PAGENO="0001" Science Policy Study-Hearings Volume 6 THE FEDERAL GOVERNMENT AND THE UNIVERSITY RESEARCH INFRASTRUCTURE HEARINGS BEFORE THE TASK FORCE ON SCIENCE POLICY OF THE CONIMI[TTEE ON SCIENCE AN]) TEChNOLOGY HOUSE OF REPRESENTATIVES NINETY-NINTH CONGRESS FIRST SESSION MAY 21, 22; SEPTEMBER 5, 1985 [No. 101] Printed for the use of the Committee on Science and Technology 0 U.S. GOVERNMENT PRINTING OFFICE 53-2770 WASHINGTON 1986 For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, DC 20402 PAGENO="0002" COMMITTEE ON SCIENCE AND TECHNOLOGY ROBERT A. ROE, New Jersey GEORGE E. BROWN, JR., California JAMES H. SCHEUER, New York MARILYN LLOYD, Tennessee TIMOTHY E. WIRTH, Colorado DOUG WALGREN, Pennsylvania DAN GLICKMAN, Kansas ROBERT A. YOUNG, Missouri HAROLD L. VOLKMER, Missouri BILL NELSON, Florida STAN LUNDINE, New York RALPH M. HALL, Texas DAVE McCURDY, Oklahoma NORMAN Y. MINETA, California MICHAEL A. ANDREWS, Texas BUDDY MACKAY, Florida** TIM VALENTINE, North Carolina HARRY M. REID, Nevada ROBERT G. TORRICELLI, New Jersey RICK BOUCHER, Virginia TERRY BRUCE, Illinois RICHARD H. STALLINGS, Idaho BART GORDON, Tennessee JAMES A. TRAFICANT, JR., Ohio GEORGE E. BROWN, JR., California TIMOTHY E. WIRTH, Colorado DOUG WALGREN, Pennsylvania HAROLD L. VOLKMER, Missouri STAN LUNDINE, New York NORMAN Y. MINETA, California HARRY M. REID, Nevada RICK BOUCHER, Virginia RICHARD H. STALLINGS, Idaho MANUEL LUJAN, JR., New Mexico* ROBERT S. WALKER, Pennsylvania F. JAMES SENSENBRENNER, JR., Wisconsin CLAUDINE SCHNEIDER, Rhode Island SHERWOOD L. BOEHLERT, New York TOM LEWIS, Florida DON RITTER, Pennsylvania SID W. MORRISON, Washington RON PACKARD, California JAN MEYERS, Kansas ROBERT C. SMITH, New Hampshire PAUL B. HENRY, Michigan HARRIS W. FAWELL, Illinois WILLIAM W. COBEY, JR., North Carolina JOE BARTON, Texas D. FRENCH SLAUGHTER, JR., Virginia DAVID S. MONSON, Utah MANUEL LUJAN, JR., New Mexico * ROBERT S. WALKER, Pennsylvania *** F. JAMES SENSENBRENNER, JR., Wisconsin *** CLAUDINE SCHNEIDER, Rhode Island SHERWOOD L. BOEHLERT, New York ~ TOM LEWIS, Florida SID W. MORRISON, Washington RON PACKARD, California DON RITTER, Pennsylvania JAN MEYERS, Kansas HARRIS W. FAWELL, Illinois **** D. FRENCH SLAUGHTER, JR., Virginia **** DON FUQUA, Florida, Chairman HAROLD P. HANSON, Executive Director ROBERT C. KETCHAM, General Counsel REGINA A. DAVIS, Chief Clerk JOYCE GROSS FREIWALD, Republican Staff Director SCIENCE POLICY TASK FORCE DON FUQUA, Florida, Chairman JOHN D. Houe1~LD, Study Director R. THOMAS WEIMER, Republican Staff Member * Ranking Republican Member. * * Serving on Committee on the Budget for 99th Congress. ~ Term expired June 30, 1985. * ** * Term commenced July 1, 1985. (II) PAGENO="0003" CONTENTS WITNESSES May 21, 1985: Page Dr. Bernadine Healy, Deputy Director, Office of Science and Technology Policy, Executive Office of the President, Washington, DC 2 Prepared statement 7 Discussion 16 Henry G. Kirschenmann, Jr., Deputy Assistant Secretary, Procurement, Assistance and Logistics, U.S. Department of Health and Human Serv- ices, Washington, DC 21 Prepared statement 34 Discussion 53 Dr. Dale R. Corson, president emeritus, Cornell University, Ithaca, NY, and chairman, Government-University-Industry Roundtable, National Academies and Sciences and Engineering, Washington, DC 58 Prepared statement 63 Discussion 70 Dr. T. Edward Hollander, chancellor, Department of Higher Education, State of New Jersey, Trenton, NJ 76 Prepared statement 81 Discussion 105 May 22, 1985: Dr. Oliver D. Hensley, associate vice president, Texas Tech University, Lubbock, TX 110 Prepared statement 124 Hayden W. Smith, senior vice president, Council for Financial Aid to Education, New York, NY 145 Prepared statement 161 Dr. Frank B. Sprow, vice president, Exxon Research & Engineering Co., Annandale, NJ 185 Prepared statement 189 Dr. Donald N. Langenberg, chancellor, University of Illinois at Chicago, Chicago, IL 206 Prepared statement 211 Panel discussion 230 Questions and answers for the record: Dr. Sprow 236 Dr. Langenberg 241 September 5, 1985 (Financing and managing university research equipment): Dr. Richard A. Zdanis, vice provost, The Johns Hopkins University, Balti- more, MD 246 Prepared statement 251 Dr. Ray C. Hunt, Jr., vice president for business and finance, Charlottes- ville, VA 260 Prepared statement 264 Dr. Praveen Chaudari, vice president, science and director, physical sci- ences department, IBM Corp., Armonk, NY 270 Prepared statement 273 Panel discussion 278 Questions and answers for the record 295 Appendix 1.-1982--83 Voluntaiy Support of Education, prepared by the Coun- cil for Financial Aid to Education and jointly sponsored by the Council for Advancement and Support of Education and the National Association of Independent Schools, August 1985 305 (111) PAGENO="0004" IV Page Preface * 308 Higher education-Part I: National estimates 309 Institutional Expenditures and Voluntary Support 310 Higher education-Part II: Survey results 312 The Recipients 313 The Donors 315 The Purposes 317 Details of support by participating institutions 319 Independent secondary and elementary schools 370 Appendix tables: A. Voluntary support, colleges and universities, 1983-84 381 B. Colleges and universities reporting in both 1982-83 and 1983-84 382 C. Voluntary support, independent schools, 1983-84 383 D. Independent schools reporting in both 1982-83 and 1983-84 383 E. Voluntary support of higher education, by source and by purpose .... 384 F. Estimated total voluntary support of higher education, 1949-50 to 1983-84 385 Appendix 2.-The Department of Defense Report on Selected University Labo- ratory Need.s in Support of National Security, prepared for the Subcommit- tee on Research and Development of the Committee on Armed Services of the U.S. House of Representatives, April 29, 1985 386 Chapter I: Introduction 389 A. Rationale 389 B. Definitions 390 C. Research disciplines and thrust areas 390 D. Information acquisition 391 Chapter II: DOD support for university laboratories 393 A. Introduction 393 B. Origins of DOD support for university laboratories 394 C. Present DOD support for university laboratories 395 C.1 Direct funding of university research 395 C.2 Instrumentation program 399 C.3 University research initiative 401 C.4 Coordination activities 401 Chapter III: Previous studies 402 Chapter IV: Selective university laboratory modernization 411 A. Introduction 411 B. Disciplines 413 B.1 Chemistry 413 B.2 Electronics 415 B.3 Engineering 416 B.4 Materials 417 B.5 Physics 419 C. Summaries 420 Chapter V: Discussion and recommendations 443 A. Discussion 443 B. Recommendations 446 Appendix 3.-Financing and Managing University Research Equipment, Asso- ciation of American Universities, National Association of State Universities and Land-Grant Colleges, and Council on Governmental Relations, Wash- ington, DC, 1985 452 Contents 455 Summary and recommendations 461 1. Academic research equipment: The Federal role 474 Background and trends 474 Funding mechanisms 481 Federal regulatory issues 491 Recommendations 502 2. The State role in the acquisition and management of research equipment 507 Introduction 507 Modes of State support 512 Controls on debt financing 516 Controls on purchasing 518 Controls on use of equipment 521 Financial flexibility 521 PAGENO="0005" V Recommendations 3. The universities' role in the acquisition and management of re- search equipment Introduction Acquisition of research equipment Management of research equipment Optimization of use Strategic planning Recommendations 4. Debt financing Introduction Implications and analysis in debt financing Choosing the appropriate debt instrument Short- to medium-term debt instrument Long-term debt instruments Innovative techniques Recommendations 5. Private support of academic research equipment Introduction Mechanisms of corporate support Other private support Tax incentives State tax incentives R&D limited partnerships Leasing Developing a donation strategy Recommendations Appendixes A. R&D expenditures at universities and colleges by year and source of funds: Fiscal years 1953-83 B. Current fund expenditures for research equipment at universities by science/engineering field and source of funds: Fiscal years 1982 and 1983 C. Federal instrumentation programs D. Analysis of loan subsidy programs E. Representative State regulations F. Representative State statutes authorizing the issuance of bonds to fund higher education facilities G. Iowa State University research equipment assistance program H. Examples of debt financing I. Debt financing instrument J. Examples of equipment donations Appendix 4.-Adequacy of Academic Research Facilities: A Brief Report of A Survey of Recent Expenditures and Projected Needs in Twenty-Five Academ- ic Institutions, prepared under the direction of the Ad Hoc Interagency Steering Committee on Academic Research Facilities with the assistance of the NSF Task Group in Academic Research Facilities, April 1984 Appendix 5.-Howard J. Hausman and Kenneth Burgdorf, NIH Program Evaluation Report: Academic Research Equipment and Equipment Needs in the Biological and Medical Sciences-Executive Summary, Westat, Inc., pre- pared for the Program Evaluation Branch, Office of Program Planning and Evaluation, National Institutes of Health, April 1985 Appendix 6.-Howard J. Hausman and Kenneth Burgdorf, NIH Program Evaluation Report: Academic Research Equipment and Equipment Needs in the Biological and Medical Sciences, Westat, Inc., prepared for the Program Evaluation Branch, Office of Program Planning and Evaluation, National Institutes of Health, April 1985 719 721 Acknowledgments 724 1. Introduction 734 1.1 Background of the survey 734 1.2 Overview of the survey 738 1.3 Objectives and limitations of this analysis 740 1.4 Contents of this report 741 2. Methodology 743 2.1 Sample design 743 2.2 Survey procedures 749 2.3 Definitions 749 Page 524 527 527 528 534 546 554 554 557 557 558 561 561 571 574 575 577 577 579 583 583 590 592 593 594 594 598 598 600 602 623 628 639 644 649 667 683 695 703 PAGENO="0006" VI Page 2.4 Survey response 754 2.5 Data collection for Departments of Medicine 760 2.6 Treatment of date 761 3. Needs and priorities for research equipment assessment by department heads 763 3.1 Adequacy of current instrumentation 763 3.2 Priorities for increased Federal support 767 3.3 Types of instrumentation most urgently needed 769 3.4 Summary 774 4. Expenditures for research equipment, fiscal year 1983 776 4.1 Department expenditures for instrumentation 776 4.2 Equipment expenditures per research 778 4.3 Summary 781 5. The national stock of academic research equipment 783 5.1 Number of cost of instrument systems 783 5.2 Unit costs 787 5.3 State-of-the-art and obsolete instrumentation systems 797 5.4 Summary 800 6. Age and condition of research equipment 803 6.1 Age of research equipment 803 6.2 Condition of research equipment 812 6.3 Summary 819 7. Funding of equipment in active research use 821 7.1 Means of acquiring research equipment 821 7.2 Funding sources for research equipment 821 7.3 Summary 833 8. Location and use of academic research equipment 835 8.1 Location of equipment 835 8.2 Availability for general purpose use 840 8.3 Annual number of research users per instrument program 843 8.4 Summary 847 9. Maintenance and repair 850 9.1 Assessment of M&R facilities 850 9.2 The costs of M&R 852 9.3 Relationship of means of servicing to working condition 857 9.4 M&R costs and age of instruments 857 9.5 Summary 861 10. Summary 863 10.1 Overview 863 10.2 Department-level findings 863 10.3 The national stock of academic research equipment 865 10.4 Age and condition of academic research equipment 866 10.5 Funding of equipment in active research use 868 10.6 Locations and use of academic research equipment 869 10.7 Maintenance and repair 870 10.8 Group comparisons 871 Appendix A. Comparison tables for all fields of science 875 Appendix B. Department/Facility questionnaire 894 Appendix C. Instrument data sheet 901 Appendix D. Advisory group, phase II survey 906 PAGENO="0007" THE FEDERAL GOVERNMENT AND THE UNIVERSITY RESEARCH INFRASTRUCTURE TUESDAY, MAY 21, 1985 HOUSE OF REPRESENTATIVES, COMMITTEE ON SCIENCE AND TECHNOLOGY, TASK FORCE ON SCIENCE POLICY, Washington, DC. The task force met, pursuant to call, at 10:10 a.m., in room 2318, Rayburn House Office Building, Hon. Don Fuqua (chairman of the task force) presiding. Mr. FUQUA. This morning our task force begins 2 days of hear- ings on an important but complex issue, that of the Federal Gov- ernment's role in providing a research infrastructure at the Na- tion's research institutions. This is an issue which, since 1945, seems to come before us peri- odically. Thus we saw in the 1960's, both the National Science Foundation and National Institutes of Health provided extensive support for research facilities and training facilities. In the 1970's, little concern was expressed about the need for such a role until the end of the decade when the instrumentation obsolescence issue was raised, and in the last 2 years, the request for buildings and building modifications has again come before us. In addition, our committee has also had to provide for newly emerging infrastructure needs such as supercomputers. These indi- vidual research support requirements are all part of. the broader set of needs which taken together have come to be termed "re- search infrastructure." This includes in addition to buildings, in- struments, and computers, such things as research libraries, re- search hospitals, and a wide range of research support personnel such as technicians, assistants, and secretarial staff. In these hear- ings we have begun our inquiry into what the long-term needs for infrastructure support are likely to be and what the role of the Federal Government should be in meeting those needs. We expect to learn what the other sources of support are, such as State gov- ernment, private giving, and an extensive system of indirect cost payments which are providing to support and maintain research infrastructure. We also want to explore the alternative mechanisms that may have been available to provide Federal support for research infra- structure. Should separate categorical programs for the support of individual infrastructure needs, such as, for example, instrumenta- tion and supercomputers, be put in place? Should more general in- stitutional support programs giving more latitude for the individ- (1) PAGENO="0008" 2 ual institutions be used? Or would it be better to increase signifi- cantly the payments of indirect costs and through this mechanism provide the funds for infrastruture needs? All of these are difficult and important questions. We are de- lighted to have a group of outstanding witnesses to discuss them with us today. We begin with Benjamin Healy, Deputy Director of the Office of Science and Technology Policy, Executive Office of the President. Did I say Benjamin? I am sorry, I apologize. I need new glasses, I guess. Thank you very much, we will be delighted to hear from you. [A biographical sketch of Dr. Healy follows:] BERNADINE HEALY, M.D.' Dr. Bernadine Healy is Deputy Director of the Office of Science and Technology Policy, Executive Office of the President. Her appointment was made by President Reagan and confirmed by the Senate in June of 1984. Prior to that time she was Professor of Medicine at The Johns Hopkins Hospital and School of Medicine. Dr. Healy was born in New York City, completed secondary school at the Hunter College High School, graduated from Vassar College, summa cum laude, in 1965, and the Harvard Medical School, cum laude, in 1970. She completed advanced post graduate training in internal medicine, anatomic pathology, and cardiovascular dis- ease at The Johns Hopkins School of Medicine. She joined the faculty of medicine and pathology at Johns Hopkins in June 1976 where she had clinical responsibilities and ran an active research program in cardiovascular pathology. In 1977 she became Director of the Coronary Care Unit of The Johns Hopkins Hospital. In 1979 she assumed the additional role of Assistant Dean for Post Doctoral Programs and Faculty Development, a position which included responsibilities for approximately 900 post graduate physicians, and policy issues regarding appointment and academic advancement of the medical faculty. Dr. Healy has been President of the American Federation of Clinical Research (AFCR), and was Chairman of its Public Policy Committee. She is on the Board of Directors of the American Heart Association, is Chairman of the Scientific Sessions, and has served as Vice President and Chairman of the Research Committee of the Maryland affiliate. She has served on the Board of Governors of the American Col- lege of Cardiology, was a member of several Advisory Committees to the National Heart, Lung and Blood Institutes and the Cardiovascular Devices Committee of the Food and Drug Administration. Dr. Healy is the author or co-author of nearly 200 medical and scientific articles, mostly in the area of cardiovascular research and medicine, and has served on the Editorial Boards of numerous scientific journals. She has been a member of the Board of Directors of the Stetler Research Fund for Women Physicians. Dr. Healy is a recipient of the 1983 National Board Award for Medicine of the Medical College of Pennsylvania and is a member of several honorary societies, including Phi Beta Kappa, Alpha Omega Alpha, and the American Society of Clinical Investigation. In her present position at OSTP she is involved in life sciences and regulatory issues; is the OSTP representative to several panels including the National Cancer Advisory Board and the National Heart, Lung, and Blood Institute Council; is execu- tive secretary of the White House Science Panel's Study on the Health of the Un,- versities; and chairs the White House Cabinet Council Working Group on Biotech- nology. STATEMENT OF DR. BERNADINE HEALY, DEPUTY DIRECTOR, OFFICE OF SCIENCE AND TECHNOLOGY POLICY, EXECUTIVE OFFICE OF THE PRESIDENT, WASHINGTON, DC Dr. HEALY. Thank you, Mr. Chairman. I am pleased to be here today to discuss one of the most impor- tant issues affecting the future of our Nation: the health of our university system, and specifically, the condition of the research fa- `Dr. Healy (formerly Bernadine Healy Bulkley). PAGENO="0009" 3 cilities and equipment in our universities and colleges. I would like to confine my remarks today to the policy issues we face, on the assumption that my colleagues from the universities and industry are in the best position to provide an accurate picture of the physi- cal condition of research infrastructure in our universities. Assessing the condition of university research infrastructure is not an easy task. Each university has unique needs and long-term objectives, and is at a unique stage of its own physical and intellec- tual development. Estimates of the cost of renovating and modern- izing the university research infrastructure ranges from about $5 billion to over $20 billion in a period of around 5 years. To get more specific than that often requires arbitrary judgments. What we do know is that present conditions do not make us espe- cially comfortable about the prospects that our university system will be able to meet our Nation's needs in coming years. As many of you are aware, for the past year, a Panel of the White House Science Council has been studying the health of our university system. The Panel was asked to address one fundamen- tal question: "Are our colleges and universities prepared to train and educate the talent we need to remain preeminant in an age of rapid technological change and intense competition?" In a matter of months, the Panel, which is chaired by Mr. David Packard, will release its report. As the Panel has addressed the issue of infrastructure at some length, many of my remarks will resemble those expressed in the forthcoming report. I should stress, however, that I do not claim to speak on behalf of the Panel; and because their work is not yet completed, I will not be able to dis- cuss their recommendations in great detail. The central issue the Panel is addressing is not merely whether the universities are physically equipped, or have adequate faculty, to train the talent our Nation needs today. The real issue is wheth- er our Nation is in a position to ensure that the universities are able to train such talent consistently and continuously for the fore- seeable future. This is a subtle, but important distinction. We are concerned about more than the specific infrastructure problems we currently face. The American university system is dis- tinctive in that our universities conduct research and education ac- tivities simultaneously. In fact, in most graduate programs in sci- ence and engineering, the graduate student is being trained while he or she participates in research. Research in universities thus yields a dual dividend: talent and new knowledge. Strengthening the research capabilities of a university by definition strengthens the education capabilities of the university, and vice versa. The link is important, because it is largely due to the simultane- ous practice of research and training that America maintains such undisputed world leadership in science. In no other nation are stu- dents trained by such eminent practicing scientists as they are in the United States. That we have won the overwhelming majority of the Nobel Prizes in science in the last decade attests to that suc- cess. But world leadership in technology is a much more complex en- deavor. Our technological capabilities reside in a complex interrela- tionship among Government, industry, and the universities. At the PAGENO="0010" 4 risk of oversimplifying a bit, let me try to describe this interrela- tionship. Industry employs scientists and engineers to apply new knowl- edge to specific problems-the result of which is new technology. The universities' role is to provide new talent, in the form of new scientists and engineers and new knowledge on a continuous basis. Government's role is to provide the climate that promotes the ap- propriate investment by both the public and private sectors to meet the Nation's present and future demands for talent and new knowledge. Ideally, this interrelationship is a partnership among the three central institutions. The partnership works best through team- work, with each partner reinforcing the other's capabilities to re- spond to the challenges of competition and technological change. it is industry that is most affected by rapid change; it is industry, too, that most heavily depends on universities to help it. adapt and contribute to change. Of the three, industry in particular feels the heat of competition. industry, therefore, is the key to the universi- ties' ability to adapt to the changing demands of the world around them. The universities are uniquely able to assess their own immediate strengths and weaknesses. The reason: Because they are nearest to the problems, and because, in their research and teaching activi- ties, they are made aware of society's needs, and their own institu- tions' abilities to respond to them. The Government is, however, the only one of the three in a posi- tion to take the broad, long-term view. Industry is necessarily con- cerned about the nearer term-issues like the number of engineers graduated per year in a given field. These issues are resolved in a supply and demand interaction between industry and the universi- ties. But the Government is in a special position to worry about long-term issues like the productivity of the research enterprise, the quality of the talent and new knowledge our universities produce, the overall ability of the universities to adapt and respond to the changing demands of industry and the rest of society, and so on. These are global needs vital to our Nation that the Federal Gov- ernment must address, along with our universities, our State and local governments and our industries. This is why so many say that Federal funding of basic research is an investment. The Government is not buying packages of research results; it is investing in the long-term strength of the research and education enterprise. So, what does this mean when we discuss the condition of infra- structure in our universities? We all agree that there are deficien- cies. But the central question is not so much what to do about the present condition of the university research infrastructure. The real question is more fundamental: Is the partnershp among indus- try, Government, and the universities functioning in a manner which ensures that the United States will maintain a healthy, modern research infrastructure? I think most of us would agree that, given its present condition, and in spite of the strengthened commitment to the basic research enterprise which Chairman Fuqua and the Committee on Science PAGENO="0011" 5 and Technology, and many others in Congress have shown in the last several years, the partnership may not be adequate to the task. Although there has been a 30 percent real growth in basic research funding since 1981 and a 23 percent real growth in university basic research funding since 1980, there has been little emphasis on in- frastructure. In fact, none of the three partners have fully ad- dressed this issue in the last decade or more, although we have in the last few years begun to see some significant improvement. After Sputnik, the Government began a whole series of programs of investment in new facilities and equipment. Our research capac- ity in this Nation expanded rapidly, and the system produced much of the talent and new knowledge upon which today's technological revolution is based. But in the early 1970's, these investments were discontinued. Construction stopped. By the late 1970's, the universities warned that unless the Government came up with new facilities funding, the research infrastructure was in trouble. Industry was making some contributions, but those were small compared to the benefits they derived from the talent and new knowledge produced by the universities. For most of the decade of the 1970's and into the early 1980's, the universities themselves behaved largely as dependents of the Government, abdicating their responsibility for infrastructure and biding their time until Federal facilities programs were resumed. And the Government, not fully acknowledging its responsibility for the long-term health of the system, attempted not to invest in the research enterprise, but to procure packets of research results at the lowest possible price. Facilities use allowance reimbursements, for example, are based on an average useful life of 50 years for a university laboratory. The actual average useful life of a modern laboratory is probably closer to 20 to 25 years, as it is for industrial laboratories. As for research equipment, in addition to having unrealistically long am- ortization periods-15 years, in contrast to the actual 6 to 8-the Government also micromanages the purchase of new equipment. Although financial accountability is an integral part of good Fed- eral management, the level of detail required by 0MB circular A- 110 in documenting the need for any piece of equipment costing more than $5,000 is an unnecessary burden. The Government also requires inventories of all research equipment owned by an institu- tion, presumably to serve as a basis on which to compare the A-lb screening documents. Well, what should we do? Simply creating a new multibillion dollar facilities program may, over the near term, improve the con- dition of infrastructure, but it won't restore teamwork to the part- nership, or prevent a boom-bust cycle. It is equally important that change take place in the attitudes and performance of each of the three partners. The Government must focus on our research expenditures as in- vesting in the research enterprise and not just procuring research results. This means bearing the reasonable and necessary costs of the research it sponsors. But it means more than that. As I indicat- ed earlier, the Federal Government shares the responsibility along with the universities to respond and adapt to the changing de- PAGENO="0012" 6 mands of society. As regards infrastructure specifically, I would say bringing amortization periods for both facilities and equipment into line with those for industry would be a wise and appropriate change. In addition, much of the Federal paperwork and manage- ment associated with university research should be reevaluated and eliminated if inappropriate or unnecessarily burdensome. The universities must assume a far more significant and respon- sible role in managing the Nation's investment in university re search. The Government-university relationship should be a mutu- ally reinforcing, mutually beneficial, equal partnership. I would like, for example, to see a system in which the universities would be reimbursed realistically for facilities and equipment used in Federally-sponsored research and for the universities to take a leadership role in identifying cost savings associated with research overhead. As for industry, a direct involvement by industry in the universi- ty research process offers significant benefits to both. Direct contri- butions of state-of-the-art research equipment, and industry-univer- sity cooperation in its use and maintenance, is one remedy for some of the weaknesses in the partnership. Unrestricted donations, as well as donations toward renovation or new construction of fa- cilities, should be encouraged. I would anticipate that some of this will cost money. But we must ask ourselves, can our Nation remain competitive in this fast- changing age if we are not training the very best talent we can? An increased Federal commitment to university research is indeed an investment-an investment that we probably cannot get along without. Because only the universities train and educate the talent that is so central to our continued world leadership in both science and technology, university research is the highest priority in the civilian R&D effort. Yet, of the more than $20 billion we spend on civilian R&D, about $6 billion is invested in university research. This balance may be inapprorpiate to today's circumstances. Since the budget deficit forces us to select from among competing priorities, I would suggest that we continue what we all began several years ago, and redirect civilian R&D funds from lower priority areas, particularly technology development projects, to the highest priority, universi- ty-based basic research. This would permit us to be both fiscally re- sponsible and attentive to the need for investment in the future growth, prosperity and leadership of our Nation. I would be pleased to answer questions. Thank you. [The prepared statement of Dr. Healy follows:] PAGENO="0013" 7 PROPOSED REMARKS OF DR. BERNADINE HEALY, M.D. DEPUTY DIRECTOR OFFICE OF SCIENCE AND TECHNOLOGY POLICY EXECUTIVE OFFICE OF THE PRESIDENT MAY 21, 1985 Mr. Chairman, I am pleased to be here today to discuss one of the most important issues affecting the future of our nation: the health of our university system, and specifically, the condition of the research facilities and equipment in our universities and colleges. I would like to confine my remarks today to the policy issues we face, on the assumption that my collegues from the universities and industry are in the best position to provide an accurate picture of the physical condition of research infrastructure in our universities. Assessing the condition of university research infrastructure is not an easy task. Each university has unique needs and long term objectives, and is at a unique stage of physical and intellectual development. Estimates of the costs of renovating and modernizing the university research infrastructure range from about $5 billion to over $20 billion in a period of around five years. To get more specific than that would require arbitrary judgments. What we do know is that present conditions do not make us especially comfortable about the prospects that our university system will be able to meet our nation's needs in coming years. PAGENO="0014" 8 As many of you are aware, for the past year, a Panel of the White House Science Council has been studying the health of our university system. The Panel was created by Dr. George A. Keyworth, the President's Science Advisor, who asked them to address one fundamental question: "Are our colleges and universities prepared to train and educate the talent we need to remain preeminant in art age of rapid technological change and intense competition?" In a matter of months, the Panel, which is chaired by Mr. David Packard, will release its report. As the Panel has addressed the issue of infrastructure at some length, many of my remarks today will resemble those expressed in the forthcoming report. should stress, however, that I do not claim to speak on behalf of the Panel; moreover, because their work is not yet completed, I will not be able to discuss their recommendations in great detail. The central issue the Panel is addressing is not merely ~.~~ther the universities are physically equipped, or have adequate faculty, to train the talent our nation needs today. The real issue is whether our nation is in a position to ensure that the universities are able to train such talent consistently and continuously for the foreseeable future. This is a subtle, but important distinction. If I may digress for a moment, I think I can demonstrate to you why we are concerned about more than the specific infrastructure PAGENO="0015" 9 problems we currently face. The Mterican university system is distinctive in that our universities conduct research and education activities simultaneously. In fact, in most graduate programs in science and engineering, the graduate student is being trained while he or she participates in research. Reearch in universities thus yields a dual dividend: talent and new knowledge. Strengthening the research capabilities of a university by definition strengthens the education capabilities of the university, and vice versa. The link is important, because it is largely due to the simultaneous practice of research and education that America maintains such undisputed world leadership in science. In no other nation are students trained by such eminent practicing scientists as they are in the U.S. That we have won the overwhelming majority of the Nobel prizes in science in the last decade attests to that success. But world leadership in technology is a much more complex endeavor. Our technological capabilities reside in a complex interrelationship among government, industry, and the universities. At the risk oL oversimplifying a bit, let me Lry to describe this interrelationship. Industry employs scientists and engineers to apply new knowledge to snecific problems--the result of which is new technology. The universities' role is to provide new talent, in the form of new scientists and engineers and new knowledge on a continuous basis. Government's role is to provide the climatethat promotes the appropriate investment by both the PAGENO="0016" 10 public and private sectors to meet the nation's present and future demands for talent and new knowledge. Ideally, this interrelationship is a partnership among the three central institutions. The partnership works best through teamwork, with each partner reinforcing the other's capabilities to respond to the challenges of competition and technological change. It is industry that is most affected by rapid change; it is industry, too, that most heavily depends on universities to help it adapt and contribute to change. Of the three, industry in particular feels the heat of competition. Industry, therefore, is the key to the universities' ability to adapt to the changing demands of the world around them. The universities are uniquely able to assess their own immediate strengths and weaknesses. Ask a researcher which wheels need grease-- a new NMR machine, larger computing capacity--and he or she can answer immediately. The reason: because they're nearest to the problems, and because, in their research and teaching activities, they are made aware of society's needs, and their own institutions' abilities to respond to them. The government is, however, the only one of the three in a position to take the broad, long-term view. Industry is necessarily PAGENO="0017" 11 concerned about the nearer term--issues like the number of engineers graduated per year in a given field. These issues are resolved in a supply and demand interaction between industry and the universities. But the government is in a special position to worry about long-term issues like the productivity of the research enterprise, the quality of the talent and new knowledge our universities produce, the overall ability of the universities to adapt and respond to the. changing demands of industry and the rest of society, and so on. These are global needs vital to our nation that the federal government must address, along with our universities, our State and local governments and industry. This is why so many say that federal funding of basic research is an investment. The government is not buying packages of research results; it is investing in. the long term strength of the research and education enterprise. So, what does this mean when we discuss the condition of infrastructure in our universities? We all agree that there are deficiencies. But the central question, I hope I have now explained, is not so much what to do about the present condition of the university research infrastructure. The real question is more fundamental: Is the partnership among industry, government, and the universities functioning in a manner which ensures that the U.S. will maintain a healthy, modern research infrastructure? PAGENO="0018" 12 I think mostof us would agree that, given its present condition,. and in spite of the strengthened commitment to the basic research enterpise which Chairman Fuqua and the Committee on Science and Technology, and many others in Congress have shown in the last several years, the partnership may not be adequate to the task. Although there has been a 30% real growth in basic research funding since 1981 and a 23% real growth in university basic research funding since 1980, there has been little emphasis on infrastructure. In fact, none of the three partners have fully addressed this issue in the last decade or more, although we have in the last few years begun to see some significant improvement. After Sputnik, the government began a whole series of programs of investment in new facilties and equipment. Our research capacity in this nation expanded rapidly, and the system produced much of the talent and new knowledge upon which today's technological revolution is based. But in the early l970s, these investments were discontinued. Construction stopped. By the late l970s, the universities warned that unless the government came up with new facilities funding, the research infrastructure was in trouble. Industry was making some contributions, but those were small compared to the benefits they derived from the talent and new knowledge produced by the universities. The universities themselves behaved largely as dependents of the government, abdicating their responsibility for infrastructure and biding their time until federal facilities PAGENO="0019" 13 programs were resumed. And the government, not fully acknowledging its responsibility for the long term health of the system, attempted not to invest in the research enterprise, but to procure packets of research results at the lowest possible price. Facilities use allowance reimbursements, for example, are based on an average useful life of 50 years for a university laboratory. The actual average useful life of a modern laboratory is probably about 20-25 years, as it is for industrial laboratories. As for research equipment, in addition to having unrealistically long amortization periods--15 years, in contrast to the actual 6 to 8--the government also micromanages the purchase of new equipment. Although financial accountability is an integral part of good federal management, the level of detail required by 0MB Circular A-lb in documenting the need for any `-~ece of equipment costing more than $5,000 is an unnecessary burden. The government also requires inventories of all research equipment owned by an institution, presumably to serve as a basis on which to compare the A-lb screening documents. Well, what should we do? Simply creating a new multi- billion dollar facilities program may, over the near term, improve the condition of infrastructure, but it won't restore teamwork to the partnership. it is equally important that change take place in the attitudes and performance of each of the three partners. The government must focus on our research expenditures as investir~ in the research enterprise and not procuring research results. This means bearing the reasonable and necessary costs of PAGENO="0020" 14 the research it sponsors. But it means more than that. As I indicated earlier, the federal government shares the responsibility along with the universities to respond and adapt to the changing demands of society. As regards infrastructure specifically, I would say bringing amortization periods for both facilities and equipment into line with those for industry would be a wise and appropriate change. In addition, much of the federal paperwork and management associated with university research should be reevaluated and eliminated if inappropriate or unnecessarily burdensome. Accordingly, however, the universities must assume a far more significant and responsible role in managing the nation's investment in university research. The government-university relationship should be a mutually reinforcing, mutually beneficial, equal partner- ship. I would like, for example, to see a system in which the universities would be reimbursed realistically for facilities and equipment used in federally sponsored research and for the universities tr take a leadership role in identifying cost savings asso ia~c~d .,~hresearch overhead. As for industry, a direct involvement by industry in the university reearch process offers significant benefits to both. Direct contributions of state-of-the-art research equipment, and industry-university cooperation in its use and maintenance, is one remedy for many weaknesses in the partnership. Unrestricted donations, as well as donations toward renovation or new construction of facilities, should also be encouraged. PAGENO="0021" 15 I would anticipate that some of this will cost money. But we must ask ourselves, can our nation remain competitive in this fast-changing age if we're not training the very best talent we can? An increased federal commitment to university research is indeed an investment--an investment that we probably can't get along without. Because only the universities train and educate the talent that is so central to our continued world leadership in both science and technology, university research is the highest priority in the civilian R&D effort. Yet, of the more than $20 billion we spend on civilian R&D, about $6 billion is invested in university research. This balance may be inappropriate to today's circumstances. Since the budget deficit forces us to select from among competing priorities, I would suggest that we continue what we all began several years ago, and redirect civilian R&D funds from lower priority areas, particularly technology development projects, to the highest priority, university based basic research. This would permit us to be both fiscally responsible and attentive to the need for investment in the future growth, prosperity, and leadership of our nation. I would now be pleased to answer any questions you might have. PAGENO="0022" 16 DISCUSSION Mr. FUQUA. Thank you very much, Dr. Healy. That was a very constructive statement, I might add. Dr. Keyworth has testified before the committee before and dis- cussed in generalities this same issue. The question that I guess comes to my mind is the fact that we are talking about doubling the universities' capacity to produce new Ph.D.'s or even tripling it maybe, by the year 2010 to meet the demands that have been fore- cast that would be required. Now, what I am concerned about is are we just trying to meet the current demands and not factoring in that increased number that we are going to need? Do you have any opinion about that? Dr. HEALY. I think I-- Mr. FUQUA~ I hope I am making myself clear. Dr. HEALY. Yes, you are, and I quite agree with your concern, and the White House Science Council Panel has been trying to stress the fact that the issue is not whether facilities are adequate or whether the equipment today is adequate, but what about the long-term future? Are we strategically planning? I think this is clearly an issue of broadest and pressing concern. I think the com- mittee such as yours and the White House Science Panel are the kinds that should be addressing these issues. I think industry and the universities now are worried about their budgets and their planning for the next 3 months and the next year. Mr. FUQUA. You would be a hero about your comments about Circular 110. Dr. HEALY. Heroine. Mr. FUQUA. Can we expect that to be implemented any time soon? Dr. HEALY. Any time soon? Depends how you define soon. As you know, things don't work with real swiftness sometimes. Mr. FUQUA. You also mentioned in your statement about the changing of the amortization schedules and so forth. I think it would be an excellent idea. However, that is more in the long- range and really doesn't address the short-range situation where we are approaching 20 years in some of those that were built in the late 1950's and early 1960's when those programs were then in use, plus the equipment associated with that, too. You also state that the universities themselves behave largely as dependents of the Government, abdicating their responsibilities and biding their time until a Federal program on facilities is resumed. Is there anything that can be done to change the attitude on the part of the universi- ties? Dr. HEALY. I think there have been signs of change. I think that was prevalent in the 1970's when people expected big construction grants to be resumed that we saw in the 1960's. I think that most of our major research universities have recognized that they cannot afford to wait for what might come along. I think there are-we are seeing substantial movement and more creative ap- proaches as you have suggested in floating bond issues to renew in- frastructure. But I think that the problem is so large that in all likelihood the universities, when they are doing a substantial amount of federally sponsored research, particularly, cannot handle it alone. I think the Government has to be a partner in it. PAGENO="0023" 17 To this extent, the universities that have taken the lead in start- ing to renew their infrastructure and come up with more creative approaches to the problem are not functioning as dependents. I think it is important that they truly be part of that investment partnership with the Federal Government as part of it. Also, the State governments-I think we are seeing a very excit- ing motion on the part of State and local governments to become part of this effort both with industry and with universities. Mr. FUQUA. Thank you. Mr. BROWN. Mr. BROWN. Thank you, Mr. Chairman. Dr. Healy, I have been looking both at your testimony and at the text of the National Science Engineering and Technology Policy Priorities Act which this committee spawned several years ago, and I am wondering if there are any defects in language of this act which may have led to development of some of these critical prob- lems, such as the infrastructure problem, and while I must confess to some pride of authorship as far as this committee is concerned in the act-I have a tendency perhaps to gloss over its deficien- cies-nevertheless, it seems to me this act clearly places on the Office of Science and Technology Policy the responsibility for ascer- taining, in a long-range way, the development of problems of this sort, and recommending to the President and to Congress strategies for dealing with it. I sense that this problem has crept up on us without being faced up to realistically, and yet I don't see from the standpoint of what the Congress could have done, any way to better anticipate than to lay out the responsibilities as we have in this act. Can you discuss with me why broad problems of this sort can de- velop without receiving adequate attention and sometimes narrow- er problems? To give you an example of a narrower problem, I was reading in the last couple days-I think it was the Scientific Ameri- can magazine article-lamenting the lack of support for basic re- search in mathematics, a fundamentally important field to us, and if this is true, that for 10 years we have been neglecting this, it is a problem that requires some action. Why are we not getting a sur- facing of these problems in a more timely fashion and recommen- dations for solution to them? Dr. HEALY. Well, I think that perhaps right now we are. You can argue why has it taken us so long, but I think that one of the things that makes me extremely optimistic is that I think the prob- lems of our research universities, the essentiality of our research universities to the Nation as a whole, is being perceived in a bipar- tisan fashion and is clearly perceived by the Congress and is per- ceived by the administration. I don't think it is a coincidence that, really totally independent- ly, your committee has addressed this issue and the White House Science Office has taken this on. I think that you may be nudging me a bit and suggesting we may have done it a little sooner over at OSTP, but we did start this about a year ago and I think that both your-the congressional efforts and efforts of the administration are trying to remedy perhaps this past fault which is not thinking enough strategically, thinking in terms of procuring packets of re- search or putting out immediate fires, or dealing with problems in PAGENO="0024" 18 the next few months, rather than saying: "Is this of substantial in- vestment that we must nurture, can we get along with boom and bust approaches to investment, does this require a commitment?" I think one of the fundamental problems in all our investment in science, as well as in universities, is the perception that because we renegotiate the budget every year and go through the hassles of the budget process, we are somehow renegotiating the commitment to invest in our scientific enterprise. The nature of the scientific enterprise is one that you cannot for a moment question the impor- tance of that investment. It is not an entitlement program. It is not a subsidy program that can be subject to cancellation or severence; it is the essence of our productivity and our future. I sense, and I suspect you do as well, that at this point in time, people are aware of that perhaps as never before. The problems have been developing a long time. I don't see that they will be solved overnight, but I think there is a bipartisan and rather wide- spread and rather vocal commitment to the fact that things must change. Mr. BROWN. Well, I obviously pick on the administration or any agency of it that I can from time to time, and one of the things that I pick on in OSTP is that rarely do they seem to have read the act. There is, for example, within this act the emphasis upon the importance of supporting high quality basic research which this ad- ministration has to be commended for encouraging. On the other hand, there is also the emphasis upon the Five-Year Outlook, and annual reports of developing problems in science which I cannot commend this administration for doing much about and in fact, they seem to have shorted it considerably over the period of years. Now, I think that is the appropriate role for us in Congress to point out where you are doing things right and where you are not doing things right, and I hope that we can continue that, but spe- cifically I see nothing that represents a timely response to the ad' monitions contained here to maintain a continuing surveillance over all of the aspects that relate to the health of science in this country, and I question whether possibly your office has the re- sources to accomplish this. As far as this committee is concerned, I think we would like to give you those resources but we get very little encouragement in trying to do that. Dr. HEALY. Well, I would agree with you, I think that the Office of Science and Technology Policy, which is a very small policy office within the EOP, does not have the resources to fulfill the task outlined in the act, and I think there is no place else within the executive branch of Government that that is being carried out in a global way. Sometimes even within agencies-for example, our wonderful NIH-you don't even have a global strategic look at the overall $5 billion investment there. It tends to be separated up into individual institutes. So I think that the importance of strategic 5-year looks at our overall research enterprise, both within very broad categori- cal areas and also across the Government in general when we are investing $50 billion in research, is important. I would agree with you. It must be done better than it is being done. As you know, the President's Commission on Industrial Com- PAGENO="0025" 19 petitiveness recommended that there be a Department of Science. And I really believe-and as you know Dr. Keyworth in the Office has supported that-and I believe that that was not a self-serving support, but rather a recognition of the fact that when you have something which is so essential to the fabric of our Nation, it af- fects all walks of life, all people, and that you don't have a coordi- nated opportunity within the administration to look at science in its broadest pespective, to bring it to the table, to examine it in a strategic way, that there is a problem. It needs to be remedied. I think the support for the Department of Science and Technology was not a bureaucratic escalation. It really was an attempt in part to respond to the very spirit of that act you are speaking about. Mr. BROWN. I sensed that that was the case, and I commend the results of that work. I note also looking at broad approaches to some of the problems in science that face us, that the National Academy has recently done a study of international competitive- ness of some of our basic industries. I would suspect that that was an unaccustomed task for the Academy because they had to look at a wide range of nonscientific problems that relate and couple that with the science and technology problems in order to reach a con- clusion. But they did and they emerged with some rather good re- sults in my opinion. If the Academy can go through that strain, I don't see why the Office of the President cannot go through that strain and tie together some of these pressing national problems and this is the language, the authority is contained in the language of the act. There is no question about that. But there is reluctance in any administration-I am not ,iust picking on this one-to carry out functions which they don t quite perceive, they don't quite-it doesn't quite fit into their priority scheme for meeting the needs of the country. We suffer as a consequence of that. Dr. HEALY. Well, believe it or not, I read that act in great detail and I think that it should be taken seriously and often the advice of acts like that need to be accompanied by a check. Mr. BROWN. We sometimes find that Science Advisors are not willing to admit that until after they have left office, however. Dr. HEALY. I hope that is not a premonition. Mr. BROWN. Thank you. Mr. FUQUA. Thank you. Mr. Lujan. Mr. LUJAN. Thank you, Mr. Chairman. I think my colleague from California missed the last point that it ought to be accompanied by a check. He didn't comment on that. I think you have made an excellent presentation, which you made very well, to show the relationship between industry, univer- sities and the Government and what each of our responsibilities are. There is an emphasis as there should be in this particular earing on university research. And with that emphasis, and oming from the office that you do-Dr. Keyworth maybe right at he very beginning, as a matter of fact, got into trouble with some f his colleagues at the Government laboratories by saying more of his should be done over at the university level rather than the overnment laboratories-at least that is what I understood at the ime, being a great advocate of the laboratories since they exist in PAGENO="0026" 20 my home district. But is it the feeling of OSTP that we don't do enough in university research? You mentioned $6 billion of the $20 billion in civilian research, that only that amount goes to universi- ties. You don't think that is enough? Dr. HEALY. Well, I think that I don't have the means to answer that question, but I think that question needs to be asked and I think that is a fundamental and quite strategic question that needs to be asked. Is it roughly $16 billion being spent in our Federal laboratory systems? Mr. LUJAN. If you take defense it is 40. Dr. HEALY. It is more, yes. One question is not necessarily to dis- mantle our Federal laboratory systems, which are superb, but rather to ask whether there could be better use of those facilities by some of our private research universities, more operation with the Federal laboratories and industry. As you know, Mr. David Packard chaired the Federal laboratory study which OSTP completed over a year ago with a strong recom- mendation that there be more use of the Federal laboratories by the private sector, both the universities and the industries. That isn't as far along as~ it should be perhaps. Mr. LUJAN. But basically I keep getting the feeling that OSTP feels that we have to beef up that university research rather than just continue it as it was. The reason I ask that question-- Dr. HEALY. Yes. Mr. LUJAN [continuing]. What this whole thing is about is what should our science policy be and should that policy be that a larger percentage of the R&D budget go to the universities? That is a very crucial question we will have to address in the report. Dr. HEALY. I would say that it is fair to say that the general feel- ing is that the university-based research should be the No. 1 priori- ty; that the very unique system of doing so much of our first class basic research out in a diverse and complicated system of private universities, the diversity of that system is such an important part of its creativity. And I think that it is the feeling of the Office and of the Panel that that should be the No. 1 priority, and that that again may mean that $6 billion is not enough. But I cannot say, and I don't think the Panel is going to say, x billion is what we need. I think that that question has to be asked and I think that the answer is likely to be this is not a zero sum game. Mr. LUJAN. I am just wondering, as an aside, if OSTP does differ- ent kinds of studies? And what leads me to that question is one of the witnesses the other day had a chart of postgraduate students in this country and showed how many were U.S. nationals and how many were nationals of other countries, and probably paid for by their governments to go to school. And I remember the bottom line which was engineers, that only something less than 50 percent of postgraduate engineering students were U.S. nationals, and I had never thought about it until just now, but I am wondering if those do enroll in universities that are well funded or that we have good research programs with? Is OSTP in a position to do that kind of study? PAGENO="0027" 21 Dr. HEALY. We, as part of the University Panel, were looking at the foreign students that were coming into the research universi- ties here and interestingly, the consensus of the Panel, and also of a questionnaire in which we solicited opinion from the outside com- munity and in hearings we held in general, was that the foreign students at research universities are a very positive force. Mr. LUJAN. Do they take up the room or just-- Dr. HEALY. We tend to get the very best and that in fact is a positive, net positive for the intellectual environment of our uni- versities. There was really no sense, and frankly this surprised me, because in the field of medicine which is my background, some- what different, there was not the sense that they were taking posi- tions away from American students. Mr. LUJAN. There was room over and above what we required? Dr. HEALY. There was more than just room, there was a need. They were not producing enough in some of these areas on our own, among our own, and we needed to have some of this talent. Mr. LUJAN. That is interesting. Thank you very much. Mr. FUQUA. Thank you very much, Dr. Healy. We appreciate your being here and for your remarks this morning. Our next witness will be Henry G. Kirschenmann, Deputy Assist- ant Secretary for Procurement, Assistance, and Logistics at the De- partment of Health and Human Services. We would be pleased to hear from you. [A biographical sketch of Mr. Kirschenmann follows:] HENRY G. K!RSCHENMANN, JR. Henry G. Kirschenmann, Jr. is the Deputy Assistant Secretary for Procurement, Assistance and Logistics in the Department of Health and Human Services. As such he is one of the Department's chief career officials and advisors to the Office of the Secretary in the grant and procurement area. He is also responsible for developing audit resolution policy and overseeing the process within the Department. Prior to being appointed to his current position, Mr. Kirschenmann served in var- ious financial management positions in the Department and at the National Insti- tutes of Health. He was involved in developing and implementing cost policy and other financial management policy for colleges and universities and other non-profit organizations, State and local governments and hospitals which receive grants and contracts from the Department. He was also involved in establishing indirect cost rates. Mr. Kirschenmann has served with the Defense Contract Audit Agency, was a staff member of the national accounting firm of Price Waterhouse and Company, and has held various positions in industry. He holds a Bachelor's Degree from the University of Maryland, a Master's Degree from The American University and is a certified public accountant. He is the recipi- ent of Senior Executive Performance Awards, the Department of Health, and Human Service's Superior Service Award, and two achievement awards and the President's Citation from the Association of Government Accountants. STATEMENT OF HENRY G. KIRSCHENMANN, JR., DEPUTY ASSIST- ANT SECRETARY, PROCUREMENT, ASSISTANCE AND LOGISTICS, DEPARTMENT OF HEALTH AND HUMAN SERVICES Mr. KIRSCHENMANN. Thank you, Mr. Chairman. It is a pleasure to be here. I and my Department are pleased to assist the task force in its tudy of Government science policy by providing information on ayments for indirect costs to colleges and universities. As we un- erstand it, the task force is interested in knowing the amounts of PAGENO="0028" 22 indirect costs paid to the institutions as part of the total costs of research grants and contracts, as well as the extent to which these payments support the research infrastructure of the institutions. We have endeavored to meet the task force's request and have developed a substantial amount of information on this subject which we believe you will find useful. The information, in the form of a series of charts and graphs, is attached to my statement. I note, however, that the amounts and percentages on indirect costs shown in the charts are approximations based on an analysis of available information on total Federal R&D obligations to colleges and universities, NIH indirect cost payments, and components of indirect cost rates, supplemented by detailed information on cer- tain indirect cost subcomponents provided by 50 major research universities. In order to put this information in perspective, some background on indirect costs might be useful. Indirect costs are the costs of ad- ministrative and supporting services which cannot be readily iden- tified with specific research projects, instructional programs, or other university activities. They are therefore grouped in a series of cost pools and allocated between research and other activities based on cost allocation procedures. The portion of indirect costs allocated to research is then further * distributed to individual research projects by an indirect cost rate, which is expressed as a percentage of direct research costs. The in- stitutions negotiate these rates annually with a "cognizant" Feder- al agency. HHS is the cognizant agency for about 95 percent of the colleges and universities receiving Federal research, although some of the major institutions, such as MIT and Stanford, negotiate their rates with the Department of Defense. Universities generally have six principal components of indirect costs: One, use allowances or depreciation on buildings and equipment. Use allowances are essentially a simplified form of depreciation; Two, operation and maintenance of facilities, which covers such costs as utilities, janitorial services, repairs and maintenance, and similar expenses; Three, general administration, encompassing the institution's ex- ecutive offices, administrative services, such as accounting and pur- chasing, and other costs of a general nature; Four, departmental administration, consisting of the expenses of deans' offices and administrative expenses at the academic depart- ment level; Five, sponsored projects administration, which are specialized services related to the management of sponsored research and training, such as review of grant applications and monitoring grant terms and conditions; Six, the costs of institutional libraries, including the salaries of library staff and books and periodicals. With that as background, I would now like to turn to the specific information requested by the task force, as detailed in the attached charts: Total Federal R&D obligations to colleges and universities have gone from $1.9 billion in fiscal year 1972 to over $5 billion in fiscal PAGENO="0029" 23 year 1983, an increase of about 160 percent. Specific year-by-year information is shown in graph and chart 1. GRAPH 1 TOTAL FEDERAL R & 0 OBLIGATIONS TO COLLEGES AND UNIVERSITIES `I) z 0 * 5-~ 4.-~ 77Z~ 7;~ ~/ 7~7 4444~~4 1* 0~ 7 (~ff // 6~i~ 79 ~o ~i a FlSC~4L. YEAR , I /7/, PAGENO="0030" 24 CHART 1 TOTAL FEDERAL R & D OBLIGATIONS TO COLLEGES AND UNIVERSITIES IN MILLIONS OF DOLLARS) AUARD I NG AGENCY TOTAL HHS DOD NSF OTHERS 72 1,853 879 244 335 307 73 1,871 904 233 349 386 74 2,085 1,129 184 376 396 75 2,246 1,205 191 405 446 76 2,431 1,296 212 437 486 77 2,803 1,452 267 491 593 78 3,386 1,658 452 532 744 79 3,874 1,967 529 588 791 80 4,160 2,026 556 634 945 81 4,411 2,113 700 617 981 82 4,553 2,111 814 690 939 83 5,022 2,360 913 759 989 84 DATA NOT YET AVAILABLE FROM NSF SOURCE: TABLE 8-2 -- FEDERAL OBLIGATIONS TO UNIVERSITIES AND COLLEGES IN NSF'S PUBLICATION ~FEDERAL SUPPORT TO UNIVERSITIES, COLLEGES AND SELECTED NONPROFIT INSTITUTIONS'. As shown in graph and chart 2, during the same 1972 to 1983 period, total estimated indirect cost payments by all Federal agen- cies have increased by 275 percent, from about $400 million to $1.5 billion. At NIH, indirect costs are now running about 32 percent of total university research grant costs, up from 22 percent in 1972. This disproportionate growth in indirect costs, in comparison with direct costs, has been a concern to sponsoring agencies and the re- search community for some time, and is currently being reviewed by the White House Office of Science Technology Policy. PAGENO="0031" (1) ______________________ z 0 _______________________ APPROXIMATE AMOUNT PAiD TO COLLEGES AND UNIVERSITIES FOR INDIRECT COSTS UNDER R & D AWARDS BY ALL FEDERAL AGENCIES (IN MILLIONS OF DOLLARS) 72 393 73 419 74 491 75 562 76 624 77 720 78 885 79 1,039 80 1,050 81 1,247 82 1,310 83 1,480 1~ 706 11,925 25 GRAPH 2 APPROXIMATE AMOUNT PAID TO COLLEGES AND UNIVERSITIES FOR INDIRECT COSTS UNDER P & D AUARDS BY ALL FEDERAL AGENCIES 1.6 1.7 1.6 1.5 1.3 1.2 1.1 0.9 0.8 0.7 n~. `-~ ,`.~ ~` `I ~i /~, 7-~ ~- ,,, ,~ 7~ "1 z `*i . r7~/ 1771 Vi `i `i `i "~ `i `i 0 0 0 /A VI,' V~A r,. Y I 2' `1 `1 `2' 7 2' "A VA VA Vi /`~ `i 0 `, `i "i 0 0 0 . .` . r ,` r r ._,A A A~ -~ -~ -~ -!= -~ -~ -~ -~ (*~ 7' I, ,~ `1 ~, (i z 7 fj ~~1 z u.~. /J V 0 6 `7 0 ".4. 0.3 ni,. r77~-i,JI 11-, 2'~ V /1 V . L~JI 1.T.~1 V~~' 6 6 `C-, `i-, &~ 0.1 0 A~ ~1L `C-i ~,` `.~ ~` ~-,4 £-~L 72 73 74 75 76 77 78 79 80 81 82 83 84 FiSC~óL YEAR CHART 2 84 TOTAL PAGENO="0032" 26 Based on an analysis of fiscal year 1982 through 1984 indirect cost~ rates negotiated by HHS, the largest component of indirect costs is departmental administration, which averages one-third of the rate. Operation and maintenance of facilities is next at 28 per- cent, followed by general administration at 15 percent. Use allow~ ances on buildings and equipment is currently running between 9 percent and 10 percent of the rate; sponsored projects administra- tion is 7 percent; and library is 4 percent. What that translates to is administrative cost equalling about 55 percent of the rate as op- posed to such things as use charges and operation and maintenance facilities cost. CHART 3 AVERAGE PERCENT OF EACH COST COMPONENT TO THE TOTAL INDIRECT COST RATE FOR MAJOR RESEARCH UNIVERSITIES NEGOTIATED BY HHS COST COMPONENTS 1982 1983 1984 USE ALLOWANCES/DEPRECIATION ON BUILDINGS & EQUIPMENT 97. 97. lox OPERATION AND MAINTENANCE OF PHYSICAL PLANT 277. 28% 287. GENERAL ADMINISTRATION 177. 157. 157. DEPARTMENTAL ADMINISTRATION (INCLUDING DEANS' OFFICES) 32% 337. 337. SPONSORED PROJECTS ADMINISTRATION 77. 77. 77. LIBRARY 57. 47. 47. STUDENT SERVICES 17. ox ox OTHER 27. 37. 3% TOTAL RATE 1007. 1007. 1007. The rest is in minor items, such as a small portion of student service costs associated with students working on research projects. As indicated in chart 3, these percentages have held reasonably steady for the 3-year period. Chart 4 shows the rate components ex- pressed as a percentage of direct research costs. PAGENO="0033" 27 CHART 4 AVERAGE INDIRECT COST RATE COMPONENTS FOR MAJOR RESEARCH UNIVERSITIES NEGOTIATED BY HHS COST COMPONENTS 1982 1983 1984 USE ALLOUANCES/DEPREC I AT I ON ON BUILDINGS & EQUIPMENT 4.2 4.3 4.5 OPERATION AND MAI-N'rENANCE OF PHYSICAL PLANT 12.0 12.8 13.3 GENERAL ADMINISTRATION 7.4 7.1 7.3 DEPARTMENTAL ADMINISTRATION (INCLUDING DEANS' OFFICES) 14.2 15.2 15.4 SPONSORED PROJECTS ADMINISTRATION 3.3 3.2 3.1 LIBRARY 2.1 2.0 2.0 STUDENT SERVICES 0.6 0.2 04 OTHER 1.0 1.2 1.4 TOTAL RATE 44.7 46.0 47.1 RATES ARE EXPRESSED AS A PERCENTAGE OF TOTAL DIRECT COST OF ORGANIZED RESEARCH EXCLUDING CAPITAL EXPENDITURES, MAJOR SU9CONTRACTS AND OTHER DISTORTING ITEMS. Chart 5 shows the approximate dollar amount paid to the institu- tions for each indirect cost component from fiscal year 1982 to 1984. The total amount paid during this period was about $4.5 bil- lion, broken down in round numbers as follows: Use allowances, $400 million; operation and maintenance, $1.2 billion; general administration, $700 million; departmental admin- istration, $1.5 billion; sponsored projects administration, $300 mil- lion; library, $200 million; other, $150 million. 53.277 0 - 86 - 2 PAGENO="0034" CHART 5 APPROXIMATE AMOUNT PAID TO UNIVERSITIES FOR INDIRECT COST COMPONENTS BY ALL FEDERAL AGENCIES (IN MILLIONS OF DOLLARS) ---3 YEAR--- COST COMPONENTS 1982 1983 1984 TOTALS RATIO USE ALLOUANCES/OEPRECIATION ON BUILDINGS & EQUIPMENT 123 138 163 424 97. OPERATION AND MAINTENANCE OF PHYSICAL PLANT 351 412 482 1245 287. GENERAL ADMINISTRATION 216 228 264 709 167. DEPARTMENTAL ADM IN I STRAT ION (INCLUDING DEANS' OFFICES) 415 489 558 1462 337. SPONSORED PROJECTS ADMINISTRATION 97 103 112 312 77. LIBRARY 62 64 72 198 47. STUDENT SERVICES 18 6 4 28 17. OTHER 29 39 51 .119 37. TOTALS 1310 1480 1706 4496 1007. PAGENO="0035" 29 Charts 6, 7, and 8 take this indirect cost component analysis one step further, to more detailed breakouts of each indirect cost com- ponent into various subcomponents which we thought might be of interest to the task force. These are very rough approximations based on estimates provided to us by 50 major research universities or information on these institutions in our regional negotiation files. PAGENO="0036" COST COMPONENTS USE ALLOWANCES/DEPREC I AT ION -BUILD I NGS/ IMPROVEMENTS -EQUIPMENT OPERATION AND MAINTENANCE OF PHYSICAL PLANT -UT IL I T I ES -REPAIRS & MAINTENANCE -CUSTODIAL SERVICES -SECURITY -OTHER GENERAL ADMINISTRATION -EXECUT I VE MANAGEMENT -FINANCIAL OPERATIONS -ADMINISTRATIVE SERVIC1ES -OTHER DEPARTMENTAL ADM I NI STRAT ION -OEANS OFFICES -DEPT. HEADS & FACULTY ADM. -SUPPORT STAFF -OTHER SPONSORED PROJECTS ADMINISTRATION -OFFICE OF GRANTS & CONTRACTS -ACADEMIC DEPT. CHARGES -OTHER LIBRARY -SALARIES & WAGES -BOOKS 6 PERIODICALS -OTHER STUDENT SERVICES OTHER TOTAL RATE 12 6,' 5;' 1;' 3,' 3;' 3;' 5,' 6,' 8,' 11;' 7,' 12 6,' 5~4 1;' 4,' 3,' 3,' 4,' 5,' 8,' 11~4 12 6 4,' 3,' 3,' C.'., 4" c 5,' 8,' 11;' 7;' 7,' 5,' 0;' 2,' 2,' i ~ 1;' CHART 6 AVERAGE PERCENT OF EACH COST RATE COMPONENT AND SUOCOMPONENT TO THE TOTAL INDIRECT COST RATE FOR MAJOR RESEARCH UNIVERSITES NEGOTIATED BY HHS 1982 1983 1984 COMPONENT SUBCOMPONENT COMPONENT SUOCOMPONENT COMPONENT SUBCOMPONENT 9,' - -- -- 9~. 10 - 4,' 4,' 4,' 5,' 6,' 15;' 33;' 2?,' 28 28 j7,' 15 327~ 33,' 5_4 0 2 2 1;' 2 4,' 5,' 04 2,' 2,' i;' 1,' . 1;' 0;' 0,' 2 3,' 3,' 100;' lao;' 100,' PAGENO="0037" COST COMPONENTS USE ALLOWANCES/DEPREC IAT I ON -AU I LO I NGS/ I MPROVEMENTS -EQUIPMENT OPERATION AND MRINTENAI4CE OF PHYSICAL PLANT -UT IL I TIES -REPAIRS 6 MAINTENANCE -CUSTODIAL SERVICES -SECUR I TY -OTHER GENERAL ADMINISTRATION -EXECUT I VE MANAGEMENT -FINANCIAL OPERATIONS -ADMINISTRATIVE SERVICES -OTHER DEPARTMENTAL ADM IN ISTRAT ION -DEANS' OFFICES -DEPT. HEADS & FACULTY ADM. -SUPPORT STAFF -OTHER SPONSORED PROJECTS ADMINISTRATION -OFFICE OF GRANTS & CONTRACTS -ACADEMIC DEPT. CHARGES -OTHER LIBRARY -SALARIES & UAGES -BOOKS & PERIODICALS -OTHER STUDENT SERVICES OTHER TOTAL RATE 1.8 2.4 5.2 2.5 2.3 0.5 1.3 1.5 2.2 2.4 3.5 4.8 3.0 2.9 2.3 0.2 0.8 1984 COMPONENT SUBCOMPONENT 4.5 1.9 1.9 2.4. 2.6 13.3 S.? 2.8 2.5 0.6 1.? 7.3 - 1.3 1.5 2.2 2.4 15.4 3.8 5.3 3.2 3.1 3.1 2.2 0.2 0.? 2.0 1982 COMPONENT SU8COMPONENT CHART 7 AVERAGE INDIRECT COST RATE COMPONENTS AND SUBCOMPONENTS FOR MAJOR RESEARCH UNIVERSITES NEGOTIATED BY HHS 1983 COMPONENT SUBCOMPONENT 9.5 2.? 2.4 0.6 1.6 1.3 1.4 2. 2. 3.? 5.2 3.2 3.1 2.2 0.2 0.8 4.2 12.0 7.4 14.2 3.3 2. 1 0.6 1.0 44.? 4.3 12.8 7.1 15.2 3.2 2.0 0.2 1.2 46.0 0.9 0.5 0.6 0.9 0.5 0.6 0.9 0.5 0.6 0.1 1.4 4?. 1 RATES APE EXPRESSED AS A PERCENTAGE OF TOTAL DIRECT COST OF ORGANI2ED RESEARCH EXCLUDING CAPITAL EXPENDITURES,NAJOR SUOCONTRACTS AND OTHER DISTORTING ITEMS. PAGENO="0038" COST COMPONENTS USE ALLOWANCES/DEPRECIATION -BUILOINGS/ IMPROVEMENTS -EQUIPMENT OPERATION AND MAINTENANCE -UT ILl TIES -CUSTODIAL SERVICES -SECUR$TY GE~0ERAL AOMINISTRATION -EXECUTIVE MANAGEMENT -F INANCIAL OPERAT IONS -ADMINISTRATIVE SERVICES DEPARTMENTAL AOMINISTRAT ION -DEANS OFFICES -DEPT. HEADS & FACULTY ADA. -SUPPORT STAFF SPONSORED PROJECTS ADMINISTRATION -ACADEMIC DEPT. CHARGES LIBRARY -SALARIES 6 WAGES -BODES & PERIODICALS STUDENT SERVICES OTHER TOTALS 1, 245 402 200 1110 21 264 53 05 13? 190 1)6 114 112 2? 72 31 19 22 530 2119 230 156 120 141 210 229 CAD 359 305 299 312 210 19 190 06 52 20 119 4,496 APPROXIMATE AMOUNT PAID ~D UNIVERSITIES FOR INDIRECT COST COMPONENTS ANt) SUDCOMPONENTS BY ALL FEI)EIOTIL AGENCIES IIN MILLIONS OF DOLLARS) 1902 123 53 70 1903 1904 --3 YEAR TOTALS COMPONENT SUBCOMPDNENT COMPONENT SUOCOMPONENT COMPONENT SUBCOMPONENT 130 163 424 60 70 103 75 93 241 351 152 412 175 15 44 10 52 216 39 43 64 220 41 46 6? 415 102 409 120 55 100 9? 60 103 72 23 25 62 2? 16 19 64 20 1? 19 IS -- 6 -- 4 29 ;,;;; 39 1,400 -- St 1,706 1,462 2$ 119 4,496 PAGENO="0039" 33 This analysis shows, for example, that of the $424 million paid for building and equipment use allowances from 1982 to 1984, ap- proximately $183 million was for buildings and $241 million for equipment. Similarly, of the $198 million paid for library expenses, $146 million was attributable to library staff and operating ex- penses while .$52 million covered books and periodicals. Depending upon how broadly one defines "research infrastruc- ture," some or all of these components or subcomponents of indi- rect costs might be viewed as infrastructure costs. It seems clear that, as a minimum, the building and equipment use allowance components would constitute part of the infrastructure. The same could be said of part or all of the operation and maintenance com- ponent. The library and other components represent various types of technical or administrative support, which might also be consid- ered part of. the infrastructure, depending on the purpose to be served. That concludes my prepared statement, Mr. Chairman. I hope this information proves useful to the task force in its study and would be glad to respond to any questions the task force may have about the data. [The prepared statement of Mr. Kirschenmann follows:] PAGENO="0040" 34 STATEMENT BY HENRY G. KI RS CHENMANN, JR. DEPUTY ASSISTANT SECRETARY FOR PROCUREMENT, ASSISTANCE AND LOGISTICS DEPARTMENT OF HEALTH AND HUMAN SERVICES BEFORE THE TASK FORCE ON SCIENCE POLICY COMMITTEE ON SCIENCE AND TECHNOLOGY U.S. HOUSE OF REPRESENTATIVES TUESDAY, MAY 21, 1985 PAGENO="0041" 35 Mr. Chairnian and Members of the Science Policy Task Force: We are pleased to be able to assist the Task Force in its study of Government science policy by providing information on oayments for indirect costs to colleges and universities. As we understand it, the Task Force is interested in knowing the amounts of indirect costs paid to the institutions as part of the total costs of research grants and contracts as well as the extent to which these payments support the research infrastructure of the institutions. We have endeavored to meet the Task Forces request and have developed a substantial amount of information on this subject which we believe you will find useful. The information, in the form of a series of charts and graphs, is attached to my statement. I must emphasize, however, that the amounts and percentages on indirect costs shown in the charts are rough approximations based on an analysis of available information on total Federal R & D obligations to colleges and universities, NIH indirect cost payments, and components of indirect cost rates, supplemented by detailed information on certain indirect cost subcomponents provided by 50 major research universities. PAGENO="0042" 36 ifl order to put this information in oerspective, some background on indirect costs might be useful, indirect costs are the costs of administrative and supporting services which cannot be readily identified with specific research projects, instructional programs or other university activities. Theyare therefore grouped in a series of cost pools and allocated between research and other activities based on cost allocation procedures. The portion of indirect costs allocated to research is then further distributed to individual research projects by an indirect cost rate, which is expressed as a mercentage of direct research costs. The institutions negotiate these rates annually with a "cognizant' Federal agency. JUS is the cognizant agency for about 95% of the colleges and universities receiving Federal research, although some of the major lnstitutionS, such as JIT and Stanford, negotiate their rates with the Department of Defense. Universities generally have six principal components of indirect costs: 1. Use Allowances or Depreciation on buildings and equipment. (Use allowances are essentially a simplified form of depreciation.) PAGENO="0043" 37 2. Operation and Maintenance of facilities, which covers such costs such as utilities, janitorial services, repairs and maintenance, and similar expenses. 3. General Administration, encompassing the institutions executive offices, administrative services, such as accounting and purchasing, and other costs of a general nature. 4. Departmental Administration, consisting of the expenses of deans' offices and administrative expenses at the academic department level. 5. Sponsored Projects Administration, which are specialized services related to the management of sponsored research and training, such as review of grant applications and monitoring grant terms and conditions. 6. The costs of institutional Libraries, including the salaries of library staff and books and periodicals. PAGENO="0044" 9 U With that as background, I would now like to turn to ~he sDecific information reauested by the Task Force as :~etailed in ~he attached charts: o Total Federal R&D obligations to colleges and universities have gone from $1.9 billion in FY 1972 to over $5 billion in FY 1983, an increase of about 160%. Specific year-by-year information is shown in Graph and Chart 1. o As shown in Graph and Chart 2, 5uring the same 1972 to 1983 period, total estimated indirect cost payments by all Federal agencies have increased by 275~, ~rom r~bout $400 million to $1.5 billion. At WIH, ~ndiroct ~osts ~re now running about 32~ of total university research grant costs, up from 22% in 1972. This disproportionate growth in indirect costs, in comparison with direct costs, has been a concern to sponsoring agencies and the research community for some time, and is currently the subject of a study by the White House Office of Science and Technology Policy. o Based on an analyis of FY 1982 through 1984 indirect cost rates negotiated by HHS, the largest component of PAGENO="0045" 39 indirect costs is Departmental Administration, which averages one-third of the rate. Operation and Maintenance of facilities is next at 28%, followed by General Administration at 15%. Use Allowances on buildings and equipment is currently running between 9% and 10% of the rate; Sponsored Projects Administration is 7%; and Library is 4%. The rest is in minor items, such as a small pOrtion of student service costs associated with students working on research projects. As indicated in Chart 3, these percentages have held reasonably steady for the three-year period. Chart 4 shows the rate components expressed as a percentage of direct research costs. o Chart 5 shows the approximate dollar amount paid to the institutions for each indirect cost component from FY 1982 to 1984. The total amount paid during this period was about $4.5 billion, broken down (in round numbers) as follows: -- Use Allowances $400 million -- Operation & Maintenance $1.2 billion -- General Administration $700 million -- Departmental Administration $1.5 billion -- Sponsored Projects Administration $300 million -- Library $200 million -- Other $150 million PAGENO="0046" 40 o Charts 6, 7 and 8 take this indirect cost comoonent analysis one step further, to more detailed breakouts of each indirect cost component into various subcomponents we thought night be of interest to the Task Force. These are very rough approximations based on estimates provided to us by 50 major research universities or information on these institutions in our regional negotiation files. This analysis shows, for example, that of the $424 million paid for building and equipment use allowances from 1982 to 1984, approximately $183 million was for buildings and $241 million for equipment. Similarly, of the $198 million paid for library expenses, ~l46 million was attributable to library staff and operating expenses while $52 million covered books and ~ericdicals. Depending on how broadly one defines "research infrastructure", some or all of these components or subcomponents of indirect costs might be viewed as "infrastructure" costs. It seems clear that, as a minimum, the building and equipment use allowance components would constitute part of the infrastructure. The same could be said of part or all of the Operation and Maintenance component. The Library and other components represent various types of techical or administrative support, which might also be considered part of the infrastructure, depending on the purpose to be served. PAGENO="0047" 41 That concludes my prepared statement Mr. Chairman. I hope this information proves useful to the Task Force in its study and would be glad to respond to any questions the Task Force may have about the data. PAGENO="0048" 42 0 z 0 * GRAPH 1 TOTAL FEDERAL R & D OBLIGATIONS TO COLLEGES AND UNIVERSITIES 4 3 2 . 92~4~ 7- ~!=~"" / I, -~ -~ -~ 0 , * * . . I I 72 73 74 75 76 77 76 79 80 81 82 83 FISCAL. YEAR PAGENO="0049" AGENCY----- NSF OTHERS 335 307 349 386 376 396 405 446 437 486 491 593 532 744 588 791 634 945 617 981 690 939 759 989 FROM NSF~-~-~~ SOURCE: TABLE B-2 -- FEDERAL OBLIGATIONS TO UNIVERSITIES AND COLLEGES IN NSF'S PUBLICATION UFEDERAL SUPPORT TO UNIVERSITIES, COLLEGES AND SELECTED NONPROFIT INSTITUTIONS'. 43 CHART 1 TOTAL FEDERAL R & D OBLIGATIONS TO COLLEGES AND UNIVERSITIES IN MILLIONS OF DOLLARS) TOTAL HHS AUARDING DOD 72 73 1,853 1,871 879 904 244 233 74 2,085 1,129 184 75 2,246 1,205 191 76 2,431 1,296 212 77 2,803 1,452 267 78 3,386 1,658 452 79 3,874 1,967 529 80 4,160 2,026 556 81 4,411 2,113 700 82 4,553 2,111 814 83 5,022 2,360 913 84 DATA NOT YET AVAILABLE PAGENO="0050" 44 GRAPH 2 APPROXIMATE AMOUNT PAID TO COLLEGES AND UNIVERSITIES FOR INDIRECT COSTS UNDER R & D AUARDS BY ALL FEDERAL AGENCIES 1.... 1.7~ ~I Cl) (j 1.5 1.4 ~ ::~. 0.5 7_ :::~~ ~ ~ r~IE;i ~72 73 74 75 76 77 78 79 FISCM.. YEAR 80 81 82 83 84 PAGENO="0051" 45 CHART 2 APPROXIMATE AMOUNT PAID TO COLLEGES AND UNIVERSITIES FOR INDIRECT COSTS UNDER R & 0 AUARDS BY ALL FEDERAL AGENCIES (IN MILLIONS OF DOLLARS) 72 393 73 419 74 491 75 562. 76 624 77 720 78 885 79 1,039 80 1,050 81 1,247 82 1,310 83 1,480 84 1,706 TOTAL 11,925 PAGENO="0052" 46 CHART 3 AVERAGE PERCENT OF EACH COST COMPONENT TO THE TOTAL INDIRECT COST RATE FOR MAJOR RESEARCH UNIVERSITIES NEGOTIATED BY HHS COST COMPONENTS 1982 1983 1984 USE ALLOUANCES/DEPRECIATION ON BUILDINGS & EQUIPMENT 97. 97. 107. OPERATION AND MAINTENANCE OF PHYSICAL PLANT 277. 287. 287. GENERAL ADMINISTRATION 17X 157. 157. DEPARTMENTAL ADMINISTRATION (INCLUDING DEANS' OFFICES) 327. 337. 337~ SPONSORED PROJECTS ADMINISTRATION 7Z 77. 77. LIBRARY 57. 47. 47. STUDENT SERVICES 17. 0% 0% OTHER 2% 37. 3% TOTAL RATE 1007. 100% 1007. PAGENO="0053" 47 CHART 4 AVERAGE INDIRECT COST RATE COMPONENTS FOR MAJOR RESEARCH UNIVERSITIES NEGOTIATED BY HHS COST COMPONENTS 1982 1983 1984 USE ALLOUANCE5/DEPRECIATION - - ON BUILDINGS & EQUIPMENT 4.2 4.3 4.5 OPERATION AND MAINTENANCE OF PHYSICAL PLANT 12.0 12.8 13.3 GENERAL ADMINISTRATION 7.4 7.1 7.3 DEPARTMENTAL ADMINISTRATION (INCLUDING DEANS' OFFICES) 14.2 15.2 15.4 SPONSORED PROJECTS ADMINISTRATION 3.3 3.2 3.1 LIBRARY 2.1 2.0 2.0 STUDENT SERVICES 0.6 0.2 O..~ OTHER 1.0 1.2 1.4 TOTAL RATE 44.7 46.0 47.1 RATES ARE EXPRESSED AS A PERCENTAGE OF TOTAL DIRECT COST OF ORGANIZED RESEARCH EXCLUDING CAPITAL EXPENDITURES, MAJOR SUBCONTRACTS AND OTHER DISTORTING ITEMS. PAGENO="0054" CHART 5 APPROXIMATE AMOUNT PAID TO UNIVERSITIES FOR INDIRECT COST COMPONENTS BY ALL FEDERAL AGENCIES (IN MILLIONS OF DOLLARS) ----3 YEAR--- COST COMPONENTS 1982 1983 1984 TOTALS RATIO USE ALLOUANCES/DEPRECIATION ON BUILDINGS & EQUIPMENT 123 138 163 424 9% OPERATION AND MAINTENANCE OF PHYSICAL PLANT 351 412 482 1245 28% GENERAL ADMINISTRATION 216 228 264 709 16% DEPARTMENTAL ADMINISTRATION (INCLUDING DEANS' OFFICES) 415 489 558 1462 33% SPONSORED PROJECTS ADMINISTRATION 97 103 112 312 7% LIBRARY 62 64 72 198 4% STUDE1~4T SERVICES 18 6 4 28 1% OTHER 29 39 51 119 37. -TOTALS 1310 1480 1706 4496 1007. PAGENO="0055" COST COMPONENTS USE ALLOWANCES,DEPREC I AT ION -BUILD I NGS/ IMPROVEMENTS -EQUIPMENT OPERATION AND MAINTENANCE OF PHYSICAL PLANT -UTILITIES -REPAIRS & MAINTENANCE -CUSTODIAL SERVICES -SECURITY -OTHER GENERAL ADM IN I STRAT ION -EXECUTIVE MANAGEMENT -FINANCIAL OPERATIONS -ADMINISTRATIVE SERVICES -OTHER DEPARTMENTAL ADM IN I STRAT ION -DEANS OFFICES -DEPT. HEADS & FACULTY ADM. -SUPPORT STAFF -OTHER. SPONSORED PROJECTS ADMINISTRATION -OFFICE OF GRANTS & CONTRACTS -ACADEMIC DEPT. CHARGES -OTHER LIBRARY -SALARIES & WAGES -BOOKS & PERIODICALS -OTHER STUDENT SERVICES OTHER TOTAL RATE 125 65 55 15 35 35 35 55 65 85 115 75 65 125 65 55 15 45 35 35 45 55 85 115 75 75 55 OX 2X 125 65 45 35 35 45 55 85 115 75 75 55 OX 25 2X 15 15 CHART 6 AVERAGE PERCENT OF EACH COST RATE COMPONENT AND SUOCOMPONENT TO THE TOTAL INDIRECT COST RATE FOR MAJOR RESEARCH UNIVERSITES NEGOTIATED BY HHS 1982 1983 1984 COMPONENT SUOCOMPONENT COMPONENT SUBCOMPONENT COMPONENT SUBCOMPONENT 9X 95 105 45 45 55 SX 275 28X 285 175 155 155 325 335 335 75 7~ 75 OX 25 4X 4X 15 OX OX 2S 3X 35 100X bOX 2X 2X 25 15 15 PAGENO="0056" COST COMPONENTS USE ALLOUANCES/DEPREC I AT I ON -AU I LD I NGS/ I MPROVEMENTS -EQUIPMENT OPERATION AND MAINTENAnCE OF PHYSICAL PLANT -UT I L I T I ES -REPAIRS & MAINTENANCE -CUSTODIAL SERVICES -SECUR I TV -OTHER GENERAL ADMINISTRATION -EXECUT I VE MANAGEMENT -FINANCIAL OPERATIONS -AOM IN I STRAT I YE SERV I CES -OTHER DEPARTMENTAL ADM IN I STRAT I ON -OEANS OFFICES -DEPT. HEADS & FACULTY ADM. -SUPPORT STAFF -OTHER SPONSORED PROJECTS ADMINISTRATION -OFFICE OF GRANTS 6 CONTRACTS -ACADEMIC DEPT. CHARGES -OTHER LIBRARY -SALARIES & UAGES -BOOKS & PERIODICALS -OTHER STUDENT SERVICES OTHER TOTAL RATE CHART 7 AVERAGE INDIRECT COST RATE COMPONENTS AND SURCOMPONENTS FOR MAJOR RESEARCH UNIVERSITES NEGOTIATED BY HHS 1982 1983 COMPONENT SU8COMPONENT COMPONENT SUACOMPONENT 4.2 - 4.3 1.9 1.9 2.4 2.4. 12.0 12.8 5.2 5.5 2.5 2.7 2.3 2.4 0.5 0.6 1.0 1.6 1.3 1.5 2.2 2.4 14.2 4.8 3.0 2.9 2.3 0.2 0.8 0.6 1.0 -- 44.7 1984 COMPONENT SUBCOMPONENT 4.5 1.9 2.6 13.3 5.? 2.8 2.5 0.6 1.? 1.3 1.5 2.2 2.4 3.8 5.3 3.2 3. 1 2.2 0.2 0.? 7.4 2. 1 7.1 15.2 3.2 2.0 0.2 1.2 46.0 1.3 1.4 2. 2. 3.? 5.2 3.2 3.1 2.2 0.2 0.8 0.9 0.5 0.6 0.9 0.5 0.6 7.3 15.4 3.1 2.0 0.1 1.4 47.1 0.9 0.5 0.6 RATES ARE EXPRESSED AS A PERCENTAGE OF TOTAL DIRECT COST OF ORGANI2ED RESEARCH EXCLUDING CAPITAL EXPENDITURES,MAJOR SUACONTRACTS AND OTHER DISTORTING ITEMS. PAGENO="0057" COST COMPONENTS USE ALLOWANCES/DEPRECIATION -BUILDINGS, IMPROVEMENTS -EQUIPMENT OPERATION AND MAINT~NAI9CE OF PHYSICAL PLANT -UTILITIES -REPAIRS & MAINTENANCE -CUSTODIAL SERVICES -SECURITY -OTHER G~(ERAL ROMINISTRAT ION -EXECUTIVE MANAGEMENT -F INANC IAL OPERAT IONS -ADMINISTRATIVE SERVICES -OTHER DEPARTMENTAL ADMINISTRATION -DEANS' OFFICES -DEPT. HEADS & FACULTY ADA. -SUPPORT STAFF -OTHER SPONSORED PROjECTS ADMINISTRATION -OFFICE OF GRANTS & CONTRACTS -ACADEMIC DEPT. CHARGES LIBRARY -SALARIES & UAGES -BOOKS B PERIODICALS -OTHER STUDENT SERVICES OTHER TOTALS 1904 --3 YEAR TOTALS-- COMPONENT SUBCOMPONENT COMPONENT SURCOMPONENT 163 424 70 103 93 241 APPROXIMATE AMOUNT PAID ~O UNIVERSITIES FOR INDIRECT COST COMPONENTS AND SUOCOMPONENTS BY ALL FEDERAL AGENCIES (IN MILLIONS OF DOLLARS) 1902 1903 COMPONENT SUBCOMPONENT COMPONENT SUOCOMPONENT 123 130 93 60 70 70 391 412 192 170 73 06 15 10 44 52 216 220 39 41 43 46 70 74 410 409 102 120 142 16? 0? 102 05 100 9? 103 60 72 6 6 23 25 62 64 2? 20 16 1? 19 19 10 -- 6 -- 29 -- - ~9 -- 1,310 1,400 402 200 21 264 40 93 05 950 13? 190 1,6 112 70 7 27 72 31 .19 4 St 1,245 530 259 230 54 156 700 120 141 210 229 1,462 305 312 210 19 06 52 20 20 119 119 4496 4,496 PAGENO="0058" 52 Notes to Charts 1. Total payments for indirect costs by all Federal agencies in Chart 2 are estimates based on the amount of indirect costs paid to universities by NIH each year as a percentage of total NIH research grant obligations to the institutions for the sane year. The percentage for each year was applied to total Federal R & D obligations to universities published by NSF .to arrive at the approximate amount paid for indirect costs by all Federal agencies. 2. NSF has not as yet published Government-wide data on R & D obligations for FY 1984. Consequently, the estimated indirect cost amount for FY 1984 in Chart 2 is based on the rate of growth between 1983 and 1984 in NIH research grant obligations applied to the 1983 Government-wide R & D data published by NSF. 3. Average indirect cost rate components for FY 1982 to 1984 in Charts 3 and 4 are averages for the approximately 120 largest research universities that negotiate their indirect cost rates with HHS. Universities that negotiate their rates with the Department of Defense are not included. Universities under HHS negotiation cognizance receive about 80% of total Federal R & D obligations. The 120 largest schools used to develop the averages receive over 70% of the total Federal R & D obligations. 4. The approximate dollar amounts paid for each indirect cost component in Chart 5 were developed by multiplying the percentage for each of the average rate components in Chart 3 by the estimated total Government-wide indirect cost payments for FY 1982, 1983 and 1984 in Chart 2. 5. The breakdowns of rate components into subcomponents in Charts 6, 7, and 8 are very rough approximations based on estimates provided by 50 large research universities or information on these institutions in HHS negotiation files. PAGENO="0059" 53 DISCUSSION Mr. FUQUA. Thank YOU very much. This will certainly be very helpful to us in what we are trying to do. I understand that rates for each indirect cost category are negoti- ated separately with each of the universities. Does the Government verify later as a followup that these sums were in fact expended by the instiutions for the purposes intended? Mr. KIRSCHENMANN. Yes, we do, Mr. Chairman. That process takes place in two steps. We have a force of negotiators throughout the country that review each of the proposals that are submitted and those proposals are based on an institution's audited financial statement for the most part, and a number of institutions are also subjected to audit on site by our audit agency. So the answer to your question is yes. Mr. FUQUA. Well, you were here earlier for the testimony of Dr. Healy when she was talking about the-making the basis signifi- cantly shorter for depreciation for buildings, from 50 years down to a shorter period of time, and also for instruments. How would you view that? Mr. KIRSCHENMANN. In my view, that is a policy decision based upon what it is that one intends these reimbursements to accom- plish at a university. The current rules are based on the conven- tional accounting concepts of a going concern which is that an in- stitution should be. reimbursed for the costs associated with the conduct of a given project and that assumes certain conventions such as the base on the useful life of an asset, however that asset- however long that asset can be kept in service. One could reimburse this on some basis other than that. I would point out, however, that the cost principles right now are quite flexible on what they would permit an institution to do. For the most part, institutions use a use charge in claiming reimbursement for facilities. That use charge is 2 percent for buildings which as- sumes a 50-year life, and about 162/3 percent for equipment-excuse me, 6% percent for equipment, which assumes a 16 or 17 year life. The cost principles permit an institution to depreciate those assets .over its useful life to the institution which would in most cases be substantially less if they want to. Most institutions do not now. I hope I have answered your question. That was a wordy re- sponse. Mr. FUQUA. Well, in your chart 2 the amount of indirect paid to universities is about $1.19 billion. Mr. KIRSCHENMANN. Yes. Mr. FUQUA. If use charges remain constant at approximately 9 to 10 percent, would we be correct to infer that .in the same time period just over $1 billion was provided to the universities in build- ing and equipment use charges? Mr. KIRSCHENMANN. Yes, sir, that is correct. That equates to about $100 million a year. Mr. FUQUA. Do you have any idea how they spent that money? Did any of it go back to refurbishment of the buildings, replace- ment of equipment? PAGENO="0060" 54 Mr. KIRSCHENMANN. We know how they spent the sums reim- bursed for operation and maintenance, which is repair and janitori- al services and so on. Those moneys were spent for that purpose. We don't know how they actually spent the cash that they received for the amortization, use charges on the building itself. We do know they spent that money initially and all we are doing is reim- bursing them for that past expenditure. Whether they actually took the cash that they received and reinvested that in plant or they used it for some other purposes, we don't know. Mr. FUQUA. Or for operating expense? Mr. KIRSCHENMANN. Or for operating expense, we don't know. Mr. FTJQUA. Or paying salaries? Mr. KIRSCHENMANN. That is correct. Mr. FUQUA. But your followup doesn't reveal that? Mr. KIRSCHENMANN. No, it doesn't. Itdoesn't. Mr. FUQUA. Do you think it should? Mr. KIRSCHENMANN. Well, only if you-under the current con- cept, no. We really don't care what they use the cash for. Mr. FUQUA. Yes, OK. Mr. KIRSCHENMANN. Yes. Mr. FUQUA. And they have contractual arrangements, too. Mr. KIRSCHENMANN. Yes; if that is important to the Government as a policy, we could, yes. Mr. FUQUA. Mr. Brown. Mr. BROWN. It seems to. me, Mr. Kirschenmann, that this system would allow for some alleviation of the problems with the universi- ties, if it were treated as a tool trying to alleviate the problems. In other words, if the problem is inadequate equipment and facilities, then what you have allowed is, indirect cost for use allowance could be used to amortize new facilities and equipment. If the amount were large enough to be substantial, it might mean that you would have to reexamine whether or not the current amount, which you say is running between 9 and 10 percent, is adequate, maybe it would take 15 or 20 percent to handle the problems that are surfacing in these .institutions, which vary from institution to institution, of course. There is no theoretical reason why that couldn't be done, and then the increased use allowance could be used to make the mortgage payments. on the new facilities and equipment. Mr. KIRSCHENMANN. There. is no real reason other than the ac- counting convention, that is correct. One might also develop a policy. which would reimburse an institution for its mortgage pay- ment until such time as that facility is paid for and then subse- quent to that, one might have a policy that no further charge can be made to the government, there are all-- Mr. BROWN. I am using mortgage in the broad sense. If the insti- tution had the flexibility both to reimburse they could proceed in some reasonable basis to acquire the things that they needed and then to defray some portion of the cost at least out of the user fee that they received. Mr. KIRSCHENMANN. Yes, sir. Mr. BROWN. I don't know that you can answer this question or not, but you refer to the fact that. a study is being made by the White House Office of Science and Technology Policy, and I assume PAGENO="0061" 55 that that study might make some recommendations with regard to this kind of issue. Is that a correct assumption? Mr. KIRSCHENMANN. I believe they are looking at alternatives and may make a recommendation. Dr. Healy would be in better po- sition to answer than I am. Mr. BROWN. It is quite obvious that this isn't a static situation in view of the fact that you have had 50-percent increase in indirect costs over the last 12 years. Mr. KIRSCHENMANN. That is correct. Mr. BROWN. Are you familiar with the increase cost ratios that are applied by various types of private enterprise to direct labor costs? Mr. KIRSCHENMANN. Yes, sir. Mr. BROWN. For example, an engineering firm that has a con- tract with the Government to perform a certain task would apply an indirect cost to their direct labor cost in order to determine some reasonable figure. Can you give me an idea what kind of ratios might be customary in those? Mr. KIRSCHENMANN. Those rates are very, very high compared to university rates. I think if you take the manufacturing overhead, and engineering overhead, and G and A, the most large R&D or manufacturing firms defense industry particularly apply, you are talking about well over 100 percent. I am not sure that is a fair comparison. Mr. BROWN. I am not sure it is either. Some intermediate-that may set the limit to what a fair comparison would be? Mr. KIRSCHENMANN. Yes, sir. Mr. BROWN. And the question, what goals are we trying to achieve? Now, in a private contract, the firm is going to make sure that its billings provide the income necessary to keep its equipment and facilities up to date, I presume. Mr. KIRSCHENMANN. Yes, I would presume, yes, sir. Mr. BROWN. So that if we were interested in achieving that for university research, we might want to have a little more flexibility in those indirect costs. Mr. KIRSCHENMANN. Yes, sir, what I don't know, what I can't re- spond to you right now, is the percentage of that industrial over- head rate that is applicable to its facilities. Mr. BROWN. I understand that, part of it would be their profit margin. Mr. KIRSCHENMANN. That is also in there, that is right. Mr. BROWN. And, of course, we don't normally associate that profit margin with university research. Mr. KIRSCHENMANN. That is correct. Mr. BROWN. We are getting a bonus there. Mr. KIRSCHENMANN. Yes, sir. Mr. BROWN. That is correct. Mr. FUQUA. Mr. Lewis. Mr. LEWIS. Thank you, Mr. Chairman. I understand that the indirect cost category rates are negotiated separately with each university. Does the Government come back and audit in these areas and determine how and where the indirect funding was expended, or is the university in a position to-uncom- PAGENO="0062" 56 promising position like some of our defense contractors-deal with indirect cost? Mr. KIRSCHENMANN. We do know with reasonable certainty that where these costs that are being reimbursed are incurred. As I mentioned to the Chairman, the only area we do not know is whether the actual cash that is reimbursed to a school for its cap- ital, amortization use charges and so forth, is actually used to re- place though. We don't know that, but we do know that all the other expenditures, all the other claims that they make, this charge that they make, in the indirect cost proposals are in fact expended for those purposes, yes, sir. Mr. LEwIs. Is that done on an annual audit or audit per contrac- tor? Mr. KIRSCHENMANN. Well, it is done annually or semiannually by our negotiations staff in the field, and then there are periodic audits, onsite audits, by audit agencies of at least a major institu- tion. That is not done every year, but it is done sufficiently often, I think, to give us reasonable assurance what the institutions identi- fied in their proposal actually do spend. Mr. LEWIS. Is there a possibility that we could see a fixed base contract, fixed contracts for the institutions that x number of dol- lars for a particular project that they have the right to spend any- where they want without an audit? Mr. KIRSCHENMANN. Well, one could have that policy. I think what people like myself, from the administrative side that has to go back in and look at those charges, would like is some definition, some reasonable definitive statement as to what it is those moneys are to be expended for and to what extent there would need to be an accountability for them and, for example, how one computes that amount. But given those caveats, I think it could be done; yes. Mr. LEWIS. Do we have a situation where one university or one group could submit RFP's for particular projects rather than then go after. a grant after that to make it more competitive? Mr. KIRSCHENMANN. I am sorry, I didn't understand the ques- tion. Mr. LEWIS. I didn't understand it myself. Rather than apply for a grant, is there some way universities could be more competitive for research. programs, rather than just apply for a grant? Mr. KIRSCHENMANN. Well, my sense of the Research Grants Pro- gram certainly at our department, NIH, is that it is highly com- petitive. I don't know whether you would get any more competition by moving into the procurement arena as opposed to the grant arena. I have sat in on a number of study group evaluations of pro- posals, and I can tell you they are very stringent evaluations. I think there is a great deal of competition out there. To answer your question, I don't think you would increase competition by going to the procurement arena. Mr. LEWIS. Do we have a situation where you would have a grant issued and at the completion of that grant x research has been ac- complished, but then a followup grant is issued to another organi- zation or university, and how do you-- Mr. KIRSCHENMANN. For the same project? Mr. LEWIS. Yes. PAGENO="0063" 57 Mr. KIRSCHENMANN. I guess that could occur, and I know it occurs. I am really not the best person to ask that question. You would be better served by asking somebody in the scientific area. I do know, for example, that there are instances in which a project, a principal investigator on a project, changes universities and the grant would go with that individual because he is key to the con- duct of it. Mr. LEWIS. Thank you. Mr. FUQUA. Thank you very much. We appreciate your being with us today, and we will also, without objection, make the entire comments, including the charts, part of the record. Mr. KIRSCHENMANN. Thank you. Mr. FUQUA. Next is Dale Corson, Chairman of Government-Uni- versity-Industry Research Roundtable in the Academy of Sciences. [A biographical sketch of Dr. Corson follows:] DR. DALE R. CoRsoN Dale R. Corson is President Emeritus, and was the eighth president of Cornell University. He was appointed President by the Board of Trustees on September 5, 1969 after serving since July 1, 1969 as Provost with "full executive and administra- tive responsibility and authority for the management of Cornell." From July 1, 1977 until June 30, 1979 he served as Chancellor. Dr. Corson was appointed Provost of Cornell University in 1963 after four years as Dean of the College of Engineering. He joined the Cornell faculty as an assistant professor of physics in 1946 and helped design the Cornell synchrotron housed in the Newman Laboratory of Nucle- ar Studies. He was appointed associate professor of physics in 1947, became a full professor in 1952 and was named Chairman of the Department of Physics in 1956, and Dean of the College of Engineering in 1959. He is co.author of two books, Electromagnetic Fields and Waves and Electromagne. tism, and has written numerous papers for physics journals. Dr. Corson has been a member of the American Council of Education's Board of Directors and its Commission on Plans and Objectives for Higher Education and the Panel of International Technical Cooperation and Assistance, a subpanel ofPresi- dent Lyndon B. Johnson's Science Advisory Committee. He is a former member of the Executive Committee of the National Association of State Universities and Land Grant Colleges. He has also been a member of the National Science Foundation's Panel on Sci. ence Development Programs and a consultant to the Ford Foundation's Overseas Development and International Affairs Programs. He has also been a member of the New York State Commission on Industrial Research and Development and the New York State Science Advisory Council. Locally, he is a member of the Board of Directors of the Tompkins County Trust Company in Ithaca. He also serves as a Director of the International Minerals and Chemical Corporation and of the Kmart Corporation. He is a member of the New York Academy of Sciences, the American Association for the Advancement of Science, and is a fellow of the American Academy of Arts and Sciences. He is also a member of the National Academy of Engineering. He is listed in Who's Who in America, American Men and Women of Science, Leaders in Education and The International Who's Who. Dr. Corson was President of the Association of Colleges and Universities of the State of New York (ACUSNY) from 1974-76. ACUSNY includes, as members, most of the 200 public and private colleges and universities in New York State. He was Chairman of the Commission on Physicians for the Future, which was es- tablished in early 1974 by the Josiah M. Macy, Jr. Foundation in response to the growing controversy relating to an impending physician surplus or shortage in the United States. From 1979 to 1981 he served as Chairman of the National Research Council's Committee on Satellite Power Systems; and was a member of the National Commission on Research. In 1982 he served as Chairman of the Panel on Scientific Communication and National Security, sponsored by the National Academy of Sci- ences and the National Academy of Engineering. He currently serves as Chairman of the International Advisory Panel on Chinese University Development under World Bank sponsorship. PAGENO="0064" 58 Dr. Corson was a staff member of the Massachusetts Institute of Technology Ra- dation Laboratory from 1941-43. He served as a technical advisor in Air Force head- quarters in Washington from 1943-45 and received an Air Force Commendation for his achievements during World War II in the introduction of new radar techniques into military air operations. At the end of the war, he joined the staff of Los Alamos Scientific Laboratory, assuming primary responsibility for the organization of Sandia Laboratory, which later became a major engineering facility of the Atomic. Energy Commission. He received a Presidential Certificate of Merit in 1948 for his contributions to national defense. Dr. Corson, a native of Pittsburg, Kansas, received his bachelor of arts degree from the College of Emporia in 1934, his master of arts degree in physics from the University of Kansas, 1935, and his Ph.D. in physics from the University of Califor- nia in 1938. He was associated with the design and construction of the 60-inch cyclo- tron at the University of California Radiation Laboratory. He is a fellow of the American Physical Society and a member of Phi Beta Kappa, Tau Beta Pi and Sigma Xi. Dr. Corson received an honorary doctor of laws degree from Hamilton College in 1973, similar honorary degrees in 1972 from Columbia University, and from Elmira College in 1977. In 1970, the College of Emporia awarded him an honorary doctor of humane letters degree. In 1975 the University of Rochester awarded him an honor- ary doctor of science degree. He was awarded a distinguished service citation by the University of Kansas Alumni Association in 1972 and, in 1971, received the Out- standing Alumnus of the Year Award from the College of Emporia. Dr. Corson's hobbies include hiking, mountain climbing, canoeing, photography and sailing. He is married to the former Nellie E. Griswold and has four children. STATEMENT OF DR. DALE R. CORSON, PRESIDENT EMERITUS, CORNELL UNIVERSITY, ITHACA, NY; AND CHAIRMAN, GOVERN- MENT-UNIVERSITY-INDUSTRY RESEARCH ROUNDTABLE, NA- TIONAL ACADEMIES OF SCIENCES, WASHINGTON, DC Dr. CORSON. Mr. Chairman, and members of the task force, my name is Dale Corson, and I am chairman of the Government-Uni- versity-Industry Research Roundtable, sponsored by the National Academies of Sciences and Engineering. I am a physicist by train- ing, and I am the emeritus president of Cornell University. I am happy to appear before you today to talk about the infrastructure for academic research, a topic of great national importance. To begin with, let me define what I mean by "infrastructure." Definition: By infrastructure for university-based research, I mean the people, the facilities, the necessary equipment, including some very large equipment, the research libraries, and the institutional arrangements best designed to promote effective, research. These arrangements extended beyond those between the Federal Govern- ment and the research universities. They now include the States and industry. In discussing these topics, I will be describing a system of nation- al investment in a research enterprise designed to serve best our national interest. I emphasize the word "investment." Another concept that must characterize the research system is that of partnership. A concept that I reject is that of procurement in promoting the research enterprise. Research is too unpredictable and too fragile to treat in this way. Finally, I want to keep the concept of excellence squarely before us. Let me now discuss the elements ,of the infrastructural system and let me begin with the people. This is the most important ele- PAGENO="0065" 59 ment of all. Without qualified people at all levels, nothing else matters. I want to emphasize the importance of skilled supporting techni- cal staff and to state my belief that an adequate flow of such people may be in jeopardy. At Cornell University, there are five or six supporting staff for every faculty member. Many of these are unskilled workers and secretaries. Many others, however, are skilled technical staff. These include electronic technicians, instru- ment makers, and an increasing number are super technicians, op- erating centralized and complex facilities. This latter group is a growing group of technical workers that we may find in short supply in the future. I base my concern on the state of high school science and mathe- matics teaching, which may also jeopardize the flow of scientists themselves. No more than 20 percent of high school students are exposed to physics, and only 50 percent are exposed to as much as 2 years of science of any kind. Only 6 percent of high school stu- dents take 4 years of mathematics. How can we interest enough people in science and engineering to meet our future needs, whether for research scientist or for super- technician careers, given the state of affairs? Research instruments and research equipment generally have reached a state of obsolescence that limits the amount and the quality of research that is possible in the research universities. In engineering, this is a factor turning young research people away from academic careers. The result is an inability of universities to fill available engineering faculty teaching and research positions. Academic careers are simply not as attractive as are industrial ca- reers. It is ironic that the great interest in computers and comput- er-related technologies has attracted more and more engineering students at the undergraduate level, but the same technologies are pulling graduates into attractive jobs after the bachelors degree and are deflecting them from graduate study which would prepare them for academic research and teaching careers. In light of this situation, more than half of the young faculty appointments that are being made in engineering are foreign nationals. There~ have been more comprehensive studies of the instrumenta- tion and equipment shortages than I can give here. I want to stress that as we learn more and more about the underlying phenomena in the fields we study, we learn more and more about how to meas- ure the things we want to measure. Inevitably, these new measur- ing instruments are large and expensive-very expensive. What we can do with it, however, is little short of miraculous. Today progress in many fields is limited by the unavailability of instru- ments that cost hundreds of thousands of dollars. As the need for very expensive equipment develops, the shared use concept is essential. Shared use is one example of the partner- ship concept that I believe is so important. Other partnerships must also be developed to magnify the impact of the Federal agency equipment support programs that we have begun in recent years. Company-funded instrumentation programs have been im- portant in selected areas. More directed attention to partnership with the states in sorting out responsibilities for both research and 53-277 0 - 86 - 3 PAGENO="0066" 60 instructional equipment would be beneficial. Finally, opportunities for pooling funds and distributing the debt risk should be explored. In connection with the equipment problem, and related to the people problem, is the issue of equipment maintenance. The Feder- al Government, the State governments and the universities must resolve the issue of cost sharing and provide for adequate support staff in this area. Facilities, as typified by research laboratories, represent another large national need. One must distinguish those cases where new facilities are absolutely essential to the progress of the science in question from those where the science can continue to be done in the old facilities but at the price of less than optimum productivity. I can put no numbers on the problems. I know of no studies which have provided adequate data. The total need for new and renovated facilities is certainly measured in billions of dollars. To provide facilities, we need a national program, again based on the partnership concept, that will regularize the facilities appro- priation process, that will provide for comprehensive merit review taking into account social and economic factors, as well as scientif- ic merit, and which will leverage Federal funds to the maximum degree possible. As we develop programs to address these facility needs, we must think about new ways to finance them. Given the magnitude of the problem, and given the degree to which the national welfare de- pends on solving such problems, the Federal Government must nec- essarily play the lead role. There is no possiblity, however, that the Federal Government will provide funds in an amount sufficient to relieve the accumulated need. Various approaches to financing have been proposed for discus- sion within the Research Roundtable. I put them forward here not as recommendations but as suggestions deserving further examina- .tion. I also assume that any national program will include some, or a combination, of these approaches. Using the terms of the financial world, equity financing can be provided through direct Federal appropriations, set-asides from current federal R&D programs, realistic depreciation charges on Federal research grants and matching funds from universities, from States, from industry and from gifts. Further leverage on these funds can be provided through debt fi- nancing. We must look for a way to use Federal funds as a base for a national program of construction bond issues, preferably tax- exempt, to be amortized over a period of years-say 10 or 15-from one, or a combination, of the equity sources listed above. The Government-Industry-Research Roundtable, which I repre- sent, will conduct a 2-day conference in July, under joint sponsor- ship with the Office of Science and Technology Policy and the Na- tional Science Board, to explore approaches such as these to pro- vide academic research facilities. We expect to have congressional representation at the conference, of course. I include research libraries as a part of the research infrastruc- ture. The ways these libraries are opened and used have evolved substantially over the past two decades and they hold the promise for entirely new ways to communicate through the written word. The systems now in place are impressive-in a matter of seconds PAGENO="0067" 61 an investigator can locate any book or other bibliographic material cataloged by any one of the Nation's major research libraries. There is also the promise of replacing the hard text copy of writ- ten material with computer screen readouts or rapid printouts of text that is of interest. This promise is still a long way from mate- rialization, however. In fact, the computerized library systems, as they exist, still have a long way to go to provide the optimum serv- ice to scientific investigators. We must find ways to invest in li- braries in the same way we invest in other research infrastructure. Finally, I will discuss the institutional relationships which I think important in promoting research of the quality best designed to serve the national interest. I have already touched on this sub- ject in my discussion of "investment" versus "procurement" con- cepts. I want to emphasize that the system we developed following World War II, based on the Bush Report, is an excellent system. However, over the decades the system has adapted to changing con- ditions and changing requirements by applying patches. The cur- rent system of rules, regulations and procedures is inappropriate for the most effective operation of the research system. It is time to take a look at the entire research supporting enterprise to see how it might be simplified and modified to serve the national need more efficiently. To this end, the Research Roundtable is sponsoring a 1- day event on June 5 to explore the issues. There are other institutional arrangements that are important. With fewer tenure-track positions available, universities must find new ways to appoint more research scientists, and they must find ways to bring "new blood" into their aging faculties. We have seen the evolution of many cooperative ventures be- tween universities and industry in recent years. The Research Roundtable is conducting a set of case studies of new university-in- dustry alliances to examine what the effects are. A central ques- tion to be addressed concerns what new institutional arrangements within universities and within industry are necessary to make the alliances productive? The most productive research at the frontiers of science demand interdisciplinary approaches. Modifications in Federal funding pro- cedures and in university structure and reward systems are re- quired in order to pursue these opportunities. Another institutional arrangement worthy of consideration is that by which national laboratories develop programs that are of joint interest with industry and universities. I will conclude by mentioning, with no detailed discussion or analysis, the most difficult and complex of all infrastructure issues-the appropriate size of the academic research system, the roles of the research universities and their relationship to other in- stitutions in our society. Our system has been driven by a number of forces since World War II. In the years after that war, there was. popular belief that science could solve any societal problem. When that illusion was fading, Sputnik put renewed vigor into our educational and re- search systems, and there was a period of great vitality. The move to the "Great Society" in the 1960's led to an enormous expansion of our educational system, and we built capacity that we do not PAGENO="0068" 62 now need. As we back away from the concepts of that era, great strains have been introduced. As we seek ways to relieve those strains, we must examine the overall size and scope of the educa- tional and research enterprise. Some parts of the system will need expansion. Other parts will need contraction. I have no advice on how best to carry out this difficult examina- tion. The Research Roundtable has not come to grips with it. To sum up: I have interpreted the term "infrastructure" broadly. I see the entire system supporting our national research effort as a national investment enterprise, including many sectors of our soci- ety, with the Federal Government necessarily being one of the principal partners. The enterprise is in need of revitalization, and as the task force proceeds with its study, there are two concepts I hope you will keep before you: "investment" and "partnership." Thank you for the opportunity to discuss these matters with you. [The prepared statement of Dr. Corson follows:] PAGENO="0069" 63 U.S. HOUSE OF REPRESENTATIVES SCIE?