[Senate Hearing 110-]
[From the U.S. Government Publishing Office]



 
  COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES APPROPRIATIONS FOR 
                            FISCAL YEAR 2008

                              ----------                              


                        THURSDAY, MARCH 1, 2007

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Barbara A. Mikulski (chairman) 
presiding.
    Present: Senators Mikulski, Kohl, Reed, Shelby, and 
Alexander.

                         DEPARTMENT OF COMMERCE

                        Office of the Secretary

STATEMENT OF THE HONORABLE CARLOS M. GUTIERREZ, 
            SECRETARY


            opening statement of senator barbara a. mikulski


    Senator Mikulski. Good morning, the Subcommittee on 
Commerce, Justice, Science, and Related Agencies will come to 
order. This is the first time in 13 years that I assume the 
chair of this subcommittee, and it's a great honor, and it's a 
bit of an emotional moment.
    In 1994, the power transferred to the other party, and in 
those 13 years, much has changed. Our economy has certainly 
changed, the challenges to our country have certainly changed, 
the jurisdiction and scope of this subcommittee has expanded.
    The one thing that will not change, is the enduring spirit 
of bipartisanship that has always been characteristic of this 
subcommittee, working as I did at VA/HUD, with Senator Bond, 
and last year with my esteemed colleague, Senator Shelby. We 
see ourselves as a partnership, on promoting what is right, and 
so this sense of cordiality, consultation, and civility will 
continue to be an enduring principle of this subcommittee.
    Just to outline a few of the priorities for this year, this 
subcommittee will focus on innovation, security, and 
accountability. When I look at the agencies in our 
jurisdiction, I see tremendous opportunities to promote 
innovation that creates jobs in our own country, makes our 
community more secure, while assuring accountability for the 
stewardship of the taxpayers.
    The funding that this subcommittee puts in the Federal 
checkbook, must meet the mission and mandate of each agency, 
and make a down payment on its priorities. The Commerce, 
Justice, Science Subcommittee is the innovation subcommittee. 
If America is going to be more competitive, we need to focus on 
funding and policies to develop new technologies, that lead to 
new products and new industries that create new jobs.
    It is not the role of this subcommittee to pick winners and 
losers. We are not an industry-controlled society. But it is to 
provide the basic and applied research that results in these 
new products and technology, and our agencies set the policies 
that will make sure that we have an innovation-friendly 
government.
    Over the next several weeks, we will initially focus on 
innovation. Then we will go to both Federal Bureau of 
Investigation (FBI) and law enforcement to focus on security. 
Underlying in all of the hearings will be questions related to 
accountability, and our stewardship of taxpayers dollars.
    We're looking at the National Science Foundation (NSF) that 
funds promising research and cultivates the next generation of 
science and engineers, particularly at the graduate level. The 
National Institute of Standards and Technology (NIST), that 
we're going to hear from later today, that funds new 
technologies, to make us more competitive. And, by the way, 
they win Nobel Prizes, too.
    The science at the National Aeronautics and Space 
Administration (NASA) and the National Oceanic and Atmospheric 
Administration (NOAA) help us better understand our planet and 
provides the scientific building blocks for innovation. Nothing 
gets kids more interested in science, like exploration and 
discovery in outer space, and the inner space in the ocean.
    We want to make sure, though, this--we have an innovation-
friendly government. NIST sets measurements and standards that 
the private sector can rely on, and the world counts on. The 
U.S. Patent and Trademark Office protects our intellectual 
property, and the International Trade Administration (ITA) 
enforces our trade agreements.
    We also will be focusing on security, but that's for 
another day. This subcommittee will also be looking at 
accountability in terms of the expenditure of taxpayers 
dollars, and to make sure that, whether it's waste, or abuse, 
or poor performance, will not be tolerated. But today, we're 
going to kick off our innovation hearing with the Secretary of 
the Commerce Department, a long-advocate for America's role in 
international trade, promoting competitiveness, and encouraging 
innovation and technology.
    Later on, in the second panel, we'll be hearing from the 
Director of the National Institute of Standards and Technology 
and also the Director of the Patent Office.
    Today, I will want to know how the budget meets the 
Department of Commerce mission to foster, serve, and promote 
the Nation's economy, which is a little bit rockin' and rollin' 
today, but again, you know, we're a country of institutions, 
and innovation. I want to know how the budget will promote the 
mission, and how the Commerce Department will improve 
accountability.
    In the accountability areas, the three flashing lights we 
have are, the NOAA satellite program, also some issues that--
the Patent Office, that I will raise from there, and also the 
managing of the 2010 census.
    But, today, we're very pleased to have the Secretary of 
Commerce, we want to hear what he has to say, we've enjoyed 
such a cordial relationship. He has been the President's link 
to the business community here, and to the growing 
international markets. So, we welcome him, and with that 
statement, I turn to my colleague, ranking member and, 
essentially, vice chairman, Senator Shelby.


                 STATEMENT OF SENATOR RICHARD C. SHELBY


    Senator Shelby. Thank you, Senator Mikulski.
    As Senator Mikulski said, we've worked extremely well 
together, sharing many of the same goals and the expectations 
of the agencies that we oversee. We go back to our House days 
on the Energy and Commerce Committee, seems like yesterday, but 
it was more than that, I think Senator Mikulski would note.
    But I'm--Senator Mikulski, I'm pleased to serve beside you, 
once again on this subcommittee. I served as chairman, and now 
I serve as ranking, and you as chairman. Perhaps that'll change 
someday, but until it does change, we'll be working together 
either way.
    Today, I also welcome the Secretary of Commerce before the 
subcommittee as well as Dr. Jeffrey and Mr. Dudas. I look 
forward to learning more about how the 2008 budget request will 
improve the Department of Commerce, many important activities. 
The Nation, Mr. Secretary, relies heavily on the Department of 
Commerce that you head up, to maintain America's 
competitiveness within today's foreign marketplace, and to 
promote and to expand our international trade agreements.
    Through the programs of the Department of Commerce, the 
country is able to maintain high technical standards, as well 
as staying on the cutting edge of scientific research, all of 
which are fundamental, Mr. Secretary, to our Nation's 
leadership in the global market. You know this well.
    Overall, the Department of Commerce's budget request for 
2008 is $6.5 billion. This is an increase of $90.4 million from 
the funding level provided in the joint resolution for fiscal 
year 2007.
    Mr. Secretary, at this time, I want to also compliment you 
on how well your Department, through NOAA, continue to perform 
along the gulf coast in the wake of the devastating 2005 
hurricane season. Last year, the committee appropriated $150 
million in emergency supplemental funding through the 
Department to aid recovery efforts, which you needed. A portion 
of these funds went toward locating--and removing--marine 
debris deposited by the hurricanes. Fishing snags, and 
navigational hazards that halted maritime commerce, and pose a 
threat to the fishing industry of being removed.
    I've seen the images of salvage wreckage, which include 
fuel storage tanks, large trees, and even sunken barges. NOAA, 
with the help of partner agencies, is quickly and efficiently 
clearing obstructed shipping channels and fishing grounds, 
making the area safer, which is vital to the economies of 
Mississippi, Louisiana, and of course, my State of Alabama.
    I share Senator Mikulski's expectations for the Department 
of Commerce, particularly her emphasis on accountability. We 
have to be accountable. We will continue to monitor how the 
Department strengthens, and improves computer security to 
protect sensitive agency information, and we will continue our 
scrutiny on cost overruns and schedule delays which negatively 
impact NOAA's satellite program.
    The Department's request includes $1.2 billion for the 
Census Bureau, which--with nearly one-half of these funds 
directed toward the anticipation of the 2000 census--all comes 
under your jurisdiction.
    The decennial census, and the comprehensive collection of 
other surveys makes the Census Bureau a provider of fundamental 
data to Federal, State, and local governments, financial 
markets, and the public. These data sets are collected from a 
wide variety of sources, including businesses and citizens. 
Public trust, Mr. Secretary, in the security and 
confidentiality of this information is absolutely critical to 
the accuracy and the validity of the vital statistics published 
by your agency.
    There have been recent problems with the Department of 
Commerce and other Government agencies, of not having adequate 
security measures in place to protect personal data. Less than 
3 weeks ago, in my home State, Birmingham, Alabama, the 
Alabama--the Veterans Administration's employee laptop was 
stolen, it's all been in the news. It contained hundreds of 
thousands of records of personal information belonging to 
veterans. This is not under your jurisdiction, I know, but this 
is an incident, and that's unacceptable.
    I cannot emphasize how critical it is that the data be 
secure. The Census relies upon information from people 
divulging this data, and public trust in the security and 
confidentiality of the information being provided is absolutely 
crucial to the accuracy and validity of the vital statistics 
published by your agencies.
    The Department must never lose sight of the duty to protect 
the information it collects. I'm pleased to see the American 
Competitiveness Initiative, or ACI, has continued to receive 
support from the administration, through the National Institute 
of Standards and Technology budget request. ACI will keep the 
competitive edge that our Nation expects in the world economy 
through research and innovation, by focusing on the ingenuity 
of our people, and tying our capabilities to policies that will 
keep us at the forefront of scientific and technical 
advancement for generations to come.
    The collaboration of NIST and industry and academia is an 
excellent example of how this country can take advantage of 
these resources, and remain competitive in an increasingly 
challenging world. I believe that such collaboration can be 
seen in my home State of Alabama. NIST working with the 
University of Alabama at Birmingham is in early developmental 
stages for standards in research related to medical devices, 
for example. Such collaborations combine the expertise of our 
world-class research universities, with the needs of our 
Nation, and the end result is innovation and creative problem 
solving.
    I look forward to Dr. Jeffrey's testimony on how the work 
in NIST will continue to ensure the Nation's competitive edge.
    Mr. Secretary, I will also be interested in your comments 
about the rationale to exclude NOAA from ACI, something that I 
believe is a mistake. It seems logical to me that NOAA's vast 
research capabilities be utilized in these efforts. The 
strength of America's economy rests on our ability to innovate 
and to use the latest in technology, to solve the problems of 
today and preserve our economic and scientific leadership in 
the future.
    Certainly the activities of both NIST and NOAA will work to 
keep the Nation competitive, and inspire the next generation of 
scientists and researchers. I hope to learn more today, from 
Mr. Dudas, about how the U.S. Patent and Trademark Office 
intends to further protect American businesses in 2008 from 
theft and piracy.
    Intellectual property rights and its associated 
enforcement, continue to have an important impact on 
international trade, and the U.S. economy. Intellectual 
property-based industries in this country are one of the 
largest exporters in the global economy, as you know.
    Protecting the value of these rights is critical if we, as 
a Nation, are to continue being a world leader in innovation. 
Piracy of those rights costs the American economy and the 
American workers tens of billions of dollars each year.
    Mr. Secretary, we look forward to your testimony, and we 
appreciate your appearance here today.
    Senator Mikulski. Thank you very much, Senator Shelby.
    Just in terms of the rules of the subcommittee, we're going 
to recognize people in their order of arrival. And, if they 
have opening statements, we will put them in the record, or we 
ask that they incorporate them in their early questions, so we 
can move to the Secretary, and move to your questions.
    Mr. Secretary, would you proceed, and then we'll go to 
questions?
    Mr. Gutierrez. Thank you.
    Madam Chairman, and Senator Shelby and members of the 
subcommittee, I'm pleased to present President Bush's fiscal 
2008 $6.55 billion budget request for the Commerce Department. 
With your permission, I'd like to briefly discuss some key 
elements of our budget and programs, and submit my written 
testimony for the record.
    We believe this is a very disciplined budget. It is focused 
on the best use of taxpayer resources to advance America's 
economic and innovative leadership in an increasingly 
competitive world. So, we've had to make some choices regarding 
where we allocate the increases, and where we focus our time.
    Among the highlights of the increases are, $338 million for 
the Census Bureau to ramp up for 2010, and reevaluate data 
collection programs; $69 million for the National Institute of 
Standards and Technology to implement the second year of the 
President's American competitiveness initiative, and $123 
million for NOAA administration--for NOAA to fund high-priority 
oceans projects.
    Every agency in the Commerce Department is charged with the 
same critical mission--to promote American innovation and 
competitiveness, to create economic opportunities, and to 
improve the lives of the American people.
    I'd like to do something a little different this time, 
Madam Chairman, and that is to illustrate how Commerce agencies 
are fulfilling the mandate by developing, protecting, 
promoting, and strategically using innovative technologies, 
such as the global position system (GPS). I brought some 
examples here to show how new technology can be transferred to 
different bureaus within the agency, and I think it's also 
representative of how one technology for one given industry can 
be used in many industries around the country.
    As you know, the global positioning system technology is 
now so advanced, the device is as small as this cell phone. I 
actually have a GPS incorporated into the cell phone. GPS has 
multiple applications--the technology is used by governments, 
businesses, and individuals.
    The world's first atomic clock, which is the key innovation 
that enables GPS to work, was invented by scientists at the 
National Institute of Standards and Technology. This digital 
clock here, which is always exactly on time, contains 
technology that synchronizes with the NIST atomic clock. Its 
timing is extremely accurate, and it can adjust automatically 
for changes in daylight savings time.
    NIST is now pioneering new approaches to atomic 
timekeeping, such as the chip-scale atomic clock. We expect 
that chip-scale atomic clocks will soon be used in GPS 
receivers, cell phones, and other portable electronic devices, 
to greatly improve performance.
    Last year alone, the U.S. Patent and Trademark Office 
issued over 800 GPS-related patents. The Census Bureau is 
adopting GPS technology to collect street coordinates, and 
create a more accurate database for field personnel. It will be 
incorporating GPS-equipped handheld computers like this one 
into data collection operations during the 2010 census, to 
improve productivity, and reduce errors. Just as a matter of 
illustrating how advanced this is, in my previous role, our 
sales force had laptop computers, but they were very heavy, and 
very cumbersome. I find it today, it's actually quite light and 
very easy to hold up, so we continue to make great advances in 
this technology.
    Senator Mikulski. Excuse me, Mr. Secretary, that's what the 
census takers are going to have?
    Mr. Gutierrez. Yes.
    Senator Mikulski. So everything will--go ahead.
    Mr. Gutierrez. That's right. Whatever doesn't get sent 
through the mail, will be followed up using this handheld 
device. To get into it, they actually use their thumb, that 
protects the device from anyone else wanting to use it.
    Senator Mikulski. Could you, tell us then, what are the 
security measures? Because, we're not America's snoop, we're 
America's census takers.
    Mr. Gutierrez. Right.
    Senator Mikulski. How would it protect personal 
information?
    Mr. Gutierrez. Yes. This essentially will have a password 
and probably the most accurate device, which is a thumbprint 
for the specific enumerator.
    And if you'd like, I'll pass this onto you so you can take 
a look, why don't you just go ahead and give it to them. Thank 
you.
    Additionally, NOAA has created a network of GPS-tracking 
stations that makes available to the public minute measurements 
that are used to establish real estate boundaries, position 
bridges and roads, and do other geo-spatial work.
    The International Trade Administration (ITA) is working to 
remove trade barriers to increase export sales of innovative 
U.S. GPS technology, with NOAA and the National 
Telecommunications and Information Administration (NTIA). ITA 
is also taking the lead to ensure a level playing field for 
U.S. GPS manufacturers, as Europe enters the satellite 
navigation market.
    The Bureau of Industry and Security continues to monitor 
and control dual-use GPS technology, and export sales, to 
protect our national security while ensuring that America's GPS 
industry has access to open markets.
    Measuring the impact of our economy, of innovative R&D, and 
technologies like GPS to reflect new, 21st century realities, 
is now the subject of research by our Economics and Statistics 
Administration (ESA), in coordination with the private sector. 
This is an example of how we're thinking about technology, and 
an example of what we believe is success, to develop one 
technology that can be transferred quickly across many 
industries, so we can get the benefit across our economy.
    Madam Chairman, I use this GPS example to tell the story of 
the Commerce Department commitment to providing America's 
industries and workers with the services and tools needed to 
continue to make this the most competitive country in the 
world.
    The President's fiscal 2008 budget request for the 
Department is reflective of this commitment and more 
importantly, this commitment is behind where we have made 
decisions to allocate budget funds. It is carefully targeted to 
programs necessary to maintain our competitive edge in this 
very intense economy.


                           PREPARED STATEMENT


    I look forward to working with you to achieve this 
important goal, I thank you for giving me this opportunity to 
discuss the President's budget, and the role of the Commerce 
Department in advancing our Nation's economic strength. I feel 
very privileged to be able to represent the Department and the 
President at this very critical time in our history, and I'd be 
pleased to hear your comments and take any questions, thank 
you.
    [The statement follows:]

             Prepared Statement of Hon. Carlos M. Gutierrez

    Madam Chairman and members of the subcommittee, I am pleased to 
appear before you today to present the President's budget request for 
the Department of Commerce. Our request of $6.55 billion in 
discretionary funds reflects a balance between the administration's 
commitment to promote and sustain economic growth, and the need to 
restrain discretionary Federal spending. Enactment of this budget will 
enable the Department to continue to support the innovative and 
entrepreneurial spirit of America and increase our competitiveness in 
the international marketplace.
    The President's fiscal year 2008 budget request of $3.82 billion 
for the National Oceanic and Atmospheric Administration (NOAA) reflects 
the administration's commitment to environmental stewardship. NOAA 
encompasses the National Weather Service, which provides critical 
observations, forecasts and warnings; the National Environmental 
Satellite, Data and Information Service, which provides timely global 
environmental satellite data; the National Marine Fisheries Service, 
which provides stewardship of the Nation's living marine resources and 
their habitat; the National Ocean Service, which measures and predicts 
coastal and ocean phenomena; the Office of Oceanic and Atmospheric 
Research, which provides research for understanding weather, climate, 
and ocean and coastal resources; and the Office of Marine and Aviation 
Operations, which operates a variety of aircraft and ships providing 
specialized support for NOAA's environmental and scientific missions.
    This budget request includes increases of $123 million for projects 
that will advance ocean science and research, protect and restore 
sensitive marine and coastal areas and ensure sustainable use of ocean 
resources. These initiatives will further the administration's 
commitment to make our oceans, coasts and Great Lakes cleaner, 
healthier and more productive, as reflected in the U.S. Ocean Action 
Plan and creation of a Cabinet-level Committee on Ocean Policy.
    The increases for ocean science and research include $20 million to 
implement the Ocean Research Priorities Plan, $16 million to support 
the Integrated Ocean Observing System, and $8 million to define the 
outer limits of the U.S. extended continental shelf.
    The increases to protect and restore coastal and marine areas 
include $8 million for management of the newly-designated Northwestern 
Hawaiian Islands Marine National Monument, $10 million for restoration 
of nearly 1,000 miles of habitat for the endangered Atlantic salmon in 
the Penobscot River watershed, $15 million for the Coastal and 
Estuarine Land Conservation Program, and $5 million for the 
implementation of coastal resource priorities identified by the Gulf 
Coast States.
    The increases for ensuring sustainable use of ocean resources 
include $20 million to improve fishery management, including $6.5 
million to implement the newly-reauthorized Magnuson-Stevens Act. An 
additional $3 million will support development of offshore aquaculture, 
for which the administration has proposed legislation to establish 
clear regulatory authority and permitting processes.
    The President's fiscal year 2008 budget also continues support for 
development and acquisition of geostationary and polar-orbiting weather 
satellites, for climate research programs, and for high priority 
weather forecasting endeavors including improvements to hurricane 
modeling and tsunami warning systems.
    The Economics and Statistics Administration (ESA) promotes the 
understanding of the U.S. economy and its competitive position. Under 
ESA's umbrella, the Bureau of Economic Analysis (BEA) provides key 
objective data, including the Gross Domestic Product, on the Nation's 
economic condition in a timely and cost-effective manner. The 
President's fiscal year 2008 budget requests $85 million for ESA 
Headquarters and BEA to provide statistics that are critical to public 
and private sector decision-making. This request includes an increase 
of $2 million to measure the impact of research and development along 
with other knowledge-based activities on economic growth.
    ESA's Census Bureau is the leading source of quality data regarding 
the Nation's population and economy, and the President's fiscal year 
2008 budget requests $1.23 billion in discretionary funds for the 
Census Bureau. This includes a program increase of $325 million for 
Periodic Censuses and Programs. Of this increase, the largest component 
is $281 million to continue reengineering the 2010 Decennial Census to 
reduce operational risk, to improve accuracy and relevance of data, and 
to contain total costs and provide for the 2008 Census Dress Rehearsal. 
Another program addition includes $43 million to support collecting and 
processing data from the 2007 Economic Census. Also included is an $8.1 
million initiative to provide quarterly and annual coverage of all 12 
service sectors, matching the coverage of the quinquennial Economic 
Census. This will greatly improve understanding and tracking of 
economic developments in the service sector, which currently accounts 
for 55 percent of Gross Domestic Product.
    The International Trade Administration (ITA) supports U.S. 
commercial interests at home and abroad by strengthening the 
competitiveness of American industries and workers, promoting 
international trade, opening foreign markets to U.S. businesses, and 
ensuring compliance with domestic and international trade laws and 
agreements. The President's fiscal year 2008 budget requests $412 
million for ITA to serve its goals, including an increase of $1.3 
million for monitoring and enforcement of compliance with Free Trade 
Agreements, concluding the Doha Round of World Trade Organization (WTO) 
negotiations and reducing market access barriers through relevant WTO 
committees.
    The Economic Development Administration (EDA) supports America's 
regions in their growth and success in the worldwide economy. The 
President's fiscal year 2008 budget requests $203 million for EDA to 
carry out its mission effectively.
    The Bureau of Industry and Security (BIS) regulates the export of 
sensitive goods and technologies to protect the security of the United 
States. The President's fiscal year 2008 budget requests $79 million to 
enable BIS to effectively carry out this mission. This request reflects 
greater efficiencies from the consolidation of administrative services 
and increased use of information technology in handling export 
applications, resulting in savings of $1.5 million from the President's 
fiscal year 2007 request adjusted for inflation.
    The Minority Business Development Agency (MBDA) focuses on 
accelerating the competitiveness and growth of minority-owned 
businesses by assisting with economic opportunities and capital access. 
The President's fiscal year 2008 budget requests $29 million to support 
MBDA's programs and expand the availability of services to minority 
business enterprises.
    The President's fiscal year 2008 budget request of $641 million for 
the National Institute of Standards and Technology (NIST), a part of 
the Technology Administration (TA), will advance measurement science, 
standards, and technology. NIST's activities provide key support for 
the administration's American Competitiveness Initiative. This budget 
request includes a $69 million increase for NIST laboratories, National 
Research Facilities, and Construction and Major Renovations. Of these 
funds, $47 million are proposed to support critical improvements to 
NIST's research laboratories in Boulder, Colorado and the NIST Center 
for Neutron Research in Gaithersburg, Maryland, while $22 million are 
proposed to support research programs in nanotechnology, quantum 
information science, climate change measurements and standards, 
disaster-resilience of structures and earthquake hazard reduction.
    The Under Secretary for Technology (TA/US) currently provides 
policy guidance to the Secretary of Commerce and the Technology 
Administration's component agencies (NIST and NTIS). Technology plays a 
critical role across every sector of the economy, and the promotion of 
technology in advancing America's competitiveness has become an 
integrated part of the mission across the bureaus of the Department. In 
keeping with this evolution, the President's fiscal year 2008 budget 
proposes to modernize the Department's approach to technology policy by 
elevating those activities to the secretarial level. This modernization 
includes the appointment of a senior advisor in the Department's Office 
of Policy and Strategic Planning who will chair a Department-wide 
Technology Council to coordinate technology policy activities across 
the Department in lieu of a stand-alone Technology Administration. The 
request of $1.6 million provides resources for the orderly transition 
of TA/US to the new coordinated structure.
    The National Technical Information Service (NTIS) collects and 
preserves scientific, technical, engineering and other business-related 
information from Federal and international sources and disseminates it 
to the American business and industrial research community. NTIS 
operates a revolving fund for the payment of all expenses incurred and 
does not receive appropriated funds.
    For the National Telecommunications and Information Administration 
(NTIA), the President's fiscal year 2008 budget request includes $19 
million in discretionary budget authority. During fiscal year 2008, 
NTIA estimates obligating $534 million from the Digital Television 
Transition and Public Safety Fund to support several programs created 
by the Deficit Reduction Act of 2005, most notably $426 million for the 
Digital-to-Analog Television Converter Box Program. Following enactment 
of the Call Home Act of 2006, up to $1 billion will be awarded in 
fiscal year 2007 to qualified applicants in the Public Safety 
Interoperable Communications Grant program, though outlays will 
continue over several fiscal years.
    Furthering the mission to promote the research, development, and 
application of new technologies by protecting inventors' rights to 
their intellectual property through the issuance of patents, the 
President's fiscal year 2008 budget requests $1.9 billion in spending 
authority for the U.S. Patent and Trademark Office (USPTO). The USPTO 
will use these funds to reduce application processing time and increase 
the quality of its products and services. This includes $36 million to 
hire new examiners to improve processing times and increase the quality 
of its services. Consistent with prior years, the administration 
proposes to fund the USPTO budget exclusively through offsetting fee 
collections. Fee collections for fiscal year 2008 are projected to 
cover the proposed increases.
    The USPTO, the National Intellectual Property Law Enforcement 
Coordination Council (NIPLECC), and ITA participate in the Strategy 
Targeting Organized Piracy (STOP!) initiative's goal of ending trade in 
counterfeit goods. This initiative places additional intellectual 
property experts in high priority markets, trains foreign government 
officials in intellectual property protection, and educates foreign 
publics about the importance of intellectual property. STOP! also 
provides resources for harmonizing patent laws, and for supporting the 
negotiation of intellectual property sections of free trade agreements.
    Today, I would like to show how diverse components of the 
Department contribute to innovation and competitiveness. Many people 
see the Department of Commerce as a conglomerate with diverse and 
distinct missions. While the Department's bureaus encompass broad, but 
distinct, areas of the American economy, their core mission is U.S. 
competitiveness.
    Innovation is essential to competing globally and enhancing our 
quality of life. This is increasingly important as political and 
technological changes open access to the global economy--creating both 
new markets and increased competition. The Department of Commerce is 
well positioned to help America address this challenge.
    There are many areas across the Department where we are working on 
different aspects of competitiveness. Technological innovation is one 
of this Nation's most significant competitive advantages. The 
Department promotes and protects technological innovation through the 
efforts of its bureaus. A prime example is Global Positioning System 
(GPS) technology. Highly accurate timekeeping is a crucial element of 
GPS. The Department's National Institute of Standards and Technology 
(NIST) invented the core GPS timekeeping technology--the world's first 
atomic clock--in 1949 and continues to make significant improvements in 
its accuracy.
    GPS is made up of more than two dozen satellites in medium Earth 
orbit, which transmit signals that allow GPS receivers to determine 
location, speed and direction. Since the launch of the first 
experimental satellite in 1978, GPS has become a vital tool to 
governments, businesses, and private citizens worldwide. Its navigation 
capabilities are indispensable not only to the airline and shipping 
industries, but also to many Americans who now have personal GPS 
devices that they use in their cars, on bikes, and while camping and 
hiking.
    As the timekeeping technology improves, so do the navigation 
capabilities of GPS, expanding its uses into more areas. Currently, 
NIST operates the world's best standard atomic clock, NIST-F1, with an 
accuracy equivalent to about one second in 70 million years. NIST 
scientists are developing new atomic clocks that will soon be accurate 
to one second in many billions of years. NIST also is pioneering new 
approaches to atomic timekeeping such as the chip-scale atomic clock, 
which could dramatically improve GPS receiver performance and impact 
many other technologies.
    In addition to developing technologies underlying GPS, the 
Department, through the United States Patent and Trade Office (USPTO), 
protects individual and corporate inventors of GPS technology. In 
exchange for this protection, inventors are required to share 
information about their inventions, allowing others to build upon them 
and create further innovations. Taking GPS as an example of how well 
the patent system encourages innovation, the USPTO issued over 800 GPS-
related patents in 2006 alone.
    The Department, through the USPTO, also helps protect both GPS 
manufacturers and the public by registering trademarks. Manufacturers 
rely on trademark protection received from registering their trademarks 
with the USPTO to prevent others from marketing products under their 
good names. The public relies on trademarks as an assurance of the 
quality and source of the products they purchase.
    The Department understands that GPS and other technological 
innovations are critical to making the U.S. more globally competitive. 
As such, the International Trade Administration (ITA) works closely 
with the United States Trade Representative to develop Free Trade 
Agreements (FTA) that will eliminate duties on GPS receivers and 
transmitters in all FTA countries. This will expand opportunities for 
U.S. businesses, allowing them to export these GPS technologies to FTA 
countries duty-free. ITA, along with NOAA and NTIA, is also taking the 
lead in trade discussions with Europe to maintain a level playing field 
as Europe's upcoming Galileo system enters the satellite navigation 
market.
    Additionally, ITA's U.S. Commercial Service assisted iSECUREtrac 
Corp, based in Omaha, Nebraska, with a contract for the sale and 
installation of the first ever state-of-the-art Canadian-based GPS host 
monitoring system capable of serving the mission critical offender 
monitoring requirements of every Canadian Province.
    As trade barriers are reduced and technology transfer becomes more 
seamless across the globe, GPS technology is increasingly disseminated 
worldwide for both civilian and military use. The Department's Bureau 
of Industry and Security (BIS) oversees and implements regulations that 
clearly distinguish between military and civilian GPS user equipment to 
foster economic growth in the U.S. GPS manufacturing industry while 
protecting U.S. national security. These regulations define, identify, 
and distinguish military receivers, encryption devices, and GPS 
components with missile or certain defined airborne applications from 
their civilian counterparts. These controls have helped accelerate U.S. 
industry's exports to foreign GPS markets and have enabled the U.S. GPS 
manufacturing industry to retain a large share of those markets.
    Prior to September 1991, most GPS user equipment shipped abroad 
required individual validated licenses to ensure compliance with U.S. 
export control regulations. Under current regulations, civilian GPS 
receivers, other satellite equipment, and associated telecommunication 
equipment are allowed to be shipped, with certain restrictions, to most 
destinations without a license. However, BIS has implemented stringent 
regulatory controls to prevent transfer of GPS equipment to terrorist-
supporting countries, as well as to those end users known to be 
involved in proliferation activities. These export license applications 
are closely scrutinized and vetted in an interagency review process 
coordinated by BIS.
    Beyond making GPS work better, helping facilitate the success of 
U.S. businesses in the global marketplace, and ensuring that the global 
spread of GPS technology will not endanger our national security, the 
Department utilizes advances in technology to significantly improve how 
we conduct business--making our processes more efficient. For example, 
the Census Bureau launched a reengineering effort in preparation for 
the 2010 Decennial Census that centered on using technology to improve 
processes and keep down overall lifecycle costs. GPS technology is 
critical to the success of this effort. The first step involves 
collecting the GPS coordinates of streets, county by county, across the 
Nation. This multi-year effort will be completed in 2008, giving the 
Census Bureau an accurate database for the country. This database, the 
Topologically Integrated Geographic Encoding and Referencing system 
(TIGER), will then allow personnel operating in the field to know their 
relative position--a critical aspect of finding the right housing unit.
    GPS-equipped handheld computers (HHCs) will be used for data 
collection in several major field operations during the 2010 Decennial 
Census. During the address canvassing operation, the HHCs will be used 
to record GPS coordinates for every structure, including newly 
identified addresses. Later, using GPS, the HHCs will enable staff to 
conduct data collection for the non-response follow-up operation, allow 
for the removal of late mail returns, and record daily payroll for all 
census enumerators. The use of GPS technology will result in improved 
productivity and reduced errors.
    The Economics and Statistics Administration is building measures of 
innovation in the economy generated by such technological advancements 
as the GPS-equipped HHCs. Similarly, the Bureau of Economic Analysis is 
refining its ability to measure the impact of research and development 
on the economy.
    In addition, NOAA uses GPS to navigate its fleet of ships; enforce 
fishery boundaries in open waters to prevent overfishing; survey the 
Nation's coastlines, waterways, and airport approaches; and make 
improved weather forecasts. NOAA also provides a public service to the 
Nation known as the National Continuously Operating Reference Station 
(CORS) network. The CORS network consists of over a thousand GPS 
tracking stations that enable users to refine GPS measurements down to 
the centimeter level, which is particularly important for measuring 
real estate boundaries, positioning bridges and roads, and doing other 
geospatial work.

                               CONCLUSION

    The Department of Commerce's development, promotion, and 
advancement of GPS technology demonstrates how the Department 
successfully encourages innovation to create economic growth without 
sacrificing our national safety. It also illustrates that Commerce is a 
diverse group of agencies, with varied expertise and differing needs, 
all engaged in a common commitment to keep the United States at the 
global forefront of competitiveness and innovation. This is the way we 
at the Department do business every day--working together, across 
disciplines, making real, positive, and sustained impacts on the 
American economy.
    The President's fiscal year 2008 budget effectively meets those 
needs, while exercising the fiscal restraint necessary to sustain our 
economic prosperity. I look forward to working with the committee to 
keep our Nation's economy growing and strong, and to promote and 
preserve the American people's entrepreneurial spirit.

    Senator Mikulski. Well, thank you very much, Mr. Secretary 
for that informative conversation and also bringing us in the 
real-world capability. And, of course, it would involve the 
Patent Office as well, because while people invent it, we gotta 
protect it, so others don't steal it.
    But, let me get right to the heart of my questions. As we 
look at the President's budget request of $6.5 billion, about 
one-half is in NOAA, and about one-third is in the Patent 
Office, the Patent Office about $1.9 billion--we'll round it 
off and say $2 billion--and there were other related agencies.

                          PROMOTING INNOVATION

    Let's go to your promotion of innovation, you meaning 
Commerce, and not you personally. How do you see, given that 
you have the major agencies of NIST, NOAA, the Patents and some 
other related agencies--where is it in your operation that 
says, we've got to promote innovation, and I'm going to stand 
sentry over it to make sure we're coming up with the kind of 
research ideas, and then as industry does what it does--which 
is invent--we protect them. Do you have a one-stop shop? How 
does this work?
    Mr. Gutierrez. Stepping back, the way we're thinking about 
it, is our whole economy is really a partnership between the 
private sector, the public sector, and academia. The private 
sector does about two-thirds of all the research and 
development (R&D) spending in the country, and that R&D in the 
private sector is very focused on the development side.
    The Government does about one-third, and of that one-third, 
its primary focus is on the ``R,'' the research side. We tend 
to do projects that are very long term in nature, that the 
private sector sometimes does not have the time or the 
resources, or the competitive environment to be able to take 
the time to look out 10 or 15 years.
    As we work on our technologies, we have to ensure that 
there's a customer on the other end. And that customer, of 
course, is the private sector. Dr. Jeffrey, I hope, will be 
talking about members of the private sector that work inside of 
NIST. And every time we open up a project in NIST, it starts 
out with members of the private sector who are interested in 
the developments of that project.
    As part of our overall system, we have to have a patent and 
trademark operation that responds to increasing demands of 
businesses, and increasing demands to be responsive to issue 
patents, and to issue trademarks and copyrights. In essence, we 
participate in the creation of the innovation, we coordinate 
very closely with the private sector, and then we enable that 
innovation by having an efficient Patent and Trademark Office. 
I would say innovation is embedded in every one of our bureaus.
    Senator Mikulski. But you have a coordinating council?
    Mr. Gutierrez. Yes, we do.
    Senator Mikulski. That you chair?
    Mr. Gutierrez. This is a new Technology Policy Council, as 
well as an Innovation Metrics Advisory Council, which we've 
just started.
    Senator Mikulski. Yeah, I've read about it in Technology 
News, I actually read these things. It's great.
    Mr. Gutierrez. We just had our first meeting, too.

              PATENT AND TRADEMARK OFFICE REMEDIATION PLAN

    Senator Mikulski. Well, in--first of all, I think, I know 
Senator Shelby wants to talk about NOAA and why it wasn't in 
the President's competitive agenda, but I'm going to take up 
the issue of intellectual property, and then come back to NOAA 
and its satellites.
    When I read the inspector general's report of the commerce, 
it talked about the major challenges of the Department, and it 
said it was making improvement. But one of the things that it 
raises is the fact that we have to ensure that the Patent 
Office uses its authorities and flexibilities to achieve better 
results--and I would say money, too, because that goes with it.
    In the last 5 years, under Senator Gregg, Senator Hollings, 
and Senator Shelby, and now me--we've increased Patent Office 
by 50 percent. And you're close to $2 billion. Yet, there 
continues to be reports about the management issues, and I know 
we'll hear about it more in the testimony--the lack of 
effective strategies to communicate and collaborate with 
examiners, of course, the production quotas, which is the 
tremendous backlog, and the lack of ongoing technical training 
for examiners. I won't go through every item, but I commend to 
you the GAO report, and also the major challenges.
    Now, we want to hear from Mr. Dudas about this. I would 
like to have a remediation plan. And I'd like to have it from 
Mr. Dudas, as the Chief Executive in the agency, but I would 
also ask that you personally review that remediation plan, and 
get back to us in about 45 days. So, that when we do this 
year's appropriation, it is about money, it is about 
management, it is about leadership, and it's about protecting 
our ideas.
    So, if we could have a specific remediation plan that goes 
along with this, I think we would go a long way.
    Mr. Gutierrez. Yes, Madam Chairwoman, we will do that, and 
we will have a plan ready for your review. I think that's an 
excellent idea.
    [The information follows:]

        USPTO Report ``The Path to the Future, the Next Steps''
                                                         April 2007

                           EXECUTIVE SUMMARY

    Fiscal year 2006 was a record-breaking year for the USPTO. Our 
8,500 employees had the highest production, highest hiring, highest 
usage of electronic filing and electronic processing, highest number of 
examiners working from home and lowest error rate in history. While 
this is a source of pride, we all recognize that even more can and must 
be done. Below is a list of initiatives that are either in place, being 
piloted for implementation, or are planned for implementation as 
permanent improvements.

                           MEASURES IN PLACE

Pendency/Productivity
    The USPTO has built a performance-based culture.
    Hiring 1,200 new patent examiners per year (fiscal year 2006-2012).
    Improved Training for new patent examiners in a university-style 
environment.
    Accelerated Examination--a guaranteed complete patent examination 
in 12 months.
    Increased overtime authorization levels and a home office laptop 
program to increase morale and encourage productivity.
    Electronic Processing from start to finish.
    Work Sharing with foreign patent offices to decrease U.S. 
examiners' workload.
    Flat Goal pilot program to allow examiners more flexibility and an 
opportunity to earn increased bonuses for increased productivity.
    Early Interviews between applicants and examiners--speeds the 
process by focusing issues and minimizing misunderstandings.
Human Resources
    Aggressive and Expanded Recruitment efforts targeting able 
candidates likely to succeed in an individualized, production-oriented 
environment.
    Higher Pay: Special pay rate for examiners; bonuses for higher 
production and quality; recruitment bonuses; and retention bonuses.
    Teleworking: The USPTO has the gold standard for federal 
teleworking. More than a thousand patent and trademark examiners are 
working from home with hundreds more added each year.
    Increased and better communication with employees through 
management training, employee training and communication initiatives.

                           MEASURES PROPOSED

    Applicant Quality Submissions aid and hasten examiner reviews.
    Public Review of published applications.
    Public Quality Submissions allow the public to comment on pending 
applications with more prior art, which results in quicker, higher 
quality examiner reviews.
    National Workforce so USPTO employees may ``work from anywhere'' in 
the United States.
    Alternative approaches to examination.
    University certification program to prepare students for examiner 
jobs at USPTO.
    The charts below illustrate the impact on the Pendency, 
Productivity, and Quality measures if the Proposed Applicant Quality 
Submissions are executed:

----------------------------------------------------------------------------------------------------------------
                           Fiscal year                               Pendency      Productivity       Quality
----------------------------------------------------------------------------------------------------------------
2007............................................................            33.0            75.8            96.0
2008............................................................            34.7            73.1            96.0
2009............................................................            34.7            80.4            96.0
2010............................................................            34.8            87.0            96.0
2011............................................................            32.9            91.4            96.0
2012............................................................            28.0            92.6            96.0
----------------------------------------------------------------------------------------------------------------

                                                                                                  
                                                                                                  

    As the chart above illustrates, in fiscal year 2006 the USPTO met 
90 percent of the performance goals established pursuant to the 
Government Performance and Results Act of 1993 (GPRA), providing its 
best record to date for achieving important measures of performance and 
results.
    This report lists and discusses our ongoing, planned, and 
envisioned initiatives intended to address the challenges facing the 
USPTO in terms of patent pendency, patent application backlog, and the 
effective recruitment, training and retention of patent examiners.

