151 



Overmanagement, undue regulations on university research and 

 so on, they raise the costs and they produce inefficiencies, they do 

 some damage, and so there's a lot of room for improvement there. 



Dr. Fox. I could add that the cost to university research pro- 

 grams is substantial and contributes significantly to the indirect 

 cost rates that universities are forced to impose in order to provide 

 the infrastructure for the conduct of research. 



Chairman Walker. You know, it's interesting that one of the de- 

 bates that we're having in the Congress is whether or not we ought 

 to figure out some way to limit the indirect costs that the univer- 

 sities then charge back to the government. 



But the fact is that some of the indirect costs are directly attrib- 

 utable to the conditions that the Federal Government imposes upon 

 the universities. 



So that's an unhealthy synergism there that I think we need to 

 look at. And if you would have any suggestions for some of the 

 areas that we ought to look into for possible modification of some 

 of those rules and regulations, the Committee would be deeply ap- 

 preciative of getting some ideas. 



Since Mr. Mahoney is a part of your group, it's a good oppor- 

 tunity to ask whether or not there's anything that Congress could 

 do that would help universities get more in the way of research 

 funding from the private sector? 



Let me give you an example of some of the kinds of things that 

 we've suggested. 



For example, first of all, we need to make the R&D tax credit 

 permanent. But if we did that in a way that also encouraged more 

 in the way of university and private-sector cooperation, would that 

 be something that would likely increase the desirability of private 

 companies to engage with universities in doing research? 



Mr. Mahoney. It would help the smaller companies. I don't be- 

 lieve that the larger companies do those kinds of collaborations 

 with £iny major consideration about the tax break. But it's very im- 

 portant to the small companies. 



Chairman WALKER. So the small entrepreneurial companies, the 

 high-tech entrepreneurial companies that we see arising. 



Mr. Mahoney. Absolutely. It's very critical. 



Chairman Walker. This would give them an incentive to come 

 in and utilize this. 



Mr. Mahoney. And I think the universities are beginning to 

 learn how to make themselves more user-friendly because the 

 transfer of technology shouldn't have to be pushed onto industry. 



Natural greed ought to take over and let the system work. 



[Laughter.] 



Greed takes over when, first, there's a motivation to want to suc- 

 ceed and, second, there's an easy way to do it. 



Our relationships with the universities that have been going on 

 for a number of years are not widely agreed to by my colleagues. 

 In fact, we're still waiting for some of the products that we've been 

 spending on for a long time. But the universities are getting a lot 

 better about opening themselves up to these sorts of things. 



Chairman Walker. But, you know, what strikes me is that 

 there's a phenomenon which is rather interesting and one that I 

 think probably deserves a little bit of attention. 



