Executive Summary Since unveiling its technology policy on February 22, the Clinton-Gore Administration has followed up with concrete actions designed to create jobs, strengthen America's technological and industrial leadership, and boost our standard of living today and tomorrow. In the first 9 months, the Administration has: þ Provided incentives for private-sector research and development and new business formation by extending the R&D tax credit and reducing the capital gains tax for investments in small businesses; þ Developed a National Export Strategy, including the elimination of export controls on computers and telecommunications that will free up $35 billion in high-tech exports; þ Aggressively pursued bilateral and multilateral trade agreements (NAFTA, U.S.-Japan, Uruguay Round) that will expand access to foreign markets for America's high-tech companies; þ Shifted Federal R&D priorities toward civilian technology, with dramatic expansion of initiatives such as the Advanced Technology Program, manufac- turing extension, the Small Business Innovation Research program, and NASA's new Technology Investments Package; þ Promoted defense conversion through the highly successful Technology Reinvestment Project and comprehensive procurement reform; þ Invested in worker skills required for the high-performance workplace of the 21st century and developed an aggressive program for investing in educa- tion and training technologies; þ Developed an action plan for the National Information Infrastructure and ordered the transfer of 200 MHz of spectrum from the Federal Government to the private sector to jump-start new wireless technologies; þ Forged industry partnerships in sectors such as electronics, autos (Clean Car), energy and environment, and advanced transportation; þ Expanded Federal investments in basic research through agencies such as the National Science Foundation; and þ Made better use of information technology a cornerstone of its efforts to "reinvent government," by, for example, moving toward electronic procurement. Collectively, these initiatives will lead to economic growth, the creation of high-wage jobs, a cleaner environment, and a continuation of America's leadership in basic science goals established in the Administration's February 22 statement on technology policy. As noted in that document, the Administration believes strongly that: þ Technology is the engine of economic growth, accounting for over half of America's long-run productivity. þ Leadership in the use and deployment of technology is also essential for the achievement of other national goals, including sustainable development, energy efficiency, an industrial base capable of meeting our national security requirements, and a government that works better and costs less. þ The United States must establish a world-class environment for private- sector investment, given the mobility of capital and technology in today's global economy. For that reason, tax, trade, macroeconomic, regulatory, and human resource policies are all key to making the United States second to none in the commercialization of new technologies. þ The Administration's technology policy will not be successful without the establishment of a genuine partnership with industry, labor, and academia. Given the rapid pace of technological change, government programs will not be successful unless they are tightly coupled to industry requirements. This document outlines the Administration's accomplishments and indicates its plans for the future. The President's technology policy is very much a "work in progress" and the Administration welcomes suggestions for enhancing and accelerating these initiatives. Technology for Economic Growth: A Checklist of Clinton Administration Key Accomplishments Establish clear policies for the Federal Government's role in civilian technology, including a shift in the Federal R&D balance for civilian technology toward a 50/50 ratio. Developed within the Administration's first month an explicit, aggres- sive plan for using technology to support America's economic growth. Submitted and advanced a budget for FY 1994 that included an addi- tional $2.6 billion investment in civilian R&D, moving the government toward greater civilian-military balance in Federal R&D support. Launch the Technology Reinvestment Project (TRP) to stimulate the transition from defense to civilian industrial capabilities. Conducted a national outreach initiative to ensure maximum TRP participation by U.S. industry, generating 2,850 proposals for this unprecedented, ARPA-led multiagency program. Selected 41 projects, accounting for $140 million in requested Federal matching funds the first wave of grants to projects designed to create jobs by promoting new, dual-use technologies. Planned to announce remainder of awards in this $472 million merit- based program in November. Expand dramatically the Advanced Technology Program (ATP) to spur industry's development of high-risk, high-payoff commercial technologies. Strongly endorsed the tenet behind this cost-shared program with industry to support high-risk, high-potential commercial technologies, a major change in policy from previous Administrations. Designed the scale-up of the ATP to ensure that it has major impact on the U.S. economy and won congressional support for dramatic funding expansion for this program to $200 million in FY 1994, up from $68 million at the Commerce Department's National Institute of Stan- dards and Technology. Planned to announce 60 new ATP awards to industry in FY 1994, plus three first-time strategic program competitions. Increase access to commercially useful technology at Federal R&D agencies. Made a clear break with prior Administrations by placing heavy empha- sis on dual-use technology development by the Department of Defense to ensure that military and commercial sectors benefit mutually from technology advances and proposed an additional $260 million for this effort. Declared goals and established a specific plan for strengthening and streamlining linkages between Department of Energy laboratories and U.S. industry. Upgraded technology commercialization priorities at the National Aero- nautics and Space Administration. Mobilize Federal resources and policies to support the National Informa- tion Infrastructure (NII). Set an ambitious action agenda for a National Information Infrastructure that clarifies private- and public-sector responsibilities and makes clear the fundamental requirements for universal citizen access and commercial-sector benefits. Organized a multiagency task force to coordinate the Federal Government's NII activities and to work closely with industry in carry- ing out the action agenda and in addressing specific policy issues. President Clinton signed legislation to transfer to the private sector a portion (200 MHz) of the radio frequency spectrum now used by Federal agencies, and to allow competitive bidding in granting new licenses thereby promoting private investment in the National Information Infrastructure. Initiated a grants program to ensure all Americans have access to the NII and won congressional approval for $26 million to begin the initiative. Promote technology-based exports by revamping and liberalizing govern- ment export control and promotion programs, and by establishing and carrying out supportive trade policies. Completed a major review of government's trade promotion and export policies and operations and developed a strategy to boost U.S. exports by 60 percent and generate 6 million new jobs by the year 2000. Freed up $35 billion in exports by reducing controls on U.S. computer, supercomputer, and telecommunications products, raising the threshold for licensing computer exports, and proposing a dramatic change in the definition of a supercomputer and removal of prior export licensing requirements for most telecommunications exports. Began to streamline and improve the government's export promotion programs, creating a pilot one-stop shop to eliminate the maze of Federal offices that exporters must now contact. Advanced the NAFTA agreement, which is expected to bring substantial benefits for U.S. technology-based industries and workers. Establish a network of manufacturing extension centers to assist small and medium-sized businesses to modernize. Created a comprehensive plan to scale up from seven government- supported centers to a nationwide network of 100 centers in a Manu- facturing Extension Partnership by 1997. Jump-started this national network through the defense Technology Reinvestment Project, and gained congressional support to fund addi- tional centers in FY 1994. Make worker training and education more accessible and more productive to better prepare the American workers of tomorrow. Established a new Office of the American Workplace in the Department of Labor to speed the adoption of high-performance work practices, including people-oriented technology strategies. Initiated a thorough review of federally funded retraining and assistance programs with the aims of consolidating the patchwork of existing services and of improving program effectiveness. Proposed creation of a national system of standards for occupational skills to improve the match between workers' skills and businesses' workforce needs. (Legislation is pending in Congress.) Advocated an initiative to build an effective school-to-work system that prepares young people for high-skill, high-wage jobs. Developed an aggressive and innovative program for investing in education and training technologies. Create new Federal partnerships with industry to strengthen U.S. economy and create jobs through the development and commercialization of technology. Established a partnership with the auto industry for a new generation of more energy-efficient vehicles, the Clean Car Initiative, and agreed upon aggressive, far-reaching goals. Entered into a record number of Cooperative Research and Development Agreements between Federal technology agencies and U.S. industry, with an additional 1,600 new joint projects expected this year. Began or strengthened collaborations with industry through consortia covering semiconductors, display technology, textiles, biosensors, aero- space alloys, polymer blends, and microelectromechanical systems. Create a business environment that fosters innovation and forward-looking private-sector investments. Won congressional approval of tax incentives for private-sector invest- ment in R&D and new business formation, including a 3-year extension of the R&D credit and a targeted capital gains reduction for investments in small businesses. Harmonize environmental and economic objectives and improve efficiency in the use of energy resources. Developed a strategy for reducing the growth of greenhouse gases linked to global warming, including initiatives relying on increased energy efficiency that will stimulate technology investments and strengthen the U.S. position in the global environmental marketplace. In addition to the Clean Car initiative, launched separate initiatives: to fund a long-term Federal R&D effort for natural gas and to develop environmentally sound technologies and to boost exports of these technologies. Organize government technology efforts to perform more efficiently and effectively, and to work more closely with the private sector. Created a strong, new system to better coordinate technology plans and programs across the government and with industry. Championed key legislative proposals to increase coordination across government agencies and to improve the effectiveness of Federal technology programs. Made advanced civilian technology a top priority at the Commerce Department for the first time and developed a department-wide strategy for meeting industry's technology-related development, commercializa- tion, and trade needs. Launched a wide-ranging effort to reinvent government, including the start of a major push to capitalize on new technologies to revamp Federal agency operations and better serve industry and the public. Maintain U.S. leadership in basic science, mathematics, and engineering. Worked with the Congress to increase the National Science Foundation's FY 1994 budget by 11 percent to a total of $3 billion, providing: strong support for fundamental research critical to manufac- turing, advanced materials, environmental technologies, and biotech- nology; establishment of a technical education program geared to community colleges; and doubled support for modernizing academic research facilities and instrumentation. Putting Technology to Work for America's Future On February 22, the Clinton Administration issued Technology for America's Economic Growth, A New Direction to Build Economic Strength, enunciating a technology policy that takes a realistic and comprehensive view of intensifying global economic competition. This policy recognizes that industry is the primary creator of new technology and the main engine of sustained economic growth. It assigns the Federal Government a supporting role, performing as partner to industry by facilitating technology development and application. The February report provides a blueprint for a far-reaching set of specific actions. At its foundation are three central goals that provide touch- stones for the government's overall role in science and technology: þ Long-term economic growth that creates jobs and protects the environment; þ A government that is more productive and more responsive to the needs of its citizens; and þ World leadership in basic science, mathematics, and engineering. Since February, the Administration has put into place programs and initiatives to fulfill these goals. Manufacturing research programs have been expanded, education and training programs have been restructured, the entire Federal Government has begun the process of reinventing itself, and basic research in science and engineering is benefiting from a sustained level of investment. Meeting the Challenges As the pace of technological progress accelerates and other nations increase their mastery of technology development and application, the public and private sectors must confront together the challenge of devising and carrying out strategies that foster innovation and enable U.S. industry to realize the commer- cial benefits of new technology. Challenges abound. One is to respond to the increasing complexity and uncertainty of technological innovation, engendering costs and risks that may be too great for even the largest of firms to undertake on their own. Another is to maintain a vigorously competitive high-technology sector, where average annual compensation exceeds by 20 percent the average for all manufacturing. High-technology products account for a rapidly increasing share of world manufacturing output, nearly doubling to about 35 percent since 1980. The United States, however, has not benefited fully from the boom in high- technology markets. Over the last decade, exports of high-technology products as a share of all U.S. merchandise exports increased only about 4 percentage points. Imports of high-technology goods grew much more rapidly, recording a 20 percentage-point jump in the share of all U.S. imports. Consequently, the U.S. share of global shipments of high-technology goods dropped by one-tenth, from 40 percent to 36 percent of the world total. New technology also is vital to the health of conventional industries, leading the way to market-building improvements in existing products and services, manufacturing processes, and overall business performance. In the service sector, the tools of the Information Age with each new generation of technology growing in capability and flexibility help create new opportunities for business growth. New technology also underpins productivity increases, job creation, and gains in wages. The real wage of the average American worker increased eightfold over the last century, the direct result of an eightfold increase in average productivity. Advances in technology better machines, organizational improvements, and more-skilled workers account for as much as three-fourths of this productivity growth. In recent decades, however, declining rates of investment in production technologies have contributed to sluggish productivity growth. At the same time, the educational system has not produced adequate numbers of workers prepared for the modern workplace, resulting in a large pool of low-skilled workers being relegated to low-wage jobs. Over time, lagging investment in new technology contributes to a less-skilled workforce and, in turn, to worsening employment opportunities (lower-quality jobs and lower wages). Through direct, purposeful investments, leveraging of existing re- sources, and new programs, the Administration aims not only to strengthen the Nation's technological leadership but also to ensure that the Nation realizes the wealth- and job-creating benefits of innovation. A key component of its National Economic Strategy, the Administration's technology policy: þ aims not only to accelerate technology development and commercialization but also to promote the diffusion of productivity-enhancing advanced technolo- gies, technical know-how, and modern business and human-resource practices across industrial sectors; þ balances the need for economic security in the post-Cold War era by increasing the civilian portion of the Federal science and technology budget to more than 50 percent by 1998, allowing for enhanced investments in both basic and applied science and engineering; þ addresses the national security need to maintain a technologically superior military by advancing a "dual-use" strategy that reflects the increasing depen- dence of the defense sector on technologies initially developed for commercial markets; þ seeks to mobilize a sustained continuous effort to strengthen the Nation's economic competitiveness by fostering partnerships between and leveraging the strengths and unique capabilities of government, industry, labor, and