           ADDRESSING PATENT PENDENCY AND APPLICATION BACKLOG

Hiring Patent Examiners
    With full access to our collected fees, the USPTO hired a record 
1,218 patent examiners in fiscal year 2006, exceeding our hiring goal 
by more than 200 examiners. The USPTO plans to hire 1,200 patent 
professionals a year in fiscal year 2007 through fiscal year 2012 for a 
gross total of at least 8,400 patent examiner new hires by end of year 
fiscal year 2012. After attrition, USPTO staffing increased by 683 in 
2006 and will increase by 3,900 over 2006-2012.
    While hiring a sufficiently qualified and productive patent corps 
is a critical factor in controlling pendency and reducing backlog, we 
recognize that hiring alone is simply not enough. Supplemental 
initiatives, including fuller participation by patent applicants as 
described below, will help us attain our long-term strategic goal of 
reducing patent pendency from the current 33 months to 28 months for 
final disposition, by 2012.
Full Access to Fees
    We are thankful that the subcommittee and your House colleagues 
have ensured that our current fee schedule remains in effect for fiscal 
year 2007. We are also pleased that the fiscal year 2008 budget request 
gives the USPTO full access to the $1.9 billion in fees we expect to 
collect. This is the fourth consecutive year that the President's 
budget recommends full access to collected fees, and the USPTO 
appreciates the continued Congressional support for that funding level.
    The Administration is considering for submission to Congress draft 
legislation that will make permanent our current fee schedule. We look 
forward to working with the subcommittee toward enactment of 
appropriate legislation.
    Full access to user fees is needed to allow the USPTO to continue 
its successful model of disciplined focus on real measures that enhance 
quality and increase production, increase hiring and training, promote 
electronic filing and processing, provide telework opportunities for 
our employees, and improve intellectual property protection and 
enforcement domestically and abroad.
    Full access permits us to finance the initiatives--particularly 
initiatives requiring long-term planning and commitment--necessary to 
providing and maintaining reliable, functioning systems. Without 
Congressional support, we would not be able to function in a business-
like manner and achieve these results.
Electronic Filing and Processing
    The USPTO continues to promote electronic filing and processing of 
patent applications as a means of reducing paper-based inefficiencies. 
Patents implemented the Electronic Filing System-Web (EFS-Web), a user-
friendly, Internet-based patent application and document submission 
program. Prior to fiscal year 2006, less than 2 percent of patent 
applications were filed electronically. After working with the public 
and introducing the much-improved EFS-Web system in late 2006, a total 
of 14 percent of patent applications were filed electronically in 
2006--with more than one-third being filed electronically in the last 
month of fiscal year 2006. We anticipate that electronic submission of 
new applications will grow to more than 50 percent in fiscal year 2007. 
We will work with our stakeholders to further promote electronic filing 
and interaction with patent applicants.
    We are developing the electronic Patent File Wrapper (PFW) that in 
conjunction with current Patent Automated Information Systems will 
allow for a fully automated, text-driven patent application processing 
system.
    Operating in today's wired world requires that the USPTO have full 
electronic processing that is safe, secure and continually available to 
employees, applicants and stakeholders. We will continue to work toward 
that goal.
Innovative Processing
    The USPTO is developing and reviewing a variety of innovative 
patent processing initiatives including a new offering for the public 
called ``Accelerated Examination.'' Under this program, which began 
August 26, 2006, any applicant who wants or needs quick turnaround can 
obtain a patent determination within 12 months. In exchange for this 
quick turnaround, applicants must file a complete application, agree to 
interviews and accelerated response periods, must file and prosecute 
their application electronically and must provide more information 
about the invention to the USPTO in the form of a prior art examination 
support document. The first application to be completed under this 
program was filed on September 29, 2006, and the patent issued on March 
13, 2007 (less than 6 months from date of filing).
    The USPTO is also cooperating in a pilot program involving peer 
review of patent applications. Up to 250 applications, assigned to 
Technology Center 2100, which examines computer-related technologies, 
will voluntarily be placed, by the applicants, on a non-USPTO web site 
for an expanded and public review by a peer group of patent users, 
attorneys and academics. The pilot group of applications will include 
applications filed by small entity filers. The public group will 
determine and submit to the USPTO what they consider the best available 
and relevant prior art. The pilot will test whether this peer review 
can effectively identify prior art that might not otherwise be found by 
our examiners during the typical examination process. We will also make 
an evaluation as to whether this process results in measurable 
examination timesavings and quality improvements.
    We will continue to collaboratively work with our stakeholders to 
determine if there is some combination of examination alternatives to 
the current one-size-fits-all filing and examination process that would 
better meet applicants' needs while providing a more efficient use of 
USPTO examination resources.
    The USPTO, with the help of its Congressionally mandated Patent 
Public Advisory Committee (PPAC), is reaching out to the intellectual 
property community to seek their input on improvements to the patent 
system in all areas including, but not limited to, examination, 
prosecution, enforcement and levels of patenting. Through the PPAC, we 
anticipate an open dialogue with patent stakeholders and the public as 
to what the Office needs to do to best protect and encourage innovation 
in America. We are open to all possibilities from minor improvements to 
a dramatic overhaul of patent protection, if necessary. We are looking 
at a wide variety of alternative examination products from those 
needing statutory changes to those that can be implemented immediately 
under our existing authorities. We look forward to working with the 
Congress and the public to develop these possible alternative 
examination products that effectively and fairly balance the needs of 
the Office and the interests of the intellectual property community to 
provide a system that allows for maximum enforceability.
    Our long-term strategic goal is to reduce patent pendency from the 
current level of 33 months to 28 months for final disposition, by 2012. 
Metrics include reduction of the initial waiting time for patent 
applications (first-action pendency) in our most backlogged Technology 
Centers and successful implementation of various initiatives (such as 
Accelerated Examination) that ensure goal achievement by 2012.
    The USPTO is both implementing initiatives and exploring strategies 
that will reduce the backlog of unexamined patent applications and 
improve the timeliness of a patent examination.
Applicant Quality Submissions
    By shining the light inward on the USPTO, we have had the 
opportunity to improve our system and offer applicants new 
alternatives. As policymakers, we must also analyze how the patent 
system can be improved from the outside in. Perhaps the most important 
element of ensuring that patent examinations are of the highest quality 
and completed as efficiently as possible is what the applicant files.
    The patent applicant has the most knowledge, the most opportunity, 
and the most to gain by providing the USPTO with the best possible 
information about his or her invention. Unfortunately, in many cases, 
applicants have expressed strong concerns about providing the USPTO 
with information about their applications. In some cases, applicants 
simply do not want to provide important information for fear that it 
will limit the scope of the patent they may receive (though such a 
limitation would be right under the facts and the law) or do not want 
to do the work associated with better defining their inventions. In 
some other cases, applicants or their attorneys recognize that 
providing information improves quality and timeliness but fear that the 
legal system unfairly punishes them with draconian penalties for 
innocently omitting information. The theory is that if one provides 
information, he or she must do so perfectly or potentially lose the 
patent; whereas, a failure to share any information carries no 
consequences.
    Quality absolutely begins with the application. Nobody knows more 
about the invention than the applicant. In the Accelerated Examination 
Program--where the first patent issued in less than six months--the 
applicant is required to submit to an interview and to provide a search 
and a support document. Our limited experience with this initiative is 
that both applicants and examiners believe that more written and oral 
information from applicants improves quality and timeliness.
    We would like to take the success of this model of applicant 
quality submissions to lower pendency, raise productivity and increase 
quality in all patent examinations. To that end, we believe that 
applicants should be given every opportunity and responsibility to 
provide more and better information to examiners about their 
inventions. For such a program to be successful, policymakers must work 
to ensure that more and better information does not become burdensome. 
Policymakers would also need to consider how the current doctrine of 
inequitable conduct may discourage applicants from fully and fairly 
sharing relevant information with the USPTO.
Rule Making and Examination Reform
    We believe that to effectively address and control pendency, and 
reduce backlog, the USPTO needs to receive more and better-focused 
information from applicants themselves and from the public at large. 
The USPTO has proposed and will propose regulations and administrative 
changes governing submission of patent applications that will enable 
our examiners to make more efficient and informed patentability 
determinations.
    First, we have proposed limiting the number of continuing 
applications and continued examination requests to provide an incentive 
for applicants to focus their initial patent applications on their 
inventive contributions. Second, we have proposed to limit the number 
of claims that are initially examined in order to provide an incentive 
to focus the examination process. The first and second proposals have 
optional procedures which continue to provide an applicant flexibility 
where the applicant may need additional continuing applications or 
initially examined claims upon a showing of that need or by shouldering 
additional responsibilities. Numerous comments have been received in 
response to these proposals and are being carefully considered prior to 
promulgation of any final rule. In parallel, we have proposed revisions 
to our information disclosure requirements to focus our limited 
examination resources on prior art that is most relevant to the 
examination process. Additionally, we are considering a new practice 
change to require applicants to conduct a pre-examination search and 
provide to the Office prior to examination a report on why they believe 
that they are entitled to the claims presented in view of the 
information discovered during that search.
    Our hope is to achieve examination reform that creates better-
focused examination and enhances information exchange between applicant 
and examiner. We look forward to working with the public and Congress 
to develop an enhanced examination system that effectively and fairly 
balances the needs of the Office and the interests of patent 
applicants, interested third parties and the general public.
Public Quality Submissions
    While the USPTO currently has a procedure for submission of prior 
art after publication, which allows submission by third parties within 
two months of publication, the procedure does not allow explanations or 
other information about the patents or publications, absent express 
written consent of the applicant.
    We look forward to working with Congress to develop a submission 
procedure that effectively and fairly balances the interests of the 
patent applicant, interested third parties and the general public.
    We are also looking to provide assistance to the open source 
community in their development of an open source database to provide 
examiners with potential prior art.
Work Sharing
    The USPTO continues to work with the world's major intellectual 
property offices to study, review and implement work-sharing efforts 
that promote examination efficiencies in each participating office. The 
USPTO launched a trial cooperation program with the Japan Patent Office 
(JPO) last summer to leverage fast-track patent examination procedures 
already available in both offices to obtain corresponding patents 
faster and more efficiently. It also permits each office to benefit 
from work previously done by the other office, in turn reducing 
examination workload and improving patent quality.
    This program is a significant first step in cooperative efforts to 
support United States and Japanese industries in their global patent 
prosecution activities and represents the first concrete implementation 
of a work-sharing arrangement between the USPTO and the JPO.
    The USPTO continues to have informal discussions on expanding the 
work-sharing program to other intellectual property offices, mainly in 
Australia, the United Kingdom, and Canada. The USPTO will continue its 
efforts in expanding this program and will develop a coordinated 
approach among the offices in order to streamline practices and 
procedures.

       ADDRESSING RECRUITMENT, TRAINING AND RETENTION CHALLENGES

Making USPTO an ``Employer of Choice''
    Continuing to attract and retain the finest public servants is a 
growing challenge. Our employees are at the heart and soul of our 
intellectual property system, and we need to do everything we possibly 
can to ensure they have an environment of trust, respect and 
opportunity.
    The USPTO has developed and implemented a variety of workplace-
friendly, family-friendly initiatives that have earned the USPTO 
recognition by Business Week magazine as one of the best places in 
America to launch a career and to round out one's career. The USPTO has 
also been lauded by Families magazine as one of the best places in the 
Washington area to work if you have a family. We will expand and 
improve our workplace offerings and attributes to promote the USPTO's 
image as an ``employer of choice.''
Recruitment
    The USPTO's recruitment efforts are strong and nationwide in scope. 
Planning efforts have culminated in targeted TV, print, radio and 
Internet banner advertising, and developing a brand image, ``Examine 
the Possibilities''. Additionally, in 2004, the USPTO increased career 
and job fair participation and, in 2006, participated in over 180 
events throughout the country. Also, in 2006, a recruitment incentive 
(up to $9,900 per year for four years) was offered to computer and 
electrical engineers.
    A pre-employment compatibility assessment tool has been developed 
and is in use for all examiners applying through USA Staffing.
    We are exploring partnerships with universities to offer 
intellectual property courses to science and engineering students, 
develop an internship program, and train students in intellectual 
property to create a ready pool of potential examiner candidates.
Internal Communication
    Consistent with recommendations made by the Government 
Accountability Office in 2005, the USPTO has implemented a wide variety 
of initiatives to address communication issues, including a pilot 
program for an Office of Internal Communications in October 2006.
    The Commissioner for Patents and Deputy Commissioners host regular 
Town Hall meetings with employees at all levels throughout the Patent 
organization. First line supervisors are required to hold regular 
employee meetings and are held accountable through their performance 
plans. In 2005, monthly meetings were instituted with Patent 
management, Administration management and patent union representatives, 
as well as quarterly Joint Labor Management meetings.
    In 2006, we also had the first ever Management Conference for all 
of the USPTO's managers, numbering over 500 employees. For two days, 
our managers attended sessions and collaborated on best practices of 
how to manage the highly skilled and dedicated workforce at the USPTO.
    On November 1, 2006, the USPTO held an agency-wide celebration 
event where management thanked and praised employees for their efforts 
in making 2006 a record-breaking year.
Training and Development
    In fiscal year 2006, the USPTO implemented a university approach to 
training new examiners. The university method provides training to new 
examiners in a classroom setting for eight months, rather than using 
the traditional one-on-one training model. This allows us to deliver 
intensive training to the newly hired examiners, leaving more 
experienced examiners and supervisors to focus on quality examination 
and reducing the backlog. In fiscal year 2006, 123 examiners completed 
the university's eight-month program. So far in fiscal year 2007, a 
total of 303 new examiners completed the training, with an additional 
451 examiners slated to graduate by the end of the fiscal year. To 
date, 871 patent examiners are either in the Patent Academy or have 
completed the eight-month program.
    Patent examiner training programs have been enhanced to include 
eight hours of technical training. We will work to enhance the skill 
sets of examiners authorized to train others by providing formal 
training to all personnel who are responsible for training new 
examiners and reviewing their work.
    Sixty-six patent examiners currently participate in USPTO's law 
school tuition reimbursement program, with tuition assistance up to 24 
credits per fiscal year. In addition, tuition assistance up to $5,000 
per examiner per fiscal year is available for technical courses.
Pay and Retention
    Last year, 60 percent of all patent examiners exceeded their goals 
in production and received a bonus for exceeding those goals. We are 
proud of their achievements. The average total compensation package 
(salary plus bonuses) for patent examiners is $99,000. While the U.S. 
Government's average pay grade is at the GS-8 level, the average at the 
USPTO is GS-11.
    All patent examiners received a 7 percent special pay rate increase 
in November 2006, making their total special pay rate a 10 percent 
increase.
    The USPTO expects to increase productivity in patents by offering 
examiners more opportunities to determine when and how they do their 
work, and achieve higher bonuses. The USPTO is piloting a voluntary 
flat goal program for patent examiners that builds upon the successful 
system in Trademarks and moves production away from an hourly-based 
system. Highlights of the program include awards of up to $5,000 per 
quarter; flexibility in where work is done; and a predetermined amount 
of work based on grade and docket.
    In 2006, USPTO management submitted proposals to patent union 
representatives for a new collective bargaining agreement that would 
replace a previous agreement negotiated in 1986. Proposals include 
enhanced patent examining monetary awards as well as a stand-alone 
quality award.
    Because more experienced examiners naturally are able to review 
cases faster, and in a more accurate manner, the USPTO has implemented 
a program of recruitment bonuses to hire and retain the talented 
engineers and scientists we need to examine our increasingly complex 
applications. We are reviewing other possible programs to help us 
compete with industry for professionals in the ``hot'' technology 
sectors. We want to be an ``employer of choice'' to the pool of tech 
professionals.
    The USPTO's fiscal year 2006 attrition rate was 10.6 percent--lower 
than comparable industry averages and a significant improvement over 
comparable past years. However, we believe we can further improve upon 
that number. The USPTO is reviewing additional incentive programs to 
recruit, retain and reward top performers. We will continue to become 
more flexible to enable us to attract and retain those top performers.
USPTO Telework--the ``Gold Standard''
    As we hire over 1,200 patent examiners a year, much of our human 
capital focus is on recruitment, retention, a balancing of work/life 
issues, less commuter time and more productivity, and the need to more 
efficiently manage our space.
    In fiscal year 2006, a pioneer group of 500 patent examiners 
participated in the newly implemented Patent Hoteling Program (PHP). 
The PHP was developed using the very successful Trademarks telework 
program model. PHP is a voluntary program and provides patent examiners 
the ability to work from home with complete on-line access to USPTO 
resources. We will add 500 more examiners to the hoteling program each 
year for the next several years. The goal of the hoteling program is to 
change the boundaries of the old workplace patterns allowing for 
decreased commute time, a more efficient use of office space, and even 
a more balanced lifestyle for our employees. This all translates into 
increased employee productivity and satisfaction, as well as higher 
employee retention.
    Patents is also piloting a work-at-home program for technical 
support staff.
    On a more long-term basis, we hope to create a workplace where an 
examiner can be successful from anywhere. In this regard, three 
possibilities are being investigated: (1) expanding the successful 
Patents Hoteling Program (PHP) in such a way as to create a more 
nationwide workforce; (2) creating remote or regional offices, or brick 
and mortar presences, in different locations across the country, 
selected upon a variety of factors such as where pockets of technology 
may be concentrated or there is increased access to a suitable 
workforce for hire; and (3) a storefront approach which, in a sense, is 
a hybrid of possibilities (1) and (2). The storefront approach would 
potentially provide a small-scale brick and mortar presence, or node, 
which could then act as a support center for employees participating in 
an expanded hoteling program.
    With respect to expanding the current PHP program to create a truly 
nationwide workforce, the Office is currently engaged in conversation 
with Congress, OPM and GSA about addressing the present requirement 
that hoteling employees physically report into the Office at least one 
hour per week to maintain the Office as their official duty station. 
Round-trip commuting to the official duty station for an hour plus, 
which is the current requirement, results in a very unproductive day. A 
modification of this requirement would permit hoteling employees to 
relocate to geographic locations at further distances from the Office, 
thus enhancing the Office's ability to reach out to high quality talent 
pools and those individuals not interested in living in or financially 
unable to live in the Washington, D.C. metropolitan area. If the one-
hour duty station requirement was lifted and USPTO was allowed a pilot 
or demonstration program, we would expect many retired patent examiners 
would consider working half-time or under the flat goal program. A 
further expansion on the second possibility (2) is that we might build, 
even locally, telework sites to provide employees with a brick and 
mortar presence to which to report, but one which may reduce or 
eliminate a great deal of their commuting time. The Office is open to 
all of these possibilities, or any combination thereof, as ways in 
which to better attract new employees, retain existing employees, and 
actively participate in e-government initiatives.
Retirees
    The USPTO takes advantage of the knowledge and skills of retirees 
who have left the USPTO. The opportunities where this pool of 
candidates can help us are tremendous. While some retirees have 
returned as rehired annuitants, many opted to work for companies who 
have contracted with the USPTO in the areas of examiner training in the 
Patent Training Academy, help-desk service for our customers in our 
Inventors Assistance Center, and examiner recruiting. This has allowed 
the agency to free up valuable examiner resources to focus on patent 
examining.
    The flexible work arrangements that the USPTO provides are very 
attractive and accommodating to retirees' schedules. Also, we expect 
that our vision of a truly nationwide workforce will include 
opportunities for USPTO retirees--including possible half-time or flat 
goal programs for retirees. The BusinessWeek recognition of the USPTO 
as one of the best places in America to round out one's career should 
allow us to recruit retirees from other industries as well.

                               CONCLUSION

    This report has offered a comprehensive review of what has been 
done, what is in the process of being done, and what can still be done 
to further strengthen the patent system in the United States. While the 
Administration is committed to pursuing and improving upon its 
management initiatives and record level achievements in hiring, quality 
and production, electronic tools and teleworking, some of the key 
solutions to reduce pendency and optimize productivity and quality will 
require Congressional action.

    Senator Mikulski. And then we can match performance with 
money.
    Mr. Gutierrez. Yes.
    Senator Mikulski. It will be your plan?
    Mr. Gutierrez. Yes.
    Senator Mikulski. Senator Shelby.

                    GROSS DOMESTIC PRODUCT REVISION

    Senator Shelby. Thank you, Madam Chairman.
    Mr. Secretary, I understand--excuse me--that the announced 
quarterly gross domestic product (GDP) for the country 
contained a relatively large revision, we are all familiar with 
this, one-half of 1 percent downward from the amount estimated 
in January of this year. Such a revision has only occurred 
seven times in the last 30 years. While rare, this type of 
revision has impact on markets, and anticipate less volatility 
in the data released from the Bureau of Economic Analysis.
    What procedure does the economic--Bureau of Economic 
Analysis--have to help lessen the odds that similar revisions 
will occur again in the future? Or will not occur?
    Mr. Gutierrez. Yes, sir. Thank you.
    Senator Shelby. In other words, I know it's--you don't have 
all of the data and you're pushed to get it out.
    Mr. Gutierrez. Right.
    Senator Shelby. And you revise it with more accurate data.
    Mr. Gutierrez. Yes. Obviously it's a very complex set of 
sources that we have to be able to consolidate this one GDP 
number. I would say the one area that stood out as impacting 
that was the service industry. We know that we still have to 
make progress to be able to measure services, as well as we can 
measure manufacturing. We actually have $8 million in our 2008 
budget to be able to measure all service industries. We're not 
covering all services today.
    If I had to point to one thing, and there are many things, 
Senator Shelby, if I had to point to one thing that threw us 
off in that quarter, it was the service number. I think we can 
get better, and we need to get better, at measuring services, 
given that they're over two-thirds of our economy.
    Senator Shelby. You know, the Federal Reserve does a lot of 
measuring of our economy. Do you have an interoperable 
connection to the Federal Reserve on this? On the way you 
measure production and everything? You feed them things.
    Mr. Gutierrez. Yes, sir.
    Senator Shelby. I thought you did.
    Mr. Gutierrez. Yes, sir. We work very closely with them, 
with the Office of Economic Advisors, with Treasury and with 
Labor.

   NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION'S EXCLUSION FROM 
                  AMERICAN COMPETITIVENESS INITIATIVE

    Senator Shelby. NOAA. Last year, Mr. Secretary, the 
President designated a National Institute of Standards and 
Technology, the National Science Foundation (NSF), and the 
Department of Energy's Office of Science as part of the 
American Competitive Initiative Act. However, NOAA was 
noticeably excluded from this program, and that's troubling. To 
me, NOAA stands out as an international leader in marine and 
atmospheric science, and as a cornerstone of our Nation's 
research community.
    NOAA's education and outreach activities appear to fall 
directly in line with ACI's educational goals. Given NOAA's 
diverse research--you're very familiar with it--and innovative 
technology, why was this agency not recognized as a candidate 
for the ACI Program, and does the Department intend to endorse 
NOAA in the future to become an ACI Program?
    Mr. Gutierrez. Thank you, Senator. I think that's an 
excellent question.
    Technically, it's not under the umbrella of the ACI, but we 
think about NOAA as very much part of our competitive 
advantage.
    Senator Shelby. I know that Senator Alexander is very 
involved in the competitiveness issue.
    Mr. Gutierrez. We do think about it as our competitive 
edge. We believe that the management of our coastal marine 
resources is a competitive advantage, as we look at the rest of 
the world, and how they do it. It may not be under the ACI 
umbrella, but we think about it as very much a part of our 
competitive advantage.

    NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION, NATIONAL POLAR 
          ORBITING OPERATIONAL ENVIRONMENTAL SATELLITE SYSTEM

    Senator Shelby. I hope you can get it under there, we'll 
have to see what happens.
    NOAA, again. Last year, the national polar orbiting 
operational environmental satellite system--pronounce it, what, 
NPOESS program--was scrutinized for its mismanagement and lack 
of oversight. Now that the Nunn-McCurdy process has subsided, I 
feel that the Departments of Defense and Commerce have 
genuinely strived to regain control of the program, hopefully.
    I'm still dismayed with the revised program plan. When I 
compare the new goals with the program's original prospects, I 
see that we've lost two of the six satellites, and 4 of the 13 
sensors package, while adding 4 years of delay. Not to mention, 
a cost increase of $4.1 billion. Why are we spending more 
money, perhaps, to receive an inferior product? And how have 
the ramifications for this particular program impacted the rest 
of your Department's overall acquisition and procurement 
activities, and to ensure that the taxpayers do not see a 
situation like this again? I know, it's a big-ticket item.
    Mr. Gutierrez. It is, Senator. And, I appreciate the 
question, this is a very important topic. Twenty-five percent 
is a tremendous overrun. Just so that you know, I have met with 
the chief executive officers (CEO) of Lockheed Martin and of 
Northrop Grumman as soon as we heard about this. I'd say two 
big things contributes to the overrun. One is the process of 
evaluating these bids. Too often, I think, we go to the lowest 
bid, and not necessarily understanding that that supplier can 
come back and increase the amount after we have approved it.
    Senator Shelby. It's not a good way to do business.
    Mr. Gutierrez. It's not.
    Senator Shelby. You were the CEO of a large company.
    Mr. Gutierrez. Absolutely. I used to have to go to my board 
for a 10 percent overrun. And, it was a very bad day, so this 
is a very bad day.
    Senator Shelby. Twenty-five percent overrun is----
    Mr. Gutierrez. Twenty-five percent.
    Senator Shelby [continuing]. Should be a wake-up call.
    Mr. Gutierrez. It's 25 percent, and as you say, the scope 
of what we thought we were getting has been reduced. We're 
getting less than what we thought we were buying at the 
beginning. It is absolutely not acceptable. A lot of it also 
goes to our processes. This is Air Force, NOAA and NASA working 
together. Too often, we have a handoff of individual project 
timelines to the other agency. We need to have someone managing 
the whole process. I think there's a lot that we can be doing, 
and we are doing. I get a briefing on this probably once a week 
from my Deputy, who is all over this. And we still have to stay 
very close, because I don't want to have another situation 
where I come back to you and say that the project is off course 
again. I can assure you that this is one of the items that 
rarely does the day go by that I don't think about this.
    Senator Shelby. If you put your background in business to 
this program, and other programs, you'll meet the 
accountability standard that Senator Mikulski talked about 
earlier.
    Mr. Gutierrez. Yes, Senator.
    Senator Shelby. Thank you, Madam Chairwoman.
    Senator Mikulski. I'm going to associate myself with the 
line of questioning of Senator Shelby. We're in absolute 
agreement on the fact that this has to be fixed.
    Senator Reed, Senator Alexander came first--I would like to 
turn to call upon Senator Alexander, noting that he has been 
truly one of the leaders in our bipartisan effort to create a 
framework for innovation, and implementing the National Academy 
of Science report, ``Rising Above the Gathering Storm.'' We're 
really happy to have him on the subcommittee.

                    AUGUSTINE REPORT ON IMMIGRATION

    Senator Alexander. Well, thank you Madam Chairman, and 
Senator Shelby. I'm glad to be here with you, especially 
because of that interest, and I want to thank Senator 
Mikulski--there was no more enthusiastic supporter for the 
Augustine report, and the work that we have done over the last 
2 years than she has been.
    And, Mr. Secretary, I want to ask you a question about 
competitiveness--and this also relates to some work the 
chairman's done over time.
    At the Oak Ridge National Laboratory, which has led our 
effort to help the United States capture the worldwide lead in 
computing, it has the largest new materials machine in the 
world, it's the world's largest energy laboratory, the top 
three people there all have green cards. Fifty of the 100 
American Nobel Prize winners in physics are immigrants, or are 
foreign-born. We have more than 500,000 foreign students at our 
colleges, universities--all of these people are helping create 
this incredible standard of living we have in this country, 
creating jobs for us.
    Now, when the Senate passed the immigration bill, which you 
are very much a part of these days, I know, from talking with 
you--we seemed to have a consensus that we ought to do what the 
Augustine report, the National Academy's report describes as, 
``instituting new skills-based preferential immigration 
options.'' In other words, we've got 500,000 or 1 million 
people coming into this country legally every year, we may have 
that many illegally, if we secure the borders, that means we'll 
have 1 million or more people coming in every year, and I 
believe there's a consensus in the Senate that we ought to--
that we ought to make sure that we make it easier for us to in-
source brain power. We outsource jobs, we can in-source brain 
power.
    And, there were three provisions in the Senate-passed 
immigration bill to help do that, improving visa processing, 
giving a green card to doctorates, to foreign students who 
received their doctorates in science, technology, engineering, 
math, and if they had jobs, increasing the H1B visas for those 
sorts of people coming to our country. I think Senator Gregg 
also may have gotten onto the bill a provision that took a part 
of the visas that are in the lottery and made those more 
available.
    But, what I would like to do is ask you to comment on that, 
and to encourage you--since I know you're working on 
immigration, that with your background--both as a business 
leader, and someone who's, who I've heard speak eloquently 
about the importance of immigration to our country, and who 
understands it very, very, very, very well. I wonder if you can 
think of more ways, as we deal with immigration this year--more 
ways for us to institute skills-based preferences for people 
coming to our country that will increase our brain power 
advantage, which creates new jobs.
    Mr. Gutierrez. Yes, Senator, I think there's broad 
agreement on this. Many of the scientists who are driving 
Chinese innovations, and Chinese industries, as well as Indian 
industries were educated in the United States. We are giving 
these foreign scientists the best education you can get in the 
world, and then because they can't stay here, they have to go 
back home and compete against our companies.
    We have about 80,000 higher learning students from India 
and about 60,000 from China. Essentially, our quota just will 
not absorb all of them. So, the challenge here is to expand the 
quota, and be willing to give more green cards, and more 
residency status to these graduates. This is part of our 
comprehensive reform, this is the high-skilled portion of it 
that we don't talk that much about, but is perhaps just as 
important as anything else.
    Senator Alexander. Well, and, I guess the point of my 
question is, is to encourage you in it. Because, I know you're 
going to be in the middle of these debates and discussions, and 
I don't think it lacks for support in the Senate. We're for it, 
but we need some more creative ideas about how to do it. 
Sometimes ideas fail around here for lack of the idea.
    So, if you can suggest two or three other ways in the next 
few months that we could beef up whatever immigration bill 
passes, I'll bet you'd get a lot of support for that, and we 
need to do something about the provision in the law that makes 
a future Nobel Prize winner--American Nobel Prize winner--who 
starts out being born in India, today we make that person 
swear, before they come over here to get their graduate degree, 
that they're going home, when, in fact, it's in our interest 
for them to stay here. And, as we know, Chinese and Indian 
universities are now recruiting, back to their own 
universities, the best Chinese, Indian professors to help beef 
up their competitiveness efforts.
    Mr. Gutierrez. If I could add something, because I think 
you're touching on something very important.
    If we go back to, say, the last 50 years, some of our best 
scientists came to our country during World War II from Europe 
and they contributed immensely. We have the ability to bring 
the best brains in the world today, and we just can't let more 
time go by, because they want to do it, we can do it, there's 
no excuse for not doing it. So, I appreciate your leadership on 
this.
    Senator Alexander. Thank you, Madam Chairman. And, if I may 
say, Madam Chairman, I think if we put our minds to it, and 
we're creative, we could to any immigration bill that passes, 
more support for those bringing in people with those sorts of 
skills.
    Senator Mikulski. Mr. Gutierrez himself is an immigrant, 
and I bet when his family came here from Cuba, they didn't know 
that this was going to be a future entrepreneur that would be 
the Fortune 500 corporation, and lead a major Government 
agency, and had the ear of the President of the United States 
any time he wanted to. So, yes, immigration is a challenge.
    Senator Reed.

     MANUFACTURING EXTENSION PARTNERSHIP AND ECONOMIC DEVELOPMENT 
                         ADMINISTRATION FUNDING

    Senator Reed. Thank you very much, Madam Chairman, and 
Senator Shelby.
    Mr. Secretary, welcome, thank you.
    The Department of Commerce plays a very critical role in my 
home State of Rhode Island, I was very pleased recently when 
Admiral Lautenbacher announced that NOAA was considering the 
home porting of the Okeanos Explorer--NOAA's first ship of 
ocean exploration--in Rhode Island. And I look forward to 
working with you and the admiral to ensure this effort is 
completed.
    There are two issues I'd like to address, first is a 
manufacturing extension partnership program (MEP)--I'm 
disappointed that a cut in the program is included in the 
budget. It's absolutely critical--we all say this, 
manufacturing is such an important part in not only the 
economy, but the fabric of every community in America, I think 
we have to do more.
    And second, with respect to the Economic Development 
Administration (EDA), the proposal for the second year in a row 
to transform core programs into a regional development account, 
funded at about $170 million, to support large regional-based 
development projects. It's my understanding that the existing 
EDA program has received very high marks from the Office of 
Management and Budget (OMB) and independent analysts for their 
assistance to local communities with respect to public works, 
and economic justice, technical assistance, and I'm just 
wondering why we would abandon a proven model, and adopt this 
regional approach--at least propose it.
    Mr. Gutierrez. Yes, Senator, we're obviously committed to 
it, and we're not thinking of abandoning it. We did have to 
decide strategically as to where we put the funds. Do we invest 
in high technology, basic research, and maintain those other 
programs, as you say, which are very important--especially 
EDA--where we believe we do invest to get a return? The balance 
we found was with $170 million, we are trying to be more 
efficient by having a regional development account, so we can 
continue to contribute to these communities, while at the same 
time, put money behind the long-term research.
    I understand your concern, and this is a topic that I knew 
would come up, because MEP and EDA are both areas that warrant 
much debate. But, it was a choice that we made and we felt that 
we were looking to the longer term.
    Senator Reed. Well, Mr. Secretary, one of our--my 
concerns--is that with a regional approach you lose focus, and 
there is the tendency, I think, to--in that respect--to see 
these accounts diminish, not expand. And I think we've got to 
expand these accounts for the reasons you've suggested.
    And one of the things that's a bit perplexing is that the 
EDA proposal attempts to cut $80 million this year. A year ago 
you were requesting a $40 million increase, which would suggest 
that you were very enthusiastic about EDA--what's changed?
    Mr. Gutierrez. Well, 2 years ago, you may recall, we were 
looking at strengthening America's communities initiative, 
which would have combined the block grant programs that are in 
Housing and Urban Development (HUD) with EDA, and so we are 
actually moving more money into this model.
    What we'd like to do is look at this regional development 
account idea, develop a plan to make it more efficient--not 
just for us, but for the users--and come back with a plan, and 
share how we believe we can make it work with $170 million. We 
wouldn't go ahead and execute this without at least coming back 
and talking with major stakeholders as yourself.
    [The information follows:]

    Meeting With Senator Reed's Staff on the Efficiency of Regional 
                          Development Accounts

    Although nothing has been scheduled at this time, EDA will arrange 
for a meeting with Senator Reed's office to discuss the efficiency of 
Regional Development Accounts.

    Senator Reed. Well, Mr. Secretary, I was actually not 
impressed with the strengthening American communities approach, 
which would have put EDA proposals together with HUD funding. 
And, it looks like this budget--there's diminishing EDA, and 
the HUD budget, too, is being squeezed hard, which is not going 
to strengthen our communities. And, I think, when you go to a 
regional basis it's sort of a toss-up, who gets what, and 
again, I'm concerned--terribly concerned.
    So, I appreciate your willingness to talk about this, but 
this is something that is, again, I think we'll revisit this.
    I've mentioned before, my concerns about the manufacturing 
extension partnership centers. Dr. Jeffrey--Dr. Jeffrey will be 
testifying later, indicated there's going to be re-competition, 
because the proposed $46 million fiscal year 2008 is not 
sufficient to support the National budget? Or, that's a 
question I have--what is this re-competition about?
    Mr. Gutierrez. We haven't really honed in on re-competition 
as a solution. We obviously have to do a lot of thinking as to 
how to make the $46 million go as far as possible. Understand 
that that's one-third of the total amount; there's private 
sector and there's local money.
    But, we haven't recommended re-competition as the course of 
action. Again, we'd like to go back, think through this, and 
discuss it with you once we have a better plan in place.
    Senator Reed. Well, thank you, Mr. Secretary.
    Mr. Gutierrez. Thank you, sir.
    Senator Reed. Thank you, Madam Chair.
    Senator Mikulski. Senator Kohl.

                  MANUFACTURING EXTENSION PARTNERSHIP

    Senator Kohl. Thank you very much, Madam Chairman.
    I'm wanting, also, to discuss the manufacturing extension 
partnership account with you, Mr. Secretary. It's--and perhaps 
you're not fully familiar with it, because your job is so 
broad, so big, and has so many different pieces to it, and I 
can understand that.
    But, the manufacturing extension partnership has been a big 
success, at a relatively low cost, at preserving and creating 
more jobs in small and medium-sized manufacturing companies.
    I'm very familiar with it in my State because it's been a 
very active program, it's helped hundreds and hundreds of 
companies--many of whom I've visited--and gotten personal 
experience in seeing what they've done and listened to the 
accolades expressed by management, as well as those people who 
are MEP employees, go on to companies, seen what they've done, 
seen the results that they've produced in terms of increased 
efficiencies in these companies that have allowed these 
companies--in some cases--to come back from near bankruptcy. 
But, in many cases, just to continue to grow and produce sales 
and profits and employment. Our manufacturing jobs, which, of 
course, are critical and crucial for our economy. It's a 
success story, you know? It's something that I would hope that 
you would all talk about, and want to keep, at least at its 
present level of funding, which is $106 million, roughly $2 
million per State.
    And, as you indicate, it's complemented by State funding, 
as well as funding by the companies who use it. So, it's not 
one of these programs that we just sort of throw money at the 
wall, here at the Federal level, and hope that it may do some 
good--it is funded, as well, by the States, and the companies 
that use the service.
    I went to a company in Wisconsin over the weekend, by 
coincidence. And they're a company that is presently using the 
MEP program, and they just rave about how MEP has come in and 
helped them to improve the efficiency of their business.
    Now, in light of that, could you say something that would 
encourage us to believe that we're not going to have to go back 
to the mat again this year as we did last year and got the 
funding restored? Several of us Senators--and, you know, we 
got--it was cut last year and we got it restored to its funding 
level, and now here we come back this year, and it's cut in a 
similar fashion. And if we have to, you know, we'll fight like 
heck to get that funding back, and I hope, successfully. But, 
it would be nice if we wouldn't have to do that. And, you know, 
I'd just like to hear something from you.
    Mr. Gutierrez. I understand your concern, let me just say 
that. We're constantly faced--and we do go through this, pretty 
much, every year--we're constantly faced with the choice of 
where do we allocate the money. And we have been--especially 
over the last several years--moving more and more toward what 
we believe is the public sector's role, which is basic 
research.
    On the MEP, because we play a matchmaking-type of role, we 
try to pair up private sector needs with consultants, that 
perhaps we can continue to play that matchmaker role, more 
efficiently, more productively, without giving up on the 
program. We've got the network in place, that's not going to go 
away. So, we want to keep the program going, understand that it 
is operational in the sense that, these are companies that are 
up and running, working with consultants, trying to get better 
rates, trying to match up consultants that are more suited with 
specific companies.
    So, not giving up on the program, while being able to put 
more money behind the long-term research. As you know, when we 
make these choices, it never comes out perfectly, and there 
will be those who are not satisfied with that. But, that's sort 
of the thinking, and there's plenty of work that we need to do 
to get inside these offices and understand, how can we serve 
our customers with less money? My commitment to you is that I 
will do that and I will spend time on that, and try to stretch 
it out as much as possible.
    Senator Kohl. I'm listening, and I'm trying to understand 
and, you know, and you speak very clearly and directly, which I 
appreciate. But, here's a program that works, Mr. Secretary. It 
works. I'm, you know, sometimes we come to these sessions and 
you make out a budget and you try and cut the fat off the bone, 
which, you know--which, what we're all wanting to do, the 
programs that don't work very well. But, I have not heard you 
say--or anybody say--that this is not a program that works.
    And when you have a program that works at a relatively 
modest cost, particularly in keeping manufacturing from getting 
worse. Explain to me again, I mean, again--why try to knock 
this program off, you know, off its stool? It works. I'm 
familiar with it in my State and other States, and again--I 
don't just listen to some public relations (PR) people putting 
out a release, I've visited dozens and dozens of companies that 
have used the MEP program, and that it does work, in helping, 
and to become more efficient by bringing in--as you know--
experts who are federally funded, at least, you know, they're 
Federal employees, but they also get paid by State and--and 
they come in and they do a job in making the company more 
efficient and more effective and more profitable.
    Well, I guess I'm--I don't want to, I don't want to ask you 
to repeat what you've already said. But I--I'm surprised. 
You're a person who comes from the world of business, and so do 
I. And, I know you're concerned about dollars, and dollars 
spent, and value return for dollars spent and how important 
that is. And, I can tell you, this is a really, really good 
program, and you need to be proud of it. And that's not to say, 
``I'm proud of it, but I'm cutting its budget,'' because those 
things don't comport. If I'm proud of it, and it's a modestly 
funded program, then I'm not going to be cutting it.
    And, so somewhere in your Department, somebody's not very 
proud of it, and somebody thinks it's not a very good program. 
And, I'm here to tell you--from my experience and my knowledge 
of the program, Mr. Secretary, it is a good program. And it 
deserves your sweat and effort to keep it funded at its 
currently modest level.
    And with that, whatever you say, I will not respond and try 
to be critical, but I'd like to hear one last comment from you, 
and then I'll quit.
    Mr. Gutierrez. What I will say is there isn't a 
disagreement that there's a concept and an idea and a model 
that could work, and that has worked. We have examples of 
projects where there has been a success. Not all projects have 
been successful and, perhaps these are outside of your State, 
or in other parts of the country. Our challenge is to focus our 
money on those projects that are successful. We're trying to 
cut off the tail that isn't successful, and trying to get a lot 
better at putting the money behind those projects that do have 
a return.
    That's what I would do with the $46 million, as opposed to 
the $110 million, or $105 million. What we would try to do--is 
allocate the money to projects that do have a return, because 
there are some that don't. I think our challenge is to identify 
those, and we should have enough experience to have a better 
sense of which ones those are.
    I understand your concern. I don't think there's anything I 
could say to convince you, but we do think about these things, 
and we take up the challenge and we try to make the most of it.
    Senator Kohl. Thank you.
    Thank you, Madam Chair. Chairwoman.
    Senator Mikulski. Thank you very much, Senator Kohl. We 
appreciate the rigor of your questions, and you've expressed 
many of ours.
    Mr. Secretary, in the interest of your time and ours, we're 
not going to go to a second round of questions. We're going to 
submit them--ask our colleagues to submit them in writing. And 
we know that the international markets are rattled, and we have 
a second panel, and we want to continue before the noon hour.
    Colleagues will submit questions for the record, know that 
we will have ongoing concerns raised by members. NOAA--why 
isn't it in the competitive agenda? How we can put it in? How 
we can make sure the satellite program is back on track, the 
follow up on the patents, we'll be talking to Mr. Dudas in a 
minute or two, and then also, the census, because we're 
concerned about the security issues at the Census, and also the 
fact that as of this moment, the Director and the Deputy have 
resigned, and people are in an acting category. And, as we get 
ready for 2010, which is going to come so quickly, we've got to 
make sure that our census not only has the technology, but the 
leadership to do it.
    So, those would be the areas that I think we look forward 
to following up. So, thank you.
    Mr. Gutierrez. Thank you.
    Senator Mikulski. And, colleagues, we'll submit it for 
record.
    Thank you very much, Mr. Secretary.

                         CENSUS DEPUTY DIRECTOR

    Mr. Gutierrez. Madam Chair?
    Senator Mikulski. Yes, sir.
    Mr. Gutierrez. If I may?
    Senator Mikulski. Yes, sir.
    Mr. Gutierrez. We have named Jay Waite the permanent Deputy 
Director at Census. He is permanent, and we will bring the 
person who will be nominated for the Director job as soon as we 
have that person.
    Senator Mikulski. Well, we look forward to that and working 
with our authorizers for an expeditious confirmation. So that 
we're all going in the same direction.
    Mr. Gutierrez. Thank you.
    Senator Mikulski. Thank you very much, Mr. Secretary.
    Mr. Gutierrez. Thank you very much.
    Senator Mikulski. Until we meet again.
    Mr. Gutierrez. Thank you, thank you.

             National Institute of Standards and Technology

STATEMENT OF DR. WILLIAM JEFFREY, DIRECTOR
    Senator Mikulski. Now the Chair calls to the table, as our 
Secretary departs, the Director of NIST, Dr. Jeffrey. For the 
record, it is the National Institute of Standards and 
Technology, and also, Mr. Dudas, the head of the Patent Office.
    We're really glad to see both of you. As you can hear the 
things of the subcommittee, and the fact that we have such a 
bipartisan commitment to innovation, and you're, you're--you're 
part of the A-team on this. Both, what you provide in terms of 
research, and also service to the private sector, it's a unique 
way that this country operates, and then--that if we invent it, 
we gotta protect it. And you know the challenges there. So, 
ours is not meant to be a school-marmish hearing, but how do we 
get--help you get the results that our country really needs 
this minute?
    So, how about if we lead off with Dr. Jeffrey, and then, 
Mr. Dudas, we're going to turn to you, okay?
    Dr. Jeffrey. Thank you, Chairman Mikulski, Ranking Member 
Shelby, and members of the subcommittee.
    I am pleased to present the President's 2008 budget request 
for NIST. This is a strong budget that will further enhance our 
ability to support the measurement and standards needs of U.S. 
industry, and universities.
    NIST has a long history of being at the forefront of new 
innovations, through our measurements and standards. In 2003, 
the National Academy of Engineering identified the greatest 
engineering achievements of the 20th century. NIST measurements 
and standards were integral to the successful development and 
adoption of virtually every one. Nineteen retrospective studies 
of economic impact show that on average NIST labs generated a 
benefit to cost ration of 44:1 to the U.S. economy.
    The high rate of return results from the fact that new 
measurements or standards benefit entire industries, or sectors 
of the economy, as opposed to individual companies.
    For example, NIST researchers recently developed new 
measurement techniques that cut up to 80 percent of the cost 
and time for industry to develop advanced materials. As one 
industry scientist put it, ``NIST scientists are reawakening a 
major element of creativity that analytical science almost 
lost.''
    NIST also operates world-class user facilities. Last year 
approximately 2,000 researchers from 60 different industries 
leveraged the NIST Center for Neutron Research, or the NCNR. A 
National Academy of Sciences (NAS) report describes the NCNR's 
capability to image an operating fuel cell as ``a considerable 
achievement,'' and ``one of the most significant analytical 
advances in the fuel cell realized in decades.'' Industry 
scientists have stated that the research performed at the NCNR 
has allowed them to jump 5 years ahead in fuel cell 
development.
    To prepare for the future, NIST is working with industry to 
identify critical measurement barriers to innovation, 
evaluating its physical infrastructure, forming new and 
strengthening existing partnerships, and updating the ways it 
stimulates the knowledge transfer from its labs to industry and 
academia.
    The increased funding provided through the budget request 
will directly support innovative advances in broad sectors of 
the economy, as well as improve the safety and quality of life 
of our citizens.
    For example, the research initiatives will speed the 
development and foster the adoption of nano-technology 
products, and provide the physical measurements to ensure their 
safety, accelerate the revolutionary economic potential in 
exploiting unique properties of the quantum world, provide 
confidence and reduce uncertainty in measurements supporting 
global climate change models, reduce the risk to communities, 
as they encroach on hurricane-prone coasts and fire-prone wild 
land/urban interface regions, and enhance the safety of new and 
existing structures from the catastrophic impact of 
earthquakes.
    To meet the demands for measurements at ever-smaller 
scales, at faster rates, and with more accuracy, requires 
excellent laboratory and user facilities. The 2008 budget 
request, therefore, includes capacity and capability 
improvement at both our Boulder campus, and the NCNR.
    The budget request for MEP is identical to last year's 
request, and is a reduction of $58.3 million from the fiscal 
year 2006 enacted level. I recognize the difference in priority 
between the administration and Congress regarding the Federal 
funding level for the MEP program.
    One thing you can be absolutely certain of--regardless of 
the final appropriations, NIST will execute this program in the 
most effective manner possible, to support the Nation's small 
manufacturers.
    No funds for ATP are requested in the President's 2008 
budget. The 2006 enacted budget was consistent with the phase-
out of the program. Since the 2007 full year continuing 
resolution, however, included funding for ATP, we will be 
initiating a new competition.
    In summary, recent NIST measurements and standards research 
have enabled innovations now embedded in the IPOD, body armor--
saving the lives of domestic law enforcement officers and our 
service men and women overseas--and diagnostic screening 
devices for cancer patients, making their treatment more 
targeted and accurate. The results of NIST research can be 
found in virtually every manufacturing and service industry.

