill. And in this subcommittee, at least,
the dangerous part of the journey is over. You will find an
inquiring, friendly environment.
Before we begin, I would like to make a short introduction
of each of the panelists, other than Mr. Ryan, who has already
been very well introduced by Dr. Gingrey.
First, Dr. Bill Jeffrey has been the Director of NIST for
the past year and a half. Before that, he was at the White
House Office of Science and Technology Policy, the Defense
Advanced Research Projects Agency, and he started his career at
the Defense Airborne Reconnaissance Office. Since coming to
NIST, Dr. Jeffrey has been their strongest advocate within this
Administration.
Dr. Stan Williams of the Hewlett-Packard Corporation is a
senior HP fellow and founding Director of the Quantum Research
Group. I have never been able to find anything there, and maybe
you can tell me what I have been missing. Dr. Williams is an
expert in nanotechnology and quantum computing. He has been
awarded the Julius Springer Award for Applied Physics, the
Feynman Prize in Nanotechnology, the Dreyfus Teacher-Scholar
Award, a Sloan Foundation fellowship, and was named by
Scientific American as one of the 50 top technology leaders.
Mr. Michael Borrus is the founding general partner of X/
Seed Capital, a seed-focused, early-stage venture fund. That,
plus your youth, must be where the ``X'' comes from. He has
taught at UC-Berkeley and is the author of three books on high-
tech issues.
Mr. Peter Murray is the Vice President of Welch Allyn, a
prominent manufacturer of patient-monitoring equipment with a
footprint across the world but with a location, importantly, in
Beaverton, Oregon. His company has relied upon the services of
the Oregon Manufacturing Extension Partnership, or the MEP,
center in Oregon.
And Dr. Gingrey has already introduced Mr. Ryan.
And if I may have the envelope, please. No envelope.
Gentlemen, I understand that you all have submitted
substantial materials in writing. We have a five-minute period
for a statement, and if you could, please, summarize and point
out the highlights or lowlights, or both, of your written
testimony.
Dr. Jeffrey, let us begin with you.
STATEMENT OF DR. WILLIAM JEFFREY, DIRECTOR, NATIONAL INSTITUTE
OF STANDARDS AND TECHNOLOGY, TECHNOLOGY ADMINISTRATION, U.S.
DEPARTMENT OF COMMERCE
Dr. Jeffrey. Thank you.
Chairman Wu, Ranking Member Gingrey, and Members of the
Subcommittee, I am pleased to present the President's 2008
budget request for NIST. This is a strong budget that will
further enhance our abilities to support the measurements and
standards needs of U.S. industry and academia.
NIST has a long history of being at the forefront of new
innovations through our measurements and standards. In 2003,
the National Academy of Engineering identified the greatest
engineering achievements of the 20th century. NIST measurements
and standards were integral to the successful development and
adoption of virtually every one.
Nineteen retrospective studies of economic impact show
that, on average, NIST labs generated a benefit-to-cost ratio
of 44:1 to the U.S. economy. The high rate of return results
from the fact that new measurements or standards benefit entire
industries or sectors of the economy as opposed to individual
companies.
For example, NIST researchers recently developed new
measurement techniques that cut up to 80 percent of the cost
and time for industry to develop advanced materials. As one
industry scientist put it, NIST's scientists are reawakening a
major element of creativity that analytical science almost
lost.
NIST also operates world-class user facilities. Last year,
approximately 2,000 researchers from 60 different industries
leveraged the NIST Center for Neutron Research, or the NCNR. A
National Academy of Science's report describes the NCNR's
capability to image and operate a fuel cell as ``a considerable
achievement and one of the most significant analytical advances
in the membrane fuel cell realized in decades.'' Industry
scientists have stated that the research performed at the NCNR
has allowed them to jump five years ahead in fuel cell
development.
To prepare for the future, NIST is working with industry to
identify critical measurement barriers to innovation,
evaluating its physical infrastructure, forming new and
strengthening existing partnerships, and updating ways to
stimulate the knowledge transfer from its labs to industry and
academia.
The increased funding provided through the budget request
will directly support innovative advances in broad sectors of
the economy as well as improve the safety and quality of life
for our citizens. For example, the research initiatives will
speed the development and foster the adoption of nanotechnology
products and provide the physical measurements to ensure their
safety, accelerate the revolutionary economic potential in
exploiting the unique properties of the quantum world, provide
confidence and reduce uncertainty in measurements supporting
global climate change models, reduce the risk to communities as
they encroach on hurricane-prone coasts and fire-prone wildland
urban interface regions, and enhance the safety of new and
existing structures from the catastrophic impact of
earthquakes.
To meet the demands for measurements at ever-smaller
scales, at faster rates, and with more accuracy, it requires
excellent laboratory and user facilities. The budget request,
therefore, includes capacity and capability improvements at
both our Boulder campus and the NCNR.
The budget request for MEP is identical to last year's
request and is a reduction of $58.3 million from the fiscal
year 2006 enacted.
I recognize the difference in priority between the
Administration and Congress regarding the federal funding level
for the MEP program. One thing that you can be certain of,
regardless of the final appropriations: NIST will execute the
program in the most effective manner possible to support the
Nation's small manufacturers.
No funds for ATP are requested in the President's 2008
budget. The 2006 enacted budget was consistent with the phase-
out of the program. The 2007 Joint Resolution, however,
included funding for ATP. And I understand it was approved by
the Senate last night, and assuming it is signed by the
President, NIST will initiate a new competition in 2007.
In summary, recent NIST measurements and standards research
have enabled innovations now embedded in the iPod, body armor,
saving the lives of domestic law enforcement officers and our
service men and women overseas, and diagnostic screening
devices for cancer patients making their treatment more
targeted and accurate. The results of NIST research can be
found in virtually every manufacturing and service industry.
For more than a century, NIST research has been critical to
our nation's competitiveness. The increased funding requested
for NIST will directly support innovations in broad sectors of
the economy that will, quite literally, define the 21st
century.
Thank you, and I would be happy to answer any questions.
[The prepared statement of Dr. Jeffrey follows:]
Prepared Statement of William Jeffrey
Chairman Wu, Ranking Member Gingrey and Members of the
Subcommittee, I am pleased to appear before you today to present the
President's FY 2008 Budget request for the National Institute of
Standards and Technology (NIST). This is a strong budget for NIST and
it will further enhance NIST's ability to support the measurement and
standards needs of U.S. industry and universities. The FY 2008 request
of $640.7 million includes $594.4 million for NIST's core (encompassing
NIST's research and facilities) and $46.3 million for the Hollings
Manufacturing Extension Partnership. The budget for the NIST core
represents an 11 percent increase over the President's FY 2007 request
and a 21 percent increase over the proposed FY 2007 joint resolution
(H.J. Res. 20) recently passed by the House and sent to the Senate.
This funding supports NIST's mission to promote U.S. innovation and
industrial competitiveness by advancing measurement science, standards
and technology in ways that enhance economic security and improve our
quality of life.
NIST's Impact on Innovation and the Economy
NIST has a long history of being at the forefront of new
innovations through our high-impact measurements and standards. In
2003, the National Academy of Engineering identified 20 of the greatest
engineering achievements of the 20th century--including automobiles,
aircraft, lasers, computers, and the Internet. NIST measurements and
standards were integral to the successful development and adoption of
virtually every one. Now NIST is paving the way for the greatest
achievements of the 21st century which are still yet to be imagined.
NIST's measurement science and standards form part of the
foundation upon which innovation is built. Just as the Nation's
physical infrastructure (e.g., roads or power grid) define the Nation's
capacity to build and transport goods--the Nation has an innovation
infrastructure which defines the Nation's capacity to innovate. And
investment in long-term basic research like that done at NIST is an
integral component of the innovation infrastructure. As stated in the
National Academy of Sciences' Rising Above the Gathering Storm, ``The
power of research is demonstrated not only by single innovations but by
the ability to create entire new industries.''
NIST researchers are world leaders in their fields. They frequently
arrive at the ``cutting edge'' of science before anyone else. And once
there, they partner with industry and academia to identify and overcome
barriers that can slow or even halt the progress of new innovations.
With the proposed FY 2008 budget, NIST will continue developing the
measurement and standards tools that enable U.S. industry to maintain
and enhance our global economic competitiveness.
NIST continues to meet the Nation's highest priorities by focusing
on high impact research and investing in the capacity and capability of
our user facilities and labs. This emphasis is validated by the high
rate of return to the Nation that the NIST labs already have
demonstrated. Nineteen retrospective studies of economic impact show
that, on average, NIST labs generated a benefit-to-cost ratio of 44:1
to the U.S. economy. The high rate of return results from the fact that
new measurements or standards benefit entire industries or sectors of
the economy--as opposed to individual companies.
NIST supports U.S. innovation and economic competitiveness
primarily through its measurements, standards, and national user
facilities. Recent NIST successes highlight the importance of each of
these critical components and illustrate how NIST's labs are able to
return such a large benefit to the Nation:
Measurements--NIST researchers recently developed new
measurement techniques that allow for rapid and cost-effective
assessments of advanced materials that are used in a range of
products from new detergents to improved adhesives for next-
generation electronics. Previously, it could cost industry $20
million to develop and understand the characteristics of one
new material. With this NIST measurement advance, the cost and
time are estimated to have been cut by 80 percent. To
facilitate the transfer of this technique to industry, NIST
organized an open consortium now consisting of 23 members that
are learning to use and adapt these new measurement techniques.
As a scientist from Honeywell International put it, ``. . .NIST
offers an invaluable resource to show what can be done, and how
to go about it. NIST Combinatorial Methods Center scientists
are reawakening a major element of creativity that analytical
science almost lost.''
Standards--Nanotechnology has the potential to revolutionize
manufacturing. And one of the most promising nanomaterials is
the carbon nanotube. Carbon nanotubes have unique electronic
and mechanical properties that lend themselves to a variety of
applications, ranging from the development of stronger and
lighter materials to nanowires and transistors for miniature
electronics. Regardless of the potential application, the
quality of the materials is paramount. Unfortunately, current
production techniques for carbon nanotubes result in products
with high levels of uncertainty in their quality and
uniformity. To address this concern, NIST is currently
developing a carbon nanotube reference material. This reference
material, when deployed, can be used by any nanotube
manufacturer to validate their product's quality, purity, and
consistency and accelerate the adoption of carbon nanotubes
into more sophisticated devices.
National User Facilities--NIST operates world-class user
facilities that benefit the entire U.S. research community.
Last year, approximately 2000 researchers from 60 different
industries across the country leveraged the NIST Center for
Neutron Research (NCNR). One recently developed application of
the NCNR was to image the interior of operating fuel cells to
help improve the efficiency and durability of these devices.
Large and small companies involved in the manufacture or use of
hydrogen fuel cells, including General Motors, Daimler-
Chrysler, Dupont, and PlugPower, have benefited from this new
capability. The NCNR is the premier facility in the world
providing this capability. A National Academy of Sciences
report describes the NIST efforts in regards to fuel cell
technologies as ``. . .a considerable achievement and one of
the most significant analytical advances in the membrane fuel
cell realized in decades. The NIST facility offers the entire
fuel cell community unique research opportunities that
previously eluded them.'' Industry scientists have stated that
the research performed at the NCNR has allowed them to jump
five years ahead in terms of fuel cell development.
The President recognized NIST's critical role for the Nation as
part of the American Competitiveness Initiative (ACI). The ACI
describes NIST as: ``. . .a high-leverage federal research agency that
performs high-impact basic research and supports the successful
technical translation and everyday use of economically significant
innovations. . .'' Under the ACI, overall funding for NIST's core, the
National Science Foundation, and the Department of Energy's Office of
Science is together slated to double by 2016.
Preparing for the Future
The 21st century will be defined by technology innovations that
fundamentally change the products and services available, the way they
are manufactured and provided, and the impact on our quality of life.
These advances will arise from basic research now beginning in, for
example, nanotechnology, quantum science, and alternative energies--all
areas in which NIST has a strong and increasing focus with its
investments.
The goal of increasing physical sciences research at NIST (along
with that supported by the National Science Foundation and the
Department of Energy's Office of Science) provides a unique opportunity
to strategically establish the programs, plans, and infrastructure that
will more than double the impact that NIST has on the economy. To
prepare for the future, NIST is working with industry to identify
critical measurement barriers to innovation, evaluating the capacity
and capability of NIST's physical infrastructure, forming new and
strengthening existing partnerships, and updating the ways it
stimulates the knowledge transfer from its labs to industry and
academia.
For example, over the past year, NIST worked with over 1,000
experts from industry and universities to identify measurement barriers
to innovation in a number of critical industry sectors. Over 700
technical barriers were identified, analyzed, and documented in a
report. NIST is now in the process of working with industry,
universities, and other government agencies to address many of these
identified barriers over the coming years.
In terms of facilities, NIST has conducted a rigorous evaluation of
its laboratory capacity and capabilities on its Boulder, Colorado,
campus. This review found facilities' shortfalls in our ability to meet
both current and projected industry and university needs in a number of
important areas. Examples include the high-speed and high-frequency
measurements required for electronics, defense, and homeland security;
measurements and tests at the single atom level; and improved methods
for measuring time, an area expected to vastly improve navigation and
positioning systems. Each technical area was evaluated in terms of
necessary laboratory conditions (to include stability of temperature,
vibration, and humidity, as well as air cleanliness). As a result of
this assessment, new laboratory space to meet the Nation's needs well
into the 21st century is proposed in the FY 2008 budget (Boulder
Building 1 Extension).
NIST also serves industry and academia by being a steward of world-
class user facilities. As part of the ACI, NIST identified two
important opportunities first called out in the FY 2007 budget and
enhanced in the FY 2008 budget--increased capacity and capability of
the NIST Center for Neutron Research and creation of the NIST Center
for Nanoscale Science and Technology. Both of these facilities are
designed to stimulate progress in support of our nation's economic
competitiveness.
The ACI provides NIST the opportunity to further promote U.S.
innovation and industrial competitiveness. With focused, world-class
research and facilities, NIST will have a greater impact on the 21st
century economy than it did even over the past century.
FY 2008 President's Budget
The increased funding provided through the FY 2008 request will
directly support innovative advances in broad sectors of the economy as
well as improve the safety and quality of life for our citizens. The
following table summarizes the proposed FY 2008 budget. In this table
we show both the FY 2007 President's budget and the FY 2007 joint
resolution (H.J. Res. 20) for comparisons as different baselines.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The FY 2008 budget was formulated with the FY 2007 President's
request as the baseline. Since H.J. Res. 20 provides a smaller budget
for the NIST core (STRS and CRF) than the FY 2007 President's request
by $43.6 million, some proposed initiatives in FY 2007 that will not
receive full funding are implicitly contained within the President's FY
2008 request. New initiatives are described in more detail below:
Scientific and Technical Research Services (STRS)
Enabling Nanotechnology from Discovery to Manufacture (+$6 million)
The potential market for products containing nanomaterials is
estimated at over $1 trillion by 2015. Because of their small size--a
thousand times thinner than a human hair--nanoscale products require
entirely novel ways to characterize their physical properties and fully
exploit their unique characteristics in the manufacture of new
products.
In FY 2007, NIST began a major initiative to address the
measurement barriers hindering rapid development of nanotechnologies. A
new NIST Center for Nanoscale Science and Technology (CNST) has been
established that combines both research and a state-of-the-art
nanofabrication and nanometrology user facility.
The research initiatives proposed in FY 2008 will build on recent
NIST advances by:
Developing ways to measure strength, stress, strain,
optical, and electronic properties of nanostructures to improve
processes and understanding of failure mechanisms;
Creating three-dimensional, high-resolution imaging
methods that reveal details of structure, chemical composition,
and manufacturing defects and allow researchers to view
nanostructures as they interact with their environment;
Simulating nanoscale phenomena with computer models
to allow economical development of production methods for
complex nanodevices; and
Producing the measurement techniques required to
address the interagency efforts to characterize nanotechnology
impacts to our health, safety, and environment.
Measurements and Standards for the Climate Change Science Program (+$5
million)
The climate is changing. Determining how fast it is changing, and
understanding the complex relationships between all the environmental
variables is a critical objective of the U.S. Climate Change Science
Program. Many different climate monitoring systems in space, in the
air, and on the ground are currently monitoring solar output as well as
trapped and reflected heat by the Earth's atmosphere. These systems are
operated by many countries and research groups. Establishment of
absolute calibration and standard references will allow accurate inter-
comparisons of these systems, will help identify small environmental
changes occurring over many years, and will reduce uncertainties in the
data input to global climate change models.
With the proposed FY 2008 funding, NIST will, working in
coordination with other agencies, develop:
An international irradiance measurement scale to be
used in rigorously calibrating satellite light intensity
instruments prior to launch to ensure sufficient accuracy to
allow valid comparisons among results from different
instruments or from data sets taken over different periods of
time;
New instrument design strategies and quality
assurance programs to optimize accuracy and stability of
satellite-based irradiance measurement systems;
Techniques for generating specific types of aerosols
in the laboratory, measuring aerosol optical and physical
properties, and for simulating aerosol properties that cannot
yet be measured in the laboratory; and
A database of critically evaluated data on aerosol
properties collected at NIST and elsewhere.
Enabling Innovation Through Quantum Science (+$4 million)
Unlike the laws of physics that govern our ``every day'' world, the
laws of physics that govern the quantum world of atoms, electrons, and
light particles are fundamentally different. These quantum particles
are able to interact in ways that according to human experience would
seem impossible. For example, a quantum particle can actually be in two
different places simultaneously.
Conceptualizing these phenomena is difficult to say the least, but
developing ways to exploit them for the development of technologically
significant innovations is even more challenging. NIST, however, has
world-class scientists who are leaders in the emerging field of quantum
information science. Three NIST scientists have won Nobel Prizes in the
last 10 years based on their work in this field. Many of the best minds
in physics today believe that applications of quantum science will
transform the 21st century just as integrated circuits and classical
electronics revolutionized the 20th century.
The proposed FY 2008 initiative will build upon NIST's significant
expertise in this area, and leverage the collaborations established in
the recently created Joint Quantum Institute between the University of
Maryland, NIST, and the National Security Agency. NIST proposes to
accelerate the potential of the quantum world for enhancing our
nation's competitiveness through research into:
Quantum ``wires'' that use ``teleportation''
techniques to reliably transport information between the
components of a simple quantum computer;
Quantum memory analogous to the random access memory
of today's computers to allow more complex logic operations;
Quantum conversion processes that transfer
information from one form of quantum information to another
(for example, ways to transfer information about the quantum
characteristics of an atom to a photon); and
Quantum based measurement tools such as optical
clocks and single electron counters.
Disaster Resilient Structures and Communities (+$4 million)
The past few years have reminded us that both natural hazards--
including extreme winds, storm surge, wildland fires, earthquakes, and
tsunamis--as well as terrorist actions, are a continuing and
significant threat to U.S. communities. The disaster resilience of our
physical infrastructure and communities today is determined in large
measure by the building codes, standards, and practices used when they
were built. Many of these legacy codes, standards, and practices--which
have evolved over several decades--are oversimplified and inconsistent
with current risk assessments. As construction and rebuilding costs
continue to rise, there is increasing recognition of the need to move
from response and recovery to proactively identifying and mitigating
hazards that pose the greatest threats.
The proposed FY 2008 initiative will, working in coordination with
other agencies, develop:
Standard methods to predict losses, evaluate disaster
resilience, and estimate cost-to-benefit of risk management
strategies at the community and regional scales that local
officials can use to evaluate and mitigate risks via land-use
planning and practices;
Decision support tools to modernize codes, standards,
and practices consistent with the risk;
A validated ``computational wind tunnel'' for
predicting extreme wind effects on structures; and
Risk-based storm surge maps for the design of
structures in coastal regions.
National Earthquake Hazards Reduction (+$3.25 million)
Many earthquakes strike without warning. Within the U.S., more than
75 million people are located in urban areas considered to be of
moderate to high risk of earthquakes. Just the economic value of the
physical structures within these regions--not including the potential
loss of life and economic disruption--is valued at close to $8.6
trillion. To address this threat Congress (and this committee in
particular) has provided longstanding support for the National
Earthquake Hazards Reduction Program which NIST coordinates across the
Federal Government.
This initiative will enhance the safety of:
New structures by establishing and promoting
performance-based standards for entire building designs and by
accelerating the adoption of basic research into the model
building codes, standards, and practices; and
Existing structures through research on actual
building performance in earthquakes; developing structural
performance models and tools; and establishing cost-effective
retrofit techniques for existing buildings.
Construction of Research Facilities (CRF)
Building 1 Extension (B1E)--Enabling Sustained Scientific Advancement
and Innovation (+$28 million)
When President Eisenhower dedicated the NIST facilities in Colorado
in 1954, no one imagined that half a century later scientists would be
manipulating matter atom-by-atom. Such technological advances require
increasingly complex and difficult measurements--to be able to observe,
characterize, and create structures at ever smaller spatial scales. As
the structures shrink in size, small fluctuations in temperature,
humidity, air quality, and vibration begin to distort the results. We
are now at the point where laboratory conditions are inhibiting further
advances in some of the most promising areas of research for the 21st
century.