~E AN) TEQiN)LOGY CX].Q4ITTEE TASK FOI~E ON SCIE~ICE POLICY Testiirony by Dale R. Corson on ¶EHE FEDERAL GCIVERRIENT AN) ThE UNIVERSITY RESEAI~H INFRASTRUCIIJRE May 21, 1985 Mr. Chairman and ineirbers of the Task Force. My name is Dale Corson and I am Chairman of the Government-University-Industry Research I~und- table, sponsored by the National Academies of Sciences and Engineering. I am a physicist by training and I am the &~ritus President of Cornell Uni- versity. I am happy to appear before you today to talk about the Infra- structure for Academic Research, a topic of great national inçortance. Th begin with, let me define what I mean by "infrastructure". DEFINITION. By infrastructure for university-based research I mean the people,. the facilities, the necessary equipi~nt, including some very large equipoent, the research libraries and the institutional är- rangernents best designed to proirote effective research. These ar- rangements extend beyond these between the federal government and the research universities. They now include the states and indus- try. PEOPLE. The people I include are these essential to support efficient research programs. These include technicians, mechanicians, research assistants, secretarial and administrative staff. FACILITIES. By facilities I mean the buildings, the laboratories, the machine shops, and the specialized technical operation facilities designed to house and to support research projects effectively. EQUIPMENT. By equipoent I mean these essential scientific instruments and machines which are too large and too expensive to be supported on a single principal investigator's grant or contract. As research equipoent becomes larger and trore expensive, it is increasingly necessary to supply such equipoent on an institutional, regional or even national basis. RESEAI~H LIBRARIES. The major research libraries provide the biblio- graphic foundation of the nation's research effort. They face serious problems as they strive to serve research ends adequately. Among the problems are the requirement, and the opportunity, to use n~i computer and corrirunications technology, the need to meet expanded expectations for collection coverage, and the need to provide easy access and service reliability. The rapidly rising cost of such services is a major part of the problem. INE'TITUTIO~L ARRAr~EMENrS. Here I mean organizational arrangements designed to further the objectives of the relevant research programs. Included are institutional relationships within universities, between universities, between universities and PAGENO="0070" 64 industrial laboratories and, especially, between universities and sponsoring federal agencies and state governments. In discussing these topics I will be describing a system of national investment in a research enterprise designed to serve best our national interest. I emphasize the word "investment." I will be describing a system intended to make research in science and engineering prosper to the maxisun degree possible. `1k) do this, the system must support the enter- prise adequately, on a base broad enough to permit the research to progress effectively in any promising direction. Another concept that rmist characterize the research system is that of "partnership". Altbough the partnership must involve many sectors of our society, the research universities and the Federal Government are by far the must important elements of the system. These are the elements that I will be discussing primarily. Industry and state governments are playing mere inportant roles in the research system, and we must find ways to nurture these relation- ships. We must bring other institutions of our society into the research supporting system, as well; for example the financial world. We must find ways to finance the provision of facilities and the large equipoent so that we do not rely totally on the federal government for the enormeus capital outlays required. A concept that I reject is that of "procurement" in prometing the research enterprise. Over a long time our research system, which has been the envy of the world, has gradually assumed mere and mere features char- acteristic of the federal procurement system, designed for the procurement of "things". There has been a trend toward specification of particular research results required and toward the use of the mechanisns of the pro- cureinent process to address that requirement. Research is too unpre- dictable and too fragile to treat in this way. Finally, I want to keep the concept of "excellence" squarely before us * In the words of the late Philip Handler, former President of the National Academy of Sciences: "In science the best is vastly mere iir~ortant than the next best". Let me now go back and discuss the elements of the infrastructural system, and let me begin with the people. This is the must important element of all. Witbout qualified people at all levels, nothing else matters. The must important people of all are the scientists and engineers themaelves, and while they do not constitute part of the infra- structure, it is important to consider them in any discussion of science policy. I will not pursue this subject here but I will discuss the issue in a separate letter to the Task Force. In defining the scope of the study the Task Force stated that "only PAGENO="0071" 65 these aspects of science and engineering education which are directly related to research activities sheuld be covered in the Study". I am unsure of the intent of this statement but I want to emphasize the importance of skilled supporting technical staff and to state my belief that an adequate flow of such people may be in jeopardy. At Cornell University there are five or six supporting staff for every faculty nester. Many of these are custodial staff, other unskilled workers and secretaries. Many others, hewever, are skilled technical staff supporting the work of the research faculty. These include elect- ronic technicians, instrument makers and other sore or less traditional workers. An increasing nurrter, hewever, are "super technicians", oper- ating centralized and complex facilities. Prrong these are electron microscopy centers, nuclear magnetic resonance facilities, the very lowest temperature cryogenic laboratories, and crystal growing facilities in "super clean" rooms. This is a growing group of technical workers that we may find in shert supply in the future. I base my concern on the state of high scheol science and math- ematics teaching, which may also jeopardize the flow of scientists themselves. ~ sore than 20% of high scheol students are exposed to physics these days, and only 50% are exposed to as such as two years of science of any kind. Only 6% of high scheol students take four years of mathematics. Further, the number of science teachers in training is declining. How can we interest enough people in science and engineering to meet our future needs, whether for research scientist or for super technician careers, given this state of affairs? Both the structure and the infrastructure of research may be at risk. Research instruments ~ research equipment generally have reached a state of obsolescense that limits the anount and the quality of research that is possible in the research universities * In engineering this has reached proportions that is a factor in turning young research people away from academic careers. The result is an inability of universities to fill available engineering faculty teaching and research positions. Academic careers are simply not as attractive as are industrial careers. It is ironic that the great interest in computers and computer-related tech- nologies have attracted sore and sore students at the undergraduate level but the same technologies are pulling graduates into attractive jobs after the bachelors degree and are deflecting them from graduate study which would prepare them for academic research and teaching careers. In light of this situation, sore than half. of the young faculty appointments that are being made in engineering are foreign nationals. There have been better comprehensive studies of the instrumentation PAGENO="0072" 66 ~ ~4pnent shortages than I can give here. I want to stress the large equipoent which is required for the best research in some fields. As we learn sore and sore about the underlying phenomena in the fields we study, we learn sore and sore about how to measure the things we want to measure. Inevitably, these new measuring instruments are expensive. For example, as we go to smaller and smaller structures in microelectronic tech- nologies, we reach limits where optical photo-lithographic techiques for making the small chip structures are inadequate, and we sost go to x-ray lithography and to electron beam writing techniques. The equi~ient to do this is large.and expensive--very expensive. What we can do with it, however, is little short of miraculous. A technology that has proved of enornous usefulness in studying atomic and solecular structures, including those in living bodies, is nuclear magnetic resonance. Such a machine, large enough to accorrodate a human body, costs hundreds of thousands of dollars. The same techoology provides powerful analytical tools in fields as diverse as materials science and irolecular biology. Thday progress in many fields is limited by the unavailability of instruments such as these. These large and expensive machines are leading to the concept of pooled use. The using pool may be all the interested departments in a single university or it may be a regional facility serving all the research laboratories, university and industrial, in the region. As the need for very expensive equipoent develops, the shared use concept is essential. Shared use is one example of the "partnership" concept that I believe is so important. Other partnerships rust also be developed to magnify the impact of the federal agency equiçrnent support prograrrs that have begun in recent years. Company-funded instrumentation programe have been important in selected areas * There appears to be real potential for constructive partnership with the states, especially when one considers the instructional equipsent needs which appear to be fully as important as the research needs in many places. Some states have launched substantial prograirs for upgrading scientific equipoent. More directed attention to partnership with the states in sorting out responsibilities for both research and instructional equi~xnent would be beneficial. Finally, debt financing has been used to fund equipient acquisition. (~portunities for pooling funds and distributing the debt risk should be explored. In connection with the equipoent problem, and related to the "people" problem, is the issue of equi~*rent maintenance. As the equi~xrent becomes sore sophisticated and expensive, the maintenance technicians require sore training and corsnand higher salaries. The federal government, the state governments and the universities must resolve the issue of cost sharing and provide for adequate support staff in this area. The increasing cost and sophistication of research equipiient, and the requirement to develop partnership approaches, as I have outlined above, are straining the current administrative procedures and rules, at both the state and the federal levels. The available procedures require a PAGENO="0073" 67 thorough review. Facilities, as typified by research laboratories, represent another large national need. It is iir~ossible for me to put any nuither on the magnitude of the need. One irust distinguish these cases where new facil- ites are absolutely essential to the progress of the science in question, from these where the science can continue to be done in the old facil- ities, but at the price of less than optin-um productivity. In the essential category are "clean" laboratories for work at the frontier in microelectronics, "contained" laboratories for areas of bio- technology such as recoritinant D~ work, facilities to handle toxic waste and perhaps adequate animal care facilities. It is iir~ossible, or at best cost ineffective, to provide such badly needed facilites by renovating old buildings. Research in the fields I have mentioned is facility limited. In other areas with inadequate facilities, renovation may be both adequate and cost effective. Again I can put no nunters on the problems. I know of no studies which have provided adequate data. The total need for new and renovated facilities is certainly measured in billions of dollars. Th provide facilities, we need a national program, again based on the parthership concept, that will regularize the facilities appropriation process, that will provide for corrprehensive merit review taking into account social and economic factors as well as scientific merit, and which will leverage federal funds to the maxirrusn degree possible. As we develop programs to address these facility needs we irust think about new ways to finance them. Given the magnitude of the problem, and given the degree to which the national welfare depends on solving such problems, the federal government nust necessarily play the lead role. There is no possibility, however, that the federal government will provide funds in an anuunt sufficient to relieve the accurrailated need. Various approaches have been proposed for discussion within the Research Roundtable. I put them forward here not as recorranendations but as suggestions deserving further examination. I also assume that any national program will include some, or a contination, of these approaches. Using the terms of the financial world, equity financiang can be provided through direct federal appropriations, set-asides from current federal R and D programs, realistic depreciation charges on federal research grants and matching funds from universities, from states, from industry and from gifts. Further leverage on these funds can be provided through ~ fit-ian- cing. We rust look for a way to use federal funds as a base for a national program of construction bond issues, preferably tax-exempt, to be PAGENO="0074" 68 anortized over a period of years-say 10 or 15-frorn.one, or a coirbin- ation, of the equity sources listed above The Government-Industry-Research Roundtable, which I represent, will conduct a tvo-day conference in July, under joint sponsorship with.the Office of Science and Technology Policy and the National Science Bc4j~1, to explore approaches such as these to provide academic research facilities Part of the discussion will focus on financing mechanisns. We are~bring- ing experts from the investment banking werld into the planning for this conference. We expect to have Congressional representation at the cOn- ference, of course. I include research libraries as a vital part of the research infrastructure. These libraries are essential elements in the preser- vation and transmission of knowledge and in the creation of new know- ledge. The ways these libraries are operated and used have evolved substantially over the past tvo decades, with consequent expansion in staff, equipment and expense-especially the latter. New data management technology and new congrunication technology have given the research scientist research tools not previously available, and these tools bold the promise for entirely new ways to comrrunicate through the written vord. The systenE now in place are impressive-in a matter of seconds an investigator can locate any book or other bibliographic material cataloged by any one of the nation's major research libraries. There is also the promise of replacing the hard text copy of written material with computer screen readouts or rapid printouts of text that is of interest. This promise is still a long way from materialization, bow- ever. In fact the computerized library systeirs as they exist, still have a long way to go to provide the optirrum service to scientific inves- tigators. These libraries, with their new library services, are essential elements of the research enterprise. We rrust find ways to invest in then in the same way we invest in other research infrastructures. Finally, I will discuss the institutional telationships which I think important in pronoting research of the quality best designed to serve the national interest. I have already touched on this subject in my discussion of "invest- ment" vs "procurement" concepts. Consideration of these concepts leads to study of the entire granting and contracting practices in the support of research. I want to emphasize that the system we developed following World War II, based on the Bush Report and leading to the creation of the National Science Foundation and the greatly expanded National Institutes of Health, is an excellent system. However, over the decades the system has adapted to changing PAGENO="0075" 69 conditions and changing requirements by applying patches. Substantial bureaucratic accretion has resulted and elements of the system, must notably the infrastructure that we are addressing here today, have gone unattended. The current system of rules, regulations and procedures is inappropriate for the must effective operation of the research system. It is time to take a look at the entire research supporting enterprise to see hew it might be sinplified and rrodified to serve the national need note efficiently. ¶E~ this end, the Research Poundtable is sponsoring a one-day event on June 5 to explore the issues. Participants will include federal agency officials, university officials, research scientists, research administrators and others concerned about the efficacy of the system. There are other institutional arrangements that are iirportant. I think that new organizational patterns are necessary for the univer- sities. With fewer tenure-track positions available they must find new ways to appoint rrore research scientists, and they must find ways to bring "new blood" into their aging faculties. We have seen the evolution of many cooperative ventures between universities and industry in recent years. There are inportant reasons for these devèloixnents. I believe that industry is mure dependent on universities than in the past for help in bringing new. ideas to the marketplace. The developuents in biotechnology are one exasple. Micro- electronics and artificial intelligence are others * These develognents have proceeded at a time when universities are resource limited in pursuing research in these fields. So they, too, look to the new industrial alliances with enthusiasm. The new technologies and the new alliances bring with them pressures on the university for nore effective multidisciplinary research and edu- cation. The must productive research at the frontiers of science also demand interdisciplinary approaches. At a syirposium last year hunoring the 1983 Pmerican Nobel laureates, several earlier Nobel laureates from a variety of disciplines all said that the must exciting science is devel- oping at the interface between disciplines, not within single discip- lines. Modifications in federal funding procedures and in university structure and reward systens are required in order to pursue these opportunities. The Research Roumdtable is conducting a set of case studies of new university-industry alliances to examine~ what the effects are. What is happening to graduate education in the participating universities? Are the alliances effective in bringing new and inportant ideas to the market place sooner? What new institutional arrangements within universities and within industry are required to make the alliances productive? Another institutional arrangment s~rthy of consideration is that by which the federally supported national laboratories develop programe that are of joint interest with industry and universities. I want only to mention this, witheut any analysis of the opportunities. I will conclude by mentioning, with no detailed discussion or PAGENO="0076" 70 analysis, the nx)st difficult and corr~lex of all infrastructure issues-the appropriate size of the academic research system, the roles of the research universities and their relationship to other institutions in our society. Our system has been driven by a nurrber of forces since World War II * In the years after that war there was popular belief that science could solve any societal problem. When that illusion was fading Sputnik put renewed vigor into our educational and research systems and there was a period of great vitality. The cove to the "great society" in the l960s led to an enornous expansion of our educational system and we built capacity we do not now need. As we back away from the concepts of that era, great strains have been introduced. As we seek ways to relieve these strains we cost examine the overall size and scope of the educational and research enterprise. Some parts of the system will need expansion. Other parts will need contraction. I have no advice on how best to carry out this difficult examin- ation. The Research Roundtable has not come to grips with it. Some states, Michigan for exarr~le, are tackling the problem in the context of their own needs. Th sum up: I have interpreted the term "infrastructure" broadly. I see the entire system supporting our national research effort as a national investment enterprise, including many sectors of our society, with the federal government necessarily being one of the principal partners. The enterprise is in need of revitalization and as the Task Force proceeds with its study there are two concepts I hope you will keep before you: "investment" and "partnership". Thank you for the opportunity to discuss these matters with you. DISCUSSION Mr. BROWN [acting chairman]. Thank you, Dr. Corson. I commend you and the Research Roundtable for the initiatives that you are taking. I perceive in these initiatives the possibility of developing the strategies to address a number of the problems that we face if all of your meetings and conferences are successful. I hope they will be. I brought out earlier in questioning Dr. Healy the fact that many of the things that you are doing are embodied in the Science Policy Act, which placed some of these responsibilities on the President's Science Advisor. I note that in your activities, you are maintaining a close liaison with that office, and I hope that you will consider that what you are doing is an extension to what we have indicated is desirable in that particular piece of legislation. Let me raise one problem which you will be addressing in some of your activities, but it seems to me to be particularly important, and that is the situation involving maintaining an adequate supply of competent research faculty. In a situation where you may, and in fact have in some parts of the past, recent past, experienced a decline in students, a decline in the number of tenured faculty which the institutions are able to maintain has been part of the decrease in students. At the same time, our needs for the research that would be done by those faculty members is increasing, which seems to perhaps indicate too close a coupling between the teach- ing and the research activity. We may be needing an increase in PAGENO="0077" 71 research at the same time we are needing a decrease in teaching because of the decline in the number of students. Now, there are solutions to that problem. One direction, of course, is this greater emphasis on cooperative research between universities and industries, which would provide an outlet for addi- tional university research personnel, and would be beneficial to all concerned, and there are probably other avenues, such as placing a greater emphasis upon the kind of research institutions that are best exemplified by the Max Plank Institutes in Germany. Is it your feeling that the Research Roundtable might be able to present some attractive solutions to this problem which could be considered in terms of some rather significant changes in the way we organize the research and teaching capabilities of this Nation as a whole? Dr. CORSON. Well, let me address the problem. Let me say at the beginning that it is going to take the best effort of everybody that can be brought to bear on the problem to deal with these issues, and I want to point out that Dr. Healy is a participant in some of our Roundtable activities; we maintain close link to that office. When you asked if we can provide solutions, you are asking for a great deal. If you want to talk about illumination and discussion of the problems, we can certainly do that. Let me talk a little bit about the university versus the research institute, which you raised. We are in a difficult situation in the country right now. The uni- versities are under a great deal of strain in the first place. In the sciences, we have little opportunity to make new faculty appoint- ments in the next decade even because of the bulge of faculty people that came in during the great expansion in the universities in the 1960's in physics and chemistry and mathematics; this is particularly serious. At Cornell, for example, in those three depart- ments in the next decade, unless something special is done, there are no opportunities for more than two or three appointments in all three departments, and all three are large departments. At the same time, the need for research in areas that are pri- marily university-based, are to a large degree university-based, is growing. For example, in biotechnology, microelectronics, in artifi- cial intelligence and other computer developments, there is a need for universities to link themselves with industry or for industry to link themselves with universities in bringing these new technol- ogies to the marketplace more rapidly. A great deal more research is needed in these areas, but the uni- versities have no capacity to appoint the necessary people except in engineering, where there are openings that can't be filled. But in the basic sciences, there is no opportunity to appoint new people, and there is not going to be for a decade. So this means that the universities must develop some new structures, or we must have some new restructure, as you point out. There is a Soviet model which is research institutes largely di- vorced from universities. I don't think that is a very good model. A more successful model is this Max Plank Institute, one that you mentioned, which again is divorced from the universities, but I think more closely tied to the universities than in the Soviet case. There is-as Dr. Healy pointed out in her testimony, we built so PAGENO="0078" 72 much strength into our system, where we tied teaching and re- search, that it seems to me that it by far will be best to serve our national interest if we maintain that link and find ways to solve the problems. The way we are going to solve the problems, I think, is to build research institutes that are going to be parallel in part, linked to universities, but not with a staff that is full-fledged members of university faculties. They can be adjunct appointments, joint ap- pointments, they can teach classes, the institute people can teach classes, they can supervise graduate students if the arrangements are developed most effectively-the institutes will be separately fi- nanced and managed probably. It is good to take all the wisdom anybody can bring to bear in developing these, this relationship, but I think it is essential, if we are to provide research activities that these new fields require, where that activity is based to a large extent in the universities. I don't know exactly how it is going to go, but these institutes are springing up in biotechnology, microelectronics, and my own strong recommendation is to keep the teaching and the research to- gether. One can make a strong case for the proposition that the role of the university is to teach people to solve difficult, novel problems and that the way we do that is by apprenticing students to people who are themselves solving difficult, novel problems and in the process, we are turning out some of the world's best scien- tists, and we are producing some of the world's best research. Mr. BROWN. Well, I appreciate that response. I think that we have the capability in this country to develop a model which is su- perior to anything that any other country has done. In each of the other countries that we can look to, the ones that you have men- tioned and others, their particular structural pattern arose out of their historical experience, just as ours did. Our superiority is going to consist of developing for ourselves, based on our historical experience, something that is better suited to cope with the prob- lems of the future and the capabilities to analyze and visualize what that structure will be that will give us our leadership in the world. There are the problems that we have referred to here that need to be overcome. The coupling of research in teaching at a time when they get out of phase, the problems that you have at Cornell, the problems that your teaching is basically disciplinary while the need for interdisciplinary research is growing, and we have to de- velop a model in which we can combine the strengths of both kinds of systems. And it woUld be my hope that in your wisdom in the Research Roundtable that you could, at least in stimulating a dis- cussion of these things, pose some alternatives that could be exam- ined critically, and we could develop some answers that will help us to cope with the next generation instead of continually worrying about the failures of the past. Dr. CoRsoN. One of our working groups is addressing this very issue, the changes in the structure of the university among other institutions; it is going to have to take place if we are to meet the challenge adequately. The chairman of that working group is Harold Shapiro, president of the University of Michigan, and the PAGENO="0079" 73 cochairman is Ed Jefferson, who is CEO of Du Pont. We have got some good talent thinking about the problem. Mr. BROWN. I think there comes to my mind some of the out- standing interdisciplinary research organizations in this country, of which the Bell Labs and Watson Laboratories at IBM are exam- ples. The research done there is first-rate quality and includes both the applied and basic research. There is also a strong emphasis on teaching; a good number of the staff that I have met there are ad- junct professors at some institutions,~ outstanding institutions gen- erally. Yet to achieve a proper meld between those facilities, those insti- tutions, and the needs of the great teaching and research universi- ties is going to take some real imagination if we are going to solve our problems. Dr. CORSON. I am assured by my efforts over the past 20 years to build that kind of activity at Cornell, and I know some of the things that work, and I know a lot of the things that don't work. Mr. BROWN. Thank you, Mr. Chairman. Mr. FUQUA [presiding]. Mr. Lewis. Mr. LEWIS. I have no questions. Mr. FUQUA. I have one question, Dr. Corson. Back when you were president of Cornell, and starting after Sputnik when the Na- tional Defense Education Act, some of the others, we had some block grant programs at universities then that later changed to more project type grants. Do you see that as having an impact on the decline of some of the infrastructure that we are talking about today? In other words, have we caused our own problem? Dr. CORSON. I think the problem is so complex, it is hard to place blame in any one place, but some of the block grant programs were extraordinarily successful. Let me give an example. In about 1960, the Defense Department started the Materials Re- search Laboratory venture. ARPA [Advanced Research Projects Agency], was the sponsor. NSF took that over after a few years, and they promoted a series of interdisciplinary laboratories in the materials field. There are something like 11 of those in the first round and a few more were added later. Those appear to me to be some of the most successful federally- sponsored research efforts going. Those are block grants, at least at Cornell it is, where the grant comes to the university, and the whole program is reviewed very carefully by high level review teams periodically, NSF organizations. The program is adminis- tered locally by a steering committee made up of working scien- tists, university administrators, and I don't know what the freedom is, the degree of freedom-I have forgotten-to use that money for facilities, but we have built with that program large central facili- ties. For example, there is a so-called millidegree facility-very lowest temperatures-for doing cryogenic work on superconductivity. A high pressure facility where people have now made solids and are perhaps on the verge of making metallic hydrogen, which will pro- vide a great deal of understanding about some of the fundamental structural possibilities for new materials. There are crystal growing facilities, clean rooms, maximum cleanliness-these have all been built out of that block grant pro- PAGENO="0080" 74 gram with local decision. There is an opportunity to fund young people when a young investigator develops new ideas, where in some of the conventional funding mechanisms there at least would be a long delay, and perhaps you would stand no chance against the established investigators; he can get support based on the confi- dence of his local peers. There is the opportunity to support established investigators who want to change fields, who have a new idea. It has been, in my opinion, one of the most successful federally-supported programs-I don't mean at Cornell, but the whole MRL [Material Research Lab- oratories] around the country-and I applaud that, and I hope there will be more opportunities to go that direction in the future. And I do not believe the program has been abused in any way by this system. Mr. FUQUA. Thank you very much. We appreciate that. Mr. BROWN. Before you leave, Dr. Corson, it has occurred to me from time to time that one of the reasons for the excellence of our biological research and our leadership in this area and our general health research might be the fact that we have a model of very close cooperation between our outstanding hospitals in this country and our outstanding medical schools frequently. I know you can think of many examples of this. Massachusetts General and Harvard and others to the point where over the last 10 years, or 20 years, in establishing new Federal hospitals, veter- ans hospitals, for example, it has almost become a requirement that they be associated with a medical research facility at a medi- cal school, or something of that sort. That seems to have been healthy, both in terms of fundamental research in biology and medicine and in improved health care for individuals. We are talk- ing about doing something like this in the nonbiological sciences. I am wondering if we shouldn't conceptualize this a little bit more clearly than we have. It seems to me that what we have seen is almost an accidental growth in this kind of coupling between research and teaching in- stitutions, and that perhaps we should recognize the need to formu- late specific policy to encourage this in all of the fields of science. We are looking at plant biotechnology today as being a neglected area. Perhaps one of the reasons for that is that we don't have that kind of close coupling between research and practice in the plant field that we have had in the human field and that we need to en- courage it there as well in physics and chemistry and engineering and all of the other areas that we are talking about. I don't know how this could be brought about, but it seems to me that this is the line of thinking that we are pursuing in an effort to bridge this gap that seems to exist here. Dr. CORSON. Let me comment a little bit about the complexities of doing that. It depends on the nature of the technology at hand and the degree to which the university or the research scientists participate in the application of the science that he helps develop. In medicine, whereas you point out the medical college and the medical college faculty and the teaching hospital is the preeminent place where new medical technology is applied, that is the one place where the people who are doing the research are also the ones who are-the PAGENO="0081" 75 applied scientists who the applied science tests-are carried out in the hospital by the very people who have done it there. They are all MD's that are involved. If you go to the other extreme, and you go to aeronautical engi- neering, there is no possibility that the university can become closely involved with the application of the basic science at hand. The scale is simply too large for the university to be closely linked. The scale, whatever the entire price is, must be human scale to have universities directly involved with facilities on campus. To apply high velocity gas dynamics in rocket development is not fea- sible. The scale is wrong. At the intermediate range are some of the plant agricultural ac- tivities, for example, in plant genetics----developing new seed vari- eties, disease-resistant seed varieties. These are developed in uni- versities and in university-related experiment stations up to the point where samples of new seed in sufficient quantity to grow a small crop to carry the tests through that implementation stage before the seeds are turned over to large seed companies for quan- tity production. This is an intermediate situation that is on a scale where the link between the university that does the basic science and the applier of that science can be close enough to make it prof- itable. I think we have to look at the technology involved. Some of it is going to be well served by bringing the university and industry close together in the cooperative venture that is typified in a medi- cal school teaching hospital setting. Others of it are going to be on such a scale that it is impractical. I suspect that many of the things that we are talking about in microelectronics and biotech- nology are on a scale that make the cooperation profitable. Mr. BROWN. Well, I don't want to question the validity of your point there, but it seems to me that the scale is in the eye of the beholder. There has been for 40 years a close working relationship between the Caltech, for example, and Jet Propulsion Laboratory, which has done a lot of work in the aircraft propulsion, aerody- namics and so forth, as well as being the foundation of the space program. I am not sure that they have the best possible coupling there, but they do have a coupling which is important. Dr. CORSON. Yes, it is a rather loose coupling. Mr. BROWN. Yes, but-- Dr. CORSON. MIT and Lincoln Laboratory. MIT and Draper Lab- oratories and all missile guidance. Mr. BROWN. If we think in terms of institutional changes for both the universities and industrial research facilities, we might be able to overcome some of these problems of scale that you are talk- ing about. Dr. CORSON. I think that we must address those problems and face up to the troubles and find ways of making new relationships work. I think we can. Mr. BROWN [presiding]. Thank you very much, Dr. Corson, for your very helpful testimony. Our last witness this morning is Dr. Edward Hollander, chancel- lor, Department of Higher Education of New Jersey, and we wel- come him here this morning, and we very much appreciate your PAGENO="0082" 76 being able to be here on I understand what is fairly short notice, Dr. Hollander. Dr. HOLLANDER. Yes, sir. Mr. BROWN. It is a tribute to your understanding of the impor- tance of the subject that we are discussing, and we are very grate- ful to you. STATEMENT OF DR. T. EDWARD HOLLANDER, CHANCELLOR, DE- PARTMENT OF HIGHER EDUCATION, STATE OF NEW JERSEY, TRENTON, NJ Dr. HOLLANDER. Thank you very much. I have given you two statements, a longer statement for the record, and then a shorter statement which I would like to present directly to the committee. Mr. BROWN. The full statement will appear in the record. Mr. HOLLANDER. Thank you. Higher education has contributed to national science policy by building a basic research capability upon an intellectual base rooted in the liberal western tradition. Future progress rests upon stimulating the graduate and research capabilities of America's universities as a national policy. One means to achieve this end is a new collaboration between higher education, the State, the Fed- eral Government, and industry. My purpose here is to call for a renewal of the public role in fur- therance of science education at all levels, in furtherance of gradu- ate and research capabilities in the sciences and applied sciences and in the stimulation of the higher education-industry partner- ship. Using my own State, New Jersey, as illustration, I will report on how one State has responded to the withering away of national commitment to the infrastructure of higher education. Subsequent- ly, I shall argue for a renewed Federal commitment to complement State efforts. In New Jersey, Governor Kean is determined to make higher education more entrepreneural. While protecting institutional base budgets from enrollment erosion, he has proposed funding new ini- tiatives on a challenge grant basis, that is, requiring that public and independent institutions compete for new funds. Additionally, the Governor has secured passage of a $90 million bond issue and has directed annual appropriations towards economic development through support of basic and applied research at New Jersey's uni- versities. Still further, he~ has supported financing of improvement in science and mathematics education at all levels of schooling in the State. A longstanding and major State commitment to science and tech- nology is New Jersey's support of the intellectual and technological infrastructure of research-oriented institutions. For example, almost half of the State's total appropriation for higher education, or $300 million annually, supports the State's three public universi- ties, Rutgers, the University of Medicine and Dentistry of New Jersey, and the New Jersey Institute of Technology. These funds include support for research facilities, laboratories, and libraries. They permit reduced faculty teaching loads to support research, basic and applied. They support special highly paid distinguished PAGENO="0083" 77 research scientists and humanities. The State finances the gradu- ate programs that educate the Nation's instructors and research scientists. Private funds and Federal support have built and main- tained similar efforts at Princeton University and. Stevens Institute of Technology. The point is that this Nation's university-based research capacity has been built and is maintained in large measure by State govern- ment. New in New Jersey this year is Governor Kean's challenge to New Jersey's higher education institutions to reach for national status through improved quality. The State is helping Rutgers Uni- versity to increase its operating budget by $60 million annually, over a 3-year period. The new funds will strengthen the universi- ty's research capability by financing the recruitment of world-class scholars, young faculty members and graduate assistants. New funds will enhance the library and finance computer acquisitions. A similar program has been established for the State's technologi- cal university, the New Jersey Institute of Technology. Complementary challenge grant programs have been established for all of the State's teaching institutions. A challenge grant fund of up to $30 million, over 3 years, will strengthen the nine State colleges. A fund that could reach. over $25 million is dedicated to providing competitive grants for technological equipment acquisi- tions and computer applications at all public and private institu- tions. Over $3 million has already been provided to retrain primary and secondary school teachers of mathematics and science. New teacher training requirements emphasize liberal education with a required major in a field of study in the sciences, social sciences, or the humanities. Remedial education is required to be provided to every freshman admitted to a public college who is deficient in verbal or mathematical ability. Competitive challenge grant funds also are available to strengthen education in the humanities, for- eign languages, global education, and the improvement of teaching. Merit-based scholarships for, undergraduates and State graduate fellowships tell students we care about scholarship and intellectual development. All of these efforts and others are designed to strengthen quality ~~in undergraduate teaching, with emphasis in science and technology. These efforts are complemented by the new funding of science and technology as recommended by the report of the Commission on Science and Technology. The Commission, after an 18-month study, proposed a program for economic development using the State's research universities. Peer review teams identify fields of priority development in the State and select institutions best able to undertake collaborative research with industry. State funding is contingent upon matching industry funds for research activity. State capital funds finance major research centers for industry-academic research in priority fields. University-based technical extension centers disseminate state-of-the-art development throughout the industry. Research grants to faculty and institutions stimulate research interest and attract faculty to areas selected for priority development in the State. Funds are also available to finance new facilities for new technology programs in scientific and technological fields. PAGENO="0084" 78 Last year a $90 million bond issue was passed to implement the recommendations of the Commission. The Commission's operating budget, established especially to stimulate research, is $16 million for the 1985-86 fiscal year. What has been accomplished or provided for thus far? A $24 million Center for Advanced Biotechnology will be con- structed for Rutgers University and the University of Medicine and Denistry of New Jersey. Partial capital support will be provided to- wards Princeton University's $43 million biotechnology program. An additional $11 :inilhion will finance construction at the Waks- man Institute of Rutgers and at the University of Medicine and Denistry of New Jersey. New Jersey Institute of Technology will house a new Cooperative Research Center for Hazardous and Toxic Waste Management. The ~center is also supported by the National Science Foundation. Indus- trial company members, currently 12, contribute research guidance and $30,000 each to annual operating needs. A Center for Ceramics Research has been established at Rutgers with support from the National Science Foundation. The Center enjoys over $1 million in industrial support through affiliate fees of $30,000 from each of 32 companies. Under consideration is the de- velopment of a second wing for research in fiber optic materials. Rutgers University's Cook College will house a Center for Ad- vanced Food Technology. Food processing is a $6 billion industry in New Jersey. The Commission also has made grants in the areas of telematics, surface modification technology, and computer-aided manufactur- ing. New areas under study are fisheries development and aquacul- ture. New Jersey has been selected as a national site for a supercom- puter facility. Commission funding helped sway the decision New Jersey's way. The State funding will lend the supercomputer to New Jersey's research universities. Two computer-integrated facilities-one in South Jersey and one in Newark-will be established jointly by NJIT and the State's community college. The centers will provide research and training in the application of robotics to the manufacturing process. New educational and training programs have been established throughout the State's higher education system in such fields as laser optics, computer-aided design, software development, and ro- botics. Industry has been an active partner in program develop- ment. New Jersey's efforts are ambitious and expensive. We believe that a stronger higher education systems serves New Jersey's resi- dents who seek collegiate education in the State's institutions. We believe, too, that strengthening the higher education system's capacity for teaching and research in science and technology con- tributes significantly to the State's economy, to employment and the economic well-being of all of our residents. Through each pro- gram in the Governor's science and technology efforts and the col- lege grant program, New Jersey's research institutions are better able to contribute to national needs and national goals in science and technology. PAGENO="0085" 79 New Jersey efforts are no different from the efforts of many States across the Nation. States support the research universities in the public sector and, in many States, in the private sector as well. Special State efforts in science and technology are also common. Through such efforts, States finance initiatives that are also prop- erly the responsibility of the Federal Government. Where is the Federal Government in these initiatives? Federal financing of research through the National Science Foundation, the National Endowments, and Federal departments related directly to applied research needs-Federal efforts in these areas have been adequate, if not substantial. Even so, the States have had to shoulder at least two burdens that deserve Federal help because they are primarily national rather than State priorities. While States have maintained the intellectual and technological infrastructure for graduate education in the sciences, engineering and related technologies, they do not, should not and cannot fi- nance fellowship for students who enroll in such studies. Doctoral students in all disciplines serve a national need; they are highly mobile individuals who often leave a State upon comple- tion of doctoral studies. This support in doctoral studies clearly is a Federal responsibility and not a. State responsibility. The Federal Government has been derelict in this area. National graduate fellowships, awarded competitively, will assure that the most talented young people will pursue careers in basic and applied research. Now many of the best students are drawn to study in business, law, engineering and other professions where high rewards are coupled with less costly academic prepara- tion. Our doctoral programs in science and engineering enjoy heavy enrollments of foreign students who constitute a majority of stu- dents at our public institutions. Where is the next generation of American research scientists? They are not at our universities in sufficient numbers today. The States cannot afford to pay for all of the costly research fa- cilities and state-of-the-art equipment needed in today's research and instructional programs. The States do shoulder a large share of the costs. That they cannot come near to doing the whole job is re- flected in the higher dependence on obsolete, poorly maintained and inadequate equipment. We have come to be dependent on private industry for donations of obsolete equipment. The States need Federal help to maintain up-to-date facilities for teaching and research. The New Jersey unemployment rate is 6.2 percent, below the na- tional average. It is low because our State has created a climate supportive to emergent industries. New university/industry re- search collaboration can spinoff new companies, new industries, new jobs. The new jobs replace those lost in the declining blue- collar industries. Our unemployment rate of 6.2 percent is too high. In part, it is so high because vacant positions go begging while the unemployed and underemployed are not qualified to fill them. PAGENO="0086" 80 We are determined to keep the economy growing by stimulating applied research and entrepreneurship. We are equally determined to keep the economy growing by improved technological literacy among all potential employees in all of the States, urban as well as surburban communities. We want a renewed Federal effort in support of basic research to complement the new State initiatives. Thank you very much. [The prepared statement of Dr. Hollander follows:] PAGENO="0087" 81 1Etl JERSEY'S SCIEIICE AHD TECHMOLCGY IHITIATIVE TESTIflOUY CF T EDUARD HOLLANDERJ C.HAHCELLCR OF HIGHER EDUCATION, NEW JERSEY TO THE US HOUSE OF REPRESENTATIVES SUB-CO~1ITTEE OH SCIEIICE AtJD TECHNOLOGY POLICY NARCH 21, 1985 (DETAILED REPORT ATTACHED) PAGENO="0088" 82 Higher education haS contributed to national science policy by nuilding a basic research capability upon an intellectual base rooted in the liberal western tradition Future progress rests unon stimulating the graduate and research capabilities of Anierica's universities as a national policy One means to achieve this end is a new collaboration between higher education, the state, the federal government and industry, My purpose here is to call for a renewal of the public role in furtherance of science education at all levels, in furtherance graduate and research capabilities in the sciences and applied sciences and in the stimulation of the higher education-industry partnership, Using my own state, Mew Jersey, as illustration, I will report on how one state has responded to the withering away of national cornitment to the infrastructure of higher education, SubseQuently, I shall argue for a renewed federal cocmnitrnent to complement state efforts In New Jersey, Governor Kean is determined to make higher education more entrepreneural. While protecting institutional base budgets from enrollment erosion, he has proposed funding new initiatives on a "challenge grant" basis, that is, requiring that public and independent institutions compete for new funds. Additionally, the governor has secured passage of a $90 million bond PAGENO="0089" 83 issue and has directed annual appropriations tonards economic development through support of basic and applied research at hew Jersey's universities, Still further, he has supported financing of improvement in science and matnematics education at all levels of schooling in the state. A long-standing and major state coanitment to science and technology is hew Jersey's support of tne "intellectual and technological" infrastructure of research oriented instititutions, For example, almost half of the state's total appropriation for higher education, or $300 million annually, supports the state's three public universities, Rutgers, the University of tledicine and Dentistry of hew Jersey and the hew Jersey Institute of Technology, These funds include support for research facilities, laboratories and libraries, They permit reduced faculty teaching loads to support research, basic and applied, They support special highly paid distinguished research scientists and humanists, The state finances the graduate programs that educate the nation's instructors and research scientists. Private funds have built and maintained similar efforts at Princeton University and Stevens Institute of Technology, The point is that this nation's university based research capacity has been ouilt and is maintained in large measure by state government, PAGENO="0090" 84 hew in lew Jersey tlis year is Governor Kean's cnallenge to ieu Jersey's hig;ier education institutions to reach for national status through improved quality, The state is helping Rutgers University to increase its operating budget by $60 million annually (over a three-year period). The new funds will strengthen the University's research capability by financing the recruitment of world-class scholars, young faculty members, and graduate assistants, New funds will enhance the library and finance computer acquisitions, A similar program has been established for the state's technological university, tile New Jersey Institute of Technology, Complementary "challenge grant" programs have been established for all of the state's teaching institutions. A challenge grant fund of up to $30 million (overthreeyears) will strengthen the nine state colleges. A fund that could reach over $25 million is dedicated to providing competitive grants for technological equipment acquisitions and computer applications at all public and private institutions, Over three million dollars has already been provided to retrain primary and secondary school teachers of mathematics and science, New teacher training requirments emphasize liberal education with a required major in a field of study in tile sciences, social sciences or the humanities Remedial education is required to be provided to every freshman admitted to a public college who is deficient in verbal or mathematical ability, Competitive challenge grant funds also are available to strengthen education in the humanities, foreign languages, global education, and tile improvement of teaching, PAGENO="0091" 85 flerit-o~ed sc~io1arships for undergraduates and state graduate feii~I3n~ps tell students we care about scholars~iip and intellectual deveio~ment, All of these efforts and others are designed to strengtnen quality in undergraduate teaching, with emphasis in science and technology, Tflese efforts are complemented by the ne! funding of science and technology as recommended by the report of the Cormiiission on Science and Technology, Established by Executive Order in 1932 on my recommendation and the recommendation of several college presidents, the Commission proposed a program of economic development through new partnerships between graduate research institutions, The Commission, after an eighteen month study, proposed a program for economic development using the state's research universities, Peer review teams identify fields of priority development in the state and select institutions best able to undertake collaborative research with industry, State funding is contingent upon matching industry funds for research activity, State capital funds finance major reseach centers for industry-academic research in priority fields, University-based technical extension centers disseminate state-of-the-art development throughout tile industry, Research grants to faculty and institutions stimulate research interest ond attract faculty to areas selected for priority development in the state, Funds are also available to finance new facilities for new teaching programs in scientific and technological fields, PAGENO="0092" 86 Last year a $90 million oond issue was passed to implement tie recmmiiendutions of tfle Commission The Cormimission's operating budget established especially to stimulate research is $16 million for the 1935-86 fiscal yeur What has been accomplished or provided for thus far? -- A $211 million Center for Advanced Biotechnology will be constructed for Rutgers University and the Unrversity of Nedicine and Dentistry of New Jersey, Partial capital support will be provided towards Princeton University's $43 million biotechnology program An additional $11 million will finance construction at the Uaksman Institute of Rutgers and at the University of Medicine and Dentistry of New Jersey, -- New Jersey Institute of Technology will house a new Cooperative Research Center for Hazardous and Toxic Waste Management, The center is also supported by the National Science Foundation, Industrial company members, currently 12, contribute research guidance and $30,000 each to annual operating needs. -- A Center for Ceramics Research has been established at Rutgers with support from the National Science Foundation Tne center enjoys over one million dollars in industrial support through affiliate fees of $30000 from each of 32 companies. Under consideration is the development of a second wing for reseach in fiber optic materials. PAGENO="0093" 87 -- Rutgers University's Cook College ~iill louse a Center for Advanced Food Technology, Food processing is a $5 billion industry in New Jersey, -- Tne Cornission also has made grants in the areas of telematics, surface modification tecnnolojy, and computer aided manufacturing, New areas under study are fisheries development and apuaculture, -- New Jersey has been selected as a national site for a supercomputer facility, Commission funding helped sway the decision New Jersey's way, The state funding will lend the supercomputer to New Jersey's research universities, -- Two computer integrated facilities--one in Soutn Jersey and one in Newark--will be established jointly by UJIT and the state's community colleges, The centers will provide research and training in the application of robotics to the manufacturing processes, -- New educational and training programs have been established throughout the state's higher education system in such fields as laser optics, computer aided design, software development and robotics, Industry has been an active partner in program development, New Jersey's efforts are ambitious and expensive, tie believe tnat a strong higher education system serves New Jersey's residents who seek collegiate education in the state's institutions, We believe, too, that strengthening the higher education systems capacity PAGENO="0094" 88 for teac:ling and research in science and technology contriojtes significantly to the state's economy, to employment and t;ie economic well-being of all of our residents Through each progran in tne Governor's science and technology efforts and tie challenge grant program, New Jersey's research institutions are better able to contribute to national needs and national goals in science and technology, New Jersey efforts are no different from the efforts of many states across the notion. States support the research universities in the public sector and, in many states, in tne private sector as well Special state efforts in science and technology are also comon. Through such efforts, states finance initiatives that are also properly tile responsioility of the federal government. Where in the federal government are t~iese initiatives? Federal financing of research through the National Science Foundation, the National Endo~iients, and federal departments related directly to applied research needs. Federal efforts in these areas have been adequate, if not substantial. Even so, the states hove had to shoulder at least two burdens that deserve federal help because they are primarily national rat~1er than state priorities. Wnile states have maintained the "intellectual and technological" infrastructure for graduate education in the sciences, engineering and related technologies, they do not, should not and PAGENO="0095" 89 cannot finance fellowthip for students who euroll in such studies. Doctoral students in all disciplines serve a national need; tney are hignly caaile individuals who often leave a state upon completion of doctoral studies, This support in doctoral studies clearly is a federal responsibility and not a state responsibility, The federal government has been derelict in this area, national graduate fellowships, awarded competitively, will assure that the most talented young people will pursue careers in oasic and applied researcu, ~Iow many of the best students are drawn to study in business, law, engineering and other professions where high rewards are coupled with less costly academic preparation, Our doctoral programs in science and engineering enjoy heavy enrollments of foreign students who constitute a majority of students at our pualic institutions, Where is tne next generation of American research scientists? They are not at our universities in sufficient numbers today, The states cannot afford to pay for all of the costly research facilities and state-of-the-art ec~uipment needed in today's research and instructional programs, The states do shoulder a large share of the costs, That they cannot come near to doing the whole job is reflected in the higher dependence on obsolete, poorly maintained and inadequate equipment, We have come to be dependent on private industry for donations of obsolete equipment, T;ie states need federal help to maintain up-to-date facilities for teaching and research, PAGENO="0096" 90 The New Jersey unemployment rate is 62%, oelo~ the national average It is lots because our state has created a climate supportive to emergent industries. Maw university-industrY research collaboration COfl spin-off new companies, new industries, new jobs. The new jobs replace tflose lost in the declining blue-collar industries. Our unemployment rate of 6,2% is too high, In part, it is so high because vacant positions go begging while the unemployed and underemployed are not qualified to fill them, We are determined both to keep the economy growing by stimulating applied research and entrepreneurshiP, Ne are eaually determined tO keep the economy growing by improved technological literacy among all potential employees in all of the states, urban as well as suburban comunities, We want a renewed federal effort in support of basic research to complement the new state initiatives. PAGENO="0097" 91 At technent :o Test imony Dr. T. Edward Hollander inited States Congress Chancellor of Higher Education ~as~ington, D.C. State of New Jersey Nay 21, 1915 Peoort to the u.S. House of Representatives Sub-Committee on Science and Technology Polic.' (Appendix to Oral Statement) Our nation and most of the developed world are undergoing a furudarrentsl transition from industrial economies to informstioo/ knowledge-based economies. It is a transition as profoundly altering as the Great Depression of the 1930s, when the United States emeroed fully from its agricultural past to its industrial present. Nhether we call it a "ruegatrend," to use John Naisbitt~s popular word, or the core conventional phrase of economists, that of "structural change, it is real; it is here now, and it is no longer an idea to be planned for the future. Change will result in shifts: from new manufactured products to new services; from a workforce which was predominantly blue collar to one that is white collar; and from heavy, rigid technologies to automated, flexible technologies. The most obvious example of the latter is the powerful new generation of microcomputers, which are highly portable and adaptable to torumorrow' a software developments. For individuals, the shift will be from an emphasis on manual dexterity -- or running a machine-to cognitive skill -- understanding a technology. Each change underscores a basic characteristic of our knowledge-based society. These changes promise a new and vital role for higher education. It is in the higher education classroom and laboratory -- at our two-year and four-year colleges and universities -- that training for entry-level jobs will occur. Educators must employ greater rigor in determining what our students -- 20 million students each year -- study and learn. As we ensure the development of "computer literacy," along with other forms of technical training, we must also cultivate older, more basic literacies essential to educated men and women. At the same time, those who hire the graduates of higher education -- business and industry -- must seek and he encouraged to collaborate in the development of instructional needs and personnel exchanges. The relationship between these two sectors, higher education and industry, is no longer sequential; it will become increasingly interactive and lifelong. Programs of customized training, Which represent a successful collaboration of industry and community Colleges, are but one example of 53-277 0 - 86 - 4 PAGENO="0098" 92 cons interaction. There is a need for coc:inunng e~ucation to combat obsolescence in the face of changing knowledge. :~igher Education hss m~rh ro learn -- and offer in return -- fron tie exoarcences of cor~orate training pro~raos in this area, :i:h their affective use of telecourses and videoco.~oling. To ignore this challenge to both partners is to risk a greater consecuence to our society -- to enter the 1990s, ;;nen labor nhortages are oredicted, with vast numbers of our countrymen unemployed, underemployed, or, worse still, unemployable. It is my purpose to call for a renewal of the nublic role am part of these partnerships. Governments, both federal and state, are kidding themselves if they expect business and industry to support, in any meaningful way, the costs of basic scientific research and instruction. Beyond this recognition, it is essential to make a further distinction between the province of the states and the federal government in the development of natiOnal science and technology policies. It is both unfair and unrealistic to expect individual states to shoulder the burden of the nation, if the federal government proposes to retreat from its traditional responsibilities. This is especially true in the sponsorship of basic research, where the budgets of the National Science Foundation, the National Institutes of Health, and the mission agencies must be advanced beyond maintenance levels. Only the federal government can command the resources necessary to support effectively basic research. Despite the exigencies of the deficit, if the federal government pursues policies of under-funding higher education and research, I doubt that the new partnership between hioher education and industry will reach its full potential -- and the difference will not be trivial. By the same token, we should not exempt state governments from this support problem. My report is offered as a representative of one of the nation's largest state systems of higher education. I believe that, during the first four years of the current national administration, the states, and in particular Hew Jersey (the state I know best), have responded well to the changing locus of higher education support. We are providing the support for what I would call the "intellectual and technological infrastructure." This represents funding for the financing of the facilities and the equipment for research and instruction, as well as the salaries for top-flight faculty and technical personnel. Using my own state, New Jersey, as my illustration, I hope to portray the magnitude of this support. This funding is occurring both through the on-going and expanded efforts of the Nev Jersey Department of Higher Education and through a special science and technology initiative of our Governor, which recently became a permanent Commission on Science and Technology. I shall describe both sources. I also intend to offer some general observations on the role of the states in science and technology, expanding on my previous point about what the states can and cannot do. PAGENO="0099" 93 The State appropriation for higher education s;pport in ew Jersey is aooroachinc $650 iillion, for the coning fi.~:m year. Of this amount, nearly 50%,or $298,316,000, is aoprooriated to support New Jersey's three pthiic doctoral-level irnetituticns Oi higher education (i.e., Nutgers Univeraity, New Jersey Institute ci Technology, and the University of ledicine and Dentistry of New Jersey). These amounts constitute base support. The Department receives another $40 million for debt service, to ceet the capital construction costs of higher education facilities. These construction obligations are distinct from the $90 million science and technology bond which the voters of New Jersey overwhelmingl'.r approved, in November 1984, for the construction of new research laboratories and centers and instructional facilities. Beyond these base level and construction oblications, the Governor has recommended special initiatives for both instructional and research improvements in higher education. These initiatives include an $8 million "challenge grant for excellence" to Rutgers iniersity, to be expended as follows: (1) World - class scholars $1,200,000 (2) Junior faculty ... 989,000 (3) Graduate assistantships ~44,000 (4) Faculty support, . . . 2,267,000 (5) Libraries ~00,000 (6) Computers - ... . .. 1,300,000 (7) Academic facilities ..... 1,000,000 S8, 000, 000 The New Jersey Institute of Technology will receive $3.7 million for similar purposes, broken down as follows: (1) Instructional equipment- .... $3,000,000 (2) Faculty chairs , - ~00,000 (3) Computer networking . . . 100,000 $3,700,000 With a "technology and computers fund" of neary $7.6 million, the Department of Higher Education will undertake prcgrams to modernize scientific and engineering equipment, facilities and curricula, and to integrate computers into the college curriculun. In addition, programs will upgrade the technical knowledge and skills of teachers and college faculty contribute to the technological literacy of all New Jersey citi zens. PAGENO="0100" 94 (1) Technical/engineering education ~:anrs. $2,873,000 (2) South Jersey Regional c:M Center. 300,000 (3) ath/science/computer science ciaching initiative 1,000,000 (4) Comouters in curriciPt 2,919,000 (5) Information-age initiative 500,000 $7, 592,000 These several initiatives combine to form a major instructional improvement program in New Jersey, with primary emphasis on scienceand technology. Improvements in research are being stimulated by the Commission on Science and Technology, especially where these efforts support New Jersey's high technology economic development strategy. The Governor's Commission on Science and Technolog~' was established by Executive Order in July 1982, to create a bluepdnt and action plan for the economic development of New Jersey, in a post-smokestack industrial era. This program of economic development emphasizes the applications of science and technology, through new partnerships between graduate research academic institutions and industry. The Commission has identified the components of a technology development strategy that builds on New Jersey's industrial mad academic strengths. The strategy requires that we make investments in ideas, enterprise and people. It also requires coordinated efforts by both public and private sectors. Finally, it requires a long-term commitment. One of the Commission's most important recommendations is that the infrastructure for New Jersey's science and technology initiative -- the laboratories and research centers -- be provided through a major capital improvement program. These improvements will he accelerated now that the voters have approved the referendum for the $90 million `Jobs, Science and Technology Bond.' Details on this bond issue are provided in a later section of this report. The Commission's funding programs emphasize the technology fields that have been designated as `priority' (materials science, biotechnology, hazardous substance management, food technology, and telematics) for New Jersey's development orogram. Moreover, these grants have been received, in the main, hi those institutions housing Advanced Technology Centers in these priority fields or, in the case of Stevens Institute of Technology, a Technology Extension Center in polymer processing. The program expenditures of the Commission for the current fiscal year (FY 1985) amount to more than $9 rillion, which provide operational funding for the Centers and new categories of support, such PAGENO="0101" 95 as :nn.~vat~on Partnerships (matching research grants for selected scientific and engineering projects). In addition to broader ranges of ou~por~, 1-is aopro~riation continues to fund the priority technology fields and add start-up support in second-stage fields, such as materials ~.andling and lisharies development. The Science and Technology Budget for FY 1986 requests funds tota~l~.nc 516 million for new and on-going programs and administrative experisas. These allocations are commensurate with the levels of funding recommended by the expert peer review panels which the Commission engaged to evaluate the relative strengths of New Jersey's science and technology initiatives. Especially significant is the funding for new areas of science and technology research. Such funds are vital to the Commission's plan of diversifying high technology opportunities for the state. There are several sources of non-State revenue which will strengthen the research programs of New Jersey' a higher education institutions, principally as a consequence of the Commission's matching grant requirements as applied to appropriated funds. The most significant sources are from the federal government and industry. The Commission's matching guidelines currently require that each State-funded dollar for "research and operating" support of New Jersey's high technology initiative be equally matched from non-State sources (generally, industry and the federal government). Under the category of "capital equipnment," with the understanding that corporate giving patterns have proven to be much more conservative, the Commission is requiring that one-third of the total cost be represented by matching funds from non-State sources. The Commission currently projects industrial and federal matching funds to reach $23 million, in FY 1986. The attainment of this multiplier effect on appropriations is an important measurement of the payback of New Jersey's investment in science and technology development, as one important aspect of the State's overall program of economic development and new revenue generation. FY 1986 will see the initiation of several important new programs by the Commission. Among these new programs is the establishment of a nationally-based advanced scientific supercomputer center in new Jersey; a research center to investigate fiber optical materials; an industrially co-sponsored plastics recycling research program; and a private industry challenge grant organized by the American Electronics Association, with the anticipation of State matchinc, to fund graduate education, faculty development, and instructional equipment in electrical engineering and computer science. PAGENO="0102" 96 These and other initiatives will ce overseen ow a permanent New Jersey Cor~icsion on Science and Technology, a:gnei iOto law on ~crii I, 1585, reslacing the temoorary Governor's Commission. I :ndicated earlier, the technol~ny infrastructure for many of these orojects will occur through the $90 million `Jobs, Science and Technology 3ond.' These ~noroVement3 .;itl proceec according to the following ;eneral exsenditjre sian: A. Advanced Technology Centers Major construction orojects are proposed on sitCs at or near New Jersey's graduate research institutions of higher education. Construction, which could include the acquisition of real property, principally would occur at Rutgers, the New Jersey Institute of Technology (UJIT) , and the University of ~edic:ce and Dentistry of New Jersey (UV.DNJ), although some capital improvements night qualify at private higher education institutions such as, Stevens Institute of Technology and Princeton. (For planning ourpotes, a construction cost of S200, per square foot, has been used to arrive at these budget estimates.) (1) BiotechnolOgy. The Advanced Technology Center for Biotechnology, for which the most significant capital improvements were recommended by the Commission on Science and Technology, actually refers to five interrelated projects, which together total S40 million. The core facility, to be known as the New Jersey Center for Advanced Biotechnology and Medicine, would be new construction located on the adjoining campuses of Rutgers and `JMDNJ in Piscataway. It is here that the major research projects of Rutgers and UMDNJ jointly would be conducted and where senior staff, including the director, and technical support would be housed. The capital cost of this project are $23,600,000. This core facility would be backed-up by three satellite facilities, all within close proximity to the new Center. First, a fermentation and biomaterials seoaration facility would be added to the current Waksman Institute for Molecular Biology, at a total capital cost of S4 million. Second, the clinical research facility for the Center would be housed at the Middlesex General~UniVersitY Hospital, in New Brunswick, where renovations are proposed at $4.6 million. Third, existing laboratories at both Rutgers and UMDMJ would be integrated into the research complex of the core facility, with building modification and new equipment costs targeted at $3 million. Finally, the Science and Technology Commission has recommended, and the presidents of both Rutgers and UMDNJ also have called for, a contribution of $5 million to the capital PAGENO="0103" 97 facilities in :eolecular biology, proposed for construction at Princeton. This amount represents only a small portion of the 546 million investment Princeton is ~akins in ~olecu1ar biology, hut it would signify a genuine endorsement by New Jersey of the new spirit of cooperation in this field, amonc Rutgers, UNDNJ, and Princeton, and help to draw these three institutions closer together for combined research. Developing a world-class center in biotechñolocy in New Jersey, with all its component parts, requires serious attention to the advantages of this three-way relationship. (2) Hazardous and Toxic Substance Management. Although without a central facility, the Cooperative Research Center for Hazardous and Toxic Waste began its research activities in 1984.. The Center is supported by the Commission, the National Science Foundation, and industrial company members (currently twelve), each contributing research guidance and an annual fee of S30,000 toward research sponsorship. The research and public policy programs of the Center, which will emphasize such areas as incineration, biological and chemical treatment, and physical treatment, will be assets to both New Jersey and the nation. They will bring university-level research to bear on such problems as toxic waste clean-up, as well as apply these fundings to such economic growth areas as resource recovery. The Center will receive a core facility, both to meet this potential and to draw together the five graduate institutions of higher education -- led by NJIT ~- that have formed the research consortium to do the work. The Commission has recommended that $7 million of the bond issue be assigned to this facility, with new construction to occur in Newark, at the campus of NJIT. Additional funds will be provided for land acquisition. (3) Advanced Ceramics. The Center for Ceramics Research (CCR) at Rutgers, performing lead-edge research in one of the so-called new materials of the future, is fast approaching world-class status -- both in the independent judgment of leading faculty from MIT and as assessed recently by Hiqh Technologv Magazine. The Center has an industrial membership of thirty-two companies, with its annual affiliates fee to $30,000, all of which translate into an industrially-sponsored research program of nearly Sl million, per year. CCR also is supported by the National Science Foundation. The recommendations of the Commission are designed to ensure that CCR attains this world-class standing and generates benefits of primary inportance to `1ev Jersey. The latter will occur through a further enhancement of CCR's research program PAGENO="0104" 98 emphasizing technology transfers to :ew Jersey's small and medium-size industrial ceramics companies and through the provision of a core facility oo CCN on the 3usch campus of Rutgers. Currencly, CCR operates from borrowed (and out crown) space at the Engineering School. The Commission has recommended 59 nillion for this core facility. in addition, preliminary discussions have been held on the development of a "second wing of this facility, for the research and prototype development of optical fibers -- the materials over which fiber optic network transmissions occur. CCR has nascent strengths in this area that many companies and the U.S. government wish to.encourage. (4) Food Technology. Food technolocy encompasses the study of chemical, biological, and engineering aspects of food and food processing, packaging, and storing. The food industry is an important part of New Jersey's economic base; food processing represents annual shipments of over 36 billion in New Jersey. ~t the same tine, the state has experienced a loss of employment in the overall food industry, wit:i the relocation of production centers. The proposed Center for Advanced Food Technology, with a capital requirement of $6 million, will strengthen New Jersey's research and economic base in this industry by providing new food products and developing more efficient and economical food processing and related techniques. * The nucleus of this Center will be formed around the Food Science Department at Cook College/Rutgers. The core facility, to be located on the Cook campus, will draw together the strengths of nearly a dozen academic departments, including Biochemistry, Chemistry, Nutrition, Plant Physiology, ;iechanical Engineering, Chemical Engineering, and Materials Science. In addition to strengthening joint research and development programs, this facility will include a pilot plant designed to bridge the technical gap between laboratory research and commercialization. Given the cross-disciplinary, commercial orientation of the Center, we anticipate that it will help to spin-off new businesses in such areas as ingredient supplies, chemical and packaging supplies, processing and sensory equipment and instrumentation, warehousing, and waste disposal. (5) Stage Two Needs. Although the Cocmissionuas not able to ascertain additional needs with the sane finality as those identified above, its report e~ohasizes that there will he other capital requirements over the next several years. We already have mentioned the optical fiber materials area as a possible `second wing' of the Center for Ceramics Research. Another academic area where we anticipate requirements for PAGENO="0105" 99 temital improvements is the field of telematics -- representing the growing confluence of computer technologies telecommunication. A third area, under the gemeral reedinu of materials science, is surface ~odific.~tjo~ zec~ologv. ~7e helieve there will other needs, as well. For this reason, the Science and Technology Commission :t:mmgl7 urged tnat sufficient funding -- $15 million -- be `sil~ole to permit timely forward movement in these areas as uoon as their importance is confirmed and their requirements ~tore precisely identified. These determinations will be the responsibility of the new permanent Commission. 3. Undergraduate Technical and Engineering Facilities To ensure the instructional improvements that are needed for a technolocy-trained workforce in New Jersey, the Commission recommended that substantial capital funds -- $23 million -- be provided to maintain high quality science and technology education at the public four-year and community colleges, as well as at many independent institutions of higher education. These funds will be applied to the constrection and improvement of instructional laboratories, computer and educational facilities, and huilding space for technical equipment installations. Projects to be funded from this portion of the bond issue will be for major capital expenditures valued at more than $250,000, and with ~n extended use-life expectancy. These expenditures will differentiate themselves by dollar size and nature from current technology initiative grant programs to higher education institutions and especially Eros Chapter 12 projects that fund the county colleges. A competitive grant process, within each sector, will be used. All projects drawn from this $23 million fund will receive the approval of the Board of Higher Education. C. Other Technology Initiatives (1) South Jersey En9ineerina~ Facilities. At present, there are no facilities for undergraduate or continuing professional engineering training in South Jersey. There is an increasing need for such programs with the growth Of technology-based businesses in this area of the State. The bond sets aside S3 million for construction of needed facilities as part of the establishment of a new yest Campus for Burlington County College. The last two years of undergraduate engineering training and continuing Professional education for the industrial community will be provided here. The program will te a cooperative venture between Burlington County College and the New Jersey Institute of Technology. PAGENO="0106" 100 CD) 2r)J~~ Assisted Design/Computer Assiste~ Canufacturing _____ A regional county collese-based :raining center for conpucer assisted design and commuter assisted nanufactcrinq `CAD/CAM) will be established with $4 million of the bond ?roceeds. This center .;ill focus on rohr:ics technologies cod would ne used by the community colleges in South Jersey for rechnician training. A consortico of county colleges will omerate the center. (3) Other srojects, to be designated. The State Board of Higher Education will retain control over $3 million. These funds will be used to meet future needs for construction and renovat ion. Sunmar-, Observations High technology development is currentll, of great concern to many state governments. Various measures exist to promote advanced scientific and technological growth at the state level. These include sumpor:ing technological training programs and removing barriers to business development which are imposed by individual states. Some of the most important activities which will promote the growth of advanced technological industries cannot, however, be undertaken at the state level. These include the removal of tariffs on American goods in foreign countries, and the reform of federal regulations concerning business taxation and investment, in the following discussion, the focus is on those areas which individual states can and cannot affect to promote high technology development. What State Government Can Do: Education And Economic Development State governments can play a significant role in high technology development through their involvement in education and economic development. Specific measures which enhance high technology development are outlined below. A. Industry - Education Alliance: State governments can seek to increase and strengthen collaboration in research and instructional support between their industries and academic institutions, by encouraging I. the development of joint appointments and improved salary packages to enhance the recruitment and retention of engineering and computer science faculty, esnecially of faculty; 2. the development of joint and third-party suoport mechanisms to encourage specialized graduate courses and research at the cutting edge of science and technology, jointly conducted research and development and exchanges of personnel; PAGENO="0107" 101 3. technolog, transfers, especially to small end medium-sized industria. enter~rises, to increase :he actual implementation of high technology research and development; and 4. tie develo~rsent :)f incer-institutjonal "centers of excellence,' witn industry particimation and with a precise focus on isissior. (e.g., telecommur.~cetjons, biogenetics), since a critical mass" of faculty and fecilities, supporting infrastructure, and economic resources is viewed as essential to successful imolementation. B. ~ggineering Education and Training: Recognizing the high level of responsibility which states must accept for the health of engineering education, state government can identify ways to expand the applied scientific, technical, engineering and computer science caoabilities of their higher education institstio-is, including 1, aggressively recruiting promising undergraduates for graduate programs in ~ielis like engineering and computer science, with support from both publicly-sponsored and industry-sponsored stipends (based upon work commitments for sponsored students); 2. increasing higher education's capacity to train a more technology-oriented work force, especially through associate degree programs and programs of customized training; 3. providing greater access to professional engineering and technical careers for students who traditionally have entered scientific fields in limited numbers (i.e., women and minorities); 4. expanding continuing education opportunities, particularly at the professional and technical levels, to overcome job skill obsolescence; and 5. a re-examination of those policies which may preclude making the pay of engineering faculty competitive, including the removal of disincentives to entrepreneurship. C. Equipment and Facilities: State government can seek to overcome any equipment or facilit, `~eficiencies at their institutions of higher education, ~including 1. improvement and upgrading of the research and instructional equipment at these institutions, through both equipment donations from industry and industry_government matching support programs; and PAGENO="0108" 102 2. in combination i:itn other capItal nueds for higner education, -ie authorization oi general reenue `sci~nce and tecono~ogy" bond issues to finance laboratory inorovenents and related areas of deferred ~aintenance. D. Research/Industrial Parks: State covernment can also investigate the feauibili:~7 of stinuating public/private research and induscrial parks, incliding the provision nf io~: cost financing from the States economic development agencies for the construction of such par~cs intareeted urban areas capable of benefitting from close interaction with academic research centers. E. The Economic and Working Environment: State governments can assist their agencies by helping to investigate the economic obstacles to and incentives for high technology development, including 1. the usefulness of revising the corporate tax code, and especially the provision of loss carry-overs, to encourage capital formation and new business investment; 2. the viability and potential use of differential tax rates, and tax abatements, as well as easements on the availability of loans, industrial bonds and grants, as incentives to high technology industrial start-ups; 3. government regulations on business operations, including those pertaining to environmental protection, to determine whether obstacles to economic development can be alleviated; 4. the participation of financial institutions, especially those vertically-integrated institutions that can assist high technology development in all its phases, from research to commercialization; and F. Scientific and Technological Literacy: State government can identify programs to improve science education and technological and computer literacy at all educational levels, such as 1. the feasibility of establishing science and mathematics teacher training institutes at colleges and universities to meet shortages of qualified teachers in t~e secondary schoolris in these fields; 2. the encouragement of programs which serve to ~demystify~ science and technology as subject-areas beyond everyday comprehension; PAGENO="0109" 103 3. tne develomment of special high school programs to increase the pooi off qt~alified minority group students who concentrate on science and mathematics as preparation for higher education and rele:ant careers; and 4. the development of enriched undergraduate programs for econoaicaiiy and educationally disadvantaged students to increase entry and eventual empio~ment in technological fields. ~1hat state goverments cannot do: improve export market conditions, reform federal tax and environmental regulations. Several of the most important measures which need to be taken in order to promote high technology growth in the United States cannot be carried out at the state level. These are in addition to the fundamental role of the federal government in Sponsoring basic research, as dtscussed earlier. Among these measures are the following: s~. cmoroving the market conditions abroad for high technoloav products. ~1any foreign countries have extremely high tariffs against imported goods which are produced using advanced technology. These countries claim to be protecting domestic producers of the same goods. The federal government can lobby for greater free trade in products resulting from sophisticated technological processes. State governments have no authority to conduct foreign affairs, so they can do little to improve this situation. B. Imoroving the business climate by-lowering corporate taxes and eliminating unnecessary regulation of high technology industries. State governments are limited in the degree to which they can foster high~ technology development by' corporate taxes and regulations imposed at the federal level. State governments can press the federal government for change, but' there is nothing they can do legislatively to ameliorate the situation. C. Controlling migration of the labor force. The manufacturing side of high technology development involves blue-collar workers engaged in running factories in which Sophisticjted products are made. High technology firms are eager to locate in states with large numbers of skilled and unskilled laborers. Other states may suffer a loss of workers, if more attractive positions exist elsewhere in the country. There may be little that state governments can do to prevent these migrations. that the federal government can do: help to modernize on-camDus facilities and equipment for basic research. This report describes major initiatives occurring at the state level, and in particular in New Jersey, aimed at improvements in science PAGENO="0110" 104 and technology. Joining forces with local industries and major co:pnretiooa, the states are providing leadership in the education of students and in the formation of industrial policies for economic de.eloprcent and ne~ jos creation. For these efforts and policies fully no succeed, however, we need the active particimanion of the federal government, especially to help meet the considerable costs of the infrastructure for `aasic science and research. The days are past when we should expect the federal government to provide the sole support for these needs. Support from the federal government must be matched by the states, the recipient higher education institutions, and industry. My report indicates that these sources are both available and actively engaged in making improvements. What also must occur is leadership from Washington. While states have maintained the ~intellectual and technological~ infrastructure for graduate education in the sciences, engineering and related technologies, they do not, should not and cannot finance fellowship for students who enroll in such studies. Doctoral students in all disciplines serve a national need; they are highly mobile individuals who often leave a state upon completion of doctoral studies. This support in doctoral studies clearly is a federal responsibility and not a state of responsibility. The federal government has been derelict in this area. National graduate fellowships, awarded competitively, will assure that the most talented young people will pursue careers in basic and applied research. I am calling on this committee to support legislation for a major laboratory modernization program for on-campus facilities and equipment in basic research. This legislation should seek increased appropriations for NSF, NIH, and the mission agencies, with the costs shared fairly by higher education, industry, and states. It is only in this way that we can hope to remove the twenty years of neglect faced by these laboratory facilities and restore them as the driving engines of our science and technology machinery. There should be no underestimation of the magnitude of this problem. Several years ago, my Department analyzed the costs to remedy the serious disrepair of research equipment, alone, at our major academic institutions. The result was estimated, conservatively, as a $40 million problem in New Jersey, and a $1 billion problem, nationwide. Our Commission on Science and Technology responded quickly, but within the limits of the State's resources, hyrecommending that more than $4 million be spent for these improvements~in New Jersey, during FY 1984. In subsequent fiscal years, we have rais~ed this level to the $6-7 million range, annually. We have made improvements but the eradication of this equipment oroolem, and the construction of the facilities to nouse these rb r men a is 1Oi~ m ~ d srenai coo 1 a is oal a a major infusion of federal support that we will aver be able to race above these maintenance levels. The national and ~nternationsl ~cuirenent5 of science and technology do not permit cm no stay at naintenance levels. We must advance through growth and expansion. PAGENO="0111" 105 DISCUSSION Mr. BROWN. I can assure you that is a very impressive statement and testimony to the leadership which New Jersey has given. I hope you are correct that the other States are doing as well. Dr. HOLLANDER. Some are. Mr. BROWN. Some are. But it would make me rest easier at night if I felt they were. Mr. Lewis, do you have any questions? Mr. LEWIS. I have one, Mr. Chairman. You are stating, Doctor, that you want renewed Federal effort in support of basic research. How do we compare to, say, the Soviet Union or to Japan in that area? Dr. HOLLANDER. I can't answer that question specifically. I be- lieve we do very well. Mr. LEWIS. Do you feel that we provide more assistance for stu- dents, for doctoral theses than, say-- Dr. HOLLANDER. I can't `answer that question. Mr. LEWIS. How do you~ feel, then, we need to do more? Dr. HOLLANDER. Well, our efforts in New Jersey are essentially supporting applied research. There is a direct and tangible reward, if you like, to our taxpayers in that research. The payoff is clear,~ and it is not too difficult, has not been too difficult, for us to persuade taxpayers to support investments in re- search in the universities where those investments in the taxpay- ers' minds are ~related to the creation of new jobs, a greater tax base. We have greater difficulty arguing for support of basic research, more theoretically oriented research, which we do support indirect- ly in our support of the staffings at the universities and facilities at the universities. But that fundamentally is a Federal responsibility; it crosses State lines. It is of interest to the Nation, and our institu- tions participate in that effort, as do the major universities throughout the country. But the Federal Government really has a responsibility to do for those institutions, in terms of basic research, what we in New Jersey are doing with taxpayer money for applied research. Mr. LEWIS. Do you feel that the Federal Government should also be involved in establishing chairs for various scholars in the State university systems? Dr. HOLLANDER. I would say that would be a lesser priority. I think that is more of a State responsibifity than Federal responsi- bility. 1 would define the priorities in the Federal responsibility as facil- ity, maintaining equipment up to date, and national graduate fel- lowship programs in support of doctoral studies. Mr. LEWIS. Thank you. Thank you, Mr. Chairman. Mr. BROWN. Dr. Hollander, I would like to explore with you just a little bit more the role of the Commission on Science and Tech- nology which you have described in your statement. I gather that that is ongoing? Dr. HOLLANDER. Yes. Mr. BROWN. A permanent commission? PAGENO="0112" 106 Dr. HOLLANDER. It will be continuing. Mr. BROWN. A continuing commission established how long ago? Dr. HOLLANDER. About 2 years ago. Mr. BROWN. And it has a separate operating budget, and were some of these or most of these initiatives that you have described recommended by this commission? Dr. HOLLANDER. Yes, they were. The Commission was staffed ini- tially by the department, my department, the Department of Higher Education. It was comprised of university presidents as well as chief executive officers of major corporations in the State. We set up a system of peer review to evaluate, first, where we thought the State would grow on the basis of pure and applied re- search and, two, where our universities really had a capability of making a contribution. Where those two coincided, the Commission recommended major State funding of a Center for Advanced Technology in that area. Where the Commission based on peer review felt that we needed capability in the area, the commission recommended funding of what we call innovative partnership. That is funding of research by faculty and encouraging industry to also fund research to build up a capability, hopefully, to lead to an advanced center for research in that area, and that has been done. The third part of it, also recommended by peer groups, is a strat- egy for dissemjnation. That is to make the result of the research available not just to one or two companies, but the whole industry in the State, the service organization based at the university. Mr. BROWN. How would you categorize the degree of cooperation from your industrjes' CEO's; have they played a prominent role in developing the kind of cooperation you have described here? Dr. HOLLANDER. An important role; in fact, the most important role, in my judgment, was their identification of, if you like, world- class national capability, nationally recognized researchers in a number of fields where they had heretofore been skeptical of the research capability in the state outside of Princeton. Their investment with the Commission led to their direct commit- ment of resources in support of some of the centers, but more im- portant than that, their commitment of support for increased State financing of our higher education system. And that aspect, as a result of the Commission activity, benefited all the institutions in the State. Mr. BROWN. In other words, their support of the State's funding provided the political? Dr. HOLLANDER. They helped sell the bond issue. They also helped sell it under conditions which they recommended involving matching support, that is, requiring matching support in all the areas. That is built into all of our proposals. Mr. BROWN. How long do you anticipate, or is it possible to quan- tify this, that you will begin to see some measurable results in terms of economic impact, impact on the unemployment rate and so forth, from this kind of a comprehensive program? Dr. HOLLANDER. That is hard to say. It is going to come slowly at first, and hopefully faster later on. There has been some impact al- ready. There have been a number of firms that located or will be PAGENO="0113" 107 spun off from research activities as a direct result of the Commis- sion and other efforts of the university. For example, one, a new pharmaceutical house was established by a university researcher at our medical school. The company has since gone public and that has brought research jobs into the State, and if the research is successful, possibly something beyond that. We have got spinoffs that have greatly affected over a longer period. Even before this Commission, there has been collaboration between our universities and the pharmaceutical industry and chemical industry which are very strong in New Jersey. These have been more formalized with the centers, where collaborative research can take place. I don't know how long it will take to spin off into new companies or new products or expansion based on patentable products from the research efforts. That is really hard to say. And I guess even if it isn't directly discernible, the impact indirectly on the State's eco- nomic environment and attitude toward the State on the part of new companies, I think, is considerable. Mr. BROWN. Well, I am very grateful to you for your testimony, Dr. Hollander. It has been a major contribution to the work of our task force, and we appreciate your being here this morning. Dr. HOLLANDER. Thank you for inviting me. Mr. BROWN. The task force will be adjourned. [Whereupon, at 12:10 p.m., the task force recessed, to reconvene Wednesday, May 22, 1985, at 10 a.m.] PAGENO="0114" PAGENO="0115" THE FEDERAL GOVERNMENT AND THE UNIVERSITY RESEARCH INFRASTRUCTURE WEDNESDAY, MAY 22, 1985 HOUSE OF REPRESENTATIVES, COMMITTEE ON SCIENCE AND TECHNOLOGY, TASK FORCE ON SCIENCE POLICY, Washington, DC. The task force met, pursuant to recess, at 10:05 a.m., in room 2318, Rayburn House Office Building, Hon. Don Fuqua (chairman of the task force) presiding. Mr. FUQUA. Today we continue hearings on the role of the Feder- al Government in supporting the research infrastructure of Ameri- ca's universities. Yesterday we heard from several members of the administration, a representative of the State governments, and the National Academy of Science. Today we are privileged to hear from several of the major asso- ciations of research universities, from a representative from Ameri- can industry, and from two individuals who can tell us about spe- cialized aspects of funding and manpower issues affecting the re- search infrastructure. These hearings before the task force will give us a sound basis for developing the recommendations we will have next year con- cerning this important issue. We hope to learn more about the fiscal issues which directly affect the maintenance of the research infrastructure and, based on what we have learned, we may wish to ask our witnesses some supplemental questions. We hope they will be able to continue to give the benefit of their experience in the coming months. Our first witness this morning will be Dr. Oliver D. Hensley, chairman, Study Group on Research Personnel, Society of Research Administrators, and associate vice president for research, Texas Tech, Lubbock, Tx. We will be pleased to hear from you at this time. [A biographical sketch of Dr. Hensley follows:] * DR. OLIVER D. HENSLEY Associate Vice President Texas Tech University. Chairman of the Society of Research Administrators Study Group on Research Support Personnel. Years Chemist, Drew Chemical Co 10 Public schoolteacher 6 Research administrator, faculty member and principal investigator at Uni- versity of Illinois 2 (109) PAGENO="0116" hG Years Southern Illinois University . 6 Northeast Louisiana University 9 Texas Tech University 1 STATEMENT OF DR. OLIVER D. HENSLEY, CHAIRMAN, STUDY GROUP ON RESEARCH SUPPORT PERSONNEL, SOCIETY OF RE- SEARCH ADMINISTRATORS, AND ASSOCIATE VICE PRESIDENT FOR RESEARCH, TEXAS TECH, LUBBOCK, TX Dr. HENSLEY. Mr. Chairman, members of the task force, I am Oliver Hensley, associate vice president for research at Texas Tech and chairman of the Society of Research Administrators' Study Group on Research Support Personnel. I want to thank you for inviting me to testify about the signifi- cance of research support personnel to university research and about their impact on national and university research policy. I will want to emphasize the importance of reassessing both national and institutional policies and linking these others. The topic that I am talking about is most important to the maintenance of excel- lence of university research and to the continuing welfare of the Nation. I have been studying research support personnel, one part of the infrastructure, for 5 years. It is difficult to give uniform data about them. I will share with you some personal impressions about research support personnel and some interrelated modeling problems that exist with that particular group, and then point out some of the highlights of recent developments from a comprehensive SRA study of research support personnel. First, I would like to talk about the significance of research sup- port personnel to research. It is not understood by policymakers and, consequently, this group has been ignored in science policy. Second, I believe that the exact size of the total research support personnel population is not presently known, but there are esti- mates that they number more than a half million and are the fast- est growing group in academia. Third, the present national cost of maintaining university re- search personnel is enormous. I believe that it is the biggest part of the university research budget and that their cost is increasing at an astounding rate. Fourth, I believe that quality support services can be maintained with a strong congressional commitment to support this part of the infrastructure. Fifth, the direct and indirect cost reimbursement mechanism as- sociated with project funding is an adequate and a fair way of maintaining the infrastructure if policymakers will accept the fact that the full cost of research must be recovered for every project and if policymakers will update their personal perceptions and share formal models that keep pace with the changing times. Sixth, I believe that a continuing comprehensive study can be made by research support personnel and other segments of the in- frastructure if Congress, the National Science Foundation, and the professional associations such as SRA will arrange for and support the periodical exchange of timely information. PAGENO="0117" 111 Your hearings are an excellent start in that direction. The Socie- ty of Research Administrators will respond by inviting one of your members to speak about the task force agenda at our national con- ference in St. Louis in October of 1985. I would like to spend some time just highlighting the results of this comprehensive SRA study. The majority of my remarks will be included in the written presentation I have given to you. Time does not permit the full coverage of that, so I will just headline some of the more important findings. The most important finding of the SRA study group was that this part of the infrastructure, the research support personnel, has grown so fast that it really has not been studied and it is complete- ly undervalued because policymakers at the national level and in the institution really don't understand the significance of this par- ticular group. The SRA study group found that Federal agencies, university as- sociations, and the professional societies have not valued research support personnel enough to distinguish them from other groups and then to study them. They also found out that there was a wide acknowledgment that research personnel are essential to the con- tinued advancement of science, to the advancement of specific mis- sions of postsecondary institutions, and to American technological leadership. Yet, this vital group's value for science remains largely unrecognized, its size, contribution, and composition universally unknown and the field generally ignored by disciplined inquiry. For some time the Society of Research Administrators has real- ized that many national and institutional issues could not be ad- dressed rationally by the university and their several sponsors until a working definition and a common classification was devel- oped for research support personnel [RSP]. They recognized that the lack of knowledge about this part of the infrastructure was the primary problem leading to a host of secondary difficulties related to the Government-university partnership. Second, they realized that it was creating numerous institutional operating problems di- rectly affecting the daily activities of the principal investigor. Third, it was instigating many personal difficulties related to morale, productivity, and job satisfaction of the research support person. For example, the secondary problems of capping indirect costs, of decaying support services in the universities, and, of technical per- sonnel shortages within academia and industry stem from inad- equate information on research support personnel. Also, valid in- formation related to this group is essential to the development of modern university personnel management systems and to the re- cruitment, morale, and retention of this essential group of individ- uals within academia. Effective and employee-accepted subsystems of performance ap- praisals, job classification, and equitable employee incentives are dependent upon national norms for particular jobs. Development of these key systems, their specific components and employee satisfac- tion with their university jobs, requires basic national information and specific national indicators related to this group. PAGENO="0118" 112 In the past the National Science Foundation has gathered a great deal of information on scientists and engineers, but they have completely neglected this group. In 1983 the society established a study group to investigate the problems related to the RSP. After 2 years of investigation, the study group has developed: One, an acceptable definition to universities; Two, a functional classification system; and Three, an indepth analysis of divisional research support person- nel patterns in universities. The RSP are now defined as those individuals other than stu- dents who render assistance directly or indirectly to principal or coinvestigators. Research support personnel may be assigned di- rectly to a project or they may provide indirect or occasional assist- ance to the researcher or project director. This heterogeneous group of employees include Ph.D.-level analysts, special mechanics, many types of clerical individuals, and accounting personnel as well as all levels of academic administrators. The study produced some indicators of the composition of the RSB which I would like to present. To give us a common frame of reference, I call your attention to the SRA "Taxonomy of Research Support Personnel" within the research establishment. PAGENO="0119" CV) "V C C) E t a a. C) a >~ U, a, 113 (0 I ~ ~w2c\100C~1(oc~Co .0 p4 *0 0 2 CO Co 00 ~- Co C~ `a,,. ~ 0 g~0.o ~ 9 t~- 10 `Co (.0 ~ 10,-I 1010 Co t- ` p4~ C)Cot~tCo~10c,~0oo 0~C)~'0.~ ~ `-4 `4 ~ * ~ ~ ~il 0)00@000000t-.~0~ `0000 `4,4 C~1 Co Co'-V `.4 `~ OJ I © Co °` ~a~0 140 ~ ~ 9'a.~ 99 ~ 01 `-1 Co Co o ~` I Co b~ : "-. 0bC.~ ~ U) ~ ~ E~E~ `.-~ - I ~ c~i `-~ ~ ~ : 000 ~ ~ ~ °~`0)0)O'V'0.100Co&0C4t- ,.., `.4'.I ~ . I..~. ~ ~ z~ `o~ot-~ `.1 ~4 I l~4 V-I `.-I - :: :: I, `a~ Ijo e~ .0~ z~. 99 10~O01~t~000),..CoO0t~ Co0Co10V-ICoCoCo,~I 4) >~ -c a- C 0 g-a ~ u E C) t -C U a a) U, C, I'- 0 U' U, a C 0 .~ ~. - :~ : : `-401 CO ~I R~ (.0 t~ 000) ~ ~I - PAGENO="0120" 114 For many years the model for research within universities has been primarily researchers and students with a sponsor. This model changes things. The largest group of people in the universi- ties now, excluding students, are research support people. That group has not been looked at. That third dimension that you see running down on the model has really not been investigated by in- stitutional policymakers or national policymakers. There is a large, large number-almost 75 percent-of the people who in some way make their living associated with university re- search who are tied up in this group, and it has been completely unstudied. The students have been studied; the researchers have been studied; and certainly the sponsors. There is a large group of them. This model of the research establishment attempts to explain in a graphic fashion the composition and the complex interaction of the principal types of people in a modern research community. It also provides a shocking picture of the size and signfficance of the research support personnel. Moreover, it helps institutional data- gathering and policymaking if we have first classified individuals according to their primary purpose. Each of the classes of individuals has well-defined roles that de- termine the traditional relationship with one another. If we under- stand the composition of the establishment, we should be able to formulate policy that facilitates the achievement of research goals. Note that the support types are in the middle between the re- searcher and the sponsor. This places them in a brokerage position, making them valuable to both sponsor and the researcher. You will notice that there are 12 functional classes in the SRA taxonomy for research support people. They range from grants and contracts officers down to medical support personnel. If you will turn to the next page, you will see a model that is used to classify these individuals. Universities use a variety of or- .ganizational structures and support positions to administer re- search funds. These positions are shown in table IV-1. PAGENO="0121" 115 Table IV-1 The 1~ypical Divisional Patterns Used by Universities to Organize Their Research Support Activities in Grants arsi Contracts Offices Directors of Grants and Contract Offices Pre-award Division Post-award Division Pre-award and Post-award Integration Director of Research & Developnent Director of Ccm~unity Support Director of Prepare- tiai/Reviecq ~ General Ngr. of Devmt. Dean/Director Office of Research Director of Res. Main. Director of Sponsored . Prograns Director of Grants & ! Contracts Main. Director of Res. Sew. Director of Projects Director of Research Devmt. & Main. Director of Prog. Devmt. & Main. Director Award 1~at. & Resources Info. Dir. Fed. Res. Furaling Sew. Office Res. & . Prog. Madn. Interns (Mainistra- tive) ! ! `DIRFCIORS & . DEA~ ~ ~ . Assoc. General Ngr. Deputy Dir. Res. Develoçmmnt Assoc. Dir. Contracts & Grants Deputy Dir, of Prog. Assoc. Dir. Sponsored Progress Deputy Dir. of ! ASSOCIATE & DEPIJIY DIRECIORS Assist. Dir, for Research Services Assist. Dir. of Program Devint. Assist. Dean for Res/Res Pros Sec. Assist. Dir, of Assist. Dir. Office of! Research Mmin. Prog. & Devmt. Main.! Assist. Ngr. Sponsored ! Assist. Dir. Sponsored! ASSISTANt Progs. Acctg. Office Prograris Main. DIRECtORS Assist. Dir. Sponsored! Projects/Bus. Affairs! Coord. Sponsored Prograrts . Sr. Grants & Contracts Sponsored Projects Administrator Administrator A~IRA~VE Coord. Grants & Con~ Sponsored Progrsrrs (XXRDINAIDRS Administrator Main. Grants & A1MtNIS'JIATIVE Contracts Office Administrative ASSISTANtS ! Assistants Some universities use a preaward division, some use a post- award division, and some use an integrated approach, but some place within the university there is someone with the title "Direc- tor of Research Sponsored Programs." There are assistants, there are coordinators, and there is a whole list of other types of clerical support. The next page, table IV-3, you see the composition of the people who are directors of contract offices. You get some idea from a sampling of about 20 institutions of how many males and females you have and a salary range. You can see where some of the costs associated with research go, if you are talking about people who are in support positions. PAGENO="0122" * ** Ii 1111 Or) ~ ~ ~ ft ~ g ~ ~ ~. CD~. C) ci- I E~ ~P ~iE ~ 1-1 H ~ 1! f1 `U U ~ F P11 H P1 if r ~-~.c-~%)c-t$l ~t~l~I `it'' U PAGENO="0123" 117 There have been 10 other study members who have made inten- sive studies of their functional classes and have provided a current picture of the composition of their category of research support. Taken together, these 12 studies provide the best indicators of what positions are included in the university research infrastruc- ture. The study group estimates that currently 75 percent of the total research personnel are employed in support positions. If you will turn two pages over, you will see a copy of the SRA summary re- sults. Here you see an example of where institutions have 1,700 faculties but 7,300 support personnel, giving them a percentage of faculty at 19 percent with 81 percent of support people. If you will look at the amount of money that they are getting in the way of Federal research funds, you see that they are getting over $200 million in Federal support to support research. Some idea of the size of the group can be found if we look at table II, called an "Analysis of Research at Selected University De- partments (1939-40)." At that time Vannevar Bush reported that there was approximately 82 percent faculty in relation to 18 per- cent support people in 1940, in the beginning where university re- search began to really take off and grow very, very rapidly. PAGENO="0124" 118 Figure 1. 1F2.O The SRA Taxonomy For the Research Support Personnel within the Research Establishment PAGENO="0125" 119 Many of us still hold that outmoded concept in mind, that we think of an investigator and maybe a part-time person supporting. That type of research still exists in universities, but it is not the type of university research that we really have. We have a few in- vestigators and a large support group. One of the problems that comes up is the indirect cost. Reducing rapidly increasing indirect costs is of considerable concern to the Congress, to the scientific community, and to users of basic re- search and technological innovation. The disproportionate continu- ous, rising, indirect cost for university research is one of the most serious and frequently discussed problems confronting the academe today. That rise in indirect costs can be partially explained by a related rise in the percent of research support people in universi- ties. We constantly talk about the rising indirect cost rates. We must constantly think also about the infrastructure that it takes to sup- port that, and the infrastructure is pretty much captured in our in- direct cost return. If one reviews the arguments for indirect costs, it is obvious that neither university administrators nor Government officials know enough about the support cost, nor do they have the foundation in- formation on the research support personnel, to justify those costs to the faculty or to the taxpayer. Earlier we saw that research support people are estimated to be at least 75 percent of the total research personnel. They can be di- rectly or indirectly identified with some kind of research function. At this time we should look at the total cost of university re- search. That means looking both at the direct cost and the indirect cost, and then look at the contribution that research support people make to these costs. Since most universities cannot presently determine exactly who and for how much time each research support personnel is as- signed to an organized research unit, it is impossible to say precise- ly what the mix of costs are within university organized research budgets, but one writer guessed that the principal investigator costs are less than 20 percent of total direct cost for research and that research support people account for more than 50 percent of the total research cost. Moreover, the trend is for more research support costs; thus, higher indirect cost rates. Figure 4 shows three university research administrators' ópin- ions about what the relationship and the distribution might be among major cost factors in university research. Exact knowledge of this ratio should be determined. PAGENO="0126" 120 FIGURE 4. A GRAPHIC REPRESENTATION OF ESTINATED RSP COSTS IN RELATION TO TOTAL UNIVERSITY RESEARCH COSTS. TOTAL RESEARCH COSTS During the past 5 years I have given the questionnaire on size and significance of research support personnel to several hundred faculty and science policymakers to determine their image of the size and significance of the research support personnel. Most of those interviewed have dangerously low estimates of the size of this group and hold an outmoded picture of how research is organized and conducted on today's campus. ~Moreover, they conceive of university research in an antiquated and parochial fashion. Most look upon university research as being confined to basic research. This narrow, personal image is rein- forced by the Bowman model for American research which was adopted informally by the Federal Government in the forties when Vannevar Bush sent to President Harry S. Truman his recommen- dations for the advancement of national research. Isaiah Bowman, in his recommendations, maintained that scien- tific research could be divided into three broad categories: one, pure research; two, background research; three, applied research and development. Briefly stated, Bowman suggested that pure research should be performed by universities and applied research and development should be conducted by industry, with some being done by Govern- ment labs. He provided an elaborate rationale to explain the proper roles and relationships of public and private research orga- nizations and to guide the Government's aid to them. Today, the National Science Foundation uses categories 1 and 3 of the Bowman model to gather scientific information from univer- sities. Most agency directors and university administrators have adopted the conventional rationale set forth by Bowman in "Sci- ence-the Endless Frontier." A large part of existing Government and university policy starts with the Bowman model. Today policymakers now use current NSF data and the Bowman model to formulate new policy. It is my opinion that the Bowman model is inappropriate for un- derstanding today's research activities, as it discourages scientific Direct Costs I Indirect Costs `~ RSP Contc D Other Costs PAGENO="0127" 121 interaction and it does not allow a quantification of the products of research. I suggest that the 1984 model to classify university re- search activities, which you will see on the next page, is more rep- resentative of what the universities presently do and is a more powerful and precise model for information gathering on university research. More importantly, this model encourages the develop- ment of industrial as well as Government sponsorship of university research. The 1984 model is more realistic as it shows the vast scope of innovative problem-solving activities that society currently demands of the university, in addition to the university's conven- tional training mission. PAGENO="0128" A MODEL FOR CLASSIFYING UNIVERSITY RESEARCH ACTIVITIES CLASSES OF BASIC APPLIED PRODUCTION ACTIVITIES RESEARCH RESEARCH DEVELOPMENT RESEARCH A `PROCESS B OUTPUTS C TECHNOLOGICAL INNOVATION DISCIPLINARY IMPERATIVES EXPLORING NATURAL/HUMAN PHENOMENA KNOWLEDGE ARTICLE ALGORITHM ORGANIZATION PRIORITIES STEPPING UP-A MODEL SOLUTION PROTOTYPES SOCIAL UTILITY RENDERING INTO PRACTICE I NVENT IONS PATENTS! TRADE SECRETS! COPYRIGHT MARKET MANDATES PRODUCTIVITY IMPROVEMENT PRODUCTS GOODS/SERVICES SOC IAL!D ISCIPLINAR~ NEEDS INTERDISCIPLINARY! INTERSECTOR IDEAS ADOPTION OF AN INNOVATION PAGENO="0129" 123 Policymakers must understand that universities perform the vital task of creating new knowledge, of inventing new devices, of developing prototypes, of improving production of goods and serv- ices, and of transferring technology. Not only has the scope of the work of the university expanded, but the volume of the work has increased many hundredfold. In 1939 to 1940 the total university research expenditure was $30 mil- lion. In 1985 the expenditure is well over $10 billion, a 300-fold in- crease. Universities have been transformed in the past 40 years. Univer- sity research is big business. It provides the fuel, innovation that propels our technological society. Slow the production of these in- novations and American technology is slowed. There is a wide- spread perception that scientists and engineers are usually the people who conceive our inventions. This is true, but we have scoto- mas in our national and institutional policies that have long ex- cluded the research support person, a group essential for universi- ties to conduct modern science and to produce an expanding varie- ty of innovations. To draft policy that will facilitate research, we must not only have new data; we must have realistic personal per- ceptions of the subject and valid models to follow. I am pleased that the Science and Technology Committee has structured a broad-ranging study of Government science policy. A comprehensive reassessment of the relationship among the organi- zations and the research establishment is much needed. Your hear- ings are most timely, as I believe that our research universities are caught in a great wave of technological change that requires both national and institutional policymakers to assess both our policy and our national models, in light of four decades of dramatic uni- versity transformation..that promises to become increasingly more rapid in the remaining years of this century. Hopefully, the results of your study will stimulate and provide a guide for self-studies by universities and professional associations. I thank you. [The prepared statement of Dr. Hensley follows:] 53-277 0 - 86 - 5 PAGENO="0130" 124 The Significance of Research Support Personnel (RSP) to University Research and Their Impact on Research Policy I am Oliver Hensley, Associate Vice President for Research at Texas Tech University and Chairman of the Society of Research Administrators Study Group on RSP. I want to thank the Task Force for inviting me to testify about the significance of Research Support Personnel (RSP) to university research and about their impact on national and university research policy. The topic is most important to the continuing excellence of univ~ersity research and to the welfare of the nation. The Task Force has asked for a broad review of the entire question of the composition of the university research infrastructure and the role of the government in providing and maintaining it. I will begin by sharing with you some personal impressions about research support personnel and then point out some of the highlights of recent developments from the comprehensive SRA Study of the RSP. (1) The significance of the RSP to research is not understood by policy makers; consequently they have been ignored. (2) The exact size of the total RSP population is not presently known, but there are estimates that they number more than a half-million. (3) The present national cost of maintaining university research support personnel is enormous and their costs are increasing at an astounding rate. (4) Quality support services can be maintained with a strong Congressional commitment to support this part of the infrastructure. (5) The direct and indirect cost reimbursement mechanism associated with project PAGENO="0131" 125 funding is an adequate and a fair way of maintaining the infrastructure if policy makers will accept the fact that the FULL costs for research must be recovered for every project and if policy makers will update their personal perceptions and formal models to keep pace with the changing times. And, (6) a continuing, comprehensive study can be made of the RSP and other segments of the infrastructure if Congress, the NSF and the professional associations such as SRA will arrange for and support the periodical exchange of timely information. Your hearings are an excellent start in that direction. The SRA will respond by inviting one of your members to speak about the Task Force agenda at our national conference in St. Louis on October 1, 1985. In a moment V will provide some crude indicators of the size and composition of the RSP which in my opinion currently constitutes the greatest single segment of university research costs. As an expenditure item in the annual budget it is far greater than buildings, equipment, materials and supplies and, yes, even larger than the costs for the support of principal investigators. This is not a commonly held opinion in the research establishment as the data to support this opinion is scanty and the thesis only recently formed. Nevertheless, there is mounting evidence that support personnel are now the largest group on campus if students are excluded. The Significance of RSP Is Not Understood The SRA Study Group on RSP found that Federal agencies, university associations and the professional societies have not valued the RSP enough to distinguish them from other groups and then to study them. They also found that there was wide acknowledgement that RSP, the largest group of personnel in research universities, excluding students, PAGENO="0132" 126 are essential to the continued advancement of science, to the achievement of the specific missions of post-secondary institutions, and to American technological leadership. Yet, this vital group's value for science remains largely unrecognized; its size, contributions, and composition universally unknown; and the field generally ignored by disciplined inquiry. A literature search brought out the fact that the RSP are incidentally mentioned in studies by the National ~Research Council, the National Academies and the federal science agencies "as large groups of people vital to the success of the research enterprise" and then these agencies effectively ignore the problems of the RSP by immediately moving on to what they consider to be more critical issues. In a survey of maj~r research universities, the Study Group had a very poor response from officers responsible for personnel data gathering. They disclaimed any responsibility for distinguishing this class of employee as the RSP are not perceived to have a high priority for study within their institutions. For. some time, the Society of Research Administrators has realized that many vital national and institutional issues could not be addressed by the university and their several sponsors until a working definition and a common classification system was developed for research support personnel. They recognized that the lack of knowledge about the RSP was the PRIMARY PROBLEM leading to a host of secondary difficulties related to the government/university partnership; creating numerous institutional-operating-problems directly affecting the daily activities of the principal investigator; and instigating many personal difficulties related to morale, productivity, and job satisfaction of the research support person. For example, the secondary problems of PAGENO="0133" 127 capping indirect costs, of decaying support services, and of technical personnel shortages within academe and industry stem from inadequate information on the RSP. Also, valid information related to this group is essential to the development of modern university personnel management systems and to the recruitment, morale, and retention of these essential individuals within the academy. Effective and employee-accepted subsystems for performance appraisals, job classification and equitable employee incentives are dependent upon national norms for particular jobs. Development of these key systems, their specific components, and employee satisfaction with their university jobs requires basic, national information and specific indicators relatedto this group. In 1983 the Society established a Study Group to investigate the problems related to the RSP. After two years of investigation the Study Group has developed an acceptable definition, a functional classification system and in-depth analysis of divisional RSP patterns in universities. Research Support Personnel (RSP) are now defined as those individuals (other than students) who render assistance directly or indirectly to principal or co-investigators. Research Support Personnel may be assigned directly to a project or they may provide indirect or occasional assistance to the researcher orproject director. This heterogeneous group of employees includes Ph.D.