                           PREPARED STATEMENT

    For more than a century, NIST research has been critical to 
our Nation's competitiveness. The increased funding requested 
for NIST will directly support innovations in broad sectors of 
the economy that will, quite literally, define the 21st 
century.
    Thank you, and I'd be happy to answer any questions.
    Senator Mikulski. Thank you very much, Dr. Jeffrey, and we 
will be asking you questions.
    [The statement follows:]

               Prepared Statement of Dr. William Jeffrey

    Madam Chair Mikulski, Ranking Member Shelby and members of the 
subcommittee, I am pleased to appear before you today to present the 
President's fiscal year 2008 budget request for the National Institute 
of Standards and Technology (NIST). This is a strong budget for NIST 
and it will further enhance NIST's ability to support the measurement 
and standards needs of U.S. industry and universities. The fiscal year 
2008 request of $640.7 million includes $594.4 million for NIST's core 
(encompassing NIST's research and facilities) and $46.3 million for the 
Hollings Manufacturing Extension Partnership. The budget for the NIST 
core represents an 11 percent increase over the President's fiscal year 
2007 request and a 21 percent increase over the fiscal year 2007 
continuing resolution (H.J. Res. 20) recently signed by the President 
(Public Law 110-5). This funding supports NIST's mission to promote 
U.S. innovation and industrial competitiveness by advancing measurement 
science, standards and technology in ways that enhance economic 
security and improve our quality of life.
NIST's Impact on Innovation and the Economy
    NIST has a long history of being at the forefront of new 
innovations through our high-impact measurements and standards. In 
2003, the National Academy of Engineering identified 20 of the greatest 
engineering achievements of the 20th century--including automobiles, 
aircraft, lasers, computers, and the internet. NIST measurements and 
standards were integral to the successful development and adoption of 
virtually every one. Now NIST is paving the way for the greatest 
achievements of the 21st century which are still yet to be imagined.
    NIST's measurement science and standards form part of the 
foundation upon which innovation is built. Just as the Nation's 
physical infrastructure (e.g., roads or power grid) define the Nation's 
capacity to build and transport goods--the Nation has an innovation 
infrastructure which defines the Nation's capacity to innovate. And 
investment in long-term basic research like that done at NIST is an 
integral component of the innovation infrastructure. As stated in the 
National Academy of Sciences' Rising Above the Gathering Storm, ``The 
power of research is demonstrated not only by single innovations but by 
the ability to create entire new industries.''
    NIST researchers are world leaders in their fields. They frequently 
arrive at the ``cutting edge'' of science before anyone else. And once 
there, they partner with industry and academia to identify and overcome 
barriers that can slow or even halt the progress of new innovations. 
With the proposed fiscal year 2008 budget, NIST will continue 
developing the measurement and standards tools that enable U.S. 
industry to maintain and enhance our global economic competitiveness.
    NIST continues to meet the Nation's highest priorities by focusing 
on high impact research and investing in the capacity and capability of 
our user facilities and labs. This emphasis is validated by the high 
rate of return to the Nation that the NIST labs already have 
demonstrated. Nineteen retrospective studies of economic impact show 
that, on average, NIST labs generated a benefit-to-cost ratio of 44:1 
to the U.S. economy. The high rate of return results from the fact that 
new measurements or standards benefit entire industries or sectors of 
the economy--as opposed to individual companies.
    NIST supports U.S. innovation and economic competitiveness 
primarily through its measurements, standards, and national user 
facilities. Recent NIST successes highlight the importance of each of 
these critical components and illustrate how NIST's labs are able to 
return such a large benefit to the Nation:
    Measurements.--NIST researchers recently developed new measurement 
techniques that allow for rapid and cost-effective assessments of 
advanced materials that are used in a range of products from new 
detergents to improved adhesives for next-generation electronics. 
Previously, it could cost industry $20 million to develop and 
understand the characteristics of one new material. With this NIST 
measurement advance, the cost and time are estimated to have been cut 
by 80 percent. To facilitate the transfer of this technique to 
industry, NIST organized an open consortium now consisting of 23 
members that are learning to use and adapt these new measurement 
techniques. As a scientist from Honeywell International put it, ``. . . 
NIST offers an invaluable resource to show what can be done, and how to 
go about it. NIST Combinatorial Methods Center scientists are 
reawakening a major element of creativity that analytical science 
almost lost.''
    Standards.--Nanotechnology has the potential to revolutionize 
manufacturing. And one of the most promising nanomaterials is the 
carbon nanotube. Carbon nanotubes have unique electronic and mechanical 
properties that lend themselves to a variety of applications, ranging 
from the development of stronger and lighter materials to nanowires and 
transistors for miniature electronics. Regardless of the potential 
application, the quality of the materials is paramount. Unfortunately, 
current production techniques for carbon nanotubes result in products 
with high levels of uncertainty in their quality and uniformity. To 
address this concern, NIST is currently developing a carbon nanotube 
reference material. This reference material, when deployed, can be used 
by any nanotube manufacturer to validate their product's quality, 
purity, and consistency and accelerate the adoption of carbon nanotubes 
into more sophisticated devices.
    National User Facilities.--NIST operates world-class user 
facilities that benefit the entire U.S. research community. Last year, 
approximately 2,000 researchers from 60 different industries across the 
country leveraged the NIST Center for Neutron Research (NCNR). One 
recently developed application of the NCNR was to image the interior of 
operating fuel cells to help improve the efficiency and durability of 
these devices. Large and small companies involved in the manufacture or 
use of hydrogen fuel cells, including General Motors, Daimler-Chrysler, 
Dupont, and PlugPower, have benefited from this new capability. The 
NCNR is the premier facility in the world providing this capability. A 
National Academy of Sciences report describes the NIST efforts in 
regards to fuel cell technologies as ``. . . a considerable achievement 
and one of the most significant analytical advances in the membrane 
fuel cell realized in decades. The NIST facility offers the entire fuel 
cell community unique research opportunities that previously eluded 
them.'' Industry scientists have stated that the research performed at 
the NCNR has allowed them to jump 5 years ahead in terms of fuel cell 
development.
    The President recognized NIST's critical role for the Nation as 
part of the American Competitiveness Initiative (ACI). The ACI 
describes NIST as: ``. . . a high-leverage Federal research agency that 
performs high-impact basic research and supports the successful 
technical translation and everyday use of economically significant 
innovations.'' Under the ACI, overall funding for NIST's core, the 
National Science Foundation, and the Department of Energy's Office of 
Science is together slated to double by 2016.
Preparing for the Future
    The 21st century will be defined by technology innovations that 
fundamentally change the products and services available, the way they 
are manufactured and provided, and the impact on our quality of life. 
These advances will arise from basic research now beginning in, for 
example, nanotechnology, quantum science, and alternative energies--all 
areas in which NIST has a strong and increasing focus with its 
investments.
    The goal of increasing physical sciences research at NIST (along 
with that supported by the National Science Foundation and the 
Department of Energy's Office of Science) provides a unique opportunity 
to strategically establish the programs, plans, and infrastructure that 
will more than double the impact that NIST has on the economy. To 
prepare for the future, NIST is working with industry to identify 
critical measurement barriers to innovation, evaluating the capacity 
and capability of NIST's physical infrastructure, forming new and 
strengthening existing partnerships, and updating the ways it 
stimulates the knowledge transfer from its labs to industry and 
academia.
    For example, over the past year, NIST worked with over 1,000 
experts from industry and universities to identify measurement barriers 
to innovation in a number of critical industry sectors. Over 700 
technical barriers were identified, analyzed, and documented in a 
report. NIST is now in the process of working with industry, 
universities, and other government agencies to address many of these 
identified barriers over the coming years.
    In terms of facilities, NIST has conducted a rigorous evaluation of 
its laboratory capacity and capabilities on its Boulder, Colorado, 
campus. This review found facilities' shortfalls in our ability to meet 
both current and projected industry and university needs in a number of 
important areas. Examples include the high-speed and high-frequency 
measurements required for electronics, defense, and homeland security; 
measurements and tests at the single atom level; and improved methods 
for measuring time, an area expected to vastly improve navigation and 
positioning systems. Each technical area was evaluated in terms of 
necessary laboratory conditions (to include stability of temperature, 
vibration, and humidity, as well as air cleanliness). As a result of 
this assessment, new laboratory space to meet the nation's needs well 
into the 21st century is proposed in the fiscal year 2008 budget 
(Boulder Building 1 Extension).
    NIST also serves industry and academia by being a steward of world-
class user facilities. As part of the ACI, NIST identified two 
important opportunities first called out in the fiscal year 2007 budget 
and enhanced in the fiscal year 2008 budget--increased capacity and 
capability of the NIST Center for Neutron Research and creation of the 
NIST Center for Nanoscale Science and Technology. Both of these 
facilities are designed to stimulate progress in support of our 
Nation's economic competitiveness.
    The ACI provides NIST the opportunity to further promote U.S. 
innovation and industrial competitiveness. With focused, world-class 
research and facilities, NIST will have a greater impact on the 21st 
century economy than it did even over the past century.
Fiscal Year 2008 President's Budget
    The increased funding provided through the fiscal year 2008 request 
will directly support innovative advances in broad sectors of the 
economy as well as improve the safety and quality of life for our 
citizens. The following table summarizes the proposed fiscal year 2008 
budget. In this table we show both the fiscal year 2007 President's 
budget and the fiscal year 2007 continuing resolution (Public Law 110-
5) for comparisons as different baselines.

                           BUDGET SUMMARY SHOWING BOTH FISCAL YEAR 2007 PRESIDENT'S REQUEST AND PUBLIC LAW 110-5 AS BASELINES
                                                                [In millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Fiscal Year 2007
                                                               Fiscal Year 2007      Continuing     Fiscal Year 2008   Change Between    Change Between
                                                                  President's        Resolution        President's    Fiscal Year 2008  Fiscal Year 2008
                                                                    Request       (Public Law 110-       Request       and Fiscal Year   and Public Law
                                                                                       5) \1\                           2007 Request          110-5
--------------------------------------------------------------------------------------------------------------------------------------------------------
STRS (Labs)..................................................             467.0              432.8             500.5             +33.5             +67.7
CRF (Facilities).............................................              68.0               58.7              93.9             +25.9             +35.2
                                                              ------------------------------------------------------------------------------------------
    Core Subtotal............................................             535.0              491.4             594.4             +59.4            +102.9
                                                              ------------------------------------------------------------------------------------------
ITS (MEP + ATP) Subtotal.....................................              46.3              183.6              46.3  ................            -137.3
                                                              ------------------------------------------------------------------------------------------
    TOTAL....................................................             581.3              675.1             640.7             +59.4             -34.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Totals for fiscal year 2007 do not include the 50 percent of the pay raise that was included in Public Law 110-5.

    The fiscal year 2008 budget was formulated with the fiscal year 
2007 President's request as the baseline. Since Public Law 110-5 
provides a smaller budget for the NIST core (STRS and CRF) than the 
fiscal year 2007 President's request by $43.6 million, some proposed 
initiatives in fiscal year 2007 that will not receive full funding are 
implicitly contained within the President's fiscal year 2008 request. 
New initiatives and program increases are described in more detail 
below:

Scientific and Technical Research Services (STRS)
            Enabling Nanotechnology From Discovery to Manufacture (+$6 
                    Million)
    The potential market for products containing nanomaterials is 
estimated at over $1 trillion by 2015. Because of their small size--a 
thousand times thinner than a human hair--nanoscale products require 
entirely novel ways to characterize their physical properties and fully 
exploit their unique characteristics in the manufacture of new 
products.
    In fiscal year 2007, NIST began a major initiative to address the 
measurement barriers hindering rapid development of nanotechnologies. A 
new NIST Center for Nanoscale Science and Technology (CNST) has been 
established that combines both research and a state-of-the-art 
nanofabrication and nanometrology user facility.
    The research initiatives proposed in fiscal year 2008 will build on 
recent NIST advances by:
  --Developing ways to measure strength, stress, strain, optical, and 
        electronic properties of nanostructures to improve processes 
        and understanding of failure mechanisms;
  --Creating three-dimensional, high-resolution imaging methods that 
        reveal details of structure, chemical composition, and 
        manufacturing defects and allow researchers to view 
        nanostructures as they interact with their environment;
  --Simulating nanoscale phenomena with computer models to allow 
        economical development of production methods for complex 
        nanodevices; and
  --Producing the measurement techniques required to address the 
        interagency efforts to characterize nanotechnology impacts to 
        our health, safety, and environment.
            Measurements and Standards for the Climate Change Science 
                    Program (+$5 Million)
    The climate is changing. Determining how fast it is changing, and 
understanding the complex relationships between all the environmental 
variables is a critical objective of the U.S. Climate Change Science 
Program. Many different climate monitoring systems in space, in the 
air, and on the ground are currently monitoring solar output as well as 
trapped and reflected heat by the Earth's atmosphere. These systems are 
operated by many countries and research groups. Establishment of 
absolute calibration and standard references will allow accurate 
intercomparisons of these systems, will help identify small 
environmental changes occurring over many years, and will reduce 
uncertainties in the data input to global climate change models.
    With the proposed fiscal year 2008 funding, NIST will, working in 
coordination with other agencies, develop:
  --An international irradiance measurement scale to be used in 
        rigorously calibrating satellite light intensity instruments 
        prior to launch to ensure sufficient accuracy to allow valid 
        comparisons among results from different instruments or from 
        data sets taken over different periods of time;
  --New instrument design strategies and quality assurance programs to 
        optimize accuracy and stability of satellite-based irradiance 
        measurement systems;
  --Techniques for generating specific types of aerosols in the 
        laboratory, measuring aerosol optical and physical properties, 
        and for simulating aerosol properties that cannot yet be 
        measured in the laboratory; and
  --A database of critically evaluated data on aerosol properties 
        collected at NIST and elsewhere.
            Enabling Innovation Through Quantum Science (+$4 Million)
    Unlike the laws of physics that govern our ``every day'' world, the 
laws of physics that govern the quantum world of atoms, electrons, and 
light particles are fundamentally different. These quantum particles 
are able to interact in ways that according to human experience would 
seem impossible. For example, a quantum particle can actually be in two 
different places simultaneously.
    Conceptualizing these phenomena is difficult to say the least, but 
developing ways to exploit them for the development of technologically 
significant innovations is even more challenging. NIST, however, has 
world-class scientists who are leaders in the emerging field of quantum 
information science. Three NIST scientists have won Nobel Prizes in the 
last 10 years based on their work in this field. Many of the best minds 
in physics today believe that applications of quantum science will 
transform the 21st century just as integrated circuits and classical 
electronics revolutionized the 20th century.
    The proposed fiscal year 2008 initiative will build upon NIST's 
significant expertise in this area, and leverage the collaborations 
established in the recently created Joint Quantum Institute between the 
University of Maryland, NIST, and the National Security Agency. NIST 
proposes to accelerate the potential of the quantum world for enhancing 
our nation's competitiveness through research into:
  --Quantum ``wires'' that use ``teleportation'' techniques to reliably 
        transport information between the components of a simple 
        quantum computer;
  --Quantum memory analogous to the random access memory of today's 
        computers to allow more complex logic operations;
  --Quantum conversion processes that transfer information from one 
        form of quantum information to another (for example, ways to 
        transfer information about the quantum characteristics of an 
        atom to a photon); and
  --Quantum based measurement tools such as optical clocks and single 
        electron counters.
            Disaster Resilient Structures and Communities (+$4 Million)
    The past few years have reminded us that both natural hazards--
including extreme winds, storm surge, wildland fires, earthquakes, and 
tsunamis--as well as terrorist actions, are a continuing and 
significant threat to U.S. communities. The disaster resilience of our 
physical infrastructure and communities today is determined in large 
measure by the building codes, standards, and practices used when they 
were built. Many of these legacy codes, standards, and practices--which 
have evolved over several decades--are oversimplified and inconsistent 
with current risk assessments. As construction and rebuilding costs 
continue to rise, there is increasing recognition of the need to move 
from response and recovery to proactively identifying and mitigating 
hazards that pose the greatest threats.
    The proposed fiscal year 2008 initiative will, working in 
coordination with other agencies, develop:
  --Standard methods to predict losses, evaluate disaster resilience, 
        and estimate cost-to-benefit of risk management strategies at 
        the community and regional scales that local officials can use 
        to evaluate and mitigate risks via land-use planning and 
        practices;
  --Decision support tools to modernize codes, standards, and practices 
        consistent with the risk;
  --A validated ``computational wind tunnel'' for predicting extreme 
        wind effects on structures; and
  --Risk-based storm surge maps for the design of structures in coastal 
        regions.
            National Earthquake Hazards Reduction (+$3.25 Million)
    Many earthquakes strike without warning. Within the United States, 
more than 75 million people are located in urban areas considered to be 
of moderate to high risk of earthquakes. Just the economic value of the 
physical structures within these regions--not including the potential 
loss of life and economic disruption--is valued at close to $8.6 
trillion. To address this threat Congress has provided longstanding 
support for the National Earthquake Hazards Reduction Program which 
NIST coordinates across the Federal government.
    This initiative will enhance the safety of:
  --New structures by establishing and promoting performance-based 
        standards for entire building designs and by accelerating the 
        adoption of basic research into the model building codes, 
        standards, and practices; and
  --Existing structures through research on actual building performance 
        in earthquakes; developing structural performance models and 
        tools; and establishing cost-effective retrofit techniques for 
        existing buildings.

Construction of Research Facilities (CRF)
            Building 1 Extension (B1E)--Enabling Sustained Scientific 
                    Advancement and Innovation (+$28 Million)
    When President Eisenhower dedicated the NIST facilities in Colorado 
in 1954, no one imagined that half a century later scientists would be 
manipulating matter atom-by-atom. Such technological advances require 
increasingly complex and difficult measurements--to be able to observe, 
characterize, and create structures at ever smaller spatial scales. As 
the structures shrink in size, small fluctuations in temperature, 
humidity, air quality, and vibration begin to distort the results. We 
are now at the point where laboratory conditions are inhibiting further 
advances in some of the most promising areas of research for the 21st 
century.
    The $28 million proposed in the fiscal year 2008 budget will 
leverage previously proposed funds ($10.1 million) in the fiscal year 
2007 budget to construct state-of-the-art laboratory space that will 
meet the stringent environmental conditions required for 21st century 
scientific advances. An additional $38.1 million will be needed in 
fiscal year 2009 to complete the project. With a total cost of $76.2 
million, the Building 1 Extension is the most cost-effective approach 
to enabling world-class measurement science in support of some of the 
country's most important economic sectors.

            NIST Center for Neutron Research (NCNR) Expansion and 
                    Reliability Improvements (+$19 Million)
    The NCNR is widely regarded as the most scientifically-productive 
and cost-effective neutron facility in the United States, and serves 
more scientists and engineers than all other U.S. facilities combined. 
Neutron scattering techniques, in which beams of neutrons are used as 
probes to see the structure and movements of materials at the smallest 
scales are critical in a wide range of applications that will define 
the 21st century including nanotechnology, alternative energies, and 
understanding the structure of biological molecules. Because of the 
unique properties of neutrons for probing materials and their 
applications to some of the most advanced technologies, a significant 
shortage of neutron beam capacity and capability exists in the United 
States to satisfy the demands of industry and academia.
    This initiative begun in fiscal year 2007 is the second-year of a 
planned 5-year program to expand significantly the capacity and 
capabilities of the NCNR. The program includes the development of a new 
neutron cold source together with a new hall to house the guide tube, 
modernization of the control system, and five new world-class neutron 
instruments. The specific fiscal year 2008 funding will complete 
construction of the new guide hall.
Industrial Technology Services

            Hollings Manufacturing Extension Partnership (MEP) ($46.3 
                    Million--No Change from Fiscal Year 2007 
                    President's Request; -$58.3 Million From Public Law 
                    110-5)
    The MEP program is a partnership between the Federal Government and 
local officials to provide assistance to small and medium sized 
manufacturers around the country. Surveys taken of companies 1 year 
after receiving MEP assistance indicate a significant financial benefit 
accrued to the individual company.
    The Federal Government is an important partner in the MEP program. 
Specifically, the Federal Government:
  --Develops new services and programs in response to the evolving 
        manufacturing environment and propagates them throughout the 
        network;
  --Evaluates and ensures high-quality performance of every member of 
        the network; and
  --Ensures that small manufacturers remain the focus of the effort.
    The above Federal role can be accomplished within the requested 
budget. The reduction of Federal funds to the local centers may have to 
be compensated through a combination of increased fees derived from the 
benefits accrued by individual companies and cost-savings in the 
operations of the centers.

            Advanced Technology Program (ATP) ($0--No Change From 
                    Fiscal Year 2007 President's Request)
    No funds for ATP are requested in the President's fiscal year 2008 
budget. The fiscal year 2006 enacted budget and the 109th Congress' 
House mark and Senate Appropriations committee mark were consistent 
with the phase-out of the ATP program. The last new awards were made in 
2004 and sufficient funds were available in the carryover to complete 
all awards and provide government oversight.
    The fiscal year 2007 Continuing Resolution (Public Law 100-5) 
recently signed by the President included funding for the ATP program. 
NIST will work with Congress to ensure the funds are executed in the 
most effective manner to promote U.S. industry's competitiveness.
Summary
    Measurements and standards are the bedrock upon which any economy 
stands. Our founding fathers recognized this. The Constitution assigns 
the Federal Government responsibility to both issue money and to ``fix 
the standards of weights and measures.'' The two are actually more 
similar than they might seem at first glance.
    All economic transactions rest fundamentally on trust--trust 
between two parties that a given amount of something is worth a given 
amount of something else. Helping to create that trust for innovative 
new technologies is the common theme that runs through all of NIST's 
proposed fiscal year 2008 research initiatives. Each helps build a 
missing or inadequate measurement base--a rigorous, accepted way of 
quantitatively describing something--that improves confidence in 
scientific results or improves the quality, reliability or safety of 
innovative products. Recent NIST measurements and standards research 
have enabled innovations now embedded in the iPod, body armor currently 
saving the lives of domestic law enforcement officers and our service 
men and women overseas, and in diagnostic screening devices for cancer 
patients making their treatment more targeted and accurate. The results 
of NIST research can be found in virtually every manufacturing and 
service industry.
    For nearly 106 years, NIST research has been critical to our 
Nation's current and future competitiveness. The increased funding in 
the President's fiscal year 2008 budget for the NIST core will directly 
support technological advances in broad sectors of the economy that 
will quite literally define the 21st century--as well as improve the 
safety and quality of life for all our citizens.

                    U.S. Patent and Trademark Office

STATEMENT OF JON W. DUDAS, DIRECTOR
    Senator Mikulski. Mr. Dudas, why don't we welcome you, and 
look forward to hear from you and your protecting intellectual 
property.
    Mr. Dudas. Thank you, Madam Chairwoman.
    Thank you ranking member Shelby, and Senator Alexander.
    I appreciate this opportunity to share with you the things 
we're doing at the USPTO, and I also recognize I have a 
responsibility--and it's even clearer now--a responsibility to 
the employees of the USPTO to do a better job, not only talking 
about the challenges we face, but communicating the successes 
that our employees have had at the USPTO. So, I really do 
welcome this as an opportunity.
    And with that, I think I'll just cut to the chase and say, 
on behalf of the 8,500 of my colleagues at the USPTO, I'm truly 
proud to report that the women and the men of the USPTO 
delivered results in 2006 in, literally, record proportions. 
Last year, the USPTO set 11 all-time agency-wide records, 
including the highest quality in the history in trademarks, the 
second highest quality in history in patents, the highest 
production in history in both patents and trademarks, the 
highest hiring of examiners in history, in both patents and 
trademarks, the highest electronic processing, and electronic 
filing in history in both patents and trademarks, and allowing 
more examiners than ever before to work from home. Eighty-five 
percent of trademark examiners, and 500 new patent examiners 
were working from home last year.
    In 2006, we were also chosen by Business Week magazine as 
one of the best places in America to launch a career, and we 
were featured in Business Week magazine as a premier place to 
round out one's career. One of our examiners, who is 66 years 
old was featured in Business Week as, again, a place to round 
out your career.
    And USPTO examiners not only succeeded on behalf of the 
United States on protecting innovation, they succeeded 
personally and professionally. Sixty percent of all patent 
examiners, and 70 percent of all trademark examiners exceeded 
their goals in production and quality, or production or 
quality, and received an additional bonus for exceeding those 
goals.
    Thanks is owed, first and foremost, to these loyal and 
determined employees of the USPTO, and in our office hangs a 
banner, seven stories high, that says, ``Celebrating 2006, Our 
Record-Breaking Year.'' We held an 8,500 person, all-hands 
celebration, where senior executives served the rest of our 
colleagues a thank you lunch, a well-deserved thank you lunch, 
for breaking those records.
    Simply put, these results would not have been possible 
without this subcommittee allowing all innovators' fees to be 
used to fund determination of their innovations. The years 2005 
and 2006 were the first 2 years in more than 15 years, that the 
USPTO operated under full funding, and the difference has been 
dramatic. Since Congress passed the Government Performance and 
Results Act to hold Government agencies accountable and report 
their metrics, and hold them accountable, the USPTO, on 
average, had only met about 25 percent of their key goals.
    Under the Government Performance and Results Act, just last 
year, after full funding, an appropriate strategic plan, new 
methods in place, responding to some of the reports you've 
mentioned, we moved to 90 percent of our goals met. There's one 
we missed, we should meet it, we should be at 100 percent of 
our key goals, and our overall goals, we've met 94 percent of.
    In 2007, you again provided full funding, and we look 
forward to working with this subcommittee, to make this a 
permanent policy.
    This subcommittee has helped the USPTO come a long way, but 
as you point out, there are real challenges that lie ahead. 
Continuing to attract and retain the finest public servants is 
a growing challenge. Our employees are at the heart and soul of 
our intellectual property system, and we need to do everything 
we can possibly do to ensure they have an environment of 
respect, and an environment of opportunity.
    The Business Week magazine article I talked to before, 
reported that the most favored employers in the United States--
not the average, but the most favored employers in America--are 
losing about one-third of their new hires within the first 3 
years of employment. The USPTO is experiencing similar 
attrition in the first 3 years. And with the record hiring we 
have done, that pushes our overall attrition to slightly above 
what the average has been. That's something we need to, again, 
focus more on, and I can share with you some of the things 
we're doing.
    The pendency of application also continues to be a 
challenge. Despite record-level hiring, and record-level 
production increases in both patents and trademarks last year--
19 percent increase in trademarks, and a 17-percent increase in 
patents, in terms of production--and an already demanding 
environment for examiners, we continue to receive applications 
at a record that exceeds our capacity to examine. We've simply 
broken records in the number of applications we've received for 
over 20 years now.
    The answers there lie, in large part--and I think this is 
some of what we'll talk to you about in the plan--in asking for 
more and better information. Not just from our examiners--we 
recognize that the USPTO owes a whole lot, and that our 
examiners are the finest in the world--but we need to get more 
and better information from applicants themselves, and from the 
public at large. And those are some of the strategies that can 
increase productivity, and increase production.
    To that end, I'd like to share with you that we introduced 
a system of accelerated examination last year. Under this 
program, for those applicants--any applicant, any technology, 
from anywhere--who want quick turnaround, the USPTO now offers 
a complete examination within 12 months. An applicant can 
literally reduce their time to 12 months as of August 26, 2006.
    In exchange for this quick turnaround, we don't ask for a 
whole lot more money, but what we ask is that applicants file a 
complete application. That they give us meaningful and quick 
turnaround. That they file electronically, so things can be 
more efficient. And importantly, they give us search reports 
and information that will help our examiners become more 
efficient and more proficient.
    The first application to be completed under this program 
will issue this month, and it will issue in less than 6 months.
    Thank you, again, for this opportunity to discuss the 
progress the USPTO has made, and importantly, the challenges 
that we still face. I look forward to working with this 
subcommittee to make the best intellectual property system in 
the world even better.
    Please accept my invitation--if you have an opportunity--to 
come down and visit the USPTO, an open invitation to any and 
all of you to meet with the examiners, to share in the success. 
I can just tell you, anecdotally, the very best ideas we've had 
have come from opening communication more with employees, the 
people who are on the ground, doing the work, who have the very 
best ideas. And I think that's where you'll find the solutions 
that you're looking for.
    Thank you.

                           PREPARED STATEMENT

    Senator Mikulski. Thank you very much, Mr. Dudas, and also 
Dr. Jeffrey.
    [The statement follows:]

                   Prepared Statement of Jon W. Dudas

    Chairwoman Mikulski, Ranking Member Shelby, and members of the 
subcommittee: Thank you for this opportunity to appear before you to 
discuss the United States Patent and Trademark Office's (USPTO) 
operations, programs and initiatives and the President's fiscal year 
2008 budget request to fund those efforts.
    I first want to take this opportunity to thank this subcommittee 
and your colleagues on the House side for ensuring that our current fee 
schedule remains in effect for fiscal year 2007. We look forward to 
working with you to make that fee schedule permanent.
    We are also pleased that the fiscal year 2008 budget request gives 
the USPTO full access to the $1.9 billion in fees we expect to collect. 
This is the fourth consecutive year that the President's budget 
recommends full access to collected fees, and we appreciate the 
continued congressional support for that funding level.
    Full access to user fees allows the USPTO to continue our 
successful model of disciplined focus on real measures that enhance 
quality and increase production, increase hiring and training, promote 
electronic filing and processing, provide telework opportunities for 
our employees and improve intellectual property protection and 
enforcement domestically and abroad.
    As we entered the 21st century, the USPTO faced a number of 
challenges, all of which are well known to the subcommittee. We did not 
have access to all of our fee collections, our workload in patents was 
growing at record and unanticipated rates, and there existed the 
perception that patent examiners did not produce high quality work 
while management ignored the growing backlog of patent cases and acted 
to erode employee morale. Indeed, 6 months before I entered the USPTO 
as the Deputy Under Secretary, this subcommittee had communicated its 
strong concerns with the agency in its report:

    ``The ability of the administration to formulate an adequate budget 
for the PTO is complicated by two factors. First, the agency 
historically has formulated an incremental budget based on the previous 
year's budget, and does not provide the committee with a thorough 
business plan that demonstrates how resources will be used and what 
results will obtain. Second, PTO management has not been sufficiently 
innovative. * * *  Finally, the committee lacks full confidence in the 
information provided to it by PTO management regarding its needs and 
performance.'' Senate Report 107-42.

    This subcommittee's concerns weighed heavily on the USPTO. As 
Deputy to Under Secretary Rogan, and upon assuming responsibility for 
the USPTO as Under Secretary in January 2004, I made commitments to the 
administration, the Congress, our stakeholders and my dedicated 
colleagues at the USPTO to address these issues. I made specific 
promises, namely, that: we would make quality our number one priority; 
we would control pendency by increasing production; we would ``hire 
more, train better, retain better and telecommute''; we would make 
patent processing fully electronic; we would protect the U.S. 
intellectual property system and American interests internationally; 
and we would reaffirm the USPTO's credibility within the administration 
and with the Congress.
    We made promises, and we have kept those promises. Thus, I am 
pleased to be able to share with you today the real, measurable 
successes the USPTO has achieved. The women and men of the USPTO, my 
colleagues, delivered results in record proportions in fiscal year 
2006. Last year, the USPTO set 11 all-time agency records, including: 
highest quality in history, highest production in history, highest 
hiring of examiners in history, highest electronic processing and 
electronic filing in history and allowing for more examiners than ever 
to work from home-saving them precious time and the rest of us space on 
the roads. In 2006, we were also chosen by Business Week magazine as 
one of the best places in America to launch a career. I can further 
promise you that the men and women of the USPTO will not rest on our 
accomplishments while we have so many things we still want to achieve.
    This subcommittee has made USPTO's recent successes possible. This 
is our third year operating under the new patent and trademark fee 
schedule, which provides funding appropriated by the subcommittee. The 
reliable fee schedule permits us to finance the initiatives--
particularly initiatives requiring long-term planning and commitment--
so necessary to providing and maintaining reliable, functioning 
systems. Without your support, we would not be able to function in a 
business-like manner and achieve these results.




     USPTO--Percent of Performance Goals Met Under the Government 
                  Performance and Results Act of 1993

    Our success has been accomplished in the following manner. We have 
spent the last 4 years concentrating on meeting or exceeding objective 
measures, as required by the Government Performance and Results Act of 
1993 (See chart above).
    This requires continual assessments that identify system-wide 
process improvements. We use relevant metrics and measures to gauge 
progress and as early warning of deviations that indicate a need for 
process adjustment. Our record reflects the hard work and sound 
decisions of more than 8,000 USPTO employees. We are now seeing the 
results of their efforts.
Quality
    We have focused our attention on improving quality. Public 
confidence in the quality of our patent grants and trademark 
registrations is critical. Confidence is earned, and we do not take it 
for granted. At the USPTO, we believe the essential components of 
quality are accuracy and consistency. We must ensure that allowed 
applications meet both statutory and regulatory standards, thus 
providing the certainty that enhances competition in the marketplace. 
We must not allow the need for timeliness to adversely impact the 
requirement for quality. Last year, despite receiving a record level of 
patent applications, we achieved the highest patent allowance 
compliance rate in nearly a quarter century at 96.5 percent. Our 
trademark organization had a final compliance rate of 96.4 percent--the 
best rate since we began measuring quality.
Human Resources
    In September 2006, Business Week identified the USPTO as one of the 
best places in America to launch a career. The USPTO has also been 
lauded by Families magazine as one of the best places in the 
Washington, DC area to work if you have a family. These results are due 
in part to the fact that the USPTO seriously addressed the audit 
findings involving our past human resources practices.
    We are now attracting and hiring record numbers of employees--at a 
rate of 1,200 new patent examiners a year. We started a new, university 
style approach to training, which allows us to deliver intensive, 
balanced and long-term training to newly-hired examiners. We now offer 
bonuses to hire and retain talented engineers and scientists in certain 
critical fields.
    An achievement of which we are also proud is the number of patent 
examiners who have joined their trademark counterparts in working from 
home. Our 10 year old Telework program is the gold standard and has 
proven to be a key quality-of-life benefit for increasing employee 
morale and retention, and now 500 patent examiners per year have chosen 
this route.
    In 2006, we also had the first ever management conference for all 
of the USPTO's 800 managers. For 2 days, our managers attended seminars 
and collaborated on best practices of how to best manage the highly 
skilled and dedicated workforce at the USPTO. On November 1, 2006, we 
also held an agency-wide ``thank you'' event for all of the USPTO's 
8,000 plus employees. Senior executives served lunch and thanked our 
colleagues for making 2006 a record-breaking year. At the management 
level, we also have started to implement our long-term Strategic Human 
Capital Plan.
Electronic Government
    Our commitment to e-Government has been unequivocal. In March 2006, 
we unveiled ``EFSWeb,'' the first-ever, user-friendly, Internet-based 
patent application and document submission system. Since last March, 
electronic filing of patent applications has skyrocketed from the 1 
percent rate of fiscal year 2005, to almost 40 percent filings today. 
In other words, in less than a year, almost 40 percent of our patent 
applications are now filed electronically, via the Internet. Last year, 
94 percent of trademark applications were filed electronically, and we 
recently celebrated receipt of electronic trademark application number 
1,000,000.
International IP
    On the global level, we continue spreading the word about 
protecting and respecting intellectual property, both domestically and 
internationally. We are fully engaged in the Bush Administration's 
Strategy Targeting Organized Piracy (STOP!) in the fight against piracy 
and counterfeiting around the world. We hold intellectual property 
awareness conferences, with a focus on small-businesses, all around the 
country. More than 90 percent of the attendees have rated these 
programs as good or excellent, and it has been described by at least 
one participant as ``the best use of my taxpayer dollars.'' Some of our 
conferences focus exclusively on doing business in China, from an 
intellectual property perspective.
    The USPTO has the lead for the United States in discussions and 
negotiations to strengthen global intellectual property protection 
throughout the world. We operate the Global Intellectual Property 
Academy, which offers intensive patent, trademark, copyright and IP 
enforcement training for foreign government officials and private-
sector representatives from around the world. Finally, we have placed 
intellectual property experts in Brazil, China, Egypt, India and 
Thailand, to advocate for improved intellectual property protection 
that benefits all, including our American businesses.
Production and Productivity
    The rate of filing of applications in the United States continues 
to break records every year. The USPTO's core business continues to 
grow at a steady pace. In fiscal year 2006 we received 419,760 UPR 
(utility, plant and reissue) patent applications and expect an increase 
of 7 percent in fiscal year 2007 followed by an anticipated annual 
increase of 8 percent in fiscal year 2008 through fiscal year 2012. In 
the trademarks area, we received 354,775 applications and expect an 
increase of 6 percent in fiscal year 2007 followed by an 8 percent 
increase in fiscal year 2008. Trademark applications are anticipated to 
increase by 7 percent in fiscal year 2009 and increase 6 percent each 
year from fiscal year 2010 through fiscal year 2012.
    This is a strong sign of growing innovation and investment in the 
United States, but it also represents potential strains on the system. 
The USPTO has the highest productivity of any major IP office in the 
world. The USPTO processes and examines more patent applications and 
more trademark applications than any other office in the world. Based 
on the latest statistics, the USPTO also has the lowest pendency of any 
other major office in the world. In addition, 2006 was a record year 
for production--from 2005 to 2006 production increased 18 percent in 
trademarks and 16 percent in patents.
    Even with the success we have had increasing production and hiring, 
the volume of patent applications continues to outpace our capacity. 
Even with 1,200 new hires each year through 2012, pendency, which 
averages about 31 months now, will be nearly 39 months in 2012. Of 
course, hiring is critical--without that plan, pendency would be more 
than 50 months in 2012. However, as this subcommittee has noted, hiring 
alone is simply not enough. As a result, the USPTO's Strategic Plan 
released this year places a high emphasis on increasing productivity in 
the USPTO and in patent systems throughout the world by leveraging the 
work that is being done in other offices, by applicants themselves and 
from interested parties in the public.
    While increasing productivity, we must take into account the 
incredible demands placed upon our examiners to issue on the highest 
quality results in an increasingly demanding world. The inventions for 
which patent protection is sought are becoming more technically 
complex. Complex technologies take more time to examine and make up an 
ever-greater percentage of applications. For the average application, 
an examiner now has to review 50 percent more claims and 300 percent 
more background literature. At the same time, the mix of more 
experienced, more productive examiners to less experienced, less 
productive examiner varies every year, as does the production loss to 
train new examiners. For these reasons, patent productivity (the number 
of patent applications examined per examiner per year) has been 
steadily decreasing from 101 in 1993 to 78 in 2006.
    These are challenges that we can and will overcome. In trademarks, 
the USPTO increased productivity by 7 percent in fiscal year 2006 after 
negotiating a new performance plan. Although the trademark examiners 
union expressed good faith concerns that the vast majority of trademark 
examiners would fail under increased production and quality 
requirements, examiners flourished when given this opportunity to 
succeed--70 percent of trademark examiners earned a production bonus 
and the number of trademark examiners who received an ``Outstanding'' 
or ``Commendable'' rating grew by nearly 10 percent.
    We are adopting a number of strategies in the patents area as well. 
The USPTO expects to increase productivity in patents by offering 
examiners more opportunities to determine their workload and achieve 
higher bonuses. The USPTO is piloting a voluntary flat goals program 
for patent examiners that builds upon the successful system in 
trademarks.
    We are trying a variety of innovations, including a new offering 
for the public, called ``Accelerated Examination.'' Under this program, 
which began August 26, 2006, for those applicants who need or want 
quick turn around, the USPTO offers a complete examination within 12 
months. In exchange for this quick turn around, applicants must file a 
complete application, agree to telephone interviews and accelerated 
response periods, must file and prosecute their application 
electronically and must provide more information about the application 
to the USPTO in the form of a search and a support document. The first 
application to be completed under this program was filed on September 
29, 2006 and will issue on March 13, 2007 (less than 6 months from date 
of filing).
    While the significant growth in patent and trademark applications 
indicates that innovation and entrepreneurship are alive and well, it 
presents our agency with a variety of challenges. We plan to use the 
following strategies to address these challenges which are included in 
USPTO's fiscal year 2008 budget request.
            Strategy #1: Hiring, Retention
    The USPTO hired a record 1,218 patent examiners in 2006, exceeding 
our hiring goal by more than 200 examiners. The USPTO plans to hire 
1,200 patent professionals a year in fiscal year 2007 through fiscal 
year 2012 for a total of at least 8,400 patent examiner new hires by 
end of year fiscal year 2012.
    Since more experienced examiners naturally are able to review cases 
faster, and in an excellent manner, the USPTO has implemented a program 
of recruitment bonuses to hire and retain the talented engineers and 
scientists we need to examine our increasingly complex applications. We 
are reviewing other possible programs to help us compete with industry 
for professionals in the ``hot'' technology sectors. We want to be an 
``employer of choice'' to the pool of tech professionals.
            Strategy #2: Training
    In fiscal year 2006, the USPTO implemented a university approach to 
training new examiners. The university method provides training to new 
examiners in a classroom setting for 8 months, rather than using the 
traditional one-on-one training model. This allows us to deliver 
intensive training to the new hired examiners, leaving more experienced 
examiners and supervisors to focus on quality examination. In fiscal 
year 2006, 123 examiners completed the university's 8-month program. So 
far in fiscal year 2007, a total of 225 new examiners completed 
training, with an additional 293 examiners slated to graduate by the 
end of the fiscal year.
            Strategy #3: Quality Initiatives
    In fiscal year 2008 and beyond, patents will use a number of 
strategies to improve quality, such as:
  --leveraging the effectiveness of the Patent Training Academy to 
        enhance examiner skills;
  --creating chief scientist positions;
  --designing and implementing a comprehensive quality system to 
        collect and analyze all quality review information for 
        consistency and to provide feedback and improved training;
  --offering a separate quality award that better recognizes the 
        accomplishments of examiners who meet or exceed quality 
        expectations;
  --conducting targeted reviews in problem areas which focus on 
        examination processes or functions that show problematic 
        trends; and
  --encouraging submissions of prior art by participating with a 
        consortium of patent users, applicants, attorneys, and members 
        of the academic community to build a system to actively solicit 
        prior art.
    Trademarks will continue quality improvements by increasing the use 
of quality review findings, analyzing and incorporating the results in 
training, examination guidelines, policies and manuals. In addition, 
trademarks will create comprehensive new employee training programs, 
and explore the creation of web-based search tools, data mining, and 
automated preliminary searches so that examining attorneys can search 
more effectively.
            Strategy #4: E-Government
    The USPTO promotes electronic filing of applications. In fiscal 
year 2006, 94 percent percent of trademark applications and 14 percent 
of patent applications were filed electronically. Trademarks and patent 
programs estimate that rates of electronic submission of new 
applications will continue in fiscal year 2007, at 90 percent and 40 
percent respectively. In fiscal year 2008, patents expects to receive 
50 percent of all patent applications electronically, while trademarks 
will hold at approximately 90 percent or above of applications filed 
electronically.
    Trademarks is continuing to enhance electronic filing by expanding 
the number and type of transactions offered on-line and by offering 
reduced fees to any applicant who files a complete applications using 
the newer system, the Trademark Electronic Application System-Plus 
(TEAS-Plus).
    Patents implemented the Electronic Filing System-Web (EFS-Web), a 
user friendly, Internet-based patent application and document 
submission solution. This system dramatically increased the electronic 
filing of patent applications from 1.5 percent per month to 33 percent 
per month at the end of fiscal year 2006. This easy to use system will 
continue to encourage applicants to file electronically.
    Patents is developing the electronic Patent File Wrapper (PFW) as 
the solution to several business problems. PFW in conjunction with 
current Patent Automated Information Systems (AIS's) will allow for a 
fully automated, text-driven patent application processing system.
            Strategy #5: Telework
    In fiscal year 2006, a pioneer group of 500 patents examiners 
participated in the newly implemented Patent Hoteling Program (PHP). 
This voluntary program is designed to comply with congressional 
direction and build upon the lessons learned from the very successful 
Trademark Work-at-Home program. The PHP provides patent examiners the 
ability to work from home with complete on-line access to the USPTO 
resources. This concept allows participants to reserve time in 
designated shared ``hotel'' offices at the Carlyle Campus in 
Alexandria, Virginia. We plan to add 500 more examiners to the hoteling 
program in fiscal year 2007. The goal of the hoteling program is to 
change the boundaries of the old workplace patterns allowing for 
decreased commute time, greater control over workloads, and even a more 
balanced lifestyle for our employees. This all translates into 
increased employee productivity and satisfaction, as well as higher 
employee retention. On a more long-term basis, we hope to create a 
workplace that can be anywhere, any time. Patents will also pilot a 
work-at-home program for technical support staff.
    In 2006, Trademark's Work-at-Home program for examining attorneys 
received the ``Telework Program with Maximum Impact on Government 
Award'' from the Telework Exchange. The Trademark Work-at-Home program 
is considered a ``best practice'' because of its success in addressing 
budgetary, space, retention, recruitment, and job satisfaction issues. 
During 2006, trademarks expanded this program to include 85 percent of 
all eligible employees.
            Strategy #6: International
    With substantial congressional support, the USPTO has significantly 
expanded its efforts to strengthen intellectual property (IP) rights 
protection globally. As part of the Bush Administration's Strategy 
Targeting Organized Piracy (STOP!) initiative and the National 
Intellectual Property Law Enforcement Coordination Council (NIPLECC), 
the USPTO worked with other U.S. Government agencies to fight piracy 
and counterfeiting around the world. We collaborate on IP training, 
advocating progress in IP-related norm-setting bodies (e.g., 
intergovernmental organizations such as World Intellectual Property 
Organization (WIPO)), and enforcement efforts with our colleagues in 
the Departments of Commerce, Justice, and State; the Department of 
Homeland Security's Customs and Border Protection; the Copyright 
Office; and the Office of the United States Trade Representative 
(USTR).
    As part of STOP! the USPTO continues a communications campaign to 
educate small businesses about protecting their IP in the United States 
and abroad. Small business conferences are offered throughout the 
country and other USPTO conferences focus exclusively on the IP 
challenges of doing business in China. The USPTO continues to staff the 
STOP! Hotline, which lets callers receive information on IP rights and 
enforcement from our attorneys with regional and subject matter 
experts. In 2006, the hotline received 1,460 phone calls from people 
across America with a range of IP questions--an increase of 52 percent 
over 2005.
    To strengthen global IP protection, the USPTO represented the 
United States in discussions and negotiations at the WIPO throughout 
2006. Most notably, the USPTO led a delegation to the WIPO Diplomatic 
Conference, which culminated in the adoption of the Singapore Treaty on 
the Law of Trademarks. The new treaty will help trademark owners around 
the world file applications and renew registrations with fewer 
formality requirements.
    The USPTO has promoted IP protection in China. Through the Joint 
Commission on Commerce and Trade and its Intellectual Property Rights 
Working Group, the USPTO and USTR have negotiated commitments from the 
Chinese Government to reduce counterfeiting and piracy.
    The USPTO has established the Global Intellectual Property Academy 
and has conducted IP rights programs for foreign government officials 
and private sector representatives around the world. Additionally, we 
have placed IP experts in Brazil, China, Egypt, India, Thailand, and 
Geneva to advocate improved IP protection for American businesses and 
to coordinate training to help stop piracy and counterfeiting abroad.
            Strategy #7: Business Continuity/Disaster Recovery
    The USPTO Business Continuity Program/Disaster Recovery Program is 
committed to ensuring protection of USPTO data and systems from damage 
or unavailability in the event of a disaster or prolonged outage. The 
USPTO is operating both the patent and trademark production pipelines 
in a predominantly electronic environment and is dependent on automated 
systems to support the end-to-end processing of patent and trademark 
applications. As such, the continuing operations of the USPTO are at an 
increased risk should catastrophe strike the single data center prior 
to the full deployment of disaster recovery services. We are 
undertaking a phased implementation for deploying dual, load balanced 
data centers that would enable us to protect our mission critical 
patent and trademark data.
    The USPTO's Business Continuity Program completion timeline will 
occur in five major phases. As part of phase one, in 2007 the USPTO 
will establish an off-site data ``bunker,'' far enough away from our 
current data center to prevent a disaster from affecting both sites. 
Phase two will begin with the establishment of a ``warm site'' that can 
be activated in the event of a disaster at the primary data center. 
Future phases will provide distributed processing, load balancing, and 
automatic fail over for both core and non-core systems.
Conclusion
    Intellectual property rights is a critical aspect of how nations 
protect and promote innovation and global competitiveness. The United 
States represents the gold standard for intellectual property 
protection, and the USPTO is the most productive and most respected 
intellectual property office in the world. However, because 
intellectual property protection is so fundamental to our Nation's 
economic growth, being the best is not enough. We must be perfect. 
Despite the challenges, we at the USPTO strive to get it perfect, and 
we look forward to working with the subcommittee to ensure that we do.
    Thank you.