educational institutions; þ strives to create a regulatory and domestic economic environment favorable to capital formation and private-sector investment in R&D, new plant and equipment, worker training, and continuing enhancement of the infrastructure that supports technology development, manufacturing, and efficient commerce, particularly the information infrastructure; þ promotes measures to enhance competitive opportunities for small and medium-sized businesses; and þ emphasizes the importance of raising the skill level of the American workforce. Technology Development and Commercialization Competitive pressures in commercial markets drive innovation. Industrial and national economic growth depends not only on the ability of companies to develop new technologies, but also on the speed and efficiency with which they apply new technologies, regardless of where they originate. The Administration's technology initiatives aim both to prime the pump of com- mercial innovation and to help industry apply new technologies to production processes and commercial products. They also seek to develop an effective means of monitoring science and technology developments in other nations, enabling U.S. firms to identify advances they might exploit to their competitive advantage. In fostering development and diffusion of strategically important new technologies, the Federal Government has begun to work more closely than ever before with U.S. industry to identify high-priority technology needs and opportunities and to determine the appropriate roles of the public and private sectors. For example, cost sharing between the Federal Government and the private sector will enable industry to pursue high-risk technologies anticipated to have a significant commercial impact. Federal funding will be used primarily to provide incentives to industry to undertake high-priority technology- development activities that have not attracted private-sector investment because of high technical risk, prohibitive costs, long pay-back horizons, or anticipated returns that are not appropriable to individual firms or distinct industrial sectors. Technology Reinvestment Project The Technology Reinvestment Project (TRP), launched in March to stimulate the transition to a "growing, integrated, national industrial capability," is devoting over 85 percent of its $472 million budget to technology development and deployment activities. Managed by the Defense Department's Advanced Research Projects Agency (ARPA) in cooperation with five other Federal agencies, the TRP elicited 2,850 proposals of projects seeking a total of $8.5 billion in Federal matching funds. The majority of proposals nearly 2,000 were in the category of technology development for creating new technologies with the potential for commercialization in 5 years. In late October, the President approved the first projects selected for funding. (See page 51.) Advanced Technology Program The Advanced Technology Program (ATP) works with U.S. industry to advance the Nation's competitiveness and economy by sharing part of the cost of developing high-risk but powerful new technologies that underlie a broad spectrum of potential new applications, commercial products, and services. Through cooperative agreements with individual companies or groups of companies, large and small, the ATP invests in industry-proposed projects to develop technologies with the potential to improve industrial performance and pay economic dividends to the Nation. The ATP is explicitly focused on the objective of economic growth as its sole aim, not as a derivative spin-off benefit. Managed by the Commerce Department's National Institute of Standards and Technology (NIST), the program uses a rigorously competitive process free of political influence to select proposals for support, with both technology and business plans assessed. For example, private-sector business experts are brought in to assure that business assessments are probing and complete. New ATP Support and Directions. The ATP holds great potential to be an effective, highly productive element of the Nation's technology strategy. The challenge is to scale the ATP to a major national program, while retaining its essential characteristics of objectivity, fairness, and efficiency. The Clinton Administration has taken the first steps toward scale-up of the ATP. With the Administration's FY 1994 budget proposal of $199.5 million receiving congressional approval in October, the ATP is moving from a pilot-level to a national-scale program. To date the ATP has used general competitions open to proposals in all areas of technology as its sole investment mechanism. As it grows, the ATP will be able to deepen support in selected, well-defined program areas, while continuing to hold competitions open to promising ideas from any area of technology. While the Administration's target budget of $750 million in 1997 represents a significant increase for the ATP, it is still less than one-half of one percent of the Nation's R&D budget. The effect of the ATP will be diluted if it is spread evenly across every area of technology. Each program will have well-defined technological and business goals. Often these will involve the parallel development of a set of interlocking R&D projects. By managing groups of projects that will complement and reinforce each other, the ATP will be able to have the greatest possible impact on technology and the economy. Specific program areas will be selected based on ideas from industry to preserve the strongly industry-oriented outlook that has characterized the ATP from the start. For each program, the individual ATP projects will still be selected under the existing competitive process. The Administration has decided that a typical program will run for 5 or more years and require about $20 million to $50 million per year from the ATP. The duration and level of funding will depend on the scope of each program as it is defined in cooperation with U.S. industry. NIST is seeking industry input on the direction, scope, and content of the ATP program. The next round of competitions will begin in January 1994. During FY 1994, NIST expects to announce about 60 awards in general competitions and to run three first-time competitions in the strategically redesigned ATP. Alliances to Tackle Technology Challenges A central tenet of the Clinton-Gore Administration's technology policy is that industrial consortia will be preferred performers of commercially oriented R&D, helping to ensure that government-supported projects are driven by market needs. Examples of government-facilitated research alliances include: þ Clean Car Initiative In a historic research partnership, the Federal Govern- ment and the Nation's Big Three automakers committed in September to a 10-year technical collaboration that will combine the basic research expertise and advanced facilities of the Federal laboratories with the market-responsive engineering and applied research capabilities of General Motors, Ford, and Chrysler. The partners have set the ambitious long-term goal of developing the technologies for a new generation of cars and trucks that are three times more fuel efficient than today's vehicles. (See page 63.) þ U.S. Display Consortium The Advanced Research Projects Agency announced in July that it is providing $20 million to advance a 10-firm consortium's efforts to organize U.S. expertise to develop the national infra- structure required to support a world-class, U.S.-based capability in the manu- facture of high-definition displays. þ SEMATECH Funding from ARPA will continue Federal matching support of the consortium of U.S. integrated circuit producers, which was formed to advance the Nation's capabilities in semiconductor manufacturing technology and strengthen the domestic base of suppliers of semiconductor manufacturing equipment. þ Advanced Communications Technology Satellite An experimental testbed for evaluating concepts and technologies for advancing on-demand, flexible communications services, this National Aeronautics and Space Administration (NASA) satellite now has attracted 21 partners from industry and 25 from universities. Over the next 2 years, more than 50 experiments are scheduled in areas ranging from business communications to supercomputer networking to remote delivery of health care services. The Administration is continuing to pursue and encourage research alliances in several other strategically important technology areas, such as new construction technologies, intelligent control and sensor technologies, rapid prototyping, and environmentally conscious manufacturing. Leveraging Federal Agencies' R&D Since January, the number of cooperative research projects between U.S. companies and Federal laboratories has increased significantly, reflecting an increasing emphasis on aligning agencies' R&D with industry's technology needs. Within the Department of Energy's (DOE's) network of 30 laboratories, for example, the more than 271 new cooperative research projects initiated since January represents an 82-percent increase in the agency's total number of cooperative R&D agreements (CRADAs). Of DOE's 601 CRADAs, 29 percent are with small businesses and about 75 percent focus on information and communications, advanced materials, or manufacturing. At the Commerce Department's National Institute of Standards and Technology, the number of CRADAs has surged to 385, with more than 110 new agreements signed since February. About 50 percent are with small businesses. In the aeronautics program at NASA, the number of cooperative projects with industry and government users of aeronautics technology has increased to more than 400. Examples of new collaborations include: þ Sandia National Laboratories, in April, entered into a $103 million, multiyear collaboration with SEMATECH to develop advanced technologies for semiconductor manufacturing. þ NIST has launched, since January, three new consortia in the areas of biosensors, aerospace alloys, and advanced processing of polymer blends. Twenty-eight firms are participating in the new consortia. þ In the area of microelectromechanical systems or computer-chip-sized machines NASA is in the process of finalizing 11 cooperative agreements with industry. This complements a larger ARPA program. Increasing Access to Commercially Useful Technology On their own and together, Federal science and technology agencies are re- evaluating existing technology transfer mechanisms and experimenting with new methods for delivering commercially useful services and technologies to U.S. industry. At DOE, the agency's commitment to enhancing economic competitiveness was strengthened by a package of initiatives for working more closely with U.S. businesses. The initiatives were spelled out in DOE's Partnerships for Global Competitiveness, released in late July by Energy Secretary Hazel R. O'Leary. The strategic plan provides a blueprint for making the department's laboratory system user friendly, market driven, and consumer oriented. Among other things, the plan calls for cutting in half the average time for processing new CRADAs, and it permits laboratory directors to commit, at their own discretion, as much as $500,000 in DOE funds to help support cooperative research projects with industry. DOE laboratories are exploring new avenues for commercializing their R&D. Several have developed venture capital funds and programs to "spin off" new companies. In August, the Los Alamos National Laboratory formed a partnership with the Microelectronics and Computer Technology Corporation (MCC), in which MCC, a 70-firm research consortium, will help the DOE lab to transfer technology to its member companies, spin off companies, and explore other commercialization approaches. NASA has recently established several initiatives for cooperative work with industry. The Office of Advanced Concepts and Technology is charged with instilling technology transfer more directly into the fabric of the agency by ensuring that research is focused not only on the agency's needs but also on national needs. This office will work with all NASA Field Centers and NASA headquarters to ensure that the agency has explicit plans for making technology transfer a high priority. In FY 1994, NASA will establish an Industry Technology Program in which industry-led teams adapt and develop new technologies to applications in aerospace and other commercial sectors. This program will support high-risk research and applications with a strong potential for yielding commercial benefits and strengthening the competitive posture of U.S. industry. Technology priorities will be set by industry, and winners of cost-shared grants will be competitively selected on the basis of technical and business merit. In still another initiative, the Advanced Small Spacecraft Technology program, NASA will work with industry to develop and apply advance minia- turization technology for spacecraft design and instrumentation. Such tech- nology promises to reduce space-mission costs and development times, poten- tially broadening the range of space-based commercial applications. Industry- led "integrated product development teams" will define the content of the program and develop implementation plans. Projects will involve collaborators from industry, government, and universities. Technology Infrastructure The Administration is moving to correct chronic underinvestment in infrastructural technologies essential to innovation and improvements in manufacturing. Sometimes called generic technologies because of their broad industrial utility, infrastructural technologies underpin the Nation's economic competitiveness. The market does not provide adequate incentives for investing in productivity-enhancing infrastructure technologies. Because returns on R&D devoted to the development of such technologies, which include measurement tools, evaluated technical data, and testing and processing methods, are not easily recovered by individual firms, companies are reluctant to invest on their own. Yet, these and related technologies are fundamental to innovation and manufacturing improvements. In the manufacture of complex integrated circuits, for example, testing is estimated to account for 30 percent of the cost. To capture the economic benefits of innovation, the Nation also requires other elements of a broadly supporting infrastructure, which enhances industry's ability to assimilate and capitalize on new technologies and new technical and scientific information. These critical elements include a modern manufacturing base, an advanced transportation system, and, as the Nation and world proceed further into the Information Age, a National Information Infrastructure. National Information Infrastructure. Facilitating the development of a National Information Infrastructure (NII) is a top Administration priority, a necessity for economic growth in the 21st century. A web of advanced commu- nications networks that will put vast amounts of information in all its forms at users' fingertips, the NII will spawn a range of benefits and contribute directly to economic growth, U.S. technological strength, and the creation of productive jobs. As explained on pages 41 to 47, the Administration released in Sep- tember an agenda for action that assigns to the private sector the lead role in developing and deploying the NII. The Federal Government's role will be to complement and enhance private-sector activities by creating a favorable regulatory and policy environment, supporting advanced research, developing applications that improve access to government services, and procuring leading- edge NII hardware and software. One such application-oriented activity under way at the Commerce Department is a program to establish an Advanced Manufacturing Systems and Networking Testbed (AMSANT). Working closely with industry groups, Commerce researchers at the National Institute of Standards and Technology will use the testbed to learn how with appropriate information and networking standards the NII could benefit large and small manufacturers alike through electronic product data exchange, electronic commerce, and flexible manufacturing. The Administration's FY 1994 budget allocates $1 billion for R&D work on high-performance computing and communications, including a new $100 million program to develop information-technology applications in educa- tion, manufacturing, health care, and other areas. Strengthening NIST Laboratory Programs. Responding to industry's needs, the Administration has strongly and successfully supported expansion of the industry-oriented laboratory research and services at the Commerce Department's National Institute of Standards and Technology (NIST). With a 21-percent increase in its FY 1994 budget for its laboratory programs (to $226 million), NIST will be able to broaden and deepen its emphasis on U.S. industry's infrastructural technology needs. NIST, whose mission is to promote U.S. economic growth by working with industry to develop technology, measurements, and standards, will devote the majority of its additional laboratory resources to expanding efforts in high- performance computing and communications, advanced manufacturing, ad- vanced materials and processing, electronics, and biotechnology. Manufacturing Extension Partnership. The economic benefits of innovation flow most directly to nations with a strong, modern manufacturing base. However, the core of the U.S. manufacturing base the nation's 350,000 small and medium-sized manufacturers has been lagging international compet- itors in the adoption of productivity-enhancing equipment, production methods, and organizational practices. The Administration is progressing in its plans to build a national network of manufacturing extension centers a comprehensive industrial outreach program to help smaller firms modernize their operations and improve their competitive performance. Called the Manufacturing Exten- sion Partnership, which is