ACKNOWLEDGMENTS

The Committee on Civilian Industrial Technology wishes to express sincere appreciation

to Carol Ann Meares and John F. Sargent, Jr., of the Office of Technology Policy at the

Department of Commerce for their formulation and preparation of this document, under

the direction of Graham R. Mitchell, Assistant Secretary of Commerce for Technology

Policy. Similarly, many Federal departments and agencies provided information, review,

and comments that helped ensure that the document achieved the highest level of quality possible, including Department of Agriculture, Department of Commerce, Department

of Defense, Department of Education, Department of Energy, Department of Health and

Human Services’ National Institutes of Health, Department of the Interior, Department of

Justice, Department of Labor, Department of Transportation, Department of the Treasury,

Environmental Protection Agency, National Aeronautics and Space Administration,

National Science Foundation, Office of Management and Budget, and Office of Science

and Technology Policy. The dedicated efforts of Cheryl Mendonsa and Kathleen Sullivan

of the Commerce Department’s Office of Technology Policy in overseeing production of

this document are sincerely appreciated.

Photo Credits

3M Corporation

ALZA Corporation

Ford Motor Company

IBM Corporation, Research Division

Lawrence Livermore National Laboratory

National Aeronautics and Space Administration

National Cancer Institute

National Institutes of Health

National Institute of Standards and Technology

Office of Technology Policy, U.S. Department of Commerce

Robert U. Paz

Thomas Radcliffe

United States Department of Agriculture

University of Pennsylvania Archives

Submission of photographs by these companies does not necessarily reflect any endorsement of the policies

expressed in this document, nor does it reflect any endorsement of these companies by the government.

The volume is dedicated to Katherine Backus Gillman

Design and Production by: Renan Kiper and John Kennedy, Alpha MicroDesigns, Inc.

Technology in the National Interest Acknowledgments 2
Technology in the National Interest Committee on Civilian 3 Industrial Technology

Dr. Mary L. Good, Chair

Under Secretary for Technology

Department of Commerce

Dr. Martha A. Krebs, Vice Chair

Director, Office of Energy Research

Department of Energy

Lionel “Skip” Johns, White House Co-Chair

Associate Director for Technology

Office of Science and Technology Policy

■ Members

Dr. Catherine E. Woteki

Acting Under Secretary for Research, Education, and Economics

Department of Agriculture

Dr. Arati Prabhakar

Director

National Institute of Standards and Technology

Department of Commerce

Dr. Anita K. Jones

Director of Defense Research and Engineering

Department of Defense

V. Larry Lynn

Director

Defense Advanced Research Projects Agency

Department of Defense

Mortimer Downey

Deputy Secretary

Department of Transportation

Al McGartland

Director of Economic Analysis

and Industrial Development

Environmental Protection Agency

Dr. Robert Whitehead

Associate Administrator

National Aeronautics and Space Administration

Dr. Joseph Bordogna

Assistant Director for Engineering

National Science Foundation

Lisa Gaisford

Program Examiner

Office of Management and Budget

COMMITTEE ON CIVILIAN

INDUSTRIAL TECHNOLOGY
FOREWORD

5

In February 1993, President Clinton and Vice President Gore set forth the Administration’s

technology policy, Technology for America’s Economic Growth: A New Direction to Build

Economic Strength. The policy found that American technology must move in a new direction to spur economic growth. The traditional Federal role in technology has been limited to support of basic science and mission-oriented research, a strategy appropriate for a

previous generation but not for today’s profound challenges.

Technology for America’s Economic Growth established three overarching goals:

■ Long-term Economic Growth that Creates Jobs and Protects the Environment 

■ A Government that is More Productive and More Responsive to the Needs of its Citizens

■ World Leadership in Basic Science, Mathematics, and Engineering

Technology in the National Interest addresses the first of these goals. It highlights the important role technology plays in the American economy and the challenges we face in an

increasingly competitive, technology-based global economy. The document describes

Federal technology initiatives designed to stimulate economic growth and job creation in

the United States. It also traces the evolution of U.S. technology policy, identifying milestones in that evolution, from the Constitution of the United States to major legislation of

the past decade. This history demonstrates a long-standing tradition of bipartisan support

for science and technology, and the invaluable contribution the Federal government has

made to technological progress and technology-driven economic growth.

Other National Science and Technology Council (NSTC) documents address the need to

protect the environment. Technology for a Sustainable Future: A Framework for Action initiated

a national dialogue that laid the foundation for a public-private partnership to advance environmental technologies. Bridge to a Sustainable Future: National Environmental Technology

Strategy built on that foundation with a strategy that highlights the roles of individuals and

organizations in fostering the development and adoption of environmental technologies and

identifies strategic goals for all partners in this important national endeavor.

The second goal is being pursued vigorously in the National Performance Review led by

Vice President Gore.

The third goal recognizes that the flow of scientific knowledge and the development of scientific and technical personnel help underpin our nation’s ability to achieve technological

innovation and the economic growth that flows from it. The Administration’s goals and

policies for basic science, mathematics, and engineering are detailed in the August 1994

statement Science in the National Interest.

The National Security Science and Technology Strategy presents a comprehensive approach to

bringing science and technology to the service of our nation’s security and global stability.

It highlights the importance of U.S. investments in science and technology to preventing

conflict and maintaining the strength and capabilities of our Armed Forces.

Taken together, these NSTC documents reflect the Clinton Administration’s commitment

to carrying forward America’s great legacy of scientific advancement and technological

progress for economic growth, national security, and a better quality of life.

Foreword Technology in the National Interest
Table of Contents Technology in the National Interest 7

TABLE OF CONTENTS

■ EXECUTIVE SUMMARY ............................................................................................8

■ CHAPTER 1 OVERVIEW

Forces of Global Change ..............................................................................................12

A Golden Age of U.S. Technological Leadership ..........................................................15

■ CHAPTER 2 A TRADITION OF FEDERAL SUPPORT 

FOR SCIENCE AND TECHNOLOGY

Origins of U.S. Science and Technology Policy ............................................................20

Science and Technology Policy During World War II ..................................................23

An Expanding Role for Government ............................................................................24

Spin-off: Commercial Benefits of Federal R&D ............................................................29

Government-Industry Partnerships for Technology 

Development, Diffusion, and Commercialization ..................................................31

Spurring Cooperative Research in the Private Sector....................................................33

Focus on Competitiveness: Partnership Programs 

and Policies Support U.S. Industry and Workers ..................................................34

■ CHAPTER 3 NATIONAL TECHNOLOGY POLICY IN AN ERA 

OF GLOBAL ECONOMIC COMPETITION

Forging Government-Industry Partnerships ................................................................38

■ CHAPTER 4 MEETING THE GLOBAL COMPETITIVE CHALLENGE: 

A NATIONAL TECHNOLOGY POLICY FOR THE 21ST CENTURY

Five Goals ....................................................................................................................42

Business Environment ..................................................................................................45

Technology Development and Diffusion ......................................................................49

Infrastructure to Support Industry and Facilitate Commerce ......................................63

Integration of Military and Civilian Industrial Bases ....................................................70

A World-Class Workforce ............................................................................................75

■ CHAPTER 5 CHALLENGES IN U.S. TECHNOLOGY POLICY

Challenges in U.S. Technology Policy ..........................................................................82
TECHNOLOGY AND THE U.S. ECONOMY

With the end of the Cold War, we Americans and our leaders are turning greater attention

to U.S. economic growth. Technical progress is the single most important factor in generating sustained economic growth, estimated to account for as much as half the Nation’s

long-term growth over the past 50 years. Technology underpins our fastest growing industries and high-wage jobs, provides the tools needed to compete in every business today,

and drives growth in every major industrialized nation.

Technological advance plays a large role in improving our quality of life through new drugs

and medical therapies that promise new hope for the sick and a healthier life for all.

Environmental research promises cleaner air, water, and soil. Rapid technological advances

are making enhanced communications, better food, and cleaner, safer, more fuel-efficient

transportation possible.

The United States has an unmatched capability for technological innovation—an unparalleled R&D enterprise; a world-class cadre of scientists and engineers; the world’s most

diverse and productive manufacturing base; a broad and technologically sophisticated service sector; the world’s most productive workforce; and a climate and culture that encourage competition, risk-taking, and entrepreneurship. These assets have positioned the

United States for global technological leadership in the 21st century.

A TRADITION OF FEDERAL SUPPORT FOR 

SCIENCE AND TECHNOLOGY

For more than 200 years, the Federal government has played a vital role in establishing a

scientific and technological infrastructure that has contributed substantially to U.S. economic growth and the competitive success of American industry. This long-standing tradition of support for science and technology has paid handsome dividends to the Nation.

Federal research has given birth to new industries, such as computers and biotechnology,

and propelled U.S. firms into a leadership position in other industries, including aerospace, telecommunications, and pharmaceuticals. Federal research has also made possible

many smaller contributions to American life–from better tasting frozen orange juice and

highly absorbent disposable diapers to vaccines for malaria and closed-captioned television for the deaf.

EXECUTIVE SUMMARY

8 Technology in the National Interest Executive Summary
Executive Summary Technology in the National Interest 9

CLINTON ADMINISTRATION TECHNOLOGY POLICY

The Clinton Administration came to office at a time of increasing concern about the state

of American technology and competitiveness. The Administration has sought to address

these concerns by building a technology policy on the firm foundation of past success, an

awareness of the new global competitive environment, and an eye to the future. The technology policy set forth by President Clinton and Vice President Gore is guided by five goals:

■ The primary role of the Federal government in technology policy is to create a business environment in which the innovative and competitive efforts of the private sector can flourish.

■ The Federal government must encourage the development, commercialization, and use

of technology.

■ The Federal government must invest in a world-class infrastructure for the 21st century to support U.S. industry and promote commerce.

■ U.S. policy must seek to integrate the military and commercial industrial bases into a

single base capable of meeting both defense and civilian technology requirements cost efficiently and effectively.

■ The United States must develop a world-class workforce capable of participating in a

rapidly changing, knowledge-based economy.

Carried out by departments and agencies across the Federal government, a rich portfolio

of policies and programs is advancing these goals. These initiatives help ensure that technology remains our engine of economic growth, creating high-wage jobs in the United

States and improving the standard of living and quality of life for our people.
CHAPTER 1

OVERVIEW

“Since the dawn of the industrial revolution, alarmists have argued that

technology and automation threaten jobs. Such claims are still heard today.

But history shows that they have never been right in the past and suggests

that they are wrong again. Time after time, in epoch after epoch and country after country, technological advance has produced higher wages and

living standards, not mass unemployment. This is exactly what we expect

to happen again in the 21st century. And the government should be helping this process along—facilitating growth and change, not impeding it.”

1994 Economic Report of the President

More than ever before, technological leadership is vital to the national interests of the

United States. As we enter the 21st century, our ability to harness the power and promise

of leading-edge advances in technology will determine, in large measure, our national

prosperity, security, and global influence, and with them the standard of living and quality of life of our people.

In February 1993, President Clinton set forth his vision for a national technology policy

in Technology for America’s Economic Growth: A New Direction to Build Economic Strength.

This policy—a key element of the Administration’s strategy for long-term economic

growth—outlines measures to ensure America’s global technological leadership into the

next century. During the past three years, the Administration’s technology policy has

evolved to respond to new conditions and to address a broader range of factors that affect

the ability of the Nation to develop, diffuse, adopt, and commercialize new and existing

technologies. National prosperity requires a comprehensive technology policy, integrated

with the Nation’s economic, trade, education and training, science, and defense policies.

This document reaffirms the Administration’s commitment to U.S. technological leadership, details the Nation’s technology policy and its rationale, and describes the portfolio of

programs established in support of this policy.
We live in an era of profound change—political, economic, and technological. Global

competition has reached unprecedented levels. With the end of the Cold War and the

demise of communism, new nations have emerged across the globe, building on a foundation of freedom, democracy, and free market principles. Today we compete not only

with advanced industrialized nations such as Germany and Japan, but also with new competitors such as China, South Korea, Malaysia, and the states of the former Soviet Union.

A new battlefield has emerged in the form of a global marketplace, and able competitors

from around the world are fighting for a share. International accords, such as GATT and

NAFTA, are fostering competition, opening new markets and expanding existing ones,

and bringing consumers more choices and higher quality at lower costs.

Technology is reshaping our world at a speed unimaginable just a few decades ago.

Competition to meet the increasingly high expectations of the world’s consumers has

accelerated the rate of technological progress to a breathtaking pace, with each advancement more dazzling than the last. Technology plays an increasingly important role in the

global economy, in the lives of every American, and in our national defense.

In the wake of these forces, the way we live, learn, and work is being forever transformed.

Each of these changes—the emergence of a global economy, unprecedented global competition, and rapid advances in technology—would be revolutionary on its own, but

together they have produced staggering results that are deeply felt by Americans in all

walks of life.

TECHNOLOGY AND THE AMERICAN ECONOMY

Technology is the engine of economic growth. It underpins America’s fastest growing

industries and high-wage jobs, provides the tools needed to compete in every business

today, and drives growth in every major industrialized nation. Today, technological leadership often means the difference between success and failure in the global marketplace—for

companies and countries alike.

Technical progress is the single most important

determining factor in sustained economic

growth, estimated to account for as much as

half the Nation’s long-term economic growth

over the past 50 years. Increases in productivity have long been recognized as one of the primary mechanisms by which technology contributes to growth. It is estimated that technology and advances in knowledge account for

approximately 80 percent of total factor productivity growth. Ultimately, long-term, noninflationary growth is the only true path to real wage increases and an improved standard

of living.

Technology in the National Interest Chapter 1 12

FORCES OF GLOBAL CHANGE

“Our Nation faces significant economic

challenges. Markets are global, competition is fierce, technological change is swift

and unabating. Meeting these challenges

requires a strategy to equip American

companies and workers to compete successfully in the 21st-century economy.”

John H. Gibbons

Director, White House Office of

Science and Technology Policy

“...technical progress is by far the most

important source of economic growth of

the industrialized countries in our sample, accounting for half or more....”

Michael Boskin

Professor of Economics, 

Stanford University, 1992

(former Chairman, President Bush’s

Council of Economic Advisors)

“The United States must invest in technology and in our workforce if we are to meet

the challenges of intensifying global competition. Our foreign competitors are shifting into high gear in the race for the future.

They are rapidly expanding their technological capabilities and developing the skills of

their people. Their governments are developing policies and programs to enhance

the competitiveness of their industries and

attract the engines of economic growth to

their shores. America’s future prosperity

depends on answering these challenges

loudly and clearly.”

Michael Kantor

Secretary of Commerce

America’s research-intensive industries—

aerospace, chemicals, communications

equipment, computers and office equipment, pharmaceuticals, scientific instruments, semiconductors, and software—

have been growing at about twice the rate

of the economy as a whole in the past two

decades.

Capital 24%

Labor 27%

Technical 

Progress 49%

RELATIVE CONTRIBUTION

SOURCES OF U.S. 

ECONOMIC GROWTH

Source: Boskin and Lau, 1990
Chapter 1 Technology in the National Interest 13

The performance of individual companies—the agents through which economic growth

occurs—is strongly linked to their use of technology. A recent Department of Commerce

analysis shows that the use of advanced technologies enhances manufacturing in virtually

every important performance category. Firms that use advanced technologies are more productive and profitable, pay higher wages, and increase employment more rapidly than

firms that do not. Between 1987 and 1991, employment at plants that used eight or more

advanced technologies grew 14.4 percent more than plants that used no advanced technologies, and production workers’ wages were more than 14 percent higher.

Technology is transforming the very basis of competition—enabling small businesses to

perform high-quality design and manufacturing work that previously required the

resources of big business, while allowing big businesses to achieve the speed, flexibility,

and closeness to customers that were once the sole domain of smaller firms.

Technology provides the tools for creating a spectacular array of new products and new

services. It is creating new industries—advanced materials, mobile cellular communications, electronic commerce—and revitalizing old ones—steel, automobiles, textiles. The

information industry as we know it now barely existed just decades ago. Today, however,

the communications and information industries are among America’s largest, constituting

about 10 percent of U.S. gross domestic product and employing more than 4.5 million

people in the United States. The economic importance of these technologies extends

beyond the borders of the communications and information industries. By making it possible to manage vast quantities of information, these technologies are transforming every

sector of our economy—manufacturing and services, transportation, health care, education, and government—and, in the process, changing forever the way people live, work,

and interact with one another.

By the end of the 20th century, information will be the most important commodity in the

world’s economic system. The speed with which we create knowledge and our ability to

put it to work for us will determine America’s position in the international marketplace of

the next century. Advances in information technology—software, semiconductors, microprocessors, telecommunications—are essential for managing this information explosion,

putting a world of knowledge, global commerce, and communications at our fingertips.

America is leading the world into the Information Age. The United States is laying the

foundation for a National Information Infrastructure (NII) that will link schools and

homes, offices and factories, hospitals and clinics, and a myriad of other business, academic, and social institutions. This network will enable a colossal leap in knowledge sharing, propelling scientific inquiry and discovery, business productivity, transportation system performance, and the education of our citizenry.

The NII—and its international corollary the Global Information Infrastructure—will spur

the growth and creation of American companies and jobs, facilitate the conduct of business

worldwide, and accelerate the development of new products, services, and capabilities in

the United States. American companies, large and small alike, will be able to respond quickly and flexibly to ever-changing global market demands with high-quality, customized goods

and services at competitive prices.

High-technology firms are associated with

high rates of improvement in value-added

manufacturing and success in foreign

markets, which help support worker 

compensation that is 20 percent higher

than the average for manufacturing.

Employment in the cellular telephone

industry has grown from 7,100 in 1987

to 53,900 in 1994.

0

5

10

15

20

25

30

1987 1988 1989 1990 1991 1992 1993 1994 1995

In 1985, there were only 300,000 

registered e-mail users. In 1993, an 

estimated 12 million Americans regularly

used e-mail and related on-line services.

Today, the number of e-mail users is 

estimated to exceed 27 million.

It has been estimated that accelerated

deployment of the NII would increase

U.S. GDP by $100 to $300 billion over

the next decade.

In 1978, the cable television industry

employed 23,500; today, the industry

employs more than 112,000.

Cellular Telephone

Subscribers Soar

(In millions)
Technology in the National Interest Chapter 1 14

TECHNOLOGY AND THE NATIONAL DEFENSE

On the battlefield, technology can be the decisive edge. America’s technological superiority has provided our men and women in uniform the wherewithal to protect the freedom,

democracy, and security of the United States. Beyond our own borders, U.S. military

strength—built on a foundation of high-technology—has enabled the United States to

stand in defense of our allies, preserve the peace, deter hostilities, repel aggression, and

foster fledgling democracies across the globe.

During the Cold War, an arsenal of advanced weapons allowed the United States to field

a technologically superior force to counter the numerically superior Soviet threat. Today,

these high-technology weapons and the transportation and logistics systems that support

their deployment provide the United States with the ability to undertake global military

operations and conduct surgical strikes on strategic military targets—as in recent operations in Iraq and Bosnia—while minimizing the risk to U.S. soldiers and civilians.

Continued technological leadership is essential to U.S. national security, military readiness, and global influence.

TECHNOLOGY AND AMERICA’S QUALITY OF LIFE

New technologies are also improving the quality of life for all Americans. Medical research

in pharmaceuticals, biotechnology, and medical devices promises new hope for the sick

and a healthier life for all. Environmental research offers cleaner air, water, and soil

through better monitoring, prevention, and remediation technologies. Advanced monitoring and forecasting technologies—from satellites to simulation—are helping save lives

and minimize property damage caused by hurricanes, blizzards, microbursts, and other

severe weather. Sophisticated traffic management systems for land, sea, and air transportation enable the movement of more people and goods in less time.

Agricultural research is producing a cornucopia of safer, healthier, and tastier food products.

Automobile research is providing safer, cleaner, more energy efficient, and more intelligent

vehicles—saving lives, preserving natural resources, and keeping our environment cleaner.

Aeronautical technology is making air travel safer, less expensive, and environmentally compatible. Energy research is helping to deliver cleaner and less expensive fuels, reduce

American dependence on foreign resources, and tap alternative sources of energy—solar,

nuclear, geothermal, biomass, and hydroelectric. Information and telecommunications technologies have enabled instantaneous communications across the globe. And the ability to

telecommute allows many American workers to spend more time with their families.

“We are not the only nation with competence in defense technology. To sustain

the lead which brought us victory during

Desert Storm,...recognizing that over time

other nations will develop comparable

capabilities, we must...invest in the next

generation of defense technologies.”

William J. Perry

Secretary of Defense

The top 15 U.S. pharmaceutical 

companies employed more than 350,000

people and earned profits of $13.3 billion

on sales of $84.8 billion in 1994.

By 2001, there will be an estimated 

15 million American telecommuters.

■ Safer poultry products.
Chapter 1 Technology in the National Interest 15

“We are, in a way, a whole Nation of inventors and explorers...We believe

in technology and we are determined to pursue it in all of its manifestations...I do believe that the 21st century can be a Golden Age for all

Americans.”

President William J. Clinton

1995 National Medal of Technology Ceremony

With the increasing importance of technology to our prosperity, national security, and

quality of life, America stands poised to lead the world into an exciting new era filled with

opportunity. This new era—this “Golden Age”—is tailor-made for Americans.

The vision, commitment, and investment of those who have come before us have provided

the United States with the most powerful economic engine in the world—an unparalleled

R&D enterprise that spans industry, academia, and government; a world-class cadre of scientists and engineers; the world’s most diverse and productive manufacturing base; a broad

and technologically sophisticated service sector; the world’s most productive workforce; and

a climate and culture that encourage competition, risk-taking, and entrepreneurship. These

assets provide America with a competitive advantage in today’s global economy.

We must plan for the future and invest as wisely as the generations before us if America

is to retain these assets in the future.

A GOLDEN AGE OF U.S.

TECHNOLOGICAL LEADERSHIP

“Americans also understand that in a

global economy the only way to maintain

America’s competitive edge is to lead

the world in innovation and new technologies. Investments in science and

technology mean better jobs, higher

wages, and a growing economy—

not to mention new cures for diseases

and new products that enrich our lives.”

Vice President Albert Gore, Jr.

■ Magnetic Resonance Imaging

Spectrometer.
Medical research supported by the National Institutes of Health (NIH) has led to many discoveries that have improved both the

health and the quality of life of the American people. This is NIH’s foremost goal, but medical research also yields technological

and economic benefits.

■ Biotechnology—Harnessing the Power of a Scientific Revolution. NIH support of laboratory research in fields such as

microbiology, molecular biology, and genetics during the 1950s and 1960s led to revolutionary discoveries about the structure

and functioning of cells, genes, and proteins. In the 1960s, for example, scientists discovered two classes of proteins, one called

restriction enzymes, which cut DNA strands, and the other called ligases, which join the cut DNA strands together. In the early

1970s, scientists built upon these discoveries and developed DNA cloning techniques. They took advantage of another class of

naturally occurring molecules—bacterial plasmids, which are circular pieces of DNA that replicate autonomously. Researchers

discovered how to isolate plasmids from bacteria, cut them open at specific sites with restriction enzymes, splice in fragments of

foreign DNA—such as the human gene for insulin—and seal the plasmids back together with ligase. Then the hybrid plasmids

containing the foreign DNA were transferred back into bacteria, where they replicated along with the bacteria and began producing the protein coded for by the foreign DNA. These techniques and subsequent advances such as DNA sequencing methods

have been pivotal to the further advancement of basic research, and they provided a revolutionary new way of developing and

mass-producing large quantities of valuable proteins, drugs, and vaccines. The industrial application of this new approach harnesses living cells to treat a variety of diseases and conditions and for other useful purposes such as agriculture and environmental

remediation. Today, 40 approved biotechnology drugs are on the market, and 494 others have reached clinical testing stages.

Some of the drug products developed through biotechnology include the following:

■ Human Insulin. The first drug produced through biotechnology was human insulin in 1982. About 500,000 Americans

with diabetes must take insulin daily to control their blood sugar levels. Before 1982, insulin was manufactured from the

pancreas of cows and pigs. The production process was costly, supplies were affected by the vagaries of the cattle and hog

markets, and the animal-derived product caused immune reactions in some people. A recombinant form of human insulin

was developed by splicing the human gene that produces insulin into the common intestinal bacteria called E. coli.

Fermentation vats grow huge quantities of the human insulin-producing bacteria. The resulting insulin is then purified for

human use. This whole process has allowed human insulin to be mass-produced.

