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1998 Budget Highlights
(February 1997)


'98 Technology Administration Budget Highlights

More than ever before, U.S. economic growth and prosperity depend on technology. Leading economists have found that technical progress is the largest contributor to U.S. economic growth, accounting for as much as 50 percent of the U.S. economic growth over the past 50 years.

A Department of Commerce analysis shows that the use of advanced manufacturing technologies enhances manufacturing in virtually every important performance category. Firms that use advanced technologies are more productive and profitable, pay higher wages, offer more secure jobs, and increase employment more rapidly than firms that do not use advanced technologies. While the role of technology in the U.S. economy and the desire to keep it in the country are increasing, technology—in the form of products, know-how, intellectual property, people, and companies—is being traded, transferred, hired, bought, and sold on a global basis.

Led by the Under Secretary for Technology, the Technology Administration—the Office of Technology Policy, the National Institute of Standards and Technology, and the National Technical Information Service—is implementing an industry-driven agenda to ensure American companies and workers have the tools they need to compete and win in the new global economy. Specifically, the Technology Administration:

  • encourages the development of the technological infrastructure required to support U.S. industry into the 21st century;
  • fosters the development, diffusion, and adoption of new technologies;
  • disseminates technological information; and
  • seeks to create a business environment conducive to innovation.


To continue the successful implementation of this civilian technology agenda, the President requests:

Office of the Under Secretary/Office of Technology Policy:
Total funding requested: $9.2 million

National Institute of Standards and Technology:
Total funding requested: $692.5 million

National Technical Information Service:
No funds requested; NTIS is a self-supporting agency.

Specific budget proposals are described on the following pages.


US/OTP Budget Highlights

SUMMARY

President Clinton requests $9.2 million for the Office of the Under Secretary for Technology and the Office of Technology Policy (US/OTP) for FY 1998.

This request supports US/OTP core competencies and functions necessary to meet critical Administration and Congressional civilian technology priorities.

The funding, representing a decrease of $270,000 from FY 1997 appropriations, will provide support for the Under Secretary as she oversees TA’s three operating units and coordinates and leads several interagency civilian technology efforts. It also maintains OTP’s role as the Executive Branch’s principal civilian technology policy analyst and advocate.

In addition to providing broad policy guidance to the Secretary, the Under Secretary serves as an advocate for innovation and industrial competitiveness within and outside of government. As chair of the Committee on Technological Innovation of the President’s National Science and Technology Council, she coordinates the civilian technology efforts of all federal agencies and helps to shape federal civilian R&D priorities, ensuring they reflect industry needs. The committee currently is coordinating several major Administration R&D initiatives in materials, construction and building, manufacturing infrastructure, electronics, and automotive technologies.

The Under Secretary also chairs the oversight committee for the Partnership for a New Generation of Vehicles (PNGV) initiative, a technological venture involving seven federal agencies, the nation’s automakers, and hundreds of suppliers. These organizations have united to advance manufacturing methods; develop technologies to improve automobile efficiency, safety, and emissions; and conduct research that could lead to vehicle prototypes with a threefold improvement in fuel efficiency.

The Under Secretary remains the principal U.S. government representative for technology on the U.S.-Japan Economic Framework Talks, the U.S.-Egypt Partnership for Economic Growth, the U.S.-Israel Science and Technology Commission, and the Presidential initiative to support the peace process in Northern Ireland.

The President’s proposal also will enable US/OTP to:

  • assess the impact of fiscal, tax, and regulatory policies on the U.S. climate for innovation;
  • analyze the competitive status of U.S. firms in several key industries;
  • administer the National Medal of Technology;
  • continue to represent U.S. interests in international technology fora and activities; and
  • finalize U.S. policy on the use of excess foreign ballistic missiles and publish information on current business trends in commercial space.


JUSTIFICATION

The US/OTP is responsible for developing a national technology policy designed to maximize technology’s contribution to economic growth, job creation, and Americans’ standards of living and quality of life. For decades, the U.S. government has played a significant role in the development of new technologies to meet the mission requirements of federal agencies. These federal research and development activities contribute substantially, but indirectly, to the competitiveness of U.S. industry. US/OTP seeks to maximize the effectiveness of federal investments in R&D through an integrated technology policy that encourages the commercialization of government-supported research.

US/OTP works to create a business environment that fosters innovation and enhances the competitiveness of U.S. industry by 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 formulating and advocating new policies that foster innovation. In addition, TA’s Office of Air and Space Commercialization develops policies fostering the competitiveness of the U.S. commercial space sector.

The following accomplishments are indicative of some of US/OTP’s recent successes:

  • wrote and produced Technology in the National Interest, which was published as an Executive Office of the President/National Science and Technology Council document. The report articulates a comprehensive approach to a national technology policy and establishes a framework for federal efforts to support the competitiveness of the United States in the global economy.
  • served as a forceful advocate for reinventing the U.S. environmental regulatory system by recommending that federal agencies move away from the current “command and control” approach toward an incentive-based system in which government sets the performance standards and allows industry to determine how best to achieve them.
  • completed a new civilian industrial technology annex to the U.S.-China S&T agreement that provides a framework for joint projects and improved U.S. access to Chinese science and technology.
  • established the U.S.-Japan machine translation center where a computer is used to translate Japanese technical documents to English. This project is demonstrating to U.S. industry the effectiveness of machine translation technology in tapping into Japanese technical information.
  • administered the U.S.-Israel Science and Technology Commission, which awarded grants for six projects aimed at increasing collaborative activity between the countries’ high-technology sectors.
  • was instrumental in shaping the President’s commercial remote sensing policy, the President’s National Space Transportation Policy, and space launch agreements with Russia, China, and, currently, the Ukraine.