-level analysts, special mechanics, and general clerical and accounting personnel, as well as academic administrators. Some Indicators of the Composition of the RSP To give us a common frame of reference I call your attention to Figure 1, Taxonomy for Research Support Personnel Within The University PAGENO="0134" 128 Figure 1. 1F2.O The SRA Taxonomy For the Research Support Personnel within the Research Establishment PAGENO="0135" 129 Research Establishment. This model attempts to explain in a graphic fashion the composition and complex interactions of the principal types of people in the modern research community. It helps in our data gathering and policy making if we can classify individuals first by their primary purposes as: (1) Students (2) Researchers (3) Research Support Personnel (4) Sponsors Each of these classes of individuals have well defined roles that determine the traditional relationships with one another. If we understand the comjiosition of the establishment, we should be able to formulate policy that facilitates the achievement of research goals. Note that the support types are in the middle between the researcher and sponsor. This places them in a brokerage position making them valuable to both the sponsor and the researcher. You will notice that there are twelve functional classes in the SRA Taxonomy of RSP. o Grant and Contract Office Directors o Program Development Officers o Business Managers o Animal Care Personnel o Research Shop Personnel o Laboratory Personnel o Clerical Personnel o Academic Officers o Research Center Personnel o Agricultural Extension Personnel o Medical Personnel o Other RSP Within each of the functional classes you will notice Divisional Patterns such as those Dr. Charles Gale has prepared for the Directors PAGENO="0136" 130 Table IV-1 The Typical Divisional Patterns Used by Universities to Organize Their Research Support Activities In Grants and Contracts Offices Directors of Grants and Contract Offices Pre-award Division ! ! Post-award ! Division Pre-awardand Post-award Integration ! ! ! Director of Research & Developiant Director of Ccminity Support Director of Prepare- tion/Review General Ngr. of Devat. Dean/Director Office of Research ! Director of Des. Main. I Director of Grants & I Contracts Main. ! Director of Projects I Devait. & Main. I I ~ I ! ~ ~ I . ~ Director of Sponsored Programs Director of Res. Sew. Director of Research Director of Prog. Devat. & Main. Director Award Mgmt. & Resources Info. Dir. Fed. Des. Funding Serv.OfficeRes.& Prog. Main. Interns (Mministra- tive) ! I ! ! ! ! I ! DIBFCIDPS & I DEA~ ! ! I ! I ~ Assoc. General Mgr. Deputy Dir. Des. Deve~o~nt I Assoc. Dir. Contracts & Grants ` ! Deputy Dir, of Prog. Developnent Assoc. Dir. Sponsored Programs Deputy Dir, of Sponsored Prog. ASSOCIATE & DEEUI? DIR3~IORS Assist. Dir. for Research Services Assist. Dir. of Program Devmt. Assist. Dean for Res/Des Prom Svc. I Assist. Dir. of . Research Main. I Assist. ~r. Sponsored ! Progs. Acctg. Office ! I Assist. Dir. Office of Prog. & Devat. Main. Assist. Dir. Sponsored ASSISTANT Programs Athdn. DIRECIORS Assist. Dir. Sponsored Projects/Bus. Affairs Cooed. Sponsored Programs I Sr. Grants & Contracts ! Administrator I Cooed. Grants & Con. ! Adam. Grants & Contracts Office . Sponsored Projects Administrator Sponsored Programs Administrator Administrative Assistants tM~t~~RATIVE COORDINATORS A1IIINISRDATIVE ASSLS'EANIS PAGENO="0137" rt ~ ~ 8~8~S~~8 ~ Ills' ~8~88~~8 88~ U1O~O\O~QLn ~O ~c~-'sjio ~lI~F~lII ~ PAGENO="0138" 132 of Grant and Contract Offices, Table IV-l. In Table IV-3 a further analysis is made of the composition of the class by providing statistics on gender and salary. Dave Canham, another Study Group member, has designed A Pattern for Classifying Business/Fiscal Officer Positions (Table VI-l) and has completed a thorough analysis of gender and salary ranges for 577 subjects in fiscal officer positions. Ten other Study Group members have made intensive studies of their functional class and have provided a current picture of the composition of their class of RSP. Taken together these studies provide the best indicators of what RSP are included in the university research infrastructure. The Size and GrowtEh of the RSP. Currently no one in the United States knows the size of RSP in American universities. This lack of knowledge leads to a number of misconceptions of the composition of the research establishment and the significance of the RSP to higher education and research advancement. Although there are no current official records, one can obtain an idea of the growth of the RSP in the university from occasional statistics related to different groups within the university. Statistics such as those published by Bush (l3a) show that selected university departments held a ratio of 82% professional, to 18% support personnel in 1939-1940. PAGENO="0139" Table VI-I. A Pattern for Classifying Business/Fiscal Officer Positions Vice President Financial Affairs cI~ I I I U ! III I IV I V ! VI I ! I BUSINESS I FISCAL I I AIFIRATIVE I (F~Ffl~OILING ! ACXXXJNI'ING I AFFAIRS ! MAN~NF I BUDGEFIBU I SERVICES I I I I I I I I Controller I Accounting Business I Director I Director I Director I ! I Manager I Manager I Fiscal I Budgeting ! Mministrative I 1 1 1 1 Services I I Service ! I ! I I ! I I Assistant Director of I Assistant I Fiscal I Manager I I ! Controller Accounting ! Business I Manager Budgets I I I I Manager I I I I I I IAsslstant I I I I IDirector I I I I I !Fiscal ! I I IServices ! I I I I I ` I I Audit I Chief or ! Fiscal I Budget I I Supervisor I Senior I Coordinator I Analyst I I Accountant I I I,II,Ill 1 1. 1 1 I Auditor Accountant 1 Fiscal I I I,II,III,IV,VI ! Accounting I 1 1,11,111 I I I I Accounting I I I Professionals Associate I I I I I I Accounting I I I Technician I I I I I I I I I PAGENO="0140" i~ij ~ 9 a a 3 I[~ * * -~o~ j~*~ ~ Ha ~, ~ ~~I* ~t~a : ~ ~, ~ i~a ~ ~ t1~L ~ a~ ~ 0 0 *-%~ ~ a:~ig~ ~ ~:IF PAGENO="0141" 135 The SRA Research Committee guessed in 1983 that there were probably 3 or more RSP for every investigator in their institutions (76). Although limited to 20 institutions, the returns of the 1983 SRA Survey support that estimate showing a ratio of 25% of Faculty. to 75% Support Personnel. These figures exclude graduate and undergraduate students. From these information sources, Hensley and Grace (CC) made the;~ following rough estimate for distribution of research support personnel in research universities in 1984 and they estimated the total RSP in American universities to be well over 500,000 members. Unfortunately, there has been no exact determination of their number, but the Summary results from the SRA Survey of RSP 1983 show the wide range of percentages of RS?in individual universities. As one might expect the re.search universities had a much higher percentage of RSP than did the institutions with an undergraduate instructional orientation One research institution reported a high ratio of 897 RSP to 117 faculty while another institution with a ~ma1l amoUnt of. research reported only a 53% RSP to 47.1% faculty. Although the correlation is not perfect, crude preliminary data indicates that higher education. institutions with large expenditures for research have a high percentage of support personnel. FIGURE 1. ESTIMATED DISTRIBUTION OF RESEARCH PERSONNEL WITHIN THE UNIVERSITY 1983. PAGENO="0142" 136 A comparison of 1984 statistics with the 1939-40 statistics show a reversal in the mix of professional and support personnel. Today, there seems to be more RSP than researchers. If we are to understand the phenomenal growth and the significance of this overlooked group, we should investigate first the rapidly expanding role that university research plays in American society as the size of the total RSP is dependent upon that variable. Next, we should think about the increasing functions that the RSP assume in the development of research as their value is related to their performance of support activities. All of us make decisions based on our personal images of real world subjects and on professionally accepted formal models of what th& collective mind tells us is the larger and more generally accepted representation of reality. Our policy making is derived from those images. Therefore, any review of institutional and national policy must begin with an assessment of the personal perceptions of policy makers about the size and significance of the RSP to modern science and then consider those images in the mosaic of existing policy that guides individual actions and institutional data gathering. The Cost of Maintaining Research Support Personnel. If RSP are to be maintained the Federal government must supply the full cost of federally sponsored research. Similarly, industry, the states, and foundations should supply their full share of indirect costs. If each sponsor pays their freight for the RSP, there will be few problems with maintaining the university research infrastructure . Unfortunately, the relationship between the value of RSP and the rising indirect cost rates is not understood by many members of the research establishment. PAGENO="0143" 1. 1,700 18.8% 2. 4,021 18.9% 3. 1,917 29.5% 4. 2,780 19.3% 5. 1,870 23.8% 6. 109 11.0% 7. 1,505 19.0% 8. 1,271 36.6% 9. 710 23.7% 10. 858 25.0% 11. 550 20.0% 12. 845 26.4% 13. 888 21.8% 14. 829 37.7% 15. 939 31.0% 16. 830 33.2% 17. 1,770 38.6% 18. 330 33.3% 19. 458 24.5% 20. 400 47.1% TOTALS 24,580 23.7% 239,869,000 71,204,000 41,850,060 37,034,000 26,367,000 23,415,000 13,933,000 13,162,000 10,484,000 10,263,000 9,776,000 8,450,000 7,979,000 7,177,000 6,221,000 5,477,000 2,923,000 2,628,000 1,523,000 1,039,000 137 SRA 1983 ~ RESULT PERCENT OF FACULTY TOTAL PERCENT SUPPORT OF PERSONNEL TOTAL TOTAL PERSONNEL FEDERAL RESEARCH AWARDS 7,300 81.2% 17,200 81.1% 4,583 70.5% 11,627 80.7% 5,985 76.2% 880 89.0% 6,382 81.0% 2,202 63.4% 2,285 76.3% 2,569 75.0% 2,200 80.0% 2,355 73.6% 3,180 78.2% 1,371 62.3% 2,094 69.0% 1,670 66.8% 2,815 61.4% 600 66.7% 1,414 75.5% 450 52.9% 9,000 21,221 6,500 14,407 7,855 989 7,887 3,473 2,995 3,427 2,750 3,200 4,068 2,200 3,033 2,500 4,585 930 1,872 850 79,162 76.3% 103,742 PAGENO="0144" 138 A large number of secondary national and institutional issues (deteriorating laboratory conditions, personnel shortages, performance appraisals, merit salary increases, allocation of shrinking resources, affirmative action employment, and rising indirect costs) are constantly being raised in every quarter of the research community and each could use its own full related literature search to convince the reader of the importance of the RSP to each issue. We will review in this testimony only one issue--the relationship of the increasing RSP numbers and their productivity to the escalating indirect costs. Reducing rapidly increasing indirect costs is of considerable concern to Congress, to the scientific community, and to users of basic research and technblogical innovation. The disproportionate, continuous rising indirect costs for university research is one of the most serious and frequently discussed problems confronting the academy today. Gross (33), Warner (83), Wyngaarden (86), and others have complained about a wide range of problems, yet no one has systematically and empirically identified the components of the problem. Lang (47), notes that the determination of what is an "indirect" cost as distinguished from a "direct cost" is to a large extent arbitrary, and depends on political, subjective judgments. Lang (48) has been told by administrators "that if pressed too much on `indirect costs' university administrators will find it necessary to adapt their accounting systems to claim as a direct cost what is now classified as indirect." All of this leads into extremely complicated tertiary questions of funding, political pressures, and the value of the RSP. Stokes (75) noted in his analyses of the top 100 universities indirect coat policies that there were significant differences between the administrative groups (business PAGENO="0145" 139 officers and research administrators) and research faculty on the general topic of indirect costs. Also, the professional societies (26, 31, 47) have accused the university administrator with ducking and dodging the fundamental issue of indirect costs, and have characterized the assignment of costs as a four-dimensional shell game. Several long-time university administrators felt the conflict between faculty and administrators and universities and sponsors should be reduced with a rational accounting of RSP costs, and called to NCURA and SRA's attention that the lack of standards for classification prevents cooperation between the fiscal side of university management and the science side. When testifyii~g to the Committee on Science~ and Technology of the House of Representatives on 24 March 1980, David Saxton, President of the University of California, recognized varying points of view and acknowledged that there was vast disagreement among elements within the research establishment as to who bears the expense of rising indirect costs. He cautioned, In trying to cone to grips with this issue (of Circular A-21), we are not dealing with a couple of monoliths; the Federal Government does not present an absolute unified view of the issues, and on the other side, neither do the universities. Our faculty, for example, is as convinced as anyone in the Government that indirect costs are too high. They believe that indirect costs come at the expense of their own grants. It is obvious that neither university administrators nor government officials know enough about the support costs nor do they have the PAGENO="0146" 140 foundation information on RSP to justify these costs to faculty or taxpayers. Earlier we saw that RSP are estimated to be at least 75% of the total research personnel who can be directly or indirectly identified with some research function. At this time, we should look at the total costs of university research, direct costs and indirect costs, and the estinated contribution of the RSP to those costs. Since most universities cannot presently determine exactly who and for how much time each RSP is assigned to an organized research unit, it is impossible to say precisely what the mix of costs are within the university organized research budget, but one writer guessed that principal investig~tor costs are less than 20% of total direct costs for research and that the RSP account for more than 50% of total research costs and that RSP costs are rapidly growing. Figure 4 shows three university administrator's opinions about what the relationship and distribution might be among the major cost factors in university research (CF). Exact knowledge of this ratio should be determined. FIGURE 4. A GRAPHIC REPRESENTATION OF ESTIMATED RSP COSTS IN RELATION TO TOTAL UNIVERSITY RESEARCh COSTS. TOTAL RESEARCH COSTS Direct Costs Indirect Costs E.I RSP Cont~ fJ Other Costs PAGENO="0147" 141 Anderson (3), Hensley (40), and Jung (44) have postulated that the alarming increases in agency indirect cost rates are only a gross indicator of the declining quality of work and is a contributing factor to rising support costs. They analyzed the work-social interaction of RSP in six institutions and found that certain employees spend better than 80% of the "working hours" on work related activities; however, other employees !pend less than 30% of their working-time on work related activities. These findings should be more frightening than the 150% increase in indirect costs as these costs would not show up in indirect cost studies (87). During the past five years I have given the Questionnaire on the Size and Significance of RSP to several hundred faculty and science policy makers to determine their image of the size and significance of the RSP. Moat of those interviewed have dangerously low estimates of the size of the RSP and hold an outmoded picture of how research is organized and conducted on today's capus. Moreover, they conceive of university research in an antiquated and parochial fashion. Most look upon university research as being confined to basic research. This narrow personal image is reinforced by the Bowman Model for American research which was adopted informally by the Federal government in the forties when Vannevar Bush sent to President Harry S. Truman his recommendations for the advancement of national research. Isaiah Bowman In those recommendations maintained that scientific research could be divided into three broad categories: (1) pure research; (2) background research; and (3) applied research and development. Briefly stated, Bowman suggested that pure research should be performed by universities and applied research and development should be conducted by Industry with PAGENO="0148" 142 with some being done by government labs. He provided an elaborate rationale to explain the proper roles and relationships of public and private research organizations and to guide the governments aid to them. Today, NSF uses categories (1) and (3) to gather scientific information from universities and most agency directors and university administrators have adopted the conventional rationale set forth in Science--The Endless Frontier. A large part of government and university policy starts with the Bowman Model and then uses NSF data as their base to formulate policy. It is my opinion that the Bowman Model is inappropriate for understanding today's research activities, as it discourages scientific interaction, and i~ does not allow a quantification of the products of research. I suggest that the 1984 Model for Classifying University Research Activities is more representative of what universities presently do and is a more powerful and precise model for information gathering on university research. More importantly this model encourages the development of industrial as well as government sponsorship of university research. The 1984 Model is more~ realistic as it shows the vast scope of innovative problem solving activities that society currently demands of the university, in addition to its conventional training mission. Policy makers must understand that universities perform the vital tasks of (1) creating new knowledge, (2) inventing new devices, (3) developing prototypes, (4) improving production of goods and sevices, and (5) transferring technology. Not only has the scope of the work expanded, but the volume of work has increased many hundred-fold. PAGENO="0149" A MODEL FOR CLASSIFYING UNIVERSITY RESEARCH ACTIVITIES CLASSES OF BASIC APPLIED PRODUCTION TECHNOLOGICAL ~CTIVITIES RESEARCH RESEARCH DEVELOPMENT RESEARCH INNOVATION A DISCIPLINARY SOCIAL ORGANIZATION MARKET SOCIAL/DISCIPLINAF IMPERATIVES UTILITY PRIORITIES MANDATES NEEDS PROCESS B EXPLORING RENDERING STEPPING PRODUCTIVITY INTERDISCIPLINARYi NATURAL/HUMAN INTO UP-A MODEL IMPROVEMENT INTERSECTOR PHENOMENA PRACTICE SOLUTION IDEAS OUTPUTS c KNOWLEDGE INVENTIONS PROTOTYPES PRODUCTS ADOPTION OF AN ARTICLE PATENTS! GOODS/SERVICES INNOVATION ALGORITHM TRADE SEC RET S/ COPYRIGHT PAGENO="0150" 144 Universities are big business. They provide the fuel and innovation that propels our technological society. Slow the production of innovation and technology is slowed. There is a widespread perception that scientists and engineers are usually the people who conceive our innovations--this is true; but nationally we have scotomas that have long excluded the RSP--a group essential for universities to conduct modern science and produce an expanding variety of innovations. To draft policy that will facilitate research, we must not only have new data, we must also have realistic personal perceptions of the subject and valid models. I am pleased that the Science and Technology Committee has structured a broad ranging study of government science policy. A comprehensive reassessment of the relationships among the organizations in the research establishment is much needed. Your hearings are most timely, as I believe that our research universities are caught in a great wave of technological change that requires both national and institutional policy makers to reassess our policies and national models in the light of four decades of dramatic university transformation that proaises to become increasingly more rapid in the remaining years of this century. Hopefully, the results of your study will stimulate and provide a guide for self studies by universities and professional associations. PAGENO="0151" 145 Mr. FUQUA. Thank you very much, Dr. Hensley. I think at this point we will take a short recess while we go vote. What we will do today, in the interest of time, because I also think many of the questions are interrelated to each other, is that we will hear from all of the other witnesses and then we will have questions at the end of everyone. Dr. HENSLEY. I will remain. ~Recess taken.] Mr. FUQUA. We will resume the meeting. We have three other members who have not spoken. If the three other members will take their places at the table, we will resume with Mr. Smith, who is senior vice president ofthe Council for Fi- nancial Aid to Education. STATEMENT OF HAYDEN W. SMITH, SENIOR VICE PRESIDENT, COUNCIL FOR FINANCIAL AID TO EDUCATION, NEW YORK, NY Mr. SMITH. Thank you, Mr. Chairman. It is a pleasure to appear before this task force. The Council is very appreciative of the opportunity to share some of its informa- tion and hopes that it will be useful to the work of this committee. The Council is known throughout the corporate and academic worlds as CFAE. I will use those initials here. By way of identification, CFAE is a nonprofit service agency cre- ated in 1952 by eminent business leaders. Its purpose is to encour- age the widest possible support of higher education by private donors, especially the corporate community itself. It is supported exclusively by voluntary contributions from some 400 business cor- porations, and our program consists of research, publications, and consultations with business executives-all designed to encourage corporate support of higher education. We are best known to the corporate community at large through a public service advertising campaign that uses the well-known slogan, "Give to the College of. Your Choice." I am appearing here today to provide the task force with some information on the extent to which private donors, including indi- viduals, industrial firms, and foundations, have supported the ac- quisition and maintenance of the research infrastructure in Ameri- can universities. I intend also to comment on current and future trends of this type of support and to discuss several elements of Federal fiscal policy that impinge on donors' incentives. Among the research activities for which CFAE is well known is its annual survey of voluntary support of education. We are the only agency that gathers such data, and we are the leading author- ity on this type of information. I have previously furnished to the task force copies of our 1982-83 survey report, and I would like to walk you through a couple of the numbers in here, just to highlight the findings. If you will turn to page 3 in this report, you will find charts which depict our estimates of the total voluntary support received by all colleges and universities. These estimates are prepared from our survey findings and they take into account the relative impor- tance of different kinds of institutions and the differential response rates that come from them. PAGENO="0152" 146 Chart 1. EstImated Voluntary Support of Colleges end UnIversItIes by Major Sources and In Total ri ions of dollars) - Current doll am Adjusted for Higher Education Price Index (1967 = 100) Alumni 1,400 1,200 E ~111flhIItIHhIIllITh 0_~~R,AA_a_a_a - 1972- `74- 76- 78- 80- `82- 1972- `74- `76- `78- 80- 82 73 75 77 79 81 83 73 75 77 79 81 83 FoundatIons auskesa Coporattons 1.200 1,000 -~ 800- :~i~d - : 20:01111 1972- 74- `76- `78- 73 75 77 79 -1--u'. 80- `82- 1972- 74- 76- 78- 80- 82- `81 83 73 75 77 79 81 63 The chart on the left shows that voluntary support rose from $2.16 billion in 1975, which was a recession year, to $5.16 billion in 1983. Although we don't have a complete analysis of the data from the 1984 survey at this time, there is enough information off our computer to permit an estimate of $5.6 billion. This implies the pri- vate giving to higher education has increased at an average rate of- 11.2 percent per year over the last 9 years, which, when corrected for inflation, represents a real growth of about 3.5 percent annual- ly. If you will turn to page 4, table 1 gives a breakdown of our esti- mates by source and by purpose. The individual donors, you will note, account for roughly half of-all voluntary support, and the dol- lars are divided about equally between institutional alumni and all other individuals. Business corporations and private foundations account for about one-fifth of the total; the remainder comes from religious denominations and a variety of other sources. 1972- `74- `76- `78- `80- 82- 73 75 77 79 81 83 PAGENO="0153" 147 Table 1. Estimated Voluntary Support by Source and Purpose (millions) % Change, 1982-83 v. 1977-78 1977-78 1981-82 1982-83 v. 1981-82 v. 1977-78 adj. for HEPI TOTAL VOLUNTARY SUPPORT $3,040 $4,860 $5,160 + 6.2 + 69.7 + 10.7 Sources Alumni $ 714 $1,240' $1,237 - 0.2 + 73.2 + 13.0 Nonalumni Individuals 766 1,097 1,190 + 8.4 + 55.4 + 5.0 Foundations 623 1,003 1,018 + 1.4 + 63.4 + 6.8 BusinessCorporations 508 976" 1,112 +13.9 +118.9 +42.9 Religious Denominations 158 175 206 + 17.7 + 30.4 -14.1 Other 271 369 397 + 7.6 + 46.4 - 4.4 Purposes Unrestricted $ 934 $1,348 $1,506 + 11.7 + 61.2 + 5.2 Physical Plant 447 747 791 + 5.9 + 77.0 + 15.3 Research 480 676 750 + 10.9 + 56.3 + 2.1 Student Aid 429 658 689 + 4.7 + 60.6 + 4.7 Faculty Compensation 185 284 334 + 17.6 + 80.5 + 17.4 Other 565 1,1471 1,090 - 5.0 + 92.9 +25.6 Current Operations $1,825 $2,870" $3,125 + 8.9 + 71.2 + 11.6 Capital Purposes 1,215 1,990' 2,035 + 2.3 + 67.4 + 9.1 Price Indices (1967 = 100) Consumer (CPI) 188.5 280.8 293.8 + 4.6 + 55.9 Higher Education (HEPI) 201.3 290.4 308.8 + 6.3 + 53.4 ~Inc1sdes beqsests from Edward Malllnckrodt, Jr., of $77 million to Harvard University and $38 million to Washington University for"other" capital purposes ~Inc1sdes newsreelfilmlibraryvalued at$30.4 million from Hearst CorporationtoUniversisyof Californiaat LosAsgeles for"otlser"purpcaes. Includes $115 million In bequests and $30.4 million gift-in-kind. I call your attention to the fact that support from the business community has grown faster than that from any other source since 1978 and, even when adjusted for inflation, represents a gain of 43 percent over this period. A significant part of this extraordinary growth consists of inventory giving; that is, gifts of products manu- factured by the donor companies. This form of giving is now domi- nated by the computer companies, and the gains are known to be associated with the Economic Recovery Tax Act of 1981 which pro- vided an enhanced deduction for certain contributions of this type of equipment. The table also shows that about 60 percent of total support was designated for current operations and about 40 percent for capital purposes, including endowment. I regret that our data don't ade- quately distinguish between gifts for endowment and those for buildings and other physical facilities. Since the interest of the task force at this hearing is in research infrastructure, I intend to provide a little supplementary data that bears on this interest. The purposes for which voluntary support is given are shown for two general categories. About 30 percent of the total is not restrict- ed as to purpose by the donors and may, therefore, be allocated by the recipient institutions according to their perceptions of need. Al- though it becomes comingled with other general funds, some of this money is eventually used for research support. Among the restricted purposes is the category of research. You will note that an estimated $750 million was given specifically for this purpose in 1983. I will shortly expand on this figure to indicate what information we have as to its source and content. PAGENO="0154" 148 Some private giving to higher education is restricted to physical plant purposes. You should note the estimate of $791 million. About 10 percent of this money consists of current operating sup- port that is restricted to use in maintaining buildings and other physical facilities. The remaining 90 percent is for capital purposes. This would include some of the research infrastructure, but we have no information as to the exact amounts. I also call your attention, however, to the category of "other pur- poses," which now exceeds $1 billion. In fact, the amounts reported in this category in both actual and inflation-adjusted terms have been growing very rapidly during the last 5 years. Our impression from talking to those in the academic community is that much of this increase consists of support for academic pro- grams, library acquisition, and support of individual departments or schools within the institutions. While we have made some changes in the breakdowns by purpose for our 1984 survey, it is un- likely that we will be able to determine just how much of these miscellaneous grants is going to research support. It is probable, however, that some part-and perhaps a very large part-of the de- partmental support is used for this purpose. On page 5, table 2, there are a few significant figures. The last column on the right shows the total support now constitutes only 6.3 percent of the total operating and capital expenditures of all colleges and universities. Table 2. Voluntary Support in Relation to Enroll ment, Inflation and Instit utional Expenditures T~t~l P,k~ I,,di,~, E,i,,ut~d V~1~r00y S~pp~t A~ % ,f (1967-100) Y~ ~ CPI HEPI T~t~1 P~ St~d~t (biI1i~~~~) ~ (CPI) To~.I P~, Sthd~t ~ ~ (CPI) I,tit~~th~,u1 ~ 1949-50 2,659 71.7 n.a. $ 2.5 $ 940 $1,310 $ 240 $ 90 $126 9.6 1965-66 5,967 95.9 95.0 15.2 2,547 2,656 1,440 241 251 9.5 1970-71 8,581 118.8 128.6 26.9 3,135 2,639 1,860 217 183 6.9 1975-76 11,185 165.9 177.2 42.6 3,809 2,296 2,410 215 130 5.6 1980-81 12,097 259.6 263.9 70.5 5,828 2,245 4,230 350 135 6.2 1982-83 12,358 293.8 308.8 82.5 6,676 2,272 5,160 418 142 6.3 Average Annual Percentage Change: 1949-50 to 1965-66 5.2 1.8 na. 11.9 6.4 4.5 11.9 6.4 4.4 1965-66 to 1970-71 7.5 4.4 6.2 12.1 4.2 -0.1 5.3 -2.0 -6.1 1970-71 601975-76 5.4 6.9 6.6 9.6 4.0 -2.7 5.3 -0.2 -6.6 1975-76 to 1980-81 1.6 9.4 8.1 10.6 15.7 -0.4 11.9 10.2 0.8 1980-81 to 1982-83 1.1 6.4 8.2 8.2 7.0 0.6 10.4 9.3 2.6 Historically, this percentage has been higher than this. For ex- ample, as recently as the mid-1960's it was about 10 percent. It fell slowly to less than 6 percent in the mid-seventies and has been on a slight up trend. Throughout the period for which we have these data, voluntary support has risen much faster than the rate of inflation. This is true whether inflation is measured by the Consumer Price Index, or the CPI, or the Higher Education Price Index, HEPI. It has also risen faster than the number of students, and support per student is shown to be now more than four times what it was in 1950. How- ever, since the mid-1960's the growth of private giving has been slower than the combined effects of inflation and enrollment PAGENO="0155" 149 growth, so that support per student measured in constant dollars is now 40 percent less than it was in 1966. There has also been a decline in institutional expenditures per student, measured in constant dollars. We take these facts to sup- port the view that there has been some decline in the quality of higher education that has probably affected both instruction and research. At the back of the report are several summaries and historical tables of data. On page 72, table E gives our estimates of voluntary support with a breakdown between current and capital money and the distribution by sources for all years since 1950. PAGENO="0156" 150 0 a I.. 0 0 a 0 A. a z U) A. 0 0 U a C, = a a A. A. U) Ii Q E H U I U H PAGENO="0157" 151 There are two points worth noting. Support for capital purposes, which would include research infrastructure, typically exceeded support for current operations until about 1970. Since then, operat- ing support has consistently accounted for the larger share. The distribution of total support by sources displayed an extraordinary stability. The gifts and bequests from individuals have consistently accounted for about half of the total, with roughly equal shares from alumni and nonalumni donors. The only major trends are a generally declining share from reli- gious denominations, some decrease in the share of private founda- tions since 1969, and a significant increase in the proportion of the total that comes from business corporations. We expect these trends more or less to continue. The remainder of the tabular material in this report represents not our estimates of the total for all higher education, but the amounts actually reported by the participating institutions. Let me skip down and just call your attention to one of these tables, which is table C on page 70, which is a distribution of re- ported support by type of institution. PAGENO="0158" Table C VOLUNTARY SUPPORT OF HIGHER EDUCATION BY TYPE OF INSTITUTION (Including percentage of Grand Total and average per institution; dollar totals and averages in thousands) TYPE OF INSTITUTION' 1973.1974 1974-1975 1975-1976 1976-1977 1977-1978 1978-1979 1979-1980 1980-1981 1981-1982 1982-1983 Private $701,160 (40.2%) $648,477 (38.7%) $731,914 (38.7%) $804,997 (37.6%) $877,122 (37.4%) $1,001,888 (35.2%) $1,202,420 (39.4%)" $1,328,044 (40.0%) $1,513,497 (37.0%)) $1,530,592 (35.0%) Universities (68) Av. $10,311 (69) Av. $ 9,398 (71) Ac. $10,309 (73) Av. $11,027 (69) Av. $12,712 (73) Av. $13,724 (74) Av. $16,249 (75) Av. $17,707 (74) Av. $20,453 (73) Av. $20,967 Private 26,671 (1.5%) 17,860 (1.0%) 24,852 (1.3%) 20,337 (1.0%) 28,325 (1.2%) 20,230 ( 0.8%) 16,158 ( 0.5%) 14,680 ( 0.4%) 20,802 ( 0.5%) 20,438 ( 0.4%) Men's Colleges (14) Av. $1,905 (13) Av. $1,373 (16) Av. $1,553 (11) Av. $1,849 (9) Av. $ 3,147 (6) Av. $ 3,372 (7) Av. $ 2,308 (5) Av. $ 2,936 (7) Av. 9 2,972 (9) Av. $ 2,271 Private 68,291) 3.9%) 64,460) 3.8%) 74,422) 4.0%) 71,866) 3.4%) 80,723) 3.4%) 80,856) 3.2%) 97,548) 3.2%) 118,947) 3.8%) 127,333) 3.1%) 155,421 ( 3.6%) Women's Cotleges (78) Ac. $ 875 (80) Ac. $ 805 (81) Ac. $ 919 (69) Av. $1,042 (80) Av. $ 1,009 (73) Ac. $ 1,108 (74) Ac. $ 1,318 (73) Ac. $1,629 (77) Ac. $1,654 (77) Av. 9 2,018 Private 461,117 (28.4%) 426,579 (25.8%) 470,983 (24.9%) 571,410 (26.7%) 620,795)26.4%) 624,425 (24.4%) 732,832 (24.0%) 784,468 (23.7%) 1,018,482 (24.9%) 1,075,872 (24.6%) Coed Colleges (463) Av. $ 995 (453) Ac. $ 941 (448) Ac. $1,051 (476) Ac. $ 1,200 (459) Ac. $1,352 (449) Ac. $1,391 (473) Ac. $1,549 (440) Ac. 9 1,783 (496) Ac. $ 2,053 (495) Ac. 9 2,173 Professional 84,365) 4.8%) 69,327) 4.1%) 93,036) 4.9%) 89,475) 4.2%) 94,651) 4.0%) 95,267) 3.7%) 128,104) 4.2%) 121,276) 3.7%) 155,347) 3.8%) 185,809) 4.3%) & Specialized (51) Ac. $ 1,654 (54) Ac, $1,283 (55) Ac. $1,692 (59) Ac. $1,517 (61) Ac. $1,552 (67) Ac. $1,422 (68) Ac. 0 1,884 (62) Ac. $1,958 (73) Ac. 0 2,128 (90) Ac. 0 2,065 Public 386,181 (22.1%) 430,831 (25.6%) 476,915)25.2%) 562,405)26.3%) 623,444)26.6%) 715,156)28.0%) 856,193)28.0%) 929,238)28.0%) 1,216,681 (29.9%)) 1,362,397)31.2%) InstitutIons (208) Ac. $1,874 (207) Ac. $ 2,081 (216) Ac. $ 2,208 (213) Ac. $ 2,640 (209) Ac. $ 2,983 (214) Ac. $ 3,342 (218) Ac. 0 3,927 (209) Ac. $ 4,448 (258) Ac. 0 4,716 (267) Ac. $ 5,103 Two.Year 19,086(1.1%) 17,009(1.0%) 18,709(1.0%) 18,137) 0.8%) 22,865)1.0%) 18,173) 0.7%) 21,797) 0.7%) 21,413) 0.6%) 34,060) 0.8%) 37,643) 0.9%) InstitutIons (108) Ac. $ 176 (110) Ac. $ 154 (104) Ac. $ 180 (105) Ac. $ 173 (178) Ac. $ 128 (90) Av. $ 202 (105) Ac. 9 208 (64) Ac. $ 334 (116) Ac. $ 254 (126) Ac.) 299 GRAND TOTAL $1,746,851 (100%) $1,674,543 (100%) $1,890,832 (100%) $2,138,627 (100%) $2,347,925 (100%) $2,555,995 (100%) $3,055,053 (100%) $3,318,064 (100%) $4,086,204 (100%) $4,368,171 (100%) (988) Ac. $1,765 (986) Ac. $1,698 (991) Ac. $1,908 (1,008) Ac. $2,128 (1,065) Ac. $2,205 (972) Ac. $2,630 (1,019) Ac. $2,998 (928) Ac. $3,576 (1,101) Ac. $3,711 (1,137) Ac. $3,842 `In every survey each Institution Is classified in the category appropriate to its status In thatyear. Since the status of many Institutions has changed over the years, the data by category are not strictly rum- parablefromonesurvey toanother. SeeTabtr3onpage7foracomparlsonof 198l.O2and 1982.83data on an adjusted basis. "Includes nonrecurring transfer of $105 million. * (Includes $115 mitlion in bequests. §Inctudes $30.4 million gift-in-kind. PAGENO="0159" 153 A group of 70 or 75 private universities consistently accounts for between 35 and 40 percent of the total received by all institutions, but the most significant change on this table in terms of institu- tional shares is the growth of public colleges and universities from about 22 percent of the total to 31 percent over this particular period of time, and a declining share received by the categories of smaller private colleges. All this information is stored on computer tapes since 1966, and it is possible to prepare special tabulations and analyses of these data to serve particular purposes. In order to address the specific subject of this hearing, I prepared a few supplementary tables and they are appended to the statement itself. Table 1, for example, shows the preliminary figures from our 1983-84 survey and the estimated $5.6 billion in total support is broken down by source. I am sorry that we do not have figures yet for a breakdown by purpose. PAGENO="0160" Table 1. Estimated Voluntary Support, by Source and Purpose (millions) Percent change, 1983-84 1978-79 1982-83 1983-84 v.1978-79 v.1982-83 v.1978-79 adj. for HEPI TOTAL VOLUNTARY SUPPORT $3,230 $5,160 $5,600 + 8.5 +73.4 +15.6 Purposes: Current Operations Capital Purposes $2,010 $3,125 $3,405 1,220 2,035 2,195 + 9.0 +69.4 + 7.9 +79.9 +12.8 +20. 1 Price Indices (1967-100): Consumer (cP1) Higher Education (HEPI) 206.4 293.8 304.8 216.9 308.8 325.4 + 3.7 +47.7 + 5.4 +50.0 Sources: Alumni $ 785 $1,237 $1,305 + 5.4 +66.2 +10.8 Nonalumni individuals 736 1,190 1,316 +10.6 +78.8 +19.2 Foundations 701 1,018 1,081 + 6.2 +54.2 + 2.8 Business Corporations 556 1,112 1,271 +14.3 +128.6 +52.7 Religious Organizations 161 206 190 - 7.8 +18.0 -21.6 Other 291 397 437 +10.1 +50.2 - PAGENO="0161" 155 The results do reflect a continuation of current trends or recent trends. Again, I call your attention to the fact that support from business corporations has shown an extraordinary inôrease in infla- tion-adjusted terms over the previous 5 years. Much of this growth, perhaps as much as $250 million, is associated with the addition of section 170(e)(4) to the Internal Revenue Code. This is the section that provides the enhanced tax deduction in the case of inventory gifts of scientific property that are made to institutions of higher education to be used for research or experimentation or for re- search training in the physical or biological sciences. To throw some light on this matter, we conducted a survey of the leading industrial corporations last fall. Our report on that survey is available as well. I have provided copies to the task force. Although the response to this particular survey was relatively low, the data we did obtain reveals clearly that this type of giving is dominated by companies in the electrical machinery industry, es- pecially the companies that manufacture computers, medical in- struments, and other electronic products. That is shown on the table on page 2 of the special survey report. Gifts of Company Products Industry 1983 19814 Manu facturing: Electrical machinery (21) $61,729,490 (19) $95,281,540 (1'J) Chemicals & drugs (6) 13,910,196 (3) 167,917 (3) Food, beverage & tobacco (4) 32,939 (3) 36,1420 (3) Machinery (4) 1180.000 (3) 311,700 (3) Fabricated metals (3) 32,800 (3) 252,000 (3) Primary metals (3) 3,818 (1) 1,000 (1) Paper & lumber (3) 1,500 (1) 11,800 (1) Printing & publishing (2) `41,1185 (2) 33.809 (2) Petroleum & gas (2) 12,500 (2) 13,500 (2) Transportation equipment (1) 25,000 (1) Subtotal - Manufacturing (49) $76,269,728 (38) $96,109,286 (32) Nonmanufacturing: Transportation (2) $ 40,1403 (2) $ `45,000 (1) All others (3) 300 (1) 500 (1) Subtotal - Nonmanufacturing (5)$ `40,703 (3) $ 115,500 (2) GRAND TOTAL (54) $76,310,431 (141) $96,155,186 (311) (Numbers in parentheses show the number of companies reporting.) I should also call to your attention that the numbers shown on this report reflect a tax deduction value of the gifts to the donors. The colleges and universities report a significantly higher figure because they tend to report the list price value. It is my personal view that this enhanced deduction should be extended to all inventory gifts of company products and not limited to any class of qualified recipients or to any designated purposes. The formula used for the tax reduction adequately protects the public interest in preventing the kinds of abuses that led to the re- strictive legislation in the Tax Reform Act of 1969. It would clearly provide additional incentives for contributions of state-of-the-art 53-277 0 - 86 - PAGENO="0162" 156 equipment to the scientific laboratories on the Nation's campuses as well as a broad array of other products that are useful and needed by charities generally. Table 2, the supplementary table attached to the statement, gives a breakdown of the research support by donor groups taken. from the surveys of 1973 and 1983. This type of support is shown to be of relatively little interest to individual givers, and what they do give accounts for a very small share of the total support. Contribu- tions for research purposes are clearly a major growing interest to corporations and foundations, and between them they account for about 70 percent of the total. Table 2. Voluntary Support for Research Purposes, by Donor Groups (millions) Alumni Nonalumni Individuals Foundations Business Corporstions Religious Organizations Other Table 3 shows the sources of total support, research support, and physical plant support for 1983 with a division between current op- erating support and support for capital purposes. While capital support accounts for about 42 percent of overall giving, it com- prises only 9 percent of giving for research purposes. The bulk of research support obviously goes for institutional operating budgets. Table 3. Total Voluntary Support, Research Support, and Support for Physical Plant, by Purpose (Current Operations and Capital Purposes), 1982-83 (millions) On the physical plant side, however, it was 92 percent capital, and some part of that $614 million of capital support for physical plant purposes was undoubtedly aimed at the kind of research in- frastructure in which this task force is interested, although we do not have any specific information as to exactly how much. 1972-73 1982-83 Amount 1 Percent of total support $ 13.3 5.8 3.2 37.6 16.3 8.0 89.0 38.6 21.7 53.9 23.4 21.6 .1 - .1 36.9 16.0 29.3 Percent Amount 1 of total support $ 24.8 3.9 2.4 77.2 12.2 7.7 207.4 32.7 24.1 232.0 36.6 24.6 .4 - .3 92.9 14.6 27.7 $230.8 100.0 13.2 $634.7 100.0 14.5 Support for Total Voluntary Support Research Support Physical Plant Alumni tlooalumni Inds. Foundations Corport ions Religious Orgns. Other Total Cur. Cap. $1,046.9 $ 503.8 $ 543.1 1,007.2 450.5 556.7 862.1 497.2 364.9 941.6 662.4 279.2 174.4 150.2 24.2 335.9 260.3 75.6 Total Cur. Cap. Total Cur. Cap. $ 24.8 $ 18.0 $ 6.8 77.2 48.6 28.6 207.4 198.2 9.2 232.0 222.7 9.3 .4 .1 .3 92.9 90.1 2.8 Total $4,368.1 $2,524.4 $1,843.7 $132.5 $ 153.3 177.9 167.0 16.1 22.6 7.8 $124.7 11.3 142.0 14.3 163.6 16.0 151.0 2.6 13.5 3.4 19.2 $643.7 $577.7 $ 57.0 $669.4 $ 55.4 $614.0 PAGENO="0163" 157 Table 4 gives an historical overview of estimated research sup- port and shows the percentage of research to estimated total sup- port for all purposes. You will note that there is a modest up trend in this percentage. Prior to 1975, for example, it averaged 12.8, and in no year was it as high as 15 percent. In the last 10 years, howev- er, it has averaged 15 percent, and in no year was it less than 13.9. Table 4. Estimated Voluntary Support and Support of Research, 1954-55 to 1983-84 Total Support Voluntary* of Support Research 1954-55 $ 475 $ 60 12.5 1956-57 840 85 9.9 1958-59 760 105 14.0 1960-61 900 125 14.1 1962-63 1,050 140 13.4 1964-65 1,400 155 11.2 1965-66 1,440 205 14.4 1966-67 1,480 185 12.4 1967-68 1,600 200 12.5 1968-69 1,800 225 12.5 1969-70 1,780 215 12.1 1970-71 1,860 245 13.3 1971-72 2,020 260 12.8 1972-73 2,240 290 13.0 1973-74 2,240 290 13.0 1974-75 2,160 325 15.0 1975-76 2,410 355 14.7 1976-77 2,670 400 14.9 1977-78 3,040 475 15.7 1978-79 3,230 505 15.7 1979-80 3,800 575 15.1 1980-81 4,230 630 14.9 1981-82 4,860 675 13.9 1982-83 5,160 750 14.5 1983-84 5,600 840 15.0 (est.) While prediction is always hazardous, I believe that there are reasons to anticipate further growths in this percentage. One reason is the growing relative importance of corporate support in the total picture. In the past 15 years the percentage of corporate giving to total support has increased from less than 15 to more than 22 percent, and it is still rising. Since a high proportion of corporate support is designated for research purposes, continued growth in the relative importance of corporate giving will cause some further rise in the overall importance of research support. The second reason is that there has been, and continues to be, a growing sense of partnership between the corporation and the campus, especially in the research area. The universities are now PAGENO="0164" 158 making special efforts to enhance further this community of inter- est. Table 5 gives some detail of corporate support and corporate sup- port of research by type of institution in 1982-83. The most rele- vant figures here are those which show the relative importance of the public and private institutions. Although the corporations give more to private institutions than to public colleges and universi- ties, the proportion of support designated for research purposes at public institutions has more than doubled the corresponding number for private colleges and universities. Table 5. Corporate Support of Colleges and Universities and Corporate Support of Research, by Type of Institution, 1982-83 (millions) Corporate Research Support Note: Numbers in parentheses are numbers of participating institutions. You should note that the division of corporate support at 4-year institutions between public and private colleges is now in the ratio of about 46 to 54. Twenty-five years ago the ratio was 25 to 75, and this shift reflects a long-term trend of growing importance-it re- flects the growing importance of public research in universities to the business community. Given that the corporate support of public institutions is growing more rapidly than that for private colleges, and given the relatively greater importance of research support in public institutions, it also follows that a continuation of these trends will invariably raise research support as a percentage of total giving by corporations. Total Corporate Support Private Universities (73) Private Men's Colleges (9) Private Women's Colleges (77) Private Coeducational Colleges (495) Private Professional & Specialized Insts. (90) Total Private Four-Year Institutions (744) Total Public Four-Year Institutions (267) Total Four-Year Institutions (1,011) Two-Year Institutions (126) Grand Total, All Institutions (1137) $ 334.1 $ 74.3 22.2 1.5 - - 13.4 .2 - 127.9 1.9 1.5 27.9 6.2 22.2 $ 504.8 $ 82.7 16.3 428.6 149.3 34.8 $ 933.4 $ 232.0 24.8 8.2 - $ 941.6 $ 232.0 24.6 PAGENO="0165" 159 Over and above the gifts and grants that corporations provide to the colleges and universities for research purposes are two other forms of research support from business. One is contract research in `which the university performs specific research of a proprietary or quasi-proprietary nature as a quid pro quo for the money it re- ceives under the contract. The second covers a variety of coopera- tive research projects, and these are typically informal arrange- ments under which one or more persons on the corporate side join with their academic counterparts to pursue a specific line of in- quiry. The corporation will often loan or donate equipment to, and pay the out-of-pocket costs of, such projects. In both these cases, of course, our numbers exclude the corporate money received by the institution. The growth of all these related shifts in the past 3 or 4 years has undoubtedly been stimulated by the provisions of the Economic Tax Recovery Act of 1981 which added section 30 to the Internal Revenue Code, and this is the 25 percent credit for increasing re- search activities, which will expire or sunset at the end of this year. The success of this legislation in accomplishing its purposes- namely, to increase corporate research and development activi- ties-and the desirability of increasing such activities further indi- cate the need for making this section to become permanent. In view of the fact that the credit now applies to 65 percent of any incremental contract research expenditures, including contract re- search at universities, it would be most unfortunate if this section were allowed to expire. Indeed, the credit should be renewed at a higher percentage, even 100 percent, of the contract research on campus eligible for this 25 percent credit. I have a final word about public policy in this whole area of pri- vate giving to higher education. Educational support is part of the total charitable contributions from individuals, corporations, and foundations. The basic motivation for making contributions has little or nothing to do with the tax laws; people and corporations give for reasons that are independent of taxation. However, once the decision to give has been made, the charitable deduction does have an influence on the amount that is given. While this is theo- retically true for all individuals, it is particularly true for those in the upper tax brackets. The relevance of this to the purpose of this hearing is that pri- vate contributions for research and for research infrastructure at universities in the future will depend greatly on the content of the tax laws with respect to the charitable deduction. Any simplifica- tion of the income tax involving the reduction of marginal rates will indirectly tend to reduce the amounts that people and corpora- tions give, simply because it would increase the after-tax cost of contributions. Since there is a valid objective to be served by such rate reduction, then the indirect impact on charitable giving is simply a burden that will have to be borne. However, there have been specific proposals for altering the charitable deduction itself, and these would have additional and direct negative effects on giving, including research support to higher education. One proposal would put a floor on the deduction, so that only contributions in excess of some specific dollar amount or some percentage of income would be deductible. Another propos- PAGENO="0166" 160 al would limit the deduction for gifts of property to the lower of cost or inflation-adjusted cost, and deny any deduction for capital appreciation in such gift property. A third proposal would elimi- nate the present provision for an above-the-line deduction for non- itemizers. All three of these proposals, taken together, would seri- ously erode the present levels of charitable giving in general and support of higher education in particular. I would hope that the members of this task force will conclude that private support of research and of research infrastructure at universities, although small in relation to support by Government in recent years, is a necessary, desirable, and vital activity, to be encouraged to the maximum reasonable extent. And should any of the above tax proposals become part of a tax simplification bill, I would hope that the members of this task force will oppose those proposals as contrary to the public interest. This concludes my prepared statement. If there are any ques- tions or needs for amplification of any of the above facts, I will be happy to try to provide the answers. Mr. FUQUA. Thank you very much, Mr. Smith. [The prepared statement of Mr. Smith follows:] PAGENO="0167" 161 PRIVATE SUPPORT OF RESEARCH AT COLLEGES AND UNIVERSITIES Testimony of Hayden W. Smith Senior Vice President Council for Financial Aid to Education 680 Fifth Avenue New York, New York 10019 Task Force on Science Policy Committee on Science and Technology U.S. House of Representatives Hay 22, 1985 PAGENO="0168" 162 PRIVATE SUPPORT OF RESEARCH AT COLLEGES AND UNIVERSITIES Hayden W. Smith Senior Vice President Council for Financial Aid to Education 680 Fifth Avenue New York, New York 10019 My name is Hayden W. Smith. I am senior vice president of the Council for Financial Aid to Education, located in New York City. The Council is known throughout the corporate and academic commun- ities by its initials, CFAE, and I shall use them here. CFAE is a nonprofit service agency created in 1952 by eminent corporate leaders. Its purpose is to encourage the widest possible support of higher education by private donors, especially the corporate community itself. It is supported exclusively by voluntary contributions from some 400 business corporations. Its program consists of research, publications, and consultation with business executives to encourage corporate support of higher education. It is best known to the country at large through a public service advertising campaign that uses the well-known slogan, "Give to the College of Your Choice." I am appearing here today to provide the Task Force with information on the extent to which private donors, including individuals, industrial firms, and foundations, have supported the acquisition and maintenance of the research infrastructure at American universities. I intend also to comment on current and future trends in this type of PAGENO="0169" 163 support, and to discuss several elements of federal fiscal policy that impinge on donors' incentives. Among the research activities for which CFAE is well known is the annual Survey of Voluntary Support of Education. We are the only agency that gathers such data and we are the leading authority on this type of information. I have previously furnished copies of our latest survey report to the Task Force, and will comment on its contents as they bear on the purpose of this hearing. The report before you covers the academic year 1982-83. This represents the 24th survey of private giving to education that we have conducted since 1955. The survey has been an annual undertaking since 1965, and is now cosponsored by the Council for Advancement and Support of Education and the National Association of Independent Schools. Although it includes data on private support of private precollege schools, I will exclude them from our discussion today. The survey questionnaires are mailed to virtually all of the 3,000 institutions of higher education in the United States. The informa- tion requested includes the amounts, sources, and purposes of private gifts, grants, and bequests received during the previous academic or fiscal year. We specifically request the exclusion of pledges, endowment income, and any receipts which represent payment for services rendered. While we cannot guarantee the accuracy of the figures provided, we have no reason to believe that they contain any significant errors. The response rate varies from year to year but generally amounts to 35 percent. On the basis of careful comparisons with finan- PAGENO="0170" 164 cial data previously gathered by the U.S. Office of Education (now the Department of Education), it is clear that those institutions participat- ing in the survey typically account for about 85 percent of the total dollars received by all colleges and universities. The nonparticipating institutions are primarily two-year colleges, the smaller state colleges and universities, and very specialized private schools such as religious seminaries and bible colleges, most of which receive little or no volun- tary support. If you will turn to page 3 of the 1982-83 report you will find charts which depict our estimates of voluntary support of higher education for the previous decade. These estimates are prepared from the survey findings by means of a careful analysis of the reported data, taking into account the relative importance of different kinds of institu- tions and the differential response rates. The chart on the left shows that total voluntary support rose from $2.16 billion in 1974-75, which was a recession year, to $5.16 billion in 1982-83. Although we do not yet have a complete analysis of the data from the 1983-84 survey, there is enough information off the computer to permit an estimate of $5.6 billion. This implies that private giving to higher education has increased at an average rate of 11.2 percent per year over the last nine years which, when corrected for inflation, represents a real growth of about 3.5 percent annually. Table 1 on page 4 gives breakdowns of our estimate by source and by purpose. Individual donors account for roughly half of all voluntary support, and the dollars are divided about equally between institutional alumni and other individuals. PAGENO="0171" 165 Business corporations and private foundations each account for about one-fifth of the total; the remainder comes from religious denotnina- tions and a variety of other sources. I call your attention to the fact that support from the business community has grown faster than that from any other source since 1977-78, and even when adjusted for inflation represents a gain of 43 percent over this period. A significant part of this extraordinary growth consists of inventory giving, i.e. gifts of products manufactured by the donor companies. This form of giving is now dominated by the computer companies, and the gains are known to be associated with the Economic Recovery Tax Act of 1981 which provided an enhanced deduction for certain contributions of this type of equipment. The table also shows that about 60 percent of total voluntary support was designated for current operations and 40 percent for capital purposes, including endowment. I regret that our data do not adequately distinguish between gifts for endowment and those for buildings and other physical facilities. Since the interest of the Task Force at this hearing is' in `research infrastructure, I intend to provide some supplemen- tary data that bears on this interest. The purposes for which voluntary support is given are shown for a few general categories. About 30 percent of the, total is not restricted as to purpose by the donors and may, therefore, be allocated by the recipient institutions, according to their perceptions of need. Although it becomes comingled with other general funds, some of this money is eventually used for research support. Among the restricted purposes is the category of research, and you will note that an estimated $750 million was given specifically for this purpose in 1982-83. I will shortly expand on this figure to indicate what information we have as to PAGENO="0172" 166 its source and content. Some private givi'ig to higher education is restricted to physical plant purposes, and you should note the estimate of $791 million. About ten percent of this money constitutes current operating support that is restricted to use in maintaining buildings and other physical facilities; the remaining 90 percent is for capital purposes. This would include some research infrastructure, but we have no information as to the amounts. I also call your attention to the category of "other" purposes, which now exceeds $1 billion, and to the fact that the amounts reported in this category in both actual and inflation-adjusted terms have been growing very rapidly in the past five years. Our impression from talking to those in the academic community is that much of this increase constitutes support of academic programs, library acquisitions, and support of individual departments or schools within the institutions. While we have made some changes in the breakdowns by purpose for the 1983-84 survey, it is unlikely that we will be able to determine how much of these miscellan- eous grants is going for research purposes. It is probable, however, that some part, and perhaps a large part, of the departmental support is used for this purpose. There are a few significant figures in Table 2 on page 5. The last column on the right shows that total voluntary support now constitutes only 6.3 percent of the total operating and capital expenditures of all colleges and universities. Historically this percentage has been higher than this; for example, as recently as the mid-1960s it was about ten percent, then it fell slowly to less than six percent in the mid-1970s, and it has since been in a slight uptrend. PAGENO="0173" 167 Throughout the period for which we have these data, voluntary support has risen much faster than the rate of inflation, and this is true whether inflation is measured by the Consumer Price Index (CPI) or the Higher Education Price Index (HEPI). It has also risen faster than the number of students, and support per student is now more than four times what is was in 1950. However, since the mid-1960s the growth of private giving has been slower than the combined effects of inflation and enrollment growth, so that support per student measured in constant dollars is now 40 percent less than it was in 1966. There has also been a decline in institutional expenditures per student, measured in constant dollars, and we take these facts to support the view that there has been some decline in quality in higher education that has probably affected both instruction and research. At the back of the report are several summary and historical tables of data. On page 72, Table E gives our estimates of voluntary support, with a breakdown between current and capital money and the distribution by source, for all years since 1950. There are two points worth noting. Support for capital purposes typically exceeded support for current operations until 1970; since then operating support has consistently accounted for the larger share. And the distribution of total support by source has displayed an extraordinary stability; the gifts and bequests from individuals have consistently accounted for about half of the total, with roughly equal shares from alumni and nonalumni donors; the only major trends are a generally declining share from religious denominations, some decrease in the share of foundations since 1969 and a significant increase in the proportion of the total that comes from business corporations. PAGENO="0174" 168 The remainder of the tabular material in this report represents not our estimates for all higher education but amounts actually reported by the participating institutions. Of special interest to this Task Force is the bottom half of Table D on page 71. The amounts reported over the last ten years have shown remarkable stability in terms of purpose; there has been a decline in unrestricted money from about 33 percent to 29 percent and a corresponding increase in the "other" cate- gory from 17 to 21 percent; support for physical plant and for research each account for about 15 or 16 percent every year, student aid has been relatively constant at 13 percent, and faculty compensation at about 6 percent. Finally, I call your attention to Table C on page 70, which shows that a group of 70 or 75 private universities consistently accounts for between 35 and 40 percent of the total support received by all institutions. The most significant change in the institutional shares is a growth for the public colleges and universities from 22 to 31 percent of the total and a corresponding decline in the shares received by the four categories of smaller private colleges. All this information has been stored on computer tape since 1966, and it is possible to prepare special tabulations and analyses of these data to serve particular purposes as needed. In order to address the specific subject of this hearing, we have prepared a few supplementary tables, and they are appended to this statement. Table 1 shows the preliminary figures from the 1983-84 survey. The estimated $5.60 billion of total support is broken down by source, and the results reflect a continuation of recent trends. Again I call your attention to the fact that support from business corporations has shown PAGENO="0175" 169 an extraordinary increaae in inflation-adjusted terms over the previous five years. Much of this growth, perhaps as riuch as $250 million, is associated with the addition of section l70(e)(4) to the Internal Revenue Code. This section provides for an enhanced tax deduction in the case of inventory gifts of scientific property that are made to institu- tions of higher education and to be used for research or experimentation or for research training in the physical or biological sciences. To throw some light on this matter, we conducted a survey of the leading industrial corporations last year, and our report on that survey is svailable to this Task Force. Although the response rate was relatively low, the data we did obtain reveals clearly that this type of giving is dominated by the companies in the electrical machinery industry, especially companies that manufacture computers, medical instruments, and otherelectronic products. The numbers shown on page 2 of that report reflect the tax-deduction ~value of the gifts made, and this figure is significantly lower than the list price value used by recipient institutions in our voluntary support survey. It is my personal view that this enhanced deduction should be extended'to all inventory gifts of company products and not limited to any class of qualified recipients or to any designated purposes. The formula used for the tax deduction adequately protects the public interest in preventing thekinds of abuses that le4 to the restrictive legislation in the Tax Reform Act of 1969, and it would clearly provide additional incentives for contributions of state-of-the-art equipment to the scientific laboratories on the Nation's campuses as well as a broad array of other products that are useful and needed by charities generally. PAGENO="0176" 170 The second supplementary table attached to this statement gives a breakdown of research support by donor groups taken from our voluntary support surveys of 1972-73 and 1982-83. This type of support is of relatively little interest to individual givers, and what they do give accounts for a small share of the total. Contributions for research purposes are clearly of major and growing interest to corporations and foundations, and they account for about 70 percent of the total. Table 3 shows the sources of total support, research support, and physical plant support in 1982-83 with the division between current operating support and support for capital purposes. While capital support accounted for 42 percent of overall giving, it comprised only 9 percent of giving for research purposes. The bulk of research support obviously goes for institutional operating budgets. Physical plant support, on the other hand, was 92 percent capital. Some part of the $614 million reported in the survey was undoubtedly aimed at the kinds of research infrastructure in which this Task Force is interested, but we do not have any information as to how much. Table 4 gives an historical overview of estimated research support and shows the percentage of research support to estimated total support for all purposes. There is a very modest uptrend in this percent- age. Prior to 1974-75 it averaged about 12.8 and in no year was it as high as 15.0; in the last ten years it has averaged 15.0 and in no year was it less than 13.9. While prediction is always hazardous, I believe there are reasons to anticipate further modest growth in this percentage. One reason is the growing relative importance of corporate support in the total picture; in the past 15 years the percentage of corporate giving to PAGENO="0177" 171 total voluntary support has increased from less than 15 percent to more than 22 percent and it is still rising. Since a high proportion of corporate support is designated for research purposes, continued growth in the relative importance of corporate support will cause some further rise in the relative overall importance of research support. A second reason is that there has been, and continues to be, a growing sense of partnership between the corporation and the campus, especially in the research area, and universities are making special efforts to enhance further this community of interest. Table 5 gives some detail of total corporate support and corporate support of research by type of institution in 1982-83. The most relevant figures here are those which show the relative importance of public and private institutions. Although corporations give more to private institutions than to public colleges and universities, the proportion of support designated for research purposes at public institu- tions is more than double the corresponding number for private colleges and universities. Please note that the division of corporate support of four-year institutions between public and private colleges is in the ratio of 46-to-54; 25 years ago the ratio was 25-to-is, and this shift reflects a long-term trend of growing importance of public research universities to the business sector. Given that corporate support for public institutions is growing more rapidly than that for private colleges and universities, and given the relatively greater importance of research support at public institu- tions, if follows that a continuation of these trends will invariably PAGENO="0178" 172 raise research support as a percentage of total corporate support of higher education. Over and above the gifts and grants that corporations provide to colleges and universities for research purposes, there are two other forms of research support from business. One is contract research, in which the univesity performs specific research of a proprietory or quasi-proprietory nature as a quid pro quo for the money it receives under the contract. The second covers a variety of cooperative research projects. These are typically informal arrangements under which one or more persons on the corporate side join with their academic counterparts to pursue a specific line of inquiry; the corporation will often loan or donate equipment to, and pay the out-of-pocket costs of, such projects. In both these cases, of course, our numbers exclude the corporate money received by the institution. The growth of these relationships in the paat three or four years has undoubtedly been stimulated by theprovision in the Economic Recovery Tax Act of 1981 whichadded section 30 to the Internal Revenue Code. This is the 25 percent credit for increasing research activities, and it will expire or "sunset" at the end of this year. The success of this legislation in accomplishing its purposes, namely to increase corporate research and development activities, and the desirabliity of increasing such activities further, indicates the need for making this section of the Code permanent. And, in view of the fact that the credit now applies to 65 percent of any incremental contract research expendi- tures, including contract research at universities, it would be most unfortunate if this section were allowed to expire. Indeed, the credit PAGENO="0179" 173 should be renewed and a higher percentage -- even 100 percent -- of contract research on campus should be made eligible for the 25 percent credit. A final word on public policy in the area of private giving to higher education. Educational support is a part of total charitable contributions from individuals, corporations and foundations. The basic motivation for making contributionè has little or nothing to do with the tax laws; people and corporations give for reasons that are independent of taxation. However, once the decision to give has been made, the charitable deduction does have an influence on the amount that is given. While this is theoretically true for all individuals, it is particularly true for those in the upper tax brackets. The relevance of this to the purpose of this hearing is that private contributions for research and for research infrastructure at universities in the future will depend greatly on the content of the tax laws with respect to the charitable deduction. Any simplification of the income tax involving the reduction of marginal rates will indirect- ly tend to reduce the amounts that people and corporations give, simply because it would increase the after-tax cost of contributions. Since there is a valid objective to be served by such rate reduction, then the indirect impact on charitable giving is simply a burden that will have to be borne. However, there have been specific proposals for altering the charitable deduction itself, and these would have additional and direct negative effects on giving, including research support to higher PAGENO="0180" 174 education. One proposal would put a floor on the deduction, so that only contributions in excess of some specific dollar amount or some percentage of income would be deductible. Another proposal would limit the deduction for gifts of property to the lower of cost or inflation- adjusted cost, and deny any deduction for capital appreciation in such gift property. A third proposal would eliminate the present provision for an above-the-line deduction for nonitemizers. All three of these proposals, taken together, would seriously erode the present levels of charitable giving in general and support of higher education in part icular. I would hope that the members of this Task Force will cocciude that private support of research and of research infrastructure at universities, although small in relation to support by government in recent years, 18 a necessary, desirable, and vital activity, to be encouraged to the maximum reasonable extent. - And should any of the above tax proposals become part of a tax simplification bill, I would hope that the members of this Task Force will oppose those proposals as contrary to the public interest. This concludes my prepared statement. If there are any questions or needs for amplification of any of the above facts, I will be happy to try to provide the answers. PAGENO="0181" Table 1. Estimated Voluntary Support, by Source and Purpose (millions) Percent change, 1983-84 1978-79 1982-83 1983-84 v.19 1S-19 v.1982-83 v.1978-79 adj. for HEPI Purposes: Current Operations Capital Purposes $2,010 $3,125 $3,405 1,220 2,035 2,195 + 9.0 +69.4 + 7.9 +79.9 +12.8 +20.1 206.4 293.8 304.8 + 3.7 216.9 308.8 325.4 + 5.4 +47.7 +50.0 TOTAL VOLUNTARY SUPPORT $3,230 $5,160 $5,600 + 8.5 +73.4 Sources: Alumni Nonalumni individuals $ 785 736 $1,237 $1,305 + 5.4 +66.2 Foundations 701 1,190 1,316 +10.6 +78.8 Business Corporations 1,018 1,081 + 6.2 +54.2 Religious Organizations 1,112 1,271 +14.3 +128.6 206 190 - 7.8 +18.0 +15.6 +10.8 +19.2 + 2.8 +52.7 -21.6 Price Indices (1967-100): Consumer (cPI) Higher Education (HEPI) PAGENO="0182" Table 2. Voluntary Support for Research Purposes, by Donor Groups (millions) 1972-73 19 82-83 Percent of total Amount % support Alumni $ 13.3 5.8 3.2 Nonalumni Individuals 37.6 16.3 8.0 Foundations 89.0 38.6 21.7 Business Corporations 53.9 23.4 21.6 Religious Organizations .1 - .1 Other 36.9 16.0 29.3 Percent of total Amount 1 support $ 24.8 3.9 2.4 77.2 12.2 7.7 207.4 32.7 24.1 232.0 36.6 24.6 .4 - .3 92.9 14.6 27.7 $230.8 100.0 13.2 $634.7 100.0 14.5 PAGENO="0183" Table 3. Total Voluntary Support, Research Support, and Support for Physical Plant, by Purpose (Current Operations and Capital Purposes), 1982-83 (millions) Support for Total Voluntary Support Research Support Physical Plant Alumni Nonalumni Inds. Foundations Corport ions Religious Orgns. Other Total Total Cur. Cap. $1,046.9 $ 503.8 $ 543.1 1,007.2 450.5 556.7 862.1 497.2 364.9 941.6 662.4 279.2 174.4 150.2 24.2 335.9 260.3 75.6 Total Cur. Cap. Total Cur. Cap. $ 24.8 $ 18.0 $ 6.8 77.2 48.6 207.4 198.2 232.0 222.7 9.2 .4 92.9 .1 90.1 .3 2.8 $4,368.1 $2,524.4 $1,843.7 $132.5 153.3 177.9 167.0 16.1 22.6 $ 7.8 $124.7 11.3 142.0 14.3 163.6 16.0 151.0 2.6 13.5 3.4 19.2 $643.7 $577.7 $ 57.0 $669.4 $ 55.4 $614.0 PAGENO="0184" 178 Table 4. Estimated Voluntary Support and Support of Research, 1954-55 to 1983-84 Total Support Voluntary* of Support Research % 1954-55 $ 475 $ 60 12.5 1956-57 840 85 9.9 1958-59 760 105 14.0 1960-61 900 125 14.1 1962-63 1,050 140 13.4 1964-65 1,400 155 11.2 1965-66 1,440 205 14.4 1966-67 1,480 185 12.4 1967-68 1,600 200 12.5 1968-69 1,800 225 12.5 1969-70 1,780 215 12.1 1970-71 1,860 245 13.3 1971-72 2,020 260 - 12.8 1972-73 2,240 290 13.0 1973-74 2,240 290 13.0 1974-75 2,160 325 15.0 1975-76 2,410 355 14.7 1976-77 2,670 400 14.9 1977-78 3,040 475 15.7 1978-79 3,230 505 15.7 1979-80 3,800 575 15.1 1980-81 4,230 630 14.9 1981-82 4,860 675 13.9 1982-83 5,160 750 14.5 1983-84 5,600 840 15.0 (eat.) PAGENO="0185" Table 5. Corporate Support of Colleges and Universities and Corporate Support of Research, by Type of Institution, 1982-83 (millions) Private Universities (73) Private Men's Colleges (9) Private Women's Colleges (77) Private Coeducational Colleges (495) Private Professional & Specialized Insts. (90) Total Private Four-Year Institutions (744) Total Public Four-Year Institutions (267) Total Four-Year Institutions (1,011) Two-Year Institutions (126) Grand Total, All Institutions (1137) Total Corporate Support Corporate Research Support $ 334.1 $ 74.3 22.2 1.5 - - 13.4 .2 - 127.9 1.9 1.5 27.9 . 6.2 22.2 $ 504.8 $ 82.7 16.3 428.6 149.3 34.8 $ 933.4 S 232.0 24.8 5 941.6 5 232.0 24.6 Note: Numbers in parentheses are numbers of participating institutions. PAGENO="0186" 180 ~ Council for Financial Aid ~ to Education, Inc. A ~id 680 Fifth Avenue. New York. New York 10019 CORPORATE GIFTS OF COMPANY PRODUCTS AND OTHER PROPERTY TO EDUCATION Introduction Corporate interest in donations of company products to colleges and universities grew sharply after the passage of the Economic Recovery Tax Act (ERTA) in August 1981. ERTA provided for enhanced tax deductions for gifts from inventory of products to be used In research or research training in the physical and biological sciences. CFAE started to collect data in 1982 about the total amounts of these gifts and of gifts of other types of property to education In its two annual surveys-Voluntary Support of Education and Corporate Support of Education. In the 1983 edition of the latter, 25 corporations reported donations of $147.5 million in company products to education. But no details existed about the nature of these gifts and company policies concerning them. Hence, a special survey was indicated. In the fall of 198'4, "product-property-gift" questionnaires were sent to 1,663 corporate contributions officers to solicit these additional details about gifts to education only. A total of 298 companies responded; 102 made gifts of company products, other property or both. An additional 7 had no formal programs but were beginning to track such contributions, which were usually made by divisions or subsidiaries. The remaining 189 did not make such gifts. Survey Results A breakdown of the responses by type of program and by industry sector follows: Industry Type of Program ------------ ---- Total Manufac- Nonmanu- Unknown turing facturing Company products only 19 2 21 Both products and other property 30 3 33 Other property only 15 30 3 ~48 TOTAL 614 35 3 102 PAGENO="0187" 181 Despite the fact that all of these companies indicated the existence of programs for making product or property gifts, not all of them made such gifts in any given year or even every year, nor could all of them put a value on such gifts. Some companies have not kept track of such gifts in the past. Some gifts were equipment that had already been fully depreciated and had no book value. Some companies did not answer all questions. Although the size of the sample is too small to permit generalization to the total corporate community, the data reported are sufficient to provide a valuable insight into the amount and nature of these gifts. The respondents also represent the major company product donors known to CFAE. Gifts of Company Products Nineteen companies in 8 manufacturing industries made donat~ions of company products only. An additional 30 manufacturers in those 8 and two other industry groups gave both company products and other property. Two companies in a service industry gave company products, one through a manufacturing subsidiary. Three companies in three additional nonmanu- facturing industry groups reported the existence of programs for making both types of gifts, although only one reported making such gifts during the period covered by the survey (1983 and 1984). The value of product gifts, where known and reported, was as follows: Gifts of Company Products Manufacturing: Electrical machinery (21) Chemicals & drugs (6) Food, beverage & tobacco (4) Machinery (4) Fabricated metals (3) Primary metals (3) Paper & lumber (3) Printing & publishing (2) Petroleum & gas (2) Transportation equipment (1) Subtotal - Manufacturing (49) Nonmanufacturing: Transportation (2) $ 40,403 (2) All others (3) 300 (1) GRAND TOTAL (54) $76,310,431 (41) $96,155,186 (34) 1983 1'~84 $61,729,490 (19) 13,910,196 (3) 32,939 (3) 480,000 (3) 32,800 (3) 3,818 (1) 1,500 (1) 141,485 (2) 12,500 (2) 25,000 (1) $76,269,728 (38) $95,281,540 (14) 167,917 (3) 36,1420 (3) 311,700 (3) 252,000 (3) 1,000 (1) 11,800 (1) 33,809 (2) 13,500 (2) $96,109,286 (32) $ 45,000 (1) 500 (1) $ 45,500 (2) Subtotal - Nonmanufacturing (5)$ 40,703 (3) (Numbers in parentheses show the number of companies reporting.) PAGENO="0188" 182 As can be seen in the table, the electrical industry dominated this type of giving. Of the 19 electrical machinery companies donating their products in 1983, 7 (or 36.8 percent) said they gave only to colleges, while 12 (or 63.2 percent) gave to both colleges and precollege institutions. In 1984, 6 (42.9 percent) gave to colleges only and 8 (57.1 percent) gave to both educational levels. None gave only to precollege institutions in either year. Of the remaining 33, 13 (44.8 percent) gave to colleges only, 6 (20.7 percent) to precollege institutions only and 34 (34.5 percent) to both. Four did not indicate an educational level. There was considerable variation in valuation practices. Of the 54 companies reporting donations of company products, 22, or just under 41 percent, used the sales price, list price or fair market value to notify recipients of the value of the gift. Another 18, or 33.3 percent, em- ployed a lesser figure, including the discounted price, the book value. cost, or half the difference between cost and resale price. These latter mechanisms may apply to the "other property" gifts that some of these companies made, because the questionnaire did not differentiate between. the two types of gift when asking for methods of notifying donees of gift values. Just over one quarter (13, or 25.9 percent) either did not answer or did not notify recipients of the value of the gift. One company, for example, explained that the donation was already fully depreciated. Obviously, this comment applied to gifts of other property. Forty of the manufacturers and three of the nonmanufacturers donating only company products took them as a tax deduction in 1983; the numbers dropped to 37 and 3, respectively, in 1984. Some of the respondents made no product gifts in 1983; others made none in 1984. The sample was different each year. Gifts from 11 companies were eligible for the enhanced deduction under Section 170(e)(3) of the Internal Revenue Code for "care of the ill, the needy, or infants." Gifts from 21 companies were eligible for the enhanced deduction under Section 17O(e)(4) for research or research training, as provided in ERTA. Although 15 of the companies indicated that they had written policies and forms for certification by the recipient about the use of the donations, only four were able to provide copies. Gifts of Other Property Other property donations were almost entirely used or surplus items. They are often unplanned, and data about their value tend to be very lumpy. Most frequently they were used furniture or office equipment, but also included used audiovisual or computer equipment, used vehicles or paper and office supplies. Occasionally, companies gave real estate and art works, usually on a one-time basis, and some of them at times provided construction materials or pro bone services, with no tax deduction being taken on the latter. PAGENO="0189" Of the `45 manufacturing companies that donated other property to educational institutions, the 30 that gave both products and property represented 10 industries; the 15 that confined their gifts to other property were in only 7 of these industries. The 30 nonmanufacturers that gave other property were in 7 industry groups, with the three that also gave company products in three of those groupings. The breakdown of corporate gifts of other property by industry groupings is as follows: Corporate Gifts of Other Physical Property Industry --~ 1983 Manufacturing: Electrical machinery (11!) Chemicals & drugs (9) Petroleum & gas (6) All others (16) Nonmanufacturing: Utilities (9) Insurance (7) Banking (6) Telecommunications (5) Engineering & Construction (2) All others (`4) $ 302,672 (7) 97,500 (`4) 51,500 (2) 2,1142,616 (`4) 15,000 (2) 20,000 (1) (20) (Numbers in parentheses show the number of companies reporting.) Only 714 of the respondents indicated the educational level to which they made property gifts. Almost half (36, or 148.7 percent) gave to both colleges and universities and precollege institutions; 30, or `40.5 percent, gave to colleges only and 8, or 10.8 percent, to schools only. 183 19814 $ 1,876,7142 (6) $ 2,576,000 (5) 8,699,218 (`4) 276,917 (3) 1,760,753 (3) 71,700 (3) 1,5214,078 (5) 188,662 (6) Subtotal - Manufacturing (145) $13,860,791 (18) Subtotal - Nonmanufacturing(33)$ 2,629,288 $ 3,113,279 (17) $ 18,116 (5) 9,200 (3) 1,3142,3147 (14) 10,000 (2) $ 1,379,663 (114) $ 117,500 (2) Unknown (anonymous replies) (3) $ 623,500 (3) GRAND TOTAL (81) $17,113,579 (`41) $ `4,610,'4'12 (33) PAGENO="0190" 184 Of the `~8 companies that only gave property, 28 notified recipients of the value of their gifts. Fifteen, or 31.2 percent, used the list price or fair market value; 13, or 27.1 percent, applied a variant, such as the net depreciated value, the salvage value or an appraised value. The rest (20, or ~1.7 percent) either did not answer or had already depreciated the property and therefore took no tax deduction on it. Slightly over half (26) of the companies took a tax deduction for their property gifts in 1983; exactly half did so in 198'4. Where do Proposals Originate? Most requests for company products came from recipients, but an almost equal number of offers of gifts originated with the companies. Most of the companies responded to requests as well as made their own offers. Three respondents also received proposals from employees outside the contributions function for gifts to organizations they worked with. Requests for gifts of "other" property originated equally from donee requests and from within the companies. Again, most companies received proposals from both sources. Two also received proposals from employees who had worked with the recipient organization. Discounted Pricing Fourteen of the companies donating only their own manufactured products also sold their products to educational institutions at discounted prices. These companies were in three industries: electrical machinery, printing and publishing and petroleum and gas. Most of them indicated that they gave standard, industry-wide discounts. A few, however, reported that discounting was done only by certain divisions or subsidiaries andthat there was no company-wide policy. A few others were in the process of setting up a company policy. The remainder of the respondents either reported that their company had no such policy or did not answer the question. CFAE Research 1/30/85 PAGENO="0191" 185 Mr. FUQUA. Now we will hear from Dr. Frank Sprow, vice presi- dent of Exxon Research &~Engineering Co. [A biographical sketch of Dr. Sprow follows:] DR. FRANK B. SPROW Dr. Sprow received his Bachelor of Science (1962) and Master of Science (1963) de- grees in Chemical Engineering from MIT and his Ph.D. in Chemical Engineering (1965) from the University of California at Berkeley. Dr. Sprow assumed his current position in December 1982 as Vice President, Technology Support for Exxon Research and Engineering Company, Clinton, New Jersey. Technology Support is responsible for managing business and technical sup- port to ER&E's R&D and engineering activities. This includes financial, legal, ana- lytical, computing, and other areas. Construction and planning for ER&E's new fa- cilities are also included. He began his career with Exxon at Baytown, Texas, in 1965 and worked in vari- ous engineering and supervisory positions there. In May 1971, Dr. Sprow joined Exxon U.S.A.'s Supply Department in Houston, and later became Head of Com- merce-Raw Materials, responsible for negotiations for purchase and sale of Exxon's U.S. crude oil supplies. He then became Technical Manager of Exxon U.S.A.'s Bayway, New Jersey Refinery in August 1975 and was named Operations Manager in August 1977. Dr. Sprow joined Exxon Research and Engineering in March 1979 and was General Manager of Petroleum R&D Programs. In January 1980, he was promoted to Vice President, Synthetic Fuels Research, where he was responsible for development and management of Exxon's research efforts on the conversion of coal and shale to liquid and gaseous products. Dr. Sprow is a member of the AIChE and the Society of Automotive Engineers. He is active in Exxon's university relationships programs and has served on various college advisory boards. STATEMENT OF DR. FRANK B. SPROW, VICE PRESIDENT, EXXON RESEARCH & ENGINEERING CO., ANNANDALE, NJ Dr. SPROW. Thank you, Mr. Chairman. It is a pleasure to have the opportunity to offer an industry per- spective regarding the research infrastructure at the university. I am quite concerned about the condition of our university re- search facilities. Frequently, when I visit a university lab, I see ob- solete instruments, crowded and marginally safe facilities, and the move to shared computing and electronically-linked research appa- ratus has passed many schools by. At the same time the health of the university research system is critical to industry. We need trained graduates in our own labora- tories and fundamental work is carried out on the universities which is too speculative for profit-making firms to engage in. This problem needs more than money as a cure. If we continue with current methods of funding university research, not enough money could be printed to really solve the infrastructure problem on a continuing basis, especially if the United States wants to retain its technological edge. As severe as this problem is, in my view it could well be much worse but for the 1981 Tax Act which provides an incentive for cor- porate donations of research and development equipment to univer- sities. The fruits of this program are obvious, most particularly in the electronics and computing disciplines. The coming consider- ation of tax reform proposals should certainly include this discus- sion of this important area. Let me back up and say that in my experience an effective re- search and development program has five requirements: First, creative people working independently and in teams. PAGENO="0192" 186 Next, state-of-th&art facilities and tools. Next, establishment of realistic research objectives, including how the work will be used if it succeeds. Next, sharing of resources to save money. Finally, but very importantly, stewarding the results of the re- search to insure that we have learned from the experience, positive or negative. Did we get what we paid for? If we did, fine. If not, why not? The current system of individual grants to university researchers has been successful in the first of these, attracting creative people, but contributes relatively little to the other four. An alternate ap- proach that would lend itself to greater utilization of business prin- ciples for managing our research resources would be the adoption of supplemental institutional grants to encourage the establish- ment of a centralized facility. Such centers would be collaborative- ly managed by the institutions using them. As envisioned here, they would facilitate the acquisition, maintenance, and sharing of instrumentation. Flexible guidelines could enable the aggregation of funds for the purchase of expensive instruments. Second, a reasonable level and continuity of funding could allow a long-term commitment to provide adequate maintenance support and operating personnel. Third, the scale of the programs would make it possible to pro- vide shared instrumentation and management in a cost-effective manner. The principal motivation behind establishing and funding cen- tralized research facilities is an attempt to solve the dilemma cre- ated by the combined increases in the need for and the cost of modern research facilities. At some cost threshhold, it is clear that centralized research fa- cilities are necessary, because the infrastructure required to sup- port research is simply too expensive to continue to exist under the purview of the individual researcher, a single department, a single university, or a single company. The concept of shared research facilities is already established in the field of physics where instrumentation at very high cost is re- quired; for example, synchrotron light sources. When instrumentation and facilities of such high capital and op- erating costs are involved, there is no alternative to shared facili- ties. There are several successful university, industry, and Govern- ment cooperative arrangements in operations today. Under the di- rection of Stanford University, an accelerator was constructed with Federal funds. Usage of this instrument, while managed by Stan- ford, is allocated on a proposal basis to industry, Government, and other universities. Industry has contributed significant resources to improve the ca- pabilities of this facility. For example, in partnership with the Lawrence Berkeley Laboratory and Stanford, we at Exxon have ex- panded the facility to include the world's most powerful x-ray source which is used for materials science research. A similar col- laboration which we are involved in exists at Brookhaven Labora- tory on Long Island where the National Synchrotron Light Source is managed by an advisory committee of representatives from several universities. PAGENO="0193" 187 The participating research team concept enables industry as well as university and Government labs to contribute funds and exper- tise to enhance and upgrade the instrumentation in return for pri- ority use. Collaboration between universities and industry in centers or through other vehicles provides an opportunity to take unique ad- vantage of the different characteristics of each, the universities on the one side, industry on the other. Universities often have difficulty upgrading their facilities and instrumentation. At the same time, labor costs are low at universi- ties due to the involvement of graduate students in the research program. In industry, just the converse is true. Investment in equipment presents no unusual hurdles. If it is justified, it is purchased. At the same time, labor costs are quite high in industry due to exten- sive overhead associated with recruiting, training, and other typi- callycorporate costs. This suggests collaborations in such centers where at the margin equipment is supplied by industry and staff- ing from universities. I also believe it is time that universities and the Government give serious consideration to some of the management procedures and techniques which have been used by industry to increase effi- ciency and output. The principles have been around for a long time: justification, objectives set, stewardship. These principles are just as applicable to individual university administrations as they are to shared instrumentation facilities. The establishment of a formal justification procedure going beyond initial procurement would help insure cost efficiency and improve return on investment not only for the procurement of equipment, but also its maintenance, upgrading, and eventual re- placement based on expected obsolescence rates. Proposals to acquire equipment should be required to address questions of continuing maintenance, training needs, safety of oper- ating personnel, planned use, availability of existing instruments which might do the job, and included in that analysis of alterna- tives to the proposal. Setting objectives for what we expect to achieve would provide benchmarks for measuring and controlling progress. Just what is it that we need to measure, with what accuracy, how rapidly? In industry, such objectives are crucial to good long-range plan- ning, and the efficient rebuilding of our research infrastructure re- quires just such a long-range view. The establishment of a stewardship mechanism can help insure maximum scientific results with the resources expended. In the ab- sence of a direct economic and competitive focus, there is a need for a mechanism to insure accountability. In industry we hold re- searchers accountable for their investment decisions as well as the quality and productivity of their research work. While we dare not* breathe excessive conservatism into a research organization, an in- telligently applied, continuing appraisal procesè is needed so that we can allocate scarce funds to the most productive laboratories and the most effective workers. There is also a great opportunity for the Federal Government to leverage its funds through collaborations with State governments 53-277 0 - 86 - 7 PAGENO="0194" 188 who have also begun to recognize the importance of a healthy re- search infrastructure to their economic well being. In my State, New Jersey, the Governor established a special com- mission to examine ways of upgrading the State's research infra- structure. The commission recommended the passage of a bond issue to create four advanced technology research centers at key New Jersey universities. The electorate approved the bond issue in the November 1984 general election. In addition to conducting research on new techniques, these cen- ters will share information with other academic institutions, gov- ernment, industry, and the public. These are suggestions meant to stimulate discussion on solutions to this critical problem. I have expanded on them in my submitted testimony. Research is becoming so capital-intensive that strong manage- ment procedures must be used to insure that our country's techno- logical investments yield maximum return. At the same time we must recognize that a purely business approach will not fit. Uni- versities are and should be different. I do know that in encouraging our researchers and managers to work with universities on this issue, industry has demonstrated a willingness to help and that this help is needed. Thank you. [The prepared statement of Dr. Sprow follows:] PAGENO="0195" 189 STATEMENT before the TA~ ~`ORCE ON SCIENCE POT~i~y COMMITTEE ON SCIENCE AND TECHNOLoGY U.S. HOUSE OE' REPRESENTATIVES by Dr. Frank 3. Sptow Vice Pregjden~ EXXON RESEARCH AND ENGINEERING COMPANY May 22, 1985 PAGENO="0196" 190 MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE: MY NAME IS FRANK SPROW, AND I AM VICE PRESIDENT, TECHNOLOGY SUPPORT, EXXON RESEARCH AND ENGINEERING COMPANY. MY RESPONSIBILITIES INCLUDE PROVIDING BUSINESS AND TECHNICAL SUPPORT TO THE COMPANY'S RESEARCH AND DEVELOPMENT ACTIVITIES. I ALSO SERVE AS A MEMBER OF THE GOVERNMENT RELATIONS COMMITTEE OF THE COUNCIL FOR CHEMICAL RESEARCH, AND THE COMMITTEE OH SCIENCE, ENGINEERING AND PUBLIC POLICY (COSEPP) OF THE AMERICAN ASSOCIATION FOR THE ADVANCEMENT OF SCIENCE. BOTH OF THESE GROUPS ARE VERY INTERESTED IN THE INSTRUMENTATION AND INFRASTRUCTURE PROBLEMS FACING UNIVERSITY RESEARCHERS, AS WELL AS OTHER MATTERS BEING CONSIDERED BY THE COMMITTEE. I WELCOME THE OPPORTUNITY TO OFFER AN INDUSTRY PERSPECTIVE TO THE MANAGEMENT CF CUR RESEARCH INFRASTRUC- TORE. THE HEALTH OF UNIVERSITY RESEARCH AND TEACMING IS CRITICAL TO THE U.S. INDUSTRIAL COMMUNITY FOR TWO PRIMARY REASONS. FIRST, THE UNIVERSITY SYSTEM ?ROV~ES INOUSTRY WITH A CONTINUING STREAM OF HIGHLY TRAINED TECHNICAL PAGENO="0197" 191 PERSONNEt~. SECOND, IT P5RMITS THE EXPLORATION OF IDEAS THAT PROMISE POTENTIALLY LARGE PAYOFFS FOR THE NATION, BUT THAT ~ARE P.S YET TOO SPECULATIVE TO JUSTIFY SUBSTANTIAL INVESTMENT BY A COMPANY SEEKING TO MAKE A PROFIT. AMERICA'S ABILITY TO COMPETE INTERWATIONALE~Y IS FACING UNPRECEDENTED CHALLENGE FROM ABROAD. MAINTAINING THE HEALTH OF OUR RESEARCH EQUIPMENT AND FACILITIES IS ESPECIALLY CRITICAL TO THIS COMPETITION. MOST INDUSTRIAL RESEARCHERS AND ACADEMICS AGREE THAT THE RESEARCH INFRA- STRUCTURE IS CURRENTLY IN A STATE OF SERIOUS DECLINE. THE FEDERAL GOVERNMENT'S SUPPORT FOR RESEARCH AND TEACHING LABORATORY EQUIPMENT AND FACILITIES GREW RAPIDLY THROUGH THE SO'S AND 60'S, RESPONDING TO A PENT-UP DEMAND FOR HIGHER EDUCATION, INCREASED ENROLLMENTS, AND AN EXPLODNG BODY OF SCIENTIFIC AND TECHNOLOGICAL KNOWLEDGE. THE NATIONAL SCIENCE FOUNDATION (NSF), THE DEPARTMENT OF DEFENSE (DOD), AND NATIONAL INSTITUTES OF HEALrH (NIH) ASSUMED THE PRINCIPAL RESPONSIBILITY FOR ALLOCATING FEDERAL FUNDS. THE PRIMARY MECHANISM USED WAS A SYSTEM OF GRANTS-IN-AID TO COMPETITIVELY PEER-REVIEWED PROJECTS. THIS RESEARCH SYSTEM WAS SUCCESSFUL. IN ESTABt.iSH~G THE U.S. A~ THE WORLD LEADER IN BASIC SCIENCE. WE RAVE PAGENO="0198" 192 ENCOURAGED INNOVATIVE ~EW TECHNOLOGIES AND BUILT A RESEARCH BASE THAT REMAINS THE STRONGEST AND MOST PRO- DUCT::VE IN THE WORLD. HOWEVER, SINCE 1968 FEDERAL FUNDING FOR MAIN- TAINING OUR RESEARCH INFRASTRUCTURE HAS REMAINED ESSEN- TIALLY FLAT IN REAL DOLLARS. THE GOVERNMENT NOW PROVIDES ABOUT OWE-SIXTH OF THE ESTIMATED $2.0 BILLION DOLLARS SPENT PER YEAR BY UNIVERSITIES FOR EQUIPMENT AND FACILI- TIES, AS COMPARED TO ONE-THIRD IN 1968. TO MY I(NOWLEDGE, THERE IS NOW NO PLANNED EFFORr BY NSF OR ANY MISSION AGENCY SPECIFICALLY DESIGNED TO HELP MAINTAIN AND REBUILD UNIVERSITY RESEARCH FACILITIES. WE HAVE INSTEAD RELIED ON THE RESEARCH FUNDING "SYSTEM" TO SEE TO THE STRENGTH OF OUR RESEARCH INFRASTRUCTURE. THERE HAS BEEN NO EXPLICIT DEFINITION OF THE RESPONSIBILITY OF THE FEDERAL GOVERN- MEN'!'. AS A CONSEQUENCE, SEVERAL SCHOOLS HAVE LOBBIED CONGRESS DIRECTLY FOR SUPPORT, BYPASSING THE TRADITIONAL SCIENTIFIC PEER-REVIEW SYSTEM. THESE TACTICS HAVE RESULTED IN FUNDS FOR FACILITIES BEING INSERTED IN CONGRESSIONAL APPROPRIATIONS BILLS. HOWEVER DISCONCERTING THIS MAY BE TO THE RESEARCH COMMUNITY, T HAS BEEN DRIVEN BY REAL NEEDS AND THE INADEQUACY OF EXISTING MECHANISMS TO MEET THEM. PAGENO="0199" 193 ONE COULD ARGUE AT LENGTH OVER THE SIZE OF THE PROBLEM. FOR EXAMPLE, THE DEPARTMENT OF DEFENSE (DOD) HAS ESTIMATED THAT $1.5 to $2.0 BILLION WOULD BE REQUIRED TO ELEVATE QUALIFIED ACADEMIC LABORATORIES TO `WORLD-CLASS" STATUS IN INSTRUMENTATION. WHETHER THIS IS SOMEWHAT EXAGG.ERATED, UNDERESTIMATED, OR RIGHT ON THE MARK DOESN'T REALLY MATTER. THE PROBLEM IS A MA.0R ONE. ANOTHER INDICATION OF THE EXTENT OF THE NEED IS TO GAUGE DEMAND. FOR EXAMPLE, CONSIDER THE RESPONSE TO THE RECENT NSF INITIATIVE TO CREATE SUPERCOMPrJTINC CENTERS AT UNVERSITIES. THE INITIAL $20 MILLION PROGRAM DREW Si. BILLION IN PROPOSALS. A FURTHER INDICATION OF NEED COMES FROM THE RESPONSE TO A PROGRAM INITIATED BY DOD. IT PRO- VIDES $30 MILLION ANNUALLY FOR SUPPORT OF INSTRUMENTATION IN ACADEMIC SCIENCE AND ENGINEERING. THIS PROGRAM HAS DRAWN PROPOSALS TOTALLING NEARLY $650 MILLION. AS SEVERE AS THE PROBLEM IS, IN MY VIEW T COULD WELL BE MUCH WORSE BUT FOR THE 1981 TAX ACT WHICH ~RCV!DES AN INCENTIVE FOR CORPORATE DONATIONS OF R~SE7%P~H AND DEVELOPMENT EQUIPMENT TO UNIVERSITIES. THE FRCITS CF THIS PROGRAM ARE OBVIOUS, MOST PARTICULARLY IN THE EI.ZCT~CNtCS PAGENO="0200" 194 AND COMPUTING DISCIPLINES. THE COMING CONSIDERATION OF TAX REFORM PROPOSALS SHOULD INCLUDE DISCUSSION OF THIS IMPORTANT AREA. AS DIFFICULT AS THE SITUATION IS FOR XNSTRUMEN~- TATION, REBUILDING CAMPUS LABORATORY FACILITIES IS PERHAPS EVEN MORE CHALLENGING. MANY OF US IN INDUSTRY AR! SHOCKED WHEN WE EXPERIENCE THE CURRENT STAT! OF MANY UNI- VERSITY LABORATORIES. THE NEEDS FOR MODERNIZED FACILI- TIES ARISE FROM CHANGES IN PROGRAMS AND TECHNOLOGIES, PHYSICAL DETERIORATION, AND COMPLIANCE WITH GOVERNMENTAL SAFETY AND ENVIRONMENTAL REGULATIONS. A RECENT NSF SURVEY OF PLANNED CAPITAL EXPENDITURES AT 25 MAJOR RESEARCH UNIVERSITIES--EXTRAPOLATED TO ALL RESEARCH UNIVERSITIES- -ESTIMATES THAT $1.3 BILLION PER YEAR WOULD BE NEEDED TO MEET FACILITY NEEDS. THE ESTIMATE OF FUNDS REQUIRED IS NOT SURPRISING, MY OWN COMPANY RECENTLY COMPLETED CON- STRUCTION OF A NEW LABORATORY IN CLINTON, NEW JERSEY, TO PROVIDE STATE-OF-THE-ART FACILITIES FOR SEVERAL HUNDRED SCIENTISTS. THE COST OF THIS FACILITY WAS OVER 5200 MILLION, CORRESPONDING TO OVER $300 PER SCUARE FOOT OZ LAB SPACE. IN ADDITION TO MAKING THE FACZE~ITY ST~TZ-OF- THE-ART, SAFETY AND ENVIRONMENTAL COMPLANC WERE O~ CON- CERN, AND AR! INCREASINGLY COSTLY. PAGENO="0201" 195 SOt~VING THE INFRASTRUCTURE PROBL~EM WILL HOT BE EASY. SINCE THE INSTRUMENTATION AND FACIr.~ITY HORIZON IS CONSTANTLY MOVING, ANY SOLUTIONS DEVISED WILL HAVE TO BE SUSTAINED ONES, HOT ONE-SHOT EFFORTS. THE POLICIES AND INSTITUTIONS THAT WORKED IN THE PAST WILL LIKELY HOT BE APPROPRIATE FOR THE FUTURE BECAUSE OF RAPID CHANCES IN TECHNOLOGY, AND.INTENSE COMPETITION FOR SCARCE FEDERAt~ RESOURCES. THIS COMMITTEE HAS RECEIVED A GREAT DEAL OF TESTIMONY RECOMMENDING APPROACHES TO PROVIDING INCREASED SUPPORT FOR THE MAJOR PRE-REQUISITES--TRAINED PERSONNEL, STATE-OF-THE-ART EQUIPMENT, AND MODERN FACILITIES--NECZS~ BAR! FOR SUCCESSFtJE. RESEARCH AND DEVELOPMENT. WHAT HAS OFTEN BEEN OVERLOOKED IN THE DISCUSSION HAS BEEN THE HEED FOR BETTER SYSTEMS FOR MANAGING, OPERATING, SHARING, AND STEWAROING RESEARCH RESOURCES. MANAGEMENT ISSUES HAVE LARGELY BEEN LEFT UNADORESSED, DUE PERHAPS TO OUR HIGHLY DECENTRALIZED SYSTEM OF UNIVERSITY RESEARcH. IT :s TIME THAT WE ADDRESS THEM BECAUSE THERE ARE ABUNDANT OP?OR- TtJNITIES TO BOTH INCREASE RESEARCH OUTPUT AND ~FFic:ENcy, THE FEDERAL GOVERNMENT CLEARLY HAS TO ASSUME SOME DEGREE OF DIRECT RESPONSIBILITY, BUT IT CA:~NOT SOLVE PAGENO="0202" 196 THE PROBLEM BY ITSELF, PARTICULARLY IN AN ERA OF LIMITED RESOURCES. THE PROBLEM CAN BE EFFECTIVELY ADDRESSED BY AN AMALGAM OF THE BEST MANAGEMENT TECHNIQUES OF UNIVERSITIES, INDUSTRY, AND GOVERNMENT. OUR RESEARCH INFRASTRUCTURE CAN BENEFIT SUBSTAN'- TIALLY FROM THE APPLICATION OF MANAGEMENT PROCEDURES AND TECHNIQUES DEVELOPED IN THE INDUSTRIAL RESEARCH SECTOR. HOWEVER, THE USE OF THESE PROCEDURES WILL REQUIRE CONSID- ERATION OF ALTERNATE MECHANISMS FOR ALLOCATING FEDERAL RESEARCH FUNDS TO UNIVERSITIES AND INDIVIDUAL INVESTIGAT- ORS. AT THE SAME TIME, WE SHOULD NOT OVER-CENTRALIZE AND DESTROY THE AUTONOMY AND DIVERSITY NEEDED FOR GOOD RE- SEARCH. THE CURRENT PROJECT GRANT SYSTEM, WHICH HAS BEEN SUCCESNEUL IN DIRECTING FEDERAL FUNDS INTO HIGH-QUALITY RESEARCH, HAS IN SEVERAL WAYS ADVERSELY AFFECTED THE MAIN- TENANCE OF OUR RESEARCH INFRASTRUCTURE, PART~ULARLY IN THE AREA OF INSTRUMENTATION. THE INTENSE COMPETITION FCR THE LI~'ITEC FUNDS AVAILABLE HAS AFFECTED THE FUNDING ALLO- CATION DECISIONS Of PEER REVIEW COMMITTEES, OFTEN .EADING TO SPECIFIC DENIAL OF FUNDS REQUESTED FOR INSTRUMENTATION. PAGENO="0203" 197 IT HAS DISCOURAGED INVESTIGATORS FROM APPtJYI~G FOR SEEDED INSTRUMENTATION OR DETERRED THEM FROM UNDERTAKING RESEARCH REQUIRING IT. IT HAS LED SOME INVESTIGATORS TO DEFER ACQUISITION O~ INSTRUMENTATION IN ORDER TO USE LIMITED FUNDS TO PRESERVE SCIENTIFIC AND SUPPORT STAFF. AN ALTERNATE APPROACH THAT WOULD LEND ITSEt~F TO GREATER UTILIZATION OF BUSINESS PRINCIPLES FOR MANAGING OUR RESEARCH RESOURCES WOULD BE THE CREATION OF A NEW SUP- PLEMENTAE4 INSTITUTIONAl4 ~9IPMENT GRANT TO ENCOURAGE THE ESTABLISHMENT OF CENTRALIZED FACILITIES, SUCH CENTERS WOULD BE COLLABORATIVELY MANAGED BY THE INSTITUTIONS USING THEM. AS ENVISIONED HERE, THEY WOULD FACILITATE THE ACQUISITION, MAINTENANCE, AND SHARING OF INSTRUMENTATION, FLEXIBLE GUIDELINES COULD ENABLE THE AGGREGATION OF FUNDS FOR THE PURCHASE OP EXPENSIVE INSTRUMENTS. SECOND, A REASON;~BLE LEVEL AND CONTINUITY Of' FUNDING COULD ALLOW A LONG-TERM COMMITMENT TO PROVIDE ADEQUATE MAINTENANCE SUP- PORT AND OPERATING PERSONNEL, AND THIRD, THE SCALE OF PROGRAM.3 WOULD MAKE IT POSSIBLE TO PROVIDE SHARED INSTRU- MENTATI)N AND MANAGEMENT IN A COST-EFFECTIVE MANNER. PAGENO="0204" 198 THE PRINCIPAL MOTIVATION BEHIND ESTAB~SHING AND FUNDING CENTRALIZED RESEARCH FACILITIES IS AN ATTEMPT TO SOLVE THE DILEMMA CREATED BY THE COMBINED INCREASES ZN THE NEED FOR AND COSTS OF MODERN RESEARCH FACILITIES. AT SOME COST THRESHOLD, IT IS CLEAR THAT CENTRALIZED RESEARCH FACILITIES ARE NECESSARY, BECAUSE THE INFRASTRUCTURE RE-. QUIRED TO SUPPORT RESEARCH IS SIMPLY TOO EXPENSIVE TO CONTINUE TO EXIST UNDER THE PURVIEW 0! THE INDIVIDUAL RESEARCHER, A SINGLE DEPARTMENT, A SINGLE UNIVERSITY OR COMPANY. THE CONCEPT OF SHARED RESEARCH FACILITIES IS ALREADY ESTABLISHED IN THE FIELD OF PHYSICS WHERE INSTRU- MENTATION OF VERY HIGH COST IS REQUIRED, SUCH AS SYNCHRO- TRON LIGHT SOURCES. WHEN INSTRUMENTATION AND FACILITIES OF SUCH HIGH CAPITAL AND OPERATING COST ARE INVOLVED, THERE IS NO ALTERNATIVE TO SHARED FACILITIES. THERE ARE SEVERAL SUCCESSFUL UNIVERSITY, INDUSTRY, AND COVERNMENT CO-OPERATIVE ARRANGEMENTS IN OPERATION TODAY. UNDER THE DIRECTION OF STANFORD UNIVERSITY, AN ACCELERATOR WAS CONSTRCCTED WITH FEDERAL FUNDS (DOE) - USACE OF THIS INSTRUMENT, WHILE MANAGED BY STANFORD, IS ALLOCATED ON A PROPOSAL BASIS TO INDUSTRY, GOVERNMENT AND OT!~R ~NIVZR- SITIES. INDUSTRY HAS CONTRIBUTED SIGNIFICANT RESOURCES TO PAGENO="0205" 199 IMPROVE THE CAPABILITIES OF THE FACILITY. FOR EXAMPLE, IN PARTNERSHIP WITH LAWRENCE BERKEI3!Y LABORATORY AND STANFORD, WE IN EXXON HAVE EXPANDED THE FACILITY TO IN~ CLUDE THE WORLD'S MOST POWERFUL X~RAY SOURCE (FOR MATERIALS SCIENCE). A SIMILAR COLLABORATION EXISTS AT BROOKHAVEN LABORATORY ON LONG ISLAND, WHERE THE NATIONAt~ SYNCHROTRON LIGHT SOURCE IS MANAGED 8? AN ADVISORY COM- MITTEE OF REPRESENTATIVES FROM SEVERAL UNIVERSITIES. THE PARTICIPATING RESEARCH TEAM CONCEPT ENABLES INDUSTRY, AS WELL AS UNIVERSITY AND GOVERNMENT LABS, TO CONTRIBUTE FUNDS AND EXPERTISE FOR ENHANCING AND UPGRADING THE INSTRUMENTATION IN RETURN FOR PRIORITY USE. OTHER CENTRALIZED FACILITIES USED B! MY COMPANY ARE THE INTENSE PULSED NEUTRON SOURCE AT THE ARGONNE NATIONAL LABORATORY IN CHICAGO, THE NATIONAL CENTER FOR SMALL ANGLE SCATTERING RESEARCH AT OAK RIDGE, T!NN. AND THE NEUTRON SCATTERING RESEA~CH FACILITY AT THE UNIVERSITY OF MISSOURI. PURCHASE OF SUCH SOPHISTICAT~ INSTRUMENTATION BY INDUSTRIAL LAB- ORATORIES CANNOT BE COST JUSTIFIED~. OUR EXPERIENCE HAS SHOWN THAT PARTICIPATION IN COOPERATIVE RZE~1ENTS IS MORE COST EFFICIENT AND WE ALSO BENEFIT FROM TONTACT WITH THE COMMUNITY OF RESEARCHERS IN THESE CENTERS. PAGENO="0206" 200 COLLABORATION BETWEEN UNIVERSITIES AND INDUSTRY IN CENTERS OR THROUGH OTHER VEHICLES PROVIDES AN OPPOR- TUNITY TO TAKE ADVANTAGE 0? THE DIFFERENT CHARACTERISTICS OF EACH. UNIVERSITIES OFTEN HAVE DIFFICULT? UPGRADING FACILITIES AND INSTRUMENTATION FOR THE REASONS ALREADY OUTLINED. AT THE SAME TIME. LABOR COSTS ARE LOW DUE TO THE INVOLVEMENT OF GRADUATE STUDENTS IN THE RESEARCH PRO- GRAMS. IN INDUSTRY, THE CONVERSE IS TRUE. INVESTMENT IN EQUIPMENT PRESENTS NO UNUSUAL. HURDLES--I? IT IS JUSTIFIED, IT IS PURCHASED. AT THE SAME TIME, LABOR COSTS ARE HIGH DUE TO EXTENSIVE OVERHEADS ASSOCIATED WITH RECRUITING, TRAINING, AND OTHER TYPICAL.Z.Y tsCORPORATEn COSTS. THIS SUGGESTS COLLABORATIONS WHERE -- AT THE MARGIN -- EQUIP- MENT IS DISPROPORTIONATELY SUPPLIED BY INDUSTRY AND STAFF- ING FROM UNIVERSITIES. STATE GOVERNMENTS HAVE ALSO BEGUN TO RECOGNIZE THE IMPORTANCE OF A HEALTHY RESEARCH INFRASTRCCTURE TO THEIR ECONOMIC WELL-BEING. IN MY STATE, NEW ERSEY, THE GOVERNCR ESTABLISHED A SPECIAL COMMISSION TO EXAMINE WAYS OF UPGRADING THE STATE'S RESEARCH INFRASTRUCTURE. THE CQMMIS3ION RECOMMENDED THE PASSAGE OF A B0N~ ISSUE TO CREATE FOUR ADVANCED TECHNOLOGY RESEARCH CENTERS AT Z(EY PAGENO="0207" 201 NEW JERSEY UNIVERSITIES. THE ELECTORATE APPROVED THE BCND ISSUE IN THE NOVEMBER 1984 GENERAL EZ~ECTION. IN ADDITION TO CONDUCTING RESEARCH ON NEW TECHNIQUES, THESE CENTERS WILL SHARE INFORMATION WITH OTHER ACADEMIC INSTITUTIONS, GOVERNMENT, INDUSTRY, AND THE PUBLIC. THE KEY POINT HERE, AS REGARDS INFRASTRUCTURE, IS THAT THESE RESEARCH CENTERS ARE BEING ESTABLISHED ZN AREAS WHERE THERE IS CLEAR ECONOMIC AND INDUSTRIAL NEED AND WHERE SOME RESIDENT CAPA- BILITY ALREADY EXISTS IN THE STATE. FURTHERMORE, IT IS REQUIRED THAT THE ACADEMIC INSTITUTION HOUSING THE CENTERS SHARE EQUIPMENT AND FACILITIES. ALL PARTICIPANTS WERE MADE AWARE THAT RESOURCES WERE NOT SUFFICIENT TO ALLOW FOR DUPLICATION. INDUSTRY IS BEING WELCOMED INTO THESE ACTIVITIES. EVEN WITHIN THE EXISTING FRAMEWORK OF OUR NATIONAL LABORATORIES, THERE ARE OPPORTUNITIES FOR THE APPLICATION OF SOME BASIC MANAGEMENT PRACTICES. SEVERAL OF THESE PRACTICES WERE RECOMMENDED TO THE PRESIDENT AS A RESULT OF A YEAR-LONG REVIEW OF THE NATION'S FEDERAL LABORATORIES CONDUCTED 5Y THE WHITE HOUSE SCIENCE COUNCIL. I ENDORSE THE SUGGESTIONS OFFERED BY THE STUDY PANEL PAGENO="0208" 202 CHAIRED BY DAVID PACKARD, AIMED AT ELIMINATING DEFICIEN- CIES THAT LIMIT BOTH THE QUALITY AND COST EFFECTIVENESS OF THE RESEARCH PERFORMED AT OUR FEDERAL LABORATORIES. TO IMPROVE MANAGEMENT, THE PANEL RECOMMENDED THE ESTABLISH- MENT OF AN EXTERNAL OVERSIGHT COMMITTEE, INCLUDING UNI- VERSITY AND INDUSTRY REPRESENTATIVES, TO EVALUATE PERFORM- ANCE AND RESULTS. SECOND, THE PANEL RECOMMENDED THAT LAB DIRECTORS BE HELD ACCOUNTABLE FOR THE QUALITY AND PRODUC- TIVITY OF THEIR LABORATORIES. THE THIRD RECOMMENDATION FOR IMPROVING MANAGEMENT DEALT WITH REDUCING THE DEGREE OF DETAILED DIRECTION EXERCISED BY PARENT AGENCIES. THERE IS AN URGENT WEED TO IMPROVE MANAGEMENT CAPABILITIES FOR DEVELOPING AND MAINTAINING OUR RESEARCH INFRASTRUCTURE. WITH THE ESTABLISHMENT OF NEW SHARED RESEARCH CENTERS AND THE FUNDING MECHANISMS TO SUPPORT THEM, THERE ARE SEVERAL ADDITIONAL APPROACHES THAT COULD BE CONSIDERED FOR MANAGING FEDERAL AND UNIVERSITY INSTRU- MENTS AND FACILITIES. AT THE RISK OF SOUNDING LIKE A MANAGEMENT TEXTBOOK, THE PRINCIPLES HAVE 8EEN AROL~ND FOR A LONG TIME: JUSTIFICATION, OBJECTIVE SETTING, AND STEWARD- SHIP. INCIDENTALLY, TH~SE PRINCIPLES ARE A?PLIA3LE TO INDIVIDUAL UNIVERSITY ADMINISTRATIONS AS WELL AS TO SHAREO PAGENO="0209" 203 INSTRUMENTATION FACILITIES. THE ISSUE IS HOW TO CREATE AN INCE~'rIVE FOR UNIVERSITIES TO APPLY THESE MANAGERIAL. Tooi.s. IN ANY CASE, THE ESTABLISHMENT OF A FORMAL. ~STIFICATION PROCEDURE GOING 3EYOND INITIAL PROCUREMENT WOULD MEL.? ENSURE COST EFFICIENCY AND IMPROVE RETURN ON INVESTMENT NOT ONLY FOR THE PROCUREMENT OF EQUIPMENT, BUT ALSO ITS MAINTENANCE, UPGRADING, AND EVENTUAL REPLACEMENT BASED ON EXPECTED OBSOLESCENCE RATES. PROPOSALS TO ACQUIRE EQUIPMENT SHOULD BE REQUIRED TO ADDRESS QUESTIONS OF CONTINUING MAINTENANCE, TRAINING AND SAFETY FOR OPERAT- ING PERSONNEL, PLANNED USE, AVAILABILITY OF EXISTING INSTRUMENTS, AND INCLUDE AN ANALYSIS OF ALTERNATIVES. SETTING OBJECTIVES FOR WHAT WE EXPECT TO ACHIEVE WOULD PROVIDE BENCHMARKS FOR MEASURING AND CONTROLLING PROGRESS. JUST WHAT DO WE NEED TO MEASURE? WITH WHAT ACCURACY? HOW RAPIDLY? IN INDUSTRY, OaECTIvES ARE CRUCIAL TO GOOD LONG RANGE PLANNING, AND TM! EFFICIENT REBUILDING OF OUR RESEARCH INFRASTRUCTURE RE~UIR!S JUST SUCH A LONG-RANG! VIEW, PAGENO="0210" 204 THE ESTABLISHMENT OFA STEWARDSHIP MECHANISM CAN HELP ENSURE MAXIMUM SCIENTIFIC RESULTS FOR THE RESOURCES EXPENDED. IN THE ABSENCE OF A DIRECT ECONOMIC AND COM' PETI~'IVE FOCUS, THERE ISNEED FOR A MECHANISM TO ENSURE ACCOtNTABIL.ITT. IN INDUSTRY, WE HOLD RESEARCHERS ACCOUNT- ABLE FOR THEIR INVESTMENT DECISIONS, AS WELL AS THE QUALI- TY AND PRODUCTIVITY OF THEIR WORK. WHILE WE DARE NOT BREED EXCESSIVE CONSERVATISM IN A RESEARCH ORGANIZATION, AN INTELLIGENTLY APPLIED CONTINUING APPRAISAL PROCESS IS NEEDED TO ALLOCATE FUNDS TO THE MOST PRODUCTIVE LABORA- TORIES AND WORKERS. LET ME MAKE TWO ADDITIONAL POINTS. FEDERAL AND STATE GOVERNMENTS DO NOT HEED TO BEAR THE FULL BURDEN OF MODERNIZING INSTRUMENTS AND FACILITIES AT THE UNIVERSI- TIES. ALTERNATIVE METMODSO FUNDt~G SHOULD BE EXPLORED. ONE SUCH ALTERNATIVE, DEBT FINANCING, HAS BEEN USED SUC- CESSFULLY FOR MORE THAN 10 YEARS AT COLORADO STATE UNI- VERSITY. SECOND, THE USE OF !