> **TESTIMONY OF**
>
> **PHILLIP J. BOND**
>
> **UNDER SECRETARY FOR TECHNOLOGY**
>
> **U.S. DEPARTMENT OF COMMERCE**
>
> **BEFORE THE**

**HOUSE SCIENCE COMMITTEE**

**February 11, 2004**

Mr. Chairman and members of the Committee, I am pleased to join with my
fellow Administration colleagues in your review of the President's
Fiscal Year (FY) 2005 budget request for science and technology
programs. As you have already heard from Dr. Marburger, the President's
budget focuses on leadership in science and technology by calling for an
unprecedented \$132 billion investment in research and development (R&D)
that represents a 44% increase since President Bush took office.

I want to thank the Committee, especially Chairman Boehlert, for your
continued support and leadership on innovation issues. You have been a
constant and strong voice for the science and technology community --
especially in the areas of basic research and nanotechnology. I look
forward to continuing to work together to ensure America remains the
world leader in the science and technology field.

The President's focus in the area of science and technology is reflected
in the Department of Commerce R&D portfolio. The Commerce budget
maintains substantial R&D investments in our two primary technical
research bureaus, the Technology Administration (TA) and the National
Oceanic and Atmospheric Administration (NOAA). Through these two
bureaus, the Department of Commerce is engaged in critical cutting-edge
research in high-priority areas of technological innovation such as
nanotechnology, information technology, and manufacturing technology.

The Fiscal Year 2005 President's budget request for TA is \$529.8
million in total discretionary budget authority, which includes \$8.3
million for the Office of Technology Policy and \$521.5 million for the
National Institute of Standards and Technology (NIST). The Fiscal Year
2005 President's budget request for NOAA is \$3.4 billion in total
discretionary budget authority.

Additionally, both TA and NOAA have developed strong collaborations with
other Federal science and technology agency partners to develop
interagency activities and coordinate major R&D initiatives in these
high-priority areas. Given the budget pressures facing our Nation, this
approach is necessary in order to fund important Federal science and
technology programs. Working with my fellow panelists and others
throughout the Administration, at the Department of Commerce, we have
been engaged in extending efforts to cross agency boundaries to
strengthen our research and development capabilities.

Secretary Evans is proud that the Department has been able to play a
leadership role in interagency coordination, especially through the
President's National Science and Technology Council (NSTC). For example,
I co-chair the NSTC Committee on Technology and NOAA Administrator
Admiral Lautenbacher chairs the NSTC Committee on Environment and
Natural Resources. The Secretary has tasked us to continue developing
partnership models inside and outside of our building to leverage the
nation's science and technology enterprise. By developing new methods
for collaboration within Commerce and with other agencies, the
Administration can maximize the best use of our scarce Federal dollars.

Mr. Chairman, in my time with you today, I wish to review the
Department's science and technology budget priorities for the upcoming
fiscal year, as reflected in our TA and NOAA requests. Since I know that
the Committee intends to hold a separate hearing in the near future just
on the NOAA budget with Admiral Lautenbacher, I will give a short
summary of the NOAA FY 2005 priorities before discussing the proposed
budget priorities for the Technology Administration.

The Commerce budget priorities reflect the Department's continuing
commitment to creating conditions for both economic growth and
employment opportunity by promoting innovation, entrepreneurship,
competitiveness, and stewardship. To enhance these services, resources
have been shifted from various lower priority programs. To be sure, the
Administration has had to make some very tough choices and some
otherwise well-managed and successful programs could not be given a high
priority for funding. The Department, however, has an ambitious agenda
to use our science and technology resources and we look forward to
working with you as these proposals move through the legislative
process.

**National Oceanic and Atmospheric Administration (NOAA)**

Number range CHAPTERThe President's Fiscal Year 2005 budget request
totals \$3.4 billion for NOAA, including program increases of \$146.9
million over the FY 2004 request. NOAA believes that the proposed budget
maintains and enhances the programs that enable our scientific
understanding of the oceans and atmosphere, while also sustaining the
Nation's environmental health and economic vitality. The budget request
allows NOAA to develop the science necessary to improve weather, water
and ecosystem forecasts of the future, as well as give policymakers the
data they need to make important decisions related to climate change.