The $28 million proposed in the FY 2008 budget will leverage
previously proposed funds ($10.1 million) in the FY 2007 budget to
construct state-of-the-art laboratory space that will meet the
stringent environmental conditions required for 21st century scientific
advances. An additional $38.1 million will be needed in FY 2009 to
complete the project. With a total cost of $76.2 million, the Building
1 Extension is the most cost-effective approach to enabling world-class
measurement science in support of some of the country's most important
economic sectors.
NIST Center for Neutron Research (NCNR) Expansion and Reliability
Improvements (+$19 million)
The NCNR is widely regarded as the most scientifically-productive
and cost-effective neutron facility in the U.S., and serves more
scientists and engineers than all other U.S. facilities combined.
Neutron scattering techniques, in which beams of neutrons are used as
probes to see the structure and movements of materials at the smallest
scales are critical in a wide range of applications that will define
the 21st century including nanotechnology, alternative energies, and
understanding the structure of biological molecules. Because of the
unique properties of neutrons for probing materials and their
applications to some of the most advanced technologies, a significant
shortage of neutron beam capacity and capability exists in the U.S. to
satisfy the demands of industry and academia.
This initiative begun in FY 2007 is the second-year of a planned
five-year program to expand significantly the capacity and capabilities
of the NCNR. The program includes the development of a new neutron cold
source together with a new hall to house the guide tube, modernization
of the control system, and five new world-class neutron instruments.
The specific FY 2008 funding will complete construction of the new
guide hall.
Industrial Technology Services
Hollings Manufacturing Extension Partnership (MEP) ($46.3 million--no
change from FY 2007 President's request; -$58.3 million from
H.J. Res. 20)
The MEP program is a partnership between the Federal Government and
local officials to provide assistance to small and medium-sized
manufacturers around the country. Surveys taken of companies one year
after receiving MEP assistance indicate a significant financial benefit
accrued to the individual company.
The Federal Government is an important partner in the MEP program.
Specifically, the Federal Government:
Develops new services and programs in response to the
evolving manufacturing environment and propagates them
throughout the network;
Evaluates and ensures high-quality performance of
every member of the network; and
Ensures that small manufacturers remain the focus of
the effort.
The above federal role can be accomplished within the requested
budget. The reduction of federal funds to the local centers may have to
be compensated through a combination of increased fees derived from the
benefits accrued by individual companies and cost-savings in the
operations of the centers.
Advanced Technology Program (ATP) ($0--no change from FY 2007
President's request)
No funds for ATP are requested in the President's FY 2008 budget.
The FY 2006 enacted budget and the 109th Congress' House mark and
Senate Appropriations Committee mark were consistent with the phase-out
of the ATP program. The last new awards were made in 2004 and
sufficient funds were available in the carryover to complete all awards
and provide government oversight.
The FY 2007 Joint Resolution (H.J. Res. 20) recently passed by the
House included funding for the ATP program. If enacted, NIST will work
with Congress to ensure the funds are executed in the most effective
manner to promote U.S. industry's competitiveness.
Summary
Measurements and standards are the bedrock upon which any economy
stands. Our founding fathers recognized this. The Constitution assigns
the Federal Government responsibility to both issue money and to ``fix
the standards of weights and measures.'' The two are actually more
similar than they might seem at first glance.
All economic transactions rest fundamentally on trust--trust
between two parties that a given amount of something is worth a given
amount of something else. Helping to create that trust for innovative
new technologies is the common theme that runs through all of NIST's
proposed FY 2008 research initiatives. Each helps build a missing or
inadequate measurement base--a rigorous, accepted way of quantitatively
describing something--that improves confidence in scientific results or
improves the quality, reliability or safety of innovative products.
Recent NIST measurements and standards research have enabled
innovations now embedded in the iPod, body armor currently saving the
lives of domestic law enforcement officers and our service men and
women overseas, and in diagnostic screening devices for cancer patients
making their treatment more targeted and accurate. The results of NIST
research can be found in virtually every manufacturing and service
industry.
For nearly 106 years, NIST research has been critical to our
nation's current and future competitiveness. The increased funding in
the President's FY 2008 budget for the NIST core will directly support
technological advances in broad sectors of the economy that will quite
literally define the 21st century--as well as improve the safety and
quality of life for all our citizens.
Biography for William Jeffrey
Dr. William Jeffrey is the 13th Director of the National Institute
of Standards and Technology (NIST), sworn into the office on July 26,
2005. He was nominated by President Bush on May 25, 2005, and confirmed
by the U.S. Senate on July 22, 2005.
As Director of NIST, Dr. Jeffrey oversees an array of programs that
promote U.S. innovation and industrial competitiveness by advancing
measurement science, standards, and technology in ways that enhance
economic security and improve quality of life. Operating in fiscal year
2006 on a budget of about $930 million, NIST is headquartered in
Gaithersburg, Md., and has additional laboratories in Boulder, Colo.
NIST also jointly operates research organizations in four locations,
which support world-class physics, cutting-edge biotechnology, and
environmental research. NIST employs about 2,800 scientists, engineers,
technicians, and support personnel and has extensive cooperative
research programs with industry, academia, and other government
agencies. Its staff is augmented by about 2,500 associates and visiting
researchers from industry and universities.
Dr. Jeffrey has been involved in federal science and technology
programs and policy since 1988. Previous to his appointment to NIST he
served as Senior Director for Homeland and National Security and the
Assistant Director for Space and Aeronautics at the Office of Science
and Technology Policy (OSTP) within the Executive Office of the
President. Earlier, he was the Deputy Director for the Advanced
Technology Office and Chief Scientist for the Tactical Technology
Office with the Defense Advanced Research Projects Agency (DARPA).
While at DARPA, Dr. Jeffrey advanced research programs in
communications, computer network security, novel sensor development,
and space operations.
Prior to joining DARPA, Dr. Jeffrey was the Assistant Deputy for
Technology at the Defense Airborne Reconnaissance Office, where he
supervised sensor development for the Predator and Global Hawk Unmanned
Aerial Vehicles and the development of common standards that allow for
cross-service and cross-agency transfer of imagery and intelligence
products. He also spent several years working at the Institute for
Defense Analyses performing technical analyses in support of the
Department of Defense.
Dr. Jeffrey received his Ph.D. in astronomy from Harvard University
and his B.Sc. in physics from the Massachusetts Institute of
Technology.
Chairman Wu. Thank you, Dr. Jeffrey.
Dr. Williams.
STATEMENT OF DR. R. STANLEY WILLIAMS, SENIOR HP FELLOW IN
QUANTUM SCIENCE RESEARCH, HEWLETT-PACKARD CORPORATION
Dr. Williams. Chairman Wu and Representative Gingrey, I
thank you for this opportunity to testify before you today on
behalf of ASTRA, the Alliance for Science and Technology
Research in America.
Benjamin Franklin, often called the ``first American,'' was
also the first American scientist. He understood that science
was not just a pastime to demonstrate wealth or satisfy
curiosity, but rather a force that could generate wealth and be
utilized for the public good. Franklin performed careful
experiments to characterize electrical phenomena. He was the
first to understand the nature of electrical conduction and he
utilized his knowledge to invent the lightning rod, which was
one of the most important technical advances of his day. Thus,
Franklin created the distinctly American paradigm for
technological innovation: If you measure something that has
never been quantified before, you can discover something that
has never been known before, which enables you to invent
something, which has never existed before. He said, ``An
investment in knowledge always pays the best interest.''
Over a period of nearly two centuries, American
technological innovation has been the primary source of our
wealth in this country. ASTRA was founded in 2000 to work on
behalf of and provide a more effective voice for industry,
academia, and professional associations involved in the
technology enterprise. Our members represent an underlying
constituency of more than 2.4 million scientists and engineers
in the United States who work every day to build a stronger
America.
The focus of today's testimony is NIST. And I gratefully
acknowledge the extensive collaborations that Hewlett-Packard,
in general, and my research group, in particular, have enjoyed
with NIST scientists. ASTRA strongly endorses the doubling of
the NIST budget because of its unique role and strategic
importance to our country's research ecosystem.
The mission of NIST is to promote U.S. innovation and
industrial competitiveness by advancing metrology, standards,
and technology to enhance economic security and improve our
quality of life. As a government agency, it does so objectively
without favor or advantage to any preferred technology or
enterprise. Unfortunately, the essential role NIST plays in
enabling the competitiveness of American industry has often
been under-recognized.
Among other activities, NIST develops and improves
measurement technologies, supplies critical reference standards
used across industries to calibrate their products and
services, and from my point, most importantly, provides
verified and reliable technical data to the scientific
community. NIST scientists act as a critical check on the often
conflicting and confusing claims coming out of various research
labs. I consider these activities to be the core of the NIST
mission and the keystone for technological innovation. Before
we can discover and invent today, we must measure with
extraordinary precision and trust the results.
I compliment NIST on the extent of its efforts to
understand and respond to the needs of industry and on the
quality of its oversight programs. However, it is my
observation that the scientific staff at NIST are now
overwhelmed by their responsibilities. The number of new
program areas that have been added to the NIST portfolio has
really exceeded their funding increases. This mission creep has
stretched the staff and slowed their ability to respond. In
some cases, it has taken several years to complete key
measurements, which can make them less valuable in an era of
rapid technological change.
In order to respond to new opportunities, NIST scientists
often have to compete for grant funding from other federal
agencies. While such activities can meet important governmental
needs, the need for such activities should be an exception.
ASTRA strongly recommends that all current NIST missions
and programs, including the newly-created NIST Center for
Nanoscale Science and Technology, the ATP and the MEP should be
adequately funded and supported by Congress and the
Administration under the doubling initiative. These programs
are sound investments with high potential returns for American
taxpayers. We should resist the temptation of adding new
responsibilities, especially unfunded ones in 2008 and the
future until we can be certain that the current missions will
be adequately served. An important issue to realize here is
that during the next five years, the amount of scientific
information that we will accumulate will double. In other
words, we will learn as much about science over the next five
years as we have over all of human history. So we somehow need
to keep up with this information glut and make it something
that we can internalize and understand and utilize.
NIST must attract and hire a continuous stream of world-
class researchers in order to carry out its mission. The three
Nobel Prizes awarded to NIST staff in the past years
demonstrate the quality of the current staff and have brought
overdue recognition to NIST. However, in my view, the current
climate at NIST is strained with the technical staff having to
work harder and longer to accomplish less. The budget doubling
should be accomplished in a manner that the research, support,
and infrastructure is improved to make the current staff more
flexible and productive, which will, in turn, attract new
scientific stars to the NIST staff.
In summary, ASTRA believes that NIST must maintain its
world leadership in metrology and understanding the
infrastructure of emerging technologies in order for the United
States to remain technologically and economically competitive.
Nanotechnology, I think, is an ideal area of focus because of
the tremendous potential of economic rewards and the acute
demand it places on metrology.
NIST holds the key to American technological innovation and
competitiveness. Today, more than ever, exquisite measurement
is necessary for discovery and invention.
I thank you for this opportunity to speak to you today on
these important issues.
[The prepared statement of Dr. Williams follows:]
Prepared Statement of R. Stanley Williams
Chairman Wu, Representative Gingrey and distinguished Members of
the House Subcommittee on Technology and Innovation; I thank you for
this opportunity to testify before you today on behalf of ASTRA, the
Alliance for Science and Technology Research in America. My name is
Stan Williams, and I am a Hewlett-Packard Senior Fellow and the
founding Director of H-P's Quantum Science Research Group in Palo Alto,
California. Our laboratory was created in 1995 at the behest of David
Packard to prepare HP for the major challenges and opportunities ahead
in electronic device technology as feature sizes continue to shrink to
the nanometer scale, where quantum mechanics dominates the behavior of
matter.
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I. Background
Benjamin Franklin has been called by many people the ``first
American.'' He was also the first American scientist of world renown.
Franklin understood that science was not just a pastime to demonstrate
wealth or satisfy curiosity, but rather a force that could generate
wealth and be utilized for the public good. He performed careful
experiments to characterize electrical phenomena: he was the first to
understand the nature of electrical conduction and he utilized his
knowledge to invent the lightning rod. Thus, Franklin created the
distinctly American paradigm for technological innovation: If you
measure something that has never been quantified before, you can
discover something that has never been known before, which enables you
to invent something that has never existed before. He was also
prescient about the funding of research when he said ``An investment in
knowledge always pays the best interest.''
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Over a period of two centuries, technological innovation became the
goose that laid the golden eggs for American society. Inventions such
as the telephone, light bulb, radio, phonograph, vacuum tube,
transistor, laser, and integrated circuit, among many others, have
created huge industries that employ our citizens, improve our lives,
and supply a large fraction of the tax dollars collected by the U.S.
Government.
However, toward the end of the last century, we started to become
complacent and neglectful. Our wonderful goose was slowly being
starved, and the consequences of that were alarming indeed. This
situation brought scientists like me to Washington in a new role--
rather than trying to obtain a research grant, we had to learn to
represent the entire scientific enterprise in the annual budgetary
process so familiar to you but foreign to us.
ASTRA was founded in 2000 to work on behalf of, and provide a more
effective voice for, industry, academe, and professional and trade
associations involved in the technology enterprise. Our members, in
turn, represent an underlying constituency of more than 2.4 million
scientists and engineers in the United States. We have had the pleasure
of working with many of you on bipartisan efforts over the years, and
together we have accomplished a great deal. But as you know, this work
is never done, and there have been a significant number of emergencies
and distractions that have prevented us from reaching our goals.
We must succeed in revitalizing the math, physical science and
engineering infrastructure of the United States. The cost of failure is
too grim to contemplate. One necessary component of this revitalization
is the doubling of the budgets of the National Science Foundation, the
Department of Energy's Office of Basic Energy Sciences, Department of
Defense 6.1 research and the National Institute of Standards and
Technology, preferably on a five-year time frame. We must do this
before we lose an entire generation of American scientists and
engineers and become completely reliant on other countries for our
technology. I have appended several graphs to my presentation to
illustrate the situation we face today, especially in the context of
global competition.
The primary focus of today's testimony is NIST. I gratefully
acknowledge the extensive collaborations that HP in general, and my
research group in particular, have enjoyed with NIST scientists over
the years, and the crucial contributions they have made to American
industry. ASTRA has paid special attention to NIST because of its
unique role and strategic importance to our country's research
``ecosystem.''
II. NIST in Context
The mission of NIST is ``To promote U.S. innovation and industrial
competitiveness by advancing measurement science (or metrology),
standards, and technology in ways that enhance economic security and
improve our quality of life.'' As a government agency, it does so
objectively, without favor or advantage to any preferred technology or
enterprise. NIST has been described before this committee--by
representatives of both Republican and Democratic Administrations--as
the ``crown jewel of the federal laboratories,'' since it is recognized
as the broadest and strongest national metrology institution in the
world. Unfortunately, the essential role NIST plays in enabling the
competitiveness of American industry has often been under-
recognized.[1]
Among other activities, NIST develops and improves measurement
technologies, supplies critical reference standards used across
industries to calibrate their products and services, and provides
verified and reliable technical data to the scientific community. NIST
scientists act as a critical check on the often conflicting claims
coming out of various research labs on the discovery of new phenomena.
In our group at HP, we consider it to be the ultimate validation of our
claims when NIST scientists reproduce our experimental results. We are
eager to collaborate with NIST to ensure our measurements are as good
as they can be. These activities are the keystone for technological
innovation--before we can discover and invent today, we must measure
with extraordinary precision and trust the results.
Metrology is also an essential enabler of standards, especially
those standards that describe the properties and performance of
products. A customer can make wise choices among competing products
only when the specifications of those products are determined
accurately, using the same or consistent methods.[2]
III. The Need for Additional Resources and Avoiding Mission Creep
I would like, first of all, to compliment NIST on the extent of its
efforts to understand and respond to the needs of its industrial
constituency and on the quality of its oversight programs. These
efforts start at the highest levels of NIST management, with the
statutory (15 U.S.C. 278) NIST Visiting Committee on Advanced
Technology (VCAT). VCAT members are high level executives and managers,
two-thirds of whom must, by law, represent U.S. industry. They advise
the NIST Director on broad policy issues and report their views to the
Secretary of Commerce and Congress.
For more detailed advice, NIST contracts with the National Research
Council (NRC) to review, annually and in depth, the technical direction
of its individual scientific programs. The results of this review are
reported to NIST staff at all levels, and are publicly available
through the NRC. And as in many large organizations, each
organizational unit of NIST develops its own strategic and tactical
plans.
Recently there has been a noteworthy effort at NIST to structure
its knowledge of industrial measurement needs. The first result was a
special report issued last year called ``An Assessment of the United
States Measurement System: Addressing Measurement Barriers to
Accelerate Innovation.'' NIST should be commended for this proactive
effort to understand measurement needs and to promote greater dialog
with industry.
All this said, it is my observation that the scientific staff at
NIST are now overwhelmed by the volume of work that they face. In the
past, the number of new programs and responsibilities that have been
added to the NIST portfolio has dramatically over-reached their funding
increases. This mission creep has stretched the staff very thin, and
has made their response time quite long.[3]
In some cases, it has taken several years to complete key
measurements, which can make them ineffectual in an era in which a new
technology can become obsolete in a single year. Some projects have
taken so long they have not survived reorganizations or staff
reassignments. In order to respond to new opportunities, NIST
scientists often have to compete for grant funding from other
government agencies, which creates even more demands on their time.
According to the NIST web site, in FY 2006, roughly 25 percent of
the approximately $520 million NIST expended for Scientific and
Technical Research and Services was from such contracts. While these
activities can meet important governmental needs, they diminish the
Institute's flexibility in responding to the industrial priorities it
identifies. Dependence on such short-term funding also diminishes the
opportunity to plan long term programs of broader benefit.
Thus, ASTRA strongly recommends that all current NIST missions and
programs, including the newly created NIST Center for Nanoscale Science
and Technology, the Advanced Technology Program and the Hollings
Manufacturing Extension Partnership (MEP) Program, should be adequately
funded and supported by Congress and the Administration under the
``doubling'' initiative. These programs are sound investments with high
potential returns for American taxpayers, and should be seen in the
context of managing a vital portfolio of assets and talents for the
country's economic and security needs. We must resist the temptation of
adding any new programs in 2008 to justify the increase in funding
until we know that current missions are adequately served.
IV. Construction and Facilities
I am pleased to note that $94 million of the NIST budget proposal
for FY 2008 is devoted to ``Construction and Research Facilities,''
roughly half for maintenance and repairs and the remainder for new
construction. Most of the facilities on the NIST Gaithersburg campus
date from the 1960's and all of the facilities on the Boulder campus
date from the 1950's.
All too often, maintenance and repairs are deferred year after year
in difficult budget times, leading to buildings and facilities that are
obsolete. When most of the current buildings were dedicated, nobody
anticipated the manipulation of matter atom-by-atom or metering of
light photon-by-photon. Such research requires facilities with extreme
mechanical and thermal stability. The proposed state-of-the-art
facilities will enable NIST to meet these and other emerging industrial
needs.
V. NIST Involvement with Industry Must be Maintained and Expanded
Something that makes NIST exceptional among federal laboratories is
the extent of involvement by NIST staff in industry activities and
industrial researchers in NIST. Historically, NIST management has
encouraged staff at all levels to participate in technical conferences
and the activities of professional societies and trade associations,
and through these activities to become well informed about industrial
trends and measurement needs. Even more importantly, it empowers staff
to act on what they learn, providing channels through which any
professional staff member can propose and advocate new projects. This
culture of gathering information and acting on it is effective, and it
is essential that it be maintained.
An example of NIST collaboration with industry is its participation
in the International Technology Roadmap for Semiconductors. The roadmap
process brings together over 800 experts from around the world to
identify technical barriers that would prevent continued advances in
semiconductor technology. Almost three quarters of the roadmap
participants are from industry, with the remainder from universities,
research institutes and consortia, and from government. NIST co-chairs
and has four scientists on the Metrology technical working group, and
also has experts on the Emerging Research Devices and Materials,
Assembly and Packaging, Factory Integration, and RF for Wireless
working groups. Through this interaction, NIST is very familiar with
the industry's needs and can direct internal NIST metrology research to
address these challenges. NIST should continue to host user facilities
for both academic researchers and industry. Areas like the neutron
facility for materials testing and the new nano metrology laboratory
should be user friendly without a lot of bureaucratic interference.
VI. Future NIST Staffing and Workforce Development
NIST must attract and hire a continuous stream of world-class
researchers in order to carry out its mission and to maintain its
position as the premier metrology institute in the world. The three
Nobel prizes awarded to NIST staff in the past ten years demonstrate
the quality of the current staff, and have brought overdue recognition
to NIST. However, the current climate at NIST is strained, with the
technical staff having to work harder and longer to accomplish less.
The budget doubling should be accomplished in a manner that the
research support and infrastructure is improved to make the staff more
flexible and productive, rather than erecting barriers and increasing
red tape.