~~TROWIC NETWORKS TO GATHER AND COMMUNICATE INFORMATION AMONG RESEARCHERS IN A YIELD COULD HAVE A SUBSTANTIAL IMPACT ON THE EFFtCIENT USE OF PAGENO="0211" 205 INSTRUMENTATION AND DEVELOPMENT OF TECHNOLOGY. AS ONE EXAMPLE, A NATIONAL ELECTRONIC INVENTORY OF AVAILABLE INSTRUMENTS (POSSIBLY INCLUDING SOME INDtJSTRIAL EQUIPMENT) MIGHT GO A LONG WA! TO REDUCE DUPLICATION AND MAXIMIZE USAGE. FURTHER, SUCH A SYSTEM COULD HELP FACILITATE AN ASSESSMENT OF THE MAGNITUDE OF EQUIPMENT AND FACILITIES HEEDS. THESE ARE SUGGESTIONS MEANT TO STIMULATE DIS- CUSSION ON SOLUTIONS `to THE INFRASTRUCTURE PROBLEM. I HOPE I HAVE IDENTIFIED SOME PRACTICES ROUTINELY USED BY INDUSTRY THAT CAN BE ADAPTED FOR REBUILDING OUR RESEARCH INFRASTRUcTURE. RESEARCH IS BECOMING SO CAPITAL-INTENSIVE THAT THE USE OF PROVEN BUSINESS PROCEDURES AND TECHNIQUES MUST BE USED TO ENSURE THAT OUR INVESTMENTS YIELD MAXIMUM SCIENTIFIC AND TECHNOLOGICAL RETURN. AT THE SAME TIME, WE MUST RECOGNIZE THAT INDUSTRIAL AND UNIVERS:TY RESEARCH ARE NOT AND SHOULD NOT BE THE SAME. I DO KNOW THAT IN ENCOURAGING OUR RESEARCHERS AND MANAGERS T~ WORK WITH UNIVERSITIES ON THIS ISSUE, INDUSTRY HAS ~EMONSTRAT!D A WILLINGNESS TO HELP -- AND THAT THIS HELP IS NEEDED. PAGENO="0212" 206 Mr. FUQUA. Thank you very much, Dr. Sprow. We are now very pleased to welcome back Dr. Donald Langen- berg. He has been here many times before. He is currently the chancellor of the University of Illinois at Chicago. STATEMENT OF DR. DONALD N. LANGENBERG, CHANCELLOR, UNIVERSITY OF ILLINOIS AT CHICAGO, CHICAGO, IL Dr. LANGENBERG. Thank you, Mr. Chairman. Let me say that it is a pleasure to be here before you again. I am- here' today on behalf of five higher education associations: ~The Association of American Universities, the National Association of State Universities and Land-Grant Colleges, the American Coun- cil on Education, the Association of Graduate Schools, and the Council of Graduate Schools in the United States. As this commit- tee is well aware, universities comprising the membership of these associations perform most of the academic research supported by the National Science Foundation and by the mission agencies of the Federal Government. Mr. Chairman, I would like to begin by congratulating you on behalf of those associations, you and your panel, for undertaking this timely and thorough review of our science policy and for in- cluding in your work an examination of the longer term capital needs of research universities. We welcome this opportunity to dis- cuss with you the universities' research facilities, capital deficit, and to offer our suggestions on how we ought to meet our future requirements. In the interest of time, I am going to summarize my remarks, so that we might have -some more time for questions. When the National Science Foundation was established in 1950, a concern for the research capital base became an early mission of the Foundation. Beginning in 1959, the Foundation joined with the National Institutes of Health, the U.S. Office of Education, NASA, the Department of Defense, and other agencies in establishing re- search facilities programs designed to expand and strengthen the Nation's research capacity. NSF and NIH led the way, but the mis- sion agencies, especially DOD and NASA, also played essential roles. On the NSF side, there was established the Graduate Science Fa- cilities Program. Between fiscal 1960 and fiscal 1970, the Founda- tion provided just under 1,000 grants totaling $188 million to assist in the construction of laboratories and the acquisition of equip- ment. As we face our present budget constraints, it is important to remember that the Foundation did not pay the entire cost of the facilities it helped to fund. Matching funds were required. In fact, the Foundation's contributions had a very impressive leveraging effect. The total value of the facilities and equipment acquired with NSF assistance was about $500 million, and that is better than a 2-to-i leverage. According to NSF, over the period 1957 to 1970, Federal grant funds for graduate science facilities totaled about three-quarters of a billion dollars. National investments from all these sources were surely several times that. Then in 1970 all Federal funding for this purpose ceased. Federal leadership receded. The linkage between PAGENO="0213" 207 federally-funded research programs and the Federal contribution to the capital facilities necessary to sustain them was broken. We re- versed our commitment to stimulating capital investments in uni- versity research facilities, and our present problems began to grow. The topic of your hearing is infrastructure. Yesterday, Dr. Dale Corson, in his testimony before this committee, defined the term infrastructure to include the people, the facilities, the equipment, the research libraries, and the institutional arrangements required to do effective research. Dr. Corson is, as usual, correct. The term "infrastructure" includes much more than the research facilities which, however, are the focus of my remarks today. Even the term "research facilities" requires some definition. The Committee on Science, Engineering, and Public Policy of the Na- tional Academy of Sciences has just published the fourth edition of the report required by the National Science and Technology Policy Organization Priorities Act of 1976. It is titled, The Outlook for Science and Technology, 1985. That report helpfully distinguishes among four classes of re- search facilities: national facilities like the Fermi National Acceler- ator Laboratory in Illinois; university-based research facilities, a new or renovated chemistry or engineering building would be an example; regional research facilities-for example, the Triangle Universities Nuclear Laboratory in North Carolina; and technology centers-as an example there, the Basic Industry Research Insti- tute at Northwestern University. All of these facilities are typically located at or in some associa- tion with a university or group of universities. There are important resource and policy questions surrounding each one of those class- es. I would like to limit my remarks, however, to just one of them: the need to modernize university campus-based research facilities that are home to the Nation's competitive scientific and engineer- ing research programs. Now a few words about the dimensions of the problem: the prob- lem, in its essentials, is quickly stated. Many of the Nation's lead- ing universities are hampered by substantial and growing invento- ries of obsolete laboratories. Present estimates of the capital deficit are inadequate and they vary rather widely. We are pleased, there- fore, incidentally, that this committee addressed the need for better information and analysis of the problem by including in the FY 1985 NSF Authorization Act new authority for NSF to develop a permanent analytical capability in this area. We hope the Founda- tion will proceed rapidly to develop this essential data base. Now although we don't know the dimensions of the problem with any precision, there are estimates that can give us a general idea of its magnitude. There are some present estimates that say that one-half of the physical plant of all universities and colleges is more than 25 years old, and that one-quarter of it was built prior to World War II. In 1981, the AAU reported that universities were able to meet only about half of their accumulating needs to re- place, modernize, and renovate their research laboratories. Our experience at the University of Illinois confirms these earli- er findings. We have just completed an audit of the condition of all university buildings excluding student auxiliary buildings-hous- ing, unions-and also excluding our powerplants. We are talking PAGENO="0214" 208 about academic and administrative space. The audited buildings university-wide number more than 280 and they house nearly 10 million net assignable square feet, and they have an estimated re- placement value exceeding $2 billion. Fifty-six percent of the build- ings on the Urbana campus and 44 percent of the total on both campuses are over 50 years old. The total cost to renovate the better buildings and replace the worst is estimated at just under $600 million; that is to say, nearly 30 percent of the total replace- ment costs. A considerable portion of these facilities is research fa- cilities. In summary, the University of Illinois has an immediate research facilities deficit conservatively estimated to be several hundred million dollars. Furthermore, these estimates do not in- clude the projected requirements of new research programs. This building condition audit was carried out in terms of continuing use of these buildings for their present purposes. It does not include the estimated cost of their adaptation to those special needs of new kinds of research programs. The Department of Defense has recently published a report that I believe confirms that these audit results are not peculiar to the University of Illinois. On April 29, the DOD, in response to an 1984 request by the House Committee on Armed Services, published a report entitled, Selected University Laboratory Needs in Support of National Security. I understand that copies of that report have been provided to the committee. Significantly, this report does not present information gathered from the university. Instead, it gives the DOD perspective, in particular, a research program officer in the DOD research support arm. We understand that only a small fraction of the top 100 research universities were included in each review, and, unlike our audit at the University of Illinois, which was university- wide across all fields, the DOD estimates are confined to the needs of relatively few institutions in just five disciplines which were judged essential to the Department's mission: chemistry, electronics, engi- neering, materials, and physics. The services estimate that these key universities have priority needs for equipment and facilities in just these five fields of almost $700 million. The report recommends that the Department of De- fense establish a 5-year, $300 million laboratory modernization pro- gram and that other Federal agencies join DOD in a Government- wide effort. We are pleased to see that the House Committee on Armed Serv- ices already is responding to the DOD's concerns. Last week the committee increased from $25 to $200 million the funding request- ed by the President for a new program named the "University Re- search Initiative." We hope that the members of the Committee on Science and Technology will join with the House Committee on Armed Services in securing an appropriation for this potentially important initia- tive at the full authorized level. A satisfactory solution to this problem lies beyond the capacity of almost all institutions. There is required, we believe, a broader effort that must come from a well-conceived and well-coordinated national program, led by the Federal Government and again work- ing through its six major research agencies: DOD, DOE, NASA, NIH, NSF, and USDA. PAGENO="0215" 209 We believe there are several basic principles that ought to guide the development of a Government-wide reinvestment initiative. Let me underline the word "reinvestment." The bit of historical back- ground that I gave suggested that there was a period when the Federal Government was investing heavily in the capital infra- structure for research in the Nation's universities. Any renewed program could be characterized as a reinvestment. Among those are the following principles: university research and training programs supported by Federal agencies are essential to our security, our health, our economy, and our general well being. Research and education programs of many universities and col- leges are hampered by inadequate research facilities and equip- ment, and these institutions lack the ability to replace or modern- ize their facilities without the assistance of the Federal research agencies. The capital deficit of universities is threatening the Nation's competitive position in science, engineering, and technology; thus, placing at risk our future national security, our health, and our standing in the international marketplace. A national program to secure the necessary reinvestment in the capital base at universities is needed. Federal agencies, States, in- dustry, and others all must participate because the Nation's needs exceed the capacity of any one sector to address them alone. The Federal research agencies must rebuild the linkages between their research programs and the capital base by making capital in- vestments in those academic fields and institutions that are essen- tial to each agency's mission. Facilities modernization programs ought to be established and developed an integral parts of each agency's research program. Proceeding from these guiding principles, we suggest that a suc- cessful facilities reinvestment program will have at least the fol- lowing characteristics: It will provide for a sustained commitment for a period of at least 8 to 10 years. Each Federal dollar invested will be matched, thereby at least doubling the leverage of each tax dollar. Awards will be made competitively among qualified institutions with primary but not necessarily sole emphasis given to the scien- tific and technical quality of the research and training to be pro- vided. State and local considerations will also be taken into ac- count. Finally, smaller, developing research universities and research- oriented colleges will be guaranteed an opportunity to compete for funds among comparable institutions, so as to provide them a rea- sonable chance of success. Mr. Chairman, we believe that we can no longer defer our recom- mitment to the research enterprise and that we can no longer afford to turn our backs on the eroding foundations of our universi- ties. Difficult choices lie ahead, only because these are unusually difficult times. Some of our choices no doubt will require us to defer certain pri- orities in order to get on with the necessary rebuilding effort. PAGENO="0216" 210 Saying no is never easy, but it is absolutely essential that we begin that priority-setting process. I thank you for the opportunity to share these thoughts with you. I would be pleased to respond to your questions. [The prepared statement of Dr. Langenberg follows:] PAGENO="0217" 211 STATEMENT OF DR. DONALD N. LANGENBERG CHANCELLOR UNIVERSITY OF ILLINOIS AT CHICAGO BEFORE THE COMMITTEE ON SCIENCE AND TECHNOLOGy TASK FORCE ON SCIENCE POLICY U.S. HOUSE OF REPRESENTATIVES IN BEHALF OF ASSOCIATION OF AMERICAN UNIVERSITIES NATIONAL ASSOCIATION OF STATE UNIVERSITIES AND LAND-GRANT COLLEGES AMERICAN COUNCIL ON EDUCATION ASSOCIATION OF GRADUATE SCHOOLS COUNCIL OF GRADUATE SCHOOLS IN THE UNITED STATES MAY 22, 1985 PAGENO="0218" 212 Introduction Mr. Chairman and members of the Science Policy Task Force, my name is Donald Langenberg and I am Chancellor of the University of Illinois at Chicago. Before assuming my present responsibili- ties, I had the honor of serving for two and a half years as Deputy Director of the National Science Foundation. I am pleased to appear before you today on behalf of five higher education associations: the Association of American Universities, the National Association of State Universities and Land-Grant Col- leges, the American Council on Education, the Association of Graduate Schools and the Council of Graduate Schools in the United States. As this Lommittee is well aware, the universities comprising the membership of these associations perform most of the academic research supported by the National Science Founda- tion and by the mission agencies of the federal government. Mr. Chairman, we congratulate you and the Panel for undertaking this timely and thorough review of our science policy, and for including in your work an~examination of the longer term capital needs of research universities. We welcome this opportunity to discuss with you the universities' research facilities capital deficit, and to offer our suggestions on how we ought to meet our future requirements. PAGENO="0219" 213 Background About forty years ago, inspired by Dr. Vannevar Bush and using the lessons learned during World War II, we charted a new course for our research universities in the nation's life. We saw these institutions in a new perspective, and we chose to nurture their unique research and training capabilities. We committed the resources necessary to enhance our research base and to have universities play central and indispensable roles in the nation's long-term research and training effort. With the benefit of hindsight, most now recognize the wisdom of those decisions. But it is good to remember that they were farsighted and courageous decisions in their time. The National Science Foundation was created through a lengthy and contentious process. - Many leaders of science and government differed over the appropriate role of the federal government in academic science. Some were concerned that a National Science Foundation might interfere with, rather than nurture, the free conduct of science. But, after several years of effort, the necessary accommodations were achieved, and, to the nation's benefit, the NSF was established in 1950. A concern for the research capital base became an early mission of the Foundation. Beginning in 1959 the Foundation joined with the National Institutes of Health, the United States Office of Education, NASA, the Department of Defense and other agencies in PAGENO="0220" 214 establishing research facilities programs designed to expand and strengthen the nation's research capacity. NSF and NIH led the way, but the mission agencies, especially DOD and NASA, also played essential roles. NSF established the Graduate Science Facilities Program. Between Fiscal Year 1960 and Fiscal Year 1970 the Foundation provided 977 grants totaling $188 million to assist in the construction of laboratories and the acquisition of equipment. As we face our present budget constraints, it is important to remember tnat the Foundation did not pay the entire cost of the facilities it helped to fund. Matching funds were required. In fact, the Foundation's contributions had a very impressive leveraging ef- fect. The total value of the facilities and equipment acquired with NSF assistance was about $500 million, better than a two-to- one leverage. The programs and funding mechanisms of the agen- cies varied, but the policy objectives were the same--all of the agencies sought to strengthen the universities' research ana graduate training capabilities. According to the NSF, federal grant funds for graduate science facilities for fiscal years 1957-1970 totaled about $3/4 billion. National investments from all sources surely were several times that. Then, in 1970, all federal funding ceased. Federal lead- ership receded. The linkage between federally funded researcri programs and the federal contribution to the capital facilities necessary to sustain them was broken. We reversed our commitment PAGENO="0221" 215 to stimulating capital investments in university research facili- ties, and our present problems began to grow. The fruits of those original decisions confirn their wisdom. The nation can take legitimate pride in the extraordinary accomplish- ments of the past four decades. There is no need to recount the history for this Committee. You provided indispensable leader- ~hip for this historic effort. It is sufficient to note how those policy choices have transformed our health, our economy, our educational system and our national security. As we look ahead, we can glimpse our future as we contemplate the implica- ~gu~s 1. Total P.diral Grant Funda foe Graduate Science FaiMdas by Ascal Years 1157.1170 PAGENO="0222" 216 tions of revolutionary developments in such promising fields as biotechnology, advanced materials, microelectronics, and super- computers. The question before us is whether we remain today sufficiently wise, and courageous, to make the inescapable and difficult choices before us. The Meaning of Infrastructu~.~ The term infrastructure, though widely used to characterize our concerns, is an imprecise guide to discussions of the problem and policy choices. Yesterday Dr. Dale R. Corson, in his testimony before the Committee, defined the term infrastructure to include the people, the facilities, the equipment, the research libraries and the institutional arrangements required to do effective re- search. He is correct. The term includes much more than the research facilities which are the focus of my remarks. The term research facilities itself requires definition. The Committee on Science, Engineering, and Public Policy of the National Academy of Sciences has just published the fourth edi- tion of the report required by the National Science and Techno- logy Policy, Organization and Priorities Act of 1976 titled "The Outlook for Science and Technology 1985." The report helpfully distinguishes among four classes of research facilities: 1. national facilities, intended to serve a national, often international, research community. The report PAGENO="0223" 217 cites the Fermi National Accelerator Laboratory in Illinois as an example of such a facility. 2. university-based research facilities; a new or. reno- vated. chemistry or engineering building is an example. 3. regional research facilities usually based at a univer- sity; the report cites the Triangle Universities Nuclear laboratory in Durham, North Carolina, as one example. 4. technology centers; these are usually located at or affiliated with universities and are tied to local or regional economies--for example, the Basic Industry Research Institute at Northwestern University. Important resource and policy questions surround each of these four classes of facilities. I will limit my remarks, however, to just one of them: the need to modernize university, campus-based research facilities that are home to the nation's competitive scientific and engineering research programs. The Dimensions of the Problem The problem, in its essentials, is quickly stated. Many of the nation's leading universities are hampered by substantial and growing inventories of obsolete laboratories. In a rea.i. sense we PAGENO="0224" 218 have allowed the capital base of our research enterprise to become a wasting asset. For many years, as we stimulated invest- ment in research with striking success, we simultaneously forced our institutions to consume their capital assets. When we abruptly stopped investing in the capital base for our national research programs, we effectively mortgaged our future, and that mortgage has now come due in institutions and states across the country. The consequences are ominous for the researchers and students who must work in inadequate buildings with obsolete equipment. Rich opportunities to exploit new fields are being lost, many of the most promising research questions are not being addressed, exces- sive time is being consumed by the maintenance and repair of outdated instruments and support equipment--often because labora- tories lack the necessary technical support personnel, interac- tions between academic and industrial researchers are being im- poverished, commercially available devices for making advanced measurements are not being applied to research questions and the quality of training provided to advanced undergraduate and graduate students is being compromised. These conditions erode faculty morale at a steady pace, and they make careers in industrial and national laboratories increasingly attractive for our brightest students. Prospective graduate students, especially highly talented U.S. citizens, now fre- quently opt to pursue alternative careers rather than work in PAGENO="0225" 219 inferior university environments. Half of the Ph.D. degrees awarded by our engineering schools now go to foreign nationals, many of whom return to their own countries. Our ability to attract and retain highly qualified minorities and women. also is being steadily reducea. Obsolete research equipment is one important aspect of tne broad- er problem now widely recognized by federal and state government, by industry and, of course, by the universities themselves. Some important steps already have been taken by federal agencies, especially by NSF and DOD. But anyone who looks carefully at the equipment problem will quickly see that these efforts are only a beginning. For example, a recent NSF survey of 43 universities found that 25 percent of equipment now in use is obsolete; only 16 percent is state of the art; halt of ~t is at least six years old. More than 90 percent of the department heads responding reported that ~important subject areasN of research could not be pert ormea in their laboratories because they lack the necessary instrumenta- tion. Almost half of them rated their equipment as insuff i- cientR; only 8 percent said their equipment is Nexcellent.N These findings are based on a survey of 22,300 items inventoried in three key fields: computer science, physical science and engineering. They ought.to interest any who are concerned about our ability to develop new technologies, to create advanced 53-277 0 - 86 - 8 PAGENO="0226" 220 manufacturing processes and to shorten the time necessary to transfer findings from the laboratory. to new applications. Beyond the instrumentation problem lies the ill-defined but lar- ger, and certainly more difficult, problem of replacing and modernizing the research buildings which house our researchers, their students and their research instruments. Present estimates of the capital deficit are inadequate, and they vary widely. We are pleased, therefore, that this committee addressed the need for better information and analyses of the problem by including in the FY 1985 NSF Authorization new authority for NSF to develop a permanent analytical capability in this area. We hope the Foundation will proceed rapidly to develop this essential data base. Some present estimates are that one-half of the physical plant of all universities and colleges is more than twenty-five years old; one-quarter of it was built prior to World War II. A 1980 report by the Association of American Universities found that the median age of research instruments in university laboratories surveyed was twice that of commercial laboratories. In 1981 the AAU reported that universities were able to meet only about half of their accumulating needs to replace, modernize and renovate their research laboratories. - Our experience at the University of Illinois confirms these earlier findings. We have just completed an audit of the condi- PAGENO="0227" 221 tion of all university buildings, except student auxiliary build- ings and our power plants. The audited buildings number more than 280, house nearly 10 million assignable square feet and have an estimated replacement value exceeding $2 billion. Fifty-six percent of the buildings on the Urbana campus and 44 percent of the total on both campuses are over 50 years old. The total cost to renovate the better buildings and to replace the worst is estimated at just under $600 million; i.e., nearly 30 percent of the total replacement cost. A considerable portion of these facilities are research facilities. In summary, the University of Illinois has an immediate research facilities deficit conser- vatively estimated to be several hundred million dollars. And. these estimates do not include the projected requirements of new research programs. Furthermore, this building condition audit was carried out in terms of continuing use of these buildings for their present purposes; it does not include estimated costs of their adaptation to the special needs of new kinds of research programs. A report just published by the Department of Defense confirms that our audit results are not peculiar to the University of Illinois. On April 29 the DOD, in response to a 1984 request by the House Committee on Armed Services, published a report titled, "Selected University Laboratory Needs in Support of National Security." I understand that copies of the report have been provided to the Committee. PAGENO="0228" 222 This new report increases our understarding of the research capital deficit. Significantly it doeE~ not present information gathered from the universities. Instead it gives the DOD per- spective of the problem. It provides Estimates prepared by research program officers of the Office of Naval Research (ONR), the Army Research Office (ARO), the Air Force Office of Scienti- fic Research (AFOSR) and the Defense Acvanced Research Projects Agency (DARPA). The Division Directora of the Services assessed the priority research laboratory needs of the key universities in which they fund research. (We understand that only a small fraction of the top 100 research universities were included in each review.) Unlike the Illinois audit, which was university- wide across all fields, the DOD estimates are confined to the needs of relatively few institutions in just five disciplines essential to the Department's mission: chemistry, electronics, engineering, materials and physics. The following table, ~IV-1 Summary of Selected Laboratory Needs of Major University Performers of Defense Research,~ presents the results of the study. The Services estimate that the key univer- sities have priority needs for equipment and facilities in these five fields of almost $700 million. The report recommends that the Department of Defense establish a five-year $300 million laboratory modernization program, and that other federal agencies join DOD in a governmentwioe effort. Data prepared by the National Science Foundation help to place PAGENO="0229" 130,000 49,000 33,000 82,000 296,500 36,200 39,000 75,200 55,000 62,100 117,100 15,800 9,300 25,100 ~ ~: ~j' 161,000 15?,~00 318,4oo !!!L~!! 259,11001' 373 700*1 275,300 ~t6,800" 6~jj~ji. Table IV-1. &sary of selected laboratory needa of Jor univ.ralty per(orra of defense renearcb. Building Discipline Priority kequirements (gross ft2) Fecilities Eq4~nt Total Coats Chemistry 1 35,000 5,000 111,000 19,000 2 412000 `111700 Subtotals $T~öISO i?~~ Electronics Subtotals Engineering Subtotals Materials Subtotals Physics Subtotals 2 2 2 2 22(10(0) 390,0011 I 80,000 Siaaary 1 761,500 2 783.300 ________ Totals 1,51111,800 *Nuaibers are rounded to the nearest $100 thousand. "includes $150 million for astrophysics high angular resolution t~ger. PAGENO="0230" 224 the DOD findings in context. Spending by universities on R&D facilities and equipment, currently about $1 billion per year, has been relatively flat since 1968 in current dollars, and in constant dollars, declined some 60 percent during 1966-81. The federal share of the total facilities effort, meanwhile, declined from 32 percent in 1966-68 to 16 percent in 1981. In constant dollars federal obligations for academic R&U plant decreased by 90 percent between 1966 and 1983. (See the following figure.) Clearly a competitive industry would not so effectively decouple investment in its capital base from its long-term objectives. Federal Obligations for R&D PIWt to Universities and Collages Fiscal Years 1963-1985 (Dollars in Millions) 250f 0 L~. / `~ 150\~/__~...._ 100-- -\ ~.. a .~ ~ 63646566675869707172737475767778 79808182838485 SOURCE: Division of Science Resources Studies. National Science Foundation. Figures for 1984 and 1985 are estimates. We are pleased to see that the House Committee on Armed Services PAGENO="0231" 225 already is responding to the DOD's concerns. Last week the Committee increased from $25 million to $200 million the funding requested by the President for a new program named the University Research Initiative (URI). Through this program the DOD. intends to strengthen its investment both in people and in the capital base. Graduate fellowships, faculty development programs, re- search instrumentation and facilities programs are proposed. In its report the Committee addressed the seriousness of the pro- blem. The Committee's statement is attached to my testimony (Attachment A). We hope that the members of the Committee on Science and Technology will join with the House Committee on Armed Services in securing an appropriation for this potentially important initiative at the full authorized level. A~Suggested Approach In the absence of a cohesive national effort, universities are attempting to address the capital deficit by a variety of means. Debt is mounting in many institutions as they borrow funds, use available bonding authorities, leverage available funds with other private and state funds, and cost-share with other institu- tions. Certainly the creative energies of universities must be tapped to their capacity. I believe most already are stretching their imaginations and resources to the prudent limit, and sometimes beyond. A satisfactory solution lies beyond the capacity of almost all / PAGENO="0232" 226 institutions. That broader effort must come from a well-con- ceived, well-coordinated national program led by the federai government, again working through its six major research agen- cies: Department of Defense, Department of Energy, National Aeronautics and Space Administration, National Institutes of Health, National Science Foundation, and United States Department of Agriculture. We believe that severs], basic principles ought to guide the development of a governmentwide reinvestment initiative. Among these are the following: - University research and training programs supported by federal agencies are essential to our security, our health, our economy and our general well-being. - The research and education programs of many universi- ties and colleges are hampered by inadequate research facilities and equipment, and these institutions lack * the ability to replace or modernize their facilities without the assistance of the federal research agencies. - The capital deficit of universities is threatening the nation's competitive position in science, engineering and technology, thus placing at risk our future nation- al security, our health, and our standing in the PAGENO="0233" 227 international marketplace. - A national program to secure the necessary reinvest- ments in the capital base of universities is needed; federal agencies, states, industry and others all must participate because the nation's needs exceed the capa- city of any one sector to address them alone. - The federal research agencies must rebuild the linkages between their research programs and the capital base by making capital investments in those academic fields and institutions that are essential to each agency's mis- sion; facilities modernization programs ought to be established and developed as integral parts of each agency's research program. Proceeding from these guiding principles, we suggest that a successful facilities reinvestment program will have at least the following characteristics: - it will provide for a sustained commitment for a period of at least eight to ten years; - each federal dollar invested will be matched, thereby at least doubling the leverage of each tax dollar; - awards will be made competitively among qualified in- PAGENO="0234" 228 stitutions with primary but not necessary sole, empha- sis given to the scientific and technical quality of the research and training to be provided; state and local considerations also will be taken into account; and - smaller, developing research universities and research- oriented colleges will be guaranteed an opportunity to compete for funds among comparable institutions so as to provide them a reasonable chance of success. Conclusion Mr. Chairman, we believe that we no longer can defer our recom- mitment to the research enterprise. We can no longer afford to turn our backs on the eroding foundations of our universities. Difficult choices lie ahead only because these are unusually difficult times. Some of our choices no doubt will require us to defer certain priorities in order to get on with the necessary rebuilding effort. Saying no is never easy, but it is absolutely essential that we begin that priority-setting process. Thank you for the opportunity to share these thoughts with you. I will be pleased to respond to your questions. PAGENO="0235" 8~ 229 ATTACH~~~ E z I In C k ~Iz il h PAGENO="0236" 230 PANEL DISCUSSION Mr. FUQUA. Thank you very much. Let me thank all of you, and particularly, Dr. Langenberg, for the comment about the University Research Initiative that the Armed Services Committee has put forth. We have not had a chance to discuss that with them and I am very pleased to see the forward-looking attitude they have taken in this area and with con- siderable increase over what had been recommended by the Presi- dent. You can rest assured of my personal support when that comes to the floor for authorization as well as the appropriations process. I think it is very important to support that program. Dr. Hensley, in your opinion the growth in the number and the cost of research support personnel-I think you included about one- fourth research and about three-fourths support personnel-is that attributed to the growth of government regulation and so forth? Dr. HENSLEY. A portion would be, the accounting portion, but very small. It is really the changing science structure that is changing on the universities. Mr. FUQUA. The management of the research and support per- sonnel is principally a matter for the universities to manage them~ selves. Dr. HENSLEY. That is correct. Mr. FUQUA. Is there anything that the Federal Government can do to try to reduce that escalating cost of research infrastructure? Dr. HENSLEY. I don't think it is reducible. I think it is going to continue to grow. The accounting procedures and management procedures that are currently in the universities are in need of a reassessment by insti- tutions themselves. Some place along the way a system of prioriti- zation, what they will do, and a way of looking at where they are spending their money has to occur. Academics will have to resist this, the same way they have resisted time and effort reporting. It is very difficult to get a handle on exactly where money is going in university research unless you do it on a project-by-project basis. The infrastructure as a whole is not costed out to a project. Infrastructure is supported at a departmental level usually or a central facilities level without a system of chargebacks unless it is for computers, so it becomes very difficult as an accountant to look at it and find out where the money is going specifically. University academics want the support but they also do not want to make the effort as far as paperwork is concerned to give you some kind of audit trail back to where those facilities are supporting a particu- lar project or a particular piece of research. Mr. FUQUA. What impact would it have for changing the ac- counting procedures, particularly depreciation or amortization of equipment and buildings as suggested to us yesterday by one of the witnesses? Dr. HENSLEY. I think it would have-- Mr. FUQUA. Some 50 years to 25 years more realistically. Dr. HENSLEY. I think that would help. Again, in supporting sci- ence and research that we will need it would mean changing our PAGENO="0237" 231 models within our institutions about how we will do this. However, it would be a step forward as far as I am concerned. Dr. Langenberg may have a different opinion. Dr. LANGENBERG. I think it would be a helpful recognition of the realities of lifetimes of research laboratories and research instru- mentation. I do not think it provides the solution to our present problem. Mr. FUQUA. Mr. Smith, you mentioned in the report you had pri- vate support. How much of that is going for basic research versus general education? Do you have a breakdown of that? Mr. SMITH. No, Mr. Chairman, we do not have a breakdown fol- lowing that particular line; 15 percent is what we show the institu- tions reporting to us as support for research. That is the only clue we have here. The general categories that are recognized by both the account- ing people and fund-raising people with whom we have contact cor- respond to those various purposes we show. Mr. FUQUA. What I am trying to get at is this: you indicated a number of colleges and the amount of money they raise privately, from corporations, nonalumni, et cetera. Of course, I have been in- volved in that business somewhat, too, being an alumnus of a school and serving on the foundation. Some of that goes for schol- arships that may not be in basic research but other areas. Not all of it is in what we call basic research. It may go into other func- tions. Some of it also may go to support eminent scholars, Chairs, and so on. I wondered whether there were some kind of breakdown as to how much was going in each direction or whether those fig- ures were available. I am not sure they are. Mr. SMITH. They are not available in quite that form. We do know about 70 percent of all the funds received by all colleges des- ignated by a variety of things would be a general designation- used by the college for student aid, any kind of student aid, gradu- ate, undergraduate, minorities, it can be used for those students who have particular financial needs, or a recognition for scholastic excellence. It can be used in any way they want. Other funds can be used for endowed Chairs. Some funds go directly to academic de- partments. Mr. FUQUA. That is right. Mr. SMITH. They may be restricted as far as the university is concerned to the chemistry department, engineering school, medi- cal school, but unrestricted by the dean of that school. Undoubted- ly, some of those funds that are likely funds designated for capital purposes ultimately wind up used for research or research infra- structure. There is no way to trace it down because these are not clear-cut categories. Mr. FUQUA. Dr. Sprow, you mentioned four or five things univer- sities do in teaching-new knowledge, and so on. Dr. SPROW. Correct. Mr. FUQUA. The one thing I thought was missing which I thought was very important was that of teaching. It is not neces- sarily the genesis of it because it starts in the home, secondary and elementary schools and graduate schools where you really have the basic training mechanism for future scholars and researchers and people who serve in Congress and whatever. I feel very strongly PAGENO="0238" 232 about this and I made that point many times. That is where we train people and these are the people we will need in society. Per- haps that can be No. 6. Dr. SPROW. That goes along with 1 through 5. The teaching is critical from an industrial perspective. I think from my own obser- vation this problem we are talking about, the equipment, instru- mentation and infrastructure problem is at its most critical in teaching facilities, particularly in the undergraduate activities in the universities. It is the undergraduate engineering lab, under- graduate chemistry lab where this situation we are talking about is really critical. Mr. FUQUA. You also mentioned using business management pro- cedures and techniques developed in the industrial sector to im- prove the effectiveness of infrastructures. Based on your own obser- vations and experience, what has kept the universities from doing that? Are there cases, institutions, or other situations where there has been significant progress made in trying to apply these proce- dures? Dr. SPROW. The current system with the great majority of the funding going to individual researchers just generally works against the application of a great deal of management techniques. University people, faculty members, and researchers are an inde- pendent breed, are thankful they are, are not all conservative types like us folks in industry. I think when you have a system that by and large allocates sums to a group of independent people the chances to apply management techniques in an across-the-board way to maximize sharing and maximize planning or obsolescence and looking at ways to tie together research activities electronical- ly and through computing, it is sort of like pushing the wrong end of the straw. It never will get through as long as that is the funda- mental mechanism. That mechanism has a place. It has produced some tremendous research. The cost of the equipment has gotten to the megascale- supercomputers, advanced physics equipment. That old mechanism and independence which is inextricably a part of it I do not think will solve the problem. Mr. FUQUA. We discussed this yesterday briefly from the academ- ic standpoint. One of the questions that comes to mind, and it has been mentioned in some of the conversations we have had before the task force, that back when we switched somewhat from the block grants, larger grants, more individual oriented research pro- grams, we tend then to remove long-range planning and so forth for infrastructure. You mentioned 1970. There were some after that time, I think. The National Science Foundation has centers of excellence awards which worked very effectively. They were very beneficial to all concerned. Dr. LANGENBERG. That is correct. Mr. FUQUA. Do you think that has contributed part of the prob- lem? Dr. SpRow. Now that I have the mike, on the centers, I think there is a key philosophical decision which has to be made when such centers are set up, and that is not to let the organization that is geographically responsible for the center dominate the activities in the center. If you set up a center at the University of Utah and PAGENO="0239" 233 make it so difficult for researchers not at that university to partici- pate at the university it is-I am not picking on Utah but picking them out of the air-if you make it so difficult for people outside that geographic area to participate, the center is of no use. You have to work at that from the front end to be sure there is an advi- sory board, active participation of proposals and research from out- side the host university. Dr. LANGENBERG. If I may, a couple general comments on the management question. I think this is indeed a serious question. Universities need to pay more attention than they have in the past to the managing of universities. They are different from industry. They are managed from the top down only to a degree. They are managed to a substantial degree by the individual faculty and indi- vidual researchers. A colleague of mine defines a faculty member as someone who thinks otherwise. That is, I think, a very true defi- nition. As has been pointed out, when they are equipped with their own funds from NSF, NIH, through a grant which they consider to be their own, just like the fact the university is the grantee, it tends to be very difficult to manage the process in any kind of a coherent way. One has an individual group of entrepreneurs, if you will. Nevertheless, because they are forced to do so, I think more and more the universities, the leading universities, are beginning to de- velop quite sophisticated management systems. They are not exact- ly like those in industry. To some degree they might be said to rely on some of the consensus development or collective management techniques that we sometimes look at our Japanese colleagues and, wonder whether they are using those better than we are in indus- try. In some sense they are a bit like that. There are many univer- sities with strong management systems. I also believe that larger research systems, had they been cen- ters, centers of excellence awards, had they been Materials Re- search Laboratories, centers in which the funding depends on the bringing together of many different faculty researchers, many fac- ulty students, and post-doctorates, institutions requiring manage- ment, they do tend to enhance and promote the notion that to a degree even the research process at a university can be managed to our advantage, financial and otherwise. Dr. HENSLEY. I would like to address that issue, also. Universities have developed centers. They have developed their own centers. If you were to look at the directory for centers and institutions, you would find there has been a large growth since 1960 from close to 1,800 up to 5,500 at this time. There was a huge growth in centers and institutes during the 1960's and seventies at all institutions. These were not necessarily funded or started by the Federal Government. They were started by the institutions themselves. In some cases material science cen- ters were started by the National Science Foundation funds, but other types of centers have been started because they have recog- nized a disciplinary or regional need to establish that center at that particular institution. More moneys are coming in to these centers and they have grown from an average size of about 18 people per center up to PAGENO="0240" 234 where there are 63 on the average size of each center. Therefore, the composition within institutions is changing. If you look at the National Science Foundation statistics as to where money is going, you will see more money is going to centers percentagewise, an increasing amount of money into center and in- stitute-type of development rather than individual areas. Institu- tions are putting together management techniques that will meet the changing needs of the society and they are doing it in their own way in what they call their centers, and these things are rela- tively small-100 people or so. That is the way they are handling their response to better management. Mr. FUQUA. Before I call on Mr. Bruce, we may have some addi- tional questions. I will have to excuse myself. We may have addi- tional questions to submit to you. We would appreciate your re- sponding to those questions. Mr. BRUCE. Welcome, Dr. Langenberg. I am glad to have you here. One of the things in your testimony you brought forward is that there should be matching grants. You mentioned $700 million in immediate needs and perhaps another $300 million over a 5-year period. Dr. Hensley, I noticed in this morning's paper that Texas col- leges and universities are falling on to hard times because of the lack of oil revenue. Could the universities in this country try to come .up with matching dollars on a $1 billion research program? Could you match that dollar for dollar? Dr. LANGENBERG. I believe they could. There is almost no incen- tive like money. If Federal money would flow only in response to a match from another source, I think if you look for the public insti- tutions that States support, prototypes of a kind of program that could be looked to for possible matching funds for the public insti- tutions, if you look at the very substantial numbers we have heard about for private, particularly corporate, giving, yes, I think the universities could come up with matching funds. They have in the past and I think they could now from one source or another. Dr. HENSLEY. I would concur with that opinion. Mr. BRUCE. I came from another science and technology meeting. We talked about transfer of information from research facilities. There is a possibility we will have legislation pending to allow a 15- percent royalty program, having researchers participate in patents and licensing provisions. Down the road, would that work if these research facilities were private individuals who would receive a portion of the proceeds from licenses or patents? Dr. LANGENBERG. That is presently the case in most places I know of. Where there is an invention and where the university in one way or another uses the patent, the faculty researcher normal- ly participates in the proceeds. Mr. BRUCE. Does the university realize itself anything? Dr. LANGENBERG. Yes, it is shared and often shared among the university and inventors, department or center and then the uni- versity. Mr. BRUCE. Our proposal is to do that with Federal laboratories. Do you think that might be successful? Dr. LANGENBERG. It might very well be successful, yes. PAGENO="0241" 235 Mr. BRUCE. Thank you, gentlemen, for your testimony today. The task force stands adjourned subject to the call of the Chair. [Whereupon, at 12:10 p.m., the task force recessed, to reconvene on Tuesday, June 10, 1985, at 9:30 a.m.] [Questions and answers for the record follow:] PAGENO="0242" 236 ANSWERS TO QUESTIONS FOR THE TASK FORCE ON SCIENCE POLICY COMMITTEE ON SCI ENCE AND TECHNOLOGY U.S. HOUSE OF REPRESENTATIVES PREPARED BY DR. FRANK B. SPROW VICE PRESIDENT EXXON RESEARCH AND ENGINEERING CO. NOVEMBER 14, 1985 PAGENO="0243" 237 1. Q. We have often been told that a general concern which industry has about today's science and engineering graduates is that they are trained on obsolete research equipment in comparison with the more up-to-date equipment they will be using in industry. How does industry manage to acquire and make available to their research staff the most modern equipment, and what lessons can government and the universi- ties learn from industry in this area? A. The principles employed by industry for purchasing research instruments are the same as those used when consid- ering other significant investments. To ensure that research results are obtained in a timely and cost-efficient manner, we make certain that all the alternatives to achieving research results are evaluated prior to purchase. Government and universities should consider separating equipment costs from other costs when analyzing proposals, and require investigators to offer alternatives to purchasing additional new equipment for achieving research results. This should help ensure that excessive equipment is not purchased, and that the available funds are channeled to state-of-the-art apparatus. ` 2. Q. You have made the suggestion that in most areas of research a threshold exists between when each researcher should have his or her own instrument and when an instrument should be used by a group of researchers. In the absence of the recognition of such a threshold by the universities, can and should the government science agencies develop and establish such thresholds? A. Yes. Factors that should be considered in establishing such a threshold include the cost of the equipment, ease of operation, calibration repeatability and expected time of usage. 3. Q. You observed (page 7 of your prepared testimony) that, in your' view, the "exact size of the instrumentation deficit does not really matter. The problem is a major one." Would you not agree, however, that for us in the Congress, where the allocation of scarce resources and the matching of needs to resources is an important function, there is a compelling requirement to have estimates of the infrastructure needs that are as accurate as possible? A. Yes. A reasonably accurate assessment of the cost to rebuild our research infrastructure is important for estab- lishing priorities for the allocation of available resources. However, before commissioning new studies, government should review the already published data to be certain that it is inadequate. My impression is that it is sufficient. PAGENO="0244" 238 4. Q. You noted (bottom of page 7 of your prepared testimony) that competition for limited funds combined with the decision-making system involving peer review has- often led to the specific denial of funds requested for instrumentation. Do you mean the denial of proposals specifically for instru- mentation only, or do you mean the denial of instrumentation funds when they are part of a research proposal? A. The denial of instrumentation funds when they are part of a research proposal. Researchers frequently have to request equipment for two or three years before it is granted. Routine but essential instrumentation is frequently cut from research grant awards on the sometimes incorrect premise that instruments are readily available from other sources. As a consequence, researchers may be forced to use less effective, obsolete equipment which slows the pace of their research. Further, researchers may not request needed instruments in their research proposals because they fear the funds necessary will jeopardize approval of the basic proposal. 5. Q. You made the observation (page 11 of your prepared testimony) -that "In industry. . . investment in equipment presents no hurdles - if it is justified, it is purchased." Why, in your opinion, have government agencies and the universities not been able to do the same? A. Research programs in the private sector are justified on economic return, and programs surviving this selection process are appropriately supported with manpower and equip- ment. Government and universities appear to have difficulty in making hard choices and narrowing programs down. For example, the NSF and DOE have a history of opting to provide low levels of funding for many investigators versus ade- quately funding fewer projects. Industry's capital and equipment investment tends to be high, while manpower is tightly stewarded. The tendency within government and universities seems to be to favor projects which employ large numbers of researchers rather than equipment. 6. Q. Are there, to your knowledge, any instances where govern- ment agencies or the universities themselves have successful- ly established mechanisms for holding researchers accountable for investment decisions, as is being done in industry (page 15 of your prepared testimony)? A. Although research proposals are subject to extensive review prior to approval, I know of no formal stewardship mechanism for holding individual investigators accountable for the quality and productivity of their work. PAGENO="0245" 239 7. Q. The debt financing method has been explained in detail before this Committee in previous hearings. What are the reasons, in your experience, why that financing method has not been more widely used in the universities? A. University administrators tend to be concerned with the risk involved with debt financing. Incurring debt for the purchase of equipment is uncommon, and may in some cases be prohibited by state law. Instrumentation is so closely tied to the researcher that his or her leaving the institution could render the equipment nonusable. The university could be left with interest payments but no offsetting income stream from a sponsoring agency, etc. Federal regulations, as represented by 0MB Circular A-21, do not allow interest payments as costs which will be funded by government grants. Therefore, universities seek to avoid interest costs, as the majority of their funding for research comes from government sources. Additionally, universities are nonprofit operations; consequently, the tax deduction associated with interest costs does not provide the same tax reduction incentive as in a prof it-oriented industrial organization~ -~ 8. Q. It has been suggested that the allowances under the indirect cost system in 0MB Circular A-2l have too long write-off times to realistically allow for the replacement of buildings and equipment. For example, the use charge for laboratories is now based on a 50-year life, whereas indus- trial practice is said to be to write of f laboratories on a 20 to 25 year basis. What are, in general, the practices in industry with respect to write-off periods for buildings and equipment? A. Industry typically follows tax depreciation schedules as set forth by ACRS, namely 18 years for buildings and 3 years for equipment. 9. Q. Certain tax provisions now are intended to encourage industry to donate research equipment to the universities. Do we have any data on how much such equipment is being donated to the universities? A. To the best of our knowledge no compilation has been made of the aggregate. i am concerned that such donations do not typically include funds to maintain the equipment, and this can be a substantial burden to the receiving organization. PAGENO="0246" 240 10. Q. Is the incentive on industry to don~e research equipment to universities having the effect that modern equipment is being given to universities, or is it in fact obsolescent equipment that reaches the universities when industry replac- es its own equipment with more up-to-date instruments? A. The 1981 Economic Recovery Tax Act (ERTA) contained a provision encouraging corporate donations of instrumentation to institutions of higher learning. This provision allowed a deduction equal to cost plus one-half of the difference between the market value and cost. We believe the ERTA incentive has encouraged the donation of badly needed, modern computer equipment to universities; however, it appears to have had little impact on corporate donations of other types of modern instruments. We should point out that the ERTA provision provides an incentive for equipment donations by manufacturers, but offers no incentive for industry research organizations to donate equipment, nor does it offer an inducement for manu- facturers to provide funds for maintaining the equipment they donate. 11. Q. How many scientists and support personnel will be housed in the $200 million research facility which your company has just completed? Is this facility paid for through charges to the companyt s operating divisions, that is, through some form of overhead payments, or through other means? To what extent is justification for such a large facility based on forecasts of specific benefits versus more general forecasts of the expected but unpredictable benefits of scientific research generally? A. At present, about 800 scientists and support personnel are housed in our Clinton, New Jersey, research facility. Operating costs, including rental of the facility from its owner, Exxon Capital Corporation, are borne by Exxon and its affiliates. Justification for use of this new facility is based on the realization of specific benefits, i.e., safety, efficiencies of consolidating activities, upgrading of high maintenance equipment, etc., as well as on intangible factors associated with research productivity and growth potential. PAGENO="0247" 241 Questions f or Dr. Donald N. Langenberg 1. It now appears highly likely that the size of the pie from which all feder- al research support must come will remain fixed in the foreseeable future, or only expand slightly. If that is the case where, within that total re- search budget, can we, in your opinion, make modest decreases in funding levels in order to provide the resources for the needs of the infrastruc- ture at the universities? I. Under the assumption that total federal funding for University research will remain essentially constant, I would support a general all-agency increase of funding for infrastructure needs. This would obviously have to occur, given the assumption, at the expense of other programs. Within the resource pool available for non-infrastructure needs, I think it is essential to continue to apply the criteria presently used by the R&D fund- ing agencies, rather than target particular areas to assume the full cost of intrastructure funding. The need is very real, in my opinion of the highest priority, and broadly distributed across the science and engineering disci- plines and the universities which foster them. The burden of meeting the need should be spread correspondingly broadly. 2. In both cases of infrastructure need which have received special attention in the last few years, instrumentation and buildings, the problem has been presented in terms of crisis suddenly being upon us. How could this occur without anyone in either the universities or the government science agen- cies detecting that a gradual decline was taking place? 2. Neither the decline in instrumentation nor that in buildings escaped detection by some in the universities and government science agencies. In the case of instrumentation, the public alarms go back to NAS/NAE/NRC reports in the early 1970s. It is, however, a common human characteristic to post- pone going to the doctor until one has a severe pain. Or, in the words of a maxim taught me by an old Washington hand: When the practitioners in a field encounter real difficulties, it's possible there's a little problem. When people in related areas begin to suffer the consequences, there probably is a real problem. When the media and the politicians finally find out about it, WE HAVE A NATIONAL CRISIS!!!! Neither the instrumentation nor the buildings element of the infrastructure problem is what I could honest- ly call a crisis in the sense that if they're not completely solved this year ~he Nation will fall. Both are, however, very serious problems which have taken many years to reach their present level, will surely get worse in the absence of any serious attack, and will take years to solve with a serious attack. Each has become a "crisis" simply by crossing a certain threshold of general awareness. This effect, like so many in human be- havior, is highly nonlinear. PAGENO="0248" 242 ~ 3. One approach to the federal role in providing support for research infra- structure needs is to put in place individual, categorical programs in response to the needs in each area. We already had special programs in several government departments addressed to the instrumentation needs and the supercomputer needs. Should we expect a proliferation of such cate- gorical programs every few years, or has the time come to find a more com- prehensive solution to all infrastructure needs? 3. It is always time to seek comprehensive generic solutions to problems. In the case of the infrastructure problem, the possibility of finding such a solution is certainly worthy of pursuit. Unfortunately, however, identi- fication and adoption of such a solution would, in my view, require that the federal government take an unprecedented step. It would have to em- brace publicly and explicitly the notion that it has a long-term interest in the health and vitality of the nation's research universities. That would be a position radically different from the government's present stance of turning to the research universities for research and other services malnly on a selective case-by-case basis. Since I doubt the federal govern- ment would be either willing or able to make such a radical shift of posi- tion, I believe problem-oriented programs, i.e., categorical programs, are the only practical solution. They're not ideal, they don't go to the root of the matter, but they work, after a fashion, and they're better than nothing. 4. Do you have any thoughts on the suggestion that use charges be based on significantly shorter life times, for example, that Instead of basing building use charges on a 50'-year life (equal to 2% per year), they be based on, say, 25 years (4% per year use charge). 4. Yes, and it's a simple thought. The practical lifetime of a research laboratory building doesn't remotely approach 50 years. Its steel frame or its concrete floors may survive long, but as an environment for state- of-the-art research it's not likely to go more than 20 years without need- ing major changes. The government needn't rely upon an academic for such a judgment. It need only consider what kind of research it was supporting in 1935, and where it was being performed, and compare that past with the present. Changing use charges to a shorter-life basis would be no more than a recognition of reality. 5. A witness suggested recently that "For most of the decade of the 1970's and Into the early 1980's the universities themselves behaved largely as depen- dents of the government, abdicating their responsibility for infrastructure and biding their time until Federal facilities programs were resumed." In your view, can anything be done to bring about a change in this attitude on the part of the universities? 5. Yes, but it won't be easy. This academic would be among the first to concede that our research universities, with a few exceptions, have not recognized and accepted the implications of their accession to research university status and their consequent partial federalization. In my answer to Question 3, I suggested that the federal government often behaves as though it still thinks it's in the business of farming out research in micro- and mini-projects to university job shops. Not surprisingly, in response the universities behave as though they were job shops. The notion that both the government and the universities are committed to a long-term partner- ship seems to have scant acceptanceon either side. Attitudes on both sides can be changed, but like any change in basic attitudes, it'll take a lot of time and effort, backed by evidence of solid commitment on both sides. PAGENO="0249" 243 6. We have occasionally had suggestions, from the GAO and others that all or part of the indirect costs be paid to the university on the basis of a fixed percentage of the direct costs rather than on the basis of detailed audits and negotiations. In your opinion, what would be the advantages and disadvantages of such a fixed percentage rate for the indirect cost cover- age, and specifically, would it be helpful to the universities in giving increased flexibility to the acquisition of the infrastructure items? 6. Whether an indirect cost rate "fixed" in whole or in part would have any advantage would depend strongly on who fixed it and on what basis. In- direct costs generally are real and necessary costs attendant on the con- duct of research. The federal government's present policy of reimbursing all research-related indirect costs is, in my view, just and fair. The persistent problems associated with indirect costs result from the diffi- culties of identifying and justifying research-related indirect costs in the academic research environment where research is conducted in close re- lationship with other functions. In such an environment, some elements of research-related indirect costs are relatively easily isolated and accounted for, and some are not. The most prominent example of the latter is the so- called departmental administration cost. It is this element which has en- gendered the debates over faculty effort reporting. I think it possible that some accommodation might be reached between the federal government and the research universities in which the departmental administration cost element might be "fixed" by mutual agreement in exchange for the elimina- tion of effort reporting and other forms of detailed accountability with respect to this cost element. Where research-related indirect cost ele- ments can be more simply identified, they should be so identified and re- imbursed. We should resist the temptation to cut the Gordian knot by pick- ing some overall indirect cost rate out of a hat and "fixing" it. Whether that rate were high or low, it would be wrong for at least one partner in the government-university partnership and give rise to continuing strains in the relationship. There is no necessary connection between a fixed indirect cost rate and "increased flexibility to the acquisition of the infrastructure items." If the government and the universities could agree on realistic infra- structure use charges and on a mechanism for allocating them to future infrastructure acquisitions, the indirect cost system could provide a long- term solution for at least part of the infrastructure problem, as implied by Question 3. However, such a mechanism would obviously increase indirect cost rates significantly. A great deal of political groundwork would have to be done both in the government and in the universities to make this palatable. 7. Apart from the question of the effective life of buildings, laboratories, and equipment, to what extent have the universities been setting aside the use charges as reserves against future replacement needs? 7. In the absence of good information about the practices of universities other than my own, I really can't answer this question adequately. However, I doubt that a careful study would reveal that most universities have been setting aside use charges in reserve against future infrastructure needs. If that is the case, I would agree that this is a failing which ought to be corrected in any future reform of the indirect cost system. I would assert, however, that it is an understandable failing given the absence of any real correspondence between presently allowable use charges and the real costs of recurring infrastructure needs. PAGENO="0250" 244 8. An estimate by the government auditors of indirect costs suggests, that over the period 1972 - 1984 a total of just over $1 billion was provided in use charges to the universities. To what extent can we account for the appl cation of those funds to construct new buildings, and can we expect those charges in the future to provide a significant fraction of the needed funds for that purpose? 8. I suspect it would be very difficult to establish a one-to-one relation- ship between use charges provided over the 1972-84 period and new building construction during that period. As for the future, the following order- of-magnitude estimate suggests, to me at least, that reimbursed use charges at the rate estimated for the 1972-84 period would provide only a very small fraction of the real needs. There are between 50 and 100 universi- ties in this country with substantial levels of federally funded research. At the 1972-84, rate that implies use charges in the neighborhood of $1-2 million per year per university. My experience in two universities suggests that the annual recurring cost for maintenance, renovation, and replacement of research facilities exceeds that level by a factor approaching ten! 9. You suggested that the funding of university Infrastructure needs be done on the basis of matching funding by the Federal Government. What other sources do the universities have to match the federal funds? 9. The other sources are state tax funds' (available in most cases only to public universities), and gifts from private donors, either direct or via endowment income resulting from prior gifts. In a properly designed use charge system, it might be possible to derive matching funds from the sale of bonds backed by the promise of future use charge income. The latter would, of course, simply transfer most of the cost to the federal government, spreading it over many years. 10. How can we, in your view, ensure that the financial contribution of the Federal Government, if it is done a project funding, does not, in effect, serve as a disincentive to the other partners, including industry, the states, and private donors, to contribute financially? 10. There is really no way to ensure that; there are no absolute guarantees in life. However, I would suggest that any federal fears on that score can be allayed by looking at the actions of industry, the states, and private donors in recent years. In the face of reasonably stable, if not munif i- cent, federal support for university research, industry has been increasing its support for university research at a faster rate than any other contribu- tor. This has certainly happened in part because the universities, driven by the need for more dollars than the federal government can provide, have been pursuing industry support more aggressively. But I an convinced. that it has also happened because both the universities and industry have become more aware of the importance of stronger university-industry linkages, and because the federal government has found ways to encourage these in many of its own programs. Many states, in greater awareness of the connection between their economic development and their research universities, have initiated new research support programs. One example is the Benjamin Franklin Partnership in Pennsylvania. Finally, gifts from private donors `have been increasing at a substantial rate across the country. If the federal government can avoid slaughtering these several golden geese in the cousre of reforming it's tax law, I would anticipate no abatement in these trends. In short, while I expect the federal government to continue to provide the majority of the support for university research, absent major course changes, I see no reason to fear that the other patrons of university research will use the federal government's participation as an excuse to abdicate their responsibilities. PAGENO="0251" THE FEDERAL GOVERNMENT AND THE UNIVERSITY RESEARCH INFRASTRUCTURE Financing and Managing University Research Equipment THURSDAY, SEPTEMBER 5, 1985 HOUSE OF REPRESENTATIVES, COMMITTEE ON SCIENCE AND TECHNOLOGY, TASK FORCE ON SCIENCE POLICY, Washington, DC. The task force met, pursuant to call, at 9:30 a.m., in room 2318, Rayburn House Office Building, Hon. George E. Brown, Jr., presid- ing. Mr. BROWN. If we may get underway here, we will be able to get our business taken care of. The chairman, Mr. Fuqua, regrets that for personal reasons, per- sonal matters will keep him away from the hearing, at least for a portion of the morning. He has asked me to substitute for him briefly. I would like to get you warmed up by making brief opening re- marks, if I may. In the late 1970's, the research community in this country became aware that a gradual and apparently widespread deteriora- tion in university research instrumentation was going to take place. In spite of earlier assumptions that funds for such equip- ment was routinely being provided as grant moneys, the instru- mentation base was said to be in danger of becoming seriously out- dated. In particular, it was noted that researchers in American in- dustry were much better equipped and that in some cases industry was unhappy with recent Ph.D. graduates that they hired from many universities because they had received their training on obso- lete research equipment. At that time, about 5 or 6 years ago, very little in the way of hard solid data was available about the current status and future needs of research instrumentation. The Government agencies and the committees of Congress were forced to respond based on scat- tered anecdotal evidence, and there was no way of knowing how good the situation actually was. Nor was there available any care- ful analysis to the extent to which the Federal Government's re- sponse was meeting 20 percent or 80 percent of the actual need for new instrumentation. (245) PAGENO="0252" 246 Today we have before the task force the principal authors of the first major comprehensive study of the research instrumentation question. Jointly funded by a number of the affected Federal agen- cies, it was conducted by three of the leading university associa- tions: the Council on Governmental Relations, the National Asso- ciation of State Universities and Land-Grant Colleges, and the As- sociation of American Universities. The strength of this study is its comprehensiveness and its basis in data and data analysis. It's comprehensive in that it covers all the sources of instrumentation funding, including not only the Fed- eral Government but also State governments and private industry. It also covers a wide variety of funding mechanisms, including vari- ous forms of debt funding. Furthermore, it builds on previous, more limited studies and includes, as well, data from a series of field visits made by the members of the study team. I will note, however, that the study may also suffer from some weaknesses. It was conducted by the organizations and through interviews with many individuals who themselves have a strong and direct interest in research and research instrumentation. It's also clear that the study raises a number of important questions to which answers are not totally obvious. Nevertheless, we look for- ward to today's testimony and discussion, and we welcome the dis- tinguished panel members of the Task Force on Science Policy. Mr. Lujan. Mr. LUJAN. Thank you, Mr. Chairman. I don't have an opening statement. I am pleased to be here this morning to listen to those who were responsible for putting out this excellent report. I do think it's excellent, and I look forward to hearing from all of you. Thank you, Mr. Chairman. Mr. BROWN. Thank you, Mr. Lujan. Now, we will hear from the task force: Richard A. Zdanis, Ray C. Hunt. Mr. Zdanis is vice provost of Johns Hopkins. Mr. Hunt is vice president for business and finance at the University of Virgin- ia, and Praveen Chaudari, vice president, science and director, Physical Sciences Department of the IBM Corp., accompanied by Mr. Milton Goldberg, executive director of the Council on Govern- mental Relations, and Ms. Suzanne Woolsey, partner, Coopers & Lybrand. We are pleased to have you all here. You start first, Dr. Zdanis, I believe. STATEMENT OF DR. RICHARD A. ZDANIS, VICE PROVOST, THE JOHNS HOPKINS UNIVERSITY, BALTIMORE, MD Dr. ZDANIS. Thank you, Mr. Chairman. I appreciate this opportunity to appear before you as chairman of the steering committee that directed the newly published report Financing and Managing University Research Equipment. My col- leagues and I hope to outline for you the findings and recommenda- tions of our study and, of course, we will be happy to answer questions. As you have noted, the events which brmg us here today began in the early 1970's when the problem of maintaining and replacing modern research equipment was noted in American universities, PAGENO="0253" 247 and these problems are now acknowledged to be severe. Let me quote a few statistics from the National Science Foundation's Na- tional Survey of Academic Research Instruments. The Survey covers the years 1982 and 1983, and it shows in part that 72 percent of the academic department heads surveyed said that there was lack of instruments which was preventing critical experiments. Twenty percent of the universities' inventories of scientific equipment were obsolete and are no longer useful for research purposes. Twenty-two percent of the instrument systems in use in research were more than 10 years old. Only 52 percent of the instruments in use were reported to be in excellent working condition. Forty-nine percent of the department heads surveyed said that the instrument-support serv- ices, such as machine electronic shops, were of poor quality or nonexistent. I think you will agree that these conditions are not what the Nation must have. To some degree, this situation was created by scientific and technical progress. Rapid gains in the productivity and sensitivity of research instruments have been accompanied by the higher costs of buying and operating and maintaining these pieces of equipment. The cost of acquisition has outpaced inflation. The same progress that brought us greater capability of instru- ments has also shortened their useful lives. For 15 years, the funds from all sources for research equipment has not met the needs cre- ated by rising costs and more limited useful lives. An Interagency Working Group on Research Instrumentation- composed of several officials of the National Science Foundation, the National Institutes of Health, the National Aeronautics and Space Administration, the Departments of Agriculture, Defense and Energy-was convened in the early 1980's to coordinate action on this problem. The States, industry and universities themselves launched vari- ous initiatives. Of course, in times of limited budget in which we are pleased to live, it's of utmost importance that the maximum use be made of the funds available, and the Interagency Working Group approached the Association for American Universities, the National Association of State Universities and Land-Grant Col- leges, and the Council on Governmental Regulations, and asked it to-asked them to undertake a special effort to identify any bar- riers which may prevent the most expeditious acquisition of equip- ment and to document new and innovative financing mechanisms which might exist for replacing and refurbishing the research equipment. The three associations undertook the study that we are reporting on today, and it's important to note that funds for this study were contributed by the six Federal agencies represented on that Inter- agency Working Group as well as the research corporation. A steering group of scientists and administrators from the academic community and industry was established to direct the study, and onsite interviews were conducted at university and industrial lab- oratories as well as national laboratories and extensive interviews on reviews of legislation at both Federal and State levels. The report of the field research team by three experienced science ad- ministrators reflected meetings with more than 500 individuals at 23 university, developmental, and industrial laboratories. The firm PAGENO="0254" 248 of Coopers & Lybrand also did field work in addition to extensive literature review in its report on debt financing and tax aspects. These reports and other information developed by the three asso- ciations were combined into our final report. In general, we exam- ined the Federal and State regulations, practices, and management practices within the universities, and the sources of funding mecha- nisms for instruments. We have 26 recommendations directed at each of these sectors. In addition, we reached the comprehensive conclusion, and that I will quote from the summary of our report: Many actions can be taken that clearly would enhance the efficiency in acquisi- tion of, management, and use of research equipment by universities. . . . The over- all problem is so large, however, that it can not be properly addressed without sub- stantial, sustained investment by all sources-federal and state governments, uni- versities, and the private sector. Let me take a moment to emphasize "sustained investment." Be- cause of the relatively short lifetime of adequate research equip- ment these days, it's important that an investment strategy be de- veloped which will be sustained over time to address this problem and any solution must recognize this costly fact. Let me turn to the role of the Federal Government. There are five topical sections in our report, and the Government, as the task force well knows, is the leading funder of academic research. The potential impact of Federal regulations on efficiency in buying and managing equipment is correspondingly large. We looked at the Federal regulations and the two basic circulars which undergird the purchase of equipment, A-21 and A-lb. In addition, there are the Federal acquisition regulations, and each of these cir- culations may be supplemented by agency regulations. Only certain parts of those circulars apply to scientific equipment. We find few barriers that contribute to the problems directly within the language of the regulations; however, the difficulty is in interpretation and application of those regulations by the Federal agencies. Interpretations vary from agency to agency, from region to region within the country, within the same agencies, and from time period to time period. So that, in this swirl of uncertainty, university management is forced to be very conservative, and it's so conservative as to be inefficient at times, we believe. So, therefore, we believe as a first step that the heads of the Fed- eral agencies should issue internal policy statements designed to reinforce their commitment to the overall goal of assuring the effi- cient acquisition and maintenance of research equipment. Today we discuss global goals. What is the acquisition of research equip- ment throughout the Nation, throughout all of the Federal agen- cies? However, on a daily basis, the management is done on a pro- gram-by-program basis. The success, promotional performance and evaluation is on a program-by program basis. It's not clear that the sum of all those local optimizations of each program necessarily is the same as the global optimizations of the acquisition of research instrumentation across the Nation. It would help considerably to have statements that would encourage action at the programmatic level to adhere to global policies that we believe are proper for the Nation. This we are going to talk about-commingling of funds and use of equipment by multiple projects, that is across agencies, across PAGENO="0255" 249 particular tasks, and those are decisions that are difficult for pro- gram administrators to take unless they have an overall guiding statement that, yes, this is part of the action that we believe is de- sirable for his agency by the agency head. To be more specific, and addressing some other points of Federal barriers, the costs of a full functioning piece of research equipment are not always considered in an orderly manner. The full costs in- clude space renovation, installation, service contracts, operation and maintenance, and technical support. in addition to the initial purchase price. Federal agencies should consider the full costs of the equipment in research awards and insure they will be covered either by the research award itself or by the recipient as a condi- tion of that award. In programs that require university contribu- tion for matching funds toward acquisition of instruments, we be- lieve that the agencies should accept payment of costs such as in- stallation and maintenance as matching funds. Individual research awards, the backbone of the Federal basic re- search support, usually are not large enough to accommodate equipment of more than modest cost. Investigators often will have more than one award but have difficulty combining funds from dif- ferent awards to buy equipment. To ease this problem, we recom- mend that Federal agencies encourage the sharing of support for equipment across award and agency lines. We also recommend that they adopt procedures that make it easier to spread the cost of the equipment charged directly to research project awards over several award years. Many universities are unable to recover costs of non-federally funded equipment used in conducting federally-sponsored research on a timely basis. This famous circular, A-21, permits universities to recover these costs through an annual use allowance of 6% per- cent. At this rate, the full cost is not recovered for 15 years. Histori- cally, that was not an unreasonable recovery rate because of the then useful life of this research equipment. However, today, state- of-the-art equipment may have a realistic life which is 5 years or less. Circular A-21 also permits universities to recover the cost of non-federally funded equipment by depreciating it over a realistic lifetime, and it permits them to change from the use allowance to the depreciation formula. However, when universities make the switch, auditors of the Department of Health and Human Services have permitted recovery as if the equipment has always been de- preciated. For example, if a piece of equipment purchased with uni- versity funds had a useful life of 5 years and was 3 years old when the switch in accounting procedures took place, 20 percent of the cost would have been recovered under use allowance; 40 percent would be recovered under depreciation in future years. However, the university would never recover 40 percent of the cost simply because it had changed accounting procedures. This practice is a major disincentive to universities to invest their own funds in re- search equipment which will be used on federally-sponsored re- search. Less troublesome is the uncertainty surrounding recovery of in- terest on money that universities borrow externally to finance equipment. Circular A-~21 states that interest is an allowable charge to Federal awards at the discretion of the funding agency. PAGENO="0256" 250 Approval is required for each purchase, and there are instances when even before the fact, agency acceptance in principle has been obtained. When specific purchases have been asked to allow the charge to be put into the indirect cost pooi, the approval has been denied. We believe that universities should not be subject to this flexibility of this decisionmaking, and 0MB should revise this cir- cular to make it an allowable charge. Policies regarding title to equipment vary among agencies. Those who wish to combine university funds with Federal funds to buy an instrument are uncertain about where the title will reside. It's es- pecially true where research is funded by contracts rather than grants, and we recommend that all Federal agencies invest title to equipment in the universities upon acquisition. The management of research equipment is also complicated by a number of paper working rules that are embodied in Circulars A- 21 and A-lb. The thresholds at which documentation needs to be retained are unrealistically low, and they are inconsistent between these two circulars. We recommend that they be raised to a realis- tic level, and that will prevent the abuses that might occur in mul- tiple purchases of equipment. That may occur, but it will reduce the paperwork considerably. Circular A-hO, for instance, requires that the university inven- tory be researched to prevent duplicative purchases at a $300 threshold-an unrealisticly low point. We recommend the screen- ing levels be raised considerably. The screening levels have been negotiated at a $10,000 level, but on a university-by-university basis. This is again one of the uncertainties of dealing with the multitude of agencies and actors within agencies where one univer- sity may be allowed to keep an inventory and do the screening at a $10,000 level when a neighbor or good institution is not given that privelege. We recommend that the Department of Defense discontinue its requirement that the inventory of the Defense Industrial Plant Equipment Center be screened for scientific equipment which is re- quested by universitites before new equipment is purchased. We found, in the course of our study, no piece of equipment that could be identified which was acquired via this screening. The last of our recommendations in the Federal area involves the prior agency approvals for various actions under research grants and contracts. These requirements can significantly delay equipment transactions. Certain prior approval authorities are del- egated to universities under the Institutional Prior Approval System of the NIH and the Organizational Prior Approval System of NSF. These two systems, among other benefits, reduce the turn- around time on requests~ from weeks to days, and the savings can permit the university to take advantage of timely purchase price discounts and other special arrangements. We recommend that these systems which have proved themselves in the field be adopt- ed by other Federal agencies. Thank you for this opportunity to present this material, and I would now like to turn to Ray Hunt. [The prepared statement of Dr. Zdanis follows:] PAGENO="0257" 251 Mr. Chairman and members of the Task Force on Science Policy: My name is Richard Zdanis, and I am Vice Provost of the Johns Hopkins University. I appreciate this opportunity to appear before you as chairman of the steering committee that directed the newly published study "Financing and Managing University Research Equipment." My colleagues and I will outline for you the findings and recommendations of our study and will be happy to answer questions. A summary of the study is attached to my written testimony. We understand that the National Science Foundation has distributed the full report to the Committee. With me today are two other members of our steering commit- tee, Praveen Chaudhari of IBM and Ray Hunt of the University of Virginia. Also with me are Milton Goldberg of the Council on Governmental Relations. Suzanne Woolsey of Coopers & Lybrand, Patricia Warren, Project Manager, and John Crowley, Director of Federal Relations for Science Research of the Association of American Universities. The Council with the Association of American Universities and the National Association of State Universities and Land-Grant Colleges were the organizers of our study, and Coopers & Lybrand helped us with the debt-financing and tax-related aspects. The events that bring us here began in the early 1970s, when U.S. universities began to experience problems maintaining and replacing modern research equipment. These problems are now widely acknowledged as extremely severe. The situation threatens the quality of our academic science as well as the quality of education of new scientists and engineers. Let me cite just a 53-277 0 - 86 - 9 PAGENO="0258" 252 few statistics from the National Science Foundation's National Survey of Academic Research Instruments. The survey covers the years 1982 and 1983. It shows in part that: o 72% of academic department heads surveyed said that lack of equipment was preventing critical experimenta. o 20% of universities' inventories of scientific equip- ment was obsolete and is no longer useful for research. o 22% of instrument systems in use in research were more than 10 years old. o Only 52% of instruments in use were reported to be in excellent working condition. o k9% of department heads surveyed said that instrument- support services--such as machine and electronics shops--were of poor quality or nonexistent. I think you will agree that the condition of research instrumentation available to universities is not what we must have. To some degree, this situation was created by scientific and technical progress. The rapid gains in the productivity and sensitivity of research instruments has been accompanied by higher costs for buying, operating. and maintaining them. The costs of acquisition have well outpaced inflation. The same progress that haa brought greater capability to instruments has also shortened their useful lives. Instruments today may be superseded by better ones in five years of less. Finally, for more than 15 years, funds from all sources for research equipment have not met the needs crested by rising costs and shrinking useful lifetimes. PAGENO="0259" 253 Major efforts to ease the universities' difficulties with research equipment began in the early 1980s. An Interagency Working Group on research instrumentation--composed of several officials of the National Science Foundation, the National Institutes of Health, the National Aeronautics and Space Admini- stration, and the Departments of Agriculture, Defense, and Energy--was convened to coordinate action on this problem. The states, industry, and the universities themselves also launched various initiatives. These developments have helped, but the equipment problem has by no means been solved. Federal and academic officials, of course, were well aware that with limited budgets available it was of utmost importance that these funds be used as efficiently as possible. In July 1982, the Interagency Working Group asked the Association of American Universities, the National Association of State Univer- sities and Land-Grant Colleges, and the Council on Governmental Relations to undertake a special effort to identify any barriers that may prevent the most expeditious acquisition of equipment and to document new and effective financing and management techniques for academic research equipment. The three associations jointly undertook the study we're reporting on today. Funds for the study were provided by the six federal agencies represented on the Interagency Working Group as well as the Research Corporation. A Steering Committee composed of scientists and administrators from both the academic community and industry was established to direct the study. On site interviews were conducted at university and industrial labora- tories as well as extensive reviews of legislation and regulation PAGENO="0260" 254 at both the federal and state levels. The report prepared by a field research team of three experienced science administrators reflected meetings with more than 500 individuals and 23 univer- aity, governmental and industrial laboratories. The firm of Coopers and Lybrand also did field work in addition to an extensive literature review for its report on debt financing and tax aspects. These reports and other information developed by the three associations were combined in our final report. In general, we examined federal and state regulations and practices, management practices in universities, and sources and mechanisms of funding. We have 26 recommendations directed to the federal and state governments, the universities, and the private sector. In addition, we also reached one comprehensive conclusion, and I will quote it from the summary of our report: Many actiona can be taken that clearly would enhance efficiency in the acquisition, management, and use of research equipment by universities...The overall problem is so large, however, that it cannot be properly addressed without substantial, sustained investment by all sources--federal and state governments, universities, and the private sector. I would like to emphasize the words "sustained investment." Laboratories in most sciences must now be reequipped approxi- mately every five years to remain competitive in research. Any effective approach to maintenance of a competitive research PAGENO="0261" 255 environment must recognize this costly fact. Let me now turn to the role of the federal government, the first of the five topical sections of our study. The government, as the Task Force well knows, is the leading funder of academic research. Federal agencies account for nearly two-thirds of the funds spent annually to buy academic research equipment. The potential impact of federal regulations on efficiency in buying and managing equipment is correspondingly large. The basic federal regulations that we assessed are Office of Management and Budget Circulars A-21 and A-hO and the Federal Acquisition Regulations. Circulars A-21 and A-hO apply to research grants, and Circular A-21 and the FAR apply to research contracts. These regulations may be supplemented by agency rules. Only certain parts of them apply to scientific equipment. We find that few of the basic federal regulations contribute directly to problems with equipment. The difficulties arise mainly from the interpretation and application of the regulations by federal agencies. Interpretations vary from agency to agency from region to region, and from time period to time period. This inconsistency leads universities to adopt unnecessarily conserva- tive management practices, which further complicate equipment problems. We think changes can be made that would much improve efficiency in dealing with equipment without going against the purpose of the regulations_..insuring accountability for public funds. As a first step, we recommend that the heads of federal agencies that support academic research issue Internal policy statements designed to reinforce their commitment to the overall PAGENO="0262" 256 goal of assuring the efficient acquisition and management of research equipment. Today we are discussing global goals for the nation and universities, but on a daily basis decisions are made at the project level and performance appraisal is conducted on a by-program basis. Some of the recommendations we make advocate the comingling of runds and the use of equipment by multiple projects. Agency statements that these actions are to be encouraged would be a major help in providing guidance at the program level. We also recommend actions aimed at certain specific barriers. One of these barriers is that federal agencies--and states and universities as well--do not provide for the full costs of functioning research equipment in an orderly manner. These full coats may include space renovation, installation, service con- tracts, operation and maintenance, and technical support in addition to initial purchase price. Federal agencies should consider the full costs of equipment in research awards and insure that they will be covered either by the research award itself or by the recipient as a condition of the award. In programs that require the university to contribute matching funds toward the acquisition of instruments, the agencies should accept universities' payment of costs such as installation and main- tenance as matching funds. Individual research-project awards, the backbone of rederal support for basic research, usually are not large enough to accommodate equipment of more than modest cost. Investigators often will have more than one award, but they have difficulty PAGENO="0263" 257 combining funds from different awards to buy equipment. To ease this problem we recommend that federal agencies encourage the sharing of support for equipment across award and agency lines. We also recommend that they adopt procedures that make it easier to spread the cost of equipment charged directly to research- project awards over several award years. Many universities are unable to recover the cost of nonfed- erally funded equipment used in conducting federal sponsored research, on a timely basis. 0MB Circular A-21 permits universi-. ties to recover these costs through an annual use allowance of 6 2/3 percent of acquisition cost. At this rate, full cost isn't recovered for at least 15 years. Historically, this was not an unreasonable recovery rate but today the realistic life of state-. of-the-art equipment may be five years or less. Circular A-21 also permits universities to recover the cost of nonfederally funded equipment by depreciating it over a realistic lifetime, and it permits them to change from use allowance to depreciation. But when universities make the switch, auditors of the Department of Health and Human Services only permit recovery as if the equipment had been depreciated. For example, if a piece of equipment purchased with university funds had a useful life of 5 years, and was 3 years old when the switch in accounting took place 20% of the cost of the equipment would have been recovered under use allowance. 40% will be recovered under depreciation in future years. The university will never recover 40% of the cost simply because it changed accounting procedures. This practice is a major disincentive to universities own investments in research equipment used for federally sponsored research. We PAGENO="0264" 258 have recommended that this practice be changed to permit full recovery. Also troublesome is the uncertainty surrounding recovery of interest on money that universities borrow externally to finance equipment. Circular A-21 states that the interest is an allow-. able charge to federal awards, at the discretion of the funding agency. Approval is required for each purchase and even w~ien agencies have approved the concept in principle interest may not be allowed on specific purchases. We believe 0MB should revise Circular A-21 to make such interest unequivocally an allowable cost. University officials who are uncertain about recovering interest are reluctant to consider debt financing as a mechanism for updating equipment. Policies regarding title to equipment vary among agencies. Investigators or administrators may wish to combine university funds with federal funds to buy an instrument, but without assurance of title they may be unable to do so. This is espe- cially true where research is funded by contracts rather than grants. We recommend that all federal agencies vest title to equipment in the university upon acquisition. Management of research equipment by universities is compli- cated by certain provisions of 0MB Circulars A-21 and A-.110. The Circulars prescribe capitalization thresholds that are unrealis- tically low and also different--$500 in A-21 and $300 in A-hO. Universities must maintain equipment inventories, and these would be simpler to manage if the capitalization thresholds were raised and made uniform. We recommend a threshold of $1000--this level PAGENO="0265" 259 would likely halve the number of items in the typical university inventory of capital equipment while retaining 80% o the combined value. Circular A-lb requires universities to avoid buying dupli- cate equipment, which is interpreted to mean that they must screen their inventories before purchase. We learned that the $300 threshold requires a great deal of screening for equipment that isn't economical to share. Higher screening levels have been negotiated, and we recommend that 0MB set the minimum at $10,000. At one university we visited, that level a~ccounted for 3.2% of the pieces of equipment in the inventory bought in 1983 and 50% of the dollar value. We also recommend that the Department of Defense discontinue its requirement that the inventory of the Defense Industrial Plant Equipment Center (DIPEC) be screened for scientific equip- ment requested by universities before new equipment is purchased. We found no one in the course of our study who could identify any research equipment acquired via DIPEC screening. The last or our recommendations on federal regulations involves the prior agency approvals required for various actions under research grants and contracts. These requirements can significantly delay equipment transactions. Certain prior- approval authorities are delegated to universities under the Institutional Prior Approval System (IPAS) of NIH and the Organizational Prior Approval System (OPAS) of NSF. IPAS and OPAS, among other benefits, reduce turnaround time on requests from weeks to days. The saving can permit the university to take advantage of timely price discounts or other special arrange- ments. We recommend that these systems be adopted by other federal agencies. Again, I appreciate the opportunity to appear before you today on this important matter. You will hear next from Ray Hunt of our steering committee. PAGENO="0266" 260 Mr. BROWN. Dr. Hunt. STATEMENT OF DR. RAY C. HUNT, JR., VICE PRESIDENT FOR BUSINESS AND FINANCE, UNIVERSITY OF VIRGINIA, CHAR- LOTTESVILLE, VA Dr. HUNT. Mr. Chairman, members of the task force, today I will briefly give you the ideas that we have developed during the re- search instrumentation project on the roles of States and universi- ties relative to scientific equipment. I will also touch briefly on the subject of debt financing. The NSF study mentioned earlier found that States directly funded 5 percent of the aggregate cost of instruments in use in the academe in 1982 and 1983. States also pay for equipment indirectly through tax benefits. On the other hand, the States often hamper the purchase and use of equipment through regulations and restric- tions on schools' financial flexibility. These activities apply mainly to public universities. Private institutions rarely have access to State funds, and they are virtually exempt from State controls on equipment, except when they use State borrowing authority. The States' broad roles as funder and regulator of scientific equipment in public universities are inherently in conflict to some degrees. Nevertheless, we think they could combine these roles more rationally in ways that would help the schools with their equipment problems. The States are not going to replace the Federal Government as the major funder of academic research equipment. But we do think they should look carefully at their direct support for scientific equipment in both the public and private institutions, relative to support from other sources. Judicious and highly selective in- creases in State funding could be most helpful to the scientific stat- ure of the States and could also make Federal and industrial funds more effective. We also recommend that States give their universities more lati- tude in handling funds. We think that institutions should be per- mitted such actions as transferring funds among budget categories and carrying funds forward from one fiscal period to the next. A fiscal period typcially is 1 or 2 years. The added flexibility would clearly make the universities better able to deal with problems of research equipment. We also think greater flexibility would save money in the purchasing process and permit academic administra- tors to do their jobs more effectively. Tax benefits specified in the Economic Recovery Tax Act of 1981 are available to equipment donors in 34 States simply because their tax codes follow the Federal code. Relatively few States have adopt- ed tax benefits designed to fit their particular circumstances. We think the States should examine the use of their taxing powers to foster both academic research and modernization of the equipment it requires. State procurement controls also need attention. In general, we think they should be revised to suit the unusual nature of scientific equipment. Such equipment should be exempt from purchasing re- quirements designed for generic items like batteries and cleaning materials, where brand-to-brand differences may be insignificant. PAGENO="0267" 261 Each university should have the authority to buy scientific equip- ment without having rules imposed beyond those of Federal agen- cies. We recommend that States consider revising their controls on debt financing so as to help public universities acquire scientific equipment. It would be helpful if debt financing could be used to buy equipment independently of construction projects, which now is not generally the case. It would also be helpful to recognize that scientific equipment may need to be replaced in only a few years, although acquired as part of a construction project financed for 30 years. Finally, we think that schools ought to be permitted to lease re- search equipment for periods longer than the 1- or 2-year state budget period to which they are now often held. This restriction limits the institutions' ability to arrange advantageous leases. The universities themselves, public and private, funded about one-third of major instrumentation systems in use in 1982 to 1983, according to NSF. The schoOls deal with scientific equipment in many ways in addition to the conduct of research. They fund equip- ment from their own resources, from gifts they solicit, and from various forms of debt financing; they handle the purchasing proc- ess; they pay part or all of the costs of operation and repair; they maintain equipment inventories; they help to optimize the sharing of equipment by investigators; and they handle disposal of equip- ment no longer needed or useful. Given this degree of involvement, one would expect to find oppor- tunities to improve efficiency, and we did. The measures we believe would help suggest that universities individually ought to consider a more centralized approach than is now common in their acquisi- tion and management of research equipment. I might point out that other pressures also appear to be pushing the schools toward a more centralized approach in their operations in general. These pressures include the growing interest in debt financing and joint development efforts with State governments and industry. We concluded that universities should plan their allocation of re- sources more systematically to favor research and research equip- ment in subject areas that offer them the best opportunities to achieve distinction. In other words, we recommend that universi- ties engage in more intense strategic planning with participation by both administrators and faculty. Hard decisions may be re- quired as a result of conscious strategic planning, but we think they are needed to optimize the use of funds available. We also recommend that universities budget more realistically for the costs of operating and maintaining research equipment. As you heard earlier, we think that Federal agencies can help to en- courage realistic budgeting through practices associated with their research-award procedures. Lack of operating and maintenance costs are serious and pervasive problems at universities, and lack of planning for the full costs of research equipment is much too common. User charges are often assessed to cover maintenance and the costs to support staff, but they can rarely be set at a high enough level to recover full costs. You also heard earlier that individual research awards cannot usually accommodate costly equipment. We believe that Federal PAGENO="0268" 262 agencies should make it easier to spread the costs of equipment charged directly to awards over several award years. We also rec- ommend that university administrators and investigators more ag- gressively seek agency approval to do so. Universities could facilitate timely acquisition of research equip- ment at optimum cost by working to minimize delays and other problems caused by procurement procedures. The purchasing proc- ess, as I said earlier in regard to the role of the States, ought to be adapted to the specialized nature of the research equipment. Spe- cialized purchasing entities or individuals can help. We also recom- mend formal programs to explain to purchasing personnel and in- vestigators the needs and problems of each. We believe that universities should also consider establishing in- ventory systems that facilitate sharing of equipment by investiga- tors. The inventory systems encountered by our field research team were not generally useful for this purpose, with one exception-the inventory set up by the Research Equipment Assistance Program [REAP] at Iowa State University. The REAP inventory contains only research equipment. The program may not be cost-effective for all universities, but we think that most of them would find parts of it useful. Another point touched on earlier is the choice of use allowance or depreciation to generate funds for replacing equipment. We rec- ommend that depreciation be used because the funds in principle can be generated over the useful life rather than the unrealistic 15 years required by the use allowance. This recommendation pre- sumes that universities can negotiate realistic depreciation sched- ules and dedicate the funds to purchase of equipment. You will recall that costs can be recovered by use allowance or depreciation only for non-federally funded equipment. I should also add that both methods add to the indirect costs, which are always under pressure to be reduced and are particularly contentious between academic administrators and investigators. We also recommend that universities look for better and more systematic ways to facilitate internal transfer of equipment from investigators and laboratories that no longer need it to those that could use it. Faculty at most schools have no incentive to transfer equipment, except for the need for space, and every incentive to hang on to it, just in case there is a future need. Universities, as you know, have long used tax-exempt debt to pay for major facilities. In more recent time they have been using this method to some extent to buy research equipment. We believe they should explore greater use of tax-exempt debt for this purpose, so long as proper attention is given to the long-term consequences of debt. A basic requirement when assuming debt is a reliable stream of income to pay it off. This commitment of funds cuts into the uni- versity's flexibility in responding to new and unanticipated oppor- tunities. Also, debt financing obviously increases the overall cost of scientific equipment to both the universities and the external spon- sors of research. We recommend that universities develop their own expertise on leasing and debt financing. Outside counsel will still be needed to issue major debt, but institutions should be able to determine the true costs of debt financing and make this expertise and related in- PAGENO="0269" 263 formation readily accessible to research administrators and to prin- cipal investigators. The increasing complexity and variety of debt financing procedures and instruments-for any purpose-make it essential that universities fully understand the marketplace. I wish to thank you for your attention. The third member of our steering committee here today is Praveen Chaudhari who will con- clude our presentation on the research instrumentation project. [The prepared statement of Dr. Hunt follows:] PAGENO="0270" 264 Mr. Chairman and members of the Task Force: I am Ray Hunt, and I am Vice President for Business and Finance at the University of Virginia. Today I will briefly give you the ideas we developed during the research instrumentation project on the roles of states and universities relative to scientific equipment. I will also touch on debt financing of equipment. The NSF study mentioned earlier found that the states directly funded 5% of the aggregate cost of instruments in use in academe in 1982-83. States also pay for equipment indirectly through tax benefits. On the other hand, the states often hamper the purchase and use of equipment through regulations and restrictions on schools' financial flexibility. These activities apply mainly to public universities. Private institutions rarely have access to state funds, and they are virtually exempt from state controls on equipment, except when they use state borrowing authority. The states' broad roles as tunder and regulator of scien- tific equipment in public universities are inherently in conflict to some degree. Nevertheless, we think they could combine these roles more rationally in ways that would help the schools with their equipment problems. The states are not going to replace the federal government as the major funder of academic research equipment. But we think they should look carefully at their direct support for scientific equipment in both public and private institutions, relative to support from other sources. Judicious and highly selective PAGENO="0271" 265 increases in state funding could be most helpful to the scien- tific stature of the states and could also make federal and - industrialfunds more effective. - We also recommend that states give their universities more latitude in handling funds. We think that institutions should be permitted such actions as transferring funds among budget cate- gories and carrying funds forward from one fiscal period to the next. A fiscal period typically is one or two years. The added flexibility would clearly make the universities better able to deal with problems of research equipment. We also think greater flexibility would aave money in the purchasing process and permit academicadministrators to do their jobs more efficiently. Tax benefits specified in the Economic Recovery Tax Act of 1981 are available, to equipment donors in 314 states whose tax codes automatically follow the federal code. Relatively few states have adopted tax benefits designed to fit their particular circumstances. We think the states should examine the use of their taxing powers to foster bothacademic research and.moderni- zation of the equipment it requires. State procurement controls also need attention. In general, -we think they should be revised to suit the unusual nature of scientific equipment. Such equipment should be exempt from purchasing requirements designed for generic items like batteries and cleaning materials, where brand-to-brand differences may be insignificant. Each university should have the authority to buy scientific equipment without having rules imposed beyond tbose of federal agencies that fund equipment. PAGENO="0272" 266 We recommend that states consider revising their controls on debt financing so as to help public universities acquire scien- tific equipment. It would be helpful if debt rinancing could be used to buy equipment independently of construction projects, which now is not generally the case. It would also be nelpful to recognize that scientific equipment may need to be replaced in only a rew years, although acquired as part of a construction project financed by 30-year debt. Finally, we think that schools ought to be permitted to lease research equipment for periods longer than the one- or two-year state budget period to which they are now often held. This restriction limits the institu- tions' ability to irrange advantageous leases. The universities themselves, public and private, funded about one-third of major instrumentation systems in use in 1982- 83, according to NSF. The schools deal with scientific equipment in many ways in addition to the conduct of research. They fund equipment from their own resources, from gifts they solicit, and from various forms of debt financing; they handle the purchasing process; they pay part or all of the costs of operation and repair; they maintain equipment inventories; they help to opti- mize ~he sharing of equipment by investigators; and they handle disposal of equipment no longer needed or useful. Given this degree of involvement, one would expect to find opportunities to improve efficiency, and we did. The measures we believe would help suggest that universities individually ought to consider a more centralized approach than is now common in their acquisition and management of research equipment. I might point out that other pressures also appear to be pushing the PAGENO="0273" 267 schools toward a sore centralized approach in their operations in general. These pressures include the growing interest in debt financing and joint development efforts with state governments and industry. We concluded that universities should plan their allocation of resources more systematically to favor research and research equipment in subject areas that offer them the best opportunities to achieve distinction. In other words, we recommend that universities engage in sore intense strategic planning, with participation by both administrators and faculty. Hard decisions may be required as *a result of conscious strategic planning, but we think they are needed to optimize the use of the funds available. We also recommend that universities budget more realisti- cally for the costs of operating and maintaining research equipment. As you heard earlier, we think that federal agencies can help to encourage realistic budgeting through practices associated with their research-award procedures. Lack of oper- ating and maintenance~ costs are serious and pervasive problems at universities, and lack of planning for the full costs of research equipment is much too common. User charges are often assessed to cover maintenance and the costs of support staff, but they can rarely be set high enough to recover full costs. You also heard- earlier that individual research awards cannot usually accommodate costly equipment. While we believe that federal agencies should make it easier to 3pread the costs of equipment charged directly to awards over several award years, PAGENO="0274" 268 we also recommend that university administrators and investiga- .tors more aggressively seek agency approval to do so. Universities could facilitate timely acquisition of research equipment at optimum cost by working to minimize delays and other problems caused by procurement procedures. The purchasing process, as I said earlier in regard to the role of the states, ought to be adapted to the specialized nature of the equipment. Specialized purcbasing entities or individuals can help. We also recommend formal programs to explain to purchasing personnel and investigators the needs and problems of each. We believe that universities also should consider establish- ing inventory systems that facilitate sharing of equipment by investigators. The inventory systems encountered by our field- research team were not generally useful for this purpose, with one exception--the inventory set up by the research equipment assistance program (REAP) at Iowa State University. The REAP inventory contains only research equipment. The program may not be cost-effective for all universities, but we think that most of them would find parts of it useful. Another point touched on earlier is the choice of use allowance or depreciation to generate funds for replacing equip- ment. We recommend depreciation because thefunds in principle can be generated over the useful life rather than the unrealistic 15 years required by the use allowance. This recommendation presumes that the university can negotiate realistic depreciation schedules and dedicate the funds to equipment. You will recall that costs can be recovered by use allowance or depreciation only for nonfederally funded equipment. I should add that both PAGENO="0275" 269 methods add to indirect costs, which are always under pressure to be reduced and are particularly contentious between academic administrators and investigators. We also recommend that universities look for better and more systematic ways to facilitate internal transfer of equipment from investigators and laboratories that no longer need it to those that could use it. Faculty at most schools now have no incentive to transfer equipment, except the need for space, and every incentive to hang on to it, just in case. Universities, as you know, have long used tax-exempt debt to pay for major facilities. Lately, they have been using this method to some extent to buy research equipment. We believe they should explore greater use of tax-exempt debt for this purpose, so long, as proper attention is given to the long-term conse- quences. A basic requirement when assuming debt is a reliable stream of income to pay it off. This commitment of funds cuts into the unive.rsity's flexibility in responding to new and unanticipated opportunities. Also, debt financing obviously increases the overall cost of scientific equipment to both the universities and the external sponsors of research. We recommend that universities develop their own expertise on leasing and debt financing equipment. Outside counsel will still be needed to issue major debt, but institutions should be able to determine the true costs of debt financing and make this expertise and related information readily accessible to research administrators and principal investigators. The increasing complexity and variety of debt financing procedures and instru- ments--for any purpose--make it essential that universities fully understand the marketplace. Thank you for your attention. The third' member of our steering committee here today is Praveen Chaudhari, who will conclude our presentation on the research instrumentation project. PAGENO="0276" 270 Mr. BROWN. Dr. Chaudhari, could we ask you to bear with us for .a few moments while we go over and answer that rollcall, and then we will come back and continue. We will recess briefly, and I urge all the members to return promptly. [Recess.] Mr. BROWN. The task force will resume. We will call on Dr. Chaudhari to proceed with his portion of the statement. STATEMENT OF DR. PRAVEEN CHAUDHARI, VICE PRESIDENT, SCIENCE, AND DIRECTOR, PHYSICAL SCIENCES DEPARTMENT, IBM CORP., ARMONK, NY Dr. CHAIJDHARI. Mr. Chairman and members of the task force, my topic is private support for academic research. Private support for higher education, as the data compiled by the Council for Fi- nancial Aid to Education show, has more than tripled from 1966 through 1983 to $5.15 billion. Corporate support has been rising faster than other private funding and in 1983 comprised 21.4 per- cent of the total. It is more than twice as likely to be earmarked for research as are contributions from other private sources. How- ever, corporate sources accounted for only 4 percent of the total dollar value of academic equipment in 1982-1983. In comparison, the National Science Foundation's survey of equipment in use in 1982-1983 shows Federal funding accounts for 54 percent, universi- ty funding for 32 percent, State governments and other private support for 5 percent each, of the total of approximately $1.18 bil- lion. How can we increase private support for academic equipment? Before answering this question and making a set of recommenda- tions, I should like to describe to you what we have learned from our own survey about the reasons cited for corporate support of equipment, the limitations on such support, and how support is provided. Equipment is provided to universities by corporations on a chari- table or discounted basis for several reasons: to help sustain the quality of teaching and of research; to expose prospective custom- ers to their products; to get feedback on the performance of their products and on need for new equipment; and to maintain good re- lations with faculty. Universities are a major market for scientific equipment. They are also a major source of research results needed by designers and makers of such equipment. These companies clearly have an inter- est in the academic world, but they also have an inherent conflict between charitable contributions and profit making. Donations of equipment usually do not cover the costs of renovat- ing space and installing, operating, and maintaining the instru- ment donated. These expenses can be a significant part of research. Universities acquire equipment from companies in many ways. These include cash gifts, contract research, discounts on equipment sales, industrial affiliate programs, research consortia, informal loans and sharing of equipment, and, of course, outright purchase. Donations of equipment in recent years have been especially PAGENO="0277" 271 common in computing, microelectronics, and engineering. Compa- nies often use discounts and flexible payment schedules to help universities get research equipment. One manufacturer visited by the field research team used a two-for-one discount on purchase of new equipment to generate goodwill and to start a series of infor- mal exchanges between its scientists and investigators at the recip- ient school. We found that the tax benefits have several possible effects. The tax situation seems to influence the size of contributions. Also, a manufacturer may elect to sell costly equipment to a university at a substantial discount rather than donating it outright. Companies have taken this tack both before and after the Economic Recovery Tax Act, ERTA, of 1981, but the added tax benefits under the act clearly could affect the decision to sell or donate. In fact, a compa- ny that wishes to help a university get qualified research equip- ment but doesn't wish to donate it outright can still get tax bene- fits under ERTA by means of a bargain sale-a sale for less than fair market value. The Economic Recovery Tax Act of 1981, as the task force knows, was designed to spur technological development. The act provides special charitable deductions for scientific equipment given to a university by its manufacturer. It also provides tax credits for com- pany spending on research and development conduct!ed inhouse or by universities or other organizations. The R&D tax credit is sched- uled to expire at the end of this year. As you have heard, 34 States whose tax codes follow the Federal code have adopted the provisions of ERTA. Also, as of the comple- tion of our study, 7 States, including some of the 34, had adopted various additional tax benefits designed to encourage support for research and research equipment at universities. It may not be possible to assess the impact of ERTA very accu- rately, in terms of either the R&D tax credit or equipment dona- tions. As you know, the results of extensive study presented during hearings on the act in 1984 provided conflicting evidence of its impact. Nevertheless, the consensus seems to be that ERTA, espe- cially with certain modifications, should spur technological progress as intended, partly by encouraging private support for academic research and scientific equipment. We agree with this view. Let me return now to the question of how can we increase pri- vate support for academic research and for equipment in particu- lar. We recommend that universities seek donations of research equipment more aggressively. Although our full report gives the elements of a donation strategy in some detail, let me stress a par- ticular point here. We believe that personal involvement of aca- demic researchers with their counterparts in likely donor compa- nies is essential to cultivating the relationships needed to get con- tributions of research equipment. Quite apart from donation of equipment, such interactions are desirable for exchange of techni- cal information which, in turn, enhances technological progress. We recommend several modifications to ERTA. First, we propose that the range of equipment qualified for the charitable donation deduction be expanded to include computer software, equipment maintenance contracts and spare parts, equip- PAGENO="0278" 272 ment in which parts not made by the donor cost more than 50 per- cent of the donor's cost in the equipment, and used equipment less than 3 years old. Our arguments for these changes are as follows. Computers are incomplete without software. Maintenance con- tracts are valuable because keeping equipment in repair costs so much that universities have sometimes declined donations because of the maintenance expense. Companies that develop and make sci- entific equipment are selling primarily their technological knowl- edge, not their ability to make parts. For this reason, we believe the 50 percent limit on parts not made by the donor is unrealistic. Next, we propose that the R&D tax credit be made permanent. We also recommend that the credit be revised to create a special incentive for companies to support research in: universities. As it stands, ERTA gives companies the same incentive to contract for research in academe as in other qualified organizations. We propose further that the social and behavioral sciences be made qualified fields of academic research in terms of both the equipment donation deduction and the R&D tax credit. These sci- ences contribute to the applications of other sciences and technolo- gy, and social and behavioral scientists are increasingly using in- struments in their research. Our last pi~posal for ERTA is that research foundations that are affiliated with universities, but remain separate entities, be made qualified recipients of equipment donations and R&D funding. That, Mr. Chairman, concludes our presentation and the results of the research instrumentation project. * On behalf of my colleagues, I should like to thank you once again for your attention. [The prepared statement of Dr. Chaudhari follows:] PAGENO="0279" 273 Mr. Chairman and gentlemen: I am Praveen Chaudhari, and I am Vice President for Science in the Research Division of IBM. My topic is private support for academic research equipment. Private support for higher education, as the data compiled by the Council for Financial Aid to EducatIon show, has more than tripled from 1966 through 1983 to $5.15 billion. Corporate support has been rising faster than other private funding and in 1983 comprised 21.