managed by NIST, the network is envisioned to grow to some 100 electronically linked service delivery centers by 1997. Progress toward reaching this objective is discussed in the section on manufac- turing initiatives. Technology "Road Maps" and Competitive Benchmarks. In coopera- tion with industry, the Commerce Department's Technology Administration has committed to develop strategic technology road maps to help guide industry and government R&D efforts and to promote the efficient allocation of public- and private-sector resources. In a complementary initiative, the Technology Administration now will carry out comparative quantitative assessments of how the U.S. technology sector is performing relative to international competition. Industry will set the agenda for these much-needed benchmarking evaluations. Together, the technology road maps and the comparative assessments will provide essential information for guiding the formation of Federal policies and programs and for helping industry establish clear technology-development objectives. Access to Foreign Science and Technology. The United States has not had a coherent approach to monitoring and reporting on science and technology developments in other nations, and, in general, U.S. firms have not exploited technologies developed elsewhere. Many foreign companies, in contrast, have been extremely successful in commercializing technologies that originated outside domestic borders. To help increase U.S. industry's awareness of promising technologies and practices developed in other nations, the Commerce Department will expand its Japan Technology Program to broaden U.S. industry's access to Japanese technical and scientific information. By 1995, the department aims to have counterpart programs for translating and disseminating technical informa- tion originating in other Pacific Rim nations and the European Community. Learning by Showcasing Successes. Administered by the Technology Administration in the Department of Commerce, the National Medal of Tech- nology is an annual Presidential award that recognizes individuals, teams, or companies whose technological innovations have dramatically contributed to an improved standard of living, job creation, and economic growth. On September 27, Commerce Secretary Ronald H. Brown and President Clinton announced the nine 1993 National Medal of Technology recipients. On September 30, President Clinton and Vice President Gore awarded the National Medal of Technology to this year's medalists. Beyond highlighting America's top technological innovators, the National Medal of Technology is an example of successful government/private- sector partnerships. All members of the judging committee are from the private sector; the Foundation of the National Medals of Science and Technology, a non-profit organization whose primary mission is to support the medal pro- gram, has a Board of Directors that is comprised of some of this country's leading technology executives. The Malcolm Baldrige National Quality Award also demonstrates how effective government/private-sector partnerships can be. The President and Secretary Brown in October announced this year's two winners: Eastman Chemical Company and Ames Rubber Corporation. Each is a technology- intensive manufacturer that serves as a role model for quality management to achieve greater competitiveness. In another Clinton Administration initiative, NIST, which manages the program, now is reaching out to both the education and health care communities to assist them in applying quality management criteria to these areas. People-Oriented Technology Policy The principle underlying the Administration's technology policy is that technol- ogy development is not an end in itself but rather a means to enhancing the standard of living of the American people and the competitiveness of American business. New and planned initiatives, led by the Departments of Labor and Education, are contributing to this aim by encouraging the creation of high- performance workplaces and by helping to upgrade the skills of American workers. In July, the President, Labor Secretary Robert Reich, and Commerce Secretary Ronald Brown convened a Conference on the Future of the American Workplace in Chicago. This conference brought together leaders from business, labor, government, and academia, as well as front-line workers, to highlight workplace success stories and the need for more widespread adoption of high- performance work practices, including people-based technology strategies. Upgrading Training and Skills. The Labor Department is reviewing existing federally funded retraining and unemployment assistance programs. It is devising new plans for making effective, industrially relevant training programs accessible and affordable to all workers who need to upgrade their skills or acquire new skills in response to changing job-market demands. The Labor Department also has developed a proposal, now pending in Congress, to create a national system of standards for occupational skills to improve the match between workers' skills and businesses' workforce needs. Office of the American Workplace. The Labor Department's newly created Office of the American Workplace (OAW) is charged with promoting the widespread adoption of high-performance work practices in both the private and public sectors. It will promote specific initiatives to encourage employee involvement in the development and deployment of new technologies, helping to ensure that technology enhances rather than demeans the skills of American workers. Another emphasis of OAW is enabling more cooperative worker- management relations and greater union involvement in efforts to introduce new technology and organizational practices into the workplace. This initiative will be aided by an enhanced Labor Department database of best-practice worksites and wide distribution of the information in the database. Partnerships to Promote Worker Training. Working with other Federal agencies and State and local organizations, OAW and the Labor Department's Employment and Training Administration are helping technology extension services to develop programs that enable firms to adopt high- performance work practices, integrate new technologies with innovative work systems, and involve employees in technology development and deployment decisions. þ With a grant from the Labor Department, the National Alliance of Business will establish a National Workforce Assistance Collaborative, which will provide information and technical assistance on human resource development practices to small and medium-sized businesses. Training tools and other center products will be made available through the Commerce Department's Manu- facturing Extension Partnership, State industrial modernization programs, teaching factories, the Small Business Administration's Small Business Devel- opment Centers, community and 4-year colleges, and other assistance providers. þ The State of Maine will use a grant from the Labor Department and NIST to create a human resources development and technology extension service for small and medium-sized businesses. þ A recent Labor Department grant to the Massachusetts Bay State Skills Corporation for the Industrial Modernization and Workforce Development Project will be used to help 55 small machine shops in Western Massachusetts respond to worker needs and facilitate modernization efforts, including the formation of a flexible manufacturing network. Preparing Tomorrow's Workers. Championed by the Administration, the School-to-Work Opportunities Act would create partnerships of schools, businesses, local governments, and others to build an effective school-to-work system that prepares young people for high-skill, high-wage jobs. Managed by the Departments of Education and Labor, the proposed initiative, designed to correct a serious weakness in the Nation's education system, would use a flexible combination of grants and waivers that enable communities to develop programs tailored to local needs and responsive to changes in the local economy and job market. A portion of funding will go for direct grants to high-poverty areas, which confront unique challenges in implementing school- to-work systems. Students who successfully complete a school-to-work program will receive a high school diploma, an occupational skill certificate, and, if appro- priate, a certificate or diploma from a post-secondary institution. The skill certificate will be a portable, industry-recognized credential that certifies competency and mastery of specific occupational skills. Leadership in Basic Science, Mathematics, and Engineering Nothing speaks to the Clinton Administration's commitment to the Nation's future economic and social progress more than the priority it has assigned to basic research in science, mathematics, and engineering. The February tech- nology strategy noted the inseparable links between fundamental scientific research and technological progress: "scientific advances are the wellspring of the technical innovations whose benefits are seen in economic growth, im- proved health care, and many other areas." The excellence and vitality of the U.S. scientific enterprise was demonstrated once again by the most recent Nobel Prize announcements, for American researchers received a majority of the awards in scientific areas. The Administration aims to ensure that this comparative advantage works to the full benefit of the American people. For example, in keeping with the Administration's investment priorities and its commitment to basic research and education, the Congress recently increased the National Science Foundation's budget by 11 percent to a total of $3 billion. þ Strong support was provided for fundamental research activities that are critical to progress in strategic areas including manufacturing, advanced materials, environmental technologies, and biotechnology. þ In education, the Foundation is now establishing a technical education program that is geared to community colleges. þ NSF also will be able to double the amount of support it provides for the modernization of academic research facilities and instrumentation. Because university laboratories often serve as testbeds for new technologies, this additional investment has the potential to advance the state of the art in many areas of electronics and manufacturing. A vigorous and healthy science and engineering research enterprise is essential if the Nation is to compete successfully in world markets both today and in the 21st century. The Administration is committed to providing strong, sustained support for basic research and education in science and engineering. Environment for Innovation and Private-Sector Investment The Administration is taking steps to create a regulatory and domestic eco- nomic environment that fosters capital formation and private-sector investment in R&D, new plant and equipment, and worker training. Most significant is the President's $496 billion deficit-reduction package, which will decrease Federal borrowing and promote national saving. Without compromising public safety, health, and environmental concerns, new initiatives will streamline regulatory and enforcement procedures, eliminate regulations rendered obsolete or ineffec- tive by new information or by advances in scientific and technical capabilities, and minimize industry's cost of compliance. Parallel activities are focusing on Federal procurement policies and regulations, particularly those of the Defense Department, with aims that include integrating defense and commercial production capabilities and creating markets for new advanced technology products. Efforts also are under way to increase the amount of "patient capital" available to small technology companies that may be several years away from refining their research results and prototypes into marketable products. For example, on August 5, the Small Business Administration (SBA) published for comment new regulations intended to help match emerging technology compa- nies with lenders willing to provide long-term financing. The proposed regula- tions are expected to increase the amount of patient capital available through the SBA's Small Business Investment Companies (SBICs), already a significant source of financing for small technology firms. During the 5-month period ending June 30, 1993, SBICs made nearly 700 financings totaling more than $300 million. About 1 in every 5 SBIC dollars went to a small technology firm. In addition, newly passed legislation provides tax incentives to promote SBIC investments in small businesses owned by persons who are socially or economically disadvantaged. Other examples of new or planned initiatives include: þ The President has signed into law tax incentives for private-sector invest- ment in R&D and new business formation, including a 3-year extension of the R&D credit and a targeted capital gains reduction for investments in small businesses. þ The National Performance Review, led by Vice President Gore, has identi- fied concrete ways to use information technology to improve government services and cut costs, and agencies now are beginning to make changes that would have been unthinkable until recently. þ President Clinton has signed legislation that reduces antitrust barriers to the formation of joint-production ventures. þ The Defense Performance Review a top-to-bottom evaluation of the Defense Department that is nearing completion will yield recommendations leading to streamlined acquisition procedures (including the 32,000 military specifications for DOD-purchased products) and to additional measures that will foster integration of the defense and commercial industries. þ In September, the Environmental Protection Agency completed a review of its policy and regulatory procedures, resulting in recommendations for ensuring that current scientific knowledge is incorporated into agency decision making. þ The Administration's Information Infrastructure Task Force is developing recommendations for reforming Federal laws and regulations to increase competition and ensure universal access in communications markets. þ The SBA issued, on January 26, a new policy directive implementing legislation that significantly expands the Small Business Innovation Research (SBIR) Program, which has the goal of commercializing the results of research performed for Federal agencies. The 11 participating agencies have been directed to increase their SBIR funding by 20 percent, or to 1.4 percent of their extramural budgets. By FY 1997, the agencies are directed to increase program funding to 2.5 percent of their extramural budgets, raising the total amount of SBIR funding to about $1.2 billion. þ The SBA began implementing a 3-year pilot program designed to foster research and commercialization partnerships between non-profit research institutions and small technology businesses. The National Science Foundation, Department of Health and Human Services, Department of Energy, Department of Defense, and NASA are participating. The first solicitation from the Small Business Technology Transfer Pilot Program was made in September. During the first year, about $25 million will be awarded; by FY 1997, program funding will triple. Coordinating Actions The initiatives and plans described here are complemented and strengthened by other technology-related measures advanced by the Administration, which are described later in this report. All of these activities are being coordinated across the Federal Government under the leadership of the White House. A revitalized coordinating mechanism in the Office of Science and Technology Policy (OSTP) will provide a strong focal point within the Executive Branch for planning and overseeing Federal science and technology expenditures. It also will align R&D budget allocations to Federal agencies with national priorities, ranging from basic research to manufacturing to education. It will work closely with the National Economic Council (NEC), which is coordinating technology policy with other important elements of the Administration's economic strategy, including trade, tax, and regulatory policies. For the first time, the Commerce Department, which is charged with helping to enhance the technological capabilities of American industry and business, is integrating its technology responsibilities with its overall mission of fostering, promoting, and developing the foreign and domestic commerce of the United States. Under the leadership of Commerce Secretary Brown, the Department's Technology Administration has developed an Advanced Civilian Technology Strategy, which it has just released for public and industry comment. Within the Federal Government, there is a new spirit of cooperation. Agencies are forming partnerships to address U.S. industry's technology needs. The ARPA-led Technology Reinvestment Project is a prime example. Over 300 personnel from six agencies participated in reviewing proposals submitted during the first round of applications. Another example is the collaboration between the Commerce Department's National Institute of Standards and Technology and DOE's Sandia National Laboratories, which are developing plans for joint projects in key areas of advanced manufacturing technology, including intelligent machines, modeling and simulation, and networking and communications. Likewise, the Departments of Commerce and Labor have developed a partnership to promote high-performance work and quality management. The Clinton Administration has charged every Federal agency with linking up more closely with its customers. Government technology agencies have a special responsibility to better reach out and listen more closely to industry. Moreover, all agencies are being directed to better measure their performance and results. As the Administration's technology initiatives break important new ground, they must be held to high standards to ensure a high rate of return on the public investment. Initiatives