■ Human Growth Hormone. Beginning in the late 1950s, children with growth hormone deficiency were treated with

injections of growth hormone extracted from the pituitary glands of deceased organ donors. Tragically, some of the glands

used to develop growth hormone were obtained from donors who were infected with the agent that causes CreutzfeldtJakob disease, which slowly destroys the brain. About 15 people contracted the disease from growth hormone injections.

Biotechnology made it possible to develop a synthetic version of the hormone. Following FDA approval of the drug in 1985,

children could be treated safely for growth hormone deficiency.

■ Erythropoietin. Each day, thousands of people with kidney failure must undergo kidney dialysis in order to live. Dialysis

cleanses their blood of impurities that are normally filtered by the kidneys. It also tends to deplete essential red blood cells

from the body, causing severe anemia in many patients. In 1989, a recombinant form of a natural human hormone that

stimulates red blood cell production was produced through biotechnology. Today, this drug, called erythropoietin, helps

kidney dialysis patients and others avoid the debilitating effects of chronic anemia.

■ Hepatitis B Vaccine. Hepatitis B virus attacks the liver, causing a chronic infection that sometimes leads to life-threatening liver disease. It is transmitted through contact with blood and other body fluids. About 1 million Americans suffer from

the serious effects of this virus. In 1982, NIH scientists developed a vaccine for hepatitis B virus. Four years later, a safer,

cheaper vaccine developed through biotechnology was approved. Vaccination is now routine for health care workers and is

recommended for others at risk of infection and all infants and adolescents. Widespread use of the hepatitis B vaccine will

help reduce the transmission of this viral infection.

NIH RESEARCH YIELDS TECHNOLOGIES THAT IMPROVE HEALTH AND

QUALITY OF LIFE AND STRENGTHEN THE NATION’S ECONOMY
■ On the AIDS Front, Basic Research Pays Off. A long-term investment by NIH in studies of the molecular composition of

viruses, especially a subtype of viruses called a retrovirus, is directly responsible for recent successes in the production of drugs

effective against HIV, the cause of AIDS. The most potent of these drugs are inhibitors of an essential viral enzyme called a “protease,” an enzyme that cuts proteins into their working components. Retroviral proteases were first discovered in viruses found

in chickens and mice. Later research revealed that retroviruses cannot replicate—or reproduce themselves—without proteases.

Because HIV is also a retrovirus, scientists theorized that inhibiting HIV protease might block replication of the virus and could

lead to a new treatment for AIDS. The pharmaceutical industry subsequently identified and developed agents that would inhibit HIV protease. These therapeutic agents appear to be the most effective and least toxic drugs now available to combat HIV.

■ Will Structural Biology Cure the Common Cold? One of the greatest challenges in finding a cure for the common cold is

that the “common cold” is actually caused by more than 100 varieties of a certain type of virus called a rhinovirus. The development of a vaccine, the usual approach to the prevention of a viral infection, is impractical against cold viruses because more than

100 different vaccines would need to be designed, each one tailored to a different rhinovirus variety. Structural biology, a technology-based science developed in part by NIH-supported scientists, deciphers the atomic structure of biological molecules.

Understanding the structure of viral molecules may one day help overcome the rhinovirus diversity problem. In 1985, a team of

NIH-supported scientists discovered the atomic structure of one cold virus variety known as rhinovirus #14. The structure of #14

revealed tantalizing clues about how viruses infect people and how they might be prevented from doing so. One specific finding

was that there are repeated deep clefts on #14’s surface. These deep clefts are a common feature of rhinoviruses and are suspected to be the sites on the virus that attack human cells. The pharmaceutical industry has capitalized on this work by synthesizing

drugs that can enter the clefts and interfere with the cold virus’s ability to infect cells and reproduce. The drugs should be able to

block infection of all varieties of cold virus, including new ones that arise in the future through mutations. After years of refinement and further studies, these drugs have been shown to be effective and safe in mice. Testing in humans is now under way.

■ Exploring the Brain Through PET. NIH research on imaging and analytical instrumentation was applied to the commercialization of an advanced imaging technology called

Positron Emission Tomography (PET). PET scanning enables the function of organs to be

studied through the mapping of metabolic activities that are normal chemical reactions that

take place in the body. In PET scanning, substances used in metabolic processes are tagged

with short-lived radioactive markers and injected into the blood stream. They are then

taken up by metabolically active tissues or organs such as the brain. Sophisticated sensors

are used to detect the location of the radioactive substance, and a computer generates a

three-dimensional image of the organ being studied. Researchers have used PET scans to

study changes in brain activity that occur when a person is experiencing behavioral or emotional disorders or performing specific tasks. These studies have helped advance understanding of brain activity in patients suffering from depression, schizophrenia, and drug addiction. PET technology is also used

clinically in the diagnosis of disease.

■ The Visible Human Project. The Visible Human Project is an unprecedented information resource that is revolutionizing education and research on the human body. Two people who willed their bodies to science a few years ago have become the world’s first

digitized humans. NIH-supported research combined powerful computer and imaging technologies to create digitized images of a

59-year-old woman and a 39-year-old man. First, the donated bodies were embedded in a special gelatin and frozen to -160°F. After

computer tomography and magnetic resonance imaging technologies were used to make images of the bodies, very thin crosswise

sections were cut and photographed at high resolution. The images were compiled into complete, anatomically detailed, threedimensional representations of the human male and female bodies. The entire data set of images can be licensed through NIH’s

National Library of Medicine.

■ An Implantable Device Can Bring Sound to the Deaf. Thirty years ago, medicine could do very little about deafness. Decades

of NIH research led to the development of the cochlear implant, a dramatic advancement that enables deaf people to hear sounds

they have never heard before, sounds that dramatically enhance communication. The cochlear implant works by changing sound

into electrical impulses that stimulate auditory nerve fibers. Today, more than 12,000 American children and adults are using

cochlear implants. NIH had a pivotal role in the development of the initial technology and continues to support refinement

efforts. Recent progress was made on the device’s speech processor component, giving speech sounds greater clarity.

■ Brain scan.
CHAPTER 2

A TRADITION OF FEDERAL SUPPORT 

FOR SCIENCE AND TECHNOLOGY

Throughout our history, the United States has led the world into the future—ever at the

leading edge of discovery, creating new visions, blazing new technological trails, and

expanding human horizons. And for more than 200 years, the Federal government has

played a vital role in establishing a national scientific and technological infrastructure that

has contributed substantially to U.S. economic growth and the competitive success of

American industry.

Evolution of Technology Policy

1787–1941 Patents, agriculture, infrastructure, education, and standards

1941–1945 Manhattan Project, science, and manufacturing

1945–1980 Defense, space, energy, environment, health, and science

1980–1988 Partnerships for commercialization of government research, 

cooperative research, development and diffusion of civilian technology

1988–present Partnership programs and policies
ORIGINS OF U.S. SCIENCE

AND TECHNOLOGY POLICY

Our Founding Fathers envisioned a country of perpetual innovation and saw a need to

encourage the champions of technological progress. Thus the Nation’s first technology

policy was written directly into the Constitution of the United States, establishing Federal

responsibilities to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors exclusive Right to their respective Writings and

Discoveries” and to “fix the Standard of Weights and Measures.”

Nearly a century later, during the administration of Abraham Lincoln, the Federal and

state governments embarked on a bold initiative to support America’s farming industry

and the Nation’s emerging industrial sector. The Land-Grant Act of 1862, the Morill Act,

offered tracts of Federal land to states as an incentive to create college programs in agricultural, scientific, and industrial studies. As a result, many states established Land-Grant

colleges to support agriculture and the industrial arts. Today, many of these institutions

are leaders in science and engineering research and education.

In 1914, the Federal government established the U.S. Agricultural Extension Service to

ensure that farmers across the Nation received the benefit of the ground-breaking knowledge generated by these institutes of higher learning. Together, the Land-Grant colleges

and the Agricultural Extension Service helped establish a cadre of well-trained agricultural technologists, develop new agricultural technologies, and diffuse these advancements to

American farmers. This strategy played a critical role in increasing the productivity of U.S.

agriculture and making America the breadbasket of the world.

Driven in large part by the needs of the agricultural sector, the United States began in the

19th century to develop the road network that is now the longest in the world. By 1900,

universities and the Federal government had established road research laboratories.

Forerunners of several of today’s leading science and technology institutions were established during this period as well.

Many studies during the past 30 years

have found rates of return to public

investments in agricultural research of

more than 35 percent.

In 1860, three out of five Americans

worked in agriculture. Today, less than 

3 percent of the population feeds the

Nation—and many others throughout 

the world.

Attention frozen food shoppers:

You won’t find the Agricultural Research

Service in your grocery store’s frozen

food aisle, but the products of its basic

thermodynamic and enzymologic

research—the foundation of frozen food

technology—can be found there.

More than half of the Agricultural Research Service’s CRADAs and patent licenses involve small businesses located in rural areas. These partnerships with companies, agricultural producers, universities, and state economic development

programs help put new agricultural technologies to work for our economy.

These technologies have stimulated new businesses that manufacture products

from renewable resources grown on farms and enabled new uses for raw and

waste feed stocks. A partnership between USDA and the State of Florida focuses on transferring food- and fiber-production technologies to businesses, which

will increase exports of citrus fruits and stimulate job growth in rural areas.

AGRICULTURAL TECHNOLOGIES 

SPREAD GROWTH TO RURAL AMERICA

1787-1941

20 Technology in the National Interest Chapter 2

“Effective research is fundamental to agriculture: solving problems from food safety

to sustainability, increasing efficiency and

competitiveness, and opening new economic opportunities.”

Dan Glickman

Secretary of Agriculture
For more than 100 years, America has harvested the fruits of its investment in agricultural research—from the impressive productivity of American farmlands to the variety, safety, and convenience of foods and other products we enjoy today. This national investment has yielded important contributions to America’s economy and continues to pay handsome dividends today.

■ Flavorful Frozen Orange Juice. Year-round, fresh-tasting orange juice is the result of a public-private

partnership between U.S. Department of Agriculture (USDA) laboratories and the Florida Citrus

Commission. For many years, growth in the frozen food industry was restrained by consumer distaste for

the loss of flavor and color in frozen foods. In 1946, researchers found a method for restoring the flavor

and aroma lost during vacuum evaporation of orange concentrate and developed new ways to freeze it for

longer preservation, opening new markets across the world.

■ Wash-and-Wear Cotton. Government-industry partnerships have been invaluable to the U.S. cotton

industry. USDA research contributed to the first wash-and-wear cotton shirts in 1958 and continues to

improve the worldwide marketability of cotton fabric. Research conducted by USDA’s Agricultural

Research Service (ARS) has given cotton stretchability and resistance to flame, heat, rotting, and weather. Other ARS contributions include a process that gave textile mills the ability to dye cotton in bright,

color-fast shades; a formaldehyde-free textile finishing technique that keeps cotton fabrics wrinkle-free

for more than 100 washings; and the discovery that use of advanced open weaves can make all-cotton

outdoor fabrics—used, for example, in tents and awnings—more durable and tear resistant.

■ A Shot in the Arm. During World War II, ARS scientists learned to make huge quantities of stable, potent penicillin by growing mold number 1951 B25 in a drum of corn-processing water. This innovation helped launch the modern pharmaceutical

industry by delivering inexpensive penicillin shots that cured millions of infections.

■ Engineering Fresher Tomatoes. USDA is also fueling the growth of emerging industries, such as biotechnology. As much as

half of all fresh produce—fruits, vegetables, cut flowers—is currently lost to spoilage. But ARS scientists developed a gene that

blocked 99.5 percent of the production of ethylene, a natural ripening gas, in greenhouse-grown tomatoes. The gene could enable

produce to be harvested, shipped, then injected with ethylene closer to the time it is delivered to consumers, preventing loss

caused by premature ripening. Calgene, Inc., DNA Plant Technology, and Monsanto have obtained licenses to use the gene to

genetically engineer tomatoes and other produce.

■ Safer Poultry Products. Two new treatments for animal diseases, developed in part by ARS, promise to improve the safety and

reduce the costs of poultry products. In 1987, ARS and Embrex, Inc. developed a method for vaccinating hatching poultry eggs

against coccidiosis, a chicken disease that costs the industry $300 million annually. ARS has also developed a method to combat

Salmonella, a potentially lethal bacterium, by injecting “good bacteria” into incubating eggs, as well as new tests to detect spoilage

in liquid eggs used to produce bakery goods.

■ Painless, Early Detection of Colon Cancer. ARS scientists have developed a non-invasive method for detecting colon cancer. By

isolating as few as 20 million colon cells from a stool sample, doctors will be able to diagnose early stages of colon cancer and gauge

colon inflammation while avoiding the patient discomfort and hospitalization associated with invasive colonoscopy.

■ Drier Baby Bottoms. Babies owe their dry bottoms to the “superslurper” developed by ARS scientists, a cornstarch derivative

capable of absorbing hundreds of times its weight in water. “Superslurper” has been put to dozens of uses, from diapers and baby

powder to batteries and fuel filters.

■ Mooolicious. ARS development of lactose-modified milk enables millions of lactose-intolerant people to enjoy milk and milk

products.

■ Gobble, Gobble. The Beltsville Small White Turkey—the small turkey with enough white breast meat to go around—was bred

by ARS scientists.

■ From the Vineyards. California vineyards are producing an average of 30 million pounds per year of the Flame grape—a seedless red grape developed by ARS—a harvest valued by growers at $130 million.

LONG-TERM PARTNERSHIPS IN AGRICULTURE YIELD PLENTIFUL HARVEST

■ Fresh tasting orange juice.
In 1842, the Federal government 

appropriated $30,000 for Samuel Morse

to build his original telegraph line from

Washington to Baltimore to demonstrate

the feasibility of the technology.

22 Technology in the National Interest Chapter 2

In 1887, the Marine Hospital Service established the Laboratory of Hygiene—a one-room,

one-person attic laboratory—to assist in the clinical diagnosis of infectious diseases, such

as cholera, among immigrants arriving on ships. After the Spanish-American War, Congress

formally recognized the laboratory, authorized $35,000 for a new building, and charged it

with investigating “infectious and contagious diseases and matters pertaining to the public

health.” In the ensuing years, the laboratory acquired increasingly broader responsibilities,

evolving from its humble origins into the world’s foremost biomedical research agency, the

National Institutes of Health.

At the turn of the century, the lack of effective standards became a national issue. While a

block of butter might weigh a pound at the shop on the corner, it might weigh more than

a pound at the shop in the middle of the block. Inaccuracies in railroad scales caused disputes about taxes and charges. Scientists looked abroad for precise instruments, because

most precision measuring instruments were foreign-made in 1900. Even those produced

domestically had to be calibrated abroad.

Many industries lacked acceptable standards. For example, in the late 19th century, the

infant electrical industry could not measure the volt, ampere, ohm, watt, or candle with

sufficient accuracy. The confusion that reigned at home and abroad is illustrated by the

fact that a lamp drawing 10 amperes at 45 volts was called 2,000 candlepower in the

United States, 400 candlepower in Britain, and 500 candlepower in Germany. Despite the

Federal government’s constitutional responsibility to set standards, it did not have the

technical competence to do so.

These conditions convinced Congress that the United States needed a Federal science laboratory to maintain and develop standards for commerce, science, and industry. So in

1901, President McKinley signed the act that created the National Bureau of Standards.

Within a decade, this new agency began to bring harmony to measurement practices in

commerce through uniform, legal weights and measures.

Since then, the National Bureau of Standards—and its successor, the National Institute of

Standards and Technology—has laid the groundwork for undreamed-of advances in electricity, aviation, automotive engineering, and materials such as plastics and building materials, as well as conducting pioneering work in aeronautics, radio, and cryogenics.

In 1915, Congress established the National Advisory Committee on Aeronautics (NACA)

to promote this fledgling technology for both civilian and military purposes. NACA—predecessor to NASA—built the world’s first full-scale wind tunnels and promoted the cooperative government-industry R&D that enabled the Nation’s aircraft industry to keep pace

with foreign competitors through the peacetime years of the 1920s and 1930s. When war

came again in 1941, the United States had the technology and industrial base that enabled

the production of tens of thousands of warplanes a year.
Chapter 2 Technology in the National Interest 23

During World War II, the United States turned to science and technology to provide a battlefield advantage. Substantial Federal expenditures on research and development led to

technological breakthroughs that helped bring about a decisive victory for the Allies in the

European and Pacific theaters.

Perhaps no war effort characterizes the power and challenges of modern technology more

than the Manhattan Project. In the course of developing the world’s first atomic weapon,

America’s leading scientists and engineers faced daunting technological challenges spanning a wide array of disciplines—from basic physics to manufacturing—as well as

demanding time constraints. This project established the national laboratories in Los

Alamos, New Mexico, and Oak Ridge, Tennessee.

SCIENCE AND TECHNOLOGY

POLICY DURING WORLD WAR II

1941-1945

■ The world’s first general-purpose

electronic digital computer ENIAC

(Electronic Numerical Integrator 

and Computer.)
AN EXPANDING

ROLE FOR GOVERNMENT

24 Technology in the National Interest Chapter 2

The end of World War II marked the beginning of a new era in which the government role

in science and technology expanded dramatically. Emerging from World War II as the

world’s first superpowers, both the United States and Soviet Union recognized that a leading-edge scientific and technological capability was essential to projecting national military and economic might. As a result, the two nations engaged in a heated technological

race throughout the Cold War.

The United States invested in a massive expansion of the military-industrial complex and

established an unprecedented research and development base for defense technologies,

fueling expansion of the U.S. national laboratory system—to this day a scientific and technological asset unique in the world.

In the years following World War II, the U.S. government added significantly to the

world’s science and technology base through a two-part strategy: support for basic scientific research and pursuit of the science and technology agendas of Federal departments

and agencies. After 1960, Federal spending on civilian technology rose dramatically as the

Nation undertook a range of new civilian missions to accompany its efforts in basic

research and defense.

NATIONAL SECURITY

Cold War concerns drove unprecedented Federal investments in the development of defense

technologies and weapons platforms based on those technologies. These investments not

only provided the United States with the world’s most technologically advanced Armed

Forces, but contributed significantly to advances in a wide range of commercial applications,

from civil aviation and advanced materials to computers and communications. Sustained

technology investments and purchases of early prototypes by the Department of Defense contributed

greatly to the maturation of these technologies for

commercial markets. Traditional representations of

Federal R&D include the test and evaluation (T&E)

components of defense RDT&E as in the figure.

Defense RDT&E increased sharply in the early 1980s

and has since declined after the end of the Cold War.

The R&D component of those expenditures

remained relatively constant throughout this period

and, when compared with data in the figure for

other agencies, presently accounts for about 15 percent ($7.8 billion in fiscal year 1996) of Federal

R&D expenditures. Sustaining this investment is

critical to ensuring the technological superiority of

the Nation’s Armed Forces in future conflicts.

1945-1980

60

50

40

30

20

10

0

(in billions, constant 1987 dollars)

1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

Defense

Civilian (1940–1960)

Space

Health

Energy & Environment

Science

Other

Federal R&D Spending, 1940–1994
While many applications of defense-funded technology are self-evident—such as aircraft, radar, and satellite communications—

the defense origins of a myriad of other technologies in commercial use today are not so obvious.

■ Global Positioning System—A Modern Navigational Miracle. While the Department of Defense developed the Global

Positioning System (GPS) for uses such as precision weapon targeting, it has become indispensable in ship navigation and numerous civilian applications, such as emergency rescue, early earthquake prediction through precise measurement of fault line movement, and airport landing systems that perform flawlessly even in the most severe weather conditions. GPS consists of a network

of earth-orbiting satellites sending radio waves that contain precise timing signals. When signals are received from three or more

satellites, precise locations on earth can be determined in latitude, longitude, and elevation. Today, manufacturers are developing GPS-based systems worldwide for a new multibillion-dollar market.

■ Defense Against Disease. In the past, mosquito-borne malaria parasites quickly developed resistance to each new vaccine. A

major breakthrough occurred in the 1970s, when defense researchers identified two new compounds—mefloquine and halofantrine—that were found effective in fighting drug-resistant parasites. Other key advances include finding innovative ways to

stimulate production of malaria-fighting antibodies, distribute antimalarial drugs within the body, and produce the first genetically engineered malaria vaccine. Defense research has made similar contributions with flu virus vaccines, originally developed

to protect recruits, but now used worldwide.

■ Own the Night. Defense night vision research eliminated darkness as mankind’s adversary. Early infrared searchlights and

bulky viewers were followed in the 1960s by the first generation of passive night vision devices, image intensifiers capable of

amplifying even overcast starlight 20,000 times. As they became lighter and cheaper, television, law enforcement, and rescue

agencies started using them. Thermal imaging, the ability to see objects by minute differences in the heat they emit, matured in

the 1980s and now makes it possible to see through smoke, fog, and dust at long ranges in day or night. Civilian applications of

thermal imaging enable us to monitor earth resources from space, detect cancer, make homes more comfortable, and gaze with

greater clarity into space. Declassified infrared sensors are an automotive option. By the turn of the century, infrared systems

might be sold in consumer appliance stores for the price of a camcorder. They could be used in night vision systems for automobiles, home security monitors, and devices that ferret out insulation leaks and faulty electrical wiring.

■ Lasers—The Power of Light. A defense-sponsored microwave research program at Columbia

University—which uncovered the basic concepts that led to the development of the laser—has

yielded economic and social benefits far beyond any imagined at the time of the work. While

Charles Townes received the Nobel Prize for Physics in 1964 for his pioneering work in laser technology, the Nation has reaped enormous economic benefits from the widespread development of

laser applications—fiber-optic communications, compact disc players, laser printers, new cancer

surgeries—and the establishment of whole industries, such as the fiber optics industry that resulted from the marriage of lasers and transistors. Laser techniques developed for the military have also

been applied to ophthalmic surgery. Combining low-energy, blue-green lasers with a computer

workstation, surgeons are able to alter the shape of the cornea to repair vision impairments, including near- and farsightedness and glaucoma.

■ Adaptive Testing. Students, employers, and prospective employees are benefitting from defense

research that established a strong mathematical theory for the construction of tests. Called Item

Response Theory (IRT), it is coupled with actual test performance to reliably predict the difficulty

of the test, as well as the test taker’s ability. Most professionally constructed tests are based on IRT.

One million students taking the Scholastic Assessment Test, thousands of young people seeking to enter military service, and civil

service applicants in Michigan will soon be using computerized adaptive testing. The evolution of these tests has led to restructuring the Graduate Record Examination into a computerized form. This restructuring allows more frequent and convenient

administration of the test and immediate feedback to some 400,000 graduate school hopefuls annually.

DEFENSE R&D DELIVERS DIVERSE BENEFITS

■ Using the power of light.
SPACE RESEARCH

In 1957, the Soviet Union launched the first artificial satellite, and with it, a major U.S. mission in science and technology—the Space Race. President Eisenhower and Congress

responded with the 1958 National Aeronautics and Space Act, establishing NASA and its role

in ensuring U.S. leadership in aeronautics and space science and technology. This act laid the

foundation for public-private partnerships on which U.S. leadership in aeronautics and space

technology has been built. Throughout the 1960s, the United States committed financial,

human, and industrial resources to achieve President Kennedy’s bold objective of landing a

man on the moon and returning him safely home by the end of the decade. In 1969,

the United States achieved this historic

accomplishment and, in the process, contributed enormous advances in scientific

and technological knowledge that have

helped underpin America’s competitive

strength in aerospace, satellite communications, computers, telecommunications, and

other industries. Since 1958, NASA has

annually spent roughly 90 percent of its

R&D dollars in the industrial sector, thus

ensuring the transfer of government-funded technologies to American industry. Also,

the National Defense Education Act of

1958 brought, for the first time, Federal

funding to elementary and secondary

schools to improve mathematics and science education in support of the national

initiatives in space and science.

MEDICAL RESEARCH

In the 1950s, the development of antibiotics and other medical miracles—such as the Salk and Sabin vaccines that eradicated the scourge

of polio—spawned a Federal government commitment to advance the

state of medical science. Federal funding for health sciences led to the

establishment of an unparalleled national health research infrastructure centered around the National Institutes of Health and medical

research universities. Federal investments through the Atomic Energy

Commission, the Energy Research and Development Administration,

and now, the Department of Energy have provided the basis for most

of the nuclear medicine techniques used today, ranging from imaging

technology to the use of radioisotopes as powerful diagnostic and

therapy tools. These investments have produced a flow of blockbuster

drugs, therapies, and medical technologies; propelled America’s phar-

“I believe that this Nation should commit

itself to achieving the goal, before [the]

decade is out, of landing a man on the

moon and returning him safely to earth.”

