[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                     NIST'S FY 2009 BUDGET REQUEST:
                     WHAT ARE THE RIGHT TECHNOLOGY
                         INVESTMENTS TO PROMOTE
                          U.S. INNOVATION AND
                            COMPETITIVENESS?

=======================================================================

                                HEARING

                               BEFORE THE

               SUBCOMMITTEE ON TECHNOLOGY AND INNOVATION

                  COMMITTEE ON SCIENCE AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 11, 2008

                               __________

                           Serial No. 110-83

                               __________

     Printed for the use of the Committee on Science and Technology


     Available via the World Wide Web: http://www.house.gov/science


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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              ROSCOE G. BARTLETT, Maryland
BRAD MILLER, North Carolina          VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois            FRANK D. LUCAS, Oklahoma
NICK LAMPSON, Texas                  JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona          W. TODD AKIN, Missouri
JERRY MCNERNEY, California           JO BONNER, Alabama
LAURA RICHARDSON, California         TOM FEENEY, Florida
PAUL KANJORSKI, Pennsylvania         RANDY NEUGEBAUER, Texas
DARLENE HOOLEY, Oregon               BOB INGLIS, South Carolina
STEVEN R. ROTHMAN, New Jersey        DAVID G. REICHERT, Washington
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               PAUL C. BROUN, Georgia
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               ADRIAN SMITH, Nebraska
MIKE ROSS, Arizona                   PAUL C. BROUN, Georgia
LAURA RICHARDSON, 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
           PIPER LARGENT Republican Professional Staff Member
                 MEGHAN HOUSEWRIGHT Research Assistant


                            C O N T E N T S

                             March 11, 2008

                                                                   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..................................     9
    Written Statement............................................    10

Statement by Representative Phil Gingrey, Ranking Minority 
  Member, Subcommittee on Technology and Innovation, Committee on 
  Science and Technology, U.S. House of Representatives..........    10
    Written Statement............................................    11

                               Witnesses:

Dr. James M. Turner, Acting Director, National Institute of 
  Standards and Technology, U.S. Department of Commerce
    Oral Statement...............................................    13
    Written Statement............................................    15
    Biography....................................................    26

Dr. James W. Serum, Chairman, NIST Visiting Committee on Advanced 
  Technology; President, Scitek Ventures LLC
    Oral Statement...............................................    27
    Written Statement............................................    28
    Biography....................................................    34

Dr. Mary L. Good, George W. Donaghey Professor and Dean, Donaghey 
  College of Engineering and Information Technology, University 
  of Arkansas, Little Rock
    Oral Statement...............................................    36
    Written Statement............................................    38
    Biography....................................................    40

Dr. Peter S. Fiske, Vice President for Research and Development, 
  PAX Scientific, Inc.; Co-Founder, RAPT Industries, Inc.
    Oral Statement...............................................    41
    Written Statement............................................    43
    Biography....................................................    44

Mr. Michael J. Coast, President and CEO, Michigan Manufacturing 
  Technology Center; President, American Small Manufacturers 
  Coalition
    Oral Statement...............................................    44
    Written Statement............................................    46
    Biography....................................................    47

Discussion.......................................................    48

             Appendix 1: Answers to Post-Hearing Questions

Dr. James M. Turner, Acting Director, National Institute of 
  Standards and Technology, U.S. Department of Commerce..........    54

Dr. James W. Serum, Chairman, NIST Visiting Committee on Advanced 
  Technology; President, Scitek Ventures LLC.....................    60

Dr. Mary L. Good, George W. Donaghey Professor and Dean, Donaghey 
  College of Engineering and Information Technology, University 
  of Arkansas, Little Rock.......................................    64

             Appendix 2: Additional Material for the Record

Success Stories from the Field submitted by Mr. Michael J. Coast, 
  President and CEO, Michigan Manufacturing Technology Center; 
  President, American Small Manufacturers Coalition..............    66

Michigan Client List submitted by Mr. Michael J. Coast, President 
  and CEO, Michigan Manufacturing Technology Center; President, 
  American Small Manufacturers Coalition.........................    86

Comments on NIST Technology Innovation Program (TIP) by Robert D. 
  ``Skip'' Rung, President and Executive Director, Oregon 
  Nanoscience and Microtechnologies Institute (ONAMI)............    97


     NIST'S FY 2009 BUDGET REQUEST: WHAT ARE THE RIGHT TECHNOLOGY 
      INVESTMENTS TO PROMOTE U.S. INNOVATION AND COMPETITIVENESS?

                              ----------                              


                        TUESDAY, MARCH 11, 2008

                  House of Representatives,
         Subcommittee on Technology and Innovation,
                       Committee on Science and Technology,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 2:08 p.m., in 
Room 2318, Rayburn House Office Building, Hon. David Wu 
[Chairman of the Subcommittee] presiding.


                            hearing charter

               SUBCOMMITTEE ON TECHNOLOGY AND INNOVATION

                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                     U.S. HOUSE OF REPRESENTATIVES

                     NIST's FY 2009 Budget Request:

                     What Are the Right Technology

                         Investments to Promote

                          U.S. Innovation and

                            Competitiveness?

                        tuesday, march 11, 2008
                          2:00 p.m.-4:00 p.m.
                   2318 rayburn house office building

1. Purpose

    On Tuesday, March 11, 2008, the Technology and Innovation 
Subcommittee of the House Committee on Science and Technology will hold 
a hearing to consider the President's fiscal year 2009 (FY09) 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 budget request, 
NIST's strategic plans, and the future direction of the agency.

2. Witnesses

Dr. James Turner, Acting Director, National Institute of Standards and 
Technology

Dr. James Serum, Chairman, NIST Visiting Committee on Advanced 
Technology

Dr. Mary Good, Founding Dean, George W. Donaghey College of Engineering 
and Information Technology, University of Arkansas at Little Rock, 
Little Rock, AR

Dr. Peter Fiske, Vice President for Research and Development, PAX 
Scientific, Inc.

Mr. Michael Coast, President, Michigan Manufacturing Technology Center; 
Chairman of the Board, American Small Manufacturers Coalition

3. NIST Overview

    The National Institute of Standards and Technology (NIST) is a non-
regulatory agency of the Department of Commerce. Founded in 1901, 
NIST's mission is 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 helps U.S. industry, workers, and consumers by 
ensuring that technical standards are used in a way that creates a 
level playing field for global trade, rather than a barrier to 
commerce.
    NIST operates research facilities at Gaithersburg, MD, and Boulder, 
CO, and radio stations located at Kauai, HI, and Fort Collins, CO. NIST 
has partnerships with and personnel located at the Hollings Marine Labs 
in Charleston, SC, the JILA joint institute in Boulder, CO (operated 
jointly with the University of Colorado), and the Center for Advanced 
Research in Biotechnology (CARB) in Rockville, MD (operated jointly 
with the University of Maryland).
    NIST employs approximately 2,800 scientists, engineers, 
technicians, and support personnel. NIST also hosts approximately 2,600 
research associates and facility users from academia, industry, and 
other government laboratories. NIST partners with about 1,600 
manufacturing specialists and staff at affiliated centers around the 
country. In recent years, NIST staff members have earned three Nobel 
Prizes, the National Medal of Science, a MacArthur Fellowship, the 
L'Oreal-UNESCO Women in Science Award, and numerous other honors.
    NIST operates four major cooperative programs to carry out its 
mission:

          NIST laboratories and user facilities. NIST's 
        internal laboratories conduct basic and applied research in a 
        wide array of fields to support the U.S. technology 
        infrastructure. This research focuses on developing tools to 
        measure, evaluate and standardize, which enable U.S. companies 
        to innovate and remain competitive. NIST's user facilities 
        provide industry, academic and government researchers with 
        access to advanced technical equipment for research and 
        development.

          Baldrige National Quality Program. The Baldrige 
        program promotes excellence among U.S. manufacturers, service 
        companies, educational institutions, health care providers, and 
        non-profit organizations by conducting outreach programs and 
        managing the annual Malcolm Baldrige National Quality Award 
        recognizing performance excellence and quality.

          Manufacturing Extension Partnership. The MEP program 
        offers services in business and process improvements to 
        modernize the operations of small- and medium-sized 
        manufacturers and enhance their competitiveness. MEP 
        distributes its services through a nationwide network of local 
        centers in all 50 states and Puerto Rico, which receive equal 
        funding from federal sources, State and local sources, and fees 
        charged for services.

          Technology Innovation Program. The TIP (formerly the 
        Advanced Technology Program) supports and accelerates the 
        development of high-risk, innovative technologies that promise 
        broad benefits for the Nation by awarding cost-shared grants to 
        small- and medium-sized companies, and to joint ventures 
        between industry, academia, non-profit research institutes and 
        national laboratories.

NIST Legislative Background

    On April 17, 2007, Reps. David Wu and Phil Gingrey introduced H.R. 
1868, the Technology Innovation and Manufacturing Stimulation Act of 
2007, with bipartisan co-sponsorship. H.R. 1868 authorized 
appropriations for NIST's programs in fiscal years 2008 through 2010 
(see Table 1). The authorization levels placed the overall NIST budget 
on a ten-year path to doubling. Within this envelope, the bill doubled 
NIST's laboratories over ten years, doubled the Manufacturing Extension 
Partnership (MEP) over ten years, replaced the Advanced Technology 
Program (ATP) with the Technology Innovation Program (TIP) and provided 
funding for $40 million in new TIP awards per year, and funded the 
completion of existing laboratory construction projects.
    H.R. 1868 also required NIST to deliver a three-year programmatic 
planning document to Congress with the annual budget request. This 
document must address all of NIST's programs. NIST's external 
industrial advisory committee, the Visiting Committee on Advanced 
Technology (VCAT), is directed to comment on the document in its annual 
report.
    H.R. 1868 was reported unanimously by the Committee on Science and 
Technology on April 30 and passed the House on May 3 by a vote of 385-
23. It was subsequently incorporated into H.R. 2272, the America 
COMPETES Act (P.L. 110-69), which became law on August 9, 2007.

NIST Program Details

    The NIST laboratories are comprised of seven labs and a technical 
program, and are funded under the Scientific and Technical Research and 
Services (STRS) account.

          Building and Fire Research Laboratory (BFRL) works to 
        improve quality and productivity in the U.S. construction 
        industry and reduce loss of life and property damage from 
        fires, earthquakes, wind, and other hazards, by studying 
        building materials and fire safety engineering.

          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 necessary for enhancing 
        the competitiveness of the U.S. chemical industry, and 
        improving public health, safety and environmental quality.

          Electronics and Electrical Engineering Laboratory 
        (EEEL) provides the technical basis for all electrical 
        measurements in the U.S.

          Information Technology Laboratory (ITL) conducts 
        research and develops test methods and standards for emerging 
        and rapidly changing information technologies, focusing on 
        technologies that will improve the usability, reliability and 
        security of computers and computer networks for work and home 
        use.

          Manufacturing Engineering Laboratory (MEL) develops 
        measurement methods, standards and technologies to enhance U.S. 
        manufacturing capabilities and to improve manufacturing 
        efficiency and productivity.

          Materials Science and Engineering Laboratory (MSEL) 
        researches materials that are needed by industry sectors 
        including microelectronics, automobiles, and health care.

          Physics Laboratory (PL) provides measurement services 
        and research for electronic, optical, atomic and radiation 
        technology. PL also maintains the NIST F-1 atomic clock, the 
        primary frequency standard in the United States.

          Technology Services (TS) provides support for NIST 
        programs to calibrate industry equipment, to sell standard 
        reference materials, to train foreign technical standards 
        officials, to accredit private testing laboratories, and other 
        technical standards services.

    In addition, the STRS account funds the Baldrige National Quality 
Program (described above) and NIST's two national research facilities.

          NIST Center for Neutron Research (NCNR) provides 
        facilities for outside researchers to study the structure and 
        dynamics of a wide range of materials. This facility is used 
        heavily by industry. In fiscal year 2007, researchers from 59 
        U.S. companies, 40 national labs, and 137 U.S. universities 
        conducted research at the facility in collaboration with NIST 
        staff.

          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 that are necessary to convert nanoscale science and 
        technology research into usable commercial products.

    NIST also manages two programs that support small businesses, which 
are funded under the Industrial Technology Services (ITS) account.

          The Manufacturing Extension Partnership (MEP) is the 
        only federal program that specifically targets small- and 
        medium-sized manufacturers to help them modernize their 
        operations, improve their competitiveness, and reduce or 
        reverse job losses. A proven public/private partnership, MEP 
        operates a network of 59 centers in all 50 states and Puerto 
        Rico, whose mission is to improve the competitiveness of small- 
        and medium-sized manufacturers. The centers are funded through 
        equal contributions from federal sources, State and local 
        sources, and fees for service. Clients who used MEP services in 
        fiscal year 2006 reported that they created or retained over 
        52,000 jobs, increased or retained sales of $6.8 billion, 
        leveraged $1.7 billion in new private-sector investment, and 
        generated cost savings of $1.1 billion.

          The Technology Innovation Program (TIP) was created 
        by the America COMPETES Act (P.L. 110-69) to replace the 
        Advanced Technology Program (ATP). TIP's purpose is to support, 
        promote, and accelerate innovation in the United States through 
        high-risk, high-reward research in areas of critical national 
        need. Through private/public partnerships, TIP's early-stage 
        investments will accelerate the development of high-risk, 
        broadly enabling technologies and help bridge the gap between 
        the laboratory and the market place. Through September 2007, 
        TIP's predecessor, ATP, co-funded 824 projects with 1,581 
        participants. Eighty percent of single-applicant ATP awards 
        were made to small businesses (fewer than 500 employees) while 
        more than 170 different colleges and universities have 
        participated in ATP projects. Benefit-cost studies from 
        approximately 40 projects indicate an eight to one return on 
        investment. The 56 ATP grants awarded in the final round of the 
        program's existence (September 2007) will be continued to 
        completion under TIP.

NIST Strategic Planning Documents

    The America COMPETES Act created a requirement for NIST to deliver 
a three-year programmatic planning document to the Congress at the time 
of the submission of the President's budget. This document is to 
address NIST's programs under the Scientific and Technical Research and 
Services, Construction of Research Facilities, and Industrial 
Technology Services accounts. The Act also requires the NIST Visiting 
Committee on Advanced Technology (VCAT, a FACA advisory committee) to 
comment on the document. NIST delivered the first iteration of this 
document in February 2008.
    NIST previously developed the NIST 2010 Strategic Plan, released in 
its final form in June 2004, which outlined strategic drivers, NIST 
responses to these drivers, and potential impacts on the economy. The 
plan included technical areas of importance for NIST investments, and 
strategies that would be pursued by all of NIST's programs to achieve 
its overall mission.
    In August 2006, NIST released An Assessment of the United States 
Measurement System: Addressing Measurement Barriers to Accelerate 
Innovation, which identified gaps in measurement technology and 
standards through a process of stakeholder discussions and workshops. 
This document included high-level judgments on where measurement 
technology gaps are impeding innovation in specific technology areas, 
and included a discussion of possible NIST responses to these gaps.

NIST Budget Summary

    The enacted, COMPETES-authorized, and requested levels for FY07 to 
FY09 are summarized in the table below.



4. NIST Budget Highlights

NIST's Laboratory Programs

    The FY09 budget requests $638 million for NIST, $243.8 million 
(27.6 percent) lower than the amount authorized in COMPETES and $117.8 
million (15.6 percent) lower than the FY08 enacted amount. The request 
comes close to the authorized level for NIST's laboratories and user 
facilities, proposing a number of new research initiatives in cyber 
security, biotechnology, nanotechnology, and other areas. However, it 
eliminates all funding for the Technology Innovation Program (TIP), and 
provides only nominal funds for the Manufacturing Extension Partnership 
(MEP) program to cover the costs of eliminating federal support. The 
request includes construction funds for several laboratory facility 
upgrades that total $12.6 million (14.6 percent) above the authorized 
level.
    The increase in laboratory programs and user facilities account 
(STRS) for FY09 includes 14 new research initiatives, ten of which are 
carried over from the FY08 request.

          Environment, Health and Safety Measurements and 
        Standards for Nanotechnology (requested increase of $12 
        million, new in FY09) will provide standards and 
        characterization methods to enable the assessment of the 
        potential environmental, health and safety impacts of 
        nanotechnology.

          Measurement and Standards to Accelerate Innovation in 
        the Biosciences (requested increase of $10 million, new in 
        FY09) will expand NIST's work in the biosciences, with a focus 
        on developing measurement technologies, standards, and data to 
        enable faster and more efficient research and development by 
        the biotechnology and pharmaceutical industry.

          Cyber Security: Leap-Ahead Security Technologies for 
        Interconnected Systems (requested increase of $5 million, new 
        in FY09) will expand NIST's work in computer security. This 
        initiative is part of the multi-agency Comprehensive National 
        Cybersecurity Initiative.

          Going at Light Speed: Optical Communications and 
        Computing (requested increase of $5.84 million, new in FY09) 
        will accelerate the adoption of high-speed networks by 
        developing methods for diagnosing faults in optical networks.

          NIST Center for Neutron Research Expansion and 
        Reliability Improvements (requested increase of $2 million, 
        continued from FY08) will enable the installation of 
        instruments at the upgraded NCNR neutron source.

          Enabling Nanotechnology from Discovery to Manufacture 
        (requested increase of $7 million, continued from FY08) aims to 
        advance scientific understanding of engineered nanotechnology 
        materials and help U.S. industry develop manufacturing 
        technologies for these materials. This initiative is a 
        component of the National Nanotechnology Initiative (NNI).

          Quantum Information Science (requested increase of $7 
        million, continued from FY08) will increase NIST's research in 
        high-risk quantum technologies, including nanoscale electronics 
        and new kinds of computer memory devices.

          Measurements and Standards for the Climate Change 
        Science Program (requested increase of $5 million, continued 
        from FY08) will enhance the NIST component of the multi-agency 
        U.S. Climate Change Science Program (CCSP) to study the 
        climate-relevant properties of aerosols and develop methods for 
        improving satellite measurements of the sun.

          Innovations in Measurement Science (requested 
        increase of $3 million, continued from FY08) allows NIST to 
        pursue the development high-risk, high-reward technology to 
        improve the precision of a variety of measurement tools.

          National Earthquake Hazards Reduction Program 
        Initiative (requested increase of $3.25 million, continued from 
        FY08) will fund research into technologies for retrofitting or 
        otherwise protecting buildings against earthquake damage. NIST 
        is the lead agency of the multi-agency NEHRP program.

          Disaster Resilient Structures and Communities 
        (requested increase of $4 million, continued from FY08) will 
        develop technologies for improving the resilience of structures 
        and communities to natural disasters such as fires, wind storms 
        and tsunamis. NIST will conduct this work in partnership with 
        NOAA, FEMA, and insurance industry organizations.

          Enabling the Hydrogen Economy (requested increase of 
        $4 million, continued from FY08) will fund research into fuel-
        cell design and high-volume manufacturing by developing 
        technologies for measuring hydrogen fuel cell performance and 
        hydrogen transportation.

          Biometrics: Identifying Friend or Foe (requested 
        increase of $2 million, continued from FY08) will develop 
        technologies and standards for testing and evaluating biometric 
        identification systems, in partnership with DHS, the FBI, and 
        the State Department.

          Manufacturing Innovation through Supply Chain 
        Integration (requested increase of $1 million, continued from 
        FY08) will expand NIST's efforts to move industry towards 
        seamless global supply chains by developing open manufacturing 
        standards, measurements, and testing tools.

    The FY09 request for the construction and maintenance account (CRF) 
includes funds for two major construction projects and an increase to 
the maintenance funds for NIST facilities.

          Boulder Building 1 Extension (requesting $43.5 
        million) is the final year of requested funding for the 
        construction of a new laboratory building on the Boulder campus 
        with high-performance facilities.

          JILA Expansion: Preparing the Next Generation of 
        Physicists (requesting $13 million) is the first year of 
        funding requested to expand laboratories at the JILA joint 
        institute operated by NIST and the University of Colorado. The 
        expansion will allow JILA to expand its research capabilities 
        in atomic, molecular and optical physics and train 30 percent 
        more students in these fields.

          Safety, Capacity, Maintenance, and Major Repairs 
        (SCMMR) Increase (requesting increase of $5.15 million) will 
        permanently increase the NIST budget for maintenance and repair 
        of laboratory facilities. NIST uses the SCMMR account to 
        modernize aging infrastructure and repair damage to its 
        buildings.

    The FY09 request for the industrial technology services account 
(ITS) proposes elimination of both programs in the account.

          The Technology Innovation Program (TIP) (formerly the 
        Advanced Technology Program, ATP): The FY09 budget request 
        eliminates TIP, which was funded at $65.2 million in FY08. 
        Under the provisions of the COMPETES Act, TIP will continue to 
        support the final round of ATP grants, awarded in 2007.

          The Manufacturing Extension Partnership (MEP): The 
        FY09 request for MEP is $4 million to cover close-out costs. 
        The budget proposes that MEP Centers become self-sustaining, as 
        was intended in the original legislation that created the 
        program. However, the Technology Administration Act of 1998 
        (P.L. 105-309) amended this original sunset provision, 
        extending federal support for MEP Centers indefinitely so long 
        as they receive a positive evaluation through an independent 
        review.

5. Issues

          Does the three-year programmatic planning document 
        establish a good strategic plan for NIST?

          Does the FY09 budget request set the appropriate 
        priorities to achieve NIST's mission of improving U.S. 
        competitiveness?

          What stakeholder outreach did NIST conduct to develop 
        its budget initiatives?

          What would be the impact on small manufacturers if 
        federal support for MEP is eliminated?

          Is eliminating TIP a good idea in today's global 
        innovative environment? Does a competitiveness initiative in 
        the beginning of the 21st century make sense without programs 
        like TIP?
    Chairman Wu. The hearing will now come to order. Good 
afternoon, ladies and gentlemen. I would like to welcome 
everybody to this hearing of the Technology and Innovation 
Subcommittee.
    Today, we will be discussing the National Institute of 
Standards and Technology, or NIST, and its fiscal year 2009 
budget request. The Science and Technology Committee has always 
been one of NIST's strongest supporters. It is one of my 
favorite agencies. NIST's work on standards and technology has 
enabled many of the products and services in our modern 
economy, from semiconductors to ATMs to hearing aids.
    Today, NIST is in a position to play a vital role in 
keeping our nation innovative and economically competitive. 
Last year, Congress passed the America COMPETES Act, which put 
NIST on a 10 year path to doubling as an investment in our 
innovation future. COMPETES included the first comprehensive 
authorization of NIST in 15 years.
    This subcommittee developed that authorization bill, which 
was incorporated in the COMPETES Act, and we believe it made 
NIST an important component of a balanced innovation agenda. At 
that time, I, and other Members of the Committee, were 
concerned that NIST did not have a good, comprehensive plan for 
what its research activities would be with a doubled budget. It 
was not clear how NIST set its funding priorities, and how it 
allocated resources among different technical areas. Indeed, 
witnesses at last year's hearing expressed similar concerns.
    That is why the America COMPETES Act included a requirement 
that NIST deliver a three-year strategic plan to Congress with 
the budget request. This plan was to include all of NIST's 
programs, including the NIST Labs and lab construction, the 
Industrial Technology Services Programs, and the Baldrige 
Award.
    The document that NIST delivered falls far short of this 
requirement. It leaves out several of NIST's most important 
programs, and it does not lay out a strategic plan to ensure 
that NIST's investments are suitable for the competitive 
challenges of the 21st Century. I am deeply concerned that NIST 
has still not developed a comprehensive, programmatic planning 
document. The COMPETES Act clearly established Congressional 
priorities for NIST. However, the budget request this year 
largely ignores Congress' input.
    The request is 28 percent lower than NIST's financial year 
2009 authorization. In fact, NIST is the only science agency 
included in COMPETES whose budget request is actually lower 
this year than last year. COMPETES put the Manufacturing 
Extension Program, or MEP, on a 10-year path to doubling, to 
enhance its ability to help small manufacturers modernize their 
operation and remain globally competitive. I am disappointed to 
see that once again, the Administration proposes to eliminate 
this program.
    In addition, COMPETES created the Technology Innovation 
Program, or TIP, to provide cost-shared grants to small, high-
tech companies that are working to bring new technologies from 
concept to reality. TIP updated and replaced the highly 
successful Advanced Technology Program, and it will help reap 
the benefits of the federal investment in research. I am 
disappointed that the Administration wants to eliminate this 
key component of a comprehensive innovation agenda.
    And 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 would like to call the Subcommittee to order.
    I want to welcome everyone to this hearing of the Technology & 
Innovation Subcommittee. Today we will be discussing the National 
Institute of Standards and Technology, or NIST, and its fiscal year 
2009 budget request.
    The Science and Technology Committee has always been one of NIST's 
strongest supporters. NIST's work on standards and technology has 
enabled many of the products and services in our modern economy, from 
semiconductors to ATMs to hearing aids. Today, NIST is in a position to 
play a vital role in keeping our nation innovative and economically 
competitive.
    Last year, Congress passed the America COMPETES Act, which put NIST 
on a ten-year path to doubling as an investment in our innovation 
future. COMPETES included the first comprehensive authorization of NIST 
in 15 years. This subcommittee developed that authorization bill, which 
we believed made NIST an important component of a balanced innovation 
agenda.
    At that time I and other Members of the Committee were concerned 
that NIST did not have a good, comprehensive plan for what its research 
activities would be with a doubled budget. It was not clear how NIST 
set its funding priorities, and how it allocated resources among 
different technical areas. Indeed, witnesses at last year's hearing 
expressed similar concerns.
    That is why the COMPETES Act included a requirement that NIST 
deliver a three-year strategic plan to Congress with the budget 
request. This plan was to include all of NIST's programs, including the 
NIST labs and lab construction, the industrial technology services 
programs, and the Baldrige Award.
    The document that NIST delivered falls far short of this mandate. 
It leaves out several of NIST's most important programs, and it does 
not lay out a strategic plan to ensure that NIST's investments are 
suitable for the competitive challenges of the 21st century. I am very 
concerned that NIST has still not developed a comprehensive 
programmatic planning document.
    The COMPETES Act clearly established Congressional priorities for 
NIST. However, the budget request this year largely ignores any of 
Congress' input. The request is 28 percent lower than NIST's FY09 
authorization. In fact, NIST is the only science agency included in 
COMPETES whose budget request is actually lower this year than last 
year.
    COMPETES put the Manufacturing Extension Partnership, or MEP, on a 
ten-year path to doubling, to enhance its ability to help small 
manufacturers modernize their operations and remain globally 
competitive. I am disappointed to see that the Administration proposes 
to eliminate this program.
    In addition, COMPETES created the Technology Innovation Program, or 
TIP, to provide cost-shared grants to small, high-tech companies that 
are working to bring new technologies from concept to reality. TIP 
updated and replaced the highly successful Advanced Technology Program, 
and it will help reap the benefits of the federal investment in 
research. I am very disappointed that the Administration wants to 
eliminate this key component of a comprehensive innovation agenda.