The Fiscal Year 2005 budget request supports the NOAA core activities,
including its fisheries and oceans programs, climate research
activities, weather forecasting capabilities, and the satellite
infrastructure necessary to support these functions. In addition, the
request continues to focus on maintenance and safety issues associated
with NOAA facilities, vessels, and aircraft.

In order to meet international standards for research surveys and
substantially improve the quality of fishery research, NOAA requests an
investment of \$34 million to complete NOAA's third fisheries survey
vessel. NOAA will also seek to expand its focus on climate research by
devoting \$19 million of new funding to address the critical knowledge
gaps identified in the recently released Climate Change Science Program
Strategic Plan. Finally, NOAA will continue to improve its weather
forecasting abilities by requesting funding to expand air quality
forecasts nationwide and investing in improved long-range weather
forecasting. The Department will also request an additional \$56 million
for the continued development of next-generation geosynchronous and
polar orbiting satellite programs.

Some additional highlights of the NOAA FY 2005 budget proposal include:

-   Weather and Water - to serve society's needs for weather and water
    information -- The \$1.41 billion request is an increase of \$58.1
    million over base goal levels.

-   Climate - to understand climate variability and change to enhance
    society's ability to plan and respond \-- The \$369.3 million
    request is an increase of \$28.7 million over base goal levels.

-   Ecosystems - to protect, restore and manage the use of coastal and
    ocean resources through ecosystem approach to management \-- The
    \$1.158 billion request is an increase of \$145.3 million over base
    goal levels.

-   Commerce and Transportation - support the Nation's commerce with
    information for safe, efficient and environmentally sound
    transportation \-- NOAA is requesting \$252.1 million, an increase
    of \$23.1 million over base levels, to address this goal.

**Technology Administration (TA)**

TA's Fiscal Year 2005 funding priorities for its \$529.8 million budget
support programs that promote U.S. industries to meet the President's
national priorities of fostering economic growth, providing for a secure
homeland and defense, and winning the war on terrorism. TA meets these
priorities by helping to shape an economic climate that leads to
innovation and growth; investing in the NIST core mission of
measurements, standards, research, and services to industry; and
supplying NIST scientists with the laboratory equipment and facilities
necessary for world-class research.

TA's NIST is well-known to the members of this Committee, but the
world-class research of its award-winning scientists and engineers can
often be overlooked because the NIST contributions are often made at the
beginning of the R&D process -- invaluable contributions that pave the
way for the rapid commercialization needed to advance our economy.

NIST has been often referred to as the "crown jewel" of our Federal
laboratory system. It is a well-deserved title because there is no other
Federal lab that industry relies on as much as NIST. Industry needs the
critical NIST metrology research standards for measurement, testing,
analysis, and protocols that allow for interoperable products to be
created, new products to be developed based on consensus standards,
assurances that products meet conformity assessment requirements, and
the ability to effectively bring their innovation from the laboratory to
the marketplace.

NIST is an important component of the TA mission, performing world-class
research to enhance productivity, facilitate trade, and improve the
quality of life. Given the rapidly accelerating pace of technology
development and change during the past decade, NIST has had to remain
agile and flexible in order to make the best use of its resources. One
telling measure of NIST's success is that nearly 30 economic impact
studies by independent experts calculate that every dollar invested in
NIST measurement and standards programs returns at least three dollars
in economic benefits to the Nation. Indeed, most NIST programs return
substantially more.

The President's request for NIST for FY 2005 reflects his appreciation
of the role technology plays in both our economic security and our
homeland security while holding the line on non-defense spending. This
request -- which is 5 percent more than his request for FY 2004 \--
includes \$417.5 million for the NIST laboratories and \$5.4 million for
the Baldrige National Quality Program. Another \$59.4 million is
requested for badly needed facilities maintenance and upgrades.

The Manufacturing Extension Partnership (MEP) requests \$39.2 million to
help small U.S. manufacturers become more competitive and productive.
Through its network of centers, MEP makes it possible for small U.S.
firm to tap into the knowledge, skill sets, and experience of leading
manufacturing, business, and technology specialists from across the
country. With MEP as a resource, American manufacturers have at their
disposal the latest and most efficient technologies, processes and
business practices.