VII. Conclusion
In summary, ASTRA would like to see NIST maintain its world
leadership in researching and understanding the infrastructure of
emerging technologies. Increased funding and proper planning executed
now will give our country vital resources that it will need to remain a
major competitive force in the world economy.
The range of activities at NIST is quite broad and it should remain
so. The example of nanotechnology is an ideal area to focus on because
of the tremendous potential it has for the U.S. to be very competitive
in a new field and the extreme demands it places on metrology. However,
we have to ensure that NIST can perform its current responsibilities
before tacking on any more.
Finally, there will always be debate in the science and engineering
community over the details of how NIST should best use additional
resource. In any case, ASTRA recognizes the need for increased support
at NIST and is pleased that Congress and the Administration have
recognized the importance of metrology. And we fervently hope that
Congress will be able to provide NIST with the funds requested as we
embark upon this exciting journey.
NIST holds the key to American technological innovation and
competitiveness--measurement is necessary discovery and invention.
I thank you for the opportunity to speak to you today on these
important issues.
Footnotes
1. Example of How Advances in Metrology Boost U.S. Competitiveness
As conventional integrated electronics continue to shrink, our
ability to continue to increase the performance of the circuits on each
chip is on a collision course with the laws of physics. A good example
of the importance of advances in the science of metrology is offered by
the recent HP announcement of research that could lead to integrated
circuits with eight times the logic density of current chips without
having to shrink the transistors on the circuit. In a paper that I
published with Greg Snider in the January 24 issue of Nanotechnology, a
publication of the British Institute of Physics, we documented how a
nanoscale crossbar switch structure could be layered on top of a
conventional layer of transistors to create significantly more capable
field programmable gate arrays (FPGAs). A FPGA is a type of
semiconductor chip that can be adapted by end-users for specific
applications, and is used in a wide range of industries, including
communications, automotive and consumer electronics.
To actually produce this chip in the lab, and then to introduce it
into the commercial marketplace requires numerous measurements,
including the width and alignment of the crossbars, the electrical
characteristics of the connection between the crossbar and the
conventional semiconductor device, and the presence of defects in the
crossbar and substrate material. In our paper, we presented a chip
model using 15-nanometer-wide crossbar wires which could be
technologically viable by 2010, and a model based on 4.5-nanometer-wide
crossbar wires, which could be ready by 2020. To shrink the crossbars
and connect them to the semiconductor devices will require improvements
in the accuracy of all of the required measurements. NIST metrology
research is absolutely essential if we are to continue to improve our
electronic circuits at the traditional rates that have made America the
leader in this technology.
2. Semiconductor Industry of Association Written Testimony for this
Hearing
Written testimony submitted to this hearing by the Semiconductor
Industry Association, an ASTRA Founding Member, discusses other
measurements needed to continue to increase the circuit density on each
semiconductor chip, the productivity and competitiveness effects
resulting from these advances, the industry-university-government
collaboration through the Nanoelectronics Research Initiative to find a
new technology to replace our current semiconductor logic switch, and
NIST's role in keeping U.S. leadership in this area.
3. Concern About NIST Workforce Preparedness and New Missions
In my capacity representing ASTRA (and not H-P), I would like to
express concern about NIST moving into fields in which they have no
history or prior expertise (e.g., climate science and geophysics), and
which are arguably outside of NIST's mission in support of American
industry. The fact that current NIST staff are stretched too thin might
exacerbate the problem. NIST reliance on contract workers and guest
researchers can be a two-edged sword. Such reliance may enable
``scalability'' for project needs, but also create an impermanence and
ad hoc nature to NIST as an institution. Currently, contract worker and
guest researcher numbers are almost as large as the permanent S&T
staff.
According to public reports, NIST currently has a staff of about
2,800--roughly half of whom are professionals in science and
technology. In addition, about 1,200 guest researchers and contractors
work at NIST. Though the guests and contractors are professionals who
bring creativity and energy to the Institute, they are unable to
participate in inherently governmental functions, such as measurement
services performed for the public.
Neither can they participate in research under Cooperative R&D
Agreements (CRADAs) with private sector collaborators, an important
vehicle by which NIST research is transferred to industry.
In terms of our concern about ``mission creep,'' all of which are
laudable goals, ASTRA cites the agency's own Web Site which identifies
five new initiatives which have been added to the Fiscal Year 2008
Budget Request as well as 12 Initiatives described in the FY 2007
Budget. They are:
Major components of the '08 budget request include five new initiatives
in the following areas:
Enabling Nanotechnology from Discovery to Manufacture (+$6
million)
Measurements and Standards for the Climate Change Science
Program (+$5 million)
Enabling Innovation Through Quantum Science (+$4 million)
Disaster Resilient Structures and Communities (+$4 million)
National Earthquake Hazards Reduction Program (+$3.25 million)
Plus continuation of 12 initiatives previously described in the FY 2007
budget:
Enabling Nanotechnology from Discovery to Manufacture
NIST Center for Neutron Research Expansion and Reliability
Improvements: A National Need
Enabling the Hydrogen Economy
Manufacturing Innovation through Supply Chain Integration
Quantum Information Science: Infrastructure for 21st-Century
Innovation
Structural Safety in Hurricanes, Fires, and Earthquakes
Synchrotron Measurement Science and Technology: Enabling Next
Generation Materials Innovation
International Standards and Innovation: Opening Markets for
American Workers and Exporters
Innovations in Measurement Science
Bioimaging: A 21st-Century Toolbox for Medical Technology
Cyber Security: Innovative Technologies for National Security
Biometrics: Identifying Friend or Foe
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Biography for R. Stanley Williams
R. Stanley Williams is an HP Senior Fellow at Hewlett-Packard
Laboratories and founding Director (since 1995) of the HP Quantum
Science Research (QSR) group, which currently has over 50 scientists
and engineers working in areas of fundamental physical sciences. There
are five active HP Senior Fellows out of a total technical staff of
40,000 at Hewlett-Packard. The QSR was established to prepare HP for
the major challenges and opportunities ahead in electronic, photonic
and mechanical device technology as features continue to shrink to the
nanometer size scale, where quantum mechanics becomes important.
He received a B.A. degree in Chemical Physics in 1974 from Rice
University and his Ph.D. in Physical Chemistry from U. C. Berkeley in
1978. He was a Member of Technical Staff at AT&T Bell Labs from 1978-80
and a faculty member (Assistant, Associate and Full Professor) of the
Chemistry Department at UCLA from 1980-1995. His primary scientific
research during the past thirty years has been in the areas of solid-
state chemistry and physics, and their applications to technology. This
has evolved into the areas of nanostructures and chemically-assembled
materials, with an emphasis on the thermodynamics of size and shape.
Most recently, he has examined the fundamental limits of
information and computing, which has led to his current research in
nano-electronics and nano-photonics. He has received awards for
business, scientific and academic achievement, including the 2004 Joel
Birnbaum Prize (the highest internal HP award for research), the 2003
Herman Bloch Medal for Industrial Research, the 2000 Julius Springer
Award for Applied Physics, the 2000 Feynman Prize in Nanotechnology,
the Dreyfus Teacher-Scholar Award and the Sloan Foundation Fellowship.
He was named to the inaugural Scientific American 50 Top Technology
leaders in 2002 and then again in 2005 (the first to be so named
twice), and the molecular electronics program he leads was named the
Technology of the Year for 2002 by Industry Week magazine.
In 2005, the U.S. patent collection that he has assembled at HP was
named the world's top nanotechnology intellectual property portfolio by
Small Times magazine, and the Chinese Academy of Science voted the
crossbar latch as the number three scientific breakthrough of the year
(behind the Cassini and Deep Impact space missions). He was a co-
organizer and co-editor of the workshop and book ``Vision for
Nanotechnology in the 21st Century,'' respectively, that led to the
establishment of the U.S. National Nanotechnology Initiative in 2000.
He has been awarded fifty-two U.S. patents with more than forty
more pending, he has published over 280 papers in reviewed scientific
journals, and he has written several general articles for technical,
business and general interest publications (including an article in the
Nov. 2005 issue of Scientific American). One of his patents was named
as one of five that will ``transform business and technology'' by MIT's
Technology Review in 2000.
Williams has presented hundreds of invited plenary, keynote and
named lectures at international scientific, technical and business
events, including the 2003 Joseph Franklin Lecture at Rice University,
the 2004 Debye Lectures at Cornell University, the 2004 Herman Bloch
Lecture at the University of Chicago, and the 2005 Carreker Engineering
Lecture at Georgia Tech.
Chairman Wu. Thank you, Dr. Williams.
Mr. Borrus.
STATEMENT OF MR. MICHAEL BORRUS, GENERAL PARTNER, X/SEED
CAPITAL
Mr. Borrus. Mr. Chairman, distinguished Members of the
Congress, and staff members, for reasons I will describe in a
moment, I created X/Seed to focus on a sorely-neglected part of
early-stage capital markets, the so-called seed stage, which is
typically the first money raised by entrepreneurs to start a
new business to begin to transition an idea, a rudimentary
technology, out of the laboratory toward the commercial
marketplace. My typical investment involves two entrepreneurs
and ten PowerPoint slides, and not much else.
I also want to call the Committee's attention to several
other parts of my background, because they are relevant to my
testimony today.
Prior to entering the venture capital industry, I spent a
little over half a decade as a start-up entrepreneur. And for
over a decade before that, I was at UC-Berkeley on the
engineering faculty where my work focused on emerging new
technologies, the commercialization of innovation, and related
policy.
My testimony is based on my experience in all of those
domains: studying, doing, and now investing in high-risk, early
technological innovation.
As I have been asked to comment on the ATP program, I would
also call the Committee's attention to the fact that I
currently serve on the external industry Advisory Committee to
ATP, and I previously served on the National Academy's Steering
Committee on Government and Industry Partnerships, which issued
two very detailed analysis reports on the ATP program in 1999
and then again in 2001.
I have three simple points to make. I will make them
briefly, and they all lead to one conclusion.
First, significant changes over the last 15 years in early-
stage capital markets in the United States create, in my view,
an urgent need for the ATP to be continued and for it to be
substantially funded so that it can run new competitions.
The most significant change in those markets is this: as
the venture capital has grown and matured, the bulk of that
industry has moved away from seed-stage investing to invest
later in the life cycle of a start-up. When large amounts of
capital can be efficiently deployed to permit companies to
expand later on, at the point in which companies already have
products developed typically may actually have initial sales.
That drift-away from early-stage funding has created a paradox.
There is plenty of capital available to expand company
operations, but there is too little capital available at the
riskiest moment in a start-up's life, at the very beginning
when only an idea, a concept, or a rudimentary technology
exists and needs to be transitioned out of the lab, across the
so-called ``valley of death,'' and toward the commercial
marketplace. Very few organized financing mechanisms of
sufficient scale exist to address that problem. That, frankly,
is why X/Seed Capital exists. And that, frankly, is also ATP's
historical sweet spot, and there is plenty of room for both of
us.
That leads to my next point: why ATP?
ATP is, quite likely, the most intensively studied,
rigorously scrutinized, and carefully assessed U.S. technology
program of the last 50 years at least. As the National
Academy's reviews concluded, ``ATP is an extremely well-run
program that works and works well.'' Several of its program
features, notably its rigorous peer-reviewed, pork-free, merit-
based competitions, its emphasis on cost sharing, its rigorous
self-assessment, and its measured return on investment set the
standard to which other federal technology programs ought to
aspire, which leads to my third point.
As the Committee knows, as a nation, we face a series of
major challenges to which continued innovation is the best
response. These include the need to move to carbon-neutral
alternative energy technologies to maintain energy security for
this country; escalating health care costs driven by an aging
population, one increasingly prone to chronic long-term
illnesses, like diabetes; the competitive rise as technological
challengers of China, India, and other advanced economies; and
not least, the concomitant erosion of U.S. technological
leadership in a number of significant areas. In addressing
these challenges why reinvent the wheel? Leverage a program
that historically has helped to produce significant innovation
and that works and works well. Use ATP.
That leads to my conclusion.
As a result of those arguments, I recommend that Congress
should reauthorize the ATP program, provide sufficient funding
for ATP to run several competitions, both general and specific
competitions focused in areas of acute need, like the search
for carbon-neutral alternative energy technologies, and picking
up on your opening remarks, Mr. Chairman, I believe the
Committee should consider ways that ATP might be stably and
predictably funded over a long enough timeframe, perhaps a
decade, to have a significant impact over time.
Thank you very much.
[The prepared statement of Mr. Borrus follows:]
Prepared Statement of Michael Borrus
Distinguished Members of Congress:
I am Michael Borrus, founding General Partner of X/Seed Capital, a
seed-focused early stage venture fund based in California's Silicon
Valley. I have been asked to give my views on the Advanced Technology
Program (ATP) at NIST, a program that, since its inception, I have
studied closely--first as a UC-Berkeley faculty member focused on
emerging technologies, technology markets and policy, then as an
entrepreneur at an innovative start-up, and now as a very early-stage
(so-called ``seed-stage'') venture capital investor focused on
breakthrough innovation. Those experiences provide an informed
perspective on ATP and color this testimony. You should also note that
I currently serve on the external industry Advisory Committee to ATP
and that I previously served on the National Academies' steering
Committee on Government-Industry Partnerships, chaired by Intel founder
Gordon Moore, which issued two detailed evaluations of the ATP program
in 1999 and 2001.\1\
---------------------------------------------------------------------------
\1\ National Research Council, Committee on Government-Industry
Partnerships Review of ATP, Washington, D.C.: National Academy Press,
2001. In addition to the papers and proceedings in that volume, the
Committee issued National Research Council, The Advanced Technology
Program: Challenges and Opportunities, Washington, D.C.: National
Academy Press, 1999.
---------------------------------------------------------------------------
Summary Conclusions
Significant changes over the last 15 years in early
stage capital markets in the U.S.--in particular, an
institutional drift away from very risky, seed stage funding by
private venture capital investors--create an urgent need for
the ATP to be continued, for substantial funding to be restored
so that ATP can run new competitions, and for it to be stably
funded for the foreseeable future.
The ATP is quite likely the most intensively studied,
rigorously scrutinized and carefully assessed U.S. technology
program of the past 50 years. The overwhelming consensus of
such painstaking analysis, as of the prior NRC reviews, is
easily summarized: ATP is an extremely well run program that
works and works very well.\2\ Indeed, ATP boosts several unique
features that permit it to set the standard among federal
technology programs. It is, for example, the only federal
technology program that actually measures its economic return
to the Nation.\3\
---------------------------------------------------------------------------
\2\ In addition to the NRC studies, Ibid., see the numerous
evaluations referenced therein.
\3\ See the discussion at http://www.atp.nist.gov/factsheets/1-a-
1.htm and the source cited there, suggesting at least $18 billion in
present value social benefits from 40 ATP projects (over 8X ATP's total
investment over the full life of the program).
As an especially well-run federal technology program
targeted at areas of market failure and long-term national
needs, a restored ATP has a vital role to play and can be an
essential element in the broader American response to global
changes in technology markets, in climate, in energy security,
and in the U.S. competitive position in the global economy.
Indeed, given the stakes, a restored ATP with increased, stable
funding is in fact the most prudent, cautious and conservative
approach for it risks the least: By contrast, failing to fund
ATP risks sacrificing American opportunities for technical
advance and the long-term economic growth and productivity
---------------------------------------------------------------------------
gains it produces.
For all of these reasons, I believe that Congress
should re-authorize the ATP program, provide sufficient funding
for ATP to run several competitions focused around areas of
acute need or promise in such areas as carbon-neutral
alternative energies and energy storage, and consider ways that
ATP might be stably and predictably funded over the next
several years to maximize its contribution to the Nation.
Let me now touch on key aspects of these summary points.
Seed financing
There is a paradox in today's venture capital markets: There is
simultaneously too much venture capital and too little. There is too
much venture capital available once early stage risk has been reduced
and start-ups seek capital for expansion. However, there is too little
venture capital available for the riskiest, de novo start-up phase of a
new venture's life. That `seed' stage--when an entrepreneur may have a
good idea, some scientific validation and at best only a rudimentary
technology--is typically when potential innovations are transitioned
out of the lab and toward the commercial marketplace. It is when they
must navigate the gap in seed-stage funding dubbed by many analysts as
the `valley of death'--a classic market failure in early stage
innovation.\4\
---------------------------------------------------------------------------
\4\ See, e.g., NIST head and IBM chief scientist, now Harvard
Professor, Lewis M. Branscomb and Philip E. Auerswald, ``Valleys of
Death and Darwinian Seas: Financing the Invention to Innovation
Transition in the United States,'' The Journal of Technology Transfer,
Volume 28, Numbers 3-4/August, 2003, and sources cited there.
---------------------------------------------------------------------------
The two parts of this paradox are actually halves of a single
explanation: In the last 15 years, as the venture capital industry has
grown in size, venture firms have put more capital under management.
Managing more capital typically requires deploying more capital in each
investment, that is, in far larger increments than can be consumed at
the seed stage by start-ups. The bulk of the venture capital industry
has consequently drifted away from seed and very early stage financing
to invest later in more mature stages of a start-up's life when more
capital is required to expand operations. Data compiled for the
National Venture Capital Association confirm all of these trends.\5\
---------------------------------------------------------------------------
\5\ See the last five years of the annual PricewaterhouseCoopers/
National Venture Capital Association MoneyTreeTM Report; in addition,
the testimony by Jonathan Cohen, founder and CEO of 20/20 GeneSystems,
at the House Science Committee Hearing on ``Small Business Innovation
Research: What is the Optimal Role of Venture Capital,'' July 28, 2005;
Generally, the last 10 years has seen a decline in the percentage of
venture investments going to seed and early stage and a concomitant
shift away from higher-risk early-stage funding. See the discussion in
the introduction in National Research Council, SBIR and the Phase III
Commercialization Challenge, Charles W. Wessner, Ed., Washington, D.C.:
The National Academies Press, 2007.
---------------------------------------------------------------------------
The consequence of these trends is a need for additional sources of
capital at the seed stage. That is why my fund exists. And that is one
of the reasons there is a greater need than ever before for ATP, which
has always focused on filling the seed-stage gap, helping to cross the
`valley of death.' The need is sufficiently large that there is plenty
of room for both government and private money--crowding out is just not
an issue.
Unique ATP features
One of the reasons ATP works well is that it boosts several unique
features that ought to be more widely adopted across the broad
ecosystem of federal technology programs. ATP competitions are peer-
reviewed, pork-free and merit based. The program's public-private cost-
sharing, its demonstrated ability to run multiple competitions, both
general and focused in areas of acute need, and to run them fast and on
budget, its detailed, economically sound self-assessment, its measured
return on investment, its explicit mission to enhance U.S.
competitiveness through innovation--all set it quite apart from almost
every other federal technology program.
So effective are these attributes, that at the same time the Bush
Administration has sought to kill ATP, it has been widely taken as an
ideal model and copied by foreign governments from Asia to Eastern
Europe. These same attributes are one of the reasons the program has so
effectively played a key role in providing early capital to the
companies like Affymetrix and SunPower responsible for a wealth of
valuable new innovation from gene chips, rapid DNA sequencers and cheap
digital mammography to fuel cells, high-efficiency solar photovoltaic
cells and novel engineered materials.\6\
---------------------------------------------------------------------------
\6\ For more detail see the descriptions on the ATP web site at
http://www.atp.nist.gov/gems/listgems.htm
---------------------------------------------------------------------------
ATP is sometimes labeled with the profoundly misleading and
profoundly misinformed characterization of `picking winners and
losers': That is, frankly, flat wrong. No investor, private or public,
picks winners and losers in technology innovation. Rather, it is the
market (customers) that does the picking. By contrast, with ATP and
other federal technology programs, the government is really helping to
plant long-term technology seeds in areas of private market failure or
acute public need. Some of those technology seeds will sprout, others
will not. But the planting, the activity as a whole, must go forward if
long-term economic gains are to be effectively harvested.
Global challenges and U.S. innovation
The U.S. faces numerous competitive challenges globally--among
then, the rapid technological rise of China, India, and parts of
Eastern Europe and Latin America, the need to respond to global climate
change and the concomitant shift to carbon neutral energy sources,
declining competitive position in certain technologically intensive
industries.\7\ The only enduring answer to all of these challenges that
can sustain U.S. leadership and a growing standard of living for future
Americans, is increased long-term innovation leading to wholly new
industries and to the transformation of existing industries.\8\ In
turn, substantial domestic U.S. investment in research and
development--both public and private--is the prerequisite for that kind
of innovation.\9\
---------------------------------------------------------------------------
\7\ On some of these and other challenges see, the National
Research Council, Rising Above the Gathering Storm, Washington DC:
National Academies Press, 2006.
\8\ See Michael Borrus and Jay Stowsky, ``Technology Policy and
Economic Growth,'' in Lewis Branscomb and James Keller, Editors,
Investing in Innovation: Creating a Research and Innovation Policy,
Cambridge, MA: MIT Press, 1998. The contribution of technology to
economic growth is now well recognized. See P. Romer, ``Endogenous
Technological Change,'' Journal of Political Economy, 98(5):71-102,
1990. See also G. Grossman and E. Helpman, Innovation and Growth in the
Global Economy, Cambridge, MA: MIT Press, 1993.
