[Senate Hearing 114-584]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 114-584

                      LEVERAGING THE U.S. SCIENCE 
                       AND TECHNOLOGY ENTERPRISE

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

                                 HEARING

                               BEFORE THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 11, 2016

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation


       
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                   JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
DEAN HELLER, Nevada                  JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               GARY PETERS, Michigan
STEVE DAINES, Montana
                       Nick Rossi, Staff Director
                  Adrian Arnakis Deputy Staff Director
                    Rebecca Seidel, General Counsel
                 Jason Van Beek, Deputy General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
       Clint Odom, Democratic General Counsel and Policy Director
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 11, 2016.....................................     1
Statement of Senator Thune.......................................     1
Statement of Senator Peters......................................     3
Statement of Senator Udall.......................................    42
Statement of Senator Blunt.......................................    44
Statement of Senator Gardner.....................................    45
Statement of Senator Klobuchar...................................    46
Statement of Senator Moran.......................................    52
Statement of Senator Markey......................................    54

                               Witnesses

Dr. Kelvin Droegemeier, Immediate Past Vice Chair, National 
  Science Board..................................................     4
    Prepared statement...........................................     6
Jeannette Wing, Corporate Vice President, Microsoft Research, 
  Microsoft Corporation; Member of the American Academy of Arts 
  and Sciences Committee on New Modes for U.S. Science and 
  Technology Policy..............................................    14
    Prepared statement...........................................    15
Dr. Robert D. Atkinson, President, Information Technology and 
  Innovation Foundation..........................................    27
    Prepared statement...........................................    28
David C. Munson, Jr., Robert J. Vlasic Dean of Engineering, 
  College of Engineering; Professor, Dept. of Electrical 
  Engineering and Computer Science, University of Michigan.......    35
    Prepared statement...........................................    36

                                Appendix

Letter dated May 11, 2016 to Hon. John Thune and Hon. Bill Nelson 
  from the New England Innovation Alliance.......................    69
Letter dated May 11, 2016 to Hon. John Thune and Hon. Bill Nelson 
  from B. David Green, Ph.D., President and CEO, Physical 
  Sciences, Inc..................................................    71
Response to written question submitted to Dr. Robert Atkinson by:
    Hon. John Thune..............................................    73
    Hon. Steve Daines............................................    73
Response to written questions submitted to Dr. Kelvin Droegemeier 
  by:
    Hon. Kelly Ayotte............................................    75
    Hon. Steve Daines............................................    78

 
                      LEVERAGING THE U.S. SCIENCE 
                       AND TECHNOLOGY ENTERPRISE

                              ----------                              


                        WEDNESDAY, MAY 11, 2016

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m., in room 
SR-253, Russell Senate Office Building, Hon. John Thune, 
Chairman of the Committee, presiding.
    Present: Senators Thune [presiding], Blunt, Moran, Johnson, 
Heller, Gardner, Klobuchar, Markey, Booker, Udall, and Peters.

             OPENING STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    The Chairman. Good morning. This hearing will now get 
underway.
    I want to welcome our witnesses to today's hearing, which 
presents a good opportunity to discuss ways to improve the 
efforts of the Federal Government, the private sector, and 
academia in R&D, STEM education initiatives, and technology 
transfer of scientific research to commercial applications.
    The Committee has jurisdiction over important Federal 
science agencies, including the National Science Foundation, or 
NSF, the National Institute of Standards and Technology, or 
NIST, and the White House Office of Science and Technology 
Policy, or OSTP. And the Committee's been actively developing 
legislative proposals to confront the challenges associated 
with advancing the U.S. science and technology enterprise in 
our budget environment.
    The good news is that, among individual countries, the 
United States is still the largest investor in public and 
private R&D, comprising 27 percent of the global R&D total in 
2013, according to the National Science Board. But, China's 
catching up, with 20 percent of the global total.
    While we could hope for more resources, tough budget 
realities underscore the importance of developing policy 
solutions that maximize our Federal investment so we can stay 
competitive, get the biggest bang for our buck, and leverage 
even more private-sector resources to expand the reach of our 
R&D. This committee has been active on this front.
    Last year, in consultation with Ranking Member Nelson, we 
established an Innovation and Competitiveness Working Group of 
the Commerce Committee to inform efforts to craft legislation 
to reauthorize science and technology R&D policies previously 
directed under the America COMPETES Act. We asked Senators 
Gardner and Peters to lead this Working Group, and we're 
appreciative of their sustained efforts over many months to 
help develop consensus-based policy solutions that could 
comprise a bipartisan Commerce Committee product.
    The Working Group convened a series of candid bipartisan 
discussions to gather input from the U.S. science and research 
community regarding Federal R&D policy priorities. The 
roundtable format of these meetings allowed for a free-flowing 
discussion among key stakeholders. These roundtable meetings 
focused on the topics of maximizing the impact of basic 
research, STEM education and workforce issues, and research, 
commercialization, and technology transfer. We had broad 
participation by research universities, government advisory 
bodies, and nonprofit research organizations in the informal 
discussions with Senators. Members of the public and interested 
groups were also invited and encouraged to submit input on the 
topics via e-mail, with over 250 e-mail submissions received on 
these three topics.
    Common themes arising from the roundtables included support 
for continued investment by the Federal Government in basic 
research, as well as encouragement of wider participation in 
STEM subjects, stronger partnerships among government, the 
private sector, and academia that could better leverage 
discoveries emerging from our research universities to drive 
innovation, and the importance of minimizing barriers and 
improving incentives for universities in the private sector to 
better maximize the scientific and economic return on limited 
Federal research resources.
    The Committee's Working Group is developing bipartisan 
legislation drawing on the input received from the roundtables 
and stakeholder feedback, related bills introduced by members 
of the Commerce Committee and others, and policy 
recommendations made by entities such as the American Academy 
of Arts and Sciences, the Information Technology Innovation 
Foundation, and the National Academy of Sciences. We are 
hopeful the bill will be ready in the coming days.
    Again, I want to thank the witnesses for being here today, 
and I look forward to hearing about policy ideas that can 
leverage our science and technology enterprise, such as 
improved public-private partnerships, reduction of 
administrative burdens, and improved strategic planning of the 
Federal R&D investment.
    We have a distinguished list of witnesses from academia, 
the private sector, and government advisory bodies testifying 
before the Committee today. Dr. Droegemeier joins us having 
just finished his term as Vice Chair of the National Science 
Board this past Friday. Dr. Wing has served as Corporate Vice 
President for Microsoft Research, as well as at NSF, and 
contributed to a recent report published by the American 
Academy of Arts and Sciences entitled ``Restoring the 
Foundation.'' Dr. Atkinson's organization, ITIF, has published 
numerous recommendations related to tech policy. And both he 
and Dr. Droegemeier previously participated in our Working 
Group roundtables on STEM and commercialization. Finally, Dr. 
Munson joins us from the University of Michigan's College of 
Engineering, where he's helped translate university research 
into commercial applications, including at his own company, 
InstaRecon.
    I want to welcome our distinguished panel today, and thank 
you so much for being here.
    And we'll now flip it to our Ranking Member, Senator 
Peters, for an opening statement.

                STATEMENT OF HON. GARY PETERS, 
                   U.S. SENATOR FROM MICHIGAN

    Senator Peters. Thank you, Chairman Thune. And thank you 
for the Committee's focus on this very important issue of U.S. 
research enterprise.
    I'd also like to thank all the witnesses for taking the 
time to share their expertise with us today. And I'd especially 
like to welcome Dr. David Munson, the Dean of Engineering at 
the University of Michigan.
    Like many of you, I grew up during the Apollo era inspired 
by Neil Armstrong's first steps on the Moon and mesmerized by 
the launch of the 36-story-tall Saturn V rocket that took him 
and others to the Moon. But, the impacts of the space program 
reached beyond inspiration to growing the economy and improving 
the security of our Nation. In fact, as much as half of the 
economic growth in the United States over the last 50 years is 
attributable to advances in science and technology. These 
innovations led to the founding of global companies and 
establishing the United States as the international leader in 
innovation.
    But today, the picture is troubling. The United States is 
quickly losing ground in the global marketplace. We are 
spending less on science, research, and education, while our 
competitors are spending more. Over the last year, I was 
honored to join my colleague, Senator Cory Gardner, in 
examining the issues of American competitiveness and policy 
solutions to reassert America's place internationally. As 
mentioned by Chairman Thune, we held three roundtables on 
innovation and competitiveness. These forums examined a variety 
of topics centered around the role of Federal R&D, building a 
STEM workforce, and improving commercialization of federally-
funded research.
    The Working Group received hundreds of inputs from 
industry, academia, science organizations, and economic 
development organizations on policies to improve the American 
innovation ecosystem. Experts from the scientific community, 
industry, academia, nonprofits, and economic development 
organizations all agree that modest, sustained, and predictable 
increases in Federal research and development investments are 
critical to ensuring the economic competitiveness of the United 
States moving forward. The community voiced support for 
continued investment by the Federal Government in basic 
research while providing opportunities to commercialize that 
research, where appropriate. We heard that the United States 
must improve participation in STEM among women and 
underrepresented minorities. These groups represented the 
largest untapped talent pool to fulfill the shortage of 
qualified STEM workers.
    We also heard that reducing administrative burdens on 
researchers could significantly increase the scientific and 
economic return on Federal research investment. Some expressed 
that stronger partnerships are needed among government, the 
private sector, and academia in order to better capitalize on 
discoveries emerging from our research universities.
    Coming from the great State of Michigan, that's a need that 
really resonates, certainly with me. And I firmly believe that, 
if we want to continue to be a leader in the global economy, we 
need to make things. That's something we do pretty well in 
Michigan. We make things. From large manufacturers to small 
mom-and-pop businesses, the amazing industrial base that once 
dominated the global auto industry is now being retooled into 
advanced technologies to build things like space vehicles and 
renewable energy systems. We need to double down on that type 
of transformation here in the United States.
    We also have some of the world's greatest research 
universities in Michigan. These universities and others all 
across the Nation are investing in and developing the next-
generation technologies that will keep America relevant in the 
global marketplace. Investments in advanced manufacturing, for 
example, will lift all ships, creating new capabilities that 
can increase commercial productivity.
    Simply put, science and technology are critical to American 
competitiveness, and we need to focus on the entire ecosystem, 
from STEM or STEAM to basic research, to application and 
commercialization, to the inspiration that results from 
ambitious endeavors, like exploring space and other frontiers 
of science. That whole ecosystem of discovery and innovation is 
absolutely critical to American competitiveness. These are big 
challenges that require everyone, Democrats and Republicans, 
the Federal Government, and State and local governments, 
industry, and academia to work together on these solutions.
    The discussion today will continue to inform that 
legislation, and I look forward to the input of the witnesses. 
Thank you again for being here.
    The Chairman. Thank you, Senator Peters. And thanks again 
to you and Senator Gardner for your great work on the Working 
Group and what that has led to. And, like I said, I hope we'll 
have a bill here before long that we can start to show people.
    Well, we'll start with our panel. I think we have a vote at 
10:30. I'll try and get through all the testimony and then 
perhaps get into a few questions before the vote, and try and 
keep rolling through the vote, if that works. And if the 
witnesses could confine their testimonies as closely as 
possible to 5 minutes, that would be most helpful.
    So, Dr. Droegemeier, we'll begin with you. Thank you.

STATEMENT OF DR. KELVIN DROEGEMEIER, IMMEDIATE PAST VICE CHAIR, 
                     NATIONAL SCIENCE BOARD

    Dr. Droegemeier. Thank you very much, Chairman Thune, 
Ranking Member Nelson--I appreciate your good work--and 
Senators Peters and Gardner, members of the Committee.
    I am Kelvin Droegemeier, Vice President for Research at the 
University of Oklahoma, and, as you heard, immediate past Vice 
Chair of the National Science Board. Although I testify today 
in my capacity as a University Vice President and Professor, a 
lot of my thinking is shaped by my dozen years on the National 
Science Board.
    As you all know, we live in a time of extraordinary 
possibilities. The pace of discovery is accelerating. The 
global science and engineering ecosystem is rife with 
competition but also tremendous opportunities for cooperation. 
Domestically, we're seeing a growing demand for workers with 
STEM skills, including in occupations traditionally not seen as 
STEM jobs. We all have heard about LIGO recently, an amazing 
instrument that now verified Einstein's prediction of 
gravitational waves 100 years ago, that's completely 
transforming our understanding of the universe. We have the 
ability now to sequence a human genome in a matter of hours, as 
opposed to a matter of years. Technology is touching our lives 
every day.
    And we live in this world because of our sustained Federal 
investments in basic research. It is absolutely the starting 
point for everything that follows. But, the generation who cut 
their teeth on the space race, as we heard from Senator Peters, 
they're now retiring, and we're investing less of the Federal 
budget in R&D than in any time since Sputnik. And, over the 
past decade, Federal investments in basic research have fallen 
over 10 percent. Yet, we have to be mindful of the realities of 
the budget and the challenges posed by the slow but steady 
growth of mandatory spending programs. And, despite those 
challenges, I'm very optimistic.
    This committee is taking a first and very important step in 
making science bipartisan again, which is really boosting the 
morale of the scientific community. I cannot say enough good 
things about Senator Peters and Gardner in the listening 
sessions that I had the privilege to participate in. It really 
was a boon to our enthusiasm about research, and we're very, 
very excited about what's happening here today.
    I want to highlight, just very briefly, three bipartisan 
activities that we think could help this legislation and help 
the U.S. retain its leadership amid very significant fiscal 
constraints.
    The first suggestion is that the Federal Government focus 
on where it adds unique value, especially in basic or discovery 
research. It is the seed corn of our scientific enterprise. And 
if we eat that seed corn, and we let other countries drive the 
research agenda, then we will absolutely regret it in the 
future. And so, even in a very constrained fiscal environment 
that we all understand, we have to invest in all areas of basic 
research. If the past 65 years since the founding of the 
National Science Foundation has taught us anything, it's that 
there are no sure bets and that winners will be found where we 
least expect them. Today's pressing challenges are highly 
interdisciplinary and they're often centered on people as well. 
In this environment, it would be a very big mistake to exclude 
any discipline, especially the social, behavioral, and economic 
sciences.
    This is true in my own field. I'm a meteorologist, and I 
study how we predict the weather, and especially how we predict 
tornados, like those that ravaged Oklahoma a couple of days 
ago. At the end of the day, we're dealing with human beings who 
make decisions. All the science and technology in the world--
physical science, engineering--will not prevent lives from 
being lost. We have to understand how people react to using 
that technology. That's in the social behavioral science 
domain. It involves psychology, sociology, anthropology. And 
we, as meteorologists, have awakened to that fact, and we're 
working with those disciplines.
    Second, as you heard from the Chairman, we have to reduce 
administrative burdens and other unnecessary drains on research 
dollars. We have to get our scientists back to the bench and 
out from underneath a mountain of paperwork. Researchers are 
spending, on average, 42 percent of their time on 
administrative activities. We certainly understand and 
appreciate the importance of accountability and compliance. 
What we want to see is a removal of duplicative regulations or 
things that are really having no positive impact on ensuring 
accountability and transparency and effectiveness in research. 
And led by Senators Lamar Alexander and Patty Murray, the 
Senate HELP Committee, as you know, recently took steps to help 
address that problem. There's similar legislation in the House. 
The scientific community is very, very supportive of that, and 
I urge this committee to adopt those recommendations in the 
Academy's report on Federal research regulations.
    Finally, I would ask that you look for ways to make agency 
budgets more predictable. That may seem strange coming from a 
meteorologist, but really it will help us all plan 
strategically and minimize costs associated with unexpected 
delays. We also have to think about the workforce of tomorrow, 
realizing STEM education investments go hand-in-hand with 
discovery research, training the next generation of 
researchers. Our Nation thrives on a STEM-capable workforce at 
every level, even in non-STEM jobs, and we have to make certain 
that all of our folks have the capabilities they need to 
succeed.
    The new COMPETES legislation offers a really wonderful 
opportunity, even in constrained fiscal times, to think big. It 
means reinvesting in basic research in all fields across the 
enterprise, and also stimulating academic/industry partnerships 
and interagency collaborations. It means reducing 
administrative burdens and building on successful programs that 
spur commercialization such as the NSF I-Corps program.
    My colleagues and I in the scientific community deeply 
appreciate the bipartisan effort that you all are showing, and 
the opportunity to testify before you today.
    Thank you very much.
    [The prepared statement of Dr. Droegemeier follows:]

   Prepared Statement of Dr. Kelvin Droegemeier, Vice President for 
Research, University of Oklahoma and Past Vice Chair, National Science 
                                 Board
Introduction
    I thank Chairman Thune, Ranking Member Nelson, Senators Gardner and 
Peters, and other committee members for the opportunity to testify on 
the vital role of the science and engineering enterprise to our 
Nation's competitiveness. My name is Kelvin Droegemeier and I am Vice 
President for Research, Regents' Professor of Meteorology, and 
Weathernews Chair Emeritus at the University of Oklahoma. I am also, as 
of yesterday, immediate past vice-chair, of the National Science Board 
(NSB, Board) which establishes policy for the National Science 
Foundation (NSF) and serves as an independent body of advisors to both 
the President and Congress on matters related to science and 
engineering research and education. I am testifying today as Vice 
President for Research at the University of Oklahoma, although my 
remarks are also shaped by my dozen years on the Board.
    The prospect of a new COMPETES Act comes at a time of extraordinary 
possibilities for science. The NSF-sponsored Laser Interferometric 
Gravitational Wave Observatory (LIGO) recently opened new windows on 
our understanding of the universe and is creating an entirely new area 
of research into gravitational wave astronomy. Clustered Regularly 
Interspaced Short Palindromic Repeat (CRISPRs) are helping us cheaply 
and precisely edit the human genome to find ways to prevent and cure 
insidious diseases such as cancer, Alzheimer's, diabetes, and HIV/AIDS. 
And the potential for using big data to expand the scope of our 
research and to revolutionize how we do science is now before us. The 
NSF has bold plans to lead the science enterprise to new frontiers. The 
Foundation envisions supporting research on how genes interact with the 
environment, on interactions between people and technology, and on the 
rapidly changing Arctic. The opportunities before us are incredible, 
all the more so when you think of the pace at which scientific 
advancement has accelerated during the past few decades and the tools 
and level of understanding we now have.
    Science and engineering are now truly a global enterprise. Other 
countries have followed the U.S. lead, and are emulating our model, 
investing heavily in S&E research, education, and workforce 
development. China, for example, has nearly tripled the number of high 
performance computing (HPC) systems on the most recent ``TOP500'' list, 
while the number of systems in the United States has fallen to the 
lowest point since 1993. We know how to meet this challenge. The recent 
National Academies report, Future Directions for NSF Advanced Computing 
Infrastructure to Support U.S. Science and Engineering in 2017-2020, 
for instance, outlines a framework to ensure continued U.S. leadership. 
The question before the U.S. is whether we have the will to capitalize 
on these emerging opportunities.
    Over the past decade, NSF's research budgets have been nearly flat 
in real dollars. The Federal Government now invests less of its budget 
in research and development (R&D) than at any time since Sputnik was 
launched. Over the longer term, this will need to change if we want to 
remain world leaders in S&T. In the near term, I am mindful of the 
enormous challenges posed by the slow-but-steady growth of mandatory 
spending programs. Yet despite these fiscal realities, I am also 
hopeful, in a way that I have not been since the National Academies 
undertook the Rising Above the Gathering Storm report and Congress 
responded with the original COMPETES Act. This committee has already 
addressed one of the greatest long-term threats to American innovation: 
You've made science bipartisan again, countering rhetoric that has at 
times made the research community feel under siege.
    My testimony offers a three-pronged approach to leveraging our 
existing R&D resources. First, we need to focus on where the Federal 
Government adds unique value. This includes the basic research that is 
generally not conducted by the private sector. Second, we need to 
maximize the impact of our investments, particularly by decreasing 
regulatory burdens and increasing the effectiveness of 
commercialization activities. Finally, we need to redouble our efforts 
to develop the workforce of tomorrow. For decades, our country has 
reaped the returns on huge investments in the space race, especially in 
terms of our science and engineering workforce. We can only address the 
oncoming ``silver tsunami'' of retirements by leveraging the full 
breadth of our Nation's talent pool.
Importance of Discovery Research
    In the waning days of World War II, President Roosevelt, 
recognizing that wartime cooperation between the Federal Government and 
scientific community had contributed to the U.S. victory, asked 
Vannevar Bush how the Government could promote scientific progress in 
the postwar period. That report, Science--The Endless Frontier, called 
for the creation of what would eventually become NSF. Bush stressed the 
essential role of the Federal Government in funding basic--or 
``discovery''--research and cultivating the Nation's ``scientific 
talent.''
    Discovery research uses the scientific method to understand the 
natural universe, and it is the DNA from which new innovations emerge. 
That DNA, representing thousands of discoveries across all science and 
engineering disciplines, can be assembled, refined, set aside for a 
time until other advances call upon it, and re-used in an almost 
infinite number of ways to produce outcomes with profound benefits for 
society. Nowhere is this more evident than in current and rapidly 
evolving national security challenges. Discovery research has fueled 
advances in image processing, electrochemical sensing, and data mining. 
These advances have, in turn, led to the rapid creation of field-
deployed technologies for enhancing security in airports, improved 
safety of our soldiers, and the ability to fight next generation cyber-
attacks.
    Federally-funded discovery research is just one vital component of 
our Nation's highly interdependent innovation ecosystem. Total national 
investment in R&D includes funding by the Federal Government, states, 
colleges and universities, and the business and nonprofit sectors. 
Today, businesses fund about two-thirds and perform nearly three-
quarters of R&D in the United States. Because returns on investments in 
basic research are unpredictable and may take years, if not decades, to 
materialize, the business sector focuses largely on development. In 
2013, businesses directed about 78 percent of their R&D resources 
toward development, compared to just under 16 percent toward applied 
research and about 7 percent towards basic research.
    The Federal Government, and NSF in particular, plays a critical, 
complementary role by supporting discovery research. NSF's motto is 
``Where Discoveries Begin,'' and NSF is the only Federal agency whose 
mission is to promote the progress of discovery research in all fields 
of science and engineering. By investing in early stage research in all 
scientific fields, NSF lays the knowledge foundation that makes 
possible the application-oriented science pursued at other agencies and 
the technological innovations developed by the Nation's businesses. I 
fully agree with Senator Peters, who said ``Basic R&D is the seed corn 
of our economy, and the innovation that it generates helps build new 
industries, increase productivity, and enhance American 
competitiveness.''
    NSF-funded research not only helps our Nation tackle the societal 
challenges of today and tomorrow, but also provides the U.S. with a 
competitive advantage in a globally competitive marketplace. In April 
of this year, Bill Gates wrote that ``Government funding for our world-
class research institutions produces the new technologies that American 
entrepreneurs take to market.'' Recognizing this, numerous developed 
and emerging economies, including South Korea, India, Brazil, and 
especially China, have ramped up their investments in R&D. Indeed, 
China is now second in the world in R&D, having surpassed Japan and 
drawn equal with the European Union. While science and technology is 
not a zero-sum-game--innovations in China can improve the life of 
Americans--it is important that we remain a global leader. Continued 
U.S. leadership in science will ensure that future generations of 
Americans will live in a secure and prosperous country.
    NSF's ability to invest in discovery research in all fields of 
science, including the social, behavioral and economic (SBE) sciences, 
is central to this competitive advantage. The United States is one of 
the only countries in the world that makes significant investment in 
SBE sciences. NSF-funded research into understanding individual and 
societal human behavior often sits at the interface between technology 
and the people who use it. If we do not understand why some people 
ignore storm warnings or the factors that support economic development 
or drive the activities of rogue states and terrorists, we are 
crippling the ability of our Country and every individual in it to reap 
the full benefits that scientific and technological progress has to 
offer.
    The broader point is that the knowledge gained from discovery 
research in all disciplines strengthens our innovation ecosystem and 
ensures that the United States is maximally prepared for an 
unpredictable future. Because we do not know a priori how we will solve 
the great challenges of the 21st century or even what all of these 
challenges will be, it is imperative that we combine robust support for 
core research in all fields of science with interdisciplinary and 
collaborative initiatives. As the National Academies wrote in its 2014 
report, Convergence, the ``merging ideas, approaches, and technologies 
from widely diverse fields of knowledge at a high level of integration 
is one crucial strategy for solving complex problems and addressing 
complex intellectual questions underlying emerging disciplines.'' Said 
another way, some of the most societally important and intellectually 
challenging problems occur not within disciplines, but at the 
boundaries among many disciplines. I have included two examples that 
illustrate this point:

  1.  Discovery research at the interface of the biological and 
        mathematical sciences is addressing important human health 
        challenges. The spread of infectious diseases from wildlife to 
        humans is on the rise, with this year's Zika virus and last 
        year's historic Ebola outbreak as recent examples. Factors that 
        affect such outbreaks include the density of human and wildlife 
        populations, changes in land use, and human behavior. A joint 
        initiative between NSF's Division of Mathematical Sciences and 
        the National Institute of Health's National Institute of 
        General Medical Sciences has supported work on Ebola, fostering 
        collaborative research projects that leverage the contributions 
        of disease ecologists, epidemiologists, mathematicians and 
        economists to better understand this and other rapidly evolving 
        infectious diseases.

  2.  Nearly a decade ago, NSF--recognizing that the electricity sector 
        was insufficiently focused on security--invested in early stage 
        research on how to design and build resilient 
        cyberinfrastructure for the power grid. This research, 
        sponsored by NSF's Computer and Information Science and 
        Engineering (CISE) Directorate, has since been carried forward 
        with funding from the Department of Energy's Office of 
        Electricity Delivery and Energy Reliability (DOE-OE) and the 
        Department of Homeland Security Science and Technology 
        Directorate. Today, the Trustworthy Cyber Infrastructure for 
        the Power Grid Project (TCPIG) is collaborating with national 
        laboratories and the utility sector to improve the design, 
        security, safety, and resiliency of the U.S. power grid. Thanks 
        to these successive Federal investments, the group's 
        technologies are being piloted in real utility environments and 
        their work has become foundational technology for three start-
        up companies.