    Mr. Gingrey. Good afternoon, and thank you, Chairman Wu. 
Thank you for convening the hearing today on the Fiscal Year 
2009 budget request for the National Institute of Standards and 
Technology, better known as NIST.
    Unfortunately, my duties with the House Armed Services 
Committee will pull me away from this important hearing on the 
most important federal agency under the jurisdiction of our 
Subcommittee, Technology and Innovation, and therefore, I am 
eager to begin testimony from our esteemed panel, and will keep 
my remarks brief.
    NIST is simply exceptional in the quality and impact of its 
scientific research, services, and partnerships. Almost every 
federal agency in the United States industry sector uses the 
standards, the measurements, and certification services that 
NIST labs provide. In 2007 alone, NIST provided over 42,000 
calibration tests and reference materials across the country. 
And furthermore, 78 scientists and engineers from my home State 
of Georgia, along with approximately 8,000 scientists and 
engineers nationwide, collaborated with NIST throughout the 
year.
    NIST's work helps small and large manufacturers in our 
country compete in the emerging global marketplace, and the 
assistance NIST provides is critical to our 21st Century 
innovative economy.
    Mr. Chairman, I am pleased with the President's request of 
$535 million for NIST Labs, which does put NIST back on the 
path to doubling its budget laid out in the American 
Competitiveness Initiative, as you pointed out. However, it is 
unfortunate that the Administration has sought to end federal 
contributions to the Manufacturing Extension Partnership 
program, or MEP.
    Last year, at this subcommittee's very first hearing, I 
said that I was disappointed with the President's request of 
only $46 million for MEP. Unfortunately, I am even more 
disappointed with the current request to actually end federal 
participation in this very important program.
    Mr. Chairman, MEP helps small and medium-sized United 
States manufacturers optimize their operations and remain 
competitive in a global economy. In Georgia, our MEP program 
served 834 manufacturing clients in Fiscal Year 2007. It helped 
create 761 jobs across my state. In my district alone, MEP has 
completed 20 unique projects for companies in northwest Georgia 
that will help them stay on the cutting edge of manufacture and 
innovation.
    Because of the positive impact that the MEP program has for 
our economy, it deserves at least the approximate $100 million 
Congress has provided in recent years. So, I intend to work 
with my colleagues to see that it does receive an adequate 
appropriation for this fiscal year.
    Mr. Chairman, NIST is largely an agency that does not 
receive its due credit for its yeomen's work across all federal 
agencies, and I want to thank Dr. Turner and his team for the 
job that they do on a daily basis. I look forward to hearing 
from you on the panel. I am, again, apologetic that I am going 
to have to run out, and may hopefully get back in time to hear 
the rest of your testimony.
    And at this point, Mr. Chairman, I will yield back my time.
    [The prepared statement of Mr. Gingrey follows:]

           Prepared Statement of Representative Phil Gingrey

    Good afternoon Chairman Wu. Thank you for convening this hearing 
today on the Fiscal Year 2009 budget request for the National Institute 
of Standards and Technology. Unfortunately, my duties with the House 
Armed Services Committee will pull me away from this important hearing 
on the most important federal agency under the jurisdiction of the 
Technology and Innovation Subcommittee. Therefore I'm eager to begin 
testimony from our esteemed panel and will keep my remarks brief.
    NIST is simply exceptional in the quality and impact of its 
scientific research, services, and partnerships. Almost every federal 
agency and U.S. industry sector uses the standards, measurements, and 
certification services that NIST labs provide.
    In 2007 alone, NIST provided over 42,000 calibration tests and 
reference materials across the country. Furthermore, 78 scientists and 
engineers from my home State of Georgia--along with approximately 8,000 
scientists and engineers nationwide--collaborated with NIST throughout 
the year. NIST's work helps small and large manufacturers in our 
country compete in the emerging global marketplace, and the assistance 
NIST provides is critical to our 21st Century innovation economy.
    Mr. Chairman, I am pleased with the President's request of $535 
million for the NIST labs, which puts NIST back on the path to doubling 
its budget laid out in the American Competitiveness Initiative. 
However, it is unfortunate that the Administration has sought to end 
federal contributions to the Manufacturing Extension Partnership 
program or M-E-P. Last year at this subcommittee's very first hearing, 
I said that I was disappointed with the President's request of only $46 
million for MEP. Unfortunately, I am even more disappointed with the 
current request to end federal participation in this important program.
    Mr. Chairman, MEP helps small- and medium-sized U.S. manufacturers 
optimize their operations and remain competitive in the global economy. 
In Georgia, the MEP program served 834 manufacturing clients in Fiscal 
Year 2007 and helped create 761 jobs across the state. In my district 
alone, MEP has completed 20 unique projects for companies in Northwest 
Georgia that will help them stay on the cutting edge of manufacturing 
innovation.
    Because of the positive impact that the MEP program has for our 
economy, it deserves at least the approximate $100 million Congress has 
provided in recent years, and I intend to work with my colleagues to 
see it receives an adequate appropriation for FY 2009.
    Mr. Chairman, NIST is largely an agency that does not receive its 
due credit for its yeoman's work across all federal agencies. I would 
like to thank Dr. Turner and his team for the job they do on a daily 
basis. I look forward to hearing from our panel, and I yield back the 
balance of my time.

    Chairman Wu. Thank you, Dr. Gingrey. If there are other 
Members who wish to submit additional opening statements, your 
statements will be added to the record at this point.
    And at this point, I will briefly introduce three of our 
witnesses, to allow Dr. Ehlers to introduce two of the 
wonderful witnesses who come from the great State of Michigan.
    First, Dr. James Turner, who has been the Acting Director 
of NIST since September of 2007. Dr. Mary Good, who is the 
Founding Dean of the College of Engineering and Information 
Technology at the University of Arkansas at Little Rock, and 
served as the Under Secretary of Technology during the first 
Clinton Administration. And Dr. Peter Fiske is Vice President 
of Research and Development at PAX Scientific, an engineering, 
research, and product design firm.
    And I would like to yield to the gentleman from Michigan, 
Dr. Ehlers, to introduce the final two witnesses.
    Mr. Ehlers. Thank you very much, Mr. Chairman. I appreciate 
you yielding.
    First of all, let me just say that I have a very soft spot 
in my heart for NIST. Years ago, when it was still NBS, and 
which I think it should still be, I served as a Fellow at the 
Joint Institute for Laboratory Astrophysics in Boulder, and 
they then elected me a Nonresident Fellow, and I went back for 
three summers. At a great institution, I learned a great deal. 
I hope I contributed something, as well. But I have also served 
on the visiting panel for NBS for several years, and it was a 
good experience.
    In terms of introducing the two individuals from Michigan. 
First of all, Dr. James Serum who, with a name like that, 
obviously was destined to become a scientist. He comes from 
Hudsonville, Michigan, which, its most important product, in 
addition to Dr. Serum, is Hudsonville Ice Cream, and had I 
known you were here, I would have brought you a gallon of that. 
At one time, I got on a plane in Michigan to fly to California, 
and the person next to me was holding a steaming box on his 
lap. Today, they would have assumed he was a terrorist. It 
turned out he couldn't leave, couldn't go back home without 
taking a gallon of Hudsonville Ice Cream back home, so he had 
it in dry ice just to please his wife.
    Next, we have Mr. Michael Coast, who is the President and 
CEO of the Michigan Manufacturing and Technology Center. Also, 
I believe, President of the National Association of the 
individuals who direct that, and that is why he is representing 
all of them here. But also, the Grand Rapids, Michigan MEP 
program is partially under his jurisdiction. He has done a 
fantastic job in Michigan. I totally agree with the comments of 
Mr. Gingrey that the importance of that program, I also don't 
understand why the Administration keeps zeroing it out. I 
finally decided that there is a little man buried in the bowels 
of the White House who thinks it is a bad program, and zeros it 
out every year, and then, the Congress proceeds to fund it 
appropriately.
    I am pleased with the MEP program. I am pleased with the 
TIP program, and I thank you, Mr. Chairman, for giving me the 
liberty to expound my views on this. I think they are both 
excellent programs, and I assume that we will, once again, 
reinstate them and fund them appropriately.
    Thank you for giving me the extra time.
    Chairman Wu. Thank you very much, Dr. Ehlers, and I not 
only appreciate your comments about MEP and TIP, but I will 
keep my eyes open for that wonderful ice cream, smoking or not, 
on airplanes.
    As our witnesses know, your written statements will be 
taken into the record. Spoken testimony should be limited to 
five minutes, after which, Members of the Subcommittee will 
have five minutes each to ask questions.
    And Dr. Turner, we will start with you.

  STATEMENT OF DR. JAMES M. TURNER, ACTING DIRECTOR, NATIONAL 
   INSTITUTE OF STANDARDS AND TECHNOLOGY. U.S. DEPARTMENT OF 
                            COMMERCE

    Dr. Turner. Thank you very much, sir. Chairman Wu, Ranking 
Member Gingrey, Dr. Ehlers, we thank you for the opportunity to 
present the President's Fiscal Year 2009 budget request for 
NIST.
    This budget puts us back on the doubling path, as 
envisioned in the President's American Competitiveness 
Initiative, and as reflected in the America COMPETES Act that 
Congress enacted last year. I want to thank the Chairman and 
the Ranking Member, and the other Members of the Committee, for 
their leadership in the America COMPETES Act.
    For FY09, our request is $638 million, which includes $634 
million for NIST's core programs, encompassing NIST's research 
and facilities, and $4 million for the Hollings Manufacturing 
Extension Partnership. The funding level decisions for MEP, as 
well as the TIP program, were difficult choices that had to be 
made in tight budget times. The budget for NIST's core 
represents a 22 percent increase over the FY08 appropriations 
for these programs.
    You will hear today from our VCAT, our Visiting Committee 
on Advanced Technology. I want to thank them for the time and 
effort that they offer and provide in advising NIST. Most 
recently, they recommended an internal Nanotechnology Council 
to coordinate our nanotechnology work. We welcome their 
recommendation, and as of Friday, that Council now exists.
    The President's request focuses on high impact research 
that will spur economic growth, and improve our quality of 
life, and thereby accomplish NIST's mission to advance 
innovation and industrial competitiveness. The ACI and COMPETES 
Act enable NIST to continue to aggressively lay the science and 
technology foundation recommended by so many reports and 
proclamations on U.S. innovation and competitiveness. It is 
paramount that NIST move rapidly and wisely toward realizing 
the vision of being the world's leader in creating critical 
measurement solutions and promoting equitable standards.
    Well-targeted measurements and standards investments are a 
proven path to stimulate innovation, foster industrial 
competitiveness, increase economic security, and improve the 
quality of life of all Americans. The FY 2009 budget proposal 
contains a total of 17 initiatives. These initiatives were 
developed using a rigorous process that includes talking with 
industry, stakeholders, and our Visiting Committee.
    Five of the initiatives are new for FY09. The rest were 
previously proposed in the FY08 budget, but to all our 
collective disappointment, the FY 2008 budget took us off the 
doubling track. At NIST, this has real consequences. Three 
hundred new employees and guest researchers were not hired. A 
number of important research projects were stopped or delayed, 
and maintenance of our facilities will slow down while 
increasing the risk of equipment and facility failures.
    Our experience last year makes this year's budget request 
much more important. We must not lose this historic moment to 
make the significant, necessary investment in the physical 
sciences.
    Let me briefly describe our initiatives. We have grouped 
them into three areas. First, addressing urgent environmental 
safety and security needs, which include initiatives in 
nanotechnology, climate change, biometrics, earthquake hazards, 
and disaster-resilient structures. Secondly, investment in 
strategic and rapidly advancing technologies, which includes 
initiatives in bioscience measurements, quantum computing, 
cyber security, optical light communications, hydrogen fuel, 
and manufacturing supply chain integration. And finally, 
building our science and engineering capacity and capability, 
which includes a proposed expansion of the JILA facility that 
Dr. Ehlers referred to, in Boulder, and a new Boulder lab 
facility, an expansion of the NIST Center for Neutron Research 
in Gaithersburg, and an increase in our major repairs and 
maintenance.
    For 107 years, NIST research has been critical to the 
Nation's innovation and competitiveness. The increased funding 
in the President's FY09 budget for NIST's core will directly 
support technological advances in broad sectors of the economy 
that will, quite literally, define the 21st Century, as well as 
to improve the safety and quality of life for all our citizens.
    Again, this is a historic moment. The ACI is truly a once 
in a generation opportunity to enable cutting edge advances in 
measurement science that will ensure the U.S. drives 
technological change.
    We look forward to working with you, Mr. Chairman, and 
Members of the Subcommittee throughout this process. Thank you 
very much.
    [The prepared statement of Dr. Turner follows:]

                 Prepared Statement of James M. Turner

    Chairman Gordon, Ranking Member Hall and Members of the Committee, 
thank you for the opportunity to appear before you today to present the 
President's Fiscal Year 2009 budget request for the National Institute 
of Standards and Technology (NIST). This budget reflects NIST's growth 
path under the President's American Competitiveness Initiative (ACI) 
and under the America COMPETES Act (P.L. 110-69) that this committee 
passed last year. The levels reflected in this budget will further 
enhance NIST's ability to provide the Nation's critical measurement and 
standards needs.
    NIST will meet this challenge by relying on partnerships with 
industry and academia to plan and carry out research and provide 
services. These partnerships also allow NIST to stay abreast of current 
high priority needs and to anticipate emerging needs. More than 1,800 
guest researchers work with nearly 3,000 NIST staff members in NIST 
laboratories and facilities on several campuses to provide the Nation 
with the most advanced measurement and standards research and services.
    The FY 2009 request of $638M includes $634M for NIST's core 
programs (encompassing NIST's research and facilities) and $4M for the 
Hollings Manufacturing Extension Partnership. The budget for the NIST 
core represents a 22 percent increase (excluding congressionally 
directed grants) over the FY 2008 appropriations for these programs. 
The President's request focuses on high-impact research that will 
address critical national needs, spur economic growth and accomplish 
NIST's mission to advance innovation and industrial competitiveness.

Supporting Innovation and the Economy

    The well-being of U.S. citizens is affected every day by NIST's 
measurement and standards work. Virtually every segment of the 
economy--transportation, computers, banking, food processing, health 
care and communication--depends on NIST research, products and 
services. More broadly, the quality of the water we drink, the air we 
breathe, and the food we eat depends in part on that work. NIST 
standards-which are not regulatory-ensure that consumers are confident 
of the quantity and quality of the product purchased whether it is a 
gallon of gasoline or the amount of electricity used and stated in the 
monthly bill. They protect our banking at ATMs and our online 
purchases. Soon, these standards will help to protect the privacy of 
our health records.
    They improve the accuracy of our medical tests and treatments and 
help to make sure that we know the nutritional content of what we are 
eating. They help to convict criminals and free the innocent through 
more accurate and faster DNA tests. They provide crucial timekeeping 
that we depend upon for navigation, telecommunications, financial 
transactions, and basic research. And they improve the readiness of our 
first responders and our homeland security. The measurement and 
standards infrastructure provided NIST paves the way for U.S. 
innovation and economic competitiveness. In many instances, NIST work 
in measurement science is the critical path to discovery and 
innovations.
    While companies strive to make their latest products and services 
as easy to use and as simple for consumers as possible, the underlying 
knowledge and technology base that makes this possible is certainly not 
simple. Consider the web of fiber optic networks that makes broadband 
communication--from long distance telephone, to cable television, to 
high-speed Internet--possible. The system includes dozens of 
independent networks, tens of thousands of connections and millions of 
miles of optical fibers, each fiber capable of carrying hundreds of 
separate signals simultaneously. Yet, despite its already mind boggling 
complexity, this fiber optic system that our economy depends on may 
soon suffer with the same kind of traffic congestion currently clogging 
highways around many major metropolitan areas.
    To prevent this, communications manufacturers and service companies 
need faster, more accurate ways to measure the quality of optical 
signals, data analysis tools to diagnose transmission problems, and 
nanoscale monitoring systems for ultra fast microchips that use light 
instead of electrons to store and process information. NIST is uniquely 
positioned to help meet these challenges. NIST has the right 
combination of world class scientists and engineers, outstanding 
scientific facilities, and strong ties with both the industrial and 
service sectors to provide the tools needed to realize next-generation 
optical technologies. As a result, the consumer will receive 
information faster, with fewer disruptions, and be able to interconnect 
between networks to get work done that suits their needs.
    Medicine is facing a similar complexity explosion. As the project 
to decode the three billion ``letters'' of the human genome has 
demonstrated, the frontiers of medicine have moved in the last few 
decades from often qualitative assessments to increasingly quantitative 
measures down to the level of individual biological molecules. As a 
result, medical researchers skilled in the biological sciences are 
increasingly finding that they need to integrate physical scientists, 
and their quantitative measurement skills into their research teams.
    Just as a systems engineer might study an entire fiber optic 
network from its individual components to its overall efficiency, life 
science researchers are beginning to treat medical and biological 
research problems with a ``systems approach'' long used in engineering 
and the physical sciences. Life sciences researchers are attempting to 
fully integrate what they know at the nano and microscale of molecules, 
DNA, and proteins with the macroscale problems of disease and other 
medical problems experienced by patients. Again, NIST, with its 
interdisciplinary research staff and expertise in creating ground-
breaking new measurement methods and standards, can provide the tools 
needed to advance the field. The payoff will be faster development of 
new drugs, more personalized medicine, and better prediction, 
diagnosis, and understanding of disease. This approach leverages NIST's 
core competencies.
    Similar opportunities exist for NIST to undertake the equally 
complex measurement challenges involved in safely exploiting the 
promise of nanotechnologies or transforming the field of computer 
modeling and visualization to a truly quantitative, predictive science.
    To accomplish all of these goals and to meet the challenges of the 
ACI, NIST must continue to update and expand its own laboratory 
facilities. Consequently, this budget also includes a request for the 
final year of funding for the continued construction of an extension to 
NIST facilities at its laboratory in Boulder, CO (Building 1) to 
provide new high performance space; a new request for an expansion of 
facilities and capacity to train future U.S. scientists in cutting edge 
atomic, molecular, and optical physics at JILA--NIST's world renowned 
joint institute with the University of Colorado at Boulder; as well as 
funding for the third year of a program to expand and upgrade NIST's 
Center for Neutron Research--the Nation's leading facility of its kind 
and a critical research tool for more than 2,200 researchers annually 
who work in nanotechnology, advanced materials, biotechnology, and 
other fields.

FY 2008 Impacts

    The ACI and the passage of the America COMPETES Act provide an 
unprecedented opportunity to further enhance and accelerate NIST's 
contributions to innovation and competitiveness.
    Unfortunately, FY 2008 appropriations were well below the requested 
level. Those appropriations do not provide funding for NIST's 
laboratory research and facilities efforts at the President's request 
level for the ACI. We are pleased that the President's FY 2009 Request 
would restore NIST to the path to double over a ten-year period its 
core research activities. NIST will make every effort to optimize the 
funds provided, but the lower 2008 funding provided compared to the 
President's budget request will have negative impacts on NIST and its 
customers and partners in industry, academia, and other agencies. Those 
impacts include a real loss in timely research that yields positive 
benefits for the Nation. The FY 2008 omnibus appropriation included 
$83M in earmarks and unrequested grants for NIST, the impact of which 
is to slow down or limit the core research and facilities proposed at 
NIST. This means that research areas critical to U.S. innovation will 
not be advanced as aggressively as originally proposed in critical 
areas such as nanotechnology, quantum computing, climate change and 
earthquake and other disaster resistant structures.
    It also means that NIST falls $13.5M short of the amount needed to 
cover salary increases and other anticipated costs, requiring several 
actions. Consequently, NIST will slow down new hires with specialized 
skills and will not be able to bring on board the estimated 300 
additional staff and guest researchers anticipated with the budget 
initiatives requested by the President. NIST managers are reviewing 
laboratory and administrative activities to ensure that ongoing high 
priority projects receive the funding that they need and that all funds 
are used as efficiently as possible.
    As part of the ACI, NIST received $79.1M of its requested $93.9M 
for two new facilities initiatives and for operational maintenance, 
major repairs and safety of the NIST campuses. To compensate for the 
shortfall, NIST has adjusted its overall facilities plans in order to 
proceed with the two major projects. NIST will slow down its plans to 
reduce the backlog of deferred maintenance projects on existing 
facilities. This increases the chances of unanticipated major equipment 
outages and temporary loss of facilities use, resulting in higher 
repair costs and loss of researchers' productivity.
    The President's FY 2009 request for NIST would get the Institute 
back on a doubling track--enabling NIST to continue to aggressively lay 
the science and technology foundation recommended by so many reports 
and proclamations on U.S. innovation and competitiveness. It is 
paramount that NIST move rapidly and wisely toward realizing the vision 
of being the world's leader in creating critical measurement solutions 
and promoting equitable standards. Well-targeted measurement and 
standards investments is a proven path to stimulate innovation, foster 
industrial competitiveness, increase economic security, and improve the 
quality of life of all Americans.

FY 2009 President's Budget

    NIST's FY 2009 budget request totals $638M, which includes $634M 
for core research and facilities programs, a 22 percent increase 
(excluding congressionally directed grants) over the FY08 
appropriations for these same core programs. The increased funding for 
NIST's core programs provided through the FY 2009 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 FY 2009 
budget contains a total of 17 initiatives. Five of the initiatives have 
not been requested before. The balance of the initiatives was proposed 
in the FY08 budget. After being updated, all went through a rigorous 
internal process to assess their value and connection to NIST's 
mission. Their relevance, technical merit, and priority were 
reaffirmed.
    The following table summarizes the proposed FY 2009 budget. In this 
table, we show both the FY 2007 and FY 2008 enacted levels without 
congressionally directed projects for comparison.



    The total request of $638M for NIST is divided into three 
appropriations accounts:

I. SCIENTIFIC AND TECHNICAL RESEARCH AND SERVICES (STRS) $535M. This 
category includes $526.5M for NIST laboratory research and $8.5M for 
the Baldrige National Quality Program. Major components of the FY 2009 
request include four new STRS initiatives (in italics) and nine 
initiatives requested--but not funded--in FY 2008.

         Addressing Urgent Environment, Safety and Security Needs 
        (+$26.2M)

                  Nanotechnology: Environment, Health and Safety

                  Climate Change Science: Measurements and Standards

                  National Earthquake Hazards Reduction Program

                  Disaster Resilient Structures and Communities

                  Biometrics: Identifying Friend or Foe

         Investing in Strategic and Rapidly Advancing Technologies 
        (+$42.8M)

                  Innovation in the Biosciences Measurements and 
                Standards

                  Comprehensive National Cyber Security Initiative: 
                Leap-Ahead Technologies

                  Optical Communications and Computing

                  Quantum Information Science

                  Nanotechnology: Discovery to Manufacture

                  Innovations in Measurement Science

                  Enabling the Use of Hydrogen as a Fuel

                  Manufacturing Innovation through Supply Chain 
                Integration

II. CONSTRUCTION OF RESEARCH FACILITIES (CRF) $99M. This category 
includes $37.3M in base funding for operational maintenance, major 
repairs and safety of the NIST sites; and $63.7M for three initiatives 
outlined below.