Recognizing the importance of manufacturing to our economy, Secretary
Evans recently released a comprehensive manufacturing strategy aimed at
improving the climate for manufacturers in a global marketplace. With
the Manufacturing Index rising to its highest level in nearly 20 years
this past December and new orders at its highest level since 1950, it
appears America's manufacturing sector is expanding and moving in the
right direction, but there is more work to be done. President Bush will
not rest until every American who wants to work can find a job. So, the
Secretary has asked all bureaus within the Department of Commerce to be
engaged in support of manufacturers. A key part of the manufacturing
strategy outlined in Secretary's Evans' report includes stable support
for the MEP and new steps to review and improve its efficiency. To
emphasize competition in global markets, for example, the Department is
exploring ways to team MEP field agents will team directly with trade
promotion specialists in the International Trade Administration (ITA) to
leverage ITA's connections and in-depth knowledge of industrial sectors.
The report also recommends that MEP hold a recompetition of all centers
that focuses on improving effectiveness and efficiency.

There is no funding proposed for the Advanced Technology Program (ATP)
in the Fiscal Year 2005 budget. The total NIST request of \$521.5
million is \$89 million less than our FY 2004 appropriation. While there
is an increase in the FY 2005 funding request for the NIST laboratories,
the overall request for NIST is a net decrease due to the termination of
funding for the ATP.

It is also important to note that a recent trend of shortfalls in
funding for the NIST laboratories threatens to undermine the very core
measurements and standards infrastructure upon which our nation's
scientific, technological and industrial enterprises depend.
Accordingly, the President's request for NIST incorporates several major
new R&D initiatives, including \$15.6 million to support advanced
manufacturing, \$18.6 million for work related to public safety and
security, and \$16.2 million to develop advanced measurement
capabilities to meet the needs of 21^st^ century science and industry.

Last June the President's Science Advisor laid out the Administration's
priorities for science and technology R&D in the FY 2005 budget. These
NIST R&D initiatives are an excellent fit with those priorities --

-   Under R&D for Combating Terrorism, the NIST public safety proposal
    includes a funding increase to advance national measurement
    capabilities in the detection of chemical, biological, radiological,
    nuclear, or explosive materials; in biometric identification, and in
    cyber security. This work is closely coordinated with the Department
    of Homeland Security and other national security agencies.

-   In the rapidly developing field of Nanotechnology, the NIST advanced
    manufacturing proposal encompasses a wide array of measurement
    tools, devices, measurement technologies, standards, and data to
    provide a critical measurement and standards infrastructure for
    leading-edge developments in nanotechnology manufacturing areas.
    These are assignments directly fulfilling NIST's mission and in line
    with NIST's role in both the National Nanotechnology Initiative and
    the 21st Century Nanotechnology Research and Development Act (P.L.
    No 108-153) that was spearheaded by this Committee.

-   In line with the Administration's priority emphasis on
    Molecular-level Understanding of Life Processes, NIST's Measurement
    Science initiative includes the development of measurements and test
    methods that will be critical to developments in biosystems and
    health, such as work in the measurement and analysis of gene and
    protein expression, nanobiotechnology and DNA and protein markers.

-   In Networking and Information Technology, NIST initiatives in Public
    Safety and Advanced Measurement include IT research ranging from
    improvements in the state of the art of computer and network
    security -- especially wireless and industrial control systems -- to
    cutting-edge research in the emerging field of quantum information
    science, which promises to lead to advanced information processing
    systems with phenomenal increases in information storage and
    processing speeds.

-   NIST also maintains a substantial effort in the areas of Environment
    and Energy, including unique research facilities and expertise
    related to various aspects of hydrogen fuel cells, covering the
    entire spectrum from fundamental science to successful
    commercialization.

NIST is also requesting an FY 2005 funding increase to address an issue
increasingly important to the U.S. economy -- equipping U.S.
manufacturers with the necessary tools to track and effectively respond
to the development of international technical standards, particularly
where they impact the access of U.S. manufacturers to international
markets.