           PTO deg.PATENT APPLICATIONS AND PENDENCY

    Senator Mikulski. I have visited NIST, and I've been 
inspired. I've seen the hydrocarbon car and rode around in it 
and looked at how you've examined building properties after 
what happened at the World Trade Center, so not only do we 
prevent an attack on us again, but that our buildings will be 
safer and more secure.
    Let me now go to patents, and then I'll come back to you, 
Dr. Jeffrey.
    The protection of our intellectual property is an obsession 
with me. Because if we invent it, and all that goes into it, 
that's how we're going to compete in the world. My question to 
you, Mr. Dudas--and thank you for your energetic testimony--how 
many patents do you receive a year, and what is the nature of 
the backlog? I understand it's called ``pendency.''
    Mr. Dudas. Pendency is the amount of time it takes for an 
application from the time it's filed until the time it's 
completed, and the backlog is literally the number of 
applications that are waiting in line.
    Senator Mikulski. Okay, well, tell me how many do you get?
    Mr. Dudas. Yes, we are now receiving----
    Senator Mikulski. What is the backlog, and what is the 
pendency?
    Mr. Dudas. Yes, the number of applications we receive is 
growing every year, this year we anticipate 440,000 new patent 
applications--largest in the world--which is a good news in 
terms of innovation. 440,000 applications, and we're 
experiencing growth right now of about 8 percent--many 
countries are wanting to file more, and certainly Americans are 
filing more.
    Senator Mikulski. So, we have to be clear that it is not 
only inventors and entrepreneurs of the United States of 
America that file with you. But they file with you from around 
the world.
    Mr. Dudas. Absolutely.
    Senator Mikulski. And, I understand one of the largest 
countries is South Korea.
    Mr. Dudas. South Korea is one of the fastest growing 
countries. It is not right now one of the largest, but it is 
the fastest growing.
    Senator Mikulski. But you have 400,000 applicants a year, 
of pretty techno stuff.
    Mr. Dudas. Absolutely.
    Senator Mikulski. Okay, and what is the backlog?
    Mr. Dudas. The backlog is 700,000 patent applications 
waiting in line.
    Senator Mikulski. And how long is the timeframe?
    Mr. Dudas. The average across the board is 31 months--and 
it is growing because that backlog is, you know, I just call it 
``deficit examining''--more applications coming in, even with 
record hiring. So 700,000 applications, it's 31.1 months right 
now, on average--but that's a little misleading, let me tell 
you, to say ``on average'' because we have some areas--in the 
mechanical arts, for instance--maybe relatively simple 
inventions that are only taking 14 months. That's wonderful, 
but on the other hand, we have some areas--like the electrical 
arts--where you see a lot of the high technology, unfortunately 
where you see the short life cycle, that could take 5 or 6 
years. And this is exactly why we are introducing concepts like 
accelerated examination.
    Senator Mikulski. Well, then, let me go to these questions. 
You've read the Government Accountability Office (GAO) report, 
you're obviously there, and we're glad about the recognition in 
Business Week. But my concerns relate to ongoing communication.
    Mr. Dudas. Right.
    Senator Mikulski. And the issues related to improving 
technical education of staff. You're hiring people that are hot 
tickets in the marketplace.
    Mr. Dudas. Right.
    Senator Mikulski. These are intellectual property lawyers, 
paralegals, support staff--they're hot.
    Mr. Dudas. Right, very.
    Senator Mikulski. And, in some instances, they also have to 
have security clearances.
    Mr. Dudas. Right, absolutely.
    Senator Mikulski. And we understand the dynamic in that.
    Mr. Dudas. Right, they all have to be American citizens, as 
well.
    Senator Mikulski. So, could you--one of the things I noted 
in your prepared remarks that you submitted, that you want to 
retain, you don't want to keep training the new.
    Mr. Dudas. Right.

  PTO deg.PATENT AND TRADEMARK OFFICE RETENTION AND TRAINING

    Senator Mikulski. And we support that. Could you tell us 
what you're doing in the area, both of retention, and providing 
and cracking this whole issue of ongoing technical training. 
There are people, when I talk to Nobel Prize winners that have 
worked, who were civil servants, both at NASA and NIST, they 
said they liked working for the Federal Government because it 
was mission, it wasn't money, it was purpose. And, they also 
worked with the best colleagues in the world, and they had the 
opportunity for their own intellectual expansion. For us, for 
them to stay fresh, both technically, and fresh in terms of 
enthusiasm for the job, and a desire to stay.
    Could you talk, then, about your retention techniques, and 
the opportunity for them to get ongoing education.
    Mr. Dudas. Absolutely.
    Senator Mikulski. And do you need something from us?
    Mr. Dudas. I'll report what you have, and quite honestly, 
we're looking for guidance from anywhere and everywhere we can 
get it, but I will tell you that I think we've done a number of 
things.
    First and foremost, what you talked about--what do people 
want today? They're called the ``millennial,'' I'm not a 
millennial, the millennial generation, but many of the people 
we hire today, they care about Government service, they want to 
be valued--money matters, but that's not the number one thing 
that attracts them, and we try to address that, as well.
    And you talked about training, and making sure you show 
value. Of course, we have a challenge, because we are a 
performance-based organization, people do have to work hard in 
our office, but there's a number of things that we've done.
    First and foremost, we've changed the way we train. Instead 
of having examiners come in and train for 2 to 3 weeks and then 
have a mentor approach, we've actually started a Patent 
Examiner Training Academy, where they come in for 8 months, we 
give extended-term training, so we can get a greater level of 
consistency, it allows for more teamwork, it allows for people 
to get to know the office better, and more consistency. That is 
something that we needed to do, both because we thought it was 
a best practice, and because of the amount we were hiring. It 
turns out it has been a good practice.
    Senator Mikulski. That's when they come in. What about 
training for them while they're there? In other words, say 
they've worked for 3 years, and they want to get refreshed and 
renewed----
    Mr. Dudas. Yes, absolutely.
    Senator Mikulski. Both intellectually, and professionally.
    Mr. Dudas. Absolutely.
    Senator Mikulski They need to know the new stuff and the 
new bus.
    Mr. Dudas. Absolutely. One of the things we've done, is 
beef up on allowing examiners to take time and use money to get 
external training. And we're doing more internal training as 
well. So, for instance, an examiner can have an opportunity to 
have their legal degree paid for. If they want to get education 
outside, they can get a legal degree outside the office and the 
office will pay for it. In addition to that, any training they 
want to get that's related to their field, outside the office, 
PTO will pay up to $10,000.
    Last year we had the first-ever managers training 
conference, where we worked with managers, we got all of the 
managers out, 2 days away from the office, to talk to them 
about how they can train better, how they can resolve conflicts 
better, how they can listen and communicate better with 
examiners. Now we're also developing the different kinds of 
training programs we can offer. We already offer several 
through the office, and through the Federal Government. But, 
how do we tailor it specifically for those examiners who've 
been there for a long time?
    Another program that we think is very important for 
retention is teleworking. Five hundred examiners were given the 
opportunity to work from home last year, and 500 more patent 
examiners this year. Giving the examiners the opportunity to 
have the flexibility to determine what they think is the best 
work environment for themselves. We've found that that has been 
an incredible boost for morale. Teleworking also gives people 
more time with their families, but also more time to increase 
their production, if they want to do that.
    Senator Mikulski. Well, my time has expired, I will turn to 
Senator Shelby. But, Dr. Jeffrey, you won't leave without a 
question from me.
    I think that's exciting--no, go ahead, go ahead. Senator 
Shelby, you go right ahead.
    Senator Shelby. Thank you.

         NIST deg.AMERICAN COMPETITIVENESS INITIATIVE

    Dr. Jeffrey, I'll start with you, if I could.
    The National Institute of Standards and Technology. Last 
year, we've been talking about, the President announced the 
American competitiveness initiative--investments are made in 
federally funded research to ensure that the country has a 
technologically skilled workforce. The National Institute of 
Standards and Technology is one agency designated to lead this 
initiative.
    Dr. Jeffrey, how has the American competitiveness 
initiative improved your portfolio in NIST?
    Dr. Jeffrey. Thank you very much, Senator.
    The ACI was an absolutely tremendous boost to NIST's 
ability to do its mission. NIST stimulates innovation and 
competitiveness through measurements and standards, 
specifically to help support U.S. industry in terms of their 
competitiveness, and also improving the quality of life.
    The ACI finding will help us in a number of areas. For 
example, it helps us to accelerate the development and adoption 
of absolutely groundbreaking, and economically significant 
technologies. Like, for example, nano-technology, which is 
estimated to, perhaps, be a $1 trillion industry in 10 years. 
Also, in support of our energy independence through advancing 
the hydrogen economy and biofuels work.
    It also supports the technical infrastructure that industry 
needs for the measurements like the work at the NIST Center for 
Neutron Research (NCNR), and the new NIST Center for Nano-Scale 
Science Technology. Bottom line is the ACI substantially 
enhances NIST's capacity and capability to meet our mission.

        NIST deg.DISASTER RESILIENT STRUCTURES STUDIES

    Senator Shelby. I'm also pleased to see that the budget 
request includes an increase of funding for improving disaster-
resilient structures in communities. Results from these studies 
are expected to influence building codes and construction 
practices along the gulf coast, which need updating to match 
current risk assessments.
    How are you planning to coordinate with gulf coast 
communities and State agencies to implement any results from 
this program? As you know, continued construction--costs 
continue to rise in the gulf coast as a result of rebuilding 
from the 2005 hurricane. What part of this program explores how 
safer construction could actually become more cost-effective 
than current practices? Looking at the whole picture.
    Dr. Jeffrey. Thank you, Senator.
    We're very excited by the programs and new initiatives that 
we put in in the 2008 budget. To answer the first question 
``how we're going to coordinate''. After Hurricanes Katrina and 
Rita, NIST did an assessment--Lessons Learned in the Gulf Coast 
Region. At that point we worked very closely with a lot of 
State and local officials who were responsible for enacting and 
enforcing the building codes. We have a good working 
relationship with them, as well as the construction industry 
down there.
    Just like that, we will continue to work with the State and 
local officials and with the local industry building officials 
as the results from these new initiatives come forward. We'll 
also continue to work with the National Building Codes and 
Standards, to make sure that the lessons get adopted in there.
    To answer the second question, which is how do we ensure 
the cost effectiveness, the whole crux of that program, the 
whole goal is to find a way of balancing the risk and the cost. 
So the overall programs focus on exactly that goal. There are 
actually three ways that we're going to be doing that. One is 
in the focus on the building codes and standards on the local 
risk assessment. It matters--whether you're a block away from 
the ocean, versus 1 mile away from the ocean, and that needs to 
be included when one looks at the risk assessment, and what the 
building codes should be.
    Second, we're emphasizing performance of the building 
codes, as opposed to individual components, that way, it's very 
prescriptive right now. What you want to do is look at the 
performance in the entire structure.
    And last, to really foster the adoption of new construction 
techniques and materials that are at lower costs, that can help 
provide greater security and risk assessment.

              PTO deg.INTELLECTUAL PROPERTY THEFT

    Senator Shelby. Secretary Dudas, what are you doing at the 
U.S. Patent and Trademark Office to curb intellectual property 
theft, and strengthen both domestic and international 
protection of these rights?
    Mr. Dudas. Thanks for asking that question.
    We are working both internationally and domestically. 
First, while training small businesses in the United States, we 
came to the conclusion we can't just issue patents and 
registered trademarks, we need to educate businesses. So, we 
have seminars throughout the country training small businesses.
    First, on intellectual property generally, second on how to 
do business in China, particularly, because it's such a hot 
area and there's such a problem there.

         PTO deg.INTELLECTUAL PROPERTY LAW ENFORCEMENT

    Senator Shelby. What about enforcement?
    Mr. Dudas. Enforcement, we are not police.
    Senator Shelby. We know that. But you aid in the----
    Mr. Dudas [continuing]. Absolutely. We're the advisors to 
the rest of the administration on free trade agreements, we 
work very closely with the Departments of Justice and Customs 
and Homeland Security, and we are often on the front lines. We 
place people in China, Brazil, India, Russia, who work with 
custom officials and others. And we also have a Global 
Intellectual Property Training Academy where we train hundreds 
of officials from foreign governments. We bring them here, 
they're Supreme Court justices, customs officials, and train 
them here in the United States.
    Senator Shelby. Absolutely. How large of a role does lax 
enforcement--lax enforcement--of patents and copyrights 
agreements, internationally play in violating intellectual 
property rights? In other words, if you don't enforce what you 
have.
    Mr. Dudas. Right.
    Senator Shelby. Or if you don't try to enforce it, if 
you're not diligent, you're not on top of things--what do you 
have, right?
    Mr. Dudas. Right. Lax enforcement, I think, is the number 
one problem for intellectual property rights. Many nations have 
put laws into place that might comply, but if you don't enforce 
them, you have nothing. Sometimes shaking a stick at other 
nations, and telling them why it's critical, and we do that 
through a variety of ways--but also, educating their officials 
in why it's in their interest, as well as the United States.

          PTO deg.COST OF INTELLECTUAL PROPERTY THEFT

    Senator Shelby. Well, what's the estimated cost impact in 
the United States, to the U.S. economy in terms of money and 
jobs that can be attributed to the theft of U.S. intellectual 
property?
    Mr. Dudas. We've seen estimates as high as $250 billion.
    Senator Shelby. Say that again, for the record, two 
hundred----
    Mr. Dudas. $250 billion.
    Senator Shelby. $250 billion of lost money, it's jobs, is 
it not?
    Mr. Dudas. And the estimates of up to 750,000 jobs just 
from intellectual property theft.
    Senator Shelby. Do you have the coordination of the other 
agencies to enforce our copyrights?
    Mr. Dudas. I think we do, and----
    Senator Shelby. Is it working pretty well?
    Mr. Dudas. At the Presidential level, they pull together 
nine different departments and agencies, targeting organized 
piracy. We now see the President raising, as he has been for 
some years, the issue with world leaders, and we've seen real 
results because of that. The Department of Justice had a 
copyright takedown in 10 different countries because of 
international cooperation.

              PTO deg.PATENT EXAMINATION QUALITY

    Senator Shelby. The quality of patent examination is 
central to ensuring that we have strong, enforceable patents, 
otherwise they challenge, and say there's absolutely nothing to 
that, you know, that's in the marketplace, everybody knows it. 
What are you doing to ensure the quality of the patent 
examination? You talked about the applications with Senator 
Mikulski, and the backlog, but you know, you don't want to run 
in and do something too hastily.
    Mr. Dudas. Right.
    Senator Shelby. Because, otherwise you--the quality's not 
there.
    Mr. Dudas. You're 100 percent right that there is tension 
between productivity and quality, and we have to be fair to the 
examiners. I will tell you, our number one goal was to make 
certain we improved certainty and quality in the system.
    The first thing we do is hire the best and the brightest, 
the most dedicated people.
    Senator Shelby. How do you do that, and compete in the 
marketplace, this is very important for a governmental agency 
that we fund to do that?
    Mr. Dudas. Hiring 1,200 examiners has been an incredible 
challenge, to hire the best and the brightest. We've judged by 
grade point averages, and where people are coming from. Quite 
honestly, I think the reason we've been successful in this 
model, is because we do offer what Senator Mikulski mentioned, 
which is Government service. You take a constitutional oath to 
come to our office.
    Senator Shelby. They're not doing it for money.
    Mr. Dudas. They're not doing it for money.
    Senator Shelby. But also, intellectual challenges in there.
    Mr. Dudas. The intellectual challenges in our office are 
absolutely one huge challenge for us. They do become valuable, 
because they are so intelligent coming in, and the skills they 
learn at the Patent and Trademark Office make them valuable in 
other ways. But, we actually have a team that measures, 
separate team that measures randomly, quality of examiners, 
randomly 6 to 18 different cases. We've beefed up that, in 
terms of how many cases we look at.
    Senator Shelby. You have production goals, but at the same 
time, it can't just be numbers, it's got to be quality.
    Mr. Dudas. Right, we have production goals and quality 
goals, and there are no bonuses--you cannot get a bonus until 
you've met your quality goal. At least met your goal for 
quality.
    Senator Shelby. The worst thing you could do is allow a 
patent for something that, isn't, perhaps not patentable, just 
to meet a goal or a deadline, is that correct?
    Mr. Dudas. You're absolutely right that quality has to be 
first and foremost. And that's why, probably, the thing we are 
proudest of is that we drove our error rate down to the lowest 
it's been in history in trademarks, and second lowest in 
history of patents.
    Senator Shelby. The chairman has indulged me, if I have one 
more question, Madam Chairman?

           PTO deg.HUMAN CAPITAL MANAGEMENT REVIEWS

    Mr. Dudas, over the past 7 years, independent audit in 
agencies such as Government Accountability Office, OPM and the 
inspector general have reviewed your office management of human 
capital. What has been the result of these numerous audits, and 
do you believe that your agency is aggressively implemented the 
recommendation of these reviews, can you--and can you provide 
specific improvements that has shown in the area of human 
capital management?
    Mr. Dudas. Absolutely.
    Senator Shelby. So much of what you're doing is dealing 
with people, but people with high intellectual capacity.
    Mr. Dudas. Right. First, to answer your question directly, 
I am certain that we're aggressively implementing the 
recommendations in these studies, and I will give you 
specifics, but I want to point out--I think you're 100 percent 
right--we have some of the smartest people there are, and 
they're at the cutting edge of technology. I'm always humbled 
when I sit down and talk to a Ph.D. in biotechnology in our 
office to try to learn something specifically about a case.
    And, I will tell you, first and foremost, when we look at 
the Federal human capital survey, what our employees----
    Senator Shelby. You got a lot of Phi Beta Kappas over 
there?
    Mr. Dudas. We've got a lot of Phi Beta Kappas, yes.
    And when we look to our employees themselves, and look at 
the results we have--and quite honestly, anecdotally, from me 
walking around in the gym, and the preschool, and walking 
around, just talking to examiners--what we do incredibly well 
is measure. We give people the expectations they need and they 
believe they're promoted for the right reasons.
    What we're not doing well enough, and what we're focused on 
now, is letting people feel they have creativity and innovation 
in what they're doing. Because this production environment and 
the metrics environment is a challenge to that.
    And, so we've done a number of things. We've established an 
Office of Internal Communications, focused only on how we 
communicate with others. I've called in our management team, we 
actually changed some of our management team, because we wanted 
to make certain that we're communicating better, and we wanted 
to make certain our senior managers did communicate better. So 
our Commissioners of Patents and Trademarks have brown bag 
lunches at least every month. Sometimes it's little things, 
like going to retirement parties, speaking to examiners, 500 or 
600 at a time. The Patent Training Academy brings in classes of 
about 120 examiners at a time. Either I, or the Deputy and the 
Commissioner will meet with them two or three times, to make 
certain we're letting them know what's going on. And certainly, 
most importantly, open to the different questions.
    But on the more administrative side, we have a human 
capital plan that we put in place and the Human Capital Council 
that we've put in place. The question is, what are the results? 
So, certainly, long term, I think administratively we've made a 
big difference. I will tell you some of the results, I think, 
we've gotten this year.
    Being able to hire 1,200 examiners, and have a high-quality 
class is something that, quite honestly, we were intimidated 
by, because a number of Senators, a number of Members said, 
``You simply can't do it.'' Our original goal was 750, and then 
we did 875, and then we raised the goal to 1,000, and we did 
1,219. And now we feel comfortable and confident that we can do 
this with 1,200 folks. So, I think, just having an operation 
that can hire 25 percent of your workforce every year is a 
testament to what our human capital plan has put in place so 
far.
    Although money is not the most important thing, we 
recognize we need to be competitive. We were able to get both 
retention and recruitment bonuses adopted through the Office of 
Personnel Management, as well as an across-the-board pay raise 
of 7 percent for all patent examiners, both in the same year, 
to say, ``Listen, we have to be able to recruit on this 
basis.''

    PTO deg.RELATIONSHIP WITH FOOD AND DRUG ADMINISTRATION

    Senator Shelby. What kind of relationship do you have with 
the Federal Drug Administration?
    Mr. Dudas. Food and Drug Administration?
    Senator Shelby. Food and Drug----
    Mr. Dudas. It's more administrative than anything else. Our 
policy folks get together and talk, but certainly we have an 
administrative relationship in that certain pharmaceutical and 
agricultural products----
    Senator Shelby. Right.
    Mr. Dudas. Have an administrative way of getting a term 
extension. It's mostly a ministerial task at the Patent and 
Trademark Office.
    Senator Shelby. Because they patent.
    Mr. Dudas. What happens is that the Food and Drug 
Administration or Agriculture has to approve a certain product, 
so they're not allowed to get to the market----
    Senator Shelby. Absolutely, it's safety.
    Mr. Dudas. Yeah, exactly, the Hatch-Waxman law allows for 
some extensions. So, we have a relationship in that we 
communicate with them, so we understand----
    Senator Shelby. Sure.
    Mr. Dudas. But, really it's more administrative.
    Senator Shelby. Okay.
    Thank you for your indulgence, Madam Chairman.
    Senator Mikulski. Well, Senator Shelby, those were 
excellent questions, and certainly reflect my own thinking.
    I just wanted to close the loop for the purposes of this 
hearing on the patent issue. I think what we're saying is, that 
what we want is the PTO to really function in the way I think 
you and we would like it to be. There have been a series of 
issues that have been raised, and there are numerous reports, 
and that you have raised internally. We know that there's been 
legislation that took the PTO from kind of a 1950's Government 
thinking--when Rubric's quoting in 50's and 60's technology--to 
a performance-based agency in a new world order. Not only a new 
economy. And, therefore, we're very conscious in performance-
base with benchmarks, and metrics, these things are important.
    All of this is important, but ultimately, it's those 
employees who feel that they are on solid ground, and they want 
to either make it a career, or they want to make it a long 
enough of a career to make what we invest in them worthwhile. 
That's really our question. Because we know, in the 
marketplace, they'll move out. But you will always need a cadre 
of civil servants that are there. So, this is why we'll come 
back to you in terms of what I raise with both Secretary Dudas 
and Gutierrez, you've heard what we've raised, no surprises, 
and no spring hazing--we wanted that remediation plan. So, 
let's get this remediation plan. You know what the challenges 
are, and what we think we can do this year, and what we can do 
subsequently.
    We're also aware of the international challenges--not only 
the number of countries that are applying and--because they 
want our intellectual property so they can come into our 
market. We're the gold standard. You are, like FDA, the gold 
standard.
    And, what we're very impressed by the National Intellectual 
Property Law Enforcement Coordinating Council. I've read their 
most recent report, and Senator Shelby, I know you've traveled 
the world on security matters, both as intel chair, and 
actually of this subcommittee, which--you get high marks for 
training Government officials in other countries to enforcement 
issues, educating foreign publics about intellectual property, 
the group called STOP.
    So, that's a whole other area we could follow up on. But, 
we want to be sure, as we go ahead in this year's 
appropriation, you can meet some of those international 
challenges, as well as being flooded with patents. So, we're 
going to come back to you.

   NIST deg.NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY 
        FUNDING INCREASE FOR AMERICAN COMPETITIVENESS INITIATIVE

    But, Dr. Jeffrey, let me go over to you, I mean, we're very 
impressed that the President's budget increased funding for 
NIST, particularly in the laboratory and some construction 
accounts, however we're concerned that it was paid for out of 
ATP and the manufacturing extension program.
    But, if we could come back to you being in the 
competitiveness agenda--what do you think are the three kinds 
of most robust things that you want to do with this new money, 
and is this--does it go to the horizon, or does it take us over 
the horizon? And also, looking at both innovation and then, to 
the extent that you can testify publicly, its link to security?
    Dr. Jeffrey. Absolutely. The three overriding things that 
we need to do at NIST to ensure that we're providing the 
support in industry and academia that we need to do, is one, we 
need to absolutely ensure that our basic core competencies are 
strong, and that we're meeting the needs of industry today, and 
as we look forward to the future. And there's a number of areas 
that some of the funding under ACI is going in to strengthen.
    It's no secret that the NIST funding has--over the last, 
essentially, two decades, not really kept pace with the needs 
that were arising. And so we've eaten into our seed corn. This, 
now, fixes that.
    Second, we need to look at was the future to those areas 
that are going to be absolutely critical for industry and 
universities. Nano-technology is a great example. That's going 
to be an incredible disruptive and important economic impact. 
It's estimated that up to 15 percent of all manufactured goods 
in 10 years is going to include nano-technology. We need to be 
there and ready for them.
    And the third area is that we have to ensure that we have 
the facilities capabilities to make these kind of measurements. 
And that also, if I could almost follow on to the last of the 
questioning, is critical to being able to attract and retain 
the best and the brightest scientists. They have to be able to 
have the kinds of facilities necessary to do the job, and 
that's why you also see an important component on the 
facilities, and in our budget.

       NIST deg.CENTER FOR NANO-SCALE SCIENCE TECHNOLOGY

    Senator Mikulski. Well, we appreciate that, and if I could 
go right to nano-technology in a question.
    As I understand it, this is $6 million for enabling nano-
tech from discovery to manufacturer. At this center, do you, 
have you developed an operating business plan for moving ahead 
with this, because there's some question about the user 
facility.
    Dr. Jeffrey. Absolutely, the Center for Nano-Scale Science 
Technology is sort of a two-pronged program. One is, as a 
national user facility, and the other is as a research 
facility. That was created in the 2007 President's budget and 
is now being expanded in 2008. We are in the process of 
completing all of policy documents and all of the business 
models for that. I was, quite frankly, slowed down a bit 
because of the continuing resolution, until that was resolved, 
and thanks to a lot of the support of the people here and on 
the House side, we've had sufficient funding in the continuing 
resolution to now move forward.
    So, we expect to have all of the documents done, and open 
for business, essentially, May of this year.

              NIST deg.SAFETY OF NANO-TECHNOLOGY

    Senator Mikulski. Well, that sounds good. One last question 
about nano-tech.
    One of the issues that is raised is, that--is nano-tech 
safe? Because they're such mini-, micro-particles, I don't even 
have--they're nano-particles, which means they're sub-mini-
micro-particles. But there's a lot of question, as you know, 
about the safety of them. Is part of your ongoing research and 
standards is, the flashing yellow lights around the impact of 
health, the part of the NIST effort?
    Dr. Jeffrey. Excellent question, Senator.
    NIST is taking very seriously the issues of safety in nano-
technology. And we're working with other agencies to make sure 
that we have good answers for the general public, because the 
worst thing that can happen is, either an actual 
environmental----
    Senator Mikulski. But are you doing it?
    Dr. Jeffrey. The role that NIST plays is on the 
measurements and characterization of the nano-technology that 
gets, that one can then determine the health impacts.
    I'll give you an example, a concrete example. Carbon nano-
tubes, which are one of the essential building blocks of nano-
technology--we received a sample of carbon nano-tubes from 
industry to characterize it. We found that 60 percent--six-zero 
percent--of the atoms were not carbon, they were heavy metals.
    Senator Mikulski. Oh, gosh.
    Dr. Jeffrey. There were catalysts that were used, thereby 
contaminating the sample. So, when one, then goes to NIH or 
others to look at the toxicity, are you measuring the toxicity 
of the carbon nano-tube? Or the toxicity of the heavy metals?
    So, NIST is working very closely to characterize materials, 
to purify the materials, to ensure that we've got the 
measurements that we can then apply, working closely, and we 
are working closely and collaboratively with NIH, with FDA and 
with others, to have that collusive approach. We provide the 
measurements characterizations, they supply the medical 
implications.
    Senator Mikulski. That's fantastic.
    We also are very heartened by the fact that you are one of 
the lead agencies in dealing with the climate crisis, when 
measurements and standards for climate change science, as well 
as the practical things like the national earthquake hazard 
reduction program.

 NIST deg.EFFECTIVENESS OF MANUFACTURING EXTENSION PARTNERSHIP

    We won't go into that now, but here's the question--you 
hear our colleagues here raising questions about manufacturing 
extension. And then you've also heard on the floor, challenges 
to ATP, is it corporate welfare, whose time has come and gone. 
What are your comments about ATP and MEP? We're going to be on 
pressure from one group of Senators who want to save ATP and 
another group of Senators who want to tank it. And then, of 
course, there's enthusiastic support for MEP. And, I think, 
well-warranted--the support is not, again, it's not about pork, 
but in their community it's been, it's brought the beef.
    Dr. Jeffrey. Thank you. Let me take the last part first, on 
MEP, as the Secretary testified to, the administration 
recognizes the effectiveness of MEP, it is an effective 
program, it's been measured and rated by OMB as an effective 
program. The issue is one of prioritizations in the tight 
budget climate. Our core competencies and concentration is on 
the measurements and standards that impact entire industries, 
and opposed to individual companies one at a time. And, in a 
tough budget climate, those prioritizations had to be made.
    On ATP, there is a lot of disagreement as to where the 
appropriate role is for the Federal Government to be investing. 
One thing, I think, is fairly clear, though, is that there is 
friction between the basic scientific discoveries, and when it 
ends up in the marketplace.
    And, there are a number of different ways that one can look 
at trying to minimize that friction, and make it easier to 
increase the efficiency by which a scientific discovery is able 
to get commercialized. And I think we need to be open in 
looking at all sorts of different models and policy options to 
try to help and make that the most efficient. Because, the 
faster we can get those discoveries to market, the better the 
advantage we will have in the global economy.
    Senator Mikulski. Well, that's exactly right, and you're 
working to develop those standards and so on, and that's the 
heart and soul of a patent process--not only what is it and 
what does it do, but how do you kind of measure it, or certain 
metrics, not only measurement, to identify it, et cetera.
    Well, our time is really up.
    Senator Shelby. I just wanted to----
    Senator Mikulski. Yes, we could go on all day, and I hope 
one day to visit you, and of course, visit you, Dr. Jeffrey, 
and perhaps we could go together, but Senator Shelby?
    Senator Shelby. I would like to go sometime, and I don't 
know if I'd understand everything they were doing, but I'd be 
fascinated.
    Senator Mikulski. Me too.

  NIST deg.NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY'S 
                      COLLABORATION WITH INDUSTRY

    Senator Shelby. Dr. Jeffrey, in your testimony, you 
mentioned the recent advancements, I'm picking up on Senator--
in nano-technology, and how your agency is developing a method 
for testing the quality of nano-tube material.
    Besides testing the tubes, what other ways does NIST plan 
to interact with the industry? Particularly, with the 
manufacturing of more efficient fuel cells, and creating 
baseline standards for the use of nano-particles within the 
medical industry.
    Dr. Jeffrey. Thank you very much. There's a number of 
different areas where we've been reaching out to industry. One 
of the beauties of NIST, which is almost unique among the 
Federal Science and Technology Enterprise, is the close 
collaboration that we have with industry. Where they are not 
just customers, they are partners.
    I believe Secretary Gutierrez made a reference that we have 
about 1,500 technical Government employees, but we have about 
2,800 technical private sector people from industry and 
academia, literally coming to the NIST campus and working side 
by side, so it's a very close collaboration.
    In terms of some of the specifics, I'll give this as an 
example. We actually just completed a study, it's called An 
Assessment of the U.S. Measurement System, where we actually 
looked at----
    Senator Shelby. What are the results of the study?
    Dr. Jeffrey. Well, the results are that we're trying to 
identify measurement barriers to innovation. This is to help us 
in our strategic planning process, as well as to reach out to 
other parts of the Federal Government, where they have 
measurement needs. We identified 723 measurement barriers to 
innovation that were in 11 different industry sectors--
including ones that you described. One of the things that we're 
now doing, now that we have--this is the first cut--it's 
fascinating reading, sir, we'll be glad to provide copies. But 
one of the things that we're now doing is, essentially, a deep 
dive into this, and looking at--as opposed to 723 separate 
measurement needs, are there systemic issues that we can attack 
that would be the highest priority that we can then, really 
make the biggest difference on.
    And, so we're working very closely with the universities 
and I'm very proud to say we hosted a set of universities from 
Alabama up on the NIST campus, specifically looking at some of 
the health impacts on the new technology, and looking broadly 
at reaching out and forming partnerships. I was very impressed 
with what I saw.
    Senator Shelby. This is very promising. It's a different 
field from anybody could imagine other than the lab 25 years 
ago, is that right?
    Dr. Jeffrey. Absolutely. This is an entirely new area. One 
of the things to put this into perspective, when we talk about 
nano-technology, and mini-micro and going all the way down. We 
have a beautiful picture that we captured of a carbon nano-
tube, again, it's sort of a basic building block--on the hair 
of the leg of an ant.
    Senator Shelby. It's so small, it's hard for us to imagine, 
isn't it?
    Dr. Jeffrey. Yeah, absolutely.
    Senator Shelby. We talked about miniaturization of 
everything, but then, this has gone a quantum leap, has it not?
    Dr. Jeffrey. Absolutely. We are literally talking about a 
few atoms. It's really where the action is occurring.
    Senator Shelby. Thank you, Madam Chairman.
    Senator Mikulski. Well, thank you. And, we want to thank 
our panelists, and I think this has been a very, a very robust 
hearing. And we've gotten the subcommittee off to a good start, 
we thank you for your service, and we look forward to working 
with you now, as we go through the appropriation process.

                     ADDITIONAL COMMITTEE QUESTIONS

    If there are no further questions, Senators may submit 
additional questions for the subcommittee's official record. We 
request the Department's responses in 30 days.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
           Questions Submitted by Senator Barbara A. Mikulski
                  departmental management wcf and a&r
    Question. Please provide the WCF bill breakout (including the A&R) 
by bureaus for fiscal year 2001-2007. Also provide the estimated WCF 
bill (including A&R) for each of the bureaus in the fiscal year 2008 
request.
    Answer. The requested information follows.

                                               ATTACHMENT 1.--ADVANCES & REIMBURSEMENTS SUMMARY BY BUREAU
                                                                [In thousands of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Fiscal year--
                                                                 ---------------------------------------------------------------------------------------
                             Bureau                                                                                                    2007       2008
                                                                     2001       2002       2003       2004       2005       2006     estimate   estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
OFFICE OF THE SECRETARY--SALARIES & EXPENSES....................      4,201      4,333      3,873      2,690      5,094      4,306      4,820      4,931
INTERNATIONAL TRADE ADMINISTRATION..............................     15,351     15,202     15,454     12,901     13,910     12,510     13,319     13,622
ECONOMIC DEVELOPMENT ADMINISTRATION.............................      1,376      1,411      1,370      1,230      1,298      1,372      1,613      1,647
NATIONAL TELECOMMUNICATIONS AND INFO ADMIN......................      2,608      2,650      2,579      2,027      2,431      2,387      2,582      2,641
NATIONAL TECHNICAL INFORMATION SERVICE..........................        282         32         76        211         85        129        143        145
BUREAU OF THE CENSUS............................................      1,703      2,261      1,367      1,540      1,503      3,210      4,873      4,956
ECONOMIC AND STATISTICAL ANALYSIS...............................      1,109      1,135      1,128        901      1,195        882      1,058      1,081
NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION.................      4,805      4,047      3,810      4,062      3,938      5,420      7,155      7,290
NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY..................      1,042        825        778        988        910      1,002      1,451      1,476
MINORITY BUSINESS DEVELOPMENT AGENCY............................        786        797        849        602        709        703        777        795
BUREAU OF INDUSTRY AND SECURITY.................................      3,643      3,735      3,662      3,061      3,487      3,243      3,550      3,630
TECHNOLOGY ADMINISTRATION.......................................        929        937        932        775        660        423        277        283
OFFICE OF INSPECTOR GENERAL.....................................      1,350      1,373      1,126        999      1,163      1,130      1,142      1,169
OFFICE OF COMPUTER SERVICES.....................................        419        425        309        266        269        268        276        282
OFFICE OF THE SECRETARY--WORKING CAPITAL FUND...................      6,813      7,076      6,813      5,338      6,066      5,661      5,918      6,057
                                                                 ---------------------------------------------------------------------------------------
      SUBTOTAL BY BUREAU........................................     46,417     46,239     44,126     37,591     42,718     42,646     48,954     50,005
                                                                 =======================================================================================
PATENT AND TRADEMARK OFFICE.....................................      1,248      1,107        825      1,133      1,135      2,517      2,610      2,655
                                                                 =======================================================================================
      TOTAL A&R.................................................     47,665     47,346     44,951     38,724     43,853     45,163     51,564     52,660
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Fiscal years 2001-2002 represents the operating plan for the year.