    Our national innovation ecosystem is only as strong as its 
component parts. In addition to the threat posed by efforts to 
dramatically decrease or eliminate funding for the SBE sciences, our 
innovation ecosystem is equally weakened by the challenges facing our 
Nation's colleges and universities. The majority of NSF-funded 
discovery research is performed by universities and colleges, and these 
institutions are equally important in educating and training the next 
generation of STEM-capable workers. The NSB's recent policy-focused 
Companion Brief to Science and Engineering Indicators 2016 entitled, 
Higher Education as a Public and Private Good, describes how declines 
in Federal support for R&D, waning state funding for public research 
universities, and tuition increases are converging to create a 
``perfect storm.'' This storm threatens to undermine the ability of 
these institutions to perform their vital research and education 
missions.
Reduce administrative burdens and other drains on research dollars
    The current funding challenges only serve to underscore that we 
must ensure that taxpayer dollars are spent wisely and efficiently. NSF 
ensures that it invests in only the best scientific projects using two 
evaluation criteria--intellectual merit and broader impacts. NSF's 
merit review process is highly emulated and widely considered the best 
in the world. Despite the impressive track record of discoveries 
produced by NSF's merit review system, NSF and the NSB regularly 
strengthen and clarify it. For example, in 2011 the NSB re-examined the 
intellectual merit and broader impacts criteria,\1\ and in 2013 NSF 
launched the Transparency and Accountability Initiative to strengthen 
Agency efforts in transparency and accountability around the merit 
review process, and the Board adopted a formal policy resolution in May 
of 2015.\2\
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    \1\ http://www.nsf.gov/nsb/publications/2011/nsb1211.pdf
    \2\ http://www.nsf.gov/od/transparency/transparency.jsp
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    While transparent, merit-based competition is a powerful incentive 
toward the efficient use of taxpayer dollars, it is not enough by 
itself. At a time of fiscal challenges and with low funding rates at 
many Federal agencies, we also need to ensure that Federal dollars are 
spent efficiently, without fraud, abuse, or waste. This includes 
reducing the administrative workload placed on federally-funded 
researchers at U.S. institutions. As detailed in the Board's 2014 
report and the subsequent National Academies' report, there are 
numerous opportunities to address unnecessary regulations that 
interfere with the conduct of science in a form and to an extent 
substantially out of proportion to the well-justified need to ensure 
accountability, transparency and safety.
    As a vice president for research at a tier-1 comprehensive research 
university, I can attest to the growing number of unfunded compliance 
and reporting requirements and their deleterious impact on research. I 
hasten to add that researchers and university research leaders 
understand and appreciate the importance of appropriate compliance 
rules and regulations. The academic enterprise rests on the integrity 
of its participants. However, the important issue at hand is the extent 
to which aggregated regulations are appropriately structured, 
implemented, and evaluated with regard to their effectiveness and 
unintended or unnecessary consequences. It is also important to note 
that this is not just a Federal problem. States, accrediting 
organizations, and universities themselves all contribute to 
administrative burdens.
    I am heartened by the attention this committee and others in 
Congress have paid to these studies and, based on legislation already 
introduced, I am confident that any comprehensive legislation written 
by this committee will address these concerns in a bipartisan way. I 
hope that attention will also be given to the forthcoming Part II 
report from the Academies' Committee on Federal Research Regulations 
and Reporting Requirements. I am also pleased to report that the NSF 
has been acting independently to implement some of the recommendations 
from the Board's report. Great improvements have been made in 
standardizing and simplifying some of NSF's reporting requirements and 
in avoiding errors in grant submission. In addition, a number of pilot 
programs are also underway to streamline the proposal process (for 
instance, exploring just-in-time budget submissions).
    While I am sensitive to the budget constraints faced by 
legislators, I feel it is incumbent on me to remind you that 
unpredictable funding is also a source of inefficiency. Simply put, 
continuing resolutions and unknown funding bring with them delays that 
cost money. This is especially true for NSF's Antarctic program and our 
large facilities. Congressional support for long-term strategic plans, 
including community-driven decadal surveys and prioritization 
processes, can help reduce uncertainty in this regard.
    One of the biggest challenges facing NSF and basic research 
generally is the balance between high-risk, high reward research and 
delivering tangible returns to taxpayers. I urge the Committee to 
embrace the complexity of our enterprise, and to understand that these 
long-term basic research investments must be undertaken by the public 
sector. In my view, the level of oversight should be linked to the 
level of risk in our investments. Science should never be risk free, 
and oversight activities--never free--should always have a positive 
return on investment.
    NSF is keeping this in mind as it implements the recommendations in 
the recent National Academy of Public Administration (NAPA) report, 
National Science Foundation: Use of Cooperative Agreements to Support 
Large Scale Investment in Research. This is proving a timely tool to 
improve NSF's oversight of large facilities. The NAPA committee 
rigorously addressed its charge, which was jointly developed by the NSB 
and NSF Senior Management, identified areas where NSF can improve, and 
provided recommendations that will strengthen our oversight of 
facilities. The Board and NSF Senior Management are in general 
agreement with the Panel's recommendations.
    The Foundation's leadership and I appreciate Congress' shared 
recognition that wise stewardship of taxpayer dollars is essential to 
the progress of science. In that vein, I note that while the NAPA 
report described a need for heightened accountability, it also 
concluded that Cooperative Agreements (CAs) are an appropriate 
mechanism for NSF to use for designing, constructing, and operating 
large facilities. NSB endorses this conclusion and I have repeatedly 
seen how NSF uses these cooperative tools to address the Board's 
concerns.
    With respect to the NAPA report, I urge the Committee to set goals 
and expectations while preserving an appropriate level of flexibility 
with respect to pre-award cost analyses, audits of incurred costs, and 
management fees. I believe that prohibiting the use of management fees 
in cooperative agreements (as allowed by OMB regulations) would 
ultimately result in the public paying more for less research. Even 
codifying current practice risks hampering opportunities for additional 
efficiencies. For instance, mandatory incurred cost audits for large 
facility construction projects can cost millions of dollars that would 
have otherwise gone to funding grants. It is more sensible, and 
appropriate, to conduct such audits only when project risk warrants it. 
NSF's recent improvements in large facilities management, recognized by 
NAPA as ``tremendous efforts,'' have to a great extent sought to 
realize a risk-appropriate level of oversight.
    In this vein, I especially commend the Academies' recommendation to 
ensure balance between Inspectors General's twin mandates. The 
Inspector General Act of 1978 charged leadership in preventing fraud 
and abuse and in promoting ``economy, efficiency, and effectiveness in 
the administration of programs.'' I believe the associated 
recommendations regarding transparent reporting of costs and 
recoveries, interpretation of agency policies, and risk-based 
methodology can be helpful in ensuring balance between these mandates.
    Finally, I remind the Committee that in many cases it is worth 
paying for transparency and oversight. Inspectors General have 
delivered tremendous returns to taxpayers, as have regular audits, and 
NSF's Large Facilities Office (LFO). NSF is already pursuing the NAPA 
panel recommendation that it add training for program officers and add 
personnel to the LFO. These improvements are necessary, but they cost 
money. While NSF continues to process a larger number of more 
complicated grants, its Agency Award Management and Operations (AOAM) 
account has remained flat. Even the most efficient handling of grants 
and oversight of projects requires resources, and I encourage the 
Committee to support increases to this account. Without increases, I 
worry that these costs could degrade or reduce NSF's investments in 
research and education.
STEM education and STEM-capable workforce
    Investments in STEM education go hand-in-hand with investments in 
discovery research. Both are vital to continued U.S. scientific 
leadership, economic competitiveness, and national security and 
prosperity. Furthermore, to compete and win in the current global 
environment, the Nation needs flexible STEM-capable workers at every 
education level. The days in which STEM skills were necessary only for 
occupations traditionally classified as ``science and engineering'' 
(S&E) are over. We must recognize this breadth and heterogeneity of the 
STEM workforce within the framework of America COMPETES.
    Workers who hold a STEM degree, work in a STEM job, or who use 
significant STEM knowledge and skills in their jobs are part of the 
STEM workforce. Of course, the STEM workforce includes scientists and 
engineers who further scientific and technological progress through 
research and development (R&D). In addition, workers in non-R&D jobs 
who use STEM knowledge and skills and those in technically demanding 
jobs who need STEM capabilities to accomplish occupational tasks are 
also part of this workforce. Far from being a monolithic, homogenous 
group, the STEM workforce is comprised of workers with different 
educational qualifications who are employed in a wide range of fields 
and careers. All of these jobs have one essential characteristic in 
common: They are the better-paying jobs that have driven recent 
economic growth.
    In 2013, over 13 million U.S. workers were employed in an 
occupation classified as ``S&E'' or ``S&E-related''. Yet in a survey of 
individuals with at least a four-year degree, including many working in 
sales, marketing, and management, almost 18 million reported that their 
job required at least a bachelor's degree level of S&E expertise. In 
fact, in 2013, the number of non-S&E jobs that require a bachelor's 
level of S&E skills surpassed the number of traditional S&E jobs for 
the first time, demonstrating that the application of S&E knowledge and 
technical expertise is widespread across the U.S. economy.
    In our knowledge-and technology-intensive economy, STEM skills are 
also required for many in-demand, well-paying careers that are 
available to workers with less than a bachelor's degree. These jobs, 
which combine conventional literacy with technical expertise, are 
concentrated in information technology (IT), health care, and skilled 
trades. Career and technical education in high schools, community 
colleges, and certification programs provide vital pathways into this 
``technical STEM workforce.'' When these workers are included, there 
may be as many as 26 million jobs in the U.S. that require significant 
STEM knowledge and skill in at least one field. This represents nearly 
20 percent of all U.S. jobs. Demand for these jobs is distributed 
nationwide, providing a gateway to opportunity for a segment of the 
U.S. workforce that has been hard hit by transformations in the 
domestic and global economy. As Anthony Carnevale, director of the 
Georgetown Center on Education and Workforce, noted, ``There's a new 
middle. It's tougher, and its takes more skill.''
    In addition, the new COMPETES framework should recognize that STEM 
education and training is no longer just for our Nation's young people. 
To keep pace with the changing global S&E landscape, the U.S. needs to 
ensure that incumbent workers (both those currently in STEM and those 
who would like to enter it) have opportunities to upskill and reskill. 
Given the rapid pace of scientific and technological change in the 
twenty-first century, STEM-capable workers will need to periodically 
update their skills. To prepare students and workers for this 
environment that will demand lifelong learning and reskilling, we must 
ensure that our STEM education programs create a foundation on which 
individuals can continuously scaffold new competencies and knowledge; 
and that government, educational entities, and industry each do their 
part to make such reskilling and upskilling accessible and affordable.
    At the same time that the COMPETES framework recognizes the 
importance of STEM skills for an ever wider swath of the U.S. 
workforce, we must recognize that an innovation economy and continued 
U.S. global leadership cannot be secured through STEM education alone. 
Arts and humanities education is an essential complement, teaching 
students interpretive and philosophical modes of inquiry, honing 
communication and writing skills, fostering multicultural and global 
understanding, and encouraging an appreciation of history, aesthetics, 
and the human experience. As a 2013 American Academy of Arts and 
Sciences report highlighted, study of the humanities and arts develops 
both critical perspective and imaginative responses, ways of thinking 
that contribute to inventiveness.
    While adopting a broader vision of STEM education and workforce 
training, the U.S. must continue to support the core of its advanced 
R&D workforce, doctoral degree recipients. NSF facilitates the 
education and training of the next generation of scientists and 
engineers (graduate students as well as postdoctoral researchers) by 
funding grants to support their research and training. Flagship 
programs such as the NSF Graduate Research Fellowship, which has 
produced several Nobel Laureates over the past six decades, are seminal 
to U.S. competitiveness and STEM workforce development. The American 
system of doctoral education is widely considered to be among the 
world's best, as evidenced by the large and growing number of 
international students--many of them among the top students in their 
countries--who choose to pursue the doctoral degree at U.S. 
universities. However, the continued preeminence of U.S. doctoral 
education is not assured. Other nations, recognizing the contributions 
PhD recipients make to economies and cultures, are investing heavily in 
doctoral education.
    Doctorate recipients are the best avenue for transferring basic 
research discoveries into the technology and biotechnology economies. 
They begin careers in large and small organizations, teach in colleges 
and universities, and start new businesses. Among individuals with S&E 
doctorates, the proportion working in the business sector (46 percent) 
is similar to the proportion working in the education sector (45 
percent). As these data show, doctoral education develops human 
resources that are critical to the Nation's progress--scientists, 
engineers, researchers, and scholars who create and share new knowledge 
and new ways of thinking that lead, directly and indirectly, to 
innovative products, services, and works of art. In doing so, PhD 
recipients contribute to a nation's economic growth, cultural 
development, and rising standard of living.
    The COMPETES framework should recognize the importance of this 
group to our Nation's competitiveness and work toward ensuring that 
careers in R&D--including those in universities--are attractive to the 
next generation of scientists and engineers. From the Federal 
Government standpoint, one key component of this is steady, predictable 
funding for scientific research. Unpredictable changes to Federal 
funding for research and ``boom-bust'' cycles can significantly disrupt 
the balance between the number of STEM PhDs and the availability of 
permanent jobs where PhDs can use their specialized training in the 
academic sector.
    The foundation for building this STEM-capable workforce begins with 
quality primary and secondary STEM education. Almost all of today's 
STEM jobs require completion of some additional STEM education/training 
after high school, whether that be a certificate program, coursework, 
or a degree. K-12 science and math education is therefore critical to 
preparing students to pursue post-secondary STEM education/training. At 
a time when more and more individuals in a variety of jobs, including 
those that were not historically seen as STEM, require STEM 
capabilities, we need to ensure that all our K-12 students achieve 
basic STEM literacy. As a nation, our goal should be STEM literacy for 
all, rather than just for some.
    The COMPETES framework should also support continued efforts to 
attract and retain women and underrepresented minorities in STEM. 
Although there are some encouraging trends--such as improved high 
school completion rates, the increasing number of Hispanics earning S&E 
bachelor's degrees, and an increase in the proportion of S&E PhDs 
earned by women, there is still much more to be done in this arena. The 
long-term strength of our workforce requires that the full range of 
STEM career pathways be available to all Americans. This is a matter of 
economic opportunity--as I mentioned, STEM jobs are among the highest 
paid and most recession-resistant of all jobs in the U.S. economy. It 
is a matter of the robustness of our science; research demonstrates 
that diverse perspectives are critical to the enterprise. Indeed, the 
research enterprise is impoverished when individuals from 
underrepresented groups leave STEM fields or fail to select them to 
begin with. It matters even more urgently in light of rapidly shifting 
national demographics, given that Hispanic, blacks, women, and Alaskan/
Native students are not obtaining S&E degrees in numbers commensurate 
with their representation in the U.S. population.
    NSF is poised in the coming years to make substantial progress in 
addressing this. Earlier this year, NSF rolled out Inclusion across the 
Nation of Communities of Learners of Underrepresented Discoverers in 
Engineering and Science (INCLUDES), its most ambitious broadening 
participation endeavor to date. Building upon its history of funding 
research into what works in STEM education and facilitating its 
translation into practice, the multi-year INCLUDES program is designed 
to help take insights and best practice and bring them to scale. Other 
initiatives that support the development of a more diverse STEM 
workforce include the Historically Black Colleges and Universities 
Undergraduate Program (HBCU-UP), the Tribal Colleges and Universities 
Program (TCUP), and the Louis Stokes Alliance for Minority 
Participation. As evidence increasingly shows that research experiences 
early in college are critical to student retention in STEM, the 
Research Experiences for Undergraduates (REU) program is also poised to 
play a vital role to bringing in and retaining women and 
underrepresented minorities.
Innovation and research commercialization
    Our nation's innovation ecosystem is the lifeblood of our economy 
and quality of life. The NSF plays a crucial role in that ecosystem by 
supporting fundamental research in all fields of science and 
engineering and creating the workforce of the future. Private industry 
relies on the new knowledge created by basic research to develop new 
and innovative products and services.
    The research that taxpayers have supported for over 60 years 
through the NSF has advanced our knowledge, developed and supported 
hundreds of thousands of scientists and engineers, fueled our economy 
and transformed our way of life by the technologies and processes 
derived from basic research.
    Several NSF initiatives play a vital role in moving innovations 
from the lab to the marketplace. NSF's I-Corps program seeks to 
accelerate commercialization and entrepreneurial education. For 
example, research funded by NSF's Social and Behavioral Sciences on the 
content of weather advisories and warnings, the communications channels 
used, and on how residents comprehend specific advisories and warnings 
highlighted that use of tailored messages is critical to saving lives. 
Professors Carol Silva and Hank Jenkins-Smith--both Political 
Scientists at the University of Oklahoma--have conducted groundbreaking 
research in these areas. Building off their NSF-funded basic research, 
Dan O'Hair and his team at the University of Kentucky are, with the 
help of an NSF I-Corps grants, exploring ways to commercialize their 
research on tailored storm warning communication. This is both a 
commercial and humanitarian opportunity, and one that highlights how 
fundamental research--in this case in the social sciences--can help 
catalyze new businesses.
    NSF's Small Business Innovation Research/Small Business Technology 
Transfer (SBIR/STTR) program seeks to transform scientific discovery 
into societal and economic benefit by catalyzing private sector 
commercialization of technological innovations. The program increases 
the incentive and opportunity for startups and small businesses to 
undertake cutting-edge, high-quality scientific research and 
development. NSF is working to better connect the I-Corps program with 
existing SBIR/STTR programs.
    The agency's EPSCoR program ensures that all geographic regions in 
the U.S. contribute to S&E research and education by providing research 
capacity-building funding. EPSCoR also plays an important role in 
economic development across this country. I would never have been able 
to start my company, Weather Decision Technologies, were it not for 
EPSCoR, which helped support one of NSF's first Science and Technology 
Centers. This center, which I directed at the University of Oklahoma, 
pioneered a new science of computer-based prediction of thunderstorms 
and led to the founding of the company, which today employs over 80 
people.
    Finally, I wish to highlight the importance of academic-corporate-
government partnerships in the innovation ecosystem. Research 
universities are important engines of local, regional and national 
economic development. However, in spite of the dramatic increase in 
private investment in R&D over the past 20 years, very little of this 
increase has come to universities.
    One of the primary barriers to greater university-industry 
partnership is that Federal tax laws place significant restrictions on 
universities' ability to negotiate intellectual property terms at the 
front end of a contract. Lack of certainty about cost makes it 
difficult for private companies to create business plans, based upon 
intellectual property licenses from universities that are acceptable to 
corporate leadership and shareholders.
    In its recent report Restoring the Foundation, the American Academy 
of Arts and Sciences recommended modifications to Federal tax law to 
remove impediments to corporate-academic partnerships. The America 
COMPETES re-authorization would do well to consider this issue and 
unlock the potential of corporate-academic collaboration.
Conclusion
    Just over 65 years ago, James Conant, the first Chair of the 
National Science Board, wrote, ``No one should expect to be able to 
assess in a short interval of time the value of the money spent on 
scientific investigations. Even in the field of applied science, 
research is in the nature of a long-term investment.'' Having just 
concluded twelve years on the Board, I am more convinced than ever that 
this long-term national investment in fundamental science, research 
infrastructure, and STEM education is essential to our future health, 
security, and prosperity. In a world where science today has bearing on 
almost every aspect of our lives, from national security and global 
economic competitiveness to our health, quality of life and future 
workforce needs, NSF continues to open new frontiers by balancing its 
longstanding ``grass roots'' vision of science with an agency-wide 
commitment to fund research addressing our Nation's priorities.
    Our challenge now is to find ways to sustain the U.S. science and 
engineering enterprise at a time when budgetary pressures are limiting 
our resources. But we can't let that stop us from continuing to dream 
big--America's greatest asset is our creativity and freedom to explore. 
We need to leverage NSF resources with interagency collaborations that 
extend the reach and yield of NSF investments and encourage academic-
industry partnerships. We need to maximize the dollars that go to 
research by reducing administrative burdens. We need to build on 
successful NSF programs that spur the transfer of knowledge to 
commercialization. And we need to remove obstacles and create 
opportunities to develop the STEM-capable U.S. workforce required for 
an increasingly multi-polar and knowledge-intensive world.
    My colleagues in the scientific community and I commend this 
bipartisan effort, and urge your continued support of NSF, the research 
enterprise, and the Nation's bold--but essential--quest to advance the 
``endless frontier.''

    The Chairman. Thank you, Dr. Droegemeier.
    Dr. Wing.

          STATEMENT OF JEANNETTE WING, CORPORATE VICE

            PRESIDENT, MICROSOFT RESEARCH, MICROSOFT

          CORPORATION; MEMBER OF THE AMERICAN ACADEMY

          OF ARTS AND SCIENCES COMMITTEE ON NEW MODES

             FOR U.S. SCIENCE AND TECHNOLOGY POLICY

    Dr. Wing. Chairman Thune, Ranking Member Peters, and 
members of the Committee, thank you for inviting me to speak 
about the Federal Government's role in supporting research.
    As Corporate Vice President of Microsoft Research, I lead 
Microsoft's basic research laboratories worldwide. My purpose 
today, however, is to describe the conclusions and 
recommendations from a recent report from the American Academy 
of Arts and Sciences titled ``Restoring the Foundation: The 
Vital Role of Research in Preserving the American Dream.''
    I was honored to serve on the Committee that produced the 
report. While my testimony generally adheres to our 
conclusions, my remarks represent my own views, and not 
necessarily those of our study group, the American Academy, or 
Microsoft.
    America is losing ground to other nations in R&D, 
particularly in the fundamental curiosity-driven research that 
is so critical for elevating our standard of living and driving 
economic growth. In my field of information technology, for 
example, basic research from the 1970s on parallel and 
distributed systems ultimately led to cloud computing, which is 
completely transforming how businesses in all sectors operate. 
And cloud computing is only one of many billion-dollar markets 
that have grown from the interplay between federally-funded 
research at universities and private-sector innovation.
    It is, therefore, alarming that neither the Federal 
investment in basic research nor the policies that govern such 
research has kept pace with the remarkable changes occurring in 
the global competitive environment. To correct this problem, 
``Restoring the Foundation'' offers recommendations to achieve 
three objectives:
    First, securing America's leadership in science and 
engineering by providing sustainable growth in the Federal 
investment in basic research. Over the past two decades, 
America has dropped to tenth place globally in investments in 
R&D, and seventh place in basic research. Strikingly, China is 
projected to overtake us in R&D investment in just 6 years, 
both as a percentage of GDP and in absolute dollars.
    Mindful of current fiscal constraints, our committee 
recommends that the Federal Government commit to an annual real 
growth of at least 4 percent for the Federal investment in 
basic research. This recommendation is based on the observation 
that, from 1975 to 1992, Federal investment in basic research 
grew at an average annual inflation-adjusted rate of 4.4 
percent, despite serious political and economic challenges. 
Members of Congress on both sides of the aisle recognized that 
investments in basic research were just that, investments in 
the long-term health, security, and prosperity of Americans 
from all walks of life.
    The second objective is to maximize the benefit that our 
taxpayers receive from Federal investments in research. Among 
its recommendations, ``Restoring the Foundation'' asks Congress 
to reaffirm merit-based peer review as the basis for awarding 
research grants in America, leaving primary responsibility for 
evaluating research proposals in the hands of scientific 
experts and the relevant agencies. I thank this committee for 
upholding this principle, including in the case of the social 
and behavioral sciences, which are critical for understanding 
the challenges we face as a country.
    The third objective identified by the American Academy 
report is to regain America's standing as an innovation leader 
by establishing a more robust national government/university/
industry research partnership. For example, academic 
institutions should be encouraged to experiment with new 
technology transfer policies that would promote innovation and 
job creation while reducing the time and cost of licensing.
    The business community strongly supports all of the 
recommendations that I have mentioned. Last summer, ten 
American business leaders, including the CEO of my company, 
Microsoft, issued a call to action entitled ``Innovation: An 
American Imperative.'' It urges Congress to take seven specific 
actions, including those that I have described, to ensure that 
the U.S. remains the global leader in innovation.
    Congress has already implemented one of those actions, 
making permanent the R&D tax credit. Members of Congress have 
an opportunity to consider additional actions that will help 
restore research as a national priority.
    Thank you again for inviting me to participate in today's 
hearing. I look forward to your questions.
    [The prepared statement of Dr. Wing follows:]

    Prepared Statement of Jeannette Wing, Corporate Vice President, 
   Microsoft Research, Microsoft Corporation; Member of the American 
 Academy of Arts and Sciences Committee on New Modes for U.S. Science 
                         and Technology Policy
    Chairman Thune, Ranking Member Nelson, and Members of the 
Committee: Thank you for inviting me to speak here today about the 
Federal Government's role in supporting research. I am Corporate Vice 
President of Microsoft Research, head of Microsoft's basic research 
laboratories worldwide. From 2007 to 2010, I was Assistant Director of 
the Computer and Information Science and Engineering Directorate at the 
National Science Foundation. I served twice as Head of the Department 
of Computer Science at Carnegie Mellon University, and was the 
President's Professor of Computer Science. I am currently an adjunct 
faculty member at Carnegie Mellon University. Prior to CMU, I served on 
the faculty at the University of Southern California for two years. As 
a student, I worked at Bell Laboratories and at Xerox Palo Alto 
Research Centers (PARC). I am currently Chair of the DARPA Information 
Science and Technology study group and Chair of the Information, 
Computing, and Communication Section of the American Association for 
the Advancement of Science. My comments today will reflect the 
diversity of my experiences in many sectors of the research system. 
Indeed, the recommendations from the American Academy of Arts and 
Sciences report that I will be discussing have found broad support in 
all of these sectors, from academia to government to industry.
    I appear here today to discuss the American Academy of Arts and 
Sciences report, Restoring the Foundation: The Vital Role of Research 
in Preserving the American Dream. The American Academy of Arts and 
Sciences was founded in 1780 by John Adams and other scholar-patriots 
to foster dialogue among leaders of science, the arts, business and 
public affairs. Today, the American Academy remains an independent 
policy research institute, applying cutting-edge scholarship to find 
solutions to critical societal problems.
    I had the privilege to serve on the American Academy's committee 
that produced the Restoring the Foundation report. This committee was 
co-chaired by former Lockheed Martin Chairman and CEO, Norman 
Augustine, and former National Science Foundation Director, Neal Lane, 
now of Rice University. Our study group was tasked with evaluating how 
to ensure the long-term sustainability of the U.S. science and 
engineering research enterprise. Neal Lane had the opportunity to 
testify before this Senate committee in July 2014 in advance of the 
report's publication. He spoke broadly about the state of the U.S. 
research enterprise and alluded to many of the recommendations that 
were published by the American Academy two months later. These policy 
recommendations have found support on both sides of the aisle. I would 
especially like to thank Senators Thune, Nelson, Gardner, and Peters 
for their leadership in convening numerous roundtables with the 
research community to explore productive steps we can take together. 
Our report committee has been encouraged by the tone of these 
conversations, and I am grateful for the opportunity to tell you more 
about the conclusions and recommendations from Restoring the 
Foundation. While the testimony I will present to you today generally 
adheres to the Committee's conclusions, the remarks represent my own 
views and not necessarily those of the study group, the American 
Academy, or Microsoft.
The Value of Curiosity-Driven Research
    America is increasingly losing ground to other nations in research 
and development (R&D), particularly in the basic research that plays 
such a central role in American innovation. Basic research refers to 
scientific studies that aim to contribute to the larger body of 
knowledge and advance our understanding on the fundamental aspects of 
natural phenomena without the goal of a specific application or 
product. During and after World War II, the U.S. made a new national 
commitment towards sustaining curiosity-driven research at universities 
across the country. This basic research has led to many notable 
breakthroughs over the past sixty years, and these investments continue 
to drive the innovation of new products today. One of my colleagues on 
the Restoring the Foundation committee, Mark Fishman, the former 
President of Novartis Institutes for BioMedical Research, often 
observes that, on average, it takes forty years for a discovery in 
biology to lead to a new drug or product. For example, the development 
of recombinant DNA techniques in the 1970s spurred the biotechnology 
revolution, creating advancements in numerous industries including 
medicine, agriculture, and manufacturing. Recombinant DNA made possible 
the development of synthetic human insulin to treat diabetes, the 
hepatitis B vaccine, and crops engineered to be resistant to pests and 
chemicals. In short, it led to many billion-dollar industries and 
opened up new research frontiers.
    The far-reaching benefits of federally-supported research are not 
limited to the biomedical sciences. Last week, the Breakthrough Prize 
in Physics was awarded to the three founders of the Laser 
Interferometer Gravitational-Wave Observatory (LIGO) and the hundreds 
of other contributors to the project who, after many years of hard 
work, made the first direct detection of gravitational waves predicted 
by Einstein a century ago. The National Science Foundation has been 
funding work that led to this discovery since the 1970s. Forty years 
later, the development of a tool to detect gravitational waves makes it 
possible to learn more about our universe and ask deeper questions 
about its origins. The technologies that made LIGO possible also have 
many additional uses and have facilitated the development and 
commercialization of new technologies such as creating more uniform 
optical coatings and improving materials used to build the structural 
components of aircraft.\1\ In fact, most new technologies are traceable 
to research projects where the scientists could not foresee the future 
applications and impact of their work.
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    \1\ Advanced LIGO: Extending the Physics Reach of LIGO. https://
www.advancedligo.mit.edu/tech_overview.html
---------------------------------------------------------------------------
    Curiosity-driven research not only leads to advances in medicine 
and technology, but is also responsible for fueling economic growth. 
Multiple economic analyses--including Nobel Prize winning research--
support that over half of all sustained economic growth since World War 
II results directly from scientific and technological advances. 
Hundreds of companies have their origins in federally-funded research 
conducted in a university. In my field of Information Technology, basic 
research on parallel and distributed systems starting in the 1970s 
ultimately led to Cloud Computing, which has completely transformed how 
businesses in all sectors operate by facilitating the storage and on-
demand retrieval and analysis of massive amounts of data.
    Also in the 1970s, basic research in information retrieval and 
networking led to the Internet search engines we take for granted 
today, completely transforming how people find information on the web 
and interact with each other professionally and socially. This pattern 
has been broadly true in Information Technology, as you can see in the 
graph below, which is often described as the ``tire tracks'' diagram. 
This graph, which is reproduced from the 2012 National Academies report 
Continuing Innovation in Information Technology, depicts the network of 
university and industry contributions that over the years has led to 
the creation of information technology firms and products with $1 
billion and even $10 billion markets.\2\ These innovations not only led 
to new industries, but also profoundly changed society in ways that we 
never could have predicted.
---------------------------------------------------------------------------
    \2\ Source: National Research Council, Continuing Innovation in 
Information Technology (Washington, D.C.: The National Academies Press, 
2012), 3.