PROGRAM DESCRIPTIONS

U.S.-Israel Science and Technology External Grant Fund—$2.5 million decrease.The three-year U.S.-Israel Science and Technology External Grant Fund program will conclude at the end of fiscal year 1997. This program successfully increased collaborative activity between the high-technology sectors in the United States and Israel, created high wage and high value jobs, expanded U.S. export opportunities, particularly in the Middle East, and strengthened the economies of both countries.

New efforts will be started in FY 1998 to support two critical programs: Experimental Program to Stimulate Competitive Technology (EPSCoT) and Economic Development in Support of the Administration’s Foreign Policy Initiatives.

Experimental Program to Stimulate Competitive Technology—$1.7 million. As the White House-designated chair of the State-Federal Technology Partnership Working Group, the Under Secretary seeks to maximize state, local, and regional investments in technology-based economic development through better integration and stronger partnerships with appropriate federal R&D programs and agencies. To help accomplish this goal, US/OTP proposes the Experimental Program to Stimulate Competitive Technology (EPSCoT). EPSCoT will foster the development of the indigenous technology assets of states traditionally under-represented in federal R&D funding. This program would complement the National Science Foundation’s successful Experimental Program to Stimulate Competitive Research (EPSCoR), established in 1979 to spur high-quality research in these regions.

Throughout the United States, powerful industrial sectors built on a family of technologies have blossomed in distinct regions of the nation. These regional clusters create jobs and generate sustainable economic growth through economies of scale and advantages in productivity and marketing. Clusters employ 57 percent of the U.S. workforce, generate 61 percent of the nation’s output, and produce 78 percent of the nation’s exports. Technology development, diffusion, and infrastructure are increasingly essential to the formation of regional clusters. Unfortunately, many regions lack the scientific and technological infrastructure that serves as a catalyst for the formation of clusters and for attracting global investment. EPSCoT seeks to fill this technology gap, fostering regional technology-based economic growth through stronger linkages among firms; universities; workers; and federal, state, and local governments.

While specific details of the program will be worked out through a series of meetings with representatives from state and local governments, regional organizations, and industry, US/OTP anticipates that it would award five to seven grants in the first year. Awards would be made on a competitive, cost-shared, merit basis to local governments, regional organizations, private businesses, institutions of higher education, non-profit organizations, or federal laboratories from the 18 states that currently are part of the NSF EPSCoR program. The grants would help create or build upon unique technology infrastructures to achieve long-term systematic changes in the states’ R&D environment and the ability of organizations to participate in national R&D initiatives.  

Economic Development in Support of the Administration’s Foreign Policy Initiatives—$350,000. US/OTP proposes to create international economic and technology development programs in support of the Administration’s foreign policy efforts. As developing countries reduce the size of their state sectors, decentralize and diversify their economies, and seek broader trading alliances, the U.S. government frequently is called upon to play an active role in promoting the development and commercialization of new technologies in these countries as part of its foreign policy. This is particularly true when it is in the U.S. national security interest to help create a more stable political and economic environment in a country or region. The Vice President and the President’s Science Advisor have asked US/OTP to develop and lead technology programs with the Middle East (Israel, Jordan, Egypt), South Africa, Russia, the Ukraine, Greece, the Balkans, Northern Ireland, and the Republic of Ireland.

The United States no longer can afford economic or technology development programs overseas that do not offer reciprocal benefits for U.S. companies. Therefore, US/OTP has begun to develop programs with these countries that help provide needed economic and technological assistance while also providing market opportunities for U.S. companies. The programs focus on the harmonization of standards, regulations, and rules of conduct and the provision of technology and manufacturing training to small and medium-sized companies. In this role, US/OTP will:

  • review existing science and technology agreements between the United States and the host country;
  • work with U.S. and foreign government representatives to assess countries’ technological strengths and requirements in certain key sectors;
  • promote the creation of task forces of government representatives and private-sector participants doing business in the United States and the host country in those sectors;
  • assist the task force in identifying impediments and creating programs to reduce the impediment and/or create infrastructure; and
  • assist in program design.

NIST Budget Highlights

SUMMARY

The Administration’s fiscal year (FY) 1998 budget request to Congress includes $692.5 million for the Technology Administration’s National Institute of Standards and Technology (NIST).

The NIST FY 1998 budget request is divided into three appropriations:

  • $399 million for extramural programs, including $275.6 million for the Advanced Technology Program (ATP) and $123.4 million for the Manufacturing Extension Partnership (MEP);
  • $276.8 million for measurements and standards research by the NIST Laboratory Program and support for the Baldrige National Quality Program; and
  • $16.7 million for critical maintenance and fire and safety upgrades of NIST facilities.


The requested budget represents an increase of $120.5 million over FY 1997 appropriations. The Administration has made eliminating the federal budget deficit by 2002 a top priority. But deficit reduction alone cannot sustain long-term economic growth. Long-term growth also requires investment in the future and in the new technologies that define the future. The requested increases are necessary investments to ensure that NIST’s four major programs—ATP, MEP, the Laboratory Program, and the Baldrige National Quality Program—continue to support effectively the nation’s long-term economic growth.

