[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





                         [H.A.S.C. No. 112-95]
,
 DOING BUSINESS WITH DOD: GETTING INNOVATIVE SOLUTIONS FROM CONCEPT TO 

                      THE HANDS OF THE WARFIGHTER

                               __________

                                HEARING

                               BEFORE THE

        PANEL ON BUSINESS CHALLENGES WITHIN THE DEFENSE INDUSTRY

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                            JANUARY 23, 2012

                                     
[GRAPHIC] [TIFF OMITTED] CONGRESS.#13

                                     


        PANEL ON BUSINESS CHALLENGES WITHIN THE DEFENSE INDUSTRY

                  BILL SHUSTER, Pennsylvania, Chairman
BOBBY SCHILLING, Illinois            RICK LARSEN, Washington
JON RUNYAN, New Jersey               BETTY SUTTON, Ohio
ALLEN B. WEST, Florida               COLLEEN HANABUSA, Hawaii
                Lynn Williams, Professional Staff Member
               Timothy McClees, Professional Staff Member
                  Catherine Sendak, Research Assistant





                  U.S. GOVERNMENT PRINTING OFFICE
72-933                    WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001


                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS

                                  2012

                                                                   Page

Hearing:

Monday, January 23, 2012, Doing Business with DOD: Getting 
  Innovative Solutions from Concept to the Hands of the 
  Warfighter.....................................................     1

Appendix:

Monday, January 23, 2012.........................................    27
                              ----------                              

                        MONDAY, JANUARY 23, 2012
 DOING BUSINESS WITH DOD: GETTING INNOVATIVE SOLUTIONS FROM CONCEPT TO 
                      THE HANDS OF THE WARFIGHTER
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Hanabusa, Hon. Colleen, a Representative from Hawaii, Panel on 
  Business Challenges within the Defense Industry................     2
Shuster, Hon. Bill, a Representative from Pennsylvania, Chairman, 
  Panel on Business Challenges within the Defense Industry.......     1

                               WITNESSES

Cross, Dr. Stephen E., Executive Vice President for Research, 
  Georgia Institute of Technology................................     3
Huffman, Dr. Stephen, Vice President and Chief Technology 
  Officer, The MITRE Corporation.................................     6
Winarsky, Dr. Norman, Vice President, SRI Ventures, Stanford 
  Research Institute.............................................     4

                                APPENDIX

Prepared Statements:

    Cross, Dr. Stephen E.........................................    35
    Huffman, Dr. Stephen.........................................    58
    Larsen, Hon. Rick, a Representative from Washington, Ranking 
      Member, Panel on Business Challenges within the Defense 
      Industry...................................................    33
    Shuster, Hon. Bill...........................................    31
    Winarsky, Dr. Norman.........................................    44

Documents Submitted for the Record:

    Summaries from Industry Roundtables in New Jersey, 
      California, and Hawaii.....................................    71

Witness Responses to Questions Asked During the Hearing:

    [There were no Questions submitted during the hearing.]

Questions Submitted by Members Post Hearing:

    [There were no Questions submitted post hearing.]
 DOING BUSINESS WITH DOD: GETTING INNOVATIVE SOLUTIONS FROM CONCEPT TO 
                      THE HANDS OF THE WARFIGHTER

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                        Panel on Business Challenges within
                                      the Defense Industry,
                          Washington, DC, Monday, January 23, 2012.
    The panel met, pursuant to call, at 3:02 p.m., in room 
2212, Rayburn House Office Building, Hon. Bill Shuster 
(chairman of the panel) presiding.

 OPENING STATEMENT OF HON. BILL SHUSTER, A REPRESENTATIVE FROM 
PENNSYLVANIA, CHAIRMAN, PANEL ON BUSINESS CHALLENGES WITHIN THE 
                        DEFENSE INDUSTRY

    Mr. Shuster. Well, I want to call the hearing to order and 
thank our witnesses for being here today, appreciate you taking 
the time, spending it with us, hear your insights.
    As you probably know, the House Armed Services Committee 
[HASC] Panel on Business Challenges in the Defense Industry was 
set up specifically to look how entities, organizations, 
firms--small, medium, large, private, public--all do work with 
the Department of Defense [DOD] and the challenges that they 
face, the hurdles that they face, and specifically today 
talking about some of the technologies that institutions like 
the three of you represent here bring to the game, bring to the 
warfighter to help them do a better job. As I said, we are 
working on trying to understand the challenges that all those 
entities face.
    Equally important to the industrial base is the role of 
universities, nonprofit research institutions, and development 
centers in bringing those different scientific discoveries and 
new ideas to the market or to the Defense Department.
    In the many roundtables we have conducted with industry, 
the constant refrain has revolved around the problems in 
bridging the so-called valley of death in transitioning good 
scientific ideas and prototypes to actual production and 
programs of record. We hope that our witnesses today will be 
able to shed some additional light on the problem and hopefully 
make recommendations on how to improve the overall technology 
transfer and transition process.
    While the industry is the maker of things, universities and 
research institutes are the makers of new ideas; and without 
that cross-flow of ideas, technical expertise, and 
manufacturing capacity and capital, most of the great 
innovations in the marketplace today simply would not exist. 
Business, and particularly small businesses, are the backbone 
of this economy, but they rely on a robust pool of new 
scientific ideas to create new commercial opportunities and 
keep the Nation's economy competitive. Looking at how the 
process can be better supported is why we are here today.
    And, as I said, welcome our three really terrific 
witnesses. Dr. Stephen Cross is Executive Vice President for 
Research at the Georgia Institute of Technology; Dr. Norman 
Winarsky, Vice President of SRI Ventures, the Stanford Research 
Institute; and Dr. Stephen Huffman, Vice President and Chief 
Technological Officer for The MITRE Corporation. That is right, 
MITRE, right? Are you still in McLean, Virginia?
    Dr. Huffman. McLean, Virginia, and Bedford, Massachusetts.
    Mr. Shuster. Okay. Well, Bedford is not a bad place. 
Bedford, Pennsylvania, is a little bit better than Bedford, 
Massachusetts, but it is all good.
    I am looking forward to the discussion we will have with 
our distinguished panel, but, before I do that, I would like 
to, first of all, introduce those on the panel.
    I think you have all briefly met Colonel West, who 
represents a district in Florida; Congressman Jon Runyan from 
New Jersey; and Colleen Hanabusa; and our ranking member, Mr. 
Larsen, is unable to make it; and Ms. Sutton is, I understand, 
having some problems getting here because of the weather. So 
our senior Democrat today is Ms. Hanabusa, but she has really 
been the star of the panel. She has made every hearing. She has 
traveled everywhere in the country we have gone. So it is a 
great pleasure. I yield to her for some remarks.
    [The prepared statement of Mr. Shuster can be found in the 
Appendix on page 31.]

   STATEMENT OF HON. COLLEEN HANABUSA, A REPRESENTATIVE FROM 
    HAWAII, PANEL ON BUSINESS CHALLENGES WITHIN THE DEFENSE 
                            INDUSTRY

    Ms. Hanabusa. Thank you. Thank you, Mr. Chair.
    And, first of all, I would like to say to our testifiers 
today that this is a topic that is really very important to--
Mr. Larsen has been an advocate of it and so has Ms. Sutton. 
So, believe me, if they could be here, they would be here.
    And it is one thing about being from Hawaii, is that I 
don't get to go home. So it is just a matter of whether the 
sidewalks are not so slippery that I don't take a spill, I will 
be here.
    Having said that, Mr. Chair, and again thank you for having 
this great hearing, I would like to ask for your unanimous 
consent to have Mr. Larsen's opening statement put into the 
record.
    Mr. Shuster. Without objection, so ordered.
    [The prepared statement of Mr. Larsen can be found in the 
Appendix on page 33.]
    Ms. Hanabusa. And with that, I think we are ready to begin.
    Mr. Shuster. Okay, great. Thank you very much.
    One thing, a little housekeeping, I need to introduce the 
summaries from the roundtables we held in New Jersey, 
California, Hawaii; and, without objection, the summary memos 
will be included in the record.
    [The information referred to can be found in the Appendix 
beginning on page 71.]
    Mr. Shuster. One thing I didn't mention is Mr. Larsen and I 
have been doing this now for several months, and it seems to me 
that we were stood up for about 6 months and that we are coming 
close to the end to come out with some concrete recommendations 
we can put in the next defense authorization bill. But it seems 
to me this is probably going to be a longer-term process, 
because there are some big problems that I think we face 
getting those ideas and those new technologies to the DOD.
    So it is my hope that after we come forth with some 
concrete ideas and legislation we will continue this look 
backward over history. And it took about 4 years for Goldwater-
Nichols to finally pound it into the Department of Defense's 
head that they need to operate jointly, so I think this is 
another situation--this is not going to be 6 months or one 
piece of legislation. This is going to be over a period of time 
convincing folks who have been doing business for a long, long 
time the same way that they need to look at things differently.
    So, with that, I will hear testimony from our panelists. 
First, Dr. Cross, please.

