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Text of the NSF Section of the House Report That Accompanies
H.R. 3666
NATIONAL SCIENCE FOUNDATION
Fiscal year 1997 recommendation |
$3,253,000,000 |
Fiscal year 1996 appropriation |
$3,220,000,000 |
Fiscal year 1997
budget request |
$3,325,000,000 |
Comparison with fiscal year
1996 appropriation |
+$33,000,000 |
Comparison with fiscal year
1997 request |
-$72,000,000 |
The National Science Foundation was established in
1950 and received its first appropriation of $225,000
in 1951. The primary purpose behind its creation was
to develop a national policy on science, and support
and promote basic research and education in the sciences
filling the void left after World War II.
The Committee recommends a total of $3,253,000,000
for fiscal year 1997. The amount recommended is $33,000,000
above the fiscal year 1996 appropriation and $72,000,000
below the President's budget request.
Of the amounts approved in the following appropriations
accounts, the Foundation must limit transfers of funds
between programs and activities to not more than $500,000
without prior approval of the Committee. Further,
no changes may be made to any account or program element
if it is construed to be policy or a change in policy.
Any activity or program cited in this report shall
be construed as the position of the Committee and
should not be subject to reductions or reprogramming
without prior approval of the Committee.
Finally, it is the intent of the Committee that all
carryover funds in the various appropriations accounts
are subject to the normal reprogramming requirements
outlined above.
RESEARCH AND RELATED ACTIVITIES
Fiscal year 1997 recommendation |
$2,422,000,000 |
Fiscal year 1996 appropriation |
$2,314,000,000 |
Fiscal year 1997
budget request |
$2,472,000,000 |
Comparison with fiscal year
1996 appropriation |
+$108,000,000 |
Comparison with fiscal year
1997 request |
-$50,000,000 |
The appropriation for Research and Related Activities
covers all programs in the Foundation except Education
and Human Resources, Salaries and Expenses, NSF Headquarters
Relocation, Major Research Equipment, and the Office
of Inspector General. These are funded in other accounts
in the bill. The Research and Related Activities appropriation
includes United States Polar Research Programs and
Antarctic Logistical Support Activities and the Critical
Technologies Institute, which were previously funded
through separate appropriations.
Beginning with fiscal year 1997, the President's budget
provided funding for the instrumentation portion of
Academic Research Infrastructure in this account.
The Committee recommends a total of $2,422,000,000
for Research and Related Activities in fiscal year
1997, a reduction of $50,000,000 from the budget request.
The Committee recommendation includes approval of
the National Science Foundation proposal to include
within the Research and Related Activities account,
$50,000,000 for acquisition of instrumentation which
was previously funded in the Academic Research Infrastructure
account. Taking into consideration the increase to
this account caused by the transfer of instrumentation
funds, the remaining increase of $108,000,000 would
have represented a growth of approximately 5% over
the fiscal year 1996 level.
While this is not an excessive amount of growth, and
while the Committee remains a strong supporter of
scientific research, the Committee can not fund the
budget request within its current allocation of budget
authority and outlays. The reduction recommended by
the Committee is taken without prejudice and is to
be allocated by the Foundation in accordance with
internal procedures, subject to approval by the Committee.
Academic Research Fleet: The Committee is concerned
with the possibility of new Navy-owned, university-operated,
Class I Oceanographic Research vessel being added
to the academic fleet. There is no existing academic
fleet planning to incorporate a new vessel at this
time. The addition of new ships without corresponding
increases in ship operations funding and in the funding
for research programs that require ship time threatens
the health of oceanography. NSF is directed to report
to the Committee by August 30, 1996, the ramifications,
fiscal and otherwise, of such an addition, with particular
attention to the overall balance between research
funding and ship operations funding. The Committee
is concerned about a funding shortfall for the operations
of the academic fleet and supports NSF's efforts to
work with other agencies to broaden usage of the fleet.