    I hope it is evident that while basic research may have no intended 
end goal, it is in fact the foundation of American prosperity and 
progress.
Improving U.S. Innovation Competitiveness
    While most of America's innovations, as well as its quality jobs, 
are created in private industry, companies depend on a continuous 
stream of new scientific discoveries and early-stage technologies that 
flow from the Federal Government's investments in research, 
particularly basic research, carried out at research universities and 
national laboratories. So it is alarming that the Federal Government's 
investment in basic research has been slowly eroding over the past two 
decades--and it should be alarming not just for the scientific 
community, but for the entire American people. This concern motivated 
the American Academy to assemble a committee of 25 leaders spanning the 
research enterprise--including from government, universities, 
businesses and industry--to consider how to address this issue. The 
committee published Restoring the Foundation in September 2014. The 
report summarizes the Committee's recommendations for policy changes in 
academia, industry, and government. Restoring the Foundation was 
immediately endorsed by leaders throughout the private and public 
sectors, including the Presidents of Merck, the Business Roundtable, 
the Association of American Universities, and the Association of Land-
grant and Public Universities, among many others.
    Nearly two years ago, report co-chair Neal Lane had the chance to 
testify before this committee in advance of the report's publication. I 
am pleased to be here today to discuss the Committee's published 
recommendations and the impressive amount of backing that the work has 
received across all sectors of the economy. We have had many 
opportunities to discuss the report with individual Members and have 
greatly appreciated the substantial interest and support our 
recommendations have received from both sides of the aisle.
    Restoring the Foundation focuses particularly on basic research, 
the imperiled foundation upon which the Nation's leadership in 
innovation and prosperity rests. The report offers recommendations to 
meet three critical objectives:

   Ensure that the American people receive the maximum benefit 
        from Federal investments in research;

   Regain America's standing as an innovation leader by 
        establishing a more robust national government-university-
        industry research partnership; and

   Secure America's leadership in science and engineering 
        research--especially basic research--by providing sustainable 
        Federal investments.

    I will use the rest of my testimony to describe in detail a few 
specific recommendations that may be especially helpful for this Senate 
committee to consider as it explores ways to promote the health and 
productivity of American research. There are several recommendations 
from Restoring the Foundation that I will not cover here, such as on 
capital budgeting for research instrumentation; university cost-
containment efforts and resource sharing with outside parties; and 
expanding the science, engineering and technology assessment 
capabilities of the Government Accountability Office. More information 
on these recommendations can be found in our report, and I would also 
be happy to discuss any questions you may have at a later date.
Ensuring that the American People Receive the Maximum Benefit from 
        Federal 
        Investments in Research
    A skilled workforce provides a tremendous return on Federal 
investment; therefore, it is imperative that scientists and engineers 
dedicate the majority of their time to the research activity that 
drives the U.S. innovation ecosystem. However, added rules and 
regulations have diverted researchers' time and focus from their 
intended jobs and created unnecessary administrative overhead. The 
National Science Board's 2014 report, Reducing Investigators' 
Administrative Workload for Federally Funded Research, cited a 2005 
finding from the Federal Demonstration Partnership that federally-
supported researchers spend, on average, 42 percent of their time on 
administrative tasks. Seven years later, that average remained at 42 
percent despite collective efforts to alleviate regulatory burdens on 
researchers.
    In light of recent recommendations issued by the National Academies 
of Sciences, Engineering, and Medicine in their 2015 report Optimizing 
the Nation's Investment in Academic Research: A New Regulatory 
Framework for the 21st Century, the time is right for Congress to 
consider implementing specific changes to reduce the amount of 
paperwork that is required of researchers. Here I would like to 
acknowledge the leadership that Senators Lamar Alexander and Patty 
Murray have shown in encouraging the Senate Committee on Health, 
Education, Labor, and Pensions to advance a number of the 
recommendations contained in the National Academies report. I urge this 
committee to do the same for the agencies under your jurisdiction.
    Merit-based peer review has long been upheld by researchers as the 
gold standard for ensuring scientific excellence, integrity, 
competitiveness as well as the most effective use of taxpayer dollars. 
Restoring the Foundation asks Congress to reaffirm that this gold 
standard should remain the practice for awarding research grants in 
America, leaving primary responsibility for evaluating the scientific 
merit of the research proposals in the hands of the relevant agencies 
and scientific experts. I should note that the American Academy 
committee has been gratified that so many in Congress on both sides of 
the aisle agree with this principle, and that this Senate committee has 
upheld it for the agencies under its jurisdiction--including in the 
case of the social and behavioral sciences and the research in these 
fields that is so important for understanding the challenges we face as 
a country. For example, in my field of Information Technology, social 
science research continues to suggest new approaches for thwarting 
cybercrime and protecting American's privacy and security in an 
increasingly connected world.
Regain America's Standing as an Innovation Leader by Establishing a 
        More Robust National Government-University-Industry Research 
        Partnership
    The report committee makes several recommendations to strengthen 
ties between government, universities, and industry. American companies 
today-most of them lacking large central research operations and some 
of them, including those in the pharmaceutical sector, having 
considerably reduced their R&D activity-have formed collaborations with 
universities and national laboratories that over time could develop as 
a national partnership. But there are still barriers that require our 
attention, including policies on intellectual property, management of 
potential conflicts of interest, and publication restrictions.
    I would like to focus on one of the report committee's suggestions 
regarding technology transfer. Specifically, the Committee suggests 
that Congress assist academic institutions in adopting new technology 
transfer policies that would promote innovation and job creation while 
reducing the time and cost of licensing. The Bayh-Dole Act, which 
allows universities, small businesses, and nonprofit organizations to 
pursue ownership of an invention arising from federally-funded 
research, has been highly effective in advancing to market the 
intellectual property (IP) generated from federally-funded research. 
Over several decades, however, it has become clear that modification of 
certain policies and regulations could further propel the flow of IP to 
market by promoting start-ups and government-university-industry 
partnerships. The majority of universities have found that the cost of 
maintaining a technology transfer office, filing for patents, and 
negotiating IP licensing exceeds the income generated from licensing. 
Licensing negotiations with companies can also pose a high barrier to 
collaboration, often delaying or preventing the transfer of 
technologies to a company and, potentially, to market.
    More universities should experiment with new policies to enhance 
the transfer of IP to the market. My previous employer, Carnegie Mellon 
University (CMU) has fundamentally changed the way it approaches 
technology commercialization. The University deemphasized revenue 
generation and created a process dubbed by former CMU Provost Mark 
Kamlet as the ``5 percent and go in peace'' policy, which eliminated or 
greatly reduced the need for faculty to negotiate with the 
institution.\3\ The outcomes of these policies should be evaluated to 
derive best practices, while staying mindful of potential conflicts of 
interest, restrictions on public access to research results, and the 
potential for resulting constraints on future research conducted in 
university and government laboratories.
---------------------------------------------------------------------------
    \3\ See Focus Section C, pg. 71, from the 2014 American Academy of 
Arts and Sciences report Restoring the Foundation: The Vital Role of 
Research in Preserving the American Dream.
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Secure America's Leadership in Science and Engineering Research--
        Especially Basic Research--by Providing Sustainable Federal 
        Investments
    I would be remiss if I did not mention our committee's 
recommendations pertaining to the Federal investment in science. The 
committee recognizes that we are in a time of fiscal constraint and 
that Congress has many priorities. Nevertheless, after much analysis 
and debate, we concluded that the U.S. will not remain competitive with 
other countries unless we find a way to increase funding in basic 
research.
    While the U.S. was the global leader in science innovation for 
years, it has recently forfeited this position to other countries like 
Korea and Japan, as the U.S. investment in R&D continues to fall short 
of other nations. The total U.S. investment (public and private) in R&D 
measured as a percentage of GDP--an accepted metric for the country's 
commitment to the future of its citizens--continues to fall short of 
the national goal of at least 3 percent adopted by several U.S. 
presidents, even as America's economic competitors move aggressively to 
increase their own investments in innovation. As the following graph 
shows, the U.S. has dropped to 10th place globally in investments in 
R&D when measured as a function of economic output. And even in basic 
research, long a particular area of strength for the United States, we 
are now in 7th place by this measure.


    And as the next graph shows, other nations are well on their way to 
achieving the goal of investing at least 3 percent GDP in R&D, and many 
have surpassed it. China will pass us in absolute R&D spending within 
eight years.


    With these concerns in mind, the Committee recommends that the 
country commit to an annual real growth rate of at least 4 percent for 
basic research. We recognize that the country is still recovering from 
the recent recession, yet as Restoring the Foundation notes, from 1975 
to 1992 the Federal investment in basic research grew at an average 
annual inflation-adjusted rate of 4.4 percent despite serious political 
and economic challenges, including the 1973 oil embargo, the Great 
Inflation of 1979-1982, and the final tumultuous years of the Cold War. 
During this period, Republicans and Democrats, in spite of a number of 
policy differences, were in agreement that Federal funding of basic 
research was a national priority. However, in the subsequent two 
decades, from 1992-2012, even taking into account the doubling of the 
NIH budget, the average growth rate was roughly 0 percent. It is 
notable that 1992, the last year the U.S. had a 4 percent growth rate 
in basic research, is also the year that the U.S. began falling behind 
other nations in our R&D investment. The following graph illustrates 
these data:


    A 4 percent growth rate is a modest number when applied to basic 
research. Since the Federal investment in such research is roughly $30 
billion per year, 4 percent growth corresponds to a long-range target 
of increasing the Federal basic research investment from 0.2 percent to 
0.3 percent of GDP over a period of 10 to 15 years. We have been very 
encouraged by the bipartisan interest in supporting science and 
engineering and the general agreement with the imperative of 
establishing a sustainable growth trajectory for basic research. 
Importantly, our committee recommended that any additional investment 
in basic research should not come at the expense of Federal support for 
applied research and development or funding for specific scientific 
fields. These investments are also critical for America's global 
competitiveness and such a trade-off would thus be counter-productive.
    Both the Federal Government and industry contribute to R&D. But 
although U.S. industry funds and performs roughly 2/3 of the Nation's 
R&D, these activities focus primarily on development rather than basic 
research. While my company continues to benefit from a robust research 
program, most companies lack large central research operations and 
cannot afford to fund basic research due to the risk of being penalized 
by corporate shareholders who do not prioritize such long-term 
investments. Additionally, while most of America's innovations, as well 
as its quality jobs, are created in private industry, companies depend 
on a continuous stream of new scientific discoveries and early-stage 
technologies that flow from the Federal Government's investments in 
research, particularly basic research, carried out at research 
universities and national laboratories. This is clearly depicted in the 
tire tracks diagram discussed earlier. Federal investments in research 
also support the training of future scientists and engineers through 
graduate programs and postdoctoral fellowships, functioning to 
replenish the scientific workforce and fuel the talent pipeline.
    For these reasons the Federal Government will remain the primary 
funder of the fundamental, curiosity-driven research on which all 
innovation depends. While the scientific community recognizes that this 
is a period of financial constraint for the Federal Government, it is 
imperative that the government recognizes that investments in basic 
science research are just that--investments. To address U.S. global 
innovation competitiveness, we must reexamine our basic science 
research enterprise and determine how to ensure that the American 
people receive the maximum benefit from Federal investments in research 
and identify how the Federal Government can support a sustainable 
trajectory for future research.
    Steady, sustainable increases in Federal investment would go a long 
way to restoring American leadership. The current strategy for Federal 
research funding relies on annual budget cycles, hindering the long-
term planning required to give researchers predictability for 
successfully executing groundbreaking research, and resulting in costly 
inefficiencies in grant programs. The committee recommends that the 
President and Congress adopt a more strategic, multiyear approach to 
funding that better reflects the long-term nature of basic research, 
possibly through a rolling 5-10 year plan. Multiyear appropriations 
should be prioritized for agencies that primarily support research and 
graduate STEM education to strengthen the future research workforce. We 
also recommend that the White House Office of Management and Budget 
establish a strategic capital budget process for Federal R&D, 
particularly the construction of research instrumentation and 
facilities that take many years to plan and build.
Overwhelming Support
    Since the release of Restoring the Foundation, members of the 
report committee and American Academy staff have met with many Members 
of Congress and their staff from both sides of the aisle, including 
meetings with Senators from this committee, to discuss the report 
recommendations. The overwhelmingly supportive response is a true 
testimony to the bipartisan spirit of these recommendations. We are 
grateful for the thoughtful discussions with you and your staff about 
how to turn them into policy.
    These recommendations have also found strong support in the 
business community. Last summer, ten CEOs and corporate chairmen--
including the CEOs of Lockheed Martin, Northrop Grumman, Boeing, John 
Deere, Merck, Novartis, the National Association of Manufacturers, and 
my company, Microsoft--issued a call to action entitled ``Innovation: 
An American Imperative.'' The statement, which is attached to this 
testimony, urges Congress to take decisive action to ensure the U.S. 
remains the leader in global innovation. The Innovation Imperative 
identifies seven specific policy recommendations, many of which echo 
those in the Restoring the Foundation report, for how to achieve this 
goal:

  1.  Renew the Federal commitment to scientific discovery

  2.  Make permanent a strengthened Federal R&D tax credit

  3.  Improve student achievement in science, technology, engineering, 
        mathematics (STEM)

  4.  Reform U.S. visa policy

  5.  Take steps to streamline or eliminate costly and inefficient 
        regulations

  6.  Reaffirm merit-based peer review

  7.  Stimulate further improvements in advanced manufacturing

    One of the proposed action items, making permanent the R&D tax 
credit for businesses, has already been implemented by Congress, which 
will encourage American corporations to strengthen their investments in 
long-range research.
    I would like to draw attention to the Innovation Imperative 
recommendation on STEM education, since computer science education, 
namely computational thinking, has long been an interest of mine. Today 
computing touches every sector, every discipline, and every profession. 
Industry in all sectors recognizes the importance of computer science 
for their future and the demand for a workforce skilled in computing is 
increasing, far outweighing the supply.
    The Innovation Imperative has now been endorsed by more than 325 
leading companies and organizations representing science and 
engineering research, American industry, and higher education, 
including at least one from each of the 50 states. All have come 
together to say that a sustained commitment to basic research should be 
a high priority for Congress. I am extremely proud that my CEO, Satya 
Nadella, was among the corporate leaders who signed the Innovation 
Imperative. To me, it means Microsoft understands and believes in the 
value of basic research--for the company and for the country.
    I am also enormously appreciative that Senators Lamar Alexander and 
Chris Coons, in addition to Representatives Derek Kilmer and Randy 
Hultgren, recently issued a Dear Colleague Letter in support of the 
Innovation Imperative statement. This hearing provides another 
opportunity for Members of Congress to come together to find practical 
solutions to restoring research to its rightful place as a national 
priority and structuring the U.S. research enterprise to efficiently 
carry out that mission. I look forward to working with members of the 
Senate Committee on Commerce, Science and Transportation to explore how 
all stakeholders in the research system can get together to advance 
these goals.
Conclusion
    Congress is poised to get the U.S research enterprise back on 
track, and your interest and hard work is greatly appreciated by the 
scientific community. I would like to close by emphasizing three policy 
recommendations that the American Academy committee that produced the 
Restoring the Foundation report believes are particularly crucial for 
the long-term prosperity of this nation, and have strong backing among 
businesses and universities alike: (1) relieving regulatory burdens 
that limit the productivity of America's researchers; (2) encouraging 
more robust research partnerships among Federal and state governments, 
public and private universities, and industry; and (3) establishing 
sustainable annual real growth of at least 4 percent in the Federal 
investment in basic research and a long-term investment goal of 0.3 
percent of GDP. Failing to put these recommendations into action would 
put the U.S. at risk of conceding our leadership in basic research to 
our economic competitors around the world. Doing so would forfeit our 
leadership in the technologies and markets of tomorrow and the 
opportunity to create jobs at all stages of the innovation pipeline.
    Thank you again for the invitation to speak before this committee 
today. Please do not hesitate to reach out to me, the American Academy 
staff, and our report committee if you would like to discuss our 
recommendations in more detail. I look forward to taking your 
questions.





    The Chairman. Thank you, Dr. Wing.
    Dr. Atkinson.

  STATEMENT OF DR. ROBERT D. ATKINSON, PRESIDENT, INFORMATION 
              TECHNOLOGY AND INNOVATION FOUNDATION

    Dr. Atkinson. Thank you. Good morning, Chairman Thune, 
Ranking Member Peters, and members of the Committee. It's a 
pleasure to come before you today to talk about why we need to 
reauthorize COMPETES.
    It's no longer enough to just fund scientific research, 
although I agree with the two prior panelists, we need to do 
more, and better. But, what we need in any system is 
innovation. And innovation is really not just about the amount 
of money, but the efficiency by which knowledge is transferred 
into the economy. And we can do a better job of that. And that 
is a lot of the focus of COMPETES.
    There's a second urgency to doing this, though, and that's 
that, in the last decade or so, other nations have really 
ramped up their game--their engineering and science 
capabilities, their ability to take U.S. knowledge and 
commercialize it for competitive advantage. We're now in a 
system where if the U.S. doesn't commercialize its own R&D, a 
competitor nation likely will.
    Why isn't it just enough to fund research? It is important 
to fund research, but it's not enough. Over the last decade or 
so, science policy scholars have really come to a much deeper 
understanding that there are an array of failures that make it 
hard sometimes to take discovery and end up with innovation. 
And, unfortunately, our system today is still fundamentally 
grounded in what science policy scholars call ``the linear 
model.'' We fund research up front, and we hope something good 
comes out the end. Oftentimes, it does, but, too often, it 
doesn't. For example, if you look at the NSF budget, only 2 
percent of the NSF budget goes to programs focused on industry/
university partnerships, despite the fact that the programs 
that NSF operates in this area have been widely reviewed as 
being excellent programs that produce good science and good 
innovation for the marketplace.
    Also, the other problem we have is, we have a vast 
difference in commercialization performance between 
universities, between our Federal labs. Some are very good, and 
some, frankly, are not that good. If you look just, for 
example, at the amount of money that industry gives for 
university research, you see a big divergence between the top-
ranked university, Duke, at around 18 percent of their funding 
for research comes from industry, to a university like Brown, 
which gets less than 1 percent. So, we can do better. And 
COMPETES has a number of--I know you've been considering a 
number of roles that will move us in that direction. Let me 
just quickly mention a few that I think are important.
    One is the Senate Manufacturing Universities Act, which 
would designate 25 manufacturing universities and fund them to 
focus more on manufacturing education and manufacturing 
research partnerships.
    Second, we need more focus and more funding for 
commercialization. And this could be done in a budget-neutral 
way; for example, as the Startup America Act does, where it 
sets aside a very small portion of Federal extramural research 
budgets to go for commercialization programs, commercialization 
grants, et cetera. My one suggestion for there would be to make 
sure that that program be expanded to include State 
commercialization programs. Every one of your states has a 
State-funded commercialization entity that does very, very good 
work. I think they should be eligible for these kinds of 
programs.
    There are a host of other areas. One would be on reforming 
and expanding the Small Business Innovation Research Program, 
the SBIR Program. There is a proposal--Senator Coons and 
Senator Gardner have a proposal to expand--allow awardees to 
expend up to $35,000 of their Phase 2 awards on 
commercialization-oriented activities. Again, it's one thing to 
do research, but if you can take a small amount of that money 
and let them think about commercialization of that, we'd be 
more likely to get that in the marketplace.
    Another area that we highlight is the importance of the 
NIST Manufacturing Extension Partnership Program, which is a 
very effective program at centers around the country, with 
private-sector engineers operating it. So, besides increasing 
the funding there, I would argue we need to change the match 
requirement, which is now 2-to-1, to a 1-to-1 match.
    Another area we believe is important is the area of high-
performance computing. ITIF issued a report recently that 
showed that, while we had been leading in HPC, and probably 
still lead, that lead is in threat, because many other 
countries--China being one of them--are putting enormous 
amounts of money and resources in supporting HPC research. 
That's why we support the President's National Strategic 
Computing Initiative, and urge Congress to fund that.
    Finally, STEM talent. Clearly, STEM education and high-
skill immigration for STEM workers is going to be critical. One 
thing I would encourage the Committee to consider is supporting 
the President's initiative on computer science education. CS 
education is critical to our future. Only about 25 percent of 
U.S. high schools even teach computer science today. And that, 
frankly, is a travesty. And so, Congress can take a key role in 
trying to turn that around.
    Thank you very much.
    [The prepared statement of Dr. Atkinson follows:]

