Economic Impact Assessment of the

NIST's Josephson Volt Standard Program

July 2001

Prepared for:

The National Institute of Standards and Technology

Program Office

Strategic Planning and Economic Analysis Group

Prepared under:

Contract No. 50SBNB7C1122

Task Order No. 5

Prepared by:

David P. Leech

Approved by:

Christopher Waychoff

Gary Payne

TASC, Inc.

1101 Wilson Boulevard

Suite 1600

Arlington, VA 22209

ACKNOWLEDGEMENTS

We wish to acknowledge the contribution of Charles G. Masi to an early
version of this report. In addition, Michael Marx (TASC) made incisive
recommendations for improving the analysis and presentation of the
report. NIST technical staff, especially Michael Kelley and Clark
Hamilton, provided extensive support in terms of patiently explaining
voltage calibration processes and a complex program history. Gregory
Tassey (NIST) provided critical insights that helped conceptualize the
economic impacts of the program

TABLE OF CONTENTS

**List of Figures [v](#list-of-figures)**

List of Tables [v](#list-of-tables)

Executive Summary [1](#executive-summary)

1\. background [1](#background)

1.1 Economic Importance of Electricity
[1](#economic-importance-of-electricity)

1.2 Voltage [2](#voltage)

1.3 calibration [2](#calibration)

1.4 Traceability [4](#traceability)

1.5 Historical Role of NIST in voltage Measurement and Calibration
[7](#historical-role-of-nist-in-voltage-measurement-and-calibration)

1.5.1 Weston Standard Era [8](#weston-standard-era)

1.5.2 Early JVS Era [8](#early-jvs-era)

1.5.3 10 Volt Josephson Standard Era [9](#volt-josephson-standard-era)

2\. economic analysis framework [11](#economic-analysis-framework)

2.1 NIST Outputs and their Economic Implications
[11](#nist-outputs-and-their-economic-implications)

2.1.1 Primary Calibration Services & Inter-laboratory Comparisons
[11](#primary-calibration-services-inter-laboratory-comparisons)

2.1.2 Transfer of JVS System Technology
[12](#transfer-of-jvs-system-technology)

2.2 Affected Organizations [13](#affected-organizations)

2.2.1 Government & Industry Metrology Laboratories
[13](#government-industry-metrology-laboratories)

2.2.2 Industry Conduct [18](#industry-conduct)

2.3 Market Barriers and Frictions [19](#market-barriers-and-frictions)

2.4 Assessment Framework and Approach
[21](#assessment-framework-and-approach)

2.4.1 Hypothesized Outcomes [21](#hypothesized-outcomes)

2.4.2 Comparison Scenario [22](#comparison-scenario)

2.4.3 Impact Estimation Timeframe (1987-2000)
[23](#impact-estimation-timeframe-1987-2000)

3\. Survey Findings [24](#survey-findings)

3.1 Survey Population and sample [24](#survey-population-and-sample)

3.2 Quantitative Findings [25](#quantitative-findings)

3.3 Qualitative Findings [26](#qualitative-findings)

4\. QUANTITATIVE ANALYSIS [28](#quantitative-analysis)

4.1 Benefits [28](#benefits)

4.2 NIST Expenditures & JVS Owner "Pull costs"
[29](#nist-expenditures-jvs-owner-pull-costs)

4.3 Measures of Economic Impact [30](#measures-of-economic-impact)

Appendix A *---* Voltage Calibration at NIST
[33](#appendix-a-voltage-calibration-at-nist)

APPENDIX b --- Electrical Metrology in Practice
[35](#appendix-b-electrical-metrology-in-practice)

Appendix C --- Economic Impact Metrics
[38](#appendix-c-economic-impact-metrics)

# List of Figures {#list-of-figures .unnumbered}

[Figure 1. The International Traceability Hierarchy
5](#__RefHeading___Toc518376510)

[Figure 2. Development of NIST Voltage Measurement and Calibration
Technology 7](#__RefHeading___Toc518376511)

[Figure 3. Hypres Inc.\'s Josephson Volt System
15](#__RefHeading___Toc518376512)

[Figure 4. Supply Chain for Voltage Measurement Technology
15](#__RefHeading___Toc518376513)

# List of Tables {#list-of-tables .unnumbered}

[Table 1. Estimates of Economic Impact 2](#__RefHeading___Toc518376727)

[Table 2. JVS Owners 14](#__RefHeading___Toc518376728)

[Table 3. User Market Shares for Voltage Measurement Instruments
17](#__RefHeading___Toc518376729)

[Table 4. Working Hypotheses: Barriers, Outputs, and Benefits
22](#__RefHeading___Toc518376730)

[Table 5. Survey Respondents and Year of JVS Implementation
24](#__RefHeading___Toc518376731)

[Table 6. JVS Owner Benefits 29](#__RefHeading___Toc518376732)

[Table 7. NIST Expenditures & Owner "Pull Costs" (Nominal \$)
30](#__RefHeading___Toc518376733)

[Table 8. Constant 2000 Dollar Benefits and Costs (1987 -- 1999)^\*^
31](#__RefHeading___Toc518376734)

[Table 9. Estimates of Economic Impact 31](#__RefHeading___Toc518376735)

# Executive Summary {#executive-summary .unnumbered}

#  {#section .unnumbered}

The National Institute of Science and Technology (NIST) has been at the
pinnacle of the nation's electrical measurement system since NIST's
founding (as the National Bureau of Standards) in 1901. NIST maintains
research and technology expertise that assures the nation's commitment
to the highest international standards of measurement. NIST often leads
in the development and advocacy of such measurement standards. To
accomplish this mission, NIST must make investments in the development,
maintenance, and diffusion of what economists call *infratechnologies*,
which allow comparable measurements among industries, between industries
and university research centers, and among nations.

This economic impact assessment focuses on a program that is in some
ways represents a major change in standards worldwide--- the shift to
*intrinsic standards*. Unlike traditional *measurement standards* that
rely on artifacts or experiments to produce the basis for measurement,
intrinsic standards are based on constants of nature, inherent
properties that are invariant and independent of the environment.
Intrinsic standards hold the promise of shortening the traceability
pathway from the end product back to the national laboratory. Examples
of quantities supported by intrinsic standards include time and
frequency, resistance, and length.

An example of this trend toward intrinsic standards is voltage
measurement. When NIST was founded in 1901 the competition for voltage
measurement technology was between two types of "wet cell" batteries ---
the Clark cell and the Weston cell. In 1905, the U.S. adopted a new
representation of the standard volt based on Weston cells located at
NIST. By the late 1960s, university researchers were beginning to
understand the electrical properties of Josephson junctions, made of
superconductor material. In cooperation with NIST (NBS), special
instrumentation was built to verify the accuracy of the university\'s
Josephson voltage standards. It was soon recognized throughout the world
that a precision *intrinsic* voltage standard was possible.

In 1972, the U.S. was the first nation to adopt a representation of the
volt based on the electrical properties of a Josephson junction
maintained at NIST. By the mid-1980s, the national standards
laboratories of most major industrialized countries used the Josephson
effect to define their unit of voltage. NIST\'s researchers envisioned a
relatively low cost and portable Josephson Volt Standard (JVS) system
infratechnology to improve the way that the metrology community conducts
routine calibration.

By the late 1980s, NIST began to transfer its JVS technology to
sophisticated manufacturing or service production environments, such as
electronic measurement instrument manufacturers and aerospace industry
metrology laboratories. By the time this economic impact assessment was
initiated, NIST had transferred it JVS technology to more than 40
government and private sector organizations worldwide, including more
than 20 in the North America alone.

It was anticipated that the transfer of NIST's technology would result
in four types of economic impacts: calibration process savings,
in-service failure cost avoidance, product development savings, and
profits from sales of products dependent on NIST JVS system technology.
While surveys of JVS system users indicate that process and
cost-avoidance savings are significant, by far the greatest measurable
impact has been on enabling leading instrument manufacturers to come to
market sooner than their international rivals, with the most
sophisticated new measurement technology, and to profit accordingly.
This is reflected in the measures of economic impact presented in the
table below.

[]{#__RefHeading___Toc518376727 .anchor}Table 1. Estimates of Economic
Impact

![](media/image1.wmf){width="4.555555555555555in"
height="0.9861111111111112in"}

#  background

## Economic Importance of Electricity

To a large extent, electricity defines modern technology-based
civilization. For the entire 20th century, electrical power and the
devices it supports have been a driving force for the U.S. economy. The
scale of electrical production and its widespread use in the automotive,
aircraft, chemical, machine tool, and, most recently, the
telecommunication and computer industries has led economic historians to
refer to the 20th century as "the age of electricity."[^1] In just over
100 years, electricity has radically transformed and expanded our energy
use.

Electricity is clean, flexible, controllable, safe, effortless, and
available instantly. In homes, it runs everything from toothbrushes and
televisions to heating and cooling systems. Outdoors, electricity guides
traffic, aircraft, and ships, and lights up the night. In business and
industry, electricity enables virtually instantaneous global
communication and powers diverse devices that include trains, auto plant
assembly lines, restaurant refrigerators, and automatic pin-setting
machines at the local bowling alley.[^2]

The penetration of electricity into our economy and way of life is
reflected in the nearly unbroken 50-year pattern of increasing electric
power sales.[^3] From 1949 to 1997, while the population of the United
States grew by 79 percent, the total amount of electricity sold grew by
more than 1,100 percent. Per-capita average consumption of electricity
was almost seven times higher in 1997 than in 1949.

## Voltage

The measurement of electrical parameters is fundamental to the producers
of electrical power as well as to the designers, producers and users of
devices that employ electricity. All electrical systems are designed to
produce information or do work. The services they provide and the proper
functioning of their devices require accurate measurement of voltage
(V), current (I), and resistance (R). Ohm's Law (V=IR) describes the
relationship among them.

