163 



ticularly the first two, are areas in which significant industry investments have 

 been made fi-om an early period ..." 

 do not reflect history. Internet grew from ARPANet, which was intended to create 

 a communications system that could withstand the destruction of many nodes and 

 was also a means for the major computing centers supported by ARPA to share com- 

 puting resources across the country. When many other uses became apparent, and 

 academic groups became major users, the network was transferred to NSF and be- 

 came NSFNet. It has since become independent of government as the current 

 Internet. Biotechnology has developed chiefly from NIH's mission-oriented health re- 

 search. The key technologies, especially cell fusion, recombinant DNA, and analyt- 

 ical methods including DNA sequencing, were initially funded by NIH, NSF, and 

 foreign equivalents. In essence, the private biotechnology industry that began to 

 take shape in the 1980s drew on three decades of public investment in molecular 

 biology. The Global Positioning System has many applications, but the Department 

 of Defense initially funded it to assist troop deployments and for other military uses. 

 b. Economists who have studied the effects of R&D investment argue that 

 in some fields industry will not make a sufficiently large investment in 

 a new technology because, for pre-commercial tecnnologfy development, 

 a single company cannot appropriate the results of the investment. Do 

 you disagree, and if not, what are the arguments against federal pro- 

 grams, which include cost sharing from industry, to support the develop- 

 ment of precommercial technologies when they have promise for large 

 societal benefits? 



The committee agrees there are often situations in which no one company can 

 fully recover the benefits of R&D investments. This is not rare, but is true of vir- 

 tually all science and most technologies, especially early in their development. Many 

 have attempted to gauge the returns on R&D investment. These studies are difficult 

 and complex, but they generally agree that returns are large and that social returns 

 far outstrip those that can be appropriated by any one firm. 



The committee thus believes that federal S&T investment is quite often justified. 

 In most cases it is justified because the promised social benefits, or at least some 

 significant initial benefits, fall within the missions of existing agencies. Those agen- 

 cies have programs intended to lay the scientific groundwork and to cultivate cut- 

 ting edge technologies in support of national defense, public health, maintaining a 

 clean environment, and many other government functions. As noted above and in 

 the report's discussion of the computing and health technologies in Supplement 4: 

 "the government role. ..is crucial in almost all the technologies. In some cases and 

 at some stages, it is the dominant factor. The critical period for federal investment 

 is often, but not always, at the beginning. Federal support for basic science is 

 often necessary, but federal support for applied research and fundamental tech- 

 nology development is also essential." 



The committee does not argue against a federal role, far from it. Rather, we be- 

 lieve that the federal R&D effort is most powerful in pursuit of public missions em- 

 bodied in existing agencies. The committee does not question federal support for 

 new enabling technologies. Rather, Recommendation 8 pertains only to direct gov- 

 ernment investment in private firms, and the "when only government funding is 

 available" criterion applies outside government missions covered by the first cri- 

 terion. 



2. The report includes the following statements: 

 "The committee believes that in many cases the government resources that 

 support CRADA research could be better spent on other, more productive 

 items in the FS&T budget." 

 "[ATP, TRP, MEP, SBIR] programs have different goals and structures but 

 share in their intention to cultivate industrial innovation . . • Most of 

 these programs are too new to be carefully evaluated, and, because of in- 

 herent features in programs design and prospects of unstable funding, 

 we may never be able to tell whether some of them achieved their goals." 

 "Some difficult questions arise with subsidized partnership programs such 

 as ATP — will they succeed in fostering new, commercially relevant tech- 

 nologies that otherwise could not develop as quickly, and are they the 

 most efficient uses of increasingly scarce federal R&D dollars? The com- 

 mittee is skeptical that the answer to these q[uestions is yes." 

 a. Would you please cite the evaluation material and criteria that the com- 

 mittee used to come to these conclusions regarding CRADAs, ATP, TRP, 

 MEP and SBIR? 