President John F. Kennedy 

26 Technology in the National Interest Chapter 2

NASA played an instrumental role in the creation of the communication satellite

business. Starting in the early 1960s, NASA was charged by act of Congress to

stimulate space communication in partnership with U.S. industry. That partnership generated technology—starting with the ECHO and SYNCOM family of

satellites—that formed the basis for today’s $5 billion communication satellite

industry. The United States dominates this industry, holding about 70 percent of

the international satellite supplier market, which is expected to grow to $30 billion by the year 2000.

To ensure U.S. leadership in satellite communications into the next century,

NASA is forming a partnership with the industry to address the role of satellites

in the National/Global Information Infrastructure (NII/GII). Among the issues to

be addressed is the investigation and development of standards and data protocols that will ensure seamless interoperability of satellite and terrestrial telecommunications in the NII/GII.

NASA BOOSTS COMMUNICATIONS SATELLITE

0 20 40 60 80 100 120

U.S.

Japan

United Kingdom

Germany

Switzerland

France

Sweden

Italy

American Pharmaceutical

Companies Produce More

World-Class Drugs

1970–1992

U.S. Leads in Gene

Engineering Patents

1992

Other

(18)

European 

Community (14)

Japan

(16)

U.S.

(140)
The Space Race has yielded a wide array of technologies with powerful commercial benefits.

■ Steeling for Foreign Competition. In the 1970s, America lost its dominant position in the global steel market to strong foreign competitors employing leading-edge technology. In 1988, Gladwin Corporation partnered with NASA to convert the space

agency’s knowledge of coating technology into improvements in the company’s continuous casting equipment that would reduce

the cost of steel production. The effort led to a breakthrough involving application of materials in the continuous casting process.

Within months of introducing the improved components, Gladwin posted large sales increases and potential savings to the steel

industry of about $20 million per year. This improved technology has helped Gladwin keep its share of the continuous casting

equipment and maintenance market despite intense foreign competition. The company expects that ongoing research with NASA

will yield further improvements.

■ Affairs of the Heart. Each year 225,000 Americans undergo coronary artery bypass surgery to replace clogged blood vessels,

a procedure that costs $25–50,000 and requires a 10- to 15-day hospital stay. Now, thanks to a system of magnetic switches developed by NASA, one in eight of these patients can be treated using excimer laser angioplasty, a $10,000 procedure requiring only

a two-day hospital stay. Medical researchers seeking an alternative to coronary bypass surgery and its primary non-surgical alternative, balloon angioplasty—which is not suitable for some patients—developed excimer laser angioplasty. This procedure offers

extraordinarily precise, non-surgical cleansing of clogged arteries without causing damage to blood vessel walls. The excimer laser

uses pulses of ultraviolet light to break chemical bonds and disintegrate the plaque blocking the arteries. Precise control of the

laser’s pulse width, a key system requirement, was made possible by magnetic switches developed by NASA’s Jet Propulsion

Laboratory (JPL) to measure atmospheric gases. Advanced International Systems, Inc. (AIS) was formed in 1988 to develop and

market an excimer laser angioplasty system. In 1990, the success rate for opening clogged coronary arteries using excimer laser

angioplasty was 85 percent. AIS received FDA approval for the angioplasty system in 1992 and has already sold more than $20

million worth of this new technology. In addition to the direct surgical cost savings achieved by excimer laser angioplasty, patients

and the national economy benefit from enhanced worker productivity due to reduced recovery time.

■ Clearly Profitable. An optical coating technology developed in 1963

for NASA’s Gemini program has found a home in the commercial marketplace. High Efficiency Antireflection (HEA) technology was developed by Optical Coating Laboratory, Inc. (OCLI) to improve visible-light

transmission in aerospace vehicles. The company subsequently found

the computer industry a ready customer for HEA technology for use in

cathode ray tube (CRT) systems. At the time, 95 percent of CRT users

complained of screen glare, and 65 percent cited specific medical problems such as blurred vision and headaches. OCLI sold HEA-coated panels to the computer industry to alleviate these problems. HEA technology is also used in invisiglass, a product employed in multi-element optical systems; readout panels for medical diagnostic and test equipment;

and energy-efficient lens systems for projectors, copiers, and largescreen video systems. Sales for these products exceed $100 million.

■ Doctors Catch an Earful of Information. For more than a century, doctors have used mercury thermometers to gauge

patients’ health. With the help of NASA technology, the two-minute wait for the mercury to warm up could be a thing of the

past. Diatek Corporation worked with JPL to develop an infrared clinical thermometer that determines a patient’s temperature in

two seconds or less by measuring the infrared radiation emitted from the bottom of a patient’s ear canal. This fast response permits temperature measurement of patients who are critically ill, incapacitated, or new-born, as well as saving valuable medical

personnel time. Diatek worked with JPL to refine the design of the infrared sensor optics in the thermometer. The collaboration

resulted in a thermometer capable of making rapid measurements of a patient’s temperature within ±0.5oF. JPL attained extensive

knowledge of infrared technology during 30 years of instrument development, including the $1.2 billion Infrared Astronomy

Satellite telescope capable of determining the temperature of a planet or star by measuring its emitted infrared radiation.

A WORLD OF BENEFITS FROM SPACE

■ Healthier computing.
More than 1 million Americans 

are employed by more than 

50,000 environmental technology 

businesses nationwide.

■ Capturing energy from the wind.

Technology in the National Interest Chapter 2

maceutical industry to global leadership; and given birth to the biotechnology

industry, viewed by many as one of the major technological opportunities of this

century. Health research has grown steadily, accounting for one-third of the total

Federal investment in civilian R&D today.

ENERGY AND ENVIRONMENTAL RESEARCH

In the 1970s, long lines at the gas pumps, dependence on foreign sources of

energy, and environmental disasters such as Love Canal, smog-choked cities,

and polluted rivers led to expanded efforts in energy research and a new mission

in environmental R&D.

In 1974, the Federal government established the Energy Research and Development Agency

(ERDA) to conduct energy-related R&D in oil, coal, solar, geothermal and nuclear energy. In

1977, ERDA became the Department of Energy and was elevated to full cabinet status.

Energy R&D funding peaked in the late 1970s.

Federal funding for environmental research—provided primarily through the Department

of Energy, Environmental Protection Agency, Department of the Interior, and the National

Oceanic and Atmospheric Administration of the Department of Commerce—has paralleled the Nation’s investment in energy. These R&D efforts have led to more fuel-efficient

vehicles, better insulated homes, increased awareness of energy conservation, improved

weather forecasts, and a myriad of technologies designed to prevent or repair environmental damage.

28

The U.S. Human Genome Project (HGP) is managed jointly by the Department of Energy (DOE) and the National Institutes

of Health (NIH). It was initiated at DOE in 1986 and at NIH in 1987. The goal of the project is to develop the technology

that will allow for complete sequencing of human DNA by 2005. The DOE program is focused on the development and

application of improved and cost effective technologies for mapping, sequencing, and informatics. The NIH program is

focused on generating comprehensive genetic and physical maps of the human genome and sequencing human DNA as well

as the DNA of several model organisms. The technologies, databases, and biological resources being developed by the HGP

are being rapidly shared with the scientific community. This is having an enormous impact on a wide variety of biotechnology-related industries and research including medicine and health care, agriculture, energy production, waste control, and

environmental clean-up. Examples of current spin-offs from the technologies and resources developed in the HGP include

the founding of numerous companies to exploit the medical applications of genome research, as well as the initiation of

genome projects for several economically important plants, animals and microbes. The economic impact of the HGP is reflected in the worldwide sales of biotechnology products that are expected to increase from less than $5 billion in 1992 to more

than $50 billion in 2000.

GENOME RESEARCH CONTRIBUTES TO INDUSTRIAL COMPETITIVENESS
Chapter 2 Technology in the National Interest 29

It is no accident that many of the industries in which U.S. firms lead the world grew from

Federal technology investments. America’s unflinching commitment to a strong science

and technology base to support national defense, space exploration, and other missions

has yielded substantial commercial benefits.

Technology spin-off—in which technology developed to meet Federal mission requirements is adapted for commercial markets—was particularly successful in the period following World War II through the mid-1970s. During this period, Federal R&D expenditures grew dramatically, exceeding the total civilian, defense, and industrial R&D of all

other developed countries in 1964. As a result of their technological sophistication, U.S.

companies were uniquely able to capitalize on the results of Federally funded basic

research and mission R&D, expanding their global commercial dominance in technologybased industries.

Spin-off, or technology transfer, worked well as long as military systems represented the

leading-edge applications of new industrial technologies, and as long as foreign competitors

did not pose a significant competitive challenge. But the circumstances that allowed the

United States to gain world leadership in commercial markets through reliance on spin-offs

from Federal R&D—primarily through a defense-led technology model—have changed.

SPIN-OFF: COMMERCIAL BENEFITS

OF FEDERAL R&D

Defense materials research—designed

to produce better armor, lighter equipment, less maintenance, and more 

durability—has moved from battlefield

applications to artificial limbs, golf clubs,

and construction of a 450-foot cablestayed bridge in San Diego.

Raytheon became a leading producer of military radars during World War II. In

1945, Raytheon engineer Percy Spencer observed that a microwave device from

a military radar set had melted a chocolate bar in his pocket. Deciding to test his

theory, Spencer placed a bag of popcorn kernels in front of the equipment and

the kernels began popping. The next day, Spencer demonstrated the effect before

a group of interested observers using an egg instead of popcorn. Though the egg

exploded, it did not leave Spencer with “egg on his face.”

By 1947, Raytheon had produced a microwave oven for use in restaurants. Nearly

two decades later, the company began development of a microwave oven for the

home. In 1967, Raytheon introduced the “Radarange,” and sales quickly exceeded the company’s expectations. Based on the commercial potential of a military

technology, Raytheon made substantial investments and carried out much technical development to bring these ovens to market.

MICROWAVE OVENS EMERGE FROM DEFENSE TECHNOLOGY

Much of America’s technological

leadership since 1945 was stimulated by Federal R&D expenditures. Some spin-offs of government research include:

■ Automated air traffic control

■ The biotechnology industry

■ Commercial satellite 

communications

■ Integrated circuitry

■ The Internet

■ Jet aircraft

■ Microwave ovens

■ Satellite-based global navigation and communications

■ Supercomputers

FRUITS OF AMERICAN

HIGH-TECH LEADERSHIP
30 Technology in the National Interest Chapter 2

American companies now face intense international competition from increasingly capable foreign firms—accelerating the pace of technological innovation and shortening product life cycles. Thus, traditional technology transfer, development, and diffusion—in

which technology developed for a Federal mission finds its way to the private sector, and

is eventually adapted to meet the demands of the commercial marketplace—often take too

long to be effective. In addition, the end of the Cold War has decreased demand for—and

investments in—new defense systems. This reduction has diminished the influence of

defense spending on technology development paths. Whereas in the past, defense technology generally represented the leading edge of innovation, today developments in commercial technology often lead those in defense. As a result, U.S. defense programs are

becoming increasingly reliant on technology “spin-on,” in which commercial technology

is adapted for use in military applications.

While the United States still gains substantial commercial benefits from its mission-related R&D, commercial product spin-offs have diminished from their heyday of the 1950s

and 1960s as a result of the changing innovation environment.

In just the past ten years, American

employment in the computer and 

software industries—born of Federal

investments in R&D—has almost 

tripled. By 2005, the number of jobs 

for computer systems analysts and 

programmers is expected to more 

than double.

■ Existing commercial space communications systems evolved from high-risk

technology developed by NASA in the

late 1960s and 1970s. Right, the

Advanced Communications Technology

Satellite.
Chapter 2 Technology in the National Interest 31

In the late 1970s, increasing challenges to U.S. competitiveness resulted in plant closings,

job losses, and an eroding tax base. Federal, state, and local governments responded with

a wide array of partnership programs with the private sector to foster economic growth and

job creation. As these competitive challenges reached into U.S. high-technology industries,

these partnerships incorporated efforts in technology development and deployment—

bringing together sources of new technology, insights into new markets, and the funding

and management needed to achieve success in those markets.

In 1980, Congress began a new era in Federal technology policy with the enactment of legislation to exploit the commercial potential of Federal R&D. By enabling firms to

secure patent rights to Federally developed technologies, promoting the role of

small business in innovation, bringing

industry into the technology development

process sooner, and coordinating policies

across agencies, Congress and successive

Presidents sought to more fully leverage

the value to society of tax dollars spent on

Federal mission-related R&D.

Two landmark pieces of legislation—the

University and Small Business Patent

Procedures Act of 1980 (the Bayh-Dole

Act) and the Technology Innovation Act of

1980 (the Stevenson-Wydler Act)—sought

to establish public-private partnerships

built on the mutual objective of fostering

the competitiveness of American firms.

The Bayh-Dole Act created a uniform

Federal patent policy that permits most

Federal laboratories to grant exclusive

licenses on Federal patents to U.S. businesses and universities. Private firms had been reluctant to invest substantial time and

resources in the commercialization of a Federally developed technology under a nonexclusive government license that competitors could secure as well. The Bayh-Dole Act

eliminated this barrier to innovation.

The Stevenson-Wydler Act found that “No comprehensive national policy exists to enhance

technological innovation for commercial and public purposes. There is a need for such a 

policy, including a strong national policy supporting domestic technology transfer and utilization of the science and technology resources of the Federal government.” The StevensonWydler Act articulated a broader role for government in promoting commercial innovation

and established the first major initiative to proactively transfer technology from Federal labs

GOVERNMENT-INDUSTRY PARTNERSHIPS

FOR TECHNOLOGY DEVELOPMENT, DIFFUSION, AND COMMERCIALIZATION

1980-1988

The cost of bringing a new invention 

to market in the 1990s can run 10 to

100 times more than the cost of

research and development.

1980 Stevenson-Wydler Technology Innovation Act

1980 Bayh-Dole University and Small Business Patent Procedures Act

1982 Small Business Innovation Development Act

1984 National Cooperative Research Act

1984 Trademark Clarification Act

1986 Japanese Technical Literature Act

1986 Federal Technology Transfer Act

1987 Malcolm Baldrige National Quality Improvement Act

1988 Omnibus Trade and Competitiveness Act

1989 National Institute of Standards and Technology Authorization Act

1989 National Competitiveness Technology Transfer Act

1991 American Technology Preeminence Act

1992 Defense Conversion, Reinvestment and Transition Assistance Act

1992 Small Business Technology Transfer Act

1993 Cooperative Production Amendment to the 

National Cooperative Research Act

1996 Telecommunications Reform Act

MAJOR FEDERAL TECHNOLOGY LEGISLATION
32 Technology in the National Interest Chapter 2

to industry. The act made technology transfer an explicit mission of the Federal labs, establishing an office within each lab charged with identifying technologies with commercial

potential and transferring that knowledge to U.S. industry.

In 1986, the Federal Technology Transfer Act (FTTA) further leveraged investments in mission-related R&D. The FTTA authorized Federal agencies to enter into cooperative research

and development agreements (CRADAs) with companies, universities, and non-profit

institutions for the purpose of conducting research of benefit to both the Federal government and the CRADA partner. Since its inception in 1986, the CRADA mechanism has

been strongly embraced by industry.

Nicknamed the “radar on a chip,” the micropower impulse radar (MIR) will

soon be available in dozens of products. Developed by an electronics engineer

working in Lawrence Livermore National Laboratory’s Laser Fusion Program,

the MIR harnesses the speed of light for measurements in daily life—all for

about $10, doing what used to require equipment costing $40,000. Computer

chip-sized radar units will detect cars in blind spots; serve as automobile backup warning systems; detect burglars; locate studs in walls; monitor a baby’s

breathing; perform search and rescue; monitor heart contractions; measure fluid

levels; and turn lights, tools, and appliances on and off. And that is only the

beginning; this exciting technology is expected to perform scores of other tasks.

To date, the MIR has been licensed to 15 companies.

PERSONAL RADAR, WAVE OF THE FUTURE

■ A potential use of the MIR–a 

back-up warning system on the 

tail-light of an automobile.
Chapter 2 Technology in the National Interest 33

In addition to efforts aimed at stimulating the commercial use of mission-related research,

the Federal government enacted legislation in the 1980s to improve the economic, tax, and

regulatory environment for the development of commercial technologies by U.S. firms.

In 1984, the National Cooperative Research Act (NCRA) reduced antitrust barriers to joint

industry research. As technology development became more costly, complex, and interdisciplinary, it became increasingly difficult for a single firm to assume the cost and risk

of developing new technologies. Cooperative research and development among firms with

similar technology requirements offered a means to share cost and risk. Antitrust laws,

however, acted as a significant barrier to such joint efforts.

The NCRA eliminated two key antitrust barriers to cooperative research. First, it eliminated the treble damages provision for consortia that registered their cooperative, pre-competitive R&D efforts with the Justice Department, limiting any successful legal action to

recovery of actual damages. Second, it replaced the “per se rule”—in which such cooperative efforts were deemed at face value to be anti-competitive—with the “rule of reason,” in

which the court must weigh the benefits of such collaboration against any potential anticompetitive effects. This legislation spurred the formation of hundreds of R&D consortia.

SPURRING COOPERATIVE RESEARCH

IN THE PRIVATE SECTOR

Today, there are 630 cooperative

research efforts registered under 

the NCRA.
FOCUS ON COMPETITIVENESS:

PARTNERSHIP PROGRAMS AND POLICIES

SUPPORT U.S. INDUSTRY AND WORKERS

34 Technology in the National Interest Chapter 2

In 1988, the partnership between the Federal government and American industry grew

closer with passage of the Omnibus Trade and Competitiveness Act. This legislation established two innovative experimental programs at the National Institute of Standards and

Technology (NIST)—one directed at fostering the development of high-risk enabling technologies, the other aimed at providing technical and management assistance to small and

mid-size manufacturers.

The Advanced Technology Program (ATP) is an industry-government partnership that is sowing the seeds of future economic growth and job creation. First implemented in 1990, ATP

competitively awards funds, matched by industry, for developing technologies with large economic potential that would not otherwise be pursued in a competitive time frame (if

at all) owing to their high cost, high risk, and delayed returns on investment. These

characteristics make such research an unattractive investment for venture capitalists

and for individual firms that must address more immediate business concerns and

stockholder demands.

The Manufacturing Extension Partnership (MEP) provides critical aid to the

381,000 small and medium-size manufacturers that form the backbone of the U.S.

industrial base, provide millions of jobs for American workers, and serve as hubs

for many local and regional economies. Under intensifying foreign competition, the

very existence of many of these companies is threatened by a failure to modernize

their operations. The MEP helps these firms become more competitive by providing technical assistance with new manufacturing technologies and approaches that lead to improvements in product quality, cost, and time-to-market.

The ATP and MEP were first implemented as pilot programs by the Department of

Commerce under the Bush Administration. After their effectiveness was proved during

this trial period, the Clinton Administration executed a plan of scale-up, securing substantial increases in funding for both programs in the interest of fostering U.S. competitiveness and economic growth.

1988-THE

PRESENT

■ The application of holographic technology to fiber-optic communications.
Government and industry have a history of partnership in technology development that dates back to the earliest days of aviation. This technology partnership has contributed tremendously to the United States’ commanding share of the global market for

both military and commercial aircraft. America’s investment in military aircraft technology and the establishment of the National

Advisory Committee on Aeronautics (NACA) in 1915 catapulted the U.S. aerospace industry to global leadership. Through the

1920s and 1930s, NACA promoted cooperative efforts between industry and government that advanced the U.S. aircraft industry and later enabled the United States to churn out military aircraft during World War II. Following the war, U.S. industry applied

military-led advancements in areas such as aerodynamics, materials, fuels, and navigation systems to the design and production

of commercial aircraft, propelling American aerospace companies to global leadership.

■ Military-Commercial Aircraft Synergy. The close relationship between military and commercial aircraft technology is highlighted by Boeing’s development of a jet refueler to replace the propeller-driven KC-97. The acquisition of large numbers of intercontinental jet bombers by the Strategic Air Command in the 1950s drove the need for a jet refueler. In anticipation of this

requirement, Boeing funded development of the Dash-80—a four-engine, swept-wing jet aircraft. Boeing modified the Dash-80

to meet Air Force refueling requirements, delivering the KC-135 Stratotanker within two years of the Air Force’s order. The Dash80 ultimately led to the highly successful 707 Stratoliner passenger jet.

In another project, Boeing failed to secure the government contract for the C-5, but built upon its design work to develop the

747 wide-body passenger jet.

■ Safety, Efficiency, and Affordability in the Air. Government research has contributed to many innovations that have made

aviation among the safest and most affordable modes of transportation available today. Funding from several Federal agencies for

research in computational fluid dynamics is increasing fuel efficiency while reducing design time, the need for costly wind tunnel experiments, and drag in aircraft and automobiles. Federally funded “fly-by-wire” and computational fluid dynamics technologies provide greater stability and maneuverability for military aircraft, as well as smoother rides through turbulent air and

greater fuel efficiency for commercial aircraft. Other recent applications of Federally funded research include supercritical wing

technologies in use on the B-757 and B-767 aircraft, winglets for the MD-11 and the B-747-400 aircraft, active turbine cooling

to improve the performance of the Pratt and Whitney JT9D engine on the B-747, and wind shear detectors for commercial transports. Today, satellite-based navigation and communications are enabling a new generation of air traffic control and management

to meet the needs of the 21st century.

■ Technology for Jobs and Economic Growth. Today the U.S. aerospace industry leads the world and is America’s leading net

exporter of manufactured goods, generating the largest trade surplus of any U.S. manufacturing industry. While American companies still dominate the aerospace marketplace, new challenges from foreign competitors threaten to erode their competitive

position. Today’s government-industry technology partnerships are helping the industry respond to these pressures by developing new jet transports and safety systems for the 21st century.

Investments in NASA’s High-Speed Research and Advanced Subsonic

Technologies programs are designed to advance U.S. aviation leadership through

technology development. These programs are developing and validating 

technologies that will enable commercial development of a new generation of

safe, subsonic, and high-speed civil transport aircraft that outperform current aircraft in affordability, efficiency, and environmental compatibility. Development of

high-speed jets that reduce flight times by more than half is expected to generate a $200 billion market and 140,000 jobs. To ensure that the United States captures a substantial share of these economic benefits, NASA is working with the

private sector to develop technologies essential to high-speed transport aircraft,

including ceramic materials capable of withstanding high temperatures, “high

lift” devices for wings, and advanced engines.

FEDERAL INVESTMENTS HELP AEROSPACE INDUSTRY SOAR

■ The High-Speed Research program is being 

conducted as a national team effort with shared 

government-industry funding and responsibilities.
CHAPTER 3

NATIONAL TECHNOLOGY POLICY IN AN 

ERA OF GLOBAL ECONOMIC COMPETITION

The Clinton Administration came to office at a time of increasing concern about the state of

American technology and competitiveness. The Administration has sought to address these

concerns by building a technology policy on the firm foundation of past success, with an

awareness of the new global competitive environment and an eye to the future.

For more than 50 years, Americans have demonstrated an unwavering bipartisan commitment to U.S. technological leadership. Presidents from Harry Truman to George Bush have

unequivocally supported a strong role for the Federal government in building the Nation’s

scientific and technical capabilities. This strong commitment, backed by investments in

R&D, has created a technology base that is the envy of the world and has paid rich dividends—generating new industries, millions of jobs, and higher living standards.

The Clinton Administration is building on this legacy of success by seeking expanded

Federal support for basic research and to commercialize more effectively the results of

Federal mission research using the licensing and cooperative R&D tools provided by the legislative initiatives of the 1980s.

While these efforts form an essential element of this Administration’s technology policy, the

competitive realities of today’s global economy require the Federal government to pursue

new approaches that directly address economic growth and competitiveness.
FORGING GOVERNMENT- INDUSTRY PARTNERSHIPS

38 Technology in the National Interest Chapter 3

Government-industry partnerships rely on the private sector as the agent through which economic growth will be achieved. Industry transforms technology into the products and services

that generate the wealth and jobs that improve the Nation’s standard of living. Government

must be a strong partner in enabling the private sector to fulfill this role more effectively.