         Boosting U.S. Science/Engineering Capacity and Capability 
        ($63.7M)

                  JILA Building Expansion: Pushing the Scientific 
                Frontiers

                  Boulder Building 1 Extension: 21st Century Tools

                  Safety, Capacity, Maintenance and Major Repairs

                  NIST Center for Neutron Research (NCNR) Capacity and 
                Capability

III. INDUSTRIAL TECHNOLOGY SERVICES (ITS) $4M. The Hollings 
Manufacturing Extension Partnership (MEP) program and the Technology 
Innovation Program (TIP) compose NIST's Industrial Technology Services 
account.
    The budget also reflects the Administration's focus on its highest 
priorities--including basic research, consistent with the American 
Competitiveness Initiative--and the need to restrain spending. The 
request for the Hollings Manufacturing Extension Partnership is $4 
million, enough for an orderly end to federal funding for the program, 
while no funds are requested for the Technology Innovation Program.

FY 2009 Initiatives in Detail.

    The initiatives are described in more detail below. They are 
organized within appropriations accounts and by FY 2009 initiative 
categories.

I.  SCIENTIFIC AND TECHNICAL RESEARCH SERVICES (STRS)

Addressing Urgent Environment, Safety and Security Needs (+$26.2M)

Nanotechnology: Environment, Health and Safety Measurements & Standards 
(+$12M)

    Products made with nanometer-scale components and materials--a 
thousand times thinner than a human hair and smaller--are already 
dramatically improving the performance of current products from stain-
resistant pants to fuel-efficient aircraft. Many more applications 
beckon such as targeted cancer drugs, ultra-fast electronics, and 
improved diagnostic tools for medicine.
    The small size of these components produces new properties not seen 
in larger-scale ``bulk'' materials. While nanomaterials promise many 
useful applications, very little is known about the environmental, 
health, and safety (EHS) risks associated with them. The safety or 
toxicity of nanomaterials can be determined only with well-understood 
materials and well-defined testing methods.
    The interagency National Nanotechnology Initiative (NNI) has 
designated NIST as the lead federal agency to develop metrology tools 
and methods for measuring and characterizing nanomaterials. NIST has 
the interdisciplinary physical-science expertise and the facilities 
needed to develop accurate, validated methods for understanding the EHS 
properties of nanoscale materials.
    The proposed initiative funding will allow NIST to launch a three-
pronged approach to the problem:

          create a classification scheme for determining the 
        characteristics of nanoparticles necessary for assessing 
        toxicity, including size, shape, and chemical composition;

          develop detection and measurement methods for 
        quantifying the number and nature of nanoparticles with EHS 
        impact in biological and environmental samples; and

          predict how modifications to nanoparticles will 
        affect their impact on the environment, health, and safety.

Measurements and Standards for the Climate Change Science Program 
(+$5M)

    The climate is changing. Determining how fast it is changing and 
understanding the complex relationship between all the environmental 
variables to allow accurate predictions is part of the objective of the 
U.S. Climate Change Science Program. Some of the drivers of climate, 
such as the sun's output, may vary slowly over decades. As a result, 
climate predictions depend critically on developing absolute 
measurements of the sun's energy that can be compared accurately over 
decades from different sensors. Other important variables include the 
sizes, shapes, and chemical composition of particles or droplets 
(aerosols) in the atmosphere. Whether aerosols contribute to the 
warming or the cooling of the Earth depends upon their composition.
    With the funding provided through this initiative and in 
coordination with other agencies, NIST will 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 and ground-based solar measurement systems;

          techniques for generating specific types of aerosols 
        in the laboratory, measuring aerosol optical and physical 
        properties, and 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.

National Earthquake Hazards Reduction Program (+$3.3M)

    Within the United States, more than 75 million people are located 
in urban areas considered to be at moderate to high risk for 
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. A single large 
earthquake in the United States, like the one that struck Kobe, Japan, 
in 1995, can easily cause damage of $100 billion to $200 billion.
    A critical gap exists between the results produced by basic 
research and the implementation of that knowledge in the field. New 
construction materials, techniques, building codes, and standards do 
not reflect the current state of knowledge. Through the National 
Earthquake Hazards Reduction Program (NEHRP), NIST is tasked with 
conducting problem-focused research to bridge this gap and to promote 
its application by the private sector.
    At the proposed funding level, NIST will:

          identify implementation gaps between basic research 
        results and design guidance and national model building code 
        provisions;

          develop rational cost-effective, consensus-based 
        seismic design and analysis procedures for use in national 
        model building codes;

          design guidelines for the testing and design of major 
        structural systems;

          characterize fully the seismic capacities of typical 
        older building structural components and systems as they are 
        built; and

          develop structural performance criteria, analytical 
        models, and cost-effective rehabilitation techniques for 
        existing buildings.

Disaster Resilient Structures and Communities (+$4M)

    For the past few years, natural hazards, including hurricanes, 
extreme winds, storm surge, wildland fires, earthquakes, and tsunamis, 
as well as terrorist actions, have been 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 
standards, codes, and practices used when they were built. With few 
exceptions, these 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.
    NIST and the National Oceanic and Atmospheric Administration (NOAA) 
have coordinated their programs in this area. Initiative funding in FY 
2009 will allow NIST to develop:

          standard methods to predict losses, evaluate disaster 
        resilience, and estimate cost-to-benefit of risk management 
        strategies at the community and regional scales as opposed to 
        the individual building scale;

          decision support tools to modernize standards, codes, 
        and practices consistent with the risk;

          a validated ``computational wind tunnel'' for 
        predicting extreme wind effects on structures; and

          risk-based storm surge maps to be used in designing 
        structures in coastal regions and an improved hurricane 
        intensity classification scale.

    In addition, the funding will expand and accelerate research 
results for projects begun with funding in FY 2007 on prediction of 
fire hazards at the wildland/urban interface; and improved tools for 
designing and constructing earthquake-resistant structures.

Biometrics: Identifying Friend or Foe (+$2M)

    NIST has decades of experience improving human identification 
systems and currently is working with other federal agencies, including 
the Department of Homeland Security, the Federal Bureau of 
Investigation, and the U.S. Department of State, to evaluate and 
improve the ability of biometrics to enhance border security. The USA 
Patriot Act and the Enhanced Border Security and Visa Entry Reform Act 
call for NIST to develop and certify a technology standard for 
verifying the identity of individuals and to determine the accuracy of 
biometric technologies, including fingerprint, facial, and iris 
recognition.
    Biometrics technologies, primarily fingerprints, are being used 
broadly in the United States for border security. New technologies 
under development, in particular, ``multi-modal'' systems that combine 
two or more biometric technologies, such as fingerprint, facial, and 
iris, promise to bring significant improvements. But NIST studies have 
shown that the accuracy of today's facial recognition systems is 
relatively poor compared to fingerprints, and iris recognition needs 
more study and testing to determine its accuracy in operational 
environments.
    In conjunction with several other federal agencies, including the 
FBI and Department of Homeland Security, private industry and 
universities, NIST is managing the Multiple Biometric Grand Challenge, 
which aims to reduce errors in both face and iris recognition systems. 
Also, NIST is performing large-scale evaluations of iris recognition to 
promote its standardization.
    NIST is also supporting the development of standards for inter-
operability between different fingerprint systems through large-scale 
testing.
    With additional funding, NIST will:

          enable facial recognition technologies to be used for 
        border security;

          build on its testing program to determine the 
        accuracy of multi-modal systems;

          develop tests and guidelines to assure that future 
        biometric systems are inter-operable, and work efficiently in 
        real-time applications by:

                  improving the use of fingerprints with real-time 
                fingerprint readers;

                  improve the inter-operability, robustness, and 
                usability of fingerprint systems and facial recognition 
                systems;

          improve biometric systems by enabling simultaneous 
        use of facial recognition, fingerprint, and iris-scan 
        technologies

    NIST will coordinate this work with other government agencies and 
the private sector while taking international standards developments 
into account.

II.  Investing in Strategic and Rapidly Advancing Technologies 
(+$42.8M)

Measurements and Standards to Accelerate Innovation in the Biosciences 
(+$10M)

    Inaccurate bioscience measurements sometimes make it hard to tell 
when treatments are healing or causing harm. They often increase costs 
and lower the quality of health care. The lack of reliable, 
quantitative measurements in the biosciences is also impeding progress 
in a number of promising life-science research areas. Compared to the 
measurements made in the physical sciences, medical tests and 
bioscience-based measurements need to be repeated and rechecked far too 
frequently. Today, even standard measurements on a limited number of 
blood proteins often yield variable results among expert laboratories.
    The research initiatives newly proposed in FY 2009 will focus on 
three intersecting areas of research:

          make biological data more quantitative and reliable 
        by establishing methods, standards, and benchmark data for the 
        fundamental measurements that underpin the life sciences in 
        techniques such as mass spectrometry and molecular imaging;

          devise new methods for simultaneously measuring 
        hundreds to thousands of molecules at a time by developing and 
        validating new technologies in areas such as microfluidics and 
        live cell imaging; and

          help laboratories more easily compare and combine 
        their measurements and computer models with one another by 
        developing standards for the exchange of biological data and 
        information.

Comprehensive National Cyber Security Initiative: Leap-Ahead Security 
Technologies (+$5M)

    Many of today's tools and mechanisms for protecting against cyber 
attacks were designed with yesterday's technology in mind. Information 
systems have evolved from room-size computer workstations shut off from 
the rest of the world to ubiquitous mobile devices interconnected by a 
global Internet. In this diverse ecology of communication devices, no 
cyber security solution works on all operating systems and can protect 
every type of computer and network component. Operating systems are now 
composed of millions of lines of code, rather than thousands, and have 
many more potential holes.
    The NIST request is part of the Administration's Comprehensive 
Cyber Security Initiative. NIST is a recognized world leader in the 
field of cyber security. Working with other federal agencies, NIST 
proposes an initiative in three essential elements of cyber security 
infrastructure:

          create technical standards for generating, 
        distributing, using, storing and destroying secret numbers 
        known as cryptographic keys, commonly used to grant access to 
        authorized individuals on encrypted computer networks and 
        systems. This effort will be conducted in technical 
        consultation with the National Security Agency (NSA) and the 
        Department of Defense (DOD), as well as other government 
        agencies and non-government organizations;

          nurture the development of ``multi-factor 
        authentication'' methods. Such methods require users to verify 
        their identities through multiple methods, such as passwords 
        and iris scans, rather than just one. NIST will develop a 
        standardized framework that ensures these methods work across 
        different computer platforms and operating systems. The effort 
        will be coordinated with vendors and federal departments, 
        including the Department of Homeland Security; and

          extend the Federal Desktop Core Configuration, a set 
        of standard security settings that optimize security, to other 
        operating systems, applications, and network devices beyond the 
        existing support for Windows XP and Vista.

Going at Light Speed: Optical Communications and Computing (+$5.8M)

    As demand on the U.S. communications network continues to grow, a 
new generation of transmission and networking technologies is required 
to keep pace. Keeping pace is critical because communications 
fundamentally drives productivity gains and economic growth; it cradles 
innovation in many current and future industries, including 
telemedicine, entertainment, and security.
    This initiative will promote advances in light-scale communications 
ranging from the nanoscopic innards of an individual computer to the 
continent-spanning scale of the Nation's optical communications 
network. Already the world leader in measurements of high-speed devices 
and of hybrid optical and electronic devices, NIST will work closely 
with industry and expand its work to include research and development 
of:

          new measurement capabilities to accommodate higher-
        speed, next-generation communications networks;

          measurements that diagnose and locate transmission 
        problems on data networks, and provide the information needed 
        to reconfigure and redirect traffic to match demand; and

          new measurement techniques for analyzing computer 
        circuits that transmit light instead of electricity, enabling 
        the manipulation of light within computer chips, and 
        interconnecting very small electronic and optical devices.

Quantum Information Science (+$7M)

    NIST scientists are world leaders in the emerging field of quantum 
science. Three NIST scientists have won separate Nobel Prizes in the 
last 10 years based on their work in the 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 transformed the 20th century.
    Having developed potential components for quantum computers and 
demonstrated other advances, NIST is proposing to expand further its 
quantum science program in FY 2009. Several of the projects proposed 
under this initiative will be in collaboration with the Joint Quantum 
Institute established by NIST, the University of Maryland, and the 
National Security Agency. NIST will:

          begin development of quantum ``wires'' that use 
        ``teleportation'' techniques to reliably transport information 
        between the components of a simple quantum computer based on 
        manipulation of atoms, other elementary particles, or solid-
        state quantum devices;

          begin development of quantum memory analogous to the 
        random access memory of today's computers to allow more complex 
        logic operations;

          begin development of methods for transferring 
        quantum-based information from one form (such as atoms) to 
        another form (such as photons);

          develop an all-optical clock for more precise time 
        and frequency measurement; and

          exploit the unusual quantum properties of 
        ``coherence'' and entanglement to provide exquisite physical 
        science measurement capabilities with improved sensitivity, 
        accuracy, and speed.

Enabling Nanotechnology from Discovery to Manufacture (+$7M)

    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.
    While a complementary NIST initiative will provide important 
groundwork in measuring environmental, health, and safety (EHS) risks 
of nanotechnology, this research initiative will build on recent NIST 
advances in developing nanoscale science and technology by:

          devising 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

          pushing existing computer technology to its ultimate 
        limit by developing measurements and standards that support 
        ``ultimate CMOS,'' or the development of current transistor 
        technology to its technological limit.

Innovations in Measurement Science (+$3M)

    As new science and technology areas emerge, NIST must quickly 
develop the measurement methods needed to support them. The Innovations 
in Measurement Science Program is one of NIST's primary mechanisms for 
keeping pace with the measurement requirements needed for innovation in 
U.S. industry.
    Established in 1979, the program supports high-risk, leading-edge 
research projects that anticipate industry needs and develop 
measurement science for the next generation of technology. At some 
point in their careers, all three of NIST's Nobel laureates have had 
their research funded by this program. Current NIST expertise in 
quantum information science, fuel cell science, three dimensional 
chemical imaging, and many other areas important to national priorities 
were launched with ``measurement innovations'' funding.
    This initiative will expand the scope and nature of projects 
selected for the Innovations in Measurement Science Program to allow 
this program to keep better pace with the evolving needs of industry 
and science. Emphasis will be placed on the development of multi-
disciplinary research areas with the greatest potential for fostering 
innovation.
    The NIST Laboratories carefully evaluate the technical merit, 
potential impact, and staff qualifications for detailed research 
proposals submitted by the NIST technical staff. Successful proposals 
are funded for five years-ensuring enough time for the innovative 
measurement science approach to be developed-and are reviewed 
throughout the program to ensure satisfactory progress.

Enabling the Use of Hydrogen as a Fuel (+$4M)

    Hydrogen offers the possibility of lowering the impact of motor 
vehicles on the environment, and reducing our nation's dependence on 
foreign oil. While the burning of fossil fuels produces carbon dioxide 
and other emissions harmful to the environment, hydrogen fuel can be 
made from many energy sources, including renewables.
    Technical challenges need to be overcome to make hydrogen-powered 
vehicles more practical and economical. Hydrogen can embrittle metals 
and other container materials, is highly combustible, and requires 
storage containers larger than those for other fuels with equivalent 
energy. Moreover, the technical infrastructure must be developed to 
ensure safe production, storage, distribution, delivery, and equitable 
sale of hydrogen in the marketplace.
    Expansion of research efforts at NIST is essential to achieving 
widespread use of hydrogen as a fuel. NIST has been a leading provider 
of data on the chemical and physical properties of hydrogen for more 
than 50 years. It has statutory responsibility under the Pipeline 
Safety Act of 2002 to develop research and standards for gas pipeline 
integrity, safety, and reliability. It is the lead U.S. agency for 
weights and measures of vehicle fuels, and the distribution and sale of 
hydrogen will require entirely new systems for ensuring equity in the 
marketplace.
    NIST's Center for Neutron Research is a premier facility for real-
time, three-dimensional imaging of hydrogen in operating fuel cells. 
Using the unique resources developed at this NIST facility will help 
reduce technical barriers for efficient hydrogen production, storage, 
and use. NIST expertise will be essential for making fuel cells less 
costly and more reliable.

Manufacturing Innovation through Supply Chain Integration (+$1M)

    America's large manufacturers are globally distributed enterprises 
that rely on a system of small manufacturers, parts suppliers, 
shippers, and raw materials producers organized in extended ``supply 
chains.'' Using the auto industry as an example, the average car has 
more than 15,000 parts coming from 5,000 manufacturers that are made to 
the precise specifications of the auto company and must arrive on time.
    Production costs are no longer the major cost component in these 
global supply chains-the dominant cost is in the engineering and 
business activities, which depend critically upon clear and error-free 
exchange of information among partners.
    Inefficiencies and needless roadblocks in the exchange of product 
design and business data in manufacturing and construction are 
estimated to cost the U.S. economy more than $25 billion per year. 
Small manufacturers are particularly hurt by these problems, but they 
affect the competitiveness of entire industries.
    In the 1980s NIST pioneered work in developing early open standards 
for data exchange. Under this initiative, NIST will conduct a much more 
extensive, wide-ranging, and technologically advanced program. Working 
closely with U.S. manufacturers to develop seamless data transactions 
throughout global supply chains, NIST will work to shorten the design-
to-manufacturing cycle, improve quality, and lower costs for large and 
small U.S. firms.
    Major goals will include:

          creating ``roadmaps'' for the development of open 
        standards for enterprise integration in target industry 
        sectors;

          developing validation and conformance tests to help 
        ensure the performance of these standards as well as their 
        proper use; and

          ensuring the standards are integrated and consistent 
        with developing international standards and easily available to 
        small- and medium-sized U.S. manufacturers.

II.  CONSTRUCTION OF RESEARCH FACILITIES (CRF)

Boosting U.S. Science and Engineering Capacity and Capability (+$63.7M)

JILA Expansion: Preparing the Next Generation of Physicists (+$13M)

    Space has run out at one of the Nation's most valuable training 
grounds of top scientific talent. JILA, a joint institute of NIST and 
the University of Colorado at Boulder, has produced three Nobel 
Laureates and two MacArthur Fellows, all named in this decade alone. 
JILA researchers are leaders in atomic, molecular, and optical (AMO) 
science, a field that the National Academies says is ``key to training 
our best scientists, engineers, and technical professionals.''
    JILA is already over capacity, and the situation is getting worse. 
The existing group of 28 JILA research scientists could train 
approximately one-third more postdocs and student researchers, but 
there is literally no place for them to work. An expert external 
assessment of the JILA laboratories warned that this shortage of space 
threatened JILA's ability to retain and recruit world-class scientists.
    NIST proposes a limited expansion of the laboratory and office 
space at JILA. With the expansion costing an estimated $27.5M, NIST 
would contribute $13M in FY 2009 and an additional $9.5M in FY 2010. 
The University of Colorado will contribute $5M in funding, as well as 
land and infrastructure services such as electricity, chilled water, 
and steam.
    The funding would add approximately 4,610 square meters (49,600 
square feet) of new space. Improving the laboratory facilities at JILA 
will ensure that the current world-class research staff maximizes its 
potential for both training a new generation of scientists and 
producing the nanoscale manipulation tools needed to keep U.S. industry 
at the forefront of science. The expansion is expected to increase the 
number of AMO grad students at JILA by approximately 50 percent. 
Because JILA produces five to 10 percent of all AMO science Ph.D.s in 
the United States per year, this will step up significantly the 
Nation's production of scientists in this important field.

NIST Center for Neutron Research Expansion (NCNR) and Reliability 
Improvements (+$2M, added to a previously funded initiative)

    Serving more scientists and engineers (over 2,100 annually) than 
all other U.S. neutron research facilities combined, the NIST Center 
for Neutron Research (NCNR) is the Nation's leading neutron facility. 
The NCNR is especially valued for its ``cold'' (low-energy) neutron 
source, which greatly increases the utility of the neutron beam, 
particularly in biotech and materials research.
    Although the NCNR is widely regarded as the most cost-effective and 
efficiently managed neutron facility in the United States, presently 
this critical research tool cannot possibly meet the demands placed on 
it.
    This is a planned increase in funding for the NCNR Expansion 
Initiative, begun in 2007. When completed, this five-year project will 
provide:

          a new generation of world-class cold neutron 
        instruments directly supporting the needs of science and 
        industry;

          more than a 30 percent increase in the overall 
        measurement capacity;

          the ability to serve at least 500 additional 
        researchers each year; and

          increased operational efficiency.

    The FY 2009 funding request supports the next phase of the NCNR 
expansion to initiate installation, testing, and commissioning of the 
new neutron instruments (such as spectrometers). These instruments will 
bring new neutron measurement capability to U.S. researchers by either 
exceeding the capabilities of current instruments by more than a factor 
of a hundred, or by providing capabilities that are not currently 
available in the United States.
    In FY 2009, the project will focus on:

          installation of new neutron spectrometers and neutron 
        beamlines;

          modification of beamlines and beamline shielding;

          modification of some existing instruments affected by 
        new beamlines; and

          testing of new beamlines and instruments.

Complete State-of-the-Art Laboratory Space at NIST's Boulder, Colorado 
Campus Building 1 Extension (+$43.5M)

    The Building 1 Extension (B1E) will provide the environmental 
control needed to reliably measure and manipulate atomic-scale 
phenomena in order to further enable 21st century technologies. 
Improvement in environmental conditions within NIST's Boulder, Colorado 
research laboratories is required to make further progress in 
measurements related to high-frequency electronics, advanced materials 
characterized at the atomic level, sub-cellular forces, timing 
accuracy, and other areas.
    As the final funding request for a three-year program, the $43.5M 
proposed in the FY 2009 budget will complete state-of-the-art 
laboratory space that will meet the stringent environmental conditions 
required for 21st century scientific advances. With a total cost of 
$77.2M, 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.
    Construction of the B1E will dramatically enhance NIST's 
measurement capability and will directly support the needs of industry 
and academia. Some of the anticipated impacts include the ability to:

          make precision frequency measurements above 100 GHz 
        (100 billion cycles per second), which are required for 
        advanced commercial electronics, military systems, and homeland 
        security;

          measure and perform research on the properties of 
        materials at the single-atom level needed for the development 
        of quantum and nanotechnologies;

          measure forces below 10-12 newtons (one billionth the 
        weight of a feather) to understand the inner workings of cells 
        and to apply this measurement capability to other physical 
        systems; and

          make timing measurements with uncertainties reduced 
        to one part in 10-18 (the equivalent of one second in 30 
        billion years), enabling whole new generations of position, 
        navigation, and guidance systems.

Safety, Capacity, Maintenance and Major Repairs (SCMMR) (+$5.2M)

    Aging and deteriorating buildings and infrastructure threaten 
NIST's ability to meet the needs of the Nation's scientific and 
industrial enterprise. NIST maintains about 50 specialized 
laboratories, offices, and support buildings at its two major sites in 
Gaithersburg, Maryland, and Boulder, Colorado, as well as critical 
infrastructure in Fort Collins, Colorado, and Kauai, Hawaii. Most of 
the Gaithersburg structures were built in the 1960s, and the Boulder 
facilities are a decade older.
    Since 1995, the Construction of Research Facilities (CRF) 
appropriation has funded building construction and the safety, 
capacity, maintenance, and major repairs (SCMMR) of NIST's physical 
plant. Although recent increases to SCMMR have led to improvements in 
these facilities and infrastructure, the current state of NIST 
facilities--whether measured in terms of safety, capacity, or state of 
repair--remains a serious impediment to NIST's mission. Funding for 
renovations has not kept pace with NIST needs. The failure rate of 
major building systems such as air-handling systems and piping systems 
has increased dramatically in the last five years. NIST's aging 
facilities and their extensive backlog of deferred maintenance and 
repairs have resulted in lost productivity and increased costs.
    These problems are not confined to the most advanced research and 
development projects. For example, the relatively straightforward NIST 
task of calibrating precision pressure gauges is the critical first 
step in a national measurement chain that ensures the accuracy of 
airplane altimeters and supports a wide variety of manufacturing 
sectors, including semiconductors and pharmaceuticals. However, 
carrying out this process has been limited by vibration problems, poor 
temperature control, and a pervasive black grit distributed by a 40-
year-old air-conditioning, ventilation, and heating system.
    Based on independent architectural and engineering reviews and in 
conjunction with the need to maintain world-class research facilities, 
NIST proposes to target the most critical SCMMR projects. These areas 
include repair and replacement of aging mechanical and electrical 
systems removal of hazardous material, including remediation of 
asbestos; structural repairs and replacements; and efforts to ensure 
accessibility in all NIST facilities.

