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subsidy to the airline industry was unneeded. The airline industry alone 

 achieved cost savings which have justified the aviation industry in funding that 

 research itself. 



This experience is relevant to the federal labs. If they do good work, the 

 benefits to industry will be sufficient that the industries could afford to fund 

 the research themselves. Changing the mission of the federal labs to support 

 specific industries is an unwarranted subsidy, even if the labs avoid falling into 

 mediocrity. 



Regarding privatizing, the Department of Energy's Mound Facility in Mia- 

 misburg, Ohio is scheduled to be closed. The State of Ohio has contracted 

 with my university to identify those Mound capabilities which have commer- 

 cial potential. 



Our findings in the effort to commercialize Mound capabilities are relevant 

 to any proposals to convert the federal labs to commercial R&D. 



One finding is that the regulatory environment at Mound is incompatible 

 with a commercial venture. Mound has in the past performed so-called work 

 for others. Obtaining approval for this work often takes 12 to 24 months. If 

 Mound were to remain a DOE facility, it would be impossible for it to re- 

 spond to the demands of commercial markets. For Mound to operate effec- 

 tively in commercial markets, it must be privatized. 



Another finding is that the DOE-mandated overhead structure makes it 

 impossible for Mound to compete for business because it raises costs unneces- 

 sarily. Yet another finding is that the DOE bureaucracy prevents Mound from 

 quickly improving its internal processes. 



For instance. Mound installed a sophisticated and costly x-ray inspection 

 device. Nearly two years after installation, the Department of Energy has still 

 not approved it for operation. Industrial firms have identical devices in opera- 

 tion within 45 days. No private firm could afford to have such an expensive 

 item sit idle while awaiting approval to operate it. 



To summarize our findings regarding Mound, its closing makes privatizing 

 both necessary and possible. If the DOE workload were to be reduced and 

 commercial work sought as a supplement, it would be completely impossible 

 for Mound to compete. 



The same will hold true for any attempts to open the federal labs to com- 

 mercial work. The bureaucracy, the regulations and the overhead will inevita- 

 bly make the labs noncompetitive. 



Prior historical experience. Once before, we faced the issue of what to do 

 with no longer needed federal labs. During World War II, many laboratories 

 were established to carry out R&D for the war effort. One of these was the 

 radiation laboratory at Massachusetts Institute of Technology. This laboratory 

 was highly successful in developing radar equipment and control systems for 

 anti-aircraft guns. The RadLab carried these to the preproduction stage be- 

 fore turning them over to industry. 



At the end of the war, the radiation laboratory was simply disbanded. Most 

 of its people returned to industry and to academia. This resulted in the mas- 

 sive transfer of its technology to industry, to academia, and to a new genera- 

 tion of students, one of whom I am, by the way. 



This is not surprising. Numerous studies have confirmed that one of the 

 most effective ways to transfer new technology to potential users is to transfer 

 the people who developed it. 