Also called "potential energy," "potential difference," voltage is an
electrical property that is basic to the structure of matter. Voltage in
an electrical system is analogous to water pressure in a faucet or a
hose.[^4]

Accurate measurement of voltage is extremely important in a wide range
of instrumentation. Specifically, voltage measurement is an important
parameter for the following four broad classes of instruments:

> • Voltage measuring equipment

• Process control instruments

• Electrical integrating instruments

• Analytical and scientific instruments.[^5]

## calibration

Every device that used to measure electrical energy must be calibrated
to assure its accuracy. Such calibration assures that the uncertainty in
measurement readings is within specified limits.[^6] While the influence
of metrology and calibration is pervasive, the average person knows
little about the infrastructure and practice of measurement generally,
and less still about the infrastructure and practice of electrical
measurement in particular. Thus, little public attention is paid to
these important measurement issues because they are regulated and
performed behind the scenes in accordance with laws and contracts.[^7]

Calibration is performed by, or in conjunction with, metrology
laboratories according to daily, weekly, monthly and annual routines.
The main business of a metrology laboratory is the calibration of test
equipment, as well as the development and maintenance of processes for
conveying accurate calibrations to all measurement and test equipment in
its purview. In a general sense, calibration is a set of operations
performed in accordance with specific documented procedures for
comparing measurements made by one instrument to those made by a more
accurate instrument or standard. The purpose of calibration is to detect
and report errors in the instrument tested, and to eliminate these
errors by making adjustments.

In a manufacturing or service production environment, routine tests of
production processes and products involve a wide variety of test
equipment that must be calibrated to assure the quality of these
products and processes. The costs of the facilities, equipment,
training, and operation of metrology labs are returned in:

• More reliable instruments

• Better control of manufacturing processes

• Fewer manufactured items that must be diverted for re-test or re-work

• Greater sales of products and services to customers satisfied with an
organization\'s quality practices.

Perfect products, perfect manufacturing equipment, and perfect test
equipment are not possible. What is possible, and what manufacturers
seek to achieve, are characterizations of quality, most generally in
terms of accuracy (uncertainty) and precision. The job of industrial
metrologists, and the mission of NIST in supporting the metrology
community, is to assure the best possible calibration procedures for
maintaining or improving product and service quality.[^8] Ultimately,
the struggle for product and service quality assures the competitive
position of U.S. producers in domestic and international markets. The
network of laboratories, organizations, people, and documents that
provide assurances of the quality of electrical measurement is known
collectively as the \"national measurement system for electricity.\"[^9]

## Traceability

Traceability is a property of the calibration process that allows a
quality control auditor to trace basic calibration values back to an
appropriate fundamental standard of measurement. Hence, standards
traceability is analogous to a pedigree.[^10] Ideally, this pedigree is
international. That is, ideally, a calibration value is agreed to by
international consensus so that scientific and industrial transactions
between nations can be made with confidence that the basis for
measurement is consistent.

As shown in Figure 1, the international traceability hierarchy begins
with international consensus under the Treaty of the Meter. The volt,
along with other key units of electrical measurement, is *defined* by a
consensus of the International Committee for Weights and Measures
(CIPM).[^11] The CIPM establishes, maintains, and disseminates the
International System of Units (SI) through its deliberations. The
"meter," for example, is a SI unit, as is the volt. SI *definitions* are
stated without uncertainties.[^12] To make use of these definitions,
however, requires a physical artifact or an experimental apparatus to
generate a useable *realization* of the defined unit. Such
*realizations* are generally carried out in National Metrology
Institutes, such as the National Institute of Standards and Technology
and similar agencies around the world

![](media/image2.wmf){width="6.497916666666667in" height="4.1in"}

[]{#__RefHeading___Toc518376510 .anchor}Figure 1. The International
Traceability Hierarchy[^13]

National traceability, in turn, involves a functional hierarchy of
measurement instruments or artifacts at various \"distances\" from the
primary standard of measurement. In general, accuracy and demands for
technical expertise diminish, and the number of customers served
increases, as one moves down through the measurement hierarchy.[^14]

At the top of the national traceability hierarchy is a *primary
standard*: A primary standard is defined and maintained by some
authority as the means for calibrating secondary standards. Within a
national context, NIST is the ultimate authority or \"owner\" of the
national representation of the primary voltage standard. Within a
corporate context, a central metrology laboratory typically owns the
primary standard (a *secondary standard* from a national perspective),
which is often referred to as a \"golden standard\" for internal
measurement purposes.[^15]

In order to transfer the accuracy base of a national primary standard to
industrial organizations, a *transfer standard* is employed. A transfer
standard is used to compare a measurement process, system, or device at
one location or functional level with another measurement process,
system or device at another location or level. NIST utilizes transfer
standards in its Measurement Assurance Program (MAP). Under this
program, solid state voltage output devices are precisely calibrated at
NIST. These calibrated artifacts are then sent to industry where their
output voltages are measured. The measurement results and the transfer
standards are then returned to NIST and measured again for comparative
analysis.

Within a corporate setting, transfer standards, which are measured
against the corporation's golden standards, are transferred to local
(perhaps divisional) quality control organizations. These transfer
standards are then re-calibrated against the organization's golden
standard at pre-determined intervals according to an organization\'s
quality assurance procedures.

*Ratio standards* are used to obtain other values of a unit from a
traceable intrinsic or artifact standard of measurement. For example, if
the national representation of the volt is an output of 10 volts, and an
application requires the measurement of 5 volts or 50 volts, then the
standard voltage outputs must be scaled accurately. The most common
scaling technique is \"ratioing\" the proportion of one level of a
quantity to another level of the same quantity. There are no national
ratio standards.[^16]

*Working standards* are used in routine calibration and comparison
procedures in the laboratory and maintained in comparison to a golden
standard. Typically, this is a solid state dc voltage output device that
is less accurate and reliable than the golden standard to which it is
compared for calibration. Finally, *workload calibration instruments*
are calibrated routinely for use in a "production environment" (i.e.,
outside the confines of the metrology or calibration laboratory).

Establishing NIST traceability for a production measurement implies a
documentation trail leading from a workload instrument that has been
calibrated through a series of working standards and transfer standards
and ultimately to a primary standard of measurement maintained by NIST.
The pinnacle of this system is the Electricity Division of NIST\'s
national measurement laboratory in Gaithersburg, Maryland.

## Historical Role of NIST in voltage Measurement and Calibration

NIST\'s involvement with the development and maintenance of the standard
volt can be described in three eras: the Weston Standard era; the Early
JVS era; and the 10 volt JVS era. This focus of this economic impact
assessment is the last of the three eras. A brief review of the
preceding history of voltage measurement technology provides context. In
this regard, Figure 1 depicts some of the more important technical and
legal developments in the history of NIST's involvement with voltage
measurement.

![](media/image3.wmf){width="6.198611111111111in"
height="3.8222222222222224in"}

[]{#__RefHeading___Toc518376511 .anchor}Figure 2. Development of NIST
Voltage Measurement and Calibration Technology

### Weston Standard Era

NIST was established as the National Bureau of Standards (NBS) in 1901
when voltage measurement technology was undergoing a change in battery
technology---from the Clark cell to the Weston cell.[^17] In1905, the
U.S. adopted a new representation of the standard volt based on values
derived from a bank of Weston cells located at NIST. This Weston
Standard era for maintaining the national representation of the volt
lasted until 1972.

### Early JVS Era 

The Early JVS Era began with collaborative efforts by researchers at the
University of Pennsylvania and NIST to measure precisely the
relationship between voltage (V) and frequency (F) in recently
discovered superconductor devices called Josephson junctions. In 1969,
University of Pennsylvania researchers published an important paper
concerning the electrical properties of solid state, cryogenic Josephson
junctions. Their research resulted in the first high-precision
measurements of the Josephson constant (2e/h), and necessitated the
construction of special instrumentation and the initiation of a special
effort, both at NBS and the University of Pennsylvania, to verify the
accuracy of the University\'s voltage standards. With this measurement
in hand, it was recognized throughout the world that a precision
intrinsic voltage standard was possible.[^18] One of these researchers
went to NIST to pursue this possibility.[^19]

At that time, the U.S. representation of the volt was maintained by a
series of specialized batteries called Weston cells. As a result of the
research conducted in this era, NIST overcame certain inherent
difficulties in using Weston cells to maintain the value of the volt,
especially their variation with time (i.e., drift), severe dependence
upon temperature, and occasional unpredictable abrupt voltage
changes.[^20] In 1972, the U.S. adopted a representation of the volt
based on the electrical properties of a superconductor component called
a Josephson junction device. It was designed and implemented by
metrologists at NIST.

At the international level, the consistency of U.S. voltage standards
with those of other countries continued to require the inter-comparison
of Weston cells. These were sent, every three years, to the Bureau
International des poids et mesures (BIPM) in Paris, France.[^21]
However, the uncertainties attributed to such cell transfers were an
order of magnitude worse than those attained when standard cells were
disciplined by Josephson arrays. Thus, international agreement on the
value of the volt could be improved by an order of magnitude by
developing a JVS standard that could be transported for intercomparison
with JVS standards sent from other countries. Such a JVS would similarly
improve agreement between NBS-maintained primary standards and primary
standards maintained at other domestic metrology laboratories.

By the mid-1980s, the national standards laboratories of most major
industrialized countries used the Josephson effect to define their unit
of voltage and maintain it constant in time.[^22]^,^ [^23]

### 10 Volt Josephson Standard Era

Ten years of NIST research culminated in 1987 with the implementation of
a new one- volt Josephson array system to maintain the U.S. legal
volt.[^24] Since 1987, NIST had supported U.S. industry\'s transition to
a new internationally agreed upon value for the volt, and continued to
develop its voltage calibration technology and transfer it to industry.