~4 per cent of the total. It is more than twice as likely to be earmarked for research as are contributions from other private sources. However, corporate sources accounted for only 1 per cent of the total dollar value of academic equipment in 1982-1983. In comparison, the National Science Foundation's survey of equipment in use in 1982-1983 shows federal funding accounts for 51~ per cent, university funding for 32 per cent, state governments and other private support for 5 per cent each, of the total of approximately $1.18 billion. How can we increase private support for academic equipment? Before answering this question and making a set of recommenda- tions, I should like to describe to you what we have learned from our own survey about the reasons cited for corporate support of equipment, the limitations on such support, and how support is provided. Equipment is provided to universities by corporations on a charitable or discounted basis for several reasons: to help sustain the quality of teaching and of research, to expose prospective customers to their products, to get feedback on the PAGENO="0280" 274 performance of their products and on need for new equipment, and to maintain good relations with faculty. Universities are a major market for scientific equipment. They are also a major source of the research results needed by designers and makers of such equipment. These companies clearly have an interest in the academic~ world, but they also have an inherent conflict between charitable contributions and profit making. Donations of equipment usually do not cover the coats of renovating space and installing, operating, and maintaining the instrument donated. These expenses can be significant. Universities acquire equipment from companies in many ways. These include cash gifts, contract research, discounts on equip- ment sales, industrial affiliate programs, research consortia, informal loans and sharing of equipment, and, of course, outright purchase. Donations of equipment in recent years have been espe- cially common in computing, microelectronics, and engineering. Companies often use discounts and flexible payment schedules to help universities get research equipment. One manufacturer visited by the field research team used a two-for-one discount on purchase of new equipment to generate goodwill and to start a series of informal exchanges between its scientists and investi- gators at the recipient school. We found that tax benefits have several possible effects. The tax situation seems to influence the size of contributions. Also, a manufacturer may elect to sell costly equipment to a universityat a substantial discount rather than donating it PAGENO="0281" 275 outright. Companies have taken this tack both before and after the Economic Recovery Tax Act (ERTA) of 1981, but the added tax benefits under the Act clearly could affect the decision to sell or donate. In fact, a company that wishes to help a university get qualified research equipment but doesn't wish to donate it outright can still get tax benefits under ERTA by means of a bargain sale - a sale for less than fair market value. The Economic Recovery Tax Act of 1981, as the Task Force knows, was designed to spur technological development. The Act provides special charitable deductions for scientific equipment given to a university by its manufacturer. It also provides tax credits for company spending on research and development con- ducted in-house or by universities or other organizations. The R&D tax credit is scheduled to expire at the end of this year. As you have heard already, 31t states whose tax codes follow the federal code have adopted the provisions of ERTA. Also, as of the completion of our study, seven states, including some of the 31k, had adopted various additional tax benefits designed to encourage support for research and research equipment at univer- sitiea. It may not be possible to assess the impact of ERTA very accurately, in terms of either the R&D tax credit or equipment donations. The results of extensive study presented during hearings on the Act in 1984 provided conflicting evidence of its impact. Nevertheless, the consensus seems to be that ERTA, especially with certain modifications, should spur technological progress as intended, partly by encouraging private support for academic research and scientific equipment. We agree with this PAGENO="0282" 276 view. Let me return now to the question of how can we increase private support for academic research and for equipment in particular. We recommend that universities seek donations of research equipment sore aggressively. Although our full report gives the elements of a donation strategy in some detail, let me stress a particular point here. We believe that personal involvement of academic researchers with their counterparts in likely donor companies is essential to cultivating the relation-. shipaneeded to get contributions of research equipment. Quite acart from donation of equipment, such interactions are desirable for exchange of teqhnical information which, in turn, enhances technological progress. We recommend several modifications to ERTA. First, we propose that the range of equipment qualified for the charitable donation deduction be expanded to include computer software, equipment maintenance contracts and spare parts, equipment in which parts not made by the donor cost more than 50% of the donor's cost in the equipment, and used equipment less than three years old. Our arguments for these changes are as follows. Computeraare incomplete without software. Maintenance contracts are valuable because keeping equipment in repair costs so much that universities have sometimes declined donations because of the maintenance expense. Companies that develop and make scientific equipment are selling primarily their technologi- cal knowledge, not their ability to make parts. For this reason, we believe the 50% limit on parts not made by the donor is PAGENO="0283" 277 unrealistic. Next, we propose that the R&D tax credit be made permanent. We also recommend that the credit be revised to create a special incentive for companies to support research in universities. As it stands, ERTA gives companies the same incentive to contract for, research in academe as in other qualified organizations. We propose further that the social and behavioral sciences be made qualified fields of academic research in terms of both the equipment donation deduction and the R&D tax credit. These sciences contribute to the applications of other sciences and technology, and social and behavioral scientists are increasingly using instruments in thetr research. Our last proposal for ERTA is that research foundations that are affiliated with universities, but remain separate entities, be made qualified recipients of equipment donations and R&D funding. That concludes our presentation of the results of the research instrumentation project. On behalf of my colleagues, I would like to thank you once again for your attention. PAGENO="0284" 278 PANEL DISCUSSION Mr. BROWN. Do we have statements from Mr. Goldberg and Ms. Woolsey? Mr. GOLDBERG. There is none from us, no. Mr. BROWN. Or are you here to correct the mistakes of the others? Ms. W00ISEY. No, thank you, Mr. Chairman. Mr. BROWN. Mr. Lujan, do you have any questions? Mr. LUJAN. Thank you, Mr. Chairman. Two things occur to me as I listen to the testimony. One is to give the university more power in making determinations. We face that in the case of the problem we have in South Africa and Nica- ragua and in El Salvador-the sharing of power. That is a very dif- ficult thing to have somebody do, and I didn't realize we had that problem at the universities as well. The other conclusion that-at least the thought they have-is that all of the testimony and the report talk about ways of the uni- versities getting the money to buy the equipment, but it seems like the study did not include the university responsibilities. I guess it's just assumed that they will use the equipment intelligently if given to them. Did that part come up at all in your deliberations? I don't find it in the report in any event. Dr. ZDANIS. Certainly the backbone of the research support pro- gram for the country has been the individual research project which undergoes peer review, and we certainly have encouraged the maintenance of that as the primary research funding mecha- nism, and under peer review we assume that the best projects will, in fact, continue to be funded, and the poorer projects will not be. Mr. LUJAN. Peer review-just changing the subject a little bit- has come under quite a little bit of discussion in the Science Policy Task Force. It's the result of 10 or 20 universities getting all of the money. Is that the same for instrumentation? Are the same 10 or 20 universities that get the top grant dollars also getting the top moneys in equipment? Dr. ZDANIS. Well, I would dispute the 10 or 20 institutions slight- ly. The number of institutions that share in university research dollars as supplied by the National Science Foundation, that set of numbers, that certainly has institutions in the hundreds that are sharing in the percentage. Mr. LUJAN. But percentagewise, what is it? Something like 75 percent or something? Mr. BROWN. I should interrupt the gentlemen to indicate to Dr. Zdanis that some members of the task force are a little biased be- cause of the small States that they come from, as you know. Mr. LUJAN. Or because of the large States they come from. Have tax credits-before that, let me ask this. You mentioned the Iowa State University REAP Program which is a good example of how things should be managed. Why don't the others do that if that is a good way of doing it? Dr. HUNT. I mentioned that, Mr. Lujan, I think the inventory systems-most schools do have inventory systems and are required to have them. What we found is that they have not been using those systems other than for recordkeeping. They have not been using them as a management tool, and with the exception, I think, PAGENO="0285" 279 of the-where we found in the REAP case where a system was being used as a management tool for effective transfer of equip- ment from one lab to another and to avoid duplication of equip- ment. There is a good screening policy there. Our recommendation is that institutions ought to make better use of inventory systems and using REAP programs as an example. Mr. LUJAN. Certainly sounds good. What effect has the tax credit for private sector entities had on giving to universities of both equipment and research credits? Has it been good and substantial or what? Dr. CHAUDHARI. Our survey found almost unanimously in a sense that the Tax Act encouraged people to donate, but when corpora- tions look to give equipment or donate equipment, they look at it first from their own point of view, what it means to them, and after they determine that, at that point they look at the donation and tax benefit that accrues from that to decide how much to give and whether to give it as a bargain sale or donate it outright. So, I think it plays a substantial role once the decision has been made to go ahead and donate equipment. Mr. LUJAN. I think you are absolutely correct. One of the things I ran into while I was at home is a large company making a sub- stantial donation of equipment to one of our universities. And I gathered that if they gave this big piece of equipment, then their system would be the primary one in the university-rather than the whole tax credit question. That is just a little icing on the cake. Dr. CHAUDHARI. Yes, that has been our experience, yes. Mr. LUJAN. One other question. What about joint use, like the computer centers that we are establishing? Do you find that an ef- fective way of equipment utilization? Give me your thoughts on that. Dr. CHAUDHARI. It's a little early to assess the supercomputer centers. It's been our experience-I say "ours," I mean IBM's expe- rience-with the Cornell Center where we made donations of equip- ment and are working with them. We have people assigned there. In fact, it's our intent to see how much we can use within IBM that center for our own work, so we are interested in that center for a variety of reasons quite apart from having a center available to others. We would like to see how we can explore the use of that for our own research. Mr. LUJAN. Do you foresee a lot of university use of it-other universities? Dr. CHAUDHARL Yes, and other corporations also. For example, a number of corporations have expressed interest in this, at least from newspaper accounts, in joining the Cornell Center to use their equipment. Mr. LUJAN. Do you find that to be the case, that the equipment is available at many laboratories that the Government owns all over the country, that universitites have access to them? Dr. CHAUDHARI. I think the university community is very di- verse. The scope of research goes all the way from a one-man effort to groups of efforts, and also the kinds of research we do is very, very varied, and what you find is, as you talk to people, where people have a need for a particular piece of equipment, and they PAGENO="0286" 280 don't have access to that equipment in their own university or it's too expensive, they will make contact there as much as they can. A good example of that is, of course, our National Synchrotron Light Source. It's expensive, and it's centralized. A large university faculty combined with university and industry can own a beam line there to do research. I know of examples in our own corpora- tion, and I know other corporations do the same. So, you will find where there is a special piece of equipment which is expensive and specialized, that industry, universities, and national labs will get together, but is it as, you know, common as it ought to be? That is hard to answer. There are those who feel it isn't worth their while to go all the way to a Government lab to do something that may be 700 miles away, or they don't have a travel budget, or their are other restric- tions on priorities and research results which they don't wish to share. Mr. LUJAN. From the standpoint of the laboratory, do you find it readily accessible? Dr. CHAUDHARI. The big industrial labs are accessible to the uni- versities. Mr. LUJAN. I am talking about the national labs. That is, the ones we have control over. Dr. CHAUDHARI. Yes, I see. At least our experience has been that they are very open and receptive to ideas. If you have research you would like to pursue, fine, and it's something they have available, they are receptive. Dr. ZDANIS. Certainly from the university point of view, they are very accessible, yes. There are two types of research instrumenta- tion, and I would like to draw the committee's attention to that once more. There are the instruments used mainly for service, making meas- urements on a repetitive basis, et cetera. Those types of instru- ments are very amenable to sharing. But there are other types of instruments where you are trying to push back the boundaries of what is measurable or to change the technique for measurement. Those you have half apart most of the time. You are changing things. It's not really feasible to share those types of instruments. Yet, they may be equally expensive. So, some things are feasible to share, others are not. The cost of sharing not only includes trans- portation to remote sites, but it includes the removal of that par- ticular expert from his home base and to some-the reason for an expert to be at a university is to provide informatin to his col- leagues, to teach the students who are there, and then he is off at some remote sjte doing research. As good as that might be, he is not available to his local community, and that is a real cost. Mr. Lu~~uc. I was thinking mostly in terms of my home area where, fortunately, we have superb national laboratories right at our back door. But I understand. Dr. ZDANI5. You are particularly advantaged. Mr. LUJAN. Thank you. Thank you, Mr. Chairman. Mr. BROWN. Mr. Morrison. Mr. MORRISON. Thank you, Mr. Chairman. PAGENO="0287" 281 I have questions in two areas. First of all, obviously some of us do have our biases as to particular institutions, and I happen to represent a rural area that has several smaller universities. I be- lieve Chairman Fuqua has, in a bill that he has introduced, Mr. Chairman, a provision that a set percentage of funding be made available for smaller universities. Do you have any reaction as a group to that sort of a concept? Dr. ZDANIS. Perhaps we should ask the association members to respond to that. Mr. GOLDBERG. That is a particularly difficult question. One would, at least I guess-I will express an opinion. I would prefer that we deal in terms of good science and merit of the best science, if you will, and that both grant funding and equipment programs go where the best science is being performed. I also worry about set-asides. No matter what position you take, you have to wonder when you do that whether all of those funds are being well spent. That doesn't mean that you will always make the right decisions when you choose merit. I don't know how else to answer that. I am not for set-asides, and I am not against a set-aside, but I view that as a set-aside, and I worry in some way that that money goes where it does the most good. Mr. MORRISON. We don't have the privilege that you have, both for and against set-asides. I can certainly see your point. I guess a concern I have is that we are included-and I look at your figures: 54 percent of the investment Federal, 32 percent State. Obviously these are taxpayers' dollars, and we would like to buy the best sci- ence with that investment. However, I think there will probably be a tendency to say, "Let's see if we can spread this across the face of the country a little more than to a selected group of institutions who by their reputations have established outstanding records of good science." Well, I guess we will return that particular decision to the political arena, Mr. Chairman. - The other question I had in just glancing through your report-I didn't get into the details of the blue book which, of course, is the complete report- I noticed, Dr. Hunt, in your comments you men- tioned leasing twice, but only in two particular ways. One is that there should be longer lease opportunities for State or institutions that have only 1- or 2-year State budgets to work with, and the other was to develop more expertise at the university level on leas- ing than long-term debt structuring. I wonder if your panel spent any amount of time, perhaps, on a new innovative approach on leasing to encourage leasing of equip- ment. It was mentioned that the tax incentives we have provided have encouraged businesses to make equipment available on some basis to university programs, but is there a possibility of going with more leasing since the life of this equipment seems to be short and maintenance is a problem? Should we devise at the Federal level some mechanism using tax incentives, and perhaps other financial rewards, or leasing programs in which the university would actual- ly not acquire equipment, but in response to a research grant, that equipment could be leased for the tenure of that particular grant? Dr. HUNT. Certainly a lot of leasing is going on at the present time. I think our review of the situation would indicate that, first PAGENO="0288" 282 of all, leasing is costly-is a more costly approach, and I think you have to look first at whether it's financially advantageous to- whether you should own the equipment or whether you should lease. In other words, there may be a financial advantage to owning equipment if it's not going to become technologically obso- lete than a long-term lease where it would be a much more costly approach. There are innovative ways, however, to structure leases so you can obtain ownership at the end of the lease, and institu- tions have used municipal leases where tax exempt rates are ob- tained. I think in the report we review a whole range of financing ap- proaches, some of which result in-most of which result in owner- ship of the equipment as opposed to simply leasing the equipment. But the advantage of leasing, as I see it right now, is the ability to spread the cost over a period of years as opposed to having to pay for the equipment up front. Most grants do not, or a project-orient- ed system does not provide sufficient funds to acquire or provide for full cost of the equipment up front. But it has to be paid for, and paying for it over time has pushed people into leasing as op- posed to purchasing and has then pushed people into innovative forms of leasing which result ultimately in ownership. I guess my problem is that leasing tends to be at a higher cost. Mr. MORRISON. The cost you don't write off as a tax advantage to an institution because it's automatically exempt anyway. Dr. HUNT. That is right. And we reviewed carefully, and with our consultants, alternatives fmancially that are being used in the marketplace today, various forms of tax exempt financing. But again, the big problem is who will pay for it ultimately? In other words, the debt has to be repaid, and the interest has to be repaid, and that has been without an assured or a systematic and rational basis of payment which, down the road, has sort of pre- cluded people from institutions getting heavily into the debt financ- ing arena. Mr. MORRISON. Is it-- Dr. HUNT. I don't know that I have answered your question. Mr. MORRISON. Well, you helped, and obviously you have given the issue some thought, and that was my basic question. Is it of sig- nificant importance that an institution, as a result of a research grant, end up with the equipment? The equipment being there means that somebody will do something with it, and it adds to the ability of that university to attract other research efforts or to be attractive from an academic point of view, at least. Dr. HUNT. Yes, I think it is. Once you have ownership, too, you have the ability to work hard towards transfer of that equipment among laboratories so that it remains a useful piece of equipment, and that you only pay for it once. That is why I think that just a straight lease is not always the best approach. Mr. MORRISON. Thank you. Thank you very much, Mr. Chairman. Mr. BROWN. Mrs. Meyers. Mrs. MEYERS. Have we-I'm sorry I didn't get here for the earli- er part of the presentation. I was at another meeting. I presume that the equipment we are talking about is primarily computers? PAGENO="0289" 283 Dr. ZDANIS. No, ma'am. Mrs. MEYERS. Tell me what other kinds of equipment we are talking about. Dr. ZDANIS. Scanning electron microscopes, mechanisms to assess surface phenomenon, materials handling equipment, materials con- struction equipment, instrumentions to measure radiations, both optical and nuclear, in order to assess all kinds of properties of ma- terials. So, there are a whole range of important university re- search equipment which are not computers at all. Many of them are now incorporating computer components in order to help the data analysis and data gathering components of that equipment, but that is not the primary focus of the instrument itself. Mrs. MEYERS. Has this problem always been with us or is this something that has happened fairly recently just because of the amount of equipment that has been developed and the fact that it's outdated earlier? Is this a new-I was on the 1202 commission at the State level, and I don't recall that this was as much of a problem with our State universities at the time. That was in the 1970's, however. Dr. ZDANIS. The development of sophistication in equipment has certainly escalated recently, so that the equipment becomes obso- lete much more rapidly now than it did 4 or 5 years ago. The tech- niques that are being used in various fields are also changing rather rapidly. If I can take an example from the medical commu- nity, there are PET scanners and CAT scanners and NMR devices, none of which were really applying to those fields 5, 10, 15 years ago, so the techniques are changing fast. That is hurting. There is no natural law which says how equip- ment needs to be used. The scale that we have to use for universi- ties is what competition has out there, because the reason for the universities to be in the research business is to be at the cutting edge. The cutting edge is defined by whoever is doing the most ad- vanced work, whether that be within the university community, within the industrial community, or in the foreign countries. It's that scale, that measure, that we are using to analyze the proper- ties of the university state right now. Mrs. MEYERS. When you talk about private support and that we need more private support for the kinds of training equipment that we need, I guess, in my experience, contributions to university re- search have usually been dollars. Dr. CHAUDHARI. That is correct. Mrs. MEYERS. Do these private concerns, either corporate or others, designate that they want this to go for scholarships or some special thing? I don't know why these dollars are not being used for equipment, I guess, is what I'm saying. Why is this a problem always? Dr. CHAUDHARI. I think two points are to be kept in mind. First, the private contribution of equipment is a very small fraction of the total needs of the Nation. Right now, it's about 9 percent. At least in 1982-83, the National Science Foundation survey found that private equipment contributions amounted to 9 percent of the equipment the universities used. Private support has increased substantially over the last decade, most of it from corporations which tend to be more and more ear- 53-277 0 - 86 - 10 PAGENO="0290" 284 marked for research and development. However, corporate support comes in many forms. For example, if I am working for a company, then if I donate $100 and the company will double that and will give it to the university, I must specify I wish to give it for a gradu- ate fellowship, or I may specify to just go to a department, and the corporation will simply match that without specifying that, "No, the $200 I gave should go somewhere else." So the support that goes to universities comes in many different ways. Most of it is not specifically earmarked that it should go for equipment. Should it be so earmarked? That issue is complex because the amount of sup- port and the way the support goes in can be very small or it can be quite large. It would be a difficult thing to do. Mrs. MEYERS. Thank you. Dr. HUNT. I might add most donors do designate a program or an activity they want their donation to support which is a restriction that institutions obviously abide by, so that scholarships or endow- ment shares is the way it has to be. Mrs. MEYERS. Do you find the States are establishing consortia of all of their universities and working together or do we need to do more of that? I just think we are going to see fewer dollars being available from the Federal level, and certainly while the States are more solvent than the Federal Government, a lot of States have problems too. And I think that unless we can pull more from the private sector, the dollars just won't be there. And I don't know if we can do that. So it looks almost like our emphasis should be in trying to get people to work together or some other devices along that line rather than just saying, "We need more money," because obviously we do. And I wish it were there because I'm very sup- portive of what you are saying. Do you find that States are working together within their bor- ders? Dr. HUNT. The first thing we have to do, I think, is sell States on the idea that they have a very important role in research. I think that State funding has by and large been focused on the instruc- tional aspect and missions of the institution and has not, except for land-grant schools, I think, has not extensively supported research. So, we have the first hurdle of getting a recognition at the State level that-that is in our report-greater recognition at the State level that they have a role to play and that increased funding is a a part of that. I think because the problem is so widespread and is getting a lot of publicity, I think there is some recognition now at the State level just beginning to emerge, so to speak. It's a time and activity, now, to be expanded. States have not seen that as their role, neces- sarily. Mrs. MEYERS. It's beginning to happen, but maybe not-I think it's beginning to happen for economic development reasons. Dr. HUNT. That's correct. Mrs. MEYERS. In some respects, States are saying we want some high-tech center, and they know that to do that, they have to have a really solid research institution in their State, and so they are going to go that way. I know that we have done several things. One of the things we did in Kansas was to have State tax deductions for any contributed PAGENO="0291" 285 computer equipment or any other equipment that could be useful in research and a lot of tax deductions. I imagine a number of States have gone that route, but in terms of economic development, I think they are going to begin to see more emphasis there. Dr. ZDANIS. I believe you are correct. For private donations to universities, the ERTA tax law also was designed. One of the sec- tions of it was designed to encourage that, and it has worked in a number of cases. So, one of the reasons that you see some more of the private sector donations being targeted to instrumentation is because of the effect of that particular law. Mrs. MEYERS. Thank you. Mr. BROWN. Mr. Fawell. Mr. FAWELL. Thank you. Mr. BROWN. Could I ask Mr. Walgren if he would be kind enough to chair? Mr. WALGREN [acting chairman]. Yes, of course. Mr. Fawell, you may proceed. Mr. FAWELL. Thank you, Mr. Chairman. I apologize, too, for being Johnny-come-lately, not only to this meeting but to the Com- mittee on Science and Technology. One question that I have that dovetails the previous question a hit is I gather most of the Federal contribution is research, and the equipment comes in as part of the research grant. Is that a fair statement? Dr. ZDANIS. A fair statement, yes. Mr. FAWELL. What about separate programs which are geared only to equipment purchases and, throwing in also matching fund- ing that would be required, and-then I will stop there. I have a question beyond that, but what about separate programs? Dr. ZDANIS. There are a number of agencies now that are trying that as an auxilliary emphasis. The Department of Defense, for ex- ample, has run that program for 2 years now. The National Sci- ence Foundation is starting that. Yes, that is a fine catchup mecha- nism for addressing this particular program. It has done well. We hope that other agencies will include that in their programs, too, and that funding be allocated for that purpose. Mr. FAWELL. Does that require you, usually, to have matching? Dr. ZDANIS. It does usually require matching. Mr. FAWELL. On what percentage is it, by and large? Dr. ZDANIS. Fifty percent is not atypical. One of the difficulties with matching is that it's not necessarily specified, and so there is a lot of negotiation about what percentage that must be, and that presents the universities with a great deal of internal deliberations as to how to try to bid for this. If we are in a program where there is only a probability of 10 percent that we will get one of these, should we allow 10 investigators to go forth and take an average that we will not have to provide the matching funds for all 10 in- struments? We get to play Russian roulette to some degree. Mr. FAWELL. One other point. Several weeks ago, I heard our new Secretary of Education make the statement that some of our more well endowed universities have indeed got tremendous in- creases and really were not-could not be-classified as financially needy at all. Have you considered the idea of a financial need factor? This gets back to the question of some smaller universities PAGENO="0292" 286 and colleges that may indeed need more attention here, and some of the very, very well endowed ones that may not be eligible. I'm talking about a financial needs test, for instance. How would that strike? Dr. ZDANIS. One of the problems with establishing financial need is "Compared to what?" If you compare it to aspirations, the needs of some of the more well-endowed institutions may, in fact, be as great as those of some smaller institutions. Mr. FAWELL. Absolutely, yes. Dr. ZDANIS. So, it's against that measuring stick that I have diffi- culty even trying to respond to your question. I know that some of the places where more research is currently done are probably the places where some of the big step functions can occur and where industrial communities may be willing to participate in joint ef- forts where they may not be willing to participate in efforts at other institutions. So, against that much larger need, they may be financially deprived. Mr. FAWELL. Do our agencies, at any time, though, take a look at what funds indeed may be available by a given university and say, "Well, look, you have a worthy project"-say Harvard or Yale- "obviously there are programs there that would be more advanced with greater aspirations," and all that. But you are very well-en- dowed, and perhaps a much higher contribution factor ought to be considered in reference to your project, lofty as they may be in the interests of being able to have elementary-up service equipment for a greater number of our universities. Dr. ZDANIS. That negotiation takes place every day between the program administrators and the principal investigators. Mr. FAWELL. It does. Dr. ZDANIS. And the program administrator will say, "Gee, that is a great project. Why don't you go see your dean and see how much more money you can get out of him?" By George, the princi- pal investigator will be in the dean's office that afternoon. Mr. FAWELL. Thank you. Thank you, Mr. Chairman. Mr. WALGREN. Thank you, Mr. Fawell. Dr. Zdanis, you start out your testimony focusing us on the effi- ciencies of procurement and so on, and yet, obviously, there is a big dollar amount involved someplace. How much is it? Those recommendations for changes in operation procedures might make things work very well and critically better for an indi- vidual project. On a percentage basis, how much of our problem do you see as solvable by efficiencies and regulatory controls as op- posed to the need for new funds? Dr. ZDANIS. A very small percentage, very small percentage. Mr. WALGREN. Certainly it's a high frustration factor. Dr. ZDANIS. Very high frustration factor, and it produces nothing of value for the country, and therefore we shouldn't be doing some of these things. The other thing that some of the barriers produce is a lack of leverage of the Federal funds which are available to commingle them and use them with other resources, so that even without ad- ditional moneys, different sources of funding can be brought to bear on the problem. PAGENO="0293" 287 We would like to remove those barriers. Mr. WALGREN. In your explorations, did any problems with the manufacturers of equipment, being in a position to be overreach- ing, raise their-raise the specter of the funds being taken advan- tage of by manufacturers of unique equipment? There are allega- tions of goldplating of instruments that would not be necessary for the experiment that would deliver more money to the manufactur- er. Is that a problem in this area that we have to be on guard against? Dr. ZDANIS. We did not see any, I don't believe. I don't believe that it's a problem. The type of instrumentation we are speaking about has a fairly narrow market. It's like selling automobiles to race car drivers who know everthing about automobiles. These are the people who use, design, and to some extent, en- hance the design of equipment that you are trying to sell the com- mercial product to. You can't easily snooker them with additional goldplated items. Also, the limitation of funds is such that the principal investiga- tor will be negotiating with the purveyor of the instrument to take all of the things that may add to the cost, but don't provide the fundamental focus of the instrument. In fact, that happens to a detrimental extent to some degree. Some major pieces of data ac- quisition equipment may be withdrawn from the purchase order in order to get the price down that can be afforded, and so the instru- ment doesn't produce the amount of data in a timely manner that it could be doing if they only had the ability to have this extra piece of equipment. So, I see the problem in exactly the reverse. Mr. WALGREN. Instinctively, where there is a Government pocket used to pay for the process or an effort, and the funding may be understood to be forthcoming, the buyer of the equipment, under those circumstances, would not necessarily be competitively sensi- tive to holding costs down. I don't have any experience in that area, but I'm just trying to dig through you people~ who have looked at it and dealt with it somewhat, and see whether or not there is. a substantial problem of overpayment for what are, admit- tedly, unique items. If not, it would seem that we could be, per- haps, less regulatory in our approach at 0MB and other places. But if it's a problem, of course we have to be more on guard. Dr. ZDANIS. I would like to give a quick response and turn to Ray. I do not know a principal investigator who is funded at such a level that he would not take every available dollar and use it for another purpose if he could avail himself of those additional dol- lars. So that the principal investigators, because they're trying to get out more research, will be very, very prudent and have been very prudent about spending those dollars in the most efficient way. Mr. WALGREN. Does the role of a principal investigator being confronted with a sole source for something he needs put him in an untenable position? Dr. CHAUDHARI. There are very few pieces of equipment where you have a sole source. It's a fairly competitive market. ~Dr. HUNT. The one comment I would like to make is we all do have our own purchasing departments, not just a principal investi- gator involved in this. There is also, in a major university, a cen- PAGENO="0294" 288 tral purchasing unit which is very much involved. It's sort of a team approach in terms of the acquisition of equipment. As one who comes from a State university, we have a State purchasing de- partment that is also involved, and in fact, until recently, we were very tightly controlled by State procurement regulations. That has now, at the State level-one of the advantageous things that has happened to us-the State now has delegated to the institution pro- curement authority which has substantially enhanced, really, our ability to meet the researchers' needs on the one hand, and still have a central overall policy that would, I think, preclude the kind of thing you are talking about. So, we have not experienced that in our case. Mr. WALGREN. Thank you. Mr. Lewis. Mr. LEWIS. Let me also apologize for not being here for your presentation, but skimming through it, it looks very thorough. On page 10 you have a recommendation that something be done to make prior approval less cumbersome. Can you give me a sce- nario of what you mean there, such as setting a $10,000 minimum level for the universities' inventories? Dr. ZDANIS. Right now, in order to abide by the regulations in* A-21 and A-hO, in order to assure that we are not duplicating a~ piece of equipment within the university that is available for re- search, when a principal investigator puts forth a purchase request to the purchasing department in the institution, he has to screen their inventory to see if that piece of equipment is available for use within the institution. The screening now has to occur if that in- strument is more than $300. We claim that that requires an awful lot of additional paperwork and screening burden for a dollar level which is really not prudent to share. You would capture, in that case, capture a majority of the value of the inventory and cut down a majority of the paperwork by raising the level at which that threshold screening must occur to a reasonable level like $10,000. Mr. LEWIS. I see. You also mentioned equipment sharing. Are you speaking of within the university itself or with other universi- ties in close proximity? Dr. ZDANIS. Yes, both. Mr. LEWIS. That is all I have, Mr. Chairman. Thank you. Mr. WALGREN. Thank you, Mr. Lewis. We have a vote on now, and if you have the time and could sus- pend for 10 minutes, it would make sense, I think, to allow us to vote. Let me ask Mr. Volkmer if he wanted to ask questions at this point. Mr. VOLKMER. No questions. Mr. WALGREN. I hate to keep you here for just a couple of things that I might have from scanning your statement. Can I ask when we say this problem is a problem that is so sub- stantial it can't be solved except by a sustained investment pro- gram, can we put a dollar figure on the problem? Laboratories would have to roll over their equipment every 5 years, apparently. Are you able, in this report, Dr. Zdanis, to put a dollar figure on size of this problem? PAGENO="0295" 289 Dr. ZDANIS. No, we did not investigate that. We understand there are additional efforts underway to try to establish what that level is, but we did not within this report address that problem. Mr. VOLKMER. Could I ask a question in that regard? Mr. WALGREN. Mr. Volkmer. Mr. VOLKMER. The university research community would be very hesitant, I'm sure, to recommend that we increase funds for equip- ment, research equipment, while we decrease funds proportionately for actual research grants. Why not? Dr. ZDANIS. That is certainly correct. Mr. VOLKMER. See, the trouble we have with these deficits is where do we find the extra money? Dr. ZDANIS. I understand the problem. Mr. VOLKMER. One thing is to take it out of the present amount and earmark it for equipment, but the other is to add. Where do we get the additional? Dr. ZDANIS. I understand the problem. Mr. VOLKMER. Do you have a situtation where we can find it? Dr. ZDANIS. No, I do not. I don't have the global view that you do. Mr. VOLKMER. I agree with you on that, but I think you under- stand the problem. Dr. ZDANIS. I understand the problem, yes. Mr. WALGREN. As I understand it, a substantial amount-you in- dicate a majority of support for equipment is obtained in the proc- ess of competitive proposals, approval of competitive proposals. If a substantial part of the equipment is obtained in that way, where does the overall relationship of the equipment that is actually pro- cured-where is that taken into account? If one research project is particularly interesting to NSF that doesn't mean that that equipment fits with any other more com- prehensive approach towards the laboratory that is involved. Dr. ZDANIS. Remember that before a proposal is allowed to go for- ward to an agency, the university has signing procedures that it goes through. At our institution, the sponsoring project office has to sign it, the department chairman has to sign it, the dean has to sign it. The institution undertakes an obligation also when it ac- cepts a research proposal and, therefore, the proposals that they allow to be submitted to the agency do, at some level, have an in- stitutional goal. Mr. WALGREN. I see. We have a vote here, and we should break. If I could ask you to just suspend for a couple minutes, I will come right back, and it will not be long. Dr. ZDANIS. We would be privileged to. Mr. WALGREN. The committee will recess for this vote. [Recess.] Mr. WALGREN. Gentlemen, I appreciate your staying on. I don't know how much more we should explore for the record. I was a little reluctant to simply stop because we had a time pressure of the bells. Doesn't the universities' interest, in a sense, run counter to peer review interests of the agencies in selecting the most interesting projects to them? When you say that we should be assured that there will be some coordination of instrumentation because the proposals, competitive proposals, are reviewed by the university, PAGENO="0296" 290 what might be of most interest to the National Science Foundation might not fit with the university's equipment acquisition program. Wouldn't that be not necessarily something we could rely on to co- ordinate these matters? Dr. ZDANIS. That is certainly true. There are, of course, the spe- cialized equipment grants which are available to help us in that regard, and there is the private sector that we call on periodically for both instrumentation itself and the funds with which we can purchase instrumentation. From a coordination-- Mr. WALGREN. Four percent. Dr. ZDANIS. Four percent. That is true. But to a considerable degree, the kinds of things the university will be interested in fos- tering are those things where the investigators are meritorious enough to be able to get research grants. We think that it enhances the viability of a proposal to have it presented in a way which can be coordinated in efforts across the institution. So, although they are not identical, they are certain- ly-they are looking at the same problem, and they are not as dia- metrically opposed as you may imagine. Mr. WALGREN. I wonder if there is any way to have an instinct for or general impression of the degree of instrumentation as pro- vided by special instrumentation program for the Federal Govern- ment? As I understand it, the Defense Department has a particular pro- gram that is instrumentation design. The National Science Founda- tion tries to take it into account even though they-I don't know that they are a line item in the National Science Foundation in- strumentation account-but the point is that the Federal Govern- ment provides 54 percent of all the instrument funds, and a portion of that is coming under specific instrumentation programs coming from the Federal Government. Do you have any instinct for the matter of how large that proportion is? How much of our instru- mentation is done indirectly, and how much of it is from the Feder- al level-is being done directly with the purpose of providing the instrument? Dr. ZDANIS. I would turn to Milt. Mr. GOLDBERG. I can't give a percentage answer. I only know that the largest proportion is being provided by individual project grants. Mr. WALGREN. So, the larger amount would come through the in- direct method, obviously? Mr. GOLDBERG. I don't know if I would call it indirect, but cer- tainly individual projects, at least. Mr. WALGREN. You folks would advocate a separate program of grants for equipment only? I gather the problem is large enough that you would like to see the Federal Government involved in this with a separate program for equipment only that presently does not exist. Dr. ZDANIS. Those have been very helpful where they have oc- curred, and we would encourage other agencies to do likewise. Mr. GOLDBERG. We would advocate a whole range of activities of which that is one. As we suggested in the recommendations, there are a number of changes that could be made in Federal regula- PAGENO="0297" 291 tions, and the universities could tidy up a little, but it takes a range of those activities as well as direct Federal investment, and as you say, indirect Federal investment and institutional invest- ment, to really deal with the size of the problem. Mr. WALGREN. Do you feel that there is a need for a mechanism to coordinate the efforts that we are making to solve this problem? Suppose you had a direct Federal instrumentation grant. Then you have the competitive applications, then the private sector coming in with 4 percent, the universities with 32 percent. If we are falling short, obviously somehow we have to set priorities to fund some areas and not others. Even if we are not falling short, it would seem that there would have to be a constant monitoring and ad- justment and an attempt to backfill where deficiencies are noted. What do we have that we can hold out to the public that they should be assured that that will happen effectively? Dr. HUNT. Two things come to mind. One is that any program should build in it, it seems to me, incentives that would enhance, incentives that would enhance other sources of support such as in- creases in State and industrial funding, so that you don't want to create something that will cause them to withdraw or allow the Federal-increase in this program to adversely affect funding from other programs. So, I think that it should be a combination and that the program should clearly create incentives maybe through matching or some other mechanism that will cause other sources of support to pick up as well. That is No. 1. Two, it seems to me the project-oriented system-in a sense, you are correct. It doesn't make for good, long-range planning. One of the things that we have struggled with, I think, in our report is how can we deal with this thing so that major items of equipment, the cost of major items of equipment, could be spread over several years ratiier than having to force it into an individual year. That would lead to greater planning, I believe, certainly would lead to more institutional involvement in the acquisition process, if there was a spreading of the cost as opposed to forcing everything up front as part of the individual grant itself. Now, that is difficult, and I say we have struggled with it and have not come up with an answer of how to do that, but I think that that would lend itself to more institutional involvement, give you greater assurance that it wasn't just the laboratory making the decision, but it was an insti- tutional planning process that was in place. Mr. WALGREN. To the degree you use debt financing, that tends to bring that in. Dr. HUNT. Tends to reinforce that, yes. Mr. WALGREN. Ms. Woolsey, do you have any suggestions we should focus on to encourage debt financing approaches in the uni- versities? Ms. WOOLSEY. One of the things that became clear to us when we visited universities is that deciding to go into debt does force a more centralized view of what the overall institutional future is going to be. That is difficult, sometimes, to pull off on campuses be- cause universities tend to be at least as decentralized as the execu- tive branch of the Government. I think that the ability to use more modern techniques of debt financing and depreciation and deal with program officers in the PAGENO="0298" 292 agencies directly on what one's needs are-pregrant OK's for put- ting in the order for the new NMR machine because it takes 8 months to get one once you decided which one you want, and that means if you have to wait until the grant is awarded, you cannot do the research for 8 months. Just minor administrative-what seem to be minor administrative details, 1 think, would smooth the way psychologically for the people on campus to do a considerably more efficient job. I spent 12 years in the executive branch before I joined the pri- vate sector, and I found most of our time was spent fighting among agencies. Coming back to this project, it became clear that a lot of time is still spent fighting among agencies with the universities and sometimes the clubs and that if one could-I realize this wouldn't be possible-could impose more consistency among agen- cies' interpretations and more coordination in terms of what is al- lowed, what is encouraged, it would enable those very, now very conservative central administration figures to become less conserv- ative because they would not have to meet the most conservative guidelines. Mr. WALGREN. Thank you. Let me recognize Mr. Slaughter. Mr. SLAUGHTER. Thank you, Mr. Chairman. I think my questions have been asked by now but what Dr. Hunt was saying, and some problems are outlined in the report, if insti- tutions could put aside so much money each year for use of depre- ciation factors, it wouldn't be desirable but we in our case don't have provision for that in State policy. I don't know whether other universities are allowed to use depreciation allowance, I don't know. Dr. HUNT. I am speaking to my former director I want you to know here, but in terms of State-appropriated funds, that is abso- lutely correct. In the area of research grants and contracts where indirect costs are retained by the institution, use allowances or de- preciation are funded amounts that are retained by the institution and can be applied to the purchase of equipment. I think what we were struggling with was the question of wheth- er-as opposed to doing it as an indirect-as recovery through the indirect mechanism, of being able to charge the cost of equipment to multiple years of a grant as a direct cost, or to leverage the transaction through debt if you had the assurance that payments would be made, funds would be available for that. That would help to first bring the institution more into the picture and provide for greater and more strategic planning, and greater institutional in- volvement in the equipment area. And second, it would permit, I think, acceleration of the-permit us to chip away at the backlog or the deficiency that now exists. Mr. SLAUGHTER. Thank you. I don't have any further questions. Mr. WALGREN. Thank you. Let me ask one other question. In the immediate response to the shortages and deficiences, there has been the thought, well, let's just pull the private industry in here and they have up-to-date equipment and there are ways that perhaps the universities could work with the private sector to let their students have access to modern equipment. I suppose the PAGENO="0299" 293 correlary is that as governmental agencies we could sit back and watch TV at that point. After about a year of that, what I heard was that private indus- try doesn't want students in there fooling around with their equip- ment and that that was a very, very weak reed to hope for and lean on. Could you give us any measure of the degree of availabil- ity that the modern-the degree of availability of those modern in- struments to the university population? Dr. CHAUDHARI. Let me try to answer that with a slight editorial comment if I may. The universities do research in very, very broad areas and indus- try in general will pick an area of research that is of interest to them, and so if you add up all the research that goes on in indus- try, you will find it is a small fraction of the total research going on in the universities. I think that is important to keep in mind. The only commonality is a small fraction of that. If you come into that small fraction you can ask: "Would we allow a student to come in and with all the rawness of a student coming in and play- ing around with sophisticated equipment; would we be willing to spend time on that?" Up to a point, yes, but it would very much depend on the individual investigator. But nowhere near the kinds of students you need to train in the university. So I don't think that is a solution to the problem. I think it is a suggestion, a gesture that allows you to build good will with the university, helps the university, establishes contact with researchers. That is just as important. To that extent, I think it is very useful. I think we ought to encourage that, yes. I think to solve-is sophisticated equipment available to universi- ty researchers? The answer is yes, where there is commonality of interest. That brings you back to the fact there is only a small frac- tion of research that has commonality of interest. And where there are labs where there is state-of-the-art equipment, that is a factor. These are all steps to be taken, but they are small steps toward solving a major problem. Mr. WALGREN. I hear you saying that that would really apply to the individual researcher who had a particularly interesting project that was-and was able to establish the confidence of the corporate counterpart and it would be a very individual relation- ship. Dr. CHAUDHARI. Yes, sir. Mr. WALGREN. That certainly would be nonexistent, essentially, with respect to training of multiple students university-wide, or training aspects that the universities engage in, such as in engi- neering and the like. Dr. CHAUDHARI. Yes; the emphasis at the industrial lab would not be on training. It would be more in research and the process of doing research where the student would learn. Mr. WALGREN. Well, if there is nothing further then-- Mr. SLAUGHTER. I have no more questions, Mr. Chairman. Mr. WALGREN. We would really want to express our appreciation for being a resource to our committee and our task force, and per- haps we can develop some of these areas that have been touched on by the members and some that have not been touched on, and we will submit written questions for you to respond. PAGENO="0300" 294 With that, we would adjourn the task force until next Tuesday at 10 a.m. Thank you very much. Mr. ZDANIS. Thank you very much for having us. Mr. CHAUDHARI. Thank you. [Whereupon, at 11:48 a.m., the task force was adjourned, to re- convene at 10 a.m. on Tuesday, September 10, 1985.] [Questions and answers for the record follow:] PAGENO="0301" 295 QUESTIONS FOR THE HEARING RECORD FINANCING AND MANAGING UNIVERSITY RESEARCH EQUIPMENT Task Force on Science Policy September 5, 1985 1. This [testimony] seems to imply that funds have been available for this special purpose, although in too small amounts, and it sug- gests that the universities, the research agencies and the research community in general somehow failed to ask for increases in this special funding category. Is there not also a question of whether, over these 15 years, the priorities within the total science budgets, both within the individual institutions, and within the state and the federal science budgets have failed to deal adequate- ly with the long-term, emerging and important need?' Answer Funds for equipment have indeed been available, but not in adequate amounts to support research instrumentation needs. Figure 3 on page 18 of our report illustrates the dropoff in total funds available and the decline of the federal portion in particular. The variation is in inverse time progression to the costs of instrumentation and the life cycle of state-of-the-art equipment. The figure shows that the problem still exists and that the issue has not been dealt with adequately. 2. "What is a `critical experiment' [in this context]?" Answer The National Survey of Academic Research Instruments and Instrumen tation Needs quoted on page 20 of the report, was designed and conducted by Westat, Inc. under the sponsorship and guidance of the National Science Foundation. Westat did not include a definition of "critical experiment" in its glossary of key terms. In the absence of such a definition we suggest language which, to the best of our knowledge, a faculty member might use in responding to the question. Critical experiments are experiments at the forefront (cutting edge) of the discipline, which the state of knowledge in the area indicates are both: 1) necessary to advance our under- standing and development of the field; and 2) now possible because of current state-of-the-art technology. 3. "How large a percentage is today obtained through competitive proposals prepared by individual faculty members? What are the advantages and disadvantages of this way as compared with providing equipment from sources separate from the research proposal such as from university sources or government equipment grants?" PAGENO="0302" 296 Answer The 1980 NSF report entitled The Scientific Instrumentation Needs of Research Universities provides an overview of the variety of support mechanisms available, given adequate funds. It discusses the advantages and disadvantages of individual project grants, special instrumentation grants, regional instrumentation centers and other sources, and in the process, makes an eloquent case for maintaining diversified funding options to respond to university needs. Both the individual research grant and the equipment grant mentioned in your question are competitive, as are most funding sources available to universities. Data on the percentage of research equipment obtained through competitive proposals has not been formally collected. Dr. Eric Bloch, Director of the National Science Foundation estimated recently that approximately 20 percent of total NSF resources is allocated to acquisition of equipment. It is unlikely, in his estimate, that the percentage can be in- creased to 25 percent, although he considers this a desirable goal. 4. "It does not appear too far-fetched to suggest that the general deterioration of important parts of the research infrastructure such as instrumentation must be attributed, at least in part, to these policies of little planning and a priority on personnel. Do not universities, realizing the problem they have created for themselves, have an obligation to think ahead and balance their priorities better?" Answer Universities do indeed acknowledge their responsibility for strate- gic planning and confirm their obligation to balance their pri- orities effectively. These issues are addressed on page 74 of our report. Universities feel vulnerable because uncertainties of federal funding patterns make projections difficult and unexpected cutbacks confound existing plans. University basic research works best in long term cycles. Yet, in times of sudden budget shifts, universities feel the obligation to protect their human resources, as their most valuable asset. Once a research team is disbanded, it is extremely difficult to regroup. Clearly, industry also experiences constraints, but, operating largely in the procurement mode, their constraints of planning and setting priorities are of a different nature than those affecting universities. 5. "What explanation is there for the fact that most other univer- sities have not done something like the Iowa State University Equipment Inventory Program (REAP)?" Answer Our report makes the recommendation that universities consider establishing inventory systems that facilitate sharing. One such system is the basis of the research equipment assistance program (REAP) at Iowa State University. REAP has many components in addition to shared use. For instance: acquisition of used equip- PAGENO="0303" 297 ment, screening, expert repair and calibration services, transfer, scientific description of inventory. The total package works well in the state of Iowa, given the research volume at Iowa State University, its geographic location and research emphasis. Because of its location, Iowa State University has generally greater difficulty in securing equipment maintenance and repairs than do universities in more populous areas of the United States. With funds provided by the National Science Foundation, Iowa State University made a sizeable investment in setting up the REAP inventory. REAP includes only research equipment, in the science and engineering area, selected to be of sufficient quality for research use. This inventory now exists as a specialized system, parallel with the much larger general accounting inventory. Other universities which consider setting up comparable systems, are acutely aware of the expense of start-up and maintenance, including the substantial faculty participation that is required to set up the expanded scientific descriptions on which the system is based. The total REAP system may not be cost effective for all univer- sities, but most will find elements of it useful. 6. `How does the situation today with respect to the current state-of-the-art of instrumentation available to researchers compare with what scientists faced in 1965 or even in 1935?" Or, to put it in a different way, do scientists ever feel that they have available the most up-to-date equipment?" Answer Science itself requires the continuous development of instruments with greater sensitivity, precision and speed. Only by developing and using improved instruments and techniques can investigators push back the frontiers of knowledge. Our report concerns itself with the inability of the scientific community to acquire the state-of-the-art instruments that their colleagues in the indus- trial sector and domestic and foreign competitors, are using in their day to day research. It is in tne scientific enterprise itself and in the international economic and technological arena that the difference between 1985 and 1965 lies. Our technological and economic competitiveness cannot be maintained without recogniz- ing the continuous need to invest in advanced research instruments and university laboratories. 7. "Why should it be the government's policy to pay the "full cost of research?" How can we justify the gradual broadening of indirect cost recovery on research grants into areas less and less connected to research under the "full cost" doctrine?" Answer There seems to be a fundamental misunderstanding about the meaning of the term "full costs of research." When the government funds an individual university research project, it never pays the full costs of that project. Federal funds help to house and conduct the project in an already existing institutional environment. Federal PAGENO="0304" 298 funds leverage institutional resources and may trigger other third party support. Unlike industry, universities do not receive independent research and development funds (IR&D). Universities build their own capacity through independent research and instruc- tion from which their research base is developed. The significance of the larger institutional base that supports academic science ~must not be underestimated. Its value lies in the large group of scientific expertise with complementing talent put together care- fully over a number of years, where dialogue among disciplines has been nurtured for decades. It allows you to bring to bear the concentration of a small group on a particular project for a brief period of time. Only the most direct "full cost" components are charged to the sponsors of the research project. The recovery of indirect costs is based on audited documentation of incurred research expense, pursuant to rules established by the government. 8. "One way to reduce the need for the government to be heavily involved in the detailed decision-making about moneys as they are budgeted, spent and recovered for such things as instrumentation, is block funding. In the long term, should federal science support rely more on such block grants and other mechanisms in order to decentralize decision-making to the universities themselves?" Answer Block funding, as exemplified by NSF's Materials Research Centers, is an effective way to decentralize governmental decision-making processes and to increase flexibility in granting prior approvals. There are others. PHS and NSF have implemented a variety of other mechanisms which delegate decision-making to the university level. The NSF Organizational Prior Approval System was expanded to all universities, after two phases of careful testing. It shifts the locus of decision-making with regard to certain budget approvals from the government to the universities. The PHS has recently completed its experiment, the purpose of which was to evaluate the effect of extending its existing prior approval list to univer- sities by an additional ten items. We understand that PHS is satisfied that it can rely on the universities to manage their grants well. Target date for implementation of a comprehensive PHS Institutional Prior Approval System is April 1986. We hope that other federal agencies will in turn be open to explore innovative ways to decentralize government decision-making. For that reason, we welcome the plan to make the State of Florida System the locus of a demonstration project on a government-wide basis. .9. "It now appears highly likely that the size of the pie from which all federal research support must come will remain fixed in the foreseeable future, or only expand slightly. If that is the case, where within that total research budget can we, in your opinion, make modest decreases in funding levels in order to provide the resources for the needs for scientific equipment at the univer- sities?" PAGENO="0305" 299 Answer It is vitally important that we do not mortgage our future by failing, to allocate appropriate resources to university research, including facilities and equipment. Even if the total R&D invest- ment remains fixed, the health of the research enterprise can be maintained by further reallocations of funds from the federal development activities into long-term research. This general policy objective has been supported by the President's Science Advi sor. 10. "How could this [research equipment problem] occur without anyone in either the universities or the government science agencies detecting that a gradual decline was taking place?" Answer The present situation is not a sudden crisis. It has been the focus of sustained attention. Pertinent studies referenced in our report, span the period of the last decade. The State of Academic Science, published in 1978, describes the status of federal support for university research and development from 1945 and traces changes through the mid 1970s. It speaks of the growing serious- ness of the problem. The American Council on Education reviewed expenditures for scientific research equipment at Ph.D granting institutions for FY1978. In 1980, a report was published for NSF, The Scientific Instrumentation Needs of Research Universities. This was followed in 1981 by an update entitled, The Nation's Deteriorating University Research Facilities, a survey of recent expenditures and projected needs in fifteen universities. In 1982, the National Academy of Sciences sponsored a workshop on "Revi- talizing Laboratory Instrumentation." All these studies were considered by the GAO for its review of equipment needs of U.S. universities, published in April 1984. Later that year, the Westat study, entitled Academic Research Equipment in the Physical and Computer Sciences and Engineering was published.. The AAU/COGR/NASULGC study, on which these hearings focus, is thus only another in a long series of warnings sounded with increased urgen- cy. 11. "For most of the decade of the l97Os and into the early 1980s the universities themselves behaved largely as dependents of the government, abdicating their responsibility for infrastructure and biding their time until federal facilities programs were resumed. In your view, can anything be done to bring about a change in this attitude on the part of the universities?" Answer Universities have warned since the late 1970s, as the quoted governmental witness acknowledges, that the research infrastructure is troubled. In response, institutions have not taken a passive position, far from it. Although government facilities investments stopped in the mid 1960s, universities have been and will continue PAGENO="0306" 300 to refurbish their facilities to the limits of their resources. But absent federal participation, university effort in real dollar terms has been eroded to the point that institutions generally are able to meet less than half of their accumulated needs. Since instruction and research require modern instruments and facilities, universities are acutely aware that the quality of their instruc- tional programs, the faculty they can attract, and the quality of their research all depend on the facilities and support systems the institution offers to faculty, staff and students. This awareness requires competitive universities to adopt creative and activist strategies. Passive postures in the present climate are self-defeating. 12. `In your opinion, what would be the advantages and disadvantages of [such] a fixed percentage rate for the indirect cost coverage, and specifically, would it be helpful to the universities in giving increased flexibility to the acquisition of research equipment?" Answer To replace the audited reimbursement of expenditures with an arbitrary formula, in the sense of a uniform fixed percentage will not result in a realistic or equitable determination of indirect costs. It would not be based on the principle of cost reimburse- ment, so it would be arbitrary and likely to be unsatisfactory to both the universities and the government. Rates vary, depending on the size of the university, its organization, its geographic location, the nature of its research and the degree of support it receives. In different university settings, it is logical to treat the same kind of cost as indirect or direct. A statutory limit on indirect cost, ignoring individual circumstances, would not lead to a reduction in indirect cost, but at best to a redistribution, which would not settle the matter to anyone's satisfaction. COGR recently addressed this issue in greater length in response to the question on the Task Force Agenda "Is it possible to replace the present complex indirect cost system with a better system?" 13. "To what extent have the universities been setting aside the use charges as reserves against future replacement of equipment needs?" Answer The government does not reimburse universities for use or depre- ciation of government purchased equipment and facilities. However, the government has agreed that indirect cost may include an amount for depreciation or use allowance on research equipment and facil- ities purchased with university funds and used on federally sup- ported research. Government reimbursement of depreciation and use allowance is committed to pay the bills for those prior university purchases. If an institution were to use those funds as a "set aside" to purchase new equipment and facilities, it could not pay for previously purchased items. The problem is one of obtaining funds for modern equipment, and one of the need for a systematic means of repayment of university research equipment purchases. PAGENO="0307" 301 14. How does industry manage to acquire and make available to their research staff the most modern equipment and what lessons can government and the universities learn from industry in this area? Answer Ihdustry clearly recognizes the need to invest in the latest state-of-the-art equipment. A glance at the most progressive U.S. corporations shows the benefits from these investments. Industry of course is supported by a favorable tax structure which allows it to use the accelerated cost recovery provisions of the 1981 Tax Act as one of many business incentives. When these incentives were not available industry was forced to be more conservative. To illus- trate this point, it is interesting to contrast the effect of depreciation rates on the resources of computer chip manufacturing firms to those of regulated telecommunication companies, or the steel industry. One industry, for example, had to work with outdated switching gear because of a 50 year write-off restriction. The universities to this day are still laboring under unrealistic use allowance policies prescribed by the government. While indus- try may depreciate research facilities over a seventeen year period, i.t has only just been recommended that universities be permitted to assess the average useful life of a research facility at twenty years, rather than the presently mandated fifty years. On a parallel basis, the concept of average useful life of fifteen years for a piece of university research equipment, on which current use allowance reimbursements are based, is inequitable and unrealistic. 15. `The debt financing method has been explained in detail. What are the reasons, in your experience, why that financing method has not been more widely used in the universities?" Answer Our report discusses the constraints on debt financing in a special chapter (see pages 56-58) and surveys instruments for debt financ- ing in Appendix 1. Essentially, universities are reluctant to use debt financing to a greater degree than they already do because there is no systematic means to assure adequate repayment and because debt limits future flexibility. 16. "Do we have any data on how much such [donated research] equipment is being donated to the universities?" Answer Data on gifts of company products and other property is reported as part of the 1983 - 1984 survey, Voluntary Support of Education, prepared by the Council for Financial Aid to Education (CFAE). Out of a total of $280 million, or 6 percent of total voluntary sup- port, company products accounted for $116.8 million. Equipment giving is likely to be adversely affected by the uncertainty in the tax system, as well as market conditions and production schedules. Finally, it would be beneficial to instructional programs if the PAGENO="0308" 302 tax provisions were broadened to include donation of instructional equi pment. 17. "Is the incentive on industry to donate research equipment to universities having the effect that modern equipment is being given to universities, or is it in fact obsolescent equipment that reaches the universities when industry replaces its own equipment with more up-to-date instruments?" Answer Under the old tax structure, only straight donations were attrac- tive to industry. These donations were not linked to any stipu- lations regarding age of the donated equipment, and as a result, universities tended to receive older equipment. The Economic Recovery Tax Act (ERTA) of 1981 changed this to require that equipment be donated within twenty-four months from the date of manufacture. Universities are receiving modern equipment. 18. "What is the best administrative process to foster increased use of shared or pooled equipment within the institution or even among neighboring institutions? Would further centralization help?" Answer According to the 1984 NSF (Westat) report, nearly half (45 percent) of all in-use research equipment in the 1982 national stock was located in shared-access facilities. High cost instruments are routinely shared across department lines. As research instruments become more costly to acquire, operate and maintain, economies of scale operate to force naturally greater sharing, centralization and remote access. Decisions to share instrument resources, however, must be based on academic needs, expressed and directed by research faculty, in compliance with the principles which initially governed the acquisition of equipment. Administrative attempts to force shared use artificially generally do not work. 19. "How successful have the NSF Regional Instrumentation Centers been?" Is this a concept that should be substantially expanded, or is it limited to certain types of equipment?" Answer The 1980 NSF report, The Scientific Instrumentation Needs of Research Universities discusses Regional Instrumentation Centers at an early stage in their development. We do not have more recent assessments, but the number of these centers is not expanding. 20. "Do you see any merit in such an approach [grants for equipment] (which would be similar to what the Fuqua bill would do for re- search facilities)?" PAGENO="0309" 303 Answer There is substantial merit to instrumentation grant programs for large equipment. The success of the Department of Defense, Univer- sity Research Instrumentation Program is concrete evidence of that. Similar programs have been introduced by NSF, DOE, and NIH. We refer to Appendix C in our report for a comprehensive list of available programs, and to the 1980 NSF report mentioned above, for a substantive review. However, such programs should not be seen by the investigators as a reduction in funds directly available to conduct research. They should rather become part of a comprehen- sive investment strategy that combines competitive grants for large, costly equipment with awards for smaller projects including instrumentation. 21. "Given that the federal government is estimated to have provided 54 percent of all instrument funds in 1982-83, how much is that percentage today, in your judgment, as the result of those initia- tives?" Answer Data are unavailable to answer this question. PAGENO="0310" PAGENO="0311" 305 APPENDIX 1 0 >~ F- z 0 > LL 0 0 0~ (I) Iii PAGENO="0312" ~qh1ights Higher Education U Total voluntary support rose $440 million in 1983-84 to an estimated $5.6 billion, up 8.5 peicent from 1982-83 * Corporate support rose 14.3 percent and provided a record 22.7 percent of all guts. Gifts from nonaluooni/ae individuals edged past those from alumni/ac for the first time since t977-78. Reports from Participating Institutions shosv that * Gifts of property totaled $279.5 million, including $116.9 million in company products U Corporate matching-gift grants totaled $78.8 million * Alumni/ac gifts to the annual fund rose 5.4 percent; the average gift was a record $113.40 and a iecord 20.-I percent of alumiii/ae responded to annual-fund drives Independent Secondarg and Elementarg Schools Reports from the Independent Schools indicate that * The 451 participants received $280 million in 1983-84 vecsus $276 million reported in 1982-83 by 480 schools * Gifts from individuals accounted for 75.5 percent of all gifts I A record 28 8 percent of alumni/ar gave a record average gift of $129.21 to the annual fund, a 6.8 percent increase over 1982-83 Addiuiooal copies. $20.00 per copy prepaid. Council for Financial Aid to Education, 680 Fifths Avenue, Nesv York, NY 10019 PAGENO="0313" Voluntanj Support of Education 1983-84 Preface 2 Higher Education Part I. National Estimates 3 Institutional Expenditures and Voluntary Support 4 Part II. Survey Results 6 The Recipients 7 The Donors 9 The Purposes ti Details of Support by Participating Institutions t3 Independent Secondary and Elementary Schools 72 Institutions Reporting the Highest Totals 74 Appendix Table A. Voluntary Support, Colleges and Universities, 1983-84 75 Table B. Colleges and Universities Reporting in Both 1982-83 and t983-84 76 Table C. Voluntary Support, Independent Schools, 1983-84 77 Table D. Independent Schools Reporting in Both t982-83 and t983-84 77 Table E. Voluntary Support of Higher Education, by Source and by Purpose 78 Table N Estimated Total Voluntary Support of Higher Education, t949-50 to 1983-84 79 A grant from the Reader's Digest Foundation assisted CFAE in meeting the costs of producing this survey. August 1985 PAGENO="0314" This twenty-fifth Survey of Voluntary Support of Educa- tion has been jointly sponsored by the Council for Finan- cial Aid to Education, the Council for Advancement and Support of Education and the National Association of In- dependent Schools, svith the cooperation of severalothec national organizations. It is the latest in a series of studies of educational philanthropy dating from 1954-55. The survey was completely restructured in 1983-84 to reflect the more precise aisd detailed definitions of sources and purposes for reporting gift income as defined in Management Reporting Standards for Educational Institutions: Fund Raising and Related Activities, pub- lished in January 1983 by the Council for Advancement and Support of Education and the National Association of College and University Business Officers. While the pri- mary definitions are essentially the same as those used in prior years, the more detailed breakdown of categories resulted in this surveyvolleciingabouttsvicea.s muchdata Voluntary support excludes income from endowment and other invested funds as well as all support received from federal, state and local governments and their agen- cies; in editing the survey questionnaires, CFAE deleted all income from these sources when so islentified by a cepsetiug institution. Any enrollment figures not tsp- pliedbytlie colleges and univccsitieswere takenfrom the hep 1984 Higher Education Llirectorsj. Most of the data supplied by the participating institu- tions since 1965.66 have been stored on magnetic tape. They are therefore availalsle for supplementary studies of educational philanthropy. A number of institutions that had participated in the past were unable to revise their gift accounting and reporting procedures in sufficient time to reply to this year's rrstructnrrd survey. A number of other institutions were not able to supply all of the data requested, but provided as much as they could. We are grateful to all of these iisstitntions fsr their efforts and expressions of cooperation. Scl,,nli Tstst 910 3,736 451 1,569 Invited md varr,stirs 1,820 Cnllrgrs 1,006 3 8 to participate Completed and tahnlatcd qncitisnnsires Nut tabulated: Unable to participate 582 3 136 2 Ns ssppsci Reporting instate se in totals only Tatat response 2 8 995 31 2 171 - 2 456 33 12 1,622 Response rate 54% 17% 50% 43% Total amount tabsslatcd Tmtate or in tstat only $4,642,891,010 9 62,328,376 $35,246,422 9 353,679 $280,119,367 $ 1,319,799 $4,958,256,799 9 64,801,854 Total amount reported $4,705,219,386 $35,600,101 $281,439,100 $5,022,258,653 (Reporting Late or in Crand Total Only) rocK-sEAts cou.rcrs & vNsvERsrriEs(3) corn- scan corvrcrs & 5JNIVERSSTIE5 (8) Cratz Cal. (PA) Benningtxn Cot. (VT) 0 2,105,548 Osteopathic Med. & Health Sci., Univ sf(IA) Emporia St. Univ. (KS) 1,150,736 Regis Cot. (CN( Free Wilt Rapt. Rible Cot. (TN) 754,207 Illinois St. Univ (IL) 1,198,211 TWO-YEAR COLLEGES (2) North Carolina, Univ sf.Chapel lull (NC) 24,926,l5t Highland CC (IL) Oklahoma, Univ of(OK) 13,300,000 Westchester CC (NY) St. L,,sis Cans. & Orbs, for the Arts (MO) Ll93,523 Yeshiva Univ (NY) 17,700,800 IN0ErENDCNT eRECOLLEGE sCHOOLS (3) Episcopal Day Och. (TN) Tsro-YEAI5COLLCCE5 (2) Si. Certende HS (VA) Lou Mocrii Cot. (TX) 329,479 Storm King Sch. (NY) Nocihero Esies CC (MA) 24,200 !NDErENnENT PRECOLLEGE sCHOOLs (2) Rreck Sch. (MN) 670,023 Procter Acad. (NH) 643,776 2~ Preface Survtsv Partirissatims, 1083.84 lii all those who filled oat itse qnestionnaisr's. lathe iuttitstioni they represent, and to the cooperating - . - .r ..s.....,:....,.~ ..,......,..,.a.. a"auc Cray ,,.,i Mats r,rre,, their ,`ratit,,,tc. PAGENO="0315" Higher Education National Estimates * Total contributions to higher education increased by $440million in1983-8ttoanestimated$5.6billion. The 8.5 percent increase bettered the 6.2 percent rise in 1982-83 and was the ninth successive annual rise in * voluntary support * Corporate gifts rose 14.3 percent, a greater increase than from any other donor group * Gifts from nonalumni/ae individuals edged past those from alumni/ac for the first time since 1977-78 * Gifts for current operations rose faster than those lbr capital purposes, growing by 9.0 percent Voluntary support of colleges and universities increased in 1983-84 for the ninth year in a row. At $5.6 billion in 1983-84, voluntary support has more than doubled since 1974-75, the last year in which gifts declined. The 8.5 percent rise in voluntary support was more than double the inflation rate of 3.7 percent as measured by the Consumer Price Index (CPI) andwas greater than the 5.4 percent rise in the cost of goods and services purchased by higher education institutions, as measured by the Higher Education Price Isdex(HEPI) (Sce Charti and Table 1). By Source Gifts from nonalumni/ae individuals, which topped those from alumni/ac forthe first time since 1977-78, accounted for 23.5 percent of total voluntary support. Corporate support continued its meteoric rise, registering a 14.3 percent gain over the 1982-83 total and providing 22.7 percent of all gifts. This is the fifth consecutive year that corporations have increased their support of colleges and universities by double-digit percentages. Foundation gifts comprised a slightly smaller share of total voluntary support, having dropped from 23.9percent of all gifts ten Chad 1. EstImated `kluntaty Suppodof Colleges and UnIversItIes by MaJorSowces and In Total tmltltonnotdottarn) Total Currentdollarn AdJuntedforIItgherEduca~ton Prtcetndexll9fll=1005 5,000 4,000 3 74 78 78 80 82 Foundations 84 74 76 78 80 82 84 BustnssuCorporallons 1IL~~ 3,500 3,000 2,500 2,000 - 1,500 - 1,000 - 500 - 0 1973. `75' `77' `79- `81' `83- 74 78 78 80 82 84 1uflIHIhnlluIff~ 1973- `75' `77' `79- `81' `83- 1973- `75- `77' 79- `81- `83- 74 76 78 80 82 84 74 76 78 80 82 84 PAGENO="0316" Higher Education/National Estimates 4~ years ago to 19.3 percent in 1983-84. Someofthe rise incorporate gifts resulted from asurge in gifts of products manufactured by the corporations. These gifts were encouraged by the Economic Recovery Tax Act of 1981 (ERTA), which provided enhanced thu deductions for products donated to colleges for use in research and.tcainiog in research. In the 1983-84 survey 1,118 colleges reported receiving gifts of company prod- ucts valued at $117 million, almost twice the $59 million reported io 1982-83. Corporations also gave almost $43 million in other kinds of physical property, such as used equipment, vehicles, land and other surplus items. Gifts from alumni/ac resumed their upward climb with a 5.4 percent increase after a small decline in 198283. Religious organizations registered a 7.8 percent decrease in support in 1983-84. The drop in the impor- lance of gifts from religious organizations is consistent with a trend seen in the last 25 years. Religious groups provided 10.3 percent of all private gifts in 1958-59; they provided 3.4 percent in 1983-84. Many of the private colleges that were once either church related or church controlled have since become independent and thus rely lesson support from their religious affiliation than in the recent past. The one-year changes in giving between 1982-83 and 1983-84 are consistent with patterns seen is the last five survey years. Corporate gifts have more than doubled; gifts from nonalumni/ae individuals have grown at afastec rate than gifts from both alumni/ar and foundations. Sup- port from religious organizations has grown only slightly. Gifts from alldonor groups escept religious organizations have outpaced the rises in both the CPI and the FIEPI. By Purpose The questions on the survey about donor purposes were changed considerably in 1983-84, so that the data enl- Table L Fs6w,utsiI Vulnotarn Sasniort, by Snarer and Purpose (isilSusis nfdnllars) ar~ 978.79 982.83 tsss-54 v ixsa.83 1978.79 sib. to urn `rov.sLvoLcNTAsus sus'rocr $3,230 $5_lan $5,600 + 8.5 + 73.4 + 15.6 Al Nonxtsmui Individuals Bssiseis Corporations Foundations Religious Organizations Other Pnrpnses 9 785 736 556 701 161 291 $1,237 1,100 1,112 1,018 206 397 $1,305 1,316 1,271 1,081 100 437 + 5.4 + 10.6 + 14.3 + 6.2 - 7.8 + 10.1 + 66.2 + 78.8 + 128.6 + 54.5 + 18.0 + 50.2 + 10.8 + 19.2 +52.7 + 2.0 -21.6 - Coereni Operations Capital Porposes Prier Indices (1067° 100) $2,010 1,220 $3,125 2,035 $3,405 2,195 + 8.0 + 7.8 + 69.4 + 79.9 +12.0 +20.1 Consumer (CPI) Higher Edseation (HEPI) 206.4 216.9 293.8 308.8 304.8 325.4 + 3.7 + 5.4 + 47.7 + 50.0 lected were not comparable with those collected in pee- funds public institutions raise ace for current npeialions vious years. The only estimairs about donor purposes rathee than foe capital purposes. possible in 1983-84 are for gifts for current operations and for capital purposes. As more data are accumulated in future surveys, detailed estimates about changes in the purposes for which gifts are made will agaiii be possible. Just over three fifths of voluntary support was desig- nated for current operations in 1983-84. Prior to 1969-70 less than half of all private gifts were channeled uiutu current operations. In the firsl half of the t970s, slightly more than half of the gift dollars went to current opera- tions; since then more than 60 percent of the fnisds raised have been designated for cnirent operations. Increased fund raising by publicly supported institutions is reSlO)ui- sible for some of this reversal. More than two thirds of the Institutional Expenditures and Voluntary Support Vols~otary support is only one factor in the economic situalion of colleges and universities. College adminis- trators must be concerned with the impact of enrollment changesand inflation on totalenpenditnres. Table2 exam- ines these factnrs and presents some good news. The long projected eniollment decliuues have not yet occurred, so that the siudeni population has reeuained fairly constant for the last ten years. Inflation, as meas- ured by both the CPI and the HEPI, has slowed since 1980-81, thus lessening the pressures of the previous PAGENO="0317" 311 E z a E 2 a -~ II ill PAGENO="0318" 6 Surveij Results * The 1,118 respondents reported gifts of $4.68 billion in 1983-84, an average of $4184 million per institu- * The 928 institntions in both the 1982-83 and the 1983-84 snrveys reported an increase in total support of 9.4 percent. Gifts to doctoral institntions grew by l2.3percrnt, toallpnblicinstitutionsby 10.3percent and to all private institotions by 9.0 percent. Corpo- rate sopport rose 13.8 percent ~ Gifts of property totaled $279.5 million, inclnding $116.87 million in company pmdncts, $42.96 million in corporate gifts of other property and $119.67 mil- lion of in-kind items from all other sources * Corporate support from matching gifts declined by 2.Spercent to atotalof$78.8 million, but theaveeage match reached a record $238.82 * Alumni/ac gifts to the annual fond grew by 5.4 per- cent; the average gift wasarecord $113.40, and a record 20.4 percent of all alumni/ac solicited gave I Almost three fifths of all contributions svere madefor current operations * Three quarters of all gifts carried restrictions about their use - This section of the survey report uses the actual figures reportrdby the participants toprovide twokinds of analy- sis: 1) details of the support raised during the year by the re5pondents-feom whom, by whom and foe what pur- pose; and 2) changes from year to year and over longer periods of time. Analyzing results over time presents difficulties not encountered in analyses of a single year's results. Many institutions respond tu the questionnaire every year, but some participate only sporadically. Meaningful compari- sons between years require identical groups of respond- ents-a"core" group ofinstitutions that reportforeach of theyearscumpared. This group is always smallerthan the total number of respondents in any single year The 1983-84 surveyhas additionalcomplicatiuns. Itwas restructured to reflect the sources and purposes for reporting gift income undefined in Munugesnent Report- ing StandurdnforEducationallnstitutions: Fund Raising and Related Activities, published by the Council for Advancementand Support of Education and the National Association of College and University Business Officers. The questionnaire therefore asked for almost twice as many details about contributions as in the past; a dunor group-parents-was added; and the donor purposes were changed drastically to reflect more accurately fund- raising activities and university accounting procedures. These changes made comparison over time even more difficult than in the past, but in the long run will provide more useful data. In addition, the participating institutions are now grouped according to the National Center for Education Statistics (NCES) classification structure. This system placesinstitotionsintohomogeneous groupings, enabling more meaningful comparisons than in the past. Also, the data gathered in this survey can now he utilized in con- nection with other data bases that use the NCES struc- NCES defines five major categories of institutions: 1. Doctorate-granting institutions: Universities that are very active at the doctoral level, grantinga mini- mum of 30 doctorates in 3 or more doctoral-level Higher Education II PAGENO="0319" Higher Education/Survey Results `/ programs, including first-professional-level medical degrees. 2. Comprehessice institutions: Colleges and soiver- sities that have strong pasthacealaureate programs, but not significant doctoral-level activity, granting a minimum of 30 postbaccalaureate degrees (includ- ing master's and some doctorate and first-profes- sional degrees). 3. General baccalaureate institutions: Those whose primary emphasis is on geoeralundergraduate, bac- calaureate education. They grant baecalaisreate degrees in 3 or more baccalaureate programs or in interdisciplinary studies (with over 75 percent of their degrees at the baccalaureate level or above) and fewer than 30 postbaccalaureate degrees. 4. Professional and specializedinstitstioso: Those that are baccalaureate and posthaccalasireate institutions with aprugrammaticemphasis in one area, usually a professional field such as business, engineering, medicine, theology or art. 5. Two-yearinatitutions: Sclsoolsthatconfer morethan 75 percent of their degrees or awards for 2 years of wurkandless than 25percent atthebaccalaureate or posthacralanreate level. (Institutions with a two- year sipper-division program do not fall in this cate- gory, since they offer the Isaccalaureate.) The institutions in each of these categories are furtlser divided by their control-that is, private and indepen- dent or publicly controlled by local, state or federal governments. The Recipients A slightly smaller number of institutions participated in the survey in 1983-84, perhaps because of the increased diffirulfy in completing the questionnaire. The 1,118 respondents (20 fewer than io 1982-83) reported good news, however, recordiog an overall increase of $306.6 million over total gifts in 1982-83 (see Table 3). The two groups of doctoral institutions-public and private-each received more than $1 billion in gifts. The $2.8 billion recorded by these 150 doctoral institutions represented 60.7 percent of the total gifts to all respond- ents. Public institutions participated to a larger degree in the 1983-84 survey than in aoy previous year. Twenty- eight percent of the respondingfoor-year universities and colleges were public, and they raised 32.4 percent of all the hinds. Ten years a go 24 percent of the respondents Table 3, Voluntary Support by Type of Institution (NCES classification) (000voaird) 1y~,1t,oa,vo, Na, Ao,,,,,t toaiiai,,a N,. A,,,o,,t I,aiva:o, ii Gouge Tail S,ppoo Na. Private 57 $1,436,537 $25,202 50 51,595,294 $28,487 + 13.0 + 12.3 55 Psblie 90 1,124,748 12,497 94 1,243,743 13,231 + 5.9 +12.3 83 Private 133 429,606 3,230 135 487,018 3,608 + 11.7 + 12.5 127 Public 117 125,039 1,069 124 118,085 852 -10.9 - 3.4 96 Private 434 872,084 2,069 411 861,649 2,096 + 4.3 + 2.8 374 Pablic 41 21,720 530 39 25,312 649 +22.4 +29.3 29 Private 119 213,617 1,795 105 194,874 1,856 + 3.4 + 1.6 79 Psbtie 20 109,512 5,476 18 116,906 6,485 + 18.6 + 2.9 16 743 $2,95t,845 9 3,973 707 $3,138,825 9 4,440 + 11.8 + 9.0 539 Public 268 1,381,020 5,153 275 1,504,056 5,469 + 6.1 + 10.4 224 Prv:te° 43 24,792 577 42 20,610 491 -14.9 + 5.4 31 Potslic 84 13,841 165 94 14,637 156 - 5.4 + 6.5 38 Alt Pcivatr 786 $2,976,637 9 3,787 749 $3,159,445 5 4,218 + 11.4 + 9.0 666 All Polslie 352 1,394,861 3,963 369 1,518,693 4,116 + 3.9 + 10.3 262 GRAND TOTAL 1,138 $4,371,488 9 3,841 1,118 $4,678,137 9 4,184 + 8.9 + 9.4 928 Table 3A, Voluntary Support by Type of Institution old CPAE classificatiss((ooo,oatr,1) Private Uisiveesilies 73 $1,530,592 $29,967 71 $1,683,947 $23,719 + 13.1 + 12.4 71 Private MesS Colleges 9 20,438 2,271 6 16,147 2,691 + 18.4 + 2.4 6 Private Wows-u's Colleges 77 155,421 2,018 72 156,996 2,181 + 8.1 + 3.4 70 Private Cas-dscatiouat Callrgv-s 496 1,079,199 2,176 472 1,095,201 2,320 + 6.6 + 4.3 429 Peefessiaoat& Specialiced Schools 90 185,809 2,085 88 209,136 2,377 + 15.1 + 15.6 61 Total t'rivate Poor-Year 745 $2,971,458 8 3,989 709 $3,161,427 8 4,459 + 11.8 + 9.1 637 P01)1w PosvYear 2660* 1,362,355 5,122 273 1,481,464 5,427 + 6.0 + 10.2 222 Total P,:,ivYeac 1,011 $4,333,813 9 4,287 982 $4,642,891 9 4,728 + 10.3 + 9.4 859 Tss'a-Yrarlostitotiaos 127 37,685 297 136 35,239 261 -12.1 + 5.8 69 r,RANDTOrrAL 1,138 $4,371,498 5 3,841 1,118 $4,678,137 5 4,184 + 8.9 + 9.4 928 0Pigacrs stiffer slightly from those psblished hs Iso 1982-83 soevey report berasse afisstitstiooat eeelassifiratioss. l)etaih do oat always add sits to totals Isrraose ofeosisdiog. 00Dilfers from the osimbre shasro is Table 3 breasse of dd$eeeot classifivatiso criteria is the two systems. PAGENO="0320" 8 Higher Education/Survey Results were public institutions, and they raised 22 percent of the gifts. Comparisons of the total amounts reported by all insti- tutions in 1982-83 and 1983-84 can he misleading because of differences in the number and characteristics of the respondents each year. Calculating average support per institution in each class partially corrects for these dis- parities. The results are shown in Table 3. In contrast tothe last several surveys, when support for public institutions surged, it was the private institutions in 1983-84 - notably the doctoral and comprehensive colleges - that reported double-digit increases in aver- age support per institution. The only groups of public institutions reporting such increases in averagesupport in this survey were the general baccalaureate and the spe- cialized institutions, both of which are very small. Gener- ally, average support for the private institutions ranged between two and three times the average foe the public institutions. The only exception was the public special- ized institutions, many of which are medical and engi- neering schools, which raised three times the average fur the private specialized institutions. The changes reported by the "core" institutions in general follow the change patterns of the averages for the total group of respondents. Analysis of the two groups that differ the most - the public doctoral and the public specialized - reveal some interesting factocs. A 22.1 percent increase in corporate support and a 19.2 percent rise in giftsfrom noualnmni/ae individuals fueled the 12.3 percentinceease in suppuetforthepublicdoctoealinstitu' ti005. An 8.2 percent decrease in gifts from nonalumni/ae individuals, sogetherxvith minimal increases in corporate and foundation support, were responsible for the suxall growth in total support for the "core" public specialized institutions. A doubling of gifts from nonalnmni/ae indi- viduals, coupled with a 38.1 percent rise in foundation support and a 30.9 percent growth in corporate grants, produced the large increase in support of the public baccalaureate institutions. Comparison of the results in Table 3 with those shown in Table 3A, which shows the responding institutions Table 4, Peereotagc Changes in Average Voluntary Support per Institution by Sourer, 1982-8 3 to t9S3-S4 Aismui . ~ 9 ~ +5: Nooatsimoi todividoals ~ + 10.4 +t3.l Foaudatiosu + 7.3 948,5t5 + 6.3 Corporationi ~ + t4.6 + t3.8 Religiousi Oegaoizatioui `~3~r° - 7.9 295,351 327,598 + 8.2 Other ~ t0.9 $3,841,386 $4,194,381 + 6.2 + 9.4 928 GRAND TOTAL (1000) (100.0) + 8.9 tostitotizus 1,138 1,118 Reporting (Figueci iu paeenthesoi ihosv peuceot of total in each colsimu.) Table 5, Alnsnuilae Support of Colleges and Univeesitieu and the Annual Fund t973-74 988 2,277,520 $t57,2t4,30t 9 69.03 1974-75 $86 2,371,331 165,955,732 69.98 1975-76 991 2,527,867 t85,436,65t 73.35 t976-77 t,006 2,659,3t3 2t0,t30,479 79.02 t977-78 t,065 2,695,689 223.633,074 82.96 t$78-79 972 2,763,t27 266,914,036 96.60 1979-80 1,019 3,0t5,052 299,247,120 99.25 1980-81 928 3,177,233 311,858,949 98.15 1981-82 1,101 3,582,677 373,184,415 104.16 1982.93 1,138 3,788,805 4t4,202,3t4 110.17° 1983.84 1,118 3,830,417 436,545,t79 113.40° 17.4% 17.4 17.6 17.5 17.6 17.9 t8.t 18.6 18.9 19.70 20.4° 9 396,865,269 377,376,344 46t,09$,585 509,125,585 552,621,466 620,347,430 725,540,650 821,135,159 1,051,897,044 1,047,173,983 1,089,575,049 °Size of average gift and solicitation cffvctis'coesi based only ou reopznseiczutainosg all data. PAGENO="0321" Higher Education/Survey Results 9 classified as in past sorvcys, illnstrates the advantages of the NCES classification. According to the resnlts in Tolde 3A, for esatuitle. snpport for all the fonr-year pultlic insti- tutions increased hy 6.0 percent in t983-84. Toble 3 reveals, however, that this single percentage masks wide variations in the changes reported ity the canons groups of ptIl)lic institistiutts, ranging from a decrease of 10.9 percent to increases of 5.9, 19.6 and 22.4 percent. Simi- larly, tlte 12.1 ttercent decrease registered by all Iwo-year instittitions results fnnn a nods larger decrease f(tr the private than for the tuhlie institntions. The Donors As groscth in cor~t()~at~~ sts~)port has ontpacrd rises in ststtpsrt from otiterdonur grnttps in the last fewyears, the average corporate support per institution now more nearly equals the averagr support from alutnni/ar and umutt i/ar indis-iduals. Eacis of ttmese titrer major donor gruu~ts provided (seer 22 percent of all voluntary snpltort itt 1993-84, as can be seen in Table 4. Average stmpp~rt iter imtstittmfkttm from nonalutttni/ae ittslivimtimals surpassed acreage support from alusuni/ar in 1983-84 fir the first time since 1977-78. Private institu- tiutts received over 70 ltercemmt of nonalumni/ae gifts and tourr hams three quarters tsfalumnni/ae donations. Corpo- rations, ott the mttlter hand, divided their grants altuost ettually lsetsveen )stblic and Isrivate institutions, wills the private colleges reeeivissg ttssly a slightly larger share in 1983-84. The divisiost (sfcm)rpstrate support betwerms pri- vate atsd 1tublie institutions has elsanged sultstantially is the bitt 25 years. Its 1958-59 77.3 percent of corporate gramtts were tnade to private iststittttistns. The allocatiosm has drtspped steadily since then, reaching the 52.8'per- cent share reported its this survey. Fnssndatiosms, no the other hansl, have oppssrtinned theirgcants eummsistently over ilte years, chanttrling ahomst 70 percent In private institsstisstss. The wide variatiun in change patterns betw ceo average gifts fr(ttn rehigiutms orgassizations for all respotsdrtmtn in 1982-83 and 1983-84 and fnr tIme "core" grtstsp stf institu- tittns respmmndingin ltnth yearsvividly illustrates the prnb- letns causeml Isydifferenees in the esperiettces and charac- teristics sf survey participants in tlse Iwn sasuples. Table 0. Am mni/ae Sopp net of Aonoat Food by Ty pe uf tnstitntiuo, 198 2-83 ammd 1983-84 t%icase 27.9% 8165.98 28.5% 9178.38 + 7.5 Psddic 14.9 88.11 15.7 63.17 - 5.3 C5i~icate 21.8 99.37 22.1 107.55 + 8.2 Puldie 10.8 42.61 12.2 42.71 + 0.2 Private 26.5 109.02 27.4 112.00 + 2.8 Pslslie 18.5 56.26 19.4 62.12 +1(1.4 i'ricatss 21.8 95.54 21.5 1(11.62 + 6.4 Psdslie 22.4 72.58 24.6 91.10 +25.5 - Peicate 25.6% 8127.92 26.1% $135.83 + 6.2 i'uhlic 14.2 78,79 , 15.2 75.2.1 4.4 Pricste 14.9 66.59 12,7 60.39 - 9.3 Psiblie 5.6 36.34 6.0 157.00° ° Alt Pricate 25.4% $127.20 25.6% $135.06 + 6.2 Alt Public 14.1 78.56 15.1 75.60 - 3.8 cnusn TtrrAL 19.7% $110.17 20,4% 9113.40 + 2.8 sOne isstitstissm eepssrtedasinglegiftef$250,000alougsvith srs'eralsthrrlaegegills, as paetsfavreyssccesshmleampaign. Euclodiug these estrosedinary data, the ocerage gift would he $20.37 and the year-to-year change -43.9 percent. Special Forms of Giving pie or even qssaslrstple tIme value of their emssployees' gifts 0-' d ` h d `d d `1 b to higher education. Gills of cnsnpuntj presductu, encour- y1' wh hg ft w m d t th m Th if d g d hy th Ecu m R y T A I f 1981 has lsmmsglseen a technique for gaining alumni/ar support. utlerPhynse1properts~ are now popular sources of spe- Beqtmeotu and various forms of deferred gifmu, such as 5 g gs. - 0 er is charitaimle remnaiudertrsmsts, pooled income funds and gift A annuities, ace estate plaooing methnds encouraged by 0 U cttlleges and universities. More than 1,000 corporations Tuble 5 presents data about annnal funds since 1973-74. have estalslished mutehing-gift progrumathat double, in- Allhough the number of institutions responding In the PAGENO="0322" 10 Higher Education/Survey Results Tahl~ 7. sueveyhasvariedovertheyears, the numberofalumni/ae donors totheannualfund, thetotalvalueoftheirgiftsand the average gift have grown steadily each year. The 20.4 percentalumni/ae response rate recorded in 1983-84 isan all-time high. The annual fund has garnered about 40 percent of all alumni/ac gifts consistently over the years. Alumni/ac of various classes of institution respond dif- ferently tosolicitations foe theannualfund, ascan be seen in Table 6. Historically, private colleges and nniveesities have relied more heavily on annual-fond drives than have public institutions, and four-year institutions conduct these drives more often than do the two-year institutions. Theaveragegiftand the response rateofthealumni/aeaee therefore generally larger at the private colleges than at the public colleges. Bequests and Deferred Gifts Bequests and deferred gifts accounted for27.3 percent of total support from all individuals in 1983-84. Prior to 1979-80 bequests and deferred gifts averaged about 35 percent of all gifts from individuals. Since then they have averaged about 28 percent. They tend to be somewhat "lumpy,"however, becauseofthe unpredictability of very large bequests. Matching Gifts Corporate ftinds matching employee gifts to higher edu- cation institutions havebeengeowingin importancetothe colleges. In 1966-67, when this surrey started collecting matching-gift data, grants from this source were 2.0 per- cent of all corporate grants. They reached 8.6 percent in 1982-83andapparentlyretrrated slightly in 1983-84 to7.4 percent. This figure may not be completely representa- tive, however, since a number of institutions which re- ported matching gifts ofovee$3 million in t982-83did not furnish matching-gift data in 1983-84. The importance of matching-gift moniesvaeiescoonideeablyaceordingtothe type of institution (see Table 7). As with the annual fund, matched gifts aeq larger and generally a more important source of funds for the private institutions than foe the public institutions. Matched gifts also represent a much targerprupoetion ofcorpoeate grants to the private liberal arts colleges than to other types of institutions. 1$peaftnft(ofto,, An,,unt h~o,gt, Mact,nt G50s Sun ,,t AmnOe Mach 1Oat Cu-~u,n)n Soppoo MacSing Gifts a a Peon,) ot T,,GtC,,,p,,,asn S,,p~,no Private Pnhtie $24,107,009 15,599,400 $262.74 189.95 9 351,617,198 424,534,750 6.9 3.7 Private Puhtie tO,309,670 1,967,030 238.87 176.85 71,647,085 34,623,282 14.4 5.7 Private Public spr~Ai:ru Public 21,498,560 334,360 3,411,884 1,182,415 282.63 269.83 193.34 176.22 93,286,5t9 6.024,t49 40,531,835 30,335,226 23.0 5.6 8.4 3.9 Private Public $59,327,123 19,083,205 $539.42 188.68 557,092,637 495,517,407 19.7 3.9 Private Public 308,540 37,488 155.53 234.30 2,614,004 5,225,732 tt.8 0.7 Alt Private Alt Public $59,635,663 19,120,693 $258.54 188.76 $ 559,696,641 500,743,139 tO.7 3.8 GRAND TOTAL $78,756,358' $238.82 $1,880,439,780 7.4 1982.83 CRAND TOTALS $50,882,184 $216.72 9 941,556,891 96 nThf s figure 1982.83, did not furnish maynotbrromptetrty representative, sinceasumherofinstitotioos, which reported natchinggiftsofovee$3mittiou in matching-gill data in 1983.84. Company Products and Other Pcoperty some institutions 1)00k in-kind gifts at a nominal value of $1 each. Data on gifts of company products and otlsee propeety Reported gifts of company products almost donhled in were sought for the lest time in the 2982-83 survey, and 1983-84, perhaps in part lw-cause of better institutional more details were collected in the 1983-84 survey. The record keeping and reporting procedures. Timing could results are presented in Table 8. Gifts-in-kind from all also account fssr wine of the increase. A grant commit- sources amounted to almost $280 million, or6.0 percent nentsnavlwsnad.-inooeacath.-oacyear,trottheproprrty of total voluutary support in 1983-84. They consisted of sot received and reported until the fohlosving academic $116.87 million of company products, $42.96 million of year Rctvsrts about these gifts c-an therefore vary widely other property from corporations and $119.67 soithioo of from \cisc )s) in-kind items from all other sources. These totals do not Cilis of csonpany products, tssgether with gifts of other represent the foIl value of all these gifts, however, since props-etc boos corporations, node up 15.1 percent of all PAGENO="0323" Higher Education/Survey Results iii corporate support. The average size and importance of such gifts to the colleges again varied according to the type of institution. More than three qssarters of all corn- panyproduct gifts assd two fifths of corporate gifts of other property went to doctoral institn~tiuns. In several in- stances larger amounts of property were given to public institutions than to peivate institutions. Colleges usually report product gifts at market value. The tax deduction taken by the donor corporation, how- evee, is less. It is either manufacturing cost or half the difference beiween mannfactnringcost and marketvalue, if the donated product is for research or training in re- search. Consequently, college reports of company prod. net gifts will be higher than corporate reports. Gifts of property from noncorpoeate sources amounted to3.2 percent of gifts from all sources other than coepuea- tions. Theprivatecomprehensiveaud generalha~alas~ee- ate institutions got more property gifts from noncorporate sources than from corporate sources. The privatedoctoral institutions received more property frons corporations than from othersources. The publicdoctoralandcompee- hensive institutions together received the lion's share of property gifts to public institutions from other sources- 81 percent. Overall, donorgrosps otherthan corporations split their property gifts almost evenly between public and private institutions. The Purposes Gifts for current opeeations accounted for almost three fifths of all voluntary support in 1983-84, and more than two thirds of those gifts werechanneled into specificnses, as shown in Table 8. Respondents were asked to provide details about the restricted uses for both current-fund and capitol gifts, Table 10 presents the results foe those institutions that could provide the data. The amounts eepotted represent 93.8 percent of all gifts for current operations and 87,1 percent nf all funds given for capital purposes, Both are large enough shares In provide valuable insights tutu how donors want their gifts used. Research, particularly fur current operations, was the mostpopulat:object of restricted gifts, with 2.5.3 percent. Student aid was next, receiving just over one fifth of the Table 8, Gifts of Property by Type of Institution, 1983-84 Crop,vy Pvd,,vt, Copv,,tk,o, .6110r1,oc So,,,,, A,v,,,v5 Si,r vICA Anoot Si,o tfCi0 Aot,ot SAc ,,fCiS Taxi $ 41,282,250 $ 88,619 9 2,228,891 $11,430 $ 26,049,248 8 3,208 $ 69,560,389 48,144,153 30,452 15,503,300 14,661 44,370,498 4,608 108,017,951 3,036,199 9,763 4,432,639 4,772 13,757,031 3,827 21,225,869 5,382,693 8,094 7,m5,513 8,348 9,074,068 4,222 22,362,274 4,435,571 5,508 6,675,518 11,111 14,569,400 1,938 2,5,680,579 1,102,661 5,807 1,200,282 6,374 2,864,082 4,566 5,167,025 5,744,547 29,459 2,600,903 13,270 1,377,014 2,387 9,722,46.1 4,699,032 142,395 631,069 16,181 660,763 4,437 5,990,864 Private Public Private Pal,liv Private Psbtic Private Public Public Private Public All Private All Public 1982-83 $ 54,498,567 8 29,969 $15,937,951 9 8,262 9 55,752,783 9 2,847 $126,189,301 59,328,539 24,059 25,240,164 11,618 56,969,411 4,535 141,538,114 135,525 2,606 74,299 1,327 5,391,155 3,848 5,600,979 2,905,060 10,927 1,707,198 7,066 1,561,268 2,036 6,173,526 $ 54,634,092 9 28,170 $16,012,290 9 9,062 9 61,143,938 9 2,855 $131,700,280 62,233,599 22,952 26,947,362 11,2.14 58,530,679 4,449 147,711,640 $116,867,691 $29,427 $42,959,612 9 9,770 $119,674,617 5 3,488 $279,001,920 $ 58,943,482 9 98,460,254 $157,403,736 TableS. Percentage changes in Average Voluntary Suppers per Institution by Purpose, 1982-83 to 1983.84 %Ctuugo %Cha,,go Unrestricted Ressrieted 9 831,844 1,388,027 9 775,323 1,641,597 - 6.3 + 18.3 - 3.5 + 17.4 TOTAL $2,219,871 $2,420,620 + 9.1 + 9.8 CAPITAL rcnrosns $1,621,515 $1,763,458 + 8.8 + 8.8 GRAND TserAa, No. Institutions Repoeting $3,841,386 1,138 $4,164,381 1,118 + 8.9 + 9.4 928 PAGENO="0324" 12 Higher Education/Survey Results restricted monies. Other restricted hut unspecified pur- poses received almost a quarter of the restricted gifts. The ways in which gifts were restricted in both public and private institutions were remark0bly similar. Size of Gifts Another first in the 1983-84 survey was the collection of data on gifts from individuals for current operations that were under $5,000 or of $5,000 or more. Participants provided these breakdowns for amounts equaling almost threeftturthsofallgiftufmm individualuforcurrentopera- tions. The results are presented in Tabk 11. Gifts of $5,000 or more numbered just 0.4 percent of thesegifts, butprovidedmoredollarsthandidthesmaller gifts (twice as much moneytbrthe privatedoctoral institu- tions). In all other groups except the public doctoral and public two-year institutions, the smaller gifts provided more total funds than the large gifts. Table 10. Support with Restetetlons units Use for CurrentOperations and for Endowment, for Institutions Reporting these Data, 1983-84 Do,,,, C,cootopnulom-Resxlctnfl5aenns Eodoenmt-tesuttedcesofhmne Cad Pa,poses `acute PAblic Total POoste Public Total Total Academic $146,653 $t3t,838 9 278,491 9 62,216 9 23,999 9 86,215 9 364,706 Divisions (16.4) (15.9) (16.2) (10.3) (11.3) (10.6) (14.4) Faculty and 32,287 16,222 48,506 117,231 40,876 158,108 206,616 Staif Compensation (3.6) (2.0) (2.8) (19.4) (19.3) (19.4) (8.1) 263,852 329,557 593,408 24,499 23,805 48,304 641,712 ltesearc (29.5) (39.8) (34.5) (4.1) (11.2) (5.9) (25.3) Ptablic Service 7,201 40,126 47,328 4,016 1,448 5,464 52,792 and Extension (0.8) (4.8) (2.7) (0.7) (0.7) (0.7) (2.1) 14,891 9,610 24,501 18,570 3,744 22,314 46,815 Lsbsuey (1.7) (1.2) (1.4) (3.1) (1.8) (2.7) (1.9) Operation O5df 36,475 8,770 46,245 16,293 6,500 22,794 69,039 Masntenanceo (4.1) (1.2) (2.7) (2.7) (3.0) (2.8) (2.7) Student 149,434 114,314 262,748 197,140 63,592 260,732 523,480 Financial Aid (16.6) (13.8) (15.3) (32.7) (30.0) (32.0) (20.6) Other d 244,495 176,180 420,675 162,979 48,070 211,050 631,724 (27.3) (21.3) (24.4) (27.0) (22.7) (25.9) (24.9) TOTAL $894,288 $827,616 $1,721,904 $082,944 $212,035 $814,979 $2,536,884 No. Institutions Reporting 626 308 934 562 223 785 Total as % of Restnctedlopport Reported by ~ 93.2 93.8 86.8 88.2 87.1 91.6 (Figures in parentheses show percent of total in each column; dollars lo thousands; details da not always add up to totals because of rounding.) Table 11. Gifts from Individuals forCurrent Operations Under $5,tOO and $S,000or More, by Type of Institution, 1983.84 Gifts LJtdctSS,000 Gift, of$5,0000r Mote A,u000t No. of Gifts Aooast No. of Gifts Private 0 90,586,302 728,911 $205,420,713 4,701 Public 71,833,481 740,790 81,807,887 2,820 Private 49,237,993 461,296 32,581,345 1,565 Public 18,167,653 266,549 4,440,798 277 Private 102,483,053 879,439 62,229,586 4,755 Public 5,072,599 58,505 452,308 44 5s'E~~ED 21,158,246 187,931 8,976,316 569 Public 6,211,329 43,154 ~ O0~7 l7t Private Public $263,465,594 101,285,062 2,257,577 1,108,908 9309,207,960 91,156,080 11,590 3,512 Pris'iate Public 2,782,918 626,025 51,744 7,473 634,961 793,434 61 20 Alt Private All Public $266,248,512 101,911,087 2,389,321 1,116,471 9309,842,921 91,949,514 11,651 3,532 COAND TOTAl. $368,159,599 3,425,792 $401,792,435 15,183 PAGENO="0325" Details of Support b~ Participating Institutions 13 Doctoral Inntitntionn -Prinate 14 Doctoral Institutions- Public 16 Cumprehennite institutions - Prin'ate 18 Connprehensin.e Institutions - Pnblic 24 General Baccalanreate Institutionn -Pris'ate 28 General Baccalaureate Inntitotions - Public 44 Profennional and Specialized Isstitntionn - Prinate 46 Professional and Specialized Institutions - Public Symbols NA Not Atailable * Book Value Technical Notest A. In thelisnlngon the follonnIng ages, Column 27does not shuocthe total opeeatiogeupendltaeenofthe cc eting Institutions; it esolosles the o eatiog costs of ducoltocles, dlolog hahn, student stones, and othee"auslhlseyenteepnlses' so sell as all outlaysofucapital notate. B. lusontelnstancesthenumheeoflnstltottlonsllstedlsgeeatccshantheoutubeetahalated, lltetn'seeasons: (1) some ntultlcatopus lustitotloos ate shunts In sutstnssy as nell us In detail; sod (2) some of the ounspusent professional schools of maine InstitutIons ate also listed sepsestely. PAGENO="0326" 14 DOCTORAL INSTITUTIONS-PRIVATE (~6) ~. T ~ ir ir- PAGENO="0327" 15 E E ~: 119,~IS,O3O PAGENO="0328" 16 DOCTORAL INSTITUTIONS-PUBLIC (941 r ~r ~r -~- -;~- ~ -i- ccl. 155Cc. ~ ~ ~ ~ 15.106.145 PAGENO="0329" 17 ~= = ~7 E ~4 "~r~ PAGENO="0330" 18 DOCTORAL INSTITUTIONS-PUBLIC (CONT.) PAGENO="0331" 19 E 1~ ~r E 9?3,15~ 3 0 31,330,936* 191U*S,U.-o~ cJ1 PAGENO="0332" 20 PAGENO="0333" 21 E o~,1& ~r 0*.6 8*~ 7~, 606.530 03,64733.336 663.730 9.733.106 99,13926.628 190.01132,739.683 94.126,773 4.864 66. 9560493 2609. 1.687.619 9.691 46.000 336,702 994,240 02.030 ~ 1~ ~ 686.434 2 14.031 409.313349.664 0 09,910 00.7255,915,58331,192, 396 2.000 01 91~l09* 604. 21,192 243.160 1.667.629 67.200 103. 105,252 21.580.000 6,524.200 1.24201 ~ 07 lO6.O~ ~ 10.302 25.665 254.951 4.270 10.600 ~ 7.687.049 4999 PAGENO="0334" 22 COMPREHENSIVE INSTITUTIONS-PRIVATE ICONT.I .~ ~r i~r .; ~,~O9,937 0 10.033.802 191.001 1.303.123 1.339,729 970,839 0 44s,10i PAGENO="0335" 23 1~$ `~ E ~: ~ 96~~ 1h330,19?1O,IZI, PAGENO="0336" 24 COMPREHENSIVE INSTITUTIONS-PRIVATE (CONT.) *~T~ m~ ~r -~;- -i- -~- -~- ~: -i- 1,S8hS9i COMPREHENSIVE INSTITU IONS-PU LIC (U24 PAGENO="0337" 25 E ~r E I43.l~ ~O ~USTERCO~. 21,5S2 ~.2OO.OoO ~DeALTZ$O1e. WUV. PAGENO="0338" 26 COMPREHENSIVE INSTITOTIONS-POBLIC ICONTI PAGENO="0339" 27 ~E' E ~- 31.?~9 93,534 185,0?? 59.632 61.07321,823,699 2.706.544 8*71115858453. 5610. PAGENO="0340" 28 COMPREHENSIVE INSTITUTIONS-PUBLIC ICONT.) .~ ~"7~ = -fl-- ~ -~- E~ GENERAL BACCALAUREATE INSTITUTI NS-PRIVATE 1411) PAGENO="0341" 29 i~r ~r ~. ~J. . 5,~12 17,161 5,651,469 6! *495960 004. PAGENO="0342" 30 GENERAL BACCALAUREATE INST)TUTIONS-PR)VATE (CURT.) -~- ~T~G -n--- -~-- ~ 4b731 3,O1Q PAGENO="0343" 31 1~& E 1,$S4~436 589,724 PAGENO="0344" 32 GENERAL BACCALAUREATE INSTITUTIONS-PRIVATE (CURT.) w~ . ~= ~= T~ !~ ~ CULRSTO~TO~COL. 2,02e,623 1,216, 8264,82929,,613 8,886 19~ 466 6,823214,28321,416 103.163 1.322.112 229,211 11.921 3 PAGENO="0345" 33 CA~ PAGENO="0346" 34 GENERAL BACCALAUREATE INSTITUTIONS-PRIVATE (CANT.) .nm~ ~! i~I HOPS COL. 6,557,513 1~54S,164 37,654 1,557.030 1,090,147 1.937.433 0.195.390 90,510 1,444.144 1.300,430 1,040.350 464.605 0 445139690$ COO.. 1.065.890 1.117.861 0 55,590 0 62.433 113,061 58.999 501.011 46,463 175.434 051,904 97,530 3066 88548965 004. 1,099,939 686.961 0 16.945 149.269 207.785 308.555 9.619 385.447 80,974 104.795 99.411 51.005 J65199 019051366 COO.. 787,881 639.006 6,935 2.260 0 119.617 65.148 23.741 31.096 94.006 7.965 111.907 437,389 JOHNSON C. 9931$ UN3V. 2.740.127 1.057.591 769.561 708.300 3 3.095 139.609 0 19.759 2.153.40o 110.423 9.899 307.704 1.804,749 744.516 161.321 357.595 144,355 416.941 13.867 358 1,387.637 12.000 136.401 044.941 12.990 PAGENO="0347" 35 MNGU~TAVU$aOOLP$U$ COL. PAGENO="0348" 36 GENERAL BACCALAUREATE (NST)TUT(ONS-PR(VATE (CANT.) ~) ~dAr !