The Administration has identified several overarching principles to guide its partnerships

with the private sector. These principles seek to develop partnership programs that are

aligned with private sector needs and build on U.S. academic strengths while maintaining

strong government stewardship over the public’s interests and investments.

SHARED RESPONSIBILITIES AND MUTUAL BENEFITS

During the past 50 years, the Federal government has been the customer for most technology programs it carried out jointly with industry. Agencies initiated programs to meet

their mission needs, established goals, and were responsible for using program results.

Government’s needs were the sole consideration, and relatively little attention was given

to the challenges faced by private participants in developing commercial applications for

their work. By contrast, the ultimate success of the technology partnership programs rests

on meeting the objectives of both government and industry partners.

Government can achieve its economic objectives only if technologies that emerge from

partnership programs are put to work in the commercial marketplace. That requires technologies that meet private sector needs. Industry should play a larger role in establishing

priorities for partnerships in Federal civilian research. In the design and management of

Federal civilian industrial research and technology development projects conducted by

the private sector, the industry partner should, where possible, specify the research direction, control project spending, and own the intellectual property to the extent necessary

to encourage its commercial development. Federal agencies are strengthening the linkages

with industry in these areas.

Cost-sharing arrangements should be undertaken wherever possible. The private sector’s

willingness to share costs and put assets at risk demonstrates that partnership programs

reflect the real needs of American business as well as a commitment to commercialize program results. Industry must be able to count on government as a reliable partner; uncertainties about government’s commitment to promising projects should be minimized.

TOOLS TO COMPETE

In addition to technology development programs, industry has identified a wide range of

government policies—including incentives for capital formation, regulatory reform, and

product liability reform—that significantly affect its ability to turn technology into products and services and bring them to market. Government must recognize and address the

many factors that affect the private sector’s ability to compete.

The diversity of industries in the United States is a significant strength that allows our country to pursue multiple paths to growth and job creation. However, it also presents complex

challenges to government policy-makers. Different industries have different concerns, face

■ Assembling miniaturized 

electronic circuit boards.
Chapter 3 Technology in the National Interest 39

different competitive challenges, and seek different types of policy solutions. For example,

incentives for capital formation are a priority for the biotechnology industry, which is populated by many cash-poor start-ups and small firms. The pharmaceutical industry has

identified product liability costs and regulatory delays in gaining approval for new products as key challenges. Telecommunications companies are eager to capitalize on the

rapidly unfolding opportunities of the Information Age and see the reform of telecommunications regulations as essential to their global competitiveness. There is no “one size

fits all” formula for ensuring that our companies lead the world in innovation; a portfolio

of policies will best serve the national interest.

FOCUS ON WHAT WORKS

Evaluation is the cornerstone of effective program management and

a key tool for government in carrying out its role as steward of the

public interest. Evaluation is especially important when new and

innovative approaches are pursued, such as the Administration’s

partnership programs.

Where government is partnering with industry to meet its own

needs, program success is ultimately measured by the cost and

timeliness of project completion by the contractor and by the project’s contribution to the agency’s mission. However, in the Federal

technology partnership programs, the ultimate measures of success

are business measures that relate to effective technology diffusion,

adoption, and commercialization, as well as economic measures

such as productivity growth and job creation.

The Federal government must focus on developing and refining

methodologies for assessing the economic benefits attributable to its

investments in technology partnerships with the private sector. For

example, measures of success for technology development partnerships may focus on new technical capabilities, reduced time-to-market, new commercial opportunities, and business growth.

Deployment programs, such as the Manufacturing Extension

Partnership (MEP), can be assessed by improvements in areas such as company sales, exports,

computer use, and quality. For example, MEP client firms were asked to estimate the benefits

they expect to realize from changes and improvements made on the basis of the assistance

they received. Based on surveys returned by 610 companies served by 13 centers in 1994,

firms reported anticipated benefits of $167 million resulting from sales increases and cost savings attributable to actions undertaken with assistance from the MEP. Based on Federal funding for the centers totaling $20 million, these results translate into an $8 return on each dollar that the Federal government invested in the MEP. Bottom-line economic impacts—such

as jobs created or saved—are powerful evidence of a program’s value to the country.

As government and industry together confront the challenges of the new global economy,

these principles will help bring this budding partnership to full flower. In the process, a

vision we all share will be realized—a secure Nation, a growing economy, high-paying highquality jobs, and a rising standard of living for our people.

100 200 300 400 500

63%

140%

181%

423%

117%

266%

156%

428%

-30 0 30 60

49%

29%

56%

43%

-28%

-20%

4%

17%

17%

15%

Aggregate Economic Rates of Return 

from Technology Investment

NIST laboratories’ R&D

and services

have yielded

high returns

Before-and-After Look at a Sample of 

Manufacturing Extension Partnership Client Firms 

(Progress measures:

average percentage

change, 1990-1992)

Power & Energy Calibration Services

Integrated Services

Digital Network (ISDN)

Electromagnetic Interference

Semiconductor- Electromigration

Optical Fiber

Semiconductors

Employment

Sales per Employee

Payroll

Average Annual Salary

Manufacturing Lead Time

Scrap Rates

Inventory Turns

Computer Usage

Exports

Annual Sales
CHAPTER 4

MEETING THE GLOBAL COMPETITIVE CHALLENGE:

A NATIONAL TECHNOLOGY POLICY FOR THE 21ST CENTURY

FIVE GOALS OF THE PRESIDENT’S TECHNOLOGY POLICY FOR

ECONOMIC GROWTH

■ Create a business environment in which the innovative and competitive efforts of the private sector can flourish.

■ Encourage technology development, commercialization, and use.

■ Invest in a world-class infrastructure to support U.S. industry and facilitate commerce.

■ Promote integration of the military and civilian industrial bases.

■ Ensure that America has a world-class workforce capable of participating in a rapidly

changing, knowledge-based economy.
42 Technology in the National Interest Chapter 4

Recognizing that U.S. global leadership in technology is vital to the national interest,

President Clinton set forth a clear and simple vision: “Technology is the engine of economic growth.” To fulfill this vision, the Administration established a policy that will maximize technology’s contribution to sustained economic growth, job creation, improved

quality of life, and the national defense. The policy recognizes that only the private sector

has the skills and abilities to manage the complex process of developing new technologies

and bringing them to market, while acknowledging that government plays a vital role in

enabling the private sector’s efforts.

Governments everywhere are working to build competitive and technological capabilities

that remain within their national borders. Assets such as a strong science and technology

base, a modern infrastructure, a skilled workforce, and a healthy business climate enable

domestically based companies to grow and compete, and attract the engines of wealth creation and economic growth to a nation’s shores. An effective technology policy must

encompass a broad and balanced approach that invests in and cultivates these competitive assets. The Clinton Administration’s technology policy is guided by five goals that

address each of these important elements of technology and economic growth.

■ The primary role of the Federal government in technology policy is to create a business environment in which the innovative and competitive efforts of the private sector

can flourish. This includes eliminating unnecessary legal, regulatory, and economic barriers to the development and commercialization of new technologies; assessing the

impact of proposed laws and regulations on U.S. competitiveness; and developing new

policies that foster innovation.

■ The Federal government must encourage the development, commercialization, and

use of technology. First, the Federal government must invest in the pre-commercial development of technologies that offer large economic and social returns to the Nation. Rising

costs and high risk are discouraging U.S. firms from pursuing the development of the

emerging and enabling technologies that will form the basis for new products, services, and

industries in the 21st century.

Second, the annual Federal investment in R&D exceeds $71 billion. A substantial portion of

these funds is devoted to the development of technologies to meet government mission

requirements. While a significant portion of these funds fall outside the traditional definition

of R&D—for example, the Department of Defense invests $26 billion of this $71 billion on

short-term developments unique to specific weapons systems—the remaining Federal R&D

investment provides robust support to many technologies with strong commercial potential.

This investment stands as a barometer of the health of the Nation’s R&D enterprise today

and a leading indicator for the vitality of the Nation’s technology-based industries decades

hence. If Americans are to receive the largest return on their tax dollars, Federal policy must

aim to ensure that the fruits of this research extend beyond government to help U.S. firms

and industries create high-wage jobs and national economic growth.

FIVE GOALS

■ Improving oral drug administration

by providing rate-controlled delivery

that can reduce side effects, increase

efficacy and decrease dosing frequency.
Chapter 4 Technology in the National Interest 43

Third, the Federal government—in partnership with state and local governments, the academic community, and the private sector—should establish a range of mechanisms that

encourage widespread deployment and use of technology.

■ The Federal government must invest in a world-class infrastructure for the 21st century to support U.S. industry and promote commerce just as it has for more than a century in canals, rail transportation, aviation, and the national highway system. Today

and in the future, infrastructure remains essential to the Nation’s ability to develop and

deploy new technologies. We must continue to ensure the availability of efficient, high-performance transportation infrastructure, and continue our commitment to a national standards research, test, and measurement capability that keeps pace with technological innovations. Also, the knowledge-based economy of the 21st century demands that the Federal

government encourage the adoption of new information technologies that will help government deliver services and meet responsibilities in transportation, public health, education,

libraries, and other fields.

■ U.S. policy must seek to integrate the military and commercial industrial bases into

a single base capable of meeting both defense and civilian technology requirements

cost-efficiently and effectively. With the end of the Cold War and the growing role of civilian technology in meeting military needs, the United States can no longer afford to maintain

two separate industrial bases—one solely to meet defense requirements, the other to address

the opportunities of the global marketplace.

■ We must develop a world-class workforce capable of participating in a rapidly

changing, knowledge-based economy. America’s greatest asset is our people. In an era in

which it is expected that most Americans will change careers several times during their

lives, education will often continue past the formal training provided in elementary

school, high school, and college.

“Transportation is the lifeblood of an

economy—national or global. The

incredible ease of movement of people

and products from one place to another

is what makes our vast U.S. economy

possible. Increasing the speed and

decreasing the cost of transportation 

is a key foundation to economic growth

and spreads prosperity over a broader

geographic area.”

Daniel S. Goldin

NASA Administrator

■ Bringing enthusiasm for technology

and science to classrooms.
44 Technology in the National Interest Chapter 4

■ Technology

National Science and Technology Council

Advanced Technology Program

Partnership for a New Generation of Vehicles

Dual-Use Applications Program

Environmental Technologies

DOE’s Industry of the Future Program

Energy Research

Intelligent Transportation Systems

Aeronautics Enterprise

Space Enterprise

Goals for a National Partnership in 

Aeronautics Research and Technology

Reusable Launch Vehicle Program

Small Spacecraft Technology (New Millennium Spacecraft)

Commercial Remote Sensing

Commercial Development of Space

NASA Commercial Technology Program

Biotechnology

Medical Research

Agricultural Research

Public-Private Technology Partnerships

Federal Patent Licensing

Cooperative Research and Development Agreements

Manufacturing Extension Partnership

National Technical Information Service

Malcolm Baldrige National Quality Award

BUILDING COMPETITIVE ASSETS FOR NATIONAL ECONOMIC GROWTH

■ Business Climate

Balanced Budget

Deficit Reduction

Research and Experimentation Tax Credit

Joint Production Amendment to the 

National Cooperative Research Act

National Institutes of Health Reasonable Pricing

Clause

Telecommunications Reform

NAFTA

GATT

Summit of the Americas

Aisa Pacific Economic Cooperation

Export Control Reductions

■ Infrastructure

National Information Infrastructure

Global Information Infrastructure

Telecommunications Information Infrastructure 

Assistance Program

High-Performance Computing and 

Communications Initiative

Standards

Patents and Trademarks

Intelligent Transportation Systems

■ People

Goals 2000

School-to-Work

Direct Loans

Education Tax Deduction

Reemployment System

Skill Grants

Undergraduate and Graduate Education

Skill Standards

Education Technology
Chapter 4 Technology in the National Interest 45

BUSINESS ENVIRONMENT Goal 1

Create a business 

environment in which 

the innovative and 

competitive efforts of 

the private sector 

can flourish. 

Perhaps the most important factor in the equation for national growth and prosperity is a

healthy business environment. Government economic, regulatory, and trade policies are

instrumental in creating a climate that enhances the private sector’s ability to develop 

technology, turn it into products and services, and bring them to global markets rapidly.

ECONOMIC POLICY

Economic policies affect the cost and availability of capital that firms need to invest in technology, product development, and manufacturing. By cutting the deficit and balancing the

budget, government borrows less, freeing capital for these private sector investments. The

Clinton Administration has made great strides in reducing the Federal budget deficit and has

proposed a viable plan to balance the budget while maintaining our investments for the

future in areas such as technology, training, and modern infrastructure. The Administration

proposed permanently extending the research and experimentation tax credit in 1993 to

provide an incentive for American firms to invest in the new technologies that will underpin

tomorrow’s products and services. While Congress ultimately extended the credit only

through June 1995, the Administration continues to support the credit and has proposed

working with Congress to extend it.

REGULATORY POLICY

Regulations often play a major role in the time and capital required to develop a new product and bring it to market. This is especially true for biotechnology, environmental technology, and pharmaceutical products. The

Clinton Administration seeks to meet public safety, consumer protection,

and health goals in a manner that is least burdensome to business by identifying and eliminating unnecessary legal and regulatory barriers that inhibit R&D and domestic production.

In 1993, President Clinton signed legislation amending the 1984 National

Cooperative Research Act to reduce antitrust barriers to joint production

ventures, offering U.S. firms a new way to cope with the escalating cost of

establishing production facilities.

In April 1995, the National Institutes of Health dropped the “reasonable pricing” clause

from its cooperative research and development agreements, a provision seen by industry

as a significant barrier to partnership with NIH.

With the recent passage of the Telecommunications Act of 1996, the United States took a

bold step into the future. These reforms will unleash a tidal wave of investment, creativity, and new technology that will spur growth, create jobs, and revolutionize our lives in

ways we cannot imagine today.

In March 1995, the President and Vice President launched the “Reinventing Environmental

Regulation” initiative to make environmental protection work better and cost less. The initiative contains 25 priority actions to both improve the existing environmental protection

system and build the foundation for a fundamentally new performance-based system.

■ Using low-level electrical energy 

to facilitate drug transport through 

the skin.
46 Technology in the National Interest Chapter 4

TRADE POLICY

Trade policies affect the playing field on which American firms must compete, but too

often the playing field has been tilted by other nations to give their companies an unfair

advantage. Access to global markets is a necessity in many high-technology industries.

The costs of R&D and production facilities in such industries are prohibitive unless markets are captured globally to generate a sufficient return on those investments. Yet, too

often, other countries’ trade policies, and even those of the United States, have acted as

troublesome barriers for otherwise able and successful American exporters.

The Clinton Administration is fighting to open markets worldwide. The Administration

brought the NAFTA and GATT negotiations to conclusion, then secured their ratification

in Congress. GATT is expected to boost the U.S. economy by $100–$200 billion in just

ten years. At the Summit of the Americas, the Administration set the stage for open markets throughout the Western Hemisphere. The Administration has also taken the lead in

promoting free trade in the Asia Pacific region, the world’s fastest growing economy,

through bilateral agreements and its leadership in the Asia Pacific Economic Cooperation

(APEC) forum. President Clinton convened the first summit of leaders of the 18 APEC

economies in 1993. U.S. exports to these economies totaled $320 billion in 1994, supporting over 2.7 million American jobs.

At home, certain export controls have hurt some of America’s most innovative and rapidly growing industries. By reducing outdated export controls on U.S. computer, supercomputer, and telecommunications products, the Clinton Administration has freed hightechnology exports worth billions of dollars annually.

NAFTA and GATT also addressed other issues critical to ensuring fair competition in the

technology-driven global marketplace. NAFTA established the highest standard of protection for intellectual property, such as patents, of any international accord. The Trade Related

Aspects of Intellectual Property, an accord reached in the GATT Uruguay Round, raised the

standard of protection accorded copyrights, trademarks, patents, industrial designs, and

trade secrets in each of the countries that are members of the World Trade Organization.

National governments increasingly are making investments in R&D to promote economic growth. Some nations, however, have used these investments to directly subsidize latestage technology development in favored companies, providing these companies with a

competitive edge over companies from nations that adhere to the principles of marketbased competition. GATT protects from action government support of industrial R&D

only through the pre-competitive stage of a non-manufacturable prototype. By discouraging industrial subsidies at the competitive stage of technology development, GATT will

help to level the international playing field in technology.
“If our environmental technology industry is to remain competitive in the global marketplace, we must implement

actions today that will be responsive to tomorrow’s problems and needs. Meeting future challenges will require our

regulatory system to adapt to a changing world by promoting the innovation that will ensure protection of our 

environment in a cost-effective manner. We want a government that offers opportunity, rewards innovation, and

demands responsibility.”

President William J. Clinton and Vice President Al Gore, Jr.

Bridge to a Sustainable Future: National Environmental Technology Strategy, April 1995

The environmental technology sector of our economy has grown to $170 billion and now provides over 1 million Americans with

high-skilled and high-paying jobs in over 50,000 businesses nationwide. Global environmental revenues are estimated at $408

billion and expected to increase by $135 billion by the year 2000—more than a 33 percent gain in five years and a dollar figure

comparable to Sweden’s and Indonesia’s combined annual gross domestic product.

Over the past three years, the Administration has worked closely with industry, non-governmental organizations, communities,

academia, and state and local governments to advance the development and deployment of environmentally sound technologies,

products, and practices both here and abroad.

Several initiatives are designed to identify and reform regulations that inhibit innovation and private sector investment in environmental technologies.

■ Project XL (Excellence and Leadership) provides an alternative performance-based approach to environmental management that will encourage companies and communities to use cheaper, faster, and safer solutions to public health and environmental problems.

■ The Common Sense Initiative (CSI) replaces a pollutant-by-pollutant approach to environmental protection with an

industry-by-industry approach for the future. CSI participants in six sectors—automobile manufacturing, computers and electronics, iron and steel, metal finishing, petroleum refining, and printing—are working on more than 40 projects.

■ The President’s Environmental Technology Initiative (ETI) has invested $104 million in support of 274 projects with public 

and private sector partners to help identify and reduce regulatory and permitting barriers to environmental technology development and commercialization, address financing barriers, and encourage the deployment of environmental technologies at

home and abroad.

THE NATIONAL ENVIRONMENTAL TECHNOLOGY STRATEGY

continued on page 48
The Federal government is working with industry to help demonstrate and verify critical environmental technologies.

■ The interagency Rapid Commercialization Initiative helps move promising environmental technologies into the marketplace by providing businesses with assistance in demonstrating, verifying, and permitting their technologies.

■ The $7 million, 3-year Environmental Technology Verification Program tests different approaches to verifying the performance and cost of drinking water treatment, monitoring, pollution prevention, and indoor air technologies. ETI-funded thirdparty verification programs provide technology users with the information they need to make informed buying decisions and

permitting officials with the data necessary to approve the use of new technologies.

Efforts are underway to support U.S. businesses seeking to capture rapidly expanding global markets for environmental technologies.

■ An Environmental Technology Export Strategy provides strategic market analyses of large emerging environmental technology markets and supports U.S. businesses interested in moving into these markets.

■ The Initiative for Environmental Technologies (through USAID) focuses development assistance on critical environmental

challenges in developing countries.

■ A new Environmental Directorate at the Export-Import Bank assists U.S. businesses with loans for environmental projects

overseas.

■ The America Desk at the State Department is tasked with helping to solve problems U.S. businesses overseas have and

bringing business concerns to the forefront of the foreign policy process.

Two services help connect businesses with these environmental technology programs as well as technologies and markets. A CDROM provides quick access to information on Federal environmental technology programs, and the Global Network for

Environment and Technology (GNET) offers an electronic marketplace and information exchange network for environmental

technologies on the World Wide Web. GNET was recently given the Golden Tiger Award as the most promising new business

networking site on the Internet (address:http://www.gnet.org).

(See page 54 for Environmental Technology Initiative)
Chapter 4 Technology in the National Interest 49

NATIONAL SCIENCE AND TECHNOLOGY COUNCIL

Careful planning to meet national needs, elimination of duplicative efforts, and program

evaluation are essential for effectively managing the Federal government’s portfolio of

research. In November 1993, President Clinton established by Executive Order a cabinetlevel National Science and Technology Council (NSTC) to coordinate science and technology policies throughout the Federal government. Chaired by the President, the

Council includes the Vice President, the Assistant to the President for Science and

Technology, the Cabinet Secretaries, and agency heads with responsibility for significant

science and technology programs.

The NSTC establishes clear national goals for Federal science and technology investments

and ensures that science, space, and technology policies and programs are developed and

implemented to maximize their contribution to national goals. Key activities include conducting across-the-board reviews of Federal investments in R&D and coordinating R&D

budget recommendations. This work is accomplished through nine committees with

jurisdiction in civilian industrial technology; information and communications; fundamental science; transportation; natural resources and the environment; national security;

health, safety, and food research; international science, engineering, and technology; and

education and training.

TECHNOLOGY PARTNERSHIPS

Today, the development of new enabling technologies and emerging technologies that

promise large economic and social benefits to the Nation is at risk. New enabling technologies would support advances across a wide range of industries, while emerging technologies promise to drive the development of entirely new industries and classes of products and services. While such technologies are the fundamental building blocks for future

economic growth and competitiveness, individual companies may be unable to develop

them in a competitive time frame (if at all) due to their high cost, high risk, and delayed

returns on investment. These characteristics make such research an unattractive investment for venture capitalists and for individual firms that must address more immediate

business concerns and stockholder demands.

In the past, American companies were able to pursue exploratory research with little

regard to its near-term impact on the bottom line. Today, however, U.S. industry’s R&D

activities have shifted away from long-term exploratory research toward the pursuit of

shorter term business goals. This shift is driven by competitive pressures to downsize and

streamline, move R&D closer to the customer, reduce costs, and improve quality. While a

rational response to today’s competitive realities, these trends threaten to dry up the wells

of new technology from which our nation must draw to remain competitive.

The Federal government’s technology initiatives are designed to help replenish these wells.

By forming partnerships with industry, government can help ensure that U.S. companies

and American workers develop the technological tools needed to compete in tomorrow’s

global markets.

TECHNOLOGY DEVELOPMENT

AND DIFFUSION

Goal 2

Encourage 

technology development,

commercialization, 

and use.

■ New fluids are replacing CFCs in

cleaning printed circuit boards during

manufacturing and in many other

applications.
50 Technology in the National Interest Chapter 4

■ Advanced Technology Program. The Commerce Department’s Advanced Technology

Program (ATP) addresses the problem of developing enabling and emerging technologies

by sharing the cost and risk with the private sector. ATP forms partnerships with companies and joint ventures that have the greatest potential for meeting the primary objective

of the program: developing technologies to achieve broad-based economic benefits with

high rates of social return for the Nation.

While government provides the catalyst, industry conceives, co-funds, and executes ATP

projects. Specific R&D projects are selected from proposals submitted by industry, and all

awards are made through a competitive merit-based selection process that evaluates technical and business merit. Industry is also the source of ideas for particular technology

areas that offer important opportunities for economic growth. These are multi-year efforts

aimed at specific, well-defined technology and business goals. By managing groups of projects that complement each other, ATP reaps the benefits of synergy and, in the long run,

can have a stronger impact on the U.S. technology base and the economy.

PARTNERING FOR MUTUAL BENEFIT

While industry and government may have different goals for their technology investments,

cooperation can create synergy that allows each to achieve those goals in a more efficient and

effective way. Several Clinton Administration initiatives exemplify this approach.

The National Electronics Manufacturing Initiative (NEMI) was created to ensure the sustained growth and competitiveness

of electronics manufacturing in the United States. Originated by the National Science and Technology Council’s Electronics

Subcommittee, NEMI was formally launched in 1996 as an industry-led initiative focused on bringing together the largest

electronic equipment manufacturers, their key suppliers, and government agencies to foster development of the world’s best

electronics manufacturing supply chain.

To advance the U.S. electronics manufacturing infrastructure quickly, NEMI first identified key R&D activities that would

require the coordination of its members and outside organizations. NEMI created technology roadmaps defining members’

expectations for the evolution of these technologies during the next five-year period in terms of performance and related

characteristics. Through this process, technology gaps were uncovered in the U.S. electronics manufacturing infrastructure.

Accordingly, initial NEMI projects are focusing on the five areas of greatest deficiency: interconnection substrates, board

assembly, final assembly, flip-chip packaging, and energy storage systems.