STATEMENT OF DR. STEPHEN E. CROSS, EXECUTIVE VICE PRESIDENT FOR 
           RESEARCH, GEORGIA INSTITUTE OF TECHNOLOGY

    Dr. Cross. Chairman Shuster and panel members, thank you 
first for the opportunity to testify today. My name, for the 
record, is Stephen E. Cross. I am a proud veteran; and I 
currently serve, as was noted, as Executive Vice President for 
Research of the Georgia Institute of Technology, more commonly 
called Georgia Tech.
    Over the past 25 years, I have been involved in defense 
research and technology transition activities through 
leadership positions in Department of Defense laboratories, 
DARPA [Defense Advanced Research Projects Agency], through the 
directorship of a federally funded research and development 
center at Carnegie Mellon University in Pittsburgh, 
Pennsylvania, called the Software Engineering Institute, and 
through my current position. I have also led many advisory 
boards related to your topic today; and, besides my academic 
appointment at Georgia Tech, I am proud to also serve as a 
member of the Defense Science Board.
    Georgia Tech includes the largest engineering school in the 
country, and it is ranked in the top 10 of technological 
universities in the world, has an enviable track record of 
economic development success, and I think this is attributable 
to both a culture and a unique integration of leading-edge 
research and technology transition and economic development. So 
in addition to the world-class faculty and graduate students, 
it includes what is called the Georgia Tech Research Institute, 
which is 1,500 people devoted to applied research and subject 
matter experts that work on many defense problems, as well as 
the State of Georgia-supported economic development arm that 
includes 225 specialists.
    It is--so we also have unique infrastructure and a culture 
where we work on classified problems right on the main campus. 
We pride ourselves on our agility and our ability to do 
research that anticipates future needs. So I will probably 
explore this more in the testimony today.
    But the challenges that we face today are, if we look at 
military history, are not completely unprecedented. What is 
changing more than anything today is the rate of change.
    It used to be that we could rely on time to respond. I 
remember when I was still on active duty in Operation Desert 
Storm, we had 5 months to respond until the Iraqis came into 
Kuwait. We just don't have that luxury anymore, especially with 
cyber attack, for instance. We also used to be able to rely on 
our geography, but we can't do that anymore. And we used to 
rely on just technologies that would come out of our 
laboratories in the United States. But the globalization of 
research means that we need to be aware of what is being done 
across the globe.
    So, not surprisingly, and of course I strongly urge 
continued support for defense-related research, but I also 
applaud this panel's looking into improvements that can be made 
in the entire defense enterprise, both cultural and in business 
practices, so that we can actually ensure that our forces can 
continue to meet the future threat, have an unfair competitive 
advantage on the battlefield, and continually embrace practices 
of innovation.
    So I look forward to doing my best to answer your questions 
here today. If I fumble or if I don't completely answer a 
question, I would be very happy to at any other time answer any 
questions or support your staff in any way I can.
    Again, thank you very much for this opportunity.
    [The prepared statement of Dr. Cross can be found in the 
Appendix on page 35.]
    Mr. Shuster. Thank you very much, Dr. Cross.
    With that, Dr. Winarsky.

STATEMENT OF DR. NORMAN WINARSKY, VICE PRESIDENT, SRI VENTURES, 
                  STANFORD RESEARCH INSTITUTE

    Dr. Winarsky. Chairman Shuster and members of the panel, 
thank you for the opportunity to submit written testimony to 
you about independent nonprofit research and development 
organizations.
    I am Norman Winarsky. I am Vice President of Ventures for 
SRI International, a nonprofit research and development 
organization with facilities in Menlo Park and locations around 
the United States and internationally, including Princeton, New 
Jersey; State College, Pennsylvania; and Tokyo, Japan; to name 
a few.
    SRI International was founded as Stanford Research 
Institute in 1946 and performs sponsored research and 
development for governments, businesses, and foundations. We 
are known worldwide for world-changing innovations in 
computing, health and pharmaceuticals, and in chemistry and 
materials, sensing, energy, education, national defense, and 
more.
    We bring our innovations from the laboratory to the 
marketplace through technology licensing, products, and spin-
off ventures. Our innovations have created entirely new 
industries, billions of dollars in marketplace value, and 
lasting contributions to society.
    SRI invented the mouse, it helped advance the Internet, it 
invented HDTV [high definition television], and those yellow 
lines that you see in the ball games, that was augmented 
reality that was invented at SRI Princeton.
    SRI's most important contributions relate to innovation 
itself. We teach innovation best practices, which we call the 
discipline of innovation. We have started more than 40 spin-off 
companies to leverage our technology in new commercial 
applications, with total market value of those companies 
exceeding $20 billion. One recent example, SRI's artificial 
intelligence project for DARPA, called CALO, led to the 
technology underpinning of Siri, the virtual personal assistant 
in Apple's new iPhone. My role in Siri was co-founder and board 
member.
    However, I am not here to talk about my organization. 
Instead, I would like to inform the members of this panel about 
the important role nonprofit research institutes play in 
keeping our armed services strong and ready.
    Let me begin by thanking the members of this panel and the 
full committee for including in its report accompanying the 
2012 National Defense Authorization Act the requirement that 
the Department of Defense brief the members of the Armed 
Services Committee on DOD policy relating to nonprofits. 
Nonprofits perform basic and applied research as well as 
development and limited production in a large number of areas. 
Since we are neither universities nor for-profit corporations, 
we are sometimes overlooked when procurement policies are 
established. In fact, we are often treated as if we are for-
profits.
    Because we are chartered pursuant to 501(c)(3), nonprofits 
possess unique advantages over other organizations. For one, we 
have no shareholders. That means we can focus on the warfighter 
with the best possible solution, less concerned about bottom 
line. We are also impartial. Nonprofit research and development 
organizations are not affiliated with any government agency or 
corporate entity, nor do we endorse products or services. And 
DOD's reluctance to use the Competition in Contracting Act 
exception that allows noncompetitive procedures to establish or 
maintain an essential engineering, research, and development 
capability is in--contrary to the intent of Congress. It is 
clear from the plain language of the statute that Congress 
authorized sole source awards to nonprofits because it 
recognized that we, like universities, FFRDCs [federally funded 
research and development centers], and government labs, exist 
to provide a public service. We would very much like to see 
this opportunity for nonprofits as well.
    The nonprofit community would also like to have the 
opportunity to participate in programs like the UARCs, the 
University Affiliated Research Centers, for which we are 
currently excluded. If nonprofits were given the opportunity to 
be designated as UARCs, then we would be able to much better 
support the STEM [science, technology, engineering, and 
mathematics] capabilities. Many of our organizations already 
provide internships, for example, to graduate students.
    On behalf of the independent nonprofit research and 
development community, we appreciate the role Congress is 
playing in facilitating a discussion between all sectors as to 
how to best serve the warfighters and the American taxpayer. We 
look forward to reading your report and working with you. I am 
happy to answer any questions.
    Thank you.
    [The prepared statement of Dr. Winarsky can be found in the 
Appendix on page 44.]
    Mr. Shuster. Thank you very much; and, with that, Dr. 
Huffman.