Meanwhile, NIST\'s Josephson Volt standard researchers envisioned a
relatively low cost and portable technology to improve the way that the
metrology community conducts routine calibration.[^25] This vision
resulted in continued NIST research that came to fruition in the
following results:

• Development and implementation of a 10 volt Josephson array system at
NIST, which culminated in 1990[^26]

• NIST\'s effort to transfer 10 volt Josephson array system technology
to industry, beginning in the late 1980s and continuing today.

NIST is now in the third era of developing and maintaining the volt, the
\"Josephson 10 Volt Standard Era.\" This era began with NIST\'s decision
to maintain the standard value of the volt via the 10 volt Josephson
array.[^27] which displaced the one volt Josephson system technology as
the national standard. Since then, NIST has provided a steady stream of
technological and organizational improvements leading to:

• Increased electrical measurement accuracy

• Reduced calibration cost throughout the national measurement system
for electricity

• Diffusion of advanced measurement technology to sophisticated
government and industrial users, which has enabled the development and
sale of electrical measurement instrumentation worldwide.

For reasons that will be explained in the following chapter, NIST's
efforts to transfer its 10 volt JVS technology to government and
industrial users will be the main focus of this economic impact
analysis.

#  economic analysis framework

NIST's role in the development and transfer of Josephson array
technology and NIST's support to industry in providing both technical
guidance and calibration services was discussed in Chapter 1. Chapter 2
establishes the framework for analyzing the economic impact of NIST's
contributions.

## 2.1 NIST Outputs and their Economic Implications {#nist-outputs-and-their-economic-implications .unnumbered}

The historical overview in Section 1.5 shows that many outputs have been
generated from NIST\'s Josephson Volt Standard program over a long
period of time. The focus of this impact assessment is confined to just
one facet of NIST's overall program. Our focus is confined to NIST
efforts to transfer its 10 volt JVS system technology to metrology
laboratories in the private and public sector. NIST expenditures that
occurred prior to the development of the 10 volt JVS system will be
considered sunk costs.[^28]

Before describing NIST's efforts to develop and transfer its 10 volt JVS
technology, it may be useful to described some NIST activities that are
related to the 10 volt JVS technology but are not the focus of this
economic analysis.

### Primary Calibration Services & Inter-laboratory Comparisons

NIST\'s Gaithersburg location provides primary calibration services to
about 50 customer organizations with most demanding requirements for
accuracy. Many of these organizations, in turn, provide calibration
services on a vendor basis. The availability of the 10 volt and one volt
standards, which are typical voltage levels used throughout industry,
reduce measurement errors that would otherwise occur in the process of
scaling up voltage measurement from millivolt output levels.

NIST's calibration laboratory is a co-developer as well as a user of the
10 volt JVS technology. However, the calibration laboratory does not use
its 10 volt JVS system for routine voltage maintenance.[^29] (See
Appendix A.) Still, from 1988 to 1991, NIST's calibration laboratory
incorporated the 10 volt JVS into its own operation in preparation for
inter-laboratory comparisons (ILCs) that would be important to the
acceptance and traceability of the JVS by other government and industry
laboratories.

The ILCs were launched to assure that the increasing number of volt
representations were performing consistently. ILCs provide participants
with an increased degree of confidence that these complex systems are
behaving properly and that they are traceable to NIST\'s representation.
ILCs have been very successful in confirming that the accuracy of the
transferred "primary" Josephson volt system standard is being
maintained.[^30]

### Transfer of JVS System Technology 

Beginning in the late 1980s, NIST began to transfer its one-volt and 10
volt Josephson array technology to sophisticated industry and government
users. These users, with extensive consulting support from NIST,
integrated NIST-produced arrays and NIST-developed software, with other
equipment into Josephson volt systems. Some users acquired both the
one-volt Josephson array technology and the 10 volt technology. The 10
volt technology was ultimately more useful to industry because it could
be applied to more generally required measurements, such as calibrating
solid state reference standards at multiple output levels and
calibrating voltage measurement instruments over a wide range of
voltages.

Recall from the discussion of the traceability hierarchy in Section 1.4
that the nation's "primary" standard is, by traditional definition,
maintained by NIST. With transfer of JVS technology to corporate
metrology labs, these organizations had direct access to, effectively,
primary standards. According to an industry "rule of thumb," shortening
the calibration chain should have a significant effect on improving
product and process accuracy.[^31] These systems were also acquired to
support develop of new instruments.

U.S. Government metrology organizations were among the first to acquire
JVS technology, and the first private sector firms to acquire NIST\'s
technology were Lockheed (Missiles and Space Division), Hewlett-Packard,
and Fluke. By 1995 Hypres Inc., Lockheed Martin (Astronautics Division),
and Keithley Instruments had acquired NIST\'s JVS technology and
participated in the national ILCs.

NIST transferred the technology for an integrated Josephson voltage
system to Hypres Inc. in 1992-93.[^32] In 1994 Hypres began to market 10
volt Josephson array chip technology, and in 1996 Josephson array system
technology became available commercially.[^33] Hypres has sold five such
systems, including one to Wiley Laboratories and one to the Boeing
Company. Today, at least 16 Josephson array systems are in operation in
the United States:

• Six at NIST[^34]

• Nine in other U.S. government laboratories (DoE National Laboratories
(2), U.S. Air Force Primary Standards Lab, NASA (3), U.S. Army, Naval
Aviation Depot, Mid-Atlantic Regional Calibration Center)

• Seven in commercial standards laboratories (Boeing, Fluke, Agilent
(formerly Hewlett-Packard), Hypres, Keithley, and Lockheed Corp. (2)).
[^35]

## Affected Organizations

### Government & Industry Metrology Laboratories 

The organizations to which 10 volt JVS systems have been transferred are
typically the metrology laboratories of large producers or users of
sophisticated electronic equipment. In the case of government-owned JVS
systems, organizations like the U.S. Army's Redstone Arsenal, or the
Department of Energy's weapons development laboratories, represent the
capstone of voltage standard traceability across large organizations
with complex electronic maintenance and quality control systems. In
addition to the needs of their own organizations, the Army's Redstone
Arsenal, for example, is required by foreign governments to whom it
sells sophisticated weapon systems to maintain the highest international
standards of quality control.[^36] Table 2 identifies owners of the
NIST-developed 10 volt JVS systems as of 2000.

[]{#__RefHeading___Toc518376728 .anchor}Table 2. JVS Owners

+------------------------------+---------------------------------------+
| **Commercial**               | **Government**                        |
+------------------------------+---------------------------------------+
| Agilent                      | > DoE (Sandia National Laboratory)    |
+------------------------------+---------------------------------------+
| Boeing Metrology Laboratory  | > NASA (Ames Research Center)         |
+------------------------------+---------------------------------------+
| Fluke Corp.                  | > NASA (Jet Propulsion Laboratory)    |
+------------------------------+---------------------------------------+
| Hypres Inc.                  | > NASA (Kennedy Space Center)         |
+------------------------------+---------------------------------------+
| Keithley Instruments         | > U.S. Air Force (Primary Standards   |
|                              | > Laboratory)                         |
+------------------------------+---------------------------------------+
| Lockheed Martin              | > U.S. Army (Redstone Arsenal)        |
| (Astronautics Div.)          |                                       |
+------------------------------+---------------------------------------+
| Lockheed Martin (Missiles &  | > U.S. Navy (Primary Standards        |
| Space Div.)                  | > Laboratory)                         |
+------------------------------+---------------------------------------+
| Unisys Government Systems    | > U.S. Navy (Mid-Atlantic Regional    |
|                              | > Calibration Center)                 |
+------------------------------+---------------------------------------+

Similarly, among commercial owners of 10 volt JVS systems, an
organization's central metrology laboratory has typically been
responsible for the transfer and use of the JVS. Like government owners,
commercial owners use the systems to develop new product features and to
maintain high standards of measurement quality control. The commercial
owners of 10 volt JVS systems consists of manufacturers of voltage
source and voltage measurement instruments, including the sole
commercial manufacturer of 10 volt Josephson voltage system technology,
Hypres Inc. In 1992, NIST began to transfer the technology for the 10
volt Josephson array system to Hypres, Inc., which began commercial
sales of Josephson array systems in 1996.[^37] The Hypres Josephson volt
system is pictured in Figure 3.

![](media/image4.png)

[]{#__RefHeading___Toc518376512 .anchor}Figure 3. Hypres Inc.\'s
Josephson Volt System

The supply chain for electrical measurement technology of which 10 volt
JVS users are a part is shown in Figure 4.

![](media/image5.wmf)

[]{#__RefHeading___Toc518376513 .anchor}Figure 4. Supply Chain for
Voltage Measurement Technology

In addition to Hypres Inc., the first tier of the supply chain also
includes manufacturers of what the industry refers to as voltage source
"standards." The worldwide market for all voltage output instruments is
estimated at \$60-100 million annually, and has been dominated by just
three firms: Fluke Corporation, Wavetek Corporation, and Guildline
Instruments.[^38] These companies manufacture high-accuracy solid state
voltage sources that are used as "golden" and transfer standards by
electronic test and measurement equipment manufacturers. Fluke and
Wavetek are also the principle manufacturers of multifunction
calibrators.

These source and calibrator instruments are utilized for production and
quality control within the first tier of the supply chain. They are also
utilized widely by calibration service providers in the second tier of
the supply chain, as well as in the manufacture and quality control
processes of third-tier voltage measurement manufacturers.

The second tier in the supply chain is comprised of about 50
organizations that provide high-accuracy voltage calibration services
commercially.[^39] The annual value of all voltage calibration services
(not just the highest accuracy services) may be as high as \$2 billion
worldwide. Domestically, the annual value of these services is estimated
at \$600 million.[^40] Presently, it is unclear what fraction of these
markets requires calibration services with accuracies at the level
provided by NIST\'s Josephson volt system technology.[^41] The voltage
source manufacturers (the first-tier of the supply chain) provide a
significant share of these services through networks of service centers
that each maintains, thus showing a degree of\
vertical integration. Additionally, many of the large aerospace and
defense contractors have established large, well-equipped, and
well-staffed "primary" standards laboratories. Most of these sell
services to customers outside the parent company.[^42]

At the third level of the supply chain are the producers of precision
voltage measuring instruments that are often used as transfer standards,
working standards, and workload instruments. Such equipment measures the
parameters of an incoming voltage signal. In particular, digital
voltmeters are dependent on high-accuracy voltage calibration.