~! :~!i -~- L !L (~ ~*I~~OU~T CO~.. OPUN~*S 141,107 741,107 0 0 U 0 10,300 033,933 90,700 69,747 211,000 60,720 PAGENO="0349" 37 E ~r E ~: "~~` ~ PAGENO="0350" 38 PAGENO="0351" 39 i~r E i~ ~- $~ !:f'~'!ll ":~~I1~'iI!; ~ ~ ~ N PAGENO="0352" 40 GENERAL BACCALAUREATE INSTITUTIUNS-PRIVATE (CONT.) ±~~!~!! L PAGENO="0353" 41 E , PAGENO="0354" 4U GENERAL BACCALAUREATE INSTITUTIONS-PRIVATE (CONT.) -~. ~r *~ -;~- -~- ~z -i- 1~. 1,~S$~3O~ ,~3I, ~1~3ZI.$Z~ 0 340.4380.343.400 842.713 3 832.. 289.293 283,360 186.36? 904,337 0 116,663 291,200 2,095 943.625 30.096 70.229 0 96396. o~6s. o~ 2.007. 132 963,534 596.638 399,5363.06922.802 33,399 96,590 70.00? ?l6.942263.436771.476 0 9903865066 806.. 763,366 214.677539.567 53,038 6 166,68? 3 912.6432,896170,739 103,300 165,638.345 4886646802.. 9,559.295683.216 0 12,693 549,922 510.380 3 9.010.549 52.059 175.768254.6518.123 29.066 666*65 896.. 3,963.264846,333492.671936.003 2.909.712 467,75? 2.793 2,229.209 25.370 1.074.303 617,367 21o.819 3 6#86L684 806.. 3,623.508030,652699.653 2.102.039 0 0 967.316 087966*0. ~ i~i'~"e~~ ~ 9.25;~~ PAGENO="0355" 43 E ~r E 9J~ ~F #7';;, ~ S ~ I PAGENO="0356" 44 GENERAL BACCALAUREATE INSTITUTIONS-PRIVATE (CONT.) I I - ..~ ~4!~ ~- ` 1= = ~L. T = -;--- ~ -;-- £~ T = -;-- =~ Cot.. 14.041.116 2,133,534 1,016,293 2,212.310 6,344,244 1,593.006 499110 0 .6 6071013 436.. 2.931,003 646,444 247,065 30.006 1.032.127 139.414 210.990 GENERAL BACCALAUREATE INSTITUTIONS-PUBLIC (39) C02T4444 OT*9000. 9:691 6002 00,309 20.217 0 030 0 33,003 000 4,529 9.050 6.0060002 COO.. 357.013 139,102 223.213 0 0 0 0 120,700 22.234 50,479 71.323 SCOT £0NI:OLU. 9609. 07 01.0 Oh, 301.790 40,733 0 133.207 3 9.163 0 100,173 106,191 PAGENO="0357" 45 E 4~r j~ j~* 196.402 20.647 9.550.236 1~000 226 OCOL. 21.141 1.230 66 62 19290166*61. U309.-OV666VOL2.I PAGENO="0358" 46 PROFESSIONAL AND SPECIALIZED INSTITUTIONS-PRIVATE (105) I~N ~r -~;- -~- -~- w -~ -;~- ATMEN&tU~ OP 0000 905,035 96,026 0 320,000 $66505 C03.. 1.736,206 107.510 36.333 0 $57051 COL. 5655555$ 00555. 735.544 0 31.930 0 65555 AL 501050 0559. 9.903.670 203.252 0 0 PAGENO="0359" i~r E~ . 2,216 5.6,3,000 PAGENO="0360" 48 PROFESSIONAL AND SPECIALIZED INSTITUTIONS-PRIVATE (CONT.) O~fD~G~TIO$ 2.Oia#iSZ ?SP,3O7 1.O34.O~S ~QO~3 ~ l~357Z 0 1.406,074 154,710 303396 3 3 ~ ~ ~ ~ `2:~~ `~;~.: ~ i.iao'i'o 7si.soi 393,099 19.944 954.934 01. IU966, COO.. OP I.339.8S4 093.941 119.053 fl.31S 0 173.942 173.015 31.o92 113.306 o36.197 917.139 10.325 97.212 ~; ~ ~ ~ 10.565 912.172 35,660 146,334 9.331 90,794 9, 137.998 270,316 23.203 sowon cot. ~ :~ "~ ~ 17.103 U9,619 ,;~23~ 963,003 0l. 7 PAGENO="0361" 49 E~ i~r E ~: ~Ei~ 1,6O4~ ~ 1 PAGENO="0362" 50 PROFESSIONAL AND SPECIALIZED INSTITUTIONS-PUBLIC 1181 TU..U.Q, C1*.S.*~TO~.tO TWO-YEAR INSTITUTIONS-PRIVATE I CCL. t.ICC.4O1 PAGENO="0363" 51 PAGENO="0364" 52 PAGENO="0365" 53 PAGENO="0366" 54 TWO-YEAR INST)TUTIONS-PUBL)C (CONY.) ~. CC. ~ -~ ~ g ~ g g PAGENO="0367" 55 ~r ~E~r ~J E ~J:~ PAGENO="0368" 56 PAGENO="0369" 57 E 1~ 1:~ 470 3~600 3,079,140 osauosTuocAoooy CO IUULIV SC300L CI, PAGENO="0370" 58 INDEPENDENT SECONDARY AND ELEMENTARY SCHOOLS (CONT.) ~N ~r ~r ~r -i;- i:- -ti- -~- PAGENO="0371" 59 E E ~: 3,496 1.600 26.082 120.572 16.000 0 02.000 0.485 1.853.076 414.378 506836080807 Of 108 50005*7208 8040. 1.150 18.378 110.548 1.550 ~ d:~ 2.QS9.8~ 320"g ~ ~ ~;C~J~ ~ 0 400 405 22.040 0 0 0 500 1.837.577 *1P49528656000L PAGENO="0372" 60 PAGENO="0373" 61 ~$ l~ ~E ~1 t.~ 3 2,133 123,311 210.328 3 84,168 12.266 38 1.668.230 481 80 36882138 028(31 sc,oai 0 360 681 70,141 0 13.486 aZI 600,222 114,144 353 10 4000 9001 100003 ~ 3,03~ 5,023 2.100 2,709,613 2,303,778 202 0 3.273 20.201 303,013 0 0 21.113 66 3,164.000 100 Cl 616130200 C00691? 030 3C#006. 0 2.241 86.162 000.133 0 6 13.410 2,3~o.i56 1,639.264 2 ~ PAGENO="0374" 62 PAGENO="0375" 63 E 1~ E ias,aaa a a.Oaa a.aaa asi ai,asa iaa,a~a a a a i.isa 1a.a1a,saa1asaaaaaa~asaaaaI. o o,iis s,iiS 50,470 062,060 0 0 0 20,055 1,041,545 01,545,410 1,69575 a005SCaaaI. D 4.559 5.514 0a0,5Z7 525,515 0 0 5.513 a, ass a,asa. ass a.szi . ala ssaoajaassasaauaasscaaaa. a a,ora 1,965 30.965 lsa.aaa a a a a,00a a.asi.soa soo.oaa aaacaaataasaosssaasaa-al. a a,oao a,oaa ao.aca aas.saa a a aa s.aaas.oei.soa i.ssa,oaas1aaaosaaacaoa~ is.aaa ooa.laaa,00a aaa. ii? 424.62? a a a a.ass.aaa 1.950,3 a4s1scTooa4saaoa-aaoasoscsaa~ a a a.asi 3.asa 9a9.aas 968.5 sssl.asas.oaOl.sol l.asa 2,440,951 3,997,301 oaT oa sIS0000sSTaS 5?555G5 5Ca0a~. ~ `,~;o ~ eas.1a ~ ~ ~ ~ ~ oass594aasuloavsosa'aa C~ a a a. a asa isa.iis a a a z,aza t,a4a,laa1~o.aoa4l7aaass,~aasassocsaal. a a ~.ioa 1,913 ss,ioa asa.aaa a a as sa.aaa a,sso,asa a.sai. 1a?a9a~a~*aaa~acaaa~ a.aaa a a.taa a.oas soa,ala aal,oos so a o.sss.ias l.zao.4oe aaa as 9*05 a590csaaa a 0 eia ass s.osa si.sia a 2.370 o,oaa.aaa 905,97~ 491 ocsasslscsaaa PAGENO="0376" 64 PAGENO="0377" 65 E ¶1 ~r ~r ~. ~j - fl#19~ ~ ZI.~'~°1 ~ ~ ~ ~ ~ PAGENO="0378" 60 INDEPENDENT SECONDARY AND ELEMENTARY SCHOOLS (CONY.) " ~i i~i i~i i~i ~ii 3~i O~1,~82,?39 ~ in ,303 iO~i33 73,403 0 1~380# 363430,093374,976 043.404203.072 0 3,720 9*3003- 90994 *090 0C9304. 210o 943 1~0. 70313.399 3 493 10,179 0 35.333134, 493 93,409 3,290 5,019 3 000 PAGENO="0379" 67 `;~;3;'~ ~: ~ :~ . + ` PAGENO="0380" 68 INDEPENDENT SECONDARY AND ELEMENTARY SCHOOLS (CANT.) ~. ~d~r ~F r -~- -~- ~ST PAGENO="0381" 69 MO ST. PSUL~S SCHOOL TOM SOILS Ca SOS PRASCOSCO SAT SCHOOL MA SalOn COUNTRY OAT SCNOSL NJ STUART COUNTRY DAY SCM. *S.N. PAGENO="0382" 70 INDEPENDENT SECONDARY AND ELEMENTARY SCHOOLS (CONT.) ~; &!; PAGENO="0383" IN E 5.6 P245 ~E' 6 ~ 11 ~ a ~ o~. a~a N ~E 5.24624.45 ~ EWaLSA ~45.6 0 0 2.OSO 2.005 56 15.595 106.102 0 0 0 31.392 1.507,601 566.214 056 505901 SCHOOL 3 0 1.037 1.055 333 64.345 004.303 0 0 0 19.506 2.155.646 1.772.595 494 90 SUNSET KILLS 3 40.160 4,605 4.606 1.053 163.315 303,557 0 0 NA 13.992 4,466.0SF 2,944.950 S16 HA OASIS ACAOINT 133.653 0 5.930 9.562 2.402 660.616 910.444 0 0 137.003 0 3.543.629 17.377.699 516 CT TAM? SCHOOL 3 0 250 0 5 0 65,990 0 0 0 4.020 NA 10.000 233 FL TAMPA P3296861088 SCHOOL 2 0 1.322 1.322 035 14.402 162,622 0 0 67,005 0 4.002,003 2.023.000 760 09 OATS6I.5. SCHOOL 13.002 51.302 2,199 1.736 9S6 233.971 406.913 NA 0 NA 05.094 2.616.929 6.742.100 222 CA THACOEN SCHOOL 2.000 2.175 3.043 6.S20 1,036 91.711 192,503 0 0 0 14.615 3.696.005 2.769.399 572 NA THAYOR ACAOE9T 3.029 3 4.567 4.061 551 63.017 103.357 0 5 0 2.667 1.012.000 2.030.000 24S NI TILTON SCHOOL O 3 2.618 2.618 933 lo.293 162.460 0 5 NA 5,94~ 3.600.003 8.030.000 665 09 10699 HILL SCHOOL 3 0 96 0 0 0 0 0 0 2.363 0 931.004 7.528 199 96 TOWER SCHOOL 5#000 0 300 90 9 S83 91.943 0 0 NA 2.971 NA 0 530 NT TOSS SCHOOL O 0 1.336 1.336 190 11.095 139.717 0 1.100 0 9.410 9.627.334 5.954,793 396 CA TOWN SCHOOL FOR NOES O 0 HA NA 4 470 33.643 0 3 0 0 66 S 370 TO TRISITT EPISCOPAL SCHOOL 006.135 3 752 SSS NH 3.310 95.630 66 0 15.000 630 1.196.979 701.937 414 MI. TN OMIT? PREPARATORY SCHOOL 0 0 48 0 3 0 0 0 0 0 0 0 1.629.914 1.340.876 456 IX TRINOT9 SCHOOL OP MIOLANO 0 0 650 450 57 6.530 51.060 0 0 0 4 0.250 NA 226.S62 166 NT TUXEDO PANS SC600L 50.364 0 4.005 6.006 1.041 260.286 600.421 0 1.SOO 6.300 20 10.903 5.006.667 7.903.617 910 80 UNOIEMSITI LI6GETT SCHOOL 91.873 NA 4.065 3.930 1.739 366.903 651.460 0 4.050 21.500 47 37.780 6.666.423 5.413.000 769 09 0509965109 SCHOOL $50,707 0 7.100 3.000 901 13S.930 299.852 0 0 0 20 10,038 3.792.256 4.660.000 71? Al OSAIVEESIT? SCHOOL OP MOLAAON SE 11.003 0 $80 590 175 16.925 63.433 0 0 0 6 1.320 932.020 359,080 176 NJ VAIL-O2AME SCHOOL 0 0 520 520 24 11,397 45.631 0 0 0 0 0 921.991 6.801.979 103 P6 HALLET SCHOOL OP L000$0E9 0 3 1.099 925 267 39.909 117.501 0 0 16.105 8 2.26S 1.224.059 170.000 112 AL 98909 OALLEI SCHOOL 2 3 NA 0 3 3 0 0 0 16.603 0 0 2.640.172 716.974 045 80 1688040 ACADEMY 1.003 0 2.330 0.089 964 139.630 041,300 0 0 96 44 04.171 1.937.066 2.822.762 2H6 VA VIRGINIA EPISCOPAL SCHOOL O 0 123 129 39 491 46.065 0 0 0 0 0 703,38? 22,362 196 NC WALLACE O'N2AL DAT SCHOOL 6.300 0 3.279 3.275 303 43.306 299.801 10.196 0 18.436 18 20,560 3.021.659 2,190.996 299 60 LATLANO 6060889 200.500 40.767 2.043 0.543 798 122.109 160.203 0 0 0 0 6.600 1.607.250 1.700.000 249 TO 8868 SCHOOL 3 5 1.992 1.990 91 5.900 60.020 IA 120 NA 0 0 2,081,512 961e651 723 TN 4288 SCHOOL OP NAONHOLLE 0 1.300 1,500 199 20.840 66.991 0 0 0 10 2.090 NA 149.064 122 85 AEST NOTT 1009AM ACASEEY 0 0 3.36? 3.042 1.333 143,014 282,090 NA NA 90 85 19.713 4.117.552 17.758.420 365 01 A2STERN RESERVE ACADEMY 0 0 2,300 2.339 591 33.566 669,045 0 0 70.000 13 3.093 3,740.960 5SO,000 685 CAAESTLANE SCHOOL POE GIRLS 3 86 2,40? 2,370 802 133.060 099.05? 0 0 25.997 132 34.582 0.061.531 6.867.018 341 CT AESTNONSTEN S0000L 23.300 0 7,125 6.37? 2.383 200.304 53H,005 0 0 7,700 110 0,431 9.000.063 11.216.012 1.691 GA HRSTVINSOER SCHOOLS 731.340 0 0.933 2.I7S 1,573 292,317 370.341 0 0 34.490 30 20.007 2,069.326 S.269.56N 172 CT 69100899 SCHOOL 0 0 2.200 2.200 722 67,062 166.13$ 0 0 27 5.930 66 2,000,000 350 CA AESTROO6E SCHOOL 07.298 516,473 6.346 5,321 1.939 843.290 263.779 0 0 55 16.106 4,261,131 10.000.000 622 PA 4ESTTOAN SCHOOL 1.000 0 2.600 2.400 601 22,03? 125.943 0 6.000 13 T.64S 2,682.500 677.511 366 NO AHEELER SCHOOL MA NA 301 073 23 3,760 20.6S5 NA 06 IA 06 46 73,503 200 #0 WHEELING COUSTNT OAT SCHOOL 2 0 410 250 7 070 63.383 0 6.000 10 5.920 925.101 63,111 240 CT AOOT8T SCHOOL 2.000 0 1,307 1.808 24? 14.635 ISS.?04 0 0 0 30 12.640 1.311.211 411.034 11 2NIA001HHDONTAON SCHOOL 0 0 26? 247 A? 0.571 105.671 0 0 0 HA 1.000 NA 0 70 COAIOT1HIA SC900L 0 0 330 310 176 9.518 122,966 0 0 0 4 H0O 475,260 54.927 71 80 UOITPIELO SCHOOL 74.079 NA 3.S1O 3.246 1.034 179.70? 250.392 0 #6 5 102 25.374 3,636.192 6.800.882 770 PA 800.0.069 PENN CHART16 SC000L 3 0 2.602 2,102 975 3.721 20,003 S.000 0 40.000 14 2.470 022.147 223.642 219 CT WILLIAMS SCHOOL 75.951 $5 2.52? 2.307 596 871.164 660.593 0 0 0 50 22,404 1.0S9.4S6 9.659,170 0 PA AILLOANSON P824 SCH. MMCI. 13. 260.194 0 7.000 6.800 1.666 191,168 310.917 5 0 0 02 27,144 4.356.590 4.787.197 101 EA AILLOSTON NORTHAMPTON 300. 5.563 0 2.000 0,792 916 56.331 141.630 0 0 3.310 26 2.486 3.096.521 2.220.322 647 OEAOLH ONGTOA PRIEHOS SCTOOL 0 0 NA 0 0 0 0 0 0 0 0 0 NA 0 178 80 AILSON SCHOOL 6.010 0 2.365 2,365 846 02.090 133.37? 5 0 956 26 6.821 2.443.423 1.34O.3SO4N7PAAOICOEST2N -THURSTON SC900L 374.45? 0 5.092 3,71? 2,265 434.110 708.513 0 0 0 97 33.139 6.961.730 97.606.148 364 HA L000NEREY FINEST SCHOOL NA MA 2.205 1.900 701 18,789 123.086 0 0 0 11 3.075 NA 29,000 110 IL 0000LANOS ACAD. SACN2O HEART 90.903 0 1.643 1.310 563 53.010 135.S33 0 66 NA SN 12.397 1.020.077 338.444 201 CT WOOSTER SC000L 27.192 0 5.619 16224 1,129 93.201 141,024 0 24.608 0 47 6.403 3.429,413 1.370.171 405 NH WORCESTER ACAEHHH 0 0 650 610 156 46.463 165.76? 0 0 5 0 0 932.932 0 66 006169068 ROSE SCHOOL 66.303 NW 7.819 7.269 1.650 110.097 179.137 17.208 0 9.070 47 14.151 3.199.100 6.143.300 636 PA 9109164 3 EIINART PAGENO="0384" Independent Secondary and Elementary Schools Surve~ Results * The45lschools inthe surveyreceived$28Omilllonin gifts in 1983-84, an increase over the $276 million reported by 480 schools in 1982-83 * The 1983-84 average per school of $621,107 was a 7.9 percent increase over the 1982-83 average of $575,462 U The year-to-year increase of the 371 schools In both the1982-S3and the 1983-S4surveys was 6.6perceot, which outpaced Inflation * Gifts from individuals accounted for 75.5 percent of all gifts. Over half of corporate support came from matching gifts and gifts ofcompany products orother property * A record 28.8 percent of alomnllae responded to annual-fund drives and increased their overage gift by 6.8 percent to a record $129.21 A total of 451 schools participated in the 1983-84 survey and reported rereiving $280,119,367 in gifts, an increase over the $276,221,734 received by the 480 schools in the 1982-83 survey. The overage of $621,107 per school in 1983-84 represented a 7.9 percent increase over the $575,462 average in 1982-83. The 1983-84 surveywas restructured in severalways. A new donor group-parents-was added; more details about the nature of gifts were asked fur; and the donor purposes, especially for capital gifts, were revised to reflect more accurately the way funds are raised and school accounts are kept. For the first time the schools are being grouped with their peers, using the following NAIS classifications: Day elementary Day elemestary/accondary Day secondary Day/boarding-are primarily day schools that enroll some boarding students Boarding and Boarding/day-enroll boarding stu- dents only, in thefirstease, orenrollsomedaystudents in the second These five classifications are then further broken down according to the sex of the students. This restructuring will help development officers and school administrators to evaluate theirartivities more effectively and also more easily tocompare results with peers andwith otherschool groupings. The first result of'this restructuring is the analysis presented in Table 12. The most successful schools in garnering voluntary support were the eight reporting Boardingand Boarding' day sclsoolsforgirls. Theseaveragedover$2millioneaeh. Table 12, Total Voluntary nu~,,ss hyTypo of Indopendoss School, 1983-84 t~pe of Sohoot G/,IS BoyS Cwi~,lo,st Tout - $ 1,404,789 Day Elementary (3) 5 11,039,925 (00) 9 12,444,714 (63) Day Etementary/ 17,456,516 11,375,459 Secondary (34) (15) 67,570,043 (120) 96.402,018 (169) 3,347,389 10,577,754 Day Secondary (8) (16) 8,750,970 (30) 22,716,113 (54) . 8,817,757 5,540,442 Day/BoardIng (10) (6) 17,317,398 (33) 31,675,597 (49) Boarding md 16,750,196 18,044,837 BoardIng/Day (8) (18) 82,085,802 (80) 116,880,025 (116) cssAxD ooma, $46,371,850 $46,043,281 $186,804,228 $280,119,367 (70) (58) (323) (451) (Figures In parentheses show number of schools reyortlng.t Table 13. Sources of Voluntary Sspport by'l('pe of Independent School, 1983.84 * l,d/,ldoats O,ga,tuttoo, Other 1/.pcofSvhool Ahosni Poess t,dloldtals Fos,dattoss Sot/gloss Co,po,atlo,ts O,gmt,atloss Other Seer,, Day Elementary $ 937,715 5 6,580,009 81,891,707 $ 1,614,892 $ 431,186 8 19,420 9 868,885 Day Elementary/Secondary 26,026,145 28,885,934 17,229,837 14,675,697 4,810,571 288,819 4,484,015 Day Secondary 5,066,544 6,144,381 5,562,719 2,882,353 1,837,084 882,628 1,140,404 Day/Boarding 11.465.885 8,ool,746 4,774.330 4,442,147 1,235,809 306,820 1,448.960 Boarding and BOarding/Day 58,361,675 17,829,577 12.719,823 21,740,282 4,134,663 609,516 1,406,089 GRAND TOTAL $101,857,964 $67,442,547 $42,277,816 $45,358,371 $11,048,313 $2,187,203 99,349.153 (Dollars in thousands) The 18 boys schools and the 80 coed schools in this category averaged $1 million each. Overall, the 58 boys schools in allfive categories averagedover $000,000earh, the 70 girls schools over $660,000 and the 323 coed schools over $578,000 cads. The examination of giving by schools its Table 13 also benefits from the more precise analysis made possible by the new survey classifications. Parents turn out to be the most important single source ofgiftsforallthrer groups of day schdols, although byonlyasmall margin overalumni/ ae for the Day elementary/secondary and Day secondary schools. Alumni/ar, as expected, led all the ccxl in giving to the boarding schools. PAGENO="0385" (Fig~~resi~~ parentheses shou 0-coot of total in each rotams.t Meaningful comparisons between two years are diffi- cult because of the different number and types of schools in each survey. Calculatissg average amounts received by each school compensates for the numerical differences but masks differessees in characteristics. A group of schools participating in two consecutive surveys is neces- saryforrealcomparisons. Only thcse"core" schools, even though a smaller groop ran provide concrete data on the nature of the year-to-year changes in voluntary support. A total of 371 schools served as the "core" group in this survey(see AppendixTable D forcompleledetailsoftheir reports). They recorded an increase of6.6percent in total support in 1983-84 over 1982-83. This increase, greater than the 3.7 percent inflation rate as measured by the CPI, was good news for the schools. Gifts from alumni/ac rose 12.6 percent and from other individuals 8.3 percent. Foundations and corporations, on the other hand, both decreased their support-by 2.4 percent and 5.8 per- cent, respectively. Contributions for current operations grew by 14.2 percent, while those for capital purposes remained almost the same. Support for boys schools surged by 18.9 percent; the coeducational and girls schools each reported much smaller increases. Alumni/ac gifts tothe annual fund have atsrays been important to independent schools. to 1983-84 Ihey totaled $36,679,678 and accounted for 36.0 percent of all alums:i/ae contributions. More alusnni/ae-28.8 per- cent-responded to the annual-fund drives in 1983-84 than in any previous year, and they increased their aver- age gift by 6.8 percent to a record $129.21. Individuals often use bequests and deferred gifts, such as trusts, pooled income funds and gift annuilies, as part of their estate plans to support independent schools. These gifts increased in 1983.84, so that they provided 8.9 percent of all contributions frosu individuals and 6.8 percent of total contributions to the schools. Curporations contributed to the independentschools through nuuching.giftprogranss and hsy making grants of company products and other physical property, aswellau through cash gifts. Corporate f:iuds from matched gifts declined slightly in 1983-84 to The Ten Boarding or Boarding/Day Schools Reporting the Highest Totals of: Alunsni/ae Contributions to the Annual Fund Phillips Exeter Academy (NH) $1,397,166 Phillips Academy (MA) 1,378,960 * Deerfield Academy (MA) 1,057,313 The Hotchkiss School (C't') 908,112 The Lawrenceville School (NJ) 899,402 Choate Rosemary Hall (CT) 7t9,442 The Taft School (Cl') 660,616 The Hill School (PA) 629,615 - Northfletd Mount Hermon School (MA) 628,608 St. Paul's School (NH) 562,236 Gifts for Capital Purposes The Culver Academies (IN) $3,448,901 St. Paul's School (NH) 3,230,011 Phillips Eseter Academy (NH) 2,882,053 The Lawrenceville School (NJ) 2,813,782 The Kishimiuetas Springs School (PA) 2,720,329 Phillips Academy (MA) . 2,766,734 The Hotchkiss School (CT) 2,277,582 Chuate Rosemary Hall (CT) 2,098,086 Emma Willard School (NY) 1,865,713 The Taft School (CT) 1,810,027 $4,227,369, but gifts of both company pruducts ($1,451,120) and other property ($566,463) increased sharply. to 1983-84 matchinggifts and propertydonations accounted for 53.6 percent of all corpucote support of independent schools. `l'he share in 1982-83 was 44.3 per- cent. An additional $3,360,715 in gifts of property from sources other than corporations flowed to the schools. Because of the differences in the categories for report- ing donor purposes in the 1983.84 survey, esact compari- sons with previous years are not feasible. Table 14, how- ever, presents data about voluntary support for current operations and capital purposes, by source of support. Historically, alumni/ac and other individuals have pro- vided about 70 percent of the private support of the independent schools. Foundations have been other large benefactors, donatingabo:st 18 percentofalhsupport. The Independent Schools/Survey Results f 73 Tabtel4. VutuntarySupportuflndeprsdentSuhmtsforCurrootoperatisusaedCapitatpm.09sesby$ uorce ufSupport, 1983.84 U - d e $ 30,190,611 (35.5) $31,904,733 (47.4) $12,206,286 (28.9) $ 4,651,905 (10.3) $ 5,221,666 (44.8) $1,629,214 (74.5) $2,736,340 (29.3) B - ci curt 5,163,060 (5.1) 5,156,549 (7.6) 3,436,209 (0.1) 5,392,240 1,334,051 365,194 2,785,711 TOTAL 41,353,677 (40.6) $37,121,282 (55.0) $15,842,495 (37.0) (11.9) $10,044,145 (22.2) (11.5) $ 6,555,717 (56.3) (16.7) $1,994,400 (91.2) (29.8) $5,522,051 (59.1) Property, Buitdiugs & Equipment $22,308,232 (22.0) $15,324,466 (22.7) $12,171,576 (28.8) $14,027,901 (30.9) $ 3,027,266 - (26.0) $ 70,009 (3.2) $1,320,802 (14.1) Enduscmeot-locome Unrestricted 21,167,326 (20,8) 8,380,277 (12.4) 7,460,597 (17.7) 7,189,417 (15.9) 1,068,142 (0.2) 5,500 (0.3) 1,590,815 (17.0) Eudsscmeut-Iocome Restricted 16,361,937 (16.1) 6,402,477 (9.4) 6,924,395 (16.4) 12,958,683 (28.5) 943,773 (8.1) 117,286 (5.4) 854,562 (9.1) Lo' F d muns 606,772 ( 0.6) 214,045 (0.3) 78,753 (0.2) 1,136,125 (2.5) 54,415 (0.4) - 60,923 TOTAL $ 60,504,287 (59.4) 030,321,265 (45.0) $26,635,321 (/3.0) $35,311,226 (77.8) $ 5,093,506 (43.7) $ 192,795 (8.8) $3,827,102 (40.9) GRAND TOTAL $101,857,964 (100.0) $67,442,547 (100.0) $42,277,816 (180.0) $45,355,371 (100.0) $11,049,313 (100.0) $2,187,263 (100.0) $9,349,153 (100.0) PAGENO="0386" The Ten Day or Day/Boarding Schools Reporting the Highest Totals ols Alumni/ac Contributions to the Annual Fond Regis High School (NY) $481,898 Milton Academy (MA) 426,861 University School (OH) 368,805 Pnnahou School (HI) 366,339 The Baylor School (TN) 322,964 The Kinkaid School (TX) 290,545 The Loomis Chalice Sclsuol(CT) 281,513 The McCallle School (TN) 279,267 St. Ignatius High School (OH) 244,953 University Liggett School (Ml) 242,286 Gifts For Capital Purposes University School of Milwaukee (WI) $2,405,667 St. John's School (TX) 2,099,284 The Brearley School (NY) 2,021,665 The Hockad$y School (TX) 1,952,324 The Kinkaid School (TX) 1,782,311 The Pingry School (NJ) 1,447,515 Polytechynic School (CA) 1,382,728 Dana Hall School (MA) 1,364,759 Montgomery Bell Academy (TN) 1,296,984 University School (OH) 1,282,132 pattern in 1983.84 showed a slight variation. More than three quarters of all support came from individuals, with alumni/ac supplying the largest percentage (36.4), par. cots the nest (24.1), and other individuals giving the rest (15.1). Foundation and corporategiftsdeclined slightly, so their shares of total support were also smaller (16.2 per- cent for ftundations versus 18.6 percent in 1982-83 and 4.2percent versus last year's 4.5 percent forcorporations). Traditionally, more than half of the gifts to the indepen' dent schools have been made with no restrictions about how they are to be used. Combining the totals lbr unre- stricted corrent-operations gifts with those Ste endow' ment with no restrictions on the use of its income pro- duces an approximate measure of "unrestricted" gifts. They totaled 50.5 percent of all support in 1983.84. Par- cots and corporations preferred to make gifts without - restrictionslbrcuerentoperatiotss, whilealumni/ae, other individuals and foundations favored gifts for capital purposes. Furtherbreakdowns of donor purposeswillbe possible Institutions Reporting the Highest Totals Harvard University $125,201,403 California, University of-Los Angeles $30834214 Stanlbrd University 111,802,741 Stanlbrd University 29,234.748 Yale University 75,338,008 Massachusetts Institute n/Technology 27,913.654 Columbia University 75,234,748 Harvard University 25,580,322 Cornell University 72,818,654 Illinois, University of 20,957,647 California, University of-Los Angeles 64,076,015 California, University of-Berkeley 18,223,409 Massachusetts Institute of Technology 62,994,928 Wisconsin, University of-Madison 16,329,412 Pennsylvania, University of 60,036,447 Southern California, University of 15,153,481 Princeton University 58.163,839 MIchigan, University of 14,638,604 Southern California. University of 55,000,784 Cornell University 14,334,465 Chicago, University of 54,877,359 Columbia University 13,787,731 lIltuots, University of 53,203,384 Pennsylvania. University of 13,495.453 Wisconsin, University of-Madison 52,469,347 Texas A & M University 13,465,231 Michigan, University of 52,072.055 Minnesota, University of 13,035,510 Texas A & M University 48,147,936 Florida, University of 12,332,047 Minnesota, University of 47,351,681 GeorgIa, University of 12,239,221 Now York University 45,268,695 Carnegie-Mellon Ussiversity 11,107,772 Johns Hopkins University 42,322,416 Duke University 10,955,165 Washington, University of 41,255,381 Rensselaer Polytechnic Institute 10,802,682 Washington University 40,751,355 Missouri, University of 10,549,146 nN0t included are two systems, each °Not included are two systems, each comprising multiple units: comprising multiple units: Calit)srnia, University of-Summary 172,638,445 California, University of-Summary 71,614,783 Texas, University of-Summary 106,578,088 Texas, University of-Summary 23,905,491 The Ten Schools Reporting the The Ten Schools Reporting the Most Voluntary Support: Most Corporate Support: Phillips Academy (MA) $4,956,755 The Amencan School in Japan Phillips Exeter Academy (NH) 4,612.826 The Blake Schools (MN) The Culver Academies (IN) 4,471,808 The Leelanau School (MI) St. Paul's School (NH) 4.348,128 Forsyth Country Day School (NC) The Lawrenceville School (NJ) 4,145,777 Punahou School (HI) The Hntchkiss School (CT) 3.623,430 Phillips Academy (MA) Choate Rosemary Hall (CT) 3,505,226 Phillips Exeter Academy (NH) \Voodherry For~xt School (VA) 3,155,056 The Culver Academies (IN) The Kiskiminetas Springs School (PA) 2.888,888 Choate Rosemary hall (CT) Deerfield Academy (MA) 2.813,669 Marine Military Academy (TX) 74 Independent Schools/Survey Results The 20 Colleges and Univeruities Reporting the Most Voluntary Support:' The 20 Colleges and Universities Reporting the Most Corporate Support:° in the future, as more data are accumulated. 9803,739 417.441 313,444 303,121 283,272 256,169 238,332 187,313 186.267 179.077 PAGENO="0387" (L6) U;Z ~ ;:~;:; :;:;~; ;:~~ x ::;~~~ ~:~` ~ ~ L9;'t9$ ~ I 62o~~s V9Y~9I$ ~~9DUU6'zU~ ~ ~ CL) (C91) - ~ U- s,,oc'Ls ~ ~ ~ ~ d ;;;;:;~;; ;;~;;;~; ;;;;;;; ;;~;;;;,-;;;;;~ f_I - V ()p~~)~q) U)CLCfl~P ~ "1 ~LP~9J~ ~~d~iP~pi) - ~INLWOd3d S3WSII3PJNN 0NVS3031103 liv `t81~6I NI (13M333N 1~OddflS AIIVLNm~ ~::::~, u::::, ~ ~ II:::::, ))9:))).)) C6:L::LLs~ ~.:L6::L: ~ ~!::::~: ~::~~: ~:::~: !!~::::::: ~:::~: *C~ ~O) (C)) )90) (51) ()0) (Z0) SNOWWISCI) 3fl~flJ PAGENO="0388" 76 Table B INT~ $URVEYYEARS BY$OUR~ENID BY PURPOSE (F~w~, ~ th~s~sa~ p h*~g~sffl 1983.84 s~p~~pd 1982-83;d~lIs~s th~s~ds) (-17.5) (8.8) (66.0) (-25.3) (-13.4) (115.8) (-10.6) C0(P0(6TIOOS (351. 239 (70.379 (49.0(1 (29.351 $540,060 $2,606 $34h654 PAGENO="0389" Table C ~ Table D AUSE (I di gp~~ bg IC&nd'lbtdi pa~ ~ d II~~i h ~d) (Fi. I ~ g g 198384 PAGENO="0390" T ki IIOLLJNThRY SUPPORT OF HIGHER EDUCATION, BY SOURCE AND BY PURPOSE ~ (Including percentage of Grand Total in parentheses; dollar totals in thoosands) 1974-75 1975-76 1976-77 1977-70 1970-79 1979-no 1980-81 198102 1982-no 1983-94 NURSER OP INSTITUTIONS 986 991 1.006 1.065 972 1.019 928 1.101 1.137 1.110 ALU,NIIaE $377,376 8461.091 6514.201 5552.621 5620.347 8725.541 8821.135 61.051.897 nn 81.046,933 81.089.575 022.55) (24.40) (24.10) (23.81) (24.30) (23.78) 24.tSO (25.70) (24.00) (23.30) NON-ALUMNI IN110IIuALS 8399.814 $447,045 8517.421 $509,914 9582.169 8677.997 9790.096 8916.511 81.007.200 81.094.443 023.90) (23.60) (24.20) (25.1)) (02.80) (22.28) (23.80) (22.60) (23.10) (23.40) POaNOATIONS 8384.500 8630.656 8445.855 8400,800 8553,803 8739.759 8724.869 8840.3)7 8062.148 9909,666 (23.0)) (22.85) 020.8)) (23.5)) (21.70) (24.2)) (21.93) (20.60) (19.7)) (19.40) 88505855(5. CORPORATIONS 8275.905 8297.812 8357.433 8392.315 8438.678 8555.756 8611.734 $823,001 8941.557 81.060.440 (16.5)) (15.7)) (16.7)) (19.70) (1?.))) (18.21) (18.40) (20.10) (21.6)) (22.70) 88)081065 ORGANIZATIONS $87,694 $101,549 $109.90) $122.40) 8127.161 $124,249 8107.969 $146.03? 8174.433 8157.757 (5.2)) (5.4)) (5.10) (5.20) (5.01) (4.10) (3.3)) (3.60) (4.01) (3.41) PUNS-RAISINS CONSORTIA 5108.716 $118,712 8160.195 8162.667 8180.033 0174.204 879.321 582.993 805.031 870.085 (6.51) (6.31) (6.91) (6.918 (7.01) (5.71) (2.68) (2.11) (2.0)) (1.48) 01888 SOORCES $40,540 033.967 946,615 847.123 853.824 $57,409 8152.941 $225,400 8250.069 $296,169 (2.41) (1.81) (2.21) (2.00$ (2.01) 11.9(3 (5.50) (5.53) (5.73) (6.30) CURRENT OPERATIONS 81.21 0.741 81,113.204 81,245.612 81.349,311 81.512.699 81.703.391 51,915.158 82.200.898 82,524.446 82.706.589 (60.9)) (30.98) (58.20) (57.50) (59.21) (35.81) (57.71) (56.01) (57.81) (57.91) CAPITAL PURPOSES $454,802 8777.628 8093.015 8098.616 81.043.296 81.351.662 81,402.906 81.799.306 01.843.725 81.971.546 (39.13) (61.11) (61.0)) (42.51) (40.01) (44.21) (42.31) (44.01) (42.21) (62.1)) GRAND TOTAL 81,614.563 51.890.832 82.138.027 02.347.925 82.335.995 03.055.053 83.318.064 84,006,206 84.368.171 84.670.135 **IsCludsO UOd $30.4 5011005 gift-b-hod (coo oocpocotioos for othor PAGENO="0391" T Li r ESTIMATEDTOTAL WLUKI*JW SUPPORTOF HIGHER EDUCATiON, BY MAJOR PURPOSE AND TYPE OF DONOR, 1849-SOlD 1983-84 ~1UiC f (MillI~, PAGENO="0392" 386 APPENDIX 2 THE DEPARTMENT OF DEFENSE REPORT ON SELECTED UNIVERSITY LABORATORY NEEDS IN SUPPORT OF NATIONAL SECURITY PREPARED FOR THE SUBCOMMITTEE ON RESEARCH AND DEVELOPMENT OF THE COMMITTEE ON ARMED SERVICES OF THE UNiTED STATES HOUSE OF REPRESENTATIVES 29 APRIL 1985 PAGENO="0393" 387 THE DEPARTMENT OF DEFENSE REPORT ON SELECTED UNIVERSITY LABORATORY NEEDS IN SUPPORT OF NATIONAL SECURITY PREPARED FOR THE SUBCOMMITTEE ON RESEARCH AND DEVELOPMENT OF THE COMMITTEE ON ARMED SERVICES OF THE UNITED STATES HOUSE OF REPRESENTATIVES 29 APRIL 1985 PAGENO="0394" 388 TABLE OF CONTENTS Page Chapter I: INTRODUCTION 1 A. Rationale 1 B. Definitions 2 C. Research Disciplines and Thrust Areas 2 D. Information Acquisition 3 Chapter II: DOD SUPPORT FOR UNIVERSITY LABORATORIES 5 A. Introduction 5 B. Origins of DOD Support for University Laboratories 6 C. Present DOD Support for University Laboratories 7 C.1 Direct Funding of University Research 7 C.2 Instrumentation Progr~n 11 C.3 University Research Initiative 13 C.14 Coordination Activities 13 Chapter III: PREVIOUS STUDIES 114 chapter IV: SELECTIVE UNIVERSITY LABORATORY MODERNIZATION 23 A. Introduction 23 B. Disciplines 25 B.1 Chemistry 25 B.2 Electronics 27 B.3 Engineering 28 B.~4 Materials 29 B.5 Physics 31 C. Summaries 32 Chapter V: DISCUSSION AND REC~MMENDATIONS 55 A. Discussion 55 B. Recommendations 58 Appendix 59 PAGENO="0395" 389 CHAPTER I INTRODUCTION A. RATIONALE The Report of the House Armed Services Committee on the 19814 Department of Defense Authorization Act contained the following request: "Many of the university laboratories in which Department of Defense research programs are conducted are obsolete and in need of major modernization or replacement. The committee believes a study should be undertaken on the need to modernize university laboratories in the physical sciences, earth and ocean sciences, atmospheric sciences, engineering, computer sciences and other fields essential to our long-term national security. The survey should (1) doc~xnent the laboratory needs of universities presently engaged in Department of Defense competitive research programs, (2) assess priorities by academic field, (3) provide estimates of costs to meet these needs, (14) provide specific recommendations appropriate to the Department of Defense and others designed to address the need, (5) state the consequences to our long-term national security." This report is a response to that request. The science and technology (S&T) base has, as its cornerstone, basic research which, in the U.S., tends to be concentrated at universities. Approximately t~-thirds of basic research in science and engineering (S&E) is carried out in academia. There is a concomitant integration of basic research with graduate education. The nation reaps a double benefit from this model in that it concurrently generates both research results and future researchers. It is for this reason that the state of U. S. university laboratory facilities is so important to the nation's long- range economic and military competitiveness. The evolution of science and technology tends to create a requirement for more sophisticated research facilities. Failure to keep pace with facilities' needs has a negative impact on researchers' creativity. This in turn limits the scope of scientific endeavor in the experimental disciplines. The consequences may include delays in the realization of new discoveries and a trend for faculty and graduate students to opt for theoretical studies rather than engage in experimental research with inadequate facilities. A further consequence is the difficulty of recruiting and retaining the most productive faculty in experimental disciplines. The foregoing points ~rk against university researchers undertaking experimental investigations. When researchers do so in spite of inadequate facilities, results of their endeavors can be compromised in a variety of ways. These include: o Inadequate environmental control resulting in decreased quality of data o Excessive down-time resulting in dijninished `productivity PAGENO="0396" 390 o Outmoded equipment leading to imprecision in acquired data o Crowded laboratory space resulting in diminished access to equipment for data gathering and maintenance purposes o Contrived experimental set-ups representing safety hazards B. DEFINITIONS The following definitions will be used throughout this report: Laboratory Needs-Facilities and equipment which collectively constitute vehicles for the generation of experimental data and other information. It denotes more than a stand-alone instnznent (e.g., spectrometer, tensile tester, etc.) that can be operated in general laboratory space typically found on a university canpus, but excludes general purpose laboratory buildings. Examples include wind tunnels, high voltage accelerator labs, clean rooms, wave tanks, etc., especially those housed within existing older buildings. It may also include specially designed structures required to house laboratory instrunentation and experimental facilities. Facilities-Laboratory structural enviroreient including hardware required to maintain special conditions in laboratory space. Equipnent-Instrunentation and devices directly supportive of data acquisition and analysis. C. RESEARCH DISCIPLINES AND THRUST AREAS Selected research laboratory needs among universities active in Department of Defense (DOD) competitive research programs are addressed in this report for the following five disciplines and constituent thrust areas: CHB4ISTRY - Laser Chemistry - Polymeric Materials ELECTRONICS - Microelectronic Fabrication and Reliability - System Robustness and Survivability ENGINEERING - Combustion - Composite Structures - Energetic Materials - Fluid Mechanics and Acoustics - Manufacturing, Design, and Reliability - Soil Mechanics . PAGENO="0397" 391 MATERIALS - Optical and Magnetic Materials - Silicon and Compound Semiconductor Growth Structural Ceramics - Structural Composites PHYSICS - Astrophysics - Coherent Radiation Sources - Directed Energy Devices - Optical Communications and Spectroscopy The foregoing disciplines do not represent the breadth of DOD research. In particular, biological and biomedical sciences are not included in anticipation of a comprehensive survey of laboratory needs by the National Institutes of Health. Computer resources not dedicated to experimental research facilities are also excluded on the basis that they are the object of considerable study and/or aggressive enhancement programs by the National Science Foundation and the Department of Energy. D. INFORMATION ACQUISITION Requisite information was initially assembled by research administrators in the three Service research offices (OXRs): the Office of Naval Research (ONR), Army Research Office (ARO), and the Air Force Office of Scientific Research (AFOSR) and in the Defense Advanced Research Projects Agency (DARPA). In particular, Division Directors in each organization representing the foregoing five research disciplines supplied data related to the sufficiency of research laboratory facilities. This information was analyzed for the purpose of developing laboratory needs representative of defense research priorities. Results are presented in thapter IV in the form of prioritized laboratory needs (where they exist), estimated costs of' desired enhancements, and assesaments of the scientific/technological and national security implications of any laboratory needs identified. Within the framework of the foregoing information acquisition plan, each of the three OXR5 identified key R&D performers for the various research disciplines. These performers were then analyzed with reference to the indicated questions. Criteria used in determining the performers to be interrogated and/or analyzed for inclusion in the report involved level of basic (6.1) competitive research funding, evaluations by OXR research administrators, and, as appropriate, independent evaluations of graduate programs corresponding to the various disciplines. In many cases, the stated costs represent partial funding reflecting the tendency of universities to seek multiple sponsors for major laboratory improvements. l4hile the method of data collection does not embody the statistical integrity of a rigorously implemented survey instrument, it is nonetheless thought to be s~gestive of the dimensions of university laboratory needs of greatest importance to DOD. Further, the study differs from previous ones in that the cited laboratory needs reflect, in part, the judgment of research sponsors (DOD scientific officers) rather than exclusively the perceptions of research performers. PAGENO="0398" 392 The primary DOD research performers encompassed by this report are, of course, only a subset of the total university R&D community. The extent to which their modernization and new facilities needs may be extrapolated to all universities performing research for DOD, or to the entire population of approximately ~OO research universities in the U.S., is an open issue. Such extrapolations beg the question, however, as to appropriate means for assessing laboratory sufficiency from the DOD perspective. This is a complex question that is under constant scrutiny for each discipline and its constituent research areas. More generally, it is an issue which demands continued vigilance at the national level. Sustained deficiencies in any discipline/thrust area will inevitably cause the corresponding sector of the U.S. science and technology base to erode, thus blunting our competitive position in the national security and world economic arenas. PAGENO="0399" 393 CHAPTER II DOD SUPPORT FOR UNIVERSITY LABORATORIES A. INTRODUCTION This chapter deals with the role that universities play in sustaining and strengthening the U.S. science and technology base (Section A), the origins of DOD support of university laboratories in that role (Section B), DOD prograils that support university science laboratories (Section C.1), and further steps that DOD has taken to upgrade these facilities (Section C.2). A new university research initiative for FY 8. (Section C.3) and coordination activities relevant to the upgrading of university research facilities are described (Section C.'!). Given the importance of university science laboratories to DOD, it is also true that maintaining adequate university research facilities is a national priority that has important economic as well as military signifi- cance. Thus, DOD should not and cannot solve the problem alone. Solutions must encompass all relevant goverrtnent agencies, private industry, and, of course, the universities themselves. This chapter focuses, however, on the relationship between DOD and the university camriunity. American universities play an indispensable role in maintaining and strengthening the nation's science and technology base. Not only are universities the source of future scientists and engineers, but the research contributions of academia to society are vast as well. Since World War II, universities have performed most of the basic research that has produced the technological innovations on which much of our economy and national defense are based today. Universities contribute nearly three-quarters of the scholarly papers published in the most noted science and technology journals. In addition to generating the insight and knowledge upon which future technological innovation is based, university research provides the envirooment for the development of future scientists and engineers. The result is enriclinent of the professional experience of faculty and graduate students involved in training our nation' s technical manpower. Thus, support of university research produces multiple benefits of enormous value to society as a whole. This report addresses selected needs of university laboratories involved in DOD sponsored research. As much as $2 billion has been estimated as the total sun needed to replace obsolete university research instrumentation. Laboratory facilities, including the instrumentation required to conduct research aimed at modernizing and expanding the U.S. technology base, are becoming increasingly expensive. Establishing and maintaining such facilities are very costly, especially those requiring advanced superccznputers, large particle accelerators, various types of analytical instrumentation, imaging devices, and automated design and manufacturing hardware. Nonetheless, such equipment is crucial for the conduct of research in important areas of science and engineering, and for educating students. DOD support for university research equipment is described in the following sections. PAGENO="0400" 394 B. ORIGINS OF DOD SUPPORT FOR UNIVERSITY LABORATORIES The DOD has recognized that technological superiority is essential to military superiority, and it has played an important role in maintaining the strength of the U.S. science and technology base. Since DOD was among the first federal agencies to recognize the essential role that the academic comunity plays in the maintenance of U.S. technological leadership, it has maintained a strong relationship with U.S. universities since before World War II. Very little involvement of universities with military technology occurred during World War I, despite the existence of in-house Service laboratories since the 1890s and the earlier creation of the National Academy of Sciences, which was established as a war measure by President Lincoln in 1863. The sudden expansion of experimental and laboratory operations that characterized the outbreak of World War II greatly overburdened the Service laboratories. Many civilian scientists and engineers were added to the staffs of Aberdeen Proving Grounds, the Naval Research Laboratory, the Naval Ordinance Laboratory, Taylor Model Basin, Wright Field (Army Air Force), and Fort Monmouth (Signal Corps). Contracting funds were also greatly increased in the effort to catch up to an enemy that had scientific groups investigating improved weaponry since the early 1920s. The Office of Scientific Research and Developnent (OSRD) was created, reporting directly to President Roosevelt, and receiving funds by direct appropriation from the Congress. These funds were placed in private and governmental laboratories. The National Research Council of the National Academy of Sciences had been created during World War I and was, by the time of World War II, well 1c~own to the military Services, which expanded their use of it. These arrangements formed a close coupling of the organized bodies of scientists and military leaders having a common appreciation of the importance of science and engineering to modern warfare. Major wartime expansion of facilities occurred at several universities. The major contributors included MIT, Harvard, Cohxnbia, the University of Ghicago, the University of California, the Johns Hopkins University, and the California Institute of Technology. Radar, acoustics, operations research, navigation, and atomic weapons were just a few of the areas in which notable contributions were made. Emerging from the wartime era were two lasting methodologies for defense investment in university laboratory facilities. First, the institute concept became well established, wherein non-profit university affiliated laboratories conduct applied research, primarily under DOD support. Products of this era which make major contributions today are Lincoln Laboratories (MIT), the Johns Hopkins University Applied Physics Laboratory, the Applied Physics Laboratory of the University of Washington, the Applied Research Laboratories of the University of Texas, the Applied Research Laboratory of Pennsylvania State University, and the Marine Physical Laboratory, Scripps Institute of Oceanography, University of California, San Diego. Second, the National Security Act of 19147, and the amendment of 19148 which established the three military Departments and the Office of the Secretary of Defense, provi~ed the framewerk that operates today for support of research at universities through the Army Research Office, the Office of Naval Research, the Air Force Office of PAGENO="0401" 395 Scientific Research, and the Defense Advanced Research Projects Agency. This partnership has been s~bstantial over the years; seventeen institutions of higher education are anong the 595 contractors that received awards of 10 million dollars or more from DOD in FY 83. C. PRESENT DOD SUPPORT FOR UNIVERSITY LABORATORIES C.1 DIRECT FUNDING OF UNIVERSITY RESEARCH U.S. universities are a major factor in current DOD activities affecting the U.S. technology base. Approximately half of all DOD basic research (6.1) funds are expended at universities ($1105 million in contract dollars with research budgets totaling ~8LlO million in FY 811), plus a smaller anount of applied research (6.2) funds (approximately $115 million in FY 811). During the past decade, DOD has made a major effort to reverse the effects of the relative neglect of university research that occurred during the Vietnan war. Figure II- 1 shows the evolution of DOD funding for basic research (6.1) since 1962. The corresponding funding history for "exploratory development" (6.2), some of which equates to applied research, is shown in Figure 11-2. These figures show that funding in current dollars for both components of the technology base grew significantly during the late 1970s and early 198Os; nevertheless, neither has returned to 1965 levels of support in constant dol- lars. In fact, in real terms, the level of funding for exploratory development has been virtually stable for over a decade. In a memorandl.xn to the Services dated August 9, 19811, Secretary Weinberger noted this situation and indicated that the Defense Guidance for the FY 1987-91 PaI would request 8 percent annual real growth in both components of the technology base. DOD still takes that position. University research has been a major component of the growth in DOD technology base activities during the past decade. Table Il-i shows DOD Basic Research (6.1) funds spent (or projected to be spent) at universities by the Army, Navy, Air Force, and the Defense Advanced Research Projects Agency (DARPA) for the years F? 711-86. During the period FY 75 to FY 811, DOD spending for 6.1 Basic Research at universities grew at a real annual rate of 9 percent- far higher than the annual growth of DOD Research (6.1) funds as a whole. Table 11-1 shows only the DOD Basic Research (6.1) funds going to universities. It includes only contracts exceeding $25,000, and does not reflect research grants. Thus total university funding is somewhat higher than indicated. A similar break-out of the university component of DOD Exploratory Development (6.2) funds is not available. To provide a basis for comparing 6.1 and 6.2 expenditures, in FY 83 a total of $102.3 million in DOD Exploratory Development (6.2) contracts went to universities while $360 million was provided for Research (6.1) contracts. An additional $50 million was awarded to universities in the form of 6.1 research grants. DOD funding for universities is not limited to Research and Exploratory Development. For exanple, DOD RDT&E (6.1 through 6.6) contracts over $25,000 going to educational institutions in F? 83 totaled $1113.6 million. Most of the $600 million in the higher categories (6.3, 6.14, 6.5, and 6.6) was for R&D in university affiliated off-canpus laboratories and Federally Funded Research and Development Centers (FFRDC5), or for vocational and technical training, and tuition fees. PAGENO="0402" DOD SCIENCE AND TECHNOLOGY FUNDING TRENDS CURRENT AND CONSTANT DOLLARS RESEARCH (6.1) 1200 v' i000F L ~FV S5 CONSTANT DOLLARS I ~ ____ CURRENT DOLLARS 200 100 0 I ~_I I I I 62 65 66 71 74 77 60 63 66 S(XflCE: Departitent of Defense FISCAL YEARS PAGENO="0403" DOD SCIENCE AND T~CRNOLOGY FUNDING TRENDS CURRENT AND CONSTANT DOLLARS EXPLORATORY DEVELOPMENT (6.2) 4000t 35~Q FY15 CONSTANT DOLLARS `4% U, z S~Th~E: Departnent of Defense FISCAL YEARS PAGENO="0404" DEPARTMENT OF DEFENSE FUNDING FOR UNIVERSITY BASIC (6.1) CONTRACT RESEARCH, FISCAL YEARS 1974-85k (In mIllIons of dollars) FY74 FY75 FY76 FY77 FY78 FY19 FY8') ServIce Qirrent Reel Qirrent Reel Qirrent Real Ojrrent Reel Qirrent Peel Qirrent Reel Current ~ ARMY 13.7 27.9 13.4 25.0 19.0 33.7 23.7 39.6 28.1 43.8 32.0 45.9 35.1 5').' AIR FORCE 23.2 47.3 22.9 42.6 28.2 50.0 41.0 68.6 49.5 77.1 46.4 66.6 55.3 72.' NAVY 45.5 92.7 47.0 89.2 64.2 113.8 62.7 p04.8 70.8 110.3 86.4 124.0 100.2 13'.' DAIS'A 21.9 44.6 19.4 36.1 19.1 33.9 18.7 31.3 17.9 27.9 21.0 30.1 19.5 7'c.~ TOTS. 104.3 2!2.4 103.6 192.9 130.5 231.4 146.1 244.3 166.3 259.0 185.8 266.6 213.4 2~1.I FY81 FY82 FY83 FY84 FY85 FY86 H Serv~ Qirr.nt Re~ Qirrent Re& 0~rrent Re& Qirrent Re& Current Rea~ Current Realee ARMY 46.5 55.9 56.1 63.5 71.4 77.7 80.6 84.6 83.8 83.8 87.9 83.8 AIR FORCE 63.4 76.2 71.5 81.0 90.3 *8.3 112.1 117.6 119.1 119.1 135.0 128.7 NAVY 115.0 138.2 142.3 161.2 152.2 165.6 158.1 165.9 176.1 176.1 198.8 189.5 DAPA 27.3 37.8 39.4 44.6 46.4 50.5 53.9 56.6 42.7 42.7 43.4 41.4 TOTS. 252.2 303.1 309.3 350.3 360.3 392.1 404.7 424.7 421.7+ 421.7 459.1 437.7 * ProjectIons ** Forecast for InflatIon Is based on COO projection SOlACE: ~my Dsputy ChIef of Staff Research Develapsent and AcquisItIon, OffIce of Navel Research, AIr Force Office of SelentIfle Research, Defense Advenced Research Projects Agency, (Qnstant 1985 Dol lers Calculated usIng GPP l~l Icit Pr Ice 0.? letor) +Restricted to awards exceeding $25,000; grants are not included 00 PAGENO="0405" 399 DOD sponsors research and development at universities to ensure the progress in fundanental knowledge that is necessary, in the long run, to maintain U.S. technological superiority. The resulting university research progr~ns also serve to benefit universities in a variety of ways. By providing opportunities to perform basic research at the forefront of science and engineering, research prograns at universities help to create an envirorinent that can attract and retain faculty and students. Past studies suggest that, on average, $1 million of funding for research provides full or partial financial support for 10-15 graduate students. Using this measure, DOD provided financial assistance for over Lt000 graduate students through its university research prograns in FY 8~I. In addition, as will be noted below, DOD-related research prograns also have significant effects on laboratory instr~.xnentation. C.2 INSTRUIENTATION PROGRAM Instrirnentation is essential to modern research. Modern instrunents with qualitatively superior capabilities for analysis and measurement often open new fields of scientific inquiry. In some scientific areas, access to the most advanced scientific instrumentation determines in large measure the extent to which scientists can ~rk at the cutting edge of their field. The Department of Defense, in concert with the scientific and university community, state and other federal agencies, and the Congress, perceived that the condition of research instrumentation in U.S. universities declined significantly during the 1970s. The Association of American Universities (AAU), in a report to the National Science Foundation (NSF) in June 1980 (see thapter III), concluded that the equipment being used in the top ranked universities has a median age twice that of the instrumentation available to leading industrial research la~F~Eories, an additional factor in the attraction of potential faculty to industry. The instrumentation problem has been growing for more than a decade. It reflects both economic factors and funding patterns: o The cost of equipment has risen much faster than inflation. o The system of one to three year contracts in the $50,000 to $100,000 per year range with individual investigators is not conducive to obtaining equipment that costs more than $50,000. o Rapid technological advances are rendering research equipment obsolete at an ever increasing rate. * In response to the foregoing situation, DOD has encouraged researchers to include more of their equipment needs in proposals and emphasized that DOD does not set arbitrary limits on the anourit of money that may be requested for instrumentation. This approach has been helpful for equipment needs in the $50,000 range or less. However, new money was clearly needed for some of the more expensive items required to modernize university laboratories. These funds were provided in FY 83 through the DOD-University Research Instrumentation Progran (URIP), which received Congressional approbation. PAGENO="0406" 400 URIP provides $150 million over five years for university research equipment. Each of the three Services is progranmed to spend $10 million per year. So far, $90 million has been spent on 652 awards going to 152 institu- tions in 147 states and Washington, D.C., Guam, and Puerto Rico. While URIP is having a major impact on the equipment needs of researchers doing werk of interest to DOD, it cannot solve the whole university instrlinentation problem. In the first year of URIP, DOD received 2,500 proposals representing requests for $6146 million werth of equipment. While some of these requests were for equipment to support research in areas not usually funded by DOD, this response is a significant and impressive measure of the needs of the universities. URIP is the most visible, but not the sole, DOD response to the university instruiientation problem. As noted previously, each of the Services and DARPA have encouraged current and prospective contractors to make their equipment needs known, in order that `many of the less expensive items could be purchased as an integral part of research progran funding: o Approximately 10 percent of Army, Navy, and Air Force research contract funding is applied to equipment purchases, most of it well under $50,000. Grants under the URIP progran provide an additional comparable dollar amount for equipment costing more than $50,000. o The portion of the Army Research Office (ARO) contract progran devoted to instrument purchases has increased steadily over the past decade; in FY 85, such purchases will represent about $6 million of the ARO contract research progran. o University-related equipment purchases associated with the Contract Research Progran of the Office of Naval Research (ONR) increased from $11.2 million in 1979 to $16.6 million in 19814. o Between 1975 and 1985, vested equipment funding by the Air Force Office of Scientific Research (AFOSR), during the usual course of its sponsored research progran, increased from $2 million to $8 million. o Although DARPA does not participate in the URIP progran, 10 to 20 percent of its university program funds have been utilized for equipment. In 1981, DARPA began a modernization program focused on obsolete equipment and the need for greater computational power. From 1981 to 19814, equipment purchases by universities using DARPA funds increased from $6.7 million to $16.8 million. In certain cases where the equipment for major research efforts has been especially costly, provisions have been made for extraordinary purchases. Examples include the purchase of large main frame computers, semiconductor processing lines, molecular beam epitaxy and analysis chambers, and ARPANET computational and communication facilities by DARPA, and an ongoing ONR program to refurbish selected research vessels. PAGENO="0407" 401 In FY p14, in addition to the $30 million per year of special URIP purchases, the three Services and DARPA purchased over $145 million worth of research instruments and -equipment for universities in connection with their research contracting activities. C.3 UNIVERSITY RESEARCH INITIATIVE In FY 86, DOD plans to establish new research progran elements that will be focused exclusively on the DOD/university relationship. Total proposed funding for the new progran elements is $25 million in FY 86 and $50 million in FY 87. Significant additional growth is expected after FY 87. Each of the Services and DARPA will implement prograns within these progran elements to meet the priorities of their own relationships with the academic ccznmunity. Although the specific proportions will vary from Service to Service, graduate fellowships, support for young investigators, purchase of research instrumenta- tion, support of special research prograns, and prograas to improve the interactions between DOD laboratory and university researchers, will be part of the total DOD package. C.LI COORDINATION ACTIVITIES DOD has long recognized that the academic ccemnunity is an invaluable source of expert advice. The Department draws on science and engineering faculty as individual consultants and as members of DOD advisory caemittees. To insure more effective ccznmunication with the academic camnunity, DOD established the DOD/University Forum in December 1983. During its first year, the Forum has provided a mechanism for dialogue between DOD and the academic community on policy and other issues of mutual interest. one significant outcome of its activities during the past year was the establishment of a new DOD policy on the transfer of scientific information. It establishes an appropriate balance between the conflicting imperatives of national security and open scientific communications. The Forum Working Group on Science and Engineering Education addressed many issues, including that of research instrumentation. PAGENO="0408" 402 CHAPTER III PREVIOUS STUDIES More than a dozenstdies of university laboratory facilities have been prepared since the late 1960s. For a comprehensive listing and summary of such studies prepared by Linda S. Wilson of the University of Illinois at Urbana- Champaign, see the Appendix. Many of these studies have concluded that a problem exists with respect to inadequate and deteriorating university laboratory research facilities. Some of the studies are qualitative and generally recommend programs for the support of facilities renewal. Others are quantitative and are based on surveys of the conditions of facilities, with projections of the amount and cost of construction and renovation required to meet future needs. The basic conclusion drawn is that renewal and replacement of facilities are an important element in assuring a national technology base. Some of the more relevant studies for the purposes of this report are discussed below. An analysis of some of their findings in comparison to the present study is given in Chapter V. -- A report to the National Science Foundation (NSF) by the Association of American Universities (AAU) in June, 1980, was devoted to "The Scientific Instrumentation Needs of Research Universities." Numerical data for the study were gathered from 14 universities and four commercial laboratories. The report found that the median age of university equipment was twice that of the commercial laboratories' instrumentatiofl. Concluding that "the quality of research instrumentation in major univer\sity laboratories" has seriously eroded, the AAU report recommended that: "Federal policy for the support of research instrumentation should provide for a basic three-part funding strategy: o Strengthen instrumentation funding in the project system. o Expand special instrumentation programs. o Create in the National Science Foundation a new, supplemental formula grant program to provide needed flexibility to meet diverse institutional needs." -- A 1981 study prepared for the Committee on Science and Research of the AAU, entitled "The Nation's Deteriorating University Research Facilities," was based on a survey of recent expenditures and projected needs of fifteen major U.S. universities in six disciplines. The principal findings of the study were: o A substantial backlog of research facilities and equipment needs was accumulating. o During the 1978-81 period, for the six fields surveyed, the fifteen universities spent ~~4O0 million for facilities and major equipment. In the next three years (1982-8~4), PAGENO="0409" 403 these universities expected to spend almost twice as much (~765 million), just to produce the necessary research facilities and special research equipment for current faculty only. o New construction to replace outmoded facilities accounted for almost 60 percent of total projected funding requirements across all fields. o In addition, substantial needs for major research equipment were identified in all six fields. Table HI-i shows the expenditures and projected needs for those disciplines included in the present report. Projected needs for both facilities and equipment were far larger (by factors ranging from three to almost ten) than actual expenditures for an equivalent period immediately preceding the report. The extent to which these differences represented realistic asses~nents of the pent-up facilities demand, and/or an effort on the part of survey respondents to "make a statement," is open to question. Among the recommendations of the AAU study was: o Provided that a review by key government agencies corroborated the assessnent of the survey, the "Department of Defense, Department of Energy, the National Aeronautics and Space Administration, the Department of Health and H~znan Services, and the Department of Agriculture should establish research instriinentation and facilities rehabilitation prograns targeted on the fields of science and engineering of primary significance to their missions." -- In 1982, Flad & Associates, a Wisconsin architectural and planning firm, published their "capital Spending Study of Research and Development Laboratories." Since the study focused exclusively on the spending plans of private industrial firms, it provides a useful basis for comparison with the plans of universities dealt with in the AAU studies described above. The Flad study was based on a survey of some 5800 directors of industrial research laboratories. About twelve percent of them responded with detailed, confidential estimates of planned spending for plant and equipment in the ensuing three years (1983-85). The firms surveyed were considered more representative of large research laboratories (25-100 staff) than analler laboratories (less than 25). Among the major findings of the Flad study were: o Estimated spending on research and development plant for 1983-85 by responding firms was $1.11 billion. o Estimated spending on research and development equipment for 1983-85 was $1.2 billion. o Nearly 40 percent of the laboratories of responding firms were built less than ten years before the survey; of these, 50 percent had undergone additions or renovations subsequent to initial construction. PAGENO="0410" 404 Table 111-1 Actual and Projected Expenditures for Research Facilities (new construction/renovation) and Special Research Equipsent for 15 Major Research Universities (thousands of dollars) FACILITIES SPECIAL RESEARCH EQUIPMENT PROJECTED PROJECTED NEEDS NEEDS FIELD 1978-RD 1981 1982-84 1978-80 1981 19R2-R~4 Chemical Sciences 12,8~5 14,089 115,022 6,701 4,767 14,688 Engineering 19,539 18,476 183,106 16,101 10,957 33,222 Physics 11,700 5,818 74,725 4,603 1,092 22,590 Source: "The Nation's Deteriorating University Research Facilities', Association of American Universities, 1981 PAGENO="0411" 405 For the purposes of this report, the Flad study has some interesting implications. If the study's findings are extrapolated onto the entire sanple, total national private industry projected capital spending for research and development ~uld be about $20 billion for 1983-85 (about $11 billion for plant and about $9.2 billion for equipment). This compares with estimates of $1 billion for total average annual planned investments in university science and education facilities. For industrial laboratories whose annual research and development budgets were in the range of 1 to 15 million dollars (145 percent of the responding firms), the expenditure planned for was about 13 percent of their annual operating budget each year for the three years beginning in 1983. The ratio of planned expenditures for equipment and plant by private industry was about the same (unity) as that shown for universities in Chapter IV below. -- The NSF published a study of "Academic Research Equipment in the Physical and Computer Sciences and Engineering" in December 1984. This study surveyed 4. universities; respondents exhibited serious concern about the adequacy of their current stock of research equipment. Among the findings of the study were: o About half of the department heads in physical and computer sciences and engineering characterized research instrixnenta- tion available to untenured and tenured faculty as "insuf- ficient." o 90 percent of the department heads surveyed reported that, as a result of lack of needed equipment, their research per'sonnel could not conduct critical experiments in important subject areas. o The top priority need was to upgrade and expand research equipment in the $10,000 to $1,000,000 range. o The estimated original purchase cost of the entire 1982 stock of all ~10,000 to ~1,000,000 academic research equipment that had been accixnulated in the fields surveyed was about $1 billion. o (~ly 16 percent of those systems were classified as state-of- the-art. Of the equipment that was not in the state-of-the- art category, over half was in less than excellent condition; about half of such equipment was the most advanced to which researchers had access. In addition to the studies and data surveyed above, the NSF has released a variety of data that are of special interest for this report. Table 111-2 gives seven-year trend data on capital expendi- tures at all U.S. universities for both research and instructional purposes. Unfortunately, there does not appear to be any systematic way of extracting purely research facility expenditures from these figures. The two research categories cited correspond roughly to the five disciplines addressed in this report. PAGENO="0412" 406 TABLE 111-2 Research and Instructional Capital Expenditures at Colleges and Universities* (thousands of dollars) FIELD 1976 1977 1979 1980 1981 1982 1983 Engineering 81,678 87,718 87,128 89,297 103,329 11411,990 1314,701 Physical Sciences ~ ~~j6 ~ ~ ~ ~ Total: 155,~l33 152,9311 151,813 166,1151 191,1112 227,352 221,7711 Source: National Science Foundation * 1978 Data not available. PAGENO="0413" 407 Research equipment expenditures for U.S. colleges and universities are sunmarized in Table 111-3 for 1982 and 1983. The data were obtained from 85 percent of U.S. universities in response to an NSF questionnaire concerning non-capitalized equipment expenditures. Engineering equipment purchases averaged approximately $70 million for the two year period. The category compares roughly to the combined engineering, electronics, and materials categories of this report. Table III-~4 lists 1982 estimated research equipment expendi- tures for 157 of the largest research universities. These 157 institutions collectively accounted for 95 percent of all norinedical, non-FFRDC R&D expenditures reported to NSF for FY 19RC) by all U.S. colleges and universities. Thus, although the survey represented only a small fraction of the nation's approximately 3,000 post- secondary institutions, it encompassed most institutions with significant capabilities for the kinds of advanced research that require instrunentation in the M0,000÷ range. The quoted figures are somewhat higher than those in Table III-~, since they include capitalized equipment, whereas the data of Table 111-3 do not. As in Table 111-3, the engineering category compares roughly to the combined engineering, electronics, and materials categories of this report. Acquisition and replacenent costs as of 1982 for research equipment in the physical sciences and engineering are given in Table 111-5. The total replacenent value in 1982 dollars for both fields exceeded $1 billion. It is interesting to note that equipment maintenance in both the physical sciences and engineering represented 5 percent of replacement costs. PAGENO="0414" 408 TABLE 111-3 Annual Expenditures for Research Equipment at Colleges and Universities (thousands of dollars) FIELD ~82 1983 Engineering 65,861 75,171 Aero/Astro 2,28~4 2,837 Chemical 6,~4't2 6,172 Civil 5,16'4 6,086 Electrical 18,~45~~ 20,685 Mechanical 7,390 10,008 Other 26,127 29,383 Chemistry 33,323 32,826 Physics and Astronomy Totals: 111,373 118,530 Source: National Science Foundation PAGENO="0415" 409 TABLE 111-4 Instrumentation-related expenditures in academic departments and çacilities, by field and type of university: National estimates, FY 1982 [Dollars in millionsi FY 1982 expenditures Principal field of research in department/facility and Purchase of Maintenance! type of university Total I ~ Purchase of research equipaent2 research- repair of related research computer equipnent services3 Total, selected fields $375.6 $231.0 $8~4.7 $60.0 Field of research Physical sciences, total 156.6 914.5 33.9 28.2 chemistry 73.7 39.6 23.3 10.8 Physics and astronomy 83.7 55.2 10.9 17.6 Engineering, total 1514.14 90.9 43.9 19.6 Electrical 52.9 36.2 11.5 5.2 Mechanical 23.0 8.7 10.8 3.5 Metallurgical/materials 9.14 7.4 0.8 1.2 chemical 15.8 7.8 5.7 2.3 Civil 16.4 9.6 5.14 1.4 Other, n.e.c. 36.7 21.3 9.5 5.9 1 Statistical estimates encompass all research departments and all nondepartmental research facilities in the physical sciences, engineering and computer science at the 157 largest R&D universities in the U.S., except: (a) departments with no research instrument systems costing $10,000 or more and (b) research installations consisting of interrelated components costing over $1 million (large observatories, reactors, accelerators, etc.). Sample size 353 departments facilities. The colums below do not add up to the indicated totals because computer science and interdisciplinary have been omitted from this abbreviated version of the original table. 2 Estimates refer to expenditures for nonexpendable, tangible property or software having a useful life of more than two years and an acquisition cost of $500 or more, used wholly or in part for scientific research. 3 Estimates refer to purchase of computer services at on-campus and off- campus facilities but not to purchase of computer hardware or software. Estimates encompass expenditures for service contracts, field service, salaries of maintenance/repair personnel, and other direct costs of supplies, equijxnent and facilities for servicing of research instrunents. Source: "Academic Research Equipment in the Physical and Computer Sciences and Engineering"; National Science Foundation, December, 19814. PAGENO="0416" TABLE ItI-5 Number and aggregate cost/value of academic research instrument systems in active research use, by field and type of university: National estimates, 1982.1 [Dollars in millions] Index of aggregate cost/value Acquisition Repla~ement 1982 cost- costa value equivalent5 410 Principal field of Number research use and of ~Fcn4se type of university systems cost Total, selected fields 17,586 $758.1 $703.2 $1,133.7 $1,162.8 Field of research Physical sciences, 8,14214 373.6 353.2 529.3 610.2 total Chemistry 14,791 210.14 201.1 295.0 331.7 Physics and 3,633 163.2 152.1 * 234.~ 278.14 astronomy Engineering, total 6,829 374.6 Electrical 1,650 89.0 Mechanical 1,363 66.9 Metallurgical! 998 60.9 materials Chemical 682 23.3 22.8 28.6 32.3 Civil 397 14.1 13.9 22.4 21.6 Other, n.e.c. 1,739 65.7 55.3 109.0 104.0 259.4 232.4 66.4 56.0 50.9 47.8 39.0 36.6 413.3 92.2 95.5 65.2 1 Statistical estimates refer to research instrtxnent systems (including all dedicated accessories and components) originally costing $1O,000-$1,000,000 in physical science, engineering, and computer science departments and facilities at the 157 largest R&D colleges and universities in the U.S. Estimates limited to systems used for research in 1982. Sanple size 2,582 systems. The coluizis below do not add up to the indicated total because computer science, materials science, and interdisciplinary have been omitted from this abbreviated version of the original table. 2 Manufacturer's list price at time of original purchase. Actual cost to acquire instrument system at this university, including transportation and construction/labor costs. User estimate of 1982 cost of sane or functionally equivalent equipnent. ~ Original purchase cost converted to 1982 dollars using Machinery and Equipment Index of the Bureau of Labor Statistics' Annual Producer Price Index to adjust for inflation. Source: "Acadimic Research Equipnent in the Physical and Computer Sciences and Engineering"; National Science Foundation, December, 1984. PAGENO="0417" 411 CHAPTER IV SELECTIVE UNIVERSITY LABORATORY MODERNIZATION A. INTRODUCTION This chapter addresses selected laboratory needs, i.e. facilities and related equipment, for a segment of the research university community representing key performers of DOD research for the disciplines and thrust areas enumerated in Chapter I. These needs, stratified by discipline and priority in Table TV-i, reflect the judgment of university research performers and, in certain cases, of administrators in the Service research offices (OXRs) and the Defense Advanced Research Projects Agency (DARPA). It should be emphasized that the cost figures in Table TV-i are estimates of university laboratory upgrade and modernization initiatives designed to bring university laboratories closer to sufficiency from the DOD perspective. As previously indicated, they represent in many cases only partial funding of the facilities in question through multiple sponsor arrangements. They are not intended to encompass laboratory needs of the entire university research community. The latter issue has been addressed in the various studies cited in Chapter III. Facilities costs vary anong and within disciplines, reflecting special requirements for the various thrust areas. They encompass both floor space requirements and laboratory accessories not falling within the instrumentation category. Thus, not all expenditures classified as "facilities" represent requirements for new or renovated buildings. The stated new floor space requiremen~s are expressed in "gross" (as opposed to "net") square feet at $120/ft . Laboratory renovation costs are calculated at $90/ft2. The allocation of laboratory needs anong the five disciplines required the exercise of judgment as to the appropriate division between (a) the parent, pure science fields of Physics and Chemistry, and (b) the applications-focused areas of Electronics, Engineering, and Materials. Ultimately, such decisions are to an extent arbitrary. Further, there are clearly a great number of ways to stratify facilities and equipment needs in terms of disciplines and thrust areas. The scheme presented in this report is thus only one of many possible approaches. Priority 1 facilities needs for the five subject disciplines, pro-rated over a five-year expenditure period, are $32 million per year. The expenditure level is equivalent to the URIP annual allocation of $30 million. It is also of interest to note that priority 1 equip- ment requirements are $31 million per year, i.e., almost identical to the annual expenditure rate of the five-year $150 million URIP initi- ative. Unquestionably, some portion of the $155 million Priority 1 equipment needs cited in this report will be addressed during the final two years ($60 million) of the URIP progran. 53-277 0 - 86 - 14 PAGENO="0418" 412 Table IV-1. Susinary of selected laboratory needs of major university performers of defense research. Cost ($ thousands)* Building 2 Discipline Priority Requirements (gross ft ) Facilities Equipment Total Costs Chemistry 1 35,000 5,000 14,000 19,000 2 412 000 1414 700 33 ~40O Subtotals 14147,000 9,700 7, 00 97,100 Electronics 1 130,000 149,000 33,000 82,000 2 ~QQQ Subtotals 155,000 55,000 41,000 96,000 Engineering 1 296,500 36,200 39,000 75,200 2 145300 8900 J.~J~QQ 27200 Subtotals ~!I4T~195 57,300 Materials 1 220,000 55,000 62,100 117,100 2 j~Q,~O 29 000 36 ~400 65 ~400 Subtotals 390,000 Physics 1 80,000 15,800 9,300 25,100 2 131 000 25 700 163,300** 189,000** Subtotals 172,600** 214,100** Summary 1 761,500 161,000 157,1400 318,1400 2 783,300 fl~,~QQ 259,1400~ 373,700** Totals 1,51414,800 275,300 416,800** 692,100** *Numbers are rounded to the nearest $100 thousand. **Includes $150 million for astrophysics high angular resolution imager. PAGENO="0419" 413 B. DISCIPLINES B.1. Chemistry Large facilities are playing an increasingly important role in chemical research. It has been an evolutionary process, starting with opportunities provided by large instrumentation and moving to facilities comprised of clusters of large integrated instrumentation/computational facilities in regional spectroscopic facilities. Ultra high vacuum chanbers with sophisticated analytical instrumenta- tion using laser, electron, and ion cluster beans, together with various spectrometers, are mandatory for leading edge research in many areas of chemistry. Lasers have become important analytical tools to stuiy the dynanics of chemical reactions and to photoinduce reactions. These instruments are usually short wavelength visible or ultraviolet tunable lasers that are themselves pushing the limits of laser technology and hence require considerable expertise and expense to operate and maintain. In addition, many research projects are concerned with the chemistry of materials processing, such as integrated circuit fabrication, that demand clean room facilities by their very nature. In order to remain globally competitive, particularly in areas of chemistry of importance to IX)D, it has been recently recognized that traditional chemical research laboratory facilities at universities are in serious need of upgrading and that shared centralized new facilities are necessary due to the high costs of the instrumentation and envirorinental control required. This evaluation applies to the two topical areas identified by DOD research managers as candidates for facilities upgrading, based on scientific opportunities and on laboratory needs. These priority topics are laser chemistry and polymeric materials. Lasers have become a valuable tool in many branches of chemistry. Catalytic activity and selectivity can be st~ied by using laser Ranan spectroscopy to determine the vibrational modes and polarization of structures of molecules adsorbed on single crystal surfaces. High powered photo-ionizing lasers can be used in conjunction with ion cyclotron resonance spectroscopy to st~y the role of metal ions as selective chemical ionization reagents. Laser induced fluorescence of metallic ions and s~sequent transfer of energy to neutral ions may yield superior detection limits, compared to well established analytical techniques that employ fluorescence of neutral metal ions in flanes. Two step laser photo dissociation of small molecules can be used to elucidate isotope separation and enricfrnent processes. In this latter process, an intense pulsed infrared laser vibrationally excites molecules containing the chosen atomic isotope and a second ultraviolet laser photodissociates the molecule, allowing the desired atomic isotope to be collected from the photo fragments. These exanples indicate the utilitarian richness of lasers in modern chemistry and illustrate that often they are used in combination with other sophisticated analytical equi~inent. The facilities investment described here would establish fifteen laser chemistry centers PAGENO="0420" 414 where the operation and maintenance of the lasers would be accomplished by support specialists to serve several research projects. On an even larger scale of centralization, a single free electron laser facility would also be established to provide a very intense and widely tunable source of radiation. Polymeric materials are found in most military equipment, because of their excellent chemical stability, mechanical properties, and low cost. The majority of the research support for improvements in these materials comes from industry in pursuit of commercial applications, although DOD does support some research specific to stringent military requirements. However, the polymer research of greatest interest to DOD, and for which university facilities upgrades are needed, concerns conducting polymers and polymeric approaches to structural composites, ceraaics, and self- reinforcing polymers. It is important to note that independent industrial support of research in these areas is minimal or not aimed at DOD needs. Conducting polymers that wauld combine the processability, durability, and light weight of plastics with the electrical conductivity of metal wauld find a wide range of applications in military systems ranging from solar cells and batteries to integrated circuits and stealth structures. Polyacetylene was the first organic polymer to exhibit electrical conductivity that could range from that of glass to that of metal, depending on the anount of dopants introduced. Doping methods have expanded to include solution doping, ion implantation, and electrochemical doping. Other new polymers have been made conducting, including polypyrrole and polythiophene. Polymer processability and stability are degraded by the doping methods currently used to induce conductivity. Much research is directed at improved doping techniques and on incorporating conducting polymers into nonconducting polymer matrices, as well as fundanental studies to explain the mechanism of electroactivity. Fiber reinforced composite structural materials are finding many engineering applications, some of which are described under Materials and Engineering. Exanples of the themistry research topics include organometallic polymer precursors for producing the fibers and self- reinforced or ordered polymers to attain the mechanical properties of fiber-reinforced composites without the need for fiber reinforcement. The most notable of the self-reinforced polymers developed under DOD sponsorship is polybenzothiazole (PBT), which exhibits an extended rigid chain aligrznent at the ultra-structural level. It offers low-cost processing, by casting and extrusion, instead of the sequence of weaving fibers, stacking of many thin plys, and curing at high temperature required for conventional fiber-reinforced composites. Other polymeric materials research includes biopolymers, such as the polysaccarides for reduced hydrodynanic drag and non-linear electro-optic polymers for optical signal processing applications. The facilities investment described here would provide the polymer processing and characterization facilities for several focused centers of university research on electrical, optical, magnetic, and structural polymers. PAGENO="0421" 415 B.2 Electronics In addition to the traditional subject areas of electronic devices, circuits, and systems, the Electronics research progran of DOD encompasses elements of information processing, low energy laser physics, optics, and material growth. For the purposes of this study, the facilities required for the growth of electronic and optical materials are reported under Materials and the low energy lasers, optical circuits, and vacu~xn tube research facilities are reported under Physics. The information processing research, being closely related to computer science, is not discussed, since, as mentioned in the Introduction, the National Science Foundation (NSF) and the Department of Energy (DOE) have major facilities prograns in progress to provide scientific supercomputing access to university researchers. DOD, through the modernization progran of the Defense Advanced Research Projects Agency (DARPA), recently made a significant upgrade in university computing facilities for symbolic computing in anticipation of the thrust in strategic computing. The Office of Naval Research is making available to its principal investigators a significant portion of the time of the Naval Research Laboratories' supercomputer at no cost to the existing research contracts. A strong and clear consensus has emerged from this st~dy indicating that the research managers of the Electronics progran within the DOD feel that microcircuit fabrication at dimensions much smaller than those of the Very High Speed Integrated Circuits (VHSIC) progran represents the greatest opportunity and greatest research facility need within Electronics. The feature sizes desired are 10 to 100 times smaller than the one-micron regime currently being advanced under VHSIC. It is in this regime that entirely new modes of operation of electronic, optical, and magnetic devices occur, due to the quantkm effects produced by the limited nunber of atoms contained within these small dimensions. These phenomena present the possibility of creating devices whose performance can be greatly superior to that predicted from the bulk characteristics of the material from which they are fabricated. This has already been observed for high speed field effect transistors (FETS), when the device dimensions are reduced below one-tenth micron. It has also been observed that dranatic increases in transmission properties of optical materials occur when very thin layers of material are stacked in a multilayer sequence, offering the possibility of improved photodetectors and lasers. The fabrication of these novel devices requires very advanced and expensive equipment for the deposition, lithography, and selective removal of the deposited materials. In addition, sensitive analysis of the surfaces and interfaces between dissimilar materials needs to be performed during the fabrication process. This is in contrast to current commercial practice (even for sophisticated microcircuits), where the analysis by electron microscopes and spectrometers is accomplished after the circuits are removed from the fabrication apparatus and before they are inserted into the next apparatus in the fabrication sequence. This requirement for in-situ analysis has greatly increased the minimun cost of doing research on device fabrication. The facilities in which this instr~nentation is housed require extreme control over air purity, to avoid dust particle disruption of the fabrication, and extreme control over vibration, to avoid rnisaligrinent of PAGENO="0422" 416 the successive patterns employed in the fabrication sequence. The reliability of these as yet undeveloped circuits is anticipated to be a major concern that is best addressed early in their development, since the failure phenomena are anticipated to be inextricably tied to the fabrication process employed at the microscopic level. For these reasons, the first priority in microcircuit fabrication was given to the refurbishment and upgrading of up to six university centers for microcircuit fabrication, with a second priority of augmenting two university reliability research centers to work closely on this new class of circuits. In a separate, but related, research area, reliability at the systems level is perceived to be threatened today by the susceptibility of advanced solid state circuits to electromagnetic interference at relatively modest power levels. Research into hardening weapons systems against intentional enemy electromagnetic interference or inadvertent disruption by radiation from nearby friendly systems is required. The facilities for enabling university participation in this research include anechoic chambers and electromagnetic measurement instrumentation as a first priority, and dedicated computational facilities for modeling as a second priority. 13.3. Engineering Engineering encompasses the disciplines usually associated with university departments of mechanical engineering, aeronautics and astronautics, civil engineering, industrial engineering, and materials engineering. The subject matter frequently overlaps that.of the other disciplines, such as Materials or Chemistry, but is usually closer to a specific end application or requirement. For example, composite structures is a thrust area that has the same ultimate goal as Materials research on structural composites, namely lighter weight and stronger structures for building weapons platforms. The distinction is the focus in Engineering on determining the performance of composites through innovative design and analysis of structures using state-of-the-art materials. Research results are fed back to materials scientists to provide guidance to their endeavors. A base of knowledge about optimal design methods is thereby developed for application to many problems. Proceeding with this example, non-destructive evaluation (NDE) techniques must be developed to enable the engineer to perform these measurements in support of the analysis of composite structures. There is considerable resultant interaction with the materials scientists who also need NDE techniques to evaluate their progress in controlling the composition of materials. Similarly, the area of Energetic Materials and Combustion involves considerable interaction with chemists to improve propellants, explosives, and fuels. The facilities in these two areas are typically large and have a significant element of concern for the safety of the personnel perform- ing the research. The instrumentation is becoming dominated by lasers and analytical tools similar to that needed in Materials science. Fluid mechanics and acoustics are the classical, almost exclusive, domain of Engineering, with slight involvement by molecular and chemical PAGENO="0423" 417 physics. The facilities are typified by dedicated wind tunnels and water tunnels. Instrumentation is dominated by automatic digital data acquisition and digital computer modeling and simulation of the phenomena. Laser probes and acoustic sensors with sophisticated signal processing are also mainstays of instrumentation in this discipline. Manufacturing, design, and reliability have increasingly been moving toward a computer-dominated emphasis on graphics, design aids, expert systems for process control, artificial intelligence to relieve pilot tirkload in single seat helicopters, and self diagnosis and self repair of machines and weapons systems. Classical industrial engineering, computer science, and structural engineering are very much coming together in this field. The facilities are replicas of factory workcells or simulators of aircraft cockpits and the instrumentation is heavily computer net~.irked. The Defense Advanced Research Projects Agency (DARPA) is making advanced teleconferencing equipment available to several university centers in robotics so they may test their algorithns for robot vision on the DARPA autonomous land vehicle located at a contractor facility. They will also plan to provide replicas of a fingered robot hand to many of these university research centers. Non-destructive evaluation for manufacturing process monitoring and control, as well as for inspection of finished parts and fielded systems, requires a comprehensive research progran, which would best be accomplished through a center of excellence in non-destructive evaluation/characterization. Soil mechanics is uniquely supportive of blast hardened silos, construction, maintenance, and repair of runways, and priority command, control, and communications centers. The facilities at universities are presses, shock tubes, or high-G centrifuges. B. 14. Materials Materials research includes the growth of semiconductor, magnetic, and optical materials, as well as processing and fabrication of structural materials such as metal alloys, ceranics, and composites. The processing of semiconductor materials into electronic and optical devices and circuits is reported under Electronics, while the testing of structural composite materials and non-destructive evaluation for both manufacturing and in-process control of materials is reported under Engineering. This traditional division of research responsibility has begun to blur in recent years, and multidisciplinary research teems have been forming in recognition of the strong interaction between material growth, component fabrication, and ultimate system performance. In fact, for optirmxn coordination, the facilities requirements reported in this section for compound semiconductor growth should be co-located or closely adjacent to the microelectronic fabrication and reliability facilities reported under Electronics. The greatest potential payoff and also the greatest investment costs are perceived by DOD materials research managers to be associated with two areas: the growth of compound semiconductors and the fabrication of advanced structural composites. High priority at somewhat reduced investment is given to facilities for optical and magnetic materials and for research on structural ceranics. PAGENO="0424" 418 Compound semiconductor growth has received only a small fraction of the scientific and technical attention that has been spent on silicon. This has been entirely justified to date, since silicon possesses excellent electrical, thermal, and chemical properties, especially with its high quality native oxides and silicides. Being an elemental semi- conductor, silicon is significantly simpler from a device processing standpoint than the compound semiconductors, such as galli~in arsenide, cadmiun telluride, and alloys, e.g. galliun aluninun arsenide and mercury cadmiun telluride. The steady doubling of the capability of silicon integrated circuits every two to four years for the past twenty years is evidence of the wisdom of this research investment strategy. It is only recently that the material property limitations of silicon have presented a serious limit to device performance. Research attention is currently turning to at least three ways to get around this limitation. ~e approach is mentioned in the Electronics section, having to do with new device physics associated with ultra small device dimensions. A second approach, for information processing, is to use artificial intelligence to make "smarter" rather than just "faster" computers. The third approach is to turn significant resources toward the growth and characterization of the compound semiconductors. The facilities investment that is detailed here would permit four to seven university centers to advance the technology of compound semiconductors for signal detection, signal processing, millimeter waves, and communications, to name just a few DOD priority applications. Composites materials have similar exciting potential for structural applications, ranging from high strength, lightweight airframes and large space structures to lightweight armor for highly mobile combat vehicles. These materials utilize high strength fibers embedded in polymeric, metal, or ceramic matrices. The creation of the fiber itself and the interaction between the fiber and the matrix during the processing largely determine the performance and reliability of the composite when exposed to harsh military environments over its service life. ~ily recently have advances in analytical tools permitted the microscopic characterization of these materials, both physically and chemically. These tools are both elegant and expensive. The facilities investment detailed here would establish, through new construction and refurbishment, six centers of university research on structural composite materials. Optical materials are beginning to emerge in communications and signal processing applications. The advances that have been made in optical waveguides using silica glass exemplify the success possible through materials processing research. The combined stringent requirements for low transmission loss and very high tensile strength were achieved through research linking materials structure, properties, and performance. Magnetic materials in bulk form are widely used in critical electrical components, such as electromechanical switches and microwave phased array transmitters and receivers. In thin film form, magnetic materials are used for recording media and non-volatile memory. The facilities investment described here would establish two university centers in optical materials and would augment one existing university center in magnetic materials. Structural ceramics research of high quality is performed in a number of small university laboratories that are in need of refurbishment and expansion to apply modern microstructural analysis techniques to PAGENO="0425" 419 processing of high temperature ceranics for hostile environments. Both bulk ceraaic components, such as radanes for high velocity aircraft, and ceramic coatings on turbine engine components would benefit from this upgraded research capability. Finally, it should be noted that a segment of the materials research community is dependent upon support from very large research facilities, such as synchrotron and neutron sources. None of these facilities are included in this report. The predominant funding for these national facilities comes from NSF and DOE, with only minor support from DOD. Any decrease in support of these facilities by the other agencies would severely affect the DOD Materials research progran. B.5. Physics Research on new and improved sources of electromagnetic radiation is a major component of the Physics prograii of DOD. The free electron laser is a direct result of high risk research funded by DOD. It has demonstra- ted an entirely new mechanism for generating coherent radiation that is freed from the usual constraints imposed by the need for a material mediua. This device has already demonstrated that very wide tunable bandwidth is possible; this has great implications for its utility as a scientific research tool in the analysis of materials, and as a frequency agile radiation source for potential military applications, si~h as communications and target tracking. Recirculating the electron bean in storage rings offers theoretically high efficiency and hence the potential of high power free electron lasers for directed energy weapons application. The facilities investment reported in this section under coherent radiation sources would refurbish and upgrade three to four existing laboratories performing research on these novel sources. More conventional lasers for a variety of wavelengths are being explored as tools for research on ultra small integrated circuits, optical computing, catalysis, and molecular biology and for tactical warfare applications such as target designation, optical jamming, and covert communications. The first demonstration of the use of a finely focused laser bean to deposit micron-sized metal connecting lines on semiconductor surfaces occurred under DOD sponsorship in the last five years. It was immediately picked up by the integrated circuit manufacturers as a tool for repairing defects in expensive integrated circuits, and in the photomasks used to produce the circuits. Prior to this breakthrough, lasers had only been used to remove excess material from circuits by vaporizing short circuits and trimming resistors to tolerance. This research continues today under DOD sponsorship and is demonstrating novel methods of doping circuits and of depositing insulators and conductors. Other laser research projects are attempting to `eapfrog over the limitation foreseen in silicon integrated circuits that results from the fact that as much as three-quarters of the surface of these circuits is devoted to metal interconnecting lines between the hundreds of thousands of constituent transistors. The propagation delay of the signals moving on these interconnects at the speed of light is becoming more important in determining the circuit speed than is the switching speed of the transistors. Optical computing chips afford the prospect of distributing the signals by laser beans to many portions of the circuit simultaneously, PAGENO="0426" 420 thereby avoiding the input-output bottleneck of electrical integrated circuits. The facilities reported under optical communications and spectroscopy in this section would establish a new center for optical circuitry and weuld upgrade an existing laboratory for optical communications. Directed energy devices require large facilities for research. The high voltages and currents required can only be stored and switched by physically large components as dictated by the scaling laws of electrical power engineering. To some extent this represents a departure from the usual scale of university research funded by DOD, since "big physics" is usually supported by NSF or DOE. ~D has funded university centers in pulsed power, but this has represented only approximately 10 percent of the physics budget. The facilities described under directed energy devices ~uld expand the existing pulsed power centers and upgrade other centers for research on accelerators and microwave and millimeterwave high power sources. Bean propagation and the interaction of electromagnetic energy with materials would also be studied at these centers. Astrophysics research directly produces knowledge of the background radiation against which space objects must be detected. Secondarily, the advances in instrLrnentation (optics, infrared, and x-ray) needed to conduct this research improve our military capability to detect and track space objects and to detect nuclear events in space. The major facility upgrade in this section, and indeed, the single highest cost itan in the entire report is a $1 50M high angular resolution imager center whose goal is a hundred-fold increase in image sharpness on celestial objects and space vehicles. C. S1!IMARIES Laboratory facilities and equi~xnent needs for thrust areas associated with the foregoing disciplines are given in the following sunmaries. The science and technology implications of laboratory enhancmnents, and their national security consequences are also addressed. PAGENO="0427" 421 CH~11STRY Thrust Area: Laser Chemistry Laboratory Needs &~ ilding Requirements Total Facility Facilities: (gross ft2) Cost ($ thousands) -- Priority 1 -- New construction Renovation/expansion 20,000 3,000 -- Priority 2 -- New construction 7~,000 9,000 Renovation/expansion 150,000 13,500 Subtotal 2145,000 25,500 Equipaent: Linear accelerator and storage ring electron sources; upgrade equipment for free electron laser facility to enhance short wave-length bean power; arrays of six lasers (dye, argon ion), with diagnostic, data processing, and bean direction equipment for each of 15 laser chemistry centers. Priority Cost, ($ thousands) 1 7,000 2 30,000 Subtotal ~7,000 Total Cost: $62,500,000 Technical Objectives and Opportunities: -- Priority 1 -- An upgraded free electron laser laboratory would be established. It would be a high power, high time resoktion facility essential to progress in chemical reaction kinetics, surface physics and chemistry, hot carrier electron transport investigations, and high resolution photo emission studies. -- Priority 2 -- Fifteen laser chemistry centers ~uld be established. This ntxnber represents a best estimate of university community requirements to ensure that DOD-sponsored research in the field is conducted in an efficient, cost- effective manner. Centralized laser resources would facilitate the sharing of expensive instrunentation and permit a reduction of' maintenance costs through the pooling of technicians and shop facilities. The centers ~uld include picosecond lasers which, especially in the ultraviolet region, offer a new tool for studying the dynamics of chemical reactions. National Security Copsequences: Fundamental knowledge of chemical reac- tions is crucial to much of military technology, e.g., to the improvement of propellants, explosives, fuels, lubricants, and high energy lasers. PAGENO="0428" 422 CHEMISTRY Thrust Area: Polymeric Materials Laboratory Needs Building Requ~recnents Total Facility Facilities: (gross ft) Cost ($ thousands) -- Priority 1 -- Ne~z construction Renovation/expansion 15,000 2,000 -- Priority 2 -- New construction 170,000 20,500 Renovation/expansion 17,000 1,700 Subtotals 202,000 2L~,200 Equi~nent: Polymer molding; film casting; film and fibers drawing! orfcutation equipment; integrated scanning transmission electron microscopes and x-ray detector systems; SQUID magnetometers; picosecond spectroscopy systems; Fourier transform nuclear magnetic resonance units; electrophoresis equi~ent; data processing and analysis instrui~entation; dedicated computer resources. Priority Cost ($ thousands) 1 7,000 2 3,350 Subtotal 1D7~U Total Cost: $311,550,000 Technical Objectives and Opportunities: -- Priority 1 -- Laboratory upgrades would provide significant capabilities for new polymer research at the molecular level, heteroatom polymer synthesis and character- ization, characterization of polymers for electronics, etc. Focused centers would be established for the development of a) a new generation of polymers for electronics, optical, and magnetic applications, and b) composite materials with unprecedented toughness and high temperature capabilities. -- Priority 2 -- The proposed expenditures would greatly enhance research in the areas of composite materials, ordered Structural polymers, and polymer thin films for electronics applications. This in turn would lead to the development of improved dielectrics, capacitors, and electroactive polymers for uses such as piezoelectric sensors. National Security Consequences: Polymer materials are essential elements of virtually all strategic and tactical weapons systems. High temperature metal matrix and ceranic matrix composites for applications such as radiation- hardened structures and gas turbine blades require high temperature fibers. Other applic~tions include cheap, expendable acoustic detectors for sonic buoys, and a variety of electronic microdevices. Improvements in polymeric materials would enhance the performance, reliability, and maintainability of a wide array of weapons systems and logistics equipment. PAGENO="0429" ELECTRONICS Thrust Area: Microelectronic Fabrication and Reliability for Unique DOD-Critical Devices/Materials Biilding Requi5ements ___________ (gross_ft_) __________________ -- Priority 1 -- New construction 60,000 Renovation/expansion 60,000 - Priority 2 -- New construction Renovation/expansion 20,000 11,000 Subtotal: 1140,000 119,000 Equipment: Vacuizn and plasma deposition; electron bean and x-ray lithography; plasma etching; wet chemical etching; impurity analysis with electron and ion beans; ccmputational support for device modelling and process simulation; environment simulators for temperature, huiiidity, vibration, and synchrotron light source for surface diagnostics. Priority Cost (~ thousands) 1 30,000 2 6,000 Subtotal: 36,000 Total Cost: $P5,000,000 Technical Objectives and Opp6rtunities: -- Priority 1 -- Provide vibration-free facilities for extremely small feature-size (one hundred angstrom) micro.-circuit fabrication of devices utilizing technology beyond VHSIC. Electron-bean and x-ray lithographic equipment and plasma and laser enhanced photo deposition apparatus are required. Electron and ion- bean imaging systems for measurement analysis of ultra small structures are necessary. -- Priority 2 -- Establish research capability in reliability of micro-circuit devices, especially with respect to temperature, huiiidity, and radiation hardness of ultra small devices. Expand synchrotron analysis capability for analysis of electrical contacts and other natural interfaces. National Security Consequences: Integrated circuit fabrication is pressing the limits of our knowledge of chemistry and physics, particularly of interfaces between materials, and the utilization of unique materials for DOD devices. Research to provide the knowledge required for further advances in integrated circuits can only come if researchers in university laboratories have access to state-cf-the-art fabrication equipment and processes. Reliability of military systems using integrated circuits depends to a large extent on the processes used to fabricate circuits and their stability over time. 423 Laboratory Needs Facilities: Total Facility Cost ($ thousands) 30,000 15,000 PAGENO="0430" 424 ELECTRONICS Thrust Area: System Robustness and Survivability Laboratory Needs aiilding Requi~ements Total Facility Facilities: (gross ft ) Cost $ thousands) -- Priority 1 -- New construction Renovation/expansion 10,000 14,000 -- Priority 2 -- New construction Renovation/expansion 5,000 2,000 Subtotal: ~ Equipnent: Electromagnetic generators; anechaic chanbers; microwave measurement equipment; propagation ranges; computation facilities for modelling and diagnostics. Priority Cost (~ thousands) 1 3,000 2 2,000 Subtotal: Total Cost: $11,000,000 Technical Objectives and Opportunities: -- Priority 1 -- Expand existing facilities for the measurement of electromagnetic propagation, measurement, and system network investigations. -- Priority 2 -- Provide computational facilities to enhance modeling of electromagnetic interference phenomena. National Security Consequences: Sophisticated weapon systems are potentially vulnerable to electro-magnetic interference, either consciously induced by enemy forces or unintentionally introduced through radiation from friendly force equipment. Subtle interactions between electronic systems operating on the sane platform can degrade performance or completely deny weapon systems availability. Fundanental scientific understanding of means for minimizing these effects is required to supplement the current engineering fixes being pursued. PAGENO="0431" 425 ENGINEERING Thrust Area: Combustion Laboratory Needs Facilities: ~uilding Requi~ements Total Facility (gross ft ) Cost ($ thousands) -- Priority 1 -- New construction 57,500 9,250 Renovation/expansion 95,000 8,600 -- Priority 2 -- New construction Renovation/expansion 9,300 1,250 Subtotal 161,800 19,100 Equi~nent: Variable high-pressure flow reactors; optical diagnostic instrumentation; chemical analysis instrumentation; vector processors for the simulation of turbulent multiphase processes; dedicated computer diagnostic and analysis capabilities. Priority Cost (~ thousands) 1 15,000 2 11,750 Subtotal 2b,750 Total Cost: $145,850,000 Technical Objectives and Opportunities: -- Priority 1 Conduct research on improving the energy efficiency of turbine and internal combustion engines, investigate the viability of alternate fuels (e.g., methanol), develop insights into high-pressure, high-temperature combustion chemistry of present and future propulsion fuels, study multiphase turbulent reacting fuels, and observe high altitude and high mach nunber combustion processes. -- Priority 2 -- Develop unique facility for studying combustion and plasma phenomena of propulsion systems; anticipated benefits include increased understanding of ranjet and rocket motor instabilities, fire propagation phenomena ignition and flane propagation mechanians, and plaana/gas dynanic interactions. Upgrade facility for quantitative flow field, imaging to advance understanding of phenomena underlying energy conversion, aerodynanics, and propulsion processes. National Security Consequences: Improve the range, performance, and relia- bility of aircraft, missile, sliip, and land vehicle propulsion systems; enhance payloads, lower operating costs, reduce corrosion and detectable exhaust signatures, increase fuel performance, and reduce engine development time. PAGENO="0432" 426 ENGINEERING Thrust Area: Canposite Structures Laboratory Needs Building Requirements Total Facility Facilities: (gross ft2) Cost ($ thousands) -- Priority 1 -- New construction Renovation/expansion 5,000 1,180 -- Priority 2 -- N/A Subtotals TT~ Equipnent: Mechanical testing devices capable of multiaxial and variable loading rates in high temperature environments; real-time non-destructive ultrasonic, acoustic emission and x-ray radiography testing equip~ent; high temperature test equipment with associated data processing and dedicated computational capability. Priority Cost (5 thousands) 1 3,1420 2 Subtotal Total Cost: $14,600,000 Technical Objectives and Opportunities: -- Priority 1 -- Composite materials have not been exploited to the degree possible, due to a lack of detailed understanding of their response to complex loading conditions, high strain rates, and hostile environments. The proposed facility would likely engender major advances in the understanding of the thermomechanical behavior and failure characteristics of composite materials, with emphasis on high temperature conditions. -- Priority 2 -- N/A National Security Consequences: Military applications of composite materials include engine hot sections, nozzles, missile nose cones, aircraft surfaces, lightweight high-strength materials, etc. Improved materials are key to enhancing the performance and maintainability of weapons systems and logistics equi~nent. PAGENO="0433" 427 ENGINEERING Thrust Area: Energetic Materials Laboratory Needs ~ilding Requi~ements Total Facility Facilities: (gross ft ) Cost (5 thousands) -- Priority 1 -- New construction Renovation/expansion 1 ,000 -- Priority 2 -- N/A Subtotals Equipment: Mechanical and x-ray diagnostic devices; time-resolved optical spectrometer; electromagnetics effects sensor; gas guns; sample preparation equipment; specialized machine shops. Priority Cost ($ thousands) 1 7,000 2 Subtotal Total Cost: $8,000,000 Technical Objectives and Opportunities: -- Priority 1 -- A primary objective is the development of a broad class of high performance propellants. A second priority objective is research on energetic materials (explosives, propellants, etc.) which remain inert under shock conditions. This involves theoretical and experimental investigations of atomic and molecular processes in shocked condensed wave materials. Experimental research would provide time-resolved optical, x-ray, electrical, and mechanical diagnostics on materials stimulated by mechanical impactors or lasers. -- Priority 2 -- N/A National Security Consequences: Inadvertent ignition of explosives and propellants under mechanical shock and thermal stress is a significant operational hazard, particularly under combat conditions. The development of energetic materials which a) are relatively inert to those stresses, and b) function optimally on command, would mitigate this problem. PAGENO="0434" 428 ENGINEERING Thrust Area: Fluid Mechanics and Acoustics Laboratory Needs Facilities: ___________________ New construction Renovation/expansion New construction Renovation/expansion Subtotals ~iilding Requirements (gross ft2) -- Priority 1 -- 7,000 -- Priority 2 -- Total Facility Cost ($ thousands) 650 350 1,1Jtgy Equipment: State-of-the-art instrumentation for physical acoustics research including highly stabilized lasers, cryogenic equipment, and digital processing gear for automating signal detection and data processing; instrumentation and support equipment for wind and water tunnel facilities for the upgrading of data acquistion and reduction capabilities. For water tunnels, traverse mechanisms, non-linear wave generators, current generators, and related measuring instruments are needed. Wind tunnel requirements include a multi-axis, three-dimensional laser doppler anemometer, and equipment for generating oscillatory flows. Priority Cost ($ thousands) 3,600 2 3,350 Subtotal ~795~ Total Cost: $7,950,000 Technical Objectives and Opportunities: -- Priority 1 -- -- Wind tunnels facilities - provide a national resource for studying turbulent and unsteady flows in Reynolds number regimes typical of subsonic flight, and a second facility devoted to the study of the physics of separated flows and transitioning boundary layers. This research could lead to the development of revolutionary concepts of, and predictive methods for, flow management and control in the flight vehicle environment. -- Water tunnel facility - upgrade an existing facility to greatly reduce flow noise inherent in present tunnel configurations. This improvement would facilitate research on reducing flow noise due to turbulent boundary layer flow around ship hulls. -- Priority 2 -- -- Wind tunnel facilities - modifications at two sites to facilitate a) research on the prediction of the transition from laninar to turbulent flow PAGENO="0435" 429 and its impact on vehicle drag, andb) low turbulence flow phenomena with emphasis on associated viscous effects, leading to improvements in aircraft design and control technology. -- Studies of nonlinear surface wave mechanics to enhance understanding of wave/wave/current interactions, ocean wave/ship wake interaction processes, and associated underwater acoustics, leading to improvements in ship designs, wake signature reduction, etc. -- Integrated physical acoustics laboratory to facilitate research in sound propagation and attenuation, molecular and chemical physics, and underwater acoustics. National Security Consequences: The proposed facilities enhancements would support research critical to improved aircraft performance, range, payload, and fuel efficiency. Defense applications of water tunnel upgrades include improved range and performance of ships (surface and submersible), reduction of noise signatures of submarines, and enhanced performance of acoustic sensors through the reduction of host-sensor interference. PAGENO="0436" 430 ENGINEERING Thrust Area: Manufacturing, Design, and Reliability Laboratory Needs &dlding Requirements Total Facility Facilities: (gross ft2) Cost (~ thousands) -- Priority 1 - New construction 77,000 9,250 Renovation/expansion 55,000 6,250 -- Priority 2 -- New construction 10,000 1,200 Reriovation/expaansion 20,Q00 J4,500 Subtotals 162,000 21,200 Equipment: Hardware and software for design of component inspectability and manufacturing process control functions; integration of advanced non- destructive testing capabilities with computer-aided mechanical design methods; modernization of dynamic track facility including electronic sensors and displays, simulators, and noise and vibration sensors; h~xnan factors diagnostic equipment; avionics gear; combustion diagnostic equipment. Priority Cost (~ thousands) 1 10,000 2 3,000 Subtotal 13,000 Total Cost: $31~,2O0,000 Technical Objectives and Opportunities: -- Priority 1 -- Advances in manufacturing methods having DOD-wide implications for reducing weapons system life-cycle cost, and for enhancing systems reliability, would be pursued. Ancillary objectives include reduced lead times and product development costs, improved productivity and quality control, and reduced inventory costs. A new, unique interdisciplinary manufacturing technology facility emphasizing optimal materials utilization and product reliability would be established. Emphasis would be placed on applications of artificial intelligence concepts to the manufacturing cycle. A second laboratory would be developed for studying the application of computers to the design, manufacture, and control of complex systems, and for the development of advanced composite materials. Integrated, coordinated research into all aspects of rotorcraft design, manufacturing, and performance at two laboratories is a second objective of the proposed expenditures. Areas of concentration include computer-aided design and manufacturing of rotorcraft components, the study of human PAGENO="0437" 431 factors problems associated with the workload of single pilots in a high performance rotorcraft, stability and control research, and combustion studies aimed at enhancing engine performance. -- Priority 2 -- Factory of the future concepts would be explored combining manufacturing physics and artifical intelligence, with emphasis on the develo~ent of unmanned, self-diagnostic, and self-repairing machines and robots. Upgrades of two more rotorcraft laboratories addressing the technical issues outlined for Priority 1 would be made possible, with emphasis on rotcrcraft dynanics and avionics, respectively. National Security Consequences: Procurement and maintenance cost- containment are key considerations in the DOD budget. The proposed facilities would support research directed toward these goals. Improved quality control would enhance product reliability. Army mobility rests to a great extent on rotorcraft (helicopter) performance capabilities, including speed, lift capacity, payload, and crash-worthiness. The proposed facility expenditures would address all of these factors in a much more comprehensive manner than is now feasible. PAGENO="0438" 432 ENGINEERING Thrust Area: Soil Mechanics Laboratory Needs Building Requ~ranents Total Facility Facilities: (gross ft ) Cost ($ thousands) -- Priority 1 -- N/A -- Priority 2 -- New construction 6,000 1,600 Renovation/expansion Subtotal 6,000 1,600 Equipi~ent: Four hundred C-ton centrif~e with support apparatus. Priority Cost ($ thousands) 1 N/A 2 200 Subtotal Total Cost: $1,800,000 Technical Objectives and Opportunities: -- Priority 1 -- N/A -- Priority 2 -- The centrifuge would permit the study of soil and structure phenomena in realistic stress regimes not possible with present facilities. The laboratory would be developed to study both static and dynamic loadings. National Security Consequences: Research ~uld be applicable to the development of improved structures for missile silos and hardened tactical facilities. PAGENO="0439" Thrust Area: Optical and Magnetic Materials Laboratcry Needs Facilities: New construction Building Requirements (gross ft2) -- Priority 1 -- 10,000 Total Facility Cost ($ thousands) 3,000 Renovation/expansion 15,000 2,000 -- Priority 2 -- New construction Renovation/expansion 10,000 2,000 Subtotal: 35,000 7,000 Equiçment: Preparation and handling facilities; high vacuun furnaces; computer-controlled annealing ovens; fiber extrusion and cladding apparatus; grinding and polishing equipaent; electron bean microscopes; laser diagnostic facilities; secondary ion mass spectrometers; electron spectrometers; Reman surface spectrometers; high field magnets; casting/grinding/magnetic aligning/sintering equiçznent operating in "oxygen-free" atmospheres. Priority Cost ($ thousands) 1 2,300 2 1,000 Subtotal: Total Cost: $10,300,000 Technical Objectives and Opportunities: -- Priority 1 -- Establish two university centers of excellence in optical materials for both fiber-optic applications and integrated optics circuits for signal processing. Facilities should include material growth, device fabrication, and evaluation capabilities. The centers would generate benefits in such DOD high pay-off areas as durable low loss fibers, laser sources in the ultra- violet and visible wavelength ranges, detectors in-the 8_i14 micron region, ~ proq ses-1-noiIi~r optical materials, etc. -----~Priority 2 -- Expand existingcapability in magnetic materials for improvements in field strength and in temperature operating range of rare earth magnet materials. Research emphasis would be on materials characterization and structure definition using Mossbauer, x-ray diffraction, scanning transmission electron microscope, and neutron diffraction methods. National Security Consequences: Optical materials are assuning greater - significance to defense systems for surveillance, laser designation, and high energy laser weaponry. In addition, optical signal processing may provide an alternate to conventional integrated circuits for infOrmation processing. Magnetic materials are currently used in microwave trananitting devices, switching devices, and in non-volatile memory systems for crucial military information processing and coriinunciation systems. 433 PAGENO="0440" -- Priority 2 -- New construction Renovation/expansion 140,000 10,000 Subtotal: 100,000 33,000 Equiçment: Molecular bean epitaxy; metal organic chemical vapor deposition electron bean diagnostics; laser probe diagnostics; mass spectrometry. Priority Cost ($ thousands) 1 30,000 2 10,000 Subtotal: ~40,000 Total Cost: $73,000,000 Technical Objectives and Opportunities: -- Priority 1 -- Crystal growth facilities for low defect silicon and for device quality gallium arsenide and gallium aluminum arsenide are required. Instrumentation in this area combines growth with evaluation of materials within the same deposition chanbers. By contrast, in commercial practice crystal growth of bulk ingots is performed in an activity separate from the evaluation of the gro~in material. These facilities are extremely expensive and are in the laboratory apparatus phase currently, with few commerical instruments being available. -- Priority 2 -- Crystal growth facilities for advanced compound semi-conductors such as mercury cadmium telluride are required for the improvement of optical as well as electronic devices. Relatively little research has been done on the application of modern growth techniques to these compounds, largely because of the attention focused on silicon and gallium arsenide. National Security Consequences: Integrated circuits are at the heart of most modern military systems, from command and control to smart weapons. The VHSIC progran has made a major advance in the capability of these devices, by rediming the feature size down to the one micron regime. Future advances in this circuitry will require greater fundanental understanding of the functioning of conventional integrated circuits. For feature sizes even smaller than this, quantum effects will introduce wholly new device phenomena, presenting major opportunities for advancement in information processing capabilty. Examples of technology applications include infra-red focal plane array detectors, integrated optics, millimeter and microwave integrated circuits, and optoelectronics. 