\9\ P. Romer, ``Endogenous Technological Change,'' op. cit.; Borrus
and Stowsky, ``Technology Policy and Economic Growth,'' op. cit. See
also National Research Council, Allocating Federal Funds for Science
and Technology, Washington, D.C.: National Academy Press, 1995. The
report notes that federal investments in R&D have produced enormous
benefits for the Nation's economy, national defense, health, and social
well-being. Ibid, p. 3.
---------------------------------------------------------------------------
For a variety of reasons--enormous uncertainty, the impossibility
of accurate risk assessment, extreme volatility, appropriability
problems, among others, very early stage technology capital markets are
especially prone to numerous market imperfections including herd
behavior, strategic gaming, information asymmetries, institutional
structures focused on early liquidity, and the exercise of market
power. These problems are especially severe for especially risky new
technical approaches, when intensive collaboration across multiple
technical disciplines may be essential for technical progress
(therefore requiring the coordination of disparate technical and market
actors), and wherever a clear, reasonably short-term path is lacking
for private market actors to reap sufficient returns from their private
investment. In those cases, federal technology funding mechanisms have
historically played an essential role in fostering technical innovation
to the point where private capital markets can then sustain
development.
That is the sweet spot that ATP very effectively addresses. Indeed,
for reasons described earlier, ATP is uniquely positioned to respond to
the competitive challenges identified above. It is my strong
recommendation that Congress re-authorize the ATP program and provide
sufficient funding for ATP to run several competitions, both general
competitions and focused competitions in areas of acute need or promise
such as carbon-neutral alternative energies and energy storage. Given
the importance of funding stability and predictability to technological
progress, Congress should also seriously consider ways that ATP might
be stably and predictably funded over the next decade to maximize its
contribution to the Nation.
Biography for Michael Borrus
Michael Borrus is the founding general partner of X/Seed Capital, a
seed-focused early stage venture fund focused on breakthrough
innovation. Prior to founding X/Seed, he was an Executive in Residence
(EIR) at Mohr Davidow Ventures (MDV) in Silicon Valley.
Michael left his faculty position at UC-Berkeley in 1999 to do a
financial services start-up for the five years prior to joining MDV. He
was Managing Director of the start-up, The Petkevich Group (TPG), a
merchant bank providing financial advisory services and investment
capital to growth companies in life sciences and technology. He led the
technology banking group at Petkevich & Partners, TPG's broker-dealer
subsidiary, executing a variety of financial transactions from M&A and
capital raising to spinouts and bankruptcy reorganization.
Before TPG, Michael was Adjunct Professor in UC-Berkeley's College
of Engineering, Co-founder and Co-Director of the Berkeley Roundtable
on the International Economy (BRIE) at the University of California,
Berkeley, and a partner in Industry and Trade Strategies, a business
consultancy. Much of his academic and consulting work has focused on
how business models need to adjust to successfully commercialize new
technologies, to exploit new market opportunities or to adapt to new
competitors.
He is the author of three books and over 70 chapters, articles and
monographs on a variety of topics including management of technology,
high technology competition, international trade and investment, and
financial strategies for technology companies. He is a frequent speaker
before corporate and public audiences, and has appeared in numerous
media outlets from CNN and NPR to Business Week and the New York Times.
Industry Associations: Michael serves on the Advisory Committee to the
U.S. Government's Advanced Technology Program (ATP), several National
Academy of Science/National Research Council Steering Committees, the
Board of Trustees of the National Center for Women and Information
Technology, and is a Director of HMicro Inc. and Geniisis Agents
(privately held companies).
Education: Michael is an honors graduate of Harvard Law School, the
University of California, Berkeley and Princeton University. He is a
member of the California State Bar.
Chairman Wu. Thank you very much, Mr. Borrus.
And I would like to thank all of the panelists to this
point for both your excellent testimony and for your
timeliness.
I would like to announce just a little bit in advance that,
as is typical of this institution, we are not quite as
entertaining as a three-ring circus, but we keep at least three
rings going at any given time, so we do have Floor action going
on. I have another committee in which, I understand, there will
be a vote sometime in the next five or ten minutes, so if you
notice a little shuffling up here, it is not out of disrespect
for you, but out of a concern for adequately discharging our
different duties.
And with that, Mr. Murray.
STATEMENT OF MR. PETER MURRAY, VICE PRESIDENT, WELCH ALLYN,
INCORPORATED
Mr. Murray. Thank you, Mr. Chairman.
I want to thank, also, the Committee Members and staff for
inviting me here to testify on behalf of MEP. I can see my
presentation is up, so we are off to a good start.
[Slide.]
What I want to talk to you about is the success we have had
with our local MEP in Oregon, and I will use the term OMEP,
because that is the acronym, and then briefly go through some
of the details of the implementation, the success story, a very
good success story, and then conclude with some observations of
the funding and what I think it will do to our local chapter
and project and what I think it will do nationally.
Again, that is my agenda.
[Slide.]
We don't need to see that.
[Slide.]
We started with OMEP in 2004. The company was facing some
serious competitive pressures, and we knew we needed to make
some changes, and we began casting about to select a partner.
And we clearly found OMEP to be the group that met our needs.
And I will speak a little bit more about that later, but
briefly, that is the timeline.
[Slide.]
What I would like to show you now in a few minutes is just
examples of the engagement work. It is a lot of detail. I just
want to give you an example of the quality of the work that the
organization provides. Again, these consultants are very
tactical and also very strategic. They gave us a lot of
customized solutions, and I am just going to roll through
these.
[Slide.]
There is a lot of generalized training that is shared among
all of the clients of OMEP. They develop customized tools. I am
just going to kind of flip through these a little bit. There
are examples that are also in the written testimony.
[Slide.]
Again, the examples here really are to convey the point
that they were teaching us how to fish as opposed to giving us
the fish. These tools are broadly adopted now within our site
in Oregon as well as spreading into some of our other sites in
the company.
[Slide.]
Again, they gave us tools so that folks in the production
area or anyone in the company that were using these
productivity enhancements could use them.
[Slide.]
Finally, some of the results that we achieved, as you can
see up here, these details may not mean much, but they were
extremely significant to our company. That represents about
half of the company being trained in two years. Again, part of
what OMEP brought to us was the ability to develop people with
ongoing skills and raise their capabilities so that we could
continue to make these improvements long after our engagement
with OMEP was completed.
[Slide.]
Some of the results that we experienced, as you can see up
here, a significant labor savings, plenty of reductions, and
these are very typical results you will see from an MEP
engagement. Additionally, the company was facing some pressures
to consolidate a wide variety of sites, and we ended up
choosing Oregon as one of the sites to consolidate into as a
result of these competitive improvements that the site had
made. So not only are we more competitive externally, but we
are competitive internally.
I want to make a couple of closing comments.
When I say, ``Why choose an OMEP?'', why did we decide to
select an organization such as OMEP, one of the key differences
between OMEP and some other providers that would give us
similar kinds of services, I think, are the way the MEPs are
measured on the clients' results gives them a focus that is
very much in the interest of the client. I don't know how else
to say that any more simply.
Again, this is what is summarized in my testimony: they are
both hands-on. They are both strategic.
Finally, let me just wrap up with where I think the funding
proposal would go. I am also on the board of our OMEP
affiliate. And I can tell you from personal experience if they
were faced with this funding reduction that is in the proposal
from the Administration, it would lead to a drastic reduction
in services. I think it would reduce the ability to market to
new clients. It will have a direct impact on the industry. Any
company facing a significant loss of revenue that this would
represent would take similar action. And I firmly believe that
the funding levels should be restored, and hopefully, with
reason, expanded.
Thank you very much. I will take any questions.
[The prepared statement of Mr. Murray follows:]
Prepared Statement of Peter Murray
Who we are
Welch Allyn Monitoring, a division of Welch Allyn, Inc., is located
in Beaverton, Oregon. The site currently employs approximately 420
people, up from 270 two years ago. Welch Allyn designs, manufactures,
and markets mission critical flexible monitoring solutions that improve
patient care and lower health care operating costs. Welch Allyn is a
key player in the biomedical device industry in Oregon, nationally, and
worldwide.
Our company faces increased and ongoing pressures from domestic and
foreign competition. Our company was confronted with a critical need to
increase profitability, quality, and shorten delivery lead times. The
company also wanted to incorporate additional manufacturing capacity
from another manufacturing location
How OMEP assisted our company
Welch Allyn felt they needed outside expertise to achieve these
objectives and conducted a search of local firms. Welch Allyn decided
to work with the Oregon Manufacturing Extension Partnership (OMEP), a
NIST MEP network affiliate, to help us achieve a major operational goal
of continued improvement of manufacturing processes, systems and
capacity building. The company views this goal as essential to long-
term financial growth and success. As a corporation, Welch Allyn was
faced with difficult decisions regarding consolidation of manufacturing
operations from four different U.S. sites. The Beaverton operation,
while operating at a high level of quality and capability, sought to
strengthen the likelihood of not only maintaining but increasing the
amount of manufacturing at their facility. Welch Allyn needed
assistance to transforming its entire operation to a culture of
continuous improvement.
The overall goal was to create a culture of continuous improvement.
This was done by starting with Lean manufacturing to obtain a larger
and more immediate payback. The training and implementation was
initially focused at the operator level and then expanded throughout
the organization. OMEP was selected to work closely with Welch Allyn to
provide classroom training, implementation and support, and guidance to
help them transform into a Lean enterprise.
Because of Welch Allyn's size and numerous needs, several processes
were created to implement their vision of becoming a Lean enterprise.
1. A steering committee was created to evaluate opportunities,
select Lean projects and Kaizen events, assign resources, and
ensure continued focus, and direction. Business needs are
clearly established and used to prioritize Lean activities.
2. OMEP provided numerous classes to teach the Lean principles
and concepts. Principles of Lean, 5S, and Value Stream Mapping
were taught as foundation classes. More advanced Lean and
leadership classes have helped support the ongoing
transformation.
3. Specific Lean projects and Kaizen events used Value Stream
Mapping to implement ``Future States'' with less waste,
increased visibility, better flow, less Work in Process (WIP),
higher quality, and increased productivity. Team leaders stayed
on track by reporting progress at a weekly accountability
meeting where they also obtained help in overcoming roadblocks.
OMEP helped Team Leaders learn valuable skills as they prepared
and presented their results to company and corporate executives
at celebratory ``close-out'' meetings.
4. OMEP worked closely with Welch Allyn to establish
standards, audits, and a significant metrics program to sustain
the gains and to create a continuous improvement environment.
5. Throughout the entire process OMEP has been key in
developing people within Welch Allyn who can internally drive
and support Lean. OMEP has provided significant coaching and
mentoring in one-on-one situations. Together, they have
developed custom training materials and have shared in
providing Lean training.
Results
Corporate has moved a significant manufacturing
operation to Beaverton resulting over 50 new jobs plus an
additional 50 jobs from organic growth created in Oregon.
Operations have expanded into a new facility to
accommodate the increased growth. There has been over $600,000
invested in the new facilities.
Welch Allyn has saved nearly $1 million in direct
expenses as a result of implementing Lean.
Inventory has been reduced by more than $500,000.
Sales of over $120 mil/year have been retained at the
Beaverton location.
Over 250 employees have received Lean training in a
total of 750 training occurrences (most completed numerous
classes).
More than 20 Lean projects and 10 Kaizen events have
successfully been completed.
10 to 15 Lean ``Stars'' have emerged and are driving
daily continuous improvement activities.
Lean methods have been shared and implementation has
expanded and is being used throughout the corporate
organization.
Employee morale and daily improvement involvement has
significantly increased.
Workforce training and skills investment: Over
$300,000.
Why we support MEP
We have had experience with purely private consulting firms and we
are convinced that, based on our experience with OMEP, there are key
differences between MEP (a public/private partnership) and private
providers;
What distinguishes OMEP from similar groups who claim
to provide the same services is OMEP's unique focus on their
client's success and less so on selling future services.
They provided core training and implementation
experience to get us started and were able then to adjust their
approach as we progressed through our Lean journey.
Their consultants are both hands on and strategic.
OMEP has been key to our success in making our Lean
transformation.
We are continuing to expand our Lean Enterprise and
we look forward to continuing to work with OMEP.
The Administration's reduced funding of the program
I understand that the Administration wants to cut by 56 percent the
funding for the MEP program to $46.332 million for FY08. I am on the
Board of OMEP and from a purely local perspective the impact to the
Oregon affiliate would be disastrous. If the board were faced with such
a funding cut we would likely be forced to dramatically reduce costs
(primarily staff) and thereby services. I would expect many of the
clients could not afford to make up the difference and OMEP's ability
to market to new clients would also be reduced. The loss to the local
economy from a withdrawal of OMEP would lead, in my opinion, to a loss
of growth for many of the small companies in the area.
I view the federal funding as an efficient use of federal dollars.
From my perspective as a board member for OMEP, I view the
administration of the organization as a model. I have served on the
boards of several profit and non-profit organizations and I view OMEP
as one of the best run organizations.
Appendix: Copy of Oral Presentation
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Biography for Peter Murray
Peter Murray worked in the semiconductor and disk drive industries
prior to spending the last 12 years in the medical device industry. He
has worked at Welch Allyn in Engineering and Manufacturing roles.
He holds a M.S. and M.B.A. from Boston University and a B.S. from
the University of California.
Chairman Wu. Thank you very much, Mr. Murray.
Mr. Ryan.
STATEMENT OF MR. MICHAEL J. RYAN, PRESIDENT AND CEO, TUG
TECHNOLOGIES CORPORATION
Mr. Ryan. It is, indeed, a pleasure to have the opportunity
to address the House Science Subcommittee.
[Slide.]
Relative to my comments I will share with you, I am going
to focus on the MEP and the role it plays in helping American
companies to describe and to deploy lean methods.
[Slide.]
I am currently the CEO and President of TUG Technologies in
Marietta, Georgia, as Dr. Gingrey mentioned. TUG, as such,
manufactures ground support equipment for domestic and
international airlines as well as the U.S. armed forces. If you
look out the window the next time your plane stops at the gate,
you will likely see a TUG baggage tractor, and you will
certainly see belt loaders that are also manufactured by TUG
Technologies.
I have had the unique opportunity over the last several
years to work with five of the state MEPs, inclusive, of
course, of the State of Georgia. But after spending 38 years in
automotive and industrial companies, I would say to you I have
learned how to learn. It is about people, and it is about
learning. So today, my thoughts to share with you specifically
focus on the last 13 years, and as an American, I believe that
we, in this country, can be globally competitive by deploying
lean methods to our manufacturing base. The MEP has played an
important supporting role to enhance American productivity, now
on record for 18 years.
[Slide.]
Back in 1982, I presented at a conference in Brazil as a
member of TRW's senior management team. At that time, I used
the flag to designate and talk to the point that order comes
before progress. The written words on the flag in Brazil
actually say ``Ordem e progresso.'' And I think that it is
significant to understand what that means as the associated
task of the MEP continues to ramp up.
[Slide.]
In 1991, the result of a U.S. Government-supported
productivity study of Japan was done, and the book that came
from that was called ``The Machine that Changed the World.''
The machine is the Toyota Production System in this designation
in the book written by Womack and Jones, and it captures the
Japanese work on productivity in the automotive industry
primarily.
[Slide.]
I had the opportunity to work with Jim Womack during the
time I worked for United Technologies, and he, subsequently, in
1996, published a book, ``Lean Thinking.'' And in his book, he
talks about a five-step process, which I show you on the
slides.
[Slide.]
Define the value of what you do, align it into a value
screen, create flow from balancing process steps, create a pull
process where the customers' needs are defined, associate it to
your demand support, and ultimately perfection can happen. And
perfection is the perfect balance of the value, value stream,
flow, pull, and perfection.
[Slide.]
They do, however, list some actions that are important to
consider, and what I have done here is try to align those
actions from that book in line with the steps they have
identified, as shown on this slide. And I show you the MEP
interface that is appropriate to helping companies convert
themselves through lean policy deployment processes.
[Slide.]
Though significantly, the MEP has a role in these process
steps to success in any company. The basis of learning from
Womack and some additional actions. The basic learning from
Womack and Jones, when they looked at the Toyota Production
System, is that we understood man, material, and machine, but
we, in America, didn't have the entire puzzle put together. And
this is a depiction of the Toyota Production System in one
slide, one picture. And what they have done here is identify
puzzle pieces that, frankly, I believe, we hadn't yet put
together in this country.
[Slide.]
So how did we take the learning from this to deploy change
in this country? There is an important quote from the ultimate
scientist, in my mind, Albert Einstein. I have been referring
to this for many years. And the questions I ask from this quote
are: Can we learn to change our minds? Can we understand the
differences we face? Can we be globally competitive? Can we
stay at the same level of thinking we were at when we created
the significant problems we are trying to fix? And it is said
that the definition of a fool is one who expects different
results while doing the same things. So, indeed, the challenge
of lean and the challenge of the MEP profile is to make people
understand and learn.
[Slide.]
In order to deploy lean, we have an implementation standard
that optimizes the efforts of independent companies and is
supported by an education process that understands the
fundamental tools.
[Slide.]
What I am showing you here is the depiction of the profile
of implementation for any lean activities. And the support of
MEP is critical here as well. The depiction is an umbrella with
leadership. And I would submit to you that the national MEP is
that leadership profile that allows us to succeed. But more
importantly, the umbrella is this Congress as well. The Members
of the U.S. Congress represent the support needed by the MEP to
truly lead the transformation process to change.
[Slide.]
On the next slides, I have just identified some of my
experiences relative to those five different state MEPs. And in
fact, I started my understanding of the MEP from having played
a part on the board of the Michigan MEP, notably the MMTC,
Michigan Manufacturers' Technical Center. The North Dakota MEP
was engaged in our transformation when I worked as President
and CEO of Bobcat Company.
[Slide.]
The teachers in Japan we call senseis. If you look back at
the study that was originally done by Womack and Jones, the
opportunity to coordinate and learn is a two-part process, if
you would. The opportunity to create success has a significant
amount of benefits, as I show on this slide. But truly, the MEP
plays a role of support that would not have a high enough level
of understanding to deploy the change processes required by
that six-step picture with the umbrella supporting it.
[Slide.]
But what are the benefits? Here are some of the benefits
achieved from doing a lean transformation supported by MEP
consultants. Significant improvements in revenue at one company
of 86 percent while operating income increased 128 percent.
Again, a North American company competing globally. Improving
inventory significantly. And improving the operational income
of the companies by 400, 500, and 550 basis points of improved
operational income. They reduced customer lead times and
developed flawless launches, as well.
[Slide.]
So now, I ask you to think about a process. Consider that
it has three versions, at least: what you think it is;
secondly, what it actually is; and then third here is what it
should be, proper value stream, mapping, and understand. And
you can imagine the efficiency improvements from that step one,
two, and three.
[Slide.]
Consider a moment that Henry Ford, at the Rouge Complex in
Detroit, delivered a car to each customer in a four-day cycle
from raw material to finished vehicle. And he did that in 1914.
Most people don't know that he wrote a book called ``Today and
Tomorrow'' in 1936 that described his lean process from some 22
years earlier. Taiichi Ohno developed the Toyota Production
System from his studies of Henry Ford's methods.
Another important point, Toyota never had to change their
bad habits since after the war they could start from the basics
in 1947.
The challenge in America, still today, is that we have to
change people from their habits of the past to the global
changes and challenges we will need to have in the future.
People do make the difference. In Japan, they call it, this
body, the JUSE, the union of Japanese scientists and engineers.
So they talk about people. We talk about, basically, the focus
of NIST as science and technology, as subject matter very
importantly.
[Slide.]
And here, a quote from Jack Welch of General Electric, who
challenges us all to go for the quantum leap. Can we do it by
reducing MEP funding? I don't think so.
[Slide.]
We pause to look at this picture. The worker is on the left
talking to the engineer. We need to help the worker here so he
can understand and also be empowered. Today, he is not.
[Slide.]
The salesmen in this picture are on the left. The two
employees on the right are wearing safety glasses, so
obviously, they must be production workers. They need, though,
a different set of tools, not just better pails, but the right
tools so they can avoid the dilemma they are in in the first
place.
[Slide.]
In summary, MEP has been a strong contributor to the need
in this country to stimulate change. They have been and need to
continue as a catalyst for that change. They provide a
countrywide network. Our government must continue to support
enterprise. Small and medium-sized businesses need this kind of
help even more. We must remember that the market is global, and
other countries are getting better, too. MEP provides
education, not just training. And not all good ideas originate
in America.
Our Congress has a responsibility to provide solutions, not
just observe. I have found the MEP five times in five states.