The world market for digital voltmeters is estimated at \~\$400 million.
Only a small fraction of these instruments require the high-accuracy
calibration technology that derives from NIST.[^43] Market leaders for
voltage measurement devices include Agilent (Hewlett-Packard), Keithley,
Fluke, Wavetek, Tektronix, and LeCroy. Table 3 provides estimates of the
distribution of these voltage measurement instrument sales across broad
user sectors.

[]{#__RefHeading___Toc518376729 .anchor}Table 3. User Market Shares for
Voltage Measurement Instruments[^44]

  ------------------------------------------ ----------------------------
  **Using Sector**                           **Percent Voltmeter Sales**

  Communications                             24

  Industrial Electronics                     20

  Military & Aerospace                       12

  Computer & Business                        8

  Transportation                             8

  Consumer Electronics                       8

  Semiconductor Mfg.                         4

  Medical & Pharmaceutical                   2

  Other (e.g., utility companies)            15
  ------------------------------------------ ----------------------------

The fourth and final level of the supply chain includes the users of
equipment that require voltage measurement as part of normal operations.
Among the most sophisticated users of voltage measurement instruments
are aerospace companies and defense contractors. As explained above,
government organizations are also users of sophisticated voltage
measurement equipment. As depicted in Figure 4, above, within large
manufacturing and system maintenance organizations, there are likely to
be several "consumers" of high-accuracy voltage metrology: the central
metrology laboratory; local calibration laboratories; equipment
maintenance organizations; and local production organizations
responsible for quality control.

### Industry Conduct

The domestic industrial suppliers of electronic test and measurement
instruments in all levels of the supply chain are strongly oriented
toward international markets. In 1999, the industry sectors to which
these firms belong are expected to post a \$3 billion trade
surplus.[^45] According to the Security and Exchange Commission (SEC)
filings of leading instrument\
manufacturers, a significant share of annual revenue is generated from
exports. The importance of the export market is reflected in the
international marketing alliances that leading competitors have made
over the past decade.

In addition to their international trade motivations, voltage instrument
manufacturers' market strategies are driven by the following trends:

• Growing device complexity and electronic content in a broad spectrum
of products and services

• Increasing reliance on mission critical electronic systems

• Decentralization of electronic systems

• Increasing need for companies to improve quality, document compliance
with regulatory or industrial standards, and maintain a safe working
environment, as required, for example, in ISO 9000

• Movement of quality control techniques from off-line sampling to
in-line control

• Minimization of development time

• Pursuit of cost reductions throughout the product design process.[^46]

These trends have guided the product/service development and marketing
strategies of leading firms.

NIST\'s strategy in developing and transferring its JVS technology
appears highly complementary to these industry trends. Clearly, the
major focus of NIST\'s program, in both its system development and
calibration services thrusts, has been to support the highest worldwide
standards of accuracy. NIST's strategy of developing portable and stable
JVS systems, to assure easy access to the highest accuracy base, appears
consistent with both the increasing electronic content of manufactured
systems and the decentralization of electrical systems.[^47] In
addition, instrument manufacturers report that NIST\'s JVS technology
has contributed significantly to the timely development of high-accuracy
voltage measurement technology.

## Market Barriers and Frictions

From an economic perspective, several factors have contributed to
underinvestment by the private sector in the electronic metrology
technology discussed here. Such underinvestment is caused by what
economists refer to as market barriers and frictions. These factors, in
turn, can lead to market failures, the principal economic rationale for
public investment in technology infrastructure.[^48]

NIST has long has a public mandate to establish standards for electrical
measurements. From an economic perspective, NIST serves this function
because of the high public good content of the underlying
infratechnology.[^49] One of the chief requirements of effective
standards is the thorough characterization of the underlying artifact,
process, or method and the broadest possible diffusion of this
information. The more freely these details are shared, the more
effective the standards employing the infratechnology. Because of their
needs to appropriate the fruits of their investments, private sector
firms typically have few incentives to provide free access to their
technology, especially when the cost of establishing the capability are
high. Hence, public sector organizations are charged with the
responsibility for maintaining standards of electrical measurement.

A second, related, reason for the primacy of public investment in basic
voltage metrology is the nature of the infratechnology in question.
According to Tassey, "infratechnologies" not only have common use
characteristics (including their use as standards), but they often
derive from a different science and generic technology base than the
core technology being developed by internally funded industrial
R&D.[^50] This was almost certainly the case with the Josephson volt
standard. The research that led to implementation of the Josephson
effect as the basis for the legal representation of the volt was very
basic and exploratory in nature. The technical risks involved in these
undertakings undoubtedly resulted in formidable barriers to private
sector investment.[^51]

Market frictions are said to exist when buyers and sellers of products
experience difficulties in assessing the quality or compatibility of
products. To mitigate these frictions, market participants incur what
economists refer to as "transaction costs:" the cost of finding parties
with whom to trade, the costs of writing contracts and policing
agreements, and the cost of bargaining. [^52] The maintenance of the
U.S. representation of the volt dramatically reduces transaction costs
that would otherwise be involved in the buying and selling of
sophisticated electronic goods and services. While this is generally
true of NIST's involvement in the traceability process, it is
exemplified in the case of voltage standards by the government's role as
a buyer and regulator of products and services whose quality could have
important public consequences. For example, the government is the buyer
and seller of sophisticated military equipment and demands that it be
maintained to the highest national standards. This functionality, in
turn, depends on the maintenance of *traceable* performance by
technologically sophisticated aerospace contractors and government
metrology laboratories.

For consumers and producers of voltage source and measurement
instruments, as well as consumers and vendors of high-accuracy
calibration services, the availability of high-quality, independent,
calibration capability has certainly reduced the transaction costs that
would otherwise have slowed the pace of market activity. According to
manufacturers of both voltage sources and voltage measurement
instruments, NIST's capability has been critical to\
manufacturers in testing the stability of new instrument designs and in
maintaining production quality control.[^53]

Finally, early in the history of the Josephson volt standard program,
NIST became a source of highly specialized know-how in the relatively
new field of Josephson junction applications. NIST's expertise
concerning metrological applications of Josephson junction technology
enabled dissemination efficiencies for public technology goods compared
with distributed private sector investment. This was not a permanent
government role. As market acceptance expanded, the private sector was
capable of taking over NIST's technology diffusion function. NIST has
actively transferred its system infratechnology to Hypres Inc. over the
past decade.[^54]

## Assessment Framework and Approach

### Hypothesized Outcomes

Table 4 summarizes our hypotheses about the nature of the economic
barriers that have been at work in the market for the most sophisticated
voltage output and voltage measurement products and services. Table 4
also identifies the beneficiaries of NIST's technology, the benefits
expected to be realized by users, and the comparison scenario against
which economic benefits are to be measured. From an economic
perspective, NIST's 10 volt JVS transfer program was established to
mitigate these barriers and compensate for the under-investments in this
socially valuable technology. The conceptualization of the economic
benefits of NIST's investments are derived from a concrete understanding
of how industry would have behaved, and how the products and services of
industry would have performed, in the absence of NIST's efforts.

[]{#__RefHeading___Toc518376730 .anchor}Table 4. Working Hypotheses:
Barriers, Outputs, and Benefits

+----------+----------+-----------+---------+-------------+-----------+
| **Market | *        | **Hyp     | **B     | **Benefit   | **C       |
| Ba       | *Related | othesized | enefici | Measures**  | omparison |
| rriers** | NIST     | O         | aries** |             | S         |
|          | O        | utcomes** |         |             | cenario** |
|          | utputs** |           |         |             |           |
+----------+----------+-----------+---------+-------------+-----------+
| *        | 10V JVS  | Enabler   | JVS     | Profit      | Adopting  |
| Infratec | te       | of new    | system  | margins on  | t         |
| hnology* | chnology | me        | owners  | sales of    | echnology |
|          |          | asurement |         | inst        | through   |
| *Conce   | T        | i         |         | rumentation | in-house  |
| ntration | echnical | nstrument |         | that would  | efforts   |
| of       | e        | designs   |         | have been   | or        |
| spe      | xpertise | (esp.     |         | delayed     | through   |
| cialized |          | linearity |         |             | German    |
| know-how |          | of ADCs   |         | Product     | PTB       |
| at NIST* |          | for       |         | development |           |
|          |          | "         |         | cost        |           |
|          |          | high-end" |         | savings     |           |
|          |          | digital   |         |             |           |
|          |          | mul       |         | Product     |           |
|          |          | ti-meters |         | tim         |           |
|          |          | (DMMs)    |         | e-to-market |           |
|          |          | and       |         | savings     |           |
|          |          | multif    |         |             |           |
|          |          | unctional |         | Total       |           |
|          |          | ca        |         | m           |           |
|          |          | librators |         | etrology/QC |           |
|          |          | (MFCs))   |         | budgets     |           |
|          |          |           |         |             |           |
|          |          | Met       |         | Scrape &    |           |
|          |          | rology/QC |         | re-work     |           |
|          |          | process   |         | cost        |           |
|          |          | eff       |         | savings     |           |
|          |          | iciencies |         |             |           |
|          |          |           |         |             |           |
|          |          | Frequency |         |             |           |
|          |          | of        |         |             |           |
|          |          | ca        |         |             |           |
|          |          | libration |         |             |           |
|          |          | increases |         |             |           |
+----------+----------+-----------+---------+-------------+-----------+

###  {#section-1 .unnumbered}

### Comparison Scenario

As described in Section 1.5 above, NIST was consciously engaged in a
race for the development and application of the Josephson effect to
voltage measurement problems with other national laboratories. From the
historical record it appears that the German national standards
laboratory --- Physikalisch-Technische Bundesansalt (PTB) --- was the
closest to developing an applicable 10 volt Josephson system that could
be viewed as a substitute for NIST's JVS. It is certainly conceivable
that private sector voltage instrument manufacturers or universities
might also have filled the niche had NIST not made the investments that
led to the JVS. On the basis of these observations, and interviews with
industry representatives, user benefits are estimated in comparison to a
counterfactual scenario that posits a time gap between the year in which
the users' JVS system became operational and the time substitute
technology --- developed in-house or purchased from the German PTB ---
would have been available. Survey respondents typically identified PTB
as the source of alternative technology, if it had not been available
from NIST. PTB's 10 volt Josephson technology was first sold in 1996.