                                             ATTACHMENT 1A.--WORKING CAPITAL FUND BILLINGS SUMMARY BY BUREAU
                                                                [In thousands of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Fiscal year--
                                                                 ---------------------------------------------------------------------------------------
                             Bureau                                                                                                    2007
                                                                     2001       2002       2003       2004       2005       2006    operating     2008
                                                                   actuals    actuals    actuals    actuals    actuals    actuals      plan     estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
OFFICE OF THE SECRETARY.........................................      6,810      6,419      6,873      7,966      8,906      8,551     10,142     10,923
INTERNATIONAL TRADE ADMINISTRATION..............................     16,997     18,905     20,673     24,356     26,886     27,688     29,801     31,306
ECONOMIC DEVELOPMENT ADMINISTRATION.............................      1,193      1,409      1,419      2,029      1,983      2,519      2,161      2,582
NATIONAL TELECOMMUNICATIONS AND INFO ADMIN......................      2,385      2,456      2,629      3,188      3,294      3,346      3,643      4,153
NATIONAL TECHNICAL INFORMATION SERVICE..........................        407        554        556        516        515        461        487        563
BUREAU OF THE CENSUS............................................     22,073     20,609     21,712     21,345     23,249     23,263     22,601     25,531
ECONOMIC AND STATISTICAL ANALYSIS...............................      1,779      2,140      2,127      2,215      2,542      2,608      2,564      3,058
NATIONAL OCEANIC AND ATMOSPHERIC ADMIN..........................     29,680     31,270     32,712     36,164     39,546     33,306     36,206     35,165
NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY..................      7,482      9,317      9,858      9,798     10,527      9,616      9,339     11,496
MINORITY BUSINESS DEVELOPMENT AGENCY............................      1,213      1,203      1,439      1,468      2,024      1,866      1,928      2,384
BUREAU OF INDUSTRY AND SECURITY.................................      4,578      4,827      5,628      6,725      6,797      7,223      7,604      8,717
TECHNOLOGY ADMINISTRATION.......................................        630        665        552        900        939        724        613      1,100
OFFICE OF INSPECTOR GENERAL.....................................        967      1,057      1,054      1,359      1,531      1,621      1,700      1,874
OFFICE OF COMPUTER SERVICES.....................................        261        355        266        326        274        231        245        331
                                                                 ---------------------------------------------------------------------------------------
      SUBTOTAL BY BUREAU........................................     96,455    101,186    107,498    118,355    129,013    123,023    129,034    139,183
                                                                 =======================================================================================
PATENT AND TRADEMARK OFFICE.....................................      6,052      3,559      3,015      2,964      2,808      3,507      2,929      2,555
OTHER AGENCIES \1\..............................................      8,593      8,762      9,666      1,067        997        714        517      1,086
                                                                 =======================================================================================
      TOTAL.....................................................    111,100    113,507    120,179    122,386    132,818    127,244    132,480    142,824
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ DOC Federal Credit Union, White House Visitor Center, National Aquarium, National Indian Gaming Comm. and FAA.

    Question. Please provide a breakout of ATBs (adjustments to base) 
by bureau for WCF payments, any E-Government initiatives and for the 
Commerce Business System.
    Answer. The requested information follows.

                               ATTACHMENT 2.--DEPARTMENTAL MANAGEMENT--WORKING CAPITAL FUND FISCAL YEAR 2008 BUDGET SUBMISSION--ATBS & PROGRAM INCREASES BY BUREAU
                                                                                    [In thousands of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   WIGS PAY
                                                     CSRS        FERS         TSP        FICA        BAND      GSA RENT    PRINTING     HEALTH      GPL ADJ    PER DIEM    COMP DAY      POSTG
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
O/S.............................................          -4           7           2           7  ..........          32           1          23          72           1          53           2
ITA.............................................          -8          13           2          13  ..........          64           1          47         177          11         105           2
EDA.............................................          -1           1  ..........           1  ..........           6  ..........           4          14  ..........          10  ..........
NTIA............................................          -1           1  ..........           1  ..........           8  ..........           4          27  ..........          11  ..........
NTIS............................................  ..........  ..........  ..........  ..........  ..........  ..........  ..........           1           3  ..........           2  ..........
CENSUS..........................................          -7          11           2          10  ..........          38           1          38         136           4          87  ..........
ESA/BEA.........................................          -1           1  ..........           1  ..........           6  ..........           4          13  ..........          10  ..........
NOAA............................................         -10          16           3          15  ..........          63           2          56         183           8         131           1
NIST............................................          -3           5           1           5  ..........          16           1          18          40           2          43  ..........
PTO.............................................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........
MBDA............................................          -1           1  ..........           1  ..........           4  ..........           3           9  ..........           8  ..........
BIS.............................................          -2           4           1           3  ..........          18  ..........          12          34           1          29  ..........
TA..............................................  ..........  ..........  ..........  ..........  ..........           2  ..........           1           6  ..........           3  ..........
OS--IG..........................................  ..........           1  ..........           1  ..........           4  ..........           2          14  ..........           4  ..........
OCS.............................................  ..........  ..........  ..........  ..........  ..........           1  ..........           1           3  ..........           3  ..........
OTHER...........................................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........
LESS ABSORBED...................................         -38          61          11          58  ..........         262           6         214         731          27         499           5
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
      TOTAL.....................................         -38          61          11          58  ..........         262           6         214         731          27         499           5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


     ATTACHMENT 2.--DEPARTMENTAL MANAGEMENT--WORKING CAPITAL FUND FISCAL YEAR 2008 BUDGET SUBMISSION--ATBS & PROGRAM INCREASES BY BUREAU--CONTINUED
                                                                [In thousands of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   SUBTOTAL
                                   EMP COMP       CBS        STEAM       PEPCO      GENERAL    2008 PAY    2007 PAY    TOTAL WCF    PROGRAM    TOTAL TO
                                               DECREASE                ELECTRIC      ATBS        RAISE       RAISE        ATB      INCREASE     BUREAUS
--------------------------------------------------------------------------------------------------------------------------------------------------------
O/S.............................  ..........          -8          41          97         326         156          39         521  ..........         521
ITA.............................  ..........         -48         138         329         846         302          75       1,223  ..........       1,223
EDA.............................  ..........          -6          13          30          72          30           7         109  ..........         109
NTIA............................  ..........          -4          27          64         138          31           8         177  ..........         177
NTIS............................  ..........          -8  ..........  ..........          -2           5           1           4  ..........           4
CENSUS..........................  ..........        -160  ..........  ..........         160         250          62         472  ..........         472
ESA/BEA.........................  ..........         -10          10          23          57          30           7          94  ..........          94
NOAA............................  ..........        -278          23          54         267         379          94         740  ..........         740
NIST............................  ..........         -70           1           2          61         123          30         214  ..........         214
PTO.............................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........
MBDA............................  ..........          -3           7          18          47          23           6          76  ..........          76
BIS.............................  ..........          -8          37          89         218          83          21         322  ..........         322
TA..............................  ..........          -1           7          17          35           7           2          44  ..........          44
OS--IG..........................  ..........          -4          13          33          68          13           3          84  ..........          84
OCS.............................  ..........  ..........  ..........  ..........           8           7           2          17  ..........          17
OTHER...........................  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........
LESS ABSORBED...................  ..........        -608         317         756       2,301       1,439         357       4,097  ..........       4,097
                                 -----------------------------------------------------------------------------------------------------------------------
      TOTAL.....................  ..........        -608         317         756       2,301       1,439         357       4,097  ..........       4,097
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Question. Please provide a complete cost breakout for the 
development of CAMS/CBS by fiscal year since inception. Cost should 
capture: all contract costs; all Commerce staff assigned to central 
coordinating offices; all detailed staff from bureaus to central 
office; all staff costs for staff that primarily worked on CAMS/CBS.
    Answer. Attachment 3 provides a complete cost breakout for the 
development of the Commerce Administrative Management System/Commerce 
Business System (CAMS/CBS) from fiscal year 1999 to 2003. Upon full 
bureau implementation at the end of fiscal year 2003, CAMS/CBS has been 
in operational maintenance and support status.

                                                                                  ATTACHMENT 3.--CAMS/CBS COSTS
                                                                                    [In thousands of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Fiscal Years--
                                       ---------------------------------------------------------------------------------------------------------------------------------------------------------
                                           1999       2000       2001       2002       2003       2004       2005       2006       2007       2008       2009       2010       2011       2012
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal Year Total.....................     27,275     33,465     41,952     46,195     36,469     35,221     34,729     35,967     38,125     38,638     39,313     39,986     40,655     40,100
Labor.................................     23,195     28,620     36,000     39,731     31,123     30,030     29,480     30,393     31,335     31,385     31,980     32,557     33,048     32,341
    Government........................      9,561     11,731     12,009     12,354     12,784     12,346     12,474     12,814     13,238     16,281     17,418     17,895     18,110     18,320
    Contractor........................     13,634     16,889     23,991     27,377     18,339     17,684     17,006     17,579     18,097     15,104     14,562     14,662     14,938     14,021
Other Costs...........................      4,080      4,845      5,952      6,464      5,346      5,191      5,249      5,574      6,790      7,253      7,333      7,429      7,607      7,759
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: No staff were detailed from the bureaus to the central office.

    Question. Please provide any estimated out-year costs associated 
with CAMS/CBS development.
    Answer. Since fiscal year 2004, CAMS/CBS development costs have 
been for technical migrations to keep current with Oracle forms and 
database applications to ensure information technology audit 
compliancy. There have been no application functionality developments 
except in non-compliance situations when dictated by new and/or changes 
in Federal policy or regulations.
    Question. Please provide the latest FAIR Act inventory along with 
the status of any on-going or planned A-76 competitions.
    Answer. The Department of Commerce has initiated a streamlined 
competitive sourcing competition for their Office of Photographic 
Services. A decision is expected to be announced by the Department by 
April 2007. No additional competitions are planned at this stage. The 
last OMB-approved inventory (fiscal year 2005) is attachment 4. We 
expect to have our fiscal year 2006 inventory approved and released by 
OMB in the next few weeks and will notify Congress at that time. There 
has been no substantial change between the 2005 and 2006 inventories.
    The link to the website is: http://oamweb.osec.doc.gov/
CS_doc_inventories.html

                                                                                          ATTACHMENT 4
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                             Total CY                  Reim CY
 Seq. No.        Agency/Bureau                                                  Department/Agency/Bureau Title                                                 FTEs     Dir CY FTEs      FTEs
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                  Department of Agriculture:
  05060003 005-03                     Office of the Secretary..........................................................................................           87           87  ...........
  05060004 005-04                     Executive Operations.............................................................................................        3,376          390        2,986
  05060005 005-07                     Office of Civil Rights...........................................................................................          191          181           10
  05060006 005-05                     Departmental Administration......................................................................................          394          327           67
  05060007 005-06                     Office of Communications.........................................................................................           90           90  ...........
  05060008 005-08                     Office of the Inspector General..................................................................................          721          721  ...........
  05060010 005-10                     Office of the General Counsel....................................................................................          330          321            9
  05060013 005-13                     Economic Research Service........................................................................................          455          452            3
  05060015 005-15                     National Agricultural Statistics Service.........................................................................        1,366        1,260          106
  05060018 005-18                     Agricultural Research Service....................................................................................        8,794        8,598          196
  05060020 005-20                     Cooperative State Research, Education, and Extension Service.....................................................          451          442            9
  05060032 005-32                     Animal and Plant Health Inspection Service.......................................................................        6,761        5,928          833
  05060035 005-35                     Food Safety and Inspection Service...............................................................................        9,761        9,525          236
  05060037 005-37                     Grain Inspection, Packers and Stockyards Administration..........................................................          725          338          387
  05060045 005-45                     Agricultural Marketing Service...................................................................................        3,455        2,344        1,111
  05060047 005-47                     Risk Management Agency...........................................................................................          568          568  ...........
  05060049 005-49                     Farm Service Agency..............................................................................................        5,498        2,134        3,364
  05060053 005-53                     Natural Resources Conservation Service...........................................................................       13,627       12,488        1,139
  05060055 005-55                     Rural Development................................................................................................        6,872        1,686        5,186
  05060068 005-68                     Foreign Agricultural Service.....................................................................................        1,002          812          190
  05060084 005-84                     Food and Nutrition Service.......................................................................................        1,488        1,488  ...........
  05060096 005-96                     Forest Service...................................................................................................       37,298       35,414        1,884
                                                                                                                                                        ----------------------------------------
  050600ZZ                              Total, Department of Agriculture...............................................................................      103,310       85,594       17,716
                                                                                                                                                        ========================================
                                  Department of Commerce:
  05061005 006-05                     Departmental Management..........................................................................................        1,134          363          771
  05061006 006-06                     Economic Development Administration..............................................................................          247          240            7
  05061008 006-07                     Bureau of the Census.............................................................................................        9,401        6,659        2,742
  05061009 006-08                     Economic and Statistical Analysis................................................................................          552          525           27
  05061025 006-25                     International Trade Administration...............................................................................        2,602        2,553           49
  05061030 006-30                     Bureau of Industry and Security..................................................................................          418          414            4
  05061040 006-40                     Minority Business Development Agency.............................................................................          115          115  ...........
  05061048 006-48                     National Oceanic and Atmospheric Administration..................................................................       12,634       11,769          865
  05061051 006-51                     U.S. Patent and Trademark Office.................................................................................        7,198  ...........        7,198
  05061053 006-53                     Technology Administration........................................................................................           31           30            1
  05061054 006-54                     National Technical Information Service...........................................................................          200  ...........          200
  05061055 006-55                     National Institute of Standards and Technology...................................................................        3,028        2,334          694
  05061060 006-60                     National Telecommunications and Information Administration.......................................................          295          128          167
                                                                                                                                                        ----------------------------------------
  050610ZZ                              Total, Department of Commerce..................................................................................       37,855       25,130       12,725
                                                                                                                                                        ========================================
                                  Department of Defense--Military:
  05062010 007-10                     Operation and Maintenance........................................................................................      433,191      353,892       79,299
  05062020 007-20                     Research, Development, Test, and Evaluation......................................................................       26,823       14,717       12,106
  05062025 007-25                     Military Construction............................................................................................        7,893        1,962        5,931
  05062030 007-30                     Family Housing...................................................................................................        2,030        2,021            9
  05062040 007-40                     Revolving and Management Funds...................................................................................      189,952  ...........      189,952
                                                                                                                                                        ----------------------------------------
  050620ZZ                              Total, Department of Defense--Military.........................................................................      659,889      372,592      287,297
                                                                                                                                                        ========================================
                                  Department of Education:
  05072030 018-30                     Office of Vocational and Adult Education.........................................................................           20           20  ...........
  05072040 018-40                     Office of Postsecondary Education................................................................................            5            5  ...........
  05072045 018-45                     Federal Student Aid..............................................................................................        1,140        1,140  ...........
  05072050 018-50                     Institute of Education Sciences..................................................................................           16           16  ...........
  05072080 018-80                     Departmental Management..........................................................................................        3,273        3,273  ...........
                                                                                                                                                        ----------------------------------------
  050720ZZ                              Total, Department of Education.................................................................................        4,454        4,454  ...........
                                                                                                                                                        ========================================
                                  Department of Energy:
  05073005 019-05                     National Nuclear Security Administration.........................................................................        2,543        2,543  ...........
  05073010 019-10                     Environmental and Other Defense Activities.......................................................................        2,566        2,566  ...........
  05073020 019-20                     Energy Programs..................................................................................................        4,660        3,373        1,287
  05073050 019-50                     Power Marketing Administration...................................................................................        4,711        1,264        3,447
  05073060 019-60                     Departmental Administration......................................................................................        1,442        1,442  ...........
                                                                                                                                                        ----------------------------------------
  050730ZZ                              Total, Department of Energy....................................................................................       15,922       11,188        4,734
                                                                                                                                                        ========================================
                                  Department of Health and Human Services:
  05074010 009-10                     Food and Drug Administration.....................................................................................        9,696        7,957        1,739
  05074015 009-15                     Health Resources and Services Administration.....................................................................        1,590        1,445          145
  05074017 009-17                     Indian Health Services...........................................................................................       13,950        8,909        5,041
  05074020 009-20                     Centers for Disease Control and Prevention.......................................................................        7,917        6,683        1,234
  05074025 009-25                     National Institutes of Health....................................................................................       17,106       11,875        5,231
  05074030 009-30                     Substance Abuse and Mental Health Services Administration........................................................          508          466           42
  05074033 009-33                     Agency for Healthcare Research and Quality.......................................................................          286  ...........          286
  05074038 009-38                     Centers for Medicare and Medicaid Services.......................................................................        4,852        4,780           72
  05074070 009-70                     Administration for Children and Families.........................................................................        1,382        1,382  ...........
  05074075 009-75                     Administration on Aging..........................................................................................          126          119            7
  05074090 009-90                     Departmental Management..........................................................................................        1,896        1,400          496
  05074091 009-91                     Program Support Center...........................................................................................        1,491           37        1,454
  05074092 009-92                     Office of the Inspector General..................................................................................        1,506          278        1,228
                                                                                                                                                        ----------------------------------------
  050740ZZ                              Total, Department of Health and Human Services.................................................................       62,306       45,331       16,975
                                                                                                                                                        ========================================
                                  Department of Homeland Security:
  05074510 024-10                     Departmental Management..........................................................................................          905          903            2
  05074520 024-20                     Office of the Inspector General..................................................................................          502          502  ...........
  05074530 024-30                     Citizenship and Immigration Services.............................................................................       10,052       10,052  ...........
  05074540 024-40                     United States Secret Service.....................................................................................        6,516        6,516  ...........
  05074550 024-50                     Border and Transportation Security...............................................................................      112,932      105,441        7,491
  05074560 024-60                     United States Coast Guard........................................................................................        7,036        6,274          762
  05074570 024-70                     Emergency Preparedness and Response..............................................................................        4,792        4,374          418
  05074580 024-80                     Science and Technology...........................................................................................          320          320  ...........
  05074590 024-90                     Information Analysis and Infrastructure Protection...............................................................          803          803  ...........
                                                                                                                                                        ----------------------------------------
  050745ZZ                              Total, Department of Homeland Security.........................................................................      143,858      135,185        8,673
                                                                                                                                                        ========================================
  05075035 025-35                 Department of Housing and Urban Development: Management and Administration...........................................       10,028        5,372        4,656
                                                                                                                                                        ========================================
                                  Department of the Interior:
  05076004 010-04                     Bureau of Land Management........................................................................................       11,065       10,691          374
  05076006 010-06                     Minerals Management Service......................................................................................        1,763        1,632          131
  05076008 010-08                     Office of Surface Mining Reclamation and Enforcement.............................................................          580          577            3
  05076010 010-10                     Bureau of Reclamation............................................................................................        5,757        3,087        2,670
  05076011 010-11                     Central Utah Project.............................................................................................           17           17  ...........
  05076012 010-12                     United States Geological Survey..................................................................................        8,950        6,007        2,943
  05076018 010-18                     United States Fish and Wildlife Service..........................................................................        9,378        8,605          773
  05076024 010-24                     National Park Service............................................................................................       20,671       19,983          688
  05076076 010-76                     Bureau of Indian Affairs.........................................................................................        9,605        8,901          704
  05076084 010-84                     Departmental Management..........................................................................................        1,810          479        1,331
  05076085 010-85                     Insular Affairs..................................................................................................           40           40  ...........
  05076086 010-86                     Office of the Solicitor..........................................................................................          422          366           56
  05076087 010-88                     Office of Inspector General......................................................................................          270          270  ...........
  05076088 010-91                     Natural Resources Damage Assessment and Restoration..............................................................            6            6  ...........
  05076089 010-90                     Office of Special Trustee for American Indians...................................................................          581          581  ...........
  05076092 010-92                     National Indian Gaming Commission................................................................................           81           81  ...........
                                                                                                                                                        ----------------------------------------
  050760ZZ                              Total, Department of the Interior..............................................................................       70,996       61,323        9,673
                                                                                                                                                        ========================================
                                  Department of Justice:
  05077003 011-03                     General Administration...........................................................................................        3,645        2,805          840
  05077004 011-04                     United States Parole Commission..................................................................................          104          104  ...........
  05077005 011-05                     Legal Activities and U.S. Marshals...............................................................................       22,694       19,159        3,535
  05077010 011-10                     Federal Bureau of Investigation..................................................................................       31,939       29,081        2,858
  05077012 011-12                     Drug Enforcement Administration..................................................................................       10,644        9,189        1,455
  05077014 011-14                     Bureau of Alcohol, Tobacco, Firearms, and Explosives.............................................................        4,940        4,885           55
  05077020 011-20                     Federal Prison System............................................................................................       41,565       38,466        3,099
  05077021 011-21                     Office of Justice Programs.......................................................................................          964          947           17
                                                                                                                                                        ----------------------------------------
  050770ZZ                              Total, Department of Justice...................................................................................      116,495      104,636       11,859
                                                                                                                                                        ========================================
                                  Department of Labor:
  05078005 012-05                     Employment and Training Administration...........................................................................        1,209        1,206            3
  05078011 012-11                     Employee Benefits Security Administration........................................................................          887          887  ...........
  05078012 012-12                     Pension Benefit Guaranty Corporation.............................................................................          806  ...........          806
  05078015 012-15                     Employment Standards Administration..............................................................................        4,120        3,992          128
  05078018 012-18                     Occupational Safety and Health Administration....................................................................        2,208        2,203            5
  05078019 012-19                     Mine Safety and Health Administration............................................................................        2,187        2,187  ...........
  05078020 012-20                     Bureau of Labor Statistics.......................................................................................        2,475        2,445           30
  05078025 012-25                     Departmental Management..........................................................................................        2,884        2,181          703
                                                                                                                                                        ----------------------------------------
  050780ZZ                              Total, Department of Labor.....................................................................................       16,776       15,101        1,675
                                                                                                                                                        ========================================
                                  Department of State:
  05079005 014-05                     Administration of Foreign Affairs................................................................................       29,685       18,895       10,790
  05079015 014-15                     International Commissions........................................................................................          307          273           34
  05079025 014-25                     Other............................................................................................................          292          292  ...........
                                                                                                                                                        ----------------------------------------
  050790ZZ                              Total, Department of State.....................................................................................       30,284       19,460       10,824
                                                                                                                                                        ========================================
                                  Department of Transportation:
  05080004 021-04                     Office of the Secretary..........................................................................................          868          596          272
  05080012 021-12                     Federal Aviation Administration..................................................................................       47,659       46,307        1,352
  05080015 021-15                     Federal Highway Administration...................................................................................        3,133        3,104           29
  05080017 021-17                     Federal Motor Carrier Safety Administration......................................................................        1,098        1,046           52
  05080018 021-18                     National Highway Traffic Safety Administration...................................................................          673          673  ...........
  05080027 021-27                     Federal Railroad Administration..................................................................................          827          827  ...........
  05080036 021-36                     Federal Transit Administration...................................................................................          527          527  ...........
  05080040 021-40                     Saint Lawrence Seaway Development Corporation....................................................................          157  ...........          157
  05080050 021-50                     Pipeline and Hazardous Materials Safety Administration...........................................................          415          384           31
  05080053 021-53                     Research and Innovative Technology Administration................................................................          620           21          599
  05080056 021-56                     Office of Inspector General......................................................................................          430          372           58
  05080061 021-61                     Surface Transportation Board.....................................................................................          150          141            9
  05080070 021-70                     Maritime Administration..........................................................................................          827          462          365
                                                                                                                                                        ----------------------------------------
  050800ZZ                              Total, Department of Transportation............................................................................       57,384       54,460        2,924
                                                                                                                                                        ========================================
                                  Department of the Treasury:
  05081005 015-05                     Departmental Offices.............................................................................................        3,035        2,016        1,019
  05081006 015-04                     Financial Crimes Enforcement Network.............................................................................          309          309  ...........
  05081010 015-10                     Financial Management Service.....................................................................................        2,134        2,044           90
  05081013 015-13                     Alcohol and Tobacco Tax and Trade Bureau.........................................................................          559          544           15
  05081020 015-20                     Bureau of Engraving and Printing.................................................................................        2,400  ...........        2,400
  05081025 015-25                     United States Mint...............................................................................................        2,108  ...........        2,108
  05081035 015-35                     Bureau of the Public Debt........................................................................................        1,318        1,301           17
  05081045 015-45                     Internal Revenue Service.........................................................................................       97,440       96,434        1,006
  05081057 015-57                     Comptroller of the Currency......................................................................................        2,791  ...........        2,791
  05081058 015-58                     Office of Thrift Supervision.....................................................................................          920  ...........          920
                                                                                                                                                        ----------------------------------------
  050810ZZ                              Total, Department of the Treasury..............................................................................      113,014      102,648       10,366
                                                                                                                                                        ========================================
                                  Department of Veterans Affairs:
  05082015 029-15                     Medical Programs.................................................................................................      203,112      197,758        5,354
  05082025 029-25                     Benefits Programs................................................................................................       14,296       13,482          814
  05082040 029-40                     Departmental Administration......................................................................................        4,447        2,516        1,931
                                                                                                                                                        ----------------------------------------
  050820ZZ                              Total, Department of Veterans Affairs..........................................................................      221,855      213,756        8,099
                                                                                                                                                        ========================================
                                  Major Independents:
  07082500 202-00                     Corps of Engineers--Civil Works..................................................................................       23,522       22,422        1,100
                                                                                                                                                        ========================================
                                      Other Defense Civil Programs:
  07082615 200-15                         American Battle Monuments Commission.........................................................................          390          390  ...........
  07082620 200-20                         Armed Forces Retirement Home.................................................................................          485          485  ...........
  07082625 200-25                         Cemeterial Expenses..........................................................................................          100          100  ...........
  07082645 200-45                         Selective Service System.....................................................................................          154          154  ...........
                                                                                                                                                        ----------------------------------------
  070826ZZ                                  Total, Other Defense Civil Programs........................................................................        1,129        1,129  ...........
                                                                                                                                                        ========================================
  07083000 020-00                     Environmental Protection Agency..................................................................................       17,635       17,166          469
  07083200 100-00                     Executive Office of the President................................................................................        1,832        1,831            1
                                                                                                                                                        ========================================
                                      General Services Administration:
  07084005 023-05                         Real Property Activities.....................................................................................        5,759  ...........        5,759
  07084010 023-10                         Supply and Technology Activities.............................................................................        4,533           61        4,472
  07084030 023-30                         General Activities...........................................................................................        2,443          956        1,487
                                                                                                                                                        ----------------------------------------
  070840ZZ                                  Total, General Services Administration.....................................................................       12,735        1,017       11,718
                                                                                                                                                        ========================================
                                      International Assistance Programs:
  07084503 184-03                         Millennium Challenge Corporation.............................................................................          133          133  ...........
  07084515 184-15                         Agency for International Development.........................................................................        2,337        2,211          126
  07084520 184-20                         Overseas Private Investment Corporation......................................................................          225          225  ...........
  07084525 184-25                         Trade and Development Agency.................................................................................           50           50  ...........
  07084535 184-35                         Peace Corps..................................................................................................        1,171        1,168            3
  07084540 184-40                         Inter-American Foundation....................................................................................           47           47  ...........
  07084550 184-50                         African Development Foundation...............................................................................           32           32  ...........
                                                                                                                                                        ----------------------------------------
  070845ZZ                                  Total, International Assistance Programs...................................................................        3,995        3,866          129
                                                                                                                                                        ========================================
  07085000 026-00                     National Aeronautics and Space Administration....................................................................       19,440       19,271          169
  07085200 422-00                     National Science Foundation......................................................................................        1,301        1,301  ...........
  07086000 027-00                     Office of Personnel Management...................................................................................        4,097          990        3,107
  07087000 028-00                     Small Business Administration....................................................................................        4,189        4,178           11
  07090000 016-00                     Social Security Administration...................................................................................       64,205       63,405          800
                                  Other Independents:
  08106000 306-00                     Advisory Council on Historic Preservation........................................................................           45           35           10
  08109000 309-00                     Appalachian Regional Commission..................................................................................           11           11  ...........
  08110000 310-00                     Architectural and Transportation Barriers Compliance Board.......................................................           30           30  ...........
  08113000 313-00                     Barry Goldwater Scholarship and Excellence in Education Foun.....................................................            2            2  ...........
  08114500 514-00                     Broadcasting Board of Governors..................................................................................        2,341        2,341  ...........
  08116500 510-00                     Chemical Safety and Hazard Investigation Board...................................................................           42           42  ...........
  08118500 465-00                     Christopher Columbus Fellowship Foundation.......................................................................            1            1  ...........
  08123000 323-00                     Commission of Fine Arts..........................................................................................           10           10  ...........
  08126000 326-00                     Commission on Civil Rights.......................................................................................           60           60  ...........
  08137000 338-00                     Committee for Purchase from People Who Are Blind or Severely.....................................................           29           29  ...........
  08138000 339-00                     Commodity Futures Trading Commission.............................................................................          491          491  ...........
  08142000 343-00                     Consumer Product Safety Commission...............................................................................          471          471  ...........
  08142500 485-00                     Corporation for National and Community Service...................................................................          589          589  ...........
  08145000 511-00                     Court Services and Offender Supervision Agency for the Distr.....................................................        1,390        1,390  ...........
  08146000 347-00                     Defense Nuclear Facilities Safety Board..........................................................................          100          100  ...........
  08146200 517-00                     Delta Regional Authority.........................................................................................            3            3  ...........
  08146500 513-00                     Denali Commission................................................................................................           12           12  ...........
  08148500 525-00                     Election Assistance Commission...................................................................................           23           23  ...........
  08149000 350-00                     Equal Employment Opportunity Commission..........................................................................        2,441        2,421           20
  08150000 351-00                     Export-Import Bank of the United States..........................................................................          420          420  ...........
  08151000 352-00                     Farm Credit Administration.......................................................................................          294  ...........          294
  08154000 355-00                     Farm Credit System Insurance Corporation.........................................................................           10           10  ...........
  08155000 356-00                     Federal Communications Commission................................................................................        1,999           21        1,978
                                                                                                                                                        ========================================
                                      Federal Deposit Insurance Corporation:
  08156010 357-10                         Bank Insurance...............................................................................................        4,223        4,223  ...........
  08156020 357-20                         Savings Association Insurance................................................................................          619          619  ...........
  08156030 357-30                         FSLIC Resolution.............................................................................................          228          228  ...........
  08156040 357-40                         FDIC--Office of Inspector General............................................................................          160          160  ...........
                                                                                                                                                        ----------------------------------------
  081560ZZ                                  Total, Federal Deposit Insurance Corporation...............................................................        5,230        5,230  ...........
                                                                                                                                                        ========================================
  08159000 360-00                     Federal Election Commission......................................................................................          391          391  ...........
  08161000 362-00                     Federal Financial Institutions Examination Council Appraisal.....................................................            7            7  ...........
  08163000 364-00                     Federal Housing Finance Board....................................................................................          146  ...........          146
  08164000 365-00                     Federal Labor Relations Authority................................................................................          175          175  ...........
  08165000 366-00                     Federal Maritime Commission......................................................................................          133          133  ...........
  08166000 367-00                     Federal Mediation and Conciliation Service.......................................................................          285          276            9
  08167000 368-00                     Federal Mine Safety and Health Review Commission.................................................................           45           45  ...........
  08168000 369-00                     Federal Retirement Thrift Investment Board.......................................................................          101          101  ...........
  08169000 370-00                     Federal Trade Commission.........................................................................................        1,080          430          650
  08171000 372-00                     Harry S. Truman Scholarship Foundation...........................................................................            5            5  ...........
  08173500 467-00                     Intelligence Community Management Account........................................................................          318          318  ...........
  08177000 378-00                     International Trade Commission...................................................................................          380          380  ...........
  08180000 381-00                     James Madison Memorial Fellowship Foundation.....................................................................            6            6  ...........
  08181000 382-00                     Japan-United States Friendship Commission........................................................................            6            6  ...........
  08186000 387-00                     Marine Mammal Commission.........................................................................................           11           11  ...........
  08188000 389-00                     Merit Systems Protection Board...................................................................................          228          202           26
  08188500 487-00                     Morris K. Udall Scholarship and Excellence in National Envir.....................................................           29           29  ...........
  08192000 393-00                     National Archives and Records Administration.....................................................................        2,870        1,459        1,411
  08193000 394-00                     National Capital Planning Commission.............................................................................           57           57  ...........
  08199000 400-00                     National Commission on Libraries and Information Science.........................................................            6            6  ...........
  08212000 413-00                     National Council on Disability...................................................................................           14           14  ...........
  08214000 415-00                     National Credit Union Administration.............................................................................          963            2          961
  08216000 417-00                     National Endowment for the Arts..................................................................................          160          160  ...........
  08217000 418-00                     National Endowment for the Humanities............................................................................          175          170            5
  08217500 474-00                     Institute of Museum and Library Services.........................................................................           57           57  ...........
  08219000 420-00                     National Labor Relations Board...................................................................................        1,865        1,865  ...........
  08220000 421-00                     National Mediation Board.........................................................................................           52           52  ...........
  08223000 424-00                     National Transportation Safety Board.............................................................................          416          416  ...........
  08228000 429-00                     Nuclear Regulatory Commission....................................................................................        3,125        3,108           17
  08230000 431-00                     Nuclear Waste Technical Review Board.............................................................................           18           18  ...........
  08231000 432-00                     Occupational Safety and Health Review Commission.................................................................           69           69  ...........
  08233000 434-00                     Office of Government Ethics......................................................................................           80           80  ...........
  08234000 435-00                     Office of Navajo and Hopi Indian Relocation......................................................................           51           51  ...........
  08235000 436-00                     Office of Special Counsel........................................................................................          113          113  ...........
  08240000 512-00                     Presidio Trust...................................................................................................          307  ...........          307
  08245000 446-00                     Railroad Retirement Board........................................................................................        1,025          975           50
  08248000 449-00                     Securities and Exchange Commission...............................................................................        3,933        3,932            1
  08251000 452-00                     Smithsonian Institution..........................................................................................        5,577        5,577  ...........
  08254000 455-00                     Tennessee Valley Authority.......................................................................................       12,019  ...........       12,019
  08254600 345-00                     United States Court of Appeals for Veterans Claims...............................................................           98           98  ...........
  08255000 456-00                     United States Holocaust Memorial Museum..........................................................................          248          248  ...........
                                                                                                                                                        ----------------------------------------
  99999999                              Report Total...................................................................................................    1,871,194    1,427,590      443,604
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Question. Please provide a funding estimate for the DOC portion of 
the HCHB renovation by fiscal year for the project.
    Answer. The Department is requesting $4.3 million for its portion 
of the HCHB renovation in fiscal year 2008. The total estimated cost 
for the Department is $21.6 million, through 2020.
    Question. Please provide an itemized listing of the $4.3 million 
requested for HCHB renovation.
    Answer. The itemized listing of the $4.3 million requested for HCHB 
renovation follows:

------------------------------------------------------------------------
                                                              Amount
------------------------------------------------------------------------
Relocation and Planning.................................        $156,000
DOC Construction Costs..................................       1,441,000
Equipment and Furniture.................................       2,117,000
Security................................................          56,000
IT......................................................         530,000
                                                         ---------------
      Total.............................................       4,300,000
------------------------------------------------------------------------

    Question. How much does DOC spend on maintenance of the HCHB? What 
is the source of those funds? Does GSA provide any funding to support 
HCHB maintenance?
    Answer. DOC spent approximately $12,413,000 for maintenance of the 
HCHB in fiscal year 2006. The source of funds is from the HCHB tenants 
through the Departmental Management's Working Capital Fund. GSA does 
not provide any funding to support HCHB maintenance.

                DEPARTMENTAL MANAGEMENT--MEDIA QUESTIONS

    Question. We understand that Commerce has been revising its over 20 
year old communications policy for the last few months. What is the 
status of the policy and when can we expect it to be released and 
implemented?
    Answer. On March 29, the Department released its new public 
communication policy, following three separate rounds of internal input 
from our employees, in particular our scientists, on the draft policy. 
The policy will take effect on May 14, following a 45 day time period 
to conduct training and outreach sessions with employees.
    Question. What steps will the Department take to ensure that all 
staff are informed of and understand how to implement the policy?
    Answer. We have publicly released the policy along with 
``Frequently Asked Question'' document, and placed both on our website. 
We are providing a 45 day window of time before the policy takes effect 
in order to conduct training and outreach sessions with current 
employees. We are also considering ways to require annual ``refresher'' 
sessions as well as to require training for new employees.
    Question. Will the revised policy include language to specifically 
address recent concerns raised by scientists regarding interference 
with the dissemination of their research results?
    Answer. Yes, the new policy provides a series of clear principles 
which reiterate the Department's support for the open exchange of 
scientific ideas, information, and research. The policy also 
specifically provides for Fundamental Research Communications (a 
communications ``carve-out'' for scientific research), a series of best 
practices for public affairs employees, and provides operating units 
with the flexibility to use existing, or issue new, guidance regarding 
the implementation of the new policy (as long as it is consistent with 
the Department policy).
    Question. Specifically, will the new policy define the types of 
media contacts, press releases, presentations, or other documents that 
would be subject to the policy?
    Answer. Yes, the policy provides clear definitions of what types of 
documents are covered by the policy.
    Question. Describe situations, if any, in which prior approval is 
required for press releases and media interviews.
    Answer. Yes, the policy describes the situations, if applicable, 
which require prior approval for press releases and media interviews.
    Question. If prior approval is required, describe the specific 
process for approving press releases and media interviews.
    Answer. The Department's policy provides an overall conceptual 
framework for public communications, and set general Department-wide 
guidelines. Because the 13 agencies within the Department are so 
diverse, the new policy will provide operating units the flexibility to 
continue to set more specific procedures, which must be consistent with 
the overall Department policy.
    Question. Explicitly delegate authority to approve releases or 
interviews of a time sensitive nature or local interest to appropriate 
levels within the Commerce agencies.
    Answer. Yes, the new policy explicitly delegates authority to 
approve releases or interviews of a time sensitive or local interest to 
appropriate levels within the Commerce agencies.
    Question. Affirm that scientists can express personal views and 
share those views with the media as long as they declare them to be 
their own.
    Answer. Yes, the policy specifically includes a section explaining 
how employees may communicate their personal views with an appropriate 
disclaimer.
    Question. Define the role of the Office of Public Affairs office 
with regard to facilitating the dissemination of research.
    Answer. Yes, the new policy defines the role of the Office of 
Public Affairs with regard to facilitating the dissemination of 
research. Each operating unit will have the flexibility to continue to 
use existing or issue new guidance regarding the implementation and 
interpretation of the policy, which must comport with the overall 
Department policy.
    Question. Delineate a process to resolve disputes regarding 
dissemination of research.
    Answer. Yes, the new policy delineates a process to resolve 
disputes regarding dissemination of research.