Our formal submission gives you additional details of these and other
research initiatives, but I would like to draw the Committee's attention
in particular to two very important facilities issues at NIST.

This budget includes a proposed initiative for \$8.3 million for
capability improvements at the NIST Center for Neutron Research. The
NCNR is one of NIST's truly unique facilities and an extraordinarily
valuable resource for the Nation's research community. Neutron beams --
especially the low-energy "cold" beams available at NCNR -- have become
an indispensable research tool in materials science, biotechnology,
chemistry, engineering, and physics. The NCNR has been cited as the
highest performing and most used neutron facility in the United States.
In fact, it draws nearly twice the number of users at the Nation's other
three neutron sources combined.

Success, however, has strained the resources of the NCNR, which now
serves over four times the number of users predicted in 1987 when it was
first funded. Fuel- and fuel-related costs have spiraled. As a result,
NIST's ability to operate the facility to its maximum utility and to
meet the growing demands of the U.S. research community has been
seriously curtailed.

The NCNR initiative will not only address this serious problem in
operating expenses but also allow NIST to expand significantly its
literally irreplaceable service to the Nation's industrial and academic
researchers with new instrumentation and analysis methods. The types of
research that would benefit include:

-   The study of proteins, that could lead to the development of new
    drug therapies, new anti-toxins and improved vaccines;

-   The development of ultra-high sensitivity detection methods for
    environmental pollutants as well as explosives and other terrorist
    materials;

-   The study of the workings of complex cellular level biological
    systems; and

-   The development of more efficient fuel cells, batteries and
    semiconductors.

The FY 2005 budget also includes a \$25.7 million initiative primarily
devoted to pressing issues of facility obsolescence at NIST's Boulder,
Colorado, laboratories.

Years of inadequate funding for maintenance and upgrades have left the
NIST laboratories in Boulder, Colorado, severely deteriorated and
obsolete. That these facilities have managed to provide U.S. researchers
one of the world's most accurate and precise time and frequency
standards, for example, or the world's most accurate voltage standards,
is a tribute to the ingenuity and patience of the NIST staff, but it
comes at a price.

-   Poor heating and air-conditioning controls have prevented on-time
    delivery of specialized superconducting integrated circuit chips to
    defense contractors, instrument makers and other NIST clients.

-   Researchers making sophisticated measurements of magnetic fields --
    important work done in support of the data storage industry -- often
    must wait an hour or more for lab temperatures to stabilize
    sufficiently to work

-   Outages, power spikes, brownouts, and other problems are damaging
    sensitive equipment, delaying research program, and necessitating
    expensive repairs.

NIST conservatively estimates a 10 percent loss in productivity at the
Boulder Labs [purely]{.underline} due to environmental problems in
obsolete buildings. And that does not begin to touch on the staff safety
issues.

We appreciate that this Committee has long been a strong advocate for
NIST. I am grateful that you understand that an investment in NIST
returns great benefits to our nation as the only Federal laboratory with
the express mission of working with industry. I look forward to working
with you in addressing NIST's needs so that its world-class scientists
and engineers can continue to serve our nation effectively.

**Conclusion**

Mr. Chairman, the Department of Commerce's R&D portfolio is not only
strengthening our science and technology portfolio but also
strengthening our Nation's economy. The past few weeks have confirmed
that America\'s economy is strong, and growing stronger. The nation\'s
unemployment rate fell to 5.6 percent in January, the fourth consecutive
monthly decline, and we added 112,000 new jobs, the largest single month
increase since December of 2000. Overall, the nation has added 366,000
jobs in the past five months. There\'s more evidence of a strengthening
economy. Manufacturers report new orders. GDP rose at a 6.1 percent in
the second half of 2003, the fastest pace in nearly 20 years. Inflation
remains low, and our nation\'s home ownership rate just reached an
all-time high. All of these are signs that our economic recovery is
becoming a lasting expansion. The President has made economic recovery a
national priority and I know the members of this Committee are equally
as passionate about this issue. At the Department of Commerce we are
fully engaged in economic recovery by providing leadership in science
and technology, with TA and NOAA leading our R&D efforts.