  STATEMENT OF DR. STEPHEN HUFFMAN, VICE PRESIDENT AND CHIEF 
           TECHNOLOGY OFFICER, THE MITRE CORPORATION

    Dr. Huffman. Chairman Shuster, honorable Members, thank you 
for the opportunity to appear before your panel.
    My name is Stephen Huffman. I am the Vice President and 
Chief Technology Officer of The MITRE Corporation. Our 
company's 53 years of experience, contributions, and 
accomplishments have given us the perspective that I believe is 
highly relevant to today's topic of getting innovative 
solutions from concept to the hands of the warfighters.
    To maintain superior military capability in a declining 
budget environment, the DOD must explore creative ways of 
rapidly deploying new capabilities in an affordable manner. 
Achieving this objective will require the best innovative 
thinking of the DOD, Government, and private laboratories and 
research institutions, and suppliers in the defense industrial 
base. As a part of this effort, federally funded research and 
development centers, or FFRDCs, are well-positioned to 
contribute to transitioning innovative technologies from 
concept to fielded capability.
    The MITRE Corporation is a not-for-profit organization 
chartered to work only in the national interest. MITRE manages 
FFRDCs; and it applies its expertise in systems engineering, 
information technology, operational concepts, and enterprise 
modernization to address our sponsors' critical needs.
    An FFRDC is a unique organization that assists the U.S. 
Government with scientific research and analysis, development 
and acquisition, and systems engineering and integration. 
FFRDCs address problems of considerable complexity, analyze 
technical questions with a high degree of objectivity, and 
provide creative and cost-effective solutions to government 
problems.
    To ensure the highest levels of objectivity, FFRDCs are 
organized as independent entities with limitations and 
restrictions on their activities. This unique standing provides 
special access to government information and provides a long-
term perspective. Since FFRDCs are prohibited from 
manufacturing products, competing with industry, or working for 
commercial companies, both industry and government confidently 
provide them with sensitive information. FFRDCs operate as 
long-term partners with their sponsoring government agencies 
and achieve a deep understanding of their sponsor's evolving 
roles, issues, and challenges.
    MITRE has supported numerous rapid capability development 
programs that address urgent operational needs. In our 
experience, there are three keys to success: Number one is to 
work closely with the operational users to understand their 
needs, the second is to adapt mature technology and build 
operational prototypes to prove the concept and get user 
feedback, and the third key is to acquire operational 
capability through an agile acquisition strategy.
    Operational users have the best understanding of the 
capabilities they need. However, they rarely have the in-depth 
technical knowledge necessary to conceive a solution. FFRDCs 
are well equipped to bring technical knowledge to the end users 
and work closely with them to solve their problems. Whenever 
possible, MITRE deploys staff to the field to study firsthand 
the special challenges our end users, including warfighters, 
face.
    Agile acquisition is a strategy for providing multiple, 
rapid deliveries of incremental capability to the user for 
operational use and evaluation. The incremental deliveries can 
be made every few weeks or every few months, and each iteration 
will be built with continuous user participation and feedback.
    The advantages of this strategy are, first, that 
development can begin immediately without the time and expense 
needed for the development, refinement, and approval of 
functional requirements; and, secondly, significant user 
involvement during the development process guarantees that the 
capabilities delivered will meet the user's needs.
    An example of the successful application of an acquisition 
strategy is the Battlefield Airborne Communications Node 
[BACN], an innovative solution that uses commercially available 
components to provide communications gateways airborne where 
the warfighters need them most. MITRE serves as the lead 
systems engineer on the BACN program for the Airborne 
Networking Division at the Air Force's Electronic Systems 
Center. These airborne gateways significantly shorten command 
and control response times by enabling machine-to-machine 
transactions, data-link translations, and voice bridging. By 
the end of 2010, the BACN team had deployed five aircraft 
carrying the new operational nodes into theater.
    In addition to directly supporting government capability 
development and conducting their own research, FFRDCs play an 
important role in interacting with other sources of innovation 
and channeling them toward government needs.
    FFRDCs often serve as brokers for interaction between 
government and industry on technical issues. For example, in 
the not-too-distant future, soldiers will routinely use 
smartphones with situation-specific mobile applications. It is 
not difficult to imagine the existence of a robust industrial 
ecosystem supplying the DOD with various mobile applications 
through the DOD's own app store. To bring that moment closer, 
MITRE created the Government Mobile Applications Group, which 
includes participations from commercial companies such as Apple 
and Google and a number of government agencies. Dozens of 
representatives from government and industry meet quarterly to 
discuss the DOD's special needs, for example, for extra 
security, and how to lower barriers to quickly fielding 
products.
    FFRDCs also interact with industry to transfer the 
practical results of FFRDC work to the commercial sector 
through such methods as cooperative research and development 
agreements, technology licensing, open source participation, 
and contributions to industry standards.
    The current fiscal environment requires significant 
reduction in DOD spending without jeopardizing national 
security. I believe that with the best innovative thinking of 
DOD, government and private research institutions, and 
suppliers in the defense industrial base, the DOD can maintain 
its superior operational capabilities even in an austere fiscal 
environment. Federally funded research and development centers 
play a unique role in addressing this challenge, working with 
government, academia, and industry to transition innovative 
technologies from concept to fielded capability.
    Again, I thank you for the opportunity to address this 
panel. I request that my prepared statement be included in the 
record, and I would be pleased to answer any questions.
    [The prepared statement of Dr. Huffman can be found in the 
Appendix on page 58.]
    Mr. Shuster. Thank you very much.
    I want to start off with Dr. Winarsky. You had mentioned 
that sometimes nonprofits are treated like for-profits. What 
does that look like?
    Dr. Winarsky. Well, relative to, for example, the 
opportunity to participate in the UARCs, which are university 
participation, the nonprofits have not been permitted, or other 
types of RFPs [requests for proposal] or BAAs [broad agency 
announcements] that correspond to university or FFRDCs just 
don't mention nonprofits. This would be very helpful if the 
nonprofits could be thought of as a major force that can help 
and accelerate bringing products to the warfighter.
    Mr. Shuster. Most universities I know, Penn State in 
particular, claim they are not for profit.
    Dr. Winarsky. They are nonprofit.
    Mr. Shuster. Well, some would question with that.
    Dr. Winarsky. Right, right.
    Mr. Shuster. But you operate very similarly to what they 
do?
    Dr. Winarsky. We do. The difference is universities have an 
educational goal, you know, educating, advancing knowledge in 
the world.
    Mr. Shuster. Right.
    Dr. Winarsky. We also have an invention goal. We are not 
educators, and that is partly why this happens, but we have a 
goal of making an impact on this world. We are nonprofit with a 
mission for the health and peace and prosperity of mankind.
    Mr. Shuster. Right. Do you work closely with the 
universities?
    Dr. Winarsky. We do. We were originally, as you know, spun 
out of Stanford University. And, in fact, for example, the CALO 
program that I mentioned that led to the creation of Siri, we 
were prime with DARPA. We had 23 subs, including Stanford, 
Berkeley, Carnegie Mellon, MIT, and, you know, the who's who of 
the AI [artificial intelligence] world.
    Mr. Shuster. Right. Thank you.
    As I mentioned in my opening statement, we have heard over 
and over throughout our roundtables and our hearings about the 
valley of death and how do we bridge that from research to 
education programs. Each of you could take a few minutes to 
talk about your recommendations on improving that process. You 
know, how do you see it? What has your experience been?
    Dr. Cross. Sure. Let me make a brief comment about the 
valley of death.
    Mr. Shuster. Is your mike on?
    Dr. Cross. Yes, Mr. Chairman, it is now. Just showing that 
I am trainable. That is good.
    The valley of death is a problem usually when we think 
about technology transition as a linear process of going from 
the research laboratory to some kind of demonstration until 
full-scale development or use in a commercial application. But 
it is not a linear process at all. Some people describe it as 
sausage making. It is really a messy process with a lot of 
give-and-take and back-and-forth.
    One of the things that I have found to be most useful is to 
have infrastructure in terms of laboratory or facilities where 
all the parties can come together and people can have wide 
bandwidth communication. Let me give an example.
    When I was a DARPA program manager, before Operation Desert 
Storm, our command and control systems--and I worked quite 
closely with both MITRE and SRI on this; they were both 
supported by my programs--we really couldn't respond to the 
kind of deployment that we saw from Europe to Saudi Arabia that 
was going to have to take place very quickly. And what we were 
able to do is all come together in a command center at Scott 
Air Force Base and have the developers work with the 
warfighters, work with the trainers, work with the testers, 
work with everybody across the DOD spectrum, and we worked 
pretty much night and day to build a system.
    So we had high bandwidth communication. We were all working 
together on the same infrastructure. There wasn't any 
confusion. There was clarity on what the goals for the project 
were, and we were all motivated to solve that problem. So that 
is one of the reasons the valley of death happens.
    Another reason it happens in our own work at Georgia Tech, 
and I suspect in other research universities as well, is where 
we are trying to go into the commercial market with 
intellectual property that we have created often through 
defense or other Federal sources of funds and, you know, there 
is just a gap in terms of the venture capital funding that is 
available or the cadre of CEOs [chief executive officers] that 
could help create these spin-out companies.
    I could explore later, if you wish, some of the things we 
have tried to do to address that, and I know other universities 
are doing the same, but those are a few examples.
    Mr. Shuster. Mr. Winarsky.
    Dr. Winarsky. Wonderful question.
    The valley of death is real. Invention--going from 
invention to implementation is often where ideas fall. SRI 
specializes in crossing the valley of death. That is one way 
that we as a nonprofit actually differ.
    One of the things, in terms of what could be done about it, 
first of all, focusing on the customer need is crucial, even in 
6.1, 6.2, when you are doing fundamental research at SRI, 