to accelerate technology development and application should spur private-sector commercialization efforts, which will necessitate follow-through efforts, including additional investment, on the part of industry. The public investment in technology should pay off in economic benefits to the Nation. The Commerce Department's Technology Administration has organized an interagency working group to measure the impact of Federal technology commercialization programs. Initially, the group will focus on measuring the effectiveness of commercially oriented technology programs in the Federal laboratories. Since it is often many years before the economic impact of technology commercialization can be determined, two types of measures will be needed: (1) process measures of technology transfer activity in the Federal labs, and (2) results measures of impact on industry and the economy. Process measures can include numbers of Cooperative Research and Development Agreements, licensing revenues, industry investment in joint research, and employee ex- changes with industry. Results measures would include jobs created, increased revenues and profits, reduced costs, and increased market share. This inter- agency group should provide some sorely needed "metrics" for the $70-billion- plus Federal R&D enterprise. Technology and Trade: Competing in a Global Economy With the advent of the truly global marketplace, exports are a major determi- nant of national economic success. The nation that successfully markets its wares to the world while maintaining or raising the living standards of its citizens has by definition produced healthy, competitive companies that are the prerequisite for a healthy, growing economy. In contrast, the nation that fails to do so relegates its citizens to declining economic opportunities and a stagnant or falling standard of living. And if growing exports can lift a nation's economic prospects, then expanding high-technology exports are the strongest levers in a nation's goods and services basket. The manufacture and sale of high-technology products produces disproportionate benefits in boosting national productivity, raising worker skill levels, advancing technology development, and creating high-wage, stable jobs. Consequently, the Clinton Administration is committed to developing and implementing trade policies and programs that foster strong growth in high- technology exports consistent with the Nation's national security interests. The Administration's policies and programs support this goal through two main approaches: þ assuring that U.S. businesses have the information, technical assistance, financial resources, and government support necessary to achieve dynamic export growth; and þ improving access to foreign markets for U.S. exports by reducing barriers to the sale of U.S. goods and services and strengthening internationally agreed upon rules governing trade. On September 29, the President released the first annual report to Congress of the Trade Promotion Coordinating Committee (TPCC), repre- senting a substantial step toward producing results in the first of these approaches. Chaired by Commerce Secretary Ronald H. Brown, the Committee includes 19 different Federal agencies with export promotion roles. Preparation of Toward a National Export Strategy involved an extensive 6-month collabo- ration by those 19 agencies, plus input from the National Security Council, the National Economic Council, and more than 2,000 representatives from small, medium, and large businesses, trade associations, academia, private-sector export service providers, labor unions, and State and local governments. The report calls for more than 60 specific actions many targeted at high-technology products designed to strengthen U.S. export promotion efforts. According to the report, "as a direct consequence of the innovations, efficiencies, and other actions of the National Export Strategy, U.S. exports of goods and services can reach $1 trillion by the beginning of the next decade and can produce over 6 million new jobs. These achievements could mean that, in the year 2000, more than 13 million Americans will be earning their living as a direct consequence of exports. What is more, they will be paid better wages because, on average, export-related jobs pay almost one-fifth more than other American jobs." Substantial progress on the second major trade front opening up foreign markets and strengthening international trading rules is also at hand. On the multilateral level, the Office of the U.S. Trade Representative (USTR) is leading an Administration-wide effort to conclude the Uruguay Round of Multilateral Trade Negotiations by December 15. The goal of these negotiations is a major updating and strengthening of the General Agreement on Tariffs and Trade (GATT), which governs more than four-fifths of world trade. At the regional level, the Administration has concluded negotiation of the North American Free Trade Agreement, designed to increase U.S. exports by eliminating barriers to trade between the United States, Canada, and Mexico and to improve the competitiveness of U.S. companies by creating the largest market in the world, with more than 370 million consumers and over $6.5 trillion in production. The Administration is making a major effort to win congressional approval for the agreement. Other efforts include developing a trade strategy for the Asia-Pacific region and launching the U.S.-Japan Framework negotiations. In these and other initiatives, the Administration is working to reduce barriers to exports of U.S. technology-related goods and services and to restructure trade rules to ensure a level playing field for American companies. For example, the USTR and the Commerce Department's Office of Air and Space Commercialization and other agencies completed negotiations for the Commercial Space Launch Trade Agreement with Russia signed by Vice President Gore and Deputy Prime Minister Chernomyrdin this summer. The agreement allows Russian entry into the international commercial launch market, while encouraging market-oriented reforms in the Russian space launch sector, and preventing disruptions of the international commercial launch market. Similar negotiations are currently under way to renegotiate the U.S. commercial launch agreement with China. Commerce is also working closely with industry to develop a com- mercial remote sensing policy that balances legitimate national security con- cerns with the desires of U.S. companies to extend America's lead in this important area. One issue is restrictions on U.S. operators facing foreign competition. Another example is the recently concluded Memorandum of Under- standing between the United States and Russia to develop expedited procedures whereby pharmaceuticals approved by the Food and Drug Administration can be marketed in Russia without having to undergo extensive recertification by the Russian government. Toward a National Export Strategy Recommendations Now Being Implemented Specific Administration actions related to technology and trade include: þ Reform current exports controls to eliminate or significantly reduce regula- tions on an estimated $35 billion worth of high-technology U.S. exports, while still protecting America's important national security and foreign policy inter- ests. Following recommendations made by the TPCC, the Administration has raised the threshold for licensing authorization of computer exports to many destinations from 12.5 MTOPS (millions of theoretical operations per second) to 194 MTOPS. It has proposed to the Coordinating Council for Multilateral Export Controls (COCOM) that this threshold be further raised to 500 MTOPS. The Administration has also proposed a dramatic change in the definition of a supercomputer, moving from 195 to 2,000 MTOPS, and the removal of prior export licensing requirements for most telecommunications exports. þ Create one-stop shops in a pilot program in four major cities in January 1994, consolidating all Federal export promotion services in each location. Additional cities will be added each year until a national network of one-stop shops has been created. Each shop will eliminate the maze of Federal offices that exporters must now contact. This will be particularly helpful to U.S. high- technology companies, many of which are fledgling enterprises headed by scientists and engineers rather than entrepreneurs with business backgrounds who may be more familiar with government export policies and programs. þ Develop a commercial strategic plan for each country that is a key U.S. export market. These plans will consolidate and improve upon information currently provided by numerous Federal agencies and better coordinate over- seas activities. þ Provide high-level U.S. government advocacy on behalf of U.S. companies pursuing major foreign government procurement opportunities. Create an interagency "Advocacy Network" to coordinate these efforts. þ Combat tied-aid practices of competitors; increase the Overseas Private Investment Corporation's project limit from $50 million to as much as $200 million; and combine into one agency the more than $80 million spent annually on feasibility studies for infrastructure projects. þ Increase Federal Government participation in standards and certification activities, including promotion of U.S. standards in foreign countries, accep- tance of U.S. certification and accreditation, dissemination of information on ISO 9000 standards, and conversion of the United States to the metric system. þ Develop a national export strategy that helps U.S. companies better tap the estimated $275 billion to $300 billion world market for environmental technol- ogies. (The Interagency Environmental Technologies Exports Working Group, chaired by the Commerce Department, will soon release a report with detailed recommendations for increasing exports of these important technologies.) Uruguay Round of Multilateral Trade Negotiations Benefits for U.S. Technology Companies þ Worldwide Economic Growth: Successful completion of the negotiations by December 15 and subsequent Congressional approval of the Uruguay Round agreement will substantially strengthen the international trading system, reducing barriers to trade worldwide, providing greater certainty for business operations, and stimulating worldwide economic growth that expands the markets for U.S. high-technology products. þ Trade Rules for Services: Successful conclusion of the Uruguay Round of negotiations will produce the first set of internationally agreed upon rules for services, reducing barriers, and stimulating demand for U.S. engineering, research, banking, accounting, tourism, and many other kinds of services. þ Protection of Intellectual Property: The proposed Uruguay Round agreement provides for unprecedented international agreement on patents, copyrights, trade names, and other intellectual property issues. This directly affects the competi- tiveness of U.S. high-technology companies, which each year lose billions in royalties and product sales to international piracy. þ Dispute Settlement: The United States is negotiating, for the first time, a speedy and effective set of mechanisms for the international settlement of intellectual property and other types of disputes. North American Free Trade Agreement (NAFTA) Benefits for U.S. Technology Companies þ Computers and Software: NAFTA immediately eliminates Mexican tariffs (currently 10 to 20 percent) on 70 percent of U.S. exports in the computer equipment and software sector. Mexican duties on the remaining 30 percent, which includes central processing units, impact printers, and certain other peripheral devices, are eliminated in equal annual stages over a 5-year period. Canadian tariffs on these products already have been eliminated in the Cana- dian Free Trade Agreement (CFTA). þ Telecommunications: NAFTA provides immediate duty-free treatment on more than 80 percent of current U.S. telecommunications equipment exports to Mexico. Duties on the remaining U.S. exports of telecommunications equip- ment are phased out over 5- or 10-year periods. Most Canadian duties on telecommunications equipment were eliminated in the CFTA. þ Electronic Components: NAFTA eliminates immediately Mexican tariffs on 49 percent of U.S. exports, including capacitors, printed circuit boards, switches, piezoelectric crystals, and some categories of resistors and tubes. Duties on the remaining 51 percent of U.S. exports are phased out in 5 or 10 years. þ Semiconductors: Under NAFTA, Mexico, Canada, and the United States agreed to immediately eliminate tariffs on each other's semiconductors. þ Medical Equipment: NAFTA immediately eliminates tariffs on 50 percent of U.S. exports to Mexico, totaling $211 million, in the medical equipment sector. Tariffs on another 37 percent of U.S. exports to Mexico in this sector are phased out over a 5-year period. Tariffs on the remaining 13 percent are eliminated over a 10-year period. þ Environmental Technologies: NAFTA will immediately remove tariff and non-tariff barriers to U.S. exports of environmental technologies to Mexico and open up Mexican government procurement opportunities for U.S. firms. In addition, experience shows that national environmental policies stimulate the demand for environmental goods and services. As part of the NAFTA process, the Supplemental Agreement on Environmental Cooperation between Mexico and the United States provides for improved environmental training, enforce- ment, monitoring, and financing by the Mexican government that will stimulate substantial demand for U.S. environmental technologies. Moving Manufacturing Technologies to the Global Marketplace As we shift from a defense-oriented to a civilian-oriented technology base and prepare for the 21st century, America has a window of opportunity to develop and apply advanced manufacturing technologies to improve the competitiveness of our manufacturing industries. By properly focusing and coordinating our national research and development effort, we can enhance the ability of U.S. manufacturers to compete in domestic and international markets. The Clinton Administration's technology policy reflects the reality that both American industry and government have underinvested in manufacturing technology, even though a strong manufacturing capability, like a highly skilled national workforce, is a critical determinant of the Nation's global economic competitiveness. In 1992, the Federal investment in commercially-oriented relevant manufacturing R&D represented less than 2 percent of the Federal R&D budget, significantly less than the shares allocated by other industrialized nations. Advanced Manufacturing Technologies The Administration is crafting a government-wide strategy to speed the devel- opment and application of advanced manufacturing technologies. The Com- mittee on Civilian Industrial Technologies, chaired by the Under Secretary of Commerce for Technology, is completing plans for a coordinated interagency effort to promote: þ partnerships to support manufacturing R&D in government laboratories, universities, and industrial consortia; þ rapid adoption of advanced technologies through a nationwide network of industrial outreach services; þ development and diffusion of environmentally benign manufacturing practices; and þ strengthening and expansion of manufacturing and engineering education and worker training programs. Within Federal science and technology agencies, manufacturing research will receive greater attention. The Administration championed, and Congress approved, a sizable FY 1994 budget increase to deepen and broaden the laboratory, competitive-grants, and manufacturing extension programs of the Commerce Department's National Institute of Standards and Technology. A portion of the 21-percent increase in funding for NIST's intramural research (to $226 million) will be used to increase the agency's advanced manufacturing research. At NIST and other Federal laboratories, information technology and its applications will be a major focus of manufacturing research. Plans call for transforming NIST's Automated Manufacturing Research Facility, a factory-like laboratory for developing the technology for flexible computer-integrated manufacturing, into a national testbed for the network technologies and proto- cols needed for virtual manufacturing enterprises. The facility will become a node in an experimental, electronic manufacturing network linked to counter- part research facilities in companies, government laboratories, and universities. In March, an industry-led, federally facilitated effort achieved initial international acceptance of a universal standardized system for electronic exchanges of technical information on products and manufacturing processes. The digital format, called Standard for the Exchange of Product (STEP) model data, was approved as a draft standard by the International Organization for Standardization; after a 6-month comment period, it will become an inter- national standard. Wide-scale adoption of a standardized, digital format for describing part information would eliminate many of the barriers that prevent units within companies and groups of companies from working as teams on design and manufacturing projects. In September, Ford Motor Co.'s Powertrain Operations in Dearborn, MI, and the Department of Energy's Allied/Signal Kansas City Plant jointly designed and built an engine part using the STEP standard. The Departments of Commerce and Defense now are playing key supporting roles in the drive to develop standards that enable agile manufacturing. DOE has taken several actions to make extensive in-house manu- facturing facilities available to U.S. industry. Much of the advanced equipment that once was restricted to classified personnel can now be used by industry, university, and other government researchers. For example, the Oak Ridge National Laboratory's once highly secretive Y-12 plant made components for nuclear warheads