       Prepared Statement of Dr. Robert D. Atkinson, President, 
            Information Technology and Innovation Foundation
    Good morning, Chairman Thune, Ranking Member Nelson, and members of 
the Committee; thank you for inviting me to share the views of the 
Information Technology and Innovation Foundation (ITIF) on the 
reauthorization of the America COMPETES Act. The Information Technology 
and Innovation Foundation is a non-partisan think tank whose mission is 
to formulate and promote public policies to advance technological 
innovation and productivity internationally, in Washington, and in the 
states. Recognizing the vital role of technology in ensuring 
prosperity, ITIF focuses on innovation, productivity, and digital 
economy issues. ITIF has long been involved in the policy areas 
COMPETES addresses, including science policy, tech transfer, and STEM 
(science, technology, engineering, and math) education. I very much 
appreciate the opportunity to comment on these issues today. I also 
want to mention that I appreciate having been invited by the Committee 
to a prior roundtable on COMPETES Reauthorization and want to commend 
the Committee for having such an open and inclusive process for 
receiving input on the bill from a wide range of stakeholders.
Why America Needs COMPETES Act Reauthorization
    Reauthorization of COMPETES is crucial to the well-functioning of 
the U.S. innovation system. It is no longer enough to simply fund 
scientific and engineering research and hope it gets translated into 
commercial results with the U.S. economy. This is true for two key 
reasons. First, for many decades after the Soviets launched Sputnik in 
1957 the U.S. Government invested considerable sums into research and 
development (R&D). And if some of that research ``sat on shelf'' or lay 
largely unread in a journal we could rest easy in knowing that at least 
some of it got into new technology-enabled products, processes, and 
services. But because of budget limitations we no longer have that 
luxury. In fact, according to the National Science Foundation (NSF), 
Federal funding for R&D in 2016 as a share of GDP will be the lowest it 
has been since the Russians launched Sputnik, almost 60 years ago. To 
restore Federal R&D to GDP ratio to levels averaged in the 1980s, the 
Federal Government would have to invest $65 billion more per year. 
These lower funding levels mean we need much more efficiency in how we 
transfer discovery to commercialization within the U.S. economy if we 
are to avoid a reduction in the pace of innovation.
    Second, for many decades after WWII the U.S. innovation system was 
unique in that few other nations had a well-established science and 
engineering system that could generate, absorb and commercialize 
discoveries. Moreover, a less interconnected globe limited 
internationally the geographic spillover of U.S. discoveries. This 
meant that much of the benefits of the scientific and engineering 
research the Federal Government funded stayed in the United States to 
the benefit of our economy as firms used the discoveries to build 
globally competitive positions. But as we point out in our book 
Innovation Economics: The Race for Global Innovation Advantage, over 
the last two decades many nations have put in place much more 
sophisticated innovation systems (e.g., funding research universities, 
supporting STEM education, crafting R&D tax incentives) to the point 
now where they are more easily able to take advantage of the knowledge 
discoveries stemming from U.S. investment in R&D. Now, if the United 
States does not commercialize its own R&D, a competitor nation likely 
will.
    In short, given the decline in R&D funding and the dramatic 
increase in technological competencies of our economic competitors, we 
can no longer simply hope that some of the R&D funding ends up actually 
being used. This is why the COMPETES reauthorization is so important 
because it focuses on improving the efficiency of the process by which 
federally-funded knowledge creation leads to actual innovation and U.S. 
jobs.
    At one level this is good news. Improving the efficiency of the 
scientific and engineering research system can provide significant 
benefits at a lower budgetary impact than increasing funding without 
improving the efficiency. But continuing to underfund research while 
also not improving the efficiency of the system with the kinds of 
measures in COMPETES is a recipe for underperformance. And to be clear 
doing both is ideal: more Federal funding for R&D and a better 
commercialization and tech transfer system.
Why Federal R&D Policy Needs to Go Beyond Simply Funding Research
    Before discussing particular provisions that I believe are needed, 
it's important to briefly discuss why these kinds of provisions are 
needed. Won't the knowledge created by Federal R&D funding naturally 
get commercialized? Won't the institutions involved, especially 
universities and Federal labs, naturally want to transfer technology? 
Why should Federal policy and funds be focused on this? The short 
answer is that the process of innovation from discovery to application 
is usually not an easy one, despite what Vannevar Bush suggested when 
he penned Science: The Endless Frontier 70 years ago. As more 
scholarship about the nature of innovation has been developed it has 
become clear that the process of innovation is much more complicated 
and subject to many failures and problems that require a more strategic 
role for government along the entire innovation lifecycle.
    Yet, the current Federal system of funding R&D still is based on a 
``linear model'' of research that simply assumes that basic research 
will get transferred into new products and services. For example, only 
2 percent of the NSF budget goes to programs focused on the development 
and commercialization of knowledge through industry-university 
partnerships. Given institutional inertia, coordination and 
communication challenges, and lack of funding for proof of concept 
research, overcoming the ``valley of death'' between basic research and 
its real world application is often the most difficult part of the 
innovation process. If this jump is not able to be made, the benefits 
of the money spent on knowledge discovery will be more limited.
    The roadblocks and challenges are many. The culture and reward 
system in many universities and labs is oriented to research, not 
application or transfer. This is reflected by the very dramatic 
difference in performance of U.S. universities when it comes to 
technology commercialization, whether it's enabling start-up companies 
or transferring technology to existing companies. The seminal report 
Innovation 2.0: Reinventing University Roles in the Knowledge Economy 
finds that while the best universities and colleges in America are 
world class when it comes to transferring knowledge, many are not and 
need to learn from and copy the best practices of the leaders. To be 
sure, compared to even five years ago, America's universities and 
colleges appear to be doing a better job of technology 
commercialization, but there is still a wide variance between them in 
terms of the focus on and effectiveness of commercialization. One 
measure of this is the share at which industry funds university 
academic research. Of the top 30 U.S. research universities, the 
percentage ranges from 17.8 percent at Duke and 13.6 at MIT to just 0.9 
percent at Brown and 2.2 percent at Johns Hopkins. There is also 
significant variation by state, with the U.S. average at 5.4 percent, 
but North Carolina at 9.8 percent, Kansas at 7.8 percent, New York and 
Ohio at 7.7 percent, but Michigan at just 3.1 percent. Moreover, the 
share has been falling, from 7.4 percent in 1999 to 5.4 percent now. We 
need more universities and colleges to be closer to national best 
practices. This means, for example, more universities should recognize 
patenting and commercialization success as part of tenure 
consideration, something which is currently the case at less than one-
quarter of America's top 200 universities. More universities should 
also allow faculty members to suspend their tenure so that they may 
pursue commercialization opportunities. More universities should also 
define an entrepreneurial leave policy for undergraduate and graduate 
students in which students could retain full-time student status for 
several years while launching their own company.
    Even if institutions are focused on transferring technology, there 
are multiple hurdles, some of them from Federal regulation, others 
stemming from market failures like the high costs of information 
search. Moreover, there is significant complexity of modern technology-
based industry structures from the fact that the scope of technology 
systems and hence the number of supplier industries has grown as 
technological complexity has expanded, creating major information and 
coordination market failures that lead to poorly functioning innovation 
systems. On top of that there is a second ``valley of death'' in the 
process of scaling up prototypes where promising discoveries can 
flounder, never making it to final production. In part this is because 
many companies--in part because of pressures from capital markets--have 
become more risk adverse, preferring, in the terms of Harvard's Clay 
Christensen, sustaining, rather than disruptive, innovation.
    Congress has a long tradition of legislation focused not just on 
funding R&D but on improving the functioning of the U.S. R&D system. In 
1980, it passed the Stevenson-Wydler Technology Innovation Act and the 
Bayh Dole Act. The latter legislation permitted inventors receiving 
Federal funds for research to own the invention rights. The former 
legislation stated that ``technology and industrial innovation are 
central to the economic, environmental, and social well-being of 
citizens of the United States.'' In 1982, the Reagan administration 
supported the establishment of the Small Business Innovation Research 
Program (which required Federal agencies to allocate a small share of 
their R&D budgets to small business research projects). Congress also 
passed a number of important laws, including the Federal Technology 
Transfer Act of 1986, National Defense Authorization Act for FY 1991, 
the Technology Transfer Improvements and Advancement Act, and the 
Technology Transfer Commercialization Act. Perhaps most important was 
the Omnibus Trade and Competitiveness Act of 1988. Among other things, 
the Act created the Technology Administration in the Department of 
Commerce, reorganized the National Bureau of Standards into the 
National Institute of Standards and Technology, and created a number of 
programs to help industry with innovation, including the Malcolm 
Baldridge Quality Award and the Boehlert Rockefeller State Technology 
Extension Program.
Recommendations for COMPETES Reauthorization
    There are many components of COMPETES that will have important 
beneficial impacts on the U.S. innovation system. Let me suggest a few 
areas that I believe are especially important.
    One focus of COMPETES is rightly on reducing the barriers and 
improving the incentives for commercialization. In this respect, small 
changes and modest amounts of funding can have an outsized impact. For 
example, ITIF partnered with the Center for American Progress and the 
Heritage Foundation to issue a report Turning the Page: Reimaging the 
National labs in the 21st Century Innovation Economy. The report 
included a number of low- or no-cost recommendations that would give 
the labs more flexibility and more incentives to see that more of their 
path-breaking research gets transferred to and used by companies in the 
United States. These included steps such as allowing labs to use 
flexible pricing for user facilities and special capabilities, adding 
weight to technology transfer in the expanded Performance Evaluation 
Management Plan, and removing top-down accounting rules to give labs 
more flexibility.
    Similarly, there are a number of steps that can be taken to better 
link American universities with industry. For example, it is striking 
that the United States lags so many nations in terms of the linkages 
between universities and industry. In fact, as a share of GDP among the 
39 OECD nations, the United States ranks just 27th in industry funding 
of university R&D, as ITIF writes in its report University Research 
Funding--Still Lagging and Showing No Improvement.
    One way to remedy this would be to provide support and incentives 
for universities to update the curriculum and approach of university 
engineering programs to better prepare engineers for careers in 
innovation and advanced manufacturing and better link university 
research to industry needs. Senators Coons, Graham, Ayotte, Gillibrand, 
Baldwin, Kirk, and Franken have partnered to introduce legislation, 
endorsed by 26 House co-sponsors, called The Manufacturing Universities 
Act, which would designate 25 ``Manufacturing Universities'' and 
provide them with grants of up to $5 million a year for four years to 
reshape their engineering programs with a stronger focus on advanced 
manufacturing. The resources would help universities promote their 
manufacturing engineering programs to attract more students into the 
field, promote more inter-disciplinary education, and allow engineering 
programs to purchase essential equipment to support hands-on, project-
based learning, and working more on collaborative research projects 
with industry.
    We also need to establish stronger university entrepreneurship 
metrics, collecting better data regarding commercialization, including: 
new business starts and spin-offs of new companies by faculty and 
students from universities, the amount of industry funding of R&D, 
patents issued, etc. Congress should direct the National Science 
Foundation to develop and implement metrics by which universities 
report such information annually.
    In addition, we need more funding for commercialization activities. 
One way to do this would be to establish a set-aside program from 
Federal extramural research for commercialization grants. In the House, 
the Startup America Act 3.0 (H.R. 714) introduced by Loretta Sanchez, 
Gerald Connolly, and Jared Polis, would set aside 0.15 percent of 
Federal agencies' extramural research budgets to offer both (1) 
``commercialization capacity building grants'' to institutes of higher 
education pursuing specific innovative initiatives to improve an 
institution's capacity to commercialize faculty research and (2) 
``commercialization accelerator grants'' to support institutions of 
higher education pursuing initiatives that allow faculty to directly 
commercialize research in an effort to accelerate research 
breakthroughs.
    However, we recommend that any such program be expanded to include 
state technology commercialization programs (either state governments 
or non-profit agencies they designate) as eligible recipients. Many 
states and regions fund their own technology transfer and 
commercialization efforts between their universities and the private 
sector. Federal funds could match these efforts at some percentage 
level to bolster their impact. Regardless of this, it will be important 
to expand funding for the Regional Innovation Program which prior 
COMPETES legislation authorized to ``encourage and support the 
development of regional innovation strategies,'' which focus on 
commercialization, entrepreneurship, and startups. There is great 
demand for this program from programs all around the Nation. In 2015, 
$15 million in grants were awarded. The program should be significantly 
expanded, to perhaps $75 million.
    In a similar manner, a number of organizations throughout the 
United States are experimenting with novel approaches to bolster 
technology transfer from universities (and national laboratories) to 
industry and to accelerate the commercialization of university-
developed technologies. COMPETES should support these types of novel 
approaches by including $5 million to fund experimental programs 
exploring new approaches to university and Federal laboratory 
technology transfer programs. The program should be managed by the 
Department of Commerce's Office of Innovation and Entrepreneurship. 
Organizations would apply for the grants and winning proposals would be 
selected on criteria such as: (1) how innovative they are in 
demonstrating a new model; (2) recent documented success of their 
program; and (3) willingness to publicly disclose best practices 
learned from their programs and teach other U.S. organizations.
    In addition, Congress should increase funding for the kinds of 
programs that are more focused on supporting university-industry 
research partnerships. While this is ideally achieved as part of an 
overall increase in Federal R&D funding, it could be done in a revenue 
neutral way. In particular, the Engineering Research Center (ERC) and 
the Industry & University Cooperative Research Center (IUCRC) programs 
should receive a larger share of the overall NSF budget. There are 19 
ERCs and 76 Industry/University Cooperative Research Centers, but their 
funding is quite modest. These programs can be quite effective at 
supporting innovation. For example, I/UCRC produces substantial cost 
savings for companies. When private companies conducted R&D projects 
through the I/UCRC partnership rather than in-house, they saved an 
average of $700,000 per project in 2014--up from $500,000 in 2012--
thereby freeing up resources to be put to other, more effective, uses.
    COMPETES should also support the NSF I-Corps program, which is an 
innovative effort to improve the ``transmission belt'' of transforming 
knowledge into innovation. As Senators Fischer and Coons have proposed, 
I-Corps should be established in statute, and authorized at least 
through 2020, and Congress should consider increasing its funding and 
expanding its availability to other Federal agencies, including the 
NIH, DOD, DOE and USDA.
    In addition, crowdsourcing and citizen science can empower 
individuals and organizations to participate in the scientific process 
by undertaking discrete, independent tasks to solve problems. For 
example, Cornell University's eBird project enlists people to record 
and report birds they say in order to improve scientific understanding 
of bird populations. Legislation proposed in the Crowdsourcing and 
Citizen Science Act of 2015 would encourage and increase the use of 
crowdsourcing and citizen science methods within the Federal Government 
to advance and accelerate scientific research, literacy, and diplomacy. 
The Act would authorize agencies to use open-innovation tools to 
advance their missions, encourage the heads of agencies to work 
cooperatively on crowdsourcing or citizen science projects, increase 
inter-agency coordination, and strengthen the public's role as an 
active partner and meaningful contributor to the U.S. innovation 
engine.
    Congress should also reform The Small Business Innovation Research 
(SBIR) program. Despite the fact that the SBIR program accounts for 
just over 3 percent of the Federal extramural R&D budget, a recent ITIF 
study, The Demographics of Innovation in the United States, found that 
60 percent of innovations included in the study created by companies 
with fewer than 25 employees utilized public grants through SBIR. Yet 
despite its strengths, there are several programmatic reforms that 
could make SBIR an even stronger engine of commercialization activity.
    First, SBIR Phase II awardees should be permitted to expend up to 5 
percent of their Phase II funding on commercialization-oriented 
activities, such as market validation, IP protection, market research, 
and business model development, as Senators Coons, Gardner, and 
Gillibrand propose in the Support Startup Businesses Act. In the House, 
legislation similar in intent to foster commercialization activities 
has been proposed in an amendment to SBIR reauthorization legislation 
submitted by House Small Business Committee Ranking Member Nydia 
Velazquez. In addition, Congress should call on Federal agencies with 
SBIR/STTR programs to standardize their commercialization data 
collection practices (whether around the DOD or new SBA model). The 
data is now collected individually by each agency in their own form and 
with different requirements, which both makes it more difficult for 
small businesses to comply or for useful insights to be gleaned from 
the data.
    In addition, NIST's Hollings Manufacturing Extension Partnership 
(MEP) plays in important role in innovation. As ITIF writes in 
International Benchmarking of Countries' SME Manufacturing Technology 
Support Programs, a number of countries, across the developed and 
developing world alike, have manufacturing extension programs whose 
mission is to assist small to medium-sized enterprise (SME) 
manufacturers with implementing advanced manufacturing and quality 
processes and undertaking innovative new product development efforts. 
These programs: (a) promote technology adoption by SMEs; (b) conduct 
audits to identify opportunities for improvement in their manufacturing 
and operational processes; (c) support technology transfer, diffusion, 
and commercialization; (d) perform research and development in direct 
partnership with SMEs, and/or providing access to research labs; and 
(e) engage SMEs in collaborative research and development and/or 
technology-specific consortia. In the United States, client surveys 
indicate that MEP centers create or retain one manufacturing job for 
every $1,570 of Federal investment, one of the highest job growth 
returns out of all expenditures of Federal funds in the United States.
    As a result, it is important to increase support for NIST's 
Hollings Manufacturing Extension Partnership (MEP), moving beyond the 
$130 million in funding the program received in FY 2016 (and even the 
current Congressionally authorized amount of $165 million in funding). 
As Senators Kelly Ayotte and Chris Coons have called for in The 
Manufacturing Extension Partnership Improvement Act of 2016, MEP 
funding should be increased to $260 million annually and the program 
authorized through 2020. In addition, a key to improving the 
effectiveness of the MEP program is to modify the cost share. 
Currently, after five years, centers are required to raise 2 dollars of 
non-federal funds for every Federal dollar received. This relatively 
high ratio (higher than other Federal matching grant programs), makes 
it harder for centers to fulfill their public purpose and respond to 
market failures. In particular, it makes it harder for centers to help 
start-ups and very young manufacturers and to support workforce 
training, export promotion, technology transfer efforts, and energy 
efficiency and environmental improvement. In addition, it makes sense 
to experiment with sectoral expansion of the MEP program into 
industries such as construction. As ITIF notes in a new report Think 
Like an Enterprise: Why Nations Need National Productivity Strategies, 
the measured productivity growth of the U.S. construction industry has 
actually been negative in recent decades. This is not because there are 
not technologies, tools, and practices the industry can use to get more 
productive. Much of the problem stems from the fact most construction 
firms are very small and lack access to information about how to use 
these technologies effectively. An MEP extension could play an 
important role in remedying this.
    High-performance computing (HPC) should be another area of focus. 
HPC refers to supercomputers and other technical computing systems 
that, through a combination of processing capability and storage 
capacity, can rapidly solve difficult computational problems across a 
diverse range of scientific, engineering, and business fields. HPC 
represents a strategic, game-changing technology with tremendous 
economic competitiveness, science leadership, and national security 
implications. The United States has long led the world in the 
development and adoption of high-performance computing systems, but as 
ITIF writes in The Vital Importance of High-Performance Computing to 
U.S. Competitiveness, U.S. leadership in high-performance computing is 
increasingly under threat as a growing number of nations, including 
China, the European Union nations, Japan, and Korea, have introduced 
concerted national strategies and announced significant investments in 
developing next-generation HPC systems. To safeguard continued U.S. HPC 
leadership, in July 2015 the Obama administration announced the 
National Strategic Computing Initiative (NSCI), a coordinated Federal 
strategy for HPC research, development, and deployment and defines a 
multiagency framework for furthering U.S. economic competitiveness and 
scientific discovery through orchestrated HPC advances. Continued 
leadership in high-performance computing will require a steady, stable, 
robust, and predictable stream of funding. To ensure the NSCI can meet 
its targeted objectives, Congress should authorize and appropriate NSCI 
funding levels as requested in the administration's FY 2017 budget for 
FY 2017 and future years, with Congress funding NSCI and related high-
performance computing initiatives at a level of at least $325 million 
per year over at least the next five years.
    Finally, increasing the supply of STEM talent is another critical 
area COMPETES legislation rightly focuses on. Despite what some have 
argued, as ITIF has shown in numerous reports, there is a shortage of 
STEM workers, including in computer science.
    A part of the solution will be increased STEM immigration. As a 
recent report by ITIF on the demography of U.S. innovation 
demonstrates, more than one-third (35.5 percent) of U.S. innovators 
were born outside the United States, even though this population makes 
up just 13.5 percent of all U.S. residents. Another 10 percent of 
innovators were born in the United States but have at least one parent 
born abroad. Immigrant innovators also are better educated on average 
than native-born innovators, with over two-thirds holding doctorates in 
STEM subjects.
    Making it easier for more immigrants with STEM graduate degrees to 
become U.S. permanent residents will be important for driving 
innovation. Congress should also reform the EB-5 visa program which 
enables foreign investors to obtain a visa if they invest in a domestic 
enterprise and create or preserve at least 10 full-time jobs and invest 
at least $1 million. But many EB-5 projects simply displace projects 
that would have occurred anyway. Commercial property development does 
nothing for competitiveness or innovation. There is no real net benefit 
from allowing someone to obtain a visa by investing in a donut shop, 
golf course, or apartment building. These activities would be developed 
naturally by the market in the United States if there is in fact a 
demand for them. There is no shortage of entrepreneurs or capital for 
these kinds of non-traded business activities. In contrast, foreigners 
who want to immigrate to the United States to establish companies, 
particularly technology-based ones, in traded sectors (e.g., 
manufacturing) are much more likely to represent a net addition to the 
economy rather than launch a business that just crowds out domestic 
activity. Therefore, Congress should consider narrowing and targeting 
the EB-5 program to be more focused on building technology-based 
businesses.
    We also face a challenge in expanding the domestic pool of STEM 
talent, particularly among women and minorities. In ITIF's study, women 
represent only 12 percent of U.S. innovators. This constitutes a 
smaller percentage than the female share of undergraduate degree 
recipients in STEM fields, STEM Ph.D. students, and working scientists 
and engineers. Minorities born in the United States are also 
significantly underrepresented: U.S.-born minorities (including Asians, 
African Americans, Hispanics, Native Americans, and other ethnicities) 
make up just 8 percent of U.S.-born innovators. These groups constitute 
32 percent of the total U.S.-born population. Despite comprising 13 
percent of the native-born population of the United States, African 
Americans comprise just half a percent of U.S.-born innovators.
    One reason to support robust funding for university research is 
that it enables universities to train more graduate STEM students. As 
ITIF has found, innovators in the United States are experienced and 
highly educated, and most hold advanced degrees in science and 
technology fields: four-fifths of innovators possess at least one 
advanced degree, and 55 percent have attained a Ph.D. in a STEM 
subject. Half of innovators majored in some form of engineering as an 
undergraduate, and more than 90 percent majored in a STEM subject as an 
undergraduate.
    One path to expanding the number of highly qualified STEM workers 
is to expand the number of STEM-focused high schools. There are 
currently about 100 of these high schools in America, like Thomas 
Jefferson in Northern Virginia or Montgomery Blair in Montgomery County 
(which just won the national Science Bowl competition). These public 
STEM high schools provide students who have an interest and aptitude 
for STEM subjects with the opportunity to focus more intently on STEM 
subjects. They have also have been proven to be effective in helping 
minorities and students from socio-economic disadvantaged areas gain a 
high-quality STEM education. Given their effectiveness, we should set a 
goal to double the number of STEM high schools. Congress could do that 
by establishing a modestly funded challenge grant program that would 
allow states and cities to receive modest grants to help plan and 
establish new STEM high schools.
    Congress should also do this for the establishment of new tech-
focused universities, such as Olin College in Massachusetts or The 
Harrisburg University of Science and Technology in Harrisburg, 
Pennsylvania, or new types of STEM curriculum and programs at existing 
universities. One way to do this would be to expand support for NSF's 
Transforming Institution Grants program.
    Another way the Federal Government could encourage STEM education 
is by providing prizes to colleges and universities that do best at 
retaining STEM students. This matters especially because 60 percent of 
those who enter college intending to pursue a STEM degree fail to 
graduate with one. Congress should authorize the National Science 
Foundation to establish a prize funds program to award to colleges and 
universities that have dramatically increased the rate at which their 
freshmen STEM students graduate with STEM degrees and that can 
demonstrably sustain that increase over five years.
    In addition, the Federal Government should also require increased 
transparency from colleges and universities regarding the number of 
STEM applicants, prospective majors, and their retention rates in STEM 
subjects. There is some evidence that colleges and universities, 
especially state universities, could enroll more STEM students, but for 
a variety of institutional reasons do not do so. Better data regarding 
applications and retention will shed light on just how much of a 
problem this is.
    Finally, one key factor in producing more PhD degrees in STEM, 
especially by U.S. residents, is the ability to support doctoral 
fellowships. But as Harvard's Richard Freeman notes, the number of NSF 
graduate research fellowships awarded per thousand of college students 
graduating with degrees in science and engineering went from over seven 
in the early 1960s to just over two in 2005. Today, the same number of 
NSF graduate research fellowships are offered per year as in the early 
1960s, despite the fact that the number of college students graduating 
with degrees in science and engineering has tripled. But rather than 
simply expand funding for the NSF Graduate Research Fellowship program 
(funded at $102 million), Congress should create a new NSF-industry PhD 
fellows program. Currently the program provides up to three years of 
support over a five-year period and supports approximately 3,400 
students per year at $40,500 per year. The new NSF-industry program 
would work by enabling industry to fund individual fellowships of 
$20,250 with NSF to match industry funds dollar for dollar. Congress 
should allocate an additional $21 million to a joint industry-NSF STEM 
PhD fellowship program. This would allow NSF to support an additional 
1,000 graduate fellows.
    In summary, COMPETES reauthorization is an important step to take 
to ensuring that America does not lose its lead in innovation. Thank 
for you inviting me to testify before the Committee today.

    The Chairman. Thank you, Dr. Atkinson.
    Dr. Munson.

      STATEMENT OF DAVID C. MUNSON, JR., ROBERT J. VLASIC

          DEAN OF ENGINEERING, COLLEGE OF ENGINEERING;

         PROFESSOR, DEPT. OF ELECTRICAL ENGINEERING AND

            COMPUTER SCIENCE, UNIVERSITY OF MICHIGAN

    Dr. Munson. Thank you to the Chairman and Ranking Member 
and members of the Committee. I appreciate the invitation to 
speak with you today about topics to help ensure Americans in 
competitiveness and global leadership innovation.
    I'm currently the Dean of Engineering at the University of 
Michigan Ann Arbor, a professor in the Department of Electrical 
Engineering and Computer Science, and the co-founder of a 
startup company that works in the area of tomographic, or CT, 
imaging.
    I would like to talk to you today about just a few topics 
critical to the higher education research enterprise. At its 
core, the U.S. investment in and commitment to research should 
be considered a strategic national asset and treasure. American 
higher education still has no peer in the development of 
talent, although other nations, as we've heard, are catching 
up. Our main competitive advantage remains in the area of 
creativity and innovation. American society fosters an out-of-
the-box unencumbered spirit, where nearly anything is deemed to 
be possible. This is exactly the mentality that creates a 
robust STEM pipeline for the conduct of high-impact federally-
funded research. And, in turn, Federal research dollars 
facilitate the education and training of an especially creative 
STEM workforce.
    Research, in many ways, is a creative process with outcomes 
that are impossible to predict. Research has led us to a wide 
range of stunning discoveries and inventions, whether it was 
the cure to a disease or the invention of the Internet. The 
Federal Government has and needs to continue to play the key 
role in enabling the creative research process through funding 
of fundamental research.
    Research impact is translated through the innovation 
ecosystem. This ecosystem is complex, requiring multiple 
partners to play a range of roles. The early phase of 
innovation is basic or fundamental research, a domain dominated 
by academic institutions and enabled by the resources and 
policies created primarily by the Federal Government.
    Moving to the applied realm, there was a wide playing 
field, where academia, industry, and government all work to 
support translational research with an eye toward desired 
outcomes. Again, at this stage, Federal resources and policies 
are important enablers, with industry and angel investors also 
key at this stage of the innovation cycle. The Federal SBIR 
program is a vitally important vehicle for supporting 
translational research.
    Moving into the final phase of development or deployment 
and implementation, the customer, whether it be industry or 
Federal Government, is the lead player, sometimes with the 
support of venture capital. Also, the Federal Government often 
plays an important policy role, especially with intellectual 
property, in appropriately enabling innovations to move 
forward.
    In thinking about the innovation ecosystem, programs such 
as the NSF I-Corps are having a tremendous impact. Similar to 
STEM pipeline programs, I-Corps is an important enabler and eye 
opener for faculty and often graduate students. On day one of 
the I-Corps program, startup teams are confronted with the 
importance of the marketplace, when teams are required to 
contact dozens of possible customers and receive their 
feedback. From personal experience, I can report that the 
startup process is grueling. The ideal technology with no 
market simply has no value. Fortunately, with positive role 
models and the encouragement and support of university and 
regional entrepreneurial ecosystems, the results can be 
amazing. The required passion and energy flows from the strong 
desire of our faculty and students to make a positive impact on 
the world. It is our job to enable and support their success 
through programs and policies.
    Probably the greatest inefficiency in the Federal research 
system is caused by the low funding rates of many agencies. For 
example, at the NSF, the fraction of research proposals that 
are funded has slipped to about 20 percent. This means that 
faculty members are spending a huge fraction of their time 
writing proposals and also reviewing proposals of their 
colleagues, with a high probability that these proposals will 
not be funded. It is my experience, from 37 years in academia, 
that about one out of three research proposals is truly 
excellent and easily merits funding. To provide a funding rate 
consistent with this statistic, one might assume that it would 
be necessary to increase the annual NSF or other agency budget 
by over 50 percent to move from a 20-percent to a 33-percent 
funding rate. However, a smaller but still significant increase 
might buy much more than is apparent. One reason the NSF and 
other government agencies receive so many proposals is because 
the probability of funding is so low. When a proposal is not 
funded, the faculty member typically reworks the proposal and 
then resubmits it, or else creates a proposal on a different 
topic. This proliferation of research proposals is bogging down 
the system, causing a waste of time and resources, and is part 
of the reason for low funding rates. In a sense, we are running 
the research system at an inefficient operating point. In my 
opinion, it would be far more effective to fund the research 
agencies at a somewhat higher level, driving down the number of 
research proposals that are written and reviewed, in which case 
funding rates would rise and researchers would spend far more 
of their time actually doing research.
    In closing, today's engineering students and faculty share 
a heartfelt passion to make a difference. Our faculty provides 
students with a firm grounding in fundamentals and also with 
the ability to learn, adapt, and create as they move through 
their careers. We must provide our faculty and students with 
the resources needed to explore and innovate. The Nation will 
be the beneficiary.
    Thank you.
    [The prepared statement of Dr. Munson follows:]

 Prepared Statement of David C. Munson, Jr., Robert J. Vlasic Dean of 
  Engineering, College of Engineering; Professor, Dept. of Electrical 
         Engineering & Computer Science, University of Michigan
    Good afternoon, Mr. Chairman, Ranking Member, and members of the 
Committee. Thank you for inviting me to speak with you today about 
topics to help ensure American competitiveness and global leadership in 
innovation. I currently am the Dean of Engineering at the University of 
Michigan, Ann Arbor, and am a Professor in the Department of Electrical 
Engineering and Computer Science. I am also the co-founder of 
InstaRecon, a start-up that has developed and commercialized patented 
and patent-pending algorithms that reconstruct images from 2D and 3D 
tomographic, or CT, data 20 to 100 times faster than conventional 
methods for typical image sizes.
    I would like to talk to you today about a range of topics critical 
to the higher education research enterprise. At its core, the U.S. 
investment in and commitment to research should be considered a 
strategic national asset and treasure.
    First, I would like to start with the talent pipeline for STEM 
(Science, Technology, Engineering and Math). In order to continue to be 
the innovation leader that we are today, it is vital that our STEM 
population be sufficiently large and especially well educated. Both the 
size of the population and the quality of education should draw on the 
rich diversity of our Nation. Talent knows no boundaries; there are 
exceptional people throughout all demographics in the country. We know 
that opportunity does not present itself to everyone in equal measure 
to all that are deserving and capable. We must continue to address this 
issue, and expand our efforts to engage the future scientists and 
engineers of our Nation. Programs such as FIRST Robotics provide a 
vital link between fun and interesting engineering projects and the 
STEM disciplines that K-12 students are studying in school. Expanding 
efforts in education to provide students with context and relevance 
opens doors and is critical to our future. The opportunity to grow a 
more diverse STEM population relies on our ability to provide a broader 
range of students with an answer to the ``so what'' question when 
participating in STEM classes--students need to better understand why 
they should care about success in STEM disciplines during their K-12 
studies.
    Today, there exists a huge range of discrete investments aimed at 
addressing this challenge. The scale of this problem, however, is 
immense. Discrete investments are helpful, but such a pressing national 
issue would benefit from a more coordinated approach. As a nation, we 
should contemplate unified programs that will enable the challenge to 
be tackled more broadly, leveraging best practices and creating 
integrated partnerships between government, industry, and academia. 
Everyone wins if our Nation's STEM pool is more robust and diverse. A 
national network, utilizing a public/private partnership, could be 
contemplated to address this issue at scale. With such a network, 
federally-funded programs that currently have discrete ``pipeline 
development'' and/or ``workforce development'' programs could integrate 
into an existing national infrastructure, with each program playing a 
well defined and coordinated role, thereby producing a broader impact 
and reach. This would build on elements of the current model where 
individual programs have created independent solutions with limited 
scope and no ability to scale.
    In reflecting on the capability of programs to have measureable 
impact, I believe there is some consensus about what works, and on key 
indicators that can be measured to make sure that programs are on 
track. The missing elements in this equation are the ability to share 
best practices across the Nation and to decide which organizations will 
tackle the big pieces and do so at scale. Of course, operating at scale 
will also require resources to assure the desired impact.
    Demand for engineering and computer science graduates has greatly 
accelerated at the University of Michigan. I am hearing the same from 
peer institutions. Talent provides the ultimate competitive advantage. 
As the world becomes smaller and smaller through technology, and the 
labor cost differential between geographic regions narrows, talent will 
be the differentiating factor in economic competitiveness. Environments 
that can best develop their talent will have a significant competitive 
advantage in attracting and retaining cutting-edge industry.
    American higher education still has no peer in the development of 
talent, although other nations are catching up in some ways. Our main 
competitive edge remains in the area of creativity and innovation. 
American society fosters an out-of-the-box, unencumbered spirit, where 
nearly anything is deemed to be possible. This is exactly the mentality 
that creates a robust STEM pipeline for the conduct of high-impact 
federally-funded research.
    And, in turn, Federal research dollars facilitate the education and 
training of an especially creative STEM workforce. Research, in many 
ways, is a creative process, with outcomes that are impossible to 
predict. Research has led us to a wide-range of stunning discoveries 
and inventions, whether it was the cure to a disease or the invention 
of the Internet. The Federal Government has and needs to continue to 
play the key role in enabling the creative research process through 
funding fundamental research.
    That said, it is important to also have a suite of programs that 
create strong links to industry and Federal customers (such as 
Department of Defense). These partners bring important research issues 
to academia in a variety of application areas. The National Network of 
Manufacturing Institutes (NNMI) is an excellent example of such a 
program, bringing a diverse group of institutions together to identify, 
research and then implement solutions which are critical to advancing a 
domain of national strategic importance--manufacturing.
    Historically, it has been a challenge to reach a level of trust 
with industry research partners sufficient to permit sharing of 
proprietary ideas, which can enable progress on topics that really 
matter. ``Trusted conversations'' are essential to enabling research 
and allowing researchers to have impact. Engaging in these 
conversations requires striking a balance between openness and a 
collaborative spirit and assuring that competitive advantage is not 
compromised. The University of Michigan has been successful in managing 
this tradeoff by investing time and effort in creating strong links 
with industry partners that are outcome oriented. Trust is an essential 
ingredient in these public-private partnerships as evidenced in the 
ongoing research program of the University of Michigan Mobility 
Transformation Center, which has a consortium of more than 60 companies 
that are supplementing Federal and State of Michigan research dollars 
in the area of connected and autonomous transportation.
    Research impact is translated through the innovation ecosystem. 
This ecosystem is complex, requiring multiple partners to play a range 
of roles. The early phase of innovation is basic or fundamental 
research, a domain dominated by academic institutions and enabled by 
the resources and policies created primarily by the Federal Government. 
Moving to the applied realm, there is a wide playing field, where 
academia, industry and government must partner to support translational 
research with an eye toward desired outcomes. Again, at this stage, 
Federal resources and policies are important enablers, with industry 
and angel investors also key at this stage of the innovation cycle. The 
Federal SBIR program is a vitally important vehicle for supporting 
translational research. Moving into the ``final'' phase (development 
and deployment/implementation), the customer, be it industry or the 
Federal Government, is the lead player, sometimes with the support of 
venture capital. Also, the Federal Government often plays an important 
policy role, especially with intellectual property, in appropriately 
enabling innovations to move forward.
    In thinking about the innovation ecosystem, programs such as the 
NSF ICorps, are having a tremendous impact. Similar to STEM pipeline 
programs, ICorps is an important enabler and eye-opener for faculty and 
(often) graduate students. On Day 1 of the ICorp program, start-up 
teams are confronted with the importance of the marketplace, when teams 
are required to contact dozens of possible customers and receive their 
feedback. From personal experience, I can report that the start-up 
process is grueling. The ``ideal'' technology with no market simply has 
no value. Fortunately, with positive role models and the encouragement 
and support of university and regional entrepreneurial ecosystems, the 
results can be amazing. The required passion and energy flows from the 
strong desire of our faculty and students to make a positive impact on 
the world. It is our job to enable and support their success through 
programs and policies.
    Probably the greatest inefficiency in the Federal research system 
is caused by the low funding rates of many agencies. For example, at 
NSF fraction of research proposals funded has slipped to 20 percent. 
This means that faculty members are spending a huge fraction of their 
time writing proposals and also reviewing proposals of their 
colleagues, with the high probability that these proposals will not be 
funded. It is my experience, from 37 years in academia, that about one 
out of three research proposals is truly excellent and easily merits 
funding. To provide a funding rate consistent with this statistic, one 
might assume that it would be necessary to increase the annual NSF 
budget by over 50 percent (to move from a funding rate of 20 percent to 
about 33 percent). However, a smaller, but still significant, increase 
might buy much more than is apparent. One reason the NSF and other 
government agencies receive so many proposals is because the 
probability of funding is so low. When a proposal is not funded, the 
faculty member typically reworks the proposal and then resubmits it, or 
else creates a proposal on a different topic. This proliferation of 
research proposals is bogging down the system, causing a waste of time 
and resources, and is part of the reason for low funding rates. In a 
sense we are running the research system at an inefficient operating 
point. In my opinion, it would be far more effective to fund the 
research agencies at a somewhat higher level, driving down the number 
of research proposals that are written and reviewed, in which case 
funding rates would rise and researchers would spend far more of their 
time actually doing research.
    The U.S. research enterprise has been and must continue to be a 
strategic national asset. As we look to the future, the Nation will be 
well served by major research investments in selected areas supporting 
economic competitiveness and national security. The European Union has 
followed this path for years, sometimes taking a ``moon-shot'' 
approach. Likewise, the U.S. military has pursued an ``offset 
strategy,'' when appropriate. The NNMI program, which is a large 
targeted investment, may prove to be a good example of a strategic 
innovation investment to foster U.S. competitiveness in the global 
economy.
    In closing, today's engineering students and faculty share a 
heartfelt passion to make a difference. Our faculty provide students 
with a firm grounding in fundamentals, and also with the ability to 
learn, adapt and create as they move through their careers. We must 
provide our faculty and students with the resources needed to explore 
and innovate. The nation will be the beneficiary. Federal programs and 
policies are critical in this regard.