### Impact Estimation Timeframe (1987-2000)

The timeframe for assessing the costs and benefits of NIST's 10 volt JVS
technology transfer program begins with the development and initial
fabrication of a 10 volt Josephson arrary, in 1987, and ends in the year
of the assessment survey, 2000. NIST's program costs, user
organizations' "pull costs," and estimates of users' economic benefits
are available for this period based on NIST's records and the results of
a survey of 10 volt JVS system owners designed and implemented as part
of this impact assessment.

#  Survey Findings

## Survey Population and sample

All Government- and private-sector metrology laboratories that employ a
10 volt JVS were contacted through an iterative e-mail and telephone
survey. The survey population is depicted in Table 3 of Section 2.2.1
above. A number of respondents did not provide sufficient information to
be useful in either the qualitative or quantitative aspects of the
impact assessment. Three organizations declined to participate --- two
manufacturers and two government laboratories. Survey respondents are
shown in Table 5 along with the year their 10 volt JVS systems became
operational. During the course of the survey it was discovered that
multiple NASA metrology laboratories share a "portable" JVS system. Few
of these labs provided sufficient quantitative information to
appreciably affect the economic impact estimates.

[]{#__RefHeading___Toc518376731 .anchor}Table 5. Survey Respondents and
Year of JVS Implementation

+-----------------------------------------------+----------------------+
| **JVS Owners**                                | **Year Operational** |
+-----------------------------------------------+----------------------+
| **Commercial**                                |                      |
+-----------------------------------------------+----------------------+
| > Lockheed Corp. (Missile & Space Div.)       | 1987                 |
+-----------------------------------------------+----------------------+
| > Agilent Inc. (Hewlett-Packard)              | 1988                 |
+-----------------------------------------------+----------------------+
| > Fluke Inc                                   | 1991                 |
+-----------------------------------------------+----------------------+
| > Keithley Inc.                               | 1992                 |
+-----------------------------------------------+----------------------+
| > Boeing Company                              | 2000                 |
+-----------------------------------------------+----------------------+
| **Government**                                |                      |
+-----------------------------------------------+----------------------+
| > U.S. Navy/NAVAIR                            | 1988                 |
+-----------------------------------------------+----------------------+
| > U.S. DoE                                    | 1991                 |
+-----------------------------------------------+----------------------+
| > U.S. Army/Redstone                          | 1992                 |
+-----------------------------------------------+----------------------+
| > U.S. Air Force                              | 1996                 |
+-----------------------------------------------+----------------------+
| > NASA/WSTF                                   | 1997                 |
+-----------------------------------------------+----------------------+
| > NASA/KSC                                    | 1997                 |
+-----------------------------------------------+----------------------+
| > NASA/Ames                                   | 1997                 |
+-----------------------------------------------+----------------------+
| > NASA/Stennis                                | 1998                 |
+-----------------------------------------------+----------------------+
| > NASA/JSC                                    | 1998                 |
+-----------------------------------------------+----------------------+
| > NASA/JPL                                    | 1998                 |
+-----------------------------------------------+----------------------+

## Quantitative Findings

Survey respondents provided estimates of four categories of benefits
attributable to the transfer and implementation of NIST technology:
benefits related to equipment cost savings, labor cost savings, external
failure cost savings (warranty, scrap, rework, re-test), and sales
revenues that would not have materialized had they not owned a 10 volt
JVS system.

The estimates were the product of a three-part analysis process in which
respondents were asked to assess:

-   Technical consequences and associated costs of maintaining the
    highest possible level of measurement quality in the absence of 10
    volt JVS technology

-   Annual costs to maintain such an alternative system (economically
    and technically)

-   Cost comparisons of the actual and counterfactual system
    implementations.

The difference between the total cost of maintaining their own JVS
system and the total cost of operating an alternative approach to
voltage metrology is the estimate of the annual benefit attributable to
the JVS technology from the NIST infratechnology.

A relatively important source of benefits to the commercial sector has
been the sale of sophisticated voltage measurement equipment that
industry representatives assert would not have been available to the
market were it not for the 10 volt JVS technology. Roughly speaking,
this category of benefits accounts for 78% of all benefits in the period
(1992 -- 1995) where benefits were the largest and were realized in all
four benefits categories. Industry representatives claim that high-end
voltage measurement equipment with high levels of accuracy and precision
would not have been possible were it not for the JVS technology that
allows the linearity of their measurement systems to be tested and
verified.[^55]

These estimated benefits were only attributable to NIST so long as an
alternative source of 10 volt JVS system technology was not available.
PTB's substitute technology would have been available in 1996. The
annual benefits estimated by respondents were only credited to NIST for
the years between the year in which the respondents' JVS became
operational and 1996. This empirical decision makes the resulting
benefit estimates conservative because attributing some portion of the
post-1996 benefits to NIST could have been justified. Also, where
respondents identified sales revenue that would not have been available
in the absence of a 10 volt JVS system, only the value added (estimated
profit margin) on the pre-1996 sales was claimed as part of the benefit
stream attributable to NIST's investments.

## Qualitative Findings 

There seems to be a significant difference between what might be called
a product development perspective concerning NIST's 10 volt JVS
technology and a calibration services perspective. From the product
development perspective, NIST's JVS technology transfer program was
fundamental. Manufacturers of sophisticated voltage measurement
instrumentation have benefited the most from this technology. Their
estimates dominate the benefit stream used to calculate the economic
impact of NIST's investments. According to one industry representative,
"I was not aware of an alternative to the JVS system at *any* cost
\[emphasis added\]. Without an on-site JVS system we could not have
developed the \[high-end instrument\] with the specs it has, and a
reduced spec product might have been delayed for several years." Another
manufacturer of a voltage measurement instruments remarked, "The
technical development by NIST was crucial to us having a JJ system
here."

The linearity of the A/D converters in their instruments was essential
to the development and sale of new sophisticated and profitable voltage
measurement instruments. The JVS system enabled manufactures to evaluate
their products at a level not previously possible. With the JVS in
house, error data could be provided to instrument design teams. When
respondents were pressed to imagine a process by which there instrument
development programs could employ external technical services to achieve
the same ends, the possibility was deemed unlikely. Ownership was
critical.

From a voltage calibration services perspective, on the other hand, the
10 volt JVS system is a sophisticated and technically demanding
investment. The expense and technical effort needed to operate and
maintain the system was commented on widely by survey respondents.
Several respondents asserted that, from a calibration-services point of
view, it was not worth the investment. Typically, that is, calibration
services customers were not interested in achieving uncertainty levels
made possible by the JVS system.

"Technological overkill" captures the sense expressed by many
respondents. Even producers of very sophisticated equipment argue that
the measurement quality provided by the JVS is well beyond their
calibration requirements. A few respondents cited "prestige" rather than
technical requirements as the primary cause of their organization's
investment in 10 volt JVS technology. They were unable to translate this
prestige into economic value.

One calibration laboratory manager articulated both perspectives when he
complained that he had to make the best of an expensive and difficult
device that was "inherited from the product development side of the
house."

For instrument manufacturers, the JVS technology has another important
economic implication. Manufacturers refer to the "prestige" associated
with early market presence of "high-end" products. From an economic
perspective an important facet of this prestige can be viewed as
transaction cost economies. In response to questions concerning such
costs, one respondent replied, "I don't know how much effort it takes
for the average sale, but after the reputation of the instrument was
established, I'll bet it doesn't take much to sell one."

Similarly, in response to questions concerning the value of high-end
measurement instruments to their users, a manufacturer explained that,
"customers will probably not know which of the \[high-end instrument\]
specs they rely on that, in turn, rely on the JJ and which ones do not.
And I\'m sure some customers just buy it because it is the best you can
buy, and so for performance applications it is a \"safe\" buy, without
analyzing which features they must have, which they want etc." In other
words, by buying "too much," users are paying a premium to compensate
for the lack of knowledge required to understand their technical
requirements, determine which instruments provide those requirements,
and thereby acquire the knowledge needed to procure the appropriate
technology.

#  QUANTITATIVE ANALYSIS

## Benefits

Broadly speaking, two types of benefits accrued to JVS system owners as
a result of the transfer of NIST's 10 volt JVS technology: cost
avoidance benefits and new product benefits. Cost avoidance benefits
were formulated through a comparison of actual process costs to
hypothesized process costs employing less advanced measurement
technology that would have been employed in the absence of NIST
technology.