and optical components for the former Strategic Defense Initiative. Now, outside researchers have access to one Y-12 plant's concurrent engineering center, prototyping facility, and ultraprecision manufacturing equipment that were formerly reserved for military work. Additional efforts to enhance industrial competitiveness are being planned as the Y-12 plant is fully converted into a Center for Defense and Manufacturing Technology. DOE is pursuing a wide range of initiatives to make its manufacturing technologies, capabilities, and know-how available to U.S. industry. In addition to contracted R&D work in support of the Department's defense and energy missions, DOE is stressing cooperative work with individual firms and with teams of companies, making available to industry its specialized centers of manufacturing expertise, and collaborating with Federal and State agencies in efforts to enhance the capabilities and competitive performance of small and medium-sized manufacturers. Currently, DOE has under way or in negotiation more than 115 advanced manufacturing cooperative projects involving more than 60 companies. Over the life of the projects, the level of effort is expected to exceed $270 million. Over the past 9 months, the Defense Department's shift to foster a dual-use manufacturing capability has gained momentum, propelled by the Administration's Technology Reinvestment Project and planned reform of an acquisition process that discouraged integration of defense and commercial technology-development efforts (see page 51). For example, the Advanced Re- search Projects Agency (formerly the Defense Advanced Research Projects Agency), long successful in nurturing progress in the development of technolo- gies that have enabled the Nation to maintain a superior military, is undertaking an ambitious program to speed the development of dual-use technologies in strategically important areas. Research on dual-use technology accounts for a substantial portion of the agency's $2.2 billion budget. ARPA allocated about $600 million for manufacturing-related research during FY 1994. It is investing its resources to drive advances in materials and materials processing, production technology, design-process integration, agile manufacturing, and enterprise integration. The National Science Foundation and ARPA are running a joint program to support agile manufacturing projects led by industry and hosted by a university or not-for-profit institute. Award announcements are expected early in 1994. Manufacturing Extension Partnership Working with a growing roster of Federal agencies and laboratories and State and local organizations, the Commerce Department's National Institute of Standards and Technology is moving ahead in its plans to build a nationwide network of electronically linked manufacturing extension centers. As envisioned in the Administration's Technology for America's Economic Growth, A New Direction to Build Economic Strength, this Manufacturing Extension Partner- ship, or MEP, will provide a coordinated mechanism for delivering technical and business support services to the nation's 350,000 small and medium-sized manufacturers. These firms employ some 6 million Americans, supply components to U.S. makers of higher-value-added products such as computers and automo- biles and are essential to the health of regional, State, and local economies. Yet, a sizable fraction of these critically important elements of the manufac- turing "food chain" have been slow to adopt modern, performance-enhancing equipment, production methods, and organizational techniques, leaving them ill- prepared to meet the challenges posed by foreign competitors that are exploit- ing the advantages of modern technology. Through the MEP, the Administration is following through on its pledge to establish a nationwide network of 100 manufacturing extension centers by 1997 to assist manufacturers to modernize their production capabili- ties. Concrete steps taken thus far to build this vital component of the Nation's manufacturing infrastructure are described below. þ NIST designed scale-up plans that allow the MEP to expand smoothly and to maintain both high-quality standards and close regional and local linkages. þ The deployment portion of the Administration's Technology Reinvestment Project includes $87 million for manufacturing extension programs (see page 51). Aimed at improving the quality, productivity, and performance of small manufacturing firms, the industrial outreach programs approved by the Defense Department-managed TRP will speed development of the nationwide MEP network. þ As requested by the President, Congress has approved a two-thirds increase in the MEP budget, raising it to $30.2 million in FY 1994. þ Linkages have been formed recently between the MEP and Federal agencies with roles to play in the delivery of technical assistance and workforce training and small business support services. Alliances with the: Environmental Protection Agency will help U.S. manufacturers adopt technologies and practices that can reduce sources of pollution. Small Business Administration will link NIST's seven existing regional Manufacturing Technology Centers with SBA's Small Business Development Centers. SBDC subcenters will be set up in each MTC to provide business- planning and financial services geared to the needs of manufacturers. Navy and University of Maryland will promote adoption of "best manufac- turing practices" identified in a long-standing Navy benchmarking program. Department of Energy's Lawrence Livermore Laboratory will provide industrial clients of the California MTC with access to laboratory scientists and engineers and to its research and testing facilities. Department of Labor will focus on workforce training needs and will provide MEP personnel with tools to assess the training needs of client firms. The Labor Department also will assist the MEP in helping businesses to integrate new technology with innovative workplace practices and human resource policies. þ Implementation of TECNET, an electronic dissemination and access system, has begun, initially linking the NIST MTCs and client firms. TECNET will be the backbone of the MEP electronic network, which will provide manufacturers with easily accessible technology and business-support services. The Departments of Commerce and Energy now are expanding and diversifying already-existing collaborative efforts to strengthen industrial out- reach efforts, including a toll-free number that provides U.S. machine-tool manufacturers with access to NIST and DOE manufacturing experts. The Oak Ridge National Laboratory's Y-12 plant provides technical assistance to the Southeast MTC, and it has a field staff that works with Southeast manufactur- ers and responds to telephone inquiries. This year alone, Y-12 plant personnel have responded to about 500 requests for help. At Sandia National Laboratories, an electronic technical-assistance system will soon go on line. Called the Technology Information Environment for Industry, or TIE-In, the system will contain technical databases, technology tutorials, analytical tools, and other resources. It also will provide industrial users with access to high-performance computers. Manufacturing Competitiveness Initiative The Department of Commerce plans to begin an annual strategic assessment of the health of the U.S. manufacturing base. This assessment will characterize the comparative strength of U.S. manufacturing, measuring the extent to which U.S. industry has adopted modern manufacturing technologies and modern workforce and organizational practices. An understanding of the strengths and weaknesses of U.S. manufacturing will help to direct government resources and guide the development of legal and regulatory policies. U.S.-Japan Manufacturing Technology Fellowship Program With Japan's Ministry of International Trade and Industry, the Commerce Department initiated, in January, an innovative program to place U.S. engineers in Japanese manufacturing firms for up to 1 year. The goal of the Manufac- turing Technology Fellowship Program is to help U.S. engineers to learn Japanese manufacturing practices firsthand and to promote long-term profes- sional exchanges with the Japanese. More than 60 Japanese firms have signed on as host organizations. Numbering 30, the first fellows will begin working for their host companies in February 1994 after a thorough orientation and training session. An agreement reached with the Society of Manufacturing Engineers provides additional private-sector involvement. Electronics Electronic devices, components, and systems are vital "building-block" technol- ogies of modern industry and commerce. The public and private sectors must devote increased effort to maintaining U.S. leadership in those areas of elec- tronics where it remains strong. They also must strive to recover lost ground in established and emerging technology areas dominated by foreign industry. Comparative competitive assessments indicate that the United States lags well behind the competition in 13 critical electronic technologies, including optical information storage, multichip packaging systems, and display technology. Two key thrusts of the Defense Department's dual-use technology strategy information technology and advanced manufacturing focus directly on issues critical to the health of the U.S. electronics sector. The ability to perform massive amounts of computing equivalent to that done on today's supercomputers on machines scaled for use by individuals or by individual enterprises will revolutionize information processing. Over the next 5 years, new scalable computer architectures will make extremely powerful software applications available to users over a broad range of computers. Computers with this common software will enable a wide range of users to analyze problems that now require the most specialized of systems. A new Defense Department initiative will help to establish a new computing paradigm based on scalable, affordable systems, from workstations to supercomputers with 200 times the capabilities of today's machines. A second major R&D activity will establish an all-optical network testbed operating at 100 gigabit (billion bits) per second by 1995 or 10 times faster than the commercial networks that will then be available. The network testbed will be the foundation of an information superhighway that can provide new commercial opportunities to U.S. manufacturing and service firms. The dual-use thrust in advanced manufacturing will emphasize multichip modules, a technology offering the potential to interconnect dozens of "bare" silicon chips in a single package no larger than the packages that now hold individual integrated circuits. At the system level, the benefits of this technology could translate into a 70-percent reduction in volume and weight, a doubling of performance capabilities, and a tenfold increase in reliability. The Defense Department's Advanced Research Projects Agency is investing more than $75 million annually to help develop a viable domestic merchant multichip module infrastructure, enabling the United States to compete strongly in a new industry anticipated to have a multibillion dollar global market by the end of this decade. Other actions in the electronics R&D area taken during the Administration's first 9 months include: þ ARPA provided $20 million in July to a consortium of display manufac- turers working with government to create an infrastructure supporting the development and growth of a U.S. display industry. Modeled after SEMATECH, the effort is one element of ARPA's High Definition Systems program, which aims to rebuild U.S. strength in this militarily and commercially important technology area now dominated by foreign competition. þ ARPA is investing $8 million annually to support R&D work on microelectromechanical systems, or MEMS. A revolutionary enabling tech- nology with applications in many commercial industries and in "smart" defense systems, MEMS are fabricated from the same materials and with the same processes used to make today's integrated circuits. Goals of the program include: demonstrating processes and prototyping systems; merging sensors, actuators, and computing devices; and lowering the barriers to access and commercialization by developing an infrastructure to support multiuser design, fabrication, and testing of new MEMS. þ ARPA's support for SEMATECH in FY 1994 will focus on the manufactur- ing tools and methodologies needed for low-cost, flexible, scalable manufactur- ing to meet defense and commercial needs. Currently, the industry is optimized to produce single part types in large volumes. Emphasis will be on combining advances in manufacturing equipment with software innovations to enable state-of-the-art microelectronics manufacturing facilities capable of producing many part types in rapid turnaround time and with reduced cost sensitivity to manufacturing volume. þ ARPA's Advanced Materials Synthesis and Processing Partnerships Program began negotiations with several consortia to advance dual-use technology objectives in strategically important areas of electronics and photonics: Smart materials and structures ($4.5 million); Advanced molecular beam epitaxy technology ($4.7 million); Organic thin-film materials for optoelectronic technologies ($2.5 million); and Visible vertical cavity surface emitting laser ($4.6 million). þ The Commerce Department's National Institute of Standards and Tech- nology and the Department of Energy's Sandia National Laboratories are coordinating their R&D efforts and assigning 40 researchers to address priority technology needs and issues identified by the Semiconductor Industry Associa- tion. In March, Sandia and NIST announced that they will align their efforts with the trade association's technological road map, which details the techno- logical milestones that U.S. integrated circuit manufacturers must achieve to remain internationally competitive. þ NIST issued in April a comprehensive summary specifying the broad range of measurement needs that must be addressed to strengthen U.S. competitive- ness in electronics. The publication, Measurements for Competitiveness, was developed in consultation with industry, and it has been favorably reviewed by some 20 industry periodicals. A portion of the FY 1994 increases sought and received by the Administration will support expanded NIST laboratory research and services for industry in this area. Realizing the Opportunities of the Information Age Information is a critical resource, for service industries as well as manufactur- ing, for economic as well as national security. By one estimate, two-thirds of U.S. workers are in information-related jobs, and the rest are in industries that rely heavily on information. The Clinton Administration has taken a leadership role in putting information technology and resources to better use in promoting U.S. economic growth. The Administration recognizes clearly that Americans have a stake in the construction of an advanced National Information Infrastructure (NII), a web of communications networks, computers, databases, and consumer elec- tronics that will put vast amounts of information at users' fingertips. The information infrastructure can be used by all Americans, not just by scientists and engineers. As entrepreneurs, factory workers, doctors, teachers, school children, users of public libraries, Federal employees, and citizens, Americans can harness this technology to: þ create jobs, spur growth, and foster U.S. technological leadership; þ reduce health care costs while increasing the quality of service in underserved areas; þ deliver higher-quality, lower-cost government services; þ prepare our children for the fast-paced workplace of the 21st century; þ support lifelong learning; and þ build a more open and participatory democracy at all levels of government. The NII: A High Priority for the Clinton Administration Promoting rapid, equitable, and smooth development and use of the NII is one of the Administration's highest priorities. In September, Vice President Gore and Commerce Secretary Brown released a policy statement and action agenda for speeding up full development and utilization of the NII. The policy state- ment clearly recognizes that private-sector firms are already developing and deploying that infrastructure today. It is the private sector that will build and own the NII of tomorrow. Nevertheless, there remain essential roles for govern- ment in complementing the efforts of the private sector and assuring the growth of an information infrastructure available to all Americans at reasonable cost. In developing our initiatives in this area, the Administration is working in close partnerships with business, labor, academia, the public, Congress, and State and local government. To ensure effective coordination of government activities and full involvement of the private sector, the President: þ Established an interagency Information Infrastructure Task Force (IITF) to work with Congress and the private sector to develop initiatives needed to accelerate deployment of a National Information Infrastructure. Chaired by Commerce Secretary Brown and composed of high-level Federal agency representatives, the IITF's three committees are now focusing on telecommuni- cations policy, information policy, and applications. þ Established a private-sector Advisory Council on the National Information Infrastructure. The Council will consist of 25 members, who will be named by Secretary Brown by December 1993. Action Plan and Accomplishments The Information Infrastructure Task Force is undertaking work in nine major areas where government action is warranted. þ Promoting private-sector investment, through tax and regulatory policies that encourage innovation and promote long-term investment, as well as wise procurement of services. The Administration is working with Congress to pass legislation by the end of 1994 that will increase