NEMI expects to help maintain a strong U.S. economy by improving the U.S. balance of trade in electronics, by enhancing

the commercialization and effectiveness of U.S. R&D programs in electronics, and by improving the business environment

for electronics manufacturing. By using product-driven technology roadmapping to improve the communication between

government and industry, NEMI plans to focus national efforts on priority areas and increase the return on investment of

declining R&D budgets through collaboration in precompetitive areas. NEMI also envisions a corresponding increase in

national security by ensuring affordable access to critical military electronics components needed to maintain the superiority of U.S. defense systems.

NATIONAL ELECTRONICS MANUFACTURING INITIATIVE

■ A Partnership for a New Generation of

Vehicles (PNGV) experimental concept car.
■ Freeing Diabetic Patients from Expensive, Unpleasant Daily Insulin Shots. A new technology being developed with support from the Advanced Technology Program would provide a better treatment for those suffering from diabetes. Researchers are

developing a way to encapsulate insulin-producing cells in microscopic polymeric spheres. These tiny spheres would allow the

cells to release insulin through custom-designed pores that would allow nutrients from the bloodstream to enter the cells and

metabolic wastes to leave the spheres. This would keep the cells alive while preventing the large proteins that comprise the body’s

immune system from entering the spheres and rejecting the foreign cells. Such a technology would allow a diabetic patient to

receive a single injection of these cells, perhaps once a year. The cells would regulate the body’s insulin level just as a properly

functioning pancreas does. Though the process is technically challenging, preliminary results are encouraging. If successful, the

United States could capture world markets for this revolutionary treatment and significantly reduce health care costs. The same

technology might eventually be used to treat other chronic diseases, such as Parkinson’s disease.

■ Lighter Weight, Fuel-Efficient Automobiles. Automobiles are now manufactured from hundreds of steel parts that are welded together during assembly. For years, people have suggested that lighter weight advanced composite materials would enhance

fuel economy and allow for substantial parts integration in the primary automobile manufacturing stages. But today, the cost of

manufacturing suitable composites is too high to permit their widespread use in automobiles and other vehicles. A portfolio of

ATP projects seeks to reduce these costs dramatically by addressing the manufacturing processes compatible with producing large,

high-performance commercial composite structures. The result could be cost-competitive vehicles that are lighter and can be

mass-produced in factories that are substantially less expensive to set up and reconfigure for producing a variety of parts.

■ Error Avoidance and Compensation to Boost U.S. Machine Tool Competitiveness. ATP support for several projects

promises to rejuvenate the competitiveness of the American machine tool industry. Under one project, a radically new architecture—octahedral hexapod design—is being explored and could lead to machine tools that are both less expensive and more accurate. In another project, advanced techniques for error compensation—which involve modeling and quantifying errors, then compensating for them in software—are also beginning to pay dividends. Such efforts would allow the Nation’s machine tool makers to increase their world market share, while discrete parts manufacturers who employ the new technology would be able to

produce higher quality goods at lower prices.

■ Virtually Human. A patient undergoes experimental surgery, comforted by the knowledge that the doctor has performed the procedure countless times. An ATP-supported project is developing a “virtual human”—a three-dimensional geometric database of the

body using leading-edge computer modeling and visualization technology. Users would be able to display portions of the body using

a computer graphics workstation; remove layers of tissue to reveal underlying structures; display the motion of joints, tendons, and

surrounding tissues; and “walk through” cross-sections from any viewpoint. This technology serves as a powerful tool for medical

education and training—surgeons will be able to simulate medical procedures repeatedly to ensure proficiency.

■ Tools for Faster, Less Expensive Software Development. Software developers have two choices: develop custom software lineby-line or learn the complex interface requirements of modular software libraries. The latter might reduce the need to write custom

code, but both are expensive, time-consuming options that require highly skilled programmers to translate business requirements—

with which they are not likely to be familiar—into software. This results in high initial and maintenance costs for complex software

systems used, for example, for financial services, chemical processing, and manufacturing. By fostering innovative methods for automatic software generation and modular assembly, the portfolio of projects funded under ATP’s Component-Based Software (CBS)

focused program promises to change the way software is produced. With the CBS approach, software that meets business requirements could be produced much faster. Such tools would allow companies to spend more time solving business problems and less

time struggling with the details of getting software to operate properly. Because software is ubiquitous, CBS success in reducing the

cost of developing complex software would produce significant economic benefits throughout the U.S. economy.

NIST ADVANCED TECHNOLOGY PROGRAM:

EMERGING AND ENABLING TECHNOLOGIES FOR THE 21ST CENTURY
■ Partnership for a New Generation of

Vehicles. In the Partnership for a New

Generation of Vehicles (PNGV), seven

Federal agencies and the Nation’s automobile manufacturers and suppliers have

teamed up to achieve R&D goals in three

areas: advanced manufacturing methods;

technologies that can lead to near-term

improvements in automobile efficiency,

safety, and emissions; and research that

could lead to vehicle prototypes with a

threefold improvement in fuel efficiency. These super-fuel-efficient family sedan-size vehicles

should cost no more to own or operate than today’s cars; offer comparable performance,

roominess, and utility; and meet or exceed all safety and emissions standards.

PNGV has the potential to boost economic growth by strengthening one of America’s most

important industries. The motor vehicles and equipment industry is the largest of all U.S. manufacturing sectors. U.S. automakers, dealers, and suppliers directly provide more

than 2 million jobs, and more than 13 million people work in related industries. In

total, the U.S. auto industry provides one

in seven American jobs. However, the

tremendous success of the automotive

industry has not come without a price. Fuel

for ground transportation accounts for 43

percent of our petroleum-based energy

demand, contributes to U.S. dependency

on foreign sources of oil, and adds to the

Nation’s trade deficit. Moreover, the nearly

200 million registered trucks, buses, and

automobiles in the United States account

for a third of the Nation’s air pollution.

PNGV will benefit the U.S. automotive

industry by establishing manufacturing

processes that are less costly and produce

higher quality and by developing technologies for the future. At the same time,

PNGV can help the Federal government

achieve its goals of fuel economy and pollution control.

Satellites monitoring crops and rainfall. High-tech insects that destroy nuisance

bugs. Biomass research that turns crop waste into fuel. These are just a few of

the potential programs that will result from a November 1995 agriculture initiative launched by the Secretaries of the Departments of Energy and

Agriculture. The Memorandum of Understanding builds on working relationships already in place in specific areas and generally authorizes research collaboration and joint partnerships with the food, forestry, and fiber industries.

This effort will open the doors of laboratories in both agencies, matching and

leveraging the Department of Energy’s unique engineering, computational, environmental, and physical sciences skills and resources with those of the

Department of Agriculture in the fields of biological and social sciences, as well

as knowledge of the industries. These public-private partnerships will lead to

new jobs and industries, especially in rural areas; reduced air, water, and soil

pollution; decreased reliance on imported oil; and improved quality and safety

of America’s food. Agriculture and Energy scientists are already working together to develop biofuels and bioproducts, electronic means to detect plant materials during airport baggage inspection, mass-produced beneficial insects to control crop pests, and technology to apply agrichemicals more precisely to minimize environmental impacts.

Federal agencies are working with industry to improve shipyard productivity by identifying cost-saving ship design features and production techniques; to implement advanced management and production technologies,

such as computer-aided design and flexible automation; and to establish

Shipbuilding Extension Centers to assist shipbuilders in applying new technologies, improving business practices, and training their workforce.

52 Technology in the National Interest Chapter 4

APPLYING ADVANCED CONCEPTS AND TECHNOLOGIES 

TO IMPROVE U.S. SHIPBUILDING PRODUCTIVITY

ENERGY AND AGRICULTURE TEAM UP FOR TECHNOLOGY INITIATIVE

TO BENEFIT U.S. FARMING, FORESTRY, AND FIBER INDUSTRIES
■ Remediation Technologies. The Department of Energy manages the largest environmental stewardship program across the

agencies with over 140 sites and facilities in over 30 states and territories. The science and technology to address these major

environmental restoration and waste management needs are managed as an aggressive national program of targeted basic science

and applied research and development, demonstration, testing, and evaluation of innovation solutions to reduce the cost of remediation; to make otherwise impossible or impractical remediation possible; to provide viable alternatives to unacceptable baseline

strategies; and to reduce risk to workers, local populations, and the environment. Examples of innovative technologies that have

resulted include: minimum additive waste stabilization; expedited site characterization; horizontal wells; pipe explorer as a radiological and video survey system; and a combination of electro-osmosis with treatment zones for in-situ remediation of soils.

■ Renewable Energy Sources. During the past 15 years, the Department of Energy working in partnership with the private sector, has significantly reduced the cost of electricity generated from high-potential renewable energy sources such as biomass,

wind, and photovoltaics. Soon these inexhaustible energy resources should lead to a green revolution in the way that energy is

produced in the United States. Biomass, for example, already produces eight gigawatts of power in the United States, and

advances in biomass gasification and turbine technology could bring biomass power to 4.5 cents per kilowatt-hour within a

decade. Similarly, wind power, which is projected to be a $50 billion industry by the year 2020, has decreased in cost by 10 percent a year and many utilities are now receiving long-term bids for electricity from wind at 4.5 cents per kilowatt-hour. The

Department has invested heavily in new thin-film technologies for photovoltaic cells, which has lowered the cost of those cells

to less than one tenth of what they cost in 1975. Photovoltaics now produce 80 gigawatts of power worldwide and hold the

promise of becoming a $100 billion industry by the year 2030.

■ Environmental Technology Partnership (ETP). Dramatically reduced energy consumption and pollution from energy and

pollution-intensive industries—those are the goals of ETP, which was launched by the Department of Energy in February 1996.

Seven industries (chemicals, petroleum refining, forest products, steel, aluminum, glass and metal casting) that consume about

80 percent of the energy and produce over 90 percent of the wastes in the U.S. manufacturing sector were targeted for an integrated program of basic and applied research. ETP will provide the critical data needed to make effective choices in the 21st century to achieve a balance between industrial activity and environmental stewardship. The prudent use of energy will be driving

those choices. The response to a call for proposals has been overwhelming. Nearly 750 ideas were suggested by researchers at

universities, industrial laboratories and the Department’s national laboratories. Approximately 125 of the most promising proposals are undergoing a detailed evaluation, including peer review to judge scientific merit. Awards are scheduled to be made in

July 1996. First research results could be reported as early as 1997.

ENERGY AND ENVIRONMENTAL TECHNOLOGIES:

STEWARDSHIP FOR AMERICA’S FUTURE

“The Department of Energy’s technology partnerships program strengthens the U.S. economy and enhances U.S.

economic competitiveness in world markets by leveraging the expertise in the department’s laboratories with the

dynamism and commercial know-how of the private sector.”

Hazel R. O’Leary

Secretary of Energy
The Environmental Technology Initiative (ETI) was announced by President Clinton in his first State of the Union address on

February 17, 1993. The ETI promotes technology innovation as a means to better, more reliable, cleaner, and lower cost ways to

protect the environment and public health. During 1994 and 1995, the ETI, an interagency effort led by the Environmental

Protection Agency (EPA), invested $104 million in 274 projects and partnerships nationwide.

WAYS THAT ETI INVESTMENTS ARE MAKING A DIFFERENCE

Making Technologies “Approvable” by Federal and State Regulators. Many technology companies complain that they can’t

get customers to buy or use their new technologies based on their own, self-generated data. ETI-funded third party verification

programs provide officials with the data necessary to approve the use of new technologies and give technology users the information they need to make informed buying decisions.

Under the ETI-funded Environmental Technology Verification Program, EPA is partnering with public and private organizations

to verify the performance of many types of new technologies. Small drinking water systems are evaluated by NSF International,

a private sector testing and standards firm. The California Environmental Protection Agency is expanding the country’s first staterun technology verification program from a focus on waste clean-up technologies to pollution prevention and waste treatment

technologies for the electronics, metal finishing, petroleum refining, and printing industries. Contaminated site characterization

and monitoring technologies are being tested by Sandia National Labs, and indoor air products are being tested by the University

of Illinois. The Environmental Technology Verification Program is also piloting an independent approach that will proceed without EPA involvement, to assess the effectiveness of a solely private sector-led technology verification program.

Making Cleaner Cars. With ETI funding, the Saturn Corporation in Tennessee is working with the University of Tennessee’s

Clean Technology center to develop new analytical tools—computer models and software that will help the company identify

pollution prevention opportunities, and energy and cost savings throughout its automobile manufacturing processes.

Harnessing the Power of New Information Networks: California’s Environmental Technology Leveraging Network Exchange

(E-LYNX). EPA, the California Trade and Commerce Agency’s Office of Strategic Technology, the Community Environmental

Council, the California Small Business Development Centers, the Hoopa Valley Tribe, the California Regional Technology Alliances,

members of the California Environmental Business Council, the Rural Community Assistance Corporation, the California

Environmental Protection Agency, and the U.S. Department of Energy California Environmental Enterprise are building an online/off-line communications and information service for technology developers, users, policy-makers, service providers, regulators,

and researchers to consolidate and distribute environmental technology resources for the electronics industry.

Constructed as a user-driven information system, E-LYNX will provide environmental technology companies with information on

sources of funding, opportunities to share experiences with other companies, and information on business assistance services available from private and public sources. It will also deliver up-to-date information on where innovative technologies are being used,

tested, verified, and certified, and on potential buyers’ needs. It will provide a forum where regulators and permit writers can identify targets of opportunity to eliminate policy and regulatory barriers and then move “better, cleaner, cheaper” technologies into the

marketplace. E-LYNX will be on-line at a World Wide Web site this year. Systems similar to E-LYNX are being developed in the

Northwest and Northeast by other ETI stakeholders.

Creating Jobs at Home Through Environmental Technology Exports. With ETI funding, EPA-New England, the Environmental

Business Council, and NALCO Fuel Tech and their partners were able to market $50 million in air quality management technologies and services to the Polish government and several Central European industries. Environmental technology export sales will generate jobs in the United States as NALCO Fuel Tech and their partners serve export market needs.

ENVIRONMENTAL TECHNOLOGY INITIATIVE
Keeping Our Air Clean. With ETI funding, EPA is exploring flexible operating permits that meet air quality standards to protect

public health while accommodating companies’ needs to use new technologies and processes. For example, EPA is working with

the State of Connecticut to give CYTEC Industries the ability to meet air quality standards using innovative pollution prevention

and control technologies at its specialty chemicals plant in Wallingford, Connecticut—without the cost and delay of having to modify permits with each equipment or manufacturing process change. CYTEC’s Wallingford plant employs 600 people, and is the

town’s fourth- largest employer and second-largest taxpayer. EPA is also working with G.D. Searle Pharmaceutical in Georgia; Lasco

Bathware in Washington state; and Rio Grande Portland Cement in New Mexico to advance this approach in other industries.

Promoting Technology Innovation Through Public-Private Partnerships. With ETI funding, EPA’s Design for the Environment

Program is assisting the Professional Wet Cleaning Partnership (PWCP) in promoting the use of wet cleaning fabric care technology as an alternative to the use of perchloroethylene, the chemical currently used in the dry cleaning industry. The PWCP is a newly

formed partnership of industry, union, and environmental groups. Partners include the International Fabricare Institute, the

Neighborhood Cleaners Association, the Federation of Korean Drycleaning Associations, the Fabricare Legislative and Regulatory

Education Council (FLARE), Greenpeace, the Center for Neighborhood Technology, the Massachusetts Toxics Use Reduction

Institute, and the Union of Needletrades, Industrial and Textile Employees (UNITE).

These diverse groups have voluntarily joined forces to encourage the development of professional wet cleaning methods to

reduce, to the extent technically feasible, the use of perchloroethylene. This effort will reduce exposures to this hazardous air pollutant among workers and thousands of Americans who live near the Nation’s more than 34,000 dry cleaning facilities.

Common Sense Approaches. With ETI funding, EPA, the Department of Energy, and a consortium of metal finishers are working together to reduce toxic emissions in more than 3,000 metal finishing facilities nationwide. One project is working to reduce

the uses of chromium, which has long been known to cause lung cancer in occupationally exposed humans. ETI also includes a

project with chemical manufacturers to reduce a range of harmful chemical exposures that Americans face in their places of work.
56 Technology in the National Interest Chapter 4

■DOE’s Industry of the Future Program.

Sustainable economic growth and environmental improvements are the targets of

DOE’s Industry of the Future Program.

DOE is working in close partnership with

America’s energy-intensive industries—

steel, chemicals, forest and paper products, metal casting, glass, petroleum, aluminum, and textiles—to develop

advanced manufacturing technologies for

improved process and materials efficiency

that will reduce the consumption of energy and resources used in production.

These technologies will foster economic

growth by improving manufacturing productivity while achieving environmental

benefits such as pollution prevention

through greater process efficiency. This

approach offers large potential economic

benefits—manufacturers currently spend

about $100 billion on energy and $50 billion on pollution abatement annually. By

partnering with industry in the development of industry visions and co-funding

the development of energy-efficient technologies, the Industry of the Future

Program is helping to reshape the way

industry sees itself and its future.

PNGV, the National Environmental Technology Initiative, and the Industry of the

Future Program demonstrate an important tenet of the Clinton Administration’s

technology policy: competitiveness, economic growth, and environmental quality

can go hand-in-hand.

FEDERAL MISSION RESEARCH

In the pursuit of its missions, the Federal

government is one of the Nation’s largest

generators of scientific knowledge and

technological advancements. The Federal

government invests more than $71 billion

annually to advance science and develop

The pulp and paper industry’s “Agenda 2020” has set out a research vision that

is contributing to deliberations with the EPA targeted at meeting environmental

goals. This research agenda provides for energy-efficient technologies that will

achieve enhanced environmental protection at significantly reduced compliance

costs. The industry estimates it may reduce its compliance costs from about $11

billion per year to $3 billion—while competitively producing paper and forest

products for the global marketplace.

A second “Industrial Revolution” for the U.S. textile industry started with the

approval in October 1993 of a cooperative research and development agreement

establishing a partnership between the Department of Energy, its National

Laboratory system, and the vertically integrated U.S. textile industry. This partnership, called AMTEX, was approved for the benefit of an industry that faces

severe global competition. The Department of Energy National Laboratory system, having proven its value at enhancing national energy security and national

defense in technology areas such as high-speed computers, communications,

and manufacturing automation, was identified as the appropriate partner for

technology R&D needed to rebuild a world-class textile industry.

AMTEX covers all phases of fiber, textile, and textile product manufacturing,

and integrates best business practices into the fiber and textile economy. Now in

the third year of partnership, emphasis is placed upon the development of tools

and techniques needed to create an “electronic marketplace” for the textile

industry so that U.S. textile businesses can identify and meet customer needs

faster and more economically than other suppliers. Emphasis is also placed on

technology for energy efficiency and pollution prevention, which will maintain

industrial competitiveness, business growth, and job security. AMTEX is the

largest partnership between a single industry sector and the Department of

Energy, and its demonstrated success provides a model for future R&D partnerships between the public and private sectors.

TECHNOLOGY ROADMAP CHARTS CLEANER, CHEAPER,

ENERGY-EFFICIENT FUTURE FOR PULP AND PAPER INDUSTRY

AMTEX: PARTNERING TO REVITALIZE U.S. TEXTILES
Chapter 4 Technology in the National Interest 57

technologies through government laboratories, universities, and private companies. The

results of these government efforts often have significant potential for applications in the

commercial sector. At a time of constrained Federal spending and unprecedented global

competition in high technology, the United States must take steps to ensure the greatest

returns on its public R&D investments.

■ Technology Transfer. The 1986 Federal Technology Transfer Act established the framework for partnerships between Federal laboratories and the private sector. Since passage

of the act, Federal agencies and their laboratories have worked hard to make technology

transfer to the private sector an integral part of their laboratory functions. These efforts

have paid off. Between 1992 and 1994, the number of licenses on Federal patents granted to industry nearly doubled, and licensing royalties paid to the Federal government

jumped 77 percent to a record $24.5 million annually. Even more important, Federal laboratories have reached out aggressively to the private sector, forming partnerships that

allow industry and government to bring complementary assets to bear on research in areas

of mutual interest. As a result of these efforts, cooperative research and development

agreements between Federal laboratories and industry have soared.

■ NASA’s Aeronautics Enterprise. Aeronautical research and technology play a vital

role in promoting U.S. economic growth and national security through safe, superior, and

environmentally compatible civilian and military aircraft, and through a safe, efficient

national aviation system. However, factors such as growth in air traffic, demanding environmental standards, an aging aircraft fleet, and foreign competition present formidable

challenges. The continued safety and productivity of the Nation’s air transportation system and future U.S. competitiveness in aeronautics depend on a coordinated and effective

national investment in aeronautical research and technology.

To help meet these challenges, NASA’s

Aeronautics Enterprise identifies, develops, verifies, transfers, and encourages the

application and commercialization of

high-payoff aeronautics technologies. This

enterprise works closely with U.S. industry,

universities, the Department of Defense,

and the Federal Aviation Administration

to coordinate R&D investments and

ensure that NASA’s technology products

and services add value, are timely, and

have been developed to the level at which

customers can confidently make decisions

regarding the applications of those technologies. The Aeronautics Enterprise

focuses on several goals:

Major advances in medical research—a legacy of the Department of Energy’s

work in nuclear energy—include the discovery of most of today’s biomedical

radioactive tracers (technetium 99m, ionic thallium 201, etc.) and the instrumentation needed to detect the tracers.

In 1992, nearly 11 million nuclear medicine procedures were performed in the

United States, and 1991 world sales of medical imaging equipment reached

$610 million. Current research programs that hold great promise include accelerator targetry, radiochemistry, radiotracer development, the development of

imaging agents, the biochemistry of brain and heart muscle and tissue, substance abuse, and neutron capture therapy.

NUCLEAR RESEARCH CONTRIBUTES TO MEDICAL PROGRESS

Today, 13 Federal agencies are engaged

in more than 3,500 CRADAs with the

private sector, an increase of 177 percent

since 1992.

■ Designing faster and more 

efficient aircraft.
58 Technology in the National Interest Chapter 4

■ Develop high-payoff technologies for a

new generation of environmentally compatible, cost-effective subsonic aircraft and a

safe, highly productive global air transportation system.

■ Ready the technology base for an economically viable and environmentally

friendly high-speed civil transport.

■ Ready the technology options for new

capabilities in high-performance aircraft.

■ Develop and demonstrate technologies

for air-breathing hypersonic flight.

■ Perform basic aeronautical research,

develop advanced concepts, and develop

theoretical, experimental, and computational tools—including high-performance

computing and information technologies— for advanced aerospace systems.

■ Develop, maintain, and operate critical

national facilities for aeronautical research

that support industry, the Federal Aviation

Administration, the Department of

Defense, and NASA programs.

To help achieve these goals, the Aeronautics

Enterprise is working to forge stronger

partnerships with its customers (for example, in program planning and execution).

An emphasis on low-cost experimental aircraft will increase flight opportunities. NASA

Centers of Excellence focus in-house research, provide single points of contact for management and external customers, and ensure maximum cost effectiveness.

■ NASA’s Space Technology Enterprise. The National Aeronautics and Space Act of

1958, designed to ensure U.S. preeminence in space, laid a foundation for the excellence

that characterizes the U.S. space program today. The act directs NASA to provide leadingedge technologies by improving the usefulness, performance, safety, and efficiency of

space vehicles; conducting research and technology development for space-related manufacturing processes; promoting the commercial use of space; and applying NASA’s

unique competence in scientific and engineering systems. In addition, NASA emphasizes

the transfer of space-related technologies from government laboratories to the commercial

sector to spur U.S. economic growth and competitiveness.

American firms and workers lead the world in manufacturing aircraft, engines,

avionics, and air transportation systems equipment. In the process, they make a

major contribution to our nation’s security and economy. Today, however, the aeronautics industry faces a number of difficult challenges. The end of the Cold War has

permitted a reduction in defense expenditures, including cutbacks in the development of new aircraft and engines. Also, foreign governments have strongly supported their own aeronautics industries through major investments in technology

development. We must meet these challenges and maintain leadership in this global industry if we are to retain the national security and economic benefits that derive

from aeronautics.

Goals for a National Partnership in Aerospace Research and Technology provides a

framework for partnership among the Federal agencies, industry, and academia in

aeronautics research and technology development. Three goals define this partnership and will help the U.S. aeronautics industry maintain its global competitiveness:

■ Maintain the superiority of U.S. aircraft and engines by pursuing the development of subsonic and high-speed aircraft, improving aircraft design and

manufacturing, and maintaining an adequate aeronautics R&D infrastructure.