They are the solution. We should expand, not retract, our
support of the MEP. MEP is that synergy. If the 2007 budget is
reduced from $109 million to $49 million, not only are past
efforts of the MEP compromised, but it would show that the
leadership umbrella I showed you, referring to it earlier, has
been closed by our own Congress. Your constituents need your
support. Your challenges as our representatives to this
Congress, are to find synergies that allow Americans to prosper
in an ongoing, expanding global market. I submit that MEP is
that synergy.
Thank you.
[The prepared statement of Mr. Ryan follows:]
Prepared Statement of Michael J. Ryan
[Slide #1]
It is, indeed, a pleasure and an honor to have the opportunity to
address the House Science Committee's Subcommittee for Science and
Innovation. My comments today will focus on Lean Policy Deployment and
the very necessary role that the NIST Manufacturing Extension
Partnership plays in helping American companies deploy lean methods.
[Slide #2]
I am here at the invitation of Representative Phil Gingrey of
Georgia. I am Michael John Ryan, currently the President and CEO of TUG
Technologies based in Marietta, Georgia. TUG manufactures ground
support equipment for domestic and international airlines and the
United States Armed Forces. If you look out the window the next time
your plane stops at the gate, you'll likely see a TUG baggage tractor
and belt loader. I have had the pleasure of working with NIST MEP's in
five states across our country. After spending 38 years in Automotive
and Industrial product companies, I have learned how to learn. Today,
as a witness to the Subcommittee, I will share my thoughts from those
experiences, specifically over the past 13 years. I am an American who
believes that we can be globally competitive by deploying lean methods
to our manufacturing base in this country. MEP has played an important
supporting role to enhance American Productivity now for 18 years.
[Slide #3]
Back in 1982 when I was Director of Quality for TRW, I spoke at a
global conference in Brazil about the need to establish structure
before improvements can be expected in any change process. After
spending 11 years working for Ford Motor Company, I had learned that
Henry Ford's successes were built on very structured methods.
[Slide #4]
Since I was in Brazil at a global conference, I used the flag of
Brazil to make my point. Their flag says ``order and progress.'' Our
approach to change too requires order before progress is possible.
[Slide #5]
In 1991, the results of a U.S. Government-sponsored study on the
productivity of Japan was published by Womack, Jones, and Roos in their
book entitled ``The Machine That Changed the World.'' Here is where
they first described their findings at Toyota as ``Lean
Manufacturing.'' In this book they captured the reasons that Japanese
productivity in the automotive industry was improving faster than in
the USA. I had the opportunity to meet Jim Womack in 1995 at United
Technologies, just before their next book, Lean Thinking, was
published. In this new book they provided case studies showing how
several American and European companies were deploying lean methods.
[Slide #6]
They describe five steps in a transformation as you see here
(value, value stream, flow, pull, and perfection). But no where is it
written; how to implement the ``lean process.''
[Slide #7]
They do, however, list some actions that are important to consider.
Here, I show you their action steps and also identify, from my
experience, the responsibility for each action. Here is where the MEP
is extremely important to the process of change.
[Slide #8]
Here they continue to identify the steps. (pause) Here again I have
identified the critical role MEP plays in these process steps.
[Slide #9]
The basis of learning that Womack and Jones discovered is best
depicted by the Toyota Production System as described here. We already
understood the alignment of Man, Material, and Machine, but they helped
us fit the other pieces of the puzzle together as shown here as a
``Global Production System.'' How did we use this learning to deploy
change?
[Slide #10]
Here is an important quote from Albert Einstein that I have been
referring to for many years. (pause) Can we learn to change our minds?
Can we understand the differences we face? Can we be globally
competitive? Can we stay at the same level of thinking we were at when
we created significant problems? It is said that the definition of a
fool is one who expect different results while doing the same things.
[Slide #11]
In order to deploy a Lean Policy we have to have an implementation
standard that optimizes the efforts of independent companies and is
supported by an education process that understands the fundamental
tools of a lean system. Back in 1994 I was Vice President Quality and
Continuous Improvement at UT Automotive. I had the opportunity to work
with United Technologies' other companies like Pratt and Whitney, Otis,
Carrier, Hamilton Standard and Sikorsky. I have used this depiction of
the deployment process ever since. The Leadership umbrella represents
the role of company leaders to support and protect a six-step
sequential process to transform a company as it accepts the changes
needed to become ``world class.'' It is these six steps of
transformation that need the supporting structure of the National MEP.
We have tried to empower our employees through Quality Circles. We have
taught SPC statistics to address TQM. But neither has worked. Why not?
Because we must create product cells first, and then the sequence can
follow. The MEP knows this! Most consultants do not.
[Slide #12]
Here I am sharing my own experiences with the application of MEP
capabilities. I've listed the companies I have worked for over the past
13 years and then I am showing the five different state-supported MEP
organizations where I have had an affiliation. Back in 2000, I was a
board member of MMTC, a Michigan MEP. In 2003, I was President and CEO
for the Bobcat Company, a division of Ingersoll Rand. The North Dakota
MEP was engaged in our transformation there. In 2005, Bobcat Company
joined a WMEP consortium with Harley Davidson, Oshkosh Truck and Trane
to develop a supplier assessment tool. This coordination between OEM's
and their supply base can be uniquely filled by the MEP. To the right I
am showing the times I have also used the expertise of Shingijutsu.
This is a teaching organization, based in Japan, that is made up of
former students of Taichi Ohno. Ohno san is the ``father'' of the
Toyota Production System. These teachers, called Sensei in Japanese,
provide the ultimate level of expertise to refine the application of a
lean system. In fact, this week we are conducting kaizen at TUG's
Marietta and Kennesaw facilities in Georgia, supported by Shingijutsu.
Without the support of MEP, we would not have a high enough level of
understanding to deploy the change processes required.
[Slide #13]
So, what are the benefits from these activities. I have listed
several for you here from my own experiences. Significant improvement
in revenue growth of 86 percent and operating income of 128 percent are
examples. Large reductions in warranty expenses and improved customer
satisfaction. Improved inventory turns; from five to 25 and from two to
16 in two examples. Operating income improvements of 400, 500, and 550
basis points over a two-year period at three different companies.
[Slide #14]
Reduced customer lead times. Flawless product launches, continuous
kaizen, and an expanded use of employee intellectual capital were
achieved. Through the Georgia Tech MEP in the past four months we have
trained 79 staff associates in VSM, Office kaizen, and Lean methods at
TUG Technologies.
[Slide #15]
So, now, think of a process. Consider that it has at least three
versions. First; what you think it is.
[Slide #16]
Second; what it actually is.
[Slide #17]
And then third; what it should be.
[Slide #18]
Consider a moment that Henry Ford at the Rouge Complex near Detroit
delivered a car to a customer in just four days from raw material to
finished car. That was in 1914. Most people don't know that he wrote a
book, ``Today and Tomorrow,'' in 1936 that describes his lean process
from some 22 years earlier. Taichi Ohno, indeed, developed the Toyota
Production System from his studies of Henry Ford. One other important
point; Toyota never had to change ``bad habits'' since, after the war
they could start from the basics in 1947. The challenge in America
still today is that we have to change people from their habits of the
past to the global challenges in our future.
[Slide #19]
People do make the difference! In Japan they have the JUSE body
focused on people. It may be subtle, but they talk about scientists and
engineers while we look at science and technology. Sometimes we seem
too focused on issues and material things. MEP provides NIST with an
opportunity to focus on the people. We must get more globally
competitive.
[Slide #20]
A quote from Jack Welch of General Electric, who challenges us all
to go for the Quantum Leap. Do we accept his challenge? Can we do it by
reducing MEP funding? I don't think so!
[Slide #21]
(pause) The worker on the left is talking to the engineer. We need
to help the worker here, so he can understand and also be empowered.
Today he is not.
[Slide #22]
(pause) The salesmen are on the left. The two employees on the
right are wearing safety glasses, so they must be production workers.
They need a different set of tools, not just better pails, but the
right tools so they can avoid their dilemma in the first place.
[Slide #23]
In summary, MEP has been a strong contributor to the need in our
country to stimulate change. They have been, and need to continue as a
catalyst for change. They provide a country wide network. Our
government must continue to support enterprise. Small and medium-sized
companies need this kind of help; even more. We must remember that the
market is global and other countries are getting better too. MEP
provides education; not training. Not all good ideas originate in
America.
Our Congress has a responsibility to provide solutions, not just
observe. I have found the MEP five times, in five states. They are the
solution. We should expand, not retract our support for the MEP budget
needs. MEP is that synergy. If the 2007 budget is reduced from $109M to
$47M, not only are past efforts of the MEP compromised, but it would
show that the leadership umbrella I referred to earlier has been closed
by our own Congress. Your constituents need your support. Your
challenges as our Representatives to this Congress are to find
synergies that allow Americans to prosper in a global market.
MEP is synergy!!!!!!!!
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Biography for Michael J. Ryan
Summary of Experience
An industrial professional with unique and exemplary global lean
business process experience as a General Manager and Operations
executive. A diversified corporate background with proven leadership
and P&L success in both favorable and challenging economic conditions.
Areas of expertise include: Lean Policy Deployment, Global Consulting/
Sourcing, Operations Management, Operating System Design, New Product
Development, Financial Reporting, Lean Manufacturing/6 Sigma, Strategic
Planning, Productivity/Process Improvement, Business Development,
Kaizen/Shingijutsu Projects, Talent Assessment and Team Building,
Sales/Marketing Strategy, Competitive Analyses, Budget Development/
Management.
2006 to 2007: JACOBSON PARTNERS, New York, New York (Private). A mid-
cap private equity fund specializing in corporate divestitures
and other middle market companies in the early stages of
turnaround.
2006 to 2007: Managing General Partner--Operations; President and CEO,
TUG Technologies Corporation
A market leader providing ground support equipment to the global
airline industry.
Leading major business turnaround
Utilizing Lean Policy deployment
Reorganized structures to bring efficiencies
Developing and implementing pricing strategies with
suppliers
Coordinating customer market needs and pricing
2003 to present: INGERSOLL RAND COMPANY, Montvale, New Jersey (NYSE).
An $11 billion diversified industrial company with 44,000
associates, 90 plants, and 150 service and distribution
centers. Brand Name Products include: Thermo-King, Hussman,
Bobcat, Club Car, Schlage, LCN, Von Duprin, ABG, Blau Knox, and
Ingersoll Rand (IR).
2005 to present: Corporate Vice President, Global Operations. Promoted
into a new corporate role directing a staff of 200 in the
operation/management of Ingersoll Rand BOS, Quality, Global
Sourcing, Global Consulting, Supply Chain/Logistics, and the IR
India Engineering Center.
Led the development of Operational Excellence thru a
common Business Operating System.
Aligned cross-sector projects in India, China, and
Eastern Europe.
Achieved continual quarter over quarter improvement
for key operating metrics.
Oversight of Sector Operations Executives to
coordinate synergies and drive Lean Policy Deployment through
Hoshin Planning, Application Modules, and Lean Conversion.
Developed Lean and 6 Sigma education through the
Ingersoll Rand University.
Served as a Corporate Officer and an active member of
the Enterprise Leadership Team.
2003 to 2005: President/CEO, Bobcat Company. Responsible for leading
all corporate functions of the largest Ingersoll Rand Division.
Moved revenues from $1.1 billion in 2002 to $2.1
billion in 2005 while launching 40 new products into strong
channels in North American and Europe.
Reduced warranty from 3.3 percent of sales to 1.2
percent saving $35,000,000 annually.
Introduced Lean systems, taught Lean Policy
Deployment and 6 Sigma tools to top 400 managers and supplier
executives.
Improved operating income by 400 basis points.
Developed dealer network to expand product offerings
in channel.
Developed new leadership team and added employees at
1/3 ratio to baseline labor standards.
Improved inventory turns while improving field
inventories for dealers.
Developed the Bobcat Production System.
2000 to 2002: INTERMET CORPORATION, Troy, Michigan (NASDAQ). A $1
billion publicly traded, casting supplier.
Executive Vice President, Operations. Responsible for
operations oversight of 23 iron, aluminum and magnesium casting
facilities and 8,400 employees.
Aligned acquisitions by deploying lean
manufacturing principles and a common Business
Operating System.
Reduced break-even by $200,000,000 and
working capital to meet debt covenants.
1998 to 2000: TRW, Cleveland, Ohio (NYSE). One of the world's largest
and most diversified suppliers of automotive safety systems,
modules and components to global vehicle manufacturers and
their related aftermarket. $17 billion in sales with $11
billion in sales to the automotive sector.
TRW AUTOMOTIVE, Livonia, Michigan.
1999 to 2000: Vice-President, Chassis Systems, North America.
Responsible for the combined North America Braking, Steering,
and Chassis Operations of the combined TRW and Lucas Varity
generating $2.7 billion sales annually.
Led 7,500 associates in 27 plants organized
into five business units.
Installed lean manufacturing principles that
reduced both cost and PPM.
Implemented a Business Operating System that
significantly improved product delivery, quality, and
warranty claims costs.
1998 to 1999: Vice-President, Braking Systems, North America.
(Formerly Lucas Varity Automotive with $7 billion in sales
including $1.7 billion N.A. Braking Systems.) Responsible for
all Operations, Manufacturing Engineering, Service, Quality,
Finance, Information Technology and Human Resources in 14
plants with 4,000 associates.
Implemented lean manufacturing methods
including 40 weeks of Shingijutsu projects.
Improved quality and delivery by over 25
percent.
Increased OI by 550 basis points for Braking
Systems.
Improved cash flow by $150,000,000 and
exceeded all balanced scorecard metrics for 1999.
1994 to 1998: UNITED TECHNOLOGIES CORPORATION, Hartford, Connecticut
(NYSE). Global company providing technology products to the
aerospace, automotive and building industries.
UNITED TECHNOLOGIES AUTOMOTIVE, Dearborn, Michigan. $18 billion sales
including $3 billion in wiring, motors, switches, and
interiors.
1996 to 1998: Vice-President, Interior Operations. Responsible
for $650 million in sales from 16 plant locations with 3,000
associates. Products included door panels, instrument panels,
headliners, etc.
Implemented Lean methods including 90 weeks
of Shingijutsu projects.
Rationalized product lines, optimized APQP
and greatly improve ROS by 500 basis points.
1994 to 1996: Vice-President, Quality and Continuous
Improvement. Responsible for Quality and Business Process Re-
engineering (BPR) for interior trim, electrical, and electronic
automotive products.
Implemented BPR plan revising Financial
Reporting and New Product Development.
Initiated QS-9000 and introduced lean
manufacturing methods.
Moved U.T.A. from ``worst'' commodity
supplier at Ford in 1994 to ``best-in-class'' in 1996.
1993 to 1994: HOLMAN ENTERPRISES, Pennsauken, New Jersey (Private). A
$1.5 billion automotive corporation of retail, service, and
lease businesses.
President, RMP. Responsible for all aspects of this re-
manufacturing company generating $80 million in sales at three
plants and five distribution centers providing engines,
transmissions, and subsystems to 900 Ford Dealers.
Implemented cost control, revised core
values, regained Q1 for Ford, and returned to profit.
1991 to 1993: MASCOTECH, Detroit, Michigan (NASDAQ). A $1.5 billion
automotive supplier operating 20 plants.
Vice-President, Operations, Braun Engineering. Managed
operations of two Braun forging and machining plants with $70
million in sales annually. Initiated self-directed work teams
and placed QCD focus through kaizen methods. Reorganized by
flow and TPM focus to improve throughput.
1981 to 1991: TRW AUTOMOTIVE, Solon, Ohio (NYSE).
1988 to 1991: General Manager, APR. Generated $20 million
sales with 450 associates and four reman plants. Consolidated
operations with PIP into Maquiladora with headquarters in South
Texas.
1984 to 1988: Director, TRW Electronic Controleld Steering.
Directed product and process development of ``ECS'' managing an
$11 million annual budget with 110 associates over five
divisions. Applied Aerospace Technologies to Automotive
steering systems.
1981 to 1984: Director, Quality, TRW Automotive Worldwide.
Managed a worldwide Quality initiative across 96 plants in 16
countries. Chaired U.S. and Europe Councils and taught Quality
College. Directed European class 8 heavy truck steering move
from England to Spain.
1970 to 1981: FORD MOTOR COMPANY, Dearborn, Michigan (NYSE); FORD
TRACTOR OPERATIONS, Troy, Michigan.
Inspection Superintendent
Staff Quality Auditor
Staff Quality Engineer
Production Analyst
Cooperative Education Trainee
EDUCATION:
MBA, Wayne State University, Detroit, Michigan
BS, Automotive Engineering, Western Michigan University, Kalamazoo,
Michigan
ADDITIONAL TRAINING:
Lean Manufacturing Institute--1996
Columbia University Executive Management Program--1986 and 1987
Deming Seminar, Ford Motor Company--1985
Manufacturing Excellence, University of Michigan--1983
PROFESSIONAL MEMBERSHIPS:
SAE, 1982 to present
ASQ, Senior Member, 1978 to present
BOARD MEMBERSHIPS:
Manufacturer's Alliance/MAPI, Quality Council Director--2005
Board Member, Michigan Manufacturer's Technical Center--2001
Director, Lucas-Sumitomo Joint Venture Board of Directors--1998
Board Member, American Suppliers Institute (ASI)--1994
INSTRUCTOR/FACILITATOR:
Taught Lean Policy Deployment to 400 Bobcat employees and suppliers--
2003
Taught Lean Policy Deployment to Lucas Varity N.A.--1998
Taught Statistical Process Control, Ford Motor Company--1979
PRESENTATIONS:
Lead Speaker, Lean System Training, University of Kentucky--2006
Lead Speaker, Ingersoll Rand Annual Worldwide Leadership Conference--
2005
Panel Speaker, Virtus International Symposium, Montreal Quebec--2005
Speaker, ESGR Fargo Air Museum Recognition Ceremony--2004
Featured Speaker at ASAE ceremony honoring Bobcat's Keller brothers--
2004
Lead Speaker at ceremony for U.S. Army Bobcat's Delivery for Use in
Iraq.
Featured Speaker: U.S. Senator Byron Dorgan, Chair of Armed Services
Committee--2003
RECOGNITION & AWARDS:
North Dakota MEP Award for Lean Training--2005
Recognized at North Dakota Governor's State of the State Address--2005
Elected to Fargo Chamber of Commerce--2004
Discussion
Chairman Wu. Well, thank you, Mr. Ryan.
And now we will have some discussion here.
I recognize the Chair for five minutes.
Manufacturing Extention Partnerships
Dr. Jeffrey, we have had eloquent, effective testimony
about the need for MEP. Let us just declare the 50-some-odd-
percent cut in MEP dead on arrival for now, and we will set
that issue aside, and we will move on to some other things and
maybe circle back to that.
I understand that NIST intends to re-compete all the MEP
centers this spring, because you anticipate some reduction in
funding from Congress. I would like to understand as best as
possible, how much this re-competition will cost NIST and the
MEP centers. I, quite frankly, think that Congress is more
likely to relatively fully fund MEP again this year. And I am a
little bit concerned about a waste of not only money but, you
know, when you wave an axe in front of a whole flock of
turkeys, it gets everybody upset, and nobody gets back to
feeding and growing more turkey for a while.
So I would really like to understand why you are doing
this, what the estimated cost is, and get a sense for how much
this is going to upset the whole flock of very hardworking
folks.
Dr. Jeffrey. Well, the intent is certainly not to upset the
flock.
In terms of the actual costs, I will have to take that for
the record. I don't have the numbers in front of me, and so I
would be happy to answer in writing to you on the costs.
In terms of the rationale as to why do this at this point,
to do an effective re-competition, it would take about five to
six months. If the budget reduction did occur, and we were to
start that after the final appropriations, by the time we
completed that competition, we would be out of money if we had
all of the centers at the same spend rate. So what the re-
competition allows, one, is a more efficient way of trying to
get through to try to extract where there may be some savings
in the program, where there may be slightly different business
models to attract additional fee extraction, and where there
may be efficiencies in consolidation that would allow for the
maximum amount of service.
If the budget cut did occur and we waited until the end to
then try to address that, we would actually have to be in a
position of just cutting every single center by the same
percentage, which would probably create much more of a
disruption, and a----
Chairman Wu. Well----
Dr. Jeffrey.--weaker system at that point.
Chairman Wu. Thank you, Dr. Jeffrey. But given that
Congress is opposed to the MEP re-competition and, in fact, in
fiscal year 2005, NIST was specifically prohibited from doing
the re-competition, I think there is some room to inquire as to
why this path is being pursued, because if we need to, I
suspect that we might put that prohibition back in the
appropriations bill.
And I would like to get a sense from Mr. Murray and Mr.
Ryan about what you think the effect of a re-competition across
the country would have on MEP centers.
Mr. Murray. Can we reply?
Chairman Wu. Yes, I am asking both of you about----
Mr. Murray. I will go first.
Chairman Wu.--your take on the effect of a re-competition.
