a reasonably good job of focusing on what we are really good at in reaching out to industry. I am personally confident that as we gain more experience with the CRADA process, as we get some additional legislative help, do more fine-tuning, that we will create additional very effective bridges, both to large and small businesses. I think the CRADA progress will increase.

There are some knotty issues, however, that I thought I would just place before you. Issues that have to be resolved before I think the full potential of DOE's resources can be realized. First of all, how do we organize and direct much larger, much more focused, national efforts, efforts that must involve extensive teaming arrangements among industry, universities, and national laboratories? I don't think we are going to save our Nation by engaging in ever larger numbers of $1 million CRADA's. I think, at some point, we need to address some truly large national technological issues. Second, how do we assure politically acceptable fairness of access to public-supported resources and avoid conflict of interest? By the way, I am a land director who, while I would like to have more authority in engaging in CRADA agreements, I also need some protection because there are very serious liability issues which would affect me as a contractor much more so than it would affect my friend, John Lyons at NIST who is a Federal employee.

Third, how do we increase DOE funding to required levels without necessitating incremental appropriations; in other words, undesirable lab expansion. Stated differently, how can we increase the utility of existing program funding without corrupting the congressional appropriation process? How do we prioritize available DOE resources? What industries do we favor? Are the auto makers more important to our economy than the textile industry? How do we make these judgments, and who will make the necessary decisions? Finally, how do we establish objective measures of performance for the laboratories as a guide for DOE investment decisions? At some point, there needs to be some judgment made as to who is really contributing value and who isn't.

I don't claim to have the answer to these questions yet; I am thinking about it. However, if we could just remember that we really are engaged in a global economic war, which is more threatening to our future than the Cold War ever was in my view, then perhaps we will find some way to get our resources applied in a most effective way. I think we will find the right answers.

I also know that the private sector, rather than the Federal Government, will increasingly be the judge of the contributions made by DOE laboratories, and that is a very profound change in our thinking. We have made a very serious commitment at Sandia to meet that challenge. We laid that out during visits by President Bush and Governor Clinton a month or so ago. I think we convinced

Chairman WYDEN. What was going on a month ago? I can't possibly remember.

Dr. NARATH. We had visits by both the President and the Governor about a month before election time, and they were very constructive visits, gave us an opportunity to show both of them the potential of dual-use applications of defense technology.

Thank you.

[Dr. Narath's statement, with attachments, may be found in the appendix.]

Chairman WYDEN. Very helpful, Doctor. I am very sympathetic to the matter of liability as it relates to Federal lab directors being given additional responsibilities. I have always thought that if Government looks to give additional responsibilities, and certainly there are going to be additional responsibilities in certain kinds of areas simply because there is too large a Federal investment and it is too important to U.S. competitiveness, you have got to go to the other end of the scale and you have got to deal with rights, and one of those rights is not to be sued for the rest of your adult life if you are going to, in effect, be on the line in terms of making some of these decisions. I am going to have some more questions in a moment.

Dr. Shank, welcome.

TESTIMONY OF CHARLES V. SHANK, DIRECTOR, LAWRENCE

BERKELEY LABORATORY

Dr. SHANK. Mr. Chairman and members of the subcommittee, my name is Charles Shank. I have been director of the Lawrence Berkeley Laboratory for the past 3 years. Prior to joining LBL I spent 20 years at AT&T Bell Laboratories. Having been both in industry and in a national laboratory, I have a view on how national laboratories can provide the American taxpayers a return on their research investment.

Let me first introduce you to the Lawrence-Berkeley Laboratory. LBL is the oldest of the DOE national laboratories, founded in 1931 by Ernest O. Lawrence. LBL has been responsible for pioneering work, ranging from particle physics to nuclear medicine. Our research has received international recognition, including nine Nobel Prizes. LBL today has a budget of $260 million and a staff of approximately 3,600, and is involved in cutting edge research for the Department of Energy.