MAJOR RESEARCH EQUIPMENT
Fiscal year 1997 recommendation |
$80,000,000 |
Fiscal year 1996 appropriation |
$70,000,000 |
Fiscal year 1997
budget request |
$95,000,000 |
Comparison with fiscal year
1996 appropriation |
+$10,000,000 |
Comparison with fiscal year
1997 request |
-$15,000,000 |
This account provides funding for the construction
of major research facilities that provide unique capabilities
at the cutting edge of science and engineering. The
Committee recommends a total of $80,000,000 for the
major research equipment account for fiscal year 1997.
This level reflects $55,000,000 for construction of
the Laser Interferometer Gravitational Wave Observatory
(LIGO) and $25,000,000 for maintenance of facilities
in Antarctica.
The Committee recommendation for LIGO funding is the
same amount that was projected as a fiscal year 1997
requirement when the fiscal year 1996 budget was presented
to the Congress. The amount recommended is $15,000,000
below the request in the fiscal year 1997 budget,
but based upon information provided with the fiscal
year 1996 budget and briefings provided by the program
managers the reduction should have no effect on the
program schedule.
The Conference Report accompanying H.R. 2099 directed
that there be a government-wide review of activities
in the Antarctic region and the results of the review
reported to the Committees on Appropriations of the
House and Senate. That report was submitted in April
and concluded that ". . . from a policy perspective
the NSTC [National Science and Technology Council]
finds that maintaining an active and influential presence
in Antarctica, including year-round operation of South
Pole Station, is essential to U.S. interests."
The report also concluded that the National Science
Foundation planning for replacement of the South Pole
Station will greatly benefit from further cost-benefit
analyses. The Committee acknowledges the conclusions
contained within the report and provides $25,000,000
for correcting critical health, safety, and environmental
issues at the current South Pole station while awaiting
further information from the NSF on how it will structure
a long-term solution to the problems of the current
station. The Committee recommends that the funds provided
be used for the heavy maintenance facility, power
plant upgrade, and fuel storage facilities.
ACADEMIC RESEARCH INFRASTRUCTURE
Fiscal year 1997 recommendation |
0 |
Fiscal year 1996 appropriation |
$100,000,000 |
Fiscal year 1997
budget request |
0 |
Comparison with fiscal year
1996 appropriation |
-$100,000,000 |
Comparison with fiscal year
1997 request |
0 |
This program is a consolidation of academic research
facility modernization and support of academic research
instrumentation. The Committee agrees with the President's
budget proposal to transfer the instrumentation portion
of this program to the Research and Related Activities
account and provide no funding for buildings and facilities.
EDUCATION AND HUMAN RESOURCES
Fiscal year 1997 recommendation |
$612,000,000 |
Fiscal year 1996 appropriation |
$599,000,000 |
Fiscal year 1997
budget request |
$619,000,000 |
Comparison with fiscal year
1996 appropriation |
+$13,000,000 |
Comparison with fiscal year
1997 request |
-$7,000,000 |
The Foundation's Education and Human Resources activities
are designed to encourage the entrance of talented
students into science and technology careers, to improve
the undergraduate science and engineering education
environment, to assist in providing all precollege
students with a level of education in mathematics,
science, and technology that reflects the needs of
the nation and is the highest quality attained anywhere
in the world, and extend greater research opportunities
to underrepresented segment of the scientific and
engineering communities.
For fiscal year 1997, the Committee recommends $612,000,000,
a reduction of $7,000,000 from the President's budget
request and $13,000,000 above the fiscal year 1996
appropriation. The Committee recommendation includes
a reduction of $2,000,000 in the grants for graduate
fellowships and $5,000,000 from undergraduate curriculum
development.
Systemic Initiative: The National Science
Foundation has made considerable progress with its
state, urban, and rural systemic initiatives designed
to promote reform of K-12 math and science education.
Early results show significant math and science student
achievements in NSF funded sites. The Committee believes
each program should be sustained as appropriate and
in particular, the Urban Systemic Initiative should
be fully funded in fiscal year 1997.