NIST’s four interwoven programs work together to support the civilian innovation process that produces these new technologies. The requested increases will help alleviate gaps in funding, expertise, and/or information that often slow development of new technologies. The increases will be used to accelerate the innovation process and its resulting economic benefits) through a broad array of NIST programs from co-funding of economically important R&D, to basic measurement research, to technical assistance to help smaller manufacturers adopt new manufacturing processes.

More specifically, increases requested for FY 1998 will:

  • Provide an additional $50.6 million in funding to allow continued expansion of the Advanced Technology Program. In its still brief history, ATP already has produced many technology success stories. The program has demonstrated that federal co-funding of high-risk, economically important R&D can accelerate progress in important enabling technology areas, stimulate the formation of joint ventures and research partnerships that help speed research results, and demonstrate the feasibility of groundbreaking technologies—thereby fostering venture capital investments by the private sector that otherwise might not have been available. The additional funding will allow the ATP to conduct a general competition and several focused program competitions.
  • Provide $28.4 million in additional funding for the Manufacturing Extension Partnership. With just seven extension centers in 1992, the MEP now has a nationwide network of centers providing smaller businesses with hands-on manufacturing and business assistance. The requested increase will provide the federal share of funding needed to support centers. It also will allow MEP to improve its services through application of advanced information technologies to small business needs, optimization of supply chains by improving the business practices of smaller suppliers, and better utilization of advanced technologies for the modernization of processes and the continual improvement of products.
  • Provide $6.5 million in additional funding for the NIST Laboratory Program. NIST’s current laboratory funding is inadequate to address a growing backlog of industry’s measurement and standards needs. The funding increases will be applied to two of these areas—new measurement tools and services for the semiconductor device, equipment, and materials industries that reduce costs and improve international competitiveness; and a comprehensive approach to technical measurements and standards needed to help support rising exports of U.S. products.
  • Provide $2.3 million more funding for the Baldrige National Quality Program. The criteria used for selection of the Malcolm Baldrige National Quality Awards have helped thousands of companies achieve business excellence. This funding increase would allow establishment of quality criteria and parallel award programs for the healthcare and education communities. NIST already has conducted a successful pilot program applying quality guidelines to these sectors. Impetus for this expansion comes from the nation’s need to improve quality management both in healthcare and education and from the business community because its competitiveness is related directly to the quality and costs of these services.
  • Provide $16.7 million for NIST’s 30- to 45-year-old research facilities to ensure a safe working environment for NIST staff. Congress provided no appropriation for this line item in FY 1997 and instructed NIST to redirect previously appropriated funds intended for new construction and facilities renovations toward completion of a new chemistry laboratory building and maintenance and necessary fire and safety upgrades at other NIST facilities. The advancing age of NIST buildings has caused a substantial backlog of critical safety and maintenance projects such as inadequate fire safety alarms, lack of sprinkler systems, and inadequate chemical exhaust systems. The proposed FY 1998 funding would be used to address the highest priority backlogged needs.

NIST Resources Fiscal Year 1998 (Proposed)

98 pie chart graphic


Background and Justification

As much as half of long-term economic growth stems from new and better use of technology. A key to the nation’s economic success in the 21st century lies in tapping the flow of technological innovation and increasing both its speed and volume. When information and know-how flow freely and at lightning speed across international borders, a nation must use all of its resources effectively, and its business and government sectors must work together, not simply side by side. The nation that marshals its resources most efficiently, that implements know-how the fastest and most effectively, will reap the reward of better products and services, a larger market share, and a higher standard of living for its citizens.

Since World War II, America has led the world in technological innovation and, not coincidentally, in standard of living. According to a recently issued report by the private-sector Council on Competitiveness, America is still in the lead but the gap is narrowing. The rest of the world is catching up, and fast. The Japanese soon will spend more in absolute terms on government-funded civilian R&D than the United States does. Perhaps more telling, those countries with the greatest recent increases in economic growth—Argentina, Brazil, Mexico, Thailand, Malaysia, South Korea, and China—are moving aggressively to acquire technology, apply it to products, and compete in the global economy for market share.

In the United States, the private sector is unquestionably the primary creator and purveyor of new technology. Industry pays for more than 60 percent of the approximately $175 billion total U.S. R&D annual budget and is responsible for the overwhelming majority of civilian R&D, especially technology development. But innovation—like all creative processes—is inefficient. Gaps in funding, expertise, and/or information often slow progress. The mission of the National Institute of Standards and Technology is to help fill these gaps by partnering with industry to provide the United States with the technology, measurement, and standards support it needs to face global competition head on and win.