competition and ensure universal access in communications markets particularly those, such as the cable television and local telephone markets, that have been dominated by monopolies. Such legislation will explicitly promote private-sector infrastructure investment both by companies already in the market and those seeking entry. The President has signed into law tax incentives for private-sector invest- ment in R&D and new business formation, including a 3-year extension of the R&D credit and a targeted capital gains reduction for investments that will help spur the private-sector investment needed to develop the NII. þ Extending the "universal service" concept to ensure that information resources are available to all at affordable prices. The Commerce Department's National Telecommunications and Information Administration (NTIA) will hold a series of public hearings on universal service and the NII, beginning by December 1993. Building on the knowledge gained from these activities, the IITF will work with the NII Advisory Council and with State regulatory com- missions to determine how the universal service concept should be applied in the 21st century. þ Promoting technological innovation and new applications. The Administra- tion will commit government research programs and grants to help the private sector develop technologies needed for the NII. These government programs will focus on the development of public applications in such fields as education and health care. The Administration will continue the High-Performance Computing and Communications (HPCC) Program. This program funds R&D designed to create more powerful computers, faster computer networks, and more sophisti- cated software. It is also intended to enable scientists and engineers to tackle "Grand Challenges," such as forecasting the weather, building more energy- efficient cars, designing life-saving drugs, and designing and simulating next- generation aircraft. The Administration requested $1 billion for the HPCC Program in FY 1994 and is in the process of forming a "High-Performance Computing Advisory Committee" to provide private-sector input on the Program. The Administration requested an additional $96 million in the FY 1994 budget to create a new component of the HPCC Program Information Infra- structure Technologies and Applications (IITA). This program will develop and apply high-performance computing and high-speed networking technologies for use in the fields of health care, education, libraries, manufacturing, and provi- sion of government information. The Administration won FY 1994 funding from the Congress for NII networking pilot and demonstration projects. Under NTIA's direction, this $26 million pilot program will provide matching grants to State and local governments, health care providers, school districts, libraries, universities, and other non-profit entities. The grants will be awarded on a competitive basis and will fund projects to connect institutions to existing networks, enhance commu- nications networks that are currently operational, and permit users to intercon- nect among different networks. Another $40 million was requested for research by the Department of Energy's national laboratories on technologies and applications related to the information infrastructure. By the end of January 1994, the IITF will complete an inventory of current and planned government activities and will widely disseminate the results through electronic and printed means. The IITF applications committee is establishing an electronic forum to encourage government and private-sector contributions and comments about government applications projects. NASA recently launched the Advanced Communications Technology Satellite (ACTS), an experimental testbed bringing together industry, govern- ment, and academia to test pioneering concepts and technologies that advance on-demand, flexible communications services. Over 50 experiments are scheduled in areas such as business communications and supercomputer networking, as well as technology verification and scientific research. To date, over 21 industrial partners and 25 universities have developed experiments for ACTS and have agreed to contribute $8 million over the life of the program. þ Promoting interactive, user-driven operation of the NII. As the NII evolves into a "network of networks," government will ensure that users can transfer information across networks easily and efficiently. To assure interoperability and openness of the many components of an efficient, high-capacity NII, standards for voice, video, data, and multimedia services must be developed. Those standards also must be compatible with the large installed base of communications technologies and be flexible and adaptable enough to meet user needs at affordable costs. The National Institute of Standards and Technology has named an inter- agency panel to review open systems network requirements and recommend policies on the use of networking standards by the Federal Government. The panel will consider issues related to the Internet Protocol Suite and Open Systems Interconnection specifications, as well as proprietary networking protocols. The Administration also will work closely with the private sector, as well as State and local governments, to identify government policies and regulations that may hinder the growth of interactive services and applications. The IITF will determine how those regulations should be changed. þ Ensuring information security and network reliability. The NII must be trustworthy and secure, protecting the privacy of its users. Government action also will aim to ensure that the overall system remains reliable, quickly repairable in the event of failure, and, perhaps most important, easy to use. The Administration is completing a Presidentially directed review of Federal policies on encryption technology. In addition, Federal agencies are seeking to work more closely with industry to develop new technologies that protect the privacy of citizens, while enabling law enforcement agencies to continue to use court-authorized wiretaps to fight terrorism, drug rings, orga- nized crime, and corruption. The National Communications System (NCS) brings together 23 Federal agencies with industry to reduce the vulnerability of the Nation's telecommuni- cations systems to accident, sabotage, natural disaster, or military attack. And the Federal Communications Commission (FCC) has an industry and user Network Reliability Council to advise it on ensuring the reliability of the Nation's commercial telecommunications networks. These efforts are increas- ingly important as the threat posed by terrorism and computing hacking grows. þ Improving management of the radio frequency spectrum, an increasingly critical resource. Many of the dramatic changes expected from the development of the information infrastructure will grow out of advances in wireless technol- ogies. The ability to access the resources of the NII at any time, from any- where in the country, will be constrained, however, if there is inadequate spectrum available. The President in August 1993 signed the Emerging Telecommunications Technology Act, which directs the Secretary of Commerce to transfer, over a 10-year period, at least 200 MHz of spectrum now used by Federal agen- cies to the FCC for subsequent licensing to the private sector. It allows the FCC to use competitive bidding to grant new license assignments for spectrum. This will accelerate the development of new wireless industries such as Personal Communications Services and will help to create good jobs. The entire cellular industry, which has generated 100,000 jobs, was created by licensing only 50 MHz of spectrum. The Commerce Department is currently determining what frequencies should be transferred to the FCC. The Administration has pledged support for greater reliance on market principles in distributing spectrum among the widely differing wireless services that will be a part of the NII. At the same time, the Administration will promote policies to ensure that entrepreneurs and small, rural, and minority- and women-owned businesses are able to participate in spectrum auctions. The FCC is currently conducting proceedings to implement these policies. þ Protecting intellectual property rights. The Administration will recom- mend ways to strengthen domestic copyright laws and international intellectual property treaties to prevent piracy and to protect the integrity of intellectual property. To ensure broad access to information via the NII, the IITF will study how traditional concepts of fair use should apply with respect to new media and new works. The IITF will explore the need for standards for the identification of copyright ownership of information products in electronic systems (e.g., electronic headers, labels, or signature techniques). þ Coordinating with other levels of government and with other nations. Because information crosses State, regional, and national boundaries, coordina- tion is important to avoid unnecessary obstacles and to prevent unfair policies that handicap U.S. industry. The IITF is planning to meet later this month with State and local officials, the private sector, and non-Federal agencies as it devises proposals for regulatory reform and other NII policy issues. The Administration will work directly on behalf of U.S. firms to open overseas markets for telecommunications-related goods and services to potential overseas customers. This includes elimination of trade barriers raised by incompatible U.S. and foreign standards or more subtly between the meth- ods used to test conformance to standards. The Administration also is working to lift export controls that handicap U.S. manufacturers of computers and telecommunications equipment. The IITF will coordinate the Administration's examination of policy issues related to the delivery of telecommunications services to and from the United States, including claims by some U.S. companies that regulatory practices in foreign countries deny market access for U.S. carriers and impose excessive charges for completing calls from the United States, thus harming the competi- tiveness of U.S. industry. þ Providing access to government information and improving government procurement. As described in the National Performance Review, Federal agencies, in concert with State and local governments, will use the NII to open the immense reservoir of government information to easy public access. Addi- tionally, Federal procurement policies for telecommunications and information services and equipment will promote important technical developments for the NII and provide attractive incentives for the private sector to contribute to NII development. IITF working groups will carefully consider the problems associated with making government information broadly accessible to the public electronically. Additionally, several interagency efforts have begun to ensure that the right information is stored and available. Finally, to help the public find government information, an interagency project will develop a virtual card catalog to indicate the availability of government information in whatever form it takes. The Federal Government has taken a number of steps to promote wider distribution of its public reports. A number of Federal agencies are converting their public information into electronic form and disseminating it over the Internet. In September, "FedWorld," an electronic locator and gateway to government information operated by the Department of Commerce's National Technical Information Service (NTIS), was made accessible via Internet. FedWorld links the public with more than 100 Federal bulletin boards and information centers. In June 1993, OMB prescribed new policies that will lower the cost to the public of acquiring information from Federal agencies. Among other things, the policies mandate that, in distributing information to the public, Federal agencies should recoup only those costs associated with the dissemination of that information, not with its creation or collection. Other efforts are also under way to afford greater public access to the government. One project would turn thou- sands of local and field offices of various Federal agencies into Interactive Citizen Participation Centers, at which citizens can communicate with the public affairs departments of all Federal agencies. The President and Vice President have made White House documents accessible to the public via electronic mail. The Administration is using on-line information services and the Internet to make available speeches, press brief- ings, executive orders, and a summary of the budget. Defense Technology: The Payoffs for Economic and Military Security Historically, this Nation's policies to support the development of advanced industrial technology were motivated primarily by national security concerns. This linkage traces back to post-Revolutionary times, when the government spurred the development of an interchangeable parts approach to manufacturing to meet a pressing need for rifles. The government's impact on manufacturing was significant then and it remained so, at least until recently. During and after World War II, new high-technology industries were driven and assisted by the government's push to strengthen national security. Defense programs dominated the Federal Government's R&D portfolio. The payoffs were substantial, with U.S. industry benefiting from defense-driven investments. But an increasingly inflexible defense acquisition process lengthened production cycles and increased costs at the same time that commercial enterprises began the drive to reduce costs and time to market. Defense systems' development needs and benefits diverged from the industrial main- stream, which was spurred by stiff overseas competition and dramatic tech- nology advances. Today, though defense continues to blaze the trail in key areas of leading-edge research, the rate at which that innovation is actually moved into production often lags well behind that of commercial industry in important sectors such as computers and microelectronics. Three Pillars of a 21st-Century Defense Technology Strategy The Clinton Administration intends to reverse this trend and will pursue more efficient and effective strategies for defense investments in technology. The three pillars that will serve as the foundation for a 21st-century defense technology strategy are: þ Reform the current Department of Defense (DOD) acquisition process, now biased against the use of commercial processes and products within defense systems. þ Focus more R&D within DOD on dual-use products and processes, empha- sizing the need to achieve advances in high-tech defense systems that are affordable. þ Reach out globally to our allies, to benefit from international cooperation on a technology-by-technology basis. These strategic thrusts are beginning to redirect this Nation's massive defense investment so that it is both more effective and more supportive of our broader industrial base. Reform the current DOD acquisition process to encourage the use of commercial processes and products within defense systems. By using compo- nents, technologies, and subsystems developed by commercial industry when- ever possible, defense should be able to attain three compatible objectives: þ Shorten development times, increasing the pace at which innovation is incorporated into new defense systems in critical areas. Introduce the commer- cial high-tech sector's continuous stream of improvements and updates during both the development and deployment phase. þ Reduce costs for procuring leading technology to satisfy military needs. Commercial components, technologies, and subsystems in many instances can meet functional needs at lower costs than technology that is military-driven and customized. Eliminate unnecessary military specifications, testing requirements, and procurement procedures. þ Prepare for building back military capabilities. Close integration with the private sector is imperative if the Nation is to be equipped to quickly gear up its capabilities. Focus more R&D within DOD on dual-use products and processes, emphasizing affordable advances in high-tech defense systems. Investments in technologies that are both critical to defense systems and vital to commercial industries serve a dual use. Dual-use technologies include manufacturing processes as well as products. For example, the Microelectronics Manufacturing Science and Tech- nology (MMST) Program supported by DOD was designed to develop fast, flexible, cost-effective techniques for manufacturing semiconductors. The primary goal was to meet military needs for relatively small batches of semi- conductors at affordable cost, but the technology is valuable to commercial production as well. In fact, it was developed in partnership with the commer- cial division of Texas Instruments. Reach out globally to our allies, to benefit from international cooper- ation on a technology-by-technology basis. Technology today is global, flowing with relative freedom across national boundaries. We need to ensure that the flow of defense technology-related knowledge is not just one way. In the recent past, we have shared considerable expertise and technology with our allies. A part of our strategy now must be to strengthen our relationships with allies and explore how they may be helpful to us in solving technology-based problems. Progress to Date The Administration has taken concrete steps to implement its new vision for a defense strategy, which makes the most of our national investment in tech- nology by supporting both military and economic strength: þ DOD is explicitly emphasizing dual-use R&D to better integrate defense technology development with commercial industry. This is a break from past Administrations' unwillingness to address defense technology's dual-use needs and opportunities. Application of critical technologies will be accelerated in four