                         SPECIAL BILL LANGUAGE

    Question. Please provide an explanation/background of each of the 
provisions within the Commerce portion of the appropriations bill. For 
example, under ITA there is the following provision, ``purchase or 
construction of temporary demountable exhibition structures for use 
abroad.'' Why is special language required? Isn't this a ``necessary'' 
expense?
Census Bureau (Account: PC&P)
    ``: Provided, That none of the funds provided in this or any other 
Act for any fiscal year may be used for the collection of Census data 
on race identification that does not include `some other race' as a 
category.''
    Census was considering eliminating the ``Some Other Race'' category 
on the questionnaire and putting the Hispanic check box at the top of 
the list. Congress opposed that option out of concern that it would 
deter Hispanics' self-identification of those who did not also fit into 
any of the standard race categories, thereby possibly under recording 
Hispanic populations.
Departmental Management (Account: S&E)
    ``For expenses necessary for the departmental management of the 
Department of Commerce provided for by law, including not to exceed 
$5,000 for official entertainment, $47,466,000: Provided, That not to 
exceed 11 full-time equivalents and $1,490,000 shall be expended for 
the legislative affairs function of the Department.''
    Appropriated funds may not be used for entertainment expenses 
except when specifically authorized by law. This provision authorizes 
the Secretary to use up to $5,000 from appropriated funds for 
entertaining foreign dignitaries and U.S. citizens who are involved in 
activities of interest to the Department.
    Congress added language imposing a ceiling on the legislative 
affairs function of the Department was included beginning in the fiscal 
year 2004 Appropriations Act.
International Trade Administration
    ``For necessary expenses for international trade activities of the 
Department of Commerce provided for by law, and for engaging in trade 
promotional activities abroad, including expenses of grants and 
cooperative agreements for the purpose of promoting exports of United 
States firms, without regard to the provisions of law set forth in 44 
U.S.C. 3702 and 3703;''
    44 U.S.C. 3702 specifies that an executive department may not 
publish or pay for advertisements without written authority from the 
head of that department.
    The nature of ITA's overseas exhibition program requires maximum 
flexibility in advertising requirements since exhibitions may be 
changed, added, or canceled. When such changes take place, 
advertisements must be placed as soon as possible to inform the local 
business community. This exception from 44 U.S.C. 3702 will provide the 
flexibility, which is required to effectively advertise for these 
exhibitions.
    44 U.S.C. 3703 stipulates that prices paid for advertising may not 
exceed the commercial rates charged to private individuals, with the 
usual discounts. Since the United States Government does not have 
sovereign status in other countries and is charged commercial rates 
without the discounts required by 44 U.S.C. 3703, this exception is 
necessary to permit contracting in a manner which conforms to the 
realities of foreign advertising markets.
    ``full medical coverage for dependent members of immediate families 
of employees stationed overseas and employees temporarily posted 
overseas;''
    This language permits the International Trade Administration to 
extend to certain of its overseas employees the same benefits afforded 
domestically employed Federal employees and employees of ITA's Foreign 
Commercial Service in equivalent positions overseas.
    ``travel and transportation of employees of the United States and 
Foreign Commercial Service between two points abroad, without regard to 
49 U.S.C. 40118;''
    49 U.S.C.  40118(d) exempts State and USAID officials from the 
requirement that government travel between two points outside the 
United States be accomplished by U.S. air carrier. This phrase 
clarifies that U.S. and Foreign Commercial Service officers are 
included in the exemption, notwithstanding a Comptroller General 
decision to the contrary. This exemption is necessary and appropriate 
in that most of the travel undertaken by U.S. and Foreign Commercial 
Service officers occurs abroad, where U.S. air carriers are generally 
not reasonably available.
    ``employment of Americans and aliens by contract for services;''
    44 CG 761, OPM guidance, and House Report 89-188 have concluded 
that Federal agencies must have specific authority to employ personnel 
by contract. In order to present its overseas exhibitions, ITA often 
requires the use of narrators, demonstrators, receptionists, clerical, 
and facilities maintenance personnel who speak the language of the host 
country; are familiar with local practices and procedures; or who only 
need to be employed for a short period of time. In addition, in some 
cases, it is more advantageous to employ U.S. citizens in the host 
country (generally members of an employee's family) because they have 
greater familiarity with American methods and, therefore, require less 
effort to train.
    ``rental of space abroad for periods not exceeding 10 years, and 
expenses of alteration, repair, or improvement;''
    Buildings, pavilions, and space in such structures must be rented 
for overseas exhibitions. However, rental terms are typically set by 
schedules established by fair authorities and are not negotiated or 
established competitively. In addition, organizers may limit the build-
out to approved contractors at scheduled prices. This phrase clarifies 
that ITA may enter into leases for real property and make such 
improvements as are necessary without limitation.
    ``purchase or construction of temporary demountable exhibition 
structures for use abroad;''
    40 U.S.C. 601 prohibits the construction of public buildings except 
by the Administrator of the General Services Administration. Authority 
to purchase or construct such demountable structures is necessary to 
allow ITA to present exhibitions overseas when permanent exhibition 
facilities are not available.
    ``payment of tort claims, in the manner authorized in the first 
paragraph of 28 U.S.C. 2672 when such claims arise in foreign 
countries;''
    28 U.S.C. 2672 provides for settlement of tort claims for monetary 
damages of $25,000 or less against the Unites States by the head of 
each federal agency for loss of property or personal injury or death 
caused by a negligent or wrongful act or omission of any employee of 
the Government while acting within the scope of his employment in 
circumstances where the United States, if a private person, would be 
liable under local law. However, 28 U.S.C. 2680 exempts the settlement 
of tort claims which arise abroad from the provisions of 28 U.S.C. 
2672. The language exempts ITA from 22 U.S.C. 2680 and covers the 
settlement of tort claims against the United States, which arise in 
connection with the ITA's trade promotion activities abroad.
    ``not to exceed $327,000 for official representation expenses 
abroad;''
    Appropriated Funds are generally not available for official 
representation, absent specific statutory authority. This gives ITA the 
authority to spend up to $327,000 on official representation abroad.
    ``purchase of passenger motor vehicles for official use abroad, not 
to exceed $45,000 per vehicle; obtaining insurance on official motor 
vehicles, and rental of tie lines;''
    Per 31 U.S.C. 1343, an appropriation may be expended to purchase 
passenger motor vehicles only as specifically authorized by law and 
places certain limitations on the total cost of such vehicles. The 
annual appropriations act sets the general limits on the total cost of 
the vehicles. This language provides ITA with the authority to exceed 
the general amount (up to $45,000) so that it can purchase vehicles 
abroad.
    ``$406,925,000, to remain available until September 30, 2007, of 
which $8,000,000 is to be derived from fees to be retained and used by 
the International Trade Administration, notwithstanding 31 U.S.C. 
3302''
    Per 31 U.S.C. 3302, agencies may not retain or use fees unless 
specifically authorized by law. This language provides ITA the 
necessary authorization to use these collections to offset its 
appropriation.
    ``That negotiations shall be conducted within the World Trade 
Organization to recognize the right of members to distribute monies 
collected from antidumping and countervailing duties:''
    This language added by Congress directed ITA to work with USTR to 
continue negotiations with the WTO regarding the ``Byrd Amendment''. In 
2003, the WTO ruled the Continued Dumping and Subsidy Offset Act of 
2000 or ``CDSOA'' (Byrd Amendment), which provides for the distribution 
of duties to the domestic parties that supported the petition under 
certain circumstance, was not in compliance.
    When the President signed the Deficit Reduction Act of 2005 on 
February 8, 2006, legislation was enacted that will bring the United 
States into compliance with the WTO Dispute Settlement Body ruling on 
the Byrd Amendment--the legislation repeals the Byrd Amendment for 
entries made on or after October 1, 2007.
    ``: Provided further, That the provisions of the first sentence of 
section 105(f) and all of section 108(c) of the Mutual Educational and 
Cultural Exchange Act of 1961 (22 U.S.C. 2455(f) and 2458(c)) shall 
apply in carrying out these activities without regard to section 5412 
of the Omnibus Trade and Competitiveness Act of 1988 (15 U.S.C. 
4912);''
    Having the references to 22 U.S.C. 2245(f) and 2458(c) in the 
annual appropriations act permits the International Trade 
Administration (ITA) to accept, retain, and expend or otherwise utilize 
contributions of funds, property, and services from foreign 
governments, international organizations and private individuals, 
firms, associations, agencies and other groups for the purposes of 
furthering ITA's mission as generally defined in the annual 
appropriations act, namely trade promotion and international trade 
activities. Among other activities, ITA relies on this authority to 
charge, retain, and expend fees for export promotion services 
benefiting individual U.S. exporters.
    15 U.S.C. 4912 states that the Secretary shall provide reasonable 
public services and access (including electronic access) to any 
information maintained as part of the National Trade Data Bank and may 
charge reasonable fees consistent with section 552 of title 5 (the 
Freedom of Information Act, which includes specific provisions 
regarding fees to be assessed under that Act). Authorizing ITA to carry 
out these activities without regard to 15 U.S.C. 4912 allows ITA to 
charge other than the public services and access fees for export 
promotion services, even when such services rely on or incorporate data 
contained in the National Trade Data Bank.
    ``and that for the purpose of this Act, contributions under the 
provisions of the Mutual Educational and Cultural Exchange Act shall 
include payment for assessments for services provided as part of these 
activities.''
    This provision was added in 1990 to clarify a question pending at 
the time with GAO concerning whether ITA's authority to accept 
contributions under MECEA was limited to voluntary gifts. This 
explicitly gives ITA the authority to accept contributions as 
assessments or fees as well as gifts.
    ``Provided further, That the International Trade Administration 
shall be exempt from the requirements of Circular A-25 (or any 
successor administrative regulation or policy) issued by the Office of 
Management and Budget:''
    This language, inserted by Congress, increases the flexibility that 
ITA has in the establishment of prices and fees for services beyond 
that allowed by OMB Circular A-25.
    ``: Provided further, That negotiations shall be conducted within 
the World Trade Organization consistent with the negotiating objectives 
contained in the Trade Act of 2002, Public Law 107-210.''
    The principle textile and apparel negotiating objectives handed to 
the U.S. government in the Trade Act of 2002 are as follows:
    (16) Textile Negotiations.--The principle negotiating objectives of 
the United States with respect to trade in textiles and apparel 
articles are to obtain competitive opportunities for United States 
exports of textiles and apparel in foreign markets substantially 
equivalent to the competitive opportunities afforded foreign exports in 
United States markets and to achieve fairer and more open conditions of 
trade in textiles and apparel.
United States Patent and Trademark Office
    ``Provided further, That not less than 657 full-time equivalents, 
690 positions and $85,017,000 shall be for the examination of trademark 
applications; and not less than 5,810 full-time equivalents, 6,241 
positions and $906,142,000 shall be for the examination and searching 
of patent applications: Provided further, That not more than 265 full-
time equivalents, 272 positions and $37,490,000 shall be for the Office 
of the General Counsel: Provided further, That not more than 82 full-
time equivalents, 83 positions and $25,393,000 shall be for the Office 
of the Administrator for External Affairs:''
    Congress wanted to ensure that the core examination functions were 
properly staffed and funded.
    ``Provided further, That any deviation from the full-time 
equivalent, position, and funding designations set forth in the 
preceding four provisos shall be subject to the procedures set forth in 
section 605 of this Act:''
    This reprogramming provision was added after fiscal year 2005 
because the floors and ceilings are statutory and Congress had to give 
us a legal way of reprogramming if we weren't going to hit our levels. 
When we tried to reprogram in fiscal year 2005, staff pointed out that 
it was the law that we hit the levels specified, neither they nor we 
had any discretion in the matter.
    ``Provided further, That from amounts provided herein, not to 
exceed $1,000 shall be made available in fiscal year 2006 for official 
reception and representation expenses: Provided further, That 
notwithstanding section 1353 of title 31, United States Code, no 
employee of the United States Patent and Trademark Office may accept 
payment or reimbursement from a non-Federal entity for travel, 
subsistence, or related expenses for the purpose of enabling an 
employee to attend and participate in a convention, conference, or 
meeting when the entity offering payment or reimbursement is a person 
or corporation subject to regulation by the Office, or represents a 
person or corporation subject to regulation by the Office, unless the 
person or corporation is an organization exempt from taxation pursuant 
to section 501(c)(3) of the Internal Revenue Code of 1986:''
    Appropriators were concerned that PTO officials had been accepting 
invitational travel, usually from non-profits but occasionally from 
other entities. This also ended the invitational examiner education 
program.
    ``: Provided further, That in fiscal year 2006, from the amounts 
made available for `Salaries and Expenses' for the United States Patent 
and Trademark Office (PTO), the amounts necessary to pay: (1) the 
difference between the percentage of basic pay contributed by the PTO 
and employees under section 8334(a) of title 5, United States Code, and 
the normal cost percentage (as defined by section 8331(17) of that 
title) of basic pay, of employees subject to subchapter III of chapter 
83 of that title; and (2) the present value of the otherwise unfunded 
accruing costs, as determined by the Office of Personnel Management, of 
post-retirement life insurance and post-retirement health benefits 
coverage for all PTO employees, shall be transferred to the Civil 
Service Retirement and Disability Fund, the Employees Life Insurance 
Fund, and the Employees Health Benefits Fund, as appropriate, and shall 
be available for the authorized purposes of those accounts.''
    OPM had been paying certain amounts on behalf of USPTO for CSRS 
retirement, health insurance, and life insurance. Because PTO is fully-
user fee funded, the Administration proposed that USPTO should pay the 
full costs of its employees' benefits.
Bureau of Industry and Security
    ``That the provisions of the first sentence of section 105(f) and 
all of section 108(c) of the Mutual Educational and Cultural Exchange 
Act of 1961 (22 U.S.C. 2455(f) and 2458(c)) shall apply in carrying out 
these activities''
    The MECEA language is intended to allow BIS to receive and retain 
the funds it receives from attendees at BIS export training programs, 
such as Update. Without this language, all money received from 
attendees would have to be deposited in Treasury.
National Telecommunications and Information Administration
    ``: Provided, That notwithstanding 31 U.S.C. 1535(d), the Secretary 
of Commerce shall charge Federal agencies for costs incurred in 
spectrum management, analysis and operations, and related services and 
such fees shall be retained and used as offsetting collections for 
costs of such spectrum services, to remain available until expended.''
    In 1996, Congress asked NTIA to investigate the feasibility of 
charging federal agencies for spectrum management services. NTIA 
proposed to Congress that each agency be charged in proportion to its 
use of the spectrum, using a simple fee-per-assignment formula. As a 
result, Congress enacted language in the fiscal year 1996 
appropriation, Public Law 104-134, which authorized the Secretary of 
Commerce to charge federal agencies for spectrum management, analysis, 
operations, and related services to cover spectrum management costs.
    Because NTIA experienced significant difficulties collecting fees 
from multiple federal agencies, Congress subsequently enacted 
additional language in the fiscal year 1997 appropriation, Public Law 
104-208, which authorized the Secretary of Commerce to charge fees, but 
also specified that the federal agencies shall pay the fees charged by 
NTIA for spectrum management costs or they would have to cease using 
the spectrum.
    Through NTIA's annual appropriation, Congress has enacted this 
authority each fiscal year. Currently, NTIA uses this authority to 
collect 80 percent of its costs for spectrum management services each 
fiscal year. The specific legislative language is necessary to permit 
NTIA to continue to collect spectrum management fees without the 
particular requirements of the Economy Act (31 U.S.C. 1535(d)) being 
imposed on the transfer of funds and to prevent the expiration of funds 
transferred from other agencies for NTIA's ongoing spectrum management 
services.
    ``: Provided further, That the Secretary of Commerce is authorized 
to retain and use as offsetting collections all funds transferred, or 
previously transferred, from other Government agencies for all costs 
incurred in telecommunications research, engineering, and related 
activities by the Institute for Telecommunication Sciences of NTIA, in 
furtherance of its assigned functions under this paragraph, and such 
funds received from other Government agencies shall remain available 
until expended.''
    NTIA's laboratory in Boulder, Colorado, the Institute of 
Telecommunication Sciences, (ITS) performs spectrum-related research 
and analysis for other federal agencies on a reimbursable basis. Due to 
the nature of this work, which involves projects that do not fit into a 
fiscal year timetable, it is necessary for NTIA to ensure that the 
funds transferred from other agencies for this reimbursable work do not 
expire at the fiscal year's end. Frequently, projects and related 
funding need to be carried over into the next fiscal year. Therefore, 
NTIA continues to need authorization to prevent the expiration of funds 
transferred from other agencies for ITS reimbursable projects. 
Currently, ITS reimbursable projects constitute about 60 percent of its 
annual budget.
Operations Research and Facilities
    ``Provided, That fees and donations received by the National Ocean 
Service for the management of national marine sanctuaries may be 
retained and used for the salaries and expenses associated with those 
activities, notwithstanding 31 U.S.C. 3302:''
    Per 31 U.S.C. 3302, fees and donations are not available to be 
retained and used by agencies without specific authority.
    ``Provided further, That in addition, $3,000,000 shall be derived 
by transfer from the fund entitled `Coastal Zone Management' and in 
addition $67,000,000 shall be derived by transfer from the fund 
entitled `Promote and Develop Fishery Products and Research Pertaining 
to American Fisheries':''
    This language transfers funds from special NOAA accounts to 
Operations, Research, and Facilities account (ORF) to partially offset 
the appropriation.
    $67 million was transferred from the Promote and Develop account to 
the ORF account. The Promote and Develop account is funded by a thirty 
percent levy on imported fish product duties and transferred from the 
Department of Agriculture to the Promote and Develop American Fishery 
Products account.
    $3 million was transferred from the Coastal Zone Management Fund. 
This fund was established by the Costal Zone Act Reauthorization 
Amendments of 1990 (CZARA). The fund consists of loan repayments from 
the former Coastal energy Impact Program. The proceeds are to be used 
to offset the Operations, Research, and Facilities account for the 
costs of implementing the Coastal Zone Management Act of 1972, as 
amended.
    ``Provided further, That no general administrative charge shall be 
applied against an assigned activity included in this Act or the report 
accompanying this Act:''
    This proviso is included to forestall NOAA from paying for general 
administration via a tax on the line offices and specific projects 
contained in the report language.
    ``Provided further, That the total amount available for the 
National Oceanic and Atmospheric Administration corporate services 
administrative support costs shall not exceed $179,036,000:''
    This proviso strengthens the previous proviso and puts a hard cap 
on NOAA administration costs.
    ``Provided further, That payments of funds made available under 
this heading to the Department of Commerce Working Capital Fund 
including Department of Commerce General Counsel legal services shall 
not exceed $34,000,000:''
    This proviso is included to limit the Department's assessment of 
NOAA for Working Capital Fund costs.
    ``Provided further, That any deviation from the amounts designated 
for specific activities in the report accompanying this Act, or any use 
of deobligated balances of funds provided under this heading in 
previous years, shall be subject to the procedures set forth in section 
605 of this Act:''
    This strengthens the force of the report language by requiring a 
notification to the Appropriations Committees if NOAA deviates from it, 
and increases oversight of spending from deobligations by requiring 
notification as well.
    ``Provided further, That grants to States pursuant to sections 306 
and 306A of the Coastal Zone Management Act of 1972, as amended, shall 
not exceed $2,000,000, unless funds provided for `Coastal Zone 
Management Grants' exceed funds provided in the previous fiscal year:''
    This language requires NOAA to divide up CZM grants fairly equally 
between the states (by formula), protecting states with small 
coastlines and preventing states with long coastlines (CA, AK, FL) from 
receiving the bulk of the grant funds.
    ``Provided further, That if funds provided for `Coastal Zone 
Management Grants' exceed funds provided in the previous fiscal year, 
then no State shall receive more than 5 percent or less than 1 percent 
of the additional funds:''
    This language was inserted to ensure that if more funds were 
available for CZM than in the prior year, all participating states 
would benefit.
    ``Provided further, That the personnel management demonstration 
project established at the National Oceanic and Atmospheric 
Administration pursuant to 5 U.S.C. 4703 may be expanded by 3,500 full-
time positions to include up to 6,925 full-time positions and may be 
extended indefinitely:''
    This language expanded the scope of the payroll demonstration 
project.
    ``Provided further, That the Administrator of the National Oceanic 
and Atmospheric Administration may engage in formal and informal 
education activities, including primary and secondary education, 
related to the agency's mission goals:''
    This provides specific authorization for NOAA to engage in 
educational activities.
    ``: Provided further, That, in accordance with the Federal Credit 
Reform Act of 1990 (2 U.S.C. 611 et seq.), within funds appropriated 
under this heading, $2,000,000 shall remain available until expended, 
for the cost of loans under section 211(e) of title II of division C of 
Public Law 105-277, such loans to have terms of up to 30 years and to 
be available for use in any of the Bering Sea and Aleutian Islands 
fisheries.''
    This language provided a $2 million subsidy to cover the costs 
associated with a $200 million loan to the Community Develop Quota 
fisheries in the Bering Sea and Aleutian Islands. These loans have 
terms of up to 30 years.
Procurement, Acquisition and Construction
    ``Provided, That of the amounts provided for the National Polar-
orbiting Operational Environmental Satellite System, funds shall only 
be made available on a dollar for dollar matching basis with funds 
provided for the same purpose by the Department of Defense:''
    This proviso was included because of concern that DOD would shift 
costs to NOAA by under funding their portion of the project.
    ``Provided further, That except to the extent expressly prohibited 
by any other law, the Department of Defense may delegate procurement 
functions related to the National Polar-orbiting Operational 
Environmental Satellite System to officials of the Department of 
Commerce pursuant to section 2311 of title 10, United States Code:''
    Air Force officials asserted that NOAA officials could not perform 
certain procurement functions because they were not authorized to do 
so. This proviso was included to satisfy the need for authorization.
    ``Provided further, That any deviation from the amounts designated 
for specific activities in the report accompanying this Act, or any use 
of deobligated balances of funds provided under this heading in 
previous years, shall be subject to the procedures set forth in section 
605 of this Act:''
    This strengthens the force of the report language by requiring a 
notification to the Appropriations Committees if NOAA deviates from it, 
and increases oversight of spending from deobligations by requiring 
notification as well.
    ``Provided further, That beginning in fiscal year 2007 and for each 
fiscal year thereafter, the Secretary of Commerce shall include in the 
budget justification materials that the Secretary submits to Congress 
in support of the Department of Commerce budget (as submitted with the 
budget of the President under section 1105(a) of title 31, United 
States Code) an estimate for each National Oceanic and Atmospheric 
Administration procurement, acquisition and construction program having 
a total multiyear program cost of more than $5,000,000 and an estimate 
of the budgetary requirements for each such program for each of the 
five subsequent fiscal years:''
    This proviso was added by Congress and requires five years of 
outyear projections for programs with total costs of $5 million or 
more.
    ``Provided further, That subject to amounts provided in advance in 
appropriations Acts, the Secretary of Commerce is authorized to enter 
into a lease with The Regents of the University of California for land 
at the San Diego Campus in La Jolla for a term not less than 55 
years:''
    NOAA is seeking to replace its Southwest Fisheries Science 
Laboratory at La Jolla, CA, because it sits at the edge of a cliff that 
is receding. Because the University of California offered suitable land 
nearby but required a long-term lease, NOAA needed specific 
authorization to enter into a lease of more than 20 years in order to 
consider the offer.
    ``: Provided further, That funds appropriated for the construction 
of the National Oceanic and Atmospheric Administration Pacific Regional 
Center are an additional increment in the incremental funding planned 
for the Center, and may be expended incrementally, through multi-year 
contracts for construction and related activities, provided that 
obligations under any such multi-year contract shall be subject to the 
availability of appropriations.''
    This provides NOAA greater flexibility in spending the funds for 
the Pacific Regional Center. Usually, NOAA would require appropriations 
in an amount that would build or buy something that would be useful 
even without further appropriation. However, even the major increments 
for this project are substantially in excess of the amounts provided to 
date. Without this authorization, NOAA would not be able to spend the 
funds appropriated, and they would expire unused.
Fisheries Finance Program Account
    ``Provided, That such costs, including the cost of modifying such 
loans, shall be as defined in the Federal Credit Reform Act of 1990:''
    Loans given out under the Fisheries Finance Program are to use 
accounting principles specified under the Federal Credit Reform Act of 
1990.
    ``Provided further, That these funds are only available to 
subsidize gross obligations for the principal amount of direct loans 
not to exceed $5,000,000 for Individual Fishing Quota loans, and not to 
exceed $59,000,000 for traditional direct loans, of which $19,000,000 
may be used for direct loans to the United States menhaden fishery:''
    Provides loan authority for two loan programs.
    Direct loan authority of $5 million was given for Individual 
Fishing Quota (IFQ). These loans provide fishery wide financing to ease 
the transition to sustainable fisheries through its fishing capacity 
reduction programs and provides financial assistance in the form of 
loans to fishermen who fish from small vessels and entry level 
fishermen to promote stability and reduce consolidation in already 
rationalized fisheries.
    Provides direct loan authority of $59 million was given for 
Traditional Direct loans. Traditional Direct Loans are available to 
U.S. citizens who otherwise qualify for financing or refinancing the 
construction, reconstruction, reconditioning, and in some cases, the 
purchasing of fishing vessels, shoreside processing, aquaculture, and 
mariculture facilities. Language was also included directing that of 
the $59 million in traditional loans, priority should be given to 
providing $19 million in direct loans to the menhaden fishery.
    ``: Provided further, That none of the funds made available under 
this heading may be used for direct loans for any new fishing vessel 
that will increase the harvesting capacity in any United States 
fishery.''
    This proviso makes it unlawful for a fisherman to use Fisheries 
Finance Program loans to modify or replace a fishing vessel such that 
it would materially increase the harvesting capacity of the fishery. 
This language prevents fisheries finance program loans from 
contributing to over-fishing.

                  ECONOMIC DEVELOPMENT REPRESENTATIVE

    Question. The Economic Development Representative (EDR) that 
services Maryland has been vacant for well over a year. When will this 
vacancy be filled? If not, please explain.
    Answer. The Economic Development Administration (EDA) has initiated 
the competitive civil service recruitment process to fill the vacant 
Economic Development Representative (EDR) position in the Maryland/West 
Virginia office. This office is to be located in West Virginia but 
would have convenient access to Maryland. EDA currently has five vacant 
EDR positions nationwide. Recruitment is currently underway to fill the 
three vacancies located in Maryland/West Virginia, Minnesota, and 
Missouri. EDA anticipates the recruitment process to fill the other two 
vacancies will begin sometime in April.

                       UNOBLIGATED BALANCE LEVELS

    Question. Please provide unobligated balance levels for the S&E 
appropriation and the Economic Development Assistance Program 
appropriation for fiscal years 2001 through 2006.
    Answer. The following unobligated balance levels are provided for 
the S&E appropriation and the Economic Development Assistance Program 
appropriation for fiscal years 2001 through 2006. The EDAP balances 
primarily consist of deobligations of prior year obligations, and were 
re-obligated against new projects in subsequent years.

                        [In thousands of dollars]
------------------------------------------------------------------------
                Fiscal year \1\                     S&E          EDAP
------------------------------------------------------------------------
2001..........................................          240       63,777
2002..........................................           42       11,902
2003..........................................          338       14,826
2004..........................................      \2\ 912       15,355
2005..........................................           20       10,965
2006..........................................       \3\ 96       10,757
------------------------------------------------------------------------
\1\ Balances were for year end for each year.
\2\ Balance due to EOY DOD reimbursable credit.
\3\ As corrected.

                ECONOMIC DEVELOPMENT ADMINISTRATION CUT

    Question. What will be the consequence of an $80 million cut in EDA 
grants? How many fewer projects will be funded? How many communities 
will not receive assistance?
    Answer. We believe the President's budget balances competing 
priorities and provides sufficient resources for the agency to 
accomplish its mission. A funding level of $170 million will provide 
60-65 public works-type grants and 25 economic adjustment-type 
construction grants, which will generate 19,000 new higher-skill jobs. 
EDA will focus these resources on the Nation's most distressed 
communities. EDA fiscal year 2006 and fiscal year 2007 funding levels 
supported approximately 140 investments.

                           STAFFING BREAKOUT

    Question. Please provide a staffing breakout (including 
contractors) at headquarters and at each of the regional offices as of 
the end of each fiscal year (2001-2006) as well as a current breakout 
as of the latest pay period. Provide staffing levels by appointment, 
grade, and position.
    Answer. Attachment 5 lists on-board staffing, including 
contractors, at headquarters and each regional office at the end of 
each fiscal year, and the current staffing, including appointment, 
grade and position.

          ATTACHMENT 5.--ECONOMIC DEVELOPMENT ADMINISTRATION STAFFING CHART AS OF 3/20/2007--EMPLOYEES
----------------------------------------------------------------------------------------------------------------
               Office                                  Positions                       Appointment       Grade
----------------------------------------------------------------------------------------------------------------
Office of the Assistant Secretary...  Assistant Secretary........................  Political.........    ( \1\ )
Office of the Assistant Secretary...  DAS for Economic Development...............  Political.........    ( \2\ )
Office of the Assistant Secretary...  Senior Advisor to Assistant Secretary......  Political.........    ( \2\ )
Office of the Assistant Secretary...  Special Advisor............................  Political.........         11
Office of the Assistant Secretary...  Confidential Assistant.....................  Political.........         11
Office of the Assistant Secretary...  Secretary..................................  Career............         10
Office of Chief Counsel.............  Chief Counsel..............................  Career............         15
Office of Chief Counsel.............  Attorney Advisor...........................  Career............         14
Office of Chief Counsel.............  Attorney Advisor...........................  Career............         14
Office of Chief Counsel.............  Paralegal..................................  Career............         12
Office of Chief Counsel.............  Administrative Assistant...................  Career............          8
Office of Management Services.......  CFO/DAS for Management Services............  Career............    ( \2\ )
Office of Management Services.......  Secretary..................................  Career............          8
Office of Management Services.......  Program Analyst--PMF.......................  Career............         12
Office of Management Services.......  Deputy CFO/Director Administration &         Career............         15
                                       Support Svs Div.
Office of Management Services.......  Human Resources............................  Career............         15
Office of Management Services.......  Management Analyst.........................  Career............         14
Office of Management Services.......  Management Analyst.........................  Career............         13
Office of Management Services.......  Management Analyst.........................  Career............         13
Office of Management Services.......  Financial Analyst..........................  Career............         14
Office of Management Services.......  Accountant.................................  Career............         14
Office of Management Services.......  Accountant.................................  Career............         13
Office of Management Services.......  Director, Budgeting & Performance            Career............         15
                                       Evaluation Division.
Office of Management Services.......  Senior Program Analyst.....................  Career............         14
Office of Management Services.......  Program Analyst............................  Career............         13
Office of Management Services.......  Program Analyst............................  Career............         13
Office of Management Services.......  Program Analyst............................  Career............          7
Office of Management Services.......  Grant Specialist--PMF......................  Career............         11
Office of Management Services.......  Budget Analyst.............................  Career............         13
Office of Information Technology....  Chief Information Officer..................  Career............         15
Office of Information Technology....  Information Tech Specialist................  Career............         14
Office of Information Technology....  Information Tech Specialist................  Career............         13
Office of Information Technology....  Information Tech Specialist................  Career............         11
Office of Information Technology....  Information Tech Specialist................  Career............          7
Office of External Affairs and        DAS for External Affairs and Communications  Political.........    ( \2\ )
 Communications.
Office of External Affairs and        Secretary..................................  Career............          8
 Communications.
Office of External Affairs and        Director, Public Affairs...................  Political.........         15
 Communications.
Office of External Affairs and        Web Master.................................  Career............         13
 Communications.
Office of External Affairs and        Senior Public Affairs Specialist...........  Career............         13
 Communications.
Office of External Affairs and        Public Affairs Specialist..................  Career............         12
 Communications.
Office of External Affairs and        Prog Comm Specialist Team Leader...........  Career............         15
 Communications.
Office of External Affairs and        Management Analyst.........................  Career............         13
 Communications.
Office of External Affairs and        Intergovernmental Affairs Specialist.......  Career............         13
 Communications.
Office of External Affairs and        Investment Information Specialist..........  Career............         12
 Communications.
Office of External Affairs and        Comm & Cong Liaison Spec...................  Career............         12
 Communications.
Office of External Affairs and        Investment Information Specialist..........  Career............         12
 Communications.
Office of External Affairs and        Program Communications Asst................  Career............          7
 Communications.
Atlanta Regional Office.............  Regional Director..........................  Career............    ( \2\ )
Atlanta Regional Office.............  EDR/Kentucky...............................  Career............         13
Atlanta Regional Office.............  EDR/Mississippi............................  Career............         13
Atlanta Regional Office.............  Administrative Officer.....................  Career............         12
Atlanta Regional Office.............  Econ Dev Prog Spec.........................  Career............         12
Atlanta Regional Office.............  Econ Dev Prog Spec.........................  Career............         12
Atlanta Regional Office.............  Econ Dev Assistant.........................  Career............          6
Atlanta Regional Office.............  Civil Engineer.............................  Career............         14
Atlanta Regional Office.............  Civil Engineer.............................  Career............         13
Atlanta Regional Office.............  IT Specialist..............................  Career............         12
Atlanta Regional Office.............  Project Manager............................  Career............         12
Atlanta Regional Office.............  Chief, Public Works & Econ Adjust..........  Career............         14
Atlanta Regional Office.............  Program Specialist.........................  Career............         12
Atlanta Regional Office.............  Program Specialist.........................  Career............         12
Atlanta Regional Office.............  Program Specialist.........................  Career............         12
Atlanta Regional Office.............  Econ Dev Prog Spec.........................  Career............         11
Atlanta Regional Office.............  Regional Counsel...........................  Career............         15
Atlanta Regional Office.............  Econ Dev Prog Spec.........................  Career............         12
Atlanta Regional Office.............  Secretary O/A..............................  Career............          6
Austin Regional Office..............  Regional Director..........................  Career............    ( \2\ )
Austin Regional Office..............  Regional Counsel...........................  Career............         15
Austin Regional Office..............  Environmental Specialist...................  Career............         13
Austin Regional Office..............  Area Director..............................  Career............         14
Austin Regional Office..............  EDR/Louisiana..............................  Career............         13
Austin Regional Office..............  Senior Program Specialist..................  Career............         13
Austin Regional Office..............  Econ Dev Prog Specialist...................  Career............         12
Austin Regional Office..............  Mgmt Analyst...............................  Career............         12
Austin Regional Office..............  Area Director..............................  Career............         14
Austin Regional Office..............  Civil Engineer.............................  Career............         13
Austin Regional Office..............  Civil Engineer.............................  Career............         13
Austin Regional Office..............  OPCS Officer...............................  Career............         12
Austin Regional Office..............  Office Tech/Office Auto....................  Career............          5
Austin Regional Office..............  Area Director..............................  Career............         14
Austin Regional Office..............  EDR--Arkansas..............................  Career............         13
Austin Regional Office..............  Econ Dev Prog Specialist...................  Career............         12
Austin Regional Office..............  Econ Dev Prog Specialist...................  Career............         12
Austin Regional Office..............  Econ Dev Prog Specialist...................  Career............         12
Chicago Regional Office.............  Regional Director..........................  Career............    ( \2\ )
Chicago Regional Office.............  Regional Counsel...........................  Career............         15
Chicago Regional Office.............  EDR/Ohio/Indiana...........................  Career............         13
Chicago Regional Office.............  EEO Specialist.............................  Career............         13
Chicago Regional Office.............  Econ Dev Prog Specialist...................  Career............          9
Chicago Regional Office.............  Supv Program Specialist....................  Career............         14
Chicago Regional Office.............  Engineer...................................  Career............         13
Chicago Regional Office.............  EA Program Specialist......................  Career............         12
Chicago Regional Office.............  PW Program Specialist......................  Career............         12
Chicago Regional Office.............  PW Program Specialist......................  Career............         12
Chicago Regional Office.............  Supervisory Econ Dev Prog Spec.............  Career............         14
Chicago Regional Office.............  Engineer...................................  Career............         13
Chicago Regional Office.............  EA Program Specialist......................  Career............         12
Chicago Regional Office.............  OPCS Officer...............................  Career............         14
Chicago Regional Office.............  Administrative Officer.....................  Career............         12
Chicago Regional Office.............  Secretary..................................  Career............          6
Chicago Regional Office.............  Secretary..................................  Career............          6
Chicago Regional Office.............  Coordinator................................  Career............         14
Denver Regional Office..............  Regional Director..........................  Career............    ( \2\ )
Denver Regional Office..............  Regional Counsel...........................  Career............         15
Denver Regional Office..............  Civil Engineer.............................  Career............         13
Denver Regional Office..............  OPCS Officer/Computer Spec.................  Career............         12
Denver Regional Office..............  Admin Officer..............................  Career............         12
Denver Regional Office..............  Program Specialist.........................  Career............         12
Denver Regional Office..............  Program Specialist.........................  Career............         11
Denver Regional Office..............  Community Planner..........................  Career............         13
Denver Regional Office..............  East Team Leader...........................  Career............         14
Denver Regional Office..............  Program Specialist.........................  Career............         13
Denver Regional Office..............  EDR Colorado/Kansas........................  Career............         13
Denver Regional Office..............  EDR Iowa/Nebraska..........................  Career............         13
Denver Regional Office..............  EDR Montana/Utah...........................  Career............         13
Denver Regional Office..............  West Team Leader...........................  Career............         14
Denver Regional Office..............  Program Specialist.........................  Career............         13
Philadelphia Regional Office........  Regional Counsel...........................  Career............         15
Philadelphia Regional Office........  Environmental Officer......................  Career............         13
Philadelphia Regional Office........  General Attorney...........................  Career............         14
Philadelphia Regional Office........  Administrative Officer.....................  Career............         12
Philadelphia Regional Office........  Adm Support Assistant......................  Career............          5
Philadelphia Regional Office........  EDR New York/VT............................  Career............         13
Philadelphia Regional Office........  Chief, Planning Technical Asst.............  Career............         14
Philadelphia Regional Office........  Community Planner..........................  Career............         13
Philadelphia Regional Office........  Community Planner..........................  Career............         12
Philadelphia Regional Office........  Community Planner..........................  Career............         12
Philadelphia Regional Office........  Chief, Pubic Works.........................  Career............         14
Philadelphia Regional Office........  Civil Engineer.............................  Career............         13
Philadelphia Regional Office........  Sr. Program Specialist.....................  Career............         13
Philadelphia Regional Office........  Civil Engineer.............................  Career............         13
Philadelphia Regional Office........  Civil Engineer.............................  Career............         13
Philadelphia Regional Office........  Public Works Program Spec..................  Career............         12
Philadelphia Regional Office........  Econ Dev Prog Spec.........................  Career............         12
Philadelphia Regional Office........  Program Specialist.........................  Career............          9
Philadelphia Regional Office........  Chief, Economic Adjustment.................  Career............         14
Philadelphia Regional Office........  Sr.Program Specialist (Financial Analyst)..  Career............         13
Philadelphia Regional Office........  Program Specialist.........................  Career............         13
Philadelphia Regional Office........  Program Specialist.........................  Career............         12
Seattle Regional Office.............  Regional Director..........................  Career............    ( \2\ )
Seattle Regional Office.............  Regional Counsel...........................  Career............         15
Seattle Regional Office.............  EEO/Civil Rights...........................  Career............         13
Seattle Regional Office.............  Administrative Officer.....................  Career............         12
Seattle Regional Office.............  Computer Specialist........................  Career............         11
Seattle Regional Office.............  EDR Alaska.................................  Career............         13
Seattle Regional Office.............  Economic Development Specialist............  Career............         11
Seattle Regional Office.............  Chief, Economic Adjustment.................  Career............         14
Seattle Regional Office.............  Economic Adjustment Specialist.............  Career............         12
Seattle Regional Office.............  EDR/Oregon, Northern Cal...................  Career............         14
Seattle Regional Office.............  EDR Pacific Islands........................  Career............         13
Seattle Regional Office.............  EDR/Idaho and Nevada.......................  Career............         13
Seattle Regional Office.............  EDR/Central, Bay, CA.......................  Career............         13
Seattle Regional Office.............  EDR/Southern California....................  Career............         13
Seattle Regional Office.............  EDR/Arizona................................  Career............         13
Seattle Regional Office.............  Supv Community Planner.....................  Career............         14
Seattle Regional Office.............  Civil Engineer.............................  Career............         13
Seattle Regional Office.............  Civil Engineer.............................  Career............         13
Seattle Regional Office.............  Civil Engineer.............................  Career............         13
Seattle Regional Office.............  Public Works Specialist....................  Career............         12
Seattle Regional Office.............  Public Works Specialist....................  Career............         12
Seattle Regional Office.............  Public Works Specialist....................  Career............         12
                                                                                                      ----------
      Total.........................  ...........................................  ..................        161
----------------------------------------------------------------------------------------------------------------
\1\ EX.
\2\ SES.


         ATTACHMENT 5.--ECONOMIC DEVELOPMENT ADMINISTRATION STAFFING CHART AS OF 3/20/2007--CONTRACTORS
----------------------------------------------------------------------------------------------------------------
               Office                              Positions                       Funded by             Number
----------------------------------------------------------------------------------------------------------------
Office of Management Services.......  Accounting Technician.............  S&E........................          2
Office of Management Services.......  Human Resources \1\...............  S&E........................          2
Office of Information Technology....  Information Technology............  S&E........................          7
                                                                                                      ----------
      Total contractors funded by     ..................................  ...........................         11
       S&E funds.
                                                                                                      ==========
Contractors Funded by Other Sources
 of Funds:
    Seattle Regional Office.........  Community Planner.................  DOD Reimb Funds............          1
    Seattle Regional Office.........  Administrative Assistant..........  DOD Reimb Funds............          1
    Seattle Regional Office.........  Civil Engineer....................  DOD Reimb Funds............          1
    Seattle Regional Office.........  Program Specialist................  DOD Reimb Funds............          1
    Seattle Regional Office.........  Environ Protection Specialist.....  DOD Reimb Funds............          1
                                                                                                      ----------
      Total Other Fund Sources......  ..................................  ...........................          5
----------------------------------------------------------------------------------------------------------------
\1\ HR services previously provided under a cross-servicing agreement with ITA.

              ESA HEADQUARTERS STAFFING AND FUNDING LEVELS

    Question. Please provide a staffing and funding breakout for ESA 
Headquarters for fiscal year 2005, fiscal year 2006, fiscal year 2007 
CR.
    Answer. All ESA headquarters' appropriated staffing and funding are 
identified in the Economics and Statistical Analysis budget under the 
``Policy Support'' heading.

----------------------------------------------------------------------------------------------------------------
                                                  Fiscal Year 2005      Fiscal Year 2006      Fiscal Year 2007
                                                       Actual                Actual                Enacted
               ESA Headquarters                -----------------------------------------------------------------
                                                Personnel    Amount   Personnel    Amount   Personnel    Amount
----------------------------------------------------------------------------------------------------------------
Positions/Budget Authority....................         34     $6,316         23     $3,975         23     $3,975
FTE/Obligations...............................         39      6,398         18      3,480    ( \1\ )    ( \1\ )
----------------------------------------------------------------------------------------------------------------
\1\ TBD.

                    DYNAMICS OF ECONOMIC WELL-BEING

    Question. Will there be a gap in continuity between the start of 
the Dynamics of Economic Well-Being and the end of the SIPP? If so, how 
long?
    Answer. The Budget provides $15.9 million (an increase of $6.7 
million over the 2007 Budget) to continue the development of the new 
Dynamics of Economic Well-being System (DEWS). However, to ensure 
Census can focus its efforts and be successful at fielding the new 
survey in 2009, the Budget does not include funding to continue SIPP 
data collection in 2008. Therefore there will be a short ``data gap'' 
between ending the SIPP and beginning of DEWS.
    Data collection will end for SIPP in September 2007. We will have 
full data through May, partial data through August, and no data from 
September through December 2007. The first DEWS data collection will 
provide data for calendar year 2008. It should be noted that there have 
been gaps in the SIPP series before. For example, to enable the Census 
Bureau to initiate a new panel in February 2001 and process data more 
recently collected, data collected from February to September 2000 were 
never released and data from October 2000 to January 2001 were never 
collected. Based on those experiences and consultations with some of 
our Federal agency partners, we believe that a similar data gap between 
SIPP and DEWS should not hamper program evaluation or modeling.

                    IMPROVED MEASUREMENT OF SERVICES

    Question. Please provide the complete funding requirements for the 
``Improved Measurement of Services'' including any out-year 
requirements.
    Answer. The Improved Measurement of Services initiative request for 
fiscal year 2008 is $8,118,000. We expect that a similar amount will be 
needed in the out-years, with adjustments for inflationary cost 
increases and other technical adjustments to base, providing for the 
continued quarterly and annual collection and dissemination of service 
industry data.

                        ITA EXPORT FEE INCREASE

    Question. The budget request proposes to double a fee that the 
Subcommittee has rejected the last two years. Will the fee increase be 
a disincentive for exports at the very time we are trying to encourage 
them?
    Please provide a schedule of current fees vs. those proposed under 
the request.
    Answer. In 2006, ITA was involved with over 12,000 export success 
stories. Overall, exports from the United States are up over 2005. In 
fiscal year 2006, ITA assumed that it would collect $8 million in fees. 
ITA actually collected $7.9 million. We believe these fees could be 
managed better to free-up funding for ITA activities that provide the 
greatest benefit to the nation as a whole. ITA believes its services 
are important for potential exporters and will continue to contribute 
to the export boom.
    ITA is working toward developing a fee setting strategy that will 
recover a slightly larger share of costs from companies that can afford 
it, while still encouraging SMEs to participate in the export market. 
The proposed fees will cover approximately 5 percent of the costs of 
the U.S. and Foreign Commercial Service (an increase from 3 percent in 
fiscal year 2007), and only about 3 percent of ITA's overall costs. The 
fees are targeted at services that provide benefits for specific firms, 
such as International Partner Searches, and Gold Key services. These 
services are most similar to those provided by private consulting 
firms.
    In addition, ITA is developing novel partnerships with companies 
such as FED-Ex and E-BAY, to name a couple, to expand the number of 
SMEs that export and those that export to more the one country. For 
example, FedEx is helping ITA to identify and inform U.S. exporters to 
Mexico about new business opportunities in Central America, which have 
come about as a result of recent Free Trade Agreements that the United 
States has signed with these countries. These private sector partners 
join ITA's traditional interagency partners, such as SBA, the Export-
Import Bank, the Overseas Private Investment Corporation, and state and 
local governments in an effort to educate, inform and assist companies. 
These partnerships help achieve the government's and the private 
partners' goals of expanding foreign sales.
    Below is a schedule of current fees. There are no proposed fees at 
this time.

------------------------------------------------------------------------
                                                    Current Fees
------------------------------------------------------------------------
                 Products

Business Facilitation Service.............  Variable depending on
                                             company requirements
BuyUSA.gov Business Service Provider......  International $150-$500
                                            Domestic $250
                                            Free for U.S. Companies
Commercial News USA.......................  Revenue comes from
                                             advertising
Customized Market Research................  Variable depending on
                                             company requirements
Featured US Exporters (FUSE)..............  $25-50
Gold Key--1st day.........................  $685-$770 \1\
Gold Key--each additional day.............  $320-$385 \1\
International Company Profile (ICP).......  $520-$810 \1\
International Partner Search (IPS)........  $500-$790 \1\
Platinum Key Service......................  Variable depending on
                                             company requirements

                  Events

Catalog Event/PLC.........................  $450 and $650
Certified Trade Mission...................  Variable depending on
                                             company requirements
International Buyer Program...............  $8,000
Seminar-Webinar...........................  Variable
Trade Fair................................  Variable depending on trade
                                             fair expenses and company
                                             requirements
Trade Mission.............................  Variable depending on
                                             company requirements
Trade Promotion Event.....................  Variable depending on
                                             company requirements
Single Company Promotion..................  Variable depending on
                                             company requirements
Certified Trade Fairs.....................  $1,750
------------------------------------------------------------------------
\1\ The range of user fees charged for certain services reflects
  variations in the cost of doing business in different markets.

                      ITA CHINESE SUBSIDY PROGRAMS

    Question. Please provide a funding summary of efforts to identify 
and analyze Chinese subsidy programs.
    Answer. While ITA records maintain cost information for overall 
China enforcement efforts, it does not record separately its activities 
with respect to China subsidies for financial purposes. We can 
reasonably estimate that, between efforts in Washington, DC, and ITA's 
foreign offices in Asia, particularly Beijing, ITA devoted well over 
$1,000,000 to research, monitoring, consultation and advocacy regarding 
China subsidy issues during fiscal year 2006. During fiscal year 2007, 
we estimate that this amount could reach somewhere in the range of 
$1,500,000.