    The Chairman. Thank you, Dr. Munson.
    Dr. Droegemeier, you just finished serving a term as the 
Vice Chair of the National Science Board, the advisory body for 
the NSF. Based on your experience in that role, what can the 
Federal Government do to better manage and prioritize its R&D 
investment portfolio to improve predictability for research 
initiatives, facilitate the discovery of new knowledge, and 
drive lasting economic growth?
    Dr. Droegemeier. That's a very good question. How it works 
now--and I think it works very well--is that it--it's really a 
team sport. We look at prioritizing research investments by 
listening to the community, thinking about what big ideas are 
out there. We look at national needs, as informed by the White 
House, as informed by Federal agencies, as informed by groups 
such as the Association of American Universities. So, we put 
all that together, and we look at available dollars, and we see 
which priorities really are most appropriate for putting forth.
    In fact, NSF just went through an exercise with its 
leadership team to come up with several major topics for the 
future--actually, six major research topics and three process 
topics for the future that we think have very substantial 
benefits to the Nation, but also are very deep intellectual 
challenges that might take many, many years to fulfill. So, 
it's the process, really, of thinking very carefully about what 
needs to be done, but also providing opportunity for other 
people to come up with ideas as time goes on so that you don't 
prescribe, necessarily, the outcome or pick winners, but also 
you create priority areas, but then you also allow a lot of 
freedom for people to create on their own and bring forth ideas 
that could be funded, as we heard just a moment ago.
    The Chairman. The NSF Inspector General and the National 
Academy of Public Administration have recommended actions to 
improve NSF's financial oversight of high-dollar, large 
research facility construction projects. Based on your 
experience, what improvements to oversight of these projects 
would help ensure that we are getting the most out of the 
Federal research dollars that we allocate to NSF, and to 
ensure, also, the efficient use of taxpayer dollars?
    Dr. Droegemeier. Right. Yes, that's a very good question, 
as well.
    NSF and the National Science Board commissioned the 
National Academy of Public Administration to undertake a study 
to look at especially the use of cooperative agreements for 
constructing large research facilities. In this regard, NSF is 
sort of a unique agency, in the sense that most agencies that 
build large things do so through contracts. In the case of NSF, 
these facilities are built for the community, not for the 
Federal agency, so the cooperative agreement is the most 
appropriate mechanism. So, what we looked at in the NAPA study 
were a variety of issues, such as incurred cost audits, looking 
at how one applies a management fee to get contractors who will 
actually operate the facility on behalf of NSF, because NSF 
does not operate facilities. It also looked at contingency 
funds and how contingency funds ought to be appropriately 
managed and supported. Also, the expertise within NSF itself, 
in terms of people who are certified project managers to 
oversee these kinds of things, looking at where, within the 
Foundation, these kinds of projects ought to naturally be homed 
and located.
    The National Science Board undertook a fairly careful look 
at itself to see what it could really be doing. And we realized 
that we needed to have greater continuity among activities on 
the Board. Sometimes these projects last for 40 years, and we 
have NSF directors come and go, NSB Board chairs come and go, 
members come and go on 6-year terms. So, these things far 
outlast the terms of any individuals, and we felt there needed 
to be greater continuity of understanding about decisions that 
were made and things like that.
    So, those are some of the actions that NSF has already 
taken, and is taking, including adding new staff to the large 
facilities office to really kind of beef up and bolster the 
expertise that is available. I think also, as we learned at the 
Board meeting last week, being very careful to make sure that 
the folks who are in the NSF who are running these projects 
have the requisite experience to manage these projects, not 
just being good scientists, but also really understanding the 
nuances of things like earned value management and all the very 
detailed aspects of executing on a very large project.
    That NAPA study turned out to be extraordinarily valuable 
to us, and I believe the IG and NSF are working very well 
together to make sure those things are implemented. In fact, 
the NSF agrees with, basically, all of the recommendations in 
the NAPA report.
    The Chairman. Dr. Wing, you've had experience in academia 
at Carnegie Mellon, in government at NSF, and now in the 
private sector at Microsoft. What roles do you believe that the 
Federal, private sector, and academic actors are best suited to 
play in bridging the so-called ``valley of death'' and in 
reducing barriers to domestic full-scale production of 
innovative products?
    Dr. Wing. Well, first of all, I very much appreciate your 
question about, essentially, the government/academia/industry 
ecosystem--research ecosystem. Each agent in this research 
ecosystem has a very critical role for advancing science and 
engineering in basic research for the country. Federal funds, 
obviously, support basic research in universities; the private 
sector does not typically fund basic research at universities, 
for sure. And the basic research advances science and 
engineering; but, more importantly, basic research also 
produces the talent on which industry very much relies, in then 
taking the ideas from basic research and going the next step to 
create new technologies that, in the end, help the economy and 
benefit society.
    So, each of the agents in this research ecosystem feed on 
each other. It starts, of course, with Federal funding of basic 
research for universities.
    The Chairman. But, tell me, how does the availability of 
STEM graduates affect corporate decisions at Microsoft? For 
example, where to conduct research or to build a business or 
manufacture goods, things like that.
    Dr. Wing. Companies like Microsoft, but indeed the entire 
IT sector, are feeling that there is huge demand for very 
little supply. Let me give you a statistic.
    There are currently 550,000 open positions in computing. 
And guess how many computer science graduates we have annually, 
nationally? Fifty thousand. So, there is less than 10 percent 
supply for the demand. And this demand is going to grow. The 
demand for computer science graduates, or the demand for people 
skilled in computing, is just going to grow, because all 
sectors, not just the IT sector, need a workforce skilled in 
computing. All sectors see the importance of software in their 
future, the importance of data analytics in their future. And 
all of those kinds of skills are what computer scientists 
learn.
    The Chairman. Thank you, Dr. Wing.
    Senator Peters.
    Senator Peters. Thank you, Chairman Thune.
    During the roundtables that we held with Senator Gardner 
and I, we certainly heard an awful lot about the need for basic 
research and how that is the fundamental aspect of innovation 
in this country. Dr. Wing, you just talked about that, as well, 
in that you need basic curiosity-driven research that kind of 
goes wherever it may go. And it is a unique government function 
to support that. We heard that, you know, public companies are 
not going to be able to do that kind of research, particularly 
because of the demands that they have from their investors and 
their shareholders.
    Could you perhaps--first, Dr. Wing, and then others, as 
well--expand on why this is a unique Federal role and that we 
have to step it up considerably if we expect to be competitive, 
globally?
    Dr. Wing.
    Dr. Wing. Just as you mentioned, for companies, a company's 
mission is typically to make money for their shareholders. It's 
not about doing basic research, and it's certainly not about 
funding academia. So, the Federal Government has a unique role 
in this research ecosystem, which is to fund the basic research 
in universities that then leads to new technologies that can 
then become new innovations that either turn into startups or 
go into industry.
    Companies typically do not fund basic research in the way 
that the Federal Government can fund basic research. And 
companies do look to academia for partnerships, where the 
people and the ideas coming out of federally-funded research 
emerge. Indeed, that is a benefit from industry/academia 
partnerships.
    But, for the most part--and I must say that Microsoft is 
uniquely different in this way, in that Microsoft does fund 
basic research--companies cannot and do not fund basic research 
in the way that the Federal Government can and should.
    And let me draw an analogy here. The Federal Government 
funds basic research to ensure the success of the country, much 
like Microsoft funds basic research to ensure the success of 
the company.
    Senator Peters. I appreciate that and your comments that it 
is a unique role. I would go even further, that it is a 
fundamental role, that all of the other stuff does not happen 
without the government investment in basic curiosity research.
    Any other panelist want to elaborate on----
    Dr. Wing. I completely agree. Thank you.
    Dr. Droegemeier. I would just add that it's difficult to 
build a business plan off of uncertainty. Private companies 
don't like uncertainty; they like certainty. Shareholders like 
uncertainty. The Bureau of Economic Analysis likes certainty in 
predicting what the next quarter of earnings will be in this 
country. So, I think the basic research is unpredictable, but 
that's--its very nature, it's unpredictable. So, it's high-
risk. It has an uncertain valuation. But, we do know from--
through the lens of history, that, without basic research, 
things like the iPhone would not have happened, because Apple 
did not invent anything that was in the iPhone. They innovated 
the capabilities that were funded by the Federal Government and 
others, you know, many decades prior to that, and came up with 
this incredible device, but they did not actually do any of the 
research. And I think that's a great example of a company doing 
exactly what Dr. Wing said, of taking the investments that the 
Federal Government made many years ago without really knowing 
how they would be used, and then innovating to create jobs and 
build economic strength and even, you know, capabilities that 
we couldn't imagine back then.
    Senator Peters. Well, that leads to the point that we 
should move away from having an emphasis on a special 
application or a specific application for the research, and 
have it wide open.
    Dr. Munson, I think you've talked about some of these 
issues in the past. If you want to expand a little bit on the 
fact that if we have a Federal emphasis on research with a 
specific application, we are probably hurting the scientific 
innovation ecosystem.
    Dr. Munson. I think probably we need a balance. And I am in 
favor of some direct Federal funds directed toward application 
areas, like manufacturing, which is very broad. The university 
work that we do in partnership with industry does tend to be 
more applied than the work we do with the Federal Government, 
and tends to be application-specific, in that we might be doing 
work on a specific component of a driverless car, for example; 
whereas, with the Federal research, it's going to be more 
basic, often more mathematical, in the case of engineering, and 
develop underpinnings for future discoveries. So, I think we 
cannot lose the fundamental basic nature of Federal research, 
but I also feel that targeted investments in specific areas is 
sometimes merited.
    Thank you.
    Senator Blunt [presiding]. Mr. Udall.

                 STATEMENT OF HON. TOM UDALL, 
                  U.S. SENATOR FROM NEW MEXICO

    Senator Udall. Thank you very much, Chairman Blunt. Doesn't 
that have a nice ring to it?
    [Laughter.]
    Senator Udall. I appreciate the hearing topic today and 
this committee's bipartisan work to update and reauthorize 
America COMPETES legislation.
    New Mexico is home to many scientists, from university 
researchers to those in our National Labs working to keep our 
country safe, from astronomers peering into the depths of 
space, to climate researchers trying to understand the impact 
of global warming on our forests and grasslands. So, I look 
forward to working with Chairman Thune and with you, all of the 
Committee members, as we consider America COMPETES legislation. 
And I'm eager to find ways to encourage women and 
underrepresented minorities to pursue the STEM fields and 
improve tech transfer from federally-funded research.
    Mr. Atkinson, as you know, New Mexico is home to Los Alamos 
and to Sandia National Labs. These are truly crown jewels in 
our Nation's research-and-development infrastructure. Your 
organization partnered with the Heritage Foundation and the 
Center for American Progress on a report called ``Turning the 
Page: Reimagining the National Labs in the 21st Century 
Innovation Economy.'' That report recommended changes to how 
our National Labs are managed. It found that the National Labs 
are a tremendous source of cutting-edge research and scientific 
talent. But, it noted that the labs could benefit from new 
management models that are best suited to nurture innovative 
ideas. Could you share more about your ideas for how our 
National Labs could do a better job, in terms of tech transfer 
and commercialization?
    Dr. Atkinson. Yes, thank you, Senator Udall.
    I hundred-percent agree with you, the labs are an enormous 
asset. And, unfortunately, they're underperforming, in terms of 
taking that knowledge and getting it out into the private 
sector. There are a lot of different reasons for that. One of 
the reasons is, frankly, there's too much top-down control in 
Washington, at DOE headquarters. To get the lab to have some 
flexibility to get something out into the marketplace is very 
onerous at times. Idaho National Labs recently cataloged 110 
different requirements for them to meet in order to transfer 
a--some technology out of that lab--110 different requirements. 
When you have to go through that, it becomes much more 
difficult. So, we made a number of recommendations, one being 
that Congress should remove prescriptive overhead accounting 
rules and allow labs more flexibility with their funds. Again, 
a lot of the funds are very stovepiped. If they want to move a 
little bit of money over here to try something new, to maybe 
prototype it, see if it's ready to go, see if they can get it 
out into the local marketplace, very difficult for them to do 
that.
    We also argued for expanding what are called Agreements for 
Commercializing Technology, or the ACT program, which right now 
is very limited to certain types of companies. That should be a 
broader program. We think it's very good program. There's also 
a process called the PEMP, the P-E-M-P process, which is an 
evaluation or accounting--accountability process for the labs. 
But, when you look at what the PEMP measures, the technology 
impact measure or technology commercialization measure that--
how the labs are evaluated accounts for very, very little in 
their evaluation. And so, a very simple thing would be to have 
DOE make technology commercialization a more important factor 
in how the labs are evaluated. Companies and organizations do 
what they're evaluated on. And if you don't evaluate them on 
that, if it doesn't really matter whether they do better or 
worse, then they're not going to do very much. So, I think 
there are a lot of different things that we could do with a--to 
really ramp up their capability.
    Senator Udall. When you talk about the 110 requirements, 
are those part of the top-down, that they have to do or are 
these internal ones, even, in the laboratory itself?
    Dr. Atkinson. I'd have to go back and look and see how many 
are which, but certainly there are many of these requirements 
that are either in regulation or just in terms of the 
bureaucratic process that goes on here in Washington 
headquarters. Some labs also have internal processes that they, 
themselves, could streamline. But, again, sometimes their 
ability to streamline those are constrained by Washington.
    Senator Udall. Yes. They now have one person dedicated in 
the Department of Energy to look at tech transfer, to look at 
commercialization. Do you think that's a step forward, in terms 
of that kind of issue?
    Dr. Atkinson. It's better than zero.
    Senator Udall. Yes.
    [Laughter.]
    Dr. Atkinson. But, when you think about----
    Senator Udall. That's the way I feel, too.
    Dr. Atkinson.--the amount of money that the labs spend, or 
we invest in the labs, and yet we have just one person doing 
that, it really tells you where the priorities are.
    Senator Udall. Yes.
    Dr. Atkinson. And I knew the prior person who did it, who 
was a wonderful person, and--but, frankly, it was hard for her 
to do that, because she's just one person looking at the entire 
lab system.
    Senator Udall. Yes.
    Thank you very much. Really appreciate it. And I may submit 
a couple of questions for the record.
    Thank you.

                 STATEMENT OF HON. ROY BLUNT, 
                   U.S. SENATOR FROM MISSOURI

    Senator Blunt. Thank you, Senator.
    I have one--we talked about the labs. That was helpful. I'd 
also like to have a little on-the-record discussion here about 
the regional innovation programs. These are programs that, with 
a one-to-one match, try to leverage and build the innovation 
ecosystem. We were able to put these in the Blunt-Brown 
manufacturing bill that passed this committee in 2014, and was 
enacted into law. So, they're extended through 2019.
    In Missouri, we have eight of these regional innovation 
programs. You know, one good example would be BioSTL, in St. 
Louis, where a coalition of not-for-profits, of community 
leaders, university leaders have pushed to make this 
environment work. And they've received a number of grants, and 
are having great success. But, I'm just wondering, on that 
regional concept, if any or all of you have any experience or 
anything you'd like to mention as to how those are working.
    And, Dr. Atkinson, we'll start with you.
    Dr. Atkinson. Thank you, Senator.
    I fully agree with you that it's an important concept. At a 
prior position in my career, I actually headed up innovation 
and economic development for a Governor. And I can tell you, 
Governors, by and large, understand this question better, 
frankly, sometimes than Washington, because they're closer to 
the ground on it. But, they're often constrained in the 
resources they have. And I think a program like the Regional 
Innovation Partnership Program, because it's a targeted 
program--not a lot of money, but enough money to kind of bring 
everybody to the table and organize these.
    We have a dynamic and very different and diverse system in 
the--between states. You have the bio-efforts in St. Louis, 
Rochester has optics. It's hard for the Federal Government to 
think about that. And it really requires a regional focus. And 
for the Federal Government to put a little bit of money into 
this to spur that, I think is a very wise investment.
    Senator Blunt. Anyone else?
    Dr. Wing.
    Dr. Wing. One of the recent programs that the National 
Science Foundation put out is a data hub program, which 
recognizes the importance of big data in all science and 
engineering disciplines; in fact, beyond science and 
engineering, in the humanities, arts, and social sciences, and 
so forth. There are four regional data hubs that were created 
in somewhat of a hub-and-spoke model so that all universities 
and research institutions in those regions can benefit. I think 
that all four hubs are doing very well in addressing very 
important concerns for society.
    Dr. Droegemeier. I would just add to that. When you think 
about these regional hubs, which I think are so important, a 
lot of times they're focused around major research 
universities. And that gets us back to the question of, how 
easy is it for private companies and universities to work 
together? And I hope, at some point, we might talk about that, 
because I think there are some significant impediments. Some of 
these were pointed out in the American Academy's report, that 
the COMPETES Act could be sensitive to it and really drive some 
important change that I think would unlock potential that is 
now kind of bound up in certain laws that are tying our hands.
    Senator Blunt. Thank you all.

                STATEMENT OF HON. CORY GARDNER, 
                   U.S. SENATOR FROM COLORADO

    Senator Gardner [presiding]. Thank you, Senator Blunt.
    And thank you very much for the witnesses' time here today 
and the work you're doing.
    What's that? Oh, I'm sorry.
    Thank you very much for the time to be here today. And 
really appreciate the work that we've been--you've helped us 
put together on reauthorization of America COMPETES. It's 
incredible what we have been able to find and learn together on 
this.
    And, at this point, I think I'm next in questioning, but 
I'll go ahead and give the time to Senator Klobuchar for the 
next time period.

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. OK, very good. I thought you were ending 
it. That's what I was sort of motioning that I wanted to----
    [Laughter.]
    Senator Klobuchar.--that I wanted to say something. So, 
it----
    Senator Gardner. I thought you really, really wanted to ask 
a question, so I said, ``Man, I'm going to let you do it.''
    [Laughter.]
    Senator Klobuchar. No, it's not. I'll be very brief.
    But, I want to thank Chairman Thune and you, Senator 
Gardner, as well as everyone that has been involved in the 
COMPETES Act. It's pretty important in my state, where--we're a 
state that makes stuff, invents things, and exports to the 
world. And we've had a lot of hearings about this.
    So, my first question is about the STEM workforce. I guess 
I'll ask this of you, Professor Munson. Do you believe that 
increasing the number of STEM secondary schools will better 
prepare students? Senator Hoeven and I have worked on this, 
and--at the home of the Mayo Clinic and other places that do a 
lot of technology, like medical device. I care a lot about 
this. So, how do you think that that will help, if we increase 
the number of STEM high schools?
    Dr. Munson. I think it's important to better integrate STEM 
throughout all our high schools. And so, I think it's great to 
have a set of high schools that focus on STEM, but it pains me 
to see any high school, for example, that teaches nothing in 
the area of computer science. And the engineering deans across 
the Nation now are working hard on various proposals to have at 
least introductions to engineering available throughout high 
schools. So, I think that's important.
    What I'm most concerned about there, though, I have to say, 
is getting more women and more underrepresented minorities into 
STEM, because we know that, in just a few short decades, if not 
sooner, the current minority will be the majority in the U.S. 
And at that point, if we have very few minorities in 
engineering and technology and science, if we have very few 
women in engineering, in technology, and science, that we're 
going to be drawing on all of our technical talent--we're going 
to be drawing on about 25 percent of the population. And there 
is no way we're going to be economically competitive----
    Senator Klobuchar. Right.
    Dr. Munson.--if we do that.
    Senator Klobuchar. And we've started this diversified tech 
caucus, with myself and Senator Capito and Senator Scott, 
that's pretty important. One of the things I've found is that a 
lot of people--especially women just don't like some of the 
work environments, in how they're set up. I've been in 
manufacturing facilities in Minnesota. They can be really 
freezing cold. And then I ask their General Manager about it. 
This actually happened. I said, ``Well, maybe people aren't 
working here because it's so cold.'' And he says, ``No, no, 
that's not it.'' And then I put it on Facebook that I visited 
there, and three people wrote in, ``Oh, my brother used to work 
there, but it's so cold.''
    [Laughter.]
    Senator Klobuchar. And so, I just think that thinking not 
how things were 20 years ago, but thinking about how you're 
going to recruit people, millennials, of any color or any 
gender that want to have a different working environment is 
part of this, as well as having mentors and everything we know. 
So.
    Dr. Munson. My impression is, the larger companies are 
doing a really good job at creating a much improved 
environment, but part of the hard thing is, at the university 
level, getting the message out to students that, in my case, 
engineering is not a solitary profession. You're not----
    Senator Klobuchar. Right.
    Dr. Munson.--hidden away in a dark lab by yourself, you're 
not chained to your computer workstation.
    Senator Klobuchar. Or your cubicle. And it's a----
    Dr. Munson. No, it's----
    Senator Klobuchar.--more open place----
    Dr. Munson.--it's a very social profession these days.
    Senator Klobuchar. OK. All right. They're--you're on record 
saying that, so that's good.
    [Laughter.]
    Senator Klobuchar. No, I believe you, Doctor. I've seen it 
myself in companies that encourage that kind of collaboration.
    Dr. Atkinson, I know you've done a lot of work--I've done 
some work with you on this--is trying to get products that a 
university researches so it just doesn't get dust on a shelf 
and so that, instead, it's sort of translated into products. 
Can you talk about that and what new steps we could take to try 
to encourage that?
    Dr. Atkinson. Yes. Well, thank you, Senator.
    I just want to also compliment you on your bill for the 
science high schools. I think it's one of the single easiest 
and best things we could do. If you looked at the National 
Science Bowl winner last--I think it was last week--was 
Montgomery Blair, right here in Montgomery County--won the 
entire country's contest. And it's a science-focused high 
school. And I think we--if we're going to get excellence--and, 
by the way, if you look at a lot of those high schools, they do 
a very, very good job of getting girls involved. And so, I 
think expanding that and having more experimentation around the 
country is really critical.
    On the whole issue of tech transfer, part of our challenge 
there is--again, we've got a great diversity between 
universities and then within labs. The challenge we have, 
though, is, frankly, a lot of universities and labs don't have 
strong incentives. They're happy with the way things are. They 
just want to keep getting grants from the Federal Government. 
And they don't have strong incentives to commercialize. And, 
second, even the ones that want to do more don't necessarily 
have the resources. And that's why I think things like the I-
Corps program, things like the initiative in the Startup Act 
that would take a little bit of that--a little bit of SBIR 
money, if you will, and move it into commercialization, the 
Regional Innovation Program that Senator Blunt talked about--
these are all really important areas to get the resources for 
people who want to do commercialization better.
    Senator Klobuchar. OK. Very good.
    Well, thank you.
    And thank you so much, Senator Gardner.
    Senator Gardner. Thank you.
    Dr. Wing, did you wish to----
    Dr. Wing. I----
    Senator Gardner.--reply, as well?
    Dr. Wing. I wanted to follow up on what universities can do 
to expedite or encourage faculty to take ideas and create 
startups and do tech transfer, to address this valley of death 
that was introduced earlier. And that is, universities can be a 
little more creative in their technology transfer policies. I 
believe that my former provost, Mark Kamlet, from Carnegie 
Mellon, spoke to Congress in 2010 about the CMU tech transfer 
policy. What happens at a university is that faculty have an 
idea, they might want to do a startup, and then there's this 
upfront negotiation with the tech transfer office. There's all 
this time spent on negotiation because the university is 
worried about, ``Oh, who is this money going to? There's going 
to be all this money, and the university should own some of 
that money.'' But realistically how many startups really 
succeed? So, there's all this upfront negotiation, and people 
are hired into these positions in the technology transfer 
office, and this creates more overhead and so, what Mark Kamlet 
did was he instituted this principle of ``5 percent, and go in 
peace.'' Now, there's a short one-page form you fill out--very 
simple and not a lot of negotiation, which reduces the staff 
and which reduces the upfront overhead and negotiation. The 
faculty are happy and the university will get something if the 
startup succeeds. That's an example of being creative. So, I 
think universities can look to themselves and say, ``If we want 
to promote more tech transfers, we want to promote an 
entrepreneurial culture on campus''----
    Senator Klobuchar. And is 5 percent kind----
    Dr. Wing.--``we can do that.''
    Senator Klobuchar.--of a normal amount?
    Dr. Wing. Of--5 percent of equity----
    Senator Klobuchar. I know.
    Dr. Wing. Yes. That----
    Senator Klobuchar. Is that----
    Dr. Wing. Yes.
    Senator Klobuchar. That's--OK.
    All right. Thank you.
    Senator Gardner. Thank you very much, Senator Klobuchar.
    And I understand your concern about weather, but if there 
are any Vitamin D-deprived scientists or engineers, you're 
always welcome to Colorado. It's----
    [Laughter.]
    Senator Gardner.--sunnier there than any other state in the 
country. I'm just going to say that right now.
    [Laughter.]
    Senator Gardner. But, thank you again, all, for being here 
and, to Senator Peters, for the work that we've been able to do 
together.
    The roundtables that we've held here in Washington, I 
think, have been very successful, very eye-opening. And, of 
course, we've learned a tremendous amount about how to build on 
a successful program. And if you look at the innovations that 
we have brought to this country through the work the Federal 
Government has participated in, from the barcode to touchglass 
on an iPhone, Federal research has contributed to many of the 
most well-known and important projects and important 
technologies this country is now living with or, in many ways, 
couldn't live without. And so, the funding issues are 
critically important. We have to recognize the U.S.'s 
leadership role in funding, and doing it better than any other 
nation in the world. But, we can also always do a better job, 
and that's what this effort is about, how we make sure that we 
can continue competing as a leader, not a follower, in this 
globe, where China, India, and other nations, Japan, are 
increasing their commitments to research, development, basic 
science. And so, how do we make sure that the U.S. maintains 
that leadership role? And so, our effort, of course, builds on 
the 2007 RAGS report that we've talked about throughout this 
entire roundtable process from last year to this report, ``The 
Rise Above the Gathering Storm,'' America COMPETES, and the 
authorization.
    And so, building on that, that report, building on the 
innovation edge that we have today, but it's not guaranteed, 
it's important that we have the advice from the academic 
sector, from the private sector, from others who are integral 
to making this Nation maintain its position--helping this 
Nation maintain its position on top. And industry, of course, 
and the partnership that they provide.
    So, over the past year, thanks to those of you who have 
participated in the roundtables, we've held a number of them, 
both in Michigan--I think you did some in Michigan--we did it 
in Colorado, where we have over 20 Federal labs that will 
partake in the work that we do today. Of course, in Washington, 
D.C. So, thank you.
    A lot of questions that I have--I wanted to get to my 
questions now and just start with one of the comments that was 
made during, I think, Dr. Droegemeier, your opening statement. 
I think you said something to the effect of, ``There are no 
sure bets, and winners are found where they're least 
expected.'' And then, follow that up with, I think, something 
that Dr. Munson had stated, which was, basically, something to 
the effect of, ``If there's no market for it--it may be the 
best technology, but no market''--something to the effect of, 
``No market for the best technology doesn't really get it 
anywhere,'' if I could paraphrase. And then, Dr. Droegemeier, 
you talked about reducing the administrative's burden.
    So, how do we make sure that we're taking this 42-percent 
administrative burden, we're reducing it so that more money can 
be spent on the science, on the research, so that more time by 
the researchers can be spent on the science, the development, 
the research, while also recognizing that we have 
accountability and transparency needs and commitments to the 
taxpayers of this country, balancing that with, ``The winners 
are found where they're least expected''? That's a difficult 
task. How do we best achieve that balance?
    Dr. Droegemeier. Well, I think we're on a right track, in 
terms of looking at all these various compliance policies and 
saying, ``Are they really working? Are they having the intended 
purpose? Are they preventing waste, fraud, and abuse? Are they 
allowing the safe research in human subjects?'' For example, in 
some cases, universities are bound by policies for, say, the 
application and the storing of chemicals that are relevant to 
industry, and yet we don't have the--nearly the amounts of 
those chemicals on our campuses. So, there's an example of 
having to comply with a policy that's completely incongruent 
with the nature of a university. Certain reporting requirements 
that--of providing information to agencies, we're all about 
doing that, but then the question is--if every agency is asking 
for the same thing in a different form, there's duplication. 
So, what we want to do is understand the--if there is 
duplication, try to harmonize and streamline those things and 
avoid situations where we're doing a lot of work that doesn't 
need to be done. It's, maybe, already done in some particular 
way.
    And so, I think there has been a thoughtful analysis. The 
National Academy is about ready to come out with the second 
part of its study. And so, I think that analysis has been done. 
Now I think we have to have the will to actually implement 
that. And you'll notice that some of those recommendations are 
for the universities themselves. Sometimes we put additional 
regulations on ourselves, because we are very concerned about 
being sued, for example, if there's a particular situation that 
happens. So, we say, ``Well, let's go ahead and add on this 
additional regulation.'' And, of course, the faculty don't 
distinguish, ``Is it a Federal regulation? Is it a university? 
Is it a State regulation?'' They just see this as a big burden. 
So, trying to tease out, I think, the various natures of those 
compliance mandates and whether or not they're actually having 
the intended effect.
    And then, as we add new compliance mandates, like for lab 
safety, are we looking at the cost and making sure that these 
things are being implemented in a way that's consistent with 
the research that's done in universities, versus, say, that at 
a Federal lab or in a private company?
    Dr. Wing. May I make a comment on that?
    Senator Gardner. Yes, please.
    Dr. Wing. I want to explain a subtle implication of when--
and this relates to the 42 percent of research time that goes 
to administrative overhead--a subtle implication of when 
Federal funds for basic research are not sustained. Because 
what happens is that a faculty member will not know whether he 
or she will be able to get funding for a graduate student 3 
years hence. A faculty member actually might hesitate in even 
taking on a new graduate student because he or she is not sure 
of how much funding he or she can expect. So, what happens is 
that, first of all, being entrepreneurial, a faculty--a typical 
faculty member will then propose to multiple agencies in order 
to support, say, one student or a set of students. And then, 
for each agency, you have these administrative rules to follow. 
First there's a pre-award process with all the rules. Then you 
get the award. Then there's a post-award process, with all the 
rules. These rules are for compliance and accountability and 
transparency for each of the little pots of money that the 
faculty was able to get to support one student or a set of 
students. And that's just for maybe 2 or 3 years looking 
forward. So, when the funding is tight and it's not 
predictable--and that's what I mean by not ``sustained''--then 
the faculty member has to spend a lot of time managing this 
large portfolio of lots of pots of money. When time goes to 
administrating grants, less time goes to research, meaning 
inefficient use of research dollars. Here then is the subtle 
implication: less time for research means less advancement of 
science.
    Senator Gardner. Thank you, Dr. Wing.
    Dr. Atkinson, you mentioned, in your opening comments, the 
ability to take--about commercialization--that the ability to 
take U.S. knowledge and commercialize it for another country's 
gain is significant. We see the research, the development, the 
science here, and then the commercialization there. Could you 
give, perhaps, an example of that, and then perhaps a policy 
response to that? What are the key things that we should be 
doing?
    Dr. Atkinson. So, there are clearly examples in a wide 
variety of industries. So, for example, some of the 
technologies that Taiwan has developed, in terms of 
semiconductors, they've used the knowledge we've developed 
here. But, I think we see that, and we're going to continue to 
see that. And at one level, science is a global enterprise, and 
they develop science, and we benefit from it. So, I'm not 
saying science is a zero-sum game, by any stretch of the 
imagination. But, at the same time, it is a global public good, 
if you will, so sort of out there for everybody to capture, and 
we don't do a good enough job to do that.
    So, there are, I think, a lot of things we could do. For 
example, one of the things would be to expand the Engineering 
Research Center Program and what's called the IUCRC Program--
Industry/University Cooperative Research Center Program at NSF. 
These were developed back in the Reagan administration, when we 
faced the Japanese challenge--the Japanese and the German 
challenge. There was an understanding back then that they were 
funding cooperative university/industry partnership programs, 
and we weren't. So, we developed these programs. Very, very 
successful. But, again, very small amount of money. So, again, 
you could expand those programs in a budget-neutral way, just 
tell NSF they have to double the size of those programs. And 
the advantage of that is, there's a direct linkage. So, for 
example, the UC Berkeley, they have a microelectronics--MEMS, 
for microelectronics----
    Dr. Droegemeier. Sensors.
    Dr. Atkinson.--yes, sensors--microelectronic--
microsensors----
    Dr. Munson. Micro Electro Mechanical Sensors.
    Dr. Atkinson. Thank you. Micro Electronic Mechanical 
Sensors, MEMS. And it has commercialized more technology than 
many, many other places. I mean, it's a little center, but, 
because they're so tightly linked with Silicon Valley and 
industry, they take these MEMS tech discoveries coming out of 
Berkeley, and they get them into the marketplace, because they 
have an industry/university focus right there. So, I think 
something like that would be very helpful.
    Senator Gardner. Thank you, Dr. Atkinson.
    Senator Moran.

