We find, for example, that the trend now is that for a number of years the number of advanced degrees in science and engineering has been doubling at the rate of once every 12 years.

Now, this has gone on for 40 years. If this trend can continue in the next decade, we will have doubled the present number. That is at least a minimum of what we require.

But if you look at the number of scientists and engineers that are going back to the universities to carry out the teaching load, this is falling way behind. Our studies indicate that 40 percent of the scientists and engineers we turn out should go back into the colleges and universities. If we do not do that, we will not be able to train those future scientists and engineers we want and we will certainly not keep up the quality. Add to that the fact that the laboratories and equipment of most universities and colleges are rapidly becoming obsolete and should be modernized. We have a real problem here. That problem, you see, is concerned with turning out adequate manpower, superbly trained as they should be.

The other side that you mentioned is the development side where, of course, if a country has the ability or the determination and the ability to specify certain areas that are going to take the complete or concentrated attention of the country, that is a short-range advantage. We have to weigh that with the priorities of effort, the interest on the part of our people, and the effort we decide to put into it. In this area I think we are doing very well, but there was a time that we were behind. That defect is what we are feeling at the pres

ent moment.

Mr. HOLIFIELD. We are going to have to adjourn promptly at noon today because the Chair has a bill coming up first thing on the floor. No further questions, Mr. Morse?

Mr. MORSE. No.

Mr. HOLIFIELD. Thank you, Dr. Waterman, and your staff, for being with us this morning and for the testimony that you have given.

The subcommittee will continue its hearings tomorrow morning in this room at 10 o'clock. We will have as witnesses from the Navy before us in the morning, Adm. W. F. Raborn, James H. Wakelin, Jr., and Vice Adm. G. F. Beardsley.

The subcommittee stands adjourned.

(Whereupon, at 11:58 a.m., the subcommittee adjourned, to reconvene at 10 a.m., Thursday, August 16, 1962.)

APPENDIX I.

REPORT TO THE PRESIDENT ON GOVERNMENT CONTRACTING FOR RESEARCH AND DEVELOPMENT, APRIL 30, 1962

EXECUTIVE OFFICE OF THE PRESIDENT

BUREAU OF THE BUDGET

WASHINGTON 25, D. C.

April 30, 1962

Dear Mr. President:

As requested by your letter of July 31, 1961, we have reviewed the experience of the Government in using contracts with private institutions and enterprises to obtain research and development work needed

for public purposes.

With

The attached report.presents our findings and conclusions. out attempting to summarize the complete report, we include in this letter a few of our most significant conclusions, as follows:

1. Federally-financed research and development work has been increasing at a phenomenal rate from 100 million dollars per year in the late 1930's to over 10 billion dollars per year at present, with the bulk of the increase coming since 1950. Over 80 percent of such work is conducted today through non-Federal institutions rather than through direct Federal operations. The growth and size of this work, and the heavy reliance on non-Federal organizations to carry it out, have had a striking impact on the Nation's universities and its industries, and have given rise to the establishment of new kinds of professional and technical organizations. At present the system for con

ducting Federal research and development work can best be described as a highly complex partnership among various kinds of public and private agencies, related in large part by contractual arrangements.

191

While many improvements are needed in the conduct of research and development work, and in the contracting systems used, it is our fundamental conclusion that it is in the national interest for the Government to continue to rely heavily on contracts with non-Federal institutions to accomplish scientific and technical work needed for public purposes. A partnership among public and private agencies is the best way in our society to enlist the Nation's resources and achieve the most rapid progress.

2. The basic purposes to be served by Federal research and development programs are public purposes, considered by the President and the Congress to be of sufficient national importance to warrant the expenditure of public funds. The management and control of such programs must be firmly in the hands of full-time Government officials clearly responsible to the President and the Congress. With programs of the size and complexity now common, this requires that the Government have on its staff exceptionally strong and able executives, scientists, and engineers, fully qualified to weigh the views and advice of technical specialists, to make policy decisions concerning the types of work to be undertaken, when, by whom, and at what cost, to supervise the execution of work undertaken, and to evaluate the results.

At the present time we consider that one of the most serious obstacles to the recruitment and retention of first-class scientists, administrators, and engineers in the Government service is the serious disparity between

We cannot

governmental and private compensation for comparable work. stress too strongly the importance of rectifying this situation, through Congressional enactment of civilian pay reform legislation as you have recommended.

3. Given proper arrangements to maintain management control in the hands of Government officials, federally-financed research and development work can be accomplished through several different means: direct governmental operations of laboratories and other installations; operation of Government-owned facilities by contractors; grants and contracts with universities; contracts with not-for-profit corporations or with profit corporations. Choices among these means should be made on the basis of relative efficiency and effectiveness in accomplishing the desired work, with due regard to the need to maintain and enlarge the long-term strength of the Nation's scientific resources, both public

and private.

In addition, the rapid expansion of the use of Government contracts, in a field where twenty-five years ago they were relatively rare, has brought to the fore a number of different types of possible conflicts of interests, and these should be avoided in assigning research and developClear-cut standards exist with respect to some of these poten

ment work.

persons in private life acting as advisers and consultants to Government, which was covered in your memorandum of February 9, 1962. Some other