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21–195PS 2005

THE NATIONAL NANOTECHNOLOGY

INITIATIVE: REVIEW AND OUTLOOK

HEARING

BEFORE THE

SUBCOMMITTEE ON RESEARCH

COMMITTEE ON SCIENCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

MAY 18, 2005

Serial No. 109–15

Printed for the use of the Committee on Science

(

Available via the World Wide Web: http://www.house.gov/science

(II)

COMMITTEE ON SCIENCE

HON. SHERWOOD L. BOEHLERT, New York, Chairman

RALPH M. HALL, Texas

LAMAR S. SMITH, Texas

CURT WELDON, Pennsylvania

DANA ROHRABACHER, California

KEN CALVERT, California

ROSCOE G. BARTLETT, Maryland

VERNON J. EHLERS, Michigan

GIL GUTKNECHT, Minnesota

FRANK D. LUCAS, Oklahoma

JUDY BIGGERT, Illinois

WAYNE T. GILCHREST, Maryland

W. TODD AKIN, Missouri

TIMOTHY V. JOHNSON, Illinois

J. RANDY FORBES, Virginia

JO BONNER, Alabama

TOM FEENEY, Florida

BOB INGLIS, South Carolina

DAVE G. REICHERT, Washington

MICHAEL E. SODREL, Indiana

JOHN J.H. ‘‘JOE’’ SCHWARZ, Michigan

MICHAEL T. MCCAUL, Texas

VACANCY

VACANCY

BART GORDON, Tennessee

JERRY F. COSTELLO, Illinois

EDDIE BERNICE JOHNSON, Texas

LYNN C. WOOLSEY, California

DARLENE HOOLEY, Oregon

MARK UDALL, Colorado

DAVID WU, Oregon

MICHAEL M. HONDA, California

BRAD MILLER, North Carolina

LINCOLN DAVIS, Tennessee

RUSS CARNAHAN, Missouri

DANIEL LIPINSKI, Illinois

SHEILA JACKSON LEE, Texas

BRAD SHERMAN, California

BRIAN BAIRD, Washington

JIM MATHESON, Utah

JIM COSTA, California

AL GREEN, Texas

CHARLIE MELANCON, Louisiana

VACANCY

SUBCOMMITTEE ON RESEARCH

BOB INGLIS, South Carolina, Chairman

LAMAR S. SMITH, Texas

CURT WELDON, Pennsylvania

DANA ROHRABACHER, California

GIL GUTKNECHT, Minnesota

FRANK D. LUCAS, Oklahoma

W. TODD AKIN, Missouri

TIMOTHY V. JOHNSON, Illinois

DAVE G. REICHERT, Washington

MICHAEL E. SODREL, Indiana

MICHAEL T. MCCAUL, Texas

VACANCY

SHERWOOD L. BOEHLERT, New York

DARLENE HOOLEY, Oregon

RUSS CARNAHAN, Missouri

DANIEL LIPINSKI, Illinois

BRIAN BAIRD, Washington

CHARLIE MELANCON, Louisiana

EDDIE BERNICE JOHNSON, Texas

BRAD MILLER, North Carolina

VACANCY

VACANCY

VACANCY

BART GORDON, Tennessee

DAN BYERS Subcommittee Staff Director

JIM WILSON Democratic Professional Staff Member

ELIZABETH GROSSMAN, KARA HAAS Professional Staff Members

JAMES HAGUE Staff Assistant

(III)

C O N T E N T S

May 18, 2005

Page

Witness List ............................................................................................................. 2

Hearing Charter ...................................................................................................... 3

Opening Statements

Statement by Representative Bob Inglis, Chairman, Subcommittee on Research, Committee on Science, U.S. House of Representatives ........................ 11

Written Statement ............................................................................................ 12

Statement by Representative Darlene Hooley, Ranking Minority Member,

Subcommittee on Research, Committee on Science, U.S. House of Representatives ........................................................................................................... 12

Written Statement ............................................................................................ 13

Prepared Statement by Representative Eddie Bernice Johnson, Member, Subcommittee on Research, Committee on Science, U.S. House of Representatives ....................................................................................................................... 15

Prepared Statement by Representative Michael M. Honda, Member, Subcommittee on Research, Committee on Science, U.S. House of Representatives ....................................................................................................................... 15

Prepared Statement by Representative Russ Carnahan, Member, Subcommittee on Research, Committee on Science, U.S. House of Representatives ....................................................................................................................... 16

Witnesses:

Mr. Scott C. Donnelly, Senior Vice President for Global Research; Chief

Technology Officer, General Electric

Oral Statement ................................................................................................. 16

Written Statement ............................................................................................ 19

Biography .......................................................................................................... 20

Financial Disclosure ......................................................................................... 21

Dr. John M. Kennedy, Director, Center for Advanced Engineering Fibers

and Films, Clemson University

Oral Statement ................................................................................................. 22

Written Statement ............................................................................................ 23

Financial Disclosure ......................................................................................... 30

Dr. John M. Cassady, Vice President for Research, Oregon State University

Oral Statement ................................................................................................. 31

Written Statement ............................................................................................ 33

Biography .......................................................................................................... 38

Financial Disclosure ......................................................................................... 39

Mr. Michael Fancher, Director of Economic Outreach, Associate Professor

of Nanoeconomics, Albany Nanotech

Oral Statement ................................................................................................. 39

Written Statement ............................................................................................ 42

Biography .......................................................................................................... 48

Financial Disclosure ......................................................................................... 49

Discussion ................................................................................................................. 50

Appendix 1: Answers to Post-Hearing Questions

Page

IV

Dr. John M. Cassady, Vice President for Research, Oregon State University 66

Appendix 2: Additional Material for the Record

Statement of Bob Gregg, Executive Vice President, FEI Company .................... 68

The National Nanotechnology Initiative at Five Years: Assessment and Recommendations of the National Nanotechnology Advisory Panel, President’s

Council of Advisors on Science and Technology, May 2005 .............................. 70

(1)

THE NATIONAL NANOTECHNOLOGY

INITIATIVE: REVIEW AND OUTLOOK

WEDNESDAY, MAY 18, 2005

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON RESEARCH,

COMMITTEE ON SCIENCE,

Washington, DC.

The Subcommittee met, pursuant to call, at 10:10 a.m., in Room

2318 of the Rayburn House Office Building, Hon. Bob Inglis [Chairman of the Subcommittee] presiding.

2

3

HEARING CHARTER

SUBCOMMITTEE ON RESEARCH

COMMITTEE ON SCIENCE

U.S. HOUSE OF REPRESENTATIVES

The National Nanotechnology

Initiative: Review and Outlook

WEDNESDAY, MAY 18, 2005

10:00 A.M.–12:00 P.M. 2318 RAYBURN HOUSE OFFICE BUILDING

1. Purpose

On Wednesday, May 18, 2005, the Research Subcommittee of the Committee on

Science of the House of Representatives will hold a hearing to review the activities

of the National Nanotechnology Initiative (NNI).

2. Witnesses

Mr. Scott Donnelly is the Senior Vice President for Global Research for the General Electric Company.

Dr. John Kennedy is Director of the Center for Advanced Engineering Fibers and

Films (CAEFF) at Clemson University. CAEFF is a National Science Foundationsupported Engineering Research Center.

Dr. John Cassady is Vice President for Research at Oregon State University

(OSU). OSU plays a leading role in the Oregon Nanoscience and Microtechnologies

Institute.

Mr. Michael Fancher is Director of Economic Outreach at Albany NanoTech. He

is also Associate Professor of Nanoeconomics at the State University of New York

at Albany, College of Nanoscale Science and Engineering.

3. Overarching Questions

• Which fields of science and engineering present the greatest opportunities for

breakthroughs in nanotechnology, and which industries are most likely to be

altered by those breakthroughs in both the near-term and the longer-term?

• What are the primary barriers to commercialization of nanotechnology, and

how can these barriers be overcome or removed? What is the Federal Government’s role in facilitating the commercialization of nanotechnology innovations, and how can the current federal nanotechnology program be strengthened in this area?

• What is the workforce outlook for nanotechnology, and how can the Federal

Government and universities help ensure there will be enough people with

the relevant skills to meet the Nation’s needs for nanotechnology research

and development and for the manufacture of nanotechnology-enabled products?

4. Brief Overview

• In December 2003, the President signed the 21st Century National

Nanotechnology Research and Development Act (P.L. 108–153), which originated in the Science Committee. This Act provided a statutory framework for

the interagency National Nanotechnology Initiative (NNI), authorized appropriations for nanotechnology research and development (R&D) activities

through fiscal year 2008 (FY08), and enhanced the coordination and oversight

of the program. Funding for the NNI has grown from $464 million in fiscal

year 2001 (FY01) to $1.1 billion in FY05, and 11 agencies currently have

nanotechnology R&D programs.

• In addition to federal investments, State governments and the private sector

have become increasingly involved in supporting nanotechnology. In 2004, the

private sector in the U.S. invested roughly $2 billion in nanotechnology reVerDate 11-MAY-2000 16:05 Oct 27, 2005 Jkt 021195 PO 00000 Frm 00007 Fmt 6633 Sfmt 6621 C:\WORKD\RES05\051805\21195 SCIENCE1 PsN: SCIENCE1
4

1Small Wonders, Endless Frontiers: A Review of the National Nanotechnology Initiative, National Research Council/National Academy of Sciences, 2002. 2Lux Research, ‘‘Sizing Nanotechnology’s Value Chain,’’ October 2004.

search, while states invested roughly $400 million. The state investment is

primarily spent on infrastructure and research at public universities, while

the private funding focuses on applied research and development activities at

small and large companies, and funding for start-up nanotechnology ventures.

• The 21st Century National Nanotechnology Research and Development Act required that a National Nanotechnology Advisory Panel (NNAP) biennially report to Congress on trends and developments in nanotechnology science and

engineering and on recommendations for improving the NNI. The first such

report will be released on May 18. Its recommendations include strengthening

Federal-industry and Federal-State cooperation on nanotechnology research,

infrastructure, and technology transfer, and broadening federal efforts in

nanotechnology education and workforce preparation.

5. Background

Overview of Nanotechnology

The National Academy of Sciences describes nanotechnology as the ‘‘ability to manipulate and characterize matter at the level of single atoms and small groups of

atoms.’’ An Academy report describes how ‘‘small numbers of atoms or molecules. . .often have properties (such as strength, electrical resistivity, electrical

conductivity, and optical absorption) that are significantly different from the properties of the same matter at either the single-molecule scale or the bulk scale.’’ Scientists and engineers anticipate that nanotechnology will lead to ‘‘materials and systems with dramatic new properties relevant to virtually every sector of the economy,

such as medicine, telecommunications, and computers, and to areas of national interest such as homeland security.’’ 1

Nanotechnology is an enabling technology and, as such, its commercialization does

not depend specifically on the creation of new products and new markets. Gains can

come from incorporating nanotechnology into existing products, resulting in new and

improved versions of these products. Examples could include faster computers, lighter materials for aircraft, less invasive ways to treat cancer, and more efficient ways

to store and transport electricity. Some less-revolutionary nanotechnology-enabled

products are already on the market, including stain-resistant wrinkle-free pants, ultraviolet-light blocking sun screens, and scratch-free coatings for eyeglasses and

windows.

In October 2004, a private research firm released its most recent evaluation of the

potential impact of nanotechnology. The analysis found that, in 2004, $13 billion

worth of products in the global marketplace incorporated nanotechnology. The report projected that, by 2014, this figure will rise to $2.6 trillion—15 percent of manufacturing output in that year. The report also predicts that in 2014, ten million

manufacturing jobs worldwide—11 percent of total manufacturing jobs—will involve

manufacturing these nanotechnology-enabled products.2

National Nanotechnology Initiative

The National Nanotechnology Initiative (NNI) is a multi-agency research and development (R&D) program. The goals of the NNI, which was initiated in 2000, are

to maintain a world-class research and development program; to facilitate technology transfer; to develop educational resources, a skilled workforce, and the infrastructure and tools to support the advancement of nanotechnology; and to support

responsible development of nanotechnology. Currently, 11 federal agencies have ongoing programs in nanotechnology R&D; funding for those activities is shown in

Table 1. Additionally, 11 other agencies, such as the Food and Drug Administration,

the U.S. Patent and Trademark Office, and the Department of Transportation, participate in the coordination and planning work associated with the NNI.

5

In 2003, the Science Committee wrote and held hearings on the 21st Century National Nanotechnology Research and Development Act, which was signed into law on

December 3, 2003. The Act authorizes $3.7 billion over four years (FY05 to FY08)

for five agencies (the National Science Foundation, the Department of Energy, the

National Institute of Standards and Technology, the National Aeronautics and

Space Administration, and the Environmental Protection Agency). The Act also:

adds oversight mechanisms—an interagency committee, annual reports to congress,

an advisory committee, and external reviews—to provide for planning, management,

and coordination of the program; encourages partnerships between academia and industry; encourages expanded nanotechnology research and education and training

programs; and emphasizes the importance of research into societal concerns related

to nanotechnology to understand the impact of new products on health and the environment.

National Nanotechnology Advisory Panel Report

The 21st Century National Nanotechnology Research and Development Act required the establishment or designation of a National Nanotechnology Advisory

Panel (NNAP) to assess and provide advice on the NNI. In July 2004, the President

designated the existing President’s Council of Advisors on Science and Technology

to serve as the NNAP. The NNAP’s responsibilities include providing input to the

administration on trends and developments in nanotechnology and on the conduct

and management of the NNI.

The NNAP is required to report to Congress on its activities every two years, and

its first report will be formally released on May 18, 2005. (Its content is described

below.) The report assesses the U.S. position in nanotechnology relative to the rest

of the world, evaluates the quality of current NNI programs and program management, and recommends ways the NNI could be improved.

Benchmarking

The NNAP report finds that U.S. leads the rest of the world in nanotechnology

as measured by metrics such as level of spending (both public and private), publications in high-impact journals, and patents. The report also finds, however, that

other countries are increasing their efforts and investments in nanotechnology and

are closing the gap with the U.S. Some countries cannot afford to invest as broadly

as the U.S., which has supported nanotechnology efforts relevant to a wide range

of industries, but these other countries—particularly in Asia—have instead chosen

to concentrate their investments in particular areas to make strides in a specific

sector. For example, Korea and Taiwan are investing heavily in nanoelectronics

while Singapore and China are focusing on nanobiotechnology and nanomaterials,

respectively.

NNI Management

The NNAP report finds that the NNI is a well managed program. The report

notes that the balance of funding among different areas of nanotechnology is approVerDate 11-MAY-2000 16:05 Oct 27, 2005 Jkt 021195 PO 00000 Frm 00009 Fmt 6633 Sfmt 6621 C:\WORKD\RES05\051805\21195 SCIENCE1 PsN: SCIENCE1
6

priate and emphasizes the importance of investment in a diverse array of fields

rather than a narrow focus on a just a few ‘‘Grand Challenges.’’ In particular, the

NNAP lauds the NNI for advancing the foundational knowledge about control of

matter at the nanoscale; creating an interdisciplinary nanotechnology research community and an infrastructure of over 35 nanotechnology research centers, networks,

and user facilities; investing in research related to the environment, health, safety,

and other societal concerns; establishing nanotechnology education programs; and

supporting public outreach.

Recommendations

The NNAP recommends continued strong investment in basic research and notes

the importance of recent federal investment in research centers, equipment, and facilities at universities and national laboratories throughout the country (see Appendix A). Such facilities allow both university researchers and small companies to

have access to equipment too expensive or unwieldy to be contained in an individual

laboratory.

The NNAP also emphasizes the importance of State and industry contributions

to the U.S. nanotechnology efforts and recommends that the NNI expand federalstate and federal-industry interactions through workshops and other methods.

The NNAP also recommends that the Federal Government actively use existing

government programs such as the Small Business Innovation Research (SBIR) and

the Small Business Technology Transfer (STTR) programs to enhance technology

transfer in nanotechnology. All grant-giving agencies are required by law to have

SBIR and STTR programs, and some of them specifically target solicitations toward

nanotechnology. However, it is hard to get a clear, up-to-date picture of how much

funding is actually provided for nanotechnology-related projects in these programs

and on what the demand for SBIR/STTR funding in this area is. The NNAP also

recommends that federal agencies be early adopters and purchasers of new

nanotechnology-related products in cases where these technologies can help fulfill

an agency’s mission.

The NNAP also finds that the NNI is making good investments in environmental,

health, and safety research, and recommends that the Federal Government continue

efforts to coordinate this work with related efforts in industry and at non-profits

and with activities conducted in other countries. The NNAP emphasizes the importance of communication with stakeholders and the public regarding research and

findings in this area.

Finally, the NNAP emphasizes the importance of education and workforce preparation and recommends that the NNI coordinate with Departments of Education

and Labor to improve access to materials and methods being developed for purposes

of nanotechnology education and training.

Challenges Ahead

The NNAP notes that successful adoption of nanotechnology-enabled products will

require coordination between federal, State, academic, and industrials efforts (including for efficient commercialization of products), training of a suitable high-technology workforce, and development of techniques for the responsible manufacture

and use of these products.

Developing a federal strategy to facilitate technology transfer of nanotechnology

innovations is a particularly complex challenge because of the wide range of industry sectors that stand to benefit from nanotechnology and the range of time scales

at which each sector will realize these benefits. The NNAP report provides examples

of various possible nanotechnology applications and when they are expected to reach

the product stage (Table 2). The applications cover sectors from information technology and health care to security and energy, and some applications are on the

market now, while others are more than 20 years in the future.

7

3 Regional, State, and Local Initiatives in Nanotechnology is the report on a workshop convened on September 30–October 1, 2003 by the Nanoscale Science, Engineering and Technology

(NSET) Subcommittee, the interagency group that coordinates NNI activities. The report is

available online at http://www.nano.gov/041805Initiatives.pdf.

As the NNAP report notes, the states are playing an increasing role in

nanotechnology. In 2004, state funding for nanotechnology-related projects was $400

million, or approximately 40 percent of the total federal investment. To date, State

funding for nanotechnology has been focused on infrastructure—particularly the

construction of new facilities—with some research support being provided in the

form of matching funds to public universities that receive federal research dollars.

In addition to receiving state support, universities and national laboratories also leverage federal investments through industry contributions of funds or in-kind donations of equipment and expertise. The report on a 2003 NNI workshop on regional,

State, and local nanotechnology initiatives lists 18 specific examples of these nonfederal initiatives.3 (Witnesses at the hearing will describe the specific approaches

being taken in New York, South Carolina, and Oregon.)

In recent years, the focus has been on the construction of nanotechnology facilities, but as these building projects financed by federal, State, and private funding

are completed, the nanotechnology community must consider how best to capitalize

on these new resources. Specifically, funding will have to be found for operating expenses, and policies that will attract public and private sector users to these facilities will be needed on topics such as collaboration, intellectual property, and usage

fees.

The diversity of industry sectors will be a challenge for developing appropriate

education and workforce training programs in nanotechnology. The predicted scale

and breadth of research and manufacturing jobs related to nanotechnology will require not only specialized programs but also integration of nanotechnology-related

information into general science, technology, engineering, and mathematics education.

Finally, successful integration of nanotechnology into products will require an understanding of the standards and regulations needed to govern responsible manufacturing and use of nanotechnology-enabled products. Currently, $82 million of the

NNI R&D funding is spent on research related to the societal implications of

nanotechnology. Of this amount, $38.5 million is specifically directed at environmental, health, and safety research, while the remainder is for the study of economic, workforce, educational, ethical, and legal implications. In addition to this

funding, relevant work is also ongoing in other NNI focus areas. One example is

the development of measurement techniques at the nanoscale which are necessary

to set standards that can be used for quality control of nanotechnology products and

to manage compliance with safety regulations. Another example is the study of the

basic mechanisms of interaction between nanoscale materials and biological sysVerDate 11-MAY-2000 16:05 Oct 27, 2005 Jkt 021195 PO 00000 Frm 00011 Fmt 6633 Sfmt 6621 C:\WORKD\RES05\051805\21195 SCIENCE1 PsN: SCIENCE1
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tems, which can provide critical information for health care applications as well as

safe use practices.