■ Improve the safety, efficiency, and cost effectiveness of the global air transportation system by increasing the air traffic management system’s capacity

and efficiency, and developing and deploying new technologies that

enhance aviation safety and security.

■ Ensure the environmental compatibility of aviation by developing and applying technologies that reduce aircraft noise and engine emissions.

GOALS FOR A NATIONAL PARTNERSHIP IN 

AERONAUTICS RESEARCH AND TECHNOLOGY

Under the 1958 Space Act, NASA has

established more than 3,500 partnerships with industry.
Chapter 4 Technology in the National Interest 59

NASA’s Space Technology Enterprise is working to integrate NASA’s technology needs

and industry’s needs in a plan for exploratory research and advanced technology development that will keep the United States on the leading edge of space science and technology. The new technologies that emerge from this partnership will not only reduce the

costs of NASA missions and enable new and more challenging missions, they will also

enable new commercial products and services that will contribute to job creation.

■ National Institutes of Health. Among the many fields of R&D, medicine is one of the

very few in which the results of exploratory research are often directly applicable to the

development of new products. In other fields, it may take decades to translate such

research results into their ultimate uses. NIH has identified five broad research areas that

are especially rich in scientific opportunity. These research areas are likely to be exceptionally productive in the near future, yielding knowledge that will contribute in many

ways to improved health and quality of life for the Nation.

Research on the Biology of Brain Disorders focuses on both the normal developments of the

brain and changes that may underlie brain disorders. The studies involve the development

and use of animal models, neuroimaging technology, and laboratory and patient-oriented

studies. Relevant research topics include pain, addiction, mental illness, neurodegenerative disease, and neurological disorders associated with aging, such as Alzheimer’s disease.

Studies of New Approaches to Pathogenesis focus on understanding disease mechanisms,

the regulation of cell division and cell death, and how cell and tissue injuries result from

infection, metabolic abnormalities, genetic deficiencies, or environmental toxins. Specific

research topics include bone and connective tissue diseases, autoimmune disorders,

virus-cell interactions in AIDS, and cardiomyopathy, to name a few.

New Preventive Strategies Against Disease addresses emerging infections, the prevention and

treatment of drug and alcohol abuse and eating disorders, as well as the development of

vaccines against cancer and infectious diseases such as HIV, otitis media, and herpes.

Prevention research also involves the identification and assessment of behavioral, genetic,

and environmental risk factors that contribute to disease.

■ Reduce the cost of access 

to space.

■ Provide innovative technologies to enable ambitious

future space missions.

■ Build capacity in the U.S. 

space industry through

focused space technology

efforts.

■ Share the harvest of space 

endeavors with the U.S. 

industrial community.

SPACE TECHNOLOGY

ENTERPRISE GOALS

■ A simple, accurate, and inexpensive screening test for HIV infection that can

also be used to monitor and ensure the safety of public blood supplies.

■ Two major therapeutics against HIV infection.

■ Vaccines for the prevention of hepatitis A and a drug for the treatment of B-cell

chronic leukemia.

■ Major advances in flow-through centrifugation used to separate blood components.

■ Enhancements to imaging technology.

PRODUCTS FROM NIH PATENT LICENSING

Between 1985 and 1995, NIH was

awarded 560 patents and negotiated

713 licenses to develop commercial

applications based on those patents.

Accumulated sales of products developed under these licenses are estimated

to be $2 billion and have generated

more than $100 million in royalty

income. Over the same period, NIH

intramural scientists negotiated 269

CRADAs with private organizations. 

The $100 million in royalty income 

plus more than $31 million in industry

resources brought in through CRADA

collaborations stimulate and support

additional research and product development at NIH.
60 Technology in the National Interest Chapter 4

Genetic Medicine research includes, for example, the sequencing and analysis of the human

genome, investigations that may lead to the development and testing of gene therapies for a

variety of human disorders, and studies of the intricate and multiple genetic interactions that

underlie complex disorders such as obesity and mental illnesses. This research holds great

promise for new insights and approaches to treating and preventing a wide range of diseases.

Studies aimed at the development and improvement of Advanced Instrumentation and

Computers in Medicine and Research include novel imaging technologies that will assist in disease diagnosis, treatment, and prevention. They also will assist laboratory studies in fields

such as cellular and structural biology, disciplines that yield essential knowledge of basic life

processes as well as more applied knowledge for drug design. Telemedicine and shared

instrumentation programs are important components of this research category.

■ Biotechnology. Biotechnology promises to have a profound impact on health care, agriculture, energy, and environmental management. Worldwide annual sales of this burgeoning industry are projected to reach $50 billion by the year 2000. The development

and production of biotechnology products will create thousands of new jobs, promote

economic growth, and help address agricultural, environmental, and health concerns.

The United States now holds a competitive edge in biotechnology thanks to significant

investment in health research. Japan and the European Union, however, have made

achieving a leadership role in biotechnology by the year 2000 a priority. Each nation is

effectively coordinating its public and private investments in biotechnology, establishing a

strong government-supported technology transfer infrastructure in partnership with

industry and the academic community.

In the United States, the Federal government has played an important role in advancing

this embryonic technology. The National Institutes of Health supported the cloning of the

first gene in 1973, the development of DNA sequencing, and the initial groundbreaking

experiments in recombinant DNA genetics.

Today, 13 Federal agencies are engaged in biotechnology research in a broad array of areas

such as agriculture, energy, the environment, health, and manufacturing/bioprocessing.

Research activities seek to meet both economic and social goals, including transferring

biotechnology research discoveries to commercial applications, improving the benefits of

biotechnology to the health and well-being of the population, and protecting and restoring the environment.

■ Small Business Innovation Research Program. The Small Business Innovation

Research Program (SBIR) encourages small businesses to participate in Federal missionrelated R&D and to take commercially promising technology to market. Under SBIR, now

authorized until the year 2000, each government agency and Federal laboratory with

more than $100 million in extramural research funds is required to set aside a percentage

(now 2 percent; scheduled to rise to 2.5 percent in 1997) of those funds to be awarded

competitively to small businesses.

SBIR is a three-phase program administered independently by each of 11 participating

agencies. Agencies invite eligible small businesses to propose innovative ideas that meet

The Biotechnology Industry Organization

reports that, before 1970, there were

only 93 U.S. biotech companies. By

1995, there were 1,308 companies

employing 108,000 people in the 

United States and generating 

$12.7 billion. Jobs in this industry 

are expected to reach 500,000 by 

the year 2000.

More than 1,000 clinical trials are 

currently in progress using biotechnologyderived pharmaceuticals, and over 700

biotechnology-derived diagnostic devices

are currently being used in clinical practice.

■ Using a confocal light microscope in

the laboratory.
Chapter 4 Technology in the National Interest 61

the specific research and development

needs of the Federal government. SBIR

proposals are competitively selected and

accepted on the basis of specific topics

proposed by the participating agencies.

Phase I of the program provides funding

to evaluate the scientific and technical

merit and feasibility of an idea. Under

Phase II, projects with the most potential

are funded to further develop the proposed idea for one or two years. Phase III

is the period in which an innovation is

brought to market through private sector

investment and support.

SBIR awards have enabled thousands of

small firms to undertake research projects,

create new and innovative technologies,

and sell competitive products.

DISSEMINATION OF 

TECHNICAL INFORMATION

Economic growth and industrial competitiveness do not stem simply or automatically from the development of new ideas.

Growth occurs because advances in

knowledge are put to work in the private

sector. However, technology diffusion can

be a slow and uncertain process in the

United States, highlighting the need for more effective mechanisms for deploying scientific,

technical, and other information. In today’s rapidly changing business environment, it is

essential that firms have the latest information on, for example, promising government

research, and more competitive manufacturing and management practices. The Clinton

Administration is expanding the private sector’s access to this critical knowledge.

■ Manufacturing Extension Partnership. New manufacturing technologies and

approaches are available that can lead to dramatic improvements in product quality, cost,

and time-to-market. With the exception of a small number of market leaders, most U.S.

firms have been slow to adopt these new technologies and approaches—especially

America’s 381,000 small and medium-sized manufacturers. These establishments form

the backbone of the U.S. industrial base and represent about 95 percent of U.S. manufacturing plants. Millions of jobs rest on their competitive performance.

More than two-thirds of the intermodal containers shipped to the Persian Gulf

during Operation Desert Storm had to be opened and checked to determine what

was inside. But a new technology developed by Savi Technology of Mountain

View, California, under a Navy Small Business Innovation Research project may go

a long way toward solving this problem for the military—and for commercial

transporters across the globe.

The SaviTag is a small electronic device that enables tagged items to be monitored and tracked automatically anywhere around the world. In essence, the

SaviTags offer wireless computing in the shape of a tag. Each tag incorporates a

miniature radio transmitter, radio receiver, and microcomputer in a compact

package about the size of a deck of playing cards. The SaviTag is programmable,

allowing it to be adapted for a wide variety of applications.

SaviTags can be located by satellite and can identify thousands of items in transit or stored over a wide area in minutes, with the location and identity of an

item displayed by icon on a computer map. In addition to its defense applications in tracking hazardous material and munitions between Europe and the

United States and in tracking equipment and materiel in and out of Somalia,

Bosnia, Haiti, and Korea, the SaviTags have been used for automatic trailer-level

receiving and sealing for one of the world’s largest commercial package shippers,

tracking jet engine parts in a major remanufacturing facility, and automatic

tracking and invoicing of the delivery of road construction material for the

Alberta, Canada, Department of Transportation. The SaviTag system can also be

used for just-in-time distribution through truck, sea, and rail hubs.

AN SBIR SUCCESS STORY

SAVITAGS: GLOBAL TRACKING OF MATERIAL
62 Technology in the National Interest Chapter 4

Many of these manufacturers lack awareness of changing technology, production techniques,

and business management practices. Owners and managers of small companies may have

difficulty in finding high-quality, unbiased information, advice, and assistance. Also, smaller

firms often work in isolation and lack opportunities to learn from other companies in similar situations. Currently available public and private sources of assistance are fragmented and

vary greatly in breadth, depth of service, and quality. In addition, they reach only a small

fraction of the small and medium-sized manufacturers whose existence is threatened by continued reliance on outdated technology, production methods, and management practices.

To accelerate and expand the adoption of manufacturing innovations, the Clinton

Administration has set a goal of establishing a nationwide network of 75 manufacturing

extension centers by 1997 to assist small and medium-sized manufacturers to modernize

their production capability. Led by the Commerce Department’s National Institute of

Standards and Technology, this Manufacturing Extension Partnership is designed to help

smaller firms upgrade their equipment, improve their processes, and strengthen their

business performance.

■ National Technical Information Service. In the course of advancing R&D, the Federal

government generates a tremendous array of scientific and technical information of potential value to the private sector. For more than 50 years, the National Technical Information

Service (NTIS)—a self-sustaining agency of the U.S. Department of Commerce—has

ensured public access to the results of taxpayer-funded R&D.

Today, more than ever, NTIS fulfills an essential role in diffusing commercially valuable

technical information to researchers in firms and universities around the Nation. NTIS

currently maintains more than 2.6 million documents and adds 100,000 documents to

the collection each year.

NTIS FedWorld provides dial-up and Internet access to customers (more than 1 million

to date) who can tap a wide range of government information services and bulletin boards,

providing the public with better, more timely access to government resources through a

“one-stop” electronic shopping mall.

■ Malcolm Baldrige National Quality Award. In addition to technology, the adoption

of management innovations is essential to the competitiveness of U.S. business and industry. The Malcolm Baldrige National Quality Award, developed and managed by the

Commerce Department with the cooperation and financial support of the private sector,

has become both the U.S. standard of quality achievement and a comprehensive guide to

quality improvement. The award program recognizes those firms that have achieved the

highest levels of quality management in manufacturing, service, and small business.

Equally important, the Baldrige Award guidelines—of which more than 1 million copies

have been distributed to date—provide a framework for quality improvement efforts in

American industry, academia, government, and non-profit organizations. The guidelines

establish evaluation criteria for quality management and performance in seven key areas:

leadership, information and analysis, strategic quality planning, human resource development and management, management of process quality, quality and operational results,

and customer focus and satisfaction.

Members of the Baldrige Board of

Examiners have delivered more than

10,000 presentations on quality 

management and the award program.

Baldrige winners have given approximately 30,000 presentations, reaching

thousands of organizations.

A report from the U.S. General

Accounting Office calls the Malcolm

Baldrige National Quality Award 

criteria “the most widely accepted

formal definition of what constitutes 

a total quality management company.”

■ Manufacturing industrial gears and

speed reducers.
Chapter 4 Technology in the National Interest

INFRASTRUCTURE TO SUPPORT

INDUSTRY AND FACILITATE COMMERCE

63

America’s superior infrastructure—our roads and highways, seaports and airports,

telecommunications and power systems—has provided American firms with a competitive edge throughout this century. While these are still essential elements of American

commerce, new kinds of infrastructure and innovative ways of managing and using existing facilities are needed to preserve America’s edge in the new knowledge-based economy

and to improve our quality of life.

■ National Information Infrastructure.

The role of information in all facets of society is growing. For business and industry,

information links producers, suppliers,

service providers, freight carriers, distributors, and customers in an ever-tightening network of commercial activity.

Information also ties R&D, production,

and marketing into a seamless innovation

process, whether these functions reside

within or outside the company. Advanced

technologies are essential for the efficient

management and use of this information.

In 1993, the Administration articulated its

vision for a National Information

Infrastructure (NII)—a seamless web of

communications networks, computers,

databases, and consumer electronics that will put vast amounts of information at users’ fingertips. Development of the NII will help unleash an information revolution that will change

forever the way people live, work, and interact with one another. Turning this vision into

reality will propel scientific inquiry and discovery, business productivity, and the education

of our people.

Private firms are leading this revolution today through the development and deployment

of the infrastructure. Nevertheless, there remain essential roles for government in this

process. Carefully crafted government actions will complement and enhance the efforts of

the private sector and ensure the growth of an information infrastructure available to all

Americans at reasonable cost.

To help communities and non-profit organizations enter the Information Age, the

Commerce Department’s Telecommunications Information Infrastructure Assistance

Program provides competitively awarded matching grants to school districts, libraries,

state and local governments, health care providers, universities, and other non-profit organizations to connect institutions to existing networks, to enhance those networks, and to

permit users to interconnect among different networks.

Goal 3

Invest in a world-class

infrastructure to support

U.S. industry and 

facilitate commerce.

■ Promote private sector investment.

■ Extend the “universal service” concept to ensure that information resources are

available to all Americans at affordable prices.

■ Promote technological innovation and new applications.

■ Promote seamless, interactive, user-driven operation of the NII.

■ Ensure network information security and network reliability.

■ Improve management of the radio frequency spectrum.

■ Protect intellectual property rights.

■ Coordinate with other levels of government and with other nations.

■ Provide access to government information and improve government procurement.

NATIONAL INFORMATION INFRASTRUCTURE GUIDING PRINCIPLES

■ Direct user access kiosks give the

public a way to immediately and 

individually interact with information

systems, such as government or 

banking systems.
In March 1994, Vice President Gore 

introduced the U.S. vision for an international corollary to the NII—the Global

Information Infrastructure—at a meeting

of the International Telecommunication

Union in Buenos Aires. Because information crosses state, regional, and national

boundaries, coordination is important to

avoid the establishment of unnecessary

obstacles and to eliminate unfair policies

that handicap U.S. industry. Like the

vision for the NII, the GII is directed at

promoting competition, creating flexible

regulatory policies, ensuring universal

service, and providing open access to the

network for all information providers

and users.

■ High-Performance Computing and

Communications. The High-Performance

Computing and Communications (HPCC)

initiative is an essential element of the

Administration’s NII efforts. HPCC funds

R&D into more powerful computers,

faster computer networks, and more

sophisticated software. The advanced technologies derived from HPCC research have

broad technical, business, economic, environmental, public safety, and military

applications. The program is also developing and applying HPCC networking technologies for use in the fields of health care,

education, libraries, manufacturing, and

the provision of government information.

■ National Institute of Standards and Technology. Establishing the Federal government’s responsibility to “fix the standard of weights and measures” as a constitutional provision, the framers of the Constitution understood that measurements and standards are

indispensable to the Nation’s industrial foundation and ability to conduct commerce. The

Commerce Department’s National Institute of Standards and Technology (NIST) helps fulfill this responsibility through its world-class laboratory programs. NIST works with U.S.

industry in areas such as manufacturing, materials, electronics, chemical processing, construction, and information technology focusing on measurement methods, standards,

evaluated data, and test methods. NIST also works with national and international standards-setting organizations to stimulate U.S. commerce and help U.S. industry understand and comply with foreign standards, regulations, and procedures.

“It’s our turn to commit to building the next frontier in surface

transportation. And that frontier will be in the Information

Age. If tens of millions of Americans can surf the information

superhighways, why can’t 175 million drive on high-tech 

highways?”

Federico Peña

Secretary of Transportation

Under the Intelligent Transportation Initiative, the Federal government is working with state and local governments and the private sector to foster the deployment of a core information infrastructure in 75 of the Nation’s largest metropolitan areas. This foundation will support traffic control centers that manage operation of all major area roads, provide real-time information to motorists and

other travelers, and identify and respond to breakdowns and accidents immediately. The result is expected to be a 15 percent savings in travel time at a small

fraction of the cost of new physical infrastructure that would achieve the same

increase in system capacity.

The Department of Transportation Intelligent Transportation Systems Program

is encouraging the application of core communications, computer, and sensing

technologies to many transportation functions, including highway traffic management, in-vehicle navigation systems, nationwide management of truck fleets,

paperless non-stop crossing of state and national borders, and availability of

comprehensive information to travelers.

INTELLIGENT INFRASTRUCTURE:

MOVING AMERICA INTO THE 21ST CENTURY

64 Technology in the National Interest Chapter 4
As the ball fell in Times Square, America counted down the final seconds of 1995—and in doing so Americans literally counted

on the Commerce Department’s National Institute of Standards and Technology, which had calibrated the clock to ensure the New

Year was celebrated on time—not too early, not too late. But, in truth, America has counted on NIST since its founding nearly a

century ago as the National Bureau of Standards (NBS). American industry and the public have relied on NIST for a broad range

of research and services in technology, measurements, and standards since 1901.

Today, NIST efforts help ensure fairness and efficiency in the sale of more than $2 trillion worth of goods and services. Knowing

that measurements of weight, size, and volume are accurate and uniform promotes customer confidence in the sale of goods ranging from lunch meat at the deli counter to natural gas flowing through transnational pipelines to ultrapure gases purchased by

semiconductor manufacturers.

American companies, small and large, depend upon NIST tools and services for hundreds of millions of measurements made daily:

■ More than 350 different NIST-developed measurement tools and services are embedded in the quality control systems of

the automotive industry—from small metal parts suppliers to large refiners of gas and oil.

■ Virtually all U.S. semiconductor manufacturers depend on NIST-developed test methods to evaluate their raw materials,

processes, and products.

■ The entire U.S. steel industry relies on more than 125 NIST Standard Reference Materials in assessing the quality of raw

materials and finished products.

■ Billions of dollars worth of electric power are measured more accurately because NIST maintains the national watt-hour

standard and conducts research to improve the accuracy of standards for calibrating watt-hour meters.

NIST has also contributed to America’s economic growth, defense, safety, and quality of life in countless other ways:

■ Saving Lives. NIST-developed smoke detector performance requirements, installation guidelines, and studies played an

essential role in dramatically reducing the fire death rate in the United States, contributed to the establishment of a $100

million U.S. residential smoke detector market, and enabled U.S. manufacturers to acquire a 50 percent share of the world

market.

■ Improving Television for the Deaf. A system called TV Time, created by NIST engineers, allowed time for frequency

information to be broadcast on TV channels without disturbing regular shows, leading to the closed captioning system for

the deaf.

■ Fighting Crime. NIST developed the computerized system the Federal Bureau of Investigation uses to match fingerprint

evidence against 30 million records so that local police can identify and arrest suspects.

■ Lighting up the Night. The first neon tube, which later formed the basis for a new industry, was developed at NIST in 1904.

■ Tuning in Tunes at Home. NIST developed the first “crystal rectification filter circuit” unit, enabling radios to operate on

household current.

■ Smile, This Won’t Hurt...as Much. For decades, NIST has maintained a partnership with the American Dental

Association to advance the state of dentistry. This enduring relationship has produced quality dental materials and procedures. One of the most significant accomplishments was the development of the high-speed dental drill, the device that in

the late 1950s replaced its slow and often torturous predecessor in dentists’ offices across the Nation.

■ Supporting Industry, Defending the Nation. Before World War I, U.S. industry had relied on precision gauge blocks

imported from Europe. During the war, NBS produced the precision gauge blocks needed for the manufacture of interchangeable parts. In doing so, NBS contributed to the war effort and freed American industry from an area of foreign technical dependence.

AMERICA CAN COUNT ON NIST LABORATORIES
Thirty-five years ago, U.S. war planners undertook an effort to ensure the survivability of America’s computing and

communications capabilities in a nuclear first strike to preserve a credible U.S. retaliatory capability. From this initiative the first network, ARPAnet, was established, allowing geographically separated researchers to share computer

resources and laying the foundation for today’s Information Superhighway.

In the early 1980s, the National Science Foundation (NSF) recognized ARPAnet’s tremendous potential for facilitating the exchange of ideas and information among computer science researchers and funded the connection of university research centers across the Nation to the ARPA Internet. In the mid-1980s, NSF extended Internet access to

other scientific communities. In addition, NSF stimulated broader use of the network by providing limited access, via

the Internet, to its supercomputer centers.

In 1988, NSF and Merit, Inc. placed a higher speed backbone into operation, fielding an advanced network called

NSFNET. This backbone, together with federally supported regional networks, vastly expanded the number and type

of network users, setting the stage for today’s explosive growth of the Internet.

Today, the Internet serves as the core of a growing National Information Infrastructure that is reshaping our economy, our jobs, and the way we live. Millions of Americans are now “surfing the net”—exchanging thoughts, gathering

information, and conducting research. And the number of users continues to rise at a meteoric pace. In 1995, the

number of Internet users grew at a monthly rate of 7 percent, more than doubling in size over the course of the year.

In January 1995, Information Week estimated the number of users at 20 million; by March, the number was 25 million according to Inc. magazine; and by April, Business Week had the count at 30 million. CompuServe and America

Online alone are reportedly adding more than 2,500 new subscribers a day, and 30 to 50 percent annual membership growth is projected through the end of the decade. At this astounding pace, analysts at Ernst and Young estimate

that every household in Europe will be linked to the Internet by 2005, while in America every person in the household will have a link.

Despite its growth, however, Americans are only beginning to tap the full potential of the Information

Superhighway—companies are exploring its value as a strategic business tool and for conducting electronic commerce; hospitals and doctors are experimenting with new ways of delivering health care; schools are discovering how

the Internet can be used to better educate our children; Federal, state, and local governments are developing new

means for delivering services more efficiently; and libraries are learning how to overcome geographic borders to make

their resources available to all.

The economic impact of an accelerated deployment of the NII has been estimated to increase U.S. GDP by $100 to

$300 billion by 2007.

All Americans have a stake in the evolution of the NII, a seamless web of communications networks, computers, databases, and consumer electronics that will put vast amounts of information at users’ fingertips and forever change the

way we live, work, and interact with one another.

SURFING THE NET—FROM ARPANET TO INTERNET...AND BEYOND

Internet Hosts Show Explosive Growth

While the actual number of Internet users is uncertain, the number of “hosts”—computers from which information can be obtained over the Internet—serves as a measure of Internet growth. As illustrated by the graph below, the number of Internet

hosts has grown exponentially since 1969.

Source: Hobbes’ Internet Timeline/Network Wizards, Internet Domain Survey; data available at http://www.nw.com/

0

1

2

3

4

5

6

7

8

9

10

1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997

(in millions)
■ U.S. Patent and Trademark Office.

For more than 200 years, the U.S. Patent

and Trademark Office has promoted technological progress by issuing patents to

enable inventors to secure for limited

times the exclusive right to their discoveries, as envisioned by the framers of the

Constitution. As a result, American industry has flourished, new products have

been invented, new uses for old products

discovered, and employment opportunities created for millions of Americans.

In addition to issuing patents, the U.S.