everyone focuses on who is the customer and what is their need. 
That is in antithesis to focusing on the technology and how can 
we advance it. It is not quite antithesis in the sense that it 
is opposition, but in fact you have to do both. You have to 
constantly look at market need.
    So in the case of Siri, for example, with CALO, the 
cognitive assistant learns and organizes this huge DARPA 
program, $150 million. There was always the advancement of AI 
technology, learning in the wild in a way that people had never 
done before, artificial intelligence for all small devices and 
large. But understanding the use and who might have it, who 
might use it, was what led to the creation of a venture, Siri, 
and led to the continued success there that would then, as we 
have heard, almost certainly assist the warfighter as well.
    So I would say, first of all, focus on customer need. 
Second, as your experience with your own businesses, focus on 
the market and the revenue opportunities that you might create 
that could sell to the warfighter so that this might be 
possible. Teach the language of innovation. Very few people 
actually understand what is a value proposition, what is value, 
and SRI does that, in fact. And realize that we should be able 
to cross the valley of death not all the time but many times 
with a rigorous innovation process. So that sounds a little 
funny because it can be the--innovation can be the work of a 
mad genius overcoming all obstacles, but it can also be the 
work of a genius team facilitated--not overcoming but actually 
supported in reaching its market.
    Mr. Shuster. Dr. Huffman.
    Dr. Huffman. Yes, I think one of the key things in 
overcoming the valley of death is really to recognize that 
research and development [R&D] of advanced technology is 
inherently risky, so those who are doing research are more 
likely to take risk, risk of failure in the research. Those 
charged with delivering a fielded capability have the charge to 
eliminate risk from their activities. They want a certain 
outcome so that they can guarantee that a capability will be 
delivered to the warfighter at a time certain.
    So those two things are inherently in conflict, taking 
additional risk with research on the one hand and trying to get 
the risk out of your acquisition program so you can ensure 
capability.
    Again, I think a key is to get the end users more closely 
engaged with the development of the technology and capability 
so they can see interim steps along the way and be able to 
provide incremental feedback to the developers. Some of the 
most success we have had is, as Dr. Cross said, when we got all 
the developers, the users in the same infrastructure and very 
closely operating together so that they could basically try out 
interim products, give immediate feedback to the developers, 
and then modify what they were doing, and that has proven 
successful on a number of occasions.
    Mr. Shuster. Thank you very much.
    That is one of the things I think we have heard from the 
for-profits, is they are unable or not allowed to talk to the 
end user going through some of these processes. It makes it 
extremely difficult, which makes absolutely no sense to me if, 
you know, what you three have said, is you have got to be in 
the room with all hands on deck, everybody trying to figure out 
how to best put this product, this technology forward.
    So, with that, I will yield to Ms. Hanabusa.
    Ms. Hanabusa. Thank you, Mr. Chair.
    Dr. Winarsky, in reading your prepared statement, of 
course, I am not sure how many people can claim nine Emmys and 
one Academy Award plus a DARPA award, but, having said that, 
certain parts of your statement have got me somewhat confused.
    You state that nonprofits like yourself excel at 
transitioning products from the laboratory to the assembly 
line. Yet on the prior page you said that because nonprofits 
are treated differently from the FFRDC that Mr. Huffman speaks 
to and universities and not able to receive sole source 
contracts that you really cannot take that product and develop 
and sell it commercially.
    So I am trying to figure out from your two statements 
exactly what it is that when you talk about dealing with the 
Defense Department, which we are curious about, what is it that 
SRI does and what has been the prohibitive parts of your 
structure or the way we do procurement that just makes it 
prohibitive for you to do it?
    Dr. Winarsky. Sorry if there was any confusion.
    We are able to, as a nonprofit, develop technology and 
deliver it to the warfighter. Just because we are a nonprofit 
doesn't mean we are not able to overcome these obstacles. So we 
can, in fact, overcome them, and we have demonstrated that many 
times.
    Ms. Hanabusa. Can you give me an example? For example, what 
exactly comes to mind as something that you have been able to 
do as SRI?
    Dr. Winarsky. So today in the--in Afghanistan and Iraq 
there is a system called TerraSight that SRI developed that 
enables you to view outside the bases and see everything that 
is going on. There are other flying systems that we can't go 
into depth on that can determine or find IEDs [improvised 
explosive devices], for example. So many, many technologies 
have left SRI and gone to help the warfighter, including the 
invention of the mouse, going back to that day.
    So it is not like it is not possible. It is just much more 
difficult to take the process and work with the warfighter in a 
way that universities and other FFRDCs and other organizations 
are capable of doing. Rather than prevent, that wasn't meant to 
be my indication, it--by virtue of giving this capability to 
us, we will be able to accelerate and be far more--even more 
productive and more efficient.
    Ms. Hanabusa. So the capability that you are asking for is 
UARC or is it--and procurement?
    Dr. Winarsky. As one very specific concrete example, yes. 
And the other example is that the DOD would consider us for 
sole source because we are nonprofits when there is sponsored 
research in other occasions.
    Ms. Hanabusa. So why are you--do you know why, if you do 
know, you are not treated as a sole source like everyone else 
and that you must compete with manufacturers, which is I think 
what your statement was here?
    Dr. Winarsky. The competition is with everyone, 
manufacturers, universities, and the like. I don't know why 
we--my best guess in terms of our discussions about this is 
that we are a small group relative to the others, and that--
basically overlooked often in terms of these procurements.
    Ms. Hanabusa. Is there a problem with the commercial 
application of whatever you may create when dealing with the 
DOD? We have heard a lot of that, that, you know, there is an 
issue about the creation and then what you do after that in the 
commercial application of it.
    Dr. Winarsky. Do you mean the valley of death again?
    Ms. Hanabusa. Right.
    Dr. Winarsky. Yeah. So there is always a problem with the 
valley of death. Invention is often by researchers, for 
example, and they are looking at technology to advance the 
technology. But, in fact, unless it is really 6.4 and beyond, 
it is very difficult for manufacturers, primes, to say this is 
what we want. And, you know, it hasn't been constructed for 
them. It has been constructed in a parallel path. So whether 
the manufacturers that make these products want that is very 
difficult and takes a great deal of collaboration with the 
manufacturers, too.
    Ms. Hanabusa. Thank you.
    Dr. Huffman, in your description of what you do and the 
ability to go in--for example, when you said you have put them 
on the ships and then, you know, they get to really interact 
with what is going on, let me understand. You are sort of an 
entity that you are not doing the actual research and 
development, you seem to be doing more of the T&E, the testing 
and evaluation, of what is then brought to the warfighter. Am I 
correct in that understanding?
    Dr. Huffman. Well, actually, all of the above.
    We do--we are a systems engineering FFRDC, so we are not 
into pure research. We do our own research and development to 
explore new concepts and develop proof of principle, proof of 
concept prototypes. We work very closely with the Government in 
acquiring operational capabilities so that we help translate 
their needs into the requirements that industry can then 
provide solutions for and help the Government be basically an 
informed consumer.
    I like to use the analogy of a building architect as the 
type of service we provide to the Government. The architect 
works for the client, not for--has no vested interest in who is 
going to build the building, and really make sure that the 
client's needs are met, that they can do trade-offs of the 
capability that they will be acquiring versus the constraints 
they have in terms of cost, schedule, and things like that.
    So that is basically how we really work from the early 
concept all the way through to the test and evaluation.
    Ms. Hanabusa. Thank you very much.
    Thank you, Mr. Chair.
    Mr. Shuster. Thank you.
    And with that, Colonel West is recognized.
    Mr. West. Thank you, Mr. Chairman and Ms. Hanabusa as well.
    Gentlemen, thank you for being here; and, as I shared Dr. 
Cross, you know, my time selling Cokes at Georgia Tech was a 
great opportunity for me to learn some responsibility and, of 
course, get a chili cheese dog at the Varsity.
    When I look--my alma mater is actually the University of 
Tennessee, and the University of Tennessee has a Defense 
Business Institute that is there. And so as I am sitting here 
and I look at the title here, ``Getting Innovative Solutions 
from Concept to the Hands of the Warfighter,'' I would like to 
throw this idea out here and see what you all think about this. 
You know, if there is some kind of way that we could develop, 
you know, regional research and development partnerships 
between, you know, our colleges and universities with, you 
know, the military--I will give you a great example.
    Georgia Tech is not that far from Fort Benning. Fort 
Benning is now the maneuver warfare center for the United 
States Army. All infantry and armor is coming out of there. Or 
we look at the Research Triangle where Duke and the University 
of North Carolina is. Right down the road you have United 
States Special Operations--I mean, the Army Special Operations 
Command and the airborne, you know, forces there at Fort Bragg.
    You know, is this a way that we can maybe streamline so we 
don't have these valleys of death or things like this, where we 
can develop these types of partnerships with our colleges and 
universities with these installations that are close by, you 
know, being Naval installations, Air Force or whatever, as we 
look across the country? So that we can start looking at, you 
know, if there is something that I am dealing with at Fort 
Benning, I want to see, you know, how can we take this concept 
and bring it to fruition, I can drive up the road to Georgia 
Tech, and the students at Georgia Tech or wherever can 
immediately come right down to Columbus. And that cuts down, 
you know, on the travel time and everything. So is that a 
viable solution to help us go from concept into the hands of 
the warfighter?
    Dr. Cross. Congressman, it is; and if I can give a couple 
examples of what we are doing in Georgia along those lines.
    Specifically with Fort Benning, the State of Georgia 
supports both the infrastructure of Georgia Tech and our 
economic development outreach. So we have 27 locations 
throughout the State of Georgia, including a location in 
Columbus, Georgia. And one of the things that is going on right 
now with the National Guard in Georgia, Fort Benning's 
increasing emphasis, as you mentioned, the maneuver function 