With a total requested appropriation of almost $700 million, NIST still represents a relatively small percentage of the federal government's R&D investment. The real value of NIST programs lies not in the total expenditure but in the benefits leveraged by these dollars. Each of the NIST programs is designed to produce broad, economic benefits that greatly exceed the program’s direct costs. For example:

  • Since 1990, the ATP has provided 280 cost-shared awards to individual companies and company-led joint ventures to conduct economically important, but risky, civilian R&D. While it is still too early to judge long-term benefits, survey results show that the program has accelerated technology development, expanded the funding companies otherwise would provide for long-term research, improved research productivity, created and retained high wage jobs, improved companies’ competitive standing, and fostered valuable industry/industry, industry/government, and industry/university alliances that have increased R&D efficiency.
  • Over just the last four years, the MEP has grown from seven initial extension centers to 360 locations covering all 50 states and Puerto Rico. The program has begun to turn fledgling state efforts at manufacturing extension into a comprehensive network with access to national experts and a rigorous, regular review and improvement process. By requiring that each center raise matching funds from state, local, and private sources, federal MEP dollars have leveraged both dollars and local commitment to manufacturing extension that otherwise would not have been available. To date, about 45,000 small and medium-sized companies have received direct MEP services with results like higher profitability and sales, lower labor and materials costs, retained and added jobs, reductions in required inventory, and increased capital investment.
  • The NIST Laboratory Program is focused on infrastructural technologies such as measurements, standards, and evaluated data and test methods that provide a common language for use in commerce. The accuracy of transactions amounting to trillions of dollars in sales depends on NIST’s maintenance and development of accurate weights and measures for the fair exchange of goods and services. Trillions of dollars in additional sales are supported by NIST-delivered measurement techniques, equipment calibrations, and standards. Moreover, U.S. scientists rely daily on NIST’s evaluated data services and measurement expertise for a host of both basic and applied research activities.
  • The Baldrige National Quality Program associated with the Malcolm Baldrige National Quality Award has inspired thousands of U.S. companies to improve their products and services and expand their markets through performance excellence. With an annual federal investment of only about $3 million, the program leverages a contribution of over $100 million from the private sector and state and local organizations. Since 1991, the program has strengthened ties to a growing array of state and local quality programs that mirror Baldrige performance excellence guidelines. In the process, NIST has established an emerging national quality network poised to better serve U.S. businesses of all sizes.


Program Descriptions

Advanced Technology Program

Holograms that make laptop displays 15 times brighter, medicines that immobilize viruses in the body and prevent infection, software components that allow non-technical users to create three-dimensional worlds that obey the laws of physics, microchips that can analyze DNA in a matter of minutes—these are some of the many technologies that are being boosted across the gap from basic research toward private development by ATP’s industry-government cost-shared efforts.

From its inception in 1990 through FY 1996, the ATP has conducted seven general competitions and 16 focused competitions. Out of a total of more than 2,500 proposals, 280 were selected for ATP support. The projects announced to date involve more than 700 participants (excluding subcontractors and informal collaborators) and commit to approximately $970 million in ATP funding and $1 billion in industry cost sharing. Because the ATP was only a pilot program prior to 1993, all but a handful of these awards were made in the last four years.

The goal of the ATP is broad-based economic growth and the good jobs and quality of life that come with economic growth. The program provides co-funding to individual companies and industry-led joint ventures for risky, challenging R&D on technologies with the potential for significant payoff for the nation’s economy. While many federal programs fund R&D in one form or another, only the Advanced Technology Program has as its explicit mission strengthening the nation’s economy through technology partnerships. Only the ATP does this by partnering with industry to support the high-risk enabling research that is fast becoming an endangered species as fierce international competition forces companies increasingly to focus on their short-term survival.

The ATP is industry driven, which keeps the program grounded in real-world opportunities. Research priorities for the ATP are set by industry: for-profit companies conceive, propose, co-fund, and execute ATP projects and programs based on their understanding of the marketplace and research opportunities.

At the same time, ATP exists for the public good, not to enrich individual companies. ATP funds only those technologies that promise to produce ripple effects throughout the economy. These enabling technologies allow additional products, services, or processes to be developed that otherwise would not have been possible. Some ATP projects have the potential to create whole classes of products with billion-dollar sales prospects and the high-wage jobs and returns to the economy that go with those prospects. Moreover, the ATP does not fund product development. ATP co-funds R&D of enabling technologies up to the point where it is feasible for companies to design products with their own funds. Of course, these companies also bear the full responsibility for production, marketing, sales, and distribution.

ATP also connects many different partners, including companies with companies, companies with universities, and companies with non-profit research laboratories and others involved in basic research. For example, more than 100 different universities are involved in over half of all ATP projects. These research collaborations have produced increases in research productivity and synergies from partners with different expertise that would be difficult to accomplish without the overarching sponsorship of the ATP. Such joint ventures also allow companies of all sizes to conduct high-risk research that would be financially impossible if they had to go it alone. Roughly half of ATP awards have gone to small companies or to joint ventures led by a small company. Even companies with large research and development departments have difficulty supporting the long-term, high-risk, generic research typical of ATP projects because the benefits of the work often extend across whole industries.

ATP’s focused programs demonstrate clearly the potential for economic benefits flowing from ATP projects to the larger economy. Focused programs were initiated in 1993 to help concentrate investment in specific high leverage research areas. An ATP focused program identifies a specific set of goals to be reached within the program’s time frame—typically about five years. Often these require the parallel development of a suite of interlocking R&D projects addressing a major technological problem with high commercial potential and broad economic benefits. By managing groups of projects that complement and reinforce each other, the ATP gains the advantage of synergy and, in the long run, can have a stronger impact on U.S. technology and the economy.

Since ATP began soliciting ideas from industry for focused programs, more than 1,000 white papers have been received recommending specific areas for funding. Dozens of workshops have been held with industry. Through January 1997, 11 focused program areas have been initiated and 142 projects funded in those programs. Current focused program topic areas include: information infrastructure for healthcare, component-based software, digital video in information networks, digital data storage, technologies for the integration of manufacturing applications, tools for DNA diagnostics, catalysis and biocatalysis technologies, manufacturing composite structures, motor vehicle manufacturing technology, materials processing for heavy manufacturing, and vapor compression refrigeration technology.