Patent and Trademark Office examines

existing legal regimes in the United States

and determines if they are adequate to

meet the needs of our inventors, creators,

and businesses in the 21st century. For

example, the NII has tremendous potential

to enhance the quality of our lives and create new sources of economic growth and

opportunity, but only if effective protection

is extended to education, information, and

entertainment products when these works

are disseminated electronically. Owners of

intellectual property will not put their

investments at risk in the NII unless appropriate systems for protection are in place.

Likewise, the public will not use the services available on the NII and generate the

market necessary for its success unless a

variety of works are available under reasonable terms and conditions, and the

integrity of those works is ensured.

The U.S. Patent and Trademark Office

advocates improvements to legal regimes

in other countries to ensure that American

inventors, creators, and businesses are

adequately protected. Efforts are conducted multilaterally and bilaterally.

Each year, hundreds of lives and billions of dollars are lost due to severe weather

conditions that could be predicted minutes to months in advance. Significant

improvements to short-term forecast and warning products—technologies that will

enhance the Nation’s ability to observe, understand, and model the environment

and to disseminate products and services to users more effectively—are a national

priority. The Commerce Department’s National Oceanic and Atmospheric

Administration (NOAA) is currently developing an integrated environmental observation, assessment, and forecast service that will improve public safety, economic

growth, and environmental security. For example, better hurricane-track forecasts

have the potential to save lives and to reduce evacuation costs, estimated at hundreds of thousands of dollars per mile of coastline evacuated. Better seasonal forecasts will produce immediate economic benefits, especially in the agriculture and

water resource management sectors. Monitoring, assessment, and research on climate change will provide the basis for long-range forecasts of ten years or more with

sufficient scientific credibility to support governmental and industrial decisions.

Cooperation among Federal agencies and the private sector is reducing risks to aviation safety posed by volcanic eruptions. Volcanic ash is hazardous to modern jet

aircraft; it can erode compressor blades, melt onto critical engine parts, and cause

loss of engine power. Worldwide, some 80 jet aircraft in the past 15 years have accidentally entered volcanic ash, putting thousands of passengers at risk and causing

at least $400 million in aircraft damage. A dramatic example of the stakes involved

occurred in 1989, when a KLM Boeing 747 jet flew through volcanic ash that had

erupted from Alaska’s Redoubt Volcano. The plane lost power to all four engines on

approach to Anchorage International Airport, and nearly crashed before landing.

Aircraft repairs cost more than $80 million. To help air traffic controllers and pilots

avoid ash clouds, the U.S. Geological Survey, the National Weather Service, and the

Federal Aviation Administration (FAA) developed new procedures to speed eruption information to commercial and military aviation. The FAA uses eruption warnings from the Geological Survey and information on ash cloud paths tracked by

satellite by the Weather Service to alert pilots and air traffic controllers. Planes can

then be rerouted around ash clouds safely and efficiently. For example, timely warnings during three eruptions of Alaska’s Mount Spurr Volcano in 1992 allowed

planes to be rerouted to safety, kept flight cancellations at Anchorage airport to a

minimum, and prevented aircraft damage.

ADVANCED TECHNOLOGIES FOR ENVIRONMENTAL MONITORING AND

TIMELY WARNING IMPROVE PUBLIC SAFETY AND REDUCE COSTS

Chapter 4 Technology in the National Interest 67
America’s transportation system comprises a growing network of highways, transit systems, railroads, waterways, airports, seaports, and pipelines that is critical to the Nation’s vitality and economic well-being. In all, transportation in the United States

accounts for 17 percent of GDP, or about $1 trillion a year. What’s more, transportation’s vast capital stock—the physical infrastructure—is worth some $2.4 trillion to the Nation.

Technology is essential to the health of our transportation system and of our nation. Innovations in transportation contribute to

America’s economic growth and national security. They enhance our environment and our local communities. And, perhaps most

important, they save lives and reduce the risk of accidents and injuries.

■ Saving Time, Saving Lives. Americans lose 2 billion hours a year to gridlock. The Transportation Department’s Operation

TimeSaver is aimed at cutting travel times by at least 15 percent and reducing the number of highway incidents. This program

challenges state and local transportation agencies to invest in an arsenal of new technological tools to keep the flow of people and

goods moving more smoothly, safely, and with less impact on the environment. Many communities are already reaping benefits

from these new technologies. For example, Lexington, Kentucky, computerized its traffic signals and reduced stop-and-go traffic

by 40 percent. Using an adaptive freeway control system, Minneapolis increased freeway speeds by 35 percent and cut accidents

by a quarter. In Baltimore automatic vehicle locators on buses have improved on-time performance by 23 percent. And thanks

to new automated toll collectors, traffic on New York’s Tappan Zee Bridge went from a crawl to more than 25 miles per hour.

■ Making Driving Safer. The work of the Transportation Department’s National Highway Traffic Safety Administration (NHTSA)

has yielded numerous technologies that make our roads and cars safer. Among the technologies that have contributed to a 50

percent reduction in the traffic fatality rate since 1970 are antilock brakes, air bags, and improved automobile structures. Today,

NHTSA is working on a “smart,” affordable crash sensor that will help drivers avoid dangerous collisions. NHTSA also is ensuring the safety of the next generation of vehicles developed under the Partnership for a New Generation of Vehicles.

■ More than Fixing Potholes. Construction and maintenance of the highway system costs the Nation about $80 billion per year.

Technologies now in use have the potential to increase the useful life of our highways and bridges dramatically, reducing maintenance costs and often eliminating the need for new construction. For example, the Federal Highway Administration’s (FHWA)

“Smart Inspector” is a unique bridge inspection tool that enables rapid and safe inspection of bridges using the latest portable

computing, voice recording, processing, and display technologies. The FHWA also is evaluating the use of recycled solid waste

materials—including steel slags, rubber tires, crushed glass, roof tiles, and recycled plastics—for everything from patching potholes to controlling ice.

■ Combatting Terrorism. The Federal Aviation Administration has worked long and hard to keep our airports and air travelers

safe from terrorists and other threats. Among the technologies that have helped ensure airport security are portals that detect

weapons on passengers and “bomb sniffers” that locate explosives in checked baggage. The FAA is now developing improved systems for detecting explosives, both on passengers and in baggage. The focus is on two basic technologies: trace detectors that

identify trace emissions from different explosives, indicating their presence, and bulk detectors that use electromagnetic energy

or nuclear radiation to penetrate and identify explosives based on their elemental or structural composition.

■ Bringing Travelers into the Space Age. The Global Positioning System (GPS) is a satellite-based radionavigation system originally developed by the Department of Defense. Today, commercial uses of the system far outnumber military applications. GPS

is now guiding everything from sailboats to supertankers. A system developed by the U.S. Coast Guard allows ships and boats

with GPS receivers to navigate their way into America’s harbors more accurately and more safely. The FAA is building a network

of ground stations that will enable GPS-based navigation for all phases of flight, making plane trips shorter and reducing costly

flight delays. Working with the railroad companies, the Federal Railroad Administration is pursuing pilot projects to incorporate

GPS into advanced train control systems that would prevent railroad accidents and injuries costing approximately $35 million a

year. Finally, as a critical component of the Transportation Department’s Operation TimeSaver program, GPS is allowing local traffic control centers to monitor the location of transit buses, emergency vehicles, and police cruisers.

LEADING-EDGE TRANSPORTATION TECHNOLOGIES

ARE SAVING LIVES, TIME, AND MONEY
■ Detecting Windshear. A severe weather phenomenon known as “windshear” can wreak havoc on planes during takeoffs and

landings, when they are close to their minimum flying speeds and altitudes. Windshear—sudden changes in wind speed and

direction found in storms called “microbursts”—has been found responsible for more than half of all airline fatalities over a tenyear period. In the past, windshear has struck with little or no warning. But NASA has developed and tested technology to detect

these invisible but extremely hazardous winds miles ahead of an aircraft. NASA developed the pilot’s alerting requirements and

procedures, and conducted studies to assess the potential for microwave radar, lidar (laser radar), and infrared to detect the hazard. These technologies have proven capable of detecting hazardous windshear conditions. After several years of development,

NASA began flight testing the prototype windshear sensor systems in 1991. On November 30, 1994, Continental Airlines Flight

1637 departed Washington’s National Airport equipped, for the first time, with an airborne detection system capable of providing the cockpit crew with up to 90 seconds advance notice of windshear activity. Several U.S. companies are commercializing

these technologies.

■ Aviation Deicing. For almost 40 years, airlines have deiced planes by spraying them with glycol. This creates excessive time

delays for the airlines, and glycol runoff poses environmental problems. A new deicing system—being demonstrated under the

Energy Department’s National Industrial Competitiveness Through Energy, Environment, and Economics Program—could solve

these problems. The Whisper WashTM, roughly analogous to a car wash, provides a portable adjustable structure that aircraft can

taxi through for deicing en route to the takeoff runway. The system delivers heated compressed air for deicing along with precise

amounts of glycol for anti-icing. Excess fluid is collected and stored for off-site filtering and distillation for possible use in other

applications. The Whisper WashTM is placed close to the end of the departure runway to minimize the time between treatment

and takeoff, a significant improvement over current methods in which aircraft are primarily deiced at the departure gate. At many

airports, the taxi time from gate to runway can exceed the safety margins for ice buildup and force a plane to return for another

treatment. One Whisper WashTM can service the same number of planes as 24 deicing trucks. The aviation and heating fuel savings and glycol reduction are estimated to reduce the annual cost of operations for a typical airport by $14 million.

■ High-Tech Transit. With the support of the Federal Transit Administration (FTA), new transit buses are on the horizon that are

cleaner, more efficient, and more accessible than conventional buses. The FTA has already developed a prototype hybrid electric

bus that runs on both diesel and electricity and has completed the initial design of a second bus, the Advanced Technology Transit

Bus (ATTB). The ATTB is the first bus to meet clean air, weight, and accessibility requirements while improving performance and

reducing operating costs for transit agencies. A third type of bus currently under development is an advanced battery-operated bus.

■ Keep on Truckin’. The American trucking industry could receive a boost in productivity from a public-private research effort

designed to keep things rolling. Currently, long-haul trucking operates under an array of Federal, state, and local regulations that

govern cargo weight, fuel taxes and fuel usage, vehicle safety, driver performance and working hours, and licensing and registration. As a result, trucks can be subjected to numerous inspections and stops during the course of a long-distance journey. This

contributes to a reduction in efficiency and an increase in total costs and time required for freight movement. A potential solution can be found in the Commercial Vehicle Operations (CVO) segment of the Intelligent Transportation Systems Program,

which applies advances in electronics, communications, and information technologies to the Nation’s surface transportation system. CVO’s HELP (Heavy Vehicle Electronic License Plate) program is a multistate, multinational research effort to design and test

an integrated heavy vehicle monitoring system that combines automatic vehicle identification, automatic vehicle classification,

and weigh-in-motion capabilities. The use of such information in intermodal freight movements is now being applied to ensure

seamless movement of shipments onto trains, through ports to ships, to highway vehicles, and on to the final recipient. Conrail

is now actively pursuing this technology.
70 Technology in the National Interest Chapter 4

INTEGRATION OF MILITARY AND

CIVILIAN INDUSTRIAL BASES

Goal 4

Promote integration of 

the military and civilian

industrial bases. Science and technology play a critical role in the national defense, allowing the U.S.

Armed Forces to counter military threats, overcome advantages that adversaries may seek,

and reduce collateral damage during wartime. With the end of the Cold War, defense

spending is in decline. Today, commercial technology development often leads defense

R&D, making the technology base that propels the economy increasingly crucial for

national defense. Many leading-edge technologies that provide our military with a battlefield advantage—software, computers, semiconductors, telecommunications, and manufacturing technologies—are being driven by rapidly changing commercial markets.

In the past, it was common to think of technologies as spinning off from military development to civilian markets. Today, many technologies have dual-use applications in both

military and commercial products, such as polymer matrix composites for airframe structures, optoelectronics for advanced computers, flat-panel displays, and digital wireless

communications. And technologies are increasingly “spinning on,” with commercial technologies being modified for military applications. While some technologies remain exclusively or near-exclusively military, many technologies originate in the commercial sector,

with the Defense Department representing only a small fraction of the total world market.

For all these reasons, the United States cannot afford to maintain distinct military and

civilian industrial bases. Instead, the United States must tap a dynamic commercial marketplace for new technologies, providing a more sophisticated and powerful military

defense at a lower cost to the American taxpayer.

Barriers have grown between the two industrial bases as special defense requirements and

business practices increasingly segregated the military sector of the industrial base from

the civilian sector. Defense Department procurement regulations, accounting standards,

and military specifications have acted as a wall between these two industrial bases, discouraging the sharing of human resources, facilities, technologies, and production lines

that offers cost savings and efficiencies through economies of scale and scope.

The Administration’s initiatives in dual-use technologies and acquisition reform are

designed to remove many of these barriers and assist in the integration of the Nation’s military and civilian industrial bases into an industrial base capable of meeting both defense

and commercial requirements. This will allow the Department of Defense to exploit the

rapid rate of innovation and market-driven efficiencies of commercial industry to meet

defense needs at lower cost. Conversely, the innovation and accomplishments that originate in defense programs and laboratories will move rapidly to the commercial sector.

■ Dual-Use Technologies. The dual-use strategy rests on three pillars: dual-use R&D to

exploit the potential of advanced commercial technologies to meet defense needs; integration of commercial and military production to enable industry to “dual produce”; and

insertion of commercial products, processes, and technologies into defense systems wherever possible. This strategy is designed to improve access to leading-edge technology,

reduce the cost of advanced defense technologies, and provide the ability to quickly

enhance military capabilities to a higher level, if necessary.

■ A tiny experimental recording head

that records 3 billion bits of information–3 gigabits–in just a square 

inch of a hard disk.
The Technology Reinvestment Project (TRP), run by the (Defense) Advanced Research

Projects Agency, was the Defense Department’s first major dual-use technology program.

The TRP awarded nearly $1 billion during a series of competitions held in 1993–1995.

Because industry was required to pay at least half of the cost of every TRP project, the government’s investment is leveraging several billion dollars of R&D. In addition to advances

in composite aircraft structures and detection of chemical/biological agents, TRP-supported projects are developing promising dual-use technologies in a range of critical defense

areas, including:

■ Low-Cost Night Vision. U.S. troops will be able to “own the night” through widespread use of infrared sensors made ten times cheaper by leveraging new commercial technology.

■ High-Density Data Storage Devices. Vast increases in portable, low-cost data storage will give our frontline soldiers access to the best information and intelligence.

■ Battlefield Casualty Treatment. New sensors and information systems will greatly

improve the ability to find and diagnose injured combatants during the critical first

hour they are down in the field.

Although no further TRP competitions are planned, the Department of Defense has

requested fiscal year 1997 funding of $250 million for a new Dual-use Applications

Program. This program will have increased involvement by the military services both to

accelerate “insertion” of specific dual-use technologies into weapon systems and to promote broader service acceptance of the dual-use approach.

In the area of dual production, the Defense Department’s partnerships are already helping

develop commercial applications for advanced military technologies as a way to lower

costs. For example, a few years ago, the Defense Department pursued microwave monolithic integrated circuit (MIMIC) technology as a strictly military development, but the

high cost prohibited widespread use of the devices. MIMICs are advanced gallium

arsenide semiconductors used for military radar. Defense now encourages MIMIC contractors to pursue commercial applications—in collision avoidance systems for automobiles, satellite communications, and air traffic control signal processing. By leveraging

commercial production, the payoff to defense is the world’s best radar at a lower cost.

The Department of Defense has pursued the third dual-use theme—commercial insertion—in several areas. For example, civilian contractors are working with Defense

Department staff to develop a process for inserting non-military parts in the Single Channel

Ground and Airborne Radio System. The broader goal is to develop a corps of “smart buyers” in the military who have a detailed knowledge of relevant commercial technologies and

an understanding of commercial markets and buying practices.

Chapter 4 Technology in the National Interest 71
America’s national defense and space missions spurred the development of many of the key technologies that have propelled the

world into the Information Age.

■ The World’s First General-Purpose Electronic Digital Computers. The computer revolution was launched during World

War II with the construction of the world’s first general-purpose electronic digital computer, ENIAC (Electronic Numerical

Integrator And Computer). Built by engineers at the University of Pennsylvania with funding from the Department of the Army,

ENIAC weighed 30 tons and filled a 30-by-50-foot room. ENIAC was joined shortly by EDVAC (Electronic Discrete Variable

Automatic Computer), the first true computer with a central processor and a memory for data and programs. These systems provided the foundation for the astounding evolution of computers.

In the late 1940s, the Department of Defense contracted with the Massachusetts Institute of Technology to develop a computing

system for use in a Navy flight simulator. The result was the world’s first reliable, real-time computer, the Whirlwind. Defense

used the Whirlwind to process data from radar stations in the SAGE (Semi-Automatic Ground Environment) air defense system,

and later for SATIN, the first automated air traffic control system. In addition to groundbreaking hardware developments, the

SAGE and SATIN programs yielded the first compilers and assemblers.

■ IBM’s Defense Calculator. With the outbreak of the Korean War in 1950, IBM invested $3 million of its own money in the

development of a general-purpose scientific calculator, the Defense Calculator, which it introduced in 1952. Though defense contractors were the primary market for the Defense Calculator, its potential for the business market resulted in further technology

development by IBM. Two years later, IBM marketed its Model 702, designed for business use, launching the company’s commercial computer business.

■ The Integrated Circuit. Texas Instruments’ Jack Kilby is credited with building the first functional integrated circuit in 1958,

a feat that attracted Air Force funds for development. In 1959, Fairchild’s Robert Noyce developed an integrated circuit using a

planar approach without Defense Department funding. Though the invention of the integrated circuit and its near-term improvements were accomplished without Federal funds, the government’s early adoption and use of the technology spurred the industry’s growth and helped catapult both companies to global leadership in semiconductors.

■ Early Advances in Supercomputing. Purchases of supercomputers by the Atomic Energy Commission’s Los Alamos and

Livermore laboratories provided some of the early funding that enabled companies to develop advanced computing systems for

commercial markets. These laboratories placed the first orders for supercomputers from IBM, Control Data Corporation, and Cray

Research. By helping to underwrite initial development costs, the laboratories enabled the companies to introduce the systems

into commercial markets at lower prices.

■ Foundations for Computer Graphics. With financial support from the CIA and a computer on loan from the Air Force, the

computer graphics group at Harvard University demonstrated a prototype virtual reality system in the mid-1960s. This work and

the Defense Research Projects Agency (DARPA) investment in computer graphics research at the University of Utah contributed

significantly to the technical foundation of the Evans and Sutherland Corporation, which subsequently provided computer-based

equipment for pilot training—equipment that is used today by the U.S. military and by commercial pilots the world over. In addition, the Department of Defense’s university funding provided training for many of today’s leading technologists, among them

John Warnock of Adobe Systems, and Jim Clark, founder of Silicon Graphics and Netscape. When the Federal government began

its support for this research, the vast implications of computer graphics—what-you-see-is-what-you-get document creation systems, scientific visualization, the entertainment industry, virtual reality—were unforeseen.

COMPUTING ADVANCES FROM DEFENSE RESEARCH

ADD UP TO COMMERCIAL SUCCESS
■ DARPA’s VLSI Program. The Very Large Scale Integration (VLSI) Program conducted by DARPA has contributed in numerous ways to the Nation’s strength in computing. VLSI was built on the vision of making integrated circuit technology available to

system designers. To this end, VLSI funded both academic research activities and the Metal Oxide Semiconductor Implementation

Service (MOSIS). The MOSIS semiconductor integrated circuit fabrication and testing facility—funded jointly by users, DARPA,

and the National Science Foundation—provides industry and universities across the Nation with low-cost, fast-turnaround prototyping of integrated circuits. In addition, the VLSI program:

■ Resulted in the development of the multichip wafer, allowing multiple designs to share a single silicon fabrication run.

This capability—together with the tools developed to assemble the designs and services for digital submission of chip

designs—made the concept of a low-cost, fast-turnaround silicon foundry a reality. Several companies based on these technologies were formed.

■ Stimulated development of the Geometry Engine project, which formed the basis of Silicon Graphics, Inc. The company’s

simulation technologies have been instrumental in creating spectacular special effects in movies such as Jurassic Park and

Forrest Gump.

■ Stimulated the development of Berkeley UNIX, an operating system funded by DARPA to provide a research platform for

VLSI tools, which has become the basis for the operating system of choice in workstations, servers, and multiprocessors.

■ Accelerated understanding of the importance of low-cost, high-quality graphics for VLSI design, inspiring the creation of

the Stanford University Network (SUN) workstation project. Together with Berkeley UNIX, this technology formed the basis

for Sun Microsystems.

■ Supported two key Reduced Instruction Set Computing (RISC) experiments, the Berkeley RISC project and the Stanford

MIPS project. These technologies formed the basis for many RISC designs, including those of MIPS Computer Systems (now

owned by Silicon Graphics, Inc.) and Sun Microsystems.

■ Sponsored extensive developments in computer-aided design (CAD), leading to revolutionary improvements in CAD

technology for layout, design rule checking, and simulation. The tools developed in this program have been used extensively in both academic research programs and industry.
74 Technology in the National Interest Chapter 4

■ Defense Acquisition Reform. The Defense Department is firmly committed to improving defense acquisition processes to help improve long-term military readiness by increasing access to state-of-the-art commercial technology, products, and services. In October

1993, President Clinton signed into law the Federal Acquisition Streamlining Act of 1994

(FASA), which provides for three key statutory changes. First and foremost, it makes it

easier for the Defense Department (and other Federal agencies) to buy commercial components, products, and services. Second, it streamlines contracting procedures for small

purchases. And third, it authorizes the Defense Department to undertake five pilot programs to test innovative approaches to acquiring commercially derived jet aircraft, aircraft

engines, and other items. The Defense Department has developed a strategic plan to

ensure that reform measures are institutionalized and to create an environment for continuous improvement.

In June 1994, the Pentagon announced a reversal of its long-standing policy toward military specifications, or milspecs, the 31,000 specifications and standards that prescribe

how military items are to be made and tested down to the most minute detail. The

Secretary of Defense has instructed the military services to use commercial or performance-based specifications and standards in lieu of milspecs unless no practical alternative exists. Already this decision has dramatically reduced the number of required milspecs for dozens of weapons systems: the Air Force’s Space Based Infrared System dropped

from 150 to 2; the Navy’s SLAM missile, from 104 to 6; and the Army’s BCIS Phase I

antifratricide digital system, from 467 to 194.

Since the 1994 FASA, there have been still other improvements in military acquisitions.

For example, the Federal Acquisition Reform Act of 1995 gave the Defense Department

authority to extend its pilot acquisition program to cover entire facilities. And further

streamlined acquisition by authorizing, for three years, greatly simplified procedures for

contract purchases below $5 million.

Together the statutory reforms embodied in the FASA, subsequent legislation, and administrative reforms such as the milspec policy further the Pentagon’s ability to take advantage

of the inventiveness and efficiency of today’s dynamic commercial high-technology market.
Chapter 4 Technology in the National Interest

A WORLD-CLASS WORKFORCE

75

Increasingly, our country’s competitiveness and what we as individuals earn depend on what

we learn. From factory floors and farms to offices and hospitals, knowledge and the ability

to use information and technology are becoming the keys to employment and wealth.

Today, American workplaces are home to a vast array of advanced information, telecommunications, and manufacturing technologies. These technologies are creating a knowledge-based economy in which our workers must be adept at gathering, processing, and

interpreting data and information.

Moreover, new forms of work organization being adopted by many U.S. companies

require workers to possess conceptual, analytical, communication, interpersonal, and selfmanagement skills in addition to basic academic knowledge and technical skills.

Too many Americans are ill-prepared for workplace roles in the new economy. By one

count, 90 million adult Americans have limited information and quantitative skills. It is

estimated that 60 percent of the new jobs in the year 2010 will require skills possessed by

only 22 percent of workers today. We are already seeing growing disparities in income that

are a direct result of disparities in levels of education. In 1979, full-time male workers

aged 25 and over with at least a bachelor’s degree earned on average 49 percent more per

year than did comparable workers with only a high school diploma. By 1993, the difference in wages had nearly doubled, to 89 percent.

In our rapidly changing economy, learning must become a way of life. To sustain rapid job

growth while increasing growth in wages and productivity, the Administration has undertaken an ambitious agenda of lifelong learning to help American workers respond to challenges and grasp opportunities in the new economy.