6. Witness Questions

The witnesses were asked to address the following questions in their testimony:

Questions for Mr. Scott Donnelly:

• What fields of science and engineering present the greatest opportunities for

breakthroughs in nanotechnology, and what industries are most likely to be

impacted by those breakthroughs in both the near-term and the longer-term?

• What are the primary barriers to commercialization of nanotechnology, and

how can these barriers be overcome or removed?

• To what extent has GE made use of university research and of facilities at

universities and national laboratories? How important are these resources to

GE’s research program and how could they be more helpful?

Questions for Dr. John Kennedy:

• How does the Clemson Center for Advanced Engineering Fibers and Films

(CAEFF) interact with the private sector? What are the greatest barriers to

increased academic/industrial cooperation in nanotechnology?

• How does the State of South Carolina provide support to CAEFF for

nanotechnology and other high-technology activities? How does this complement funding from the Federal Government and the private sector? What,

if any, gaps remain?

• What is the workforce outlook for nanotechnology, and how can the Federal

Government and universities help ensure there will be enough people with

the relevant skills to meet the Nation’s needs for nanotechnology research

and development and for the manufacture of nanotechnology-enabled products?

• How can Federal and State governments, industry, and academia best cooperate to facilitate advances in nanotechnology?

Questions for Dr. John Cassady:

• How do Oregon State University (OSU) and the Oregon Nanoscience and

Microtechnologies Institute (ONAMI) interface with the private sector? What

are the greatest barriers to increased academic/industrial cooperation in

nanotechnology?

• How does the State of Oregon provide support to OSU and ONAMI for

nanotechnology and other high-technology activities? How does this complement funding from the Federal Government and the private sector? What,

if any, gaps remain?

• What is the workforce outlook for nanotechnology, and how can the Federal

Government and universities help ensure there will be enough people with

the relevant skills to meet the Nation’s needs for nanotechnology research

and development and for the manufacture of nanotechnology-enabled products?

• How can Federal and State governments, industry, and academia best cooperate to facilitate advances in nanotechnology?

Questions for Mr. Michael Fancher:

• How does Albany NanoTech interface with the private sector? What are the

greatest barriers to increased academic/industrial cooperation in

nanotechnology?

• How does the State of New York provide support to Albany NanoTech and

the University of Albany College of Nanoscale Science and Engineering? How

does this complement funding from the Federal Government and the private

sector? What, if any, gaps remain?

• What is the workforce outlook for nanotechnology, and how can the Federal

Government and universities help ensure there will be enough people with

the relevant skills to meet the Nation’s needs for nanotechnology research

and development and for the manufacture of nanotechnology-enabled products?

9

• How can Federal and State governments, industry, and academia best cooperate to facilitate advances in nanotechnology?

10

11

Chairman INGLIS. Good morning, everyone.

Thank you for joining us for this hearing on nanotechnology. It

is good of you to come this morning to the Research Subcommittee

on a topic of such small significance. I say that, of course, because

what we are talking about here, science at the nanometer scale,

starts at 1/75,000 of the width of a human hair. We are here to

learn about nanotechnology, and I am excited to hear what our witnesses will have to say. So I will keep this opening statement small

as well.

I also want to welcome Ranking Member Hooley. I was encouraged by her insightful questions at the last Research Subcommittee

hearing, and I am looking forward to what she will contribute this

morning. I am also seeing that she and I are dressed in the right

colors for Oregon, is that right? And Clemson University, I would

point out, Dr. Kennedy.

I am not a scientist by background, and I have got to confess

that I didn’t know enough about this subject until I had prepared

for this hearing. I am not alone. A recent survey by MIT’s technology review showed that more than half of all Americans have

no familiarity with nanotechnology. That is a shame, because these

technologies are changing the products we use and have the potential to revitalize our manufacturing base. We must be about educating our children in math and science if they will need to do

these jobs. I know Ms. Hooley, being a former teacher, will have

something to say about that as well.

This morning, the President’s Council of Advisors on Science and

Technology released a report on the state of and outlook for

nanotechnology in the United States. On the whole, the report is

very encouraging, noting that we lead the world by most metrics,

including funding, patents, and scientific publications. But one of

the things I found troubling is that other countries are catching up,

and not just in funding. I hope we can talk today about the ways

the United States can maintain its status as a world leader in

these emerging technologies.

For those of us who are technologically challenged, like me,

nanotechnology is the manipulation of matter at the molecular

level to get results that just don’t occur in larger lumps of atoms.

It promises to impact virtually every field, with applications in

fields from energy, to defense, to health care, to transportation.

You can end up with things like gold-covered nanoshells to target

and burn cancer away or light-weight, super strong materials

structured at the smallest levels that could increase the efficiency

of our airplanes and automobiles.

Our experts can talk more about nanotechnology’s implications,

but what we really want to know is how to get it into products that

we will use in the future. Nanotechnology is one of the few technologies where basic research meets the marketplace in venture

capital startups and R&D at large firms. The witnesses here today

will bring the process to life and let us in government know how

we are helping and how we may be hurting advances in this very

promising area.

[The prepared statement of Chairman Inglis follows:]

12

PREPARED STATEMENT OF CHAIRMAN BOB INGLIS

Welcome. It’s good of you to come to this hearing at the Research Subcommittee

on a topic of such small significance. I say that, of course, because what we’re talking about here—science at the nanometer scale—starts at a size 1/75,000th of the

width of a human hair. We’re here to learn about nanotechnology, and I’m excited

to hear what our witnesses will have to say, so I’ll keep this opening statement

small as well.

I also want to welcome our Ranking Member, Ms. Hooley. I was encouraged by

her insightful questions in our last Research Subcommittee hearing, and I’m looking

forward to what she will contribute to this hearing.

I’m not a scientist by background, and I’ve got to confess that I didn’t know

enough about this subject until I had to prepare for this hearing. I’m not alone. A

recent survey by MIT’s Technology review showed that more than half of all Americans have no familiarity with nanotechnology. That’s a shame, because these technologies are changing the products we use, and have the potential to revitalize our

manufacturing base. We must be about educating our children in the math and

science they will need to do these jobs. I know Ms. Hooley, being a former teacher,

has a lot to say about this.

This morning, the President’s Council of Advisors on Science and Technology released a report on the state of, and outlook for, nanotechnology in the U.S. On the

whole, the report is very encouraging, noting that we lead the world by most

metrics, including funding, patents, and scientific publications. But one of the things

I find troubling is that other countries are catching up, and not just in funding. I

hope we can talk today about ways the U.S. can maintain its status as a world leader in these emerging technologies.

For those of us who are technologically challenged—like me—nanotechnology is

the manipulating of matter at the molecular level to get results that just don’t occur

in larger lumps of atoms. It promises to impact virtually every field—with applications in fields from energy to defense to health care to transportation. You can end

up with things like gold-covered nanoshells to target and burn cancer away, or lightweight, super-strong materials structured at the smallest levels that could increase

the efficiency of our airplanes and automobiles.

Our experts can talk more about nanotechnology’s implications, but what we really want to know is how to get it into the products we will use in the future.

Nanotechnology is one of the few technologies where basic research meets the marketplace in venture-capital startups and R&D at large firms. The witnesses here

today will bring the process to life and let us in government know how we’re helping

and how we may be hurting advances in this very promising area.

Chairman INGLIS. With that, I would recognize Ms. Hooley for an

opening statement.

Ms. HOOLEY. Thank you, Mr. Chair.

I am pleased to join you in welcoming our witnesses today to the

oversight hearing on the National Nanotechnology Initiative, or the

NNI. One of the signal accomplishments of the Science Committee

in the last Congress was the development of the NNI authorization

legislation, which was signed into law in December of 2003. Calling

the technology revolutionary has become a cliche ́, but

nanotechnology truly is revolutionary. A recent National Research

Council report explains why this is so: ‘‘The ability to control and

manipulate atoms to observe and stimulate collective phenomena

to treat complex material systems and to span length scales from

atoms to our everyday experience provides opportunities that were

not even imagined a decade ago.’’

Nanotechnology will have an enormous consequence for the information industry, for manufacturing, and for medicine and health.

Indeed, the scope of this technology is so broad as to leave virtually

no product untouched. The NNI is a coordinated federal R&D effort

that seeks to ensure the United States is at the forefront of research to develop nanotechnology and is positioned to benefit from

its many potential applications.

13

The focus of this hearing is to review the initial assessment of

the NNI by the President’s Council of Advisors on Science and

Technology. This assessment is mandated by statute and is required to cover both the content and the management of NNI.

Mr. Chairman, as you know, the Co-chair of PCAST was scheduled to appear today to present a report. However, the Administration suddenly and inexplicably found a constitutional objection to

this appearance. This extraordinary constitutional interpretation

would prevent a member of a statutorily mandated Advisory Committee from presenting a mandated report to Congress. I would

hope the Science Committee will formally object to this action and

will strenuously assert Congressional prerogatives for access to information about the implementation of this federal program, and

we will talk about that when we get through.

One aspect of the NNI that the Advisory Committee report

touches on and is of great interest to me is how the NNI helps facilitate commercialization of the technology. I believe that PCAST

will have some recommendations for making the NNI more effective in this area. As the PCAST report points out, many states are

investing in nanotechnology. And of course, the states play a leading role in economic development. Oregon is one of those states

that has taken steps and made investments to help create new

commercial enterprises founded on results flowing from

nanoscience research.

I am delighted that one of our witnesses this morning is Dr. John

Cassady, who is Vice President for Research at Oregon State University, and I did wear these colors in his honor today. Mr. Cassady

is closely involved with the Oregon Nanoscience and Microtechnologies Institute, of what we call ONAMI, a collaboration between

Oregon’s three major research universities, federal research agencies, and the state’s thriving high-tech sector. Dr. Cassady will be

able to describe how Oregon is supporting nanotechnology development and how ONAMI, which emphasizes rapidly commercializing

new technology, works in partnership with the private sector.

I hope to learn today how NNI could be more effective in helping

transfer technology to the private sector and helping support the

commercialization process. I will be interested in the experiences of

our witnesses and in their recommendations.

Mr. Chair, I want to thank you for calling this hearing, and I

want to thank our witnesses for appearing before the Subcommittee today, and I look forward to our discussion.

Thank you.

[The prepared statement of Ms. Hooley follows:]

PREPARED STATEMENT OF REPRESENTATIVE DARLENE HOOLEY

Mr. Chairman, I am pleased to join you in welcoming our witnesses today to this

oversight hearing on the National Nanotechnology Initiative, or the NNI. One of the

signal accomplishments of the Science Committee in the last Congress was the development of the NNI authorization legislation, which was signed into law in December 2003.

Calling a technology ‘‘revolutionary’’ has become a cliche ́. But nanotechnology

truly is revolutionary. A recent National Research Council report explains why this

is so:

‘‘The ability to control and manipulate atoms, to observe and simulate collective

phenomena, to treat complex materials systems, and to span length scales from

14

atoms to our everyday experience, provides opportunities that were not even

imagined a decade ago.’’

Nanotechnology will have enormous consequences for the information industry,

for manufacturing, and for medicine and health. Indeed, the scope of this technology

is so broad as to leave virtually no product untouched. The NNI is the coordinated

federal R&D effort that seeks to ensure the U.S. is at the forefront of research to

develop nanotechnology and is positioned to benefit from its many potential applications.

The focus of this hearing is to review the initial biennial assessment of the NNI

by the President’s Council of Advisors on Science and Technology. This assessment

is mandated by statute and is required to cover both the content and the management of the NNI.

Mr. Chairman, as you know, the co-chair of PCAST was scheduled to appear

today to present this report. However, the Administration suddenly and inexplicably

found a constitutional objection to his appearance. This extraordinary constitutional

interpretation would prevent a member of a statutorily mandated advisory committee from presenting a statutorily mandated report to Congress. I trust the

Science Committee will formally object to this action and will strenuously assert

congressional prerogatives for access to information about the implementation of

federal programs.

One aspect of the NNI that the advisory committee report touches on and that

is of great interest to me is how the NNI helps facilitate commercialization of the

technology. I believe PCAST will have some recommendations for making the NNI

more effective in this area. As the PCAST report points out, many States are investing in nanotechnology and, of course, the States play a leading role in economic development. Oregon is one of those States that has taken steps and made investments to help create new commercial enterprises founded on results flowing from

nanoscience research.

I am delighted that one of our witnesses this morning is Dr. John M. Cassady,

who is Vice President for Research at Oregon State University. Dr. Cassady is closely involved with the Oregon Nanoscience and Microtechnologies Institute (ONAMI),

a collaboration between Oregon’s three major research universities, federal research

agencies, and the state’s thriving high-tech sector.

Dr. Cassady will be able to describe how Oregon is supporting nanotechnology developments and how ONAMI, which emphasizes rapidly commercializing new technology, works in partnership with the private sector.

I hope to learn today how the NNI could be more effective in helping transfer

technology to the private sector and in helping support the commercialization process. I will be interested in the experiences of our witnesses and in their recommendations.

Mr. Chairman, I want to thank you for calling this hearing and thank our witnesses for appearing before the Subcommittee today. I look forward to our discussion.

Chairman INGLIS. Thank you, Ms. Hooley.

I might take the prerogative of the Chair just to mention that we

do agree with you that it is disappointing that we are not going to

be able to hear from the President’s advisor on this. We had hoped

that he would be here to testify. The good news, however, is that

the report is available at the back of the room and on the web. It

would have been nice to have had the opportunity to ask questions

and to see the full presentation of that, and yes, Ms. Hooley, the

Science Committee is expressing our desires in that area and expressing the prerogatives of the House to have access to that process.

It was, however, a public process that developed the report and

the report itself is public, so no secret deals here. It is just a matter

that it would be better if he were here to make the presentation.

So other Members are invited to make opening statements available for publication in the record this morning.

[The prepared statement of Ms. Johnson follows:]

15

PREPARED STATEMENT OF REPRESENTATIVE EDDIE BERNICE JOHNSON

Thank you, Mr. Chairman, for calling this very important hearing today. I welcome our distinguished witnesses.

The purpose of this hearing is to examine federal nanotechnology research and

development and to explore the outlook for the future.

Nanotechnology is the act of manipulating matter at the atomic scale. Regardless

of the diverse opinions on the rate at which nanotechnology will be implemented,

people who make it a habit to keep up with technology agree on this: it is a technology in its infancy, and it holds the potential to change everything.

Research in nanoscience is literally exploding, both because of the intellectual allure of constructing matter and molecules one atom at a time, and because the new

technical capabilities permit creation of materials and devices with significant societal impact. The rapid evolution of this new science and the opportunities for its

application promise that nanotechnology will become one of the dominant technologies of the 21st century. Nanotechnology represents a central direction for the

future of chemistry that is increasingly interdisciplinary and ecumenical in application.

Currently, manufacturing methods at the molecular level are very unsophisticated. Methods such as casting, grinding, milling and even lithography move atoms

in cumbersome and unyielding manners. It has been compared to trying to make

things out of LEGO blocks with boxing gloves on your hands. Yes, you can push

the LEGO blocks into great heaps and pile them up, but you can’t really snap them

together the way they should be attached.

In the future, nanotechnology will let us take off the boxing gloves. We’ll be able

to snap together the fundamental building blocks of nature easily, inexpensively and

in most of the ways permitted by the laws of physics. This will be essential if we

are to continue the revolution in computer hardware beyond about the next decade,

and will also let us fabricate an entire new generation of products that are cleaner,

stronger, lighter, and more precise.

I agree with the assessment that nanotechnology is one of the most promising and

exciting fields of science today. I look forward to working with this committee on

its advancement.

[The prepared statement of Mr. Honda follows:]

PREPARED STATEMENT OF REPRESENTATIVE MICHAEL M. HONDA

Chairman Inglis and Ranking Member Hooley, thank you for holding this important hearing today. As we all have heard at prior hearings, the emerging field of

nanotechnology may lead to unprecedented scientific and technological advances

that will benefit society by fundamentally changing the way many items are designed and manufactured. It will take many years of sustained investment for this

field to achieve maturity. There is an important role for the federal government to

play in the development of nanotechnology, since this science is still in its infancy.

This committee, the Congress, and the President all acknowledged that when we enacted the 21st Century Nanotechnology Research and Development Act in 2003.

The interdisciplinary nature of nanotechnology presents a challenge for the scientific community and the research and development bodies of governments and industry, since it transcends traditional areas of expertise. In addition,

nanotechnology will likely give rise to a host of novel social, ethical, philosophical,

and legal issues. For these and other reasons, in the legislation this committee required the National Nanotechnology Advisory Panel to report back to the Congress

on trends and developments in nanotechnology science and engineering; progress

made in implementing the Program; the need to revise the Program; the balance

among the components of the Program, including funding levels for the program

component areas; whether the program component areas, priorities, and technical

goals developed by the Council are helping to maintain United States leadership in

nanotechnology; the management, coordination, implementation, and activities of

the Program; and whether societal, ethical, legal, environmental, and workforce concerns are adequately addressed by the Program. I am pleased that this report is

being released today and that it has found the program is working successfully, although I am troubled by the fact that we are not able to have Floyd Kvamme, Cochair of PCAST, which is serving as the NNAP, here with us today and urge the

Administration to revisit its position on this policy.

It is critical that the United States invests in nanotechnology and does so wisely.

Other industrialized countries are already spending more per capita on

nanotechnology than the US. Leading nanotechnology researcher Dr. R. Stanley

Williams of Hewlett-Packard Laboratories believes that ‘‘we are in a global struggle

16

to dominate the technological high ground, and thus a large portion of the economy,

of the 21st Century. The U.S. cannot outspend the rest of the world this time, so

we must be by far the most productive at creating new technologies and the most

efficient at bringing them to the marketplace. This will require coordination and cooperation across a wide variety of institutions and disciplines such as we have never

seen before in the U.S. To fail places the wealth and security of this nation at serious risk.’’ I look forward to hearing the thoughts of these distinguished witnesses

about the role the Federal Government should play in helping to commercialize the

fruits of its research investments, and the impact this will have on the future of

nanotechnology.

[The prepared statement of Mr. Carnahan follows:]

PREPARED STATEMENT OF REPRESENTATIVE RUSS CARNAHAN

Mr. Chairman and Ms. Ranking Member, thank you for holding this important

and very interesting hearing.

The creation of the National Nanotechnology Initiative is a program with tremendous vision and I am thrilled to be supportive of the effort.

Nanotechnology has the promise of allowing scientists to control matter on every

length scale, including materials in the range of one to 100 nanometers. Science is

allowing us to control material behavior by altering structures at the level of one

billionth of a meter.

The field includes three main categories of promise, materials and manufacturing,

information technology and medicine. I am most eager to see what this technology

can do for our nation’s health and am hopeful that the utilization of nanotechnology

will someday positively affect our economy and job market.

I welcome the witnesses to our subcommittee today and look forward to hearing

their testimony. Thank you.

Chairman INGLIS. It is now my pleasure to introduce to you our

panel. Mr. Scott Donnelly is the Senior Vice President from General Electric Corporation, we are very pleased to have you, Mr.

Donnelly. Dr. John Kennedy is the Director of the Center for Advanced Engineering Fibers and Films at Clemson University in

South Carolina. And Ms. Hooley, we are in the right orange category here. I have got on Clemson orange here. Dr. John Cassady,

who Ms. Hooley introduced earlier, is the Vice President for Research for Oregon State University. And Mr. Michael Fancher is

Director of Economic Outreach at Albany NanoTech. He was very

nice to invite me to come see what they are doing, and I suggested

that August would be a good time to come to Albany, especially if

you are coming from South Carolina in August. Dr. Kennedy will

understand that.

So we would be happy to start with your testimony, Mr. Donnelly.

STATEMENT OF MR. SCOTT C. DONNELLY, SENIOR VICE

PRESIDENT FOR GLOBAL RESEARCH, CHIEF TECHNOLOGY

OFFICER, GENERAL ELECTRIC COMPANY

Mr. DONNELLY. Thank you very much, Mr. Chairman. It is a

pleasure to be here to testify with respect to this important technology.