that came from Fort Knox with unmanned vehicles, unmanned 
ground vehicles, if we go over to Warner Robins Air Force Base, 
they are the sustainers now for the Global Hawk and the 
Predator, so unmanned air vehicles. And if we go over to Kings 
Bay, just south of Savannah, there is a lot of emphasis in the 
Navy with undersea autonomous vehicles or intelligent 
torpedoes.
    Much of that great work is done at the UARC at Penn State. 
So what we have done in the State of Georgia is we have set up 
a coalition, if you will, that involves the National Guard, the 
State government, the military operations in the State, and the 
research universities, Georgia Tech, but other research 
universities, to look at how do we bring, what--in a use-
inspired research way, what are the open research issues that a 
research university can look at and how can we accelerate those 
research results into practice through that entire ecosystem, 
if you will?
    There is another existence proof of where that works really 
well. If we go to--it is Robins Air Force Base--I am sorry--and 
the Warner Robins Air Logistics Center where the electronic 
warfare systems for the Air Force are maintained, and much of 
that research is done out of Wright-Patterson Air Force Base in 
Dayton, Ohio, and what we have developed at Georgia Tech is a 
great deal of forward-looking research in electromagnetics and 
electronic warfare, but also through our applied research 
function, the Georgia Tech Research Institute, the 
institutional memory for electronic warfare systems in the 
Department of Defense. And we can upgrade those systems very 
quickly and then produce production plans that companies can 
take forward and produce, and we have many examples of where we 
have done that as well.
    So creating these partnerships is very much key for 
addressing the valley of death and working closely with the 
warfighters, and it is spot on.
    Dr. Winarsky. Great question, Congressman West. I would say 
absolutely it would be highly valuable. I mean, SRI basically 
believes that innovation comes from learning from the customer. 
So customer need, building a differentiated technology 
approach, understanding the benefits to the customer, and 
understanding the competitive approaches to doing all those 
things. If we have those four ingredients, then we can create 
great value for the customer.
    And in the case of what you just described, that would far 
better improve our ability to have those ingredients. We would 
understand the warfighter's needs. They would be right with the 
technologists. Otherwise, you have the separation. Oh, I am 
going to advance what I am doing, but I am not quite sure what 
it is good for.
    It is a little like, you know, tech transfer without--what 
you suggested is a little like driving in a car where 
technology is behind you and business is in front of you and 
you are driving by looking in the rearview mirror. So what we 
need to do is more of what you suggested.
    Dr. Huffman. Well, I definitely agree.
    I think Dr. Cross mentioned one of my favorite terms, use-
inspired research, which is having a purpose to why you are 
doing research. In my role, I interact very frequently with our 
academic partners, and one of the things that they are really 
asking me for is help us understand what the real needs are. 
They want to work on things that ultimately they can see 
someone benefiting from in the future. So they are highly 
motivated to have that, but they just don't know how to connect 
to have a good avenue, and that is one of the roles that we try 
to play.
    I think one of the other things that can help with such a 
mechanism, as you might suggest, one of the other things they 
lack often is connection to sources of data or information with 
which to test out their ideas. I can make anything work in a 
laboratory environment almost, but when you get out in the real 
world, things get messy, and they need to be able to acquire 
information and data to test their concepts, and very often 
there are barriers for universities to be able to access that 
kind of information and data.
    Mr. West. I think that what you just talked about was an 
unmanned vehicle center of excellence, and if we could kind of 
have that type of synergy, I think it would go a long way.
    So thank you, Mr. Chairman. I yield back.
    Mr. Shuster. Thank you.
    Mr. Runyan.
    Mr. Runyan. Thank you, Mr. Chairman.
    Gentlemen, thanks for your testimony today.
    Dr. Winarsky and Dr. Huffman, you are kind of talking about 
the exchange of ideas, the need for them or a new idea. Dr. 
Winarsky, in that realm, give me an idea of percentage numbers 
of the original ideas or you are furthering a current 
technology.
    Dr. Winarsky. SRI has about 2,000 projects a year. We are 
continuing with all of those projects to serve the government 
requests. Sorry, not all, about 70 percent of those. The rest 
are commercial.
    We create two or three ventures a year, but only because 
that is what--the ventures we create we expect or have to be 
potentially billion dollar companies in order to get Silicon 
Valley to invest in it. But then, in terms of transitioning to 
the warfighter, I am sure there is maybe 50 or so that--maybe 
more--that transition and make great success for the 
warfighter.
    Mr. Runyan. In talking about--and I will have all of you 
eventually weigh in on this. But when you talk about the 
federally funded research--and, obviously, we know the budget 
crisis we are in, and I know all of us sitting on HASC, we deal 
with it on a daily basis. Because we are going to lose our next 
generation of colonels and all that kind of stuff when you have 
these drastic cuts. So can each of you kind of talk on whether 
we are--you know, where we are talking education, we are 
talking STEM and all that stuff, how that is going to affect 
our ability to move forward and that fine line that we have to 
walk. Dr. Huffman.
    Dr. Huffman. Certainly. I think the STEM education problem 
is not just a problem for DOD. It is a problem for our Nation 
as a whole. I think the number of engineering graduates, you 
know, continues to fall off.
    It used to be that we lived for many decades on the 
intellectual capital provided by citizens of other nations who 
immigrated to the United States, were educated, and stayed here 
because this was where you could pursue a career in high 
technology and engineering. That is no longer the case. We have 
competitors in other countries who now welcome those people 
back to work in their industries. They are developing their own 
universities, not quite yet maybe to the level of ours, on 
average, but continuing to improve. That is great for the world 
in general, but for us as a nation and our competitiveness 
economically, I think science, technology, engineering, 
mathematics is critical for our future.
    Mr. Runyan. Dr. Winarsky.
    Dr. Winarsky. I agree completely.
    We have a terrific shortage of people in all of these 
areas. They are crucial for innovation, which is going to be 
the way that we create wealth and health and success for this 
country.
    I would say that we are also seeing innovations in 
education itself that can help. Education is being transformed 
in e-textbooks. There is a course at Stanford right now, by the 
way, that is offered to 60,000 students simultaneously, one 
course.
    So there is ways to teach a nation, even, and open this up 
to the world in ways that we never had before. But in terms of 
the crucial nature of bringing more students in the science, 
technology, education, and mathematics area, absolutely 
essential.
    Mr. Runyan. Dr. Cross.
    Dr. Cross. I agree completely, Mr. Congressman.
    Just personally, I was interested in becoming an engineer 
in the early 1960s in third grade when President Kennedy 
announced the moon shot, and, you know, I wanted to be part of 
that. That was exciting. That drove a whole generation of 
people going into science and technology.
    We spent a lot of our volunteer time at Georgia Tech--and I 
know this is done at other nonprofits and research 
universities, too--going out into the public school system and 
trying to get kids interested in science and technology. One of 
the ways we have been able to do that quite effectively across 
the country is through robotics and supporting robotics clubs 
in schools; and kids get really, really excited about this. So 
showing them that there is actually a path and a future in 
science and technology is very critical.
    Now, as was mentioned, at a research university like 
Georgia Tech, our product are the students; and one of the 
concerns I have about the future of S&T funding from the DOD is 
what would be really irreversible in terms of production of 
Ph.D. students that stay in this country and work. It takes 
about 10 years now to train a Ph.D. student, about 6 years for 
the education. Increasingly in engineering, post-doctoral 
assignments are required. It is common in the sciences. That is 
2 to 4 years.
    So from the time you start your graduate studies until you 
are actually hired as an assistant professor at an American 
university or a nonprofit or an FFRDC, you are looking at 10 
years; and the cuts in funding will cut down the number of such 
students we can have.
    So we really have two problems. One is getting kids 
interested in the first place, and the second one is the 
irreversibility if we cut out that pipeline.
    Mr. Runyan. And I just--I brought that point up really to 
talk about because we always talk about hollowing out our force 
from the military operations aspect, how we now are a support 
force in the same manner, and it is really something. Because 
if there is no need for it--like you said, you know, if there 
is a need for it, there is interest in it, and people are going 
to gravitate toward it, and we have to be careful with that.
    I yield back, Mr. Chairman.
    Mr. Shuster. Thank you very much.
    With that, I am going to yield another 5 minutes to Ms. 
Hanabusa. We outnumber her over here only in numbers, not in 
brain power.
    Ms. Hanabusa. Thank you, Mr. Chairman.
    Dr. Cross, I don't want you to feel left out. You made a 
statement about what we needed to do was the ability to do 
research for future needs of the military.
    Dr. Cross. Right.
    Ms. Hanabusa. And I am just curious, because this has been 
an issue for me, is what is the military going to look like in 
another 20 years, 30 years, and how do we define it. So when 
you say to address the future needs, and we know research 
begins and it takes a long time before we get the final 
product. I think an example we have is like F-22s, 17 years in 
the making, or something along those lines.
    Dr. Cross. Right.
    Ms. Hanabusa. So can you tell me in your mind when you made 
that statement, who do you feel defines the future needs?
    Dr. Cross. Well, it should be defined in----
    Ms. Hanabusa. And don't say us because----
    Dr. Cross. It should be defined by the user, Congresswoman. 
The warfighter should be the ultimate source. And if we use 
this valley of death metaphor and visualization of it, we 
should be on the far side of the valley of death, looking and 
trying to understand what the users are going to need.
    There is examples from military history. One I like to cite 
is at Maxwell Field in Montgomery, Alabama, back in the 1930s. 
It was before there was an Air Force. It was the Army Air 
Corps. And they knew that in a future combat that daytime high 
altitude bombing was going to be required, so the military was 
training and they were testing systems there before we had 
engines that were powerful enough to lift an aircraft to 25, 
30,000 feet.
    So that is an example of a venue for innovation where the 
warfighters and everybody connected to that was working 
together, and that was driving the technology requirements 