NIST coordinates effectively with other federal agencies involved in technology development to ensure that the ATP does not duplicate their efforts. ATP has close working relationships with the Defense Advanced Research Projects Agency, the National Science Foundation, the National Institutes of Health, the National Aeronautics and Space Administration, the Department of Energy, and others. ATP program managers meet with their counterparts from these agencies to share program planning information and ensure that selected focused program areas will accomplish unique research goals not already supported by other agencies.

In its six years of existence, the ATP has developed a rigorous, competitive selection process, which industry enthusiastically supports. In addition, a detailed evaluation of research progress of all ATP projects begins in the first year of an award and continues for six years beyond completion of the project.

The proposed increase of $50.6 million above the FY 1997 level of $225 million will allow continued expansion of the ATP. In FY 1998, the ATP will continue funding for multiyear projects already under way and will carry out a new general competition and several additional focused program competitions. The program already has a significant backlog of good ideas from industry for focused competitions.

Manufacturing Extension Partnership

A true federal-state partnership, the MEP network of locally staffed and operated technical assistance centers is paying dividends to local economies and to U.S. manufacturing competitiveness. The MEP has grown from a promising, small pilot program operating in seven states and accessible to only 5 percent of the nation’s smaller manufacturers to a coherent nationwide system that has placed sorely needed extension services within reach of manufacturers in all 50 states and Puerto Rico.

Already producing demonstrable benefits at local levels, the program now is well positioned to have a national impact by addressing the lagging productivity growth and technological obsolescence that are undermining the performance and threatening the survival of many of the nation’s 381,000 smaller manufacturers.

MEP services target an especially key segment of the economy. Smaller plants and factories account for almost two-thirds of all manufacturing jobs, employing about 12 million people at wages averaging substantially higher than in the retail sector. Typically employing fewer than 50 people, these firms have generated about three-fourths of new manufacturing jobs created over the last two decades. Within the manufacturing sector, smaller factories occupy a critical tier. They supply parts and equipment that now account for 55 percent of the value-added content of finished products. Yet, productivity among smaller manufacturers is growing at half the rate of larger companies. These larger manufacturers, in turn, are imposing ever higher demands for quality, efficiency, and cost control on their smaller suppliers.

Typical MEP services include helping smaller manufacturers access information on new equipment such as automation systems, find high-quality consultant advice for optimizing manufacturing systems, reduce costs by lowering waste and reducing the environmental impact of their operations, improve quality and expand markets for products, and find financing for modernization efforts. These services will not keep a weak company from failing, or ensure success for a strong one. Rather, such services help smaller manufacturers overcome the inherent isolation and lack of coverage for every needed type of expertise that comes from functioning within a small organization.

NIST’s MEP funding helps ensure that the infrastructure exists so smaller manufacturers can get the help they need when faced with complex choices. It provides a small measure of stability in the inherently volatile world of small business by providing smaller companies with some of the same resources available to larger corporations. It greatly expands a small company's access to knowledge about new technologies and reduces isolation by hooking them into a nationwide set of experts available through electronic mail, the World Wide Web, and other national networks.

As the federal partner, NIST concentrates on making the whole greater than the sum of the parts. Shared programs and resources are devised and organized to increase the depth, breadth, and effectiveness of services delivered by some 2,800 manufacturing and business experts deployed from the network’s 360 locations.

All centers must meet MEP results-oriented performance standards. NIST management makes every effort to ensure that centers succeed in reaching prospective manufacturing customers and that they provide useful, high-quality services. Centers must make significant, quantifiable differences in the capabilities and competitive performance of local manufacturers to continue to receive NIST funding. These high standards mean that some failures are likely. To date, three centers have failed to meet MEP performance standards and were either closed or reorganized.

MEP conducts internal studies and contracts for third-party evaluations to ensure that taxpayers receive a high return on their investment in MEP services. An ongoing MEP-commissioned survey conducted by the U.S. Census Bureau now regularly provides appraisals of firm-level impacts attributable to extension services. Clients that receive more than eight hours of technical assistance from MEP centers are tracked systematically. Released in October 1996, the first results from this new evaluation effort affirm earlier studies that indicated sizable benefits. For 548 firms served by 25 centers between July and December 1995, the following aggregate benefits were reported by the firms to have occurred within eight months of receiving services:

  • 586 jobs created;
  • 822 jobs retained;
  • $21,000,000 in increased sales;
  • $4,400,000 in labor and material cost savings;
  • $11,900,000 in increased capital investment; and
  • $8,100,000 in reduced inventory costs.


With a $28.4 million increase in funding over the FY 1997 level of $95 million, the MEP will work to help centers increase their “market penetration”—the number of companies within a given service area receiving benefits from the program. Currently, established centers and field offices provide assistance to between 7 and 10 percent of potential manufacturing customers in their service areas each year. The program’s five-year goal is to increase the MEP systemwide annual penetration rate to 15 percent, so that each year more than 55,000 smaller U.S. manufacturers are capitalizing on the resources and capabilities of MEP.

FY 1998 marks the first year in which NIST assumes full funding for all centers. The Department of Defense provided a one-time funding transfer to NIST to help accelerate the deployment of 36 extension centers in areas of defense downsizing with a high concentration of manufacturers. The intent was that these TRP-funded centers would “rollover” to NIST funding.