III.  Industrial Technology Services.

Hollings Manufacturing Extension Partnership (MEP) ($4.0M)

    The requested $4M provides the orderly end to federal funding for 
the Hollings Manufacturing Extension Partnership (MEP) program. The 
elimination 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.

Technology Innovation Program (TIP) ($0)

    No funds for TIP are requested in the President's FY 2009 budget. 
Anticipated prior year recoveries will be sufficient to phase out the 
program.

Summary

    For 107 years, NIST research has been critical to our nation's 
innovation and competitiveness. The increased funding in the 
President's FY 2009 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.
    Today, more than at any other time in history, technological 
innovation and progress depend on NIST's unique skills and 
capabilities. Helping the U.S. to drive and take advantage of the 
increased pace of technological change is a top priority for NIST.
    The new technologies that are determining the global winners in the 
early 21st century--including nanotechnology, information technology, 
and advanced manufacturing--rely on NIST-developed tools to measure, 
evaluate, and standardize. The technologies that emerge as a result of 
NIST's development of these tools are enabling U.S. companies to 
innovate and remain competitive.
    Technology-based innovation remains one of the Nation's most 
important competitive advantages, but that advantage is in danger of 
being lost. The American Competitiveness Initiative (ACI) and the 
enactment of the America COMPETES Act are bold initiatives to maintain 
this advantage. They have cast a spotlight on NIST's critical 
importance to U.S. economic competitiveness and innovation. To ensure 
that NIST programs deliver the highest impact, the Institute, working 
with our stakeholders in Congress, industry, academia, and other 
government agencies, will continue to identify the most critical 
measurement, standards, and technological challenges. We look forward 
to working with you, Mr. Chairman, and Members of the Committee, 
throughout this process.

                     Biography for James M. Turner

    Dr. James M. Turner is the Acting Director and Deputy Director of 
the U.S. Department of Commerce's National Institute of Standards and 
Technology (NIST). Turner became NIST Acting Director on September 3, 
2007. As Acting Director, Turner provides high-level oversight and 
direction for NIST.
    Prior to joining NIST on April 16, 2007, Turner served as the 
Assistant Deputy Administrator for Nuclear Risk Reduction in the 
Department of Energy's National Nuclear Security Administration. In 
that position, he was responsible for major projects in Russia to 
permanently shutdown their last three weapons-grade plutonium-
production reactors. He also worked with foreign governments and 
international agencies to reduce the consequences of nuclear accidents 
by strengthening their capability to respond to nuclear emergencies.
    Prior to that assignment, Turner held several senior management 
posts at DOE concerned with laboratory oversight and with nuclear 
safety and the safeguarding of nuclear weapons both here and abroad.
    He holds degrees in Physics from the Massachusetts Institute of 
Technology (Ph.D.) and Johns Hopkins University (B.A.), and taught for 
five years as an Associate Professor of Physics and Engineering at 
Morehouse College.
    Among other honors, he has received the U.S. Government 
Presidential Rank Award for Meritorious Service, three times received 
the U.S. Department of Energy Exceptional Service Award, and earned the 
Secretary of Energy Gold Award and the National Nuclear Security 
Administration's Gold Medal. Dr. Turner is an active member of the 
American Physical Society, the American Chemical Society, the American 
Nuclear Society, and the American Association for the Advancement of 
Science, ASTM, and the Council on Foreign Relations, IEEE, Phi Beta 
Kappa, Sigma Xi, and the World Affairs Council.
    Dr. Turner is a native of Washington, DC, is married, and has five 
children and one grandchild. He and his wife, Paulette, reside in 
Olney, Maryland.

    Chairman Wu. Thank you very much, Dr. Turner. Dr. Serum, 
please proceed.

   STATEMENT OF DR. JAMES W. SERUM, CHAIRMAN, NIST VISITING 
 COMMITTEE ON ADVANCED TECHNOLOGY; PRESIDENT, SCITEK VENTURES 
                              LLC

    Dr. Serum. Thank you, Chairman Wu, and Members of the House 
Subcommittee, for the opportunity to testify before you today 
on the 2009 budget proposal for NIST. My name is James Serum, 
and I am testifying on behalf of VCAT, the Visiting Committee 
on Advanced Technology. I am President of SciTek Ventures, and 
was recently elected as Chairperson for the VCAT.
    I have been asked to provide feedback on the VCAT's 
perspective for NIST's current and future strategic 
investments, the 3 year programmatic plan, and the 
effectiveness of cross-laboratory program coordination within 
NIST.
    We believe that NIST is performing high quality, state of 
the art measurement and technology research. Their equipment 
and facilities provide capability for world-class measurements 
of chemical, biological, and physical parameters, and their 
technical staff is highly competent.
    VCAT has long believed that NIST is dramatically 
underfunded to effectively accomplish its designated mission. 
We strongly support the proposed 22 percent increase in NIST's 
2009 core budget, and we support the proposed new initiatives 
for nanotechnology, innovations in bioscience, cyber security, 
and optical communication and computing. We support the 
established priorities for information technology and the 
research programs in quantum computing. The U.S. is lagging in 
broadband capacity, and better data is needed for access to and 
use of high capacity data communication capabilities. NIST can 
make a significant contribution in developing metrics that 
measure these parameters.
    We support the proposed additional funding for bioscience. 
However, the amount of NIST research dollars currently 
dedicated to bioscience and healthcare is minute relative to 
the greater than $2 trillion annual expenditure for this 
industrial sector. The subcommittee considers the current 
projects well managed, but in general, we do not see an overall 
strategic plan to provide direction and prioritization. We 
encourage them to develop a comprehensive strategic plan for 
bioscience and healthcare in 2008.
    A new Center for Nanoscience and Technology, CNST, was 
launched at NIST during 2007, to conduct nanoscale research, 
and to provide nanofabrication capabilities for both internal 
and external customers. The environmental health and safety of 
nanomaterials represents a major issue to this industry. CNST 
has established this as a priority, and they have launched a 
cross-laboratory program to investigate and develop measurement 
tools to address this issue. We caution NIST to partner 
appropriately with toxicology experts and organizations, rather 
than trying to develop this application knowledge base in-
house.
    As the facility gears up, it is necessary for CNST to 
develop new external industrial partnerships. We have reviewed 
the current CNST industrial interactions, and believe that they 
recognize the importance of developing these external 
partnerships.
    Overall, the three-year programmatic plan represents a 
comprehensive strategic plan that reflects clearly the goals of 
the organization, its core competencies, current research 
priorities, as well as an identification of future measurement 
needs, and a discussion about how technology priorities will be 
established in the future.
    During recent years, VCAT has consistently recommended an 
improvement in strategic planning, particularly a strong, 
demonstrated link between strategic plans, priority setting, 
and selecting and staffing projects. The three-year plan 
demonstrates that their strategic planning process has 
significantly improved, and appears to be a good foundation for 
better strategic dialogue between NIST staff and the VCAT. We 
encourage them to continue their efforts to implement effective 
strategic planning throughout all of their departments and 
laboratories.
    We are pleased with their proactive behavior on getting 
their stakeholders and the voice of the customer into their 
planning and prioritization process. Projects such as the U.S. 
Measurement System have identified more than 700 measurement 
needs across 11 industries. We encourage NIST management to 
continue to evaluate and integrate these diverse lists of 
measurement needs into more focused programs, and a visible 
process for establishing priorities.
    It is evident that NIST has become much more proactive in 
reaching across organizational boundaries for access to 
innovative ideas, technology, and application expertise. We 
applaud this effort, and observe that it is becoming an 
integral part of the NIST culture. The development of new kind 
of partnerships is necessary for the success in addressing new 
technologies. Applications expertise that does not exist within 
NIST should often be accessed through partnerships in the 
future.
    The Hollings Marine Laboratory in South Carolina represents 
an outstanding partnership with NOAA to gain applications 
expertise in marine biology. We believe that this type of 
relationship can serve as a model for future partnerships, 
where applications expertise in a particular field is needed.
    The VCAT 2007 Annual Report provides much more detail 
regarding our findings and recommendations. Thank you.

    [The prepared statement of Dr. Serum follows:]

                  Prepared Statement of James W. Serum

    Thank you Chairman Wu and Members of the House Subcommittee on 
Technology and Innovation for the opportunity to testify before you 
today on matters related to the President's Fiscal Year 2009 budget 
proposal for the National Institute of Standards and Technology and 
NIST's recently submitted Three-year Programmatic Plan.
    My name is James W. Serum and I am testifying on behalf of VCAT, 
The Visiting Committee on Advanced Technology, an advisory committee to 
the Director of NIST. I am the President of Scitek Ventures, a science 
and technology consulting firm focused on helping young companies 
commercialize innovative ideas and early stage technology. I have been 
deeply engaged in developing and commercializing measurement 
technologies and applications for over 40 years, having spent most of 
my career with Hewlett-Packard Company. Upon retirement in 1999, I 
founded an information technology business, Viaken Systems Inc. and a 
technology consulting firm, Scitek Ventures LLC, both focused on 
measurement systems. I have been associated with NIST for the past 10 
years, having served first as a member of the National Research Council 
Assessment Panel for the Chemical Science and Technology Laboratory 
(CSTL), and, since 2004, as an elected member of NIST's Visiting 
Committee on Advanced Technology (VCAT). I was recently elected to 
chair that organization for the next two years.
    About VCAT: The NIST Visiting Committee on Advanced Technology 
(VCAT) was established in its present form by the Omnibus Trade and 
Competitiveness Act of 1988 and was updated by the America COMPETES 
Act. The VCAT charter includes reviewing and making recommendations 
regarding general policy for NIST, its organization, its budget and its 
programs within the framework of applicable national policies as set 
forth by the President and the Congress. The 2007 annual report covers 
the topics reviewed and discussed from the March 2007 meeting through 
the February 2008 meeting.
    The Committee reviews the Institute's strategic direction, 
performance and policies, and provides the Secretary of Commerce, 
Congress, and other stakeholders with information on the value and 
relevance of NIST to the U.S. science and technology base and to the 
economy. Over the past year, the Committee has been active in assessing 
NIST's progress in the following:

          Strategic direction and performance

          Infrastructure and process in support of strategic 
        needs

          Outreach--Assessing and responding to external 
        drivers

          Organizing and executing with excellence

    Throughout the year, the Committee seeks to cover a significant 
portion of NIST programs through direct discussion with NIST leaders, 
scientists and engineers. Reactions and observations are discussed 
candidly with the NIST representatives and other guests at each 
meeting. This feedback is used to seed continuous improvement in key 
areas in the overall operation. At most meetings, the Committee also 
visits various NIST laboratories and discusses the research projects 
directly with the technical staff. These laboratory tours help the 
Committee assess the relevancy of measurement technology research and 
NIST's progress against the strategic plan and the development of the 
NIST infrastructure.
    Members of the Committee have careers in industry and in academia, 
and are selected solely on the basis of established records of 
distinguished service and eminence in their fields: research, 
engineering, business and other fields relevant to the NIST mission. 
Appointed by the NIST Director for staggered three-year terms, the 
members have diverse backgrounds and provide a representative cross-
section of traditional and emerging U.S. industries.
    In 2007, the VCAT created three subcommittees for Bioscience/
Healthcare, Information Technology, and Nanotechnology as allowed by 
its charter, in order to more thoroughly explore and understand NIST's 
programs, competencies, organizational effectiveness and alignment with 
the industrial segment ``customer'' need. These subcommittees were 
chosen not only because of the size of the industry and impact on the 
U.S. Economy but also, because each one cuts across a wide segment of 
the broad spectrum of U.S. industry. The VCAT 2007 annual report 
provides the foundation for my testimony in this hearing.
    I have been asked today to provide testimony on the VCAT's 
perspective related to NIST's current and future strategic investments. 
This includes our assessment of the proposed budget for 2009, alignment 
of the budget priorities with key technology investment areas, the NIST 
strategic planning process and the effectiveness of cross-laboratory 
coordination within NIST.

Importance of Measurements to U.S. Industrial Competitiveness:

    We believe that accurate and precise measurements and measurement 
technology provide the underpinning for economic success and 
competitiveness in almost all U.S. industries--whether it is for the 
Healthcare Sector, Information Technology, Homeland Security or 
traditional manufacturing. For example, the future economics and 
effectiveness of our health care industry depends on developing a 
thorough understanding of the cause of diseases and the development of 
specific therapeutics to treat those diseases. Only a few short years 
ago we hailed the announcement of the identification of the human 
genome. Yet today, inaccurate DNA measurements lead to incorrect and 
confusing conclusions about genetic causes of disease. Dramatic 
improvements need to be achieved relative to manufacture of DNA chips 
and application processes for interpreting the results from DNA chips. 
NIST can play a key role in developing standards and technologies for 
both DNA and protein measurements to enable and accelerate this 
critical industrial segment. A NIST report (The Economic Roles and 
Impacts of Technology Infrastructure, Gregory Tassey, 2008) describes 
many examples of the value of measurement technology in many industrial 
sectors.

VCAT General Observations about NIST:

    We believe that NIST is performing high quality, state-of-the-art 
measurement and technology research. Their equipment in general is 
current and provides for world class measurement of chemical, 
biological and physical parameters. Their staff is highly competent, 
and is validated through many peer awards including three Nobel Prizes 
since 1997. NIST is recognized world wide for its leadership in helping 
to develop industry standards and they are sought after to provide 
global leadership for international standards organizations. NIST has 
put a much-needed emphasis on its strategic planning in recent years, 
and it is the Committee's view that they have shown considerable 
improvement. We observe that the quality of strategic planning 
continues to vary by organizational unit and program within NIST. We 
also observe that NIST has strong proactive programs to gain customer 
input from various industry sectors in which it is involved.
    We recognize that NIST faces an immense challenge to balance its 
spending, resource allocation and research prioritization while serving 
such a broad group of industrial sectors from cement manufacturing to 
newer industry segments such as biotechnology, information technology 
and nanotechnology.

NIST FY 2009 Budget Proposal:

    The VCAT has long believed that NIST is dramatically under funded 
to effectively accomplish its designated mission. The final 2008 
budget--which was well below the levels requested by the President for 
the NIST laboratories--has led to setbacks in initiating important new 
programs in bioscience and other areas. We are pleased that the 2009 
proposed budget increases--if funded by Congress--will allow these 
programs to get funded and launched. The development and maintenance of 
NIST standards have proven critical to the ongoing success of a very 
broad group of industrial sectors. Existing standards and reference 
materials need to be maintained at significant expense while 
simultaneously developing new measurement technologies and standards 
for industrial segments vital to our nation's competitiveness such as 
IT, Nanotechnology and Bioscience/Healthcare. NIST needs to be 
aggressive in finding new ways to maintain the credibility and 
integrity of existing standards and materials. Their NIST Traceable 
Reference Materials (or NTRM) program is an excellent example of 
possible approaches.
    The VCAT is pleased with the proposed 22 percent increase in NIST's 
2009 core budget. We support the proposed new initiatives for 
Nanotechnology EH&S ($12M), Measurement Innovations in Bioscience 
($10M), National Cybersecurity Initiative ($5M) and Optical 
Communication and Computing ($5.8M), along with the other initiatives 
that were pending in FY 2008 and did not get funded--yet still are 
critical.
    The ability to perform state-of-the-art measurement research 
depends on state-of-the-art facilities. Building environments related 
to vibration, temperature, humidity and environmental pollutants can 
prevent necessary measurements to be developed or standards enacted. 
VCAT applauds the investment in new and renovated facilities during the 
past several years and we support the continued facilities investment 
at Boulder, JILA and the Neutron Research Center (NCNR) in the 2009 
proposed budget.
    In summary, the VCAT strongly supports the proposed budget increase 
for NIST as part of the American Competitiveness Initiative and the 
America COMPETES Act.

VCAT Focus on Information Technology, Bioscience/Healthcare and 
                    Nanotechnology:

    As stated earlier, in 2007 VCAT established three subcommittees on 
Bioscience/Healthcare, Nanotechnology, and Information Technology in 
order to more thoroughly explore NIST's programs and research in these 
very important technology and industry sectors. The following comments 
reflect a summary of our findings.

         Information Technology--Key priorities include cyber security 
        (a five-fold increase in malicious software was detected in 
        2007 compared to 2006), technology for sustainable ``green'' 
        data centers for lower power consumption and less water 
        cooling, standards for data archiving that enable 
        representation of complex information in easily accessible, low 
        capacity formats. We emphasize the importance of information 
        technology to a wide number of industrial sectors including 
        health care (electronic medical records, etc.), nanotechnology 
        and biotechnology.

         VCAT strongly endorses NIST's research program in quantum 
        computing and communication. NIST can make a significant 
        contribution in developing metrics that reveal computing and 
        communications capacity, security, compliance and reliability. 
        The U.S. is lagging in broadband capacity and better data is 
        needed on national access to and use of high capacity data 
        communication capabilities. The IT subcommittee recommends that 
        NIST consider possible measurements and metrics to assist in 
        the assessment of broadband access to Internet and related 
        services in the United States.

         The subcommittee recommends that NIST consider investigating 
        computing requirements and algorithms used for climate and 
        natural disaster modeling with the objective of validating 
        them.

         Bioscience/Healthcare--NIST has a long history of developing 
        measurements and standards for the health care industry when in 
        1918 NBS launched a dental materials group and in the 1920s, 
        established X-ray radiation standards for imaging technicians. 
        Some of the current research in bioimaging has been a result of 
        the sustained effort in this research area. However, the amount 
        of NIST research dollars dedicated to Bioscience/Healthcare is 
        minute relative to the greater than $2 Trillion dollar annual 
        expenditure for this industrial sector. The need for 
        development of advanced measurement technology to support the 
        U.S. Bioscience/Healthcare industries is vital. Despite the 
        need and the enormous size of the industrial sector, there is 
        no laboratory specifically devoted to supporting the 
        bioscience/health care industry. Research projects are limited 
        in scope and scale and are individually located in laboratories 
        across many different sites. We believe that the current 
        projects are well managed but in general we do not see an 
        overall strategic plan to provide direction and prioritization. 
        We believe that the staff has recognized these challenges and 
        is making considerable effort to coordinate and cross fertilize 
        their bioscience research projects. The bioscience/health care 
        subcommittee is concerned about continuing under funding of 
        this sector in the Three-year Programmatic Plan. The NIST 
        management team has identified five areas of focus in 2007: 
        Biospectroscopy, Cell and Tissue Measurement, DNA Technology, 
        Structural Biology and Quantitative Imaging. While we support 
        these program areas, most lack sufficient funding resources and 
        applications expertise to be successful or to have a major 
        impact. NIST has identified Bioimaging as one of its key 
        opportunities. This is appropriate and has the potential to 
        have a major impact on disease understanding and development of 
        effective therapeutics in the future.

         We applaud the America COMPETES Act for doubling the NIST 
        budget in the future. NIST staff is becoming quite proactive in 
        gaining the ``voice of the customer'' related to prioritization 
        of research programs for this industry segment. A NIST 
        conference is scheduled in October with the specific purpose of 
        gaining expert feedback on measurement priorities for 
        innovation in bioscience. The NIST staff and Bioscience/
        Healthcare subcommittee worked in excellent harmony during 2007 
        to focus on priorities and future measurement needs. We would 
        like to see a comprehensive strategic plan developed for 
        Bioscience/Healthcare in 2008.

         Nanotechnology--The National Nanotechnology Initiative (NNI) 
        provides the foundation for NIST's work in this area. The U.S. 
        Government spends over $1 billion dollars annually in these 
        efforts. Within NIST, a new Center for Nano Science and 
        Technology (CNST) has been established and the VCAT 
        subcommittee has reviewed NIST's efforts as part of the overall 
        NNI activity. The component areas in this initiative include; 
        nanoscale phenomena and processes, nanoscale devices, 
        instrumentation research and metrology and standards for 
        nanotechnology. A major U.S. issue relates to the environmental 
        health and safety of nanomaterials. In response to widespread 
        concerns about the responsible development of nanotechnology as 
        well as a recommendation by VCAT, NIST initiated in 2007 a 
        program to develop standards and metrics associated with the 
        responsible development of nanotechnology. We support this 
        program and caution them to develop appropriate toxicology 
        applications partnerships rather than bringing this expertise 
        inside. Although the Nanotechnology programs are highly 
        distributed, it is VCAT's assessment that they are well run and 
        well coordinated.

         Concerning CNST, we find that with respect to the 
        Nanofabrication facility as well as the research programs 
        residing in CNST, there has been significant progress in 
        planning and execution of both elements. The acquisition, 
        installation and commissioning of the major equipment for CNST 
        is essentially complete. Approximately 85 percent of the 
        planned technical personnel have been hired or authorized under 
        existing funding. Completion of the personnel and equipment 
        ramp-ups will require restoration of the funds deleted from the 
        FY 2008 budget to at least the level in the President's 
        proposed 2009 budget. The Nanofab facility is intended to serve 
        both internal and external users. As the facility is gearing 
        up, its primary users remain internal and academic. A person 
        has been recently hired to run the new facility with one of his 
        specific responsibilities to grow industry representation among 
        its users. We have reviewed the industrial interactions to date 
        and the goals for establishing external partnerships. We 
        believe that CNST management recognizes the importance and 
        priority of developing these external partnerships. Still 
        developing are NIST internal partnerships, which involve the 
        following OU's: MSEL (Nanomagnetics; thin film nanostructure, 
        bi-stable switch; probe beams); EEEL (Nanomagnetics; low noise 
        sensors; theory; magnetization dynamics) ITL (Nanomagnetics; 
        domain properties); CSTL (Atomic Scale Measurement; atom 
        switching dynamics); PL, (Nanofabrication; edge roughness). 
        Other connections and projects are under consideration. A 
        Nanotechnology Coordinating Council is being established within 
        NIST and we recommend that this council work to enhance 
        collaborations through all relevant OU's involved with 
        nanotechnology.

VCAT assessment of the Three-year Programmatic Plan:

    The foundation of an effective strategic plan is a clear mission 
and an accurate identification of the Core Competencies of the 
organization. NIST has a concise mission statement focused on 
innovation and industrial competitiveness through measurement science, 
technology and standards. The organization has appropriately 
articulated its competencies as measurement science, rigorous 
traceability, and development and use of standards.
    The VCAT committee did not have access to the Three-year 
Programmatic Plan with sufficient time to thoroughly evaluate and 
critique its content this year. However, the following comments reflect 
the consensus feedback of VCAT members at its last meeting plus my 
personal feedback as the VCAT chairperson having reviewed the document 
more completely following the last VCAT meeting.
    Overall, the Three-year Programmatic Plan represents a 
comprehensive strategic document that reflects clearly the goals of the 
organization, its core competencies, current research priorities as 
well as identification of future measurement needs and a discussion 
about how technology priorities will be established in the future. NIST 
has improved significantly in its overall strategic planning process as 
evidenced by this document. However, the process is not yet implemented 
consistently throughout the organization.
    The Committee endorses the four pillars of strategic planning found 
in the three-year strategic plan:

          Enhanced Stakeholder outreach and identification of 
        critical measurement and technology challenges;

          Strategic, multi-year investment framework;

          Development of infrastructure to optimize and support 
        the Nation's technological and organizational innovation--and 
        staff/equipment to succeed;

          Rigorous evaluation of all NIST investments.

    As stated previously, The NIST organization is constantly faced 
with the formidable challenge of establishing appropriate program and 
technology priorities across an extremely broad area of industries and 
technologies. They have identified stakeholders both within the 
government (OMB, OSTP, PCAST, NSTC and DOC) and across industries that 
have or can help establish those priorities related to U.S. innovation 
and industrial competitiveness. In addition, NIST has proactively 
conducted workshops and programs such as USMS (United States 
Measurement System) to gain feedback on the critical needs for 
measurement in U.S. Industry. Those have led to more than 700 
measurement needs being identified. We encourage NIST management to 
continue to evaluate and integrate these diverse lists of measurement 
needs into more focused programs with adequate goals and deliverables 
and a visible process for establishing priorities.
    The Committee agrees with the Core Competencies identified in the 
three-year plan:

          Measurement science

          Rigorous measurement traceability

          Development and use of standards

    We agree with NIST that biotechnology, advanced nano materials and 
IT infrastructure and communications are areas in which strategic 
investments are needed. We also endorse the report's detailing of the 
construction and renovation needs described in the appendix.
    We strongly endorse NIST's proposed project evaluation strategy, in 
particular the seven Heilmeier questions listed below from the Defense 
Advanced Research Projects Agency (DARPA) adapted to NIST's work. We do 
not currently see these strategic questions being effectively 
implemented throughout the organization:

          What is the problem and why is it hard?

          How is it solved today and by whom?

          What is the new technical idea and why can we succeed 
        now?

          Why should NIST do this?

          What is the impact if successful and who would care?

          How will you measure progress?

          How much and how long?