where there was missing technology, and that drove the 
research.
    At Wright Field in Dayton, Ohio, when they first built an 
aircraft with engines that still weren't powerful enough, they 
built the runway up a hill so the airplane could get enough 
velocity coming down the hill just to get it up into the air 
and test these systems.
    So I am not saying we should do things at that high risk, 
but these venues that are created to brainstorm--Skunk Works 
would be another term for that--to look and brainstorm about 
the future.
    Ms. Hanabusa. We went to Skunk Works.
    Dr. Cross. Okay.
    Ms. Hanabusa. But the other thing--and, Dr. Cross, the 
other thing I throw into this is the fact that almost every 
single person who has spoken to us--and the most recent was I 
believe General Chiarelli. He said, the one thing that you can 
count on is the fact that what we have been 100 percent perfect 
on is that we have been 100 percent wrong in predicting what 
the war is going to look like.
    Dr. Cross. Uh-huh.
    Ms. Hanabusa. So, for example, we were beginning 
Afghanistan and Iraq with World War II technology. And so I 
guess that is the concern. We know what we needed in 
Afghanistan and Iraq, but is that what the warfighter is going 
to need in the future? Because we may not be in that arena. So 
how do we define it?
    And you made also a statement that the U.S. needs to be 
aware of developing technologies worldwide.
    Dr. Cross. Right.
    Ms. Hanabusa. Are you aware of anything in government or 
someone? Is your entity, for example, actually studying what is 
going on worldwide in terms of defense type of technology?
    Dr. Cross. Well, in terms of technologies for materials, 
electronics, absolutely.
    We, for 22 years, have had--I didn't put this in my written 
testimony, but it is on our Web sites. We have had a campus in 
Europe, in France. We have partnerships in China, in Singapore, 
in Ireland, and Panama. Researchers today, regardless of any of 
the organizations they are in, this is a global pursuit, and 
your colleagues doing research are going to be at the best 
universities, the best research organizations worldwide. So to 
have credibility, you are going to be interacting with them, 
and that is very important. So, absolutely, we are engaged in 
research on a worldwide basis.
    Ms. Hanabusa. And this is one that I am going to ask every 
one of you to answer.
    One of the concerns everyone has, of course, is that as the 
defense budget begins to collapse or we start to cut the 
defense budget, and normally one of the things that always gets 
hit first is research and development, that seems to be one of 
the categories that gets cut. If there were to be major cuts, 
how would that affect the number of actual professors or people 
employed at Georgia Tech?
    Dr. Cross. Sure, Congresswoman, if I could respond, it is 
going to be linearly related to the cuts. So you could--we are 
very competitive in terms of receiving defense research 
funding. It is about a third of our overall research portfolio. 
And for a proportional cut, there will be a proportional number 
of faculty and, more importantly, graduate students. Faculty 
are not completely supported by research. Usually, they are 
covered for 9 months by the tuition and by the State support in 
a public university or by whatever the budget is for a private 
university. But it is traditionally 3 months that they are 
trying to cover with research support. But the graduate 
students will be cut, and that will be--and, to be honest, that 
is where the real innovation comes from, the younger people who 
are driven and willing to work 20 hours a day and 7 days a 
week.
    Ms. Hanabusa. How much of your budget is defense related?
    Dr. Cross. Approximately one-third of our research 
portfolio. Our research portfolio was $643 million last year. 
It is approximately $230 million in defense-related research. 
That is not all basic research. That includes 6.2 and 6.3(a) as 
well.
    Ms. Hanabusa. Dr. Winarsky.
    Dr. Winarsky. Yes, so the question you want me to answer 
is, given major cuts, how would SRI respond?
    Ms. Hanabusa. Right.
    Dr. Winarsky. My feeling is it would be worse than linear. 
And that is because SRI has and hires people here in Silicon 
Valley, in one of the most difficult places on the planet to 
recruit great engineering staff, given Google and Apple and 
Microsoft and everyone else around us. And should there be this 
decline, it has an effect on the staff that says, you know, 
this is harder and harder to do something that we want to do 
greater and greater.
    By the way, during a period of time that we have never seen 
greater market disruptions. Market disruptions are happening in 
mobile, bio, in cyber security and everywhere else. So the 
impact will not only reduce the staff for working on R&D for 
the Government. It will encourage them to go elsewhere. So we 
would very much like not to see a reduction.
    Ms. Hanabusa. Dr. Huffman.
    Dr. Huffman. Yes, I think certainly we would obviously be 
affected by significant decreases in proportion. I think we 
would expect that.
    I think, also, as my colleagues said, the desire of 
talented engineering professionals to come and work for an 
organization which primarily supports the government and 
particularly the DOD and declining defense budget will be very 
difficult. They will seek opportunities elsewhere in the 
commercial sector because they perceive that as more stable, 
more opportunities to move up, particularly if they are early 
in their careers. So I think that would probably be a bigger 
impact than the direct reduction in our work, would be the 
perception of the workforce that maybe this is not the career 
path for me.
    Ms. Hanabusa. Thank you.
    Thank you, Mr. Chair.
    Mr. Shuster. One more quick question. As far as 
compensation between--I would assume scientists and researchers 
in the Government make less than you folks pay versus what 
Google and Microsoft, would that be accurate?
    Dr. Winarsky. Yes.
    Mr. Shuster. Significantly? Do you pay significantly more 
than a government researcher or scientist would make versus--
significantly more than government?
    Dr. Huffman. Well, again, I don't know the government pay 
scales, so I can't comment on that.
    Mr. Shuster. It can't be more than about $175,000.
    Dr. Huffman. We are in a competitive market for talent, and 
we work very hard to try to understand, you know, what the 
market is paying that talent so that we can attract and retain 
those individuals. But primarily in an organization like ours 
you find a lot of the motivation of the staff is really about 
the missions we support, and they are closer to being--you 
know, desiring government service than making huge amounts of 
money in a start-up.
    Mr. Shuster. Go for all three of you basically?
    Dr. Cross. Mr. Chairman, your rankings there are accurate. 
I would just point out one of the things that all of our 
organizations do is public service is important, and we support 
people coming back into government service from our 
organizations under the--with the Inter-Personnel Act 
[Intergovernmental Personnel Act Mobility Program], the IPAs. 
And so this is one of the ways that the government is able to 
have the high-caliber, relevant technical capabilities that it 
is able to have. But, you know, it is capped, too, in pay for 
doing that.
    Mr. Shuster. Right.
    Dr. Winarsky. One of the other ways we are able to retain 
staff and--again, in this most difficult environment--is, when 
we do create a venture or a license, SRI rewards a share of the 
royalty or equity to the staff. So even though we don't have 
any ourselves as a nonprofit, when they help create and 
innovate, they are motivated by helping make that happen.
    Mr. Shuster. Right. Thank you.
    And, with that, Mr. Schilling.
    Mr. Schilling. Thank you, Chairman.
    Welcome. Sorry I was late. I was helping my wife get six 
kids to the airport. Pretty good excuse, I guess.
    So let me--I guess what I am trying to figure out here--so 
would you say basically what we are saying is to get rid of 
death valley or minimize it, basically by taking the end user 
or the warfighter with the researcher and get those folks 
basically together, is that pretty much what we are saying?
    Dr. Winarsky. That is one way.
    So another way--that is a direct way. Here is the 
warfighter. Here is the technology. Let's get together.
    Another way is commercialization, and then the warfighter 
can buy it off the shelf, basically. The GPS [Global 
Positioning System] is a good example of that or Siri or mobile 
phones or any of those other technologies. We do both at SRI.
    Mr. Schilling. Okay, very good.
    I know this will probably range all over the place, but 
what is the average time from concept to the end product from 
research?
    Dr. Cross. Congressman, it does range all over the place, 
but if I could just pick up on my colleague's comment about the 
commercial sector. The commercial sector is incentivized to be 
fast and to get products into the marketplace. Plus, the 
investment they make in maturing the technology is much higher 
than you can typically make in the DOD, which now gives the DOD 
a competitive advantage of buying back commercial products at a 
lower cost than they could possibly do over the long life 
cycles that the acquisition process kind of subjects everybody 
in the DOD to.
    Having said that, I have to point out that the DOD is 
better than other government agencies. So that is one answer to 
that.
    But industry, it is the speed of the market, how quickly 
can you get it to the marketplace.
    Mr. Schilling. Very good.
    Mr. Cross, you had mentioned in the testimony--and I just 
want to clarify this--Georgia Tech's research expenditures were 
$643 million.
    Dr. Cross. That is correct.
    Mr. Schilling. Did you say about a third of that money goes 
to DOD?
    Dr. Cross. That is correct. And I could get you the correct 
numbers. About 40 percent of--I have to do these numbers 
correctly now, because I have to break them down. It is 
approximately one-third that is based on defense sources. I 
would say about 10 percent of that is related to basic 
research, quite a bit of the supply, 6.2, and then development 
work that we have as subcontractors to defense contractors, for 
instance.
    Mr. Schilling. Okay, very good.
    As you pointed out, we are in a time of budget crunching, I 
guess you might say. How do we ensure that we maintain the 
competitive edge when we cannot fully fund all the research 
that is needed?
    Dr. Cross. Congressman, if I could--part of it is not being 
able to predict exactly what is needed, but having the capacity 
to produce options for the future is one of the things we need 
to think about doing. If we look at the definitions of basic 
research and applied research that are used by the DOD, it is 
to create understanding and knowledge of phenomena and of 
opportunities. So that doesn't mean it has to be created inside 
the DOD. We need to do a much better job I think also working 
with our international colleagues and technology scouting. 
Wherever those ideas come from. This I think is a perceptive 
innovation, casting the net wide, crowd sourcing, looking for 
ideas anywhere, and then being able to realize that those are 
good ideas and apply them in this use-inspired research 
methodology.
    Mr. Schilling. Very good.
    Mr. Winarsky, I have got--I am one of the new kids on the 
block like these three are--well, two guys.
    Mr. West. He is big enough to make two.
    Mr. Schilling. He is two of us.
    How are FFRDCs created? And then basically--maybe this 
could be for Mr. Huffman--and how do we narrow down which 
projects that they research, I guess?
    Dr. Huffman. FFRDC--there is a section of the Federal 
Acquisition Regulations that cover the creation of FFRDCs. They 