We are a lead DOE laboratory in the human genome project, have developed new energy efficient windows, and compact fluorescent lights, perform research in advanced materials, and are about to commission the advanced light source, the world's brightest source of soft x-rays. None of LBL's work is classified, and being located next to the University of California Berkeley campus, we have hundreds of graduate students involved in our research programs.

Today, our Nation faces new challenges and concerns. We are encountering a well-organized and effective competition. No time could be more propitious for the Government to leverage the investment in its laboratories by fostering partnerships with industry and academia.

We are here today to talk about technology transfer which is more than the literal meaning of these two words. Technology transfer between national labs and industry includes the transfer of ideas, people, knowledge, intellectual property, and the availability of unique facilities. It can even mean partnerships that provide a focal point for coupling industry, academia, and national labs together. In fact, the recent report on the national laboratories by

the Council on Competitiveness urges the laboratories to view industry as a customer.

In the past, it has been enough for the laboratories to perform their scientific mission and produce work of the highest scientific quality. Today, we must ensure that the value of our work finds its way into the economy. Let me give you an example of how this is done.

Shortly after the discovery of the new high-temperature superconductors, work began at LBL to enhance our basic understanding of these new materials. Efforts at LBL focused on the conductive properties of these materials which would provide a fundamental limitation on their usefulness.

Our work, supported by the Department of Energy, revealed that these materials could have technological applications. Based on our work, we formed a partnership with a small Bay Area company, Conductus, to pursue further research. It led to a device that would detect new magnetic fields emanating from the human body. This partnership has led to the development of the first complete hightemperature, superconducting, electronic circuit. The final result of this work has been a product that has just come out on the market. This CRADA shows how fundamental research results can be leveraged in partnership with the industry to return value to the economy. Continued strong support of high-risk fundamental research is essential to provide the seed for new concepts and discoveries and even new industries.

Your letter of invitation raises a number of important issues and policy options for improving the technology transfer process. Your first point concerns the authority for developing and ultimately signing CRADA's. The subcommittee should understand that when LBL enters negotiations on a CRADA, industry holds us accountable for the often lengthy delays and excessive documentation and the other DOE requirements. This is frustrating because we have no authority to deliver a CRADA without going through many layers of the risk-averse Department of Energy to get final approval to sign the CRADA.

A number of recent studies have recommended that national laboratory directors be given full authority to negotiate, sign, and approve the commitment of funds for CRADA's. Such authority would be a major step in speeding up the process. National laboratory directors who are contractors of the Department of Energy should have both responsibilities and, as we discussed, the protections given to civil service laboratory directors. There should be appropriate oversight to insure that the effectiveness of our actions meet the concerns for conflict of interest and fairness of opportunity.

In order to achieve timely and business-like agreements with industry, this oversight should be retrospective rather than prospective. We should be judged by our results.

Your next issue concerns funding of CRADA agreements. As one of the Energy Research National Laboratories, we have access to a small $10-million program of CRADA funds for which we are allowed to compete. Your proposal to expand this funding is excellent. Providing flexibility for laboratory directors to fund CRADA's at a modest level would be helpful. However, a point of serious con

cern is that the funding not be a tax on individual laboratories that would raise our overhead rates and reduce our cost competitiveness.

I would suggest a more wide ranging program to help the laboratories be more effective in technology transfer. In addition to funding CRADA's, it is important to make the connection between fundamental research and technology of interest to industry. Often, the fruits of fundamental research need to be further explored in order to evaluate the potential of a technology. I call this technology research. It is an area that is generally not supported by basic energy science programs in the Department of Energy.

What I believe is required is a new Office of Technology Research within DOE to insure that this kind of research is supported. This office would have the responsibility for providing funds for CRADA's and would support the technology research that would lead to future CRADA's and other industrial relationships.

I would like to conclude with a few comments on the roadblocks for national laboratories to accomplish the technology transfer mission. Two questions come to mind. First, can we do the job? After two decades in industry, my view is that the national laboratory scientists and engineers are not that different from those in industry. At LBL there is a ground swell of enthusiasm from the staff to embrace this mission.