GE’s research laboratories have been conducting basic and applied research for over 100 years. It is the primary mission of our

research laboratories to investigate, develop new technologies, and

most importantly transition those technologies in a consequential

way into our General Electric businesses. As a result of the family

of product lines in GE, data encompasses a very broad range of

technologies in support of energy, aircraft engines, health care, seVerDate 11-MAY-2000 16:05 Oct 27, 2005 Jkt 021195 PO 00000 Frm 00020 Fmt 6633 Sfmt 6601 C:\WORKD\RES05\051805\21195 SCIENCE1 PsN: SCIENCE1
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curity, water, and a number of other important commercial fields

of interest.

The cornerstone, frankly, of our research laboratories for over

100 years has been materials research. Our materials systems end

up impacting in a significant way various different products in GE.

As a result, nanotechnology is a very important area of focus for

research for us and has been for a number of years.

I think it is very important, the way we look at nanotechnology

is not so much in the heart that sometimes is heard or some of the

wonderful non-fiction work that has been published, but to recognize the incredible importance of this technology, it truly is a revolutionary way to look at material science and has an amazing number of properties that we think have revolutionized a lot of our GE

products.

So when we look at nanotechnology and the importance of this

area of research, we really think about how that translates ultimately into our product lines. When we look at businesses like our

aircraft engine business of today, for our customers it is very important to drive increasing fuel efficiency and lower emissions, and

extending the time between maintenance intervals for our customers is incredibly important, and we look at nanotechnology as

a very important way in developing new material systems that

have the robust performance features to allow higher firing temperatures, more robust in terms of that their time on wing is very

important to the economic model of that whole industry, frankly,

and as a result is an important area for us to focus on.

Our energy business is likewise and our conventional gas turbine

technologies is very much like aircraft engines. There is a neverending push for higher efficiencies and lower emissions, lower

maintenance cycles, and this technology is very promising in a

number of areas.

It is also, we think, a very important technology as we think

about renewable energies, things like solar cells and photovoltaics,

as a new technology that gives us an additional number of materials to take a lot of very promising new technologies and actually

make those technologies economically affordable and therefore increase the penetration of the amount of renewable technology that

we deploy across the world.

In addition to energy generation, we look very much at our consumer product lines and how we consume electricity, lighting, and

appliances and technologies like that, in which we invest considerably, in our look at how you make those more efficient, how do you

introduce new technologies that would replace conventional compression technology, let us say, with thermoelectrics, replace lighting with more highly efficient lighting, reduce things like mercury.

All of these kinds of material systems, which for many years, have

been dominant in this industry, we actually believe now can be replaced or looked at very differently with the suite of

nanotechnology-based materials.

Other increasingly—when we look at our security business, the

ability to do things that are very challenging in the security environment, like doing bio-detection of bio-agents in either the air or

the water are enabled by a number of new technologies that we are

looking at using nano-based labels for these product lines. And we

18

also think it will have a pervasive impact in our health care business where we looked at both increasing a higher spatial and temporal resolution of our medical scanners, and frankly, introducing

a whole new line of product lines and diagnostic pharmaceuticals

that allow the targeting of specific biological activities in the body

so that we can actually diagnose patients with specific diseases

long before they would see symptoms of the disease in total. And

a lot of that can be enabled by the use of these nanomaterials to

give us the kind of signal that a doctor would look for to make a

clinical determination very early on in a disease onset.

So these are all very, very important technologies for us. The research in this area is very, very difficult: identifying new compositions, exploiting those new material systems that give you very robust characteristics that we haven’t seen before, and just as importantly, learning how to process those materials. I always like to tell

people we don’t make nano-sized high pressure turbine blades or

nano-sized aircraft engines, and so the ability not just to identify

these material properties but to learn the manufacturing process

development by which you can make real products and real sizes

and maintain the material characteristics that we saw at that nano

scale is a very, very challenging task and one that requires a great

deal of research, and frankly, time to occur.

The federal role, when we look at what is going on through NNI,

the funding for research and development activity and deployment

that we see in agencies like the Department of Energy, the Department of Defense, National Institutes of Health, is very encouraging.

These are relatively long-time constant technologies, as any material system has historically been, to develop and deploy these. So

the Federal Government funding and support of those programs is

very important. Frankly, the early adoption is very important to

have an opportunity to deploy some of these technologies and get

them into the field and learn how to control and manipulate them

is very important. The funding that we see that goes through the

National Science Foundation to universities is extremely important. In our research laboratories every year, we hire approximately about 100 new Ph.D. students, most of which are conducting research for us in material sciences, and many of them in

the field of nanotechnology. The hundreds of graduates at the BS

and MS levels that are hired into our GE businesses every year

that have to understand and have an appreciation for what these

material systems can mean in terms of the design of the next generation of aircraft engine or health care scanner is very important.

And so the NSF funding that supports the nanocenters and improvement in those areas is very, very important.

So in summary, nanotechnology is an extremely important technical field to us. It is one in which we are investing a great deal

of funding. We are very supportive and appreciate the federal funding that is going into this; both the education as well as deployment through various agencies is very important, and we look forward to continuing to support that activity in the future.

Thank you.

[The prepared statement of Mr. Donnelly follows:]

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PREPARED STATEMENT OF SCOTT DONNELLY

Thank you Mr. Chairman, Ranking Member Hooley and Members of the House

Research Subcommittee of the Committee on Science.

My name is Scott Donnelly, and I am the Senior Vice President for Global Research for the General Electric Company. I am appearing here today to give you our

perspective on the challenges and opportunities in the emerging field of

nanotechnology.

The term ‘‘nanotechnology’’ has quickly become one of the latest and greatest

buzzwords and can mean different things to different people. At GE, we define

nanotechnology as the ‘‘ultimate material science,’’ and we believe that the novel

material properties found at the nanoscale can be leveraged to create completely

new material performance levels for a wide spectrum of products and applications.

The focus of our program at GE Research is to leverage these novel properties that

are found at the nanoscale and develop methods to build materials from the

nanoscale up to the macro world to capitalize on the enhanced performance characteristics demonstrated by these materials.

We believe that nanotechnology has the potential to impact numerous industries.

Some examples include:

• Energy, where new materials may enable improved machine efficiency and

decreased emissions or enable alternative energy technologies

• Transportation, where the development of new, lighter, stronger materials

could increase jet engine efficiency

• Homeland Security, where nanomaterials may lead to improved and faster

detection of chemical and biological threats

• Health care, where the development of improved diagnostic agents and equipment may lead to the diagnosis of diseases before symptoms even appear

• Defense applications, where the development of new materials may better

protect our soldiers or their vehicles or enable more electric ships.

It is difficult to predict which industries are most likely to be impacted in the

near-term and which will be impacted in the longer-term. What is more likely is

that in the nearer-term we will see nanotechnology making relatively incremental

improvements to currently existing products; such as coatings for plastic and metals, or as additives to existing products. As with all new technologies, it will take

longer to realize the truly revolutionary, game-changing technologies that will certainly come from nanotechnology.

What is important to realize, is that this adoption and development route is not

unique to ‘‘nanomaterials,’’ but is typical for all new material development.

The primary barriers to commercialization of nanotechnology lie in the translation

of a scientific innovation to a productive and cost-effective technology. The process

of transitioning a successful experiment or even a prototype in a laboratory to a reproducible, high quality, cost effective manufacturing process is a time consuming

and expensive hurdle for any invention. And even more challenging with high risk,

emerging technologies And in this context it is important to understand that

nanotechnology is not an industry, but that it is an enabling technology that will

likely impact many industries, but that the challenges and solutions for one area

do not necessarily (and probably will not) translate to other sectors.

The barriers to commercializing nanotechnology are not unique and are in fact the

same for any new product or application and will require significant time and

money—both from private industry and the government—to overcome. In addition,

another hurdle nanotechnology will need to overcome as it is commercialized is the

need to develop unique manufacturing processes to preserve the novel properties of

the nanomaterials. To date there has been a large body of research in

nanotechnology that has been done at Universities and there has been a significant

effort to establish nano-based centers and user facilities at universities and national

laboratories. Much of this has been done as part of the National Nanotechnology

Initiative and has provided solid scientific innovation in the field of nanotechnology.

In addition, this investment has started to lay the foundation for the nano-workforce

that will be required in the future. Scientists and engineers across multiple disciplines, including chemistry, biology, physics, medicine, electronics, and engineering, will need not only to be able to work at the nanoscale but they will also need

to have the ability to understand and develop new materials, devices, and systems

that have fundamentally new properties and functions because of their

nanostructure and because of the convergence of these multiple disciplines. Since

GE has it’s own corporate research center, we don’t typically need the infrastructure

provided by the user centers and facilities, and so we have had limited interaction

20

with these sites. We do collaborate with Universities as part of our nanotechnology

program, as well as other research programs, and we have found the NSF Goali program to be a good mechanism for collaborating with Universities.

In closing, the Nation’s nanotechnology program is poised to transition to the next

phase of it’s development. The effort to date has resulted in well-done science, and

should continue, but the next phase must also address nanotechnology development—that is making nanotechnology a reality, so that the full economic potential

of nanotechnology and the benefit to the Nation can be realized.

Thank you Mr. Chairman for the opportunity to testify today, and I welcome any

questions.

BIOGRAPHY FOR SCOTT C. DONNELLY

Scott C. Donnelly is Senior Vice President and Director of GE Global Research,

one of the world’s largest and most diversified industrial research organizations, and

a member of the company’s Corporate Executive Council. At Global Research, some

2,200 people—including approximately 1,700 scientists, engineers and technicians

from virtually every major scientific and engineering discipline—concentrate their

efforts on the company’s long-range technology needs. The organization has research

facilities in the United States, India, China and Germany, working in collaboration

with GE businesses around the world.

Prior to assuming his current position, Donnelly served as Vice President, Global

Technology Operations for GE Medical Systems. In that role, he drove Six Sigma

product development throughout the organization, enabled GE Medical Systems to

introduce more reliable technology faster than ever before, including: the world’s

first multi-slice CT scanner (LightSpeed), full-field digital mammography

(Senographe 2000D), high-field open MRI (Signa OpenSpeed) and digital X–Ray

(Innova 2000).

Donnelly joined GE in 1989 as Manager of Electronics Design Engineering for

GE’s Ocean Systems Division in Syracuse, NY. He went on to serve in a variety of

leadership roles for the Company, including engineering management positions with

then-GE division of Martin Marietta in both Australia and the U.S.

In 1995, he moved to GE’s Industrial Control Systems business, where he held

leadership positions as Manager of Technology and System Development, and later

General Manager of Industrial Systems Technology. Donnelly was named a Vice

President of General Electric in 1997, when he assumed his previous role at GE

Medical Systems.

Donnelly is a 1984 graduate of the University of Colorado at Boulder, where he

earned a Bachelor’s degree in Electrical and Computer Engineering.

Donnelly serves on the Industrial Advisory Committee of several engineering colleges, the Research Foundation of the Medical College of Wisconsin and the Center

for Innovation in Minimally Invasive Therapy at Massachusetts General Hospital.

He also serves as a Director of GE Capital Corporation and GE Capital Services Inc.

21

Chairman INGLIS. Thank you, Mr. Donnelly.

Dr. Kennedy.

22

STATEMENT OF DR. JOHN M. KENNEDY, DIRECTOR, CENTER

FOR ADVANCED ENGINEERING FIBERS AND FILMS,

CLEMSON UNIVERSITY

Dr. KENNEDY. Good morning, Chairman Inglis and Ranking

Member Hooley. Greetings from South Carolina, Clemson University.

Clemson University continues to climb in the national rankings,

which bodes well for the State of South Carolina and its drive toward a knowledge-based economy.

On behalf of the Center for Advanced Engineering Fibers and

Films representing Clemson University, our university partners

MIT, Clark Atlanta University, and supporting industries, I would

like to thank the Committee for inviting me to testify.

The National Nanotechnology Initiative provides a systemic program for helping the United States maintain its research and technical leadership in an increasingly competitive global environment.

I am pleased to be here to provide CAEFF support for the initiative.

CAEFF is one of 22 engineering research centers funded by the

National Science Foundation. We provide an integrated research

and education environment for the systems-oriented study of fibers

and films. CAEFF promotes the transformation from trial-anderror development to computer-based design. The industry partners

provide practical perspective on our research program. For these

industries to leverage advances at the nano level, computer-modeling techniques that maximize engineers’ understanding of and

control over structure are required.

The CAEFF team is very active in nanotechnology research. We

are studying carbon nanotubes for bio-sensors, filtration, bio-compatibility, coatings, and infection prevention. We are also exploring

nanotechnology to improve wound and incision healing and as a

means for hydrogen storage. CAEFF supports a critical component

of the U.S. manufacturing base.

However, globalization is changing this industry. A significant

portion of the commodity fiber industry has relocated outside of the

United States. The polymer industry is adjusting, however, to

globalization by focusing on value-added products, which ties well

to the push for an economy driven by innovation.

CAEFF is focusing its research on six product areas: carbon

products for transportation, bio-based polymers, bio-inspired polymers, fibers and films for biotechnology, photovoltaic films, and

sensing films. Each area supports specific commercial products that

could help reshape the polymer industry. CAEFF derives its support from four sources: the base NSF-ERC grant, the State of

South Carolina, industry membership fees, industry-supported research, and other federal support. The collective support for

CAEFF has been outstanding, enabling us to be positioned as a national leader in polymer research.

CAEFF is training a new workforce to develop nano-based applications. A team of universities led by our center is developing an

undergraduate, macro-molecular engineering curriculum that addresses design at the molecular level. This exciting concept will

combine features of materials science and engineering so that gradVerDate 11-MAY-2000 16:05 Oct 27, 2005 Jkt 021195 PO 00000 Frm 00026 Fmt 6633 Sfmt 6601 C:\WORKD\RES05\051805\21195 SCIENCE1 PsN: SCIENCE1
23

uates can consider molecular or nano issues in the design of new

value-added products.

Another workforce issue is the supply of American citizens involved in nano research. One goal of CAEFF is to develop a diverse

community of scholars trained in polymeric materials design. We

are making great progress. The center has formed a partnership

with Clark Atlanta University to increase the participation of African American faculty and students. Diversity in the center is also

fostered by outreach through Women in Science and Engineering,

the Girl Scouts, summer research, graduate assistantships in areas

of national need, Hearst Fellowships, and the newly-funded Southeast Alliance for Graduate Education and the Professoriate.

Our graduates are entering the workforce as engineers and scientists in the polymer industry. Many of them have taken jobs with

our industry partners. Several have chosen to enter academe.

The National Nanotechnology Initiative provides significant support for infrastructure, faculty, and students. As various components of the research mature, the challenge will be to transfer the

technology into profitable business ventures. It is likely that an entirely new industry will be spawned from nanotechnology. This new

industry will be comprised of small businesses that are exploiting

research advancements. For these companies to survive, they may

well need bridge funding.

To accelerate the application of nanotechnology, agencies that

have a major stake in applied research and development can bring

nanotechnology into practice through demonstration programs.

This paradigm was used successfully by NASA and DOD to accelerate the application of advanced composite materials 25 years ago.

These programs were partnerships between government and industry that drove industry to educate its personnel, develop infrastructure, and validated the advantages afforded by composites.

Thank you for inviting me to testify before your Subcommittee

today. I am fully supportive of the National Nanotechnology Initiative. It is a critical initiative with huge potential to impact the citizens of the United States. I would be glad to answer your questions.

[The prepared statement of Dr. Kennedy follows:]

PREPARED STATEMENT OF JOHN M. KENNEDY

Introduction

Good morning, Chairman Inglis and Ranking Member Hooley. Greetings from

South Carolina and Clemson University. Clemson University continues to climb in

the national rankings which bodes well for the State of South Carolina and its drive

toward a knowledge-based economy. On behalf of the Center for Advanced Engineering Fibers and Films (CAEFF), our university partners (the Massachusetts Institute

of Technology and Clark Atlanta University), our 20 industry partners, and Clemson

University, I would like to thank the committee for inviting me to represent CAEFF

at this hearing. The National Nanotechnology Initiative provides a systemic program for helping the U.S. maintain is research and technology leadership in the increasingly competitive global environment. I am please to be here to provide

CAEFF’s support of the Initiative.

The Center for Advanced Engineering Fibers and Films (CAEFF) is one of only

22 Engineering Research Centers funded by the National Science Foundation. The

CAEFF research team consists of faculty and students from nine academic departments at Clemson University (the lead institution), MIT (a core partner), Clark Atlanta University (a core partner), Lehigh University, McGill University, the University of Illinois, and 20 industry partners. CAEFF provides an integrated research

and education environment for the systems-oriented study of fibers and films.

24

CAEFF promotes the transformation from trial-and-error development to computerbased design of fibers and films. This new paradigm for materials design is revolutionizing fiber and film development.

The NSF began funding CAEFF in 1998 and funding will continue through 2008,

with research expenditures approaching $10 million annually. About 150 graduate

students, 75 undergraduates, 15 high school students, and 50 faculty members support CAEFF’s research program. Coordinated with CAEFF’s research is an education program that is offering innovative multi-disciplinary courses, seminars,

short courses, and workshops. The education experience is further enhanced by activities that emphasize teamwork and communication skills. CAEFF promotes diversity in its research team through scholarships, fellowships, and collaboration with

universities that serve under-represented populations.

CAEFF is a cornerstone of Clemson University’s research program. Several research niches, particularly nanomaterials, fall under CAEFF, and other developing

research programs have been incubated in CAEFF. After 2008, CAEFF will be a

self-sufficient research enterprise through additional government and foundation

funding, industry sponsorship, and royalties from intellectual property.

Nanotechnology-Related Research

The CAEFF team is very active in nanotechnology research that can potentially

advance technology and impact our citizens’ health and well being. Our researchers

are using carbon nanotubes (highly ordered carbon structures) for biosensors, filtration, biocompatible coatings, and infection prevention. We are also exploring

nanotechnology as a means for improving healing from surgery and wounds. Controlling cell growth through optimally changing the texture at the nano-level of sutures and meshes will strongly influence healing and repair of living tissue as in

a hernia repair.

We have also discovered that activated carbon fibers (carbon fibers with nanosized pores) can be used to achieve 30 percent of the Department of Energy hydrogen storage target at room temperature and moderate pressure.

Adding nanoparticles to fibers dramatically improves the cut resistance of the fibers. Consequently, we are presently working with a company to exploit this technology for protective clothing that would improve workers’ safety. This technology

could be useful for police officers, workers that process food or handling sharp materials such as glass or sheet metal, or our infantry.

These areas point to nanotechnology that is being or is close to being applied in

a commercial venture. However, CAEFF is also conducting fundamental research

that provides results in new knowledge that may have impact on the way we make

fibers or assembly materials. One of our research groups is trying to mimic the way

spiders make fibers because spiders have optimized the fiber spinning process. They

make a fiber with excellent properties at about room temperature and atmospheric

pressure. Also, spiders do not use oil as the feedstock which is used for over 99 percent of all man-made fibers. All of the man-made fibers require various combinations of high temperature, high pressure, and toxic solvents. If we could mimic the

process that spiders use to make fibers, then we could potentially develop processes

that are less energy intensive and environmentally friendly.

We have also learning how to assemble molecules. Once we know how to do this,

we will be able to sense, capture, and destroy toxins. This technology could be applied to provide healthier hospitals and security against bio-terrorism.

Another research group has learned how to blend materials to produce

nanolayers. This technology has been termed smart blending. The implications of

this technology are tremendous, so much so, that patents have been issued, several

companies have licensed the technology and many more are interested. With smart

blending, plastic parts have improved strength, food packaging prevents spoilage

better, and static build up in plastic parts is minimized. We are just beginning to

tap the potential of this exciting technology.

Interaction with Industry

NSF Engineering Research Centers (ERC), like CAEFF, are required to have industrial partners on the research team. These partners help the ERC define the systems-level research program which is the key characteristic of an ERC. Systemslevel research occurs on three planes—fundamental knowledge, enabling technology,

and engineered system. Clearly, the industry partners provide practical perspective

on what fundamental knowledge is needed, the technology that must be developed

to make the research advancement a viable commercial product, and the experience

to package the technology into a system for commercialization.

