In November 2003, GAO reported that university research is a vital part of the nation’s research and development efforts, primarily funded by the federal government because of the broad consensus that university research is a long-term national investment in the future. The federal investment in university research has yielded thousands of inventions each year that have fostered the development of new technologies, stimulated the creation of new jobs, and improved the quality of life. These benefits come through open communication among scientists and the sharing of research results. A National Academy of Sciences official underscored the importance of this issue in September 2005 congressional testimony, stating that over 55 percent of the engineering Ph.D. students in the United States are foreign-born and that their research helps strengthen the United States in the fastest-moving new technologies, some of which have potential defense-related application. Foreign students and scholars bring needed skills to our increasingly knowledge-based economy, build bridges to other countries and professional communities, and make other valuable contributions to our society. These contributions are particularly important for maintaining our competitiveness, fostering productivity and innovation, and strengthening our workforce. While the United States has long been a global leader in higher education and one of the most desired destinations for foreign students, international competition for the best and the brightest students and scholars is growing. Countries such as China have improved their educational capacities, possibly decreasing the incentives for students and scholars to study in the United States. The recent slowing of foreign student enrollment in United States universities and colleges has raised concerns about the extent to which we will be able to continue attracting talented foreign students and researchers to our universities and to our workforce after they graduate while also maintaining our nation’s security. Recognizing the importance of balancing national security interests with the need to allow the free exchange of information at U.S. academic institutions of higher learning, the federal government is a major funding source for research conducted at U.S. universities and colleges. In fiscal year 2003, the federal government funded almost two-thirds— approximately $29.6 billion—of all basic and applied research funding provided to universities and colleges by external sources (see fig. 1). Other sources of funding come from industry, nonprofit organizations, as well as state and local governments. According to National Science Foundation data for fiscal year 2003, the National Institutes of Health of the Department of Health and Human Services funded approximately 62 percent (about $14.1 billion) of all federally funded science and technology research conducted by universities and colleges. Other federal research funding sources identified by university officials we spoke with include the National Aeronautics and Space Administration (NASA); the National Science Foundation; various Department of Defense agencies, including the Navy and the Defense Advanced Research Projects Agency; and the Departments of Energy, State, and Transportation. This level of government funding was consistent with that of several of the universities we visited, where officials stated that their research is primarily funded by government grants and contracts, including contracts that are directed toward industry and subsequently subcontracted, or “flowed through,” to universities. Over the past several decades in which the current export control system has been in effect, the global economy has changed significantly. DOD continues to seek innovative technologies to meet the needs of warfighters and to counter technologies developed by potential U.S. adversaries. To achieve these ends, DOD has become more willing to rely on the nondefense industry to supply its needs. DOD increasingly relies on commercial research, for areas such as information systems and telecommunications, where the cutting edge of technological advancement lies. Such advances in communications technology have been made possible to a large extent by basic research, much of which was initially developed in universities and often involved foreign students and scholars. The U.S. export control system relies on the ability of exporters to recognize when certain goods and services meet the criteria for requiring an export license. The system is primarily divided between two regulatory regimes, one managed by the Department of State and another managed by the Department of Commerce. The regimes require export licensing for defense-related items and information, including data, except where exclusions apply. Both regulatory regimes include exclusions applicable in some circumstances to universities and other academic institutions of higher learning. The U.S. export control system places the onus on universities and other exporters to understand and comply with the export control regulations. The Department of State Directorate of Defense Trade Controls (DDTC) manages defense items through the International Traffic in Arms Regulations (ITAR). State issues export licenses based on the U.S. Munitions List, which identifies defense articles, services, and related technical data that are controlled for export. Moreover, the regulations state that unless otherwise expressly exempted or excluded, an export license is required for the oral, visual, or documentary transmission of technical data by U.S. persons to foreign persons, by such means as in- person or telephone discussions and written correspondence including electronic messages, even when they are in the United States. The U.S. Munitions List contains 21 categories, covering