                     ITA ASSISTANT SECRETARY STATUS

    Question. What is the status of the A/S for Manufacturing vacancy?
    Answer. We are working closely with Personnel at the White House on 
this appointment and are making good progress. We are committed to 
filling this position as quickly as possible.

                  FUNDING FOR NOAA EDUCATION PROGRAMS

    Question. Secretary Gutierrez, a few weeks ago you invited me to 
attend an event at a local Maryland high school to visit with students 
participating in the FIRST Robotics competition. From the interest you 
have shown in this program I know that you are keenly aware of the fact 
that we need to engage our young people I math and science programs.
    What is the rationale for cutting the NOAA education programs by 50 
percent?
    Does the Department of Commerce believe in the NOAA education 
mission?
    Answer. NOAA's fiscal year 2008 budget maintains NOAA's education 
spending at the fiscal year 2007 President's request level. The 
Department of Commerce strongly believes in NOAA's educational mission 
and we believe that NOAA can make considerable progress toward its goal 
of developing an ocean literate population at the requested funding 
level. In order to produce a society well versed in ocean-related 
issues, it is vital that NOAA establishes a strong foundation of 
knowledgeable students who will later move into the general population. 
The programs included in the fiscal year 2008 budget (see Table 1) all 
contribute to this goal.

  TABLE 1.--EDUCATION PROGRAMS INCLUDED IN PRESIDENT'S FISCAL YEAR 2008
                             BUDGET REQUEST
------------------------------------------------------------------------
                                                            Fiscal Year
                                                               2008
                         Program                            President's
                                                              Request
------------------------------------------------------------------------
Educational Partnership Program.........................     $14,261,000
Hollings Scholarship....................................       3,700,000
JASON...................................................       1,000,000
Nancy Foster Scholarship................................         400,000
                                                         ---------------
      Total.............................................      19,361,000
------------------------------------------------------------------------

    Examples of each of these successful NOAA programs are highlighted 
below:
    The JASON Project uses multimedia tools and cutting-edge technology 
to engage middle-school students in scientific research and expeditions 
led by leading scientists. Dr. Bob Ballard has transmitted his 
discoveries to millions of students in classrooms around the country, 
via satellite and internet broadcasts. The JASON Project also provides 
on-site and on-line teacher professional development supported by the 
National Science Teachers Association and the U.S. Department of 
Education's Star Schools Program.
    NOAA's Educational Partnership Program began in 2001 and provides 
financial assistance, on a competitive basis, to Minority Serving 
Institutions (MSIs) to increase programs and opportunities for students 
to be trained and graduate in sciences that directly support NOAA's 
mission. The program consists of four core components: Cooperative 
Science Centers, Environmental Entrepreneurship Program, Graduate 
Sciences Program and the Undergraduate Scholarship Program.
  --Five Cooperative Science Centers have been designated at MSIs with 
        graduate degree programs in NOAA-related sciences. To date, 
        NOAA has provided formal training and research opportunities 
        for 2,050 students at these centers. External teams of 
        scientists have reviewed the centers to determine the 
        effectiveness of student recruitment, training and graduation. 
        Program statistics have consistently exceeded performance 
        measures with over 383 students graduating with bachelors and 
        advanced degrees in NOAA-related sciences. Of those students, 
        33 have received Ph.D.'s and 105 students have been awarded 
        Masters Degrees. Another 94 Ph.D. candidates and 126 Masters 
        candidates are expected to receive advanced degrees within the 
        next three to five years.
  --The Environmental Entrepreneurship Program provides financial 
        assistance to increase the number of students at MSIs who are 
        proficient in both environmental studies and business 
        enterprises. The Program facilitates linkages between MSIs, 
        NOAA and the private sector.
  --The Undergraduate Scholarship Program has trained 84 students 
        majoring in NOAA-related sciences at MSIs. Of these, 69 
        students have completed the program and 15 are finishing their 
        second year of training. Twenty-eight of the students that have 
        completed the program have been accepted into graduate 
        programs.
  --The Graduate Sciences Program offers training and work experience 
        to exceptional female and minority students pursuing advanced 
        degrees in the environmental sciences. After completing the 
        program, participants commit to employment at NOAA based upon 
        the length of their training. To date, the Graduate Sciences 
        program has hired 32 graduates as NOAA scientists.
    The Dr. Nancy Foster Scholarship Program, named in honor of the 
late distinguished NOAA scientist and Assistant Administrator, 
recognizes outstanding scholarship and encourages independent graduate 
level research--particularly by female and minority students--in 
oceanography, marine biology and maritime archaeology. Congress 
authorized the Program, as described in the National Marine Sanctuaries 
Amendments Act of 2000, soon after Dr. Foster's death in June 2000, as 
a means of honoring her life's work and contribution to the Nation. To 
date, 22 students have received scholarships, 18 of whom are women.
    The Ernest F. Hollings Scholars Program recruits and prepares 
students for public service careers with NOAA and other natural 
resource and science agencies as well as for careers as teachers and 
educators in oceanic and atmospheric science. Last year, the first 
Hollings Scholars successfully participated in summer internships with 
NOAA labs and facilities. The Hollings Scholarship Program currently 
funds more than 100 students in ocean and atmospheric sciences, math, 
computer science, social science and education.
    As indicated above, the Department supports education programs at 
NOAA and is requesting over $19 million in fiscal year 2008 for 
education programs and activities.

                    UNITED STATES PTO PATENT BACKLOG

    Question. What is the current backlog of patents?
    Answer. The backlog (cases that have not been examined) of patent 
applications at the beginning of fiscal year 2007 was 701,000. As noted 
in the 2007-2012 Strategic Plan, the rate at which patent applications 
are being filed has increased beyond the rate at which the USPTO is 
presently able to examine them. It is possible that this backlog could 
approach 1.4 million by 2012.
    We are currently employing the following strategies to address 
backlogs:
  --Enhance recruitment to hire 1,200 new patent examiners a year for 
        an extended period of time, including examiners with degrees 
        and/or experience in areas of emerging technologies.
  --Expand telework and explore establishing regional USPTO office.
  --Competitively source PCT Chapter 1 applications, freeing examiners 
        to focus on national cases.
  --Explore examination reform through the rule making process to 
        create better-focused examination and enhance information 
        exchange between applicant and examiner.

               LONG-TERM METRIC/GOAL FOR PATENT PENDENCY

    Question. What is the agency's long-term metric/goal for patent 
pendency?
    Answer. Our long-term, strategic goal for patent pendency \1\ is 28 
months to final disposition, by 2012.
---------------------------------------------------------------------------
    \1\ Patent pendency is the amount of time a patent application is 
waiting (in queue) before a patent is issued or the application is 
abandoned.
---------------------------------------------------------------------------
    Metrics include reduction of the initial waiting time for patent 
applications in our most backlogged Technology Centers and successful 
implementation of various initiatives that ensure goal achievement by 
2012.
    The USPTO is both implementing initiatives and exploring strategies 
that will reduce the backlog of unexamined patent applications and 
improve the timeliness of a patent examination.
    An important set of options--important because they would have a 
significant, long-lasting positive effect on timeliness of patent 
examination--might require legislation. Therefore, we are grateful to 
the Subcommittee for its interest in the topic of patent pendency, as 
we believe faster processing of patent applications is crucial to 
America's Competitiveness.

                             RETENTION RATE

    Question. What is the current staff retention rate?
    Answer. The USPTO typically reports an attrition rate rather than a 
retention rate. In 2006 the USPTO's examining staff had an attrition 
rate of 10.6 percent. In contrast, the U.S. Department of Labor, Bureau 
of Labor Statistics reported a total government separation rate of 16.9 
percent for 2006.

                      INCREASE EXAMINER RETENTION

    Question. Beyond recruitment and retention bonuses, how is PTO 
working to increase examiner retention?
    Answer. In addition to providing eligible examiners a market-driven 
recruitment bonus for up to four years with a condition of employment 
agreement, the USPTO has identified a number of initiatives that would 
improve retention:
  --The Office is forming teams of hiring coordinators with specialized 
        technology-specific and human resources and recruiting skills 
        to attract candidates for hard to fill examining positions, 
        particularly those most likely to stay at the USPTO.
  --Another way of attracting candidates who most likely would remain 
        at the USPTO is to use personal interaction at college and 
        regional job fairs to educate candidates about the exact nature 
        of the job.
  --The on-going Patent Hoteling Program (PHP), which was launched in 
        2006 with 500 examiners, will be expanded by 500 examiners a 
        year through fiscal year 2010.
      --PH is a voluntary program whereby participants can remotely 
            access USPTO automated system, on-line resources, and other 
            information from an alternative worksite. They also can 
            remotely reserve office space one day per week in a ``hotel 
            office suite'' located at USPTO headquarters to conduct in-
            person business activities.
  --On a more long-term basis, we hope to create, with Congressional 
        support and legislative authority, a workplace that can be 
        anywhere. In this regard, three possibilities are being 
        investigated by Patents: (1) expanding the successful Patents 
        Hoteling Program (PHP) in such a way as to create a more 
        nationwide workforce; (2) creating remote or regional offices, 
        or brick and mortar presences, in different locations across 
        the country selected upon a variety of factors such as where 
        pockets of technology may be concentrated or there is increased 
        access to a suitable workforce for hire; and (3) a storefront 
        approach which in a sense is a hybrid of the possibilities (1) 
        and (2). The storefront approach would potentially provide a 
        small-scale brick and mortar presence, or node, which could 
        then act as a support center for employees participating in an 
        expanded hoteling program.
  --The USPTO plans a multi-pronged approach to provide enhanced 
        training programs for patent employees--both new employees and 
        mid-career and senior examiners.
  --The Office also plans to develop alternatives to the current 
        performance and bonus systems, for example, the Patent Flat 
        Goal pilot program, which is designed to improve flexibility as 
        to when and where examiners perform their work.
  --Patent examiners received a 7 percent special pay rate increase in 
        November 2006.
  --In 2006, USPTO management submitted proposals to patent union 
        representatives for a new collective bargaining agreement that 
        would replace a previous agreement negotiated in 1986. 
        Proposals include enhanced patent examining monetary awards and 
        production activities, as well as a stand-alone quality award.
       timeline for achieving strategic plan goals and objectives
    Question. In December, PTO submitted its latest 5-year strategic 
plan to OMB. The plan lists four goals: Optimizing Patent Quality and 
Timeliness; Optimizing Trademark Quality and Timeliness; Improving 
Intellectual Property Protection; and Achieve Organizational 
Excellence.
    What is your timeline for achieving the goals and objectives of the 
plan?
    Answer. The 2007-2012 Strategic Plan proposes consideration of 
substantial changes for patents, trademarks, intellectual policy and 
management that will better position the USPTO and its users for future 
growth and complexity. The Plan also documents our belief that 
partnership with stakeholders is crucial to defining, in a 
collaborative manner, solutions that will benefit the entire IP system.
    The Strategic Plan specifically identifies and describes more than 
60 initiatives for achieving the goals and objectives in the Strategic 
Plan. Some of these initiatives already are under way or have specific 
timeframes, while others commit us to continue researching and 
exploring options to solve specific problems.
  --For example, one alternative that is under way is the Patent Flat 
        Goal pilot program. This pilot is designed to improve 
        flexibility as to when and where examiners perform their work.
  --Another example is the initiative to competitively source Patent 
        Cooperation Treaty (PCT) Chapter I applications. As an 
        International Searching Authority under the PCT, the USPTO is 
        obligated to perform this search function. By competitively 
        sourcing this function, the USPTO will redirect patent examiner 
        resources back to the examination of U.S. applications. Two 
        contracts were awarded last fiscal year to initiate this 
        program. In addition, the USPTO entered into agreements with IP 
        Australia to perform search and examination work on PCT 
        applications. Initially, the USPTO expects to competitively 
        source up to 15,000 Chapter I applications.
  --In addition, we have identified a broad objective to explore the 
        development of alternative approaches to patent examination in 
        collaboration with stakeholders.
  --The USPTO is planning a pilot program for peer review of patent 
        applications. Up to 250 applicants whose applications are in 
        the computer architecture, software and information security 
        technologies will be able to voluntarily place their 
        applications on a non-USPTO web site for public review by a 
        peer group of patent users, attorneys and academics. This peer 
        group will determine and submit to the USPTO what they consider 
        the best available and relevant prior art. The pilot will test 
        whether this peer review can effectively identify prior art 
        that might not otherwise be found by our examiners during the 
        typical examination process. We will also make an evaluation as 
        to whether this process results in measurable examination 
        timesaving and quality improvement.
  --We also are developing a plan to reach out to the entire patent 
        community to ensure their ideas are adequately represented and 
        considered. The Patent Public Advisory Committee (PPAC) would 
        assist in this process by gathering information and making 
        recommendations to improve the patent system to the USPTO. A 
        proposed process has been developed for gathering input and 
        proposals for improving the patent examination system by 
        bringing together the diverse external patent community to 
        identify patent examination products or services that may 
        result in the more efficient use of examination resources. The 
        process would strive to identify a wide range of ideas from 
        those needing statutory changes to those that can be 
        implemented immediately under our existing authorities.
  --The USPTO is developing and reviewing a variety of innovative 
        patent processing initiatives including a new offering for the 
        public called ``Accelerated Examination.'' Under this program, 
        which began August 26, 2006, for those applicants who need or 
        want quick turn around, the USPTO offers a complete examination 
        within 12 months. In exchange for this quick turn around, 
        applicants must file a complete application, agree to 
        interviews and accelerated response periods, must file and 
        prosecute their application electronically and must provide 
        more information about the application to the USPTO in the form 
        of an examination support document. The first application to be 
        completed under this program was filed on September 29, 2006 
        and issued on March 13, 2007 (less than 6 months from date of 
        filing).
  --We believe that to effectively address and control pendency and 
        reduce backlog, the USPTO needs to receive more and better 
        focused information from applicants themselves and from the 
        public at large. The USPTO has proposed and will propose 
        regulations and administrative changes governing submission of 
        patent applications that will enable our examiners to make more 
        efficient and informed determinations.
  --First, we have proposed limiting the number of continuing 
        applications and continued examination requests to provide an 
        incentive for applicants to focus their initial patent 
        applications on their inventive contributions.
  --Second, we have proposed to limit the number of claims that are 
        initially examined in order to provide an incentive to focus 
        the examination process.
  --The first and second proposals have optional procedures which 
        continue to provide an applicant flexibility where the 
        applicant may need additional continuing applications or 
        initially examined claims upon a showing of that need or by 
        shouldering additional responsibilities. In parallel we have 
        proposed revisions to our information disclosure requirements 
        to focus our limited examination recourses on prior art that is 
        most relevant to the examination process. Additionally we are 
        considering a new practice change to require applicants to 
        conduct a pre-examination search and provide an explanation as 
        to why they believe that they are entitled to a patent in view 
        of the information discovered during the pre-examination 
        search.
  --Our hope is to achieve examination reform that creates better-
        focused examination and enhances information exchange between 
        applicant and examiner. We look forward to working with the 
        public and Congress to develop an enhanced examination system 
        that effectively and fairly balances the needs of the Office 
        and the interests of the patent applicants, interested third 
        parties and the general public.
  --While the USPTO currently has a procedure for submission of prior 
        art after publication, which allows submission by third parties 
        within two months of publication, the procedure does not allow 
        explanations or other information about the patents or 
        publications absent express written consent of the applicant. 
        We encourage consideration of a change to the statute governing 
        this procedure to allow filing of relevant information by third 
        parties after pre-grant publication. Such a change would allow 
        those interested parties to explain why the prior art would 
        have a negative impact on the patentability of the claims. This 
        process, which would provide the examiner with information he 
        or she might not otherwise obtain, should result in a more 
        efficient examination process and a higher quality, more 
        reliable patent. Putting the best and most complete information 
        before our examiners, as early in the examination process as 
        possible, is beneficial to the legitimate interests of all 
        interested parties and stakeholders.
  --We look forward to working with Congress to develop a submission 
        procedure that effectively and fairly balances the interests of 
        the patent applicant, interested third parties and the general 
        public.
  --We are also looking to provide assistance to the open source 
        community in their development of an open source database to 
        provide examiners with potential prior art.
  --Trademarks expects to achieve 3-month first action pendency by 2008 
        and maintain it thereafter. Trademarks also expects to reduce 
        disposal pendency to 16 months by 2009 and maintain it. Our 
        challenge will be to maintain performance goals given the 
        uncertainties of filings and funding. The Strategic Plan 
        addresses improvements in the criteria used to define quality 
        as well as expanding quality assessments throughout the office.
    In conclusion, we consider the Strategic Plan to be a work in 
progress, and we will refine and update it regularly to adjust to 
changing conditions and to incorporate the best thinking of the 
intellectual property community and beyond. Our budget and performance 
plan that is submitted to the Congress each year will document key 
measurements and yearly milestones to justify full funding for the 
Office in achieving our strategic goals.

                       PATENT EXAMINATION QUALITY

    Question. How does the PTO measure patent examination quality?
    Answer. Quality begins with the fundamentals--a high-performing 
workforce that is properly trained and given the tools and information 
technology systems needed to accomplish the job. Furthermore, the USPTO 
monitors quality quite precisely by measuring:
  --In-process compliance with published statutory, regulatory, and 
        practice standards;
  --End-of-process compliance with these same standards.
    These parameters are measured by performing a review of 
statistically significant random samplings of examiners' work products.
    Since we put additional quality initiatives in place in 2003, our 
compliance rates have increased.
    In fiscal year 2006, we achieved a 96.5 percent patent allowance 
compliance \2\ rate the highest in 25 years, while receiving a 
historically high number of patent applications (419,760).
---------------------------------------------------------------------------
    \2\ Compliance rate is the percentage of applications allowed by 
patent examiners with no errors after being reviewed by the Office of 
Patent Quality Assurance.
---------------------------------------------------------------------------
              WORK WITH USER COMMUNITY TO EVALUATE QUALITY

    Question. Is the PTO working with the user community to evaluate 
whether the right measures are being used to evaluate quality?
    Answer. As part of the 2007-2012 Strategic Plan, we will continue 
to work with all interested parties to find new ways to improve and 
measure quality even more effectively.
    The USPTO plans to keep developing appropriate measures of patent 
quality and related performance targets given the current patent 
examination system. We will engage the patent community about 
developing objective review criteria that can be applied in all review 
processes. By doing this, we will create more consistent and credible 
measurements of quality.

      TECHNOLOGY ADMINISTRATION STAFFING AND UNOBLIGATED BALANCES

    Question. Please provide the current on-board staffing levels for 
TA.
    Answer. As of March 14, 2007, the on-board staffing levels for TA 
are 7 consisting of 6 full-time permanent employees and 1 excepted 
service employee.
    Question. Please provide the fiscal year 2006 end-of-year 
unobligated balance for TA.
    Answer. The fiscal year 2006 end-of-year unobligated balance for TA 
was $443,000.

                           MEP FUNDING LEVELS

    Question. Please provide the analysis behind the $46.3 million 
funding level request for the MEP?
    Answer. We believe that the proposed budget would achieve these 
specific Federal objectives:
  --Ensure that MEP continues to develop and provide all the centers 
        up-to-date skills and techniques;
  --Ensure standards of quality are met and maintained at every center 
        receiving Federal funding; and
  --Ensure that centers focus on offering services to the small 
        manufacturers in their areas, rather than large firms.
    In a tight budget environment, we need to ensure that we are 
funding the highest priority programs. The President's request for the 
National Institute of Standards and Technology (NIST) will ensure that 
funding goes to basic research--especially in the areas of physical 
sciences, engineering, computing, and nanotechnology--that is vital to 
the Nation's innovation enterprise and manufacturing. NIST meets these 
priorities by focusing on high impact research and investing in the 
capacity of NIST's user facilities and labs. This emphasis is validated 
by the high rate of return to the Nation that the NIST labs already 
have demonstrated. Nineteen retrospective studies of economic impact 
show that, on average, NIST labs generated a benefit-to-cost ratio of 
44:1 to the U.S. economy. The high rate of return results from the fact 
that new measurements or standards benefit entire industries or sectors 
of the economy--as opposed to individual companies. The MEP program is 
just one method by which NIST supports small manufacturers. NIST 
laboratory activities are geared to enhancing the Nation's 
manufacturing base, provide more of a true public good, and are a 
better use of scarce Federal funding.
    The fiscal year 2008 budget request would encourage MEP Centers to 
be more efficient by reducing their overhead costs, including marketing 
costs. Given the benefits reported by MEP clients, centers could also 
ask MEP clients to cover more of the cost of the services through 
increased fees.
    Question. How would NIST implement the program at $46.3 million?
    Answer. The MEP Director will work with the centers to develop 
options that consider each center's customer base, constraints, and 
opportunities. Actions taken by any center or group of centers will be 
assessed against their ability to maintain support to the small 
manufacturers. MEP will work with the centers to examine alternatives 
and optimize the best plan for operating at the $46.3 million level 
that ensures the maximum benefit to small manufacturers.

                     NTIA'S APPROPRIATION LANGUAGE

    Question. Please provide a brief summary of the status of each of 
the mandatory spending programs funded through the Digital Television 
Transition and Public Safety Fund.
    Answer. The Deficit Reduction Act of 2005, Public Law 109-171, 
(Act) provides borrowing authority for four programs that are the 
current focus of the Department of Commerce's National 
Telecommunications and Information Administration (NTIA).
Digital-to-Analog Converter Box Program (Sec. 3005 of the Act)
    Congress directed NTIA to implement and administer a program 
through which eligible U.S. households may obtain up to two coupons of 
$40 each to be applied towards the purchase of digital-to-analog 
television converters. NTIA issued its Final Rule to implement the 
Coupon Program on March 9, 2007. The rule, which is available on NTIA's 
website at www.ntia.doc.gov, describes how consumers may obtain and use 
coupons, outlines retailer participation, and provides detailed 
specifications for manufacturers who wish to produce converters to be 
eligible for purchase with coupons.
    NTIA held a public meeting on March 19 to review the Final Rule in 
detail and to answer any questions. The meeting was the first of 
several periodic meetings NTIA will hold to communicate with the public 
and leverage a wide range of private sector, nonprofit, and 
governmental partners in disseminating information about the Coupon 
Program and the digital transition.
    NTIA intends to enter into a contract for services to administer 
the Coupon Program through a separate program acquisition. On July 31, 
2006, NTIA issued a Request for Information to initiate market research 
for the contract. Interested vendors attended an Industry Day on August 
11, 2006, and submitted information to NTIA on September 15, 2006. NTIA 
released the Request for Proposals (``RFP'') on March 13, 2007. NTIA 
held a Bidder's Conference on March 26, 2007. Offerors will respond to 
this RFP by April 30, 2007. The procurement schedule anticipates that a 
contract will be awarded by August/September 2007 and the period of 
performance will start some months later.
    The voluntary participation of consumer electronics retailers and 
manufacturers is crucial to the success of the Coupon Program. Business 
considerations, however, will ultimately guide the retailers and 
manufacturers in deciding whether they will produce and market 
converter boxes through the Coupon Program. NTIA, through its rules and 
administration of the program, is making every effort to encourage 
participation and support from these industries.
    NTIA has taken suggestions from manufacturers and broadcasters to 
establish technical specifications for converters that will ensure the 
availability of low-cost, reliable converters based on today's state of 
the art technology. NTIA set minimum specifications and features for 
converters that are ``required'' but also identified features and 
specifications that are ``permitted.'' Pursuant to the statute, NTIA's 
Final Rule also provides examples of ``disqualifying'' features such as 
built-in DVD capability.
    NTIA has addressed retailers' concerns about a range of topics such 
as the timing of payments to reimburse them for coupon redemption, 
requirements for stocking and managing converter inventory, training 
requirements, and promotion and marketing of converters. NTIA's 
retailer certification program will minimize incidents of waste, fraud 
and abuse. Retailers will be part of the Federal Government's Central 
Contractor Registry (www.ccr.gov) and will agree to have electronic 
systems in place to track coupon redemption activity. NTIA will provide 
training materials for retailers and maintain lists of certified 
retailers.
    NTIA's consumer education efforts will succeed only with the help 
of the broadcasters, consumer electronics manufacturers and retailers, 
and several key consumer and public outreach organizations. NTIA is a 
key participant in the Digital Television Transition Coalition 
(www.dtvtransition.org) which was recently launched to ensure that no 
consumer is left without broadcast television due to a lack of 
information about the transition. NTIA will work with intermediary 
groups representing vulnerable populations--rural residents, 
economically disadvantaged, minorities and seniors--to get the word out 
through broadcast stations, newspapers, advertisements, the Internet 
and other outlets that serve these communities. NTIA will also work 
with other agencies, such as Food Stamps, SSI, and Veterans Affairs--as 
well as state, county and local associations--to reach consumers 
directly through mail stuffers alerting households to the Coupon 
Program.
Public Safety Interoperable Communications Grant Program (Sec. 3006 of 
        the Act)
    The Act establishes a $1 billion grant program to assist public 
safety agencies in the acquisition of, deployment of, or training for 
the use of interoperable communications systems that utilize, or enable 
interoperability with communications systems that can utilize, 
reallocated pubic safety spectrum in the 700 MHz band for radio 
communications. NTIA does not view this language to limit the grant 
funds only to 700 MHz systems investments. Rather, NTIA is committed to 
exploring the use of all available technologies to advance overall 
public safety interoperability, as long as those technologies will 
enable first responders to interoperate with the 700 MHz bands in the 
future. The Call Home Act of 2006 directs NTIA, in consultation with 
DHS, to award the grants no later than September 30, 2007.
    On February 16, 2007, the Department of Homeland Security (DHS) 
Office of Grants and Training and NTIA signed a Memorandum of 
Understanding (MOU) through which DHS will provide NTIA with grants 
administrative services to assist in the administration of the Public 
Safety Interoperability Communications (PSIC) Grant Program. The 
program schedule has been developed to meet the statutory requirements 
and deadlines as well as to create an effective PSIC Grant Program.
    The Program will make grants to eligible public safety agencies 
through the State Administrative Agencies in the 56 States and 
Territories. In mid-July 2007, PSIC grant awards will be made and 
jointly announced by NTIA and DHS, and the grant guidance, application 
kits, and eligibility requirements will be released. PSIC funds will be 
allocated using a modified version of the DHS risk methodology.
    Up to five percent of the total grant for each State and Territory 
will be disbursed to ensure that their Statewide Interoperable 
Communications Plans (Statewide Plans) include consideration of PSIC 
requirements. No later than November 2007, States and Territories will 
submit their final Statewide Plans and an investment justification 
outlining how the PSIC funds will be used to meet the PSIC requirements 
consistent with their Statewide Plans. Once the Statewide Plans, 
applications and investment justifications are reviewed and approved, 
the PSIC funds will be disbursed to States and Territories to pass 
through to eligible public safety agencies. Projects must be completed 
by September 30, 2010.
    The PSIC Grant Program will be designed to complement funds that 
have been awarded through other grant programs--such as the Homeland 
Security Grant Program and the Infrastructure Protection Program--that 
include interoperable communications funds. The program guidance and 
application process will emphasize leveraging grants, contracts or 
state/local budgets to build and sustain intrastate and interstate 
regional capabilities and identified needs.
New York City 911 Digital Transition (Sec. 3007of the Act)
    The Act directs NTIA to reimburse the Metropolitan Television 
Alliance (MTVA) up to $30 million for costs associated with the digital 
television transition. MTVA, a consortium of New York City area 
television stations, formed when the television stations' digital and 
analog transmission facilities were destroyed in the collapse of the 
North Tower of the World Trade Center. This funding will assist MTVA in 
the design and deployment of a temporary digital television broadcast 
system to ensure that, until a permanent facility atop the Freedom 
Tower is constructed, the stations can provide digital television 
service to the New York City area.
    NTIA has been working with MTVA since June 2006 in the preparation 
of an application for this funding and to ensure that MTVA will be able 
to comply with federal funding requirements. The application process 
has been completed and the grant was announced on March 21 2007. NTIA 
is awarding $7,855,000 for fiscal year 2007 to MTVA for the first phase 
of the project that will design and test the technology for a 
distributed transmission system at three of five sites in the New York 
City metropolitan area. Based on the results of these test sites, MTVA 
anticipates requesting $21,645,000 for reimbursement in fiscal year 
2008 to complete the full 20-site system in the New York City 
metropolitan area. This will ensure operation prior to the digital 
television transition deadline of February 17, 2009.
Low-Power Television and Translator Digital-to-Analog Conversion (Sec. 
        3008 of the Act)
    The Act establishes a $10 million program to compensate each low-
power television station for the purchase of digital-to-analog 
conversion equipment to enable the conversion of an incoming digital 
signal from its corresponding full-power television station to analog 
format for transmission on the low-power station's analog channel. 
Funds are to be made available to these organizations in fiscal year 
2008. Approximately 10,000 facilities are eligible for this support.
    NTIA plans to work closely with the low-power television and 
translator communities to ensure that this $10 million program 
effectively assists these communities as the February 2009 deadline 
approaches. NTIA is currently reviewing technical issues necessary to 
draft program guidance and application guidelines, which it expects to 
issue later this year.
                                 ______
                                 
            Questions Submitted by Senator Patrick J. Leahy

                ITA WESTERN HEMISPHERE TRAVEL INITIATIVE

    Question. I have serious reservations with the manner in which the 
Departments of Homeland Security (DHS) and State (State) have pushed 
forward with implementation of the Western Hemisphere Travel Initiative 
(WHTI) before the necessary technology installation, infrastructure 
upgrades, and training takes place at our border stations. If these 
critical features of the deployment are not in place, I am afraid we 
will see severe delays at our border and law-abiding citizens from the 
United States, Canada, and Mexico will have great difficulty moving 
between our countries. Most importantly, a hasty implementation without 
assurances that the technology to be used is truly effective will 
result in a less secure border.
    Since Canada is such an important trading partner and friendly 
neighbor to the United States, it clearly is in the best interest of 
both of our countries to keep those relations as positive and 
productive as possible. To that end, we all know that there is a 
dynamic relationship between commerce and security, and we constantly 
need to balance the two.
    Has your agency conducted or been asked to conduct any economic 
impact analysis for how WHTI is going to affect communities along our 
Northern Border?
    If not, could you please provide for the Subcommittee your best 
estimate as to the economic impact that the WHTI would have on (a) the 
states along the Northern Border, and (b) the U.S. economy?
    Answer. While Commerce has not conducted, nor has it been asked to 
conduct, an analysis of WHTI's regional or national economic impact, 
the following data is provided for consideration.
    Currently, Canadian and Mexican travel to the USA has a dramatic 
impact on the country. In 2006, Canada became the second largest market 
for U.S. travel exports ($13.5 billion). Canada is still the largest 
generator of arrivals to the United States, with 16 million visitors 
staying one night or longer.
    Mexico is the fourth largest travel export market for the United 
States ($9.2 billion), and the second largest visitor market for the 
USA, setting records for arrivals and travel exports in 2004-2006. 
Since 2000, Canada and Mexico have been the only countries to post 
increases in arrivals among the top six arrival markets for the 
country.
    Commerce is working with the Departments of Homeland Security and 
State and with the industry to try to minimize any negative impact WHTI 
may have in travel and tourism. For example, discussions have taken 
place on developing a pass card between the USA and Canada; the 
passport requirement was changed to exempt children under 16; and a 
communication effort was implemented by industry and DHS to inform 
travelers of the WHTI changes.
    As the U.S. Government moves into the second wave of implementation 
(land border and cruise), Commerce will work closely with the 
Department of Homeland Security to ensure clear communications with 
potential travelers. Travel flows between the countries will continue 
to be reported on a monthly basis by Commerce's Office of Travel and 
Tourism Industries.

                  WESTERN HEMISPHERE TRAVEL INITIATIVE

    Question. I was troubled to learn that the DHS may have prematurely 
endorsed one PASS Card technology over another without first securing 
the required National Institute of Standards and Technology (NIST) 
certification of the card architecture and then notifying Congress. The 
law clearly states that the NIST must certify, prior to implementation, 
``that the Departments of Homeland Security and State have selected a 
card architecture that meets or exceeds International Organization for 
Standardization security standards and meets or exceeds best available 
practices for protection of personal identification documents.'' By 
unilaterally moving forward with vicinity-read technology, the DHS 
would be choosing an insecure technology that has not been proven 
effective at ensuring privacy protection, and it would be necessitating 
the installation of new technological infrastructure at every U.S. land 
and sea port of entry.
    Has NIST begun its analysis into the WHTI-related technology 
issues, as called for in the fiscal year 2007 Homeland Security 
Appropriations Bill?
    Answer. After passage of the statute (Public Law 109-295), NIST 
immediately began to work with the Departments of State and Homeland 
Security in order to identify appropriate standards and best available 
practices that relate to the security aspects of the card architecture, 
for the technology chosen jointly by State and DHS. NIST has engaged in 
extensive discussions with the technical staff of those departments, 
and has provided a set of requirements for certifying the security of 
the PASS Card architecture.
    Question. If so, when do you estimate the NIST will complete its 
analysis?
    Answer. NIST has advised State and DHS that certification would be 
done within four weeks of receiving the draft Request for Proposal 
(RFP) from State, and prior to the release of the final RFP. This is to 
ensure that the RFP accurately reflects the set of requirements 
identified by NIST so that the selected card architecture meets or 
exceeds International Organization for Standardization (ISO) security 
standards and meets or exceeds best available practices for protection 
of personal identification documents. This commitment presumes that 
State and DHS continue to work with NIST in their drafting of the RFP. 
That has been the case to date.
    Question. Once complete, how does your agency plan to release and 
certify the results?
    Answer. Certification by NIST would be by a letter from the NIST 
Director to the appropriate individual(s) at State and/or DHS noting 
that the test protocols in the RFP verify that the card architecture 
meets or exceeds ISO security standards and meets or exceeds best 
available practices for protection of personal identification documents 
for the chosen technology.
    Question. Do you see a difference between NIST certifying the 
procurement of the technology and certifying the feasibility of the 
technology? If so, please explain.
    Answer. NIST will be neither certifying the procurement of the 
technology nor the feasibility of the technology. Our certification 
will be focused on the specification of the statute: that NIST certify 
that DHS and State ``have selected a card architecture that meets of 
exceeds International Organization for Standardization (ISO) security 
standards and meets or exceeds best available practices for protection 
of personal identification documents.'' We will be conducting this 
certification via ensuring that the set of requirements identified by 
NIST in compliance with the statute are embodied in the Request for 
Proposals that define the compliance requirements for industry.
    Question. Have you or employees in your agency been under any 
pressure to reach a preordained conclusion or hurried certification in 
this matter?
    Answer. NIST has not been under any pressure to reach a pre-
ordained conclusion or hurried certification.

                              MEP PROGRAM

    Question. I understand that the National Institute of Standards and 
Technology (NIST) recently announced its intention to re-compete the 
MEP system beginning in April 2007, and then quickly drew back that 
proposal. I strongly disagree with any re-competition proposal because 
of the disruption it would cause to the national MEP infrastructure and 
the good work accomplished daily by the Vermont Manufacturing Extension 
Center. On top of that, the President's request of $46.3 million is not 
an appropriate level of funding for this valuable program dedicated to 
serving our nation's smaller manufacturers.
    For the past six years, a bipartisan majority of the Congress has 
fully supported the MEP program despite the annual ritual of deep cuts 
proposed by the President. This support stems from the successful 
performance demonstrated by centers nationwide in ensuring the 
sustainability of our domestic small manufacturing industry and its 
high-quality jobs.
    With the fiscal year 2008 congressional budget and appropriations 
processes just beginning, I believe it would be inappropriate for the 
Bush administration to disrupt, re-compete, or restructure the MEP 
program based on its own proposed budget proposal for the coming year. 
On top of that, any such actions during fiscal year 2007 would be 
inconsistent with Congress' intention for those funds.
    In light of the recent announcement by the NIST that it will not 
re-compete the program in April, I ask the following questions of 
Secretary Gutierrez and Director Jeffrey:
    What factors, considerations, or conversations made you change your 
mind in the eleven days that passed between your February 15 re-
competition announcement and your February 26 announcement that the re-
competition would cease?
    Answer. The proposed re-competition was intended as a contingency 
to ensure the strongest network possible regardless of final 
appropriations. To conduct such a competition would take approximately 
5-6 months, which is why we initially looked towards late spring of 
2007 to initiate the process. This would provide us the necessary data 
to make informed decisions at the beginning of fiscal year 2008--once 
the fiscal year 2008 enacted budget was known. Based upon inputs from 
the MEP Center Directors, Congressional Members and Staff, and others 
it became clear that the process of the re-competition would be 
disruptive to current Center operations. We, therefore, decided not to 
hold this re-competition.
    Question. This is not the first time you have tried to re-compete 
the MEP program, as you attempted to mount a re-competition less than 
three years ago.
    Now that you have changed course again, can you assure us that you 
will not attempt a re-competition for a third time in 2008? If you 
cannot make this affirmation, under what circumstances, and with what 
policy objectives, can you envision proceeding down the re-competition 
path again?
    Answer. We cannot make that definitive affirmation. The goal of MEP 
is to support the Nation's small manufacturers. The MEP program will 
therefore examine all possible alternatives to most effectively achieve 
that goal given any enacted budget level.
    Question. In your written testimony, you state, ``The reduction of 
Federal funds to the local centers may have to be compensated through a 
combination of increased fees derived from the benefits accrued by 
individual companies and cost-savings in the operations of the 
centers.''
    Please explain what data or reports you have to support that 
increased fees from the benefits accrued by companies and cost savings 
in the operation of the centers are possible.
    Answer. The annual reported benefits by manufacturing clients of 
the MEP Centers conducted through an independent survey demonstrates a 
significant level of cost savings and efficiency improvements for the 
MEP clients. For example, the latest MEP client survey results 
(released January 2007 and reflecting fiscal year 2005 benefits) 
demonstrate that MEP helped 16,448 clients create and retain 53,000 
jobs; increase and retain sales of nearly $6.3 billion; and generated 
cost savings of just over $1.3 billion (both recurring and non-
recurring). These impacts resulting in reduced costs and potentially 
increased profits for the client could be used to support increased 
fees for future services. With increased revenues streams from client 
fees, MEP centers may offset, in whole or in part, the reduction in 
Federal funds.
    Question. I understand that you may be considering the creation of 
regional innovation centers across the country.
    Are you considering this idea? If so, how do you envision the 
constitution of these centers? What role would the MEP play in this 
plan?
    Answer. MEP has no plans to develop regional innovation centers.
    Question. Has the NIST consulted with its state partners to ensure 
that state governments, which provide cost share to these programs, are 
comfortable with their state resources being used across state 
boundaries? If so, please describe the reaction of these state 
partners.
    Answer. MEP has no plans to develop regional innovation centers. 
MEP routinely consults with its state partners on programs priorities 
and alignment with state initiatives.
    Question. The MEP system is an effective, economic development 
program that has generated results, created and retained jobs, and 
leveraged local partnerships. In fiscal year 2005 alone, as a direct 
result of MEP services, clients reported more than $6.25 billion in new 
and retained sales, $1.304 billion in cost savings, $2.248 billion in 
client investment in modernization, 17,453 jobs created, and 35,766 
jobs retained. Thus, it appears that MEP returns far exceed the initial 
investment.
    What is your plan for building on this proven resource to produce 
even greater results for American manufacturers and workers?
    Answer. MEP will build upon our foundation of process improvements 
with clients to develop innovation and growth services that will 
position U.S. manufacturers to meet the increasing demands of the 
global marketplace. A key focus will be providing manufacturers with 
access to the technologies needed for the development of new processes 
and innovative products.
    We also will focus on supplier development since small 
manufacturers are such a crucial part of the supply chain.
    Question. It is no secret that one of the biggest challenges facing 
small American manufacturers is competition from low-cost overseas 
producers. As large Original Equipment Manufacturers seek the best, 
fastest, and cheapest suppliers, they are increasingly looking 
overseas. Even our major defense contractors are purchasing more from 
overseas suppliers, putting our Nation in the position of depending on 
parts from other countries to equip our troops.
    Have you contemplated using the MEP system to strengthen our 
domestic suppliers so that we can preserve jobs in the United States 
and keep more defense suppliers in this country? If not, would you 
consider undertaking that evaluation?
    Answer. MEP has already been working with domestic defense 
suppliers and manufacturers by providing technical assistance and 
training to improve productivity, reduce costs, and develop a highly-
skilled workforce. The small manufacturers that MEP Centers have worked 
with are crucial to a robust defense supply chain. The strengthening of 
this supply chain should help keep critical defense supply and 
manufacturing jobs in the United States.
    Specific projects within the aerospace and ship building industries 
have resulted in connecting small machining companies with Defense 
acquisition opportunities and creating groups of engineering and 
manufacturing companies that work collaboratively to supply critical 
defense equipment and parts.
                                 ______
                                 
                Questions Submitted by Senator Herb Kohl

                         MEP DEFENSE SUPPLIERS

    Question. It is no secret that the biggest challenge facing small 
American manufacturers is competition from low-cost overseas 
manufacturers. As large manufacturers seek the best, fastest, and 
cheapest suppliers, they are increasingly looking overseas. With great 
success, the Wisconsin MEP center has worked with large manufacturers 
like Oshkosh Truck, Harley Davidson and John Deere on a supplier 
development model to keep jobs at home.
    So far, the Wisconsin MEP has trained MEP centers in sixteen 
states, proving there is a strong need for this training nationally.
    Mr. Jeffrey, can you develop a plan based on the Wisconsin model 
for using the MEP system to strengthen our domestic suppliers so that 
we can preserve jobs in the United States and keep more suppliers in 
this country?
    Answer. The Wisconsin MEP Supplier Development model addresses 
several components of the supply chain issues faced by manufacturers. 
The Wisconsin model and the positive impacts realized by manufacturers 
have been presented at several MEP quarterly meetings making more 
centers aware of the approach. Within the past year, fifteen other MEP 
Centers have participated in or employed the model assisting 123 small 
and medium-sized suppliers in states, such as Illinois, Indiana, Iowa, 
Missouri, Minnesota, Ohio, Pennsylvania, and Texas.