are basically to be employed whenever the Government can't 
acquire the services either from in-house resources or from 
normal means. So there has to be a special reason to do it.
    Basically, an FFRDC is created by a government agency when 
they have such needs. There is a very tight governance 
process--or definitely should be--in terms of the operation of 
FFRDC to ensure that the work performed by the FFRDC is meeting 
those special needs. In the case of the Department of Defense, 
Congress has chosen to limit the size of the FFRDCs that the 
DOD employs, and DOD has a comprehensive management plan that 
governs how the work is selected and how the governance process 
works.
    Mr. Schilling. All right. Very good.
    I yield back the 2 seconds of my time.
    Mr. Shuster. Thank you very much.
    A couple questions concerning who you mainly work with, do 
business with, the three of you. Are they mainly dealing with 
the large primes or do you go down from large primes all the 
way down to the mom and pop who is developing something in his 
garage? Who are you working with out there?
    Dr. Cross. Go right down the line.
    We work with most of the DOD research organizations, DARPA 
and the laboratories on their competitively selected awards. We 
have master agreements with most of the large defense 
companies--the Boeings, the Lockheed Martins. We will work 
directly with them, both the transition technology and to be 
subcontractors on their projects.
    And we also in the State of Georgia try to work with small 
companies that either spin out of research universities or 
locate there and plug into the State infrastructure for that 
support. So we work with everybody, sir.
    Mr. Shuster. The majority of the work is being done, 
obviously, with the primes, because they have the majority of 
the work.
    Dr. Cross. Well, the 6.3(a), the development work, is done 
with the primes. There will be a subject matter expert on some 
aspect of the technology. With the DOD laboratory and research 
infrastructure, we work on grants and contracts that are 
competitively selected and awarded by those organizations like 
a DARPA or an Air Force research laboratory.
    Dr. Winarsky. About the same as Dr. Cross mentioned is what 
we do.
    I would also add some of the companies we work with we 
create, we incubate and make companies that we then spin off, 
and then they sell to the warfighter or to commercial.
    Mr. Shuster. How does a company come about, one person with 
an idea?
    Dr. Winarsky. No, we have a rigorous process--it sounds 
again strange to have a rigorous process of innovation, but, in 
fact, we do it to help the process. So we start with the market 
need. We create a commercialization board. That board reviews 
and incents by funding, helps recruit team members to the 
venture, helps define the value proposition and so on. And then 
we move that along to create the venture--usually venture 
capital work as well, investors.
    Dr. Huffman. Well, we work exclusively for the Federal 
Government in terms of who pays us. We interact with all of the 
above, certainly with the large prime contractors all the way 
down to very small organizations. We are primarily in the 
information technology business, so it may take a lot more 
wherewithal to build an F-35 than it does to develop the 
software application that can be employed by the DOD.
    Mr. Shuster. And how do you--I guess you are working with 
the Federal Government exclusively. How does industry know what 
is available to work with you folks? Do you have a program of 
education, of marketing? I don't know what you would call it.
    Dr. Cross. We have an array of services here. We have 
strategic partnerships through master agreements with many 
companies; and, frankly, we leverage our alumni network quite a 
bit at Georgia Tech, too. We pride ourselves on people that 
have gone into the executive ranks of major companies. The 
State of Georgia and their Department of Economic Development 
is on our campus, and they are very proactive in advertising to 
companies on our behalf. Most research universities, their 
reputation speaks for themselves as well. So that is very 
helpful.
    We also have some specialized contracts. I will just cite 
one that I did in my testimony. It is called the Military 
Sensing Information Analysis Center. It was a contract we won 
from the Defense Technology Information Center, DTIC, and it is 
the repository for defense sensor technology. It goes back to 
the 1950s. And so we are a dissemination service on behalf of 
the DOD for information in this area as well, and any industry 
in the United States can come in and use the services there. It 
is like an online library. So, many different approaches.
    Dr. Winarsky. We also have a diverse number of approaches, 
strategic partnerships working closely with the DOD awards, 
working and talking to our peers and friends and going to 
conferences, all of that.
    Mr. Shuster. Do you play a role, if any, in technology 
transfer from the Federal labs?
    Dr. Cross. The one example I can give you, it is not a DOD 
laboratory but the Department of Energy laboratories. We are in 
a partnership with Oak Ridge National Laboratory and working 
very closely with them in high-performance computing. We have 
faculty in our college of computing that are deployed there.
    But there are not many instances that I can point to 
elsewhere. I think most of the instances that I have heard 
about and seen from my own military time is where there is 
unique infrastructure or colleagues, but it is most of our 
efforts like at SRI are trying to take the intellectual 
property that we are allowed to own through the Bayh-Dole Act 
and accelerate it into commercialized activities.
    Mr. Shuster. All right.
    Dr. Winarsky. We may work on occasion with some of the DOE 
labs. Argonne might be an example of that. To my knowledge, I 
don't know of many instances.
    Mr. Shuster. You had mentioned, Mr. Winarsky, about taking 
this technology and you needed to--billion dollar companies to 
deal with. I just wondered if any of you are familiar with the 
Army Venture Capital Fund?
    Dr. Winarsky. I have heard of it, yeah.
    Dr. Cross. I have heard of it as well, but I don't have----
    Mr. Shuster. No experience with it at all?
    Dr. Winarsky. We were supposed to be responsible for that 
fund, but we lost that competition.
    Mr. Shuster. Okay. I learned about it--I don't know where 
we were--in Hawaii or somewhere in the last week or so.
    I have no further questions. I don't know if any other 
folks on the panel do.
    Mr. West. Just one.
    Mr. Shuster. Sure.
    Mr. West. Thank you, Mr. Chairman.
    Do you all get the opportunity to go over to the combat 
theaters of operation maybe to get an opportunity to see some 
of these tools that are being implemented in the theaters--
Iraq, Afghanistan, Kuwait, wherever?
    Dr. Huffman. I haven't personally done that, but we have a 
number of people who do that on a regular basis.
    Dr. Winarsky. Same with SRI.
    Dr. Cross. Okay. It is ad hoc, but through these advisory 
boards like the Defense Science Board, their opportunity.
    But one of the things that I want to commend the DOD for is 
a program that they run through DARPA--and I believe it is 
through the Institute for Defense Analyses--that recruits young 
scientists from all of our organizations to have that 
experience, to go out into the theater, to go out to the 
national test range, to learn what it is like to carry 120-
pound packs, so we need to do more research on batteries, et 
cetera, et cetera. So those programs are extremely valuable for 
providing the young researchers the opportunity to understand 
what use-inspired research is all about.
    Mr. West. And last question, what do you think are the two 
most critical or vital areas where the not-for-profits and with 
your capability and capacity can help the Department of Defense 
in research and development? If you look across the different 
type of battlefield functions, where do you think the top two, 
where you guys can really have the most impact?
    Dr. Winarsky. Persistence surveillance is one. We can have 
a tremendous impact in deploying. And cybersecurity is another.
    Dr. Cross. In our case, Congressman, it is going to be many 
specific areas. Autonomous systems will be one, for reasons for 
a previous answer to a question. Certainly cybersecurity for 
the future. And then I think the next generation of electronics 
and some of the materials that we are developing would be very 
important as well.
    Dr. Winarsky. Robotics, by the way, is going to have a 
major impact as well.
    Dr. Huffman. Our area is information technology, and 
cybersecurity is one of the top areas that I think we are 
trying to make a contribution, as well as intelligence 
surveillance, reconnaissance, and communications, moving large 
volumes of information and turning it into information that the 
warfighters can use.
    Mr. West. Thank you, Mr. Chairman. I yield back.
    Mr. Shuster. Thank you.
    Anybody else?
    Ms. Hanabusa. Sure, go ahead.
    Ms. Hanabusa. I have a question.
    Mr. Shuster. Sure.
    Ms. Hanabusa. Dr. Winarsky, Dr. Cross gave us an idea how 
much of his research budget is DOD. Can you tell me how much of 
whatever--I know you are a nonprofit, but how much money comes 
in that is DOD related?
    Dr. Winarsky. In terms of total government, it is about 70 
percent. That includes--my guess is about 20 percent is NIH 
[National Institutes of Health] and NSF [National Science 
Foundation]. So it is 40 to 50 percent, somewhere in that range 
probably, with the DOD.
    Ms. Hanabusa. And can you tell us what that equates to in 
terms of money?
    Dr. Winarsky. Total budget for SRI is about--total revenue, 
rather, is about $600 million a year.
    Ms. Hanabusa. Thank you.
    And do you have any ideas about how many--you have 2,100 
employed people. So do you know about how many of them are 
actually working on DOD-related matters or are they just all 
cross-trained, that you can't say?
    Dr. Winarsky. No. I am trying to think. There are five 
divisions, and I would say three out of five, but one is much 
larger, so I would say somewhere around 70 percent are DOD.
    Ms. Hanabusa. Thank you.
    And we know, Mr. Huffman, you are totally government, but 
can you give us an idea for MITRE how much is your budget and 
how much you think might be affected? And, also, of the FFRDCs 
that you actually supervise, if I understand where you oversee, 
how much that equates to in terms of money, too?
    Dr. Huffman. Okay. Overall, the DOD provides about 60 
percent of MITRE's revenue. We manage five FFRDCs, one for the 
Department of Defense, one cosponsored by the Internal Revenue 
Service and the Department of Veterans Affairs, one sponsored 
by the Federal Aviation Administration, one sponsored by the 
Department of Homeland Security, and one sponsored by the U.S. 
courts.
    Ms. Hanabusa. How much does that equate to in terms of 
money?
    Dr. Huffman. Total about $1.35 billion annually.
    Ms. Hanabusa. And that is all of MITRE?
    Dr. Huffman. All of MITRE.
    Ms. Hanabusa. And 60 percent is DOD?
    Dr. Huffman. Roughly $950 million I think is DOD.
    Ms. Hanabusa. And of the FFRDC that you said is DOD, do you 
know how much money that is----
    Dr. Huffman. Approximately $950-$980 million.
    Ms. Hanabusa. Thank you very much.
    Thank you, Mr. Chair.
    Mr. Shuster. Thank you, and thank all of you for being 
here. We appreciate you taking the time and helping us try to 
understand this.
    Again, we look forward--I know the staff may be contacting 
you with some further questions for clarification, so we 
appreciate any help you can give us.
    Thank you all very much, and this hearing is adjourned.
    [Whereupon, at 4:16 p.m., the panel was adjourned.]