By focusing on fiber and film technology, CAEFF supports a critical component

of the U.S. manufacturing base. The fiber and film industries provide the consumer

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with synthetic fibers, nonwoven fabrics, multi-layer films, flexible packaging, and

state-of-the-art electronic components—just to name a few of its products. When

CAEFF was selected as an NSF Engineering Research Center in 1998, economic

projections indicated that the fiber and film industries could grow by 50 percent

over the next ten years—if they responded to the needs of their customers by improving existing products, developing new products for future markets, and instituting more efficient, environmentally friendly processes. If it was apparent then

that traditional research and development practices, basically a trial and error approach to product and process development, had not produced the breakthroughs

necessary to revitalize these industries so crucial to our quality of life, today it is

glaringly evident. A significant portion of the commodity fiber industry has relocated

outside of the U.S. to take advantage of lower labor costs and to be close to the textile industry that they supply. Industry-wide restructuring has changed the operating philosophy of many major producers, who have increased profitability by reducing research and technical support. This point is driven home by the shift of polyester production from the U.S., Europe, and Japan to China, Japan and India and,

closer to home, the regular announcements of textile plant closings in the southeast.

However, the polymer industry is adjusting to globalization by focusing on valueadded or ‘‘niche’’ products and on products that are not labor intensive such as carpet and consumables. Development of value-added products ties well to the push for

an economy driven by innovation.

Since its inception, CAEFF’s mission has been to arm industry with a unique

modeling tool to design fiber and film processes and predict final properties of the

fiber or film product. This modeling capability provides industry with the knowledge, in a user-friendly software package, to develop innovative fiber and film products. Some of our industry partners are using this capability in designing processes

for new polymers. It is our belief that the fiber and film industries need to develop

products and processes in advanced engineering environments that use computer

modeling techniques and visualization to minimize experimentation, allow manipulation of both molecular and continuum information, and maximize engineers’ understanding of and control over structure formation and resultant properties. The

properties of films and fibers depend on their polymeric structure. In nearly all commercial fiber and film processes, this structure is created by the production process.

In response to these industry and societal needs, the Center has developed a materials design environment, featuring an integrated model that allows users to design an entire fiber or film system by inputting precursor specifications, processing

parameters, and desired properties. This virtual testbed will bring design improvements to current manufacturing systems, and also significantly reduces, if not alleviates trial-and-error experiments needed for the design of next-generation fiber and

film processes.

Given the evolution of our research and the emerging needs of industry, CAEFF

revised its strategic research plan in the last year. The primary change to the strategic plan was to establish six systems-level product areas that complement the

multi-length scale modeling effort that is the cornerstone of the vision and strategic

plan of CAEFF. Each of the product areas supports an opportunity for the polymer

industry to develop value-added products. CAEFF is uniquely position to conduct research in these product areas because each requires cross-disciplinary teams to

make substantive systems-level research advancements. The six product areas were

selected because they focus the modeling efforts on specific commercial products

that could help reshape the polymer industry as globalization drives production of

conventional fibers and films offshore. The research will enable industry to shorten

the cycle from concept to commercialization.

CAEFF presently has 20 industry partners that support our research with directed and undirected financial support and in-kind support. Our members represent a broad spectrum of companies from large to small and producer to user. The

logos of our industry partners are shown on the chart below. Each member pays a

membership fee that CAEFF management strategically directs to research, equipment and management. Some companies choose to provide additional funding for research specific to their needs. In this case, the company defines the research project.

In many cases a confidentiality agreement is executed so that the company can exploit the results of the research that they sponsored.

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Our industrial collaboration, including transfer of intellectual property, is governed by a common CAEFF Membership Agreement that all companies must execute. The Membership Agreement provides each industry partner a seat on the Industrial Advisory Board (IAB). The IAB is the body that provides industry guidance

on research direction and policy as discussed above. A primary function of the Membership Agreement is the transfer of intellectual property. The intellectual property

policy in the Agreement is structured to favor licensing by industry partners. The

following flow chart shows the licensing process that is called out in the Agreement.

The key features of the intellectual policy are: an industry sponsoring research has

first rights to a license resulting from their project; intellectual property resulting

from research funded by NSF, the State, or other federal agencies will be offered

to all of the industry partners; and CAEFF will place industry-experienced personnel on the committee that determines which intellectual property will be patented by Clemson University.

The two greatest barriers to academic/industrial cooperation are the elimination

or drastic reduction of central research and development staff in large companies

and the existence of companies that have the vision to exploit new nanotechnology

developed by CAEFF.

Support for CAEFF and Self Sufficiency

CAEFF derives its support from four sources: the base NSF ERC grant (currently

about $3.8 million annually), the state of South Carolina ($1.0 million annually as

cost share for the NSF ERC grant), industry membership fees (approximately

$150,000 annually), industry supported research ($250,000 annually), and other federal support routed through CAEFF ($3.6 million annually). When CAEFF was in

the formative stages the state and Clemson University provided even more support

for renovation of space and salary support for CAEFF leadership to develop the research and education program. Additionally, the state has provided funding for the

design and development of a new academic building on the Clemson campus for

CAEFF and the School of Materials Science and Engineering. Construction of the

building will commence when the next bond bill is approved by the South Carolina

legislature.

These funds can be divided into five broad categories: research, education, industry liaison, equipment, and management with the largest portion going to research,

followed by education and equipment. Generally, the support for industry directed

research his highly compatible with the research supported by NSF. We have used

our modeling capability and experimental testbeds, developed with NSF support, on

numerous industry sponsored projects.

The support for CAEFF from NSF and the state has been outstanding, enabling

us to be positioned as a national leader in polymer research. Professor Mike Jaffe

(New Jersey Institute of Technology and former employee of Hoechst Celanese Corporation,) has suggests that CAEFF provides ‘‘World leadership in modeling at

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Clemson CAEFF ERC.’’ Without the NSF ERC and State support, the claim would

not be possible. The NSF support for CAEFF will terminate in July 2008 as per

ERC guidelines. CAEFF leadership is developing a strategic plan to assure that the

NSF support will be replaced with funding from other resources.

Workforce Development for Nanotechnology

For the most part, the workforce and those entering the workforce in the

nanotechnology area have received traditional engineering or science educations

which do not provide a systems perspective related to nanotechnology. This perspective is crucial for companies because virtually all nano-based applications are multidisciplinary, requiring the talents of scientists and engineers from several disciplines. Further, most engineering programs teach design at length scales that are

much greater than the nanoscale.

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The Center is graduating students with a broad, systems-oriented technical foundation; modeling, simulation, and visualization skills; the critical thinking skills

necessary to both analyze and integrate information; an appreciation of the industry

perspective; and the teamwork and communication skills necessary to function effectively in collaborative virtual design environments. CAEFF’s integrated research

and education programs have developed advanced materials design techniques that

are communicated through courses, workshops and conferences, and outreach programs.

CAEFF is working with a team of universities to develop an undergraduate

macromolecular engineering curriculum that addresses design at the molecular

level. This exciting concept will essentially bring together features of a materials

science curriculum and those of engineering disciplines such as chemical and mechanical so that graduates will have background to consider molecular or nano

issues in the design of systems. Adding molecular level considerations to the design

process will expand the design envelope, leading to new value-added products in

transportation, medicine, defense, and national security.

Thirty-three percent of South Carolina’s population is minority, principally African-American, the opportunity exists to greatly increase the diversity in both the

student body and the faculty. For the population of South Carolina’s Land Grant

University to reflect the demographics of the state, a long-term, well funded educational program must be implemented at all societal and educational levels in

South Carolina so that all students realize the importance of higher education and

have prerequisite academic credentials and/or enter into bridge programs that give

them the opportunity to succeed in the rigorous academic environment of engineering and science disciplines. Consequently, the goal of CAEFF became to develop a

diverse community of scholars trained in polymeric materials design. The various

populations (pre-college, undergraduate, graduate and faculty) of this community of

scholars will mirror the demographics of the State of South Carolina. Meeting this

overall metric was very aggressive and will substantially exceed national engineering-wide averages for the involvement of women, under-represented racial minorities, and Hispanic-Americans. We are approaching our goals for under-represented

racial minorities in our undergraduate and masters student populations. Outlined

below are the components of CAEFF’s diversity program.

The Center has formed a partnership with Clark Atlanta University (CAU) to increase the participation of African-American faculty and students in the research

and education programs of CAEFF. A research contract was awarded to CAU for

the remainder of CAEFF’s NSF lifetime. Faculty members and students from CAU

are being integrated into CAEFF’s research topics as core members of the research

teams. CAU is being targeted to provide undergraduate and graduate students to

CAEFF’s programs at Clemson University. Our intent is to develop a dual degree

program with CAU.

Diversity in the Center has been fostered by outreach through Women in Science

and Engineering, the Girl Scouts of the USA, and the Research Experiences for Undergraduates program. The Center has also secured supplemental funding to support diversity initiatives. Department of Education-funded Graduate Assistantships

in Areas of National Need provide attractive financial incentive packages to minority and female students of superior academic ability from across the Nation. The

Hearst Scholarship endowment targets a diverse, academically qualified and economically disadvantaged student population. The newly-funded Southeast Alliance

for Graduate Education and the Professoriate will provide a mechanism for recruiting students from the University of Florida, the University of South Carolina, and

the University of the U.S. Virgin Islands. This grant will also provide international

opportunities for students through collaboration with the Latin American and Caribbean Consortium of Engineering Institutions.

Our graduates are entering the workforce as engineers and scientists in the polymer industry. Many on them have taken jobs with our industry partners. Several

have chosen to enter academe.

The Federal/State/Industry/Academe Nanotechnology Partnership

The National Nanotechnology Initiative provides significant support for infrastructure, faculty, and students. As various components of the research mature, the

challenge will be to transfer the technology in to profitable business ventures. It is

likely that an entirely new industry will be spawned from the nanotechnology initiative. This new industry will probably be comprised of small businesses that fit a

niche or are exploiting research advancements. For these small companies to survive, they may well need bridge funding which can be made available through the

Small Business Innovative Research and Small Business Technology Transfer ProVerDate 11-MAY-2000 16:05 Oct 27, 2005 Jkt 021195 PO 00000 Frm 00032 Fmt 6633 Sfmt 6621 C:\WORKD\RES05\051805\21195 SCIENCE1 PsN: SCIENCE1
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grams, available from all federal agencies, and also the Advanced Technology Program which is run through the National Institute of Standards and Technology.

To accelerate the application of nanotechnology and to identify unforeseen issues

surrounding nanotechnology systems, agencies that have a major stake in applied

research and development such as NASA, the Department of Defense, and the Department of Transportation can bring nanotechnology into practice through demonstration programs. This paradigm was used successfully by NASA and the Department of Defense to accelerate the application of advanced composite materials

in the 1970’s and 1980’s. These programs were partnerships between government

and industry that drove industry to educate its personnel and develop infrastructure. It also provided validation of the advantages afforded by composites. Finally,

after 20 to 25 years, advanced composites are being extensively used on commercial

aircraft for major structural components. This large time lag was predictable because industry needed time to train a workforce, establish design methods, and

build a database, all of which are required for confident application of composites

in complex systems and structures.

Closure

Thank you for inviting me to testify before your subcommittee today. I am fully

supportive of the National Nanotechnology Initiative. It is a critical initiative with

huge potential to impact the citizens of the U.S. I would be pleased to answer your

questions.

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Chairman INGLIS. Thank you, Dr. Kennedy. We look forward to

those questions.

Dr. Cassady.

STATEMENT OF DR. JOHN M. CASSADY, VICE PRESIDENT FOR

RESEARCH, OREGON STATE UNIVERSITY

Dr. CASSADY. Chairman Inglis, thank you for holding this hearing on the National Nanotechnology Initiative. It is a privilege to

be invited to testify before you this morning not only as a representative of Oregon State University and the Oregon

Nanoscience and Microtechnologies Institute, ONAMI, but also as

a scientist interested in the intersection of research and economic

development.

I also want to acknowledge how pleased we are at Oregon State

that our representative, Congresswoman Darlene Hooley, is now

serving as the Ranking Minority Member on this Research Subcommittee.

I want to acknowledge the assistance of the leaders of ONAMI

at Oregon State, the Dean of Engineering, Ron Adams, and the Director of ONAMI, Skip Rung, for input to this testimony.

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My perspective is not as an expert in the area of nanotechnology,

but as a person trained in organic chemistry who moved into the

interdisciplinary area of medicinal chemistry and was involved during my research career in the discovery and design of potential

anti-cancer drugs. Nanotechnology touches health in a major way,

and eventually will have a major impact in the area of diagnostics

as well as drug delivery.

As a faculty member, department chair, dean of a college of pharmacy, and now the new Vice President for Research at Oregon

State, I have promoted programs that are interdisciplinary and

translational, so one of the things that attracted me to Oregon was

the Oregon experiment in innovation that led to ONAMI.

Oregon is a small state, but it is thinking and planning in a big

way as it moves in the direction of a commercialization alliance in

micro and nanotechnology. All of the components were there in

2000, but they weren’t aligned. There were institutional resources,

our state’s public research universities, Oregon State, University of

Oregon, and Portland State, powerful research enterprises, the industrial infrastructure, companies comprising the Oregon ‘‘Silicon

Forest,’’ Intel, HP, FEI, LSI Logic, Xerox, Tektronix, ESI, InFocus

Systems, Pixelworks, Sharp, and many others.

Another strength was our regional government laboratory, Pacific Northwest National Laboratory, PNNL. Then in 2002, an economic development report was commissioned by the state, which

recommended the development of signature research centers. In

2003, the Oregon State legislature created the Oregon Nanoscience

and Microtechnologies Institute, ONAMI, with an initial allocation

of $21 million for support of operating costs and infrastructure.

The state began a commitment to make innovation a high priority. The research universities, the high-tech industries, and

PNNL joined together in aligned missions in a national model for

collaboration.

Let me describe one of the partnerships developed at Oregon

State to create the Microproducts Breakthrough Institute, MBI.

This institute, which is housed in a building on HP’s campus, is a

result of a collaboration between OSU and HP, which has donated

the lab space, and PNNL, which is providing support through research collaborations and scientific personnel that are assigned to

the project. When the institutes’ laboratories become operational

this year, up to 10 PNNL research staff are projected to be located

at MBI in addition to faculty and students from OSU.

Additional support from the state is expected, and this initial investment has leveraged over $5 million in support from the universities, $10 million from industry and private funding, and more

than $30 million in competitive research awards. This cooperative

venture is unprecedented and will lead to talented graduates, new

technology, and corporate development.

There are some barriers to collaboration. Some of these are cultural. On the academic side of the house, I think it is acceptance

of new metrics for academic excellence and our reward system. On

the corporate side of the house, control of intellectual property

rights and confidentiality limitations are what lead to what I consider to be non-transparent communications, in addition, rapid

33

changes in funding decisions, personnel changes, and corporate

structure.

Some of the barriers to protection, transfer and commercialization are lack of investment funds for IP protection, lack of gap

funding for product development, and developing processes to make

it easier to start businesses in the university.

We also need to make it easier to do business with the university

and streamline our IP licensing. There are workforce issues. There

is an impact on graduate programs due to security issues, and we

need to keep the funding for research and graduate programs a priority.

In order to facilitate advances in these areas, one possible solution is to establish federal funding sources that set clear objectives

related to translation of technology and economic development, put

in place metrics to measure progress against these goals, and hold

recipients accountable for funding for achieving these outcomes.

It is the people of Oregon and the Nation that will benefit from

programs like ONAMI. From individuals who can take advantage

of such devices as compact portable home kidney dialysis devices

to communities which experience economic prosperity with the establishment of new nanotechnology businesses and industry.

In conclusion, I wish to thank you for this opportunity.

Nanotechnology is an exciting new area, which will have tremendous impact across multiple fields of science. We are excited that

in Oregon we have been able to develop a vision for significant

partnerships, such as ONAMI, and that private, state, federal, and

university investments have made the vision a reality.

Thank you.

[The prepared statement of Dr. Cassady follows:]

PREPARED STATEMENT OF JOHN M. CASSADY

Chairman Inglis, thank you for holding this hearing on the National

Nanotechnology Initiative. It is a privilege to testify before you this morning, not

only as a representative of Oregon State University (OSU) and the Oregon

Nanoscience and Microtechnologies Institute (ONAMI), but also as a scientist interested in the intersection of research and economic development. I spent nearly forty

years an academic research scientist and only recently closed my laboratory at Ohio

State University to take the post of Vice President for Research at Oregon State

University. I am very excited about the opportunity to oversee the OSU research

enterprise and to work toward ensuring that innovation at the lab bench contributes

to public life, be it through public education, outreach and engagement or business

and industry. I also want to acknowledge how pleased we are at Oregon State University that our Representative, Congresswoman Darlene Hooley, is now serving as

the Ranking Minority Member on this Research Subcommittee.

My testimony to you this morning comes from the perspective of a research administrator. I am an organic chemist and spent most of my research career focused

on the discovery and design of anticancer drugs; I am not an engineer by training

nor am I an expert in nanotechnology. However, what I can speak to is the desire

of researchers to ask questions and solve problems and what I believe is my responsibility as a research administrator to direct these questions in a way that works

to sustain the Nation’s economic development and global technological leadership,

builds an educated workforce, and contributes to public health and security.

I believe these were all goals in the development of the National Nanotechnology

Initiative, which was envisioned as a roadmap for the Federal Government’s investments in a critical area of science. In Oregon, we, too, kept these goals in mind as

we mapped out our plan to be a part of this scientific revolution and designed a

research institute that created innovative new partnerships that cross university,

government and industry boundaries that have not previously been formally connected.

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Three words describe ONAMI: innovation, collaboration, and commercialization.

The Oregon Nanoscience and Microtechnologies Institute is the first ‘‘signature research center’’ funded by the State of Oregon for the purpose of growing research

and business development in order to accelerate innovation-based economic development in Oregon and the Pacific Northwest. Oregon policy-makers have the goal and

desire to establish additional ‘‘signature research centers’’ that will lead to a longterm economic and competitive advantage for Oregon, including commercialization

of academic research and the formation of new businesses.

ONAMI is also an unprecedented and powerful collaboration involving Oregon’s

three public research universities—Oregon State University, Portland State University, and the University of Oregon; the Pacific Northwest National Laboratory (Richland, WA); the State of Oregon; and the emerging ‘‘Silicon Forest’’ high technology

industry cluster of Oregon and southwest Washington.

Many factors precipitated this focus on nanotechnology in Oregon. Businesses in

Oregon were already leaders in industrial research and development. Intel employs

15,450 employees in Oregon and is the home of the headquarters of their semiconductor technology research and development unit. Hewlett Packard’s Ink Jet headquarters are in Oregon and the company’s largest and most advanced technology

site with 3,900 employees is also located in the state. FEI Company, LSI Logic,

Tektronix, Xerox, Invitrogen, InFocus, Pixelworks and Electro Scientific Industries

are just a few of the many other technology-based industries with a significant presence in the state. Our proximity to the Department of Energy’s Pacific Northwest

National Laboratory (PNNL) was also a factor. PNNL, a $650 million year research

operation is the largest R&D operation west of Chicago and north of San Francisco.

And, last, but certainly not least, Oregon’s three largest research universities have

world-class expertise and have decided to collaborate in three critical areas: Microtechnology-Based Energy, Chemical and Biological Systems; Safer Nanomaterials

and Nanomanufacturing and Nanoscale Metrology for Nanoelectronics and other applications.

Microtechnology-based Energy, Chemical and Biological Systems, led by Kevin

Drost of Oregon State University and Landis Kannberg of the Pacific Northwest National Laboratory, integrate nanoscale materials science and mechanical microstructures to miniaturize a wide range of important devices for both military and commercial use. Translational research and commercialization efforts related to this

work will be carried out by the Microproducts Breakthrough Institute (MBI), an

ONAMI facility jointly staffed and operated by PNNL and Oregon State University.