    We believe that the current and pending budget initiatives to: 
Strengthen Core Competencies, Address Rapidly Developing Technology, 
Expand the Frontier of Measurement Science and Meeting Critical 
National Needs, are appropriate. We support technology measurement 
advancements in optical computing and communication, nanotechnology, 
and alternative energy research. NIST has identified quantum 
information science, nanotechnology and Bioscience as High Risk, High 
Reward areas of focus. Members of the Bioscience Subcommittee consider 
Bioscience/Healthcare research as a critical priority and would 
encourage a significantly higher investment in the short-term than is 
currently proposed.
    The Committee is satisfied that NIST has a vigorous process for 
consulting with customers, industry and academia for purposes of 
formulating its strategic and tactical plans.
    VCAT supports NIST's commitment to phasing in and phasing out of 
programs and agrees with NIST's investment posture in quantum science, 
atomic, molecular and optical physics.
    Finally, we concur with NIST that it must be responsive to mandates 
(e.g., Help America Vote Act) and to other national needs in 
manufacturing, energy demand and supply, climate change measurement, 
modeling and analysis and safety in commerce. The Committee notes the 
extensive collaboration undertaken by NIST and recommends continued 
support for these wide-ranging activities.
    The VCAT endorses the articulation of the issues surrounding 
Nanotechnology Measurement Science and the movement of Nanotechnology 
from discovery to manufacture. The importance of this field to both 
U.S. technological leadership and industrial competitiveness is clearly 
described. The negative impact of the 2008 budget on the important role 
NIST must play in the responsible development of nanotechnology cannot 
be overemphasized. We agree with the assessment of the importance of 
enhancing the NIST Center for Neutron Research but suggest that the 
case could be even stronger by enhancing the important symbiosis 
between NCNR and CNST.

NIST Strategic Planning, Technology Prioritization Processes and 
                    Organizational Effectiveness:

    NIST has a clear mission and understands its core competencies. 
They recognize the importance of getting stakeholder and customer 
feedback into their processes for establishing priorities for 
technology and research programs and we believe that they have 
incorporated effective methods to gain the ``voice of the customer.'' 
We commend them for working to make this a part of the NIST culture but 
observe that these practices are not yet uniform throughout the 
organization.
    During recent years, VCAT has recommended an improvement in 
strategic planning, particularly a strong demonstrated link between 
strategic plans, priority setting and selecting and staffing projects. 
Although NIST has developed strategic plans such as the NIST 2010 
document and the USMS document, the Committee has not been able to 
fully embrace and evaluate the programs and priorities within an 
overall strategic framework. We would attribute this at least in part 
to the lack of sufficiently clear links between strategy, programs and 
the prioritization processes. The current Three-year Programmatic Plan 
appears to be a good foundation for better strategic dialogue between 
NIST staff and VCAT.
    Due to NIST's expertise in measurement systems and standards, they 
are often called upon to initiate ``ad hoc'' studies for the benefit of 
the Nation, such as the study of the World Trade Center disaster and 
the Help America Vote Act. We support these efforts and recognize their 
importance but they have the capability of distracting from the 
strategic mission and vision of the organization. Care must be taken to 
effectively manage external influences and requests.
    It is a always difficult for any organization to stop projects that 
are no longer of critical priority or that are not producing expected 
results in order to dedicate those resources and funds to more 
important projects and priorities. NIST has been proactive in this area 
and VCAT applauds these efforts. However, it is our belief that NIST 
still has too many programs that are not sufficiently coordinated and 
appropriately funded and staffed to achieve the desired projects and 
program goals. We also recognize the need for independent pioneering 
research of the type that provides the foundation for ``innovation in 
U.S. industry'' and we do not propose that every project be managed and 
coordinated within defined strategic programs. A balance is entirely 
appropriate.
    A ``metrology'' organization such as NIST should be able to 
evaluate its own effectiveness in serving their customers. In recent 
years, NIST has authorized independent outside evaluation studies to 
determine the leverage of dollars invested in NIST compared to its 
``value'' to a particular industrial segment. An average return on 
investment (ROI) is reported to be 44:1, a very impressive number and a 
number which we consider to be a conservative calculation. One may 
conclude that at least those programs chosen for evaluation were highly 
effective and chosen properly to effectively and efficiently benefit 
U.S. industry.
    Organizationally, NIST laboratories are primarily structured by 
disciplines and technology including Information Technology, Chemical 
Science and Technology, Physics, Electronics and Electrical 
Engineering, Manufacturing Engineering, Materials Science and 
Engineering, Neutron Research, and Building and Fire Research. No 
structure can effectively reflect the rapidly changing needs in the 
industries that NIST serves and the technologies and applications that 
it needs to develop and standardize. It is our impression that 
historically research projects were chosen within these ``silos'' 
according to perceived industry need and capability within the 
laboratory. It is evident that NIST has now become proactive in 
establishing NIST wide programs that require coordination across 
organizational boundaries for access to innovative ideas, technology 
and applications expertise. We also observe that cross fertilization of 
ideas and expertise is becoming an integral part of the NIST culture. 
We observe a new vigor for cross laboratory coordination for key 
technology areas such as information technology, nanotechnology and 
bioscience and we encourage it to become a pervasive behavior 
throughout the organization. We urge caution, that as new initiatives 
are launched, an appropriate assessment is made of necessary resources 
and expertise and plans are developed to acquire that expertise or 
partner within the organization or externally. There are numerous 
examples of cross department coordination and the creation of external 
partnerships to gain access to new technology and expertise needed to 
accomplish their goals. An internal example is the new Nanotechnology 
program to explore environmental, health and safety issues utilizing 
resources from the Chemical Science and Technology Laboratory but also 
many of the other NIST labs. The Hollings Marine Laboratory in South 
Carolina represents an outstanding partnership with NOAA to gain 
applications expertise in marine biology. We believe that this type of 
relationship can serve as a model for future partnerships where 
applications expertise in a particular field is necessary, for example 
in pursuing measurement solutions for the field of Diagnostics in 
Health Care.
    Research in Information Technology including optical computing and 
communication, cyber security, and data structures permeate most 
industrial sectors--so it is not surprising that each of the NIST 
laboratories relies heavily on IT-related research in order to perform 
their missions. The IT lab, with a strict focus on IT, has been 
proactively coordinating its efforts across all relevant parts of the 
NIST organization to assure efficiency and effectiveness of its 
programs. (See IT subcommittee summary for more detail).
    The VCAT 2007 Annual Report provides much more detail regarding our 
findings and recommendations.

                      Biography of James W. Serum

    Dr. Serum received a B.A. in Chemistry from Hope College and was 
awarded a Ph.D. degree in Organic Chemistry in 1969 from the University 
of Colorado. His doctorate research was directed toward studies in Mass 
Spectrometry. Following his graduate studies, he taught and did 
research at the University of Ghent, Belgium. He spent a year at Rice 
University as a Welch Fellow, and then joined the staff at Cornell 
University as Director of the National Institutes of Health High 
Resolution Mass Spectrometry Facility.
    Dr. Serum joined the Hewlett-Packard Company in 1973 as 
Applications Chemist for Mass Spectrometry. Since then he has held a 
number of management positions, including Technical Support Manager for 
Mass Spectrometry in Europe (Paris, France); Marketing Manager for Mass 
Spectrometry and Spectroscopy at the Scientific Instruments Division; 
R&D Manager at the same division; and R&D Manager for the Avondale 
Division (Laboratory Automation and Chromatography Instrumentation). 
Since 1984 he has held business unit level positions as Operations 
Manager for Laboratory Automation Systems, Automated Chemical Systems 
Operation and Analytical Group Research & Development Manager. In 1992 
Dr. Serum was named General Manager for Mass Spectrometry, Infrared, 
and Protein Chemical Systems. He was the founder of HP's Bioscience 
Products business. He has served as chairman of HP's Bioscience 
Council, co-chairman of the Hewlett-Packard R&D Council and the 
Pharmaceutical Business Council. He retired from Hewlett Packard in 
August 1999 to co-found Viaken Systems Inc, where he was a Director and 
served as Executive Vice President and Chief Operating Officer. Dr. 
Serum has been a Venture Partner with Flagship Ventures and currently 
serves as President of SciTek Ventures, a science and technology 
consulting firm that he founded in 2002. In 2002 he was elected as a 
lifetime National Associate of the National Academy of Sciences and in 
2004 he was elected to serve on the Visiting Committee for Advanced 
Technology of NIST. In 2005, Dr. Serum was named to the President's 
Advisory Board for Advanced Technology at the Research Corporation. In 
2008 he was elected Chairman of NIST's Visiting Committee on Advanced 
Technology. Dr. Serum has served or currently serves as a member of the 
Board of Directors for a number of emerging technology based companies.

OTHER PROFESSIONAL ACTIVITIES

          Member of National Academy of Sciences task force on 
        the Future of Analytical Chemistry in the U.S. (1986)

          Member of National Science Foundation task force to 
        Review Policy for Science Education in the U.S. (1987)

          Invited speaker at numerous educational meetings and 
        conferences on Science Education

          Past member of Hewlett-Packard Education Relations 
        Board

          Review Panel for Hewlett-Packard Grants Program for 
        Analytical Chemistry (1989-1992)

          Member of Science & Technology Board, College of 
        Letters and Science, James Madison University (1988-1993)

          Member of Board of Directors, Biotechnology Research 
        and Development Corporation (1988-1994)

          Member of the National Institute of Standards and 
        Technology (NIST) technology assessment panel (1990-1992)

          Counselor (alt), Analytical Chemistry Division, 
        American Chemical Society (1992-1995)

          Member of the Board, Center for Photochemical 
        Sciences, Bowling Green State University (1994-Present)

          Member of ACS subcommittee for improvement of 
        chemistry curriculum (1994-1995)

          Member of National Research Council, Committee on 
        Undergraduate Science Education (1996-2001)

          Member of National Research Council, Committee on A 
        National Digital Library (1997)

          Chairperson, NRC Review committee on National Math 
        Standards (1999)

          Member & Vice Chairman of Board of Assessment for 
        Chemical Science & Technology Laboratory, NIST (1997-2001)

          Chairman of Board of Assessment for CSTL, National 
        Institute of Standards and Technology (2001-2003)

          Member National Research Council Committee on 
        Undergraduate Science Education (2002-2003)

          National Associate (life), National Academy of 
        Sciences (2002)

          Member of Visiting Committee for Advanced Technology, 
        NIST (2004-2009, Vice Chair 2007-2008, Chair 2008-2010)

          President's Advisory Board for Advanced Technology, 
        Research Corporation (2005-present)

    Chairman Wu. Thank you very much, Dr. Serum. Dr. Good, 
please proceed.

STATEMENT OF DR. MARY L. GOOD, GEORGE W. DONAGHEY PROFESSOR AND 
     DEAN, DONAGHEY COLLEGE OF ENGINEERING AND INFORMATION 
        TECHNOLOGY, UNIVERSITY OF ARKANSAS, LITTLE ROCK

    Dr. Good. Thank you, Mr. Chairman. And Chairman Wu and 
Congressman Ehlers, it is always nice to see friends that you 
know from a long time ago. Really, it is a great opportunity to 
be here today, and to say a few words about NIST.
    I have turned in my report, and I won't read that, but I 
will simply summarize the three pieces of it that I wanted to 
make, and I will do that very quickly. First of all, all of you 
already have talked about the quality and the significance of 
NIST. I think that goes without saying. I don't think we even 
have to defend that any more. I think everybody essentially 
agrees with us on that.
    And if you have to talk about the quality, we can talk 
about Nobel Prize winners, and some of the other things that go 
with NIST these days. And certainly, one point I would like to 
make, and that is that the facility in Colorado absolutely is 
long, long overdue. Congressman Ehlers knows we have been 
trying to get that facility, I have forgotten how long ago. 
Actually, very high quality work gets done there, and they 
really need a first class facility to do it in, so I was very 
pleased to see that as part of the budget.
    But the only thing I would say with respect to how good 
NIST is--if you want to really understand that, you go into 
places where they don't have a NIST. I was invited down to 
South Africa to review their National Bureau of Standards about 
seven or eight years ago, and they were just then, as you know, 
coming out of the apartheid era, and trying to really get 
everything going, and they wanted people to come in, they had 
an international committee come to review it, and to tell them 
what they were doing right, and how to improve things, and it 
was really a very eye opening experience, because things that 
we in this country absolutely take for granted, and have been 
doing for 100 years, they were trying to get installed. So, if 
you really want to understand where we are, you can go 
someplace where they are still now trying to do what really 
NIST did in many ways at the turn of the century. These people 
were still trying to get good standards for gasoline pumps in 
the countryside, because people were being cheated, in terms of 
the standards that they were using to measure it, if you like.
    So, there is just no question about the quality, and I 
won't spend very much more time on that. It clearly is the 
metrology laboratory, the best in the world, and without it, 
our enterprise would not work nearly as well as it does.
    The second issue that I would like to speak to, I also was 
very disappointed with the lack of any funding for MEP, and for 
the Technology Initiation Program, and I would like to put a 
little different spin on why I think those are so very 
important, in addition to the ones that have already been 
stated. First of all, it is very true that MEP has been 
extraordinarily valuable to the states and to their 
manufacturing industries, and particularly to the medium and 
small manufacturers. They have been extraordinarily important 
in keeping those people in the forefront of being innovative.
    But today, NIST is being asked to look at new technologies 
and nanotechnology, in the health sciences, they are looking 
also at areas in biotechnology. All of these cutting edge 
technologies that are there, they are being asked to do the 
standards, and they are being asked to look at the 
manufacturing facilities that go with those. So it is my 
opinion that the MEP is the vehicle for getting NIST to 
understand what is important in those small companies out there 
today, because I was on the National Review Panel for the 
National Initiative for Nanotechnology, and there are now 
thousands of small companies out there who are making 
nanoproducts. They have two major problems. One is, they don't 
understand the manufacturing technologies very well. They don't 
have standards in place. And secondly, they don't know very 
much about the health effects at all. We have not done very 
much about that yet, so if you could hook these state centers, 
and have the NIST people who are working on those new, cutting 
edge technologies, and have them mesh with the state centers, 
and have those state centers out there helping these small 
startup companies, everybody would win, because NIST would 
begin to understand exactly what those companies need, and how 
to use it. They could better prioritize what they are doing, 
and secondly, certainly, the companies would win. So, this is 
kind of a win-win situation that seems to me is just, it goes 
without saying, is really very necessary.
    So, I would argue that the MEP program is as important for 
NIST as it is for the small manufacturers, if they are going to 
really be at the cutting edge in the coming years.
    I can make the same argument about TIP. If you pick the 
right ones, and NIST has shown through the stewardship of ATP 
that they can run a good program. They know how to do that. 
They have done it quite well, so if they pick the right small 
businesses to partner with, this is also one of the ways to 
really understand what small startups and small businesses 
need, so you can get your hands dirty. And one of the best ways 
for technology transfer, as everybody knows, is to get your 
hands dirty and be a part of the transfer.
    So, I would argue that the omission of these two programs 
is a real detriment to NIST, never mind to the detriment of the 
manufacturing sector out there, as well as these small 
businesses, if you like.
    The second thing has to do with the strategic plan, and I 
do agree with the Oversight Committee with respect to the 
strategic plan. It is an excellent plan, in the sense that it 
describes what the laboratories are doing in a very good way, 
but it doesn't really have much to do with the strategic plan 
over time. I would like to see NIST actually do a strategic 
plan which drives what they do, rather than having just the 
budget numbers drive what they do. I know that is asking a lot, 
and I understand the--believe me, I understand the political 
issues very well, but if I come in here from NIST with a real 
strategic plan, I think you fellows in this committee and other 
parts of the Congress would listen to that, and would move to 
the direction that makes sense, so I would like to see them put 
together a plan over the next three or four years which will 
point out where they are going, and why they are going there, 
and what portion of that they are going to--what is it that 
they provide, and what do they have to do to actually have 
interactions with the rest of the enterprise to make that work 
appropriately.
    So, I agree that the plan is excellent with respect to what 
it says about what they are doing today, but I don't find it to 
be much in the way of a strategic plan looking forward, and so, 
I think they would have to go back and sort of redo that.
    Also, I didn't see any real mention of the Baldrige, the 
National Quality Award either, and I think that was a big 
oversight. That really ought to be part of that strategic plan, 
it seems to me, because that is one of those places where we 
can really make some difference, and I think it has made a lot 
of difference in the past. And I haven't seen much publicity 
with respect to the Baldrige Award lately, and I would really 
like to see that take a little bit more front and center, and 
see that they have properly thought that one through.
    And then, of course, the last thing is just to say that if 
you look at NIST as a whole, it really is one of those 
laboratories, and one of those activities in the United States, 
that without it, and without it functioning really at a high 
level, our competitive position is just not going to be 
possible, because it really does have a lot to do with the 
competitive position that we will have going forward.
    So, I will be happy to answer questions, Mr. Chairman, but 
thank you for your time.
    [The prepared statement of Dr. Good follows:]

                   Prepared Statement of Mary L. Good

    Chairman Wu and Members of the Subcommittee: It is a great pleasure 
for me to be able to testify on the behalf of NIST and its activities. 
I regard NIST, as does most of the technology community (including the 
technology based industry), as perhaps the most important national 
laboratory because of its relevance to the long-term success of 
American industry in the stimulation of innovation and contributions to 
the competitiveness of the American enterprise. NIST has a long history 
of providing the standards for commerce which allow for an orderly and 
fair process for doing business, protecting the health of the 
population, and promoting best practices in the complex enterprise 
which is today's global economy. The value of NIST and its pervasive 
influence was brought home to me a few years ago when I was invited to 
South Africa as part of an international advisory group to review the 
South African Bureau of Standards and to provide the government with 
proposals for improvement. The work there could be defined as 
developing, institutionalizing, and monitoring everyday weights and 
measures used in everything from country stores to gasoline 
distributors to food processors to multinational companies 
manufacturing everything from automobiles to everyday household goods. 
The quality of transactions that we in the U.S. take for granted were 
still being monitored and improved. Some of these activities in the 
rural areas of the country would have been NIST activities a hundred 
years ago! The U.S. public just assumes that commerce and regulatory 
activities will be carried out with consistency and be based on 
appropriate standards that can be verified if necessary. This 
complacency is possible because of the long history of NIST standards 
work including calibration and metrology science in all areas of our 
enterprise. The value of the government's role in these activities was 
first acknowledged by the Founding Fathers when they included in the 
Constitution the need to establish a system of weights and measures. 
The establishment of the National Bureau of Standards in 1901 (NBS) 
gave this important government function to NBS. New responsibilities 
for direct industry interaction were added and NBS was renamed the 
National Institute for Standards and Technology in the 1980's. NIST 
continues the production and distribution of standards for all areas of 
commerce and modern life but it has now gone beyond these early 
responsibilities. Today NIST is the premier laboratory for metrology 
research in the world with applications in all areas of emerging 
technologies like nanotechnology, biotechnology, and high performance 
computing. The quality of this work is epitomized by the receipt of 
three Nobel Prizes by NIST scientists in the last few years. In 
summary, NIST is an American jewel that provides one of our advantages 
in a competitive global environment. Long-term support for its programs 
should be an investment at a very high priority in our federal budget. 
However, NIST should be held to very high standards and should be 
expected to justify its activities and prioritize its opportunities to 
play a significant role in the competitiveness initiatives in the 
Competes Act of 2007.
    I have reviewed the President's proposed budget for NIST for 2009 
and the planning document NIST provided to the Congress. The requested 
additional support for the NIST laboratories is certainly justified by 
the proposed new research activities outlined in their planning 
document. The facilities funding, particularly for the expansion and 
up-grade of the Colorado facilities, is long overdue. The world class 
research that takes place there deserves a world class facility.
    However, the President's budget proposal to phase out funding for 
the Manufacturing Extension Program (MEP) and the new Technology 
Initiation Program (TIP) is both short-sighted and represents a 
misunderstanding of the value of these programs. It is my assessment 
that this oversight is disastrous for the incentivization of innovation 
in small and medium sized enterprises and for NIST as it carries out 
its mandates for the support of cutting edge manufacturing technologies 
and the incentivization of new American companies utilizing emerging 
technologies. Two examples will be illustrative of these values. The 
National Academies convened a panel (I was a member of the panel) to 
review the National Nanotechnology Initiative funded through several 
government bureaus. Two of the findings were: (1) there are many (in 
the thousands) start-ups and early stage companies with potential 
products and processes utilizing nanoparticles and nanotechnology, and 
(2) the health and environmental effects of nanomaterials in the work 
place and in consumer products are not well understood. These findings 
certainly justify the proposed NIST work on nano-manufacturing 
processes and the development of metrology and standards for 
nanomaterials. The question is how to effectively couple the NIST work 
to these businesses in emerging technologies.
    The legislation renaming NBS contained the following directives: 
``to. . .modernize and restructure that agency to augment its unique 
ability to enhance the competitiveness of American industry while 
maintaining its traditional function. . .''; ``to assist private sector 
initiatives to capitalize on advanced technology''; and ``to advance, 
though cooperative efforts among industries, universities and 
government laboratories, promising research and development projects, 
which can be optimized by the private sector for commercial and 
industrial applications.'' These directives were further endorsed by 
the America COMPETES Act of 2007 where the Congress authorized MEP 
(with a proposed doubling of its budget over time) and TIP. How better 
to carry out the NIST mandate that coupling the MEP State programs with 
the NIST scientists who are developing these new manufacturing and 
metrology technologies? Many research studies have shown that 
technology transfer is most efficient if the technology developers have 
a close relationship with the users. Thus NIST could create a model of 
tech transfer by educating the personnel in the State MEP centers about 
their evolving technologies and then challenge the State centers to 
catalog and reach out to the start-ups and early stage technology 
companies in their State. The NIST scientists could both focus their 
efforts better and more rapidly see their efforts utilized by 
understanding the needs of these new companies in real time. Thus MEP 
represents a unique vehicle for a faster, better focused effort on 
NIST's part and the companies have the benefit of the early adoption of 
NIST standards and manufacturing technologies. This provides a win-win 
success for NIST, the companies, and the American competitiveness.
    A similar argument can be made about TIP. TIP was authorized in the 
America COMPETES Act to ``support, promote, and accelerate innovation 
in the United States through high-risk high-reward research in areas of 
critical national need.'' The mechanism to carry out this mandate was 
the establishment of a program of competitive grants for partial 
funding of small or medium size enterprises via contracts, 
collaborative efforts with universities, etc. Again, if NIST is to 
carry out its mandate for aiding the private sector in moving 
successfully to new, promising technologies, what better vehicle than 
interacting with real companies who are trying to turn technology into 
commercial projects and processes. The NIST experience with ATP clearly 
demonstrates their ability to propose and effectively manage a grants/
contracts program as outlined in the TIP authorization legislation. 
Thus I see the President's budget initiative to eliminate MEP and to 
not establish TIP, very short sighted and an example of not 
understanding what NIST gains from these programs and how important 
they are for the U.S. to stake out leadership in the commercialization 
of the new and emerging technologies where we have funded much of the 
underlying fundamental research. These two programs can be very 
instrumental in the successful start-ups in nanotechnology, 
biotechnology, high performance computing (including light-scale 
communications), hydrogen fuel, and quantum computing.
    With respect to the NIST Three-Year Programmatic Plan, it describes 
NIST's value in the U.S. enterprise, its processes for internal quality 
reviews, and the programs they plan with additional funding the 2009 
budget provides for the laboratories. However it is not a usual 
``strategic'' plan. For example, they point out that the programs they 
plan to focus on are: ``address critical national needs and measurement 
barriers to innovation; improve the capacity and capability of the NIST 
laboratories; and form new and strengthen existing partnerships with 
industry and academia.'' The plan, if you include the Appendices to the 
report, do a good job of the strategy pertaining to maintaining the 
NIST laboratories but the plan does not provide a strategy for 
determining national needs or how to make a significant increase in 
industry and academic ties. A strategic review and prioritization of 
the national needs results would then inform the planning for the 
laboratories. Recently the ASTRA (Alliance for Science and Technology 
Research in America) Legislative Task Force released a report entitled 
``Riding the Rising Tide: ASTRA's Strategy for Enhancing U.S. 
Competitiveness and Prosperity.'' This report, which was contributed to 
and vetted by several scientific and engineering societies, several 
industry partners and several academic institutions, proposed a 14-
point Innovation Action Agenda for the U.S. The 14 points can be 
divided into three strategic areas: Federal Funding of R&D workforce 
and STEM education; and a business climate that supports innovation. 
NIST clearly has a major role in the federal research efforts but it 
also has the opportunity to play a role in assuring an ``innovation 
agenda'' for U.S.-based industry. Thus the NIST forward plan should 
include insight beyond just next year's budget constraints. It would 
have been helpful if they could have correlated their forward plan to 
the overall innovation agenda so that they stake out their 
opportunities and responsibilities for a major impact on the rate and 
quality of innovation in the United States. Such a longer-term 
strategic view would then maximize their opportunity to guide the 
budget process rather than having the yearly budgets guide their 
activities.
    I would have also liked some detailed discussion of the Baldrige 
National Quality Award program although it is a small portion of the 
budget. This program has the opportunity to disseminate best practices 
in businesses, health, and education. It should be integrated into the 
overall push for innovation in these sectors.
    Clearly, in the limited scope of this hearing and the time 
available, it was not possible to comment on all of the facets of the 
NIST activities. So, in summary, let me say that the attention to, and 
planning for, accelerated innovation in the U.S. enterprise is the most 
important part of any plan to maintain U.S. competitiveness. Other 
factors are important, but without innovative new companies and the 
ability of established businesses to continue to change and innovate, 
the U.S. outlook for providing a high quality of life for its citizens 
gets much less positive. NIST is an important link in this plan for the 
future and a significant investment in both their internal and external 
activities is a must investment from the federal budget.