434 MATERIALS Thrust Area: Silicon and Compound Semiconductor Growth Laboratory Needs Building Requ~rements Total Facility Facilities: (gross ft ) Cost ($ thousands) -- Priority 1 -- New construction 20,000 15,000 Renovation/expansion 140,000 8,000 PAGENO="0441" 435 MATERIALS Thrust Area: Structural Ceranics Laboratory Needs &iilding Requi~ements Total Facility Facilities: (gross ft ) Cost ($ thousands) -- Priority 1 -- New construction 20,000 3,000 Renovation/expansion 5,000 1,000 -- Priority 2 -- New construction 30,000 5,000 RenovatiorVexpansion 10,000 2,000 Subtotal: 65,000 11,000 Equipnent: Ball milling and mixing equiçznent; hot isostatic presses; vacu~xn and controlled atmosphere furnaces; fume hoods; surface analysis equi~nent; scanning electron microscopes; secondary ion mass spectrometers; x-ray diffractometers;, computational facilities for data acquisition and process modelling. Priority Cost ($ thousands) 1 9,800 2 5,1400 Subtotal: Total Cost: $26,200,000 Technical Objectives and Opportunities: -- Priority 1 -- Three university laboratories currently involved in ceranics research would be upgraded. The primary benefits include enhanced understanding of the funda- mental relationships between (a) ceranics constituents and processing techniques, and (b~ material properties, reproducibility, and reliability. Elucidation of these governing factors should greatly reduce the time required to develop improved ceranic materials and composites. Principal research benefits envisioned include develo~nent of non-destructive evaluation tech- niques, methods for the deposition oc ceranic coatings using plasma techniques, and developnent of materials which will tolerate severe thermal shock and sustained high temperatures, and which have uniform, reproducible microstructures. -- Priority 2 -- Three additional laboratory facilities would be expanded in the context of the above rationale. National Security Consequences: In hostile enviromnents, metal surfaces oxidize, corrode because of stress, fail because of fatigue, exhibit effects from laser radiation and interfacial phenomena, and are subjected to friction and wear. Ceramic materials are used in extremely hostile enviroranents in turbine engines, rocket nozzles, and electromagnetic windows of high velocity aircraft and missiles. PAGENO="0442" 436 MATERIALS Thrust Area: Structural Composites Laboratory Needs &dlding Requi~enents Total Facility Facilities: (gross ft ) Cost ($ thousands) -- Priority 1 -- New construction 50,000 15,000 Renovation/expansion 60,000 8,000 -- Priority 2 -- New construction Renovation/expansion 80,000 10,000 Subtotal: 190,000 33,000 Equipment: Vapor deposition epitaxy reactors; filanent winders; squeeze casting presses; injection molding presses; textile forming looms; thermoforming presses; servo-hydraulic forming equipment; powder processing and fiber growth equipment; special equipment for ceranics processing; high temperature/high pressure autoclaves; process control computers; diagnostic and modeling computers and graphics. Priority Cost (5 thousands) 1 20,000 2 20,000 Subtotal: `tO,OOO Total Cost: $73,000,000 Technical Objectives and Opportunities: -- Priority 1 -- Establish four major university centers of excellence in the fabrication of fiber and matrix materials, emphasizing polymer matrix and ceranic matrix materials. Capabilities should include fabrication and layup of small sanples and diagnostic materials for the analysis of thermophysical and thermomechanical properties. -- Priority 2 -- Supplement the above with three to four additional university centers with similar missions. National Security Consequences: Lightweight and high strength composite materials are increasingly being used in aircraft and spacecraft. These materials combine the high strength of ceranic fibers with the ductility of polymeric or metallic matrices. Significant performance advantages have already been obtained through the use of composite materials, including ceranic matrix composites, and further performance advantages are foreseen, particularly with regard to high temperature capability, laser hardness, armor, and low observables. PAGENO="0443" 437 PHYSICS Thrust Area: Astrophysics Laboratory Needs ~iilding Requi~ements Total Facility Facilities: (gross ft ) Cost ($ thousands) -- Priority 1 -- N/A -- Priority 2 -- New construction 6,000 11,550 Renovation/expansion 35,000 5,100 Subtotal: 103,000 ~ Equipaent: Radio, optical, and x-ray astronomy equipaent; upgrade of 100 inch aperture telescope for active optics and interferometric imaging; high angular resolution imager with one milliarcsecond resolution and optical elements of 7 1/2 meters; 14-meter telescope for optical/infrared imaging and spectroscopy. Priority Cost ($ thousands) 1 N/A 2 152,065* Subtotal: 152,065 Total Cost: $168,715,000 * Includes $150,000,000 for high angular resolution imager. Technical Objectives and Opportunities: -- Priority 1 -- N/A -- Priority 2 -- - Expand laboratory capabilities in radio, optical, and x-ray astronomy to study final stages of evolution of stars, formation of neutron stars and black holes, the occurrence of supernova, and to elucidate recently observed non-thermal radio sources. - Extend existing capabilities in active optics, speckle imaging techniques, and advanced detector prograns to existing telescope to produce diffraction-limited imaging of astrophysical sources. - Establish high angular resolution imager center which exploits advances in optics, sensors, and computer technology to afford a hundred-fold increase in image sharpness on celestial objects (quasar nuclei, stellar, and solar system object surface features) and space vehicles. - Develop new optical and infrared telescope/instrumentation for astrophysics applications embodying improved precision pointing and tracking, image quality optimization, advances in optical and infrared technology, high speed two-dimensional photon detectors, etc. PAGENO="0444" 438 National Security Consequences: Advances in astrophysics-related imaging techniques have important applications for the detection and identification of space and non-space objects of military significance. In particular, the technological development of active optics in combination with speckle imaging will make possible diffraction limited observations of objects through the atmosphere. The enhancement of x-ray instrumentation capabilities has application to the detection of nuclear events in space. PAGENO="0445" PHYSICS Thrust Area: Coherent Radiation Sources Laboratory Needs Facilities: ___________________ New construction Renovation/expansion 17,000 2,500 -- Priority 2 -- New construction Renovation/expansion --- 14 ,000 Subtotal: 17,000 6,500 Equipment: Tunable two-beam two-stage free electron lasers; millimeter range free electron laser; mode-locked laser and support equipment; spectrographs for optical emission spectroscopy; electronic processing equipment (lithographic, deposition, etching); auxiliary interface and support equipment. Priority Cost ($ thousands) 1 1,500 2 6,250 Subtotal: Total Cost: $114,250,000 Technical Objectives and Opportunities: -- Priority 1 -- Laser facilities are key assets for a variety of materials and directed energy related research. The cited expenditures would substantially enhance the capability of universities to~explore and expand technology horizons in electronic materials, catalysis, corrosion, and molecular biology, among others. Emphasis is on more broadly tunable lasers, which generate coherent radiation over a wide range of energies. This greatly enhances the flexibility available to researchers for analyzing material properties, particular surfaces, and interfaces of importance to solid state electronics and optoelectronics. -- Priority 2 -- Laser-guided plamna and electron beam facility upgrades will allow the university canmunity to explore more efficiently and comprehensively heretofore unknown aspects of directed energy propagation concepts. National Security Consequences: Coherent radiation research is critical to a variety of DOD R&D missions, including the design of directed energy weapons, propagation (e.g., "channeling") of charged particle beams, improvement of high power radar technology and electronic countermeasures, advances in ultra-mnall electronic devices, optical storage and switching aspects of ultra-fast optical computers, etc. High average moderate power tunable lasers are expected to have important implications for tactical applications related to electronic warfare. 439 ~ilding Requi~ements (gross ft -- Priority 1 - Total Facility Cost ($ thousands) PAGENO="0446" 440 PHYSICS Thrust Area: Directed Energy Devices Laboratory Needs &iilding Requir~nents Total Facility Facilities: (gross ft2) Cost ($ thousands) -- Priority 1 -- New construction RenovatiorVexpansion 63,000 13,250 -- Priority 2 -- New construction Renovation/expansion 20,000 14,000 Subtotal: 83,000 f77~ Equipaent: Hardware to enlarge accelerator power supplies and capacitor banks; vacu~xn tube fabrication equipment; large electric discharge chambers; pulsed power generator; high-power glass laser; dedicated data acquisition and analysis computer facilities. Priority Cost (~ thousands) 1 6,250 2 11,000 Subtotal: 1~~5 Total Cost: $27,500,000 Technical Objectives and Opportunities: -- Priority 1 -- - Upgrade stellatron accelerator facility as a testbed for high current, high energy accelerators, `including screen room and associated diagnostic instr~rnentation. Facility would generate data of use in the developuent of' compact, high performance accelerators in the non-linear beam interaction regime. - Establish center for research on thermionic sources of millimeter wave radiation at megawatt power levels. The facility would provide under- standing electron-electromagnetic field interactions leading to the development of Rf sources in a regime extending to 30 THZ. - Develop high repetition rate, high average power pulsed power facilities to support studies in plasma beam propagation, microwave power generation, and the interaction of electromagnetic radiation with materials. -- Priority 2 -- - Expand center for research on switches and power conditioners for extr~aely high voltages and high currents. Research in this area is heavily dependent on the existence of specialized facilities. PAGENO="0447" 441 National Security Consequences: Compact high current, high energy accelerators are key components in charged and neutral particle beam weapons concepts. Thermionic radiation sources are essential components of and/or have implications for fusion power sources, directed energy weapons, and spacecraft vulnerability questions associated with ion clouds in space. High voltage and high current switches, regulators, and storage devices are required to operate directed energy weapons. The develo~nent of repetitive and reliable opening switches would remove significant impediments to the practical implementation of all directed energy devices. PAGENO="0448" 442 PHYSICS Thrust Area: Optical Communications and Spectroscopy Laboratory Needs Building Requirements Total Facility Facilities: (gross ft2) Cost ($ thousands) -- Priority 1 -- N/A -- Priority 2 -- New Construction 8,000 1,000 Renovation/expansion Subtotal: ~7~O Equipiient: Lasers (stable argon ion, ring, picosecond CO femtosecond dye and YAG, mode-locked glass); transient digitizers; computational and digital signal processing capabilities; scanning electron microscope; optical components with special coatings. Priority Cost ($ thousands) 1 1,550 2 950 Subtotal: Total Cost: $3,500,000 Technical Objectives and Opportunities: -- Priority 1 -- Laboratory upgrade would facilitate research leading to a better under- standing of the fundamental processes and interactions in semiconductors and microstructures necessary for the developoent of ultra-fast semiconductor electronic devices. -- Priority 2 -- - Laboratory improvement would permit detection of weak signals which arise in many photon statistic experiments. For example, the creation of photon pairs through non-linear processes followed by subsequent simultaneous detection (i.e. correlation experiments) generally produces weak signals. Such phenomena could greatly expand communication signal detection capabilities. - A Center for Optical Circuitry would be established for optical computing. It offers the possibility of great advances in computing speed, capacity, and degree of paralleliam over electronic computing. Dramatic new computer architectures are possible, e.g., three- dimensional logic and storage. National Security Consequences: A wide variety of defense-related technology improvements are based on progress in the development of extremely fast and compact electron devices for digital and analog appli- cations. These include smart weapons and surveillance systems. In addition, secure optical communications have important applications to C3. PAGENO="0449" 443 CHAPTER V DISCUSSION AND RECf~1MENDATIONS A. DISCUSSION The laboratory needs cited in Chapter IV relate to universities already heavily involved in conducting research for DOD. They represent a small subset of the 157 colleges and universities addressed in Tables III- 14 and 5, and an even smaller segment of all research universities included in Tables 111-2 and 3. The AAU study suamarized in Table 111-i equates with this work most readily in terms of the nullber of institutions covered. Summary comparisons follow between the prior laboratory as.sessments cited in Chapter III and the present work given in Chapter IV. It should be emphasized that these comparisons involve the DOD-specific laboratory needs developed in this report as opposed to more general needs addressed in prior studies. Nonetheless, they suggest that the cunulative expendi- tures discussed in Chapter IV are of reasonable magnitude in the context of general university laboratory needs identified in other studies. o The AAU data shown in Table Ill-i relate to 15 universities, a figure roughly equivalent to the average nuiiber of institutions encompassed by defense-related laboratory needs for each of the disciplines cited in Table TV-i. This probably accounts for the fact that, for some disciplines, defense-related totals substantially exceed the AAU report figures. Interpretations of these comparisons must be tempered by the fact that the discipline-specific university populations encompassed within the present study differ markedly from the AAU sample population. A Comparison of Tables Ill-i and IV-i indicates that the defense- related facilities needs cited in this report constitute 143 percent of the AAU Chemical Sciences projections for the period 1982-84, over 100 percent for Engineering (encompassing the Electronics, Engineering, and Materials categories of Table IV- 1), and 55 percent for Physics. For projected equipment needs, those of this study exceed the AAU figures by factors of. roughly three and six for Chemical Sciences and Engineering. The nuabers are comparable for Physics, excluding the astrophysics high resolution imager cited in the present study. o According to NSF staff, an estimated 50 percent to 70 percent of the $221 million cited in Table 111-2 for 1983 university capital expenditures (research and instructional) was devoted to research laboratory facilities. K~suming, for purposes of comparison, a 60 percent figure, 1983 research laboratory expenditures for all universities in the engineering and physical science disciplines total $133 million. To obtain a roughly comparable figure, one can annualize the ~275 million of defense-related engineering and physical sciences facilities needs (Table IV-1) over a five-year period. This yields an annual expenditure rate of $55 million. It represents slightly more than 40 percent of the estimated $133 million spent by all universities. 53-277 0 - 86 - 15 PAGENO="0450" 444 o Research equipment expenditures for all U.S. colleges and universities are sumnarized in Table 111-3 for Engineering, Chemistry, and Physics and Astronomy. Engineering expenditures average approximately $70 million for the two-year period. The NSF Engineering category compares roughly to the combined Engineering, Electronics, and Materials categories of this report, where priority 1 and 2 equipment needs shown in Table Tv-i total almost $200 million. If the $200 million is annualized over a five-year period, approximately .$~40 million in FY 85 dollars would be spent for defense-related equipment annually. This represents over 55 percent of the average 1982-83 engineering annual equipment expenditures for all higher education institutions. Similar analyses for physics and chemistry suggest that needs in these areas cited in Table IV-1 pro-rated over five years are approximately $35 million and $9.5 million, respectively. The projected annual physics expenditure is roughly equal to the NSF 1982-83 average for all universities, largely due to a $150 million high resolution imager for astrophysics. Similarly, the projected chemistry annual expenditures are 30 percent of the average for all U.S. universities for the two-year period. o Column two of Table 111_It lists 1982 research equipment expenditures for the top 157 research universities. As in Table 111-3, the NSF Engineering category compares roughly to the combined Engineering, Electronics, and Materials categories of this report, whose equipment needs total approximately $200 million. Assuming again that expenditures for defense-related laboratory equipment needs would be spread over a five-year period, approximately $~40 million in FY 85 dollars would be spent for this purpose annually. This represents roughly 145 percent of the 1982 expenditures for the 157 universities. Similarly, the five year annual expenditure level for physics from Table iv-i is over 60 percent of the 1982 equipment purchase level, largely due to the inclusion of the aforementioned $150 million high resolution imager for astrophysics applications. The five-year expenditure level implied for chemistry in Table Iv- 1 is $9.5 million, or approximately 25 percent of the stated 1982 expenditures by the 157 universities. o The replacement value of "academic research instrument systems in active research use" for the aforementioned 157 universities is given in Table 111-3 in terms of 1982 dollars (Column ID. With an inflation factor of 1.076 applied to the 1982 costs, Table v-i gives priority 1 and 2 (total) defense-related equipment needs from Table iv-i expressed as percentages of Table 111-5 replacement values. As before, the NSF Engineering category encompasses the Electronics, Engineering, and Materials categories of this report. For the Engineering and Physics and Astronomy categories, stated defense-related needs are quite substantial in comparison with the NSF equipment replacement figures. The Chemistry percentage is substantially lower, perhaps reflecting a proportionately lesser DOD involvement in broad aspects of experimental chemistry. PAGENO="0451" 445 Table V-I Defense-related university laboratory equipment needs (Table IV-1) expressed as percentages of replacement costs for all research equipment at 157 leading research universities (Table 111-5) Field of Research % of Replacement Value Chemistry 15 Engineering Physics and Astronomy 68 PAGENO="0452" 446 B. REC~1MENDAT10NS A total of $300 million over a five (5) year period is proposed for the upgrading of university laboratories. 1. The priority 1 laboratory facilities needs cited in Table IV-1 should be addressed with incremental funding of a five-year $150 million initiative. The initiative should be a part of, and administered through, the existing contract research programs of the OXRs and DARPA. It is believed that this is the most efficient mechanism for targeting facilities improvement funds toward the highest DOD research priorities. This program would be of equal magnitude (i.e. $150 million expended at an annual rate of $30 million) to the existing University Research Instninentation Program. (URIP) pertaining to equipnent, but would be allocated as facilities-earmarked increments to competitive research awards. It would thus differ from URIP in that it would not require the establishment of separate review and award mechanisms. It should be stressed that, in the best interests of national security, neither equipment nor facilities upgrade programs should be funded at the expense of existing OXR and DARPA competitive research programs. Further erosion of the latter would jeopardize the scientific basis for future technological innovation on which our national security depends. 2. The existing URIP program should be extended by three years at its present level of $30 million per year. This, combined with the remaining two years ($60 million) of the present program, would constitute the $150 million required to address priority 1 equipiment needs (Table IV-1). 3. Priority 2 laboratory needs should be addressed as a national issue with the involvement of other federal agencies having an impact on the national science and technology base, i.e. the National Science Foundation, NASA, Department of Energy, etc. Ji. Very large items of equipnent and/or facility needs, e.g. the $150 million astrophysics high resolution imager cited in this report, should be addressed on their merits as individual appropriations rather than as parts of broader, more general funding initiatives. PAGENO="0453" APPENDIX STUDIES OF ACADEMIC FACIL1TIES* Health Related Research Facilities in the U.S. in the Nonprofit Nonfederal Sector" Study by Westat Corporation for National Institute of Health (NiH) (1969) "Higher Education General Information Survey" (REGIS) Conducted by the National Center for Educational Statistics (NCES) (1974) "Health Research Facilities: A Survey of Doctorate-Granting institutions." Conducted by American Council on Education (ACE) with funding from National Science Foundation (NSF) and NiH (1976) Description of ~ Survey study to gather data on the amount, age and ownership of space in 1968, the amount of space under or scheduled for construction and the estimated space needed to eliminate overcrowding by 1980 Survey of 3,200 colleges and universities including data to estimate facilities needs Survey of 155 Ph.D. granting institutions to gather data on status of academic health research facilities, new construction in progress, and plans for expansion in succeeding five year period 10 m. of 42 a. sq. ft. in unsatisfactory condition -over 507, available space in poor condition -additional 55 a, square feet of space needed by 1980, with 17 m. square feet requiring remodeling -207. of facilities at surveyed institutions in need of replace- ment (2.3 billion square feet) -$2. billion needed just for remodeling of facilities -29% of academic facilities for health research in need of reno- vation or replacement (23 million square feet) -cost estimates to meet needs: $547 million for 1975; $560 million for each of succeeding five years -167. institutions reported need for replacement of facilities -38% reported need for remodeling of facilities -477. reported need for additional space Study Findij~g~ "National Survey of Laboratory Survey of 922 nonprofit NIH eligible Animal Facilities and Resources" institutions gathering data to Conducted by National Academy estimate facilities needs of Sciences (NAS) (NIH Publication No. 80-2091) (1978) *Source: Linda S. Wilson, "The Capital Facilities Dilemma: Implications for Graduate Education and Research', to be included in forthcoming Brookings Institution study, Bruce L. R. Smith, editor, The State of Graduate Education, 1985. PAGENO="0454" STUDIES OF ACADEMIC FACILITIES Report of Research Facilities Branch of National Cancer Institute on survey of facilities needs in cancer research Conducted at request of National Cancer Advisory Board (1979) Description of Study Survey of 106 institutions receiving National Cancer Institute Support gathering data to evaluate current and future needs for upgrading of cancer research facilities FindinAs Funding need of $149 million for the period 1980-1985 estimated for cancer research facilities "A Program for Renewed Partnership" Prepared by the Sloan Comeission on Higher Education (1980) "The Nation's Deteriorating Research Facilities: A Survey of Recent Expenditures and Projected Needs in Fifteen Universities" Conducted by the Association of American Universities (MU) (1981) Comaission report on federal government/untversity relations (No data collected) Survey of 15 leading universities gathering data on expenditures for research facilities and major equipment and estimates of funding needs for succeeding three year period for faculty research only -Recoimsendations for competitive program I or facilities research grants; $50 million annually for five years, to be allocated by NSF and NIH, to upgrade research laboratories and equipment -From 1972-1982, surveyed insti- tutions spent $400 million for facilities construction, repair, and renovation -$765 million needed for facil- ities and equipment over succeeding three year period just to sustain faculty research activities 00 PAGENO="0455" STUDIES OF ACADEMIC FACILITIES Report on academic facilities survey (in 1980-81 Comparative Cost and Staffing Report) Conducted by Association of Physical Plant Administrators (APPA) (1981) "Adequacy of Academic Research Facilities" Conducted by Ad Hoc Interagency Steering Comeittee on Academic Research Facilities (April, 1984) National Science Foundation Description of Study Survey of 226 institutions with 454 million square feet of academic space to gather data on facilities conditions and projected needs Pilot study of 25 major research insti- tutions with major study planned to gather data for detailed analysis of the condition of facilities used for science and engineering and medical research. Major study is estimate future needs for construction, re~idc1ts~ and refurbishment of academic research facilities Findings -$l.85-$2.OO/square foot re- quired to eliminate most press- ing needs -deferred maintenance need per institution of $9.5 million at universi ties $1.1 million at four year col- leges $.4 million at two year colleges -Critical, growing need for replacement of academic science facilities and equipment -recoimsends comprehensive pro- gram for facilities construction and development, acquisition, maintenance and operation of modern equipment -Over succeeding 3 year period all colleges and universities would require about $1.3 billion per year for research facilities alone, (Note: Present level of capital facilities expenditures for aca- demic research, development and instruction is $1 billion per year,) "Strengthening the Government- Coemsittee report on federal governaent/ University Partnership in Science" university relations Conducted by Ad Hoc Cowsittee of (no data gathered) HAS, National Academy of Engineering and Institute of Medicine (1983) PAGENO="0456" STUDIES OF ACADEMIC FACiLITIES Report of Department of Defense (DOD) Working Group on Engineering and Science Education. Prepared by DOD- University Forum (1983) "Report on NIH Experience with Extramural Construction Authority" Prepared by Office of Program Planning and Evaluation, NIH (1983) "University Research Facilities: Report on a Survey Among National Science Foundation Grantees" Conducted by Division of Policy Research and Analysis, NSF, for lnfrastructure Task Group of National Science Board (NSB) (June, 1984) Description of Study Working group report on condition and needs of academic science and engineering Historical comparison of legislative authorities for construction of health research facilities analyzing past facilities funding experiences Survey of 1983 NSF grant Principal Investigators (248 investigators randomly sampled) to determine condition of existing facilities and the impact of facilities on research Deficiencies in research facil-. ittes and equipment acute in most universities -Funding authorities mainly for special, not general, use -Al.ost all funds aide available under grant mechanisms -Recent authorities fail to separate funds for construction and research -None of funding authorities based on systematic analysis of need -70% facilities had. been reno- vated in last 10 years using 7% Federal $ -50% facilities slated for reno- vation in next three years -80% of P.l.c rated safety of facilities as excellent -60% reported having lost some research time in past year due to facilities-related failures; 40% reported graduate students had spent 3 or more days fixing problems created by facilities over past year Findings Cu PAGENO="0457" STUDIES OF ACADEMIC FACILITIES Study Proposed study of cancer research facilities Conducted by President's Cancer Panel and the National Cancer Institute (Proposed) Facilities Needs in Chemical Science and Engineering Conducted under aegis of the Board on Chemical Science and Technology, National Research Council (In progress) Description of Stu4y Proposed survey study to gather data to inventory the quality and quantity of current research facilities in cancer research Survey to ascertain specific facilities data for research and teaching in chemistry, bio-. chemistry, and chemical engineering academic departments Findings In progress In progress c.,1 PAGENO="0458" 452 APPENDIX 3 Financing and Managing University Research Equipment Association of American Universities National Association of State Universities and Land-Grant Colleges Council on Governmental Relations Washington, D. C. 1985 PAGENO="0459" 453 The work on which this report is based was performed pursuant to Grant No. STI-82 19525 with the National Science Foundation. Library of Congress Catalog Card Number 85-80838 Available from Association of American Universities One Dupont Circle, Suite 730 Washington, D.C. 20036 Printed in the United States of America PAGENO="0460" 454 Research Team 3. David Litster, Director Center for Materials Science and Engineering Massachusetts Institute of Technology Robert M. Bock, Dean The Graduate School University of Wisconsin 3ulie T. Norris Assistant Provost and Director, Office of Sponsored Programs University of Houston Project Manag~: Patricia S. Warren Association of American Universities Steering Committee Chairman: Richard A. Zdanis Vice Provost The. 3ohns Hopkins University Praveen Chaudhari Vice President, Science and Director, Physical Sciences Department IBM Corporation Ray C. Hunt, Jr. Vice President for Business and Finance University of Virginia W. Keith Kennedy Provost Emeritus Cornell University Reuben H. Lorenz Vice President and Trust Officer Emeritus University of Wisconsin William C. Luth Manager Geosciences Department Sandia National Laboratories Stephen A. Morange Assistant Treasurer- Finance The Treasurer of the Regents of the University of California Association Representatives Robert L. Clodius President National Association of State Universities and Land-Grant Colleges Milton Goldberg Executive Directqr Council on Governmental Relations 3ohn C. Crowley Director of Federal Relations for Science Research Association of American Universities PAGENO="0461" 455 Contents ACKNOWLEDGMENTS ix SUMMARY AND RECOMMENDATIONS ACADEMIC RESEARCH EQUIPMENT: THE FEDERAL ROLE 14 Background and Trends, 14 Funding Mechanisms, 21 Federal Regulatory Issues, 31 Recommendations, 42 2 THE STATE ROLE IN THE ACQUISITION AND MANAGEMENT OF RESEARCH EQUIPMENT 47 Introduction, 47 Modes of State Support, 52 Controls on Debt Financing, 56 Controls on Purchasing, 58 Controls on Use of Equipment, 61 Financial Flexibility, 61 Recommendations, 64 3 THE UNIVERSITIES' ROLE IN THE ACQUISITION AND MANAGEMENT OF RESEARCH EQUIPMENT 67 Introduction, 67 Acquisition of Research Equipment, 68 Management of Research Equipment, 74 Optimization of Use, 86 Strategic Planning, 94 Recommendations, 94 V PAGENO="0462" 456 4 DEBT FINANCING 97 Introduction, 97 Implications and Analysis in Debt Financing, 98 Choosing the Appropriate Debt Instrument, 101 Short- to Medium-Term Debt Instruments, 101 Long-Term Debt Instruments, 111 Innovative Techniques, 114 Recommendations, 115 5 PRIVATE SUPPORT OF ACADEMIC RESEARCH EQUIPMENT 117 Introduction, 117 Mechanisms of Corporate Support, 119 Other Private Support, 123 Tax Incentives, 123 State Tax Incentives, 130 R&D Limited Partnerships, 132 Leasing, 133 Developing a Donation Strategy, 134 Recommendations, 134 APPENDIXES A R&D Expenditures at Universities and Colleges by Year and Source of Funds: Fiscal Years 1953-1983 140 B Current Fund Expenditures for Research Equipment at Universities and Colleges by Science/Engineer- ing Field and Source of Funds: Fiscal Years 1982 and 1983 142 C Federal Instrumentation Programs 144 D Analysis of Loan Subsidy Programs 165 E Representative State Regulations 170 F Representative State Statutes Authorizing the Issuance of Bonds to Fund Higher Education Facilities 181 G Iowa State University Research Equipment Assistance Program 187 PAGENO="0463" 457 H Examples of Debt Financing 192 I Debt Financing Ihstruments 210 ~TJ Examples of Equipment Donations 226 TABLES I Regulations Affecting Cost-Reimbursement Contracts That Include Acquisition of Research Equipment 33 2 Principal Regulations Affecting Grants That Include Acquisition of Research Equipment 34 3 Sources of Funds for Acquisition of Academic Research Equipment in Use in 1982-1983, by Field 48 4 Acquisition of Research Instrument Systems in Use in 1982-1983 by Source of Funds, Type of University, and System Purchase Cost 50 5 Instrumentation-Related Expenditures in Academic Departments and Facilities in 1982- 1983, by Field 79 6 Present Value Analysis 103 7 Means of Acquisition of Academic Research Instrument Systems in Use in 1982-1983, by Field 118 8 Effect of ERTA on Cost of Donating Equipment 125 9 Calculation of Gain and Charitable Deduction in Bargain Sale 127 10 Calculation of R&D Tax Credit 129 D-l Amortization Table for $100 Million, Five-Year Loan 167 D-2 Cost to the Government of a $100 Million, Five-Year Loan Program with Interest Subsidy 168 PAGENO="0464" 458 FIGURES I Federal R&D Expenditures at Universities and Colleges, Fiscal Years 1953-1983 16 2 Percentage of Total R&D Expenditures at Universities and Colleges by Source: 1953, 1963, 1973, 1983 17 3 Capital Expenditures for Academic Scientific and Engineering Facilities and Equipment for Research, Development, and Instruction, 1964-1 983 18 4 Federal Obligations for R&D Plant to Universities and Colleges, Fiscal Years 1963-1985 19 5 Average Project Grant Size 23 6 Department/Facility Assessment of Instrumenta- tion Support Services, 1982-1983 77 7 Mean Number of Instrument System Users by Purchase Cost, 1982-1983 87 8 Percentage of Academic Research Instrument Systems Costing $75,000$l,000,000, Located in Shared-Access Facilities, 1982-1983 88 9 National Estimates of Corporate Voluntary Support of Colleges and Universities, Fiscal Years 1975-1983 120 VIII PAGENO="0465" 459 Acknowledgments Many people have assisted us in the course of this study and have influenced our report. We are deeply indebted to the more than 500 scientists, university administrators, governmental officials, and industry leaders who met with us and provided valuable insights and information about problems and practices in financing and managing research equipment. Special thanks are due to. the coordinators at the 23 univer- sities and governmental and industrial laboratories we visited for making arrangements, often on very short notice, and for their forbearance in the face of our extensive demands. They are Raymond Carter of Beckman Instruments Inc.; Angel iordan and Sandra Rocco of Carnegie-Mellon University; Crauford Goodwin and Lucy Knight of Duke University; Richard Benson of Dupont; Thomas Stelson and Albert Sheppard of Georgia Institute of Technology; Simone Reagor and Margaret Plympton of Harvard University; Charles House of Hewlett-Packard; Robert Stokes of Honeywell; Daniel Zaffarano of Iowa State University; Delbert Sundberg of Los Alamos National Laboratory; Kenneth Smith of the Massachusetts Institute of Technology; Donald Beilman of the Microelectronics Center of North Carolina; Quentin Lindsey of the North Carolina Board of Science and Technology; lohn Margrave of Rice University; Charles Winter of Sandia National Laboratories; Ron Gould of the Stanford Synchrotron Radiation Laboratory; Bruce lones and Valerie Mallace of Stanford University; Ruth Havemeyer of Syntex Research; Pieter Groot of Texas A&M University; Robert Varrin of the University of Delaware; Theodore Brown of the University of Illinois, Urbana; Albert Linck of the University of Minnesota; and Joseph Scaletti of the University of New Mexico. Early drafts of material were prepared for the Steering Committee's review and discussion by our research team, consultants, and staff. Robert Bock, David Litster, and Julie Norris drafted material on the universities' role in the acquisition PAGENO="0466" 460 and management of research equipment. Milton Goldberg pre- pared the analysis of federal regulatory issues. Michael Goldstein of Dow, Lohnes, and Albertson drafted material on the state role in acquiring and managing research equipment. The chapters on debt financing and private support of academic research equip- ment are based on a background paper prepared for the Steering Committee by Coopers & Lybrand. As our work progressed, members of the Steering Committee critically reviewed drafts of the report chapters, all of which were the'n discussed at committee meetings. We also benefited from the thoughtful reviews and substantive contributions to the report by Robert Clodius and John Crowley. Gwendolyn McCutcheon provided expert administrative and secretarial assistance throughout the study. She handled all administrative details, helped arrange meetings, and was centrally involved in preparing the manuscript for production. 3oyce Madancy helped with many research tasks. The fine editorial work of Kenneth Reese was invaluable in the final stages of report preparation. Richard A. Zdanis, Chairman Steering Committee Patricia Warren, Project Manager x PAGENO="0467" 461 Summary and Recommendations Contemporary science and technology are inconceivable with- out the array of instruments and other research equipment avail- able today. Recent years, however, have seen steady erosion of our universities' ability to acquire and maintain equipment that qualifies as state of the art--the best generally available. With- out this new equipment, advances in many scientific disciplines cannot occur. The situation has reached the point where it threatens the strength of the nation's research enterprise and the quality of education of new scientists and engineers. The project summarized here was designed to seek ways to ensure that the funds available for scientific equipment in univer- sities are used at maximum efficiency. We examined federal and state regulations and practices, management practices in univer- sities, and sources and mechanisms of funding. We reached the following broad conclusions: Many actions can be taken that clearly would enhance efficiency in the acquisition, management, and use of research equipment by universities, and they are specified in our recom- mendations. The overall problem is so large, however, that it cannot be properly addressed without substantial, sustained investment by all sources-federal and state governments, universities, and the private sector. SOURCE OF THE PROBLEM The situation has been documented in a succession of studies dating from the early l970s. The most recent and most compre- hensive study is the National Science Foundation's National Survey of Academic Research Instruments, covering the years 1982-1983. Newly published results of the survey show in part that: PAGENO="0468" 462 * Of the university department heads surveyed, 72 percent reported that lack of equipment was preventing critical experiments. * Universities' inventories of scientific equipment showed that 20 percent was obsolete and no longer used in research. * Of all instrument systems in use in research, 22 percent were more than 10 years old. * Only 52 percent of instruments in use were reported to be in excellent working condition. * Of university department heads surveyed, 49 percent rated the quality of instrument-support services (machine shop, electronics shop, etc.) as insufficient or nonexistent. Contributory Trends Such difficulties stem from several interrelated trends. As scientific instruments have grown steadily more powerful and productive, the~ initial costs have significantly outpaced the general rate of inflation. One industrial laboratory, for example, found that the cost of keeping its stock of research equipment at the state of the art rose 16.4 percent per year during 1975-1981, while the consumer price index rose 9.9 percent per year. The growing capabilities of equipment also entail higher costs for operation and maintenance. The rapid pace of development, more- over, has shortened the technologically useful life of equipment; instruments today may be superseded by more advanced models in five years or less. And for more than 15 years, the funds avail- able from all sources have failed consistently to reflect the rising costs and declining useful lifetimes of academic research equipment. Research project grants, the leading source of academic research equipment, have only slightly outpaced inflation in recent years. Individual grants averaged about $94,000 at the National Science Foundation (NSF) in 1985 and $133,000 at the National Institutes of Health (NIH). Such grants can accommo- date instruments of only modest cost. Benchtop equipment priced at $50,000 or more is common, however, and research in a number of fields is relying increasingly on equipment that costs from $100,000 to $1 million. Trends in funding of scientific equipment in universities have long been dominated by federal spending, which accounted for 54 percent of the equipment in use in 1982-1983; the universities themselves are the next most important source of support and provided 32 percent of such funding. States directly funded 5 percent of the cost of the equipment in use in 1982-1983, mdi- PAGENO="0469" 463 viduals and nonprofit organizations funded 5 percent, and industry funded 4 percent. Federal funding of academic research-- including the associated equipment--grew at an average annual rate of 15.7 percent, in constant dollars, during 1953-1967, but the rate fell to 1.6 percent during 1968-1983. Besides its role in support of research, the government was a major contributor to the universities' massive capital expansion of the 1950s and I 960s, which included substantial amounts of scien- tific equipment. Again, however, the rate Of federal investment turned downward. The government's annual spending on academic R&D facilities and equipment, in constant dollars, fell some 78 percent during 1966-1983. RESPONSES TO THE PROBLEM Both academic and federal officials responded to essentially level funding by supporting people over investment in capital equipment. The fraction of research-project support allocated to permanent university equipment by the National Institutes of Health declined from 11.7 percent in 1966 to an estimated 3.1 percent in 1985. At the National Science Foundation the fraction fell from 11.2 percent in 1966 to an average of 7.1 percent during 1969-1976. The federal mission agencies' support for research equipment declined similarly, although exact data are not available. Efforts to ease the universities' serious difficulties ~ith scien- tific equipment began to appear in the early l980s. NSF increased its investment in academic equipment from II percent of its uni- versity R&D budget in 1978 to an estimated 17.5 percent in 1985. The Department of Defense launched a special five-year univer- sity instrumentation program, totaling $150 million, which is projected to run through 1987. The Department of Energy began a special $30 million program scheduled to end in 1988. The fed- eral and state governments adopted tax incentives designed to encourage contributions of equipment by its manufacturers. State governments began to increase their funding of equipment for state colleges and universities and have initiated a range of devel- opment activities designed in part to attract industrial support for R&D in their universities. The expanded federal investments were the result, in part, of the efforts of the Interagency Working Group on University Research Instrumentation, which was organized in mid-1981 to focus high-level agency attention on the university instrumen- tation problem. Its members were senior officials drawn from each of the six major agencies supporting research in universities-- the National Science Foundation, the National Institutes of PAGENO="0470" 464 Health, the National Aeronautics and Space Administration, and the Departments of Agriculture, Defense, and Energy. BACKGROUND OF THE STUDY Although these initiatives are welcome, they clearly are not sufficient. Officials in academe and government agree that the equipment problem is critical and steadily growing and that ways to use existing resources more efficiently must be explored. In July 1982 at the request of the Interagency Working Group, the Association of American Universities, the National Association of State Universities and Land-Grant Colleges, and the Council on Governmental Relations convened an ad hoc planning committee to consider whether a special effort was needed to address the following questions: * Could changes be made in federal or state laws, regula- tions, or policies that would enhance the efficiency of acquisition, management, and use of academic research equipment? * What more can universities do to improve the way they acquire, manage, and use research equipment? * Does debt financing hold significant untapped potential for universities as a means of acquiring new research equipment? * Can present tax incentives for the donation of research equipment to universities be revised to increase support from industry? * Are there alternative methods of direct federal funding of research equipment that would yield a better return on the federal investment? The resulting analysis was carried out jointly by the three associations with funding from the six federal agencies and the Research Corporation. Substantive direction for the study was provided by a seven-member Steering Committee chaired by Richard Zdanis, Vice Provost of lohns Hopkins University. Much of the field research was done by a three-member team: Robert Bock, Dean of the Graduate School at the University of Wisconsin; David Litster, Director of the Center for Materials Science and Engineering at MIT; and Julie Norris, Assistant Provost of the University of Houston. This team visited 23 universities and governmental and industrial laboratories; they met with more than 500 faculty investigators, department chairmen, research and service center directors, deans and chief administrators, or the functional equivalents in government and industry. (A list of the places visited is appended to this summary.) The team and the firm of Coopers & Lybrand each produced background reports for the project. PAGENO="0471" 465 RECOMMENDATIONS The actions recommended below, as we stated at the outset, would clearly enhance efficiency in the acquisition, management, and use of academic research equipment. We would like to empha- size, however, that even if all these recommendations are acted upon, the universities' equipment needs are so large that they cannot be met without substantial increases in funding. Modern- ization, moreover, cannot be a one-time effort. Continuing investment will be required based on the recognition that labora- tories in many fields of science have to be reequipped at intervals of five years or less. The universities, the states, and industry must share with the federal government the responsibility for modernization and long-term maintenance of the quality of scien- tific equipment at the nation's universities. The recommendations that follow appear in the topical order employed in the full report: the federal government, the states, the universities, debt financing by universities, and private sup- port for equipment. The Federal Government The federal government has been the major funder of research equipment in universities during the past four decades. Current federal funding mechanisms, however, do not comprise adequate means of regularly replacing obsolete or worn-out equipment with state-of-the-art equipment. Regulatory and procedural difficul- ties complicate the problem. We recommend... I. That the heads of federal agencies supporting university research issue policy statements aimed at removing barriers to the efficient acquisition, management, and use of academic research equipment. Few federal regulations, as written, con- tribute directly to the equipment problem. Inconsistent interpre- tation of regulations by federal officials, however, complicates the purchase, management, and replacement of research equip- ment and leads to unnecessarily conservative management practices at universities. Desirable actions are summarized in the recommendations below. 2. That federal agencies more adequately recognize and provide for the full costs of equipment, including operation and maintenance, space renovation, service contracts, and technical support by... PAGENO="0472" 466 ...providing these costs in project grants and contracts or ensuring that recipients have provided them. ...accepting universities' payment of costs such as installation, operation, and maintenance as matching funds on programs that require matching contributions by universities. 3. That federal agencies adopt procedures that facilitate spreading the cost of more expensive equipment charged directly to research-project awards over several award-years and allow the cost and use of equipment to be shared across award and agency lines. Individual research-project grants and contracts normally can accommodate equipment of only modest cost. Investigators, moreover, have difficulty combining funds from awards from the same or different agencies to buy equipment. 4. That federal auditors permit universities to recover the full cost of nonfederally funded equipment from federal awards when they convert from use allowance to depreciation. Office of Management and Budget (0MB) Circular A-2 I permits such conversion as well as recovery of full cost. Auditors of the Department of Health and Human Services, however, permit recovery only as if the equipment were being depreciated during the time it was in fact covered by the use allowance. This prac- tice, in effect, denies recovery of full cost. 5. That the Office of Management and Budget make interest on equipment funds borrowed externally by universities unequivo- cally an allowable cost by removing from 0MB Circular A-21 the requirement that agencies must approve such charges. Interest on externally borrowed funds has been a permissible cost since 1982 at the discretion of the funding agency, but agendes have shown significant reluctance to permit it. The perception of inability to recover interest costs may lead university officials to decide against seeking debt financing for equipment. 6. That all federal agencies vest title to research equipment in universities uniformly upon acquisition, whether under grants or contracts. Federal regulations on title to equipment vary among agencies, and such variability inhibits efficient acquisition, man- agement, and use of equipment. Without assurance of title, for example, investigators hesitate to combine university funds with federal funds to acquire an instrument not affordable by a single sponsor. 7. That the Office of Management and Budget make federal regulations and practices governing management of equipment less cumbersome by... ...setting at $10,000 the minimum level at which universities must screen their inventories before buying new equipment and, above that minimum, permitting universities and agencies to negotiate different screening levels for different circumstances. PAGENO="0473" 487 ...raising the capitalization level for research equipment to $1,000 in 0MB Circulars A-2l (now at $500) and A-I 10 (now at $300) and giving universities the option of capitalizing at differ- ent levels. 8. That the Department of Defense eliminate its require- ment that the inventory of the Defense Industrial Plant Equip- ment Center (DIPEC) be screened for the availability of special- ized scientific equipment requested by universities before new equipment is purchased. The descriptions of equipment in the DIPEC inventory do not permit a federal property officer to determine whether a scientific instrument in the inventory is an adequate substitute for the one requested. Hence, the require- ment for screening is wasteful for both universities and the government. 9. That other federal agencies adopt the NIH and NSF prior approval systems. Purchases of equipment with federal funds ordinarily must be approved in advance by the sponsoring agency. Purchases can be approved by the university, however, under the NIH Institutional Prior Approval System and the NSF Organiza- tional Prior Approval System. These systems markedly improve speed and flexibility in acquiring equipment. The States State governments act as both funder and regulator in regard to academic research equipment, and conflict between these roles is inherent to a degree in the relationship between the states and their public universities. Still, we believe that in many cases the states could combine these broad roles more rationally and could otherwise help to ease the schools' difficulties with research equipment. We recommend... I. That states assess the adequacy of their direct support for scientific equipment in their public and private universities and colleges relative to support from other sources and the stature of their schools in the sciences and engineering. The states cannot displace the federal government as the major funder of academic research equipment, but judicious increases on a highly selective basis could be extremely beneficial to the scientific stature of states while simultaneously increasing the effectiveness of funds available from federal and industrial sources. 2. That states grant their public universities and colleges greater flexibility in handling funds. Desirable provisions would permit schools to transfer funds among budget categories, for example, and to carry funds forward from one fiscal period to the PAGENO="0474" 468 next. Greater flexibility would not only improve the universities' ability to deal with the problems of research equipment, it would also be likely to provide direct savings in purchasing and would free academic administrators to discharge their responsibilities more efficiently. 3. That states examine the use of their taxing powers to foster academic research and modernization of research equip- ment. Tax benefits available under the federal Internal Revenue Code are also available in 34 states whose tax codes automati- cally follow the federal code. Relatively few states, however, have adopted tax benefits designed to fit their particular circumstances. 4. That states revise their controls on procurement to recognize the unusual nature of scientific equipment and its importance to the research capability of universities. Scientific equipment often is highly specialized. Instruments that have the same general specifications but are made by different vendors, for example, may have significantly different capabilities. The differences, furthermore, may be discernible only by experts in the use of the equipment. Desirable revisions in state controls would exempt research equipment from purchasing requirements designed for generic equipment and supplies, such as batteries and cleaning materials; would vest purchasing authority for research equipment in individual colleges and universities; and would not apply rules beyond those already mandated by the federal government. 5. That states consider revising their controls on debt financing of scientific equipment at public colleges and uni- versities to permit debt financing of equipment not part of construction projects, recognize the relatively short useful life of scientific instruments, and relieve the one- and two-year limits on the duration of leases. The Universities The universities' ability to acquire and manage research equipment efficiently is affected by their individual circum- stances, their traditionally decentralized authority, the individual project-award system that funds much of the equipment, and state and federal regulations. Within this context, however, we have identified a number of management practices that warrant more widespread use. Our findings indicate that universities would benefit from stronger efforts to improve their internal communications. More- over, our recommendations on the whole imply a need for a more centralized approach than is now the general practice in univer- PAGENO="0475" 469 sities' management of research equipment. We note that other developments, including the universities' growing interest in debt financing and strategic planning, also point toward more central- ized management. We recommend... I. That universities more systematically plan their allocation of resources to favor research and equipment in areas that offer the best opportunities to achieve distinction. Such strategic planning should involve participation by both administrators and faculty. The process may well call for hard decisions, but we believe that they must be made to optimize the use of available funds. 2. That universities budget realistically for the costs of operating and maintaining research equipment. These costs impose serious and pervasive problems, and failure to plan ade- quately for full costs when buying equipment is widespread as well. Full costs include not only operation and maintenance, but space renovation, service contracts, technical support, and the like. Maintenance is particularly troublesome. Hourly user charges are commonly assessed to cover the salaries of support personnel and the costs of maintenance, but are difficult to set optimally and are rarely adequate. 3. That investigators and administrators at universities seek agency approval to spread the cost of expensive equipment charged directly to research-project awards over several award years. As noted in Recommendation 3 under the Federal Govern- ment, individual research grants and contracts cannot normally accommodate costly equipment, and this problem would be eased by spreading costs over several years. 4. That universities act to minimize delays and other prob- lems resulting from procurement procedures associated with the acquisition of research equipment. To be most effective, the procurement process should be adapted to the specialized nature of research equipment, as opposed to more generic products. Similarly, specialized purchasing entities or individuals would facilitate timely acquisition of equipment at optimum cost. Also beneficial would be formal programs designed to inform purchas- ing personnel and investigators of the needs and problems of each. 5. That universities consider establishing inventory systems that facilitate sharing. One such system is the basis of the research equipment assistance program (REAP) at Iowa State University. The REAP inventory includes only research equip- ment. REAP may not be cost effective for all universities, but most should find elements of it useful. 6. That universities use depreciation rather than a use allow- ance to generate funds for replacing equipment, providing that PAGENO="0476" 470 they cannegotiate realistic depreciation schedules and dedicate the funds recovered to equipment. Universities can use either method, but rates of depreciation are potentially higher--and so recover costs more rapidly--than the use allowance (6 2/3 percent per year) because they can be based on the useful life of the equipment. Both methods, however, add to indirect costs, and neither can be used for equipment purchased with federal funds. 7. That universities seek better ways to facilitate the trans- fer of research equipment from investigators or laboratories that no longer need it to those that could use it. Faculty at most schools have no incentive to transfer equipment, excepting the need for space, and every incentive to keep it in case it might be needed again. Some systematic mechanism for keeping faculty well informed of needs and availability of equipment would be useful. Debt Financing of Research Equipment Universities traditionally have used tax-exempt debt financing to pay for major facilities and lately have been using the method to some extent to buy research equipment. A number of financing methods can be adapted to the special characteristics of such equipment, but whatever the method, such financing competes with other university needs for debt. Debt financing imposes risk on the university as a whole, and so implies a shift from decen- tralized toward centralized authority. We recommend... I. That universities explore greater use of debt financing as a means of acquiring research equipment, but with careful regard for the long-term consequences. Universities vary widely in their use of debt financing, but a universal concern is the need for a reliable stream of income to make the debt payments. It should also be recognized that the necessary commitment of institutional resources, regardless of the purpose of the debt financing, erodes the university's control of its future, in part by reducing the flexi- bility to pursue promising new opportunities as they arise. Debt financing also increases the overall cost of research equipment to both universities and sponsors of research. 2. That universities that have not done so develop expertise on leasing and debt financing of equipment. This expertise should include the ability to determine and communicate the true costs of debt financing and should be readily accessible to research administrators and principal investigators. The increasing complexity of taxexempt debt financing, the many participants, PAGENO="0477" 471 the necessary legal opinions, and the various political and/or corporate entities associated with debt financing make it essential that universities fully understand the marketplace. Private Support The effects of the Economic Recovery Tax Act (ERTA) of 1981 on corporate spending on R&D and corporate contributions of research equipment to universities are not clear, for several reasons: the act has been in effect only since August 1981, its effects are entangled with other economic variables in a complex manner, and the uncertain future of the R&D tax credit, which is scheduled to expire at the end of 1985, may have skewed corpo~ rate response to it (the equipment donation provision is perma- nent). Nevertheless, the consensus appears to be that ERTA, suitably modified, should indeed spur technology, in part by fostering support for academic research and scientific equip- ment. We agree with this view. We recommend... 1. That industry take greater advantage of the tax benefits provided by the Economic Recovery Tax Act (ERTA)of 1981 for companies that donate research equipment to universities and fund academic research. Universities' experiences with industry indicate that company officials may not be fully aware of the benefits available, although company tax specialists generally are well informed. 2. That universities seek donations of research equipment more aggressively by developing strategies that rely in part on the tax benefits available to donors. Sound strategies would stress both federal and state tax benefits as well as other important benefits to both donor and recipient. 3. That Congress modify ERTA so that... ...equipment qualified for the charitable donation deduction include computer software, equipment maintenance contracts and spare parts, equipment in which the cost of parts not made by the donor exceeds 50 percent of the donor's costs in the equipment, and used equipment that is less than three years old. Computers are properly viewed as computing systems, which are incomplete without software. Maintenance of scientific equipment is costly to the point where universities have declined donations of equip- ment because they could not ~f ford to maintain it. Makers of sophisticated equipment rely primarily on their technological knowledge, not their ability to make parts. Thus the limit on parts from outside suppliers is unrealistic, provided that the manufacturer is in fact in the business of developing and making scientific equipment. PAGENO="0478" 472 ...the provisions on the R&D tax credit are made permanent, with revision to create an additional incentive for companies to support basic research in universities. Equipment acquired under research contracts qualifies for the credit, but ERTA currently provides the same incentive for companies to contract for re- search in academe as for research by other qualified organizations. ...the social and behavioral sciences are made qualified fields of academic research in terms of the equipment donation deduc- tion and the R&D tax credit. The social and behavioral sciences contribute to the application and utilization of science and tech- nology, and they rely increasingly on research instrumentation. * ..qualified recipients of equipment donations and R&D funding, in terms of ERTA tax credits, include research foundations that are affiliated with universities but remain separate entities. Some state universities have established such foundations to receive and dispose of donated equipment because they cannot dispose of it themselves without legislative consent. These actions, we are convinced, would yield material benefits in the acquisition and management of research equipment by uni- versities. The rationale for them here is necessarily brief. Much fuller background will be found in the five chapters of the full report, where these recommendations also appear. PAGENO="0479" 473 Site Visits UNIVERSITIES Public: Colorado State University Georgia Institute of Technology Iowa State University North Carolina State University Texas A&M University University of illinois, Urbana University of Minnesota University of New Mexico University of North Carolina, Chapel Hill University of Texas, Austin University of Virginia Private: Carnegie-.Mellon University Columbia University Duke University Harvard University Massachusetts Institute of Technology Princeton University Rice University Stanford University University of Chicago University of Delaware University of Pennsylvania Washington University, St. Louis CORPORATE LABS Beckman Instruments, Inc. Microelectronics Center Dupont of North Carolina Hewlett-Packard Syntex Research Honeywell GOVERNMENT LABS Los Alamos National Laboratory Stanford Synchrotron Sandia National Laboratories Radiation Laboratory STATE AGENCIES North Carolina Board of Science and Technology PAGENO="0480" 474 1 Academic Research Equipment: The Federal Role BACKGROUND AND TRENDS The federal government has been the major funder of research and development and the associated equipment in U.S. universities during the four decades following World War II. The government has always recognized the utility of science and technology, but, except for agricultural rese~rch, funded relatively little research in universities before 1940.' The massive postwar commitment sprang from the success of science in the war effort and its conse- quent promise for the well-being of the nation in peacetime. Federal funding of academic research drew further impetus from the launching of Sputnik I, the first earth-orbiting satellite, by the Soviet Union in October 1957. The federal commitment is by now well established, although the rate of increase of funding declined sharply after the late l960s. The government supports the acquisition and operation of research equipment in universities in a number of ways. These support mechanisms are implemented by federal regulations and agency guidelines designed to ensure accountability for the public funds expended and proper use of equipment. The regulations are administered by the sponsoring agencies and the universities. The universities' compliance with the regulations is monitored by the Audit Agency of the Department of Health and Human Services, which handles about 95 percent of all colleges and universities, and the Defense Contract Audit Agency in the Department of Defense. The regulatory structure in some measure inhibits the universities' freedom of action, but the importance of federal funds to research and graduate education causes both partners to search for accommodations. PAGENO="0481" 475 Funding Trends Federal funding of academic research and development is the best available indicator of trends in federal funding of academic research equipment (trend data specific to equipment do not exist). In constant 1972 dollars, federal funding grew at an aver- age annual rate of 15.7 percent during 1953-1967 and 1.6 percent during 1968-1983 (Figure 1 and Appendix A). Federal funding in current dollars was $4.96 billion in 1983, when it comprised 64 percent of total spending for academic R&D (Figure 2); state and local governments accounted for 7 percent, industry for 5 per- cent, the universities themselves for 16 percent, and all other sources for 8 percent. Recent data on research equipment alone show a similar pat- tern. The federal government accounted for 65 percent of total spending for academic research equipment in 1982 and 63 percent in 1983. Nonfederal sources of funding increased by 14.5 percent between 1982 and 1983, while federal funding of academic research equipment grew by only 2.4 percent (Appendix B). A significant source of research equipment was the building boom of the 1960s in academic R&D facilities. The institutions had been expanding since the early l950s in response to a national need to cope with the postwar growth in enrollments. The launch- ing of Sputnik led the federal government to invest heavily in expanding their capacity for graduate education and research in the sciences and engineering. The boom tapered off in the late 1960s. Spending on academic R&D facilities and equipment, currently about $1 billion per year, has been relatively flat since 1968 in current dollars and, in constant dollars, declined 78 percent during 1966-1983 (Figure 3). The federal share of the total, meanwhile, declined from 32 percent in 1966-1968 to 12 percent in 1983. Federal obligations for academic R&D plant have been relatively flat since 1973 in current dollars, averaging about $38 million per year (Figure 4); in constant dollars the obligations fell 93 percent during 1966-1983 and 64 percent during 1973-1983. The Equipment Problem The trends of the past 15 years or so in federal funding of academic R&D and facilities are significant elements of the universities' serious problem with research equipment. The prob- lem is usually stated as a shortage of state-of-the-art equipment, but the costs of operation and maintenance are serious difficulties as well. 53-277 0 - 86 - 16 PAGENO="0482" 476 C,) Zo ~ FIGURE 1 Federal R&D Expenditures at Universities and Colleges Fiscal Years 1953-1983 Current - Constant 5000 4500 4000 3500 ______ 3000 2500 2OO~. 1500 1000 500 0 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 FISCAL YEAR SOURCE: Appendix A. PAGENO="0483" 477 FIGURE 2 Percentage of Total R&D Expenditures at Universities and Colleges by Source V/I/I/A Fcder:il L~LLLLLJ Gverninciit State a ad Governments Industr~ lirst it Ut otta I Funds 1983 ~:~` 1973 SOURCE: Appendix A. PAGENO="0484" 478 FIGURE 3 Capital Expenditures for Academic Scientific and Engineering Facilities and Equipment for Research, Development, and Instruction Fiscal Years 1964-1983 1400 zc,) - ~L) 1200 1000 800 600 400 200 L~J Other - -I I `Ii'''''' I- ~~uf 1 64 66 68 70 73 75 77 79 81 83 FISCAL YEAR SOURCE: Division of Science Resources Studies, National Science Foundation. PAGENO="0485" 250 100 50 0 479 FIGURE 4 Federal Obligations for R&D Plant to Universities and Colleges Fiscal Years 1963-1985 SOURCE: Division of Science Resources Studies, National Science Foundation. NOTE: Figures for 1984 and 1985 are estimates.* 0 200 0 z 0 0 Current Constant 63 65 67 69 71 73 75 77 FISCAL YEAR 79 81 83 85* PAGENO="0486" 480 The ~ituation has been examined in studies that date back to 1971,2-a These studies give only crude estimates ~f the cost of updating academic research equipment nationwide,' but the reality of the problem is not in question. According to the National Science Foundation (NSF) National Survey of Academic Research Instruments, 72 percent of department heads reported in 1982-1983 that lack of equipment was preventing critical experi- ments. NSF grantees in a second study were asked to rank six factors foç importance in spending university money to improve research.'° They ranked instrumentation first more often than any other factor and facilities second. The other factors were numbers of positions and pay for faculty and for graduate students. The remarkable power of modern scientific instruments, iron i- cally, is part of the problem--as equipment has grown steadily more sophisticated, its cost has outrun the overall rate of infla- tion. The most powerful versions of some kinds of equipment, moreover, now cost so much that the government funds them only for use in national or regional facilities as opposed to exclusive use by one university or one investigator. The trend is evident in a major industrial laboratory's comparison of the cost of sustain- ing state of the art in equipment in 1975 and 1981.11 The study was based on 126 items of equipment worth some $13.5 million in 1981. Costs were found to have climbed 16.4 percent per year during 1975-1981; the consumer price index during the same period rose 9.9 percent per year. Start-Up Costs The rapid evolution of equipment in power and cost has especially affected start-up costs for faculty investigators. A midwestern university, for example, equipped two new investi- gators with comparable çxperience and interests in chemistry, one in 1970 and one in 1979.12 The investigator equipped in 1970 needed dedicated equipment costing $8,000 and access to depart- mental equipment costing $116,500. For the investigator equipped in 1979, these figures had climbed to $43,850 and $741,000, equiv- alent to an annual increase of 22 percent for laboratory instru- ments and 23 percent for departmental instruments. Without the costlier, more powerful equipment, however, the investigator equipped in 1979 would not have realized his potential in contrib- uting to his field of research. The experience was typical of the l970s, and the costs have continued to rise in the 1980s. Chemistry and other fields where investigators traditionally work with personal, bench-top equip- ment have become capital intensive. The cost of equipment and PAGENO="0487" 481 facilities needed for a new faculty member today may easily surpass the size of the endowment needed to pay his salary.'3 People Versus Equipment During this period of rising costs for research equipment, fed- eral funding agencies have displayed growing reluctance to pay for it at the expense of the operating costs of research. The usual preference is to fUnd people at the expense of equipment. The fraction of research-project support allocated to permanent lab- oratory equipment by the National Institutes of Health (NIH) declined from 11.7 percent in 1966 to an estimated 3.1 percent in 1985. At NSF, the fraction fell from 11.2 percent in 1966 to an average of 7.1 percent during 1969-1976. During the past few years, however, the agencies have been paying more attention to equipment (see below). NSF support, for example, is expected to rise to an estimated 17.5 percent of total research-project support for fiscal year 1985. FUNDING MECHANISMS Federal funds for academic research equipment for some years have largely been built into the support for the work in which the equipment is to be used. An investigator's research proposal, for example, may request funds for new equipment needed as well as for the research itself. Several agencies recently have started direct funding programs specifically for equipment in response to the universities' growing problem with it. Nevertheless, the diverse array of traditional funding mechanisms remains the leading source of federal support for academic research equip- ment. These mechanisms have contributed immensely to the strength of U.S. science. Some of their characteristics, and the associated regulations, however, tend to complicate the acqui- sition, operation, and maintenance of equipment.'4 Individual Research Projects Almost half of federal support for research in universities comprises grants or contracts for individual research projects to be conducted by one or a few investigators. Awards are made on the basis of proposals submitted by investigators and evaluated as a rule by scientific and technical review. Proposals are judged comparatively as well as on their own merits. This competitive approach is designed to ensure that the available funds support PAGENO="0488" 482 the most worthy research. Currently, a proposal has a 30 to 50 percent chance of succeeding.* Research-project grants and contracts are awarded to the investigator's university. The term `is rarely more than three years, and the amount rarely exceeds $200,000 per year. Project grants awarded by NIH in 1985, for example, averaged $133,000; at NSF they averaged about $94,000 (Figure 5). The amounts of the awards generally have kept up with inflation, but research itself has become more capital intensive, and that capital expense is often reflected in university investment in equipment and facilities.'3 The strengths and weaknç~ses of the research-project system have been studied at length.1~ The size of the awards, for example, permits many investigators to be supported and many agencies to fund research of interest to them. On the other hand, the number and relatively short terms of awards create a heavy administrative task for agencies, universities, and researchers. Active scientists may need three or four grants to support their programs and so devote much time to competing for funds from federal and other sources. As the costs of equipment have outpaced inflation, project awards increasingly have accommodated equipment of only modest cost. Funds generally cannot be carried forward or backward between grant years to acquire equipment too costly to buy from one year's funds. Further, individual scientists have difficulty combining funds from more than one award to acquire equipment; similarly, several scientists usually find it difficult to pool funds from their awards for equipment to be shared. Also, the rising costs of equipment have led agencies to increase their require- ments for matching funds from universities (see further discussion in regulatory section below). A Major Barrier The mismatch between the size of individual research grants and the costs of much research equipment would be eased sig- nificantly by permitting equipment to be purchased in the initial grant-year with payment spread over the subsequent two to four years as a direct charge. The lack of such a systematic approach *In 1975, NIH received 12,160 grant applications; 46 percent were actually funded. In 1983, appl~çations totaled 19,154, of which only 33 percent were funded.'~ PAGENO="0489" 483 100.0 H z ~ 80.0 H ~ 70.0 c_) ~ j 60.0 ~ 50.0 ~30.0 20.0 10.0 0.0 H z Hc~ OH > FIGURE 5 Average Project Grant Size FISCAL YEAR FISCAL YEAR SOURCE: National Science Foundation, National Institutes of Health. NOTE: Figures for 1984 and 1985~re estimates.* 81 82 83 84* 85* - Constant Dollars [ J Current Dollars 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 77 78 79 80 81 82 83 84* 85* PAGENO="0490" 484 to acquiring equipment is a major barrier to acquisition. Our con- versations with chief business officers of universities revealed that most would be willing to finance or arrange for financing of research equipment if repayment, including interest, could be charged directly to grants over several years. The indirect cost mechanism is not satisfactory to encourage equipment acquisition, because indirect costs are seldom fully recovered. Additionally, rising indirect cost rates are being attacked by the government, the Congress, and university faculty members. Increased indirect cost rates, even for equipment purchases, receive little understanding or support. This dilemma leaves many investigators searching for ways to acquire equipment directly that entail "reasonable" financing costs. Some such mechanisms are described in Chapter 4. Experiments with Grants A full critique of the research-project system is beyond the scope of this report. We note, however, that the flaws in the system affect not only equipment. The administrative burden was cited above. More broadly, the emphasis on discrete tasks of relatively short duration restricts the flexibility of universities and their scientists in handling funds and pursuing research in terms of long-range, coherent programs. Federal agencies are struggling with such problems. NIH is experimenting with grants of five years or more.'5 Such grants were common at one time, but maximum award periods gradually shrank to the now-common three years during the 1970s. One of the new NIH experimental programs, the Outstanding Investigator Grant of the National Cancer Institute, is a seven-year award that will permit funds to be carried over from one year to the next. Research Programs Research programs funded by federal agencies involve broad, coherent areas of investigation and more than one investigator. Annual support generally exceeds $200,000. One example of a research program is a Department of Energy (DOE) grant to a university for research by a group of investigators in high-energy particle physics. Although research programs are larger than individual projects, the strengths and weaknesses of the two mechanisms are similar. PAGENO="0491" 485 Research Centers Federal agencies also support research centers-academic organizations that work in broad fields of research of interest to the university and the sponsoring agency. Examples include the NIH Categorical Disease Centers and the NSF Materials Research Laboratories. Research centers receive block (core) funding, as contrasted with individual project funding. Management of the center and coordination of specific research projects into a coher- ent program are delegated to the university. Proposals for specif- ic research projects must be approved there, but may or may not be reviewed and approved individually by the sponsoring agency. Our study team visited four of the 14 Materials Research Laboratories (MRLs) supported by NSF. The MRLs receive five- year block grants that support multi-investigator research on materials as well as central facilities with equipment costing in the range of $100,000 to $1 million. Block funding unquestionably eases equipment problems; the scientists we spoke with con- sidered themselves relatively well equipped in relation to colleagues at many other universities. A thorough study of materials research conducted at MRLs and at other unjversities with project-grant support was com- pleted in 1978.16 The results showed in part that the MRL core-grant mechanism was more efficient than project-grant funding in terms of time and money expended by NSF and the university in administering grants. The MRLs also were found to be scientifically effective. In terms of both efficiency and quality of research, however, core funding was r~ot found to be clearly superior to other funding mechanisms examined. The results did suggest that different funding mechanisms lead to different ways of doing research and produce different kinds of science 14 NSF currently is starting a major new program of block- funded, multidisciplinary engineering research centers at universities.'7 The invitation to submit proposals drew 142 responses involving 3,000 investigators at 107 universities. One of the attractions of the program is the opportunity to obtain state-of-the-art equipment. Eight universities have been selected to start six of the centers in 1985. The six will receive $94.5 million from NSF over the next five years and are expected to attract additional funds from industry. As many as 20 of the centers may be established eventually. NSF plans also to spend $200 million over the next five years to set up supercomputer research centers at the University of California at San Diego, the University of Illinois at Urbana-Champaign, Cornell University, and the 3ohn Von Neumann Center near Princeton.'8 PAGENO="0492" 486 / Large Facilities Federal agencies support a number of national and regional facilities based on equipment deemed too costly to be dedicated to use at one university. These large facilities, like research centers, receive block funding. They are designed to give aca- demic scientists, on a national or regional basis, access to instru- ments that would not otherwise be available to them. Examples include the Stanford Synchrotron Radiation Laboratory (SSRL) supported by DOE and the regional instrumentation centers sup- ported by NSF. Large facilities serving many users predictably face problems peculiar to that mode of operation (see discussion of National and Regional Facilities in Chapter 3). For example, instruments com- mited to a broad range of users cannot also be modified to meet highly specialized needs. Large centers can provide only limited access to the instrumentation, causing delays in research. Costs of travel and lodging are rising sharply, and centers are some- times geographically isolated from universities. At national facilities, with equipment costing millions of dollars, the only realistic option is to find ways to minimize the problems. The cost of equipment at regional facilities, on the other hand, may not absolutely bar providing it for one university, providing that the equipment is utilized fully and effectively. Resolution of such issues requires an evaluation of costs versus scientific effective- ness, such as the study of the NSF Materials Research Labora- tories cited above. General Research Support Federal agencies provide general research support to univer- sities to strengthen their research capabilities or for work in a specified subject area. The recipient has considerable discretion in the use of the funds. Such support is provided today only by the U.S. Department of Agriculture (USDA), through funding of Agri- cultural Experiment Stations under the Hatch Act and related programs, and by NIH in its Biomedical Research Support Grants. The experiment stations are attached to land-grant universities and have a relatively free hand in deciding the specific research to be undertaken so long as it is agricultural research. The NIH Biomedical Research Support Grant(BRSG) provides institutional support based on NIH-funded research at the univer- sity. The grant is thus indirectly subject to scientific and tech- nical review. The funding ceiling for the BRSG program is set by statute at 15 percent of total NIH appropriations for research grants. The percentage actually awarded declined from an PAGENO="0493" 487 average of almost 8 percent in the late l960s to 1.5 percent in fiscal year 1984. BRSG awards totaled $47.4 million in 1984 and were distributed among 546 institutions. We found that BRSG awards are highly regarded in academe because of the local discretion permitted in the use of the funds. Research equipment benefits markedly from these awards. A recent assessment shows that 25 percent of the BRSG funds spent at nine universities in 1979-1980 contributed to the purchase or maintenance of central research facilities including equipment.'9 In fiscal year 1982, BRSG awards totaling about $44 million were distributed among 516 institutions; of the total, $6.4 million, or 14.5 percent, was spent by universities on shared equipment or instruments. NSF had a similar program from 1961 to 1974. The Institu- tional Grants for Science were based on all federal support for scientific research received by a university except support from the Public Health Service (mainly NIH). Obligations for these grants peaked at $15.2 million in 1967. During the 14-year life of the program, more than 50 percent of the funds awarded was used to buy instrumentation.*20 Special Equipment Programs Four federal agencies in recent years have been supporting special programs that provide academic research equipment separately from the normal research funding mechanisms. The Department of Defense (DOD) has a five-year program scheduled to run through 1987; DOE has a five-year program projected to run through 1988. NIH and NSF have programs with no fixed expiration dates. The four agencies' programs are designed to respond to competitive proposals. They vary, however, in charac- teristics and requirements; detailed descriptions are given in Appendix C. The magnitude of the universities' equipment problem is sug- gested by experience with the DOD program, which is funded at $30 million per year. For the first year of the program, fiscal year 1983, the agency received 2,500 proposals for instrumenta- *Jn the same period, NSF had two other general support pro- grams--the University Science Development Program and the Departmental Science Development Program. Both were designed to expand capacity; they were eliminated in the early l970s when that task was judged to be completed.'4 PAGENO="0494" 488 tion valued at a total of $645 million. Two hundred proposals were funded. In Phase 2 (fiscal year 1984-1985) DOD received 1,870 proposals, totaling $370.1 million, and made 452 awards to 147 institutions. An important characteristic of these special equipment pro- grams is that generally they do not pay full costs (see Appendix C). Renovation of facilities, operation and maintenance, and similar necessities are not covered. Matching funds may be required but sometimes are only encouraged. Matching contri- butions often cannot include the costs of operation, maintenance, and other elements of full cost. All of the universities we visited report that these excluded costs and matching requirements are serious practical concerns in decisions to compete for funding from the special equipment programs. Despite the differences in the programs, the agencies' general approach can be illustrated by the DOE design. A level of match- ing funds is not specified, but matching is a factor in evaluating the applications. DOE will not pay for renovation and installa- tion, operation and maintenance, service contracts, and technical support. The matching contribution, however, can include the costs of shipping, installation, and renovation and modification of the space for the instrument. (In fiscal year 1984, the match also could include the costs of operation and maintenance, and we are concerned by the removal of this provision in view of the heavy costs thus excluded from matching.) The university must estimate the usable life of the instrument and demonstrate plans for ensuring its continued availabiliy during the first five years. Operations and Maintenance Operations and maintenance are funding problems not only in special equipment programs. These functions together, over the service of life of equipment, may cost more than the purchase price. Still, funding agencies often do not cover the costs of maintenance and professional support staff for research equip- ment. This situation has started to change, however. The Chemistry Division at NSF, for example, now requires a university to indicate in research proposals how it will maintain equipment. We welcome this development as long as agencies recognize their obligation to meet these costs as part of their support for research. When funding agencies' budgets are trimmed, operating and maintenance funds are vulnerable. Astronomers at one university we visited, for example, were given a computer developed several years ago for image scanning. They have been funded by NSF to adapt it to a facility for automated plate scanning but anticipate PAGENO="0495" 489 trouble supporting it once it is operational, as NSF will not allow user charges to the astronomy community. We learned of a simi- lar circumstance at another university involving a gas-phase sequencer funded by an NIH grant; the proposal had requested funds for a supporting technician, but these were cut by the agency. Excess Property The federal excess property program makes research (and other) equipment available to universities under certain condi- tions. Equipment made available through the excess property program is usually useful to researchers, but is not state of the art. It includes items such as machine tools, vehicles, trailers, motors, pumps, cameras, and machine parts. These items reduce the cost of performing research but add to the administrative burden because of extensive recordkeeping requirements.2"22 The excess property program was modified in 1976 by Public Law 94-5 19, implemented by regulations on October 20, 1977.23 Congress purposely placed restraints on the program because of abuses by many local governments and other grantees. Public Law 94-5 19 also liberalized the surplus property programs so that surplus property became available to a wider group of nonprofit organizations. It is important here to distinguish between excess property and surplus property. Excess property is that which is no longer needed by the agency that owns it and therefore is offered by the General Services Administration to all other federal agencies. If no agency needs it, it becomes surplus property. Now that a larger audience has access to surplus property, some universities are finding items heretofore easily obtained at state agencies for surplus property to be first reserved for other nonprofit entities. The 1977 regulations that implement PL 94-519 appeared to be a deliberate attempt to discourage agencies from giving excess property to grantees. The discouragement took the form of imposing on the agencies intricate and unreasonable requirements for recordkeeping, reporting, and other paperwork. One example is the requirement that "all nonfederal screeners shall be subject to certification by federal authority." That is, a university re- searcher must state qualifications to screen excess property. Additionally, the researcher must submit a passport-style photo- graph with signature. Investigators inquire from time to time about the possibility of reestablishing the excess property program as it was before 1976, when excess property could be obtained with ease. PAGENO="0496" 490 DOE is upgrading and enhancing its excess property program to provide used instrumentation from DOE-supported national laboratories to universities for use in energy-related research and educational programs. Current DOE funding is not a prerequisite. Lists of excess equipment are available at designated DOE sites and are published monthly by the Government Printing Office. Generally smaller instruments, such as microscopes, oscillo- scopes, spectrometers, and chromatographs are made available on a first-come basis. Universities with DOE research grants may also gain access to the list of eligible equipment through DOE- RECON, an interactive, computer-based system managed by the agency's Office of Scientific and Technical Information at Oak Ridge, Tennessee. For other investigators, the data base is being put on a microcomputer for access by terminal and modem via telephone in a pilot program scheduled for operation in 1985. Federally Subsidized Loans Four programs are authorized under the Higher Education Act of 1965 (PL 89-329) to provide loans or interest subsidy grants on loans from nonfederal sources. They would reduce borrowing costs to universities for the construction, reconstruction, or renovation of academic facilities, which could include research equipment. The loan programs are unfunded, however, and the interest subsidy program is funded only to pay interest subsidies on prior loans. No equipment-specific federal loan program is currently authorized. We analyzed the potential usefulness of a loan subsidy program by developing hypothetical models and comparing costs (see Appendix D). We looked at three alternatives: loan guarantee, loan guarantee with interest subsidy, and direct loan with low interest. The loan guarantee appears to have no particular advantage. Of the two remaining alternatives, the direct, low- interest loan would be cheapest, given favorable rates of inter- est. We have not assessed the potential effects of the loan programs hypothesized in Appendix D on the overall distribution of public funds for academic research and research equipment. One question that would warrant attention is whether such pro- grams would encourage expansion of the nation's total research capacity, as opposed to upgrading or replacing equipment already in place in research institutions. A broader issue would be the effectiveness of loan programs, in terms of both economic and scientific efficiency, relative to other federal options for funding academic research equipment. PAGENO="0497" 491 FEDERAL REGULATORY ISSUES Federal regulations play an important role in the acquisition, management, and use of equipment for federally supported research at universities. Sometimes they create barriers to acquisition, complicate management, and may discourage appro- priate use of research equipment. Because regulations that deal with research equipment are designed to control, rather than facilitate, its acquisition, management, and use, they hamper innovative approaches to more effective use of existing resources. More precisely, federal regulations are usually framed in language that permits both universities and the government to accommo- date individual circumstances. It is the application or interpreta- tion of the rules that appears in most instances to create barriers. The most critical barriers are barriers to cost recovery, since these are the ones most likely to influence the acquisition deci- sion. Our approach to identifying barriers began with a regulatory inventory in each area of acquisition, management, and use. It also entailed a careful assessment of whether the actual rule or its various interpretations were creating barriers. Regulatory Framework For grants, the principal governmentwide rules controlling the acquisition, management, and use of federally supported research equipment are contained in two Office of Management and Budget (0MB) circulars: 0MB Circular A-2l (Principles for Determining Costs Applicable to Grants, Contracts, and Other Agreements with Educational Institutions) and 0MB Circular A-I 10 (Uniform Administrative Requirements, Grants, and Agreements with Institutions of Higher Education). These circulars are often supplemented by agency issuances, but those issuances are not supposed to be more restrictive than the 0MB circulars. 0MB Circular A-.2l states, "Agencies are not expected to place additional restrictions on individual items of cost." 0MB Circular A-I 10 says, "the standards promulgated by this Circular are applicable to all Federal agencies...exceptions from the requirements of the Circular will be permitted only in unusual cases. Agencies may apply more restrictive requirements to a class of recipients when approved by the Office of Manage- ment and Budget." Agency supplements, however, are not always consistent with 0MB guidance. Between the foregoing principles and their application in individual circumstances, a wide gap often exists. PAGENO="0498" 492 For contracts, the Federal Acquisition Regulation (FAR) and 0MB Circular A-21 are the principal governmentwide rules con- trolling the acquisition, management, and use of federally sup- ported research equipment. The basic FAR is further supple- mented by agency issuances. The Department of Energy, for example, supplements the FAR by its Department of Energy Acquisition Regulations (DEAR). The Department of Defense does the same with the Defense Federal Acquisition Regulation Supplement (DFARS), and so on. All of this follows principally from the basic grants statute, the Federal Grant and Cooperative Agreement Act (PL 95-224) and three procurement statutes.24 Only specific parts of each of these circulars and/or grant or pro- curement rules are concerned with the acquisition, management, and use of research instrumentation. Table I shows the principal contract rules that affect research equipment. Table 2 shows the principal grant rules that affect research equipment. An inventory was necessary because when- ever instances of regulatory barriers were raised, it was essential to identify which federal regulations created them. Several terms warrant explanation. First, the terms equip- ment, instrumentation, and personal property are synonymous as used here. Second, equipment or property is defined in 0MB Circular A-21 [Section 113.a(l)I as a tangible item having a use- ful life of more than two years and an acquisition cost of $500 or more. Third, the FAR governs procurement by all federal agencies and applies to all contractors. Barriers to Acquisition and Optimum Management and Use The most troublesome barriers to acquisition and optimum management and use of equipment, as mentioned earlier, are those dealing with cost recovery. A notable exampleis the lack of a regular mechanism that permits the cost of equipment to be recovered directly from research grants by spreading the cost over several grant-years (see previous discussion under Funding Mechanisms). Other barriers we identified include uncertainty of title to equipment, requirements for matching funds, restrictions on combining funds, and the extensive reporting and approval requirements for obtaining equipment. Equipment screening and inventory requirements were cited as expensive and unnecessary paperwork burdens. The Uncertainty Barrier The uneven application and inconsistent interpretation of the rules occur at several points in the system owing to the practices PAGENO="0499" TABLE I Regulations Affecting Cost-Reimbursement Contracts That Include Acquisition of Research Equipment Acquisition Agency and Title Management and Use Records and Reports Cost Recovery Principal Regulations DOD/GSA/NASA FAR 35.014 45.302-1 (Facil- 52.245-5 (e)-(l) (Government 52.245-5(c)(4) Alternate I 35.0l4(b)(4) 52.245-5(c)(4) ities only) Property only) Alternate I 52.245-5(c)(4) Alternate I 52.244-2 0MB Circular A-21 3.13.b.(2) and 3.38 3.9.e. 3.9 and 3.l7.e (FAR 31.303) C.4.b. Agency Acquisition Management and Use Recor~ds and Reports Cost Recovery Supplemental Agency Regulations DHHS: HHSAR DOD: DFARS 235.0 14 . Page 252.235-14 Page 252.235-15 (2 clauses) 270.601 (ADPE) 270.605 (ADPE) NSF: NSFAR . DOE: DEAR 917.7108 917.7113 (SRC) Article B-IX 917.7108-1(d) 917.7113 (SRC) 945.104-70 945.102-70 Article B-IX 935.014 945.5 952.245-5 945.505-14 952.245-5 USDA: AGAR NASA: NASA FS 1835.014 1845.72 1845.505-670 1845.502-72 I 845.70 NOTE: FAR, Federal Acquisition Regulation; HHSAR, Health and Human Services Acquisition Regulation; DFARS, Defense Federal Acquisition Regulation System; NSFAR, National Science Foundation Acquisition Regulation; DEAR, Department of Energy Acquisition Regulation; AGAR, Agriculture Acquisition Regulation; NASA FS, National Aeronautics and Space Administration Acquisition Regulation. PAGENO="0500" TABLE 2 Principal Regulations Affecting Grants That Include Acquisition of Research Equipment Governmentwide A cquisition Management Agency and Title and Use Records and Reports Cost Recovery 0MB Circular A-21 J.l3.b.(2), 3.38 J.9.e 3.9., 3.18.e and C.4.b. Circular A-I 10, para. 5 paras. 5 and 6 paras. 5 and 6 Attachment N Circular A-I 10, paras. 3.b. and 3.c. . Attachment 0 Agency Provisions To Implement 0MB Circulars HHS: PHS Grants Pages 32 and 35 Policy Statement (Addendum) 45, Pages 48-50, 81 Pages 32, 33 48-49,51,81 1)01): AFOSRa Page 14 Page 15 Page 15 Brochure NSF: Grant GPM 512.3, 515 GPM 204.2, 332, 773 Policy Manual 524, 772.1 DOE/OER:b sec. 605.17(a)(l) Proposed 10 CFRc Part 605 IJSDA: 7 CFR sec. 3015.164, sec. 3015.165-.170 Part 3015 sec. 3015.196 NASA: Grant para. 408 para. 408, para. sec. 1509 and Cooperative 508(d), para. 509 Agreement Handbook a Air Force Office of Scientific Research. h C)ff ice of Energy Research. c Office of Code of Federal Regulations. PAGENO="0501" 495 of agency program officers, contract/grant officers, and auditors. Although federal regulations, as written, almost always give the government and the universities sufficient latitude to accommo- date individual circumstances, well-meaning government officials interpret the regulations in ways that vary frOm region to region and from agency to agency. These inconsistent interpretations cause many university officials to behave cautiously, especially in generating innovative debt instruments to secure costly, short- lived, state-of-the-art research equipment. They already have tough decisions to make on accumulating debt, without having to worry that, sometime in the future, disallowances may be sus- tained on the basis of circumstances then existing, rather than on circumstances at the time of acquisition. Uncertainty is a critical barrier. Cost-Recovery Barriers In addition to the inability to recover the cost of equipment directly over several years, we identified three regulatory bar- riers to acquisition, and all deal with restrictions on cost recov~ ery. They are (I) the inability to recover interest on borrowed funds, (2) the unrealistically low allowance for equipment use, and (3) the prohibition against setting an optimal price (user charge) for equipment use and replacement. Recovery of Interest The first barrier leaves recovery of the full cost of a piece of equipment uncertain. 0MB Circular A-2l was amended in August 1982 to give federal agencies the discretion to approve interest on equipment financing as an allowable indirect cost. This discretion was restricted to interest on externally bor- rowed funds. Interest on a university's own funds used to finance equipment is not an allowable cost. There are instances where agencies have approved recovery of interest on external borrow- ing, but we found several cases in which approval was denied. A decision not to allow recovery of interest costs is often sufficient disincentive to cause academic decision makers not to use debt financing to acquire research instruments from either internal or external sources. Use Allowance/Depreciation The second barrier is the unrealis- tically low allowance permitted for federal reimbursement of the use of equipment purchased with nonfederal funds. This allow- ance is called a "use allowance" and is computed at an annual rate not to exceed 6 2/3 percent of acquisition cbst. The full cost is PAGENO="0502" 496 thus recoverable in no less than 15 years, but the realistic life of state-of-the-art research equipment is three to five years. Recognizing the disadvantage of the use allowance method, some universities wish to convert to a depreciation method of cost recovery. 0MB Circular A-21 permits such conversion and permits full recovery of the cost of an asset, notwithstanding a university's previous decision to rely on the use allowance method. The Department of Health and Human Services (DHHS) does not object to the conversion, but will only permit recovery of equipment costs as if the equipment were being depreciated dur- ing the years it was actually covered by the use allowance. This interpretation has the effect of denying full recovery of the cost of equipment. As noted at the outset, DHHS audits 95 percent of all colleges and universities. Government rules permit depreciation or use allowance only on equipment not purchased by the federal government. However, 63 percent of all academic research instruments purchased in 1983 was acquired with federal funds. These items cannot be depreciated nor may a use charge be assigned to recover the purchase price from federal awards. A second problem in switching from use allowance to deprecia- tion is that depreciation will usually result in more rapid cost recoyery, which in turn raises indirect cost rates. Increases in indirect cost rates are not acceptable to some investigators for any reason. User Charges The third cost-recovery barrier to acquisition is the stricture on differential pricing of centralized service facilities and provision for reasonable replacement cost of the equipment involved if it is federally financed. These specialized service centers contain instruments like central computer equipment or electron microscopes. 0MB Circular A-21 (Section 3.38) says the cost of using these facilities shall be charged directly to users based on actual use and a schedule of rates that does not discrim- inate between federal and nonfederal activities including use by the university for internal purposes. But the circular also says, "where it is in the best interest of the Government and the insti- tution to establish alternative costing arrangements such arrange- ments may be worked out wjth the cognizant Federal agency." The cost of using large centralized and specialized pieces of equipment often is set too high for optimal use by all investi- gators. Where individual project grants are not funded well enough to permit paying full costs, differential pricing would encourage greater use of a facility but would necessarily mean charging some users more than others. While the cognizant agency has the authority to establish alternative arrangements, PAGENO="0503" 497 we found no instances of differential pricing. It is unlikely that such arrangements can actually be established, unless the univer- sity offers its own money to subsidize the facility. Even if one were able to recover full operating costs, there is no provision for setting a fee for eventually replacing or modernizing the equip- ment. The government argues that an allowance for replacement is tantamount to paying for an instrument twice and, further, that a set-aside for replacement is without benefit of scientific review. Again, these ,uncertainties and inconsistencies mitigate against acquisition and effective use of research equipment. Matching Requirements Federal agencies that award funds for research equipment may expect or require universities to contribute funds toward the cost of such equipment. Investigators argue that the required contribu- tions, or matching funds, are usually too great and point out that the university's payment of costs such as installation, operation, and maintenance is not as a rule considered part of the match. The governmentwide rules that apply to matching are contained in 0MB Circular A-I 10, Attachment E. The rules in Circular A-I 10 are not in themselves burdensome, but each federal agency uses different criteria to decide what it considers an acceptable con- tribution. It is the unspecified match, or the uncertainty of what is acceptable, that creates a perception of inconsistency in federal regulations on matching. Actually, the amount and character of a university's matching contribution are determined by the individual agency and usually are consistent with its intent and program purpose. Program man- agers are given broad latitude in setting matching requirements. They argue that this latitude is needed to assure the best possible use of federal money. Matching, as the term is used here, differs from cost sharing, which is the requirement that the university contribute to the total cost of a research project, which may or may not involve equipment. Ownership of Equipment Some federal agencies. dp not vest title to equipment in the university receiving the support. In this instance, the problem is found in both the letter and the interpretation of the regulations. Without assurance of title, investigators hesitate to combine uni- versity funds with federal funds to acquire an instrument--they may find that it belongs entirely to the federal government. PAGENO="0504" 498 To cite an example, the Public Health Service (PHS) vests title to equipment purchased under its grants without obligation on the part of the university.* This practice is consistent with the intent of the Federal Grant and Cooperative Agreement Act, which states, The authority to make contracts, grants, and cooperative agreements for the conduct of basic or applied scientific research at nonprofit institutions of higher education, or at nonprofit organizations whose primary purpose is the conduct of scientific research shall include discretionary authority, when it is deemed by the head of the executive agency to be in furtherance of the objectives of the agency, to vest in such institutions or organizations, without further obligation to the Government, or on such other terms a~:d conditions as deemed appropriate, title to equipment or other tangible personal property purchased with such funds.25 The Department of Energy, on the other hand, does not auto- matically vest title to equipment purchased under its contracts.t Such inconsistent practices among agencies inhibit efficient acquisition, management, and use of equipment. *Consistent with 0MB Circular A-I 10, the PHS reserves the right to require transfer of title to equipment from one grantee to another or to the federal government even though title was vested in the university upon acquisition. This is known as "conditional" title, but has created no reported problems. This option must be exercised within 120 days after the end of PHS support for the project. Other agencies that transfer title upon acquisition also vest conditional title (Code of Federal Regulations 45, sec .74.136). tThe Department of Energy does not now award many research grants but relies rather on research contracts. Departmental policy urges that equipment title be transferred to universities upon acquisition, but investigators say that DOE ignores its own policy. Recently the department announced that the Office of Energy Research would be issuing a significant number of special research grants. An announcement in the Federal Register to facilitate those grants appeared on April 15, 1985 (50 FR 14856); we understand that DOE operations offices will be encouraged to vest title upon acquisition and may vest title to equipment previously purchased on contracts. PAGENO="0505" 499 Problems arise when investigators attempt to acquire an instrument by combining funds from their own grants or contracts from the same or different agencies, for example, or when two investigators want to purchase an instrument jointly with funds from the same or different agencies. Where title to the instru- ment vests in the government, rather than the university, it is easy to understand the reluctance of a university official to arrange financing. The government may prove to be unable or unwilling to continue support for the project at an appropriate level, leaving the university to pay for a piece of equipment that. belongs to the government. Inconsistencies in Federal Contract Rules The Federal Acquisition Regulation was described earlier as the basic governmentwide set of rules governing all federal procurement including the acquisition, management, and use of federally supported research equipment under contracts. The FAR is of recent origin (April 1984) and was developed to resolve the inconsistencies of the old agency-by--agency procurement regulations. The intent was admirable, but the agencies were permitted to develop supplements that implement the FAR, and these in some instances created new inconsistencies. In several cases, there are inconsistencies among the agency supplements. In other instances, the FAR itself is internally inconsistent. For universities the FAR presents two problems.26 First, definitions of equipment and facilities do not distinguish between industrial facilities, plant equipment, and special tooling, on the one hand, and research facilities and equipment on the other. Because the definitions of equipment are not clear, universities have long been subjected to unrealistic requirements, such as screening requests for state-of-the-art equipment through the Defense Industrial Plant Equipment Center (DIPEC) before the equipment can be purchased with DOD funds.* Such screening is required because research equipment is included in the definition of the term "industrial plant facilities." The universities we visited felt that the descriptions of equip- ment in the DIPEC inventory do not suffice to permit a federal property officer to determine whether an instrument in the inven- tory is an adequate substitute for the one requested. We encoun- *The National Aeronautics and Space Administration has a similar screening system, the Equipment Visibility System (EVS). PAGENO="0506" 500 tered no one who could identify scientific or technical equipment acquired via DIPEC screening. Hence the required time- consuming screening is wasteful for both the universities and the government and serves no useful purpose for research equipment. The DOD definitions of what constitutes equipment are so oriented toward manufacturing and production as to mean little to research contracts with universities. The second difficulty is the inconsistency of the FAR contract clauses governing vesting of title, which are not in accordance with PL 95-224. This law contains the statutory authority for vesting title to equipment. The policies on title to equipment acquired by universities provide that the "contractor shall auto- matically acquire and retain title to any item of equipment costing less than $5,000" and "if purchased equipment costs $5,000 or more," the parties may agree that title vests in the contractor on acquisition, or they may select among several other options. The contract clause that implements this policy provides that title ordinarily vests in the government, rather than with the contractor. It also provides, however, that title to equipment costing less than $1,000 may vest in the contractor on acquisition but only if, before each acquisition, the contractor has obtained agency approval. Capital Equipment Thresholds and Inventory Requirements 0MB Circulars A-21 and A-lb specify cost thresholds for capitalizing equipment that are inconsistent and unrealistically low. The threshold is $500 in Circular A-2 I and $300 in Circular A-lb. 0MB Circular A-21 defines equipment as "tangible personal property having a useful life of more than two years, and an acquisition cost of $500 or more per unit." 0MB Circular A-I 10 defines equipment as "tangible personal property having a useful life of more than one year, and an acquisition cost of $300 or more per unit." 0MB Circular A-2l addresses capitalization levels for pur- poses of cost recovery and allowabibity; 0MB Circular A-I 10 addresses the management of equipment. Circular A-21 also requires approval in advance of purchase of special-purpose equipment costing $1,000 or more. If colleges and universities wish to be reimbursed for depreci- ation or use allowance on equipment, they must maintain property records and conduct a physical inventory at least once every two years. The university must ensure that the equipment is used and needed. Colleges and universities that seek such reimbursement keep property records and conduct inventories, but those inven- PAGENO="0507" 501 tories are for purposes of cost reimbursement, rather than for equipment management. The difference in the two circulars' capitalization thresholds- $500 versus $300--creates difficulty in equipment management. The Circular A-I 10 definition requires keeping track of signif i- cantly more items than does the Circular A-2 I definition. Man- agement of the inventory would go more smoothly if both thresh- olds were raised and made uniform. Two universities we visited estimate that a threshold of $1,000 would halve the number of items in the typical university inven- tory of capital equipment while retaining 80 percent of the com- bined value of the equipment. At a third university, 80 percent of the items in the inventory of equipment bought in 1983 accounted for less than 20 percent of the dollar value of the inventory. Circular A-I 10 requires that universities "assure the avoidance of purchasing unnecessary or duplicative items." This requirement is interpreted to mean that universities must screen their equip- ment inventories prior to purchase. Faculty investigators generally are willing to share to cut costs, but we were told that the $300 threshold requires considerable screening for items that are not economically suited to sharing. Some universities have negotiated higher screening thresholds with their auditors. The screening level at one university we visited, for example, is $10,000. It accounts for 3.2 percent of the items in the inventory of equip- ment bought in 1983 and for 50 percent of the dollar value. Prior Approval Systems Purchases of equipment costing more than $1,000 and not otherwise approved for acquisition with NIH and NSF project- grant funds ordinarily can be approved by the university under the NIH Institutional Prior Approval System (IPAS) and the NSF Organizational Prior Approval System (OPAS). These systems eliminate some of the postaward restrictions attached to the project grant, such as the requirement for prior approval by the agency to incur certain costs or to shift funds among budget categories. IPAS and OPAS emphasize the grantee's flexibility to allocate resources to achieve optimum research outputs and are valued highly.. by investigators and administrators. They reduce turnaround time on requests from six or more weeks to a few days, thereby permitting the university to take advantage of timely price discounts or other special arrangements. Under IPAS and OPAS, the ufliversities are charged with adher- ing to both the agencies' grant regulations as well as university standards. Both individual transactions and the procedures them- PAGENO="0508" 502 selves are subject to review by the agency and the auditor. The universities must retain documentation of their IPAS/OPAS trans- actions. The NSF OPAS contains a provision that permits the university to incur cost up to 90 days before a grant is awarded. This pro- vision can reduce lags in start-up caused by delays in delivery of equipment. It also gives the university ample opportunity to obtain maximum benefit from negotiations, including taking advantage of tax incentives to industry for donations and bargain sales of equipment. The OPAS makes it easier to combine funds from NSF grants when the grants are scientifically related. Additionally, the university is authorized to rebudget grant funds for renovations costing less than $10,000. The Public Health Service is currently in the second phase of an experiment with the IPAS. This experiment extends additional approval authority to the university. It includes the ability to make decisions on the purchase of general-purpose equipment to be used for scientific applications. General-purpose equipment includes items like cargo vehicles, computing equipment, cameras, and refrigerators. The Office of Naval Research (ONR) operates a system that, among other functions, moves the locus of government decision making closer to the campus. ONR resident representatives on or near campuses around the country can approve purchases locally, which considerably expedites the acquisition process. The resi- dent representative is usually authorized to approve purchases on behalf of agencies other than DOD. This system provides certain benefits comparable to those of IPAS and OPAS, although it does not constitute delegation of prior approval authority to the universities. RECOMMENDATIONS Traditional federal funding mechanisms, although they account for well over half of expenditures on academic research equip- ment, do not on balance comprise adequate means of regularly replacing obsolete or worn-out equipment. Current special equip- ment programs, operated outside the traditional funding channels, are extremely useful. Still, they were designed largely to respond to an emergency and, at present levels, obviously are not a long- term solution to the equipment problem. Federal regulatory practices are an element of the problem. Few federal regulations directly prevent the acquisition of research equipment by universities or hamper its operation, main- tenance, and replacement; however, the interpretation of regula- PAGENO="0509" 503 tions does impede acquisition and especially complicates manage- ment and replacement and modernization of research equipment. We recommend... 1. That the heads of federal agencies supporting university research issue policy statements aimed at removing barriers to the efficient acquisition, management, and use of academic research equipment. Few federal regulations, as written, con- tribute directly to the equipment problem. Inconsistent interpre- tation of regulations by federal officials, however, complicates the purchase, management, and replacement of research equip- ment and leads to unnecessarily conservative management prac- tices at universities. Desirable actions are summarized in the recommendations below. 2. That federal agencies more adequately recognize and provide for the full costs of equipment, including operation and maintenance, space renovation, service contracts, and technical support by... ...providing these costs in project grants and contracts or ensuring that recipients have adequately provided them. ..accepting universities' payment of costs such as installation, operation, and maintenance as matching funds on programs that require matching contributions by universities. 3. That federal agencies adopt procedures that facilitate spreading the cost of more expensive equipment charged directly to research-project awards over several award-years and allow the cost and use of equipment to be shared across award and agency lines. Individual research-project grants and contracts normally can accommodate equipment of only modest cost. Investigators, moreover, have difficulty combining funds from awards from the same or different agencies to buy equipment. 4. That federal auditors permit universities to recover the full cost of nonfederally funded equipment from federal awards when they convert from use allowance to depreciation. Office of Management and Budget (0MB) Circular A-2l permits such conversion as well as recovery of full cost. Auditors of the Department of Health and Human Services, however, permit recovery only as if the equipment were being depreciated during the time it was in fact covered by the use allowance. This practice, in effect, denies recovery of full cost. 5. That the Office of Management and Budget make interest on equipment funds borrowed externally by universities unequivo- cally an allowable cost by removing from 0MB Circular A-2l the requirement that agencies must approve such charges. Interest on externally borrowed funds has been a permissible cost since 1982 at the discretion of the funding agency, but agencies have shown significant reluctance to permit it. The perception of inability PAGENO="0510" 504 to recover interest costs may lead university officials to decide against seeking debt financing for equipment. 6. That all federal agencies vest title to research equipment in universities uniformly upon acquisition, whether under grants or contracts. Federal regulations on title to equipment vary among agencies, and such variability inhibits efficient acquisition, man- agement, and use of equipment. Without assurance of title, for example, investigators hesitate to combine university funds with federal funds to acquire an instrument not affordable by a single sponsor. 7. That the Office of Management and Budget make federal regulations and practices governing management of equipment less cumbersome by... ..setting at ~l 0,000 the minimum level at which universities must screen their inventories before buying new equipment and, above that minimum, permitting universities and agencies to negotiate different screening levels for different circumstances. ..raising the capitalization level for research equipment to $1000 in 0MB Circulars A-2l (now at $500) and A-ll0 (now at $300) and giving universities the option of capitalizing at different levels. 8. That the Department of Defense eliminate its requirement that the inventory of the Defense Industrial Plant Equipment Center (DIPEC) be screened for the availability of specialized scientific equipment requested by universities before new equip- ment is purchased. The descriptions of equipment in the DIPEC inventory do not permit a federal property officer to determine whether a scientific instrument in the inventory is an adequate substitute for the one requested. Hence, the requirement for screening is wasteful for both universities and the government. 9. That other federal agencies adopt the NIH and NSF prior approval systems. Purchases of equipment with federal funds ordinarily must be approved in advance by the sponsoring agency. Purchases can be approved by the university, however, under the NIH Institutional Prior Approval System and the NSF Organiza- tional Prior Approval System. These systems markedly improve speed and flexibility in acquiring equipment. REFERENCES I. National Academy of Sciences, Strengthening the Government-University Partnership in Science (Washington, D.C.: National Academy Press, 1983). 2. National Academy of Sciences, An Assessment of the Needs for Equipment, Instrumentation, and Facilities for University Research and Engineering (Washington, D.C., 1971). PAGENO="0511" 505 3. Task Group No. 5, National Science Foundation Advisory Council, Equipment Needs and Utilization (Washington, D.C., 1978). 