focused "thrust areas": information technology, manufacturing, materials, and advanced simulation and training. þ President Clinton has changed the name of the Advanced Research Projects Agency (ARPA) to reflect its new focus on dual-use technologies. ARPA is rebalancing its advanced research portfolio while continuing its emphasis on electronics and information processing; it is also strongly supporting the High Performance Computing and Communications Initiative and the National Information Infrastructure, two notable dual-use efforts. ARPA also is seeking to transform manufacturing production processes through advances in materials, equipment, design-process integration, agile manufacturing, and enterprise integration. A key to ARPA's strategy is its emphasis on partnerships and cost sharing. þ The Administration successfully launched the Technology Reinvestment Project (TRP), the largest multiagency technology program ever conducted by the Federal Government. President Clinton introduced this top-priority dual-use effort in March 1993 as a cornerstone of his $1.7 billion Defense Reinvestment and Conversion Initiative. The TRP stresses partnering among industry, govern- ment, and universities; it has drawn a powerful show of interest, especially from industry. TRP funds are available for three key areas: technology development, to create new technologies with the potential for commercialization within 5 years; technology deployment, to disseminate existing technology for near- term commercial and defense products and to support improved use of technol- ogies in small businesses; and manufacturing education and training, to strengthen engineering and workforce capabilities necessary for a competitive industrial base. Six Federal agencies jointly manage and implement the TRP. Led by the Defense Department's ARPA, the other participating agencies are the Com- merce Department's National Institute of Standards and Technology, the Departments of Energy and Transportation, the National Aeronautics and Space Administration, and the National Science Foundation. Project managers sought broad participation through an "800" hotline and a series of regional briefings sponsored by the White House. The hotline received 35,000 calls and 55,000 information packages were distributed, reflecting an extraordinary level of interest. More than 2,800 proposals, requesting $8.5 billion, were submitted in response to the offer of $472 million in merit-based, matching Federal grants from the TRP. Proposals were received from organizations in all 50 states and the District of Columbia. The President on October 22 announced the first successful applicants: 41 projects accounting for $140 million in requested Federal matching funds. The remainder of the awards will be announced in November. Planning is under way for an expected follow-up round of competitions for the TRP. þ Technology application efforts and acquisition are beginning to reflect the new strategy for integrating defense and commercial technologies. Advanced Technology Demonstrations (ATD) in DoD are increasing the focus on manu- facturing and speeding the rate at which new technology is fielded by our military. For example, the Technology for Affordability "thrust" is now seeking major advances in design tools, process integration and control, and production management. þ DOD is emphasizing technology in the acquisition process to improve efficiency. An example is a greatly enhanced Continuous Acquisition Life- Cycle Support (CALS) program, which aims to automate much of the routine work associated with logistics support. Another element is automation of the procurement process, with pilot programs being launched to electronically advertise and respond to procurement requests. DOD intends to take an active part in the expected large-scale movement of business information into the National Information Infrastructure. þ To encourage defense firms to participate in dual-use cooperative R&D, the Administration has clarified regulations regarding the use of independent research and development (IR&D) funding as part of a firm's contribution to a cost-sharing proposal. Use of IR&D monies as part of industry matching funds is permitted in certain kinds of cooperative arrangements involving contractors working jointly with others (e.g., joint ventures, teaming arrangements, and consortia). þ DOD has launched a major new initiative with Japan to gain access to its commercial technologies, manufacturing know-how, components, and sub- systems. This effort seeks to better balance the significant amounts of U.S. defense technology that flow to Japan, with a compensating flow of dual-use technologies obtained from commercial firms in Japan for use in defense applications. The emphasis is on fostering company-to-company linkages that gain access for our defense industrial base to Japanese expertise and information. þ DOD has proposed significant new initiatives in jointly developing military systems with our NATO allies. Joint development programs can lead to additional expense since language, cultural, and institutional differences typically must be overcome. But this Administration is firmly convinced that gains from splitting development costs with partners and from interoperability of systems can greatly exceed the incremental costs of taking the trouble to work with allies. A dual-use strategy as discussed above offers clear advantages to the military. Defense planners know that the way to get the most out of shrinking dollars is to buy as much as possible from commercial manufacturers who, under the discipline of the market, must give their customers good value high quality, reliable products embodying the latest and best tech- nologies at competitive prices. While the dual-use approach is not as central to the interests of commercial companies, they too will benefit. Defense spending for dual-use R&D and procurement has a more than proportionate effect on advancement of technology, because investments will be heavily weighted to leading-edge technologies with potentially broad application. Nevertheless, defense spending makes up a small and declining share of a $5.5 trillion to $6 trillion economy. Civil-military integration is just one part, though an important part, of successful conversion to a post-Cold War economy. The best and broadest conversion strategy must also include govern- ment investments that lift the performance of the whole economy. This means: þ investing in first-class education and training of all our workers; þ forming R&D partnerships with industry on promising technologies that are primarily commercial as well as dual use; and þ developing new national initiatives that meet widely agreed public needs while also fostering the advance of technology, the growth of knowledge- intensive, wealth-generating industries, and the creation of high-quality jobs. Other sections of this progress report deal with these broader strategies for transition to a post-Cold War world. Energy and Environment: New Technologies for Growth In his February 22, 1993, statement on Technology for America's Economic Growth, President Clinton's foremost goal is "long-term economic growth that creates jobs and protects the environment." In establishing this goal, the President rejected the conventional view that economic growth and environ- mental quality are inversely related that is, that gains in one produce setbacks in the other. Today's high fuel and waste-disposal costs, stiff business competition, and high levels of national and international environmental awareness have fundamentally changed the economic growth/environment equation. Inefficient industrial practices that were economically and environmentally practical just 10 years ago are no longer viable. Today, such waste is too costly to business competitiveness and to our environment, especially with growing concern over urban air quality and global warming. The Clinton Administration is working with the U.S. business and research communities to promote the development and deployment of new technologies that simultaneously prevent pollution, increase energy efficiency, and promote economic growth. Clean technologies such as energy-efficient light bulbs and motors, alternative fuel cars, and advanced steel mak- ing reduce air pollutants and other pollutants. Such technologies also reduce the energy needs of U.S. companies, trimming costs, improving international competitiveness, freeing up money for capital investments, and reducing the Nation's energy trade deficit. The result is improved environmental quality and long-term economic growth. Adding to these positive effects are the tremendous opportunities for increasing U.S. exports of environmental technologies. Over the next decade, developing nations will be expanding their economies fivefold, while the global population doubles. Limited capital and rising world demands for environmen- tally responsible production will make traditional resource-inefficient develop- ment impractical. Sustainable development, based on energy efficient, environ- mentally benign processes, is the necessity of the future. The United States is the world's leading producer of environmental technologies with 35 percent of the current market. The Clinton Administration is working to ensure that America maintains and improves its leadership position in this growing global market. Since release of the February policy statement, the Administration has launched new initiatives and strengthened existing programs to accomplish its national energy and environmental objectives. Together, these programs repre- sent a coordinated, government-wide effort to: þ create high-wage, secure U.S. jobs through production of new and existing environmental technologies; þ promote environmental technology exports; þ improve energy efficiency and conservation; þ improve environmental quality; þ minimize industrial wastes; þ maximize industrial competitiveness; þ diversify energy supply and demand; and þ reduce energy trade deficits. Actions Taken to Date Clinton Administration Initiatives Climate Change Action Plan. This plan, released in October, presents the Administration's strategy for reducing the growth of greenhouse gases linked to global warming. The plan will reduce U.S. greenhouse gas emissions in the year 2000 to 1990 levels. It includes more than 50 new or expanded initiatives, relying primarily on increased energy efficiency. It will stimulate investments in technologies of the future, strengthening America's position in the global environmental technology marketplace. The Administration proposes to support the program with $1.9 billion largely through redirected Federal funding between 1994 and 2000. This funding will leverage an additional $60 billion in private-sector investments in environmental technology. Projected energy savings from these investments total more than $60 billion between 1994 and 2000, with continued benefits of over $200 billion in energy savings between 2001 and 2010. By the year 2000, the program should reduce total annual carbon emissions by the equivalent of 109 million metric tons of carbon. Clean Car Initiative. On September 29, 1993, President Clinton and Vice President Gore joined with General Motors, Ford, and Chrysler to an- nounce an historic new partnership. The Clean Car Initiative aims to strengthen U.S. competitiveness by developing technologies for a new generation of vehicles that are both safer and up to three times more fuel efficient (80 miles per gallon or better) than today's cars. Major collaborations with the Big Three U.S. automakers are under development. On the government side, a high-level coordinating committee chaired by Under Secretary of Commerce for Tech- nology Mary Good is directing R&D in a strategic plan to avoid duplication, focus on priority areas, and make the most of existing resources. The first stage of the plan is in fast-track development, to be completed before the end of the year. Environmental Technologies Initiative. The Environmental Protection Agency in April launched its Environmental Technologies Initiative, designed to stimulate technological innovation to meet the Nation's environmental objec- tives. The initiative aims to create a more productive environmental technology marketplace and works toward incorporating environmental considerations into the design of new technologies and into upgrades of existing technologies. Projected funding for this initiative is $36 million for FY 1994. Funding is expected to increase over the next decade. Environmental Technology Export Strategy. Following President Clinton's Earth Day charge, an interagency committee has been working with the environmental technology industry to develop a national environmental export strategy that will help coordinate public and private activities and help U.S. companies to take advantage of a world market estimated at $275 billion to $300 billion. The group has been focusing on trade development and technical assistance to increase exports of U.S. environmental technologies. Chaired by the Commerce Department with the participation of the Environ- mental Protection Agency, Department of Energy, and 10 other agencies, the Interagency Environmental Technologies Exports Working Group will soon release a report including specific recommendations to increase these exports. The National Environmental Trade Technology Initiative demonstrates how better coordination can provide industry with critical assistance. This initiative combines the Commerce Department's export-promotion expertise with the financial capabilities of the Export-Import Bank to introduce practical solutions to environmental problems in developing countries like Mexico, which need environmentally responsible technologies. The EnviroMex '93 conference held in Mexico last month, for instance, brought together over 200 American and Mexican industry representatives interested in exploring opportu- nities for increased trade. Environmental Technologies and NAFTA. President Clinton has pushed for ratification of the North American Free Trade Agreement (NAFTA), knowing that this agreement and the supplemental agreement on environmental cooperation will enhance opportunities to export U.S. environmental technolo- gies and create jobs at home. Many of the goods and services provided by the U.S. domestic environmental technology industry are being marketed and sold throughout Mexico. These exports are valued at about $1 billion each year and support about 27,000 jobs in the United States. As exports to Mexico grow, so will the number of jobs here and export-related jobs on average pay almost one-fifth more than other jobs. The NAFTA initiative clearly ties together the Clinton Administration's goals of American international economic competi- tiveness and global environmental security. Budget Priorities. The Department of Energy has revamped its science and technology budget priorities. Dramatic increases will be seen in funding for research programs related to energy efficiency, renewable energy, natural gas, alternative fuels, and technology transfer. The Environmental Protection Agency (EPA) has reallocated substan- tial funding to global warming and the environmental technology initiatives described above. Similar changes are under way at other science and technology agen- cies, such as the Commerce Department's National Institute of Standards and Technology (NIST). Expansion of NIST's Manufacturing Extension Partnership to meet the President's goal of 100 manufacturing extension centers across the country to help small and medium-sized companies adopt updated technologies will include an emphasis on environmentally sound manufacturing. In Septem- ber, EPA and NIST announced a pilot, collaborative effort to help companies adopt pollution-prevention technologies that also reduce operating costs. The Technology Reinvestment Project (TRP), designed to assist in the transition to an integrated industrial base that can meet both defense and commercial needs, also will provide support to environmentally sound manu- facturing. Several of the initial projects selected for funding have the goal of assisting smaller companies to increase their competitiveness by matching energy, environmental, and manufacturing technology needs. Clean Cities. Clean Cities is a market-driven initiative developed by the Department of Energy to promote the use of alternative fuels and assist in the implementation of the Energy Policy Act. Since its September national kickoff, Denver, Philadelphia, Wilmington, Las Vegas, and Washington, DC, have been formally designated Clean Cities. The program works by establishing partnerships between Federal, State, and local governments and the private sector, including utilities, fuel suppliers, fuel distributors, auto manufacturers, and organizations committed to acquiring alternative-fueled vehicles for their fleets. Together, these groups create a fleet large enough to support an emerg- ing refueling and maintenance infrastructure and operate on American-produced fuels, which will improve the U.S. trade deficit and decrease reliance on insecure energy sources, create jobs, and improve air quality. Natural Gas Strategic Plan. The Administration has put in place, and funded at $200 million per year, the first, credible, long-term Federal R&D effort for natural gas. It focuses on strategic opportunities in end-use markets, such as ultra-high efficiency utility gas turbines, fuel cells for both industrial and automotive applications, and natural gas vehicles. Motor Challenge. In October, the Administration launched the Motor Challenge program to provide industry leaders an opportunity to demonstrate how improved efficiency of electric motor systems can enhance industrial productivity and profitability while preventing pollution. The program is a collaboration between the Federal Government, motor manufacturers, electric utilities, and industrial motor systems users. By