items such as weapons, chemical and biological agents, missiles, and both commercial and military satellites. The Department of Commerce’s Bureau of Industry and Security (BIS) manages dual-use items, having both military and commercial applications, through the Export Administration Regulations (EAR). Under these regulations, exporters are to obtain prior government authorization in the form of a license from BIS, or determine that a license is not needed, before exporting dual-use items. Commerce requires an export license for the release of technology or software source code to a foreign national because such a release is deemed to be an export to the home country or countries of the foreign national, even if the person is in the United States. Commerce regulates the dual-use items specified in the EAR’s Commerce Control List, which are controlled for a variety of reasons, including restricting exports that could significantly enhance a country’s military potential, preventing exports to countries that sponsor terrorism, and limiting the proliferation of chemical, biological, and nuclear weapons and their delivery systems. The Commerce Control List has 10 categories covering items such as electronics, computers, telecommunications, and avionics. Most of the universities we visited aim to ensure that their research remains unrestricted and in the public domain by conducting fundamental research, which is generally excluded from export controls. To ensure that most of the research conducted on their campuses does not require an export license, these universities negotiate to exclude any restrictions on publishing and disseminating the results of the research they consider to be fundamental. For research that may be subject to export control regulations, the universities we visited have taken steps to ensure that their personnel are informed about and comply with these regulations. According to most university officials, their institutions conduct basic and applied science and engineering research in a wide variety of areas, producing findings that are conducted, shared, and published openly within a broad community that includes international students and scholars. Table 1 lists examples of research areas conducted at universities that we visited. Most officials we spoke with stated that their universities specifically seek out research contracts and grants that do not restrict their ability to conduct fundamental research by extensively screening and reviewing the terms of potential contracts and grants. If a contract includes restrictions on fundamental research, some universities attempt to negotiate the restrictive language out of the contract. Some university officials noted that such negotiations have become more frequent because government and industry contracting officials are increasingly inserting restrictive language in contracts for research that universities consider to be fundamental. For example, according to university officials, DOD agencies sometimes insert standard acquisition regulations language that prohibits the contractor from releasing information, even unclassified information, outside of the contractor’s organization. According to university officials, a rule proposed by DOD would have restricted universities from sharing information with other academic institutions and publishing research or otherwise making such information available in the public domain. DOD revised the rule to minimize the impact on fundamental research conducted at universities and acknowledged that the free exchange of ideas is a foundational concept of U.S. research and educational institutions. Several universities we interviewed stated that if they are unsuccessful in negotiating the restrictive language out of those research contracts they consider to be fundamental, they sometimes reject the opportunity to participate in the research. For research subject to export control restrictions, universities may modify the way the research is conducted to avoid the export license application process—a process some officials characterized as time- consuming and complicated. For example, officials at one university said that instead of applying for an export license for one project, they opted to use only researchers who are excluded from export license requirements, such as U.S. citizens or foreign nationals with permanent residency status. In other cases, university officials stated they move export-controlled work to off-campus facilities and laboratories administered by the universities or the entity sponsoring the contract, where such research can be better segregated and controlled. At the six university-administered laboratories that we visited, each used access control systems such as badges and computer passwords. Such restrictions limiting access to information at laboratories are not as common on the main campuses we visited, where research information is more openly available. According to a State official, U.S. export control regulations are designed for “self-compliance.” For the academic community specifically, State officials said that it is the universities’ responsibility to conduct due diligence to determine whether their research activities are subject to export laws, and to identify whether an export license is required for foreign nationals within their purview. University officials we spoke with have taken actions to become educated on complex export control regulations—an undertaking that several officials indicated requires an extensive time commitment because the government does not provide sufficient guidance. Some universities have also dedicated other resources to ensure they comply with U.S. export control laws, such as hiring legal counsel. To understand export control regulations, universities we visited frequently rely on agency training and guidance.