Mr. Murray. Okay. I think it would be disastrous, to use a
word. Again, I am speaking as a board member of the affiliate
in Oregon. The organization, as it is now, is extremely lean. I
have been to their offices. They camp out in a--kind of a--it
is anything but plush. The staff is incredibly efficient and
very lean. I really don't know where they would find additional
savings. I think it would be a distraction for that business,
take away already limited resources, to look for new business
or to market to other clients. I really think it would be a
disaster. I can't say it strongly enough.
Chairman Wu. Thank you, Mr. Murray.
Mr. Ryan, do you have anything to add?
Mr. Ryan. As I mentioned earlier in my talk that the MEP
represents synergy. One of the things that I don't believe we
do well enough in our country in the manufacturing sector is
identify the cost relationship between the supply chain steps.
The OEM manufacturer of a finished product, the supplier of
subsystems, the supplier of parts to the subsystems, et cetera,
is the supply chain. Knotting that together, as well as by
state representation, allows for some common methodology across
the country to accept the challenge to be cost-reducing our
products and to accept the opportunity to be more competitive
globally.
Chairman Wu. Thank you, Mr. Ryan.
I see that my time is actually 24 seconds over.
You know, if I do not have an opportunity to return to this
particular topic, I would like the witnesses, especially you,
Dr. Jeffrey and Mr. Murray and Mr. Ryan, to comment upon what
Dr. Jeffrey alluded to earlier, which is to compensate for the
Administration's proposed cuts, which, in my view, are, one
hopes, unlikely at this point by having them be absorbed by
increasing charges to small and medium-sized manufacturers and
what the effect of this would be on services and uptake of
services from the current client base, or customer base, if you
will. So the makeup of government funds through additional
charges in fees.
First of all, it was a shame to lose Dr. Gingrey for a very
necessary trip for our friend, Mr. Norwood, and Dr. Gingrey is
the Ranking Member of the Subcommittee. I would like to welcome
Mr. Hall, the Ranking Member of the Full Science and Technology
Committee. Thank you, Mr. Hall, for being here. I wanted to
welcome Mr. Hall, but my understanding is that Mr. Smith had
some time constraints.
Mr. Hall, a southern gentleman from morning to night.
Mr. Smith, you are recognized for five minutes.
Mr. Smith. Thank you. I, obviously, am not a Ranking
Member, but I appreciate the opportunity to be here.
Mr. Ryan, I believe you talked about empowering workers and
affording workers the tools. Do you feel that our existing
channels of empowering workers are sufficient? What suggestions
might you have for, perhaps, a change in paradigm, or whatever
the case might be, to empower workers?
Mr. Ryan. In my testimony, I make comments about 20 years
ago when the country was focused on quality circles on SBC.
Statistics, if you would, Dr. Deming methodologies. That is
some 20-plus years ago. What I showed in my presentation is an
umbrella chart, as I call it, with six significant steps in
sequence. And the second step in that sequence is empowerment
of the people. But the first step is product sales structure.
You have to be in an appropriate structural physical manner in
a manufacturing facility in order for people to be empowered.
Otherwise, management just pushes the problem at the employee
and frustrates them even more.
So my point is that the discipline for that six-step
sequence, starting with the product sales structure to the six-
step standardization, the distinction of that is the people get
empowered once you create the structure that they can be and
add, what I call, ``intellectual capital'' to the process. It
is a huge opportunity that comes from a lean transformation.
And again, the opportunity for productivity in this country
amongst the people in small- and medium-sized business is what
will make us better as production management of large
subsystems and vehicles and products for the associated markets
served.
So the people empowerment needs that first step, and the
MEP understands that sequence. And frankly, if you just go hire
a consultant in the local state and not the MEP support, what
you will find is unique opinions of what the proper process is.
And again, as I said earlier that Jim Womack, who is the expert
in lean concepts from back in 1991 on this survey work back at
MIT, the learning is there, but the absolute application of
that learning is still missing, and the linkage of the MEP--and
my experience with five states, not all 50 yet, maybe I will
live long enough to do that, but in those five states, that
linkage is common. And so I am sharing with you that it isn't
just the consulting activity at MEP. It is a common linkage of
how things are done and the philosophy will get us there. If we
take it down a notch or two or three or in half, as the
proposal says, we lose what we have built up over 18 years,
unfortunately. And that would be a travesty. And I do believe
that Congress needs to support the people, and the people need
to understand the profile of lean.
Thank you.
Mr. Smith. Thank you.
R&D at NIST
And also, Dr. Jeffrey, how does NIST evaluate new projects
and novel fields of research, and are potential economic
benefits explicitly considered when determining research
priorities? And do you perform a formal needs assessment with
involvement from the external community?
Dr. Jeffrey. Thank you, sir.
Our mission statement is to support the economic security
and quality of life of Americans, and so every new initiative
we put forward goes through a rigorous internal process that
includes inputs, generally, from industry. It includes looking
at what the kinds of impacts will be. Prospective studies have
large errors to them, so often use best technical judgments
involved.
Nanotechnology is a great example of where there have been
a number of studies that have indicated that nanotechnology in
the next 10 years may be anywhere from a $1 to $2.5 trillion
global enterprise. And a lot of the issues there have to do
with the measurements characterizations which Dr. Williams very
eloquently described in his testimony.
In addition, we reach out to the private sector, probably
more than any other part of the federal S&T enterprise to
really try to get an idea of what the potential measurement
barriers to innovation are. And in fact, we just completed our
first assessment of what we call the U.S. measurement system,
which actually looked at over 160 industry technical roadmaps,
had over 1,000 people from the private sector participating
with the NIST scientists to try to identify where there are
current measurement barriers to innovation. And so we just
catalogued that, just literally, released a report, and now
using that as part of our strategic planning to identify and
prioritize our investments.
Mr. Smith. Thank you.
I yield back.
Chairman Wu. Thank you.
The gentleman from Kentucky, Mr. Chandler.
Advanced Technology Program
Mr. Chandler. Thank you, Chairman Wu.
And I thank all of the witnesses for coming today. I
appreciate you shedding some light on some of these topics.
I would like to, Dr. Jeffrey, ask you a little bit about
the Advanced Technology Program, if I may. I understand, from
Mr. Borrus, that he feels that that is an important program,
and I understand that the Administration feels otherwise, that
the Administration sees no need for it. Is there a particular
need now, as Mr. Borrus claims, for seed stage investing?
Please illuminate that a little bit for me.
Dr. Jeffrey. Thank you, sir.
The Administration recognizes the benefits that the ATP
program has generated. It is an effectively-run program, and
actually, I would have to say, I am actually very proud, as
NIST's Director, to be hearing about success stories from all
of the programs, because we do execute and run the programs as
efficiently and effectively as possible.
Mr. Chandler. And therefore, we need to get rid of----
Dr. Jeffrey. Well, the issue isn't whether the program is
effectively managed. The issue is, in the Administration's
viewpoint, whether or not it is the appropriate role for the
Federal Government to be playing. And it gets down to whether
there are other policy mechanisms that may be able to help turn
the tide that Mr. Borrus described of the private-sector
investing in the early seed or whether a direct federal
investment is necessary, and that basically gets down to a
philosophical issue. But there really isn't so much an issue as
to the effectiveness.
Mr. Chandler. Well, my understanding of what you are saying
is if it is not broken, break it? I mean, you are saying that
the program is working well, but now you are saying that
somehow it is not the role of government to be a part of a
program that is working well?
Dr. Jeffrey. Yes. There are a lot of effective programs
that have different levels of priority for the Federal
Government. And clearly, we are in a position where there are
tight federal budgets. And, we have to prioritize what our
investments are going to be based upon not just merit but also
where we can make the biggest difference as the Federal
Government. And that is what gets folded into the calculus.
Mr. Chandler. Well, let me give Mr. Borrus a chance, if you
would like to add something.
Mr. Borrus. I would only say that not only is it an
appropriate role for the Federal Government, it is a
historically-consistent, well-established role for the Federal
Government over at least the last century and a half, if not
longer, since the Morrill Act creation of land-grant colleges
and the Agricultural Extension Service, which similarly, for
the technologies of its time, sought to move innovation out of
the colleges and out of the research institutes into
agriculture. You know, it is not a departure for the U.S.
Government. It is not something new. This is a historically-
consistent and well-received tradition. And it ought to be
continued.
Mr. Chandler. Thank you.
I yield back, Mr. Chairman.
Chairman Wu. Thank you very much.
The gentleman from Texas, Mr. Hall.
Measurement Barriers to Innovation
Mr. Hall. Thank you, Mr. Chairman.
I want to try to get two questions in.
But first--and I would like a fairly direct and maybe a yes
or no answer to one of the questions.
Dr. Jeffrey and Dr. Williams, both of you referred to the
NIST report that identifies over 700 measurement barriers to
innovation in critical industries. Give me not 700 but a few of
the concrete examples of some of these barriers, first, and
then just tell me whether or not there is a consensus on which
barriers ought to be a priority for NIST to address. That last
one, you can say yes or no and--without naming them. But give
me just some examples, so we will have it in the record.
Dr. Williams, do you want to start?
Dr. Williams. Yes, thank you.
Specifically, in this area of nanotechnology, we are now
getting into the realm of where electronic devices on circuits
are just a few atoms thick, and they are starting to get tens
of atoms wide. And in the not-too-distant future, literally, a
single electronic device will be made up of a handful of atoms.
The metrology requirements for, first of all, measuring the
size of the device and then identifying which atoms are in the
device and where they are within the device are absolutely
daunting, and yet they are absolutely crucial for being able to
understand the operation and being able to design future types
of devices.
So it is this issue of literally counting and identifying
individual atoms in a three-dimensional structure: when we can
get to that point, the amount of progress that we are going to
be able to make will really be stunning. So I would say that
that, for me, is a key and critical issue.
Also, another one is literally metering light particles,
photons, one at a time. We are now at the stage where we are
generating and detecting single photons, and we are using those
single photons to carry important information. And that is
another issue, which is key and critical to the issue of
metrology.
Mr. Hall. Dr. Jeffrey, do you want to----
Dr. Jeffrey. Actually, Dr. Williams did an excellent job.
And thank you for allowing a plug. And here is a copy of the
report that I will leave for you----
Mr. Hall. Okay.
Dr. Jeffrey.--afterwards. I will just add that----
Mr. Hall. Does that have all 700 of them in there?
Dr. Jeffrey. Actually, it does. There is a CD in the back
with all of the data.
Mr. Hall. All right.
Dr. Jeffrey. Believe me. It is a fascinating read.
Mr. Hall. With pictures or----
Dr. Jeffrey. Not too many pictures, sorry. But one of the
things I will just add is that what we concentrated on was 11
different industry sectors in this as a beginning, and so it
runs the gamut from several of the measurements that Dr.
Williams described down to some of the near-term needs of
today's auto industry, information technology, and others. And
I will leave a copy behind for you, sir.
Mr. Hall. All right. I thank you for it.
You should have given me one the other day, and I would
have been studying it, and I could have taken a test on it or
something.
Dr. Jeffrey. We just released it on Monday, sir.
Mr. Hall. And I was going to ask you if there is a
consensus on which barriers should be a priority for NIST to
address, but they are prioritized in your article there, are
they not?
Dr. Jeffrey. Well, one of the things that we are doing,
sir, is that we are taking these, and we are now doing what I
will call a ``deep dive'', trying to identify whether or not
there are some systemic issues, as opposed to 723 separate
ones, that would be the ones to really focus on.
And one of the unique aspects of what this study did was it
identified measurement barriers to innovation that may not fall
just within the NIST purview, and so we are reaching out to
industry, to universities, and to other government agencies so
that we can get a more comprehensive attack on these issues.
But we are at the point now where we are starting to look at
the systemic issues, to see if there are systemic issues, which
would then lead to that prioritization.
Mr. Hall. I lost a bet. I bet that I could get a yes or no.
And----
Dr. Jeffrey. Yes.
Mr. Hall. There was a President who didn't speak very much,
and a young journalist said, ``Mr. President, I have a bet that
I can get you to say at least three words.'' His answer was,
``You lose.''
Thank you for that.
But Dr. Jeffrey, while I am talking to you. Over the past
several years, this committee, we have been active in promoting
the nationwide transition to electronic health records that we
think hold a great promise for reducing medical errors and
lowering the cost of medical care. Can you summarize the
efforts that NIST has made to help the Department of Health and
Human Services promote EHR and the adoption of information
technology solutions generally within the health care industry?
Dr. Jeffrey. Yes, thank you, sir.
NIST has been working very closely as a partner, supporting
HHS, which has the lead on this. And we are working in several
different areas. One is working with the private sector and
standards development organizations to try to get some
coherence and compatibility on some of the standards for
interoperability of systems. We are also working and supporting
some of the contracts that HHS has out, providing technical
underpinning to them, and also looking at some of the
validation mechanisms that will come into play. So we sort of
tied in with HHS throughout the full end-to-end gamut.
Mr. Hall. I thank you. My time is out, and I understand we
can write letters, make inquiries, and they will answer them.
I have a follow-up to that, but my time is up, and I yield
back.
Thank you, sir.
Chairman Wu. Thank you, Mr. Hall. And you are absolutely
correct, as always.
Mr. Hall. About what?
Chairman Wu. That time was up and you can make written
inquiry.
Mr. Hall. All right.
Chairman Wu. All right. Mr. Matheson, the gentleman from
Utah.
Manufacturing Extension Partnership; Advanced Technology
Program
Mr. Matheson. Well, thank you, Mr. Chairman.
I apologize. I had another meeting and didn't get to be
here to hear all of the testimony, and I want to cover
something that, I think, has been discussed a little bit
before.
But Dr. Jeffrey, I wanted to ask you a couple questions,
again, related to the MEP program.
This is a program, as we all know, that is a state/federal
partnership. And I am curious, since there has been this
continued annual process where the Administration has advocated
reductions in the MEP budget, if the Administration has ever
consulted with the states and their funding agencies about your
intent and how the program would operate under the budget cut.
It is my understanding that, at least in my State of Utah, the
MEP center has not been consulted on this budget proposal. And
I think that many state agencies would likely simply reduce
their share of matching funds if the federal share is cut. But
do you have an understanding of how states would react to these
proposed cuts?
Dr. Jeffrey. In terms of the outreach, obviously, one of
the issues is discussing the budget before it is actually
submitted. Since the budget proposal has come up to the Hill, I
know that the Director of the MEP program has been talking with
the centers, having them understand what the implications would
be, and having them start thinking about what the right
approach would be to be moving forward. But as you point out,
this, I believe, is the fifth year of this see-saw, and so I
wouldn't say that it is a complete shock to the centers, but we
are working with them now and before any kind of re-competition
would occur to make sure that everybody understands what the
ground rules are, what we are looking for, and how to maintain
the most effective process for the small manufacturers that are
out there.
Mr. Matheson. Let me ask. As I understand it, one of the
justifications from OMB for the budget cut in the MEP program
is that almost 20 percent of the MEP clients are manufacturing
firms that have more than 250 employees and that these firms
would be able to make up the funding difference due to their
size. Is this an indication that the Administration now
considers manufacturers with more than 250 employees as outside
the traditional federal definition of a ``small business,'' the
point being that the SBA defines small businesses as having
less than 500 employees?
Dr. Jeffrey. I am not sure about the specific OMB reference
that you are making, but we adopted the SBA definition for what
a ``small manufacturer'' is, so that we are consistent with
that. So it would be 500 people under the MEP program.
Mr. Matheson. Okay. Well, then we do have a disagreement
here, and we will follow-up in written form and show you the
OMB document that shows that they define it as if you are over
250, you don't need MEP anymore. And I would be happy to share
that with you, because I am curious what evidence the
Administration is using to say that clients with more than 250
employees suddenly don't need MEP. I think that would be a
helpful exchange to have, because, quite frankly, I think you
know this, the average manufacturing size in this country is
about 33 employees.
One more question on MEP.
Is there a sense, under the proposed budget, how NIST is
going to decide which centers will remain operational, assuming
there would be a smaller system overall?
Dr. Jeffrey. Yes, sir. One of the things that we discussed
was that there would be a re-competition that would basically
have the centers come back with the plan for how they would be
able to keep their effective services with the lower federal
budget. And that could fall under a number of things from cost
savings within the centers to consolidation to future action to
whatever business model they want to have.
One of the things that I think is very important to
maintain is that there is an important role for the Federal
Government in the MEP program. And, I think it is very
important that we understand that. There are really three
absolutely critical core missions that the Federal Government
needs to maintain. One is there has to be a driver for
producing the new kinds of products and services that can then
get propagated throughout the network, things like lean
manufacturing and some of the other concepts that were talked
about by two witnesses.
Second, it has to maintain the quality of each of the
centers. There needs to be, essentially, that umbrella
organization to ensure that an absolute standard of quality is
maintained.
And third, it basically has to have enough skin in the game
so that the focus does stay on the small manufacturers and
doesn't just go to those customers that might be--what centers
might gravitate to without the federal pressure.
And those are the three really critical pieces that we need
to be able to maintain within NIST, and I think we can do that
within that budget.
Mr. Matheson. Well, Dr. Jeffrey, I don't think anyone is
going to disagree with those three factors as to what needs to
be maintained, but it seems like the proposed budget cut runs
completely counter to the desire to pursue these three factors,
and I suspect there is a bipartisan group on this committee
which disagrees with this proposed budget cut.
Mr. Chairman, I yield back the balance of my time.
Chairman Wu. Thank you very much.
Dr. Ehlers.
Mr. Ehlers. Thank you, Mr. Chairman. And I apologize to you
and to the witnesses for being late, but in fact, I was giving
a speech to a German American group very worried about
technology transfer.
Chairman Wu. Dr. Ehlers, you are forgiven as the only
Member of Congress to have ever been late.
Mr. Ehlers. Yes, but I try to be on time.
But it is ironic to come from that conference where a
foreign country is very eagerly trying to determine how we do
technology transfer and knowledge transfer, as they said, and
learning about America and come here to this discussion.
First of all, Dr. Jeffrey, I am very pleased that you are
heading NIST. It is an institution I have had a soft spot for,
for many years. I have used their services as a scientist. I
served on the review panel for NBS, as it was called back then
where I really got to know the inner workings. And I am pleased
with what you are doing.
The fact that it is in NIST instead of NBS indicates a
definite change of function. Not in any way cutting back the
traditional, but adding to it things such as MEP, ATP. In other
words, ways to directly assist the manufacturing in this
country.
I know you mentioned earlier that the Administration has
some disagreements about the functions of the MEP, and
particularly ATP. Let me assure you that they are wrong. And I
have been fighting a battle with them for some years. And I
have always been trying to find out who the little man in the
basement of the White House is that holds that view, and I have
yet to locate him, but yet the attitude there is of that
nature.
I first worked with MEP, incidentally, when I was in the
state legislature as well. It is a good program. I am not
saying it can't be improved, and I am certainly willing to see
a review and willing to look at new ideas, but I don't want the
objective of that review to be--to change MEP for ideological
reasons rather than pragmatic reasons. And I am very concerned
about any attempts to change it, and that is why the Congress
has always fought this.
ATP is a different matter. I think ATP does have to be
restructured. I think it should be resurrected in a
restructured form. And that could also be extremely useful. I
will not defend the way it operated originally, even though it
was not that bad, but I think it could be improved.
MEP can be improved as well, but it has to have the right
motivation.
I am not here castigating you, or anyone, and particularly
in the Administration, but I am very concerned about those
ideologues, who simply think it is improper for the Federal
Government to be working with industry in the way it does. And
that I object to strongly, because other countries are trying
to find out how we do it, because we do it so well. So it is
actually idiotic to, on ideological grounds, try to kill a
program that is helping industry, helping our nation, helping
our economy. And I appreciate especially the report of--pardon
me, the quotation from Dr. Williams, quoting Benjamin Franklin,
who should be the patron saint of all industry and political
leaders in this country, in which he said, ``An investment in
knowledge always pays the best interest.''
Just yesterday, I testified before the House Budget
Committee, along with Congressman Rush Holt, my fellow
physicist. And he made the point, too, about investments--that
there is no expenditure of money that we make in the federal
budget that has a greater return than investment in science and
technology. There is no question about it. So we have to
continue in that. And I say if you want to review MEP and
modify it just on the basis of making a good program better,
God bless you, and we would be happy to work with you and help
you.
But I would resist any impetus to do it on the basis of the
beliefs of some people in the Administration that somehow this
is something the government should not be doing and that we
have to restructure it because of some ideological beliefs.
I am not negative on the Administration. I appreciate what
they have done. I appreciate the President. He is a good man. I
have had good conversations with him about these issues. And
frankly, he is in tune with what I am trying to do. So whoever
is saying that the Administration ``has problems,'' I don't
think is speaking for the President.
Having said that diatribe, I would be happy to hear
comments from anyone on the panel who wishes to comment on my
diatribe.
Dr. Jeffrey.
Dr. Jeffrey. If I could add just a word.
Thank you very much, sir. And obviously, I have one point
that I want to make sure does not get lost on this, and that,
you know, obviously we stand by--and I personally stand by to
work with you and anyone else on this committee, to try to
improve any program, and I look forward to that. So thank you.