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




                            A P P E N D I X

                            January 23, 2012

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





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


              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                            January 23, 2012

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


    [GRAPHIC] [TIFF OMITTED] 72933.001
    
    [GRAPHIC] [TIFF OMITTED] 72933.002
    
    [GRAPHIC] [TIFF OMITTED] 72933.003
    
    [GRAPHIC] [TIFF OMITTED] 72933.004
    
    [GRAPHIC] [TIFF OMITTED] 72933.005
    
    [GRAPHIC] [TIFF OMITTED] 72933.006
    
    [GRAPHIC] [TIFF OMITTED] 72933.007
    
    [GRAPHIC] [TIFF OMITTED] 72933.008
    
    [GRAPHIC] [TIFF OMITTED] 72933.009
    
    [GRAPHIC] [TIFF OMITTED] 72933.010
    
    [GRAPHIC] [TIFF OMITTED] 72933.011
    
    [GRAPHIC] [TIFF OMITTED] 72933.012
    
    [GRAPHIC] [TIFF OMITTED] 72933.013
    
    X.eps[GRAPHIC] [TIFF OMITTED] 72933.014
    
    [GRAPHIC] [TIFF OMITTED] 72933.015
    
    [GRAPHIC] [TIFF OMITTED] 72933.016
    
    [GRAPHIC] [TIFF OMITTED] 72933.017
    
    [GRAPHIC] [TIFF OMITTED] 72933.018
    
    [GRAPHIC] [TIFF OMITTED] 72933.019
    
    [GRAPHIC] [TIFF OMITTED] 72933.020
    
    [GRAPHIC] [TIFF OMITTED] 72933.021
    
    [GRAPHIC] [TIFF OMITTED] 72933.022
    
    [GRAPHIC] [TIFF OMITTED] 72933.023
    
    [GRAPHIC] [TIFF OMITTED] 72933.024
    
    [GRAPHIC] [TIFF OMITTED] 72933.025
    
    [GRAPHIC] [TIFF OMITTED] 72933.026
    
    [GRAPHIC] [TIFF OMITTED] 72933.027
    
    [GRAPHIC] [TIFF OMITTED] 72933.028
    
    [GRAPHIC] [TIFF OMITTED] 72933.029
    
    [GRAPHIC] [TIFF OMITTED] 72933.030
    
    [GRAPHIC] [TIFF OMITTED] 72933.031
    
    [GRAPHIC] [TIFF OMITTED] 72933.032
    
    [GRAPHIC] [TIFF OMITTED] 72933.033
    
    [GRAPHIC] [TIFF OMITTED] 72933.034
    
    [GRAPHIC] [TIFF OMITTED] 72933.035
    
    [GRAPHIC] [TIFF OMITTED] 72933.036
    
    [GRAPHIC] [TIFF OMITTED] 72933.037
    
?

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


                   DOCUMENTS SUBMITTED FOR THE RECORD

                            January 23, 2012

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

      
      
    [GRAPHIC] [TIFF OMITTED] 72933.038
    
    [GRAPHIC] [TIFF OMITTED] 72933.039
    
    [GRAPHIC] [TIFF OMITTED] 72933.040
    
    [GRAPHIC] [TIFF OMITTED] 72933.041
    
    [GRAPHIC] [TIFF OMITTED] 72933.042
    
    [GRAPHIC] [TIFF OMITTED] 72933.043
    
    [GRAPHIC] [TIFF OMITTED] 72933.044
    
    [GRAPHIC] [TIFF OMITTED] 72933.045
    
    [GRAPHIC] [TIFF OMITTED] 72933.046
    
    [GRAPHIC] [TIFF OMITTED] 72933.047
    
    [GRAPHIC] [TIFF OMITTED] 72933.048
    
    [GRAPHIC] [TIFF OMITTED] 72933.049
    
    [GRAPHIC] [TIFF OMITTED] 72933.050
    
    [GRAPHIC] [TIFF OMITTED] 72933.051
    
    [GRAPHIC] [TIFF OMITTED] 72933.052
    
    [GRAPHIC] [TIFF OMITTED] 72933.053
    
    [GRAPHIC] [TIFF OMITTED] 72933.054
    
    [GRAPHIC] [TIFF OMITTED] 72933.055
    
    [GRAPHIC] [TIFF OMITTED] 72933.056
    
    [GRAPHIC] [TIFF OMITTED] 72933.057
    
    [GRAPHIC] [TIFF OMITTED] 72933.058
    
    [GRAPHIC] [TIFF OMITTED] 72933.059
    
    [GRAPHIC] [TIFF OMITTED] 72933.060
    
    [GRAPHIC] [TIFF OMITTED] 72933.061
    
    [GRAPHIC] [TIFF OMITTED] 72933.062
    
    [GRAPHIC] [TIFF OMITTED] 72933.063
    
    [GRAPHIC] [TIFF OMITTED] 72933.064
    
                                  