The additional funding also will provide the federal portion of the funding necessary to renew support for centers meeting MEP’s performance standards and will allow the MEP to develop programs that will help smaller manufacturers respond to areas of manufacturing important for success in the 21st century. In particular, NIST will increase efforts supporting:

  • supply chain optimization— helping smaller suppliers re-engineer their operations and business processes to better integrate these firms with larger manufacturers, thereby improving performance throughout the supply chain;
  • technology infusion—providing technology-intensive strategies for modernization, product expansion, and other habitually underfunded small company needs; and
  • information technology— helping smaller firms effectively integrate information technologies into their businesses and benefit from improved access to information resources and technical services.


Laboratory Program

It is not surprising that the Constitution of the United States assigns to the federal government responsibility to “coin money” and, in the very next phrase, to “fix the standard of weights and measures.” Even in an age of horse-drawn carriages and wooden false teeth, the founding fathers understood that standards of measurement are crucial to fair commerce. Trade of any kind, domestic or foreign, requires an agreed-upon value for currency and agreed-upon methods for measuring a host of things that determine the amount and quality of the product being sold.

More than 200 years later, these agreed-upon measurement methods and standards are dramatically more important. Without them the product cannot be made at all. Pocket cellular phones, hand-held video games, compact disks, supermarket price scanners—all are now ordinary necessities of modern life. And all require precise physical, chemical, or electromagnetic measurement for their manufacture and reliability testing.

The central mission of the NIST Laboratory Program is to improve continually the U.S. system of measurement and standards needed by the public, industry, and science. As one of the premier measurement laboratories in the world, NIST provides U.S. industry with a major competitive advantage not only by improving ways to measure basic quantities like length and temperature but also by developing a host of industry-specific measurement methods for quantities like materials strain in circuit connections or the optical performance of flat-panel displays. Because NIST collaborates with industry before, during, and after a project is completed, NIST measurement know-how is quickly shared with the private sector.

NIST’s Laboratory Program is one of the few in the federal government with a permanent Visiting Committee on Advanced Technology of industry and academic experts providing an annual review of its overall research programs and priorities, along with an assessment of NIST’s other programs. In addition, the National Research Council of the National Academies of Sciences and Engineering manages panels of industry, academic, and government experts who review and critique the programs of NIST’s individual disciplinary laboratories.

There has never been a time in which measuring accurately has been more important to the health of the U.S. economy. We are living in an age in which semiconductor chips shrink to half their previous size in only three years. NIST conducts research on basic infrastructural measurement needs that individual companies typically have neither the technical ability nor the incentive to conduct on their own. While each company needs these new measurement technologies and standards, the benefits, once developed, extend to all. A company paying for such research could not expect to recoup its costs—and it would be paying for research that would benefit not only itself and its customers but also its competitors.

In addition, NIST provides the essential elements of neutrality and credibility to the nation's measurement system. As a non-regulatory federal agency with a 95-year track record for technical competence and fairness, NIST develops measurement methods, standards, and testing procedures accepted by both vendor and user, regulators and industry, prosecutors and defense attorneys alike.

Funding of the FY 1998 appropriation request for the NIST Laboratory Program will support development of critical measurement technologies, methods, and data needed by the United States to improve continually the quality of products and enhance international competitiveness. A representative list of the efforts to be supported with this appropriation includes:

  • development of standards and measurement services for deep ultraviolet laser systems currently used to surgically treat nearsightedness and slated for use in the next generation of semiconductor lithography systems used in “printing” computer microchips;
  • creation of the first prototype calibration artifact that uses the extremely regular spacing of atoms in a crystal to provide nanometer-scale “rulers” for the microelectronics industry;
  • development of methodologies in protein engineering, focusing on analysis of the relationship between structure and function for biological macromolecules;
  • application of optical imaging techniques for mapping temperature distributions in advanced materials to improve the processing of products such as high-quality metal castings;
  • development of measurement methods needed for more cost-effective manufacturing of lightweight parts to help improve energy efficiency;
  • investigation of ways to measure the dispersal of liquid aerosol fire suppressants to help industry find environmentally benign alternatives to halons; and
  • advancement of computerized speech recognition technologies by implementing the first large-scale spoken document retrieval tests, revising test protocols for spoken document retrieval, and identifying new test methods to improve text retrieval techniques.


An FY 1998 increase of $2.3 million is requested for the Laboratory Program to enhance NIST's semiconductor measurement efforts as part of a national initiative. As integrated circuits become more complicated and more compact, the measurement problems become an important factor limiting quality and performance. Failure to provide the needed measurement methods in time will affect seriously the continued success of the U.S. semiconductor industry. NIST will use increased funding in this area to address three major areas of semiconductor metrology:

  • microelectronic packaging—devising better ways to evaluate the design and performance of packaging materials that protect microelectronic circuits used in cost-sensitive applications such as personal computers and automobiles;
  • lithographic metrology—providing improved measurements for increasingly small feature sizes on the masks or “stencils” used to fabricate semiconductor circuits, including pattern measurement features built into chips during production; and
  • contamination control—developing improved chemical and physical detection methods to help minimize impurities during the fabrication process and improve yields.