New product benefits are derived from estimates of profit margins on
revenue from the sale of equipment whose development, according to
industry representatives, depended on NIST JVS technology. Based on
survey information, a factor of 20 percent represents a conservative
estimate of the profit margin on sales revenue estimates provided by
survey respondents.[^56]

![](media/image6.wmf){width="3.486111111111111in"
height="3.2222222222222223in"}Both types of benefits were assigned to
NIST only for the period of time in which no substitute for the NIST 10
volt JVS system was available. The time series of these combined
benefits, in nominal dollars is presented in Table 6.[^57]

[]{#__RefHeading___Toc518376732 .anchor}Table 6. JVS Owner Benefits

![](media/image7.wmf){width="2.796527777777778in"
height="2.834722222222222in"}

## NIST Expenditures & JVS Owner "Pull costs"

The cost associated with the development and transfer of the 10 volt JVS
system technology are of two types: NIST expenditure and the one-time
costs expended by JVS system owners to acquire the technology from NIST.
NIST expenditures were estimated for the two NIST organizations involved
in the development and implementation of the 10 volt JVS: NIST's
Electricity Division in Gaithersburg Maryland, and NIST's
Electromagnetic Technology Division in Boulder, Colorado. These cost
estimates consist of total compensation paid to NIST employees for
efforts that contributed directly to the development, fabrication,
integration, and testing of the 10 JVS system and its components.

JVS owners were asked to estimate the initial one-time costs over and
above the cost of the JVS technology itself. These "pull costs" are
typically expended for technical consultants, material, or research
required to make the technology operational in the owner's particular
setting. The time series of NIST expenditures and user pull costs, in
nominal dollars, is presented in Table 7.[^58]

[]{#__RefHeading___Toc518376733 .anchor}Table 7. NIST Expenditures &
Owner "Pull Costs" (Nominal \$)

![](media/image8.wmf){width="6.097222222222222in"
height="3.0416666666666665in"}

## Measures of Economic Impact

Table 8 transforms the nominal costs and benefits reported in Tables 6
and 7 into a series of constant 2000 dollars that provides the basis for
the summary economic impact estimates reported below: social rate of
return (SRR), net present value (NPV), and benefit-to-cost ratio
(B/C).[^59] (For a explanation and discussion of these metrics, see
Appendix C.)

[]{#__RefHeading___Toc518376734 .anchor}Table 8. Constant 2000 Dollar
Benefits and Costs (1987 -- 1999)^\*^

![](media/image9.wmf){width="6.097222222222222in"
height="3.0416666666666665in"}

^\*\ The\ deflator\ used\ to\ convert\ current\ to\ constant\ dollars\ is\ the\ Gross\ Domestic\ Product\ Price\ Index\ (chain\ type),\ *Economic\ Report\ of\ the\ President,\ 2001*,\ Table\ B7.^

Based on the time series presented in Table 8, estimates of the economic
impact metrics for NIST's 10 volt JVS technology program are displayed
in Table 9.

[]{#__RefHeading___Toc518376735 .anchor}Table 9. Estimates of Economic
Impact

![](media/image10.wmf){width="4.555555555555555in"
height="0.9861111111111112in"}

There is reason to believe that the metrics reported above understate
the true economic impacts of NIST's JVS program. First, the economic
impact of the JVS technology on NIST's national calibration services was
not considered within the scope of this assessment. While the two
programs are in many ways integral, understanding the structure of the
market for calibration services --- a necessary first step --- would
have involved research that was beyond the financial scope of the
project. In addition, the 10 volt JVS system employed by NIST is used to
check NIST calibration instruments. It is not used directly to calibrate
the instruments of NIST's customers. Therefore, conceptualizing the
benefits of the 10 volt JVS system in a manner that would be sensible to
NIST's calibration services customers proved impractical. As a results,
only the impact of transferred 10 volt JVS hardware and software was
assessed.

Second, even within the context of the rather straightforward assessment
of transferred physical assets, many respondents were unable or
unwilling to respond to the counterfactual experiment posed in the
survey. It is typical to receive readily available technical information
but uncommon for respondents to "think through" the less obvious issues
of economic impact. That several NIST customers expended the energy to
do so is a credit to them and to the relationships with industry that
NIST has cultivated.

Third, the sales of high-end equipment voltage measurement equipment,
that figure so prominently in this quantitative analysis of economic
impact, have a prestige effect that has an impact on the sales of
products other than those directly related to the JVS technology. During
the early years of these sales, the United States was the unrivaled
source of this technology. Interviews indicate that considerable
spillover prestige (i.e., good will) probably accrued to US companies
offering high-end instruments to the market. Several electrical
parameters derive from the volt: electrical resistance, electric
capacitance, and conductance. To the extent that the instruments used to
measure these parameters are different than those used to measure
voltage, it is likely that some fraction of their worldwide market
success is attributable to JVS technology.

Finally, industry representatives believe that "the real impact" of JVS
technology is at the next tier in the supply chain --- the application
of JVS-enabled voltage measurement technology (DMMs and MFCs) in a
production environment--- where they should have a substantial impact on
scrap, rework, and re-test. The ability to introduce sophisticated
measurement instruments to the shop floor, in the late 1980s and
throughout the 1990s, depended on the ability to calibrate and verify
their performance. While industry representatives agree that these
benefits are likely, they were unable to identify points of contact that
could respond knowledgeably on economic impact issues.

# Appendix A *---* Voltage Calibration at NIST {#appendix-a-voltage-calibration-at-nist .unnumbered}

In 1972, NIST implemented the initial Josephson volt system in place of
Weston battery cells for maintaining the national representation of the
volt. Yet, Weston cells are still used at NIST and in many calibration
laboratories because they exhibit good voltage stability and a long,
useful life. They require special environmental control
(temperature-regulated oil or air bath) and can be unstable for months
following unanticipated changes in their environment. In addition, even
under controlled conditions, their voltage output values drift over
time. This drift is one reason that the Weston cell was officially
replaced by the NIST-developed Josephson system. According to one
source, Weston cells are becoming difficult to obtain and are being
phased out and replaced by solid state voltage output devices.[^60]

The electronics calibration laboratory at NIST is similar to the
calibration laboratory of any sophisticated producer or user of
electrical test equipment.[^61] The Weston battery cell, its electronic
counterpart (solid state voltage references), and the NIST-developed
Josephson volt system continue to be used in an integrated system of
voltage references at NIST as well as in industry standards laboratories
across the nation.

NIST maintains four tiers of voltage standards:

\(1\) 10 volt JVS system & one volt JVS system

\(2\) NIST "Primary Standards" (Weston cell banks)

\(3\) Working Cell Groups (Weston cell banks)

\(4\) Check Standards (solid state references and saturated cells)

NIST\'s calibration laboratory maintains many banks of Weston cells that
are used for different specific functions depending on their historical
performance characteristics (e.g., stability and accuracy). The two best
performing banks are designated \"NIST Primary Standards,\" which are
calibrated against the one volt Josephson system on a monthly basis. The
1 volt Josephson system is also compared with the Josephson 10 volt
system monthly to assure the long term and short term consistency of the
two systems.

All the Weston cells that are not designated as \"primary standards\"
are used as \"Working Cell Groups\" (WCGs) and "Check Standard Cell
Groups" (CSCGs). All of the NIST solid state standards are solid state
check standards (SSCSs). The WCGs are the standards used as the
reference voltages in the three measurement systems. The measurement
systems' check standards are CSCGs and SSCSs and replacement WCGs are
selected from the SSCSs. The three WCGs are calibrated against the NIST
Primary Standard cells on a daily basis. All check standards and
customer (outside) standards are calibrated against the WCGs on a daily
basis. Finally, one solid state \"check standard\" is calibrated against
the 10 volt Josephson system on a monthly basis.

Volt Calibration is managed by three measurement systems: System 1,
System 2, and System 3. System 1 handles the calibration of the three
WCGs and the standard cell groups that are used in NIST's Measurement
Assurance Program (MAP). NIST\'s Measurement Assurance Program (MAP)
ships standard cell groups with known performance attributes from NIST
to industrial and other government sites for in situ assessment of
outside calibration laboratory equipment.

System 2 is described as \"the workhorse\" of the NIST calibration
laboratory. It performs the normal workload of calibrating solid state
and saturated cell reference standards from other NIST laboratories and
outside organizations. System 3, in turn, is very similar to System 1.
It provides the back-up capability necessary for routine maintenance and
also supports periodic surges in the calibration workload.

# APPENDIX b --- Electrical Metrology in Practice {#appendix-b-electrical-metrology-in-practice .unnumbered}

**The Voltage Calibration Process**

The calibration function entails three major tasks:

• Setup activities, which involves identifying instruments to be
calibrated, determining calibration intervals, setting quality levels,
documenting the location and use of instruments, establishing the kind
of calibration test to be preformed and the place of calibration
(on-site or in lab), and determining the skill level required to make
various calibrations

• Daily operations, including transporting instruments, performing
tests, taking care of and repairing test instruments, making calibration
adjustments, maintaining measurement standards, and returning calibrated
instruments.

• Workload management, involving activities undertaken to improve the
calibration process.[^62]

The quality and cost of calibration is a function of the assignment and
adjustment of calibration intervals and policies under the circumstances
that measurements are made.[^63]

Electronic measuring devices are generally divided into "source"
instruments and "measure" instruments. Source instruments provide a
means of emitting an electrical signal with well-defined
characteristics. Calibrating a source instrument requires the use of an
equivalent measuring instrument of sufficient accuracy so that the total
uncertainty is within the instrument\'s specification.

Similarly, measure instruments, such as a digital multimeter (DMM), are
calibrated by comparison to a previously calibrated source instrument.
Thus, to calibrate the voltage scales of a DMM, a DC voltage source of
known output is needed. In either case, to complete the calibration
process, you need a means of adjusting the instrument under calibration
readings so that they match the values of the calibration standard. The
crudest way to make this adjustment is with a calibration chart, in
which measured values are plotted on the ordinate (horizontal) axis and
the corresponding \"actual\" values are plotted on the abscissa
(vertical) axis. When making subsequent readings using the measuring
instrument, the user finds the reported value read from the instrument
on the ordinate, and follows it up vertically until the calibration
curve is reached. The user then moves horizontally to the abscissa to
read off the measured value.

Most analog electronic instruments are calibrated by adjusting the gains
and offsets of the various amplifiers in the instrument to bring its
readings in line with the \"actual\" values. Depending on the particular
instrument being calibrated and the uncertainty level to which it needs
to be held, this is a more-or-less tedious manual operation.