Mr. Ehlers. Well, since you got three Nobel Prizes in 10
years, I don't think we have to worry about improving their
research program, at this point. But ATP definitely needs
improvement. MEP needs some tinkering, and I think that is the
best approach to take.
I am sorry. My time has expired.
I yield back.
Chairman Wu. I thank the gentleman.
Well, while I am going to be nicer to the little fellow in
(and I am not referring to anyone in particular). The gentleman
from Michigan referred to a little fellow in the White House--
--
Mr. Ehlers. The basement of the White House.
Chairman Wu.--that he has been looking for--and Mr. Borrus,
we are going to get to you eventually, but I am going to get
this off my chest, first.
And Dr. Jeffrey, I love you like a brother. You have been
terrific. This is not directed at you. Let us consider you a
conduit from this end of Pennsylvania Avenue to what Dr. Ehlers
has referred to as the fellow in the basement that he hasn't
been able to find. What you have referred to as an ideology,
but let us consider this a conversation with the philosopher in
the White House who has repeatedly cut back on MEP, has
repeatedly zeroed-out ATP, and I would like to ask that
philosopher--I mean, Dr. Jeffrey, you must be embarrassed to be
here, because you are a scientist, and you just told us that
ATP is a fine program and is doing great things. Now, back 150
years, would that philosopher in the White House be opposed to
public libraries and we would be counting on Andre Carnegie? If
we were back in the time of Abraham Lincoln and there were
debates when he was in the state legislature in Illinois,
should the public be involved in building roads and canals or
should that be a private enterprise? Merely 100 years ago, is
it a legitimate role for the Federal Government to ban child
labor or to begin to work toward a 40-hour work week? There
were nine old men across the street who felt it was not an
appropriate role, and it wasn't until a while later, I am
mixing my history a little bit, but it shook those nine old men
up enough that they started letting some of that legislation
live rather than stomping it out over at the Supreme Court.
Now moving it to a more relevant period, space exploration.
There is a very legitimate role for the private sector in low-
orbit space exploration. But there are some folks who are
thinking that NASA could be replaced in deep space exploration,
and quite frankly, I just don't think the numbers crunch.
Now that philosopher down at the other end of Pennsylvania
Avenue at OMB or somewhere else within a deep basement; you
know, I have always said this Administration would privatize
everything except for the Marine Corps. Then I went to Iraq.
They are privatizing the Marine Corps! They are called
contractors, and I don't know how many of them there are,
because I don't know that anybody has ever done a count, but we
are reducing our troop numbers, and we are outsourcing the
Marine Corps. At some point, philosophy hits the hard wall of
reality.
And I apologize to you for laying your ears back a little
bit about this, but it is not directed at you, Dr. Jeffrey,
because you are in a very uncomfortable spot of being a
scientist representing a bunch of philosophers down at the
other end of the street.
So just carry that message back, and tell me what they say
over a beer some time.
Availability of Venture Capital
Mr. Borrus, the Administration asserts that there is plenty
of venture capital funds. And you say there isn't. Could you
expand a little bit further on your comments about where
venture capital has gone and why they are investing, shall we
say, in more mature technologies and not, perhaps, in seed
round and bridging the ``valley of death''?
Mr. Borrus. Venture investors will only commit large
amounts of capital that they have at their disposal when they
can assess, with some degree of specificity, at least three
kinds of risks that venture investors look at. Technology risk,
you know, is this something that is at all possible from a
scientific standpoint? Can it be achieved at an appropriate
price performance points to have an impact? Market risk, is
there a growing market into which this new technological
innovation has some hope of being sold by an innovative start-
up, not a large established business that already has well-
established distribution counts? Is the market large enough to
generate the kind of return that venture capitalists look for?
And execution risk, is this a team that can be built to execute
on this business idea?
In a certain sense, you can define the seed stage of a de
novo start-up's life as that point in time in which it is
really not possible yet to assess those kinds of risks. It is
really the point of time when you need to have a leap of faith
and believe that if you do a little work and begin to
transition an idea, a fledgling technology, a rudimentary bit
of science, out of the lab and toward the commercial
marketplace, that you can begin to get your hands around
technology risks, sales risks or market risks, and execution
risks sufficiently to then convince yourselves it is worth
committing a large amount of capital, say $5 to $7 million in
an early stage, around an investment and that you can earn the
kind of return by committing that capital that you need to earn
to satisfy, as a venture investor, the investors who give you
the money that you use to invest (your limited partners).
And so the bulk of the industry has gotten so large that it
has moved away from being willing to take those kinds of leaps
of faith. They have a lot of capital they need to commit. They
can't commit it into small increments necessary to take the
first few steps----
Chairman Wu. Mr. Borrus, in some respects, the problem is
that it takes the same amount of due diligence to invest a
million dollars as it takes to invest $80 million?
Mr. Borrus. Well, in some cases more. Yes.
Chairman Wu. In some cases more due----
Mr. Borrus. Thank you for----
Chairman Wu.--diligence?
Mr. Borrus. Thank you for making that point for me.
So----
Chairman Wu. No, I didn't want to interrupt your----
Mr. Borrus. No. No. I mean, at the end of the day, if you
look at the data that the National Venture Capital Association
collects, it is just very clear that the bulk of the industry
is no longer doing very early stage, seed-stage investing.
There are still some venture funds at the early stage
investing, but the vast bulk of the money that is spent
actually goes to much later stages in the start-up's life. It
is not available for the riskiest----
Chairman Wu. With my remaining minute and a half, two
minutes, apparently, there is a philosophical disagreement at
the other end of the street, and there is a concern about
picking winners and losers. How would you try to address the
picking of winners and losers, which some believe should be
left to the private sector?
Mr. Borrus. I think picking winners and losers is a
profoundly misleading metaphor. In a certain sense, it is to
substitute sloganeering for a thorough understanding of how
risky early stage technology innovation actually works. No
investor, neither public nor private investor, picks winners
and losers. Ultimately, as the gentlemen to my left and right,
I think, will testify, it is the market that picks winners and
losers, by which I mean, of course, your competitors on the one
hand and your customers on the other.
So investors don't pick winners and losers. What they do is
they plant seeds. In this particular area of high-risk
innovation, they plant technology seeds. And in the planting of
seeds, there is a well-defined, historically-traditional role
that the Federal Government can and should play of planting
technology seeds in the areas of either private market failure
or acute national need. And that is what ATP has done. That is
what the Federal Government does in other programs, and it is
an essential role.
Chairman Wu. Mr. Borrus, let me interrupt you just with my
last 30 seconds.
There are some concerns that ATP may benefit only a single
company. Others say that the benefit is broader than that, it
casts a broader shadow. What is your view of that particular
discussion?
Mr. Borrus. I think that view is completely, flatly wrong.
Look, all government development programs, to distinguish
it from basic research funding, have to work through individual
companies in a market economy, such as ours.
In ATP's case, all right, the measured social returns of
the program far outstrip the total program dollars spent over
the life of the program, as a whole, and of course,
consequently, dwarf the amount of dollars going to any
individual company. The resulting social benefits, in the form
of jobs, in the form of seeding new technology industries that
come into being, in the form of consumer benefits are
exceptional, substantial. I mean, I suggest the critics who
take that view ask those who have been diagnosed with breast
cancer through ATP-funded digital mammography innovation and
subsequently treated, because of the early detection that ATP-
funded innovation enabled, ask them whether they think the
benefits of the program only went to a company or two.
Chairman Wu. Thank you, Mr. Borrus. I wanted to give you a
chance to finish answering the question.
And Dr. Jeffrey, I just want to return, for a moment.
Again, I still love you, but returning to that philosopher in
the basement of OMB, you know, every person has a right to be a
Luddite, but at least you should be a consistent Luddite. Now
we provide plenty of funding at Department of Energy and other
agencies that invest in private-sector technology. An example
would be the Hydrogen Initiative, the Clean Coal Initiative,
over at the CIA, the In-Q-Tel project that has been doing
pretty much what ATP does. And Dr. Jeffrey, if I were you, I
would be really angry that they are letting the CIA, in the
investment realm, do things that they want to take away from
you.
And with that, I would like to turn to the gentleman from
Michigan, Dr. Ehlers.
Joint University of Maryland-NIST Institute
Mr. Ehlers. Well, I have already given my diatribe, so I
won't add to yours.
But I do want to have one specific question, Dr. Jeffrey,
that I am asking on behalf of the Committee.
You highlighted the recently-created joint institute with
the University of Maryland. There is some concern. Was Maryland
selected through a peer-reviewed, competitive process or what--
if not, what--why--how did this come about without peer review,
if there was no peer review?
Dr. Jeffrey. The review was done internally by looking at,
basically, the statistics that the National Science Foundation
and National Academy of Science have in terms of ranking
different institutions, in terms of physics, and in this case,
since it is a physics-based institution, that looked at metrics
by their ranking in terms of their publications, the grad
students, the ability to expand into the quantum era. And one
of the other attributes was the synergy in terms of the
expertise. Maryland, actually, came out very well. The
University of Maryland came out very well in all of those. And
one very important point is that Maryland is one of the best
institutions in terms of condensed matter physics. And NIST is,
essentially, one of the best institutions in the purely quantum
phenomena.
What we end up with is that some of the work that we have
been doing in the quantum realm, creating new forms of matter,
Bose-Einstein condensates and Fermion condensates, we are
basically at the point where we have got the quantum physicists
that have been trained as quantum physicists creating these
forms of matter that are essentially acting sort of like
quantum liquids. And we have another entire branch of physics,
condensed matter physics, where the University of Maryland
excels, that actually has a lot of theory and nomenclature in
that area. And by combining these two institutions together, we
actually believe that we can cross physics disciplines and
accelerate the field.
So we looked very hard at all of the various metrics that
are kept by the Academy and kept by the Science Foundation and
made a determination. We then did put out a Federal Register
Notice to explain our intent, and we only had one university,
other than the University of Maryland, that came back and, in
further analysis and discussions with them, they agreed they
were not the right institution.
Mr. Ehlers. Now if you are going to be working on the Bose-
Einstein condensate, are you taking that work away from the
scientists at Boulder and--or is this supplementary or----
Dr. Jeffrey. Yes, this is definitely supplementary. This is
not removing the Nobel Prize winning work out in Colorado at
all. It is really extending beyond that.
Mr. Ehlers. I see. All right. Thank you very much, and I
must say I am intrigued by the Chairman's words about the
philosopher. I had never thought of this person as being a
philosopher, but since I haven't met that person, I don't know.
With that comment, I would yield back.
Chairman Wu. Dr. Ehlers, it is the task of this committee
to elevate all discussions.
Mr. Borrus, the Federal Government has invested, to date,
perhaps a little bit over $7 billion in the National
Nanotechnology Initiative over a multi-year period, and the
Administration is requesting approximately another billion and
a half investment in the National Nanotechnology Initiative for
fiscal year 2008. Their justification has been that it will
bring about the development of a whole new industrial sector,
but the challenge is that current federal funding is very much
focused on basic research in nanotechnology. We have heard from
the nanotech industry about the gap in funding between research
and having proof of concept getting to the point where it will
attract venture funding.
In your view, should the ATP program be one component of
the federal Nanotechnology Initiative?
Mr. Borrus. To echo Mr. Hall, one word, yes.
Chairman Wu. Thank you.
Now we do live in a world of budgetary constraints. Now
there is a general agreement, and we hear this from both ends
of Pennsylvania Avenue about the need for a strong innovation
agenda, which includes significant funding increases for
research and development, and on my part, I hope for education,
both K-12 and higher education.
Now the Administration has, thus far, focused primarily on
basic research in the Competitiveness Initiative. Should the
ATP program be a significant component of the federal
innovation agenda? And if it is a one-word answer yes, why?
Mr. Borrus. Yes.
Why? You only unleash the social impacts that benefit the
Nation when you transition something out of the lab and into
the commercial marketplace. As I have tried to indicate, there
are some major gaps in financing for that precise part of the
problem. And you have to bridge that. I am trying to fill it,
but I obviously, by myself, am not going to be able to fill
very much of it. There is clearly a role for other federal
funding mechanisms, and in particular for ATP, there as well.
And maybe I should elaborate on my nanotech piece. It is
beginning to trickle out a little. Many of the things I look at
and consider investing in these days have a nanoscale-
engineering component to it. I think, by the way, that it is
probably wrong to think about nanotechnology as a new, emerging
industry. It is a technology that will be very widely applied
across a very big number of industries. It is already beginning
to transform chemistry, transform material science, ultimately
will have very significant impacts in the manufacturing
industries as well.
Facilitating that transition holds out one of the best
hopes for generating the kind of innovation and revival and
continued leadership by American industry as a whole, that can
sustain a growing standard of living in this country in light
of the challenges that we face.
Chairman Wu. Are there any other questions from the members
present?
If not, I would just like to say that we all strongly
support NIST, and especially the NIST laboratories. They have
done well in terms of federal financial support, and they have
done even better in terms of their success. Three Nobel Prizes
is just the tip of the iceberg. What we want is a balance
between the laboratory enterprise and the other very important
things that NIST does. And we would like, we will insist upon a
sensible, fact-based set of policies in science and in
economics for our economy's sake. As much as we may have
interesting discussions with philosophers, when we get down to
science and running our economy, I think that it is wise to pay
heed to fact-based, numbers-based constraints.
And Dr. Jeffrey, I would look forward to working with you
to develop that. I believe that you want to do that.
And I want to thank the panelists, all of you who made this
journey to this wonderful frosted town today to make
significant contributions to this very, very important
discussion.
I thank you all very much.
I want to thank all of you for coming. The witnesses are
excused, and this hearing is now adjourned.
[Whereupon, at 11:50 a.m., the Subcommittee was adjourned.]
Appendix 1:
----------
Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by William Jeffrey, Director, National Institute of Standards
and Technology, Technology Administration, U.S. Department of
Commerce
Questions submitted by Chairman David Wu
MEP
Q1. The Administration indicates that it believes its proposed cut to
MEP can be absorbed by increased charges to small manufacturers,
increases in efficiency, cost-reduction at MEP Centers, and
consolidation of Centers. Please provide the Committee with the NIST
analysis that justifies these claims.
A1. The annual reported benefits by manufacturing clients of the MEP
Centers conducted through an independent survey demonstrates a
significant level of cost savings and efficiency improvements for the
MEP clients. For example, the latest MEP client survey results
(released January 2007 and reflecting FY 2005 benefits) demonstrate
that MEP helped 16,448 clients create and retain 53 thousand jobs;
increase and retain sales of nearly $6.3 billion; and generated cost
savings of just over $1.3 billion (both recurring and non-recurring).
These impacts resulting in reduced costs and potentially increased
profits for the client could be used to support increased fees for
future services. With increased revenues streams from client fees, MEP
centers may offset, in whole or in part, the reduction in federal
funds. The FY 2008 Budget request would also encourage these Centers to
be more efficient by reducing their overhead costs, including marketing
costs.
Q2. How many MEP Centers could be operated effectively under the
proposed budget of only $46 million? What analysis has NIST performed
to arrive at this conclusion?
A2. MEP is required by statute to use a merit-based process for
awarding funds. The specifics of how many centers and where they might
be located is unknown at this time. The MEP Director will work with the
Centers to develop options that consider each center's customer base,
constraints, and opportunities. Actions taken by any center or group of
centers will be assessed against their ability to maintain support to
the small manufacturers. If the requested budget is enacted, we will
work with the centers to examine alternatives and optimize the best
plan for operating at the $46.3 million level that ensures the maximum
benefit to small manufacturers.
Q3. What specific discussions has NIST held with MEP Centers and their
state funding agencies about the proposed 56 percent funding reduction?
A3. MEP meets quarterly with MEP Center Directors and uses these
quarterly meetings to discuss information such as the Administration's
federal budget priorities and proposed MEP program operations under a
reduced budget.
Additionally, we had discussed an MEP re-competition, but based
upon inputs from the MEP Center Directors, Congressional Members and
Staff, and others it became clear that the process of the re-
competition would be disruptive to current Center operations. We
therefore decided not to hold this re-competition.
VCAT
Q4. How did you incorporate recommendations from the Visiting
Committee on Advanced Technology (VCAT) into the new initiatives in the
FY08 budget, including those carried over from the FY07 request? What
recommendations did the VCAT make that were not included in the new
initiatives?
A4. The Visiting Committee on Advanced Technology (VCAT) is a source of
external input that is often focused around the expertise of the
individual VCAT members. NIST takes into consideration VCAT input when
developing new programs or evaluating the course of current programs.
The VCAT is only one of many sources of recommendations that NIST
considers while developing new programs and initiatives. NIST also
takes into account Congressional, Administration, and Agency
priorities, and the requirements and needs of industry, business, and
academic communities as well as the broad trends we see in science and
technology.
Shortly after arriving at NIST as the Director, Dr. Jeffrey tasked
senior management to develop a strategic vision for biosciences and
health. NIST is working with industry, academia, and the National
Institutes of Health (NIH) to develop this vision, of which the FY07
bio-imaging initiative was the first component. This is an ongoing
planning process, for example, NIST is developing a prospective
economic study in the area of biopharmaceuticals that will be available
this fiscal year.
The VCAT is very much involved in this process, and for this year's
VCAT meetings, decided to have breakout sessions in the broad areas of
bioscience, nanotechnology, and information technology to discuss
strategies and industry needs and opportunities with NIST staff.
National Research Council Review Process
Q5. You have made two major changes in the National Research Council
(NRC) review process: in December 2006 you directed the NRC to switch
from a full-agency review of NIST to reviewing only half of the labs at
a time, and you omitted all mention of assessing cross-cutting and
multi-disciplinary programs in your formal charge to NRC. Why shouldn't
the NRC review all of NIST's programs in the same cycle, and why should
it not provide an analysis of cross-cutting work? What external review
will be done of cross-cutting programs?
A5. Under the past system with annual reviews, the NRC report would
often come out in about January while the next review would be
scheduled to start in approximately March. This left very little time
to implement recommendations from the NRC report and properly measure
the effectiveness of these changes.
The new biennial review process is consistent with the
recommendations of the National Academies regarding the evaluation of
R&D programs. Specifically, the National Academy's Committee on
Science, Engineering, and Public Policy report titled Evaluating
Federal Research Programs: Research and the Government Performance and
Results Act states that the useful outcomes of basic research cannot be
measured directly on an annual basis but instead highlights the need
for assessment that evaluates the quality and relevance of the research
as well as the leadership of that research, all of which are seen as
good predictors of eventual usefulness. The biennial review process
directly addresses these metrics.
The NRC report was by and large a compilation of individual
laboratory reports. Cross-cutting and multi-disciplinary program
reviews were only tangentially addressed. NIST's new contract with NRC
includes an explicit option for special studies that may include cross-
cutting issues involving not only the NIST Laboratories but also from
areas such as the Hollings Manufacturing Extension Partnership program.
In addition to the cross-cutting and multi-disciplinary program
review that can be done under the NRC contract, NIST's Visiting
Committee on Advanced Technology also looks at NIST-wide programs.
VCAT and NIST Budget Initiatives
Q6. In its most recent report (FY05) the VCAT noted that biomedical
technology created ``a unique opportunity and challenge for NIST.'' The
FY04-05 NRC assessment of NIST recommended that NIST undertake
``comprehensive, cross-laboratory planning efforts in both the
biosciences and health.'' However, only one of the fourteen combined
FY07 and FY08 budget initiatives is in the field of biotechnology (Bio-
imaging). How did NIST determine that these recommendations were of low
priority, and what is NIST's plan for work in the fields of biosciences
and health in FY08 and future years?
A6. NIST considers the input from many stakeholders and draws on many
information sources when developing new programs and initiatives and
when evaluating the course of current programs. NIST's stakeholders
include Congress and the Administration, as well as industry, the
business community and academia. The methods used to obtain stakeholder
input range from conducting economic impact and planning studies to
outreach activities, such as the U.S. Measurement System study.
Topics developed from these stakeholder feedback processes form the
basis for many proposed initiatives which are then rigorously evaluated
and screened. Each initiative is evaluated based on a series of
questions including the difficulty of the problem, the NIST role and
cost, and the impact of the solution.
There is a clear need for improved measurement technologies in the
biosciences and health related research. NIST's core capabilities are
sure to have an impact in the measurements and standards gap that
exists in the area of bio-imaging, especially as it relates to clinical
diagnostic tools such as MRI. NIST is working with industry and
academia to further evaluate the most significant and urgent
measurement barriers that, if addressed by NIST, would have most impact
to U.S. bioscience and health care industry.
Questions submitted by Representative Phil Gingrey
MEP
Q1. Please elaborate on and provide several examples of how the
Manufacturing Extension Partnership program leverages the applied
research coming out of our nation's universities to help small and
medium-sized manufacturers compete in the global market place. We know
this type of assistance requires time and significant efforts, yet has
large potential. How do you plan to continue to support this activity
while reducing the funding for the program?