                STATEMENT OF HON. JERRY MORAN, 
                    U.S. SENATOR FROM KANSAS

    Senator Moran. Mr. Chairman, thank you very much.
    Panel, thank you very much for joining us.
    I want to--I have two questions. One is narrow, and one is 
broad. And I'll start with the narrow one, and I want to direct 
it at Dr. Atkinson.
    Doctor, you have been valuable to us in many of our efforts 
in regard to trying to increase upward mobility in the economy 
for individuals, but particularly in regard to legislation 
introduced now a number of years ago, Startup--now Startup 3.0. 
One of the components of that legislation is trying to enhance 
the opportunities to commercialize federally-funded research to 
get it further into the economy and to help startup 
entrepreneurs have access to the value of research that they 
have helped fund. And I would welcome your thoughts about that 
and its proper place of--in the COMPETES Act as an opportunity 
for us to advance this cause.
    Dr. Atkinson. Well, thank you, Senator. Thank you.
    You know, I think it's interesting when you look at that--
first of all, fully support that idea and that proposal, and 
Startup Act, in general, taking a very, very small amount of 
money. I think it's 0.15 percent, as I recall, out of the 
entire enterprise, and saying, you know, if we take a little 
bit of money and focus it on getting this knowledge 
commercialized in the U.S., to me that's a very, very wise 
investment. And not just because it would get more 
commercialization, but it would end up creating a more positive 
ecosystem. We'd have a bigger economy, so we could fund more 
science. We'd have industry more focused on this thing, so they 
would be funding more university research. So, I think the 
folks who are looking at that, maybe with some trepidation, are 
saying, ``Well, we have a fixed pie, and we don't want to lose 
our little slice,'' are looking at it in a too narrow and not 
the right way, because I think a program like that would end up 
with commercializing a lot more innovation and fundamentally 
creating more science.
    Senator Moran. Thank you. We're working with the Senators 
on this committee to see if we can't include that language or 
similar language in COMPETES.
    On the broad question, to any of you who would like to 
respond, I think the question is, is all Federal research of 
equal value or priority? And I know the answer to that can't be 
yes, but also, I think, probably, politically, it can't be no. 
But, here's what I'm thinking. I've been involved, as a member 
of the Appropriations Committee, in regard to significant 
increases in NIH funding. I now chair the Agricultural 
Appropriations Subcommittee, where there's a concerted effort 
to see if we can't increase the number of dollars available for 
agriculture research. We're talking about other research today 
in this setting. But, as I, as a Member of Congress, try to 
prioritize, where do we put the resources within the wide array 
of federally-funded research, how should I look at where those 
priorities ought to be? So, the question, again, is, is there a 
way to distinguish that certain kinds of research, federally 
supported, has a better bang for the buck, greater value to the 
country, its economy, and its people?
    Dr. Atkinson. I could start. So I know that the consensus 
in the academic community is that it's all equal and they 
shouldn't allow any prioritization. The prioritization should 
come from principal investigators. And I don't really believe 
that, nor do I believe the opposite, that the Federal 
Government should be micromanaging and picking everything. You 
need a healthy mix of that. But, I do think that there is one 
good criteria that we could use, and that's from a report we 
released on Monday about how--why we need a national 
productivity strategy. U.S. productivity over the last 7 years 
has been the lowest it has been since World War II. I think 
there's a set of technologies, including in agriculture, 
including in biotechnology, including in robotics and 
artificial intelligence and others. We know these technologies 
are going to be critical to boosting U.S. productivity, and I 
don't see any reason why we couldn't say, ``We're going to take 
a little bit more focus into these areas.'' Again, it's not to 
say that you abolish meteorology or anything like that. I'm not 
saying that, by any stretch of the imagination.
    [Laughter.]
    Dr. Atkinson. But, I am saying, though, that we do know 
that there are some areas of research that are going to have a 
bigger economic impact. And I think it is worth expanding 
those, in particular.
    Senator Moran. Thank you.
    I think it was recognized several years ago that we, as a 
Nation, don't really have a science-of-science policy. We make 
science policy sort of as we go. And so, NSF has a problem--a 
program called SciSIP, the Science of Science Innovation 
Policy, where we're actually studying this to really find out 
what--really, the answer to your question. I think one of the 
answers, though, right now, is better coordination. The 
National Science Technology Council, which is a Federal agency, 
a committee that, basically, is across all of government, 
across all agencies--for example, you look at USDA and things 
like food safety. There's a lot of basic research and biology 
at--that NSF funds that's super-relevant to food safety in 
USDA. So, then the question is, ``Well, do you need to have it 
funded four or five different places and are we properly 
coordinating our investment?'' So, I think--I would say, let's 
take what we have and make sure that we're coordinating it most 
effectively, and having crosstalk across the agencies of the 
bio director at NSF talking with USDA, which I know they are, 
to make sure that we're really thinking holistically about 
these problems, as well as the social/behavioral dimension of 
how people are responding to genetically modified foods and 
things like that. I think that broad, sort of, ecosystem is 
really the thing that we have to get our hands around. It's 
very complicated. It's difficult to do.
    Senator Moran. Doctor, thank you. That's useful to me. I 
mean, our subcommittee has jurisdiction over both USDA and the 
Food and Drug Administration. The question very well may be one 
that we ought to look at in that regard.
    And just finally, Dr. Wing, I met with the CEO of Microsoft 
recently. I very much appreciate the efforts at--that Microsoft 
is making to train, educate--to encourage the training and 
education of folks in science and engineering, and computer 
science, in particular. And we want to be an ally in that 
regard. So, thank you very much.
    Dr. Wing. Thank you very much.
    Senator Moran. Thank you, Chairman.
    Senator Gardner. Thank you, Senator Moran.
    Senator Markey.