The most sophisticated digital instruments have internal circuitry that
applies calibration corrections before reporting readings. The
measurement process is exactly analogous to using a calibration chart,
except that the digital instrument performs this automatically. Thus,
the calculation and application of calibration corrections is entirely
invisible to the user.

The final step in calibrating an instrument is to prepare a document of
relevant information about the calibration. This documentation may be as
simple as affixing a calibration sticker that reports the date on which
the calibration was done. More typically, additional information goes
into the calibration report, such as the uncertainty level and when the
next calibration is due. Calibration reports can become quite
complicated, sometimes giving all of the measurements used and the
results, calculations of secular drifts, etc. The amount of information
required in the calibration report depends on the users\' requirements.

To calibrate an electronic instrument, one must connect its terminals to
those of the standard, take several readings at different levels,
calculate the appropriate corrections, download those corrections into
the instrument\'s memory (assuming the instrument has these capabilities
built in) and create the calibration report.

**Voltage Measurement Instrumentation: The \"Production\" Environment**

The quality range of available measurement instruments blurs the line
between the laboratory and production environments. High-end digital
multimeters (DMMs), for example, can be as high in resolution and
accuracy as the multifunction calibrators (MFCs) designed to calibrate
them. DMMs typically measure a wide range of electrical stimulus,
including direct voltage, direct current, alternating voltage,
alternating current, and resistance.

There are three classes of DMMs: laboratory, bench, and hand-held.
Laboratory DMMs typically provide the highest level of accuracy and
resolution, approaching the accuracy of the MFC used to calibrate them.
They display up to 8 1/2 digits in their readouts and are frequently
calibrated automatically. Bench DMMs are very similar to the previous
class but tend to have less accuracy and resolution, typically 4 1/2 or
5 1/2 digits. In many local calibration labs, the bulk of the workload
is composed of bench DMMs. Handheld DMMs are the most commonly used and
typically offer a wider set of measurement functions than the bench or
laboratory versions. Their accuracy and resolution is typically 3 1/2 or
4 1/2 digits. Handheld DMMs tend to be used in a wide range of
applications, from sophisticated electronic testing to automotive
maintenance. Handheld DMMs are even used by hobbyists.

Electrical instruments and meters of all types are calibrated by
adjusting their circuitry so that they report the correct value when
measuring an electrical property. A DMM, for example, is comprised of a
measurement section and a control section. The measurement section (made
up of analog conditioning circuits and an analog-to-digital converter
(ADC)) requires calibration to assure stability in its sources of
variation (gain, offset, and linearity errors). Every DMM also contains
a solid state dc voltage reference for the ADC. This internal reference
is the limiting factor for the accuracy of all voltage and current
measurements performed by the DMM. It requires calibration.[^64]

# Appendix C --- Economic Impact Metrics {#appendix-c-economic-impact-metrics .unnumbered}

Two evaluation metrics used customarily by NIST\'s Program Office are
the internal (social) rate of return and the ratio of benefits-to-costs.
A third metric, net present value, is readily derived from the
information developed for the benefit-to-cost ratio.

The metrics in this report are calculated from a time series of costs
and benefits in constant dollars. Therefore, \"real\" rates of return
are presented based on this time series of constant dollars. In
contrast, several previous economic impact assessments conducted by TASC
for NIST\'s Program Office presented \"nominal\" rates of return that
were based on time series of current dollars (the dollars of the year in
which the benefits were realized or the costs were incurred).

**Internal Rate of Return (IRR)**[^65]

The IRR is the value of the discount rate, i, that equates the net
present value (NPV) of a stream of net benefits associated with a
research project to zero. The time series runs from the beginning of the
research project, t = 0, to a milestone terminal point, t = n. Net
benefits refer to total benefits (B) less total costs (C) in each time
period. Mathematically,

\(1\) NPV = \[(B~0~ - C~0~) / (1 + i)^0^\] + ... + \[(B~n~ - C~n~) /
(1 + i)^n^\] = 0

where (B~t~ - C~t~) represents the net benefits associated with the
project in year t, and n represents the number of time periods (years in
most cases) being considered in the evaluation. For unique solutions of
i, from equation (1)**,** the IRR can be compared to a value, r, that
represents the opportunity cost of funds invested by the
technology-based public institution. Thus, if the opportunity cost of
funds is less than the internal rate of return, the project was
worthwhile from an *ex post* social perspective.

**Benefit-to-Cost Ratio**

The ratio of benefits-to-costs is precisely that, the ratio of the
present value of all measured benefits to the present value of all
costs. Both benefits and costs are referenced to the initial time
period, t = 0, as:

B / C = \[∑~t=0\ to\ t=n~ B~t~ / (1 + r)^t^\] / \[∑~t=0\ to\ t=n~ C~t~ /
(1 + r)^t^\]

A benefit-to-cost ratio of 1 implies a break-even project. Any project
with B / C \> 1 is a relatively successful project.

Fundamental to implementing the ratio of benefits-to-costs is a value
for the discount rate, r. While the discount rate representing the
opportunity cost for public funds could differ across a portfolio of
public investments, the calculated metrics in this report follow the
guidelines set forth by the Office of Management and Budget:

Constant-dollar benefit-cost analyses of proposed investments and
regulations should report net present value and other outcomes
determined using a real discount rate of 7 percent.[^66]

Net Present Value (NPV)

The information developed to determine the benefit-to-cost ratio can be
used to determine net present value as:

> NPV = B - C

Note that NPV allows in principle one means of prioritizing among
several projects *ex post*.

[^1]: S. Ratner, J. Saltow, and R. Syllva, *The Evolution of the
    American Economy*, Basic Books, 1979.

[^2]: Energy in the United States: A Brief History and Current Trends,
    US Energy Information Administrations,
    http://www.eia.doe.gov/emeu/aer/eh/eh.html#TE, May 1999.

[^3]: Two years---1974 and 1982---are the exceptions to the long-term
    trend. *Energy in the United States: A Brief History and Current
    Trends*, U.S. Energy Information Administration, April 1999.

[^4]: W. E. Hafford and E. W. McWhorter, *Understanding Solid State
    Electronics,* Howard W. Sams & Co., 1984.

[^5]: These correspond with the following Standard Industrial Product
    Codes: 38252, 38230, 38251, and 38260.

[^6]: "Accuracy" is the difference between the measurement result
    (datum) and the actual value of the physical quantity being
    measured. "Precision" is the smallest difference a measuring
    instrument can report, and is a function of the instrument used to
    make the measurement. Non-metrologists usually judge the quality of
    a measurement in terms of accuracy. Metrologists, on the other hand,
    prefer to use the term "measurement uncertainty," which has the
    advantage of being defined rigorously.

[^7]: For example, we take for granted that two clocks in different
    locations read the same. In fact, the accuracy of our watches is
    often measured against a standard source by "calling time." We
    assume that a pound of hamburger is roughly the same regardless of
    where it is purchased, and while we may be aware that grocers\'
    scales are "inspected," we take it for granted that the scale\'s
    accuracy is maintained regularly. We also assume that the
    temperature on a new oven is accurate, so that it will cook food in
    roughly the time indicated in a cookbook.

[^8]: Metrology is the science and practice of measurement, including
    the design, conduct, or analysis of a test and its results.

[^9]: N. Belecki, et al, *The National Measurement System for
    Electricity*, (NBSIR 75-935), National Bureau of Standards,
    September 1978

[^10]: The *International Vocabulary of Basic and General Terms in
    Metrology* (1993) defines traceability as, "The property of the
    result of a measurement or a value of a standard whereby it can be
    related to stated references, usually national or international
    standards, through an unbroken chain of comparisons, all having
    stated uncertainties." Quoted in *NIST Calibration Services Users
    Guide, 1998* (SP 250), NIST, USGPO, 1998, pg. 3.

[^11]: The CIPM oversees the activities required under the Treaty of the
    Meter, to which most technology advanced countries are signatories.

[^12]: For example, the base unit of electricity, the ampere, is
    *defined* as follows: "that constant current which, if maintained in
    two straight parallel conductors of negligible cross-section, and
    placed 1 meter apart in a vacuum, would produce a force equal to 2 x
    10-7 newtons per meter of length between these conductors."

[^13]: This figure is based on "Traceability Diagram for Direct
    Voltage," in, Fluke, *Calibration: Philosophy In Practice,* 1994, p.
    6-7 (hereafter, Fluke, 1994); and "Typical Corporate Support
    Structure", in N. Belecki, et al, *The National Measurement System
    for Electricity*, (NBSIR 75-935), National Bureau of Standards,
    September 1978, p. 24.

[^14]: Fluke, 1994, p. 4-7.

[^15]: As explained further in section 2.1.3, the situation in the case
    of voltage standards is somewhat more complex. Due to technology
    transfer efforts by NIST, several industry-level organizations own
    primary standards that are as accurate as the national primary
    standard.

[^16]: The instruments used to derive ratio standards in metrology labs
    are known as "dividers." Fluke, 1994, p. 9-3.

[^17]: For a detailed discussion of the technical pros and cons of these
    two battery technologies, see, W.J. Hamer, "Standard Cells: Their
    Construction, Maintenance, and Characteristics," NBS Monograph No.
    84, January 15, 1965.

[^18]: B. Field, et al, *Metrologia*, "Volt Maintenance at NBS via 2e/h:
    A New Definition of the NBS Volt," Vol. 9, pp. 155-166, 1973.

[^19]: S. Kaplan, "The Josephson Primary Voltage Standard: A New Voltage
    Calibration System With 5 ppm Uncertainty," CAL LAB, March-April,
    1995.

[^20]: B. Field, et al, "Volt Maintenance at NBS via 2e/h: A New
    Definition of the NBS Volt," *Metrologia*, Vol. 9, pp. 155-166,
    1973; and N. Belecki, et al, "Guidelines for Implementation the New
    Representation of the Volt and Ohm Effective January 1. 1990," NIST
    Technical Note 1263, June 1989.