These technologies will have widespread commercial application and may well

lead to whole new industries. Examples include compact power supplies for portable

electronics; vehicular and auxiliary fuel cell systems; distributed biofuel, hydrogen,

and chemical production at point-of-use; automotive cooling systems that operate

using exhaust heat; and a new generation of distributed heating and cooling systems for residences with energy savings of approximately 50 percent. OSU researchers in this area are also working with an Oregon company, Home Dialysis Plus

(HD+), to develop a compact kidney dialysis machine that will dramatically improve

quality of life for end-state renal disease patients while also reducing treatment

cost.

The Safer Nanomaterials and Nanomanufacturing research, led by Jim Hutchison

of the University of Oregon, is focused on developing functional nanomaterials and

nanomanufacturing methods that simultaneously meet the need for high performance materials, protect human health and minimize harm to the environment. This

initiative has been focused on the applications of mixed nanoscale and microscale

systems to research problems such as those involved in nanomanufacturing. The initiative takes advantage of the world-class expertise within ONAMI in green chemistry, nanoscale materials and processes and the design and fabrication of

microscale systems (such as microchannel reactors).

Discoveries in nanoscience are providing new, powerful tools for achieving green

chemistry goals such as reducing the use of hazardous materials and improving the

efficiency of material and energy consumption. The opportunity exists to apply

nanotechnologies to the invention of new products and processes that will produce

superior products for less money and simultaneously enhance public security and

protect our environment. Researchers within the ONAMI are at the forefront in defining this emerging field with their research programs that focus on safer/greener

products and manufacturing methods for making products.

The Nanoscale Metrology Initiative, critical to continued progress in semiconductors and other forms of nanoscale manufacturing, is led by John Carruthers, former

Director of Components Research and Development for Intel, and Distinguished Professor of Physics at Portland State University (PSU). The team’s efforts are supported by the PSU microscopy facility, which features one of the Pacific Northwest’s

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most powerful transmission electron microscopes and other instruments that enable

the characterization of nanostructures. The ability to design, fabricate and test

nanoscale materials and devices depends entirely on the ability to image and measure them, which the network of ONAMI-affiliated user facilities can provide.

The purpose is to initiate additional research in nanometrology and testing of

nanodevices and circuits that enables the implementation of nanoscale materials

into useful electronic applications such as high density memories on silicon integrated circuits.

This will leverage the large nanotechnology-related investments of LSI Logic,

Nantero, Intel, Hewlett-Packard, ESI, FEI Company, and Invitrogen in Oregon’s ‘‘I–

5 Technology Corridor’’ between Portland and Eugene and ensure that a leading

edge research and education capability will be established to further grow the global

competitiveness of the nanotechnology industries there.

All of these ONAMI partners came together with several goals in mind: to attract

federal research investments in the Oregon and Pacific Northwest; to provide an

outstanding collaborative environment for researchers who are at the forefront of innovation in their fields; to increase the impact of this research on Oregon industry;

to develop superior workforce talent—especially growth in Ph.D.s; and to spin out

the innovations and new companies that will provide the high-wage jobs of the future.

At your request, I am providing to you today responses to the questions you posed

examining the challenges and opportunities related to nanotechnology, based on our

experiences at Oregon State University and with the Oregon Nanoscience and

Microtechnologies Institute (ONAMI).

• How do Oregon State University (OSU) and the Oregon Nanoscience and

Microtechnologies Institute (ONAMI) interface with the private sector?

What are the greatest barriers to increased academic/industrial cooperation in nanotechnology?

In Oregon, the cooperation OSU and our other academic partners have with private sector via ONAMI is unprecedented. Perhaps most notably, Hewlett-Packard

developed a very comprehensive inter-institutional agreement with OSU. As a part

of this partnership, HP donated the use of a building on their campus in Corvallis,

Oregon to accelerate the startup facility. This was a remarkable display of corporate

citizenship. This facility serves as a product development space for new ONAMI-related companies while the three universities complete construction of additional

ONAMI research facilities. HP donated the three-year lease of the building, valued

at $2 million. The construction of new facilities, currently underway, is primarily

funded through gifts and state appropriations.

ONAMI Board members include senior executives from some of the world’s leading nanotechnology companies: Hewlett Packard, FEI Company (the world leader in

tools for nanotechnology, based in Hillsboro, Oregon), LSI Logic and Nantero (a

partnership with a focus on nanotechnology-based semiconductor memory development, based in Gresham, Oregon), Pixelworks (the fourth fastest growing company

in the U.S.), and Battelle (the operator of five national laboratories). The ONAMI

board is chaired by a general partner of the state’s leading venture capital firm and

ONAMI has relationships with many others in the investment community. ONAMI’s

sponsored research includes research collaborations with HP, FEI, LSI, Nantero,

Xerox, many smaller companies, and Intel. In several cases, we are able to work

with industry research and production facilities that are far superior to anything

most universities typically acquire. ONAMI also has a physical joint venture with

PNNL/Battelle, which is a unique asset for not only performing cutting edge research, but translating that research into new products, new companies, and highwage jobs.

At Oregon State University, I also want to mention other efforts that keep the

university connected to industry. In our College of Engineering, we have a very successful internship program, the Multiple Engineering Cooperative Program

(MECOP). This internship experience is so sophisticated it bears little resemblance

to the ordinary internships that are increasingly common in higher education.

MECOP is, and has been since its inception more than 20 years ago, self-supporting.

Dues are paid by participating businesses and industry to support the staff needed

to develop, monitor and fine-tune the program. The program is built on a high order

of industry interaction with the university and its students; and it is continually improved as the University adjusts its curriculum on recommendations made by the

industry partners. Participating industries include Freightliner, Boeing, Sun

Microsytems, Tektronix and many, many others. Additionally, as at other institutions, OSU faculty are engaged in industry funded R&D, some researchers utilize

36

their sabbatical leave to gain private industry experience and others take leaves of

absence to help start up new companies.

While our ties to private industry are strong, there are existing barriers to collaboration. The first is industry’s need to own the intellectual property rights on research they pay for, which can be in direct conflict with faculty and student needs

to publish their work, as well as, in some instances, public information laws. An additional barrier is the proprietary nature of private business strategic plans and

their internal efforts to achieve them. It is often difficult for academic researchers

to know if their work is relevant to industry needs when industry is trying to protect their product development efforts to ensure they are developing unique and

competitive products for the marketplace.

Academic and research funding traditions and cultures have traditionally not rewarded (through promotion, tenure, peer reputation) researchers for working in

teams, performing industrially relevant research, patenting their inventions, or commercialization. In addition, unpredictable funding processes in both industry and

academia also present challenges. Industry also is subject to frequent organizational

restructuring involving staff turnover and reassignment.

The lack of research funding for joint industry/university research is a critical

barrier and has slowed down several promising opportunities. While larger businesses typically have some kind of R&D budget, this is not the case for smaller,

emerging businesses. Generally there is a lack of university funding for what the

military calls ‘‘6.2’’ research, research that seeks the application of basic science.

The National Science Foundation (NSF) funds nearly exclusively basic science and

does not typically fund development. The Defense Advanced Research Projects Agency (DARPA) is the best source for university 6.2 funding, but this often is for highly

specialized devices with military applications and without a strong commercial market. ONAMI researchers have expressed a need for a source of funding that could

be seen as ‘‘a DARPA’’ for commercial nanotechnology.

• How does the State of Oregon provide support to OSU and ONAMI for

nanotechnology and other high-technology activities? How does this complement funding from the Federal Government and the private sector?

What, if any, gaps remain?

With unprecedented focus and consensus, Oregon has chosen to focus on

Nanoscience and Microtechnologies as the state’s first ‘‘signature research center’’,

based on a clear finding that this represented the greatest overlap of (1) existing

research excellence, (2) future market opportunity, and (3) Oregon’s existing industrial strengths. In 2003, the State committed $21 million to ONAMI, and the Governor included $7 million in the proposed state budget for 2005–6. In addition, there

is a dedicated State of Oregon Innovation Economy Officer, a proposed statutory Oregon Innovation Council, and state-assisted mechanisms to increase the supply of

venture capital by almost $140M, of which over $30M will be pre-seed and seed

stage. The state’s role is to assist the research institutions in increasing their capacity for competitive sponsored research and to assist entrepreneurs in commercializing new technology.

Industry support of ONAMI’s operation since its inception has totaled approximately $10 million in equipment, facilities use commitments, R&D, and gifts. Other

research awards have totaled approximately $25 million, including federal awards

from the Department of Defense and NSF, as well as foundation awards. Oregon

State University’s commitment thus far, outside of the specified state appropriations

for ONAMI, is estimated to be approximately $3 million.

Again, the gap between State, federal and private support is in support for investigations in technologies that are beyond the basic research, but not quite ready to

be tested for commercialization. Smaller businesses often simply do not have research budgets to support these needs, and government funding for this stage of inquiry is not widely available.

• What is the workforce outlook for nanotechnology, and how can the Federal Government and universities help ensure there will be enough people with the relevant skills to meet the Nation’s needs for nanotechnology

research and development and for the manufacture of nanotechnologyenabled products?

During the December 2004 Oregon Leadership Summit Steve Grant ,Vice President for the Technology & Manufacturing Group at Intel Corporation reported that,

‘‘Over the last four years, Intel has hired 441 PhD’s in engineering and computer

science in Oregon. Only seven came from the Oregon University System. [Intel]

hired 347 Master’s degree engineers and only 11 percent came from Oregon schools.

At the Bachelor degree level [they] did better, with 21 percent.’’ Oregon is not proVerDate 11-MAY-2000 16:05 Oct 27, 2005 Jkt 021195 PO 00000 Frm 00040 Fmt 6633 Sfmt 6621 C:\WORKD\RES05\051805\21195 SCIENCE1 PsN: SCIENCE1
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ducing enough highly skilled quality engineers to meet our hiring needs, especially

at the graduate levels. However, this is not just the case in Oregon, it is a problem

nationwide.

Increased barriers to American colleges and universities for foreign students, as

well as greatly enhanced opportunities for them at home, and a lack of progress in

filling the pipeline with qualified American students are trends in direct opposition

to an increased need for workers with advanced degrees in physical sciences and

engineering. Without a trained workforce, the United States will find it hard to remain a leader in nanotechnology. Further, intense global competition has reduced

industry’s investment in scientific research, while the Federal Government investment in research that will lead to technology-based economic development has stagnated. This is a confluence of unfavorable trends.

I know you have heard this message repeatedly, but federal funds for physical

science and engineering are a part of what is needed to address the work force

issue. In the end, faculty and graduate students go where the money is and funding

for nanotechnology research is critical for producing the graduate level workforce

that nanotechnology-based industry needs. Since World War II, the Federal Government has supported training grants and research assistantships hand-in-hand with

support for basic research. The combination of study and training is a successful avenue to train a highly educated workforce.

We also need a greater emphasis on curriculum development at all levels with serious research on what academic skills are needed for the emerging technologies,

best practices in science and engineering education need to be identified and disseminated throughout the academic community.

What is also critical is inspiring young students, in elementary school, high

school, and as undergraduates to see themselves as scientists and to be exposed to

exciting new and multi-disciplinary trends. We need more students to find scientific

concepts practical and approachable and we need to inspire them to consider careers

in science. At Oregon State University, we are host to numerous outreach programs

that try to get the attention of future scientists and engineers. Many of these programs, too, are federally funded, such as the NSF GK–12 graduate fellowship program, and the NASA Space Grant program, and I encourage you to continue to invest in these activities and to work toward ensuring that they are administered in

a way that ensures their effectiveness. I also think that there should be ways to

encourage novel curricular changes.

• How can Federal and State governments, industry, and academia best cooperate to facilitate advances in nanotechnology?

It is generally recognized that university-based research is a long-term investment

in the future. The Federal Government’s support for basic research contributes to

the discoveries and innovation that underpins the future technologies and knowledge that contribute to the well-being of our nation. However, as our scientists get

involved in areas of research, such as nanotechnology, where there are demands for

near-term delivery, many challenges emerge.

In order to facilitate advances in these areas, one possible solution is to establish

federal funding sources that set clear objectives related to translation of technology

and economic development, put in place metrics to measure progress against these

goals, and hold recipients of funding accountable for achieving outcomes. While this

is not an appropriate direction to take with basic research, there are ways to designate a certain percentage of publicly funded research for multi-disciplinary teams

focused on big and emerging fields with a potential for translation and commercialization. An example of this is the NIH Roadmap Initiative and the National Cancer Institute (NCI) National Cooperative Drug Discovery Programs (NCDDGs).

As I noted earlier, three words describe ONAMI: innovation, collaboration, and

commercialization. If Federal and State governments, industry, and academia can

all keep these in mind as they examine avenues to advance nanotechnology research

and development, it is the public that will benefit from individuals who can take

advantage of such devices as compact, portable, home kidney dialysis devices to

communities which experience economic prosperity with the establishment of new

nanotechnology businesses and industry.

In conclusion, I wish to thank you for this opportunity to address you today.

Nanotechnology is an exciting new area which will have tremendous impact across

multiple fields of science and throughout many aspects of our lives. We are excited

that in Oregon we have been able to develop a vision for significant partnerships

such as ONAMI and that private, State, federal and university investments have

made the vision a reality.

38

BIOGRAPHY FOR JOHN M. CASSADY

John M. Cassady received a B.A degree from DePauw University in 1960 with a

major in chemistry; he obtained his M.S. degree in 1962 and his Ph.D. degree in

1964 from Western Reserve University with a major in Organic Chemistry. Dr.

Cassady was an NIH postdoctoral fellow from 1965–1966 at the University of Wisconsin where he worked under the direction of Dr. Morris Kupchan on the isolation

and structural elucidation of tumor inhibitors from plants. In 1966, he joined the

faculty of the School of Pharmacy, Purdue University as Assistant Professor in the

Department of Medicinal Chemistry and Pharmacognosy. He was promoted to Associate Professor in 1970 and Professor in 1974. He was appointed Associate Head of

the Department of Medicinal Chemistry and Pharmacognosy in 1976 and became

Head of the Department in January 1980. In 1987, Dr. Cassady was appointed as

the Glenn L. Jenkins Distinguished Professor of Medicinal Chemistry and Pharmacognosy at Ohio State University College of Pharmacy. On July 1, 2003 he returned to the faculty after more than 15 years as Dean. Dr. Cassady was appointed

as Vice President for Research at Oregon State University, March 2005.

Dr. Cassady holds membership in the American Chemical Society, American Society of Pharmacognosy (ASP), Academy of Pharmaceutical Sciences, British Chemical

Society, AACR, ASHP, AAAS, Sigma Xi, Rho Chi, and the AACP. He has served on

the nominating and publicity committees for the ASP, was scientific program chairman for the 1976 annual meeting of the Society, was elected to the Executive Committee (1978–1981) and President (1993–1994) and is chair of the ASP Foundation

Board (1995–present). He has served as a consultant to the National Institutes of

Health and was a member of the Bioorganic and Natural Products Study Section

from 1980–1984. He has served on the Editorial Advisory Board of the Journal of

Natural Products and the Journal of Medicinal Chemistry. Dr. Cassady has served

on the publicity, scientific program and awards committees for the Medicinal Chemistry Division of the American Chemical Society. He was appointed a member of the

Long-Range Planning Committee of the Medicinal Chemistry Division from 1983–

1986 and in 1987 he was elected Councilor for the Medicinal Chemistry Division.

He was appointed to the National Association of Chain Drug Stores (NACDS) National Advisory Council from 1997–2002. He was a member of the AACP National

Commission on Graduate Education (1996–1998), Chair of the AACP Institutional

Research Advisory Committee (1997–1998), and a member of the Ad Hoc Committee

on Academic Budgeting and Accountability (1997–1998). He was elected AAAS

Chair-elect for the Section of Pharmaceutical Sciences in 1997 and served as Chair

from 1999–2000. He served on the ASHP Commission on Goals in 2001 and 2002.

He currently serves on the Corporate Advisory Board of Pacific Northwest National

Laboratories (PNNL).

Dr. Cassady’s research interests involved the discovery and design of anticancer

drugs from natural products and nutraceuticals, specifically, the isolation, structural

elucidation, and chemical studies of chemopreventive and antitumor agents from

higher plants and the synthesis of potential antitumor agents. Other areas of research interest involved the design of enzyme inhibitors, including protein tyrosine

kinases, synthesis of selective dopamine agonists as potential antipsychotic agents,

anti-malarial and anti-Parkinson’s agents from natural products. His research resulted in the publication of more than 150 manuscripts and 150 abstracts and over

$12,000,000 in research support from the NIH and other funding agencies. Dr.

Cassady has developed strategic alliances between academic and corporate sectors.

He led a strategic alliance with Pharmacia, served on the Corporate Advisory Board

of Yuhai Phytochemicals, China, Dean’s Advisory Board for Merck-Medco and as a

consultant for Gaia Botanicals, Leadscope, Milkhaus and SSCI.

Dr. Cassady was elected to membership in the Royal Society of Chemistry and

American Association for Advances in Cancer Research, was elected a Fellow of the

Academy of Pharmaceutical Sciences in 1979, a Fellow of the American Association

of Pharmaceutical Sciences in 1987 and a Fellow of the AAAS in 1990. Dr. Cassady

received the Purdue University Cancer Research Award in 1981 and the Gisvold

Lecture Award from the University of Minnesota in 1986. In June 1989, he was

awarded the D.Sc. (Hon.) by DePauw University. He received the Research Achievement award in Natural Products Chemistry from the American Pharmaceutical Association in 1990. In 1991, he was appointed Honorary Professor to the Institute of

Medicinal Plant Development by the Chinese Academy of Medical Sciences.

39

Chairman INGLIS. Thank you, Dr. Cassady.

Mr. Fancher.

STATEMENT OF MR. MICHAEL FANCHER, DIRECTOR OF ECONOMIC OUTREACH, ASSOCIATE PROFESSOR OF NANOECONOMICS, ALBANY NANOTECH

Mr. FANCHER. Thank you, Mr. Chairman and Members of the

House Research Subcommittee on the Committee on Science. I am

appearing here today to provide our perspective on what we believe

is a new model for technology, business, and education that creates

what I would call a naturally occurring multiplier, or as PCAST refers to it as the innovation cluster with academia, governmental

agencies, and industry each contributing and benefiting in their

own way.

It is important for the Science Committee to understand that

nanotechnology is emerging from the discovery phase and is now

entering the commercialization stage and that the NNI must evolve

and expand its funding priorities to address the daunting techVerDate 11-MAY-2000 16:05 Oct 27, 2005 Jkt 021195 PO 00000 Frm 00043 Fmt 6633 Sfmt 6601 C:\WORKD\RES05\051805\21195 SCIENCE1 PsN: SCIENCE1
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nology, business, and economic challenges confronting the Nation’s

high-tech industries.

As the promise of nanotechnology provides game-changing opportunities in a variety of applications as being better defined, as we

heard from Scott Donnelly, it is becoming increasingly apparent

that the cost to commercialize nanotechnology is rising exponentially.

Chairman INGLIS. Mr. Fancher, excuse me just a second.

Mr. FANCHER. Yes.

Chairman INGLIS. Do you want some slides up?

Mr. FANCHER. Yes, I am. This is just my intro.

Chairman INGLIS. Oh, okay.

Mr. FANCHER. Companies are seeking new models to collaborate.

What I would like to do is just provide a few slides to describe

what that model is, and so please bear with me.

[Slide.]

I think it is helpful to understand that—and we have heard already that Oregon is taking the—New York—the state has gotten

involved in this, and New York State has, I think, done it in a way

that I think can be replicated around the country. And when you

look at the strategy New York State is focused on, it has been four

key drivers: selecting an overarching discipline, such as

nanotechnology, investing in state-of-the-art infrastructure, focusing on world-class, hands-on education and training, not just Ph.D.

and Masters in Engineering, but the whole supply chain, and then,

of course, leverage public-private partnerships.

I would like to just spend a slide on each to give you an example.

[Slide.]