               STATEMENT OF HON. EDWARD MARKEY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Markey. Thank you very much, Mr. Chairman.
    We are home to the best research universities in the world. 
And people from around the world flock to the United States so 
that they can do their research in the United States. I am 
proud to come from Massachusetts, where we have some of the 
finest research institutions in the world. That's why right now 
we're the home to the largest clean-tech incubator, Greentown 
Labs, in the Nation. And it's why General Electric is moving to 
Massachusetts, because we are now the Internet of Things up in 
Boston as it relates to biotech, as it relates to clean tech, 
as it relates to telecom tech, and manufacturing. All of this 
as a result of kind of basic research that was begun and 
initially given the funding to BB&N, a small company up in 
Boston, because IBM and AT&T did not want the contract to build 
a packet switch network. That basic research ultimately then 
leads to General Electric coming back, and other companies who 
didn't want the contract, saying, ``Maybe we should go to 
Boston now, where that happens.'' Sometimes what it is that we 
are doing doesn't necessarily relate directly today to the 
economic growth that we're looking for, but, nonetheless, the 
research has to be done without knowing the specifics.
    So, that's why we have to continue to increase funding for 
STEM research, why ensuring that aquariums, museums, other 
research-related institutions are also given the funding which 
they need, because people learn through those means.
    Our funding decisions for basic science research should be 
guided by the possibilities promised by science and technology, 
and not by politics. A recent version of COMPETES released by 
the Republicans over in the House has singled out certain 
sciences as winners, and other sciences as losers, authorizing 
funding increases for the former and decreases for the loser 
sciences. Now, this is a narrow view, from my perspective, of 
how advances in one area of science drives breakthroughs in 
seemingly unrelated fields. Science operates in a complex 
research ecosystem, and legislation should support the full 
range of science inquiry.
    Dr. Munson, do you agree that research should be guided by 
scientific experts and not micromanaged by policymakers?
    Dr. Munson. I agree 100 percent.
    Senator Markey. OK.
    Dr. Wing, how do you feel about that?
    Dr. Wing. I agree 100 percent, as well.
    Senator Markey. So, I would like to enter into the record 
two letters that detail how Federal investment in geoscience 
research--and education, in particular--contribute to our 
Nation's economic competitiveness.
    The first letter, signed by 100 universities, research 
institutions, and scientific professional societies, provides 
concrete examples of how geoscience is essential to tackling 
national challenges ranging from workforce development in the 
energy sector to mitigating the impact of hurricanes through 
improved forecasting and response.
    The second letter, signed by 19 geoscience organizations, 
including the American Association of Petroleum Geologists, the 
Society for Mining, Metallurgy, and Exploration, and the 
Geological Society of America, detail how geoscience plays a 
critical role in tackling national challenges in water, in 
mineral resources, energy independence, environmental issues, 
Earth's climate and ocean systems, and mitigation of natural 
hazards.
    And I would ask----
    Senator Gardner. Without objection.
    Senator Markey.--unanimous consent that those letters be 
included in the record. And I thank you for that.
    Dr. Wing, in your testimony, you highlighted the importance 
of investment in basic discovery science. U.S. technological 
and scientific leadership relies on Federal funding of basic 
science research and STEM education at agencies as the National 
Science Foundation. And the LIGO scientific collaboration and 
international project of over 900 scientists led by MIT and 
Caltech is a recent testament to the payoff of long-term public 
investment in basic science research. One hundred years ago, 
Albert Einstein predicted that violent events in the early 
universe shocked the cosmos, sending gravity waves rippling 
through the fabric of spacetime. Creating much of their own 
technology in the process, scientists were able to detect the 
vibrations from gravity waves that Einstein had predicted. For 
centuries, humanity has used telescopes to peer into the vast 
expanses of the cosmos. Now, because of the pioneering work by 
LIGO and decades of support by the NSF, we can, for the first 
time, train our ears on those dark reaches, as well.
    Can you tell us about some spinoff technologies or other 
direct benefits that have come from LIGO research?
    Dr. Droegemeier. Sure. Thank you, Senator.
    That was so eloquent, I want to get a copy of it. 
Beautifully said. Wow, LIGO is so exciting.
    There are a lot of advances now that are being made as we 
ramp up the sensitivity of LIGO to new types of mirror coatings 
which could be valuable in all sorts of medical optical devices 
and so on, to very sensitive electronics for measuring things 
that are, you know, smaller than the width of a proton. So, all 
of these kinds of things, when you think about shrinking, you 
know, device sizes and packaging of computers and so on, I 
think some of these things--we can predict that LIGO is 
producing things, just like the space program did, that will 
really change our world, and other things that we can just have 
a hint at that, yes, we could see this, and sort of project it 
forward, that that someday will result in, maybe, a device, 
where you have a battery that lasts for 100 hours that's the 
size of a penny or something like that. So, LIGO truly is 
transformative, for all the reasons you mentioned. I think 
we're just beginning to get a glimpse of the spinoffs that are 
possible from it.
    Senator Markey. So, it could lead to more uniform optical 
coatings and proving materials used to build the structural 
components in aircraft, for example. Is that correct?
    Dr. Droegemeier. And isolating vibrations. You know, this 
thing--we have to isolate it from vibrations of the Earth, 
earthquakes and just natural--cars driving by. Think about 
other devices that have to be similarly sensitive for 
microsurgeries and things like that, could be very valuable.
    Senator Markey. Yes. To some extent, this could have been 
viewed as ``loser science'' for years and years and years and 
years. But, now maybe not so much. Now you can see that there 
could be practical applications. That's kind of the tension 
that we have here. Picking kind of already existing winners of 
today as deserving of even more funding today, but 
shortchanging the future, shortchanging the scientific research 
that would give us perhaps even bigger payoffs in the future, 
although perhaps not during the tenure of any particular 
Congressman.
    So, that's kind of the dynamic tension that does exist. 
And, honestly, when IBM and AT&T turned down the packet switch 
network contract, that was a perfect example of how a large 
corporation in the short frame isn't necessarily the best judge 
of what, in the long term, is going to give us the big payoff. 
The very fact that we're now able to talk about these 
telecommunications technologies in this new dynamic is only 
possible because of an investment in a ``loser science 
project.''
    Dr. Wing. Well, I wouldn't----
    Senator Markey. From the perspective of the major 
corporations of their time.
    Dr. Wing.
    Dr. Wing. I was going to say, I wouldn't call it a 
``loser,'' but I would remind everyone that by definition, 
long-term basic research means taking a long-term view of the 
research.
    Senator Markey. No, I don't mean----
    Dr. Wing. And it means----
    Senator Markey. I mean that in----
    Dr. Wing.--it means being very patient.
    Senator Markey. Dr. Wing, I'm putting it in quotes, OK? I'm 
talking about winning and losing in the context of how the 
short-term interest of some corporations or some interests 
aren't necessarily the primary beneficiaries.
    Dr. Munson.
    Dr. Munson. You know, let me just add that a lot of times 
you just don't know where basic research is going to take you. 
And I'll just cite one example from my university. We had 
researchers, many years ago, working on the highest-power 
lasers in the world, and doing fundamentally new physics. And 
some of that gets pretty esoteric, and you kind of wonder, 
``Well, but what's this going to be,'' quote, ``useful for?'' 
Well, those very lasers are the lasers nowadays used in LASIK 
eye surgery, because they make very, very precise cuts in the 
eye. And that wouldn't have been predicted early on in that 
research.
    Senator Markey. Yes. So, ``congressional expert'' is an 
oxymoron. It's like ``jumbo shrimp'' or----
    [Laughter.]
    Senator Markey.--``Salt Lake City nightlife.''
    [Laughter.]
    Senator Markey. I mean, we're really not scientific 
experts. So, for us to be picking which of the technologies are 
going to give us the big payoff, while most of us majored in 
history or political science or English in college, is maybe a 
little presumptuous. That would be my argument. I would leave 
it to the scientific community to make the decisions. We 
provide the funding, but we don't necessarily have to then, put 
our thumb on one or the other. That would be my modest 
proposal.
    I thank you, Mr. Chairman.
    Senator Gardner. Thank you, Senator Markey.
    And for those of you who thought you were off the hook, 
we're going to go another round, here. So, sorry bout that. We 
do have a few more questions, Senator Peters and I do. And, 
Senator Markey, you're welcome to----
    Senator Markey. Thank you.
    Senator Gardner.--welcome to join, as well.
    Dr. Droegemeier, again, you mentioned in your testimony the 
importance of talking about the boundaries between different 
disciplines. All of you have mentioned that in your testimony. 
You talk about the interface, for example, between NIH and NSF, 
biological and mathematical, on NIH, NSF, on diseases such as 
NSF--excuse me--diseases such as Zika or Ebola. Both incredibly 
important threats that we're facing today that we find 
solutions to. And so, one of the concerns that we've heard 
throughout the process of the roundtables is, How do we know 
and how do we create a system where we understand what 
different agencies of government are working on so that we can 
partnership together? Because there may be an issue where they 
frequently don't know what other part of the government is 
working on, the research that's taking place. So, how do we 
best get agencies to talk to one another in advance of some of 
these efforts, or during some of these research projects?
    Dr. Droegemeier. That's a great question. I think the 
National Science Technology Council, as I mentioned earlier, is 
one mechanism. I think another mechanism is agencies that are 
developing their budgets and going through passback in Congress 
and so on with OMB, there's always an opportunity, I think, to 
interact. And agency heads, I think, do meet. I know that the 
head of NASA, Charlie Bolden, and Kathy Sullivan, head of NOAA, 
and the Director of NSF, Francis Cordova, Director of NIH, 
Francis Collins--I think they all kind of work together. And 
then, of course, all the folks within their agencies talk to 
one another. But, I think that could also be improved, where we 
are thinking, you know, more across government about how you do 
these boundary problems, to make sure that the research 
investments that we are making are really not being duplicated.
    Now, I want to hasten to add, though, I--that doesn't mean 
that just only one person ever does the study, and nobody else. 
I think there's--the competition in the scientific community is 
important, because, as we know, you know, science is all about 
continuous debate, and ideas get refashioned. Something that 
was thought to be understood, 5 years later, ``Oh, we didn't 
really understand it as well as we thought.'' So, I think we 
have to make sure that we don't conflate duplication with 
competition,.
    But, I think this kind of interaction is very, very 
important. Advisory committees that various agencies have, I 
think, interacting with one another, and crossing boundaries. I 
mean, why not think about having various advisory committees 
from NSF and DOD, the Defense Science Board, maybe meeting with 
the National Science Board at some point? To my knowledge, that 
sort of thing hasn't happened. I think cross-agency interaction 
is terribly important, especially in these times.
    Dr. Wing. May I just mention that, in computer science, the 
networking and information technology R&D is all coordinated. 
Probably at this point, about 20 different agencies come 
together and talk about their R&D investments in information 
technology. So, at least in that particular discipline, there 
is a lot of very good coordination across Federal agencies.
    Senator Gardner. Thank you, Dr. Wing.
    And I want to follow up, too, on the commercialization 
questions that you've talked a lot about. From the private 
sector, what is different, and what lessons can we learn from 
the private-sector research, development, and commercialization 
that we could apply to the Federal Government that they're 
either lacking a particular utility that they don't have that 
the private sector is able to utilize? What could we do to help 
their commercialization effort, from your experience in the 
private sector?
    Dr. Wing. Right. From my experience right now in the 
private sector, given that I run the basic research labs, we 
have a similar eagerness to get our ideas into the products and 
services of the company. And so, we work very hard internally 
to promote and encourage our own researchers to work very 
directly in partnership with product groups. Of course, in 
academia, you have less of an opportunity to do that, and, 
within a company, you have a very good opportunity, and it's, 
of course, encouraged.
    We also very recently have encouraged our researchers to be 
entrepreneurial and--in the spirit of the startup culture--to 
think about going end-to-end, for instance, talking to 
customers directly. This is something faculty in universities 
can do very easily. They are free to talk to anyone, and 
they're free to take ideas, create a startup, go outside, maybe 
take a leave of absence from the university, and try to 
commercialize an idea.
    And also, big companies can fund research at universities, 
as a way to work in closer collaboration, that is, to have 
closer partnerships between universities and industry. Kelvin 
was alluding to certain rules and regulations that might get in 
the way of making that collaboration seamless. And so, that's 
something that Congress can actually address.
    Senator Gardner. Very good.
    Dr. Atkinson, you mentioned the IUCs, I think, as part of 
this. That's the part of the communication, right, with the 
private sector you're trying to further? Very good.
    Dr. Atkinson. Yes, absolutely. You know, I think one of the 
challenges in this whole set of issues is really thinking about 
the role of the university. And I think we have this view that 
universities--that their self-interest automatically aligns 
with the national self-interest. And I think it does, in some 
cases, and it doesn't, in others. And that's one of the things 
the IUCRC program is trying to do. It's trying to align their 
interests with national interests.
    We see that, for example, in STEM education, where, 
frankly, universities are not enrolling and graduating enough 
STEM students, not because they can't, but because they don't 
prioritize that. We see that particularly in computer science. 
And, from a university's perspective, it's perfectly rational. 
They're, frankly, indifferent to whether they train French 
literature majors or whether they train computer science 
majors. I agree that that's perfectly rational from their 
perspective. It's not rational from governmental or national 
perspective. We do know that there are certain disciplines, 
like computer science, like electrical and mechanical 
engineering, like science overall, that are, frankly, more 
important to the country. And I think the same thing--we do 
know that, frankly, in terms of areas of research and 
technology.
    And the fact that we don't pick winners--we do pick 
winners. If you look at the President's last budget for the 
NSF, it didn't have the same increase for all of the different 
agencies within NSF. Some got a little more, some got a little 
less.
    So, I think the notion that somehow Washington can't 
collectively work together to help identify what the national 
interest is with regard to science, and then encourage that--I 
think that's a mistake, frankly. I think that that is the job 
of Washington, that is the job of Congress and the 
administration, to begin to better align those issues. So, I--
and there, to me, the IUCRC program is a perfect example of 
doing that.
    Thank you.
    Senator Gardner. Dr. Munson?
    Do you mind--OK.
    Dr. Munson.
    Dr. Munson. I do want to disagree with my fellow panelist 
just a little bit. Engineering enrollments across the Nation 
have swelled in recent years. In a number of universities, 
they've doubled. Computer science enrollments at my university 
have tripled in about the last 6 or 7 years. And so, we're sort 
of in the mode of taking as many of these students as we can. 
However, the problem we face is one of facilities. You can't 
teach an English class and an electrical engineering lab in the 
same facility. And those faculty need very different facilities 
for their scholarly activities. And so, at my university, we 
are raising private philanthropy as rapidly as we can to create 
more facilities for engineering. But, for us, that's the 
bottleneck. We don't have more space at the moment. We've grown 
as much as we can.
    Senator Gardner. Thanks, Dr. Munson.
    Senator Peters.
    Senator Peters. Thank you, Senator Gardner. And again, 
thank you for the work that we're doing on this. I appreciate 
your leadership on this and certainly have enjoyed the 
questions--the last couple of questions, in particular, and 
talking about agencies working together.
    Just a story from--one of my journeys out. I was with 
TARDEC, which is the Department of Defense, working on fuel 
economy within vehicles, which is an important issue for combat 
vehicles. You put men and women and risk for fuel to deliver 
that, so you want high fuel economy. That's in Warren, 
Michigan. Not too far away, in Ann Arbor, Michigan, is the EPA 
lab that's also working on fuel economy for a variety of 
environmental reasons. And they don't talk to each other, which 
I always thought was a little crazy, given the fact that they 
are in close proximity. So, we need to do a much better job of, 
certainly, recognition of competition, but also there needs to 
be some sort of collaboration there to work together and to 
move forward.
    I also appreciated the comments about science--whether or 
not it's all equal, if we have the winners and losers, in 
parenthesis, that you never really know where it may come. I 
want to use another University of Michigan example, where they 
were doing research on electrical fields on Mars. And you may 
say that's somewhat practical for NASA, for missions to Mars, 
but what does that mean on Earth? But, now there's a company 
that has been started who used that knowledge to help protect 
the electrical grid on Earth. Even when you're studying Mars, 
that has applications to what we do on Earth, which is why we 
have to continue to fund this, I believe across the board.
    And I want to turn a little bit to the process, because 
it's come up through this testimony that we've heard today, is 
the creative process of innovation. You don't know where it's 
going to lead. You need creative problem-solvers as related to 
the STEM education. Dr. Wing, I know with the work that you've 
done there and other companies have done to promote scientific 
competition, for example, with kids. I had an opportunity to be 
at the Intel award ceremony for the high school winners for, 
really, some of the best scientific projects in the country. 
And I was struck by the fact that, as they were going across 
the stage and explaining their projects, which were amazing, 
most of those students also were involved in the arts in some 
way. They played the cello, they were in theater, they had this 
art education, as well, which enhances the creative process. 
So, to me, that's an integral part of this. You need to be more 
than just a great mathematician or an engineer or some sort of 
scientific discipline. You also need some creative-thinking 
abilities.
    How would you--this goes to all the panel--any advice you 
would have to us as to how we--one, how important is STEM? And, 
two, how would we incorporate that in our COMPETES Act? Do you 
have ideas of things that you think the Federal Government 
should be doing?
    Dr. Droegemeier. Well, the National Science Board, about a 
year ago, put out a report on the STEM workforce, and it really 
tried to make clear that, when we talk about a STEM workforce, 
we're really talking about a multiplicity of sub-workforces. 
So, when we say, ``Well, there are IT jobs, and there's STEM IT 
and there are computer scientists,'' that's a very simplified 
way to look at it. It's a much more nuanced sort of thing.
    And we also made the point that STEM careers are very 
important, but we also have to really embrace the value of the 
humanities, the arts, and the fine arts, in this whole process, 
because a lot of the folks that are working in jobs that are 
not maybe even classified as a STEM job, they actually use a 
lot of STEM skills.
    So, my worry would be, if we went all the way toward having 
STEM high schools, then where do the arts go? Because that is a 
very important part of creative, you know, thinking, as you 
say, about how we actually educate students, how we go about 
solving a problem. And the folks in the artistic world think of 
it very differently than we do.
    And so, in and of themselves, those disciplines are 
valuable. They're also valuable in the sense of--for example, 
folks that do history. They look at historical plays, art 
history. We've learned a lot about climate change and the 
environment and human disease and how it evolved with time by 
studying art, by studying plays that were, you know, developed 
three-or four-hundred years ago, and also by studying ancient 
cultures and how they reacted to disease, and we then conflate 
that with tree-ring analyses and carbon analyses, and we 
understand climate change. So, it really is--it's really an 
all-hands-on-deck kind of a thing.
    So, I think, when we think of STEM, and you hear all these 
acronyms--STEAM and so on--to me, it's more--we need to think 
that STEM capabilities are valuable in any discipline, but we 
also cannot lose the value of the arts, the fine arts, and 
humanities, not only for the value they play in the sciences, 
but for the value they hold with us as human beings.
    Dr. Wing. I completely agree that it's absolutely important 
to educate the future workforce, not just in STEM, but also in 
arts and humanities.
    You asked for specific advice or actions you could take. 
One of the stumbling blocks we face now, especially in computer 
science, but, I think, in all STEM disciplines, is not having 
enough teachers who are trained to teach the discipline. We 
certainly see, at the high school level, there are not enough 
teachers at the high school who can actually teach computer 
science. So, we need to get through that hurdle. That's 
something we can do immediately. And, in fact, once we overcome 
this hurdle, I am optimistic we'll be home free: all else to 
achieve my vision of ``computing for all'' will follow. So, 
teacher training is important and one thing we can address now.
    Senator Peters. Dr. Munson?
    Dr. Munson. Yes. We've done a lot of work at the 
intersection of engineering and science and the arts at the 
University of Michigan. The engineering campus, so to speak, at 
the University of Michigan is about a mile from the main 
campus, and our only colocated units are all the different 
units in the performing and making arts. And so, we're together 
with music, theater, and dance, art and design, and 
architecture. We have an organization that the four north 
campus deans started called ``Arts Engine'' that undertakes a 
lot of programming and workshops and what have you. We have a 
section of a dormitory, where engineering and arts-related 
students live together, do projects together. We teach a number 
of different courses, including courses on creativity that are 
co-taught by a faculty member in music, one in dance, one in 
art and design, one in architecture, one in engineering. We 
also have founded a nationwide organization called the Alliance 
for the Arts in Research Universities, A2RU. We have more than 
30 partners in that still fairly new organization. Partners 
include MIT and Stanford, so a lot of name-brand universities 
think this is important.
    In my own case, 70 percent of my incoming engineering 
students are musicians, and we tell them, ``Do not leave your 
instrument at home. Do not quit singing.'' A vastly 
disproportionate fraction of the marching band, the men's glee 
club, and what have you, are engineering students. I have many 
engineering students double-majoring in engineering and music, 
or engineering and art and design. We are including students 
from the arts in our student project teams in engineering. And 
I think all this integration is just turning out to be really 
great.
    Senator Peters. And I guess I just want to expand a little 
bit on the talk of STEM education. Dr. Wing talked about 
teachers that are prepared to educate. Dr. Atkinson also 
addressed this issue. All of our panelists have. But, one 
statistic that I saw that is--then I want to raise a question 
as to why this is the case--there's a study that showed that 40 
percent of students who begin college as STEM majors actually 
complete the degree. So, that's a pretty high attrition rate 
happening, or out of universities. What's happening there? And 
what policy advice do you have for us? Any panelist.
    Dr. Atkinson?
    Dr. Atkinson. So, I think this really gets to the 
challenge, here, which is that fundamentally, from a 
university's perspective, they're indifferent to whether 
student transfers out of STEM to go into French literature. 
It's the same to them. There's a number of good studies, that 
we have reviewed in a prior report, that shows that switch-out 
rates are quite high. And, in most of those studies, they show 
that the people who switch out are not any worse off, and 
they're not any worse students. So, it's not as if they're--
it's not as if these programs are essentially weeding out the 
weak and the incompetent and just keeping the cream. They're 
actually weeding out students who could stay in. And there are 
a lot of different reasons for that. One is, for a lot of 
students, they don't get experience in hands-on lab work or 
engineering work early on, and so they kind of think it's going 
to be too hard, and they leave.
    But, I do think, if you look at the universities that have 
really focused on this, places like Carnegie Mellon, you can 
improve retention rates. I don't think it's impossible or even 
a mystery. I think part of the challenge is, you have to have 
incentives to do that. So, one measure that Congress could do 
would just be to simply require all research universities to 
report the number of students who apply to be a STEM major, the 
number that end up graduating, the numbers that switch out. If 
we just had better data on that, I think it would lead to some 
incentives for universities to, frankly, do a better job. 
Because there are very good programs at some universities 
around the country that focus on STEM retention, and they've 
been very successful at it. But, not every university is 
engaged in those programs.
    Senator Peters. Dr. Munson?
    Dr. Munson. Yes. At the better universities, I think the 
retention rates are quite high. At the University of Michigan, 
80 percent of the students who enter engineering as freshmen 
graduate in engineering from Michigan, the majority who don't 
transfer to some other discipline. But, we're at the point now 
where we have equal numbers of liberal arts students 
transferring into engineering compared to the number of 
students leaving engineering. It's a bidirectional flow. A lot 
of times, we forget to talk about the students that transfer in 
the other direction.
    I do recognize that some other universities, that they have 
tougher issues. Part of the issue is that, to succeed in 
engineering, you've got to be pretty darn good at math and 
science. And at my university, I have the luxury of lots of 
students who are good at math and science. And so, we don't 
have big issues. And in some other places, they probably 
struggle more.
    Dr. Wing. I'd like to address this, too. Thank you. Yes, at 
Carnegie Mellon University, we don't have those retention 
problems, primarily because of the structure in which majors 
are chosen at CMU. And we have a flood of people knocking at 
computer science doors, trying actually to get into the 
computer science major.
    I think one of the problems is--as alluded by Professor 
Munson--students have to come to college prepared. They have to 
have the science and math behind them in order to take the 
college-level science and math courses to do well. And some 
students may not come as prepared.
    The second is something that industry can address, which 
is, when a student is an undergraduate, he or she may not 
actually know, ``Well, what am I going to do with this major?'' 
And this is where industry can help--and we do this at 
Microsoft--by providing internships to undergraduates and 
giving them exposure to what it would be like to work in the 
field alongside an engineer or a scientist.
    Dr. Droegemeier. Just to add on that, I think preparation 
in K-12 is extremely important. Obviously, these disciplines 
require adequate preparation. I think one of the important 
things that universities are doing more now is advising their 
students. It's not OK, if you got, you know, a C in a math 
class, to just chuck the whole thing and say, ``I'm going to 
become, you know, a whatever major, a non-STEM major.'' So, 
advising, sometimes you want to make the kid happy and keep the 
parents happy, but, at the end of the day, you're giving them 
bad advice if you say it's OK to be bad at math. Right? And so, 
that's something that's very important.
    Undergraduate research, that hands-on engagement, many, 
many studies have shown that active, engaged undergraduate 
research can take kids that are not doing as well traditionally 
in a cohort, and really move them forward and help them succeed 
and graduate, where, otherwise, they wouldn't.
    And then, finally, I think one of the challenges we have 
is, kids get into these disciplines, and they look around, they 
don't see people that look like themselves. And so, we have to 
really be careful and do a good job, when we're talking about 
broadening participation, to actually enact programs. And I 
think COMPETES Act is very sensitive to this, to look at how we 
holistically move the needle and the--on broadening 
participation. The new NSF INCLUDES program, I think, is one of 
the, really, most exciting things I've seen come around for a 
long time. And we spent hundreds of millions of dollars in this 
country trying to broaden participation of underrepresented 
populations. And we've done a pretty bad job. The needle's not 
moving a whole lot. In some areas, it is. But, in computer 
science, the number of women there is still extremely low. And 
so, when kids get into those disciplines and those classrooms, 
sometimes they're really turned off by it, and they leave. And 
so, they're not counseled to stay in. So, it's really a 
multidimensional problem. It's not just one quick fix will fix 
it. We have to attack it from multiple dimensions.
    Dr. Munson. I just wanted to add that Dr. Atkinson made an 
important point a few moments ago. And that is, early on in the 
curriculum at the university, whether it's computer science or 
in engineering, it's important to have some sort of design-
based, hands-on kind of course, where students see how the 
material will be used. A lot of universities are doing that 
now, and those tend to be the places where they have the higher 
retention rates.
    Senator Gardner. Thank you.
    And, just to follow up on, Dr. Wing, your comment on sort 
of teacher training. One of the comments that I heard 
throughout various of the roundtables we held was, teacher 
training and then, particularly those who may not be--have 
initially graduated with the type of training that a STEM field 
requires--maybe they went to class or college after they've 
been teaching for a while--and they were talking about how 
there's a special way to teach these courses, and then, after a 
while, it's so difficult that sometimes they revert back to a 
teaching method that isn't necessarily reaching out to the STEM 
in such a way. So, the--that they need to in order to carry out 
the education the best possible way.
    So, what about teacher training and then ongoing mentorship 
within the private sector? How important is that? So--or, not, 
sort of, the private sector, but, I mean, how important is it 
to partner a teacher who has been trained to teach in a STEM 
field so that they can continue to have somebody in the STEM 
fields helping them along the way?
    Dr. Wing. This a great setup question for a program that 
Microsoft runs, called TEALS, where we have people in the 
company go to local high schools and work with teachers to help 
teach computer science and other STEM disciplines. And it is 
about not just training the teachers, but also about mentoring 
them and being available to them as the transition happens 
between their being a teacher in one discipline and their 
becoming a teacher in, say, computer science.
    So, I completely agree with you. It's not just about 
training the teachers and then letting them go on their own, at 
least initially. Ongoing mentoring and advising has to happen 
as well.
    Senator Gardner. Dr. Wing, Dr. Munson, so when you're in 
the private sector, what's the earliest that you hope to reach 
somebody for Microsoft, hoping they get interested in, say, 
computer science? And, Dr. Munson, when you're looking at 
graduates, what's the earliest exposure that they've had to 
engineering or computer--the STEM fields when they come in and 
enter a degree?
    Dr. Wing. So, I--speaking as Jeannette Wing, who wrote a 
paper 10 years ago on computational thinking, I have always had 
this grand vision that everyone, starting from K through 12, 
will be exposed to computing concepts. Now, of course, I wrote 
that paper 10 years ago, not knowing how much progress we would 
have been able to have made in 10 years. Realistically, 
speaking now as someone in industry who looks to the next 
generation for the workforce, minimally--minimally, every high 
school student should have access to computer science. Now, 
ideally, you will have been exposed to some of the ideas and 
some of the concepts before high school, say K-6, and so on. 
And there are computer science ideas that one can imagine 
talking about at those earlier grades. Can I give you one 
example?
    For instance, in fourth grade, we teach long division to 9-
year-olds. Long division--and specifically what we teach as 
long division to 9-year-olds it's just an algorithm. So, why 
don't we even use the word ``algorithm'' when we teach long 
division? And if we did, we would open up the minds of all 9-
year-olds to something more than a way to divide one number 
into another to get a quotient and remainder.
    Senator Gardner. Dr. Munson.
    Dr. Munson. We're very involved in K-12 outreach, probably 
more at the high school level than earlier years. We have a 
large effort in Center City Detroit, where we mentor 18 high 
school teams in first robotics. We have a few hundred almost 
100-percent underrepresented minority students there, and 
almost every student that graduates from the program is going 
on to college. And so, that's a great example of a program that 
is working really well.
    But, we worry about students that we aren't able to recruit 
into that program. And we feel like we're losing students at 
the middle-school level. And so, we're planning on increasingly 
getting involved at the middle school.
    Senator Gardner. Thank you.
    Senator Peters.
    Senator Peters. I would like to take a look at the 
ecosystem that we talked about earlier, and how we fully 
develop this broad ecosystem that is not just academia, not 
just university research, but also industry, Federal 
Government, all of these partners working together.
    Dr. Atkinson, you mentioned a small percentage of grants 
now go to the industry/academic partnerships that have been 
able to bridge some of those divides there. And yet, if we're 
going to truly move the innovation process forward, we have to 
break down all the silos, we've got to bring all these partners 
together. I know there are some real challenges, particularly 
if you've got private industry working in this ecosystem who 
want to protect some proprietary work and may feel 
uncomfortable working in an academic setting or having 
competitors in the process, as well. But, it seems to me that 
we have to figure out ways to have even more collaboration, 
going forward.
    And I raise this question to--first, Dr. Munson, to talk a 
little bit about a program that I've seen at the University of 
Michigan that I think is very innovative, dealing with 
autonomous vehicles and the transportation work that's being 
done. Where you've got insurance companies, you've got all the 
major auto manufacturers, you've got suppliers, you've got 
academia, you've got NHTSA, Federal agencies working together, 
as to how that model works, how that could be a template for 
other work. And then maybe have the other panelists discuss if 
there are ways in our COMPETES Act that we can help foster this 
kind of collaboration across all sectors and break down some of 
the barriers that just inherently exist.
    Dr. Munson?
    Dr. Munson. Yes. So, in the case of autonomous or 
driverless cars, we built a wonderful test track on our campus 
and took a year or so to put together a consortium of more than 
60 companies. And, Senator Peters, as you noted, it includes 
companies beyond just the traditional OEMs in the automotive 
space. It includes suppliers, it includes communications 
companies and insurance companies and what have you. Each of 
those companies is putting significant money into the pot, so 
to speak, and funding what is--what we refer to as pre-
competitive research. Those companies get to help choose what 
that research will be.
    That said, we have very intensive partnerships in that 
space with a much smaller number of companies. Historically, 
we've been working very, very close with Ford. We--our teams of 
faculty and students actually work part of the time at Ford. 
Ford employees are over on our campus. We test cars, the Ford 
cars, the Ford autonomous cars, both on our campus and at Ford. 
So, that's a really close collaboration, and it gets really 
touchy, because then, when other companies may want to work 
with us--the most recent is Toyota, which is going to be now 
centering its driverless car activity in Ann Arbor--we can't 
really have that same set of faculty working with Ford work 
with Toyota at that same level of depth, because, you know, 
it's--it goes way beyond just filling out nondisclosure forms. 
We know everything. And I credit, though, Ford, for being 
willing to partner with us at that level. And the same thing's 
going to be happening with Toyota. Fortunately, we've been 
hiring a lot of faculty members in this area. We can kind of 
divide up our faculty members to do the really in-depth work.
    Dr. Atkinson. So, when you look at sort of the history of 
U.S. science policy, what you found was that, before 1947, 
industry funded a lot of university research. And then the 
Federal Government kind of came in, and industry went away. 
They've come back, to some extent, and I think getting that 
partnership to grow even more is critical.
    When we look at what our competitor nations are doing, 
that's where they're putting their focus. When you look at 
the--what the Cameron government is doing in the U.K., they 
have a program called the Catapult Program, bringing industry 
and university together. They're investing over a billion 
pounds a year into that program. So, they're--a lot of 
countries are doing this.
    I think one of the challenges that we hear, but I, frankly, 
don't think it is a real challenge, is somehow that that 
university research is separate from industry research, and 
there are all these conflicts of interest and problems. I think 
good management, which it sounds like you have, is able to 
solve that. There's very good studies that Denis Gray, at NC 
State, has done, who has evaluated the IUCRC program, and he 
finds that the science produced in that program is just as good 
as the science produced in other kinds of programs, but it's 
linked more to industry.
    So, I think we could do more IUCRC programs. The 
manufacturing universities' proposal, the manufacturing 
universities' bill is an excellent way to do that. Expanding 
the NNMI program, the National Network of Manufacturing 
Innovation--you--Senator, you talked about an environment. 
Well, the lightweight materials center that is doing that is--
that's a key partnership. So, I think focusing more there is 
very, very important.
    Dr. Droegemeier. I'd like to add a couple of things.
    This ecosystem, I think, is extremely important. And one of 
the things that I think we need to consider, and the COMPETES 
Act could look at is, How do we remove barriers? And I think 
one of the major barriers that we have with universities is how 
to work effectively with private companies.
    Part--there are sort of three major issues. If you look at 
the research--R&D that's funded in this country, it's grown 
exponentially in the last, you know, 20 years or so. And 
private sector is--basically been responsible for that growth. 
And they now fund two-thirds of all the R&D in this country. 
The amount of that growth that has come to universities has 
been almost nil. You have to ask the question, Well, why? Why--
you know, why are companies not going to universities to work 
with? And, number one, I think there's a perception that 
universities only do basic research. That's not true. In 
engineering and a lot of other fields, a lot of the work is 
very applied-type work or development-type work. It's deep 
scholarship. It's very creative. But, it's not studying atoms. 
OK? It's actually doing things that have--or that are sort of 
use-inspired.
    The second point is that faculty--we--you know, our 
incentives and our reward models in universities are not 
aligned with the kinds of things we're talking about. Can you 
publish papers if--I work with a private company. As you 
mentioned, Senator Peters, if you have three companies working 
with a private--with a university, and they're all competitors 
with one another, do they feel comfortable that their interests 
will be protected?
    The third thing is law, that--or policy within the IRS that 
you guys could really work on in COMPETES Act, and that is, 
it's an issue with regard to universities that have buildings 
that are debt service with tax-free bonds and that have 
limitations on the amount of private-sector activity that can 
happen in those buildings. Roughly, about 5 percent, I think, 
is the limit. There are two safe harbors for that. One of them 
is, if the private company wants to do intellectual property 
negotiation, you have to wait until the IP exists to negotiate 
the license. So, essentially, a private company comes to a 
university and says, ``OK, I want to give you a million dollars 
to do this work for us,'' and you say, ``That's wonderful.'' 
And they say, ``What do I get from that?'' You say, ``You get a 
right to negotiate a license.'' ``Well, what's it going to cost 
me?'' ``Well, we can't tell you, because we don't know what the 
value is.'' Well, that suggests that the universities are all 
about the license fees. Universities make very little off of 
license fees, for the most part. The value of working with a 
private company for universities is the upfront direct costs of 
funding: research, students, laboratories, post docs, grad 
students, things like that.
    The second safe harbor is, it's basic research. OK? Well, 
if it's basic research, then it's in the public interest, 
right? And that's now what private-sector companies are about. 
So, these provisions in the tax line--in fact, Representative 
Lipinski, of Illinois, has introduced a bill in the House that 
sort of looks at fixing this problem. And I think--you know, 
universities are very reluctant to, you know, enter into these 
partnerships. And what this thing does is, it perpetuates this 
notion that, in the private sector, universities are hard to 
work with. And they are. But, it's not really necessarily their 
fault. They're bound by these revenue proclamations within the 
IRS tax codes that prevent them from negotiating the way that 
they would want to negotiate.
    So, if we could remove some of those barriers, we could 
change the incentive models and change the culture of the 
universities to where they embrace working with private 
companies, and see it as a value proposition for higher 
education, I think we would come a long way toward really 
unlocking the potential of the industry/academic partnership 
that we talk about a lot.
    You know, I like to say it this way. We're playing football 
with baseball rules. You see people say, ``We've got to be more 
creative.'' No, we have to change the rules of the game. If 
we're going to play football, let's play football, and let's 
change the rules to football. Let's not kid ourselves that 
we're going to win the game by playing football with baseball 
rules.
    Dr. Atkinson. Could I just add one quick point, which--to 
build on Dr. Droegemeier's point? About 15 countries around the 
world now provide a more generous research-and-development or 
research-and-experimentation tax credit if you're partnering 
with a university. So, you get a more generous credit. The 
United States does the opposite. We actually penalize you. If 
you're a Microsoft or another corporation, and you're doing a 
partnership at any of these universities, the R&D credit 
actually penalizes you to do that. And we could at least make 
it--we should at least make it neutral so we're not biased 
between whether you do it in-house or with a university.
    Senator Gardner. Thank you.
    I want to thank all of you for your time and testimony 
today. I really, truly appreciate this and look forward to 
putting forward a bipartisan bill soon that we can act upon and 
have signed into law.
    The hearing of record will remain open for 2 weeks. Members 
are encouraged to submit any questions for the record that they 
have during that time. And I would ask, upon receipt of those 
questions for the record, if you would reply as promptly as 
possible.
    And, with that, with the thanks of the Committee and on 
behalf of Chairman Thune, thank you for being here. This 
hearing is adjourned.
    [Whereupon, at 12:03 p.m., the hearing was adjourned.]

                            A P P E N D I X





                                 ______
                                 
                                     Physical Sciences Inc.
                               Andover, MA, Wednesday, May 11, 2016

Hon. John Thune (R-SD),
United States Senate,
Senate Committee on Commerce, Science, and Transportation.

Hon. Bill Nelson (D-FL),
United States Senate,
Senate Committee on Commerce, Science, and Transportation.

Dear Chairman Thune and Ranking Member Nelson,

    Thank you for convening the hearing titled ``Leveraging the U.S. 
Science and Technology Enterprise'' and for establishing the Commerce 
Committee's bipartisan Innovation and Competitiveness Working Group, 
led by Senators Cory Gardner (R-CO) and Gary Peters (D-MI). As the 
Commerce Committee continues to explore potential legislation that will 
shape our national science and technology policy, it is important for 
the Committee to review and re-familiarize itself with the scientific 
importance and economic impact that the Small Business and Innovation 
Research Program (SBIR) has on our country.
    Physical Sciences Inc. (PSI) is a small business research and 
engineering firm that successfully participates in several government 
scientific research programs including the SBIR program. PSI has 
transitioned many SBIR technologies all the way through to 
commercialization. For example, under NIH/NEI sponsorship, PSI, working 
with clinical researchers, developed a retinal tracking method 
permitting greatly improved eye examinations. We partnered with a 
leading eye equipment manufacturer, and they have sold 16,000 systems 
containing this technology over the last eight years producing over 
$1.2B in revenue, that are providing better eye care for tens of 
million Americans. Under EPA sponsorship PSI has developed a handheld 
LIDAR to detect natural gas leaks. For this technology, we partnered 
with a leading company in natural gas technology manufacturing and 
surveying. We have sold over 3,300 systems and a large fraction of 
American homes has been made safer using this technology. Many well-
paying jobs have been created both for manufacturing this technology 
product and performing natural gas surveys. Under Air Force sponsorship 
we have developed critical optical components that are now integrated 
into aircraft systems. This is R&D in action to benefit our nation--
reduced to practice and creating jobs.
    There are many stages required for a new technology to reach the 
marketplace. It is essential to work with partners--each contributing 
their expertise along the path to successful product creation. 
Innovation often occurs where areas of expertise intersect. During a 
recent five year period our company funded collaborative research 
programs with over 50 different American Universities under STTR and 
SBIR programs, but also as part of other Federal and industrially 
funded development contracts. Small businesses are an excellent partner 
to work with Universities to transition their discoveries through 
development into the marketplace.
    PSI seeks to find the best path to market for each technology 
developed under SBIR funding. We have manufactured and sold the 
technology directly into smaller uniquely specialized markets. Under 
NASA sponsorship we created accurate space simulation chambers that 
have been sold around the world, and offered testing services. Nearly 
every material that has been put into space has been tested in our 
chambers. Under Army SBIR sponsorship we have developed and sold 
sensors to detect chemical warfare agents remotely at distances 
permitting troop safety. Under Navy sponsorship we have developed fuel 
quality monitors for naval and commercial aviation. Under DNDO 
sponsorship PSI has implemented novel algorithms that vastly improve 
radiation sensor performance at screening portals critical to the 
security of our homeland. Another effort under Army sponsorship 
resulted in PSI developing a very-capable, small UAV to provide our 
warfighters and law enforcement situational awareness. Hundreds of 
these systems are now in use protecting American warfighters and 
American citizens.
    In emerging technology areas we have sought external equity 
investment and created new companies. This has allowed PSI to leverage 
early government investment, attract private funding from Venture 
Capital and Private Equity partners and create new high paying jobs 
across several industries.
    The SBIR program represents America's seed money and has helped 
create new companies, excellent high technology jobs, and a great many 
publications and patents. It is the envy of other countries, and its 
success has not been duplicated due to America's unique entrepreneurial 
culture. The SBIR program funds concepts at very early stage where no 
other funding source exists. It allows the risk takers to retain and 
reap the rewards of their dedicated efforts. The government and the 
agencies are truly patient angel investors. Ultimately the investment 
is returned through taxes. Recent studies by the National Academies and 
various Federal agencies report the programs success. Every government 
dollar results in over $3 of revenue after Phase II.
    The SBIR program has demonstrated its value over the past 33 years. 
As part of the Commerce Committee's work, there are several policy 
recommendations to consider that would make the SBIR program better and 
therefor improve our Nation's overall science and technology policy. A 
long term charter for the program would allow for better agency 
planning and staffing. Before the 2011 reauthorization, there were 14 
short-term continuations that made it difficult for the agencies to 
execute the program and made it impossible for the small businesses to 
maintain staff and advance their technology. With the 2011 
reauthorization, the SBIR program managers and staff at all the 
agencies have shown great dedication and commitment to making this good 
program even better--making ever more companies aware of this 
opportunity.
    The Committee should also look at policies that would assist small 
businesses participating in the SBIR program to create a path to 
commercialization. For years many worthy technologies have ended at the 
conclusion of SBIR Phase II programs because the technology, although 
demonstrated, is not in a form recognized by a commercial company or by 
a mission agency as viable: At the end of Phase II it often has not 
been demonstrated outside-the-lab under real world conditions. This gap 
has become known as ``The Valley of Death'' for SBIR technologies. Too 
many promising technologies do not make it through to become viable 
commercial products. A good many receive some post-Phase II funding but 
it is too little, too fragmented, too restrictive. The 
Commercialization Readiness Program created in the 2011 reauthorization 
has begun to address this need. It is worthwhile to consider policies 
that increase the SBIR allocation and focus it on further maturation of 
promising technologies post-Phase II.
    If our country is going to be successful in expanding scientific 
research and broadening economic opportunity, policy makers must look 
at ways of making scientific research programs more inclusive by 
drawing in a diversity of companies and non-traditional participants. 
We all understand that it is not easy doing business with the Federal 
Government. Recently there has been significant effort to involve 
nontraditional ventures and new companies in providing technology to 
address national needs. Instructions are complex. Submission is 
complex. Regulations are complex. A very large barrier to those new 
participants is the requirement for a government approved accounting 
system. The Committee should explore ways that will reduce the burden 
on both the companies and the government contracting officers so as to 
enable speedier contract award and more rapid advance of the 
technology. The innovators will spend more time on their technology 
rather than FAR compliance. Most importantly, this will encourage many 
new entities to participate not only in the SBIR program but across the 
wide range of opportunities to support our national needs.
    I appreciate your leadership on this key issue and hope the 
Committee will increase the participation of small businesses as you 
explore ways to leverage government programs to expand, improve and 
better our Nation's scientific and technology policy. Many of the 
policy recommendations referenced above are addressed by S. 2812--The 
SBIR and STIR Reauthorization and Improvement Act of 2016 sponsored by 
Senators Vitter (R-LA), Shaheen (D-NH), Ayotte (R-NH) and Markey (D-MA) 
and supported by several other Members of the Senate Commerce 
Committee. The SBIR program is already one of the most successful in 
the government and deserves to play a key role in this discussion.
            Sincerely,
                                     B. David Green, Ph.D.,
                                                   President & CEO,
                                                 Physical Sciences Inc.
                                 ______
                                 