Second, can we meet the expectations of Congress? As a laboratory director, confronted by the DOE bureaucracy, I sense a fear of success. If our technology transfer efforts succeed in contributing to the wealth generation process in this country, we should not fear being held accountable for our success. We must understand and accept the risks involved in working closely with industry.

In summary, I believe the DOE national laboratories are well positioned to contribute to strengthening our high-technology industry. I am convinced that an investment in our national laboratories is prudent and can meet the national interest.

[Dr. Shank's statement may be found in the appendix.]

Chairman WYDEN. Doctor, very good. We will have some questions in a moment.

Dr. Happer, your name has been invoked repeatedly this morning. Welcome. Let's move, if we could, that microphone over to Dr. Happer.

TESTIMONY OF WILLIAM HAPPER, SCIENCE AND TECHNOLOGY ADVISOR, U.S. DEPARTMENT OF ENERGY

Dr. HAPPER. Well, thank you very much, Mr. Chairman. As the official representative of the Department of Energy, I feel a little bit like the man in Abe Lincoln's story who was about to be tarred and feathered and carried out of town on a rail and said if it weren't for the honor, he would prefer to walk.

I will try to keep my remarks brief. One thing I think you need to remember is that it was not until 1989 that the National Competitiveness Technology Transfer Act permitted GOCO laboratories to even engage in CRADA's so that we have just begun to learn since that time, and almost anything you do takes some time to learn.

They tell the story about the old engineer who was very, very good at building machines, wonderful machines, and someone asked, "Well, how do you do it?" He says, "Well, you build her as best you can. You turn her on, and then you see why she don't work.'

So, of course, when we turned on this process, we found some problems, and we know that. We are trying to solve those problems. Some of that has been discussed today, so I won't go over that. But I do feel we are making a lot of progress. For example, in October 1991, just a little more than a year ago, we had 43 CRADA's executed at the DOE laboratories. Today, at last count it was 293, so the number of CRADA's has increased by a factor of 7 in just 1 year. I am pleased that a good fraction of them actually went to Sandia, and I basically agree with everything-almost everything that Dr. Narath has said.

An issue I would like to touch on just a little bit is the statutory requirements that we have in DOE to oversee the CRADA process. We are trying to live within that in as efficient a way as we can. I would like to urge some caution in changing this. Those statutes were set up for a reason. The reasons were to try and prevent conflict of interest, unfairness, and competition with the private sector. It may be that they are not the best ways to do that, but in the urge to deregulate this we have to remember other problems we have had with deregulation.

One that comes to my mind is the savings and loan deregulation, and we don't want to have anything of that magnitude as we unleash our laboratories. I am also concerned in the present budget climate about the source of funding for technology transfer. Our labs are world famous. Dr. Shank's lab has a fantastic record of Nobel Prize winners, and I would like to believe that in the future we will continue to be world famous for the quality of our basic research, and, as we push to help industry, which I am very much in favor of, I think we want to be careful to keep that balance so that these very high quality people are still attracted to the laborato

ries.

I believe I will stop at this point since we are a little bit short of time. I would be happy to answer questions.

[Dr. Happer's statement, with attachments, may be found in the appendix.]

Chairman WYDEN. Doctor, thank you. That is very helpful. All of you have been an excellent panel. Let us just get on the record here that, as I said earlier, this is not a problem in my view that is generated because a bunch of people at Sandia or Berkeley or Washington get up in the morning and say let's be rotten to private businesses that are interested in technology transfer, and let's throw out as many obstacles and give them as much grief as possible. I think this stems from a variety of things. One which you touched on in your statement, Dr. Happer, is this is a new world, and there has been sort of a new order since 1989.

At the same time, we have had technology transfer statutes on the books for a long time. Dr. Bloch makes a call I think my constituents and a lot of members would agree with. We have to get beyond hearings. We have to produce results. You read these accounts, and I hope all of you-I don't know when you got here—