■ Elementary and Secondary Education. With a strong focus on K–12 education, the

Goals 2000: Educate America Act of 1994 established eight ambitious national education

goals, including goals designed to raise U.S. students’ competence in mathematics and science and to promote adult literacy and lifelong learning.

Goals 2000 provides a framework for comprehensive state and local efforts to improve

teaching and learning. The objective is to create a system in which highly skilled teachers

can focus on achieving clear, widely agreed-upon goals, assisted by parents and the community, who in turn can look to a set of well-defined standards by which to hold educators and school systems accountable.

Mathematics and science education form the basis for the technological and scientific

advances that fuel today’s economy, and these subjects are gateways to high-wage scientific, engineering, and technical careers. Goals 2000 established an ambitious national

education goal: “U.S. students will be first in the world in science and mathematics

achievement.” This poses a tremendous challenge to American educators. In international comparisons, U.S. students rank below students in most other developed nations in

mathematics and science.

Goal 5

Ensure that America has 

a world-class workforce

capable of participating 

in a rapidly changing,

knowledge-based 

economy.

“We are moving from an Industrial 

Age built on gears and sweat to an

Information Age demanding skills 

and learning and flexibility.”

President William J. Clinton 

State of the Union Address

January 24, 1995

In 1984, 25 percent of workers 

used computers on the job; by 

1993, 46 percent did.

“The United States must sustain world

leadership in science, mathematics, 

and engineering if we are to meet the

challenges of today and tomorrow.”

President William J. Clinton

Only 11 percent of middle school 

math teachers and 21 percent of 

science teachers majored in their 

fields of teaching specialization.
76 Technology in the National Interest Chapter 4

While much of the responsibility for achieving this goal rests with school systems at the

state and local levels, the Federal government plays a role in encouraging improvements.

Federal government investments for improvements in mathematics and science education

at the pre-K–12 education levels focus on enhancing teacher skills, improving science and

mathematics curricula, promoting systemic reforms, and other areas.

Many of America’s young people are not equipped with the basic academic and technical skills

businesses demand. The School to Work Opportunities Act, proposed by the Administration

and passed by the Congress in 1994, provides assistance to States and localities for building

systems that prepare young people for a good first job. Partnerships among businesses, labor

organizations, and educators offer young people learning experiences in both school and

work settings that will help provide the knowledge and skills they need to make a smooth

transition into the world of work.

■ Higher Education. The cost of higher education discourages many Americans from

attending college, raising barriers to lifelong learning at a time when the economic benefits of higher education have increased dramatically for both individuals and the Nation.

Under the new Federal Direct Loan Program, individuals can borrow money for college

directly from the Federal government and tailor their repayments to suit their financial circumstances.

Businesses have long been allowed a tax deduction for the costs of providing education

and training for employees. Yet despite the high returns and the high costs of post-secondary training and education, the current tax code provides only limited relief to individual taxpayers making such investments. The Middle Class Bill of Rights, proposed by

President Clinton in 1994, includes a tax deduction of up to $10,000 for annual expenses on post-secondary training and education. This proposal provides a financial incentive

for Americans to get the education and training necessary to thrive in a changing economy, recognizing that investment in human capital is a major determinant of growth in

national productivity and living standards.

■ Undergraduate and Graduate Education. The principal resource for maintaining U.S.

technological leadership is our pool of well-educated scientists and engineers. They are

the wellspring of new ideas and new solutions to challenging problems.

American colleges and research universities are unmatched in their ability to provide

advanced education and to enrich it through leading-edge research. Maintaining this system of excellence is becoming ever more important as society becomes increasingly

dependent on scientific and technological advances and, by extension, on an adequate

supply of well-trained scientists and engineers.

As students progress to higher levels of formal education, fewer of them continue their

studies in science, mathematics, engineering, and technology. Too often, teaching in these

fields fails to capture students’ interests, as instructors rely heavily on lectures and repetitive textbook problems, especially in mathematics and physical sciences.

■ Encouraging curiosity and 

innovations.
Chapter 4

Technology in the National Interest 77

Our undergraduate students must have rapid access to the ever-expanding wealth of

knowledge being generated, provided by faculty who can convey the excitement of discovery and its applications and are armed with knowledge of advances in technology and

instrumentation, new experimental methods, and emerging pedagogical techniques. The

Federal government is working as a catalyst to inject such vitality into U.S. undergraduate

science, mathematics, engineering, and technology education by investing in organizational reform, faculty enhancement, curriculum improvement programs, and student support.

The Federal government plays a major role in financing graduate education in areas such

as fellowships and traineeships in pre- and post-doctoral programs. Federal research

grants also support graduate students by providing funds for assistantships.

Our graduate-level research universities have new opportunities to contribute to the

Nation’s competitiveness through the training they impart to scientists, engineers, and

technologists. While the Nation will always need outstanding scientists and engineers to

teach in colleges and universities, the share of Ph.D.-level scientists and engineers

employed at academic institutions has been steadily declining for more than two decades. Today, roughly half of all doctorate-level scientists and engineers work outside academia.

Closer ties between universities and the private sector, through industry-university cooperative activities, would yield multiple benefits. By working directly with scientists and

engineers from industry, students gain new awareness of needs and opportunities in the

private sector. At the same time, the companies are given a window on leading-edge research and emerging technologies. ■ Reemployment System. Technological change and market forces will demand new

skills in existing jobs. They may also eliminate jobs, companies, and, in some cases, even

entire industries. For example, a recent Commerce Department study showed that, over

the 1973–1988 period, job creation averaged 9.1 percent per year in the manufacturing

sector, while job destruction averaged 10.3 percent. Job creation and destruction are

observed within all manufacturing industries and require at least 11.7 percent of workers

to change their job or job status each year.

In today’s rapidly changing economy, new approaches are needed to help American workers keep pace. To address this challenge, the Administration is working with the states to

turn the Nation’s unemployment system to a reemployment system that will smooth the

transition from one job to another and increase worker skills to prevent job loss. A key

element of the new system is a nationwide network of one-stop career centers that provide job counseling and information on training opportunities, job openings, local

employment trends, and assistance programs at all levels of government.

Unfortunately, workers who need training now face a complicated maze of dozens of government-assisted training programs, each with its own rules, regulations, and restrictions.

President Clinton’s Middle Class Bill of Rights has proposed replacing this complex system with a single choice-based system for adults, consolidating nearly 70 training and related programs. The Administration proposes the use of skill grants that could be used

at any eligible training provider.
78 Technology in the National Interest Chapter 4

■ Skill Standards. Skill standards can play an important role in increasing the supply of

highly skilled workers and smoothing their transitions between jobs. In the United States,

a lack of formal mechanisms for national certification of most worker skills diminishes the

portability of training and reduces the incentive for employees to invest in increasing 

their skills.

The Goals 2000: Educate American Act established the National Skill Standards Board to

encourage voluntary development of a national system of occupational skill standards to

strengthen the connection between the skills required in the workplace and those imparted through education and training.

■ Educational Technology Initiative. Despite dramatic advances in information and communications technologies, the way Americans teach and learn remains largely unchanged

from a century ago. The textbook remains the basic unit of instruction, teachers and instructors use “chalk and talk” to convey information, school teachers work largely in isolation

from their peers, and the classroom remains a technological backwater. We can do better.

New technologies have the potential to provide learners of all ages with access to multimedia electronic libraries and museums containing text, images, video, music, instructional

software, and simulations. They can provide access to the world beyond the classroom,

including access to the best teachers, and

outside the typical nine-to-three school

day. These technologies can make job

training more accessible, especially for

small and medium-sized firms with few

resources to devote to worker training and

for workers who, on their own, are

attempting to improve their skills.

President Clinton has challenged the

Nation to connect every classroom to the

Information Superhighway by the year

2000 and to provide computers, good

software, and well-trained teachers. The

National Information Infrastructure initiative is working to promote the use of advanced information technologies for accessing the

education and training required for the knowledge-based economy of the 21st century. The

Commerce Department’s Telecommunications and Information Infrastructure Assistance

Program is providing matching grants to school districts, libraries, and universities to help

them adopt new telecommunications technologies.

The President’s challenge is galvanizing private initiatives. Tech Corps recruits, places, and

supports volunteers from the private sector to advise and assist schools in integrating new

technologies into the classroom. The American Technology Honor Society is tapping the

technological expertise of students to expand and improve their schools’ use of technology.

“I believe a total national effort to 

make the many benefits of technology

available to all of our young people 

can lift—in one bold stroke—the level 

of the American workforce and the level

of public education. This is something

American business leaders have been

asking us to do for over a decade.”

Richard W. Riley

Secretary of Education

In 1994, there was one computer for

every ten students in elementary and

secondary schools.

1 Provide all teachers the training and support they need to help students 

learn using computers and the Information Superhighway.

2 Develop effective and engaging software and on-line learning resources as 

an integral part of the school curriculum.

3 Provide access to modern multimedia computers for all teachers 

and students.

4 Connect every school and classroom in America to the Information 

Superhighway.

THE PRESIDENT’S FOUR PILLARS FOR EDUCATIONAL TECHNOLOGY

Today, only 9 percent of all 

instructional rooms in public 

schools—classrooms, labs, and 

media centers—are connected 

to the Internet.
Students will be recognized and rewarded for their efforts. A new voluntary corps of technologically literate teachers, 21st Century Teachers, will help other teachers learn how to

use new technology to improve teaching and learning in school and at home.

The Department of Education’s

Technology Learning Challenge

grant program supports partnerships of schools, colleges, and

the private sector for the development and demonstration of

educational technology. In 1995,

the initial challenge grant competition for elementary and secondary education attracted more

than 500 proposals and resulted

in 19 grants totaling $10 million.

The challenge grants have been

matched by $70 million in private sector contributions in the

first year. The President has proposed a significant expansion of

this program to help keep U.S.

schools on the leading edge of

learning technologies.

To further encourage action at

the state and local levels, President Clinton has proposed the creation of a $2 billion, fiveyear Technology Literacy Challenge Fund to be administered by the Department of

Education. States will be asked to work with local governments, private sector partners,

parents, teachers, and students to develop statewide strategies to build upon the

President’s four pillars for technological literacy. This fund expands efforts that were initiated under Goals 2000 technology planning grants.

On NETDAY (March 9, 1996), President

Clinton, Vice President Gore, and

20,000 volunteers laid 6 million feet of

cable providing thousands of California

schools with the technology required to

link classrooms, libraries, and laboratories to the Information Superhighway.

The CyberEd truck—a cyber classroom

on wheels—will bring model technology

to every rural and urban Empowerment

Zone in the Nation, providing hands-on

educational technology experience.

Chapter 4 Technology in the National Interest 79

■ Exploring the use of technology.
CHAPTER 5

CHALLENGES IN U.S. TECHNOLOGY POLICY

Since first articulating its technology policy in 1993, Technology for America’s Economic

Growth—A New Direction to Build Economic Strength, the Clinton Administration has made

great strides in fulfilling this vision with a portfolio of innovative yet commonsense technology programs. Taken together, these investments in the future promise large economic benefits to the Nation. Nevertheless, stubborn problems remain, and new challenges are

on the horizon that will require attention in the future.
CHALLENGES IN U.S. 

TECHNOLOGY POLICY

82 Technology in the National Interest Chapter 5

DEFINING NATIONAL INTERESTS IN A GLOBAL ECONOMY

Establishing government policies and programs to support U.S. national interests in a global economy presents many challenges. Today, the sources of economic growth—technology, capital, and labor—are increasingly global. For example, investment capital flows

around the world in search of the best opportunities with the greatest returns. In technology, some 640 foreign-owned R&D facilities in the United States employ more than

105,000 R&D workers, and foreign-company R&D performed in the United States has

grown to more than 15 percent of total U.S. industrial R&D. U.S. companies are taking

advantage of labor overseas, tapping the skills of engineers in India, who design computer

chips and transmit those designs back to the United States by satellite. In other cases,

American workers enjoy the benefits of foreign investment in the United States. Half of the

1 million workers in the U.S. chemical industry are employed by U.S.-based affiliates of foreign companies.

Nations everywhere have recognized this new global competition for business activity and

sources of economic growth. They have established a range of policies and programs to attract

these engines of wealth creation to their shores and to help businesses grow.

Federal policy-makers increasingly need a strategic, global point of view as they pursue

policies designed to strengthen the U.S. economy. Continued global economic growth

remains in the interest of the United States, expanding market opportunities and increasing political stability worldwide. Nevertheless, U.S. foreign and domestic policies should

seek to leverage U.S. interests in the global economy. For example, our national interests

are served through market-opening initiatives and efforts to strengthen the protection of

intellectual property rights worldwide. U.S. domestic policies should seek to create a business climate that puts technology to work in the United States, minimizes barriers that

have the potential to drive business activity and jobs offshore, attracts global investment,

and stimulates U.S. exports.

FINANCING INNOVATION

One of the most stubborn problems of innovation is ensuring the availability and affordability of capital for new technology. This age-old problem is exacerbated by the increasing costs of developing and commercializing emerging and enabling technologies. In addition, the farther downstream one goes with a technology-based project, the larger the capital requirements. Failure to secure adequate and timely financing can break a technology

venture at any stage. Unfortunately, difficulty in obtaining adequate financing—a problem

faced by entrepreneurs, small firms, and large companies alike—often prevents many

promising technologies from reaching the market in time, if at all.

The availability of company financing for technology is closely linked to a technology’s perceived cost and risk. Major business investments will not usually be made until risks have

been reduced to the level needed to meet the investment criteria in use by the corporation.

Many promising technological opportunities involve a combination of high risk and high
Chapter 5 Technology in the National Interest 83

cost that precludes their timely development in the private sector. Government can play a

role in encouraging private companies to pursue such opportunities. For example, costsharing by government where there is potential for broad-based economic benefits with

high rates of social return encourages private sector investment at the pre-competitive

stage of technology development. By serving as a catalyst to bring together complementary

expertise in consortia and alliances and by including peer review of a project’s technical

and business merit, the Advanced Technology Program and others like it will reduce the

uncertainties associated with new ideas. The reduction of perceived risk may be sufficient

to encourage the private sector to pursue technology development projects without government support.

Compared with its major foreign competitors, U.S. industry appears to invest at a lower

rate and on a shorter term basis in areas such as R&D, workforce training, and the development of supplier relationships. While U.S. capital markets are highly efficient, corporate

governance rules, accounting systems, (for smaller firms) barriers to access and transaction costs, and other factors tend to skew the allocation of capital away from investments

that boost productivity, firm competitiveness, and sales growth, which, in turn, boost

wages, employment, and economic growth. Government should explore ways to encourage longer term private investment in areas that underpin technological innovation.

PUBLIC UNDERSTANDING OF TECHNOLOGY

Americans increasingly face decisions on issues related to technology and its role in both

society and our personal lives. Yet technology itself is rarely a subject of study in our

schools and colleges. And although society relies heavily on technology, positive images of

people who make and use technology are sorely lacking in popular culture.

No Federal programs exist for the express purpose of promoting our students’ and the public’s learning about the nature of technology, its increasing role in society, and the extraordinary contributions scientists and technologists have made to our standard of living, economic prosperity, and competitiveness. To provide a foundation for understanding complex economic, political, ethical, and social issues derived from an increasingly technological society, partnerships among the Federal government, the education community, industry, and the media are needed to improve the technological literacy of Americans.

At both the undergraduate and graduate levels, greater emphasis on the processes and

methods of technological innovation, on how to use technology, and on the functions of

technology in our society is needed in curricula designed for students who do not pursue

a science, mathematics, or engineering major. Technology is pervading all aspects of society, and those who do not specialize in science, mathematics, and engineering disciplines—

such as elementary school teachers, lawyers, and business managers—are increasingly confronted by technological issues and problems in their personal and work lives.

■ The National Medal of Technology 

is the highest honor awarded by the

President of the United States of

America for technological innovation.

It is administered by the U.S.

Department of Commerce.
84 Technology in the National Interest Chapter 5

THE SERVICE SECTOR

The U.S. service sector has emerged as a set of dynamic,

technologically intensive industries that have a major

impact on the U.S. economy. Services provide roughly 75

percent of American jobs and account for 70 percent of

U.S. GDP. The U.S. service sector is a major consumer of

high-technology products, especially information technologies. The role of the service sector in technology is

growing; in 1993 this sector invested 25 billion industrysourced funds in R&D.

The growth of the service sector has not been reflected

in U.S. technology policy. Federal agencies involved in

technology policy and partnership activities with the

private sector should remedy this underrepresentation

by increasing service sector participation to levels more

commensurate with its role in the economy.

STATE-FEDERAL TECHNOLOGY PARTNERSHIPS

During the past 15 years, state and local governments have established numerous programs to fuel technology-based economic growth and job creation at the regional level.

They include new business incubators, seed capital funds, manufacturing extension programs, partnerships with Federal and university laboratories, and assistance for entrepreneurs. At the same time, the Federal government has pursued programs designed to promote technological competitiveness. In large part, these initiatives have been undertaken

with little coordination. By integrating these efforts, Federal, state, and local governments

could significantly boost the competitiveness of American firms.

Each level of government has unique experiences and resources to contribute to innovation in the United States. Strengths at the Federal level include basic research, missiondriven R&D, and the ability to address national technology issues. Strengths at the state

level include close interaction with entrepreneurs and young companies, small and medium-sized manufacturers, regional industrial consortia, and local boards and councils that

support entrepreneurship and nurture technological leadership at the grassroots level.

Moreover, states play a key role in deploying transportation, environmental, and educational technologies developed by the private sector and the Federal government.

Better integration of these complementary initiatives will allow all levels of government to

achieve more than they could acting alone. Building on recommendations developed by the

State-Federal Technology Partnership Task Force, led by former governors Richard Celeste

of Ohio and Dick Thornburgh of Pennsylvania, an intergovernmental steering group will be

created to establish policy and provide strategic direction for state-Federal technology partnership activities. High-level representatives from Federal and state governments, industry,

academia, and labor representing all regions of the country will participate. Initial focus areas will

include building the role of states in the national science and technology system, catalyzing private sector investments in technology, and building national excellence in manufacturing.

Manufacturers

68%

Federal

11%

Nonprofits 3%

U&C 

FFRDCs

3%

Academia

9%

Nonmanufacturing 6%

Manufacturers

53%

Federal

10%

Nonprofits 3%

U&C 

FFRDCs

3%

Academia

12%

Nonmanufacturing 19%

Service Sector’s Share of R&D Performance 

Has More Than Tripled

1985 1993

*Service sector R&D performance is more than 

95% of all nonmanufacturing R&D.
Chapter 5 Technology in the National Interest 85

ECONOMIC DEVELOPMENT

In the 1980s, governors and legislatures of several manufacturing states recognized that

their traditional industrial bases were in decline and that local solutions were needed.

These states looked to their native strengths in industrial and academic R&D. Each built

and tested new institutions for bringing together industry, government, and academia to

share the costs and benefits of the pursuit of new technology and new operating methods.

These cooperative technology programs have yielded solid economic development.

Each year, Federal and state governments spend billions of dollars on economic development programs to establish wealth-generating capabilities at the regional level. In the new

economy, building technology-based assets—such as linkages between creators and users

of technology, technically skilled workforces, advanced telecommunications infrastructure, and technical assistance programs that focus on technology deployment—will play

an increasingly important role in regional growth and job creation.

The Federal government should pursue policies and explore changes to existing laws that

would allow it to allocate more of its economic development funds to encouraging

regions, states, and localities to identify and develop their indigenous technology-based

resources, develop ways to fully exploit them, and build new technology-based capabilities as appropriate.

MANUFACTURING ASSISTANCE

The Administration is well on its way to achieving its goal of establishing a nationwide network of manufacturing extension centers to

assist America’s small and medium-sized producers in adopting new

technologies. These centers have helped thousands of producers

update their operations and management methods. As these producers become more technologically sophisticated, so do their requirements for information and assistance.

Many national institutions—the Departments of Energy and

Defense, NASA, Federal laboratories, large companies, industry and

trade associations—have technical knowledge and capabilities that

could propel these manufacturers even farther along the path to

excellence. With an effective deployment mechanism now in place,

the Federal government should serve as a catalyst to integrate these

national resources into the manufacturing extension network, providing small and medium-sized firms with access to the best knowledge and skills, regardless of geographic location. Advanced telecommunications and information technologies will play a major role

in achieving this goal.

■ Accessing and using information

through a laptop computer.
86 Technology in the National Interest Chapter 5

MANUFACTURING AND THE NII

The most widespread uses of advanced information technologies in manufacturing are

applications within a company, such as computer-aided design and numerically controlled

machines. As a whole, small and medium-sized manufacturers continue to lag behind

larger firms in incorporating such technologies into their operations, but the rapidly

developing manufacturing extension network is accelerating progress.

Greater competitive and economic gains could be made, however, by electronically linking groups of companies—producers, their tiers of suppliers, distributors, and customers,

and even entire industries—in a tight, seamless network of commercial activity. This

would allow producers and suppliers to collaborate in the development of innovations,

improve the speed and efficiency of business transactions, improve materials supply and

management, and allow supply chains to react swiftly to changing market demands. Yet

with limited infrastructure in place to transmit data quickly and efficiently from one application to another inside or outside the company, most businesses will remain isolated and

incapable of interacting with other companies, suppliers, and customers in a timely and

cost-effective manner.

Some industries with large, technologically sophisticated leaders—autos, aerospace, and textiles—are rapidly moving onto the Information Superhighway. Other industries, populated

with many small and medium-sized producers, remain stalled on the entry ramp. Many

smaller firms simply do not have the expertise, time, or resources to proceed on their own.

While the private sector has primary responsibility for building the National Information

Infrastructure, government can promote its widespread adoption and use. The manufacturing extension network should help interested small and medium-sized manufacturers

and groups of suppliers to prepare for the NII in manufacturing. Federal agencies that

have strong relationships with particular industries can serve as catalysts in moving those

industries closer to multi-enterprise integration; government procurements can serve as

incentives in this regard. Government should also provide strong technical support to the

private sector in establishing standards for product and business data, network interfaces,

and business and engineering practices.

POLICY INTEGRATION

Technology policy issues increasingly arise in trade, economic, regulatory, and other policy

areas. For example:

■ Technology and Trade Policy. The ability of American firms to compete in the global

marketplace is enhanced by Federal government efforts to establish a level playing field to

ensure that foreign firms do not gain unfair advantages. During the Uruguay Round of the

GATT negotiations, government R&D subsidies and the protection of intellectual property rights were prominent issues.
Chapter 5 Technology in the National Interest 87

■ Technology and Economic Policy. Technology is a principal factor in stimulating

productivity growth. Policy-makers increasingly recognize technology’s influence in the

economy and the need to maximize its contribution. To assist in this analysis, government statistical agencies are developing ways to gauge the effect of technology at the

microeconomic level.

■ Technology and Regulatory Policy. Regulation plays a major role in the capital and

time required to bring products to market, especially in the biotechnology, environmental technology, and pharmaceutical industries. For example, environmental regulations significantly influence the development of environmental and manufacturing technologies. Banking and securities regulations heavily influence the structure of capital markets, which affects the cost, availability, and patience of capital needed for technology

development and commercialization.

■ Technology and National Security Policy. Government must carefully balance

America’s national security needs and commercial interests. With the end of the Cold War,

the rationale behind export controls on U.S. computer and telecommunications products

changed. The Clinton Administration recognized this new reality and eased these controls, consistent with changing national security interests, in order to promote American

competitiveness. In establishing defense co-production arrangements with other nations,

policy-makers must consider the potential for and protect against the commercial

exploitation of advanced technologies by foreign competitors. Foreign acquisition of U.S.

high-technology companies and foreign dominance of commercial technologies vital to

the military, such as flat panel displays, continue to raise national security concerns.

■ Technology and Foreign Policy. Increasingly, technology transfer is used as an

incentive to advance U.S. non-commercial interests in other nations. Also, some foreign nations may demand transfers of technology in exchange for market access. Care

must be taken to establish arrangements that are mutually beneficial to the United

States and other nations and to ensure that one-way flows of technology do not

adversely affect U.S. competitiveness or the jobs of American workers.

Traditionally, such areas of policy have been treated separately, with little coordination

among policy-makers in different disciplines. Now, technology issues increasingly cut

across policy lines and need to be integrated with other government policies to better

promote U.S. competitiveness and economic growth, and to foster a better understanding of technology among Federal policy-makers.