     Response to Written Question Submitted by Hon. John Thune to 
                          Dr. Robert Atkinson
    Question. In your testimony, you suggest that NSF should develop 
and implement metrics by which universities report various measures of 
entrepreneurship and research commercialization.
    Can you discuss in more detail the kind of metrics you think should 
be collected, how to account for influencing factors like university 
size and geographic location, and how NSF could appropriately 
disseminate the data for public consumption?
    Answer. Currently there is no real way to assess how well U.S. 
research universities are doing when it comes to transferring knowledge 
to the private sector for commercialization. This means we can't really 
assess whether universities as a group are making progress or not; nor 
can we assess which universities are leaders and which are laggards.
    There are some data that are collected but it is inadequate and not 
combined into a single measure. NSF collects data from 895 universities 
on how much research funding from industry they receive. The 
Association of University Technology Managers (AUTM) collects data on 
technology licensing by industry, but this data is proprietary.
    One solution to this would be to require NSF to compile a set of 
indicators for each research university/college that receives Federal 
research funding. The indicators should include: (1) money from 
industry for research (they already collect this); (2) university 
patent filings; (3) license disclosures and income when the technology 
is licensed to a firm in the United States; (4) jobs in academic 
faculty or student tech-related business start-ups; and (5) the number 
of agreements signed with business to allow the use of university 
technology.
    If collected annually this would certainly help Congress and NSF 
understand longitudinal trends. It would also help compare leaders and 
laggards. Even without tying this data to any outcome it is likely that 
the simple desire of universities to want to rank well would encourage 
university leadership to adopt best practice tech transfer policies and 
practices.
    It will be important with to benchmark this data to control for 
other variables. Clearly an institution like Johns Hopkins should have 
an advantage over say, University of Northern Illinois, because it 
receives a very large amount of Federal research. In other words, the 
measure should not be in absolute terms, but in terms of how well a 
university does in relation to the amount of Federal research dollars 
it receives. In other words, if a smaller research university receives 
a limited amount of Federal research dollars but does well in 
attracting industry R&D funding and generating licenses and start-ups 
that is what really matters. Given that it all else equal it is easier 
to commercialize technology in metropolitan than rural regions, these 
measures could be reported for several different geographic classes: 
for example, research universities in areas with less than 100,000 
people, with 100,000 to 1 million, and above one million. Finally, any 
such effort should require NSF to report data in a timely way. For 
example, reporting on 2017 would need to be released by the end of 2018 
(the chronic delay in the release of NSF data continues to degrade its 
usefulness).
    After collecting this data NSF should make the data set available 
in machine-readable form so that a variety of other organizations (news 
media, professional and business organizations, academic researchers 
and others) could use the data to construct their own modified 
indicators. In addition, NSF should report the data so that all 
research universities are ranked on these variables with the amount of 
Federal funding as the denominator (e.g., patents per 1 million Federal 
R&D support).
                                 ______
                                 
    Response to Written Question Submitted by Hon. Steve Daines to 
                          Dr. Robert Atkinson
    Question. Dr. Atkinson referred to the importance of the National 
Institute of Standards and Technology's (NIST) Hollings Manufacturing 
Extension Partnership (MEP) program. In Montana, the MEP is operated 
through Montana State University. I have heard from stakeholders that 
this relationship is working well in Montana. However it is imperative 
that the public and the private sectors can work collaboratively for 
this program to be effective. Would you please elaborate on how 
relationships can be facilitated between universities, the private 
sector, government, and others in programs such as MEP, Small Business 
Innovation Research (SBIR), and Small Business Technology Transfer 
(STTR)?
    Answer. Fostering greater levels of partnership and collaboration 
between universities, industry, and Federal and state governments and 
the agencies therein (e.g., MEP, SBIR, STTR, etc.) is vital to spurring 
greater levels of innovation, including through technology transfer and 
the commercialization of new technologies developed in university 
laboratories. At the state level, many MEP centers have historically 
been focused with one-on-one project engagements with SME manufacturers 
to assist them in improving manufacturing processes or designing and 
developing new manufactured products. While the one-on-one SME 
manufacturer engagement remains the core of the MEP intervention, many 
state MEP centers are leveraging digital technologies to offer more 
Webinars, courses, and classes to all SME manufacturers broadly in a 
state across a broader range of topics, such as presentations by 
university researchers on new materials or manufacturing processes, the 
role of design and sustainability in manufacturing processes, or how to 
use cutting-edge digital tools such as high-performance computing-
enabled computer-assisted design and engineering tools. In other words, 
the MEP centers are seeing themselves become the central hub, or 
delivery mechanism, for a comprehensive suite of services, some of it 
provided by the agency itself and some of it brokered by others, all 
designed to boost the competitiveness of SMEs. Legislation sponsored by 
Senators and Ayotte in the MEP Program Improvement Act of 2016 would 
increase program funding for MEP, expand its remit, modify the Federal 
cost share, and promote MEP center competencies with ``automated 
manufacturing systems and other advanced production technologies, based 
on Institute-supported research, for the purpose of demonstrations and 
technology transfer.''
    The Federal Government could better facilitate states' efforts to 
tap into the vast treasure trove of technology that too often sits 
untapped on the shelves of state universities or research institutions. 
For example, draft legislation in S. 4047 would create a Federal 
Acceleration of State Technologies Deployment Program, or ``FAST,'' a 
Federal funding strategy for accelerating the local commercialization 
of newly developed technologies by matching cash-poor state programs. 
The program would leverage Federal resources to match states' 
investments in their technology commercialization programs. Matching 
Federal funds would be available concomitant with a state's level of 
investment (prorated against state population with a maximum cap) in 
its technology commercialization programs. States would use the money 
for direct, merit-based project grants to existing SMEs or to startup 
companies looking to commercialize new products or technologies (with 
the expectation that a major source for those technologies would be 
ones currently sitting untapped at America's colleges and 
universities).
    But, broadly, the core issue here relates to allocating (or 
directing) more funding to commercialization-oriented efforts. ITIF has 
suggested that Congress create a Spurring Commercialization of our 
Nation's Research initiative whereby Congress allocates 0.15 percent of 
agency research budgets to specifically fund university, Federal 
laboratory, and state government technology commercialization and 
innovation efforts. Such a program would be different than the STTR 
program (which funds small businesses working with universities.) Half 
of the funds would go to universities and Federal laboratories that 
could use the funds to create a variety of different initiatives, 
including mentoring programs for researcher entrepreneurs, student 
entrepreneurship clubs and entrepreneurship curriculum, industry 
outreach programs, seed grants for researchers to develop 
commercialization plans, etc.
    A similar approach was embodied in Section 8 of the proposed 
Startup America 3.0 Act, which included a section titled ``Accelerating 
Commercialization of Taxpayer Funded Research,'' which would have set 
aside 0.15 percent of Federal agencies' extramural research budgets 
from 2014 to 2018 to offer: (1) ``commercialization capacity building 
grants'' to institutes of higher education pursuing specific innovative 
initiatives to improve an institution's capacity to commercialize 
faculty research; and (2) ``commercialization accelerator grants'' to 
support institutions of higher education pursuing initiatives that 
allow faculty to directly commercialize research in an effort to 
accelerate research breakthroughs. Collaborative initiatives would be 
favored as would grants going to institutions of higher education (or 
other entities) with demonstrated proficiency in creating new 
companies.
    Whichever mechanism is chosen, increasing the focus on 
commercialization and technology transfer would play an important role 
in bringing universities closer to startups and to the private sector.
    Separately, the National Network for Manufacturing Innovation 
(NNMI) plays a pivotal role in helping industry, academia, and 
government work better together to create transformational technologies 
and build new products and industries. The nine Institutes of 
Manufacturing Innovation (IMIs) launched to date as part of the NNMI 
represent public-private partnerships that foster R&D and innovation in 
advanced manufacturing product and process technologies. The Institutes 
bring stakeholders together to solve pre-competitive industrial 
research problems; build industry technology roadmaps; provide testbeds 
and platforms; promote education, technical skills, and workforce 
development; and act as a conduit for SMEs in the supply chain to 
engage Tier 1 OEMs. The NNMI represents a crucial fabric in America's 
technology ecosystem, and Congress should continue to support 
investment in building out the national network of manufacturing 
innovation institutes, ultimately trying to reach the goal of a network 
of 45 such centers.
    Finally, the Small Business Innovation Research program represents 
one of the most successful innovation-promoting programs in the Federal 
Government. Despite the fact that the SBIR/STTR program accounts for 
less than 3 percent of the Federal extramural R&D budget, a recent ITIF 
study found that 60 percent of firms with fewer than 25 employees in 
the study utilized public grants through the SBIR in the creation of 
their innovations. Despite its strengths, there are programmatic 
reforms that could make SBIR an even stronger engine of 
commercialization activity.
    First, SBIR Phase II awardees should be permitted to expend up to 5 
percent of their Phase II funding on commercialization-oriented 
activities, such as market validation, IP protection, market research, 
and business model development, as Delaware Senator Chris Coons and 
Colorado Senator Cory Gardner propose in the new Support Startup 
Businesses Act, which establishes a pilot program allowing SBIR 
awardees to allocate no more than 5 percent of their grants for 
startup-related commercialization activities.
    Second, as NACIE, the President's National Advisory Council on 
Innovation and Entrepreneurship, has proposed for how Congress could 
further improve the SBIR program: (1) Congress should significantly 
increase the allocation of Federal agencies' SBIR project budgets 
themselves toward supporting commercialization activities; (2) Congress 
should make commercialization potential a more prominent factor in 
SBIR-funding decisions. In particular, Congress could modify the 
criteria and composition of review panels to make commercialization 
potential a more prominent factor in funding decisions.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Kelly Ayotte to 
                         Dr. Kelvin Droegemeier
    Question 1. My state of New Hampshire, like your home state of 
Oklahoma, has tried to maximize research opportunities for students 
leveraging Federal funds to develop the ``next generation'' scientific 
workforce. How do we continue to develop science and technology 
expertise nationwide to preserve America's role as the leading 
innovator, and what is the economic benefit to our Nation when we 
develop scientific minds in all states?
    Answer. Your question consists of two extremely important but 
related dimensions: First, the importance of a science and technology 
workforce to ensure the future of our Nation's leadership role in 
innovation, and second, the related benefits associated with making 
certain we engage talent in every corner of our Nation, not only those 
areas with the greatest population, wealth or infrastructure.
    To the first part of your question, a decade's worth of data 
demonstrate the increasing pervasiveness and value of science and 
technology in the American workplace. Scientific and technological 
knowledge and skills are used in many more occupations than those 
traditionally thought of as science and engineering (S&E). In 2013, 
more than 13 million U.S. workers were officially classified as having 
a S&E or S&E-related occupation. Yet an estimated 17.6 million college-
educated individuals, including many working in sales, marketing and 
management, reported that their job required at least a bachelor's 
degree level of S&E training. In addition, in the modern U.S. economy, 
many jobs that require less than a bachelor's degree still require 
science, technology, engineering, and math (STEM) skills. These 
``technical STEM'' jobs, concentrated in the information technology 
(IT), health care, and skilled trades, are often among the best paying 
and most stable jobs available to individuals with a sub-baccalaureate 
education, and are distributed across all 50 states. There may be as 
many as 26 million jobs in the U.S. that require significant STEM 
knowledge and skill in at least one field. This represents nearly 20 
percent of all U.S. jobs.
    Given this high demand across the economy and across the country, 
encouraging students to engage in the science and engineering 
enterprise and providing opportunities to do so are vital components of 
continuing our Nation's long-term success. To meet this challenge, and 
to the second part of your question, the National Science Foundation 
(NSF, Foundation) has several programs designed to recruit and retain 
students from every state and background. For example, NSF's Research 
Experiences for Undergraduates (REU) program funds dozens of sites 
annually where hundreds of students from all around the Nation, and 
across numerous disciplines, assemble for significant periods of time 
to participate in cutting-edge research. The REU program has proven 
successful in developing student interest and persistence in science 
majors. Additionally, many universities, and virtually all research 
universities, now place strong emphasis on experiential learning in and 
out of the classroom, along with undergraduate research, in virtually 
all disciplines, with most institutions having formal offices of 
undergraduate research and specific credit and credentials for pursuing 
research during the baccalaureate degree.
    Further, the vast majority of NSF research proposals include 
funding for undergraduate and/or graduate students, who participate as 
research assistants. Thus, whenever a project is funded by an 
Experimental Program to Stimulate Competitive Research (EPSCoR) grant 
from NSF, it is very likely that students will be gaining access to 
exceptionally high quality, hands-on science education and research 
experiences. Additional funding for students would be welcomed because 
there is no higher priority than investing in the next generation of 
STEM professionals as they help perform the research that will maintain 
our Nation's global science and technology leadership.
    New Hampshire provides an excellent illustration of EPSCoR's 
powerful impact. The state's first EPSCoR project boosted research 
capacity in space science, environmental science and nanotechnology. 
EPSCoR provided funds to install a thermal-vacuum chamber at the 
University of New Hampshire (UNH) and at a facility at Dartmouth 
College, enabling participation in NASA missions. Nanoscale instruments 
installed at both institutions led to discovery of a compound that 
holds promise in the manufacture of flexible organic electronics, such 
as solar cells. The NSF award--which totaled $7.78 million over four 
years, enabled new research, leading to thirty-one more grants totaling 
nearly $52 million, spawned a spin-out company, Innovacene, Inc. that 
uses technology developed at UNH, built the world's largest wind 
tunnel, and resulted in 27 research partnerships with NH companies. In 
addition, the project's outreach programs reached 172 K-12 teachers and 
3,814 students.
    Yet, in spite of the important impact of EPSCoR on New Hampshire's 
contribution to our Nation's science and engineering research and 
education enterprise, EPSCoR is under serious threat. For the past two 
years, amendments have been offered on the floor of the House to 
eliminate EPSCoR, with the presumed argument that, if its resources are 
unavailable to all states, the program is not appropriate. This logic 
runs completely counter to the NSF Organic Act, which states that NSF 
shall not unduly concentrate its funding in any geographic region. 
Furthermore, and more importantly, the logic of the amendment means 
that some regions/states that are fully capable of making significant 
contributions to science and engineering research and education--like 
New Hampshire and Oklahoma--are hampered from doing so simply by virtue 
of their historically low research dollars garnered from NSF and other 
agencies. I therefore urge you to oppose the elimination of EPSCoR. And 
indeed, the Senate has seen fit to rename EPSCoR in the bill that 
emerged from this hearing and is to be congratulated for that 
thoughtful recognition of the value of EPSCoR.

    Question 2. You identify several important governing principles: 
first, figuring out where government adds unique value, and second, 
getting government out of the way of our innovators instead of 
strangling creativity and enterprise with regulation. There is a 
conflict when taxpayer dollars fund work that is rendered inefficient 
through excess regulation. With these principles in mind, what are the 
best ways of reducing regulation to maximize the efficiency of our 
Federal dollars?
    Answer. Both the National Science Board (NSB, Board) and the 
National Academy of Sciences (NAS) have issued reports in recent 
years--the most recent only a week ago in response to Congress--
outlining steps that could be taken to reduce regulation, while still 
ensuring that taxpayer dollars are spent wisely and that human and 
animal subjects are treated ethically. Taking these steps is key to 
maximizing our Federal investments in scientific research. A survey 
conducted by the Federal Demonstration Partnership in 2012 found that 
42 percent of faculty time related to conduct of federally-funded 
research at research institutions is spent on activities other than 
research, with 19.3 percent specifically related to administrative 
activities.
    Among the principal recommendations of the NSB and NAS reports from 
the regulatory standpoint are:

   Harmonize grant proposal, submission, and reporting 
        requirements across Federal science agencies. This includes 
        establishing greater consistency in policies such as disclosure 
        of financial conflict of interest and animal care as well as 
        common, uniform guidance on things like formatting and 
        electronic submission. Absence of harmonization leads to 
        duplication of effort, multiple reporting of the same 
        information in different formats, and submission of the same 
        information on different schedules, thereby adding to 
        administrative burden. Inconsistencies in financial audits are 
        also a major contributor to administrative burden since, when 
        audit practices vary, scientists and institutions need to 
        understand how to handle the variations. This can lead 
        institutions to hold every transaction to the most stringent 
        standard that may be applied, without regard to efficiencies. 
        In harmonizing requirements across agencies, streamlining 
        should also be a consideration, so that burdensome yet 
        unnecessary requirements do not get instituted across the 
        board. Pending legislation in both the House and the Senate 
        calls for creating an entity under the aegis of the Office of 
        Science & Technology Policy to regularly review regulations 
        related to federally-funded research, identify outmoded, 
        ineffective, insufficient, or excessively burdensome 
        regulations, and coordinate new and existing regulations, 
        policies, guidance, and application and reporting formats. This 
        would be a very helpful step in promoting harmonization.

   Reform effort reporting requirements. Effort reporting was 
        widely stated to be time-consuming for researchers and costly 
        for institutions to administer, while yielding data that is not 
        generally meaningful to evaluators. The NSF and National 
        Institutes of Health Inspector Generals (IGs) are halfway 
        through the Federal Demonstration Partnership pilot on payroll 
        certification as an alternative to effort reports. Preliminary 
        reports from the pilot suggest that this approach appears to 
        reduce burden and IGs appear to accept the concept. It has now 
        become part of the Office of Management and Budget's (OMB) 
        uniform guidance. However, to ensure that payroll certification 
        becomes standard, it would be helpful for Congress to recognize 
        the acceptability of payroll certification.

   Address the increasing number of regulations related to 
        human and animal subjects that add directly to scientists' 
        workload but do not appear to improve the care and treatments 
        of humans and animals. In particular, NSB recommends using a 
        single Institutional Review Board to cover multi-site projects 
        and eliminate continuing review for all expedited-minimal risk 
        protocols.

   Re-examine applicability of certain safety and security 
        requirements. A number of safety and security requirements that 
        primarily target industry--but are applied to academic research 
        settings--such as the Chemical Facilities Anti-Terrorism 
        Standards and the Select Agent Program--should be reexamined 
        and appropriate alternatives identified and implemented. 
        Scientists report that the requirements for training; biosafety 
        protocols; reports and certification; tracking use of 
        chemicals; and frequent inspections are excessive, while not 
        improving laboratory safety.

   Support the continuation and renewal of the Export Control 
        Reform Initiative which has the potential to make significant 
        improvements to regulations, oversight, and compliance, 
        benefiting national security, the economy, and federally-funded 
        university research.

   Greater collaboration among the IGs with agencies and 
        universities, including resolving interpretation issues of 
        agency policies with the agency prior to formal audits of 
        research institutions; IGs broadly sharing model examples of 
        agency and university initiatives that advance and protect the 
        research enterprise; and publically sharing total costs (agency 
        and institution) of IG audits of research institutions.

    An additional important point, in the context of ``getting the 
government out of the way,'' concerns a recommendation made in a recent 
American Academy of Arts and Sciences Report titled ``Restoring the 
Foundation: New Models for U.S. Science and Technology Policy.'' I 
spoke to this issue during the hearing and want to reiterate its 
importance here. Specifically, the issue concerns so-called revenue 
proclamations in the Internal Revenue Code of 1986 (Section 141(b)) and 
the fact that corporate-funded research at universities is considered a 
``private business'' activity unless the research is considered ``basic 
or fundamental'' (which the private sector rarely funds) or the sponsor 
must pay a competitive price for licensing once the technology 
resulting from the research actually exists. The latter is very 
problematic and impedes corporate-university partnerships because 
companies do not want to plan their business around a technology whose 
cost cannot be determined until it actually exists.
    Modifications to this code have been proposed that would un-tie the 
hands of universities and allow them to negotiate license fees up 
front, thereby making corporate-university partnerships much more 
attractive to private industry. Evidence of the importance of this 
issue is found in the fact that, during the past 20 years, research and 
development funding in the U.S. has increased exponentially, with most 
of the increase coming from private industry (which now funds two-
thirds of all Research and Development (R&D) in the Nation). It is 
disturbing that industry funding for R&D at universities has remained 
flat, as a percentage, during this same time. Simply put, we are 
placing an unnecessary roadblock in front of private companies and 
discouraging them from accessing one of the most important assets 
available--the minds and facilities within our Nation's research 
universities.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Steve Daines to 
                         Dr. Kelvin Droegemeier
    Question 1. As you know, Montana participates in the National 
Science Foundation (NSF) Experimental Program to Stimulate Competitive 
Research (EPSCoR) program. Montana State University and the University 
of Montana as well as other institutions have benefitted from the 
investments in research capacity enabled by this program. We often 
discuss the benefits of this program for the participating states and 
universities. Would you please elaborate on the national benefits of 
having a broad research community that expands into rural states and 
communities?
    Answer. Every state, regardless of size, should have the capability 
within its borders to take on critical science and technology 
challenges that its citizens face. Smaller states are at a disadvantage 
in developing this necessary capacity. EPSCoR is specifically intended 
to build this capacity through merit-reviewed awards, by catalyzing 
additional growth by co-funding committed individual investigators, and 
by providing incentives for states to pay attention to their S&T needs 
and provide financial support to address those needs.
    As you are well aware, Montana's EPSCoR program has developed 
nationally significant and regionally relevant science and engineering 
programs. The state's national leadership in biomedical and health 
related issues, nanotechnology, and study of life in extreme 
environments is in no small way attributable to EPSCoR. In addition, 
Montana's EPSCoR serves as a model for how to integrate economic 
development with university-based research and education. The program 
has also developed the state's human capital, which is essential to 
innovation. Between 2001-2011, EPSCoR enabled the hiring of 87 new 
faculty at Montana University System institutions, supported the 
studies of over 250 graduate students and the participation of over 
1,300 undergraduates in EPSCoR research projects. In addition, since 
2007, over 107 Native American tribal college students have 
participated in EPSCoR research projects.
    A state's capacity to influence competitiveness also requires 
coordination, which is an integral part of the EPSCoR program. For 
example, EPSCoR's Research Infrastructure Improvement program supports 
research based on a state's science and technology plan, often in 
alignment with national research priorities. Since the inception of 
EPSCoR in 1980, the research competitiveness of EPSCoR jurisdictions 
has increased by as much as 41 percent. Other NSF programs, such as 
Innovation Corps (I-Corps) and Industry & University Cooperative 
Research Centers (I/UCRC), enable academic researchers to begin 
translation of fundamental research discoveries, encourage academia and 
industry to collaborate (especially regionally), and prepare students 
to be entrepreneurs in innovation. In short, EPSCoR contributes to the 
overall economy by making sure that all 50 states are meaningful 
contributors to the Nation's innovation.
    In addition to contributions to research and economic development, 
EPSCoR states, and especially their institutions of higher education, 
hire individuals educated in non-EPSCoR states. Many university 
presidents, provosts, and vice presidents for research in non-EPSCoR 
states received their advanced degrees from EPSCoR states, and the 
reverse also is true.

    Question 2. While we have seen positive research conducted with NSF 
funds, we have also seen wasteful spending. Every dollar we invest in 
these programs should be used wisely and appropriately for research 
that will have meaningful benefits for society. During your tenure on 
the National Science Board, which fortuitously ended yesterday, what 
has NSF done to improve their vetting process and make sure they are 
good stewards of tax payer resources?
    Answer. My twelve years serving on NSF's Board were profoundly 
rewarding. This agency has a long and distinguished history of 
promoting the progress of science and educating the next generation of 
innovators. We do this by supporting the best ideas and people this 
country has to offer. A quick look at our 60-plus year history shows 
the incredible results that have benefited our economy and quality of 
life. Of course, some of those benefits--to your point about 
``meaningful benefits to society''--are not immediately obvious and may 
not be for many years. Additionally, what is meaningful in the eyes of 
one person may not be in the eyes of another. And this takes us to the 
issue of merit review, which is the key to NSF's success in achieving 
its mission and its recognition, around the world, as the absolute gold 
standard for funding research that has propelled the United States into 
an undisputed world leader in science and technology.
    Merit review ensures that the choices of which ideas hold the most 
promise are informed by experts who best understand the science. This 
was a conscious, hard-fought-for principle at NSF's founding and it has 
been evaluated and refined since 1950. The principles and procedures of 
the Foundation's merit review system has been emulated by many other 
nations, who strive to duplicate NSF's peer review and grants 
management processes in hope of duplicating our success.
    As NSF's governing body, the NSB annually reviews and, as needed, 
revises these processes to ensure our investments offer maximal value 
to the Nation. During my tenure on the Board, we conducted a two-year 
review of the Foundation's merit review criteria and the methods by 
which the reviews are implemented. The resulting report, National 
Science Foundation's Merit Review Criteria: Review and Revisions, 
concluded that the agency's Intellectual Merit and the Broader Impacts 
criteria remain appropriate and critical to its mission.
    The Foundation's current merit review system, often referred to as 
the gold standard for assessing research proposals, has served the 
Nation exceptionally well. Recent legislative proposals to 
fundamentally alter NSF's merit review system by restricting NSF awards 
to a narrow subset of national goals or to projects where specific 
outcomes can be predetermined will undo the globally admired qualities 
that have made NSF so valuable to the Nation. Confining scientific 
inquiry to immediate or obvious application instead of scientific 
promise will undermine the unique strengths of the NSF system. For this 
reason, I am heartened that the initial version of the bipartisan 
Senate COMPETES bill reaffirms NSF's merit review system.
    Despite its track record of success, NSF is always looking for ways 
to improve its processes--its transparency and accountability--and 
ensure sound stewardship of tax payer dollars. NSF Director France 
Cordova and her team have achieved great results to date in this 
effort, which include implementing new policies to enhance transparency 
and improved communication about the research the agency supports, and 
reexamining NSF's management of large projects and facilities.
    Specifically, NSF has changed its policy vis a vis award abstracts 
and titles, clarifying to staff and the broad scientific community the 
need to communicate clearly and explain how a research project serves 
the national interest, as stated by NSF's mission: ``to promote the 
progress of science; to advance the national health, prosperity and 
welfare; or to secure the national defense.'' As part of this effort, 
the agency now provides resources and training to its program directors 
to help them improve the clarity of award abstracts and titles. The 
agency also refined the roles and responsibilities of its division 
directors in merit review and now provides interactive training to new 
division directors when they begin working at the agency. Director 
Cordova reached out to the broad scientific community to inform it of 
NSF's new steps to enhance transparency and accountability, including 
its responsibility to clearly describe projects and justify the 
expenditure of public funds. This included an update to NSF's Proposal 
and Award Policies and Procedures Guide.
    NSF is also working to strengthen its management of large projects. 
The recent National Academy of Public Administration (NAPA) report, 
National Science Foundation: Use of Cooperative Agreements to Support 
Large Scale Investment in Research, is proving a timely tool to improve 
NSF's oversight of large facilities. NSF Senior Management and NSB 
jointly commissioned this report, which identifies areas where NSF can 
improve and are in general agreement with the Panel's recommendations.
    The Foundation has begun acting on the NAPA report. Several of the 
recommendations relate to specific business practices; for instance, 
retaining control of a portion of contingency funds, dealing with 
exceptions to recommendations from pre-award cost analyses, and 
expectations for awardees regarding Government Accountability Office 
(GAO) best practices. The Board concurred with the Director's plans to 
implement these recommendations, and will conduct oversight to ensure 
accountability.
    A second class of recommendations relate to oversight, 
accountability, and stewardship. The Foundation is approaching these 
recommendations holistically, viewing the NSB, Major Research Equipment 
and Facilities Construction Panel, and Office of the Director as a 
system that the NAPA Panel recommendations can improve.
    Among the work in progress:

   A consolidated, facilities-related website is being 
        developed to support NSB and Senior Management decision-making.

   NSB and NSF are working jointly to clarify and codify roles 
        and responsibilities related to the management and oversight of 
        large facilities, in part to sustain working relationships 
        across transitions in Board membership and NSF leadership.

   NSF is adding project and financial management expertise to 
        criteria for the selection of external reviewers, examining 
        skill requirements for program officers and budget offices 
        involved with large facilities, and building capacity in the 
        LFO.

   NSB is continuing efforts to diversify the Board by adding 
        financial and project management expertise as desired criteria 
        for new members it recommends to the President in order to 
        enhance NSB's oversight and stewardship of these large 
        investments.

                                  [all]

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