                       Biography for Mary L. Good

    Mary L. Good is the Donaghey University Professor at the University 
of Arkansas at Little Rock, and serves as Dean for the College of 
Information Science and Systems Engineering. She is managing member for 
the Fund for Arkansas' Future, LLC. (an investment fund for start-up 
and early stage companies), past President of the AAAS, past President 
of the ACS, and an elected member of the National Academy of 
Engineering. She presently serves on the Boards of Acxiom, Inc., St. 
Vincent Health System, and Delta Bank and Trust.
    Previously she served a four-year term as the Under Secretary for 
Technology for the Technology Administration in the Department of 
Commerce, a Presidentially appointed, Senate confirmed, position. In 
addition, she chaired the National Science and Technology Council's 
Committee on Technological Innovation (NSTC/CTI), and served on the 
NSTC Committee on National Security. Previously she has served as the 
Senior Vice President for Technology for Allied Signal and as the Boyd 
Professor of Chemistry and Materials Science at Louisiana State 
University.
    She was appointed to the National Science Board by President Carter 
in 1980 and by President Reagan in 1986. She was the Chair of that 
board from 1988-91, when she received an appointment by President Bush 
to be a member of the President's Council of Advisors on Science and 
Technology.
    She has received many awards, including the National Science 
Foundation's Distinguished Public Service Award, the American Institute 
of Chemists' Gold Medal, the Priestly Medal from the American Chemical 
Society, and the Vannevar Bush Award from the National Science Board, 
among others.
    Good received her Bachelor's degree in Chemistry from the 
University of Central Arkansas and her MS and Ph.D. degrees in 
Inorganic Chemistry from the University of Arkansas at Fayetteville.

    Chairman Wu. Thank you very much, Dr. Good. Dr. Fiske, 
please proceed.

 STATEMENT OF DR. PETER S. FISKE, VICE PRESIDENT FOR RESEARCH 
    AND DEVELOPMENT, PAX SCIENTIFIC, INC.; CO-FOUNDER, RAPT 
                        INDUSTRIES, INC.

    Dr. Fiske. Thank you very much, Chairman Wu, Committee 
Members, for the opportunity to speak today.
    Seven years ago, I committed an unthinkable act. I left a 
comfortable and reasonably well paid job at Lawrence Livermore 
National Lab, and I set off to create a new business. It was 
oriented around a novel optical manufacturing technology called 
reactive atom plasma processing. The technology was developed 
at the lab, but my co-founder, Jeffrey Carr, could not find any 
support within the Laboratory. In fact, when I met him, the 
prototype was sitting under a tarp outside a loading dock in 
one of the buildings.
    Taking the new technology from the benchtop to demonstrate 
its commercial viability is an enormous undertaking. It is easy 
to demonstrate that a new technology works at some rudimentary 
level in the laboratory, but it takes a tremendous amount of 
engineering, testing, and market analysis to make a new 
technology work reliably, economically, and fit within the 
needs of the marketplace. This journey is often referred to as 
crossing the Valley of Death, and it is an absolutely critical 
process for the U.S. economy and for economic competitiveness 
overall.
    So, having been through the Valley of Death, I would like 
to share with you some observations about how this process of 
technology commercialization really works, and how federal 
policy can help, and specifically orient my comments around 
TIP, and its previous incarnation, ATP. I would also like to 
add that I have spoken with many entrepreneurs, in Silicon 
Valley and elsewhere, and my comments are largely echoed by all 
of them.
    No matter what anybody's politics, nearly everybody 
believes that technology innovation is the key factor in U.S. 
economic growth. Our ability to take scientific discoveries 
from the laboratory, and turn them into productivity enhancing 
technologies that rapidly proliferate in the national and 
international market is a key strength of the U.S. economy. 
Small technology businesses play a particularly important role 
in this. They, and the entrepreneurs who found them, take the 
risks on the new technologies because it is the only way that 
these small companies can get traction in the marketplace.
    So, while we would all like to believe that the U.S. is the 
best in the world at fostering this sort of entrepreneurship, I 
have to impress upon you how difficult the process actually is, 
how vital such tools as ATP and TIP are to entrepreneurs such 
as myself.
    Contrary to popular belief in Washington, venture capital 
does not fund a lot of early stage technologies at the early 
stages of commercialization. Venture capital shies away from 
these sorts of investments, because of the long--the high 
degree of uncertainty, and the long and uncertain pathway that 
technology has to travel. Venture capital only focuses on 
funding opportunities that are less than five years away from 
profitability, and that have a potential for enormous equity 
appreciation, and that fall within a narrow range of markets.
    Many new technologies do not fit this model, and most, like 
my company, do not receive venture funding. Technology with 
enormous potential to help the U.S. economy, in fields such as 
manufacturing and transportation, do not make attractive 
investments at their early stage for venture capitalists. This 
is not to say that venture capital is not vital or does not 
play a valuable role, but not at these early stages of 
technology development and commercialization. Any venture 
capitalist would tell you this.
    Ironically, the most important venture capitalist in the 
United States is named Uncle Sam. The Federal Government 
supports cutting edge technology development in small business 
through a range of programs, such as SBIR, cooperative research 
and development agreements, and other contract mechanisms. In 
my years building RAPT Industries, my company has benefited 
from many of these programs, and all of them were helpful in 
keeping us alive as we marched through the Valley of Death. But 
out of all these programs, ATP stands out as particularly 
effective. Our company won an ATP award in 2003, and while it 
was far from the largest R&D contract we received, it was by 
far the most potent. ATP and TIP are unique in several 
respects. First, these programs focus on technologies with the 
greatest potential for the U.S. economy. In contrast, programs 
like SBIR focus on topics and technologies that are of interest 
to the agencies, and those topics tend to be very narrow, and 
sometimes, with limited commercial application.
    Second, ATP grants support early stage technology 
commercialization for several years. SBIR Phase I contracts 
last as little as six months, and there is almost always a 
break in funding between Phase I and Phase II. That is not 
enough time really to travel the Valley of Death.
    Third, ATP couples financial support with business 
development and advice and expertise. We were paired with an 
extremely helpful business analyst from NIST, who helped us 
identify several key potential customers and new applications.
    Lastly, the ATP program is efficient and well-run. I will 
speak as a customer. Despite a highly competitive and rigorous 
review process, they take only a few months to render opinions 
on projects, and take even less time to get under contract. If 
you don't do that, if you let those processes linger, 
technology proceeds at a snail's pace. ATP was so valuable to 
my company and to many others because it was well aligned to 
the needs of small business. ATP encouraged and facilitated a 
collaboration with end customers, rather than simply tolerating 
it.
    In a nutshell, a focus on high risk, high reward 
technologies, multi-year funding, business advice, and an 
efficient program management made ATP extremely effective for 
helping small technology businesses such as mine. TIP appears 
to carry on these principles, but without much funding, it 
doesn't do us entrepreneurs very much good.
    I don't mean these comments to be interpreted as a 
criticism of SBIR and any of these other funding mechanisms, 
and we entrepreneurs are grateful for all the help we can get 
in building our companies, but the argument that ATP or TIP is 
somehow redundant or unnecessary is simply incorrect. In my 
opinion, it is the best program the Federal Government has that 
supports technology commercialization.
    I would not have been able to do what I did without ATP, 
and had there been no ATP or TIP, I would have been a lot less 
inclined to quit my job at Lawrence Livermore Lab and try.
    Thank you, and I will be happy to take your questions.
    [Prepared statement of Dr. Fiske follows:]
                  Prepared Statement of Peter S. Fiske

                  A Postcard From the Valley of Death

    Thank you, Chairman Wu and Committee Members, for the opportunity 
to speak with you today about the NIST 2009 Budget Request in 
particular and U.S. Innovation Policy in general.
    Seven years ago I committed an unthinkable act. I left a 
comfortable and reasonably well-paid job as a research scientist at 
Lawrence Livermore National Lab and set off to create a new business 
oriented around a novel optical manufacturing technology called 
Reactive Atom Plasma processing. The technology was developed at 
Lawrence Livermore National Lab by my co-founder, Dr. Jeffrey Carr, but 
was viewed by Laboratory management as too immature. In fact, when I 
first learned about the technology the only prototype was sitting under 
a tarp on a loading dock outside one of the laboratory buildings.
    Taking a new technology from the benchtop through to a demonstrated 
commercially viable product is an enormous undertaking. It is easy to 
demonstrate that a new technology works at some rudimentary level in a 
laboratory setting. It takes a tremendous amount of engineering, 
testing and market analysis to make a new technology work reliably, 
economically and fit within the needs of the marketplace. This journey 
is often referred to as crossing the ``valley of death,'' and it is an 
absolutely critical process for the U.S. economy and economic 
competitiveness.
    So, having been through the Valley of Death, I'd like to share with 
you some observations about how this process REALLY works, how federal 
policy can help, and specifically orient my comments to the TIP program 
and it's previous incarnation--ATP. I would also add that I have spoken 
to many other technology entrepreneurs and their experiences are 
similar to my own.
    No matter what their politics, nearly everybody believes that 
technology innovation is a key factor in U.S. economic growth. Our 
ability to take scientific discoveries from the laboratory and turn 
them into productivity-enhancing technologies that rapidly proliferate 
in the national and international market is a key strength of the U.S. 
economy. Small technology businesses play a particularly important 
role--they, and the entrepreneurs who found them--take the risks on new 
technologies because that's the only way they have to get a foothold in 
the marketplace.
    While we would like to all believe that the U.S. is the best in the 
world at fostering this sort of entrepreneurship I have to impress upon 
you how difficult the process of technology commercialization actually 
is--and how vital tools such as ATP and TIP are to entrepreneurs such 
as myself.
    Contrary to popular belief in Washington D.C. venture capital is 
NOT a major funder of new technologies at the earliest stages of 
commercialization. Venture capital shies away from such investments 
because of the long and uncertain pathway that technologies must travel 
to demonstrate economic viability. Venture capital ONLY focuses on 
funding opportunities that are less than five years away from 
profitability, have the potential for enormous equity appreciation, and 
fall within a narrow range of markets. Most new technologies do NOT fit 
this model, and most, like my company, don't get funded. Technologies 
with enormous potential to help the U.S. economy, in fields such as 
manufacturing and transportation, do NOT make attractive investments 
for venture capitalists. This is not to say that venture capital is not 
vital--it is--but it cannot be relied upon to support early-stage, 
high-risk technology commercialization across the board--and any 
venture capitalist you spoke with would confirm this.
    Ironically, the most important ``venture capitalist'' for early-
stage technologies is Uncle Sam. The Federal Government supports 
cutting edge technology development in small businesses through a range 
of programs such as SBIR, Cooperative Research and Development 
Agreements (CRADAs) and other contract mechanisms. My company has 
benefited from many of these programs, and all of them were helpful in 
keeping us alive as we marched through the valley of death.
    But out of all these programs, the ATP stands out as particularly 
effective. Our company won an ATP in 2003 and, while it was far from 
the largest R&D contract we received, it was the most potent. ATP (and 
TIP) are unique in several respects. First--these programs focus on 
technologies with the greatest potential for the U.S. economy. In 
contrast, programs like SBIR, focus on topics and technologies that are 
of interest to the sponsoring agency--and those topics tend to be very 
narrow and with limited commercial application. Second, ATP grants 
support early-stage technology commercialization for several years--
SBIR Phase I grants are as short as six months--hardly enough time to 
travel the valley of death. Third, ATP couples financial support with 
business development advice and expertise. We were paired with an 
extremely helpful business analyst from NIST who helped us identify 
several key potential customers and new applications. Lastly, the ATP 
program is efficient and well-run--despite a highly competitive and 
rigorous review process, funding decisions happen quickly. In contrast, 
programs such as SBIR can take many months to select projects, and 
several months more to get under contract--technology development 
proceeds at a snail's pace.
    ATP was so valuable to my company, and to many others, because it 
was well-aligned to the needs of a small business. ATP encouraged and 
facilitated collaboration with end customers--rather than simply 
tolerating it.
    In a nutshell: a focus on high-risk/high reward technologies, 
multi-year funding, business advice, and efficient program management 
made ATP extremely effective for helping small technology-based 
businesses such as mine. TIP appears to carry on these principles--but 
without much funding it doesn't help us.
    I do not mean these comments to be interpreted as a criticism of 
SBIR and other funding mechanisms--we entrepreneurs are grateful for 
all the help we can get! But the argument that ATP or TIP is somehow 
redundant or unnecessary is simply incorrect. In my opinion it is the 
BEST program the Federal Government has that supports technology 
commercialization.
    I would not have been able to do what I did without the ATP. And 
had there been no ATP or TIP, I would have been a lot less inclined to 
quit my job at Lawrence Livermore Lab and try.
    Thank you. I would be happy to answer your questions.

                      Biography for Peter S. Fiske
    MBA, UC-Berkeley, 2002; Ph.D., Stanford University, 1993

    Prior to starting RAPT Industries, Inc., Dr. Fiske led a research 
team at Lawrence Livermore National Laboratory in condensed matter 
physics. His business plan for RAPT Industries won First Place at the 
2001 U.C. Berkeley Business Plan Competition. He is the author of 20 
technical articles in leading scientific journals including Science and 
two books. In 1996 Dr. Fiske was awarded a White House Fellowship and 
served in the Pentagon as Assistant to the Secretary of Defense for 
Special Projects. His other awards include an NSF Graduate Fellowship 
(1988-91), a STA Fellowship by the government of Japan (1995), the U.S. 
Department of Defense Outstanding Achievement Award (1997) and an Aspen 
Scholarship at the Aspen Institute in 2001. Dr. Fiske was CEO of RAPT 
Industries from May, 2001 to April, 2004.

    Chairman Wu. Thank you very much, Dr. Fiske. Mr. Coast.

STATEMENT OF MR. MICHAEL J. COAST, PRESIDENT AND CEO, MICHIGAN 
  MANUFACTURING TECHNOLOGY CENTER; PRESIDENT, AMERICAN SMALL 
                    MANUFACTURERS COALITION

    Mr. Coast. Chairman Wu, Members of the Subcommittee, thank 
you for the opportunity to appear here today. I am Mike Coast, 
President of the Michigan Manufacturing Technology Center, 
Michigan's affiliate of the National Manufacturing Extension 
Partnership.
    I am also the current Chairman of the Board of the American 
Small Manufacturers Coalition, the trade association of the 59 
MEP Centers. Congressman Ehlers is already well aware of our 
work, as he represents the district that is home to our west 
Michigan office, the Right Place Program, and all the good work 
that they do over there with the manufacturers from the west 
side of the state.
    I testify today about the dire situation facing small and 
mid-sized manufacturers, and about how the President's proposed 
elimination of federal funding for MEP would affect them. There 
are more than 30,000 fewer small and mid-sized manufacturing 
plants in the U.S. than there were a decade ago. In Michigan, 
there were 16,000 such facilities in 1998. Today, there are 
barely 13,000.
    MEP Centers have proven over the past decade or more that 
they can help these smaller manufacturers succeed, despite this 
challenging landscape. In a typical recent year, MEP clients 
credit their services with: improving productivity in eight of 
every ten cases, with cost savings totaling more than $1.1 
billion; helping companies served to add or retain nearly $6.8 
billion in sales and 52,000 jobs, inducing those companies to 
help make more than $1.6 billion in additional investments. In 
Michigan, my center's clients credit it with more than $100 
million in new and retained sales, 956 jobs, $18 million in 
cost savings, and more than $30 million in investment.
    As their traditional customers globalize, small 
manufacturers have found that they need to do more than improve 
quality and reduce costs to remain competitive. The MEP network 
has responded by developing or partnering to require new 
services that help them prospect for new customers, evaluate 
new markets and product concepts, and improve the way they 
develop and launch new products. Indeed, MEP's new catchword is 
20/20, expressing that many smaller manufacturers need not just 
20 percent lower costs, but also, a 20 percent top line growth.
    At the Michigan MEP Center, services related to new 
customers, new markets, and new products have grown from almost 
nothing to about 15 to 20 percent of our total service 
portfolio. Congress recognized the effectiveness of the MEP 
program last year when it passed the America COMPETES Act. The 
legislation foresaw the need not only to maintain, but to grow 
MEP. Under the ACT, MEP's federal funding would rise from its 
recent $104 to $106 million annual level, to $122 million for 
fiscal year 2009, with further increases in 2010 and 2011.
    Despite MEP's track record of impact and efficiency, and 
ignoring the will of Congress, the President now proposes the 
virtual elimination of federal funding for MEP. One can debate 
what the precise effect of this would be, but the main outcomes 
are beyond dispute. Many Centers would close. Most that do not 
would shrink significantly, partly because many of the states 
that support the Centers explicitly in the form of matching 
funds.
    Some have argued that smaller manufacturers could go out 
and buy the services similar to those offered by MEP Centers 
from the private sector consulting firms, but history shows us 
that without some public funding to offset the cost of outreach 
and sales, consultants shy away from all but the best-heeled of 
these small companies. And that is only logical. Without public 
funds, my Center and most other Centers would have no choice 
but to focus on larger manufacturers.
    With your help, however, the Nation can avoid this sharp 
reduction in services to smaller manufacturers. By turning back 
the President's proposal, and returning it to the support 
levels authorized by the America COMPETES Act, the Congress can 
help save MEP and help it grow. MEP is the country's only 
national program created specifically to help the U.S. small 
manufacturing base, and preserve its nearly 10 million good 
jobs.
    At this moment of grave risk to the manufacturers and the 
rest of the economy, MEP brings otherwise unavailable technical 
expertise to tens of thousands of struggling U.S. companies.
    In closing, I urge you, on the behalf of my Center, 58 
other Centers of the MEP network, and nearly 340,000 small and 
medium-sized manufacturers across the Nation, to act to restore 
full funding to MEP. For you on the Subcommittee, I have 
enclosed one success story for each Member of the Subcommittee 
from their district or state, and also, from Michigan, you will 
notice that there is a list of companies that are from 
Michigan, of the 440 companies in the last couple of years that 
we have worked with, from the MEP.
    Thank you.
    [The prepared statement of Mr. Coast follows:]

                 Prepared Statement of Michael J. Coast

    Chairman Wu, Congressman Gingrey, Members of the Subcommittee--
Thank you for this opportunity to appear today. I am Michael J. Coast, 
President of the Michigan Manufacturing Technology Center, Michigan's 
affiliate of the national Manufacturing Extension Partnership. I am 
also the current President of the American Small Manufacturers 
Coalition, the trade association of the 59 MEP centers. Congressman 
Ehlers is already well aware of our work, as he represents the district 
that is home to our West Michigan office.
    I testify today about the dire situation facing small- and medium-
sized U.S. manufacturers, and about how the President's proposed 
elimination of federal funding for MEP would affect them.
    There are more than 30,000 fewer small- and medium-sized 
manufacturing plants in the U.S. today than there were a decade ago. In 
Michigan, there were 16,000 such facilities in 1998; today, there are 
barely 13,000. Thanks to increased imports of both manufactured 
products and their parts, U.S. manufacturing value-added is essentially 
unchanged over the past decade; in Michigan, it is quite clearly lower.
    This is not some long-term, inevitable decline analogous to the job 
losses in agriculture during the past century. In agriculture, 
employment fell because of rising productivity, but real output grew, 
and continues to grow. No, in manufacturing, the issue is the failure 
of many small- and medium-sized companies to perform well enough to 
withstand the competitive pressures of a globalized economy in which 
the U.S. operations of most of their traditional customers are no 
longer growing. With the sharp slowdown in economic activity that began 
last October, the situation has become even more difficult. U.S. 
manufacturing employment has plunged from 17.6 million in 1998 to 
barely 13.6 million in January of this year. Since last August, 
manufacturing has been losing an average of 60,000 jobs a month, a 
sharp reversal after a nearly four-year period of relative stability.
    MEP centers have proven over the past decade or more that they can 
help these smaller manufacturers succeed despite this challenging 
landscape. In a typical recent year, MEP centers' clients credit their 
services with:

          Improving productivity in eight of every ten cases, 
        with cost savings totaling more than $1.1 billion;

          Helping the companies served to add or retain nearly 
        $6.8 billion in sales and 52 thousand jobs; and

          Inducing those companies to make more than $1.6 
        billion in additional investments.

    In Michigan, my center's clients credit it with more than $100 
million in new and retained sales, 956 jobs, $18 million in cost 
savings, and more than $30 million in induced investment during the 
last full year for which survey data are available.
    As their traditional customers globalize, smaller manufacturers 
have found that they need to do more than improve quality and reduce 
costs to remain competitive. The MEP network has responded by 
developing or partnering to acquire new services that help them 
prospect for new customers; evaluate new markets and product concepts; 
and improve the way they develop and launch new products. Indeed, MEP's 
new catchword is ``20/20''--expressing that many smaller manufacturers 
need not just 20 percent lower costs, but also 20 percent top-line 
growth. At the Michigan MEP center, services related to new customers, 
new markets, and new products have grown from almost nothing to about 
15 percent of our total service portfolio. By 2010, I expect that they 
will exceed 25 percent of what we do with our clients.
    Congress recognized the effectiveness of the MEP program last year 
when it passed the America COMPETES Act. That legislation foresaw the 
need not only to maintain, but to grow, MEP. Under the Act, MEP's 
federal funding would rise from its recent $104-$106 million annual 
level to $122 million for FY 2009, with further increases in FY 2010 
and FY 2011.
    Despite MEP's track record of impact and efficiency, and ignoring 
the will of the Congress, the President now proposes the virtual 
elimination of federal funding for MEP. One can debate what the precise 
effect of this would be, but the main outcomes are beyond dispute. Many 
centers would close. Most that do not would shrink significantly, 
partly because many states' support for the centers is explicitly in 
the form of matching funds: that is, it could be withdrawn if federal 
funding were to end. Some have argued that smaller manufacturers could 
go out and buy services similar to those offered by the MEP centers 
from private sector consulting firms. But history shows that, without 
some public funding to offset the cost of outreach and sales, 
consultants shy away from all but the best-heeled small companies. And 
that's only logical: without public funds, my center and most others 
would also have no choice but to focus on larger manufacturers.
    With your help, however, the Nation can avoid this sharp reduction 
in services to smaller manufacturers. By turning back the President's 
proposal and returning to the support levels authorized by the America 
COMPETES Act, the Congress can save MEP and help it grow. MEP is the 
country's only national program created specifically to help the U.S. 
small manufacturing base and preserve its nearly 10 million good jobs. 
At this moment of grave risk to manufacturing and the rest of the 
economy, MEP brings otherwise unavailable technical expertise to tens 
of thousands of struggling U.S. companies.
    In closing, I urge you--on behalf of my center, the other 58 
centers of the MEP network, and the nearly 340,000 small and medium-
sized manufacturers across the Nation--to act to restore full funding 
to MEP.
    Thank you.

                     Biography for Michael J. Coast
    Mike Coast is the President and CEO of the Michigan Manufacturing 
Technology Center (MMTC) and is responsible for directing the 
operations, programs, and working relationships with Michigan's 
industrial, business, and governmental stakeholders. In 2007, MMTC was 
awarded the Not-for-Profit of the Year award from the Automation Alley.
    Additionally, he is responsible for maintaining and building on the 
successful partnership between the MMTC and the Michigan Economic 
Development Corporation (MEDC). The MMTC has been chosen to play a lead 
role in coordinating and streamlining technology-related services to 
Michigan's established industries.
    Previously, Mike was Vice President and Executive Director for the 
MMTC's statewide program. As Executive Director, he was responsible for 
developing new business, working with manufacturers to implement 
manufacturing technologies, collaborating with service providers, and 
discovering potential funding sources to increase the capabilities of 
the MMTC.
    Mike came to the MMTC with more than eight years of technology 
development experience and more than sixteen years of manufacturing 
experience. Prior to joining the MMTC, he was the Associate Director 
for the Youngstown State University Technology Development Corporation 
in Youngstown, Ohio. Also, Mike held a variety of managerial positions 
with engineering and technologically based organizations including 
Leeds & Northrup, Mayer China, Sargent Electric Company, and Airway 
Industries, Inc.
    Mike received his Bachelor of Science degree in Engineering with a 
minor in Industrial Engineering at Geneva College, Beaver Falls, PA.