[^21]: The BIPM carries out technical work for the CIPM depicted in the
    international segment of Figure 1.

[^22]: In 1982, the following countries utilized single junction and
    two-junction Josephson arrays to represent the volt: US, UK,
    Australia, Italy, Russia, France, West Germany, Canada, Japan. See,
    A. Barone and G. Paterno, *Physics and Application of the Josephson
    Effect*, John Wiley & Sons, 1982, pp.350-351.

[^23]: Unfortunately, three countries used values of 2e/h that differed
    from the values specified by the international standards body and,
    therefore, used by the majority of nations. This inconsistency
    resulted in national volt representations that were both larger than
    the international standard, for France and Russia, and smaller than
    the international standard for the United States.

[^24]: C. Hamilton, et al, "The NBS Array Voltage Standard," IEEE
    Transactions on Instrumentation and Measurement, Vol. IM-36, No. 2,
    June 1987. R. Steiner and R. Astalos, "Improvements for Automating
    Voltage Calibrations Using a 10-V Josephson Array," IEEE
    Transactions on Instrumentation and Measurement, Vol. 40, No. 2,
    April 1991.

[^25]: R.F. Dziuba, B. Field, and T. Finnegan, "Cryogenic Voltage
    Comparator System for 2e/h Measurements," *IEEE Transactions on
    Instrumentation and Measurement*, Vol. IM-23, No. 4, December 1974;
    and B. Field and V. Hesterman, "Laboratory Voltage Standard Based in
    2e/h," *IEEE Transactions on Instrumentation and Measurement*, Vol.
    IM-25, No. 4 December 1976.

[^26]: B. Taylor, "History of the Present Value of 2e/h Commonly Used
    for Defining National Units of Voltage and Possible Changes in
    National Units of Voltage and Resistance," *IEEE Transactions on
    Instrumentation and Measurement*, IM-36, No. 2, June 1987; and N.
    Belecki, et al, "Guidelines for Implementation the New
    Representation of the Volt and Ohm Effective January 1. 1990," NIST
    Technical Note 1263, June 1989.

[^27]: NIST maintains the representation of the SI volt through both 1
    volt and a 10 volt Josephson voltage standard systems. See Appendix
    A for further explanation.

[^28]: The investment in any technical innovation starts with a
    preexisting stock of knowledge, and the attainment of that knowledge
    is a sunk cost.

[^29]: For this reason, the benefits of the 10 volt JVS system to
    calibration service providers --- through NIST's calibration
    laboratory --- was not addressed in this impact assessment.

[^30]: NIST and the National Conference of Standards Laboratories (NCS)
    have organized 5 ILCs (in 1991, 1993, 1995, 1997, and 1999).

[^31]: According to this rule of thumb, accuracy declines by a factor of
    four each step from the primary standard. Thus, the transfer
    standard's uncertainty is four times worse than that of the primary
    standard. An instrument calibrated by reference to the transfer
    standard has sixteen times (4 x 4) the uncertainty of the primary
    standard, and so forth. While we are not asserting that the rule of
    thumb is empirically sound, it suggests that substantial benefits
    should accrue to owners of JVS technology in terms of the costs of
    maintaining a high level of accuracy within their organizations.

[^32]: Following IBM\'s decision to abandon its substantial Josephson
    junction research in the mid-1980s, Hypres Inc. was founded by a
    former IBM scientist.

[^33]: Personal communication with NIST, December 1998.

[^34]: The six systems referred to are conventional and compact 10 volt
    JVS systems. NIST also maintains two programmable one volt JVS
    systems. Personal communication with NIST, November 29, 1999.

[^35]: There are approximately as many JVS systems in operation in other
    nations.

[^36]: Many governments insist on doing business ISO 9000 registered
    suppliers. In the case of the U.S. Army, Redstone Arsenal is
    responsible for the Army-wide quality system.

[^37]: Personal communication with Dr. Yi-hua Tang (NIST), December
    1998. Actually NIST's initial technology transfer efforts began in
    late 1987 with a now-defunct company, RMC Inc.

[^38]: Wavetek Inc. merged with Fluke Corp. in 2000.

[^39]: We estimate that there are approximately 350 calibration service
    providers domestically. This estimate is derived from "Laboratories
    and Capabilities," pp. 42-81, *A Directory of Standards
    Laboratories, 1999-2000 Edition*, (National Conference of Standards
    Laboratories). NIST provides calibration services to approximately
    50 of these organizations. We assume that these 50 represent the
    majority of organizations that provide the highest accuracy
    calibration services.

[^40]: This is a single point estimate in need of refinement. The U.S.
    Census of Services does not provide sufficient detail to derive such
    an estimate on the basis of published data.

[^41]: We are currently communicating with NCSL and NIST to arrive at an
    approach to segmenting the calibration services tier of the supply
    chain. Approximately 50 of these labs rely on NIST calibration
    services. Some multiple of these is the likely "high-accuracy"
    segment that will be our focus.

[^42]: Fluke, 1994, p.6-9.

[^43]: We are currently communicating with NIST to establish a basis for
    making this determination. We believe that the solution will revolve
    around "manufacturers specified accuracies." Whether a systematic
    source of such information is available is being explored.

[^44]: These estimates were provided by Wampler & Associates, 1999.

[^45]: *U.S. Industry & Trade Outlook \'99*, McGraw-Hill, 1999, Table
    23-1, "Industrial and Analytical Instruments (SIC 382) Trends and
    Forecasts," p. 23-1, 23-4.

[^46]: These trends were identified in the SEC 10K reports of leading
    voltage source and measurement instrument manufacturers: Keithley,
    Wavetek, Hewlett-Packard, and Fluke.

[^47]: For early articulations of these goals, see R. Dziuba, B. Field,
    and T. Finnegan, "Cryogenic Voltage Comparator System for 2e/h
    Measurements," *IEEE Transactions on Instrumentation and
    Measurement*, Vol. IM-23, No. 4, December 1974; and B. Field and V.
    Hesterman, "Laboratory Voltage Standard Based in 2e/h," *IEEE
    Transactions on Instrumentation and Measurement,* Vol. IM-25, No 4
    December 1976.

[^48]: Noll, R. G., "Economic Perspectives on the Politics of
    Regulation," in *Handbook of Industrial Organization, Vol. II,* R.
    Schmalensee and R. Willig (Eds.) Elsevier 1989, pp. 1253-1287.

[^49]: G. Tassey, *The Economics of R&D Policy,* (Quorum Books) 1997, p.
    175.

[^50]: G. Tassey, "R&D Trends in the U.S. Economy: Strategies and Policy
    Implications," Planning Report 99-2, Program Office, Strategic
    Planning and Economic Analysis Group, National Institute of
    Standards & Technology, U.S. Department of Commerce, April 1999, p.
    40.

[^51]: The only alternative source of the JVS technology of which we are
    aware came from other national laboratories---particularly the
    German national laboratory, the PTB. The German PTB and NIST
    perceived themselves to be engaged in a technical competition with
    national technological prestige at stake. (Personal communication
    with C. Hamilton, January 1999) Over time, other nations' have
    implemented JVS technologies as well but none are believed to have
    gone as far as NIST in developing a practical, transportable, and
    transferable technology.

[^52]: Williamson, Oliver, *The Economic Institutions of Capitalism,*
    The Free Press, 1985, pp. 18-19.

[^53]: Personal communication with Agilent (Hewlett-Packard), March 3,
    1999; Keithley, April 2, 1999

[^54]: Actually NIST technology transfer efforts began in late 1987 with
    a now-defunct company, RMC Inc. RMC was not interested in acquiring
    Josephson array fabrication technology. The German national
    standards lab, PTB (Physikalisch-Technische Bundesansalt) pursued a
    similar technology transfer strategy with the German firm, Prema.
    PTB's 10 volt Josephson standard technology was not available for
    sale or transfer until 1996. (Personal communication with PTB, March
    12, 2001.)

[^55]: Generally speaking, "linearity" refers to a directly proportional
    (i.e., "straight line") relationship between two variables.
    Linearity error is an important concern for voltage source and
    measurement manufacturers and users. Liner instrument response is
    typically specified. In simple terms this means, for example, that
    if one doubles an instrument's input signal, the device that records
    that change of input records a doubling of the device reading.

[^56]: Interviews with industry representatives indicate that net
    profits for the kind of high-end measurement instruments discussed
    here range between 10 percent and 30 percent.

[^57]: Due to the nature of the comparison scenario, most benefits occur
    prior to 1996. One government laboratory that adopted the JVS
    technology relatively late, but would not have adopted a PTB
    solution, estimated cost avoidance benefits for the 1997-1999
    period.

[^58]: Pull costs were estimated on the basis of survey responses. Gaps
    in the time series of these costs reflect the timing of respondents'
    system implementations.

[^59]: The deflator used to convert to constant dollars is the Gross
    Domestic Product Price Index (chain type), *Economic Report of the
    President, 2001,* Table B7.

[^60]: See Fluke, 1994, pp. 7-12, 7-15.

[^61]: NIST\'s calibration lab is believed to be typical of advanced
    electrical metrology labs. (Personal communication with NIST's
    Calibration Laboratory, April, 1999.)

[^62]: Fluke, 1994, p. 19-3.

[^63]: Fluke, 1994, p. 24-3.

[^64]: Fluke, 1994, pp. 17-4 - 17-18.

[^65]: The characterization of the three metrics follows Chapter 4 of
    Albert N. Link and John T. Scott, *Public Accountability: Evaluating
    Technology-Based Institutions* (Boston: Kluwer Academic Publishers)
    1998.

[^66]: "Guidelines and Discount Rates for Benefit-Cost Analysis of
    Federal Programs," Office of Management and Budget (OMB), Circular
    No. A-94, 29 October 1992.