promoting a systems approach to electric motor system design and implementation, the program seeks the largest and most profitable opportunities for increasing industrial motor efficiency. Small Business Innovation Research (SBIR). In FY 1993, the Depart- ment of Energy devoted $49.7 million in grants under this competitive grants program that supports phased research and development on advanced concepts and technologies related to energy and the environment. The Department hosted a Commercialization Opportunity Forum in late September. After receiving extensive training in development of a business plan for a successful SBIR project, 24 companies made presentations to 56 representatives from venture capital firms and large corporations at the forum. These contacts are expected to produce significant investment in the SBIR projects, which will result in the creation of new jobs. Growing interest in the SBIR program among U.S. businesses was evident at the program's national conference in October 1993. The meeting attracted 1,100 attendees, the largest of any such meeting in the program's history. "Golden Carrot" Market-Pull Consortia. The Environmental Protec- tion Agency (EPA), Department of Energy (DOE), and utilities issued a challenge and an opportunity to manufacturers of refrigerators: the company that could build a chlorofluorocarbon-free refrigerator that also exceeded energy performance standards would receive a guaranteed market, with the consortium making up the difference in price between the new super-efficient refrigerator and more conventional units. President Clinton has directed DOE and EPA to expand this program to additional industries to accelerate the commercialization of advanced, energy-efficient technologies through partnerships with key market players. These partnerships may include contests for new technology introductions, working with government procurement agencies to leverage their purchasing power of certain qualifying products, and working with utilities to create market incentives for new technologies. "Green Lights" Program. EPA is expanding this voluntary program aimed at improving lighting efficiency. The program enlists participants who agree to survey all of their domestic facilities and upgrade their lighting wherever profitable over a period of 5 years. The program now has over 1,000 participants. Energy Analysis and Diagnostic Centers. This program involves local colleges and universities in performing audits of small businesses and manufac- turing plants to identify opportunities for energy-efficiency improvements and waste minimization. The Administration plans to expand this program, which currently funds about 700 audits per year. This will increase to about 2,000 per year by the year 2000. Federal Fleet Conversion Task Force. This task force is working on a plan to convert the Federal automotive fleet to alternative fuels that are cleaner burning and less expensive. The Administration plans to use the Federal Government's purchasing power to stimulate the domestic alternative fuels market and to develop a refueling infrastructure for alternative fuel vehicles. Intermodal Surface Transportation Efficiency Act of 1991. This law offers increased flexibility in how states spend their resources, thus allowing for greater flexibility and innovation. The Clinton Administration has further increased state options by expanding opportunities for states to use Intelligent Vehicle Highway Systems and telecommunications strategies to meet their Clean Air goals. Climate-Wise Recognition Program. EPA and DOE have proposed a new program dubbed "Climate-Wise" to encourage and recognize voluntary efforts to reduce greenhouse gas emissions. Climate-Wise will reinforce statutory provisions under the Energy Policy Act of 1992 and contribute to U.S. environmental objectives by allowing organizations to receive public recognition for their voluntary greenhouse gas mitigation efforts. They would be eligible by initiating actions that reduce or offset greenhouse gases, such as energy conservation and efficiency measures, switching to lower-carbon content fuels, establishing programs to encourage employees to use mass transit or carpools, or implementing carbon sequestration activities, such as urban and rural tree planting. Long-Range Environmental Export Strategy Clean Production. As a follow-on initiative to the Environmental Technology Export Strategy, the Department of Energy has proposed to develop a long-range environmental market strategy focused on the strategic market growth potential of clean production technologies. Transportation and the Economy As noted in the President's Technology for America's Economic Growth, A New Direction to Build Economic Strength, a competitive, growing economy requires a transportation system that can move people, goods, and services quickly and efficiently. To meet this challenge, each transport sector must work effectively both by itself and as part of a larger, interconnected whole. Tech- nologies that increase the speed, reliability, and cost-effectiveness of the transportation sector also will increase the economy's competitiveness and ability to create jobs. Today, one of the greatest challenges we face is to rehabilitate and properly maintain the huge stock of infrastructure facilities already in place. Providing a world-class transportation sector will require the Nation to meet the challenges posed both by increased congestion in many parts of the transporta- tion system and by the need to rebuild and maintain a public capital stock valued at more than $2.4 trillion. The Federal Government is committed to leading an effort to realize the vision of "sustainable" transportation, with the goal of balancing different modes of transportation while taking into account performance, cost, resource use, and social impact. Partnership for a New Generation of Vehicles President Clinton and Vice President Gore have joined with the Big Three American automakers General Motors, Ford, and Chrysler in an historic new partnership to strengthen U.S. competitiveness by developing technologies for a new generation of vehicles up to three times more fuel efficient than today's. It is a technological venture as ambitious as any America has ever attempted and is a model for the new partnership between government and industry envi- sioned by President Clinton. It is an all-out effort to ensure that the U.S. auto industry leads the world in technology. It will expand economic opportunity, preserve jobs, protect the environment, and strengthen our economic competitiveness. The long-term goal of the partnership is the development of affordable, safe, attractive, and dramatically more efficient automobiles. Groundbreaking research and development goals for industry and government engineering teams will be launched in three categories: þ Advanced manufacturing techniques to make it easier to get new product ideas into the marketplace quickly. Such techniques would include rapid, computer-based design and testing systems and new automation and control systems that can lower production costs. þ Technologies that can lead to near-term improvements in automobile effi- ciency, safety, and emissions, such as lightweight, recyclable materials and catalysts for reducing exhaust pollution. þ Research that could lead to production prototypes of vehicles capable of up to three times greater fuel efficiency. Radical new concepts, such as fuel cells and advanced energy storage systems like ultracapacitors, will be developed to produce more fuel-efficient cars that are affordable, meet or exceed current safety standards, and retain the performance and comfort available today. Led by Under Secretary of Commerce for Technology Mary Good, the project will be managed by an interagency team consisting of representatives from the Departments of Commerce, Defense, Energy, and Transportation; the Environmental Protection Agency; National Aeronautics and Space Administra- tion; and the National Science Foundation. This interagency team is preparing an inventory of government programs that can help meet the partnership goals, as a first step in rapid development of a coordinated R&D strategy. Electric and Hybrid Electric Vehicles The Defense Department's Advanced Research Projects Agency has selected six regional coalitions in Hawaii, Sacramento, Los Angeles, Indianapolis, Atlanta, and Boston to work on electric and hybrid electric vehicle technology and infrastructure. The projects will focus on conversion or replacement to electric or hybrid of small pickup trucks and medium-sized buses on military bases and installation of the vehicle support infrastructure; conversion or purchase of electric or hybrid vehicles for commercial use in the community, including infrastructure; research to advance the state-of-the-art on one or more components or systems for electric or electric hybrid vehicles or for their support infrastructure; and support activities. Research and Technology Outreach Seminars DOT also has begun a series of outreach seminars entitled "Promoting Trans- portation Applications in Defense Conversion and Other Advanced Technolo- gies." Held in Ann Arbor, MI; Davis, CA; Cambridge, MA; and Austin, TX, the seminars are bringing together representatives of academia, State, and local governments, and private industry to discuss transportation and the environ- ment, infrastructure rehabilitation and maintenance, and new vehicle tech- nology. DOT will use the information gathered in these meetings to shape its Transportation Research and Technology Strategic Plan. Intelligent Vehicle/Highway Systems (IVHS) DOT has initiated studies aimed at having a prototype demonstration of an automated highway system by 1997. To foster improvements in IVHS user services, DOT has begun a 3-year process to establish the overall IVHS system architecture. DOT plans to make maximum use of defense-oriented firms' developments in sensor technologies, high-speed computing, communications, human factors, display technologies, and autonomous vehicle control systems. Working with Montgomery County, MD, which is installing 200 video cameras along its roads, the Commerce Department's National Institute of Standards and Technology is evaluating automatic vision-based surveillance to determine the types of useful traffic information the system can obtain and how to quickly extract, analyze, and translate the information into traffic manage- ment decisions that ease congestion and avert safety hazards. Global Positioning System (GPS) GPS is a space-based positioning, navigation, and time distribution system designed for worldwide military use. In May 1993, the Secretaries of Trans- portation and Defense established a joint task force to examine the possibilities for expanded civil participation in the implementation, operation, and support of the GPS. A DOD-DOT team is working to identify and resolve issues related to augmentation of the current system and funding to provide civilian users with the necessary accuracy and integrity. The Federal Aviation Adminis- tration (FAA) defined the technical standards for GPS receivers to be used in civilian aviation and approved supplemental use of the GPS for all phases of flight. NASA and the FAA are testing the GPS system to investigate ways to improve navigation and collision avoidance. Full operation of GPS is expected in FY 1995. Climate Change Action Plan As part of the climate change action plan released in October, the Administra- tion is conducting a year-long process to identify and implement policies in the transportation sector to reduce the projected growth of greenhouse gases. This process will involve all relevant stakeholders and will consider, among other issues, policies to increase the fuel efficiency of new personal vehicles. Magnetic Levitation (MagLev) High-speed magnetically levitated ground transportation is a new mode of surface transportation in which vehicles glide above their guideways, sus- pended, guided, and propelled by magnetic forces at speeds of 250 to 300 miles per hour or higher. The Administration is publishing the results of the 3-year national MagLev initiative, a cooperative interagency effort of the Department of Transportation and its Federal Railroad Administration, the Army Corps of Engineers, and the Department of Energy. While questions remain about the commercial viability of MagLev, the Administration should proceed with the development of a program. In FY 1994, $20 million was provided to continue research and analysis of MagLev. Intermodal Surface Transportation Efficiency Act of 1991 The Intermodal Surface Transportation Act offers increased flexibility in how states spend their resources, thus allowing for greater flexibility and innovation. The Clinton Administration has further increased state options by expanding opportunities for states to use Intelligent Vehicle Highway Systems and telecommunications strategies to meet their Clean Air goals. In July 1993, DOT published the Surface Transportation Research and Development Plan to develop a range of technologies needed to produce convenient, safe, and affordable modes of surface transportation by the mid-1990s and to maintain a long-term advanced R&D program for next-generation systems. DOT published Intermodal Technical Assistance Activities for Transportation Planners in August 1993 and is actively seeking feedback to improve the quality of its assistance programs. Aeronautics For decades, the United States led the aviation revolution every step of the way, and America ruled the skies. Today, the aeronautics industry is one of the largest in the country employing nearly 1 million people in high-quality jobs, generating almost $100 billion in annual sales, and producing tens of billions of dollars in exports. Today's aeronautics environment, however, is extremely dynamic foreign competition, economic deregulation of the airline industry, the end of the Cold War, and the growing concern for the global environment have all changed the aviation industry. The Administration is committed to making the changes required to strengthen civil aviation in the United States. NASA is addressing the technology needs of civil aviation by expand- ing its investments in high-speed research, advanced subsonic technologies, and high-performance computing and communications. The plans for these pro- grams have been developed and will be refined. By working closely with industry and government agencies, NASA aims to ensure that design, manu- facturing, and operations issues are addressed early in the technology develop- ment process and to maximize its investments through effective and timely technology transfer. High-Speed Research (HSR) NASA is developing the technologies that industry needs to design and build an environmentally compatible and economically competitive high-speed civil transport (HSCT) for the 21st century. As currently envisioned, an HSCT aircraft would carry 300 passengers at Mach 2.4 on transoceanic routes over distances up to 6,000 nautical miles at fares comparable to subsonic transports. An HSCT would reduce flight times from California to Japan to about 4 hours, and from California to Australia to about 7 hours. Such an aircraft will be essential for capturing the valuable long-haul Pacific Rim market. Market studies indicate that the successful development of a domestic HSCT will result in $200 billion in sales and 140,000 jobs for U.S. industry. Before industry can develop this type of aircraft, environmental concerns, such as aircraft noise, sonic boom, and atmospheric contaminants, must be addressed. An HSCT must meet not only the current regulatory standards but also those anticipated for the early part of the next century. NASA is sponsoring an independent, international scientific assessment to determine globally acceptable levels of engine emissions and noise. In FY 1994, NASA will focus on technologies required to make an HSCT economically feasible and competitive. In close cooperation with U.S. industry and the university research community, NASA plans to develop and validate technologies for an HSCT, including advanced propulsion systems, new structural materials, improved aerodynamic designs, and state-of-the-art flight control and display systems. While NASA is concentrating its investments in the early, high-risk stages of development, the aircraft manufacturing industry has indicated that it is willing to make a substantial investment in this program as the technological risk decreases. The High-Speed Research program aims to produce an industry HSCT prototype around the year 2000. Advanced Subsonic Technology Subsonic airliners will continue to be a vital element of both long-haul and domestic air travel for the foreseeable future, and the Administration and NASA are accelerating investments in this key area through the Advanced Subsonic Technology Program. In partnership with U.S. industry, NASA is developing lightweight, highly reliable optical systems; lightweight, low-cost composite structures; highly efficient turbofan engines; and integrated wing design techniques. These R&D efforts are intended to increase airline profit- ability through increased aircraft productivity, lower ownership costs, and reduced direct operating costs, resulting in increased economic valuation of the aircraft relative to foreign competitors. In a collaborative effort to increase safety, FAA and NASA have successfully flight tested three types of sensors that increase warning times to airline pilots. They also are evaluating a four-dimensional Aircraft Traffic Management System known as the CENTER/TRACON Automation System, or CTAS, that will enable more on-time arrivals and departures and cut fuel consumption. By early in the next century, the combination of CTAS, GPS, and other navigation and display technologies could provide a significant improve- ment in the efficiency of our national airspace system and create a market for new products.