A1. A major focus of the MEP program is to build upon our foundation of
process improvements with clients to develop innovation and growth
services that will position U.S. manufacturers to meet the increasing
demands of the global marketplace. Moving research from universities
and federal labs is a key to providing manufacturers with access to the
technologies needed for the development of innovative processes and new
products. Recent examples include:
The Montana Manufacturing Extension Center (MMEC)
located at Montana State University helped Universal Bio-
availability Environmental/Soil Test Inc. (UNIBEST) bring to
the marketplace an innovative soil analysis device. This
``cherry tomato-sized'' capsule is filled with unique resin
beads that allow direct analysis/measurement in the field,
thereby reducing the amount of material that must be
transported to and handled in a laboratory. In addition to
working on the preliminary design of the manufacturing process
and machinery for the soil analysis capsule, MMEC also prepared
cost estimates for the design and fabrication. The capsules for
soil testing currently make up about 95 percent of UNIBEST
manufacturing demand, but the manufacturer expects that to
change because they are working to obtain EPA approval of the
same technology for use in environmental testing and
monitoring.
The Oklahoma Alliance for Manufacturing Excellence--
an MEP Center--was instrumental in the implementation of the
Oklahoma Nanotechnology Applications Project (ONAP). The ONAP
extends financial support and technical services for the
application of nanotechnology in Oklahoma's manufacturing and
business community. One of the first awardees, SouthWest
NanoTechnology (SWeNT), manufactures high quality carbon
nanotubes. With the new manufacturing techniques developed at
the University of Oklahoma, SWeNT plans to diversify its
manufacturing processes and mass produce a ``commercial grade''
of carbon nanotubes at a substantially lower price than is
currently possible. The production volumes are expected to
increase more than 30 fold while costs are expected to fall by
90 percent.
The FY 2008 Budget request would maintain a network of MEP centers
funded according to their performance and need, and would encourage
these Centers to be more efficient by reducing their overhead costs,
including marketing costs. Centers could also ask MEP clients to cover
more of the cost of the services through modestly increased fees.
Questions submitted by Representative Jim Matheson
MEP
Q1. An OMB justification for the MEP budget cut was that almost 20
percent of MEP clients are manufacturing firms with more than 250
employees and these firms would be able to make up the funding
difference due to their size. Does the Administration now consider
manufacturers with more than 250 employees as outside the traditional
definition of a ``small business''? What evidence does the
Administration use that justifies MEP clients with more than 250
employees can charge more for their services?
A1. I am unaware of the OMB justification to which you are referring.
The data describing the fraction of MEP business serving clients with
more than 250 employees was provided by the MEP in their analysis of
their business (``Making a Difference for America's Manufacturers''),
and was not a delineation chosen by the Administration.
In characterizing the size of clients, MEP uses the size guidance
developed by the Small Business Administration (SBA) Office of Size
Standards. In the current Table of Small Business Size Standards,
effective July 31, 2006, the majority of industries with 500 or fewer
employees are considered small businesses.
The cost savings and efficiency improvements reported by
manufacturing clients of MEP Centers result in reducing costs to MEP's
clients and could be used to support increased fees for future MEP
Center services. The annual reported benefits by manufacturing clients
of the MEP Centers conducted through an independent survey demonstrates
a significant level of cost savings and efficiency improvements for the
MEP clients. For example, the latest MEP client survey results
(released January 2007 and reflecting FY 2005 benefits) suggest that
MEP helped 16,448 clients create and retain 53 thousand jobs; increase
and retain sales of nearly $6.3 billion; and generated cost savings of
just over $1.3 billion (both recurring and non-recurring). These
impacts resulting in reduced costs and potentially increased profits
for the client could be used to support increased fees for future
services. With increased revenues streams from client fees, MEP centers
may offset, in whole or in part, the reduction in federal funds.
Answers to Post-Hearing Questions
Submitted to R. Stanley Williams, Senior HP Fellow in Quantum Science
Research, Hewlett-Packard Corporation
These questions were submitted to the witness, but were not
responded to by the time of publication.
Questions submitted by Chairman David Wu
Q1. Your testimony points out that the mission creep at NIST has
stretched the scientific staff very thin. What are the possible
consequences for U.S. industry if NIST starts to lag behind in its core
measurement and standards role? What NIST missions are falling behind,
or are in danger of falling behind, because of this mission creep?
Q2. You recommend that NIST should resist the temptation of adding new
programs in FY08 to justify a funding increase until it is clear that
current missions are adequately served. How do you suggest that NIST
seek outside evaluation for determining whether current mission needs
are being met? Are the current review by the National Research Council
and input from the Visiting Committee on Advanced Technology
sufficient?
Questions submitted by Representative Phil Gingrey
Q1. Given that the President intends to double the National Institute
of Standards and Technology's (NIST) research budget over the next ten
years, what process do you think NIST should use to prioritize where it
spends this new money? For example, do you believe NIST should perform
a formal needs assessment with involvement from the external community
to prioritize its research?
Answers to Post-Hearing Questions
Responses by Michael Borrus, General Partner, X/Seed Capital
Questions submitted by Chairman David Wu
Q1. How has the role of U.S. venture capital for high-technology
companies changed in the last five years? Is there still a need for
early-stage seed funding that can be filled by the Advanced Technology
Program (ATP)?
A1. Answered in submitted written and oral testimony and throughout
oral responses (see pp. 40-44, pp. 89-93).
Q2. The ATP has been characterized by its opponents as ``picking
winners and losers'' among technology companies. Do you agree with this
characterization?
A2. See oral responses, p. 90.
Q3. The Federal Government has invested more than $7 billion in the
National Nanotechnology Initiative (NNI) over the past six years, and
the Administration is requesting $1.45 billion for FY08. Does the
``valley of death'' lack of early-stage seed funding for technology
start-ups also exist in the field of nanotechnology? In your view,
should the ATP be a component of a federal nanotechnology initiative?
If so, why?
A3. See oral responses, pp. 89-93.
Question submitted by Representative Phil Gingrey
Q1. Given that the President intends to double the National Institute
of Standards and Technology's (NIST) research budget over the next ten
years, what process do you think NIST should use to prioritize where it
spends this new money? For example, do you believe NIST should perform
a formal needs assessment with involvement from the external community
to prioritize its research?
A1. As one of the very best federal research labs, NIST has scientists
who are fully competent to determine the institution's research
priorities and they should consequently be accorded a very substantial
role in the priority-setting process. However, NIST is also the primary
federal research lab entrusted with interacting with essentially all
U.S. industries--because all rely on metrology--and with playing a
significant role to enhance long-term U.S. technological
competitiveness. Consequently, NIST should also solicit substantial
input from Universities and from the broad private sector in setting
priorities. A formal needs assessment with input from the relevant
external communities--including, inter alia, the academic science and
technology communities, technology-intensive industries, long-term
technology investors--would indeed insure that NIST priorities rested
on the strongest possible foundation of insight into future needs.
Answers to Post-Hearing Questions
Responses by Peter Murray, Vice President, Welch Allyn, Incorporated
Question submitted by Chairman David Wu
Q1. The Administration indicates that it believes its proposed cut to
MEP can be absorbed by increased charges to small manufacturers,
increases in efficiency, cost-reduction at MEP Centers, and
consolidation of Centers. Do you agree with this assessment? How would
the proposed cut affect the Oregon MEP?
A1. I do not agree with this assessment for the following reasons:
A. Increased charges to small manufacturers will reduce
revenues and force the MEPs to seek larger manufacturing
clients,
B. I am on the board of the Oregon MEP and feel that the
organization is very well run and has little to no room to
absorb further cost reduction and,
C. Consolidation and further cost reduction activities will
divert already scare managerial resources away from providing
client services or badly needed marketing efforts.
Questions submitted by Representative Phil Gingrey
Q1. Given that the President intends to double the National Institute
of Standards and Technology's (NIST) research budget over the next ten
years, what process do you think NIST should use to prioritize where it
spends this new money? For example, do you believe NIST should perform
a formal needs assessment with involvement from the external community
to prioritize its research?
A1. I agree with Ranking Member Gingrey that the prioritization of the
proposed increase in funding for NIST must follow a formal needs
assessment with involvement from the external community.
Answers to Post-Hearing Questions
Responses by Michael J. Ryan, President and CEO, TUG Technologies
Corporation
Questions submitted by Representative Phil Gingrey
Q1. Given that the President intends to double the National Institute
of Standards and Technology's (NIST) research budget over the next ten
years, what process do you think NIST should use to prioritize where it
spends this new money? For example, do you believe NIST should perform
a formal needs assessment with involvement from the external community
to prioritize its research?
A1. Because NIST plays such a significant role in establishing
standards for technical applications across our country, we should
develop a clear process for aligning the private sector with the
important standards setting for the benefit it provides across the
Nation. I believe that a needs assessment would be useful. It would
allow and provide a catalyst for private science to benefit from a
government body and optimize the needed change process; especially in
the manufacturing sector. Our county is being out-paced by other
countries globally serving a global market. The MEP represents a
national tool for manufacturing system changes that requires an
education of the decision-makers so that our U.S. based companies can
compete ``on a level playing field.'' The MEP provides the needed
support. We should try to enhance it's ability, not restrict it.
Appendix 2:
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Additional Material for the Record
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Statement of Daryl G. Hatano
Vice President, Public Policy
Semiconductor Industry Association
The Semiconductor Industry Association (SIA) appreciates the
opportunity to submit testimony on the importance of NIST to the
competitiveness of the U.S. semiconductor industry.
The SIA strongly supports doubling NIST as envisioned in President
Bush's American Competitiveness Initiative and the House Democrats
Innovation Agenda's call for a doubling of basic research in the
physical sciences across all agencies.
Today I would like to share the impact of semiconductor technology
advances, the role NIST metrology research plays in furthering these
advances, and NIST's potential contributions to the challenges we face
as we approach the physical limits of our current technology. Simply
put, the country whose companies are first to market in this technology
transition will likely lead the coming nanoelectronics era the way the
U.S. has led for half a century in microelectronics, and NIST can play
a critical role in ensuring that America earns this leadership
position.
NIST Contributes to U.S. Semiconductor Competitiveness
The semiconductor industry employs 234,000 people across the U.S.,
directly contributes $60 billion to U.S. GDP and is America's largest
export sector. The U.S. industry has 46 percent of the $248 billion
world semiconductor market, down four percentage points from the 50
percent market share in 2000 but still about twice that of the next
leading industry.
SIA's support for increased NIST funding is part of our overall
innovation agenda calling for a doubling of funding for NSF, NIST,
Department of Energy Office of Science; $20 million for the Defense
Department to co-fund with industry the university Focus Center
Research Program; increased availability of green cards and H-1Bs visas
through immigration reform; increasing the number of science,
technology, engineering and math graduates and improved K-12 math,
science education; a permanent and enhanced R&D credit; and increased
awareness of the impact of foreign tax incentives.
The Exponential Increase in Transistors Drives Economic Growth
As the enabling technology behind computers, telecommunications,
consumer electronics, and the Internet, the industry's ability to
continually make better, faster, and cheaper chips is driving increased
productivity and creating more jobs throughout the economy.
For over three decades the industry has followed Moore's Law, which
states that the number of transistors on a chip will double every
eighteen months. The transistor is the basic building block within the
semiconductor chip and can be thought of as an electronic switch or as
retaining one bit (a one or a zero) in memory. The transistor is
composed of a series of precisely etched and deposited layers of
materials and semiconductors, with as many as two billion transistors
integrated on a single silicon chip, are the most complex product
manufactured on the planet.
Today the cost of making one million transistors is one penny.
The impact of Moore's Law on our economy is immense. Harvard
economist Dale Jorgenson has noted that ``The economics of Information
Technology begins with the precipitous and continuing fall in
semiconductor prices.'' Professor Jorgenson quantified the rapid
adoption of IT in the U.S. for driving substantial economic growth in
the U.S. gross domestic product since 1995, concluding ``Since 1995,
Information Technology industries have accounted for 25 percent of
overall economic growth, while making up only three percent of the GDP.
As a group, these industries contribute more to economy-wide
productivity growth than all other industries combined.'' \1\
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\1\ Dale W. Jorgenson, ``Moore's Law and the Emergence of the New
Economy'' in ``2020 is Closer than You Think;'' 2005 SIA annual report.
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To see the impact of the productivity gains on a single sector, it
is instructive to consider the benefits the government (Federal, State,
and local) receives as a consumer of semiconductors. The Department of
Commerce's Bureau of Economic Analysis has data indicating that the
government sector of the economy purchased $8.1 billion of computers in
2004, but that they would have had to spend $46.7 billion for that same
amount of computing power if they had to pay 1995 prices. The
cumulative benefit from technology improvements and resulting price
declines from 1995 to 2004 is $181 billion of ``free'' computing. In
this tight budget year, it is important to remember that the federal
investments made to support basic research are not only beneficial to
the overall U.S. economy, but also allows the government itself to do
more with less as a result of falling computing costs.
The Roadmap Sets a Timetable for Technology Advances
To continue the exponential growth of the number of transistors on
a chip, over 800 hundred chip experts around the world contribute to
``The International Technology Roadmap for Semiconductors'' (ITRS).\2\
The North American participation of the ITRS is under the auspices of
the SIA. NIST has been a strong supporter of the ITRS--in fact one of
the first meetings of what is now the ITRS was held at NIST's Boulder,
Colorado facility. Today NIST co-chairs and has four people on the
Metrology technical working group, and also has representatives on the
Emerging Research Devices and Materials, Assembly and Packaging,
Factory Integration, and RF for Wireless working groups.
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\2\ http://www.itrs.net/
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The ITRS identifies the milestones that must be reached in all
aspects of semiconductor manufacturing for technology trends such as
Moore's law to continue. One example of a roadmap characteristic is
microprocessor transistor gate lengths--a critical dimension that
affects the processor's speed. When SIA testified about the NIST budget
before this committee in 2004, the transistor gate length was 37
nanometers.\3\ This year it will shrink to only 25 nanometers, and it
is targeted to decrease from 14 nanometers in 2012 and eight nanometers
in 2017. (Note: a nanometer is one-billionth of a meter. A human hair
is 100,000 nanometers in width, and a red blood cell is 5,000
nanometers in width.) If these and other milestones identified in the
ITRS are reached, microprocessors would be five times faster.\4\
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\3\ Testimony of Daryl G. Hatano, Semiconductor Industry
Association, Before the House Science Committee Subcommittee on
Environment, Technology, and Standards; April 28, 2004.
\4\ ITRS Table 4c.
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The ITRS lists the technical barriers at each stage of production
that must be overcome if we are to continue to enjoy the benefits of
chip technology advances. One important set of challenges is in the
area of metrology. New metrology tools and techniques are needed to
accurately perform critical measurements as new materials, processes,
and device structures are introduced.
About 100 key measurements and controls have been identified by the
ITRS metrology working group as critical to future semiconductor
technology advances from now until 2020. Examples of the types of
metrology challenges confronting industry over this timeframe are:
Integrating metrology at the factory level;
Measuring the thickness of layers deposited on a
wafer, the lengths of transistor gates, and the aspect ratio of
the depth and width of trenches etched on a chip;
Measuring the roughness of line edges at the
nanoscale;
Detecting impurities in new substrates; and
Insuring that metrology within a chip accounts for
variations across a single chip and across a wafer with
hundreds of chips.
NIST's Ability To Meet The Challenges Has Not Kept Pace With Advance Of
Technology
NIST is the leader in semiconductor metrology research. Its 6th
annual nanoelectronics metrology conference next month is expected to
attract 250 attendees from all over the world and the conference
proceedings will be published by the American Institute of Physics.
However NIST's efforts are insufficient given the magnitude of the
technical challenges that must be overcome to continue the current rate
of technology advances. As an indication of the shortfall, NIST
spending on semiconductor research has only increased 35 percent since
1995. As an indication of the growing technical challenge as circuits
continue to shrink, the semiconductor industry's total investment in
R&D increased 143 percent during that period. See Figure 1.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Support for increased funding for NIST semiconductor work has come
from many quarters. In February 2005 the Defense Science Board Task
Force on High Performance Microchip Supply issued a report that
concluded ``Semiconductor technology and manufacturing leadership is a
national priority that must be maintained if the U.S. military is to
continue to lead in the application of electronics to support the
warfighter.'' \5\ In its list of recommendations, the DSB singled out a
NIST increase as a key element in a program to keep U.S. leadership in
semiconductors:
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\5\ The Defense Science Board Task Force on High Performance
Microchip Supply, February 2005 p. 27.
``NIST is best positioned to focus research on many of the
metrology challenges identified in the International Technology
Roadmap for Semiconductors. When it was established in 1994,
the NIST Office of Microelectronics Programs was to start at
$12 million in annual funding and grow to $25 million. This
level was not achieved, but this task force considers this
activity an important contribution to the national
microelectronics supply issue.'' \6\
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\6\ Ibid. p. 61.
Defense Science Board Task Force on High Performance
Microchip Supply
February 2005
Finding a New Switch
We are beginning to reach the fundamental limits of the CMOS,\7\
the process that has been the basis for the semiconductor industry for
the past 30 years. By introducing new materials into the basic CMOS
structure and devising new CMOS structures and interconnects, further
improvements in CMOS can continue for the next ten to fifteen years, at
which time CMOS begins to reach its physical (layers only a few atoms
thick) and power dissipation limits. For the U.S. economy to continue
to benefit from the information technology productivity improvements
described above, there will need to be a ``new logic switch'' to
replace the current CMOS-based transistor.
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\7\ Complementary Metal Oxide Semiconductor
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There are a number of candidates for the new switch, including
spintronics (changing a particle's spin) and molecular electronics
(changing a molecule's shape). There are many metrology challenges as
scientists search for the new switch. For example, molecular
electronics advances require the measurement of intrinsic molecular
conduction in single molecules and in 2 nm thick molecule monolayers.
Advances in spintronics will require development of capabilities to
measure spin densities and material polarization at the nm-size scale.
To identify the new logic switch to replace the transistor, the SIA
has launched the Nanoelectronics Research Initiative (NRI) that pulls
together semiconductor companies, 23 universities in 12 states, State
governments, and the National Science Foundation. The House
Appropriations Committee report singled out the NSF's work with the NRI
as well as its Silicon Nanoelectronics and Beyond program and
encouraged such work to be continued.\8\ NIST scientists have been
participating in NRI meetings and SIA and NRI are discussing with NIST
officials how this participation might be expanded.
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\8\ ``The Committee commends NSF for its Silicon Nanoelectronics
and Beyond program and its partnership with the Nanoelectronics
Research Initiative, which involves the sponsorship of research in the
areas of information' technology and electronics. The Committee
encourages NSF to continue its support for such research in Fiscal year
2007.'' House Report 109-118--Science, State, Justice, Commerce, And
Related Agencies Appropriations Bill, Fiscal Year 2006.
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NIST involvement in the effort to find a new switch is absolutely
critical. As noted at the outset of this testimony, the country whose
companies are first to market will likely lead the coming
nanoelectronics era the way the U.S. has led for half a century in
microelectronics. The impact on the U.S. economy and national security
should the U.S. not lead in the nanoelectronics is unfathomable.
SIA Recommendations to Congress for NIST and Other Research Agencies
The SIA supports a significant increase for the NIST Scientific and
Technical Research Services for FY 2008 along the lines of the
Administration's budget request and the House Democrats Innovation
Agenda's call for a doubling of basic research in the physical sciences
across all agencies within five years. In particular SIA supports the
increased funding for the newly created NIST Center for Nanoscale
Science and Technology which will engage in research on many of the
challenges outlined in this testimony, and full funding of the
facilities budget for the Advanced Measurement Laboratory.
The budget increases at NIST aimed at metrology issues should be
done in concert with increased appropriations for other programs in
semiconductor research at universities. SIA supports the significant
increases in the NSF budget envisioned by the American Competitiveness
Initiative and the House Democrats' Innovation Agenda; and in
particular encourages increased funding on National Nanotechnology
Initiative. SIA also urges Congress to appropriate $10 million for the
Defense Department's Government-Industry Co-sponsorship of University
Research program.\9\ Coupled with an expected $10 million from DARPA,
this appropriation would allow the Defense Department to leverage $20
million from industry to fund the $40 million Focus Center Research
Program that supports semiconductor research at 38 universities across
the country.\10\
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\9\ The Government-Industry Cosponsorship of University Research
(GICUR), program element number 0601111D8Z, is funded through the
Office of the Secretary of Defense.
\10\ For further information on the Focus Center Research Program,
see http://fcrp.src.org
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Summary
NIST defines its mission as ``To promote U.S. innovation and
industrial competitiveness by advancing measurement science, standards,
and technology in ways that enhance economic security and improve our
quality of life.'' There is no better opportunity for NIST to fulfill
its mission than to expand its interactions with the semiconductor
industry and solve the metrology challenges associated with advancing
CMOS technology to its ultimate limits and finding a new switch to
ultimately replace CMOS technology.
For the past five decades, semiconductors have become ever faster,
better, and cheaper, and today are a major driver of growth in economic
productivity. Congress must increase the NIST laboratory budget if the
country is to continue to enjoy the benefits of every increasing
semiconductor capabilities at ever decreasing costs.