                          MEP AND ENERGY COSTS

    Question. When I talk to manufacturers in Wisconsin, they tell me 
the same thing I am sure you are hearing across the Nation: energy 
costs are killing them. In the 2005 Energy bill, I inserted language 
into the Energy bill that directs the Small Business Administration to 
work with you and the MEP program to improve energy efficiency for 
small businesses, including manufacturers.
    Can you update me on what is going on with this program?
    Answer. Building upon existing relationships and contacts with 
other Federal agencies, NIST MEP has offered the assistance of the 
national network to educate manufacturers and better implement energy 
management approaches as described in the Energy Policy Act of 2005.
    NIST MEP has coordinated with the Small Business Administration 
(SBA) Small Business Development Center, the Department of Energy (DOE) 
Industrial Technologies Program and the Environmental Protection Agency 
(EPA) Partnership Programs on the HVAC Maintenance Consumer Education 
Program.
    NIST MEP is also developing a comprehensive energy awareness and 
implementation program with manufacturers that will result in increased 
energy efficiency, reduced business and operations costs, waste 
reduction, and new technology adoption.
    MEP has also teamed with the EPA through the Green Supplier 
Network--a collaborative venture among industry, the EPA, and MEP--to 
help suppliers learn ways to save money, optimize resource use, and 
eliminate waste through on-site technical reviews. This will help 
reduce the negative impact that manufacturing suppliers have on the 
environment.
    DOE's Industrial Assessment Centers (IAC) are sharing their energy 
assessment expertise and tools with MEP, which in turn help small 
manufacturers on the HVAC Maintenance Consumer Education Program and 
other similar energy conservation related efforts.
    MEP and SBA have developed a joint-teaming delivery system that 
provides small businesses with access to Lean implementation tools to 
improve business operations and reduce operating costs contributing to 
energy conservation.
    In a broader context, MEP has taken the lead in organizing the 
Interagency Network of Enterprise Assistance Providers (INEAP)--a 
network of Federal government agencies and programs including EPA, SBA 
and DOE's IACs--that addresses issues that facilitate the success of 
small businesses and smaller manufacturers.
                                 ______
                                 
                Questions Submitted by Senator Jack Reed

               SURVEY OF INCOME AND PROGRAM PARTICIPATION

    Question. The President's budget for last year proposed eliminating 
the Survey of Income and Program Participation (the SIPP) but according 
to many experts it failed to provide an adequate plan for maintaining 
the kind of longitudinal data that CBO and others have used to analyze 
income volatility. What is being done to make sure that we continue to 
collect data that allows us to examine the impact of a wide variety of 
government programs over time?
    Answer. Census is continuously consulting with major SIPP 
stakeholders to assure that the new Dynamics of Well-being System 
(DEWS) will continue to supply the data needed to meet the goals of the 
current SIPP as well as the goals of monitoring a changing economy. The 
overall goal of the DEWS is to reengineer the current SIPP to construct 
a streamlined system that can provide similar information at a reduced 
cost, with improved data quality, improved timeliness, and improved 
data accessibility. While the lag between data collection and release 
decreases over time within a SIPP Panel, at the beginning of a panel 
the lag between data collection and release can be as long as three 
years. By contrast, we anticipate being able to release data from DEWS 
within one year of their collection.
    The system will be able to generate data that can be used, in part, 
as SIPP data have been used, to provide accurate and comprehensive 
information about the income and program participation of individuals 
and households in the United States. The DEWS will provide a nationally 
representative sample that can be used to evaluate the annual and sub-
annual dynamics of income, the movements into and out of government 
transfer programs, the effect on family and social context of 
individuals and households, and the interaction among these items. The 
longitudinal nature of SIPP will be retained in DEWS as a critical 
aspect of its value to many major stakeholders. The three year panel 
length planned for the first Panel of DEWS is the minimum length of 
time major stakeholders, including CBO, felt necessary for their 
longitudinal analysis.
    Question. Is there sufficient funding in the budget to prevent a 
``data gap'' between ending the SIPP and the new Dynamics of Economic 
Well-being System (DEWS)? Will we be able to compare data historically 
between the two surveys?
    Answer. The Budget provides $15.9 million (an increase of $6.7 
million over the 2007 Budget) to continue the development of the new 
Dynamics of Economic Well-being System (DEWS). However, to ensure 
Census can focus its efforts and be successful at fielding the new 
survey in 2009, the Budget does not include funding to continue SIPP 
data collection in 2008. Therefore, there will be a short ``data gap'' 
between ending the SIPP and beginning of DEWS.
    Data collection will end for SIPP in September 2007. We will have 
full data through May, partial data through August, and no data from 
September through December 2007. The first DEWS data collection will 
provide data for calendar year 2008. It should be noted that there have 
been gaps in the SIPP series before. For example to enable the Census 
Bureau to initiate a new panel in February 2001 and process data more 
recently collected, data collected from February to September 2000 were 
never released and data from October 2000 to January 2001 were never 
collected. Based on those experiences and consultations with our 
Federal agency partners, we believe that a similar data gap between 
SIPP and DEWS will not hamper program evaluation or modeling. Unless 
the two surveys are conducted for the same time period, a complete 
evaluation of the impact of any differences in the two surveys on the 
same estimates will not be possible.
    Question. Has Census done any kind of systematic analysis of 
whether we are producing and maintaining the data we need to understand 
the important changes that have been taking place in the economy so 
that we can adequately answer the kinds of questions that keep coming 
up about the extent of income volatility or the impact of outsourcing 
or globalization on the quality of jobs?
    Answer. Census is continuously consulting with major SIPP 
stakeholders to assure that the new Dynamics of Well-being System 
(DEWS) will continue to supply the data needed to meet the goals of the 
current SIPP as well as the goals of monitoring a changing economy. The 
DEWS will provide a nationally representative sample that can be used 
to evaluate the annual and sub-annual dynamics of income, the movements 
into and out of government transfer programs, the effect on family and 
social context of individuals and households, and the interaction among 
these items. Labor force participation is integral to measuring these 
concepts, and in evaluating and modeling the effects of programs on 
these estimates. DEWS will continue to provide the same general labor 
force information historically provided by SIPP. As far as we know, 
however, SIPP has never been used to specifically evaluate the impact 
of outsourcing or globalization on the quality of jobs.
                                 ______
                                 
             Questions Submitted by Senator Robert C. Byrd

                           ITA TRADE ACT 2002

    Question. The Trade Act of 2002 requires that the Bush 
Administration reserve the U.S. trade laws. I understand that, in prior 
appearances before the Congress, namely before the Senate Finance 
Committee, you advised Senator Rockefeller that you would ``vigorously 
defend and enforce our existing trade remedy laws, and implement those 
laws as intended to stop dumped or subsidized goods from injuring U.S. 
industries.''
    While the United States has made some submissions in the Rules 
negotiations in the past two years, with the exception of papers on 
causation, expanding prohibited subsidies, and the proposal on 
perishable and seasonal agricultural products, most proposals either 
simply seek to codify existing U.S. practice, or improve transparency 
and processes abroad.
    Consequently, would you please identify for the Committee (1) each 
WTO dispute over the past five years in which U.S. trade remedy laws 
have been challenged and in which the WTO has issued a determination 
adverse to the United States; and (2) what specific proposals to 
correct those erroneous determinations have been submitted by the 
United States in the Rules negotiations in either 2005 or 2006. If no 
specific proposals have been submitted by the United States in the last 
two years, please identify when such proposals will be submitted, 
consistent with the Congressional mandate contained in the Trade Act of 
2002.
    Answer. There have been numerous WTO disputes over the last 5 years 
in which the U.S. trade remedy decisions have been challenged. In 
response, we have pursued an aggressive strategy in the WTO Rules 
Negotiations of defending our trade remedy regime, targeting the unfair 
trade practices of others, and improving transparency and due process 
in trade remedy proceedings so that U.S. producers and exporters are 
fairly treated. We continue to follow the basic principles that we laid 
out early in the Rules negotiations, namely to seek to: (1) maintain 
the strength and effectiveness of the trade laws; (2) enhance 
transparency and due process requirements; (3) enhance disciplines on 
trade distorting practices that lead to unfair trade; and (4) ensure 
that dispute settlement panels and the Appellate Body do not impose 
obligations that are not clearly contained in the Agreements.
    As of July 2006, when the formal negotiations were suspended, the 
U.S. negotiating team advanced proposals to address many of the Rules 
issues that are negotiating ``priorities'' for our domestic industry 
and Congress. These include such areas as facts available, causation, 
and the all-others rate, where we are seeking to correct the 
substantive results of certain disputes that we think were incorrectly 
decided by WTO panels. Some of the other proposals advanced include 
circumvention, new shippers, and perishable seasonal agriculture, all 
of which are priorities identified by the domestic industry and 
Congress.
    This Administration is committed to strong enforcement of our trade 
laws, and fulfilling our TPA obligations. The Administration will 
continue to consult closely with the Congress as the negotiations 
proceed.

              CONTINUED DUMPING SUBSIDY OFFSET ACT OF 2000

    Question. The Administration previously recognized that the WTO 
decision on the Continued Dumping and Subsidy Offset Act of 2000 or 
``CDSOA,'' also known as the Byrd Amendment trade law, incorrectly 
imposed obligations on the United States by prohibiting the 
distribution of monies collected as antidumping and countervailing 
duties on unfairly traded U.S. imports. Congress repeatedly called for 
negotiations in the Doha Round to address this issue, not only in 
letters sent to the Administration, but also in legislation signed into 
law. Further, report language accompanying a series of Consolidated 
Appropriations Acts directed the Administration to report to the 
Appropriations Committee every 60 days on the status of those 
negotiations. I understand that Commerce Department officials have a 
very important role in such negotiations, as do USTR negotiators. By 
law, the Administration has been directed to negotiate a solution to 
this trade dispute.
    In April 2004, the United States did submit a proposal in the Rules 
negotiations to recognize ``the right of Members to distribute monies 
collected from antidumping and countervailing duties.'' And, while 
undergoing your confirmation process, you explained that the Department 
of Commerce and the Office of the U.S. Trade Representative were 
consulting to ensure proper implementation of the requirements of U.S. 
law regarding negotiations over CDSOA distributions. You indicated that 
the agencies would complete those consultations as soon as possible. 
You also agreed to continue to work to advance congressional objectives 
in the Doha Round negotiations, including reversal of not only the 
adverse CDSOA decision, but also other WTO decisions where WTO 
Panelists and the Appellate Body have overreached and created 
obligations never agreed to by U.S. negotiators.
    Since committing to ``pursue changes to those Agreements that will 
reverse specific adverse findings, including those regarding the 
Continued Dumping and Subsidy Offset Act,'' the United States has not 
submitted any further proposals recognizing the right of WTO Members to 
distribute monies collected from antidumping and countervailing duties.
    Can you please explain how the Administration intends to obtain an 
acceptable and expeditious solution to the CDSOA and other WTO 
disputes, where the WTO has inappropriately breached its authority in 
decisions adversely affecting the trade laws of the United States?
    Answer. We have been concerned with the possibility of the WTO 
dispute settlement system, in your words, ``inappropriately breach[ing] 
its authority.'' The USTR has noted our disagreement with certain 
dispute settlement reports and the reasons for those disagreements in 
appropriate circumstances. In addition, Commerce has raised WTO panel 
decisions on such topics as zeroing in the ongoing Rules negotiations. 
As you know, Congress repealed the CDSOA to comply with the adverse WTO 
ruling. We evaluate each decision on its own and work in conjunction 
with Congress to find an appropriate response. Where we believe 
revision of the agreement is necessary, we work with other members of 
the WTO toward accomplishing those changes.

                              WTO DISPUTES

    Question. From 1995 to 2006, over 40 percent of all decisions 
adopted by the WTO Dispute Settlement Body addressed trade remedy 
disputes involving the WTO Antidumping (AD), Subsidies and 
Countervailing Measures (SCM) and Safeguards Agreements. And, I 
understand that, in 2005 and 2006, an even higher percentage--over 60 
percent--of WTO disputes initiated were trade remedy disputes. The 
United States, which actively helped shape the trade remedy rules and 
has a highly transparent system providing significant due process of 
law, is the primary target of those WTO trade remedy disputes. In fact, 
I have been advised that the United States has been the defending party 
in roughly 60 percent of the trade remedy decisions adopted by the WTO 
Dispute Settlement Body from 1995 to 2006. More specifically, the 
United States was the defending party in almost 50 percent of requests 
for consultations filed since 1995 concerning the WTO Antidumping 
Agreement in particular. Yet, the United States imposed only 12.6 
percent of all antidumping measures imposed by all WTO Members from 
1995 to June 2006. In the trade remedy area, the WTO has, often 
wrongly, found one or more violations by the United States in nearly 90 
percent of disputes, imposing on the United States obligations that our 
Nation never agreed to in trade talks. In fact, the United States 
actively opposed ``zeroing'' during negotiations. Thus, it is clear 
that the WTO dispute settlement system is being used unfairly, 
threatening U.S. sovereignty and eroding the effectiveness of our 
country's trade remedy laws. Despite this, the United States has 
submitted only a handful of publicly available proposals in the Rules 
negotiations suggesting textual modifications to correct instances of 
``overreaching'' by the Appellate Body.
    When and how do you intend to collaborate with USTR to correct this 
continuing imbalance? What is your strategy to rapidly generate textual 
proposals that will better protect existing U.S. trade laws?
    Answer. We are fully aware of the frequency in which the United 
States has had to defend its trade remedy laws before the WTO Dispute 
Settlement Body and have collaborated with USTR to address this issue 
since the inception of the Doha Round. In the context of the Dispute 
Settlement Understanding negotiations, we have raised proposals 
addressing the problem of the Appellate Body creating rights and 
obligations that are not contained in the underlying agreements. 
Additionally, in the Rules negotiations, the United States continues to 
emphasize the importance of clearly written rules so that the dispute 
settlement process will involve less interpretation to the extent that 
the intent of the Members is clearer. As the negotiations progress, in 
close coordination with USTR, we plan to intensify our efforts to 
advance the proposals already tabled that will protect U.S. trade laws 
and direct the WTO Dispute Settlement Body toward a balanced decision 
making process.

                  DOHA DISPUTE SETTLEMENT NEGOTIATIONS

    Question. Specifically concerning the issue of the Doha Dispute 
Settlement negotiations, during your confirmation process, you offered 
a general strategy of: (1) increasing Member nations' control over the 
dispute settlement process; (2) increasing transparency; (3) pursuing 
changes to the Rules Agreements to ensure that panels and the Appellate 
Body adhere to the appropriate standards of review; and (4) pursuing 
changes to the Rules Agreements that ``will reverse specific adverse 
findings, including those regarding the Continued Dumping and Subsidy 
Offset Act, `zeroing,' and injury determinations.''
    Can you please provide the status of U.S. efforts to advance 
negotiations concerning items (1), (2), and (3), above, and advise the 
Committee when specific proposals will be submitted by the United 
States addressing the fourth item, namely reversing the WTO's findings 
with respect to CDSOA, zeroing, and injury determinations?
    Answer. In the context of the Dispute Settlement Body negotiations, 
USTR, collaborating with Commerce, has introduced two sets of 
proposals--including proposed text. The first set of proposals would 
expand transparency and public access to dispute settlement proceedings 
by opening panel hearings to the public, requiring public versions of 
written submissions, providing for early public release of panel 
reports, and setting guidelines for amicus curiae submissions. The 
second set of proposals, submitted jointly with Chile, contains 
provisions aimed at giving parties to a dispute more control over the 
process and greater flexibility to settle disputes. These proposals 
address such concepts, among others, as ensuring that panel members 
have appropriate expertise to appreciate the issues presented in a 
dispute and providing additional guidance to WTO adjudicative bodies 
concerning the nature and scope of the issues and rules of 
interpretation of the WTO agreements. These proposals are still on the 
table, and as the negotiations progress, we will intensify our 
collaboration with USTR to advance the key concepts encompassed by the 
proposals.
    We agree that the Appellate Body's findings raise concerns; 
however, we also place significant importance on respecting the dispute 
settlement system and addressing the findings, whether we agree with 
them or not, through the appropriate mechanisms. First, we are 
developing our thoughts and options with respect to implementation and 
are committed to consulting closely with Congress as to the appropriate 
way to move forward in response to the Japan zeroing report. Second, we 
will continue to use the Rules negotiations as a forum to educate other 
Members on the troubling implications of the Appellate Body reports, 
particularly with respect to their own antidumping systems. We firmly 
believe that the zeroing issue is one that must be addressed through 
negotiation and we are in close consultation with USTR regarding how to 
move forward.
    Likewise, injury is part of our affirmative agenda in the Rules 
negotiations, and we have submitted proposals to address specifically 
the problem created by the WTO decision related to this issue. As the 
Negotiations progress, we will continue to advance these proposals and 
address our injury concerns as an integral part of the U.S. negotiating 
strategy.
    Regarding CDSOA, we have been concerned with the possibility of the 
WTO dispute settlement system, in your words, ``inappropriately 
breach[ing] its authority.'' The USTR has noted our disagreement with 
certain dispute settlement reports and the reasons for those 
disagreements in appropriate circumstances. However, in light of the 
importance we attach to respecting the dispute settlement system, noted 
above, and the potential consequences of a failure to abide by 
Appellate Body decisions, we evaluate each decision on its own and work 
in conjunction with Congress to find an appropriate response. Where we 
believe revision of the agreement is necessary, we work with other 
members of the WTO toward accomplishing those changes.

                           WTO APPELLATE BODY

    Question. As described in prior questions, it is unfortunate that 
the WTO Appellate Body for several years now has been engaged in 
improperly expanding its mandate by making a series of decisions that 
undermine our Nation's trade remedy laws. One of the most egregious of 
these decisions has been issued against the U.S. antidumping duty 
practice called ``zeroing.
    On one level, the Bush Administration should be commended for 
combating these zeroing decisions, which would force the United States 
to collect less than 100 percent of dumping duties owed. For example, 
in recent statements before the WTO Dispute Settlement Body, the 
Administration has called Appellate Body reports against zeroing 
``deeply flawed,'' and ``devoid of legal merit.''
    Yet, on February 22, 2007, the Commerce Department nonetheless 
implemented the findings of the Appellate Body with respect to 
``zeroing'' in investigations, and, two days earlier, the 
Administration told the WTO that it would comply with its WTO 
obligations with respect to ``zeroing'' in other phases of antidumping 
proceedings.
    Why would the United States implement Appellate Body reports that 
it admits are ``deeply flawed'' and ``devoid of legal merit''? Couldn't 
the United States simply refuse to implement these ``deeply flawed'' 
WTO decisions and, instead, seek a negotiated solution through the WTO 
Doha Round negotiations? This would be consistent with our Nation's 
statements on the Appellate Body's report before the Dispute Settlement 
Body (DSB), which consisted of the following:

    ``Were this a municipal court result, such an illogical outcome 
would be a prime candidate for reconsideration by the legislative 
branch. That is no less the case here, and the United States submits 
that Members take up this issue, which affects the antidumping systems 
of a number of Members, in the Rules negotiations.''

    When will the United States submit a proposal in the Rules 
negotiations addressing this issue?
    Answer. We agree that the Appellate Body's recent findings on 
zeroing in reviews are very troubling, however, we also place 
significant importance on respecting the dispute settlement system and 
addressing the findings, whether we agree with them or not, through the 
appropriate mechanisms. To that end, we are thinking about this issue 
along two tracks. First, we are developing our thoughts and options 
with respect to implementation and are committed to consulting closely 
with Congress as to the appropriate way to move forward in response to 
the Japan zeroing report. Second, we will continue to use the Rules 
negotiations as a forum to educate other Members on the troubling 
implications of the Appellate Body reports, particularly with respect 
to their own antidumping systems. We firmly believe that this zeroing 
issue is one that must be addressed through negotiation and we are in 
close consultation with USTR regarding how to move forward.

                           CAFTA--SOCK TRADE

    Question. In July 2005, during the CAFTA debate before the U.S. 
House of Representatives, you and U.S. Trade Representative Portman 
wrote a letter in which you advised that the United States would 
initiate a special CAFTA textile safeguard re-imposing U.S. tariffs on 
imported socks for three years, if imports ``cause or threaten to cause 
serious damage to the domestic industry.'' You stated that you wished 
to be ``pro-active in initiating a sock safeguard if the situation were 
to warrant it.''
    I have been apprised that, since CAFTA came into effect 11 months 
ago, sock imports from Honduras have increased by roughly 40 percent. 
Domestic production is falling, and over 20 U.S. sock mills have 
closed. Because it appears that the situation today may warrant the 
initiation of a safeguard on imported socks, is the Administration 
prepared to seek such a safeguard? Does the Administration intend to 
honor its prior commitment to the Congress in this regard, even as it 
seeks additional free trade agreements? Is there some reason that 
CAFTA's negotiators failed to anticipate and address the possibility of 
such an un-level playing field in trade in socks?
    Answer. As you noted, on July 27, 2005, USTR Rob Portman and I 
promised Congressman Aderholt that the Administration would (1) include 
socks in any textile agreement with China, (2) ensure that, if the 
existing China sock safeguard was renewed, it would be in place for the 
maximum possible time period at the minimum possible safeguard level, 
(3) seek to amend CAFTA-DR to alter the rules of origin or to lengthen 
the tariff phase-out for socks, and (4) to proactively utilize the 
CAFTA-DR textile safeguard for socks, if warranted. The Administration 
subsequently, as promised, included socks in the China textile 
agreement, concluded a special China sock quota agreement while the 
China textile talks were ongoing, and has pursued a sock amendment to 
the CAFTA-DR. We also are carefully monitoring CAFTA-DR sock import 
data and, as promised, will proactively utilize the CAFTA-DR safeguard, 
if warranted by the facts. To assess whether safeguard action may be 
warranted, the Department of Commerce carefully monitors imports of 
socks from CAFTA-DR signatories and other relevant data, including 
domestic production data, to assess whether imports of socks from these 
countries are causing, or threatening to cause, serious damage to the 
domestic industry as a result of the elimination of duties under the 
Agreement, which went into effect for Honduras on April 1, 2006. 
Notably, imports of socks from Honduras fell in each of the last three 
months of 2006 to levels lower than before CAFTA went into effect. 
Nevertheless, we are closely tracking the data and will act should data 
warrant a safeguard, but it is worth noting that domestic production 
was down by only 1.1 percent in 2006 from 2005 levels.
                                 ______
                                 
            Question Submitted by Senator Richard C. Shelby

                      BEA'S R&D BUDGET INITIATIVE

    Question. The BEA has a proposal for $2.1 million to measure the 
impact of research and development on the economy. Can you tell us more 
about this initiative and how it will impact future GDP calculations?
    Answer. While most economists believe that R&D and other 
investments in intangibles are among the most important sources of 
growth in GDP and productivity--with some estimates ranging as high as 
40 percent of growth--there are no hard official estimates on their 
impact. This project will provide the Nation with a much clearer 
picture of the impact of investments in R&D and other intangibles on 
trend growth in GDP and productivity, as well as their impact over the 
course of the business cycle. The BEA project will provide aggregate 
data, as well as data on the effects across industries, across regions 
of the country, and its impact on our international trade and balance 
of payments. These data will prove useful in a broad variety of 
contexts ranging from monetary policy and budget projections to tax 
policy and the funding of investments in R&D.
    BEA is in the early stages of developing estimates for R&D as 
investment, and these estimates will not be fully incorporated into the 
National Income and Product Accounts until 2013. However, this 
preparatory work, in the form of satellite accounts, can provide 
valuable information on the effect of investment in R&D on U.S. 
economic growth. The preliminary R&D satellite accounts released in 
September 2006 showed R&D investment accounted for 6.5 percent of 
growth in real GDP between 1995 and 2002 and 4.5 percent of growth 
between 1959 and 2002. In comparison, businesses' investment in 
commercial and all other types of buildings accounted for just over 2 
percent of real GDP growth between 1959 and 2002.

                NOAA JOCI AND THE OCEAN POLICY SCORECARD

    Question. Although NOAA's 2008 budget request boasts a $123 million 
increase for ocean-related activities, it represents a fraction of the 
true budgetary needs for the marine community. For the past few years, 
the Joint Ocean Commission, which formed the inception of the 
President's U.S. Ocean Action Plan, has clearly and objectively laid 
out the budgetary requirements to better support ocean-related science 
research and education. I am extremely concerned that Congress 
continually receives a budget request from the Administration that 
downplays these critical activities. I wonder at what level your 
department endorses marine science, because frankly, Mr. Secretary, the 
Senate is weary of being the only federal entity that champions this 
funding disparity.
    Are you familiar with the Joint Ocean Commission Initiative, and 
the contents of its recent publications, namely the U.S. Ocean Policy 
Report Card for 2006? And are you aware that the category for ``New 
funding for ocean policy and programs'' received the grade of ``F''? 
What are your thoughts on this grade?
    Answer. Yes, I am familiar with both the Joint Ocean Commission 
Initiative and the recent Ocean Policy Score Card. We are pleased to 
note that we have had grade improvements for 2006 in five out of the 
six subject areas. We were also pleased with the overall scores for 
Ocean Governance and Fisheries Management Reform. With respect to the 
grade for ``new funding for ocean policy and programs,'' the scorecard 
was issued prior to the release of the fiscal year 2008 President's 
Budget. The fiscal year 2008 Budget includes significant new increases 
in support of implementing the Ocean Action Plan, addressing many of 
the concerns noted by the Report Card.

     NTIA PUBLIC SAFETY INTEROPERABLE COMMUNICATIONS GRANT PROGRAM

    Question. Mr. Secretary, your department has entered into a 
memorandum of understanding with the Department of Homeland Security to 
assist in the development of policies, procedures and regulations 
governing the Public Safety Interoperable Communications (PSIC) grant 
program.
    What role will your department play in developing the grant 
guidance package and eligibility requirements for this $1 billion 
program?
    Answer. The Department of Commerce's National Telecommunications 
and Information Administration (NTIA) is working very closely with the 
Department of Homeland Security (DHS) in the development of grant 
guidance and requirements for the program. Consistent with the 
requirements of the Deficit Reduction Act of 2005 and the Call Home Act 
of 2006, NTIA retains final approval authority for policies, procedures 
and regulations that govern the PSIC Grant Program.
    Question. The Department of Homeland Security has been grappling 
with the issue of interoperable communications for years. I sit on the 
appropriations subcommittee for that department as well. These funds 
are intended to focus on the purchase of equipment to address 
interoperability.
    Mr. Secretary, tell me how your involvement will ensure this 
funding will be put to the best use by the localities in Alabama and 
throughout the United States to achieve true interoperability across 
county and state lines?
    Answer. NTIA intends to use its expertise to explore and encourage 
all technology solutions that are available to first responders to 
advance overall interoperability. With the Statewide Interoperability 
Communications Plans and the PSIC investment justifications, NTIA and 
DHS will be able to approve projects that clearly identify 
interoperability gaps and provide the greatest benefit toward improved 
interoperability.
    Question. Will Commerce work to ensure that the choice for a 
workable solution to interoperability will rest in the hands of locals 
and will not be dictated from the federal level?
    Answer. NTIA understands that interoperability is a complex issue 
and no one federal solution exists. Local governments have collectively 
spent billions of dollars on communication infrastructure. The program 
guidance and application process for the PSIC Grant Program will be 
designed to leverage existing investments to build and sustain 
intrastate and interstate regional capabilities and identified needs. 
NTIA is working with DHS to develop the grant guidance that ensures 
that funding will be passed through to eligible public safety agencies.

                    2010 CENSUS--COST EFFECTIVENESS

    Question. The President's budget request includes increased funding 
for the Census Bureau in anticipation of conducting the decennial 
census. These increases are quite significant and will continue to grow 
over the next several years. While this effort is constitutionally 
mandated, there are also other activities that the Census is involved 
in, including surveys of state and local governments, as well as 
economic indicators.
    Mr. Secretary, what efforts are being made to ensure that the 2010 
Census is as cost effective and accurate as possible while maintaining 
the other capabilities the Bureau provides?
    Answer. All the factors that have led to higher costs for each 
decennial census since 1970 will continue--besides inflation and 
increased workload, these include the increased difficulty of ensuring 
coverage accuracy (both overall and for each population group and 
jurisdiction); increased public resistance to answering surveys; and 
increased diversity that make it more difficult to reach everyone. No 
matter what design is chosen, the 2010 Census will be costly.
    For the 2010 Decennial Program, compared to the cost of the 
previous census (2000), the percentage increase in estimated life cycle 
costs will be the lowest in the last four decades. This pattern also 
holds when comparing unit costs. Thus, while achieving the significant 
benefits to our Nation from the annual release of long-form data by the 
new American Community Survey, and improvements to our MAF/TIGER 
(geographic) databases, the Reengineered 2010 Census of Population and 
Housing also will be significantly less costly than historical trends 
would project.
  --Cost containment is one of the four key goals for the reengineered 
        2010 Decennial Census program. When this effort was launched in 
        2001, we estimated it would save over $400 million compared to 
        repeating the Census 2000 approach. And, we now estimate that 
        reverting in fiscal year 2008 to the Census 2000 approach would 
        cost over $1 billion more than continuing with our reengineered 
        approach.
  --Significant savings and accuracy improvements will result from:
    --Not having to collect long-form data in the 2010 Census (because 
            it now is being collected by the American Community 
            Survey),
    --Restructuring our field data collection process to use GPS-
            equipped Handheld Computers (that will benefit from the 
            improvements to our MAF/TIGER databases), and
    --Reducing non-response follow-up workloads by sending a targeted 
            second mailing of questionnaires to households who do not 
            respond to initial mail-out, and being able to 
            electronically remove late mail returns from the non-
            response follow-up assignments on the Handheld Computers.

 SECURITY OF PERSONALLY IDENTIFIABLE INFORMATION ON LAPTOPS AND OTHER 
                            PORTABLE DEVICES

    Question. Last year the Department of Commerce reported the loss of 
hundreds of laptop computers, thumb drives and data disks used in 
collecting data for many of its surveys, including data associated with 
the American Community Survey. The Census Bureau is now acquiring 
hundreds of handheld devices to be used by temporary employees as part 
of the 2010 Census.
    Do all portable devices in the Bureau containing sensitive personal 
information have the necessary encryption to protect the data if the 
computer or handheld is lost or stolen?
    Answer. Yes. All data files on the laptops currently being used for 
data collection in census survey and census operations are encrypted 
(FIPS 140-2 compliant). Full disk encryption for the laptops is under 
development and will be implemented later this year. For the 2010 
Census, we plan to use handheld computers for collection of Title 13 
data for three major operations (Address Canvassing, Non-response 
Follow-up and Coverage Measurement Person Interviews), with all others 
still being done on paper. All sensitive data collected during the 2008 
Dress Rehearsal and 2010 Census using the handheld computers will be 
stored on removable secure digital (SD) cards using FIPS 140-2 
compliant encryption software.
    Question. How can we ensure we protect the privacy of our citizens 
if handhelds are lost?
    Answer. In addition to the file encryption described above, census 
enumerators will access their handheld computers through biometric 
technology (fingerprint reader) as well as a response to a question for 
which only they would know the answer. All sensitive data are encrypted 
while stored on the enumerator's handheld computer's secure digital 
(SD) card, as well as during transmission over a secure private network 
to the secure data center. Upon successful transmission, all sensitive 
data on the enumerator's Handheld Computer that are no longer required 
to conduct the census operation will be automatically deleted.
    Question. What procedures have been instituted to track devices 
that contain sensitive personal information within the Bureau?
    Answer. All laptops that currently contain sensitive personal 
information are managed through the Census Bureau's automated property 
management system (APMS). The APMS assigns a unique identifier to each 
device and associates it with the individual that is using it. In 
addition, we are implementing new procedures that will require our 
census field representatives to enter their laptops' unique identifiers 
into an automated questionnaire. This information will be automatically 
retrieved by our control systems and matched against the information in 
the APMS to ensure that all devices are accounted for on a regular 
basis. This procedure should be in place later this Spring.
    With respect to the hand-held computes (HHCs), Secure Digital (SD) 
Cards (SD), laptop computers, and air cards used in the 2008 Dress 
Rehearsal (DR) and 2010 Census, we track who possesses them via a paper 
and an automated tracking system. We track all hand-offs of equipment 
via a paper process. All staff that deliver or are assigned equipment 
sign a paper form acknowledging receipt of that equipment. We also key 
the data from the paper forms into Harris' asset management system. 
Every time a piece of equipment is replaced, the user signs a paper 
form to return the defective device. Staff also sign another paper form 
to acknowledge receipt of the replacement device. All paper forms are 
stored in computer control files in the Local Census Offices.
    Harris provided laptops are used by Field Operations Supervisors. 
These laptops are not used for data collection, but do have PII on 
them, such as payroll data and staff rosters. These laptops will have 
full disk encryption. They will require a user ID and password for 
access during 2008 DR Address Canvassing. We plan to add biometric 
technology (fingerprint reader) in time for DR Non-Response Follow-Up.
    Question. Once the sensitive data is collected on the laptop or 
handheld computer and transmitted to the Census Bureau, how do you 
ensure that the data is scrubbed from these computers?
    Answer. For the laptops currently being used by census field 
representatives, the Regional Office survey manager initiates a process 
to delete data from the laptops based on the interview period. This 
process does not require the census field representative to execute a 
routine; it happens automatically as part of the transmission 
processing. A date is stored in the survey control database indicating 
when this deletion routine was initiated, which allows us to ensure 
that it is happening on a regular basis.
    With respect to the hand held computers that will be used in the 
2008 Census Dress Rehearsal and the 2010 Census, upon successful 
transmission, all sensitive data that are no longer required to conduct 
the census operation will be automatically deleted. In addition, we 
plan to destroy the SD cards following the completion of each operation 
to further ensure data protection. Procedures will be fully developed 
and tested prior to use in the field.

                   REAUTHORIZATION OF THE NOAA CORPS

    Question. The Committee understands that the size of NOAA's fleet 
is expanding, yet the NOAA Corps authorization, which regulates the 
size of the NOAA Commissioned Officer Corps, expired in 2005. The 
Committee supports NOAA Corps officers and the valuable expertise they 
lend to NOAA's field operations and homeland security activities.
    When can Congress expect to receive the legislative package 
reauthorizing the NOAA Corps, and may I receive a copy personally?
    Answer. We are interested in reauthorizing the NOAA Corps and we 
look forward to working with the Committee on this important 
legislation. We will ensure that you receive a personal copy of any 
legislation the Administration submits to reauthorize the NOAA Corps 
when it is delivered.
   federal consistency standards and the czma for florida and alabama
    Question. Recently, an issue has come up during my meetings with 
constituents involving interstate coastal zone management activities, 
namely between Florida and Alabama. I am concerned about the potential 
situation arising where one state can influence, or even impede, 
another state's development projects. I am watching this situation 
closely as it unfolds, especially with how it may impact Alabama's 
businesses and economic development.
    What level of assurances can I receive from you that my office will 
be informed of any interstate coastal zone management issues affecting 
Alabama?
    Answer. We understand that this is an issue of high priority and 
importance for Alabama. You have my full assurance that NOAA will 
continue to keep you informed as this process unfolds. At this time, 
there has not been a formal submission by Florida of a request for 
approval to review activities in other states, but, as you know, 
Florida has initiated the state and federal agency consultation process 
to list activities for interstate consistency review. On March 7, NOAA 
staff with the Office of Ocean and Coastal Resource Management 
facilitated a meeting between the coastal program managers for the 
States of Florida, Alabama and Georgia to develop a better 
understanding of Florida' intentions, the concerns of neighboring 
States, and the expectations that NOAA will place on Florida in 
justifying their request for NOAA's approval. In addition to ensuring 
that any change to the Florida Coastal Management program is fully 
consistent with the requirements of the Coastal Zone Management Act and 
NOAA's Interstate Consistency regulations, NOAA will be fully engaged 
in a dialog with all of the states and affected federal agencies in 
addressing whatever concerns may arise from Florida's proposed 
extension of its review authority.

             FUNDING LEVELS FOR SEVERE WEATHER FORECASTING

    Question. Severe weather always threatens the Gulf Coast. Although 
last year's hurricane season was relatively light, I still encourage my 
constituents to remain vigilant as flooding, tornadoes and severe 
thunderstorms are a constant danger.
    Are we providing sufficient resources to meet the challenges of 
predicting and protecting our citizens from severe weather events?
    Answer. NOAA's fiscal year 2008 President's budget request fully 
supports its forecast and warning operations. Specifically, NOAA's 
fiscal year 2008 budget requests additional funding to improve its 
hurricane forecasting program: $3 million for hurricane data buoy O&M, 
$1 million for Hurricane Weather-Research Forecast (HWRF) model O&M and 
$2 million to accelerate research to improve hurricane intensity 
forecasts. NOAA is committed to improving operational effectiveness and 
services, particularly for high-impact weather events, by taking full 
advantage of emerging science and technological improvements. We are 
committed to evolving services to best meet the changing and growing 
need for environmental forecasts and services. NOAA's fiscal year 2008 
budget request supports efforts to upgrade the NEXRAD Radar network by 
implementing dual polarimetric radar. It also supports other efforts 
including: improved numerical modeling, data assimilation, education 
and outreach, training, forecaster workstation (AWIPS) upgrades, as 
well as efforts for future technological advances, such as phased array 
radar (PAR). We believe the President's fiscal year 2008 budget request 
positions us to make those technical and service improvements.

                PATENT ALLOWANCE VERSUS PATENT REJECTION

    Question. I'm aware that you set production goals for PTO 
examiners. Those production goals should of course promote quality 
examination. The last thing we want is for production goals to be based 
solely on patent allowance so that examiner's are motivated to allow a 
patent even if the application doesn't warrant such allowance, 
resulting in poorer quality patents.
    Do you consider patent allowance versus patent rejection when 
setting production goals?
    Answer. Examiner production goals are set so that an examiner 
receives the same amount of credit for an application that is allowed 
or becomes abandoned.
    Question. The Bureau of the Census has initiated a large IT program 
to automate the process of conducting the 2010 Decennial Census, such 
as using wireless GPS-enabled handheld computers to directly capture 
information collected during interviews. This process is expected to 
reduce the need for paper-based processing while increasing operational 
efficiency, improving accuracy and reducing costs.
    Mr. Secretary, former Census Director Kincannon testified before 
Congress last year that capital investment in an automated system to 
replace the traditional paper count will save taxpayers approximately 
$1 billion to conduct the 2010 Census. Is that estimate still accurate?
    Answer. Yes--we still estimate that reverting to paper-based 
operations would add more than $1 billion to the total cost of the 
program. Thanks in large part to the support of Congress in the 
continuing resolution for fiscal year 2007, we have been able to 
continue our efforts for the automation components of the reengineered 
census.
    Last summer, when those funds were in jeopardy, the Census Bureau 
was forced to consider reverting back to paper-based operations that 
would have added over $1 billion to the overall cost of the 2010 
Census. That estimate is based on the savings we expect to achieve 
through the use of handheld computers and other aspects of our 
reengineering efforts. If we have to revert to a paper-based census:
  --The Census Bureau would have to expand space and office staff in 
        over 450 temporary Local Census Offices by 50 percent to 
        conduct 2010 Census operations. The additional space and office 
        staff would be needed to store, track, and process the 
        additional paper forms that will be needed if we do not use 
        handheld computers for data collection.
  --Non-response follow-up and other field operations would be less 
        efficient, requiring significantly more field enumerators.
  --We would have to spend significantly more money visiting households 
        that have already responded to the Census. This is because, 
        without the handheld computers, we would have no ability to 
        remove late mail returns (those households that return their 
        census forms after the date we begin preparing non-response 
        follow-up assignments) from the assignment lists on those 
        devices.
  --Other cost increases would be inevitable, including increased cost 
        for paper and other supplies, mileage, and salaries to conduct 
        a census without automation.
    These additional costs would be offset only partially by reductions 
in automation costs that would not be incurred (under a paper-based 
census) related to the handheld computer equipment.

                    2010 CENSUS--HANDHELD COMPUTERS

    Question. What is the status of the development of the handheld 
computer that is critical to the success of this program?
    Answer. Thanks in large part to the support of Congress in the 
continuing resolution for fiscal year 2007, we have been able to 
continue our efforts for the automation components of the reengineered 
census. For the 2008 Dress Rehearsal and the 2010 Decennial Census, the 
Census Bureau plans to use handheld computers and supporting services 
to directly capture information collected during personal interviews 
and eliminate the need for paper maps and address lists for the two 
largest field data collection operations (Address Canvassing and Non-
response Follow-up) and for the Census Coverage Measurement Personal 
Interview process. The development of handheld computers for these 
operations in the Dress Rehearsal is on-track.

                          DVD PIRACY IN MEXICO

    Question. The Department of Commerce is part of the 
Administration's effort to combat global piracy. I understand U.S. 
businesses are concerned about DVD piracy in Mexico.
    Can you comment on the implications of the recent DVD and CD raid 
in Mexico City and what this might mean for United States-Mexican 
cooperation to combat piracy?
    What is Commerce's role on this issue?
    Answer. The Department of Commerce is encouraged by the Mexican 
Government's efforts to combat piracy and counterfeiting over the past 
year. Recent raids by Mexican enforcement officials during February and 
March reflect the new Calderon Administration's commitment to the rule 
of law and economic competitiveness. However, greater enforcement 
efforts and stronger prosecution are still needed in Mexico. According 
to the 2007 Special 301 Submission by the International Intellectual 
Property Alliance, trade losses due to copyright piracy in Mexico are 
estimated to have exceeded $1 billion in 2006. Accordingly, Commerce 
continues to monitor Mexico's progress on intellectual property rights 
(IPR) issues through the combined efforts of an interagency IPR team. 
Additionally, Commerce and the U.S. Trade Representative (USTR) are 
working with the Governments of Mexico and Canada on the Security and 
Prosperity Partnership of North America Intellectual Property Action 
Strategy, a trilateral initiative to combat piracy and counterfeiting 
in North America.
    Finally, the USPTO conducts several programs for government 
officials in order to improve the level of expertise on intellectual 
property enforcement in Latin America. In August of 2006 and February 
2007, the USPTO invited Latin American government officials to its 
Global Intellectual Property Academy. The Academy provided practical 
intellectual property rights enforcement education and capacity-
building to Latin American judges, prosecutors, customs officials, law 
enforcement officers and others who are involved in the civil, 
administrative or criminal enforcement of intellectual property rights. 
Mexican government officials participated in the Academy.
    Also, in December of 2006, the USPTO held a Seminar for the 
Judiciary on Intellectual Property Enforcement. The program was 
attended by both Mexican and Central American judges.

                           ITA CAFTA NATIONS

    Question. Since the enactment of CAFTA, the domestic sock industry 
has continued to close plants. The CAFTA nations, particularly 
Honduras, have increased their production and importation of socks to 
the United States by significant amounts to the detriment of our 
domestic industries. Why has the Department of Commerce not granted 
their promise to extend the period for tariffs on socks produced in 
CAFTA nations?
    Answer. As you know, on July 27, 2005, USTR Rob Portman and 
Secretary Gutierrez promised Congressman Aderholt that the 
Administration would (1) include socks in any textile agreement with 
China, (2) ensure that, if the existing China sock safeguard was 
renewed, it would be in place for the maximum possible time period at 
the minimum possible safeguard level, (3) seek to amend CAFTA-DR to 
alter the rules of origin or to lengthen the tariff phase-out for 
socks, and (4) to proactively utilize the CAFTA-DR textile safeguard 
for socks, if warranted. The Administration subsequently, as promised, 
included socks in the China textile agreement, concluded a special 
China sock quota agreement while the China textile talks were ongoing, 
and has pursued a sock amendment to the CAFTA-DR. We also are carefully 
monitoring CAFTA-DR sock import data and, as promised, will proactively 
utilize the CAFTA-DR safeguard, if warranted by the facts. To assess 
whether safeguard action may be warranted, the Department of Commerce 
carefully monitors imports of socks from CAFTA-DR signatories and other 
relevant data, including domestic production data, to assess whether 
imports of socks from these countries are causing, or threatening to 
cause, serious damage to the domestic industry as a result of the 
elimination of duties under the Agreement, which went into effect for 
Honduras on April 1, 2006. Notably, imports of socks from Honduras fell 
in each of the last three months of 2006 to levels lower than before 
CAFTA went into effect. Nevertheless, we are closely tracking the data 
and will act should data warrant a safeguard, but it is worth noting 
that domestic production was down by only 1.1 percent in 2006.

                          SUBCOMMITTEE RECESS

    Senator Mikulski. We're going to stand in recess until next 
Thursday, March 8, continuing our innovation oversight 
hearings. We will be getting testimony from the National 
Oceanic and Atmospheric Administration, and the Director of the 
National Science Foundation.
    This subcommittee stands in recess until March 8.
    [Whereupon, at 11:50 a.m., Thursday, March 1, the 
subcommittee was recessed, to reconvene at 10 a.m., Thursday, 
March 8.]
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