                               Discussion

    Chairman Wu. Thank you very much, Mr. Coast, and now comes 
the time for questions. Members will be permitted five minutes 
each to ask questions, and the Chair recognizes himself first.
    In the interests of saving some time, before I ask question 
about MEP and TIP, Dr. Turner, I just want to say very clearly 
that the three-year planning document which we have received is 
not what we had in mind when this Congress passed the 
requirement last year, and while the document speaks sometimes 
in sort of consultant's language about general values, about 
the need for outreach, all of which is commendable, it does not 
label out what research areas NIST should participate in, how 
those research areas make us a more competitive economy, and 
perhaps, most importantly, how we get from where we are to 
where we want to go in those identified research areas. It 
becomes an agreement about what those research areas are. And I 
hope that this Subcommittee, the Committee as a whole, at both 
the Member and the staff level, can work with you and your 
staff to come up with more focused three-year plans in the 
future, because I think that that is the only way that we can 
justify this increase in funding for NIST over the long haul. 
We simply have to have that statutorily required strategic 
planning document.
    Now, on MEP and TIP, we heard from Mr. Coast, we hear 
eloquently from Dr. Fiske about how TIP helped march him and 
his company over the--through the Valley of Death, and from Dr. 
Good about how MEP and TIP can be good, not only for the 
purported beneficiary, but also for NIST as an organization, to 
be more attuned to what our economy needs. These programs, MEP 
and TIP, are supported, as you heard here today, by both 
Republicans and Democrats. We have sought to avoid this seesaw 
battle where the funding goes up and down and up and down, and 
things become undependable from a user perspective.
    And Dr. Turner, you have only been in place since 
September. Let me just give you an opportunity to defend, as 
best you can, to lay out the rationale that NIST or the 
Administration may have, for zeroing out TIP, and in effect, 
zeroing out MEP, permitting closedown costs only.
    Dr. Turner. Yes, sir. Let me first say, with regard to the 
three-year plan, we welcome the opportunity to work with you 
and your staff to make the kind of document that you would find 
useful. We would like to go ahead and do that.
    But now, with respect to MEP and TIP, let me just say first 
of all, one of the things that I did, you know, the first few 
months I was at NIST was to visit an MEP Center in Colorado and 
to meet with some clients, and I was extremely impressed. And 
so, again, I believe it is a good program. In conjunction with 
the VCAT meeting that took place this past December in South 
Carolina, I had, you know, insisted on setting aside some time 
to visit the South Carolina Center, and again, meet with the 
clients down there. Unfortunately, there was a medical 
emergency involving my son and his family that caused him to be 
MedEvaced out of Cairo back to the United States, that 
prevented me from going to that meeting. But my Deputy did 
follow-up, visited the South Carolina Center, and met with some 
of their clients, and similar to my experience in Colorado, he 
came back very impressed with the work that was being done.
    Chairman Wu. It would be fair to say that both you and your 
staff, and members of the agency are supportive of MEP.
    Dr. Turner. Well, let me just say, we all agree that MEP is 
a good program, but for us, it came down to a matter of 
priorities and limited resources, and for us, our highest 
priority is to get our core programs back up to the doubling 
curve, and we tried to do that.
    Chairman Wu. But this Congress set priorities for you, and 
put those programs on a doubling curve, along with MEP and TIP.
    Dr. Turner. Well, again----
    Chairman Wu. With all due respect, Acting Director Turner.
    Dr. Turner. For us, it was the combination of the American 
Competitiveness Initiative, and the America COMPETES Act, and 
again, for us, the priority was those core programs, which 
affect broad industrial sectors, as well as creating new 
industries, and so, that was our priority, and you know, and we 
had to make some difficult choices. This was not an easy call 
to make, and so, it was a difficult choice to make.
    Regarding TIP, first of all, we fully intend to run a 
successful TIP competition, using the '08 appropriation. The 
rule that will establish the governance of TIP is now out for 
public comment. We are prepared to move forward with it, and as 
you heard, you know, we intend to apply the same standard of 
excellence to the TIP program as we did to ATP, as far as our 
ability to carry those programs out. And so, we look forward to 
that.
    Again, with TIP as well as MEP, it came down to a situation 
of priorities, trying to get our core programs back up to the 
doubling curve, and the situation where we have the resources 
at our disposal were limited, and so, we had to make those 
tough calls, and so, again, the point I want to make is, we 
agree that MEP is a good program, and with regard to TIP, we 
are going to carry out a successful '08 competition.
    Chairman Wu. Thank you very much. My five minutes has 
expired. We have a vote on, so I want to turn to Dr. Ehlers, 
but let me just reiterate, with all due respect, sir, those 
priorities were set in statute by the enabling legislation last 
year, and we would really like the agency to obey the law, as 
enacted.
    Dr. Ehlers.
    Mr. Ehlers. Thank you, Mr. Chairman.
    Dr. Good, do you, you were sort of, positions related to 
NIST, or directly in NIST for some time. You talked about, 
pretty strongly about the need for a good strategic planning 
process.
    I would be interested in a little more detail from you. 
What would you be looking for, how would you proceed with it? 
NIST is such a diverse organization that ranges from the 
esoteric research which, frankly, in my experience, is left 
best outside strategic planning, because you are always looking 
for that spark of genius, which doesn't fit in the strategic 
planning charts, but it ranges from that all the way to things 
like TIP and MEP and other programs.
    Could you describe for me what you have in mind when you 
talk about strategic planning?
    Dr. Good. I can say a few words about that. I don't 
disagree with you, with respect to the percentage of really, 
what I would call blue sky kinds of research they do. To 
include that, or try to include that, in a forward-looking 
mode, in strategic planning is very difficult to do, and if you 
do it too tightly, you end up not getting very much really new 
stuff.
    Now, the industry, over time, has that out, but what I was 
really referring to is the fact that it seems to me that NIST 
does need, though, there are so many of these new, what I call 
emergent technologies today, where they are in the process of 
now beginning to set standards for those, and the Metrology 
Lab, particularly, the Micrometrology Lab, allows them to set 
standards in areas that are truly very new.
    And so, the question is, which ones of those do they want 
to try to develop first, where is the biggest need, and how do 
you go about finding out, how do you try to at least prioritize 
where those needs are going to be? And so, I would not disagree 
with you with respect to the fundamental research that is done 
in NIST, but I would suggest that they need a strategic plan, 
though, in all of those activities that are what I call 
technology assistance programs, and MEP and TIP fit that, as 
does, really, the standards development in these emerging 
technologies. Because you cannot do all of them. You will never 
have enough money to do them all at the same time, so you need 
some prioritization of those, and you need some mechanism up 
front which tells you which ones are not going to, not--how do 
you figure out which ones don't work, and which ones, then, 
were really important, and how do we stay ahead of the 
competition. In other words, we need some view, for example, 
where is the metrology and nanotechnology transition in the 
rest of the world, and how do we compete, and how does NIST 
stand up against that? And I would think a strategic plan would 
have those sorts of issues included in it.
    Mr. Ehlers. Thank you, and I want to make it clear, I 
wasn't questioning the need for it. I was just curious what, 
from your perspective, you would see.
    Just on, and getting back to MEP for just a moment, before 
we have to go off and vote, it has always struck me, you know, 
this nation grew strong over the years, particularly in 
agriculture, which was the first industry that this nation had, 
and it was one of the most important, until just a few years 
ago, and it is still extremely important. The government, 
including the Congress, recognized that many years ago, we 
established the land grant universities, which were designed to 
do research in agriculture. They set up the Cooperative 
Extension Services, which is the combination of the federal and 
State, and everyone thinks it is a wonderful system, and we put 
about $400 million a year into the cooperation Extension 
Service.
    Now, it has always seemed very strange to me, that since 
back then, agriculture was 80 percent of the employment in the 
country. Now, it is less than two percent because of the 
modernization, and we are still spending $400 million a year on 
the Cooperative Extension Service, whereas at the same time, 
manufacturing is now roughly 14 percent of the employment in 
the country, and we have trouble getting $100 million for an 
extension program. Now, there is something wrong with this 
picture, isn't there? And I think we just have to recognize 
that.
    Agriculture grew strong because of assistance from the 
Federal Government. Manufacturing is, has been strong without 
government assistance. Now, I think we are at the point where 
it needs some, and the MEP, I think, and TIP, are very good 
programs with a huge payback to the government, in terms of 
taxes, general economic health, and so forth.
    So, I--you can tell I am the son of a preacher. I have to 
get that message across. I preach it all the time, but I just 
wanted to make my point clear on that. I think this country has 
made a bad mistake on those issues, and we should carry the 
ball forward on them.
    Thank you very much.
    Chairman Wu. Thank you very much, Dr. Ehlers. Ms. 
Richardson.
    And returning to other subjects under NIST, Dr. Turner, I 
have heard concerns both within the Federal Government and in 
the private sector, about the status of the cyber security 
initiatives at NIST, and setting standards for cyber security, 
and I wanted to ask you and ask other members of the panel to 
comment, if you would, on where we are in developing cyber 
security standards, and whether we are making adequate progress 
for where we ought to be.
    Dr. Turner. Yes, sir, one of our initiatives is a cyber 
security initiative, that we are working with NSA, the FBI and 
other groups on that. It is basically to provide defense in 
depth in protecting computer assets. It is looking at cyber 
security keys, but also, looking at other measures that can 
take the, you know, that can move forward, and layers of 
protection that we can have, and so, that is, this is something 
that we are very serious about.
    We are also--the Quantum Computing Initiative also feeds 
into that, because not only will that revolutionize the way 
computing is done, but also, it provides a huge increase in the 
level of security that can be provided for computing, and 
making sure that your messages are easily accessible to those 
who have authorization to them, but extremely difficult for an 
adversary to tap into. So, we are moving forward on both of 
those areas. Cyber security, also, is an extremely important 
area for us, because again, the way that our nation now relies 
on the network and using, moving things back and forth, you 
know, using the electronics that we have available, you know, 
we need to make sure that this is being done.
    Also, I would like to point out that we are, you know, 
doing other things to help facilitate electronic commerce, 
which highlights to us, even more, the need for a secure 
network.
    Chairman Wu. Well, if there are no other comments by other 
panelists, we are drawing down to about the last two and a half 
minutes before this voting clock expires on the House Floor, 
and let me just flag, for submission by staff and for response, 
concerns about two other general areas.
    And one is whether there has been sufficient investment in 
biomaterials, because there is discussion that sufficient 
reference materials for biologics would be of great assistance 
to developing technologies and industries. And the other is 
whether there is sufficient oversight over the tremendous 
investment that is going on in nanotechnology. Now, 
nanotechnology is a very appropriate thing to be investing in. 
However, I am told that about 20 percent of NIST's research 
budget is currently being invested in nanotechnology, and I 
want to make very sure that those investments are made with 
some coordination, and that it is a bottoms-up effort to 
support various things going on in our economy, and not a 
response to a top-down, things ought to fit in nanotechnology, 
so whatever it is you are doing, let us fit it under the 
nanotech rubric.
    My apologies to the panel for sort of the interruptions 
that we have had today, but thank you all very much for 
appearing this afternoon. Further statements will be, can be 
submitted into the record for the next five days, and I thank 
everyone for appearing.
    This hearing is adjourned. Thank you.
    [Whereupon, at 3:06 p.m., the Subcommittee was adjourned.]
                              Appendix 1:

                              ----------                              


                   Answers to Post-Hearing Questions


Responses by James M. Turner, Acting Director, National Institute of 
        Standards and Technology, U.S. Department of Commerce

Questions submitted by Chairman David Wu

Q1.  How much of NIST's resources will be devoted to cyber security in 
FY08? Apart from the $5 million cyber security initiative will this 
year's budget, how much does NIST propose to spend in FY09 on cyber 
security?

A1. NIST will devote approximately $20.8 million from STRS 
appropriations to cyber security in FY 2008, and will increase that by 
$5 million if Congress funds the FY 2009 request.

Q2.  How did NIST determine the size of the FY09 biotechnology 
initiative ($10 million)? What external strategic partners does NIST 
plan to work with in expanding its investments in the life sciences?

A2. As part of the American Competitiveness Initiative, the $10 million 
requested in the President's budget for this initiative was determined 
as sufficient to acquire the appropriate expertise and resources 
necessary in FY 2009 for building up our foundation to meet anticipated 
future needs in biosciences measurement. NIST's role in the biosciences 
is to leverage the agency's expertise in the quantitative physical and 
informational sciences that provide the measurement infrastructure for 
enabling increased innovation in this area, and to provide confidence 
for measurements of complex biological systems. To develop a robust 
measurement capability, NIST has been reaching out to stakeholders that 
include government, industry, and academia (examples include: FDA, NIH, 
Pharma, Amgen, Genetech, Merck, the Institute for Systems Biology, 
California Institute of Technology, the Mayo Clinic, and other 
organizations) to identify critical measurement needs. As a result of 
these efforts, the NIST FY 2009 budget initiative targets the need for 
quantitative, traceable measurements and standards for biomarkers, the 
ability to quantitatively make simultaneous multiplexed measurements of 
multiple biological molecules (including genes, proteins, RNA, etc.), 
and the informatics and computational tools and standards to manage and 
manipulate the tremendous amounts of data generated by biological 
experimentation.
    As NIST expands investments in the life sciences, we are continuing 
to work with stakeholders to continue our efforts in identifying other 
critical measurements and standards needs. As part of this planning 
process, NIST is working with the University of Maryland Biotechnology 
Institute to sponsor a meeting entitled ``Accelerating Innovation in 
21st Century Biosciences: Identifying the Measurement Standards and 
Technological Challenges.'' The meeting will be held from October 20-
22, 2008, at NIST and will be open to leaders from industry, academia, 
and government. Details of the meeting can be found at http://
www.cstl.nist.gov/Biosciences.html. Input from this meeting and other 
outreach activities will form the basis of NIST's strategic plan for 
future program expansion in the biosciences.

Q3.  In each of the last five years, NIST has spent approximately 20 
percent of its research budget on nanotechnology, the highest 
percentage of all the agencies in the National Nanotechnology 
Initiative. How did NIST decide to allocate this level of resources to 
this one technology area? Does NIST have a roadmap for its work in 
nanotechnology? If not, why not?

A3. The focus of a majority of research at NIST is the advancement and 
application of measurement science. This work relies increasingly upon 
advances at the nanoscale--one billionth of a meter--and smaller (the 
single atom, ion, photon, electron, etc.) It is a natural development 
as the capabilities and needs of science and industry have advanced, 
and it has been part of NIST's measurement science strategy before the 
term ``nanotechnology'' became commonly used.
    The label nanotechnology is, in fact, a broad one, linked mainly to 
the size at which a material is being fabricated or examined. So it is 
relevant to multiple disciplines ranging from physics, chemistry, and 
materials science to electronics, building and fire research, and 
information technology. That also makes nanotechnology relevant to many 
scientific and engineering advances and industrial applications being 
pursued by the customers served by NIST--and makes NIST measurement-
oriented contributions important to the nanotechnology revolution. This 
multi-disciplinary, multi-sector involvement explains the relatively 
high percentage of work at NIST that is classified as nanotechnology. 
It should be expected that a good percentage of NIST's work in 
nanotechnology also can be classified with other labels, such as 
``materials science'' or ``bioscience'' or ``electronics.''
    That is why NIST invests heavily in nanotechnology-related 
research. This work is always informed by current and future needs of 
industry, academia, and government for measurement-based advances. The 
National Nanotechnology Initiative is the overarching government effort 
to identify and address nanotechnology needs, and NIST's priorities are 
derived from this cooperative planning effort--and supplemented by 
information provided by NIST's primary customers and potential 
customers in industry, academia, and government.
    The Nanotechnology: Discovery to Manufacture initiative and the 
Nanotechnology: Environment, Health, and Safety Infrastructure 
initiative are two FY 2009 budget initiatives that tackle specific 
challenges in the development and manufacture of nanodevices, or 
products incorporating nanomaterials. Both of these initiatives were 
mapped out and planned after significant consultation and coordination 
with multiple stakeholders through interagency working groups, and 
technical workshops. Moreover, it fits into a multi-year matrix of 
phased investments in nanotechnology that NIST developed with the 
active involve of leaders of all laboratories at NIST working on 
nanotechnology. The final decision about these planned, phased 
investments was made by the NIST Director.
    NIST will continue to coordinate with the NNI and our stakeholders 
in industry to ensure that our research programs that are specifically 
targeted to nanotechnology continue to address the highest impact 
challenges and problems. We will update our planning accordingly.

Q4a.  How will NIST ensure that the results of the new initiative in 
the environmental, health and safety (EHS) implications of 
nanotechnology will be disseminated to regulatory agencies such as EPA 
and FDA?

A4a. NIST will adhere to strict guidelines published within the Federal 
EHS research strategy to ensure results of the NIST nanoEHS initiative 
will be disseminated, particularly to the regulatory agencies, to 
coordinate existing, and foster expanded, agency efforts to address 
priority research needs and identified gaps. NIST will work closely 
with the Nanomaterials Environmental Health Implications (NEHI) Working 
Group (WG) to continue to facilitate coordination and increased 
collaboration among the NNI agencies' research programs to address 
priority research needs both individually and jointly, leverage 
investment and expertise, and avoid duplication of effort.
    Additionally, NIST will work with the other agencies and convene 
workshops tailored to assess the state of science as this initiative 
moves forward. The nanoEHS initiative research will be discussed in 
detail and areas of weakness and gaps will be assessed during these 
workshops. Participants will include representatives from the NNI 
agencies, particularly the regulatory agencies, as well as academia, 
non-governmental organizations, and industry. These workshops will:

          facilitate development of joint programs among NNI 
        regulatory agencies to ensure research needs critical to 
        regulatory missions are being met

          clarify priorities and areas of focus for pursuit and 
        collaborations with the regulatory agencies

          avoid unproductive redundancy and research that is 
        decoupled from regulatory agencies' missions and real-world 
        application, and

          identify synergistic opportunities.

    In addition, NIST will continuously evaluate its activities with 
the regulatory agencies via the framework outlined below.

Establishing a regular review process. NIST with work with the NNI 
member agencies, particularly the regulatory agencies, and the NEHI 
Working Group to conduct periodic progress review of this initiative, 
anticipated at a minimum yearly, and will update the research 
activities and priorities, taking into consideration advances from 
private sector and international entities. Formats for review may 
include, for example:

          a novel peer-consultation panel review by 
        representatives from the NNI member agencies, practitioners 
        from industry and academia, and representatives from NGOs 
        conducted in a public venue,

          a review via the NIST National Research Council (NRC) 
        Laboratory Assessment Program, and

          a review via the NIST Visiting Committee on Advanced 
        Technology.

Facilitate partnerships with industry. Through its interactions with 
the NNI and the NEHI Working Group, NIST will explore and develop 
mechanisms with participating agencies for partnering with industry to 
support priority research that reduces risk uncertainty facing the 
range of businesses and industry sectors that are commercializing 
nanomaterials for beneficial and practical applications.

Coordinate efforts internationally. Participate actively in 
international efforts related to EHS research, particularly in the work 
of the OECD Working Party on Manufactured Nanomaterials (WPMN), e.g., 
WPMN efforts to develop internationally agreed EHS research priorities, 
testing protocols, and predictive tools.

Focus on development of consensus-based documentary standards to 
support oversight of nanomaterials research. Participate in and support 
efforts by national and international standards development 
organizations to develop nanotechnology-related documentary standards 
particularly those related to EHS research.

Facilitate wide dissemination of research results. Participate in and 
support activities aimed at broadly disseminating available information 
about EHS aspects of nanomaterials. Such activities include those 
already underway in the OECD WPMN, and the ISO Technical Committee on 
Nanotechnologies (TC 229) Working Group on Health, Safety, and 
Environment.

    This initiative builds upon existing NIST expertise. NIST is 
already engaged in collaborative efforts with the FDA to address 
metrology needs that will enable physical and chemical characterization 
of nanoparticles as well as bio-compatibility studies. These 
interactions will continue under this initiative. Additional 
interactions with the National Institute for Occupational Safety and 
Health (NIOSH) for safety evaluations of nanomaterials are planned with 
laboratories on the main campus in Morgantown, WV. EPA has identified 
four key research themes in its recently released draft Nanotechnology 
Research Strategy that are designed to provide leadership for the NNI 
and support the science needs of the EPA. These are: (1) sources, fate, 
transport, and exposure; (2) human health and ecological research to 
inform risk assessment and test methods; (3) risk assessment methods 
and case studies; and (4) preventing and mitigating risks. NIST's 
initiative on nanoEHS will support the development of instrumentation, 
analytical methods, and standards that will be essential to meeting the 
demands to understand and manage nanoEHS research under these four 
themes at EPA.
    Ultimately, NIST will take a leadership role in coordinating and 
communicating with the regulatory agencies, and will facilitate the 
ongoing adaptation of NNI research priorities to new discoveries and 
new materials through its continued interactions with the NNI member 
agencies via participation on the NEHI interagency working group.

Q4b.  What is the process by which NIST determines the nanotechnology 
research needs of these regulatory agencies?

A4b. As one in 20 of the 26 NNI agencies that participate in the 
Nanomaterials Environmental Health Implications (NEHI) Working Group 
(WG), NIST contributes and serves effectively to coordinate the 
planning and implementation of the Federal EHS nanotechnology research 
and activities. Through this process, the NEHI WG creates the framework 
that supports a robust, proactive process for identifying, 
prioritizing, and addressing EHS research needs with respect to 
nanotechnology. Moreover, the NEHI WG operates on a consensus basis. As 
a result, reports and documents created by the WG, reflecting the 
priority research needs of the regulatory agencies, have broad approval 
from all member agencies. Such reports reflect the input of appropriate 
experts within the regulatory agencies. Research needs are presented 
from the perspective of mission specific activities. NIST participates 
in the process of building consensus, enabling NIST to fulfill its part 
of the research activity and through that work, address the needs of 
the regulatory agencies.

Q5.  The 21st Century Nanotechnology Research and Development Act (P.L. 
108-153) tasks NIST with disseminating nanotechnology research results 
to small- and medium-sized manufacturers through the MEP program. If 
federal support for MEP is eliminated, how will NIST carry out this 
statutory requirement?

A5. NIST will rely on its laboratories to help disseminate its 
nanotechnology research results to smaller manufacturers. All of the 
NIST laboratories, including the Center for Nanoscale Science and 
Technology (CNST), play an active role in transferring both knowledge 
and technology to industry--and this includes both large and small 
companies as well as the universities that are engaged in 
nanotechnology. This takes place on a regular basis as the normal 
course of business at NIST via publications, seminars, as well as 
direct contact and collaborative research.

Q6.  In FY08, NIST is receiving about 20 percent of its research budget 
from funds transferred from other agencies. How does NIST ensure that 
this external funding does not interfere with its core mission? How 
does NIST ensure that acceptance of external funding does not 
jeopardize its position as an independent technical authority?

A6. NIST ensures that external funding does not interfere with its core 
mission by having and applying clear policies and guidelines for 
accepting other agency funding and by being selective in its ultimate 
decisions.In keeping with its authorizing legislation, NIST provides 
unique measurement services and makes available its technical 
competence for the support of important missions of other Federal 
Government agencies, including agencies where mandatory measurement and 
test standards are embodied in regulations which may be essential to 
enforcement responsibilities, e.g., law enforcement, and fair and 
rational management of the Nation's technology.
    The Congress recognizes this role by encouraging and directing NIST 
to work with other agencies on a number of issues including: the 
Election Assistance Commission on voting system testing and 
certification, and DHS on first responder communications inter-
operability.
    NIST ensures that acceptance of external funding does not 
jeopardize its position as an independent technical authority by 
strictly avoiding conflict of interests and maintaining high standards 
of scientific research and ethical conduct.
    Any proposed other agency work must meet at least one of the 
following criteria before NIST can accept the work:

        1.  Acceptance by NIST establishes traceability of measurements 
        to national standards.

        2.  Private sector cannot or will not develop test methods for 
        materials, mechanisms, and structures related to items 
        purchased by the government or important to the public 
        interest.

        3.  Support services to other agencies authorized or mandated 
        by specific legislation.

        4.  A contract placed outside the Federal Government would 
        result in an unavoidable conflict of interest.

        5.  Requirements for accuracy of physical constants and 
        properties of materials cannot be met by other sources.

        6.  Unique capability of NIST required for support services to 
        other agency.

        7.  Use of a private sector source by the other agency would 
        cause significant and intolerable delays in providing services 
        and results.

        8.  Use of a private sector source by the other agency would 
        result in a higher cost to the government.

Q7.  The Committee noted that this year's Budget Requests for FEMA, 
NSF, and USGS did not specifically request FY 2009 funding for the 
National Earthquake Hazard Reduction Program (NEHRP). As the agency 
chairing the interagency working group on this program, what measures 
did NIST take to ensure a coordinated budget process? Are the NEHRP 
related activities of these agencies coordinated with NIST's? Please 
describe what the FY 2009 will entail at each agency.