Advanced technological education program: Although
only established within the past few years, the Advanced
Technological Education program is viewed as crucial
to ensuring a highly competent technical workforce.
The Committee is pleased that the Foundation has forged
effective partnerships with the relevant, local scientific
and technical business sector to further expand the
scope and significance of the program. The Committee
encourages continued growth of this important activity.
Teacher preparation: Efforts to achieve
high quality math and science performance in the K-12
sector is highly dependent upon the quality of the
teacher workforce and, especially in urban and rural
school systems, there is a growing inadequacy of highly
qualified math and science teachers. Accordingly,
the Committee strongly urges the National Science
Foundation to strengthen and significantly expand
its math and science teacher preparation programs.
Technology education: Increasingly the
purposeful applications of technology is regarded
as an integral and value-added component of high quality
math, science, engineering and technology education.
The National Science Foundation is urged to increase
its investments in research and development that undergird
learning technologies and their application in math,
science, engineering, and technology education sites
at the K-12, two year and community colleges, and
undergraduate levels.
Experimental program to stimulate competitive
research: The Committee is pleased with the
efforts which the Foundation has made to ensure that
the Experimental Program to Stimulate Competitive
Research (EPSCoR) is part of the broader systemic
reform initiatives pursued in recent years. These
efforts have formed a solid base for education and
human resource development activities in many of the
EPSCoR states. The Committee has recommended the budget
request for the Experimental Program to Stimulate
Competitive Research (EPSCoR). As the National Science
Foundation research funding increases, new efforts
should be undertaken to ensure that the participating
jurisdictions, which are working diligently to enhance
their infrastructure and become truly competitive,
participate fully in NSF's programs. Of the funding
the Committee has recommended, $5,000,000 is available
to assist EPSCoR institutions to participate in the
new advanced computing infrastructure with high bandwidth
connections that support advanced applications, distributed
computing, remote visualization and imaging, and telecollaboration.
The Committee also recommends that funds be made available
to assist EPSCoR institutions to facilitate their
competitiveness by engaging in joint projects between
EPSCoR institutions, or between EPSCoR and non-EPSCoR
institutions. Both efforts are important to ensuring
that EPSCoR states are in the mainstream of science
and technology efforts. The participation of representatives
from EPSCoR states on peer review panels and on advisory
committees. In addition, the Committee expects NSF
to initiate a planning process for full participation
of states which generally meet EPSCoR criteria but
that are not currently participating in the EPSCoR
program.
Informal science education: The Committee
is concerned with the nearly 28% reduction in funding
for Informal Science Education. In many instances,
science education received through exposure to museums,
parks, libraries, television, and community groups
is the most important spark to stimulate greater interest
in science. The Committee has not been able to add
money to this account, but encourages the National
Science Foundation to reevaluate the priorities which
caused the current sub-allocation of Education and
Human resources funding to determine if the cut of
28% in this program is justified.
SALARIES AND EXPENSES
Fiscal year 1997 recommendation |
$134,310,000 |
Fiscal year 1996 appropriation |
$127,310,000 |
Fiscal year 1997
budget request |
$134,310,000 |
Comparison with fiscal year
1996 appropriation |
+$7,000,000 |
Comparison with fiscal year
1997 request |
0 |
The Salaries and Expenses activity provides for the
operation, support and management, and direction of
all Foundation programs and activities and includes
necessary funds that develop, manage, and coordinate
Foundation programs. Also included in this account
beginning in fiscal year 1997 is funding for NSF headquarters
relocation. The Committee recommends an appropriation
of $134,310,000 for salaries and expenses and headquarters
relocation in fiscal year 1997, the same as the President's
budget request. The amount provided is $1,800,000
above the fiscal year 1996 appropriation when adjusted
for the change to incorporate funding for the NSF
headquarters relocation.