An increase of $4 million is requested to create a comprehensive approach to technical measurements and standards needed for international trade and to promote the global use of U.S. standards and measurements. Increasingly sophisticated measurements, conformity tests, standards, and reference materials and data are required for the sale of products in world markets. In some cases, these requirements have become barriers to trade for U.S. industry. For example, in 1996 the European Union introduced new requirements for electromagnetic compatibility. U.S. industry has found these requirements so difficult to comply with that several manufacturers have taken their products off the European market.

The goals of this initiative will be to reduce barriers to exports by:

  • developing measurement methods and international infrastructures necessary to provide confidence in the traceability of physical and chemical measurements throughout the world;
  • harmonizing standards, codes, and regulations in collaboration with the International Trade Administration, the U.S. Trade Representative, and the American National Standards Institute; and
  • pursuing access to markets by introducing metrology experts in developing countries to U.S. standards, conformity assessments, and metrology practices.


NIST’s FY 1998 budget request also includes a request for $5.3 million to support the Baldrige National Quality Program. This is an increase of $2.3 million over the FY 1997 level.

The Baldrige National Quality Program has inspired thousands of U.S. companies to improve their products and services and expand their markets through quality management. Since 1993, NIST’s quality program has strengthened ties to a growing array of state and local quality operations that mirror Baldrige quality management guidelines. In the process, NIST has established an emerging national quality network poised to better serve U.S. businesses of all sizes.

The education and healthcare sectors have expressed clear interest in establishing Baldrige quality awards for these communities, and NIST already has conducted a successful pilot program involving these sectors. Establishment by NIST of a quality award for the healthcare and education communities holds tremendous promise for improved delivery of services. The impetus for such expansions comes from the nation’s need to improve quality management, both in healthcare and education, and from the business community because its competitiveness is related directly to the quality and costs of these services.

With the requested funding increase, the Baldrige National Quality Program will implement this expansion and, in the process, increase greatly its impact by helping a much larger portion of the leading players in the U.S. economy realize their full potential.

NIST Facilities

In fiscal year 1997, Congress provided no appropriation for construction and modification of NIST research facilities and directed the Institute to use previously appropriated funds intended for construction and major facilities renovation for critical maintenance and necessary fire and safety upgrades and for completion of the Advanced Chemical Sciences Laboratory. NIST’s FY 1998 budget requests $16.7 million to help assure compliance with federal, state, and local health and safety regulations; to provide modifications needed to improve access for people with disabilities; and for general facilities maintenance. The advanced age of NIST’s 30- to 45-year-old facilities has produced a backlog of $300 million worth of essential safety and maintenance projects. The FY 1998 funds will be used to address the highest priority projects from this list. No construction or major renovation funding is being requested in 1998. NIST is reassessing its larger facilities needs and priorities and will report to Congress in the future.


NIST Programs That Work: A Sampling

Advanced Technology Program

  • With a 1991 ATP award, the Aphios Corp., a start-up company in Woburn, Mass., developed an improved, cost-effective method of inactivating viruses such as HIV and Ebola in blood products without adversely affecting the blood components themselves. ATP support enabled Aphios to demonstrate the efficacy of this breakthrough technology and attract collaborators from large companies in the blood products industry. This inactivation technology has a potential multibillion dollar impact on the U.S. economy. This technology promises not only to pay high economic dividends but also to reduce human suffering and premature loss of life.
  • Accuwave, a 12-person fiber optic telecommunications start-up in Santa Monica, Calif., received an ATP award in 1992 to pursue research on an innovative holography system that would allow several communications channels to share the same optical fiber simultaneously. Prior to receiving the ATP award, Accuwave was able to demonstrate the technology in principle but was unable to obtain the critical mass of private-sector funding needed for further research because it was considered to be too risky an investment. The company now is selling three spin-off products—developed with their own funds—in the United States, Japan, and Europe. It also is developing a wavelength division multiplexing system based on the core results of the ATP project. The 1995 market for multiwavelength multiplexing was $50 million and is forecast to grow to $2 billion by the year 2000.
  • Diamond Semiconductor Group (DSG) in Gloucester, Mass., begun as two partners in a converted barn, applied for an ATP grant in 1992 (after a year and a half of unsuccessful attempts to secure private research funding). DSG has since expanded to more than 50 full- and part-time employees and has become a profitable company. As part of its ATP project, DSG developed a new enabling technology for an ion implantation machine for semiconductor manufacture that is cheaper and simpler than previous technologies. Early in 1996, the company jointly announced with Varian Associates an industry first—successful ion implantation of an extra-large 300-millimeter semiconductor wafer—using the new ATP-sponsored technology.