A7. NEHRP leadership is provided by the Interagency Coordinating 
Committee (ICC), which includes the directors of the NEHRP agencies, as 
well as the directors of OMB and OSTP. The ICC submitted the Annual 
Report of the National Earthquake Hazards Reduction Program to the 
House of Representatives' Science and Technology Committee staff in 
March 2008, which contains much valuable information. This report is 
also available on the web at http://www.nehrp.gov/pdf/
2008NEHRPAnnualReport.pdf. Table 2.2 (page 8) of the report lists the 
agencies' FY 2008 enacted budgets, while Table 2.3 of the annual report 
lists their FY 2009 requested budgets (page 9).
    As reported on page 3 of the Annual Report, the ICC members agreed 
in mid-2007 to a formal process of unified interagency program planning 
with coordinated budget requests, commencing with the FY 2010 budget 
request. While this formal agreement was not in place for the FY 2009 
budget, the agencies nevertheless worked closely together as they 
prepared their respective budgets. Table B.1 (page 66) of the Annual 
Report lists the various formal NEHRP meetings that occurred in FY 
2007. The ICC met three times. The Program Coordination Working Group 
(PCWG), which is composed of working-level representatives of the four 
agencies and chaired by NIST, met 10 times during FY 2007. Similarly, 
the ICC and PCWG have continued to meet in FY 2008. Budget and 
interagency coordination discussions occur at almost all of the ICC and 
PCWG meetings. In addition, the NEHRP Director (a NIST research 
engineer) is in constant communication with the other agencies' 
representatives to coordinate their activities.
    As the agencies prepared their FY 2009 NEHRP budget requests, they 
worked toward maintaining their already ongoing activities that 
contribute to the Nation's earthquake preparedness, and also began 
addressing the nine Strategic Priorities that the agencies have 
identified in the new draft NEHRP Strategic Plan that is now undergoing 
public review prior to its formal adoption. This draft plan may be 
found on the web at: http://www.nehrp.gov/pdf/
NEHRP-StrategicPlan-Draft.pdf
    The ICC has agreed on future directions for the program through the 
Strategic Priorities. The NEHRP Advisory Committee on Earthquake Hazard 
Reduction (ACEHR), which is composed of 16 of the Nation's leading 
earthquake professionals, has reviewed and strongly endorsed these 
priorities. The agencies have agreed strongly on these priorities and 
intend to focus on addressing them, as resources are available, 
commencing in FY 2009. All but one of the priorities will by design 
require interagency cooperation and coordination, to underscore the 
importance of interagency cooperation as key to the success of the 
overall endeavor.
    The agencies are each supporting the strategic priorities in a 
manner that is agency-appropriate. For FEMA, the President's budget 
request for FY 2009 supports the strategic priorities by including an 
increase for State assistance, which has historically been a vital part 
of NEHRP but has not been prominent in recent years. To help address 
strategic priorities, NIST has a significant increase in the FY 2009 
request, under the auspices of the American Competitiveness Initiative, 
for development and implementation of Advanced Earthquake Risk 
Mitigation Technologies and Practices and further development of 
techniques for Evaluation and Rehabilitation of Existing Buildings. In 
keeping with its overarching mission of supporting fundamental science 
and engineering, NSF does not specifically direct funding to the NEHRP 
strategic priorities or to supporting the existing research 
infrastructure. Rather, NSF highlights the NEHRP priorities in its 
research solicitations, thus encouraging the researchers it supports to 
link their activities to the NEHRP priority areas.
    NSF will encourage investigators to propose curiosity-driven basic 
research that could contribute toward the priority areas. Because of 
anticipated NEHRP budget reductions, USGS will focus on maintaining its 
ongoing NEHRP activities that include seismic monitoring and hazard 
assessment.

Questions submitted by Representative Phil Gingrey

Q1.  How many researchers will NIST support in the expanded JILA? What 
is the annual value of the utility services provided to JILA by the 
University of Colorado?

A1. The proposed expansion will allow the number of graduate and post-
doctoral students studying at JILA each year to increase from 
approximately 170 to 250. This represents approximately a 10 percent 
increase in the national training capacity for this critical field.
    At JILA, there are currently 28 senior scientists (JILA Fellows), 
and approximately 125 graduate and 45 post-doctoral students. Of the 
JILA researchers, nine Fellows and six post-doctoral students are 
members of the NIST Quantum Physics Division. The remaining researchers 
are University of Colorado faculty and students funded by various 
State, federal and private sources.
    The University of Colorado pays 50 percent of utility services 
provided to JILA. For reference, the utility costs from July 1, 2006 to 
June 30, 2007 for JILA totaled approximately $535 thousand and half was 
paid by the University of Colorado.

Q2.  One of the new initiatives in your request is for implementation 
of a new program focused on the reducing inefficiencies in global 
supply chains. You state that one of your major goals will be the 
development of development roadmaps for standards ``in target industry 
sectors.'' How will NIST determine which industry sectors to target?

A2. CNIST uses a variety of means to guide programmatic activities. In 
this case, a series of economic studies were performed by the Research 
Triangle Institute for NIST to assess the cost of inadequate inter-
operability. These studies demonstrate that the U.S. loses billions of 
dollars due to lack of inter-operability. Market-specific losses 
include at least $1 billion per year for engineering data transfer in 
the automotive sector,\1\ $5 billion in the transportation sector 
(including automotive and aerospace) \2\, and $15.8 billion in the 
construction sector.\3\ These industrial sectors are targeted in this 
initiative based on the magnitude of their inter-operability losses.
---------------------------------------------------------------------------
    \1\ Inter-operability Cost Analysis of the U.S. Automotive Supply 
Chain (NIST Planning Report #99-1)
    \2\ Economic Impact of Inadequate Infrastructure for Supply Chain 
Integration (NIST Planning Report #04-2)
    \3\ Cost Analysis of Inadequate Inter-operability in the U.S. 
Capital Facilities Industry (NIST GCR 04-867, 2004)
---------------------------------------------------------------------------
                   Answers to Post-Hearing Questions
Responses by James W. Serum, Chairman, NIST Visiting Committee on 
        Advanced Technology; President, Scitek Ventures LLC

Questions submitted by Chairman David Wu

Q1.  Is NIST's current level of investment in cyber security adequate? 
What are the areas of cyber security in which NIST can have the 
greatest impact, given its specific competencies?

A1. Cyber security is critical to the economic and national security 
interests of the United States and NIST is essential to the success of 
our country's cyber security efforts with research programs that 
address topics as diverse as the development of measurement systems 
necessary to evaluate the efficacy of current cyber security strategies 
to developing the most advanced and secure quantum encryption 
technologies available. As part of the NIST's proposed budget growth 
under the ACI and now under the COMPETES Act, NIST has been working to 
grow its programs and capabilities in this essential area with 
initiatives submitted in FY07, FY08, and FY09. Unfortunately, NIST is 
chronically under funded and the full potential of NIST in these areas 
remains unrealized.
    Increased investment would enable NIST to assist in the propagation 
of measurement software to assess the level of cyber-infection, botnet 
growth, spam, and other cyber-hazards found in computers connected to 
the Internet or on private corporate and government networks. There is 
no reason for NIST to compete with commercial sector companies in the 
production of anti-virus (or anti-malware) tools, but NIST can be very 
helpful in the development of metrics and measures of gross infections 
in computers in the government, private sector, and general user 
population. NIST can also be very helpful in analyzing risks associated 
with the aggregation of health and financial information and the 
protection of such information from unauthorized access and use. Given 
sufficient funding NIST is poised to have significant impact in a 
number of fundamental security technologies such as: cryptography, risk 
management, biometrics, tokens, industrial controls, operating system 
security, security protocols, authentication, and quantum encryption. 
In addition, NIST has experience in design usability of information 
systems and can establish broad based framework solutions that cut 
across independent, proprietary solutions. Furthermore, NIST has the 
strategic relationships with IT system developers and vendors to 
promote adoption of the research results.

Q2.  How did NIST determine the size of the FY09 biotechnology 
initiative ($10 million)? Is this level of funding adequate? How should 
NIST identify the appropriate external strategic partners to work with 
in expanding its investments in the life sciences?

A2. NIST has for many years, recognized the importance of bioscience 
research as part of its overall Healthcare Program, however, as NIST is 
chronically underfunded and is simultaneously called upon to support 
critical measurement needs in a number of fields, the VCAT Bioscience/
Healthcare Subcommittee considers the NIST funds available to target 
challenges in the Biosciences and Healthcare to be grossly inadequate 
and new funding is required. We, the VCAT, have worked closely with the 
NIST staff, with excellent synergy, to focus and direct research to 
areas of greatest need in bioscience. NIST has been working to ensure 
that their projected budget growth under the ACI is targeted to have 
maximum impact. As part of this planning process, NIST has determined 
that expanding their capabilities to address the measurements and 
standards needs of the biotech and life sciences communities is of key 
strategic importance. NIST has defined its role in the biosciences as 
leveraging its expertise in the quantitative physical and informational 
sciences to provide the measurement infrastructure necessary for 
enabling increased innovation in this area, and to provide confidence 
for measurements of complex biological systems. To develop a robust 
measurement capability, NIST has been reaching out to stakeholders that 
include government, industry, and academia (examples include: FDA, NIH, 
Pharma, Amgen, Genetech, Merck, the Institute for Systems Biology, 
California Institute of Technology, the Mayo Clinic, and other 
organizations) to identify critical measurement needs of the 
biosciences community. The FY 2009 initiative, Measurements and 
Standards to Accelerate Innovation in the Biosciences, reflects this 
input. It targets the need for quantitative, traceable measurements and 
standards for biomarkers, the ability to quantitatively make 
simultaneous multiplexed measurements of multiple biological molecules 
(including genes, proteins, RNA, etc.), and the informatics and 
computational tools and standards to manage and manipulate the 
tremendous amounts of data generated by biological experimentation. 
Given the range of NIST budget growth in FY 2009 under the President's 
proposal and the other priority areas that also require additional 
resources, NIST leadership felt that the $10 million requested in the 
President's budget for this initiative would provide a sufficient 
amount of resources to begin to acquire the appropriate expertise and 
resources necessary for building up a foundation to meet anticipated 
future needs in biosciences measurement. We, the VCAT, agree that this 
is a good beginning but the amount should be significantly increased in 
coming years. It is our understanding that NIST plans additional growth 
in this area in the coming years.
    As NIST expands investments in the life sciences, they plan to 
continue to work with stakeholders to continue our efforts in 
identifying other critical measurements and standards needs. As part of 
this planning process, NIST is working with the University of Maryland 
Biotechnology Institute to sponsor a meeting entitled ``Accelerating 
Innovation in 21st Century Biosciences: Identifying the Measurement 
Standards and Technological Challenges.'' The meeting will be held from 
October 20-22, 2008, at NIST and will be open to leaders from industry, 
academia, and government. Details of the meeting can be found at http:/
/www.cstl.nist.gov/Biosciences.html. Input from this meeting and other 
outreach activities will form the basis of NIST's strategic plan for 
future program expansion in the biosciences. NIST intends to reach out 
intensively to a wide cross-section of the biosciences and health 
community to ensure that they are properly focused and resourced. VCAT 
has participated in this planning process and supports the activities 
as they are currently defined. External feedback will also be gained 
through a variety of one-on-one meetings as well as group contacts with 
key players in the field. We believe that this activity will indeed 
assist them in developing a comprehensive Strategic Plan and provide 
the foundation for greater investment in this critical area of 
measurement science.

Q3.  In each of the last five years, NIST has spent approximately 20 
percent of its research budget on nanotechnology, the highest 
percentage of all the agencies in the National Nanotechnology 
Initiative. Is this an appropriate level of investment in this one 
technology area? How is NIST ensuring that nanotechnology work is 
coordinated across labs?

A3. On the surface, a 20 percent investment in nanotechnology seems 
high. However, the VCAT Nanotechnology subcommittee has been deeply 
involved with the NIST staff during the past two years and we support 
the efforts underway. A deeper dive into applications of nanotechnology 
and the actual research being conducted at NIST supports their current 
level of research. The focus of a majority of research at NIST is the 
advancement and application of measurement science. This work relies 
increasingly upon advances at the nanoscale--one billionth of a meter--
and smaller (the single atom, ion, photon, electron, etc.) It is a 
natural development as the capabilities and needs of science and 
industry have advanced, and it has been part of NIST's measurement 
science strategy before the term ``nanotechnology'' became commonly 
used.
    The label nanotechnology is, in fact, a broad one, linked mainly to 
the size at which a material is being fabricated or examined. So it is 
relevant to multiple disciplines ranging from physics, chemistry, and 
materials science to electronics, building and fire research, and 
information technology. That also makes nanotechnology relevant to many 
scientific and engineering advances and industrial applications being 
pursued by the customers served by NIST--and makes NIST measurement-
oriented contributions important to the nanotechnology revolution. This 
multi-disciplinary, multi-sector involvement explains the relatively 
high percentage of work at NIST that is classified as nanotechnology. 
It should be expected that a good percentage of NIST's work in 
nanotechnology also can be classified with other labels, such as 
``materials science'' or ``bioscience'' or ``electronics.'' This work 
is conducted and prioritized by current and future needs of industry, 
academia, and government for measurement-based advances. The National 
Nanotechnology Initiative is the overarching government effort to 
identify and address nanotechnology needs, and NIST's priorities are 
derived from this cooperative planning effort and supplemented by 
information provided by NIST's primary customers and potential 
customers in industry, academia, and government.
    The Nanotechnology: Discovery to Manufacture initiative and the 
Nanotechnology: Environment, Health, and Safety Infrastructure 
initiative are two FY 2009 budget initiatives that tackle specific 
challenges in the development and manufacture of nano-devices, or 
products incorporating nanomaterials. Both of these initiatives were 
mapped out and planned after significant consultation and coordination 
with multiple stakeholders through interagency working groups, and 
technical workshops. Moreover, it fits into a multi-year matrix of 
phased investments in nanotechnology that NIST developed with the 
active involvement of leaders of all laboratories at NIST working on 
nanotechnology. The final decision about these planned, phased 
investments was made by the NIST Director.
    I have addressed the question of NIST coordination and cooperation 
within NNI and across government and research organizations. The VCAT 
has also worked with NIST staff in creating an effective coordinating 
function within their own laboratories. Consistent with VCAT's 
recommendation in 2008, NIST has recently established a Nano-
Information Council under the direction of CNST Director Bob Celotta to 
facilitate the coordination of nano-related work.

Questions submitted by Representative Phil Gingrey

Q1.  You state in your testimony that the quality of strategic planning 
within NIST varies, but the agency has been largely successful in 
soliciting the views and needs of outside collaborators from industry. 
What areas need improvement?

A1. As indicated in my congressional testimony, during the past five 
years, VCAT has repeatedly emphasized the need for improved strategic 
planning throughout the NIST organization. We have observed a 
progressive improvement in their strategic planning process. In 
response to the planned budget doubling outlined in the American 
Competitiveness Initiative, NIST fully recognizes the need for a 
comprehensive strategic plan and has developed a strategic approach 
that is intended to establish the programs, plans, and infrastructure 
necessary to more than double NIST's impact on the economy. As part of 
this plan they indicate that they will:

        1)  Target research efforts on technologies that are set to 
        drive innovation in the 21st century

        2)  Identify and address the critical measurement barriers to 
        innovation.

        3)  Evaluate NIST's facilities to ensure adequate capacity and 
        capabilities exist to meet current and projected industry and 
        university needs.

        4)  Support academia and industry by enhancing the capabilities 
        and capacity of NIST's User Facilities.

        5)  Develop an expanded federal tool set for support of 
        technology innovation and industrial competitiveness.

    One of the greatest challenges of strategic planning for NIST 
relates to the tremendous diversity of critical measurement research 
across a wide number of industrial sectors within their ``mission.'' 
They must educate a broad number of employees to understand the 
strategic planning process and to make strategic planning pervasive 
across the entire organization. Not all NIST research should fit neatly 
into the strategic plan (by design to encourage basic innovation 
research) but the senior staff must carefully determine those projects 
that should fit into the strategic plan and assure that the direction 
and priorities of the projects meet the strategic goals and schedules.

Q2.  In your testimony you warn that ``ad hoc'' studies may distract 
from the mission and vision of the agency. What evidence did the VCAT 
see that suggested this possible problem?

A2. The VCAT believes that NIST is significantly under funded in many 
areas relative to the importance of measurement science to the U.S. 
Economy and National Security. Project ``initiatives'' that are funded 
at a base level to get a technology program launched too often languish 
due to lack of funds in subsequent years. VCAT has consistently urged 
NIST to implement a stronger strategic planning process and they have 
made good progress in this area. A good strategic plan has goals and 
milestones of scientific accomplishment which industry depends on to be 
achieved. Diversions of resources and funds to ``ad hoc'' programs, 
however important, can impede ongoing programs that have critical 
strategic and economic importance. The VCAT has observed that NIST 
receives many ``assignments'' from Congress and the Executive Branch, 
including OMB that can take people and resources away from NIST's 
planned research programs. The point I was making in my testimony is 
that Congress and the Administration need to be aware of the potential 
for those assignments to distract from already agreed upon priorities, 
especially when additional resources are not provided in order to 
accomplish those tasks. For example, NIST has received numerous IT-
related assignments that pertain to how federal agencies can improve 
the effectiveness and security of their operations. The World Trade 
Center Disaster and the Voting system and standards are other examples. 
Even when additional funds are added for these types of projects, NIST 
may spend significant portions of their normal research funds to 
complete these important ad hoc projects. I should emphasize that we 
believe, in most cases that NIST is the appropriate organization for 
these research projects to be undertaken due to its measurement 
research expertise. However, they do have an impact on the effective 
implementation of their strategic programs and plans. Unless the agency 
receives funding to perform this work, its research-oriented priorities 
will suffer.
                   Answers to Post-Hearing Questions
Responses by Mary L. Good, George W. Donaghey Professor and Dean, 
        Donaghey College of Engineering and Information Technology, 
        University of Arkansas, Little Rock

Question submitted by Representative Phil Gingrey

Q1.  Can you elaborate on the suggestion in your testimony that the 
Baldrige National Quality Award needs to be more closely aligned with 
NIST's strategic plan?

A1. ``The Baldrige National Quality Award'' has had a significant 
impact on companies and organizations that have followed the Baldrige 
guidelines and submitted nominations for the award. The value of this 
program is widely accepted. Strategically the Award program should 
mirror NIST interests in manufacturing, nanotechnology, science 
education, etc. It would provide great potential for meaningful 
interactions with these segments of the American enterprise that NIST 
can influence.
                              Appendix 2:

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                   Additional Material for the Record
































































          Comments on NIST Technology Innovation Program (TIP)
                        Robert D. ``Skip'' Rung
                    President and Executive Director
       Oregon Nanoscience and Microtechnologies Institute (ONAMI)

Introduction

    Chairman Wu and Members of the Committee, thank you for the 
opportunity to comment on a matter that touches a subject of great 
passion for me and also, I believe, of great importance for the 
continued economic and social health of our nation.
    Success at science-based innovation--the current cutting edge of 
which just happens to be called ``nanotechnology''--is critical for 
U.S. economic competitiveness, for the supply of jobs with sufficiently 
high productivity to offer wage levels Americans have come to expect, 
and for the prosperity that pays for all the social goods, such as 
health and education, we would like to keep intact for future 
generations.
    Oregon Nanoscience and Microtechnologies Institute, Oregon's first 
Signature Research Center, has so far received $37M from the Oregon 
Innovation Council because they know that success in the global 
competition for jobs and prosperity completely depends on a traded 
sector that wins through innovation--fueled by research and 
entrepreneurship. And that is the dual mission of ONAMI--growth in 
scientific research by means of deep inter-institutional and industry 
collaborations, and job growth at Oregon employers commercializing that 
research. I think we're an interesting case. We are a small state, but 
have arguably the world's most powerful collection of industrial 
``small tech'' R&D assets--Intel and HP's top research sites, FEI, 
Invitrogen--Molecular Probes. But we have no wealthy private university 
and are not a traditional venture capital hot spot. Still, we know for 
certain that our research quality and creative ideas are competitive 
with anyone's, and therefore we should be able to grow our 
entrepreneurial sector.
    Thus, one of ONAMI's core activities--coupled with our own set of 
user facilities--is a commercialization fund that makes grants to 
bridge the very real gap between what research agencies pay for and 
what ``pencils out'' for investors. We have so far enabled three very 
promising microtechnology spin-out companies and four nanotechnology 
spin-out companies.
    It is interesting that today, in contrast to 30 years ago, most 
high-risk and disruptive innovation--not just technology research, but 
getting to market--takes place in small companies, many of them 
venture-backed startups. Venture money originating in pension funds, 
university endowments and the bank accounts of high net worth 
individuals turns out to be more patient and risk-tolerant than 
corporate cash, and large companies increasingly innovate by 
acquisition and open technology sourcing--from small companies. This is 
why there needs to be intense focus on making U.S. nanotechnology 
entrepreneurs successful; understanding and addressing the myriad 
hurdles and challenges they face. For example, a $2M regulatory 
compliance cost that is easily absorbed by a Fortune 500 company is a 
deal killer for the entrepreneur who's inventing our future.
    Specific to nanotechnology, then, what are the hurdles? They 
include the greater expense and time required for proof-of-concept 
demonstration, comparatively high capital requirements, the need for 
convenient access to specialized facilities and expertise, and often 
very complicated technology licensing situations. And this is not to 
mention the growing burden of regulatory compliance and related 
uncertainty. Investors see these things as risks and act accordingly. 
For all these reasons, the appetite of venture capital for 
nanotechnology has turned out to be less than many hoped and expected. 
This may not necessarily be the case overseas as hungry global 
competitors such as China place a higher relative value on economic 
development.
    To address these hurdles, the Bayh-Dole Act has enabled 
universities to own and out-license federally funded research results, 
and in the process provide an incentive to faculty inventors. The NNI 
has established 13 user facilities at universities--with no recent 
additions, and the national labs have various access mechanisms, though 
they are mostly geared for publishable research and expensive for 
business to use. SBIR and STTR are vital programs and a lifeline for 
many innovative small businesses, including for our own lead 
nanotechnology spin-out, Crystal Clear Technologies. The new Technology 
Innovation Program (TIP) is an important ``next level up'' opportunity 
that has the potential to accelerate commercialization of disruptive 
technology by small- and medium-sized American businesses which will 
need to demonstrate significant excellence, competitiveness and 
commitment to win one of these prestigious awards.

Comments Specific to TIP

    Based on my reading of the authorizing law (P.L. 110-69, Sec. 
3012), I believe the TIP program will be a significant improvement over 
the ATP program which it supersedes. First, it concentrates funding 
where it is most needed and most likely to result in 
commercialization--in small and medium businesses. Second, it allows 
research institutions to lead proposals, which in some cases will be 
the most effective mechanism--particularly when a new company with 
significant participation and backing from the institution is being 
launched. As a state technology program, we are glad to see the 
requirement for TIP to cooperate and coordinate with us. We greatly 
look forward to this, and in fact are happy to say that TIP director 
Marc Stanley will be visiting Oregon later this month to talk about the 
program with our business and investment community.
    TIP retains two very important and attractive aspects of the ATP. 
First, the awards are large enough to enable significant projects. 
Second, the proposal and decision process is fast. I hope that the 
contracting and disbursement phases will be rapid as well, since time 
is very precious to innovative businesses striving for success in a 
very competitive world. Thus the ratio of proposal effort to potential 
reward is more favorable than is the case with Phase I SBIR and STTR 
awards. (I strongly encourage the Committee to consider of raising the 
size of these awards, as I know Chairman Wu has suggested.)
    From the point of view of a small, innovative business trying to 
commercialize risky but disruptive technology, I do see some TIP 
requirements that could prove daunting, so I suggest that the Committee 
discuss these and consider possible modifications to the program as 
experience is gained.
    The main concern is the 50 percent or greater cost share 
requirement (i.e., maximum 50 percent federal share, all sources). 
Small or medium businesses will have great difficulty finding these 
funds unless they are already highly profitable. An idea to consider is 
some form of sliding scale where the federal share can perhaps be 
higher for smaller businesses and/or for award amounts that are well 
below the maximum request levels.
    A related concern, again for smaller and investor-backed 
businesses, is the requirement that alternative project funding be 
sought--unsuccessfully. In order to fund their required 50 percent or 
greater share of total project cost, small businesses will almost 
always need some form of alternative funding from investors or 
customers--and the program seems to say that this should not be 
possible! Perhaps this matter simply needs some language clarification. 
The overarching point, however, is to consider the realistic funding 
environment for small businesses, and to make sure that participation 
in the TIP program is not unreasonably out of reach for them.
    To summarize, I am very glad to see that the TIP program has been 
established and funded in FY08. I encourage its continuation, 
improvement in the light of experience, and increased funding in future 
years.

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