OFFICE OF INSPECTOR GENERAL
Fiscal year 1997 recommendation |
$4,690,000 |
Fiscal year 1996 appropriation |
$4,490,000 |
Fiscal year 1997
budget request |
$4,690,000 |
Comparison with fiscal year
1996 appropriation |
+$200,000 |
Comparison with fiscal year
1997 request |
0 |
This account provides National Science Foundation audit
and investigation functions to identify and correct
management and administrative deficiencies which could
lead to fraud, waste, or abuse. For fiscal year 1997,
the Committee has recommended $4,690,000 for the Office
of Inspector General. This amount is $200,000 above
the fiscal year 1996 level and is the same as the
President's budget request.
NATIONAL SCIENCE FOUNDATION
HEADQUARTERS RELOCATION
Fiscal year 1997 recommendation |
0 |
Fiscal year 1996 appropriation |
$5,200,000 |
Fiscal year 1997
budget request |
0 |
Comparison with fiscal year
1996 appropriation |
0 |
Comparison with fiscal year
1997 request |
0 |
This account provides reimbursement to the General
Services Administration (GSA) for expenses incurred
by GSA pursuant to the relocation of the National
Science Foundation.
The National Science Foundation proposed including
this funding within the Salaries and Expenses Account
beginning in fiscal year 1997. The Committee recommendation
endorses the account change.
SECTION 421 -- ADDITIONAL VIEWS OF MR. OBEY AND MR.
SABO: SHOULD TAX DOLLARS APPROPRIATED TO ENHANCE AMERICAN
COMPETITIVENESS IN THE COMPUTER INDUSTRY BE USED TO
BUY A DUMPED FOREIGN SUPERCOMPUTER?
For decades the National Science Foundation has argued
that our public investment in science was closed linked
to the future growth of the nation's economy. Just
a few months ago the agency's director told this committee,
"There is a general consensus among economists and
policy researchers that public investments in science
and engineering yield a very high annual rate of return
to society * * * research and development have a significant
and important positive effect on economic growth and
living standards."
NSF makes this argument not only with respect to the
overall economy but with specific sectors of the U.S.
economy. In the agency's fiscal 1997 budget justification,
$277 million is requested for Computer and Information
Science Engineering, a $22 million of 8.6% increase
above the previous year. The goals of this activity,
according to the agency justification, are "to promote
fundamental research and education in the computer
and information sciences and engineering, and to maintain
the nation's preeminence in these fields." (emphasis
added)
Some in the scientific community would prefer that
the argument for research funding be based solely
on the need for expanding human knowledge and argue
that nationalistic concerns such as economic growth,
international security and the competitiveness of
the nation's industries be excluded from the debate
over federal support of agencies such as NSF. Wisely,
NSF Directors have chosen to ignore that advice and,
as a result, the Foundation has been spared the deep
cuts which have been imposed on most other areas of
the domestic discretionary budget.
THE NCAR PROCUREMENT
But there is real doubt as to how seriously NSF weighs
broader national goals once its leadership has left
the witness table. We fear that a recent incident
involving the procurement of a supercomputer by the
Foundation's National Center for Atmospheric Research
(NCAR) may be very revealing as far as defining NSF's
true commitment to broader national goals in its day
to day expenditure of public funds.
NCAR, which was organized by NSF and receives the
overwhelming share of its budget from NSF, uses supercomputers
for complex weather simulation analysis. Over the
years, NCAR has been working to build one of the world's
largest complexes of supercomputers used for purposes
other than national security. As part of that effort,
NCAR attempted to negotiate the donation of a supercomputer
by Fujitsu Ltd. of Japan but that effort was thwarted
by the realization that U.S. anti-dumping laws would
prohibit such a donation.
More recently, NCAR published a request for proposals
to provide the most capable supercomputer possible
for a fixed price of $35 million--to be operational
by October, 1998. More than 90% of the funding for
the new computer was to be provided by NSF--principally
through NSF's High Capacity Computing Program.