Manufacturing Extension Partnership

  • Timberlyne, a small cabinet manufacturer in Angier, N.C., turned to the North Carolina MEP when it was struggling with problems in finish quality and coating performance, environmental permit issues, and quality- and cost-related difficulties with its fiberboard supply. The NCMEP’s integrated approach to addressing environmental and manufacturing issues led to changes resulting in annual savings totaling $440,000. Timberlyne realized additional savings of $4,750 in lower air-permit fees. The company reduced annual emissions by nearly 230,000 pounds. Other benefits include improved quality of cabinet finishes, elimination of indoor air-pollution problems, and better relations with customers and the community.
  • With locations in Latrobe and Glassport, Pa., Pakco Industrial Ceramics asked the Southwestern Pennsylvania Industrial Resource Center (SPIRC) to help it develop an overall improvement program. A SPIRC consulting team first started working with Pakco in June 1992 and has worked on a variety of Pakco projects over the years. The partnership reduced set up time by about 50 percent without major capital expenditures and decreased throughput time from 10 to 12 weeks to approximately six weeks in 1992-1993. Sales rose more than 40 percent in 1994, and higher demand levels are now being serviced with 10 percent less work-in-progress inventory than two years ago.
  • Celesco Transducer Products, a Canoga Park, Calif., manufacturer of precision displacement measuring instruments and position devices, was challenged by shipping problems and missed delivery targets that threatened sales growth. Experts from the California Manufacturing Technology Center worked with a team from the 39-employee company to determine the root cause of high levels of incorrect shipments of semi-custom products. CMTC recommended spending $1,500 to buy three new computer terminals so the sales staff could directly enter orders onto a sales template while customers were online to verify data. Celesco made the purchase, and only one order entry error occurred during the first four months of implementation, as compared with 42 per month previously. The investment was paid back within one week of implementing the new order-entry system. Internal scrap and rework have decreased dramatically, and returns of semi-custom products have dropped to less than one a month.


NIST Laboratory Program

  • U.S. makers of coordinate measuring machines credit NIST with saving them 5 to 10 years in early-stage research. According to an independently conducted 1996 study commissioned by the Institute, firms also attributed annual production-efficiency gains—ranging from 10 to 30 percent between 1985 and 1988—to NIST’s pioneering work on computer-based, error-compensation methods. The technology enabled them to produce lower cost designs without sacrificing performance. In all, the effort is estimated conservatively to have generated first-level benefits totaling more than $93 million. Generated by an initial NIST investment of about $430,000 over 10 years, this total does not include scrap reduction and other secondary benefits realized by manufacturers because of the increased accuracy of their inspection equipment.
  • A new NIST calibration facility, only the second of its kind in the world, makes it possible for the more than 10,000 U.S. mammography centers to trace the accuracy of their X-ray exposure measurements to national standards, reducing the risk that women undergoing breast exams will receive inappropriate levels of X-ray exposure.
  • Recently begun efforts to resolve differences between U.S. and foreign standards already are yielding significant returns in Saudi Arabia, one of five nations where NIST has placed standards experts. The American Business Council in Riyadh attributes an estimated $300 million to $500 million increase in U.S. exports to NIST’s work.
  • Scientists at NIST and the University of Colorado created a new state of matter, a cluster of individual atoms that behaves as a single entity at temperatures just billionths of a degree above absolute zero. Predicted by Albert Einstein, creation of this “super atom” is already paying scientific and technological dividends, enabling scientists at the Massachusetts Institute of Technology to create the world’s first atom laser. Harnessing atoms in much the same way that an optical laser harnesses light, an atom laser opens the way to extremely accurate measuring devices and to highly precise methods for manipulating matter at the atomic level, a capability that underlies many practical uses.
  • NIST researchers, collaborating with an industrial partner, developed a “scanning capacitance microscope” that can produce quantitative images of chemical dopant densities with resolutions as fine as tens of nanometers. The achievement brings the industry closer to meeting a key requirement of the National Technology Roadmap for Semiconductors for producing next-generation microcircuits by the year 2000.


Baldrige National Quality Program

  • A winner of the 1996 Malcolm Baldrige National Quality Award, Custom Research Inc. of Minneapolis conducts survey marketing research for a wide range of clients. The firm credits a reputation for quality for making it one of only a handful of companies that has remained independent while growing over the past two decades. Since 1988, when CRI adopted its highly focused customer-as-partner approach, client satisfaction has risen from already high levels, and gains in productivity, sales volume, and profits have outpaced industry averages. CRI is now "meeting or exceeding" clients’ expectations on 97 percent of its projects.
  • ADAC Laboratories, another 1996 quality award winner, is a Silicon Valley-based maker of high-technology healthcare products. A company-initiated program based on quality management principles has helped prove that quality does indeed pay. Between 1990 and 1995, overall efficiency improvements resulted in an increase in revenue per employee from $200,000 to $330,000, 65 percent better than its competitors. At the same time, ADAC increased its market share in its core business, nuclear medicine, to over four times that of its nearest competitor in the United States and became the market leader in Europe, Asia, and Latin America.

Technology Administration
Appropriation Budget Summary
FY 1996-FY 1998
(Figures are in thousands of dollars)


FY 1996 Approp.a
FY 1997 Approp.
FY 1998 Request

US/OTP 7,000 9,500 9,230

NIST 544,574 572,000 692,544

Industrial Technology Services (ITS)


Advanced Technology Program 220,946 225,000 275,600
Manufacturing Extension Partnership 79,981 95,000 123,400
Subtotal 300,927 320,000 399,000

Scientific & Technical Research & Services (STRS)


Laboratory Program 255,774 265,020 271,563
Baldrige National Quality Program 2,896 2,980 5,289
Subtotal 258,670 268,000 276,852

Construction of Research Facilities (CRF)


Construction and Major Renovations (15,023) (16,000)b 0
Modifications and Improvements 0 0 16,692
Subtotal (15,023) (16,000) 16,692

NTISc 0 0 0

Total TA Appropriations 551,574 581,500 701,774









a Reflects post-recission appropriations available. The following rescissions were taken in FY 1996: ITS-$73K; STRS-$330K; CRF-$75,023K.
b Pursuant to P.L. 104-208, $16M is rescinded from prior year balances.
c NTIS is historically a self-supporting agency.