Well, nanochips. We have already heard about it. Nanochips are

enabling defense, bio-health, sensors, aerospace, pervasive tetherfree computing, communications, energy, and of course, automotive

industry. I think the key element here, though, is the nanochip industry is probably the first industry that has begun integrating

nanotechnology into a high-yield, low-cost production process mode.

That means they are breaking the ground for other industries to

adapt that technology, that process technology, to a variety of applications.

[Slide.]

A key driver, too, for New York State has been investment in

state-of-the-art infrastructure. This is the Albany NanoTech complex. It will be at about $3 billion in assets by the end of 2006 in

addition to the facilities that you see there. We have around

750,000 square feet of cutting-edge facilities with 85,000 square

feet of clean rooms for what is known as ‘‘300-millimeter wafer

process technology.’’ That is important because 300-millimeter is

the state-of-the-art of technology used by the computer chip industry. And it will be the platform on which nanotechnology is integrated for a variety of those applications that I already described.

Our partners include Sematech, IBM, AMD, Micron, Tokyo Electron, General Electric, and ASML. We have 200 researchers at Albany NanoTech in the college and 300 industry scientists on site,

and by the end of 2007, we will have around 1,600 people in the

complex.

41

I would like to spend just two slides on workforce, because I

think that is a particularly important challenge.

[Slide.]

And with that we have established the world’s first college of

nanoscale science and engineering. We have constellations in

nanoscience, nano-engineering, nano-biotechnology, and nano-economics, of which I am Associate Professor in that school.

I think when you look at the challenge for the workforce, what

you are looking at, and I am quoting the National Science Foundation, is that the United States will need two million nanotech-savvy

workers by the year 2014. That is a daunting challenge when you

consider that China is producing 250,000 engineers and scientists

per year while we are producing 56,000 engineers and scientists,

and I take that number from the American Electronics Association.

When you look at the breakdown of that two million, 20 percent

will be scientists, and 80 percent will be the engineers, technicians,

operators, business leaders, etc. So that means we need to start focusing on children 10 to 17 years old right now if we are going to

make that objective.

I would like to give a case in point on what Albany NanoTech

has been doing in the College of Nanoscale Science and Engineering to meet those workforce needs.

Well, as I have said, we have established the world’s first college

to break the walls down between the sciences so that everyone is

talking common language between biology, computational science,

physics, and chemistry. We have established partnerships with our

community colleges, supporting the semiconductor manufacturing

technology training program for the operators of the tools. We have

high school and undergraduates doing internships in the program.

And we also host the semiconductor equipment materials international workforce development institute, what we call a ‘‘chip

camp.’’ It is a four-day exposure for your vocational students. And

then finally, we have established a $6 million center for the construction trades.

Again, I think what is important to understand is that atomicscale manufacturing, if pushing all levels in the workforce to rise

to new levels of expertise and training right down to the construction of the building to hooking up the equipment is all now very

critical to the success of the overall commercialization.

The third driver for New York State has been establishing the

Center of Excellence in Nano-electronics by Governor Pataki back

in 2001. This has been—and I am just doing this as a timeline, but

it has been critical to provide the infrastructure and partnerships

with industry, with the SAI, with the focus center, IBM, the anchor

tenant, and the Center of Excellence with $150 million. We have

a Sematech North program, Tokyo Electron R&D center, the first

established outside of Japan is embedded in our facilities. Our complex was completed about a year ago. Albany NanoTech was

formed. We have established the first college. We recently announced the $400 million research center with ASML, one of the

world leaders in lithography equipment. And then finally, we are

closing on what we call the Center for Semiconductor Research, a

partnership with Applied Materials, which is about $450 million.

42

So I would like to take that focus of where we are, and now let

us go take it to the global marketplace.

I think it is important for you to understand that our competition

is very steep, and it is global, and that what is happening in the

nanochip world is global alliances. And when you look at what is

going on in Albany, you are seeing a partnership that initially

started with AMD, Sematech, and IBM and has now grown to

Sony, Toshiba, and Chartered Semiconductor. Our competition is in

Belgium. It is IMEK. It includes SD Phillips, and a few other companies, TSMC, and Motorola, and then, of course, Japan.

The global R&D competition drives the industry clustering effect

that PCAST mentioned. And for New York State, we have already

achieved $8 billion of investment just since 2002. I think two——

Chairman INGLIS. Mr. Fancher.

Mr. FANCHER. Yes.

Chairman INGLIS. Hold on just a second.

Mr. FANCHER. Okay.

Chairman INGLIS. We are expecting votes at 11:15, so we probably need to move a little quickly.

Mr. FANCHER. Okay.

[The prepared statement of Mr. Fancher follows:]

PREPARED STATEMENT OF MICHAEL FANCHER

A Successful New Paradigm for Innovation and Education

University based, co-located with some of the biggest names in industrial innovation, and committed to building a thriving, educated and globally-competitive workforce, Albany NanoTech is a $3 billion enterprise dedicated to creating partnerships

for leading edge nanotechnology innovations. Through its unique, vertically-integrated model that includes the world’s first College for Nanoscale Sciences and Engineering at the University at Albany—State University of New York, Albany

NanoTech’s partnerships with business, government and academia have created the

world’s premier powerhouse for research, development, technology deployment, and

education resource supporting accelerated nanotechnology commercialization.

Albany NanoTech is the umbrella under which the CNSE and the five Centers

operate; namely, the Center of Excellence in Nanoelectronics, Center for Advanced

Technology in Nanomaterials and Nanoelectronics, Interconnect Focus Center,

Nanoscale Metrology and Imaging Center, and the Energy and Environmental Technology Applications Center. The CNSE and the five centers are all located at Albany

NanoTech and have access to its facilities, but the nature of our model—through

which there are no divisions between disciplines, or between academia and industry—means that there is great cooperation and cross-pollination among the various

centers and between CNSE faculty and industrial partners. Faculty are involved in

all of the centers and in some cases, the centers cooperate closely with one another

to advance the science. Nobody is working in silos, and that is part of the reason

why we have been able to get so much accomplished.

Partnerships

How does Albany NanoTech interface with the private sector?

Albany NanoTech seeks to leverage resources in partnership with business, government, and academia to create jobs and economic growth for nanoelectronics-related industries. Governor George E. Pataki created a Center of Excellence in

Nanoelectronics at Albany NanoTech’s facilities in 2001 and since then has worked

very closely on building relationships with leading industrial players in

nanoelectronics like IBM, ASML, Tokyo Electron, and International Sematech. Since

2001, we have attracted over $1 billion in direct private investment and now have

over 100 industrial partners many of whom are on-site, which represent companies

of all sizes that share a commitment to nanotechnology innovation.

Boasting over 100 partnerships with universities, federal labs, and industry such

as RPI, Stony Brook University, Argonne National Laboratory, DARPA, NASA, GenVerDate 11-MAY-2000 16:05 Oct 27, 2005 Jkt 021195 PO 00000 Frm 00046 Fmt 6633 Sfmt 6621 C:\WORKD\RES05\051805\21195 SCIENCE1 PsN: SCIENCE1
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eral Electric, Honeywell, and IBM, to name a few, Albany NanoTech strives to help

companies overcome technical, market, and business development barriers through

technology incubation, pilot prototyping, and testbed integration support leading to

targeted deployment of nanotechnology-based products.

Albany NanoTech’s partnerships encompass multi-year research programs with

IBM, ASML, Tokyo Electron, Applied Materials, Infineon and Micron as well as

sponsored research collaborations with national defense agencies, such as the Naval

Research Laboratory and DARPA as well as start-up companies, such as Daystar

Systems and Crystal IS. Small, medium and large corporate and university partners

have access to state-of-the-art laboratories, shared user facilities, supercomputing

capabilities, and an array of research and development centers serving the short-

, medium-, and long-term nanotechnology development needs while training the

workforce for the 21st century. Partners are able to collaborate formally and informally, establish strategic alliances, or form joint ventures and consortia within a

technically aggressive and financially competitive environment.

The CNSE & Centers

What is the workforce outlook for nanotechnology, and how can the Federal Government and universities help ensure there will be enough people with the relevant

skills to meet the Nation’s needs for nanotechnology research and development

and for the manufacture of nanotechnology-enabled products?

According to National Science Foundation, the U.S. will need approximately two

million nanotech savvy workers by 2014. Approximately 20 percent of these workers

are expected to be scientists, 80 percent must be highly-skilled engineers, technicians, business leaders, economists, etc., and that means children between the ages

of 10 and 17 need to be educated NOW about the field that will define their job

market as adults.

The location of the College in the Albany NanoTech complex provides students

with a unique public-private education through research partnerships that are not

available at any other college or university. This partnership allows maximum

leveraging of synergistic resources to create a comprehensive, fully integrated powerhouse for the attraction and retention of highly qualified students to careers in

the various disciplines of nanotechnology, from theoretical principles to experimental demonstrations and practical applications.

As the first of its kind, the College provides a comprehensive education of the

highest quality enabling the discovery and dissemination of fundamental knowledge

concepts and new frontier scientific principles in the emerging interdisciplinary

fields of nanotechnology, from nanosciences and nanoengineering to nanoeconomics.

The College offers Ph.D. and M.S. degrees in the science and engineering tracks pertaining to the nanoelectronics, opto-electronic, optical, nano/micro-electro-mechanical, nano/micro-opto-electro-mechanical, energy, and nanobiological fields with curriculum integrating the fundamental science principles of physics, chemistry, computational science and biology with the cross cutting fields of nanosciences,

nanoengineering and nanotechnology.

In addition, the College supports hands-on workforce training by providing access

to state-of-the-art facilities, training the entire spectrum of technicians, operators

and technical trades through partnerships with community colleges, high schools

and leading industry players. CNSE has established partnerships with several community colleges providing the hands-on workforce component to their associate degree education necessary to operate nanotechnology equipment. The CNSE works

with local undergraduate colleges and high schools by sponsoring year round and

summer internships for students and by hosting in partnership with the Semiconductor Equipment and Materials International (SEMI) four day ‘‘chip camps’’ targeting high school vocational students to encourage then to consider carriers in

nanotechnology through hands-on curriculum. Finally, Albany NanoTech participates in a $6 million workforce training partnership for nanotech infrastructure construction trades in partnership with M+W Zander, one of the world leaders in

nanotechnology facility design and construction, the Watervliet Arsenal Partnership

and New York State.

Research & Facilities

The research performed at Albany NanoTech is broadly focused on all aspects of

the emerging nanosciences including: nanoelectronics and microelectronics, Nano/

Microsystems including MEMS, nanometrology, nanophotonics and opto-electronics,

analytical sciences and process control, nanopower, and advanced computer modeling for nanosystems and processes.

To assist in accomplishing these prominent research goals, Albany NanoTech consists of over 500,000 square feet of on-site office, laboratory, and cleanroom incubaVerDate 11-MAY-2000 16:05 Oct 27, 2005 Jkt 021195 PO 00000 Frm 00047 Fmt 6633 Sfmt 6621 C:\WORKD\RES05\051805\21195 SCIENCE1 PsN: SCIENCE1
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tion facilities. The complex includes the only 200mm/300mm wafer facilities in the

academic world that encompasses nanoelectronics; system-on-a-chip technologies;

biochips; opto-electronics and photonics devices; closed-loop sensors for monitoring,

detection, and protection; and ultra-high-speed communication components.

Albany NanoTech has literally hundreds of tools, ranging from STMs and supercomputers to the ASML TWINSCAN AT:1500i scanner, the world’s first 300mm

wafer immersion lithography tool. Our tool arsenal is one of our best recruiting

tools, since many of our scientists can do everything they need to advance their research right here.

NanoFab 300 South, which opened in January 2003, is a 138,000-square-foot technology acceleration facility that provides for business incubation, classrooms for the

CNSE, workforce training, offices for Albany NanoTech, and large and small industrial sponsors and partners including IBM, TEL, Honeywell, and SEMATECH

North. The facility also includes 16,000 square feet of cleanroom to support the

SEMATECH North, IBM, and other next-generation nanotechnology research activities.

Scheduled to be completed by the end of 2005, NanoFab 300-North features a

35,000 square foot Class 1-capable 300mm wafer R&D cleanroom, pilot prototype,

incubation, and workplace training facility that will house a full nanoelectronics

process line. The 500,000+ square-foot complex includes over 65,000 square feet of

cleanroom space supporting the nanoelectronics-related industries. Albany

NanoTech not only has the site where the world’s first 300mm wafer immersion lithography tool was installed in August 2004, enabling partners like IBM to get a

jump on this technology but Sematech has also announced that it is conducting the

bulk of its research in extreme ultraviolet (EUV) lithography at its laboratories located at Albany NanoTech. The fact that two leading organizations in

nanotechnology research—IBM and Sematech—have both announced major lithography research milestones in the past year and both of these took place at Albany

NanoTech demonstrates the effectiveness of the model.

The NY ‘‘Nano’’ State

How does the State of New York provide support to Albany NanoTech and the College of Nanoscale Science and Engineering at UAlbany–SUNY? How does this

complement funding from the Federal Government and the private sector? What,

if any, gaps remain?

New York and its industrial partners committed over $1.4 billion to establish five

Centers of Excellence throughout the State in nanoelectronics, photonics,

bioinformatics, information technology, and environmental systems. Each Center of

Excellence acts as a bridge between scientific discovery and commercialization by

supporting pilot-prototyping development, workforce training and economic outreach. Combined, these distributed technology deployment centers represent a comprehensive nanotechnology commercialization effort reflecting regional strengths.

Government support encouraging private and public investment in

nanotechnology is a key to industry success and future economic growth. New York’s

tremendous support of nanotechnology development has caused industry leaders

such as IBM, General Electric, and Corning to expand their research and development activities within the state. New York State’s support for joint technology research, development and deployment in the form of state-of-the-art facilities and capabilities has played an important role in lowering the risk and cost for companies

to accelerate the commercialization of nanotechnology.

New York State already shows signs of being a ‘Nano Hub’ and, in particular, the

capital region is becoming the world’s first ‘Nanopolis.’ Since 2002, two of the

world’s most influential tool suppliers, Tokyo Electron and ASML, have chosen to

open up their first cutting-edge R&D laboratories outside their home countries at

Albany NanoTech. Smaller high-tech startups like Starfire Technologies and Evident Technologies that were incubated at Albany are growing and attracting venture capital funding. Finally, we are finding companies are actually moving to Albany from other parts of the world.

The Future & Recommendations

Albany NanoTech’s overarching goal is to become the Bell Labs of the new millennium—bringing the best minds together, whether they are in industry, government

or academia, to work on leading-edge technologies that can revolutionize our lives

in the coming decades. In the immediate term, this means building partnerships

and creating a paradigm that practically compels companies that value leading-edge

nanotechnology research to establish partnerships at Albany NanoTech if they want

to remain competitive. In the long-term, it means re-inventing and drastically

speeding how innovation is brought to market.

45

The College’s goals are to completely redefine how scientists are educated by tearing down the traditional disciplinary silos in which they operate and by tearing

down the barriers between the research institutions, community colleges, high

schools, vocational schools and even the trades. We are confident that subjects like

biology, chemistry, physics and medicine will become increasingly irrelevant in the

coming decades as science merges around the development of tool sets and methodologies. In the immediate term, we want CNSE to be part of this redefinition of

research and pedagogy. In the long term, we aspire to create a world-class academic

center on par with—but not a clone of—the world’s greatest research universities.

Atomic-scale manufacturing requires a closer coupling between research, development and manufacturing. A new generation of institutions executing dynamic crossindustry, cross disciplinary models are emerging, such as Albany NanoTech, that

are responding to the unique challenges and opportunities created by

nanotechnology. These institutions are establishing a new paradigm for state-of-theart research, education and technology deployment that offers the Federal Government a highly leveraged return on its investment in projects, programs and centers.

Federal funding must recognize the emergence of new university-based technology, educational, and business models that concurrently support long-term research, medium-term development and short-term manufacturing. Federal funding

should reward universities and state governments who successfully pursue new

paradigms for innovation and education by encouraging joint investments in shareduse infrastructure by industry. Federal investments in shared-use infrastructure

supporting the entire continuum of nanotechnology research, development and manufacturing must be a strategic priority supporting. New business and technology

models such as Albany NanoTech’s is critical for U.S. industry to convert

nanotechnology discovery into commercial opportunities supporting national industrial competitiveness and defense and security priorities.

Shared investment and collaboration by industry, academia and government not

only improves the probability of success, leading to economic growth for both small

and large companies, but also provides the critical infrastructure necessary to support educational programs for the entire spectrum of workers to effectively compete

in the 21st Century. Significant and consistent support for the operations of this

university-based shared-use infrastructure by the Federal Government is critical for

supporting the growth of small, medium and large companies, training the entire

spectrum of nanotech savvy workers with hands-on educational programs, and

achieving the grand challenges set forth under the National Nanotechnology Initiative (NNI) which are critical for national defense, public health and economic security. More specifically, continued support for the NNI should be a priority while recognizing that current programs neither effectively address nor accommodate less

traditional models, and as such, requires a new category of funding to support ‘‘Successful New Paradigms for Innovation and Education.’’

For more information about Albany NanoTech, its mission and its programs, visit

our website at www.albanynanotech.org or contact Michael Fancher, Director of Economic Outreach at mfancher@uamail.albany.edu.

46

47

48

BIOGRAPHY FOR MICHAEL FANCHER

Michael Fancher has been the Director for Economic Outreach at Albany

NanoTech, University at Albany—SUNY for over six years. During that time he has

supported the development of partnerships with high technology companies, industry consortia, governmental entities, research institutions, private financing and

not-for-profit organizations. Specifically, he identifies opportunities to leverage financial, technological and market development resources by formulating strategic

application-specific and technology-driven development programs. Michael also supports the business acceleration initiatives by coordinating federal, State and local

financial and technical assistance programs for high technology business enterprises

through each stage of technology commercialization. Mr. Fancher holds a Master’s

degree (international economics-finance) from the University at Albany-SUNY, an

undergraduate degree in business administration (accounting & finance) from Syracuse University and is a Certified Public Accountant in New York State.

Prior to joining Albany NanoTech, Michael served as Deputy Budget Director for

the New York State Assembly Ways and Means Committee overseeing project development financing and program policy structures supporting university research, regional infrastructure, energy industry restructuring, public & private construction

projects, environmental protection, procurement reform, transportation capital planning & industry regulatory issues. He was awarded the Governor’s commendations

for legislative achievement supporting business competitiveness and project development financing.

As a Certified Public Accountant, Michael has provided audit, tax and financial

planning services for business formation, expansion, merger and acquisitions and is

experienced in financial and economic modeling.

49

50

DISCUSSION

Chairman INGLIS. But while you have got that slide up, let me

ask you the first question, if I may.

Mr. FANCHER. Yes.

Chairman INGLIS. You were actually in the process of answering

a question that I had, and perhaps others on the panel have, which

is where is our main competition? Who should we be concerned

about?

Mr. FANCHER. I think, when you look at the competition from

abroad, you are seeing the European Union as a very strong block

that invests heavily in supporting the business—the similar model

as what is at Albany NanoTech. When you look at Asia and Japan,

they also have formed a similar model in Japan. France has also

established in Grenoble, a similar model. So the model is validated,

I think, by—but the competition—and the focus is similar. They

are focusing on developing the expertise in this process technology

to not only provide a platform for nanotechnology, but to take the

knowledge base of processing and apply it to rolling production for

photovoltaics, all types of different production of materials and substrates.

Chairman INGLIS. That is helpful.

Mr. Donnelly, I should have mentioned that we are extremely

happy to have General Electric in our District making gas turbines.

I saw that operation recently. Amazing that you can run gases over

those rotors that are the higher—the gases are being at a higher

temperature than the melting point of the metal that comprises the

rotors. It is amazing.

So perhaps you—because you are in business at General Electric

to make products, tell us how we, in the Federal Government, and

folks like Dr. Kennedy in academia and Dr. Cassady, can help you

get to products. What can we best do here in government and in

the university to help you get a product into the marketplace?

Mr. DONNELLY. Well, all I can say is it is in two parts, Mr.