Three companies made proposals, NEC Ltd. of Japan,
Cray Research of the United States and Fujitsu Ltd.
also of Japan. The architecture and capabilities of
the U.S. machine differed from that of the two machines
proposed by the Japanese. The U.S. machine ran at
a faster "clock speed" and would therefore be considered
a faster machine on a pound for pound or chip for
chip basis. But one of the Japanese companies, NEC,
proposed to provide NCAR with about three times the
amount of equipment--thereby providing a significantly
faster overall machine. (The content of the Fujitsu
bid is unknown.)
Despite the very clear likelihood that such a generous
offer of equipment on the part of NEC might involve
unfair trade practices and constitute "dumping" under
U.S. law, NCAR decided to proceed solely on the basis
of cost. The Los Angeles Times reported on
May 20:
Lawrence Rudolf, NSF general counsel, said the
only criterion important to the Center was which
computer could calculate its set of equations
fastest, thereby making U.S. climate research
preeminent in the world.
"We were not weighing national interest here,
but we were evaluating the singular interest of
our scientists to be at the cutting edge of climatological
research," Rudolf said.
The Times further indicated that Rudolf has
told them "* * * federal laboratories--the biggest
customers for supercomputers--are under such tremendous
budget pressure that they are not inclined to do any
favors for U.S. corporations." The article quoted
a "senior federal technology official,"; saying, "It
is a very surprising situation. These people don't
have any loyalty to brand or country. * * *"
Because of concern that enforcers of U.S. "anti-dumping"
laws might look harshly on the generous Japanese offer
and interfere with the procurement, NCAR hired a consultant
to defend their decision. The consultant was provided
details on the NEC proposal and based on those details
estimated the true value of the NEC equipment to be
less than the price permitted by the NCAR proposal
request.
Further analysis of the work done by the NCAR consultant,
however, demonstrated that he had in fact documented
a clear case of dumping. The consultant had omitted
consideration of development costs, full costs and
full general and administrative expenses. Even the
most modest estimates of these costs indicate that
NEC was bidding to sell the NCAR computer at a significant
loss.
Cray indicates that their most conservative estimate
of the total cost to NEC of the NCAR deal is $90 million.
There are indications that other estimates of the
true value of the NEC offer may exceed Cray's.
Prior to announcing that they were proceeding with
the NEC proposal, the National Science Foundation
was warned by the U.S. Department of Commerce that
the NEC computer was being dumped. Before the Commerce
Department could deliver that warning in writing,
however, NSF sent word to NCAR to proceed with the
procurement, stating that they were "to be complimented
on the care and professionalism with which this procurement
has been managed from the initial conception * * *"
and faxed a press release to the New York Times
announcing that the NEC proposal "is best suited to
meet its technical requirements."
Following NSF's procurement announcement, the Commerce
Department warned NSF Director Neal Lane in a formal
letter, "We have significant concerns that importation
of the NCAR supercomputer system would threaten the
U.S. supercomputer industry with material injury *
* *" The letter further stated, "* * * using standard
methodology prescribed by the antidumping law, we
estimate that the cost of production of one of the
foreign bidders is substantially greater than the
funding levels projected by NCAR's request proposals
* * * the amount by which the fair value of the merchandise
to be supplied exceeds the export price, is likely
to be very high." (emphasis added)
THE U.S. SUPERCOMPUTER INDUSTRY IS CRITICAL TO
ECONOMIC GROWTH AND NATIONAL SECURITY--IT IS ALSO
HIGHLY VULNERABLE TO FOREIGN MERCANTILISM
To fully understand this story, it is necessary to
have some background on the supercomputer industry,
its financial structure and its strategic importance
to other industries with respect to competition in
international trade. The Los Angeles Times
May 20th article on the NCAR procurement provided
a succinct discussion of the critical place supercomputer
production holds with respect to international economic
competition:
Although the supercomputer industry is a relatively
small and obscure sector of the U.S. electronics
business--dwarfed by the market for personal computers,
for example--it is widely regarded as a cornerstone
of U.S. competitiveness * * *
Supercomputers are crucial to the design of aircraft
and jet engines, not to mention other computers.