Chairman. One is certainly students coming out of universities. So

again, the funding that goes through NSF, you know, the people

that try to figure out how to make those materials survive beyond

their melting point, which is actually the tricky part of these systems, is all of that intellectual capital. So the, you know, the talent

that we are able to bring in out of university systems on a constant

basis to design that next generation is incredibly important to us.

And other avenues that we see in terms of the federal role in

things like next generation aircraft engines, you know, it is—you

can’t state the importance of where the military tends to go with

things like JSF engine technology, which is important, obviously,

for the military mission perspective. But that technology then

floats and works its way down through our commercial aircraft engines, our energy businesses, and things like that.

So I think when you look at the programs that the Federal Government funds, it helps to pull a lot of these very high performance, leading-edge technologies that might first show up in a military application but ultimately work their way into a commercial

application as well. The same is true in the energy area. If you look

at the DOE funding that is in place to help support and bring some

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of these new technologies to the market, frankly, before they might

be economically suitable for wide-scale deployment, it is a very necessary step to get that technology out on the marketplace and start

working on the cost and validation of that, which ultimately ends

in a very large business.

Chairman INGLIS. Okay. Dr. Kennedy, what do you think we

could do, we, in the Federal Government, could do to help you accomplish your objectives of——

Dr. KENNEDY. I feel like that in terms of translating—transferring nanotechnology into companies, you need graduate students

that have broader perspective than just how to make polymers or

how to make this nano-material, because they don’t have it—they

really don’t have a business experience in their graduate education.

And we are looking at that as universities, but one of the things

that has happened in the polymer industry that we, as an ERC

[Engineering Research Center] and the polymer industry, now are

facing is central research at the polymer industries that was

downsized because of globalization. And that is a void that now exists in commercialization. And the government and the universities

really need to think about how that void can be replaced. And that

is something that our center is actually thinking about right now.

Chairman INGLIS. Dr. Cassady, anything to add there from your

perspective?

Dr. CASSADY. Well, I think it is interesting to look at this industry and maybe compare it a little bit to the biotech industry that

developed. And I think that you really have two types of corporations that are moving into these fields. You have the GEs, the

major, large corporations, but you also have a lot of start-up companies. I think if you look worldwide, and this is based on data,

that probably about half of the start-up companies in this area are

in the United States. So we are not doing too badly in terms of getting the companies to that stage. But if you actually look, government investment is as much in this area as corporate investment.

So I think that there is a problem there in getting the 600 startup companies into a stage where they can develop through investments. So to me, I think gap funding is important. At the university level, I think it is important to be able to protect intellectual

property. One of the things that we don’t have at the university is

a way to operate like a business. For example, we have a lot of

good ideas and innovations and intellectual property, but how do

we pay to get those protected? And then once you have a—I guess

I would call it almost an idea for a product, how do you get it

through that gap so you can actually develop it into a product? And

that needs investment.

So I think that those are areas that need to be looked at. If you

really want to talk about getting the innovation, especially out of

our universities, into something that becomes a product or a company. I think there are only six nanotech companies out of the 600

in the United States that have received a second round of venture

capital funding. And that, to me, is pretty limiting.

Chairman INGLIS. Thank you.

I am happy to recognize Ms. Hooley.

Ms. HOOLEY. I want to yield to Mr. Honda for a follow-up.

Mr. HONDA. Thank you very much.

52

The comments to—the answers to the question of the Chair were

very intriguing to me, and I have been reading through your testimonies, and it seems like there is one conclusion I come to on the

question of what role the Federal Government has in commercialization. I think I heard Dr. Cassady say that we need to have

gap funding. I hear other folks saying that there is a role—definite

role of Federal Government in bridging the ‘‘Valley of Death’’ so

that research can reach commercialization in this area. This is not

a nano industry. It is a nanoscale activity, which is an enabling

technology.

And so my question is, given the kinds of things that are going

on today, and from your point of view, what is the further role—

or what is an additional role that the Federal Government can play

that may be considered by some folks in the Federal Government

as corporate welfare? But it seems to me that we—in this new

arena of nanoscale activities, that the Federal Government has a

critical role to play with universities, start-ups, and established

corporations to be able to help and assist in bridging this gap until

we have reached that critical point where private investors can

come in with some confidence and support commercialization. Is

there a comment from any one of the four of you? And perhaps we

could start with Dr. Cassady and then work to Dr. Kennedy

and——

Dr. CASSADY. In the discussions that we have been having, one

of the points that was made is that we need, and to be really frank

with you, this is a new terminology to me, but what the military

calls ‘‘6.2 funding.’’ It is DARPA type funding. And I think that the

people at ONAMI feel like that there is a need for this sort of funding for this area. And again, I think that there is a role of government. And I know in some of the current discussions at the state

level in Oregon, there is an issue that is being raised with regard

to trying to attract more venture capital into this area. So part of

it is that. We have a fairly good environment in Oregon.

Mr. HONDA. But what I am hearing you say is that there is a

model out there that it should be applied to——

Dr. CASSADY. There may be a model, I think, that you could look

at.

Mr. HONDA. And in spite of the fact that a lot of pressure is

being put on states that the Federal Government still has a role?

Dr. CASSADY. I—you know, I would add another piece to it, because I think, you know, the collaboration between federal and

state is going to be needed in order to optimize this approach.

Mr. HONDA. And to the Chair. Would this enhance our competitive edge globally?

Dr. CASSADY. I would think so.

Mr. HONDA. I just needed an opinion from the field, that is all.

Perhaps the others have some more comments.

Dr. KENNEDY. I would like to reiterate some of my comments

that the NASA activity 25 years ago, we had done a tremendous

amount of research on composite materials. And the push that

NASA provided and DOD provided by developing components for

aircraft, such as wing flaps and wing boxes, really helped the industry. It pushed the industry to develop that technology. I think

that is an important step that the Federal Government—and that

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is consistent with the comment you heard on DARPA. So DOD,

NASA, Department of Energy, those are some wonderful places

where demonstration programs could benefit nanotechnology I

think.

Mr. HONDA. I appreciate your patience. What you are talking

about is basically a paradigm shift in how we do things, and this

composite research took, what, 20 or 25 years to get to the point

of commercialization? Is that something that the private sector can

afford to do, given the time?

I know the answer is no. The Federal Government—what you are

saying is that has a critical role in helping to bridge this end.

Dr. KENNEDY. Well, the Federal Government funded that activity

for——

Mr. HONDA. Right.

Dr. KENNEDY.—a very long period of time. But now what you are

seeing now is aircraft that are having 50 percent, or a large fraction of their structure, made out of composite materials, and it

just—it takes a while for the industry to develop the confidence to

put something on an airplane where you have—where there is potential for disaster. So there are a lot of issues there.

Mr. HONDA. And the composite has been applied to the tail section of our commercial jets now. It is stronger, lighter, and more

reliable. And this could be applied to, say, launching of satellites

that could be lighter and stronger and carry a heavier payload and

things like that.

Dr. KENNEDY. And that is where nanotechnology—those are opportunities for nanotechnology, I think.

Mr. HONDA. Thank you.

Chairman INGLIS. Mr. McCaul is going to be recognized, but he

is going to come and take the Chair for a moment while I run to

a vote in the Judiciary Committee.

So Mr. McCaul and the Chair.

Ms. HOOLEY. He came a long way.

Mr. MCCAUL. [Presiding.] Yeah, I appreciate the promotion from

being just a lowly freshman to the Chair of the Subcommittee.

My District is from Austin, Texas to Houston. I have got high

tech on either end. I have Dell, Samsung, Applied Materials. I also

have the University of Texas, and so I have the research and development arm of the university. And I am very interested in this

issue of nanotechnology as it applies to what I view as really a

great partnership between industry and the universities. We have

a lot of scientists at the universities that are interested in this

partnership. I think it is good for industry as well.

So I wanted to see, first, if you would comment on that, and then

specifically, if you could discuss two issues. One is computer models

being funded by NSF. I know that with the UT system that is very

important with respect to nanotechnology. And then, second, in

terms of the industry’s collaboration, there is always the issue of

intellectual property management and how they can properly protect intellectual property.

So I know I am throwing a lot out there, but if—just to the panel

as a whole, if you would comment on that.

Mr. FANCHER. Well, I will take a stab at the modeling, if you

would like.

54

I think it is important. You know, a science is a science, while

it is limited to just an experiment, you get one data point, and you

don’t really have predictability in it if you change variables in that

experiment, which is what is required for a manufacturing process.

So once you have more predictability, it is just to turn into a technology. And that modeling is really a precursor or a critical event

that has to happen in manufacturing so that you can start to have

the confidence to control that production process to know that as

you are changing your inputs a certain way, what the outcome will

be.

So that would be my—so yes, it is critically important.

Dr. CASSADY. I will take a stab at the intellectual property.

I think that each institution is different, but I know at our institution, we have—and I would guess that probably the other Oregon

institutions, we have to look at our process. I made the comment

that we have to make it easier to do business with the university.

And that is one of those barriers that occurs if you have too many

steps in the process to approve these transfers of intellectual property and licensing.

The second thing is partnerships. I think that we have to find

a way to make these work, and I like the idea of trying different

models around the country and then learning from one another as

to what works and what doesn’t work. And I think our experiment

is going to be very interesting.

I come from a background that was involved in—where NIH National Cancer Institute funds partnerships, inter-institutional, and

always involving a pharma partner in what they call ‘‘national cooperative drug discovery programs.’’ The bottom line, you want

drugs, you want NDAs, and you want drugs going on the market.

And I think those types of partnerships are excellent, and they are

excellent places for students to learn.

Dr. KENNEDY. I would like to comment both on the intellectual

property issue and on modeling, but I will pick modeling first.

Our engineering research center was funded based on modeling.

It was our view that we could help the fiber and film industry

transform from a trial-and-error industry to a predictive industry,

but that would require that we do modeling at both a core scale,

which we call a continuum scale, and at the molecular level. And

we are doing that now.

But let me point out the kinds of advances that we have made.

The initial algorithms that we were using to compute at the molecular level were indicating that to get an answer, it would take

thousands of years, 105 years. We have modified those algorithms

to the point where we can get that answer in several hours. That

is a major advancement. But it still takes powerful computers and

excellent computer infrastructure to do that. So we are making

progress, and we are training students to use modeling in the fiber

and film industry.

Concerning intellectual property, I heard a woman from the Dow

Company talk about their interaction with universities. And she

pointed out that universities need flexibility in the way they approach intellectual property, and she was saying that it had been

their experience that universities were very rigid in that regard

and so much so that Dow was starting to utilize industries in other

55

countries. Particularly, they are going to Europe to get research

done. It says that the universities really need to take a hard look

at that, and I think that has been suggested here. And it is something that we need to do.

Thank you.

Mr. DONNELLY. I would comment on the modeling side. This is

very important. It has been important for many years in terms of,

first, gaining a better understanding of what is going on. And in

terms of the cycle times for material systems, you reference the

composites that took 25 years.

This is quite common in any material system, nano or otherwise.

The cycles are very, very long, and utilizing modeling to understand better what is going on and reduce the number of experiments is very important, especially as you get to the nano level.

The degree to which you can experiment and truly understand the

material behaviors is very, very difficult without augmenting that

with a good modeling program. And so that is very important.

IP from an initial standpoint, I can echo the Dow position as it

has been articulated. Frankly, it is an enormous barrier to working

with universities. I would say there is a great deal of variability.

Some universities are very good to work with in this regard. Others

are on the other end of the spectrum and virtually impossible to

work with. And so it can be a significant barrier. The need to invest a great deal of funding over a long time and not have good

IP terms and exclusivity, in many cases, frankly, just leaves industry to have to walk away and look other places for this capability,

because having that intellectual property ownership is very important commercially. You really can’t do it without it.

Mr. MCCAUL. Well, thank you.

And of course any suggestions to enhance that industry-university relationship, I think the universities, to be competitive, sort of

need to get with the program, so to speak, and start working. I

think some have worked very effectively, and Dr. Kennedy, I was

actually concerned to hear that some were not, but I think it is a

great partnership for America.

So the Chair recognizes the Ranking Member.

Ms. HOOLEY. I didn’t realize I was giving away all of my time

to Mr. Honda, but that is okay. I thought you were going to ask

him a short question.

I am going to ask just a couple of very—I had some specific questions, but many of them have been asked—some very general questions. One is if there was one thing that we, the Federal Government, could do differently that would help us really be at the head

of the class in terms of global competition, what would it be? And

I will just start at one end with Mr. Donnelly and go to the other

end.

Mr. DONNELLY. I think if you will look in—and this was—I referred to it a little bit earlier in the question by Mr. Honda, but

when you think about new material sciences, of which

nanotechnology is sort of the central theme of that right now, these

are technologies that can bring a lot to new applications. That is

how we have to look at it. At the end of the day, we are not doing

nano because nano is something to do, but because we want to improve performance characteristics of some end application. It could

56

be an aircraft engine. It could be a medical scanner. Any number

of different things.

Where the Federal Government can play an important role in

that is more funding in the early stages of science and much more

focused on the ‘‘R’’ side of R&D. References were made to NASA

and a number of other military application programs. That money

that is—you know, whether it is 6.2 money and things of that

genre are really where that kind of research activity goes on for

many years before you really get the technology insertion. And

there are plenty of applications across our military and NASA and

NIH where we have challenges in terms of things we want to

achieve in new areas where new material science is ultimately the

answer to that, but they are things that need to be nurtured for

a number of years to really put money into that science side of it

before you are going to see that in the end application.

Ms. HOOLEY. Okay. So you would say more money into the research side?

Mr. DONNELLY. More money into the research side, more money

into the 6.2s, more money into the real challenges we have in

NASA and DOE and DOD and areas like that.

Ms. HOOLEY. Dr. Kennedy.

Dr. KENNEDY. More money is always wonderful, but I think we

have also got to look at workforce, very definitely. And when I say

workforce, I think we have got to back up into the public education

system and figure out ways to excite pre-college students about

science, mathematics, and engineering. We graduate 56,000, I

heard, engineers a year, and China’s goal is to graduate a million

engineers a year. Well, the competition—you see where the—they

are great minds. So we really need to reach out and involve other

people in science and technology, and the Federal Government

needs to think about that. And they are doing that. We have outreach programs that we participate in, NASA does, but we have

really got to continue to push hard on that, I think.

Ms. HOOLEY. Dr. Cassady.

Dr. CASSADY. Well, I certainly agree with both of those conclusions. I guess that my feeling is that something that would encourage the relationships between research teams in the research universities and these start-up companies in this industry that don’t

really have the R&D funding, I think that, to me, is a place where

you could have a big impact. You know, there is something wrong

when you have 600 start-up companies, only 10 percent of those got

a first round of venture capital funding, and only 10 percent of

those got a second round. So you really have a big gap there.

The other point I would make is in terms of the workforce. Are

there some issues that I think surround some of our concerns about

national security that could have a big modulating effect on our

ability to attract graduate students, international graduate students? Now I am very concerned about that. So I think if, you

know, we don’t want to have a double-edged sword where all of a

sudden they are gearing up, which they are, and then we make it

less available because of certain regulations that may be placed. I

am thinking in terms of export control, for example, as an area

where we are seeing a potential really big impact on our ability to

57

bring graduate students in from certain places and have them work

as part of these teams.

Those are a couple thoughts that I would have.

Ms. HOOLEY. Before we go to Mr. Fancher, I want to ask a question.

Is there the—being able to bring in graduate students or college

students from other countries, is that a big problem for other universities? No?

Dr. CASSADY. Well, I am talking about a potential problem and

the potential impact of export controls.

Ms. HOOLEY. Okay.

Dr. CASSADY. For example, where we may be actually in a situation where we have to get students from certain places licensed to

be able to have access to certain equipment to do their research.

Ms. HOOLEY. Okay. Okay.

Dr. CASSADY. And if you do that, and I am not saying that we

have gotten to the point where it has been done, but if you do that,

I think it will have an impact on where students decide to come

and do their graduate work.

Mr. FANCHER. Finally, I would say you are probably beginning to

observe several states have entered the game of nanotechnology in

a, I think, very complementary way to federal investments. But I

think what you also are seeing is that there is a—I kind of am

complementary to Scott’s comments about focusing just on research. I think that it is time to begin focusing on the development

and early manufacturing that the nanotechnology has come out of

the lab and it is now ready to go into commercialization. And our

competition is focusing their investments heavily in what I would

call ‘‘next generation Bell labs.’’ PCAST noted that in their study

back in 2003. There is a—the cost is daunting to commercialize

nanotechnology. It is increasing exponentially. We are producing

lots of wonderful research, but to capture the economic rewards requires a focus on supply chain, getting your partners, leveraging

the resources from the states, leveraging the resources from companies, industry to tackle that. And I think other—competition is

doing that, and if we just look at the number of papers that are

published, what you are going to be focused on is the success in the

research, but we are not going to be fully realizing the benefits of

development and manufacturing for homeland security, defense,

and all of our other economic security.

Ms. HOOLEY. All I know is having visited ONAMI and not having

quite the wonderful floor space that you have in—facility that you

have in New York, that a couple of the products that have been—

are in the stage of being developed really make a difference in people’s lives. I mean, it is amazing what nanotechnology can do and

really transforming how people live. And so it is—I mean, I think

it is really important work you are doing, and I like the partnerships. And if you would—please, if you have any suggestions about

what we can do and what we can do better, let us know.

Thank you so much for taking your time to be here today.

Chairman INGLIS. Thank you, Ms. Hooley.

I will recognize myself for another round of questions here.

Mr. Fancher, it was very interesting to hear you talk about

hands-on kind of learning, I think, in one of your slides. And the

58

engineering statistics that you cited are of great concern to us on

this committee, and we have talked about it a number of times

here. And it seems to me, as a lure, that one of the things that

would make engineering more interesting is if it is, as much as

possible, hands-on education, so that it is not an abstract principle,

but rather something that, ‘‘Oh, I can see how that might work.’’

And if you can see it, then it is an exciting thing to study. Like

the law has stories that it tells in its cases. It is interesting to

study law, because they are about people and they are about cases

and they are about situations. If you make engineering that interesting, then hopefully we will keep a lot of students going at it.

Another thing I wanted to comment on is the—I think I have

heard comments on collaboration both in Mr. Fancher’s testimony,

and I wanted to congratulate Dr. Kennedy on what Clemson is

doing. It really is significant, I think, that Clemson University is

teaming with MIT. That is obviously significant, and with Clark

Atlanta University. That is an exciting thing that you realize that

your commitment to diversity and to expanding this—opportunities

for engineering education from MIT north of you to Clark Atlanta

University south of you, and so I wanted to congratulate you on

that.

Now what is the—those of us that are new to this

nanotechnology get very excited about it. But help me to figure out

the difference between what we should be expecting here and the

hype. We have to be careful, I suppose, those of us that are novices

at this, not to be carried away and think that we have found a perpetual motion machine or something like that and go running out

and tell everybody to buy heavy in those areas. So does somebody

want to help me figure out the distinction between the reality and

the hype?

Mr. FANCHER. Well, I will take a stab, not to miss out on that

opportunity.

I think the hype a lot of times is what is often described as ‘‘bottom up nanotechnology.’’ And it is the concept of basically creating

something molecule by molecule exactly the way you want it. Think

of it as a statue from the inside out. The more closer to commercialization, though, is the top-down approach where you are integrating nanotechnology in incremental ways. And I would give an

example. Maybe you are familiar with microsystems or MEMS.

Okay. Well, game-changing performance improvements can be

made or captured by integrating nano-materials onto these microstructures. So it is the—it is an incremental process, or an evolution of nanotechnology versus there are isolated examples of the

revolutionary impact of nanotechnology. For example, the clothes

that don’t absorb dirt. You know, there are a few, but those will

be fewer and far between. The other wins, I think, are going to be

an incremental evolution. And the reason for that is that your supply chain—you know, just because you invent something, I mean,

doesn’t—you have to bring the whole supply chain along with you

before it goes into production. The tool suppliers, materials, the

chemistries. And it is one thing to make just one device. It is quite

a completely different challenge to make a high-yield, low-cost production flow for that. It is a completely different challenge. And I

59

think that is my—I hope that I—you know, at least from our perspective would kind of——

Chairman INGLIS. That is helpful. And Mr. Donnelly, something

that you mentioned is interesting. You said R&D, we should really

be focusing on the ‘‘R’’ part of that in government. And yesterday,

I was with some folks from General Motors, and that is really what

they were saying about hydrogen, that we really need for the government to be taking risk in the ‘‘R’’ part, I suppose, in your terminology, and leaving to companies like yours and General Motors to

pick up from that. But tell me how you see that ‘‘R’’ part, the risk

taking in the research area. I mean, that is, I assume, what you

would say is what government has to do is take the risk in the research.

Mr. DONNELLY. I think that is true. And not the sole responsibility, obviously. Companies like ourselves are investing in the

basic research, and we will continue to do that. But I think what

happens, if you look at the government and willingness to take risk

is to provide some early application opportunities for these technologies. I think one of the challenges in nanotechnology and for

people to understand nanotechnology and sort of what is involved

in this process is, perhaps, more difficult than a lot of other technologies we have talked about, because if people are expecting that,

you know, some day, whether it is a year or 10 years from now,

you wake up and start buying nanotechnology products, people are

really confused. I don’t know what a nanotechnology product would

be. Where the nanotechnology is going to be, it is truly enabling

technology. So whether you are talking about enabling a technology

that would allow more highly efficient ways to convert water to hydrogen, to enable the hydrogen infrastructure, or whether you are

talking about an aircraft engine that gets, you know, better fuel

economy because you can fire at a higher combustion temperature

because of a nano-alloy and a high-pressure turbine blade, the

places where the technology is going to make an impact, it is not

going to be terribly obvious. And 99.9, probably, out of 100 people

in this country will never understand or know there is

nanotechnology in the product they are buying. It is the change in

that technology that is enabling that better performance or that

higher reliability that is how the impact of nanotechnology manifests itself. And so it is hard, really, to go to the public and say,

‘‘This is what nanotechnology is,’’ because it is many different

things, and it is going to manifest itself not as a nano-product but

as something in a bigger product, everything from a semiconductor

chip that runs at a higher speed or higher transistor densities to

an aircraft engine turbine blade.

So I think when you look at what the government role can be,

and why I say to focus on the ‘‘R’’ side is that historically, the government applications, whether they be for security purposes or

military purposes or energy infrastructure purposes, can have

these challenges that can be solved by new material systems. And

that is where I think the government can take those risks in those

early applications and allow the technology to mature before it

shows in the commercial sector.

Chairman INGLIS. Thank you.

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My time has expired, and I would recognize Ms. Hooley for a second round of questions.

Ms. HOOLEY. Thank you.

Mr. Donnelly, I am going to ask you this question, and then the

rest of you can answer it afterwards.

Bridging the gap between research—basic research and

nanotechnology commercialization, as you have just explained, is

an enormous challenge.

The Advanced Technology Program at the Department of Commerce was designed to address this transition problem. And it currently supports projects in the nanotechnology area. Do you, or any

of you, believe—or have had experience with this program, and if

so, do you believe it is valuable and deserving to be continued—the

support continued for it?

Mr. DONNELLY. Well, I am familiar with the NIST programs. I

probably should preface by saying I am on the NIST Advisory

Board, and so I am—or the ATP program, and so I am familiar

with their programs.

Ms. HOOLEY. Okay.

Mr. DONNELLY. And I think they do have value. They do encourage promotion of very novel, early-on technologies and promote the

interaction, frankly, in many cases, between companies both large

and small and universities and other small companies. And so I

think that is an area on the research side where it has provided

some funding to develop some novel technologies in clearly what is

a pre-commercialization state. And so it is not necessarily targeted

at an application that is DOE related or DOD or NIH related but

really provides an avenue that historically will fund some very

early technology, pre-commercialization, and does promote what I

would kind of refer to as some ‘‘R’’ funding well before you know

where that application is going to go and where the development

phase will go.

Ms. HOOLEY. Do you think it has been successful?

Mr. DONNELLY. I think it has been largely successful. Again, it

is a case of the government taking some risk and investing in some

early technologies, and so you certainly would look at some of those

programs and say, ‘‘Nothing came of it.’’ That is truly the nature

of research.

Ms. HOOLEY. Right.

Mr. DONNELLY. And we have to look at that as well. We invest

in many things that don’t happen, but some of the things turn out

to generate some technologies to become very commercially important.

Ms. HOOLEY. Do any of the rest of you have experience with that

program and—yeah, Dr. Kennedy?

Dr. KENNEDY. Yes, ma’am. We have been very interested in the

ATP program as our NSF money runs away and goes away in another three years, and we are looking for supplemental funding to

keep our center running. And that is one of the places we will look

is at ATP with our industry partners, because we do have 20 industry partners. So we are very positive about that program. It is not a big program. It is only, what, $200 million to $300 million, I believe, so it is not really, really big, and—but I think it is

a good idea. We have attended a number of their workshops, and

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so we are pretty positive about it, and we would like for it to stick

around.

Mr. FANCHER. I would also comment. I think the NIST ATP program is extremely effective. And the reason for that is that it provides for the integration of several companies’ technologies to

work—to be integrated together. It is the funding to allow for those

types of mid-range programs that are so critical to commercialization. So it is really pre-commercialization, but it is—and I think

NIST does a nice job of focusing on taking—selecting high-impact

opportunities, things that are—you know, yes, there is risk, but if

it hits, it will provide a broad impact on a variety of other companies that—for example, tool development or something like that.

So——

Ms. HOOLEY. Dr. Cassady, any——

Dr. CASSADY. I am not that familiar with the ATP program.

Ms. HOOLEY. Okay.

Dr. CASSADY. But SBIR I am more familiar with. I think that

that also plays a role in helping with early stages of business development. And that has actually been a mechanism to help faculty

that wish to do this actually move into a business development

phase. And that has been done very successfully in certain areas,

and we just need to figure out how to make that process more efficient. But that is another mechanism that helps fill that gap.

Mr. FANCHER. I think it is also important to note, venture capital

does not tread there. And everybody thinks——

Ms. HOOLEY. Right.

Mr. FANCHER.—venture capital is early. No, venture capital——

Ms. HOOLEY. No, venture capital wants to be where they know

they are going to——

Mr. FANCHER. It is there generally where there is production already in place.

Ms. HOOLEY. Yeah.

Mr. FANCHER. There are sales, and they are ready to take it global or something. There is a lot of research——

Ms. HOOLEY. They are not risk-takers.

Mr. FANCHER. Yes. There is—a majority of the funding is in the

research realm, very little in this development mid-range. And you

are seeing it from NIST ATP. DOD, when they need something for

the battlefield, they will fund in that space. And then Department

of Energy, also. So there is—I think it is important to understand—and PCAST mentioned it. Research and development and

manufacturing, they are two pieces of it. They co-exist, and they

feed back and forth. And that is back to the workforce training.

How do you do hands-on workforce training if you are only in the

lab? You do work for hands-on exposure, because you have got actual, real-life—this is what your work environment is going to be.

This is what you are going to get, you know, to work in with these

kinds of tools or in this environment. And I think that is very engaging. Particularly, we expose kids in high school, even the vocational student kids are being brought in and rotated through. And

in fact, our region, they are actually pushing forward to build a

new high-tech vocational school focused on this, and it really creates, I think, an avenue, a strategy for engaging a restructuring of

the educational curriculum that is nano-centric, let us say.

62

Ms. HOOLEY. I think it is interesting that you are looking at

high-tech vocational training, because, at least in my state, when

I look in the newspaper and look in the help wanted ads, the number of jobs tend to be in the highly skilled area. I mean, they are

asking for not particular engineers, but highly skilled workers in

a variety of things. And that seems to be where we are missing the

boat. So I think it is interesting that you are looking at high-tech

vocational programs.

Mr. FANCHER. Yeah. Well, if you were to look at a chip fab, a

large chip fab, about 2,000 workers in it, about 20 percent of those

are Ph.D.s and engineers. The 80 percent are operators, technicians. You know. I mean, you can—they make very good money——

Ms. HOOLEY. Right.

Mr. FANCHER.—fixing these tools without even an associates degree. You are global. You are in demand. I mean, it is a very exciting opportunity. And what is nice is that there is a whole continuum so that you can go back to school. There is a—it is a nurturing—the industry provides—or the nanotechnology, I think,

promises to have a whole continuum of opportunities for a worker

to pursue lifelong education and training to work their way up

the—you know, the pay scale and the technology responsibility

scale.

Ms. HOOLEY. Thank you.

Chairman INGLIS. Thank you, Ms. Hooley.

Mr. Honda is recognized for a second round of questions.

Mr. HONDA. Thank you, Mr. Chair, and I hear a bell ringing, so

I will be real quick.

I want to thank the Chair and Ranking Member for putting this

together. And the four of you have made today really a day well

worth living, because the kinds of things that you are sharing with

us is the kind of information that we need to hear constantly, because there seems to be some—at least in my opinion, some footdragging in this arena.

I agree that we have to do a lot more in pre-high school education in the area of education and bringing along the community

in terms of they are being critical consumers of products and also

the idea of having ATP continue, which has been zeroed out.

And I guess—there doesn’t seem to be a disagreement also on the

role of government in bridging the gap. My question would be,

given that, how do you see us creating the solution set for the problems that you have described? And you know, with the short time,

I would love to have that in writing so that it would give us a little

bit more time to cogitate over the responses you may have, the solution sets that you may be suggesting from both the corporate, to

the university, to the research arena. And that would be something

that I would really love to have, because we are struggling here to

be able to address everything from ATP to funding the gap.

Thank you, Mr. Chairman and Ranking Member. And if you

have an immediate response, I will take it.

Mr. FANCHER. I would love to take a shot at that.

Actually, my written testimony, at the very end, it has my recommendations.

I think, just as in the past four years of the nanotechnology initiative, investments were made in strategic critical research infraVerDate 11-MAY-2000 16:05 Oct 27, 2005 Jkt 021195 PO 00000 Frm 00066 Fmt 6633 Sfmt 6601 C:\WORKD\RES05\051805\21195 SCIENCE1 PsN: SCIENCE1
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structure. The National Labs, for example. Significant amounts of

money were invested in the National Labs in key areas of

nanotechnology, the same as NNI provided for key research at a

variety of universities around the country. I think what is important to understand that—to help the smaller and medium-sized

companies through the ‘‘Valley of Death,’’ you can try to do it grant

by grant, company by company, but you end up with winners and

losers, and frankly you feel like you didn’t get your money’s worth.

I think what is important is to begin to focus on focusing the investments in national resources. Ours, for example, is at—we view

ourselves as a national nanotechnology resource. It is $3 billion of

investment there. To not leverage that for small and medium-sized

companies in a variety of applications is a huge lost opportunity.

The same, though, for rolling production of—in polymers and fibers. There are different challenges there, but there is a need to

focus the investment in key integration points. I think PCAST calls

it ‘‘innovation clustering.’’ Now it is not to say that all of the jobs

happen there. It is that middle that—what NIST ATP is trying to

do, you are supporting it through infrastructure, and that lowers

the risk, lowers the cost for the companies to engage work together,

leverage each other’s resources, and pull their resources towards a

common end. And I could envision having centers like this established around the country in—focused on different production or

applications for nanotechnology, depending on the particular area

and in—of advancement. Certainly Europe is doing it. Asia is doing

it. If we don’t do it, I think we are going to find ourselves losing

the economic rewards.

Dr. CASSADY. I would be pleased to provide further responses

after I consult with colleagues, but I think the idea, and the idea

that we are pursuing at Oregon State, is very similar, that is creates centers of innovation. Our research universities are centers of

innovation, but find a way to create places where we can translate

that out in a way that is more than rhetoric, that—where it actually occurs. And you need places where you can bring these teams

together to move these ideas into products and eventually into

businesses.

Chairman INGLIS. The gentleman yields back.

And I want to thank you all for coming. As you hear, we have

got votes on over at the House Chamber. Thank you for allowing

me to run out to a couple of votes at the Judiciary Committee. As

you see, we get our good exercise around here.

And I very much want to thank you for coming to share your

thoughts. It has been a very helpful hearing for me, and I am sure

for others. And we look forward to working with you on these exciting developments.

Thank you for coming.

[Whereupon, at 11:45 a.m., the Subcommittee was adjourned.]

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Appendix 1:

ANSWERS TO POST-HEARING QUESTIONS

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ANSWERS TO POST-HEARING QUESTIONS

Responses by John M. Cassady, Vice President for Research, Oregon State University

Questions submitted by Representative Dave G. Reichert

Q1. Under funding from the National Science Foundation and the Defense Advanced

Research Projects Agency, researchers at Washington State University in my

state are using nanotechnology to develop new energy production systems based

on piezoelectric materials and nanotubes for energy switching. Although such

technologies have significant potential for security and consumer applications,

development of the technology for applications can be expensive and time consuming.

Q1a. What role could national laboratories play in helping move significant new

technologies enabled through nanotechnology from university research to applications?

A1a. I believe the best group to answer this would be our national laboratory administrators. We are working very closely with PNNL and I will discuss this with

my counterpart there, Dr. Len Peters. Question is how they would view in-licensing.

The partnerships we now have to develop joint proposals lead to access to support

that academic PIS normally do not have. In some cases, this may lead to development.

Q1b. When multiple organizations, all of which are funded by the Federal Government, are involved in such work, how can the universities continue to receive

appropriate credit in accordance with the Bayh-Dole Act without directly licensing the technology to the national laboratories for further development?

A1b. These relationships are framed by agreements (MOUs) that address issues of

licensing, commercialization and revenue sharing. That is if you mean by ‘‘appropriate credit’’ licensing income. These agreements are always negotiated up-front.

The national lab might have first right-of-refusal on licensing the technology and

could be involved in further managing development.

These responses had input from Skip Rung, Director, ONAMI.

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Appendix 2:

ADDITIONAL MATERIAL FOR THE RECORD

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STATEMENT OF BOB GREGG

EXECUTIVE VICE PRESIDENT

FEI COMPANY

Chairman Inglis:

Thank you for providing the opportunity for us to express our observations on the

National Nanotechnology Initiative.

I am Bob Gregg, Executive Vice President of FEI Company. Our corporate headquarters are in Oregon, and we have 1,800 employees. Our association with

nanotechnology derives from the tools we build and the diverse international markets and customers that we serve. FEI develops, manufactures, distributes, and

services transmission and scanning electron microscopes and dual ion and electron

beam tools. Our tools enable nanotechnology by allowing materials and devices to

be observed over a size range of eleven orders of magnitude. The tools are used to

observe, characterize, manipulate, and modify structures. They allow human vision

to be continuously extended from the naked eye to the macro- and micro-worlds,

down to the meso- and the nano-scale and below. Because of the existence of these

tools, the imaging of atoms is routine. This level of performance capability is necessary to further not only basic research, but also to enable industry to manufacture

at economic levels of yield. Our products are used worldwide in academia, institutes,

and industries for research, prototyping, and production. FEI’s designated markets

are NanoElectronics, NanoBiology, and NanoResearch. Our sales revenues are evenly distributed among the Asian, European and North American markets. In 2004

our revenues approached $500 million.

We have been selected by the DOE as the primary contractor on the TEAM

project which is intent on building the highest resolution electron microscope in the

world. This instrument is targeting subatomic resolution levels and will lead to a

new generation of more powerful research tools. FEI Company is also actively pursuing initiatives with government entities in the area of researching proteomics and

in technical education.

As a consequence of our business activities that are on the forefront of

nanotechnology developments, we believe that we can offer a unique global perspective on the National Nanotech Initiative and its impact on U.S. economic development.

Our comments are directed at actions that are needed to stimulate a more direct

connection between academic science research and the economic growth of the Nation. The task is to prioritize and then channel the basic research we require into

the academic research community in order for U.S. industry to meet its strategic

objectives. The need is for a structured and sustained dialogue between U.S. industry and Government research policy makers. If we do not succeed in this, the U.S.

will become a net importer of foreign nanotechnology-based products in the future

with serious negative consequences to the social welfare and standard of living of

all U.S. citizens.

We restrict our observations to the following points.

1. The announcement of the National Nanotech Initiative in the year 2000 had

the purpose of stimulating and directing science to create a platform for new

technologies and, by implication, a basis for maintaining economic growth.

The initiative has succeeded admirably in revitalizing U.S. science. It has

also had the effect of catalyzing other nations and economic blocs to actively

compete for predominance in a future nanotechnology-based global economy.

The U.S. now trails government investments in nanotechnology in Europe

and Japan. This impacts our potential for innovation and, in turn, threatens

our future economic growth.

2. Competitive government bodies appear to have taken a business approach in

positioning themselves for future success. The fundamental difference with

the NNI approach is that other governments are gearing their strategies to

rapid commercialization of nanotechnology. The objective is a rapid returnon-investment. Their approach is to focus their efforts into specific industrial

enterprises that play to their strengths and then provide direct government

investment to industry to accelerate product time-to-market.

3. It can be argued that the commercialization of nanotechnology is made more

complex within the U.S. free-enterprise system, as there is no mechanism to

allow government to make direct investment into the industrial sectors.

The current options for industry which are needed to embrace scientific research at the nanoscale are:

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• To finance their own R&D. The trend here is not encouraging as there

is a shortage of skilled manpower within the U.S., and companies are

under pressure to reduce overhead. The predictable result is either a reduction in the level of research or stretching the available R&D budgets

by transferring operations to regions where talent and cost savings coincide.

• To either identify (a) a scientific discovery at a university that has a commercial fit and negotiate the IP rights or (b) establish piecemeal, a research program with a given university department. For industry, this is

a time-consuming, arduous task and difficult to sustain; for the university, the time and specific nature of the investigation may conflict with

current constraints-and-reward system within the academic community.

• To await academic business spin-offs financed by VCs to evolve to the

point of proof-of-concept and engage in acquisition activity.

Relative to the process of direct government investment to industry, these

routes extend the time needed for the commercialization of nanotechnology

and put the development of U.S. nanotechnology-based international commerce at a disadvantage.

4. The last observation is that the U.S. is now fighting a war on two fronts.

The obvious one is that against terrorism; the unstated one is the battle to

dominate future nanotechnology-based industrial markets. The costs of the

former are causing serious cuts in investment in the latter. As other nations

competing with the U.S. are not burdened by this dilemma, our progress is

again impeded. The long-term economic impact for the U.S. at this point in

a new era of technology shift could be major and is probably being underestimated.

What can we do to improve our current situation?

We note that research and development do not earn money—they cost money—

and that our nation’s wealth and prosperity is ultimately driven by the level and

added value of our exports to other countries. Our economic growth is heavily influenced by our manufacturing industry. Our options to improve the NNI program

within the existing national constraints are very limited and must focus on using

the basic academic research resources available to us to directly contribute to economic growth. We must create mechanisms to allow existing industrial sectors that

are now involved in building nanotechnology-based economies to communicate their

basic research needs to government. The dialogue should be structured to enable industry to directly support government in setting priority areas and in creating and

maintaining science/technology roadmaps.

In short, if the government is opposed to direct investment in industry to promote

economic growth, it must use its power and responsibility to focus the efforts of the

academic research community to support U.S. industry in competing in the coming

nanotech-based economy.

The government, through its funding agencies, would create the appropriate incentives and conditions for funding. These programs would not only have the intent

of direct funding, but would also create an environment and the rewards to encourage academic research as a team effort (nanotechnology will need a multidisciplinary approach), establish clear performance guidelines (already a reality for industrial-based research), and a tangible result (science directed to economic benefit).

We perceive that the original National Nanotechnology Initiative was carefully

phrased, as the word ‘‘technology’’ implies an end product and thus some social/economic benefit. The current reality is, however, that all the funding is directed to

‘‘nanoscience,’’ and that while there is great promise of things to come, we have few

new nanotechnology-based products in the public domain. This leads to a concern

that, without more focus and evidence of progress, there could be either a public

or political backlash that would be detrimental to U.S. commerce.

We urge the Committee to take every action within its power and sphere of influence to accelerate the transition from academically based science to commercially

relevant technology.

We thank you for your attention.

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