The nation with the best supercomputers can decode
other nation's (sic) secrets, predict the weather
with greater accuracy and better unravel the mysteries
of genetics.
Moreover, the ability to design supercomputers--the
fastest computers--has always been assumed to
create a trickle-down effect that benefits leadership
of everything from microprocessors to personal
computers.
The Times might have also mentioned the emerging
role of supercomputers in the design, simulation,
testing and manufacture of new products ranging from
automobiles to fighter aircraft and new fabrics. There
are few observers of the world automobile industry
who do not give the intensive application of supercomputers
a measurable share of the credit for the resurgence
of the U.S. automotive industry. Any cursory review
of the direction of commercial air craft production
equally demonstrates the emerging role of supercomputers
in manufacturing and production. The entire production
process of the new Boeing 777 is centered around the
supercomputer--a fact that has not been lost on Mitsubishi
and other would be entrants into the world commercial
aircraft market.
Financial analysts of the supercomputer industry have
questioned the long term viability of U.S. supercomputer
producers for some years. These questions are not
directed at the technology possessed by U.S. firms,
the compensation of their workforce or their commitment
to future research and development. Rather, analysts
have been concerned that the extraordinary expenditures
required for research in this industry provides an
inordinate advantage to firms with very deep pockets.
Because of the more fluid and open demand for capital
in the United States, it if difficult to find investors
willing to sustain large losses over extended periods
of time in order to dominate any particular market.
The difficult path which U.S. producers have faced
is demonstrated by the fact that 10 of the 15 U.S.
companies that have produced Supercomputers are now
out of business, two others remain in business but
have ceased producing supercomputers and each of the
remaining three have merged with larger companies.
The major remaining producer, Cray Research, now a
subsidiary of Silicon Graphics, does not have deep
pockets, even by U.S. standards. Although it presently
maintains more than a 60% share of the world supercomputer
market, it finances its research and development of
future generations of supercomputers out of profits
on current sales.
That stands in sharp contrast to the financial situation
enjoyed by both Fujitsu and NEC. Subsidiaries of two
of the largest capitalized companies in the world,
both producers are beneficiaries of their parent company's
membership in two of the most powerful Japanese Keiretsu
and the almost limitless credit that relationship
implies from the mega banks that lead those keiretsu.
(NEC is a member of the Sumitomo industrial group
which includes the Sumitomo Bank with assets of more
than half a trillion U.S. dollars--more than twice
the size of the largest U.S. bank.)
Laura Tyson, chairman of the President's National
Economic Council described the situation in her book,
Who's Bashing Whom:
At the root of the ability of Japanese firms to
compete aggressively on price, even when it means
selling products below cost and running losses,
are the unique structural features of the Japanese
economy. The companies competing with Cray and
Motorola have deep pockets and long time horizons.
They can afford to cross-subsidize losses in one
market with profits from another. They continue
to benefit from a variety of promotional policies
and from lax enforcement of regulations on restrictive
business practices. They also continue to benefit
from the insulated nature of the Japanese market,
fostered by these and other structural impediments.
In short, the pricing behavior of Japanese companies
is a natural outgrowth of Japan's business and
government environment.
Both NEC and Fujitsu supercomputer operations have
lost significant amounts of money every single year
since their inception in the early 1970s. Their annual
sales have averaged less than $50 million, while their
annual research costs alone are likely to have exceeded
$100 million. But the prize is the potential opportunity
to eliminate a competitor who cannot sustain losses
for an extended period of time and who currently holds
60% of the world market. Once that competitor is eliminated,
pricing could become highly advantageous. The business
partners who have helped NEC and Fujitsu sustain their
business through more than a decade of heavy losses
would not only benefit from this long term opportunity
for profitability, but also from the strategic advantage
of controlling a technology that will be critical
to future generations of manufacturing processes and
to the security efforts of the U.S. and other nations.
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