4. Irene L. Gomberg and Frank 3. Atelsek, Expenditures for Scientific Research Equipment at Ph.D.-GrantinR Instit u ;ions, FY 1978, Higher Education Panel Report, Number 47 U Washington, D.C.: American Council on Education, 1980J 5. Kirt 3. Veneer, Extramural Instrumentation Funding by the National Institutes of Health (Washington, D.C.: National Institutes of Health, 1981). 6. Association of American Universities, The Nation's Deterior.. ating University Research Facilities: A Survey of Recent Expenditures and Projected Needs in Fifteen Universities (Washington, D.C., 1981). 7. Association of American Universities, The Scientific Instrumentation Needs of Research Universities (Washington, D.C., 1980). 8. Bruce L. R. Smith and 3oseph 3. Karlesky, The State of Academic Science: The Universities in the Nation's Research Effort (New York, N.Y.: Change Magazine Press, 1977). 9. U.S. General Accounting Office, Studies of U.S. Universities' Research Equipment Needs Inconclusive (Washington, D.C., 1984). 10. Division of Policy Research and Analysis, National Science Foundation, University Research Facilities: Report on a Survey Among National Science Foundation Grantees - (Washington, D.C.: National Science Board, 1984). II. National Research Council, Revitalizing Laboratorj' Instrumentation (Washingtoii, D.C.: National Academy Press, 1982). 12. Laurence Berlowitz, et a!., "Instrumentation Needs of Research Universities," Science 211:1013 (March 6, 1981). 13. Donald Kennedy, "Government Policies and the Cost of Doing Research," Science 227:480 (February 1, 1985). 14. National Commission on Research, Funding Mechanisms: Balancing Objectives and Resources in University Research (Washington, D.C., 1980). 15. National Institutes of Health, Division of Research Grants. 16. Mitre Corporation, Evaluative Study of the Materials Research Laboratory Program (McLean, Va., 1979). - 17. Cohn, Norman, "NSF Readies New Engineering Program," Science 227:38 (3anuary 4, 1985); Cohn, Norman, "NSF Names Engineering Centers," Science 228:305 (April 19, 1985). 18. National Science Foundation, "NSF Selects Four Institutions to be National Advanced Scientific Computing Centers" (February 25, 1985). PAGENO="0512" 506 19. James Bell, et al., Short-Term Evaluation of the Biomedical Research Sypport Grant, NIH Evaluation Project No. DRR 82-30lB (Washington, D.C.: National Institutes of Health, 1984). 20. 1 G. Danek, "Institutional Management and Utilization of National Science Foundation Institutional Grants for Science," Dissertation Abstracts International (1976), P. 181. 21. Use of Government Excess Personal Property by Non-Federal Entities, LC D-76-207 (Washington, D.C.: General Accounting Office, Sept. 15, 1975). 22. Third Biennial Report on the Transfer of Excess and Surplus Federal Personal Property to Nonfederal Organizations, GGD-85-3 (Washington, D.C.: General Accounting Office, Nov. 9, 1984). 23. Federal Register 42: 56000-56033. 24. Armed Services Procurement Act of 1947, 10 USC subsec- tions 2301-2314, as amended; Federal Procurement and Administrative Services Act of 1949, 10 USC subsections 251-260, as amended; Office of Federal Procurement Policy Act of 1974 (PL 93-400), as amended. The most significant amendments to all three statutes are contained in the Competition in Contracting Act of 1984 (PL 98-369) and the Small Business and Federal Procurement Enhancement Act of 1984 (PL 98-577). 25. 41 USC 506 or PL 95-224, Section 7(b). 26. Federal Acquisition Regulation, Part 45 and Part 52. PAGENO="0513" 507 2 The State Role in the Acquisition and Management of Research Equipment INTRODUCTION State governmentsplay significant but often conflicting roles in regard to academic research equipment. On the one hand, they provide important funding for such equipment both directly and, by means of tax benefits, indirectly. On the other hand, states often constrain the acquisition and management of research equip- ment through regulatory controls and restrictions on public uni- v ersities' general financial flexibility. Data on state funding of research equipment in universities are sparse, and trend data do not exist. The National Science Foundation's (NSF's) National Survey of Academic Research Instruments has developed figures on the amount, condition, and cost of existing research equipment. The figures show that states directly funded 5 percent of the aggregate acquisition cost of major research instrumentation systems in use in academe in 1982-1983 (Table 3). This percentage is probably an underrepre- sentation of state support for many public institutions, since the self-reported university contribution may include general-purpose state appropriations. State funds for research equipment are rarely available to private universities; the NSF data show that private schools received only 2 percent of direct state funding for equipment covered by the survey, whereas public schools received 98 percent (Table 4). States provide some funding for research and development at colleges and universities, and an unknown fraction of these expen- ditures goes for research equipment. State and local governments accounted for 15 percent of total spending on academic R&D in 1953 and 7 percent in 1983 (Figure 2, Chapter 1). The decline reflects the rise in federal funding during that period (Appendix A). In constant dollars, state funding grew about 8.9 percent annually during 1953-1967 and about 1.8 percent annually during 1967-1983. Federal funding of academic R&D, in real terms, 53-277 0 - 86 - 17 PAGENO="0514" 508 TABLE 3 Sources of Funds for Acquisition of Academic Research Federal Total Total, Selected Fields $1,178.0 100% Agricultural Sciences 36.1 100% Biological sciences, total 381.3 100% Graduate schools 156.1 100% Medical schools 225.2 100% Environmental sciences 92.3 100% 351.9 100% 218.9 100% 46.9 100% 34.1 100% 16.6 100% Total NSF NIH DOD $640.3 $230.8 $176.5 $103.9 54% 20% 15% 9% 7.8 1.7 1.3 0 21% 5% 4% - 198.5 35.3 149.7 2.1 52% 9% 39% 1% 80.6 24.5 48.9 1.0 52% 16% 31% 1% 117.9 10.8 100.8 1.2 52% 5% 45% - 45.7 16.5 0.5 6.6 50% 18% - 7% 229.1 116.1 19.5 32.3 65% 33% 6% 9% 106.4 35.1 2.7 45.8 49% 16% 1% 21% 21.5 10.8 0.3 9.1 46% 23% 1% 19% *24.3 13.5 0.7 5.4 71% 40% 2% 16% 7.0 1.8 1.9 2.4 42% 11% 11% 15% Physical sciences Engineering Computer science Materials science Interdisciplinary, not elsewhere classified alndividuals and nonprofit organizations. NOTE: Sum of percents may not equal 100 percent because of rounding. SOURCE: National Science Foundation, National Survey of Academic PAGENO="0515" 509 Equipment in Use in 1982-1983, by Field (Dollars in Millions) Funding Nonfederal Funding Univ. State Busi- DOE NASA USDA Other Funds Govt. ness Othera $63.1 $30.8 $5.0 $30.2 $371.5 $61.5 $43.2 $61.5 5% 3% - 3% 32% 5% 4% 5% 0.3 0.3 2.7 1.5 17.8 6.7 1.8 2.1 1% 1% 7% 4% 49% 18% 5% 6% 3.5 0.4 1.9 5.5 131.2 18.6 6.5 26.5 1% - - 1% 34% 5% 2% 7% 0.7 0.4 1.7 3.5 48.2 13.0 4.3 10.0 - - 1% 2% 31% 8% 3% 6% 2.9 0 0.2 2.1 83.0 5.5 2.3 16.4 1% - - 1% 37% 2% 1% 7% 8.2 5.4 0 8.5 27.5 7.2 8.4 3.5 9% 6% - 9% 30% 8% 9% 4% 33.0 22.3 0.1 5.7 92.2 6.6 4.1 20.0 9% 6% - 2% 26% 2% 1% 6% 14.4 2.2 0.3 5.8 78.5 13.5 13.1 7.4 7% 1% - 3% 36% 6% 6% 3% 0.3 0 0 1.0 11.5 4.9 7.7 1.2 1% - - 2% 25% 10% 16% 3% 3.4 0 0 1.3 6.0 2.6 0.6 0.6 10% 0 - 0 - 0 4% 0.9 18% 6.8 8% 1.5 2% 0.9 2% 0.4 - - - 5% 41% 9% 6% 2% Research Instruments and Instrumentation Needs. PAGENO="0516" 510 TABLE 4 Acquisition of Research Instrument Systems in Use in Purchase Cost (Dollars in Millions) Federal Total Total NSF NIH DOD Total $1,178 $640.3 $230.8 $176.5 $103.9 100% 100% 100% 100% 100% Type of University Private 429.9 268.3 102.8 74.7 53.1 36% 42% 45% 42% 51% Public 748.1 372.0 128.0 101.8 50.8 64% 58% 55% 58% 49% System Purchase Cost $lO,000-$24,999 324.9 176.7 43.5 82.6 21.5 28% 28% 19% 47% 21% $25,000-$74,999 372.6 194.2 68.9 53.2 37.4 32% 30% 30% 30% 36% $75,000-$1,000,000 480.5 269.4 118.4 40.7 45.0 41% 42% 51% 23% 43% aln dividuals and nonprofit organizations. NOTE: Sum of percents may not equal 100 percent because of rounding. SOURCE: National Science Foundation, National Survey of Academic PAGENO="0517" 511 1982-1983 by Source of Funds, Type ol University, and System Funding Nonfederal Funding Univ. State Busi- DOE NASA USDA Other Funds Govt. ness Othera $63.1 $30.8 $5.0 $30.2 $371.5 $61.5 $43.2 $61.5 100% 100% 100% 100% 100% 100% 100% 100% 15.2 12.8 0.3 9.4 109.9 1.3 24.7 25.7 24% 42% 6% 31% 30% 2% 57% 42% 47.9 17.9 4.8 20.8 261.7 60.1 18.5 35.9 76% 58% 94% 69% 70% 98% 43% 58% 14.2 4.9 2.8 7.3 102.7 20.1 8.6 16.8 22% 16% 56% 24% 28% 33% 20% 27% 15.1 8.6 1.8 9.3 126.2 20.3 13.9 18.0 24% 28% 36% 31% 34% 33% 32% 29% 33.8 17.3 0.4 13.6 142.6 21.0 20.7 26.7 54% 56% 8% 45% 38% 34% 48% 43% Research Instruments and Instrumentation Needs. PAGENO="0518" 512 grew about 1.6 percent annually during 1967-1983 but from a base more than eight times the base for state and local government. The critical question is the degree to which state funds and tax benefits intended specifically to aid academic research are countered by constraints general to state government. State procurement laws, for example, tend to be highly conservative, and creative financing is viewed warily. States traditionally rely on negative controls to assure fiscal integrity. Such controls do not lend themselves readily to expeditious acquisition and upgrad- ing of complex and costly research instrumentation or to alterna- tive modes of financing. States typically do not have a regular mechanism for replacing obsolete research equipment nor do they recognize its rapid obsolescence when providing initial funding for equipment purchases. Other constraints include bars to the use of equipment by private entities and replacement policies inconsis- tent with the unique nature and often quite short useful life of research equipment. Finally, most states continue to treat the acquisition of research equipment, almost without regard for its cost, as an operating expense. Thus, the capital financing methods common in business, and used increasingly by private universities, remain the exception for state-funded equipment. MODES OF STATE SUPPORT The state and federal approaches to funding research equip- ment differ in part on philosophical grounds. For example, states sometimes do not consider research and graduate study among their primary responsibilities; more specifically, they consider basic research a federal responsibility. Some states, in fact, budget only for instruction in their institutions of higher educa- tion. State support is usually institutional, with only limited consid- eration of specific pieces of equipment; federal support, in con- trast, is mainly project oriented and independent of the overall financing of the institution. State funding is very likely to be in a form that merges support for equipment into a general operating base; a federal research grant is likely to anticipate the acquisi- tion of specific equipment. State funding of scientific equipment usually is associated with new buildings or major new programs. Most state purchasing regulations draw no distinction between research equipment and other equipment, whether for use by universities or other state agencies. State allocations that cover equipment, moreover, usually also cover diverse and undifferen- tiated instructional, administrative, and maintenance needs. Federal and state policies toward public and private univer- sities also differ significantly. With only minor exceptions, the PAGENO="0519" 513 federal government treats public and private universities alike in the award and management of funds for research and research equipment. States, on the other hand, impose on public univer- sities considerably more control, particularly fiscal control, than they impose on private universities. Except for controls entailed by their use of state borrowing authority, private universities are exempt from virtually all state controls on the acquisition and management of research equipment. State support of colleges and universities is largely shaped by the state appropriations process. Typically the process supplies operating and capital funds for a budget period of one or two years. The "base budget" reflects the costs of operating and maintaining the institution at existing levels; generally it includes allocations, often quite small, for buying and maintaining equip- ment. The base budget may or may not reflect inflation, depend- ing on state practice. At the end of the budget period, unexpend- ed or uncommitted balances generally revert to the state's general fund. Proposals for new or expanded programs, and the associated equipment, must include well-justified cost analyses and projec- tions and must be submitted for legislative scrutiny during the appropriations process. The economic health of the state and the interests of its political leadership are critical factors in the treatment of such budgetary proposals. States are usually under heavy pressure to pay for current operations, and very few are able to fund equipment replacement reserves. State budget officers increasingly are requiring public universities to include replacement reserves in their budget presentations. Unfunded reserves, however, set up false expectations, often exacerbated by useful-life tables that are too long relative to the actual useful life of research equipment. The regulations associated with state support (Appendix E) generally apply to all state agencies and often promote good management and provide checks and balances to ensure that funds are spent appropriately. Still, restrictions on year-end carry over of funds, overly restrictive state purchasing procedures, low dollar values for capitalization of equipment, and state budgeting processes all combine to impose burdens on state universities not common to private universities. Except in unusual circumstances, moreover, state regulations do not recognize the unique character of scientific equipment or the difficulties of acquiring it In addition to high costs and short technological lifetimes, instru- ments with the same general specifications, for example, may have different capabilities. Further, the differences may be discernible only to experts in the field. PAGENO="0520" 514 Fresh Approaches Many states are seeking ways to foster technological develop- ment, and some legislatures have recognized that colleges and universities need capital equipment to compete for federal fund- ing of research and create an environment c9nducive to economic development. In some states, for example, participants in the budgeting process have had the foresight to provide not just the salaries for new faculty, but also seed money and start-up funds for their research. We visited several such state universities. The University of New Mexico received $2 million per year for five years (1980-1985) from the state for research equipment and teaching apparatus; the money was part of $5 million per year from a statewide appropriation, which was distributed to public colleges and universities by formula. The state of Georgia set aside 1 percent of the state's higher education appropriation of $600 million for specific quality im- provement programs at state schools. The $6 million allocated in 1984 was used to improve laboratory equipment. It was appor- tioned according to need; Georgia Tech, for example, got $1 million. Officials anticipate that similar funds will be provided each year, but the focus may change from year to year according to current needs. These funds are used for one-time expenditures without continuing budgetary commitments. The New York State Foundation for Science and Technology has established centers for advanced technology at seven public and private universities within the state. Support for each of the seven centers is $1 million per year for four years. In addition, the state is supporting a research and development program in engineering at Rensselaer Polytechnic Institute and a major research facility for biotechnology at Cornell University. The state of Virginia in 1984 appropriated more than $30 million for a Center for Innovative Technology to be operated by a consortium of four universities. It is designed to support research in four areas: genetic engineering, computer-aided engineering, microelectronics, and image processing. The state money is seed money; substantial industrial support is antici- pated. The center will provide support for individual projects as well as a central facility. The North Carolina Board of Science and Technology, a 15-member board establishedby the governor, did a thorough study of academic research equipment needs in the state. In December 1983 the board recommended that the state appro- priate $73 million over five years to universities in the North Carolina system for one-time purchase of equipment and $1 0.9 million per year for maintenance of equipment.' It recom- mended also that the state allocate $20 million over five years to PAGENO="0521" 515 public and private colleges and universities for matching grants for equipment. As of mid-1985, the North Carolina legislature had not acted on these recommendations. The North Carolina Board of Science and Technology is designed in part to bring together the scientific and technological resources of government, academe, and industry in the state. One result of the board's activities is the Microelectronics Center of North Carolina (MCNC).2 It is intended to help the state develop high technology industry by enhancing the research and educational abilities of five universities and a contract research institute. The participants are Duke, Agricultural and Technical College of North Carolina, North Carolina State, the University of North Carolina at Chapel Hill, the University of North Carolina at Charlotte, and the Research Triangle Institute. MCNC thus far has been funded largely by the state and began occupying its own facilities at Research Triangle Park in 1983. Center leaders see great potential for supporting excellent research facilities in integrated circuit technology. Another technology-fostering device is the provision at some schools of "incubation" facilities for small companies just starting out. The immediate payoff for the university is not likely to be large, but advantages could accrue in the longer term. The state of Georgia in 1980 established such a facility, the Advanced Technology Development.Center (ATDC) on the campus of Georgia Tech. The center is~ designed to catalyze the growth of high technology in the state, and university officials say it is "a spectacular success." The center's location on campus gives companies ready access to Georgia Tech's scientific and engi- neering resources, both human and physical, and low-cost space for developing, testing, and manufacturing new products is also available on campus. ATDC also serves as a conduit to Georgia's other major research universities--the University of Georgia and Emory University. - Finally, a few states are permitting their public institutions to create structures that encourage public-private cooperation. In 1984, Connecticut authorized the University of Connecticut to establish a Health Sciences Research and Development Corpora- tion which would in turn own a controlling interest in a series of research and development limited partnerships. Although imple- mentation is just under way, this model promises to provide a vehicle that encourages private sector participation in R&D activities without the burdens imposed by direct state control. Tax Benefits States also support research and research equipment indirectly through tax benefits. In 34 states wbose.Iax codes~fo11ow the PAGENO="0522" 516 federal Internal Revenue Code, tax benefits are available as specified in the Economic Recovery Tax Act of 1981 (see Chapter 5 for detailed discussion). These benefits cover contributions of research equipment to colleges and universities as well as spend- ing on research. In four other states, the tax codes include comparable provisions but with certain variations. In addition, seven states have adopted tax credits designed to foster research and contributions to educational institutions. CONTROLS ON DEBT FINANCING Rising costs have led to steady growth in the universities' use of debt financing and leasing to acquire research equipment (see Chapter 4 for detailed discussion). State controls, however, have generally limited public universities' use of these financial ye- h ides. Few state universities may directly incur debt except where the debt-financed facility or equipment will generate its own definable revenue stream. Even in such cases, debt financing is usually limited to capital construction. General obligation bonds and other forms of state debt commonly issued to finance build- ings, highways, and other permanent improvements remain unavailable for most equipment needs (Appendix F), although research instruments may cost nearly as much and sometimes even more than permanent structures. The distinction is based on presumed useful life: financing equipment with a useful life of perhaps 5 years by means of state debt that will be carried for 30 years has traditionally been considered imprudent. An exception here is that most states permit the financing of new (or substantially renovated) buildings to include the cost of equipping them. Equipment has generally been taken to include the instrumentation (fixed or movable) required in laboratories or other research facilities in the new or renovated building. This approach helps the university by permitting substantial equipment costs to be financed on a capital basis. On the other hand, it creates the impression that the initial instrumentation and the surrounding building will have similar long-term useful lives. State legislators and budget directors usually will accept the need to replace the instruments before the building, but not the need to replace them in only a few years. Thus, the inclusion of initial equipment with buildings in long-term capital financing can create reluctance to replace the equipment in a timely fashion. New construction alone cannot meet the need for research equipment in academe. At most state universities, however, equipment that is not included in new construction cannot be financed through the capital route, but must be paid for out of PAGENO="0523" 517 regular appropriations. This requirement, in effect, pits needs for equipment .against needs for faculty and other claims on operating funds. Exceptions to Current Funds Only The current-funds-only rule is not universal. To buy equip- ment that is expected to generate revenue, for example, nearly all states allow issuance of revenue bonds that do not constitute state debt. Interest and principal are paid from the earnings produced by the equipment. This vehicle harbors risk, however. If the revenue stream proves inadequate, the institution or the state or both may be forced to service the debt out of general funds, risk default, lose the equipment, or suffer other harm. Another way to capitalize equipment, including research instrumentation, is pooled debt financing, where the state does not incur a general obligation. Although public as well as private institutions technically have access to pooled equipment funds, private universities have used this alternative the most. The explanation seems to lie in the schools' budgeting processes and the vagaries of state law. Private universities, at least in theory, have relatively unrestricted use of their funds and can shift them as needed to take part in pooled equipment financing. State universities, on the other hand, often are constrained by line-item or object-category budgets that lack the necessary flexibility. Some state universities have solved this problem by classifying outlays for pooled equipment funds as leases and within their power to arrange. As will be seen, however, restrictions on multiyear contracts can limit the utility of this approach. Another exception to the current-funds-only practice is tele- communications and data processing systems. A number of states have set up debt financing programs to allow their agencies, including public universities, to acquire equipment of both kinds (see also Controls on Purchasing section below). This has been a particularly attractive area fa- joint ventures, as in the case of a technologically advanced teleport under development by Ohio State University with a consortium of private interests. The tele- port is a telecommunications center that has a combination of several satellite-earth terminals, a switching center, and a data processing center and is used as a regional focal point for the reception and transmission of data for a number of users. In this case, the state has stepped aside to allow for the creation of a high-cost facility that would ordinarily be outside of the existing public resource base. Private as well as public universities have benefited from state-authorized debt financing. Most states now permit private PAGENO="0524" 518 institutions to participate in tax-exempt bond issues that impose no general financial obligation on the state. Many state legisla- tures have established financing authorities for higher education facilities that are empowered to issue bonds to finance capital projects at private universities. In a growing number of states the proceeds may. be used to buy equipment not part of a construction project. California is the primary example of a state that has aggressively promoted pooled issues, the proceeds of which could be used for equipment as well as facilities. Financing research equipment through debt that is not a gen- eral obligation of the state is an important development as more and more states find themselves at or near the statutory or constitutional limit on the money they may owe. Leasing Leasing equipment to spread its cost has become common among research universities. Public universities in many states, however, face statutory limits on the duration of contracts, including leases. Such limits, often based on the appropriations period (usually one or two years), restrict the schools' ability to arrange advantageous leases. Even where a long-term lease can be negotiated, it must by law be cancelable annually or biennially, which increases the risk to the lessor and, therefore, the cost to the lessee. Current exceptions that allow multiyear leases are commonly limited to real property or special categories of fixed equipment, particularly telecommunications. CONTROLS ON PURCHASING State controls on purchasing and procurement significantly constrain the acquisition of research equipment. Nearly every state requires its public universities to conform to at least some of the standards and procedures for buying equipment that apply to all state agencies. Such requirements include publication of specifications, approved bidder lists, competitive procurement, and the award of contracts to the lowest responsive bidder. Con- trols on purchasing and procurement usually apply with equal force whether the equipment is bought with current funds or through capital financing. State controls are frequently more restrictive than federal regulations. They may, for example, require orders to be pro- cessed and approved through a statewide purchasing agency, a procedure that often delays acquisition and isolates investigators from discretionary judgments that are essential to the purchasing process. PAGENO="0525" 519 State purchasing requirements tend to be designed to deal with the acquisition of routine and general-purpose goods: automobile tires, cleaning supplies, and the like. Although often not drafted with the requirements of sophisticated scientific research instru- mentation in mind, they often subsume those acquisitions as well. This problem becomes particularly severe because procurements are defined in generic terms in the case of many items required in the functioning of state government, such a process is both reasonable and indeed an efficient way to control expenditures. With state-of-the-art scientific apparatus, however, the brand-to- brand difference may be far from insignificant. Purchasing officers are primarily interested in saving money, whereas the scientist's main goal is to perform research. The scientist looks for characteristics that might indicate that one product is supe- rior to another; difficulty can arise when university or state pur- chasing officers are not persuaded of, Or do not understand, these subtle differences in instruments or other equipment. Addition- ally, purchasing officers sometimes do not understand the time constraints on scientific experiments. When purchasing officials fail to see that buying scientific instruments or their components is different from buying tires and batteries, misunderstandings and a degree of conflict are inevitable. Such problems are not confined to state colleges and universities, but they are less common in private institutiOns. Competitive bidding on scientific equipment may result in substantial discounts or the inclusion of additional features, spare parts, or expendable supplies, which is good for both the univer- sity and the sponsor of the research. But while the Office of Management and Budget Circular A-I 10 and the Federal Acquisi- tion Regulation require competitive procurement where prac- ticable, state law almost without exception mandates competitive procurement by public universities. In some states, the procure- ment procedures apply with full force to purchases by state uni- versities even with nonstate funds. Some states permit exceptions to normal procurement stan- dards. Competitive procurement may not be required, for example, below a specified dollar value and where the item is available from only one source or is needed in an emergency. Often, however, the threshold is so low ($100 in some states) that little scientific equipment falls below it. One public university must ask for bids on all equipment costing more than $700, even when only one vendor can meet the specifications. While a sole-source exemption is useful in principle, its value often is limited se"erely by narrow definitions of the kinds of acquisitions and the circumstances of their procurement that trigger such treatment. The investigator's view that one of several possible suppliers offers the best or most suitable device, for example, is PAGENO="0526" 520 rarely enough to invoke the exemption. The adequacy of the alter- natives is usually determined by state purchasing authorities far from the scene and with little or no scientific background. Exceptions based on emergency need are likewise of limited utility. State rules tend to define emergencies in terms of protecting health and safety and public property. Thus, a con- * tract to replace a storm-damaged roof may be let promptly and noncompetitively, but a request to acquire equipment noncompeti- tively to meet a research deadline is likely to be rebuffed. Strict application of state puchasing controls in this manner is particu- larly troublesome: opportunities for sponsored research often come on relatively short notice, and the ability to pursue the work on a timely basis may be critical to obtaining the grant or contract. State equivalents of "domestic content" laws also can present problems. These laws give in-state vendors preference in the award of contracts for equipment and services. Although a grow- ing number of states exclude scientific equipment from home- state preference rules, the exceptions generally remain narrow or depend on approval by state purchasing officials. Public universities have sought to ease the negative effects of state purchasing controls in several ways. One is the use of a university-controlled foundation as a conduit for acquiring research equipment with nonstate funds. In a number of states, however, the ability of such entities to operate outside the framework of state control has been challenged. Some states have subjected university foundations to the same purchasing and procurement rules that apply to the universities, particularly where the foundation is viewed as quasi-public. University foun- dations not created by statute are less likely to be subject to state control, but some jurisdictions have sought to require even these foundations to adhere to state procurement policies. There are indications that this policy is changing, as more and more states recognize the competitive advantages of allowing their public institutions to create nonpublic subsidiaries to conduct and reap the benefits of scientific research. State procurement requirements may even extend to private universities that rely on funds from state-sponsored bond issues or debt, direct grants, or contracts. In such cases, the acquisition of equipment and services generally must conform to the state pur- chasing act, although some states follow the federal example of requiring general adherence to the principles of the procurement rules, but not necessarily to every detail. States frequently apply particularly strict purchasing controls to data processing and telecommunications systems. These spe- cial controls were imposed after many state agencies invested considerable sums in systems that turned out to be incompatible PAGENO="0527" 521 or redundant. The imposition of uniform standards and selection criteria has been reasonably successful but is not always suited to computer and telecommunications systems for use in academic research. In consequence, a number of states have exempted such equipment from special restrictions, and many allow waivers of uniformity standards. CONTROLS ON USE OF EQUIPMENT Public universities are commonly governed by "public pur- poses" language in the state constitution or statutes that limit their freedom to enter agreements with for-profit entities. In terms of the acquisition and use of research equipment, such restrictions place the public university at a disadvantage relative to private universities. This issue raises several complex questions. First, the very concept of public purpose versus private use is not uniformly defined. In some states the determining factor is the nature of the use; in others it is the identity of the user. Sponsored research is generally viewed as a public purpose. Where the sponsor makes separate use of the equipment, however, or obtains unique rights to results obtained with it, it has been asked whether a private purpose has not overtaken the public one. Questions about private use raise anticompetitive issues as well, owing to the theory that use of state-funded property and equip- ment for private purposes gives the user an unfair advantage over private competitors. As a result of these constitutional and statutory limitations, some public universities have turned to the creation of structural appendages that are technically nonpublic and may even be profit making. Several states are actively encouraging this approach in recognition of the need to free their institutions from the con- straints imposed on other public agencies, so that they can corn- pete more effectively in the high-technology marketplace. The creation of the separate University of Connecticut Health Sciences Research and Development Corporation was applauded by the state as a means of strengthening the competitive position of the university. Like the university foundations, however, these appendages are not immune to the risk of encouraging the state to assert jurisdiction over them. FINANCIAL FLEXIBILITY While state controls on financing, purchasing, and using research equipment are important concerns, many public colleges PAGENO="0528" 522 and universities find that their ability to acquire and manage equipment depends additionally on the degree of financial flexi- bility granted them under state law and regulations. State uni- versities, for example, may have difficulty transferring funds between budget categories (e.g., personnel, capital, operations) to take advantage of opportunities such as participation in pooled equipment funds. They may be unable to carry over unexpended funds from one budget period to the next. Many state universities are not permitted to pay matching costs for equipment from tui- tion income or patient fees and so draw on gift funds or advance unrestricted funds. Financial Control Practices Financial control practices have been assessed3 in terms of institutional autonomy and grouped into two models: the state agency model and the corporate/free market model. Key features of the state agency model are as follows: * All funds (from federal and private sources as well as the state) flow through the state treasury and must be reappropriated by the legislature. * All procurements are subject to standardized requirements and centralized processing. * Detailed spending requests focus on objects of expenditure. Deviations from budgets must be approved in advance and reported. * Unexpended funds are returned to the state treasury. * Changes with long-term fiscal impact are monitored. * Purchasing, construction, and other costs of operations flow through the state government. * Oversight is focused on process (adherence to regulations) as opposed to product (quality of research and education). Other features may include state control of indirect cost recoveries from the federal government and restrictions on the disposition of state-owned surplus property. Indirect costs are commonly collected by the state and reallocated to the schools to a degree that varies by state. In many state universities, equip- ment purchased with federal funds becomes state property after title has been given to the university and is then subject to all of the arcane regulations for state property. Key features of the corporate/free market model are as follows: PAGENO="0529" 523 * Institutions have complete control of funds, whatever the source, including indirect cost recoveries. * State appropriations are made in block form, and the institution has unbridled authority to contract for goods and services from outside sources. * Oversight is focused on product as opposed to process. * Auxiliary organizations and support activities are not subjected to state controls. A recent study4 examined the financial flexibility of 88 Ph.D.-granting public universities in 49 states in terms of the characteristics of these models. The results showed no differ- ences in administrative costs, salaries, or complexity that cor- relate with the degree of state oversight. Differences were associated rather with the size of the university, the presence of a medical/hospital complex, graduate enrollment, unionization, and level of state funding. More importantly, public universities with greater degrees of autonomy tend to depend less on state appropriations and to raise more of their support from other sources, federal and private. This finding suggests that relief from state regulations frees faculty and administrators to turn their attention to more pro- ductive work, including development and sponsored research activities, investment strategies, and long-range financial planning (fostered by biennial budgets and retention of unexpended balances).5 Improvements in these areas can directly benefit the capacity of public universities to acquire and manage scientific equipment. Deregulation in Kentucky The state of Kentucky deregulated its institutions of higher education in 1982, with significant benefits.6 Kentucky had been a "strong governor" state with centralized accounting and procurement for all of higher education. The state commissioned an independent study that concluded in part that state regulation was a significant barrier to effective management of the schools because of frequent duplication of procedures. The study led to the passage of the Universities Management Bill (H.B. 622). The bill afforded changes in regulation of purchasing, capital construc- tion, accounting and auditing, payroll, and affiliated corporations and foundations. Each school was given the option of implement- ing any or all of theprovisions of H.B. 622. The primary effect of the bill was decentralization of the administration of higher education, enabling the schools to man- age their own affairs. The move has produced significant savings PAGENO="0530" 524 for both the universities and the state by eliminating duplication and freeing administrators for more productive work. The University of Kentucky, for example, estimates that it will save S500,000 per year by handling the purchasing function itself; $90,000 of the savings comes simply from being able to avoid the state stores' 9 percent markup. By assuming the respon- sibility for capital construction, the university sharply reduced the time required to appoint architects and award contracts; it awarded $7 million in contracts between JuIy 15, 1982, and March 1983 with an estimated saving of S44 5,000 resulting from the streamlined procedures. Smaller public institutions that do not havesufficient administrative staff and resources to exploit the provisions of H.B. 622 on their own are forming consortia to do so. Failure of schools to comply with the provisions of the act once they elect to follow it, or lack of cooperation among schools, could jeopardize the changes brought by H.B. 622. During the first two years under the act, however, the results were very favorable. Depending on local circumstances--the number and size of public colleges and universities and the degree of cen- tralization--deregulation as practiced in Kentucky could be beneficial in other states. RECOMMENDATIONS The conflict in the roles played by state governments vis-a-vis academic research equipment is inherent to a degree in the rela- tionship between the states and their public colleges and univer- sities. Nevertheless, we believe ti-rat in many cases the states could combine their broad roles as funder and regulator more rationally and could otherwise help to ease the schools' serious problems with research equipment. We recommend... 1. That states assess the adequacy of their direct support for scientific equipment in their public and private universities and colleges relative to support from other sources and the stature of their schools in the sciences and engineering. The states cannot displace the federal government as the major funder of academic research equipment, but judicious increases, on a highly selective basis, could be extremely beneficial to the scientific stature of states while simultaneously increasing the effectiveness of funds available from federal and industrial sources. 2. That states grant their public universities and colleges greater flexibility in handling funds. Desirable provisions would permit schools to transfer funds among budget categories, for example, and to carry funds forward from one fiscal period to the PAGENO="0531" 525 next. Greater flexibility would not only improve the universities' ability to deal with the problems of research equipment, it would also be likely to provide direct savings in purchasing and would free academic administrators to discharge their responsibilities more efficiently. 3. That states examine the use of their taxing powers to foster academic research and modernization of research equip- ment. Tax benefits available under the federal Internal Revenue Code are also available in 34 states whose tax codes automat 1- cally follow the federal code. Relatively few states, however, have adopted tax benefits designed to fit their particular circum- stances. 4. That states revise their controls on procurement to recog- nize the unusual nature of scientific equipment and its importance to the research capability of universities. Scientific equipment often is highly specialized. Instruments that have the same gen- eral specifications but are made by different vendors, for example, may have significantly different capabilities. The differences, furthermore, may be discernible only by experts in the use of the equipment. Desirable revisions in state controls would exempt research equipment from purchasing requirements designed for generic equipment and supplies, such as batteries and cleaning materials; would vest purchasing authority for research equipment in individual colleges and universities; and would not apply rules beyond those already mandated by the federal government. 5. That states consider revising their controls on debt financ- ing of scientific equipment at public colleges and universities to permit debt financing of equipment not part of construction projects, recognize the relatively short useful life of scientific instruments, and relieve the one- and two-year limits on the duration of leases. REFERENCES I. North Carolina Board of Science and Technology, "Recommen- dations for Upgrading Scientific Equipment in North Carolina's Institutions of Higher Education" (Raleigh, N.C.: Office of the Governor, December 1983). 2. P. Calingaert, "The Microelectronics Center of North Carolina--an Overview," Proceedings, 21st Southeast Region ACM Conference, 1983 (New York, N.Y.: Association for Computing Machinery, 1983). 3. Washington Council for Postsecondary Education, Washington, D.C., private communication, 1982, and 3ames R. Mingle, private communication, 1983 and 1984. PAGENO="0532" 526 4. 3. F. Volkwein, "State Financial Control Practices and Public Universities: Results of a National Study," Paper presented to the Association for the Study of Higher Education Chicago, III., March 1984. (Revised March 25, 1984). See also James A. Hyatt and Aurora A. Santiago, Incentives and Disincentives for Effective Management (Washington, D.C.: National Associa- tion of College and University Business Officers, 1984), and James R. Mingle (ed.), Management Flexibility and State Regulation in Higher Education (Atlanta, Georgia: Southern Regional Education Board, 1983). 5. Volkwein, ibid., p. 10. 6. 3. C. Blanton, E. A. Carter, and 3. A. Hyatt, "Improving Responsiveness to Fiscal Stress: The Kentucky Experience," Business Officer (June 1984), pp. 22-25. PAGENO="0533" 527 3 The Universities' Role in the Acquisition and Management of Research Equipment INTRODUCTION The universities' involvement with scientific equipment entails many activities in addition tO the conduct of research. Broadly, universities provide the administrative and physical infrastructure needed to support research that warrants the acquisition of instru- ments and other equipment. More specifically, in varying degree, the universities provide money for equipment from their own resources, from gifts they solicit, and from various forms of debt financing; handle the purchasing process; pay part or all of the costs of operation and repair; maintain inventories; help to optimize the sharing of equipment; and handle disposal of equipment no longer useful or needed. The universities' approach to these functions is conditioned by characteristics unique to themselves. Usually they perceive that their primary duty is to personnel--students and the faculty needed to teach them. Also, authority in U.S. universities is highly decentralized to foster the freedom of inquiry deemed essential to first-rate research and teaching. The majority of support for academic research and the associated equipment is obtained through competitive proposals prepared by individual faculty members or small teams of investigators. Systematic programs planned well in advance are the exception, not the rule. Much of this support comes from federal agencies, so universities must use and account for equipment in accordance with federal regulations. State universities in addition must comply with state regulations. These and other characteristics of universities and their research call for procedures in acquiring and managing scientific equipment that generally differ from practice in industry and government. In this chapter we assess academic practice, identify opportunities for improvement, and consider industrial and governmental procedures that might be relevant to academe. PAGENO="0534" 528 ACQUISITION OF RESEARCH EQUIPMENT Sources of Funds Funds for academic research equipment come from the federal government, from the universities themselves, from state govern- ments, and from business and other private sources (state funds are rarely available to private universities). The contributions of each are indicated by the NSF National Survey of Academic Research Instruments, which covers major instrumentation sys- tems in use in 1982_1983.* The data show that federal agencies funded 54 percent of the cost of acquiring these systems, univer- sities 32 percent, state governments 5 percent, business 4 percent, and other sources 5 percent (Table 3, Chapter 2). Other NSF data show that nearly two-thirds (63 percent) of expenditures for aca- demic research equipment in 1983 was funded by federal agencies (Appendix B). Funds supplied by universities may involve some form of debt financing, which is covered in Chapter 4. Also, the Economic Recovery Tax Act of 1981 permits companies to take special tax deductions for scientific equipment they donate to universities; Chapter 5 includes guidelines for universities that wish to develop a strategy for obtaining such donations. Competitive Proposals Private and public universities alike rely principally on com- petitive proposals, subject to some form of peer review, to obtain funds for research equipment. The decision to compete for funds is made by the scientist who wishes to do the research, and the outcome of competition for federal funds cannot usually be pre- dicted with confidence. A matching contribution toward equip- ment may be expected from the university (see later discussion), but usually it is insufficient without additional resources from a grant, contract, or gift. If the equipment costs more than can reasonably be expected in a normal research-grant budget, scientists usually seek supple- mental funds from the department, college, or university, from other funding agencies, and from colleagues who have grant money available and need access to the equipment. *Systems in use in these years may have been purchased in earlier years. PAGENO="0535" 529 Scientists with common interests join forces voluntarily to seek funds for equipment at most of the universities we studied. Such cooperative efforts may involve faculty in different depart- ments and even in neighboring universities. Funding agencies sup- port these joint efforts because of the quality of the collaborating faculty; further, each collaborator has apparatus and techniques that augment the shared equipment. This mode of operation is common, for example, at the Materials Research Laboratories supported by the National Science Foundation. Several scientists with common interests and needs may be able to obtain support for shared instrument facilities outside the normal single-investigator research-grant process. NIH, NSF, DOD, and DOE all have instrumentation programs that encourage or require sharing by several qualified scientists. These programs often encourage or mandate a university contribution to the cost of the equipment (see Chapter 1). The normal goal of a competitive instrument-acquisition effort is to win sufficient funds to buy the basic instrument after univer- sity contributions and vendor discounts have been exercised to the limit. Desirable features missing from the basic instrument are acquired through funding efforts in subsequent years. Often, how- ever, buying the complete package is much more economical than having components installed later in the field. If the saving is obvious, the federal agency and the university may supplement their funding awards to achieve the overall economy. We found that scientists recognize these efforts to win grant funds, pool resources with colleagues, and convince department heads and deans of the value of a university contribution as normal and necessary procedures for obtaining research equipment. Start-Up Costs The competitive grant system does not provide funds for equipment that must be acquired for newly hired faculty mem- bers. Most universities we contacted bear some such start-up costs, and these costs for laboratory scientists can require major financial commitments by universities. They may consume reserves equal to the endowment needed to support a faculty salary permanently.' Several universities queried estimated instrumentation start-up costs at $25,000 to $250,000, depending on the faculty member's discipline and academic level. Even higher costs may be entailed by hiring faculty already established as outstanding investigators. A major eastern university we visited incurred initial costs of about $2 million when it hired an established professor of chemistry. PAGENO="0536" 530 High initial costs of equipment have discouraged universities from entering certain research areas, such as work involving synchrotron radiation, which is now available only at national shared facilities. Universities also have hesitated to enter fields where equipment is too costly to obtain for one investigator and is not readily shared because of problems such as contamination in some kinds of analytical chemical apparatus. A specific example of the exclusion of universities from research by high start-up costs is molecular beam epitaxy (MBE), a means of growing new types of materials that can be controlled at the atomic scale. MBE is producing exciting new physics (e.g., the fractional quantum Hall effect) and promises to produce new types of semiconductor devices and very high speed transistors. A number of industrial laboratories are working with MBE, but the cost of the equipment--up to $1 million--has barred all but a few universities from research in this field. Raising start-up funds typically involves departmental, college, and universitywide administrators. Funds are drawn from operat- ing budgets and augmented by endowments, gifts, and flexible resources such as the NIH Biomedical Research Support Grant. The American Chemical Society's Petroleum Research Fund, the Sloan Foundation, EXXON's Centennial Engineering Education Program, Atlantic Richfield's Aid to Education Grants, and the recent NSF Presidential Young Investigator awards help cover start-up costs in certain fields. The NIH Research Career Development Award covers salary and thus helps with initial costs, since salary, as well as the costs of laboratory facilities, usually is the responsibility of the university. Methods of allocating funds for faculty start-ups will vary with the organization of the university, but faculty involvement can help by supplying an understanding of the special needs of the research community. At a midwestern university we visited, the task is handled by a board of eight senior faculty members. The board allocates about $2.5 million per year to faculty in research support. (The university spent $96 million for separately budgeted R&D in 1982.) A significant portion of this amount is used to acquire equipment, and departments may apply to the board for start-up funding for new faculty. Matching Funds Federal agencies that award funds for research equipment may expect or require the university to make a matching contribution toward the total cost (see Chapter 1). Such matching is distinct from the cost-sharing arrangements in which universities pay part of the operating costs of a research project. Matching funds play PAGENO="0537" 531 a supporting rather than a leadership role in decisions to compete for grants, since the university makes the award only if the scientist wins the competition. Many state universities are not permitted to pay matching costs from instructional monies. Instead, they draw on gift funds or advance unrestricted funds. Gift funds are used also to pay start-up costs for new faculty, and private donors may be willing to give matching funds because of their added leverage. Several universities told us they had raised matching funds from donors and philanthropic trusts. The added leverage and the appeal of some current technology help scientific equipment to compete with other would-be beneficiaries, such as athletic programs and hospitals. Several universities also cited the ef- ficacy of fund drives for specific items of research equipment. Decisions on providing matching funds are made differently among universities. At some small universities that have little flexibility in departmental or college operating budgets, the chief executive officer makes decisions on matching (as well as start-up funding). In other cases, the deans make such decisions and often delegate budget planning to the departments so the decisions reflect departmental priorities. At some universities, a faculty committee allocates the available funds. Attitudes toward matching also vary. Some universities vol- untarily offer matching on all major instrument proposals in the hope that it will improve their competitive stance. Other univer- sities pursue more conservative practice by matching only when it is a condition of receiving an award. We encountered some in- stances where matching funds were so scarce that faculty did not seek grants known to have a mandatory matching requirement. From the faculty perspective, the major reason for an institu- tion to provide matching funds is to acquire the equipment and pursue the research described in the proposal. Faculty also per- ceive that financial endorsement by the university may make a proposal more competitive. As implied above, however, some universities would rather use discretionary funds in other ways, Also, universities often are not certain that matching funds are necessary to obtain the grant; they see a need for greater clarity in agencies' statements of their matching requirements. Multiyear Payment When the outright cost of a piece of equipment is more than the funding agency can accommodate in one year, an investigator may request an advance against the university's future-year capital funds. We encountered a few instances where the sponsor- ing agency had approved a proposal to buy an instrument with PAGENO="0538" 532 72 funds advanced by the university and recovered by charging annual installments to the grant as direct costs. The interest foregone is not recoverable by the university as a direct or indirect cost. While the agency may agree to the principle of the plan, it does not guarantee future-year funding. Thus the university subsidizes the purchase and assumes significant risk. The burden of negoti- ation is also substantial for everyone involved, and the method is not widely used. Another way to obtain equipment before the full purchase price is in hand is to combine funds from two successive years. With first-year funds secured and second-year funds promised, the university may be able to deal with vendors so that payment can be spread over several years without finance charges. We found that scientists at some universities make such arrangements with- out help from university officials. Faculty members said they would like to be able to do so more formally by putting half the cost of a piece of equipment in each of two years of a proposal. We are not aware of prohibitions against combining funds from successive grants, but the perception is that agency officials are not sympathetic to such arrangements. When vendor and scientist enjoy mutual trust and confidence, some vendors have agreed to multiple-year payment plans without formal leasing and without interest charges. This practice is costly to the vendor, but it may help to consummate a sale. Leasing Leasing is a standard way to spread payment for equipment over several years. We found, however, that principal investiga- tors prefer to find ways of obtaining apparatus without resorting to leasing because the ensuing costs reduce flexibility in future years of research by obligating grant funds to cover lease costs. Carrying charges are high (typically above prime rate), and the vendor is less aggressive in discounting if a lease must be ar- ranged. Further, leasing, like other kinds of debt financing, is practical only when income is available to meet the payment (see Chapter 4). Although universities commonly lease equipment such as copying machines and computers, they lease only a very small fraction of research instruments. Lease payments, in contrast to equipment purchases, are normally charged with indirect costs. This further increases the costs of leasing to awards, relative to direct purchase, by a percentage equal to the indirect cost rate. Some universities, however, have dealt with this problem by not charging indirect costs on leased equipment. Excluding such payments from the indirect cost base requires negotiations with the auditors. PAGENO="0539" 533 Many states forbid multiyear leases unless a nonstate source provides the payments; some state schools have created foun- dations designed to overcome this and other regulatory barriers. At Georgia Tech, for example, multiyear leases are handled by the Georgia Tech Research Corporation (GTRC), a private, not-for-profit entity. All external research funds at Georgia Tech, except funds provided by law, are awarded to GTRC, which also retains part of the indirect cost funds generated in research projects. GTRC in part buys and leases equipment and provides it to individual research programs. This procedure permits Tech to get research equipment into the laboratory of the individual faculty investigator more quickly, to return obsolete equipment and replace it by newer models, and to spread equipment costs over multiple years. We cite two other examples of leasing that we encountered. One involved a 500 MHz nuclear magnetic resonance (NMR) spec- trometer acquired through a lease with an option to purchase because the funding agency would provide only $138,000 per year toward the acquisition of the equipment (an NMR of this kind typically costs about $750,000 fully equipped). The second example was a similar experience in the acquisition of a mass spectrometer and an NMR spectrometer. The corporate laboratories we visited preferred purchasing over leasing because businesses receive tax benefits from research investments and from depreciation allowances on purchased equipment. They did lease some research equipment, such as NMR and mass spectrometers and computer equipment when it was being evaluated for long-term use. One national laboratory indicated that lease to ownership is an accepted approach when capital funds are unavailable. The pri- mary consideration in selecting the financing method is the inter- est charge. Another national laboratory did a lease versus pur- chase analysis for a computer. With direct purchase defined as 1.0, the other cost ratios were as follows: lease 2.01, lease with option to purchase 1.18, third-party lease to ownership 1.17, and lease from vendor to ownership 1.40. Such analyses are valuable and are done by many universities when they are considering leasing equipment. The Purchasing Process Universities' purchasing procedures should help scientists obtain reliable, quality equipment in a timely and economical manner. For purchasing procedures to work most effectively, purchasing agents and research faculty must understand each others' needs. Misunderstanding can lead to delays in acquiring PAGENO="0540" 534 equipment, which can result in higher prices and can also severely hamper research. When buying federally funded equipment, universities must comply with federal acquisition policies prescribed particularly by 0MB Circular A-I 10, Attachment 0, for grants, and the Federal Acquisition Regulation for contracts (see Chapter 1). State uni- versities additionally must comply with state purchasing regula- tions (see Chapter 2). State regulations often are more restrictive than the federal regulations, and private universities generally enjoy substantially greater flexibility than public universities in purchasing scientific equipment. Purchasing agents can be extremely helpful in the acquisition process. Creative and aggressive purchasing agents can negotiate volume discounts and payment alternatives that provide substan- tial savings on grants and contracts. We were told of universities that have purchasing agents knowledgeable and concerned about the issues involved in acquiring scientific equipment. Many fac- ulty members at other schools, however, indicated that uninformed purchasing agents are a significant problem. The North Carolina Board of Science and Technology recommended in December 1983 that the state purchasing organization arrange continuing educa- tion programs for state purchasing agents who handle scientific equipment and assign an existing purchasing agent to specialize in scientific equipment; the board recommended also that public institutions make a special effort to educate faculty in purchasing procedures for equipment. MANAGEMENT OF RESEARCH EQUIPMENT We examined academic management practice in budgeting and planning for research equipment as well as in operation and main- tenance, inventory systems, and replacement and disposition. The nature of universities--their decentralized organization and unique system of shared governance--doubtless impedes orderly manage- ment in the corporate style. Still, we observed that some prac- tices on campus clearly ease problems with equipment more effec- tively than others, so greater attention to management would seem to be in order. Our findings indicate that universities would benefit from stronger efforts to improve their internal communi- cations. Public universities are obliged by state regulations to deal with equipment-management matters that do not normally concern private universities; these additional complications are covered in Chapter 2. PAGENO="0541" 535 Budgeting and Planning Budgeting and planning in industry and in universities differ significantly. In industry, budgeting and planning often start sev- era! months (or years) before the year in which expenditures are to be made; industrial laboratories have reasonable control of funding, planning, and scheduling, subject only to corporate strate- gies and decisions. Universities are differently situated. Although they routinely plan instructional programs in advance of the academic year and capital building programs several years in advance, most of their scientific equipment is funded from com- petitive grants and so is not readily amenable to planning. While the competition is deemed necessary to assure that the best research is supported, barriers to planning are inherent in the system of competitive proposals. Usually the outcome of a grant proposal is not known until a few weeks before the research is started. Some agencies, in fact, are unable to meet grant renewal and award deadlines, and univer- sities often take risks by carrying minimum costs to keep a re- search team together while awaiting the final terms of an award. The short term (seldom more than three years) of grants and contracts also makes planning difficult. Further, the individual researcher is always subject to congressional or agency decisions on the continuation and level of funding of federal programs. Investigators at several schools cited decisions by federal agen- cies, as a result of congressional cuts, that required significant changes in plans to acquire new equipment as well as in manage- ment practices for existing equipment. The larger block grants, such as NIH program project grants and grants to NSF regional and national facilities, offer more opportunity for planning (see Chapter 1). The involvement of more scientists with a common purpose, a strong incentive for sharing, and longer term (five year) awards all encourage plan- ning. Several universities cited such core support grants as particularly useful in providing stability, permitting some mid-term planning, and addressing the equipment problem in an orderly fashion. Universities appear to be increasing their attempts to formal- ize equipment funding processes with faculty involvement in al- location of university resources. Two universities told us of internal capital funding and resource allocation boards that attempt to identify specific needs for capital equipment and plan to meet them. No university, however, described a process as long or as detailed as those in national laboratories or in industry. One industrial department head described a model designed to calculate the costs of equipping ~: typical engineer with capital items. The mode! does not consider inflation or equipment PAGENO="0542" 536 upgrade, but does provide for replacing equipment after three years; it calculated start-up cost at $145,000 to $160,000 per engineer. The model was described as having several advantages: it eased the calculation of equipment requirements; once ac- cepted, it made funding for capital equipment easier to obtain from higher management; and it aided both morale and produc- tivity. We found no university that can exercise similar control over funding for research equipment. We feel that most universities, however, can better organize their procedures for supplying matching funds and establish clear criteria for allocation of such funds. Investment in People Universities, if forced to choose, generally will use available funds to retain faculty and graduate students in preference to buying equipment. This attitude is in keeping with the schools' dual mission--education and research--which emphasizes people and requires the long view. To build, or to rebuild, a faculty takes decades. Industrial laboratories tend to be more ready to lay off personnel, despite the potential impact on their capabilities, and will invest in automating research equipment. Automation is not as essential in universities, where graduate students change samples over nights and weekends. Universities report risking funds to keep research teams together for a time between grants in the hope that support for them will materialize; the funds so invested are invariably for personnel, so equipment budgets may be sacrificed to keep a team intact. Operation and Maintenance of Research Equipment Operation and maintenance of academic research equipment are serious management issues at every university we visited. Some universities do an excellent job of keeping research equip- ment in good repair and have qualified staff to operate it when appropriate; others leave much to be desired. All find the task a strain on their resources. The NSF instrument survey included a departmental/facility assessment of instrumentation support services. Some 49 percent said their services were inadequate or nonexistent, 39 percent said they were adequate, while only Il percent said they were excellent (Figure 6). Another survey, submitted to the National Science Board, indicated that 72 percent of the respondents relied primarily on PAGENO="0543" 537 Excellent Nonexistent FIGURE 6 Department/Facility Assessment of Instrumentation Support Services 1982-1983 (`V Insufficient Adequate SOURCE: Division of Science Resources Studies, National Science Foundation. PAGENO="0544" 538 departmental support services (computer and other electronic repairs, glass shop, machine shop, mechanical shop, other general repairs, etc.).2 The usage of support services was higher in public than in private universities. Over the service life of equipment, total operating and main- tenance costs will frequently exceed the purchase costs. One of the NSF Materials Research Laboratories has found over the years that operation and maintenance of its central facilities cost about 1.5 times the amount it spends in the same year on new equipment. NSF data on departments/facilities show that about 15 percent of annual instrumentation-related expenditures in 1982-1983 were devoted to maintenance and repair (Table 5). We encountered many cases where universities had to decline gifts of research equipment because they could not afford to operate it. One university, for example, declined a gift of computer-aided design equipment because it would have cost $170,000 per year to operate. Recognition of Costs Not all university administrators appreciate the high costs of maintaining and operating research equipment, nor do they budget for them. One state university, for example, received $10 million over five years from the state government to purchase equipment (not all was used for research equipment; some went for teaching apparatus). Adequate funds for maintenance and operation were not available in the university's budget, even when the equipment was used for teaching, nor was the faculty attracting sufficient grant money to meet these costs. In consequence, much of the equipment is not regularly available for use. Technical Support Staff Technical support staff is an important issue. Many academic departments traditionally have not used research technicians; rather, the practice has been for graduate and postdoctoral students to work with faculty repairing equipment, often at considerable expenditure of time. While some of this activity is educational, a great deal of it is not and distracts effort from research. In any event, as research equipment becomes more sophisticated, more permanent technical support people become necessary. It can be difficult, however, to attract competent support people to universities. They are usually less well paid than in industry and do not find the same attractions at a univer- sity as the faculty do. Small numbers of faculty frequently PAGENO="0545" TABLE 5 Instrumentation-Related Expenditures in Academic Departments and Facilities in 1982-1983, by Field (Dollars in Millions) Purchase of Research Purchase of Research-Related Maintenance/ Repair of Equipment Computer Research Total $500 or more Services Equipment~ Total, Selected Fields $640.6 (100%) $414.5 (65%) $121.3 (19%) $104.8 (16%) Agricultural Sci. Biological Sci., Total 40.6 (100%) 192.3 (100%) 28.4 (70%) 132.4 (69%) 7.3 (18%) 27.8 (14%) 5.0 (12%) 32.2 (17%) Graduate Schools 79.0 (100%) 51.8 (66%) 13.2 (17%) 14.0 (18%) Medical Schools 113.3 (100%) 80.5 (71%) 14.5 (13%) 18.3 (16%) Environmental Sci. 49.6 (100%) 33.4 (67%) 6.9 (14%) 9.3 (19%) Physical Sci. 151.3 (100%) 91.2 (60%) 31.9 (21%) 28.2 (19%) Engineering Computer Sci. 146.6 (100%) 29.7 (100%) 86.5 (59%) 19.7 (66%) 41.3 (28%) 3.6 (12%) 18.8 (13%) 6.4 (21%) Materials Sci. 12.4 (100%) 9.6 (77%) 0.6 (4%) 2.3 (18%) Interdisciplinary, not 17.8 (100%) 13.3 (75%) 1.9 (11%) 2.6 (14%) elsewhere classified ~Estimates encompass expenditures for service contracts, field service, salaries of maintenance/repair personnel, and other direct costs of supplies, equipment, and facilities for servicing of research instruments. NOTE: Sum of percents may not equal 100 percent because of rounding. SOURCE: National Science Foundation, National Survey of Academic Research Instruments and Instrumentation Needs. Ln 0 00 PAGENO="0546" 540 allocate the cost of a technician's salary among their grants, but grant or contract funds are often so uncertain as to bar long-term career stability for technicians. The block funding and central- ized operations of the NSF Materials Research Laboratories are an excellent solution to this problem for research that can be funded in this mode. User Charges It is common practice to attempt to cover the salaries of equipment-support personnel and the costs of operation and maintenance through user charges. The amount of use is often hard to predict, however--new facilities often require some time to reach a full level of use--which makes it difficult to set appro- priate rates. High user fees tend to reduce the use of equipment and can actually reduce total income to the facility and make it available only to the best funded potential users. We heard fre- quently that user fees considered optimal by the people running the facility do not cover the costs of operation. We rarely found that user fees paid the operating costs of shared, central-facility research equipment. The NSF-supported Materials Research Laboratories have much experience with this type of operation; typically, they find it necessary to subsidize 20 to 30 percent of the operating and maintenance costs of their central facilities from core grants. Regulatory Issues A general difficulty with user charges is that what is true at one institution is not necessarily true at another, although both are operating under the same federal regulations. The problem lies in the inconsistent and often conservative interpretation of the regulations by both federal and academic officials (see Chapter 1). Specifically, we encountered a faculty member at one univer- sity who had been able to charge his various research grants in advance for access to research equipment, and so knew at the beginning of the operating period that the full operating costs would be covered. When a similar prepayment or subscription plan for instrument use was tried at another university, the federal auditors would not allow it. Whether the difference was due to a substantive difference of process (of which we are unaware) or to the way the plan was explained to the auditors, we were unable to ascertain. PAGENO="0547" 541 0MB Circular A-2l prohibits providing use of equipment to anyone at lower cost than to government grants or contracts. This prohibition often interferes with maximum use of equipment-- it is not possible, for example, to provide low cost or free use of research equipment for instructional purposes while billing federal grants and contracts at a higher rate (low rates can be charged during low-use periods, such as from midnight until 6 A.M., so long as all users are treated equally). One university pointed out a common solution to this problem for computing centers. Like every other academic computer center we encountered, the one at this school required a university subsidy to break even. The university budgeted this subsidy as an allocation to users who could not afford the full rates, rather than applying it to an across-the--board reduction of rates. Physical Infrastructure The operation and maintenance of research equipment depend on the physical infrastructure for research. The infrastructure includes fume hoods, electrical supply and insulation, sound isolation, air conditioning, numerous kinds of support equipment, such as oscilloscopes, leak detectors, and machine tools (e.g., lathes and milling machines), service and maintenance facilities, as well as the buildings that house research laboratories. We saw many l950s vintage oscilloscopes at universities and relatively few modern ones; most of the machine tools in uni- versities were acquired well over 20 years ago, often as surplus, and are at the point of needing replacement. When funds are scarce, federal agencies tend to support equipment that will be used directly in the research they fund; the less glamorous items are essential, but not as easy to find support for. Federal agencies once funded this kind of equipment but no longer support its inclu- sion in project budgets. The universities might buy it and recover a portion of the costs attributable to organized research through the indirect cost pool, but universities are under intense pressure to hold down indirect costs. Also, cost recovery takes 15 years at the federal use allowance of 6 2/3 percent per year. University Maintenance Facilities None of the universities we visited had the service and maintenance infrastructure found in most large government and industrial laboratories. Many faculty expressed the desire for some university facility to maintain research equipment, but we found successful examples of such facilities to be rare. The one PAGENO="0548" 542 universitywide facility that seems to work well is Iowa State's REAP program (see discussion below under Optimization of Use). We think there may be several reasons for this situation. Where individual research grants pay most of the costs through user charges, the uncertainty of income is a barrier. A university is not typically a geographically focused enterprise, so a central maintenance facility may be practical at some institutions and not at others. Also, the increasing complexity and specialization of research equipment means that service people must be cor- respondingly specialized. The result is a greater tendency to rely on manufacturers' service representatives. This solution may be best in large urban areas; in more isolated areas, faculty may have to service the equipment themselves or rely on university resources. University-subsidized facilities can relieve individual faculty and departments of financial responsibility they may have difficulty meeting. Service Contracts Service contracts for most research equipment usually cost about 10 percent of the purchase price per year. When equipment is shared among a small number of faculty and research grants, it is common practice to allocate the costs of a maintenance con- tract. We learned at some universities, however, that investiga- tors could not afford service contracts on equipment and were gambling that costly service would not be needed. Some manufac- turers will give discounts on service contracts if a university issues a purchase order for servicing all its equipment on the campus; we learned of discounts on the order of 20 percent. Manufacturers also may give discounts for payment at the begin- ning rather than the end of the service year; in one instance the discount was 10 percent. Inventory Systems A reliable inventory of university-purchased research equip- ment can be used to ensure proper recovery of indirect costs (see Chapter 1). Many of the universities we studied had paid little attention to inventory systems; most have just developed or are still developing such systems. Several academic administrators reported that their inventory systems were used to screen pur- chase orders and avoid duplication, but it was not clear that this application was useful. Only one university we visited, Iowa State, routinely uses an inventory system to facilitate sharing of equipment (see section below on Optimization of Use). PAGENO="0549" 543 The REAP inventory includes only 3 percent of Iowa State's general inventory. The other university inventory systems we learned about included all equipment capitalized (commonly at $500 or more) and were very expensive to implement. One university, for example, has been working for two years to set up a system at a cost of more than $200,000; the provost estimates a steady state operating cost of $100,000 per year. A second inventory system requires eight full-time employees in steady state and is highly automated, with a bar-code label on all property. When fringe benefits and overhead are added to salaries, the cost is about $350,000 per year, plus computer.time. A third institution estimates a cost of about $10,000 per month just to maintain the data base and thinks it would be prohibitively expensive to develop a system useful for facilitating sharing of research equipment. These inventory systems are compiled by nontechnical people and do not contain the information scientists must have about equipment to assess its utility. Except at Iowa State, all faculty we asked had only negative comments about the use of inventories to promote sharing. National Laboratory Systems The two national laboratories we queried have developed effec- tive inventory systems that contain information on the capabil- ities and current state of repair of equipment. Data are entered by scientifically trained people. Staff scientists can call up the inventories on their computer terminals, and they are useful in promoting sharing of equipment. The labs also have used their inventories to argue for the replacement of old equipment, and managers felt this information was instrumental in persuading Congress to fund the Department of Energy Utilities and Equip- ment Restoration, Replacement, and Upgrade Program (see the following section on Replacement and Disposition). Replacement and Disposition of Research Equipment Replacement of research equipment with state-of-the-art models, and disposition of worn or unneeded equipment, also are significant management problems in universities. Replacement is extremely costly: data from the NSF instrument survey indicate that equipment in use in 1982-1983 has areplacement cost today that is about 50 percent greater than its original acquisition cost. Further, inadequate disposition procedures can hamper optimum use of equipment and entail costs that might be avoided. PAGENO="0550" 544 Universities, as we have seen, do not plan their purchases of research equipment in the same way that government or industry does. They have no programs like the DOE Utilities and Equip- ment Restoration, Replacement, and Upgrade Program, which has been funding replacement of poor and inadequate equipment in defense-related national laboratories since 1982. Sandia, Los Alamos, and Lawrence Livermore national laboratories, for example, will receive about $434.9 million through this program, which is projected to end in 1988. Many industrial laboratories also replace scientific equipment systematically. For reasons of obsolescence and taxes, they depreciate equipment on an accel- erated basis and often replace it as soon as it has been fully depreciated, even if it is still useful. Universities face difficulties in orderly replacement and modernization of research equipment. They pay no taxes and so gain no tax advantages by depreciating equipment. They can collect a use allowance (6 2/3 percent per year), or depreciation (at a higher, negotiated rate) over the useful life of the equip- ment, as an indirect cost of research under 0MB Circular A-2 1, but both faculty and funding agencies are exerting considerable pressure to limit indirect costs. Depreciation or the more com- mon use allowance, moreover, can be collected only for equipment purchased with nonfederal funds and so plays no role in replacing the majority of research equipment, which is purchased with fed- eral grant or contract funds. Furthermore, DHHS auditors inter- pret 0MB Circular A-2l so that universities that convert from use allowance to depreciation part way through the life of equipment must then value it as if they had used the same rate of deprecia- tion, rather than the lower use allowance, since acquiring the equipment. This requirement imposes a significant financial penalty for conversion (see Chapter 1). Assessing user charges to amortize the replacement of equip- ment is rarely practical, and recovery of purchase costs is not allowed for equipment bought with government funds. We found no case where equipment purchase costs were fully recovered through user charges. One problem is that the necessary charges may be higher than most grants can support. Recovery of pur- chase costs is being attempted in one electron microscope facility we know of, where the user charge will be $75 an hour when the debt-service costs are included. Other electron microscopes on the campus, which recover only operating and maintenance costs, charge $35 an hour. A further bar to systematic replacement and modernization is that investigators' needs can change rapidly as new research opportunities arise. Additionally, when faced with tight budgets, investigators tend to fund people and look for equipment in the next review cycle. PAGENO="0551" 545 The situation is different for centralized equipment with many users and for service equipment in the university infrastructure that needs to be kept up to date. When the task involves more than the cooperative effort of a few investigators or a depart- ment, then some universitywide planning is called for. Still, we found no plans for systematic replacement of such equipment. With the present strained budgets of most universities, the problems are dealt with only when they become crises. Disposition Issues A mong important issues in disposition is the lack of incentive to transfer equipment between investigators at the same or dif- ferent universities. Some still-useful equipment is transferred informally within universities by using barter payment. One university, for example, circulates a newsletter advertising equipment that is sought or available for barter payment. Under the present system, however, faculty at most universities have no incentive to transfer equipment other than the need for space (which, like equipment, warrants careful management). Faculty have every incentive to keep equipment in case it might someday be needed again; only at Iowa State, among the schools we visited, was much equipment relinquished. This lack of incentive to trans- fer is a barrier to optimum use, since the equipment may be more valuable to a laboratory other than the original recipient. Agen- cies and academic administrators could do more to facilitate transfer of equipment from one researcher to another by means of incentives in the form of savings to the receiver and rewards to the donor. One might imagine the transfer of useful equipment at bargain prices within or between universities. The main obstacle seems to be that such sales could result in charging the government twice for the same equipment. If allowed, the practice would yield income for activities that support the original sponsor's mission. Formalizing the procedure on a larger scale would encourage more efficient use of many items of research equipment. Disposal procedures at universities require attention. The administrator of a large academic laboratory reported that procedures for disposing of equipment that is not needed are frequently time consuming and complicated. While questions of title and disposal are being worked out, the lab must store the equipment at a cost of ~l5 per square foot per year. The administrator felt that the lab's operating funds could be better spent. He cited inadequate administrative support for an efficient disposal system as a significant contributor to the problem. We learned of a case at another university where PAGENO="0552" 546 excessive administrative delay by the surplus property office prevented researchers from realizing a good price on sale of equipment. Many universities have an administrative entity assigned to dispose of equipment that no one wants. In our investigations, it was seldom praised. The major exception is the REAP organiza- tion at Iowa State, which was highly praised for its efforts on disposal and salvage of surplus equipment. OPTIMIZATION OF USE Sharing Equipment Sharing of research equipment is a straightforward way to ease equipment problems in universities and is commonly prac- ticed. The degree of sharing that is required or is feasible, how- ever, varies greatly among fields of research; important deter- minants include the cost and nature of the equipment and the characteristics of academic science. The higher the costs of obtaining and operating a piece of equipment, the higher are the pressures to share it. Thus sharing by many users has long been characteristic of facilities in high- energy and nuclear physics and in optical and radio astronomy. The principle is evident in NSF data on academic facilities in use in 1982-1983. The mean number of users was 27 for equipment costing $75,000 to $1,000,000, 14 for equipment costing $25,000 to $74,999, and 12 for equipment costing $10,000 to $24,999 (Figure 7). The same data show that 60 percent of academic instrument systems costing $75,000 to $1,000,000 were located in shared-access facilities (Figure 8). The nature of the research and the equipment sometimes works against sharing. The research may require modifications to equip-U ment that make sharing impossible, or it may simply require full- time use of the equipment on one project. When apparatus is con~ taminated by samples, as occurs in molecular beam epitaxy machines or certain chemical analytical apparatus, for example, sharing is neither practical nor effective. Further, the characteristics of academic science are not gen- erally conducive to unlimited sharing of resources. While more collaboration as well as more sharing of research equipment would be desirable in some situations, emphasis on individual creativity and scholarship is essential to the vitality of the university. Crea- tive research is frequently a solitary activity, and it often requires dedicated equipment. Professors are judged by their contributions as individuals, which tends to discourage collaborative efforts. PAGENO="0553" 547 H rID C C) rID C-) fl-4 H rID rID FIGURE 7 Mean Number of Instrument System Users by Purchase Cost 1982-1983 27.2 $75 ,000-$ 1,000,000 $25,000-$74,999 $1 0,000-$24,999 14.2 0 5 10 15 20 25 30 MEAN NUMBER OF USERS SOURCE: Division of Science Resources Studies, National Science Foundation. PAGENO="0554" Materials Science Computer Science z Engineering 0 Physical Sciences ~ Environmental Sciences Biological Sciences Agricultural Sciences FIGURE 8 Percentage of Academic Research Instrument Systems Costing $75 ,000-$ 1,000,000 Located in Shared-Access Facilities 1982-1983 Interdisciplinary -. :___~ -~- 59% 54% -Ii 55% -I- .- I 94% 90% I I I Total ~- - 54% 01 63% ,__I ,` - I I I I ~I_~_ I 60% 0 10 20 30 40 50 60 70 80 90 100 PERCENT OF SYSTEMS SOURCE: Division of Science Resources Studies, National Science Foundation. PAGENO="0555" 549 Computers, if powerful enough, are easily shared and suff i- ciently different from other types of research equipment that we will not consider them here in depth. The increasing power and decreasing cost of small computers act to reduce the number of users who might share a machine, and we feel that computers increasingly will be shared only by those who require the compu- tational power of supercomputers. Methods of giving universities access to supercomputers have been addressed by the NSF Ad- visory Committee on Advanced Scientific Computing Re- sources.3 NSF has since announced plans to fund supercomputer research centers at four universities (see Chapter 1). We found substantial sharing of research equipment at all of the universities visited in the course of this study. The methods of sharing ranged from informal lending and borrowing of smaller, inexpensive items to operating larger items as centralized facil- ities. Small pieces of equipment are frequently shared within a geo- graphical radius determined by their portability and knowledge of their existence. Informal interaction among faculty and gradu- ate students is the most common mechanism. It should be noted that sharing usually offers educational benefits. Students learn to use a wider variety of equipment to solve their problems and in the process have the opportunity to exchange ideas with a wider circle of people. Sharing is very effective when the research requires limited and routine use of commercially available service-type equipment such as electron microscopes, surface analytical equipment (Auger electron or x-ray photoemission spectroscopy), and high-field nuclear magnetic resonance specirometers. (These items cost between $100,000 and $1,000,000.) Sharing such equipment also often permits a technician to be provided to maintain and operate the equipment as well as to train students to use it. The utility of centralized facilities is illustrated by the 14 Materials Research Laboratories currently supported by NSF through block grants to major research universities. We visited four of these labs. The grants support multi-investigator research on materials as well as central facilities incorporating the kinds of equipment noted above. We found that the Materials Research Laboratories have been effective at operating central facilities on a relatively large scale and providing an excellent educational environment for students. In many academic departments, especially chemistry depart- ments, centralized equipment, such as infrared, visible, and ultraviolet, NMR, EPR, and mass spectrometers, is used inter- mittently by a large number of researchers. Departmental laboratories at a medical school we visited were set up so that centrifuges were conveniently located for use by several research groups; we found this type of sharing in most universities. PAGENO="0556" 550 We observed that shared instrument facilities work best when supervised by a faculty member whose research depends on them and who will insist on high-quality, up-to-date performance from the equipment. Service and repair costs increase when equipment is shared by many scientists, and a technician is usually necessary to operate it and train users; in larger centralized facilities one technician can often look after several related pieces of appa- ratus. Faculty generally wish to share equipment with their col- leagues, but want sufficient control to ensure that the equipment remains in optimum working order. Under these conditions, investigators often share equipment, but commonly by means of collaboration with another investigator on a problem both are pursuing. We learned that officials at some universities encourage sharing by giving higher priority to allocation of funds for shared equipment than for nonshared equipment. We found a similar practice in industry, where equipment is frequently shared. Laboratory management at a large chemical company we visited encourages sharing by rewarding, in its research budget, a group that finds it can avoid buying equipment by sharing with another group. The REAP Program As noted earlier, an inventory system plays a significant role in equipment sharing at only one school we visited, Iowa State University. The university established its research equipment assistance program (REAP) in l~74 with the help of an NSF grant of $1 14,000. Its direct costs currently total about $123,000 per year, including salaries, computer support, and other expenses. REAP has evolved into an accepted, trusted, and helpful program in support of researchers' needs for equipment. Its components are an easily accessible, simplified, edited inventory; a diagnostic service to help maintain equipment in good working order at low cost; an apparatus stockroom that recycles, loans, and salvages equipment; and a staff who are devoted, helpful, and interested, but remain low key and nonobtrusive. A detailed report on the program appears as Appendix G, and only a brief summary will be given here. The computerized inventory is focused on scientific instru- mentation and includes only 3 percent of the university's general inventory; in June 1984, it contained almost 10,000 items (each costing at least $500 initially) having a total value of nearly $30 million. The inventory is used widely as a sharing tool; faculty are encouraged to use it to learn if a piece of equipment on cam- PAGENO="0557" 551 pus might fit their needs. The REAP staff stands between the holder and the seeker of the apparatus, and the holder is not coerced into sharing. If the device is heavily scheduled, fragile, time consuming to use, or modified so that it is not useful to others, a "no" from the investigator is accepted without chal- lenge. The general response, however, is an offer to share, because REAP is liked by the researchers, actively helps the faculty, and guarantees that borrowed equipment will be returned in at least as good condition as when it was loaned. REAP maintains a storeroom of unused equipment and parts, and browsing is encouraged. The staff are knowledgeable trouble- shooters and often can either repair equipment or point to the repairs necessary to avoid expensive service contracts. They are regularly~ sent to courses on equipment servicing to help them keep up to date. As universities develop inventory systems, we believe that they might usefully consider the innovations found in REAP. It is clear that REAP owes much of its success to a devoted and tech- nically competent staff, a well-designed, specialized inventory, and an academic community that takes pride in finding cost- effective solutions to problems. When a university has limited access to external repair facilities, is small enough to have institutionwide cohesiveness, and is able to attract and retain an interested and competent staff, an investment in a program like REAP seems wise. National, Regional, and Industrial Facilities Academic scientists also share research equipment at national and regional facilities funded by federal agencies (see Chapter 1). To a considerably lesser extent, they have access to industrial equipment. National Facilities National facilities involve equipment that is far too expen- sive--in the range of tens to hundreds of millions of dollars--to be provided exclusively to a single university. These facilities are usually associated with and managed by a university or national laboratory. Two that we visited were the Meson Physics Facility (LAMPF) operated by Los Alamos National Laboratory and the Stanford Synchrotron Radiation Laboratory (SSRL). Both are sup- ported by DOE. The chief management problem at national facilities is to provide access and a suitable environment for exploratory PAGENO="0558" 552 research. Beam time at SSRL, for example, is oversubscribed; time is assigned to investigators only after their requests are subjected to rigorous review, and only about half of the worthy proposals are awarded beam time. This limited beam time tends to reduce opportunities for serendipitous discovery and high-risk research. In an attempt to overcome this problem, SSRL has recently adopted the Participating Research Team (PRT) mode. A small number of consortia (with university participation in combination with industrial or government labs) set up instrumen- tation (which the consortium must pay for) on one of the SSRL ports; the university part of the PRT has one-third of the beam time to use as it wishes, the industry-government part has one-third, and the remaining third is allocated to the larger user community through the review process. Regional Facilities Regional facilities are designed to serve a smaller, local community of users. They are funded by agencies that include NSF, NIH, NASA, and DOE. While the equipment at these facil- ities is expensive, it would not be out of the question to buy it solely for one of the larger universities. These facilitiçs provide regional service with varying degrees of effectiveness.~ Our observations suggest that when problems occur, they have two fundamental causes. First, the scientists running the facility are usually more interested in doing research than in providing service to users. Second, even given strenuous efforts to be fair, scientists at the host institution have the advantage of being there; thus a large community of local users may dominate the facility. Where a large and scientifically strong group of potential users is based at one institution, it may be better to provide a facility dedicated to that institution, instead of to regional services. In many cases, however, regional facilities have served their communities well by providing access to equipment for users who otherwise would not have such an opportunity. The laser "lending library" (operated by scientists at the University of California-Berkeley and Stanford University) is a regional facility praised by all users. The library places a laser in an investigator's lab for a few months without charge; the spon- soring agency (NSF) pays the maintenance costs and has found them to be considerable. The regional laser facility at MIT is more conventional; the lasers are housed there and users come to them. It, too, has provided lasers to scientists who would not PAGENO="0559" 553 otherwise have had access to them. Neither of these facilities, however, is useful to investigators whose work requires long and nearly continuous access to a laser. Industrial Facilities Academic scientists can best gain access to state-of-the-art equipment in industrial laboratories through collaboration with industrial investigators. Such collaboration does occur frequently in pursuit of common interests, and we encountered several examples. Normally, however, industrial labs are not set up to service outside users; barriers to academic use include considera- tions of safety and liability and proprietary information, as well as conflicting work schedules. Industry does provide equipment for academe in other ways, sometimes involving state govern- merits, and these mechanisms are covered in Chapters 2 and 5. Remote Access to Research Equipment Because research equipment increasingly is operated under computer control, it may be possible to share it by means of remote access. Such access might also reduce the time and expense of travel to some regional or national facilities. In the future, high data-rate transmission (at 52 Kbaud, for example) from the instrument to the user via satellite down-link will be inexpensive, as will high-resolution computer graphics. User-to- instrument communication at 1,200 baud now exists, is compara- tively cheap, and should be adequate for issuing most commands. (Computing equipment--generally excluded from this discussion of sharing--is widely used by remote access.) One case that we encountered suggests the potential of remote access. Some students and a professor in the chemistry depart- ment at Duke University set up a link between a small microcom- puter, their obsolete departmental nuclear magnetic resonance (NMR) spectrometer, and a modern NMRat Research Triangle Park, 15 miles away. A user at Duke was able to operate the remote instrument as if seated at its console. This experimental study began in 1981 and employs specially designed software. We think the idea might be applicable to a limited number of other instruments in situations where the investigator need not have intimate contact with samples after they are prepared and they could be delivered by messenger. As computer networking grows and universities upgrade their telephone systems and install optical fiber communications links, opportunities for remote access to equipment, even on individual campuses, might expand significantly. PAGENO="0560" 554 Remote control of telescopes is now a fact at large observa- tories; and communications technology can extend the link between telesc~pe and control room from tens of feet to thou- sands of miles/ Kitt Peak National Observatory, for example, is now scheduling remote observations. Within the limitations imposed by the relatively slow telephone data rate (one acquisition TV frame every 30 seconds, and one terminal graphics display every 10 seconds), the observing runs thus far have proved quite successful. STRATEGIC PLANNING The costs and complexities of acquiring and managing first- rate academic research equipment are some of the several pres- sures, mainlyfinancial, that appear to be moving universities toward campuswide strategic planning.6'7 Such planning in part leads to preferential allocation of resources to disciplines that offer the university the best opportunities to achieve distinction. A university might allocate minimal resources to some depart- ments, or even close them, for example, in order to provide better research facilities for others. We believe that more hard decisions of this kind will have to be made, but keeping in mind that universities work on a much longer time scale than most of our society. Sound strategic planning must involve faculty par- ticipation, but clearly requires more centralized decision making than is now common in academe. RECOMMENDATIONS The universities' ability to acquire and manage research equipment efficiently reflects factors that include individual circumstances, decentralized authority, the project-grant system that funds much of the equipment, and state and federal regu- lations. Within this context, however, we have identified a number of management practices that are effective and warrant more widespread use. These practices form the basis of the recommendations that follow. The recommendations on the whole imply a need for univer- sities individually to consider a more centralized approach than is now the general practice in their management of research equip- ment. We note that other developments, mainly the result of f i- nancial pressures, point in the same direction. They include the universities' growing interest in debt financing and in develop- mental efforts involving close cooperation with state governments and industry. Such activities generally call for centralized deci- PAGENO="0561" 555 sion making in the universities. More broadly, universities are displaying growing interest in strategic planning, which clearly depends on more centralized decision making. We recommend... 1. That universities more systematically plan their allocation of resources to favor research and equipment in areas that offer the best opportunities to achieve distinction. Such strategic planning should involve participation by both administrators and faculty. The process may well call for hard decisions, but we believe that they must be made to optimize the use of available funds. 2. That universities budget realistically for the costs of operating and maintaining research equipment. These costs impose serious and pervasive problems, and failure to plan adequately for full costs when buying equipment is widespread as well. Full costs include not only operation and maintenance, but space renovation, service contracts, technical support, and the like. Maintenance is particularly troublesome. Hourly user charges are commonly assessed to cover the salaries of support personnel and the costs of maintenance, but are difficult to set optimally and are rarely adequate. 3. That investigators and administrators at universities seek agency approval to spread the cost of expensive equipment charged directly to research-project awards over several award years. As noted in Recommendation 3 under the Federal Government, individual research grants and contracts cannot normally accommodate costly equipment, and this problem would be eased by spreading costs over several years. 4. That universities act to minimize delays and other prob- lems resulting from procurement procedures associated with the acquisition of research equipment. To be most effective, the procurement process should be adapted to the specialized nature of research equipment, as opposed to more generic products. Similarly, specialized purchasing entities or individuals would facilitate timely acquisition of equipment at optimum cost. Also beneficial would be formal programs designed to inform purchas- ing personnel and investigators of the needs and problems of each. 5. That universities consider establishing inventory systems that facilitate sharing. One such system is the basis of the research equipment assistance program (REAP) at Iowa State University. The REAP inventory includes only research equip- ment. REAP may not be cost effective for all universities, but most should find elements of it useful. 6. That universities use depreciation rather than a use al- lowance to generate funds for replacing equipment, providing PAGENO="0562" 556 that they can negotiate realistic depreciation schedules and dedi- cate the funds recovered to equipment. Universities can use either method, but rates of depreciation are potentially higher-- and so recover costs more rapidly--than the use allowance (6 2/3 percent per year) because they can be based on the useful life of the equipment. Both methods, however, add to indirect costs, and neither can be used for equipment purchased with federal funds. 7. That universities seek better ways to facilitate the trans- fer of research equipment from investigators or laboratories that no longer need it to those that could use it. Faculty at most schools have no incentive to transfer equipment, excepting the need for space, and every incentive to keep it in case it might be needed again. Some systematic mechanism for keeping faculty well informed of needs and availability of equipment would be useful. REFERENCES I. Donald Kennedy, "Government Policies and the Cost of Doing Research," Science 227:481 (February 1, 1985). 2. National Science Foundation, "University Research Facilities: Report on a Survey Among National Science Foundation Grantees" (Washington, D.C., June 1984). 3. Neal Lane, Physics Today (May 1984), p. 144. 4. Association of American Universities, The Scientific Instrumentation Needs of Research Universities (Washington, D.C., 3une 1980). 5. H. C. Ford, "Remote Operation of Telescopes: Long-Distance Observing" (Department of Astronomy, University of California at Los Angeles, ~January 1982). 6. Richard M. Cyert, "The Importance of Strategic Planning," Business Officer (October 1983), pp. 15-16. 7. "How Academia Is Taking a Lesson from Business," Business Week (August 27, 1984), p. 58. PAGENO="0563" 557 4 Debt Financing INTRODUCTION Tax-exempt debt financing has long been used by universities to fund large capital expenditures and in recent years has at- tracted much attention as a means of funding research equip- ment. The methods of debt financing employed range from long- term instruments, such as revenue bonds, to short-term leases. Regardless of the method, debt financing of research equipment must compete with the university's other needs for debt. Univer- sities frequently use the proceeds of long-term, low-interest bonds to finance projects such as new buildings, new telephone systems, and major remodeling. When the buildings include labor- atories, most of the associated fixed equipment and some movable scientific apparatus are purchased with the proceeds of the issue. In the l950s and l960s much scientific apparatus came with new buildings at expanding universities, but recent years have seen little net expansion. Concern About Payment The amount of research equipment obtained by debt financing varies widely among universities, but the central cOmputing facil- ity at most schools we visited was either leased or financed by borrowed funds. Universities normally use debt financing to obtain equipment for a research project only if funds are not available from other sources. The basic concern is the availabil- ity of income to cover payments on the debt. Some universities indicated that multi-investigator and block grants are valuable in providing a stable income stream for equipment acquired through debt financing. User fees and grant or contract support, however, are the most common sources of income for payments on equipment debt or leases. Many univer- PAGENO="0564" 558 sities are concerned that these sources are unpredictable and unreliable and that they are likely to have to subsidize debt- service costs. We learned of no central computing facility that was leased or financed by borrowed funds, for example, that had enough income to cover the total costs of the lease or debt; all required a subsidy from the school's general funds. Institutions are additionally concerned that recovery of such subsidies (i.e., the annual deficit in a specialized service center) can be very difficult to negotiate as an element of indirect cost reimburse- ment under 0MB Circular A-2l. Because of limited opportunity to develop a reliable income stream to retire debt, some universities use no debt financing for research equipment. Some state universities are forbidden by state law to incur debt. Other universities are very active in debt financing, but generally require a fallback source of income, such as college or departmental resources, to pay the principal and interest on a debt if necessary. To obtain financing, backup commitments from departmental or college operating budgets or from a university-affiliated foundation are usually necessary. Administrators at many universities with debt financing available appear to be very selective in its use and to restrict it to large purchases (more than $250,000) for which a repayment process can be developed. One university we visited has formal guidelines for use of a line of credit for research equipment costing more than $50,000. At others, the faculty had not been told that debt financing was a potential means of acquiring equipment. At one major university we visited, senior academic officers were unaware that a line of credit had been obtained by a senior finance officer, partially to finance research equipment. IMPLICATIONS AND ANALYSIS IN DEBT FINANCING An important aspect of borrowing money to buy academic research equipment is that, like assumption of debt for any pur- pose, it shifts the locus of responsibility and decision making. U.S. universities are decentralized in any event, and the heavy reliance on individual, competitive research grants and contracts ordinarily confers considerable authority on principal investiga- tors. Borrowing to buy research equipment, however, imposes risk on the university as a whole and so requires a shift from decentral- ized to centralized planning and decision making by the school's administration. Such shifts can contribute to greater use of strategic planning by universities (see Chapter 3). PAGENO="0565" 559 Analytical Requirements Sound borrowing decisions demand a painstaking analysis of costs, risks, and potential impact. A thorough assessment of needs is essential. One university research foundation reported assuming a multimillion dollar debt to acquire a supercomputer without securing positive commitments from projected users. Plans to repay the debt through user charges were based on estimates and verbal assurances from potential commercial users that did not materialize. T1e institution was left with a very large debt and insufficient revenue from user charges to repay it. The parameters of a needs assessment will vary. The univer- sity may wish, for example, to focus on particular types of equip- ment, on replacing obsolete items, or on enabling faculty to estab- lish new programs of research. Universities also have canvassed potential external users, such as faculty at nearby institutions and government and corporate scientists, when equipment was suit- able for sharing. A problem reported repeatedly by universities was failure to plan for full costs when buying equipment. Full costs include shipping, space renovation, operation and maintenance, service contracts, technical support, insurance, utilities, and the like. As a general rule, full costs should always be included in equipment budgets and should be included, at least selectively, in calcula- tions of how much to borrow, recognizing where appropriate the possible use of other funds to pay these costs. The analysis also should cover projected sources of repayment, with the stress on known sources and reasonable expectations. If user charges are expected to supply revenue for repayment, for example, one cannot assume that they can be assessed at 100 per- cent of acquisition and interest costs without making the equip- ment too expensive for potential users. It may also be wise to assess as accurately as possible the allowability of interest costs under 0MB Circular A-2l, which requires prior agency approval to charge interest to federal grants or contracts. One university reported that its line of credit was approved for conformity with 0MB Circular A-21 by five federal agencies. In the one equip- ment purchase thus far under this financing plan, one of the age n- cies declined to allow interest charges, even though the money was available in the grant through rebudgeting. The interest is being paid from private gift funds. Prospective borrowing for equipment is best examined in terms of the university's total debt structure. This examination focuses especially on sources and amounts of revenue projected to repay all debts, repayment schedules, and overall levels of univer- sity liability. This analysis requires the university to forecast how it will meet its combined obligations and determine whether its PAGENO="0566" 560 projections are reasonable. It is important to develop at least an outline of a contingency plan for repaying equipment debt in case projected sources of repayment funds do not materialize. Impact on Academic Programs Evaluation of using debt for instrumentation should include the impact on the university's capacity to sustain research and in- struction, focusing particularly on the future. Too much debt restricts the ability to respond to new challenges and oppor- tunities in research and education. Some debt, judiciously designed to fit the circumstances of the university, may be very useful. In universities where faculty and administrators were satisfied with the decision to borrow, we found that debt was viewed as a supplement to other funds employed to sustain or expand existing programs and help to initiate new ones. The Limit of Debt We have no formula to determine how much debt a university can sustain. The appropriate level depends on many variables, including the school's philosophical approach to financial manage- ment. The National Association of College and University Busi- ness Officers says of a particular ratio of debt service to revenue, "No national standards for budget percentage dedicated to debt service may be inferred from the median values. The willingness and ability to commit revenues to debt service vary greatly among institutions." Among factors that have been identified2 as measures of the debt capacity of a university are: * Ratio of available assets to general liabilities (ordinarily stipulated at 2:1 minimum). * Ratio of debt service to unrestricted current fund revenues. * Ratio of student matriculants to completed applications. * Ratio of opening fall full-time enrollment this year to opening fall full-time enrollment in base year. A number of factors in addition to these ratios usually are considered in assessing the debt capacity, or creditworthiness, of universities.3 PAGENO="0567" 561 CHOOSING THE APPROPRIATE DEBT INSTRUMENT A number of forms of debt financing are available to univer- sities, and each debt instrument has terms and conditions that can be attractive in the right circumstances. Examples of the use of debt financing by universities are described in Appendix H, and representative debt instruments are summarized in Appendix I. It should be noted that the types of instruments available, the relevant tax laws and interpretations of them, and the conditions of the debt market are always subject to change.* Thus the selection of debt instruments by universities should be based on current expert advice from investment, legal, and tax counsel. The discussion of debt instruments in this chapter is intended to be illustrative, not comprehensive. Factors to be considered in selecting a debt instrument include the amount to be borrowed and the equipment to be bought. One supercomputer, for example, may call for a different debt instru- ment than many devices each costing less than $100,000. The urgency of the need may be a factor--a line of credit may be arranged fairly quickly, while a bond issue is time consuming. The single most important factor in selecting a debt instrument is the correlation with use: short-term debt for short-term use, long- term debt for long-term use. Also a factor is the impact of different repayment schedules on the university's programs. In addition, different types of debt instruments have different costs, including the rate of interest, issuance costs, legal fees, and printing charges. SHORT- TO MEDIUM-TERM DEBT INSTRUMENTS Short- to medium-term debt instruments include leases, munic- ipal leases, lines or letters of credit, pooled revenue bonds, tax- exempt variable rate demand bonds, and tax-exempt commercial paper. Maturities vary from I to 10 years. Selection criteria may include the following: * Equipment is needed only for a specific period and may or may not have to be permanently retained by the university. * Leasing costs can be identified with a specific piece of equipment, which can be readily identified with a grant or contract for reimbursement. *The material in this chapter was current as of October 1984. PAGENO="0568" 562 * A lease can be arranged to include a maintenance and service contract. * Short-term debt can be used temporarily until permanent funding becomes available. * Conditions in the bond market do not favor issuance of long-term debt. * The institution may not have the credit rating or sufficient funding needs to issue long-term debt. The Decision to Lease or Purchase The decision to lease or purchase usually involves a present- value analysis, in which the financing alternatives' net cash flows over time are discounted back to present-day value (see Table 6). The financing alternative with the lowest present-value cost would be considered best on a cost basis. The final decision to lease or buy depends on the prospective lessee's total financial position and equipment need. The ease and the initial low cost of entering into a lease agreement should not preclude performing cost-benefit analyses of other debt alternatives. Over the long term, high-priced, long-term equipment will most likely have a higher net effective cost under a lease arrangement than under a long-term debt instrument. For short-term, low-priced equipment, the university might consider a line of credit as an alternative to leasing. General Uses of Leasing Ordinary leasing takes two basic forms: * Operating lease: an institution acquires the use of equip- ment for a fraction of its useful life. Title is retained by the lessor, and the lease contains no option to purchase the equip- ment. The lessor may provide services in connection with maintenance and insurance of property. * Capital lease: a capital lease must meet one of the following criteria: - Title is transferred to lessee at the end of the lease. - Lease contains a bargain purchase option. - Lease term is at least 75 percent of the leased property's estimated economic life. - Present value of the minimum lease payments is equal to 90 percent or more of the leased property's fair market value, less related investment tax credit retained by the lessor. PAGENO="0569" 563 TABLE 6 Present Value Analysis Yr. Outflow($) Inflow($) Net($) PV Factor* Net Present Value($) ~ption A 0 1,000,000 0 (1,000,000) 1.000 (1,000,000) 1 100,000 500,000 400,000 0.909 363,600 2 100,000 500,000 400,000 0.826 330,400 3 100,000 500,000 400,000 0.751 300,400 4 100,000 500,000 400,000 0.683 273,200 5 100,000 500,000 400,000 0.621 248,400 Net present value 516,000 ~ption B 0 0 0 0 1.000 0 1 400,000 500,000 100,000 0.909 90,900 2 400,000 500,000 100,000 0.826 82,600 3 400,000 500,000 100,000 0.751 75,100 4 400,000 500,000 100,000 0.683 68,300 5 400,000 500,000 100,000 0.621 62,100 Net present value 379,000 DECISION: Option A, purchasing equipment with available cash. Option A states that the acquisition of new laboratory equipment will save the department $500,000 per year in contracting the services from a private lab. Costs of about $100,000 per year are directly attributable to the new equipment maintenance which will reduce the potential annual savings to $400,000. The cost of the equipment and its installation is $1.0 million. At the end of five years, the equipment has zero salvage value. Option B states that the leasing of new laboratory equipment will save the department the same $500,000 as in Option A. The cost of lease will be $300,000 per year for five years with an additional $100,000 per year for maintenance. The department has no purchase option at the end of the lease. *PV factor assuming a 10 percent discount rate. SOURCE: Coopers & Lybrand. PAGENO="0570" 564 The benefits commonly attributed to leasing are primarily available in a tax-oriented lease in which the lessor retains and claims the tax benefit of ownership. This type of lease is called a true lease for tax purposes. Nearly all operating leases are con- sidered true leases, but only some capital leases qualify as true leases. Not-for-profit organizations do not accrue tax benefits from leasing capital equipment, benefits that are available to profit- making organizations. With state universities, IRS regulations prevent the lessor from benefiting from the investment tax credit because the end property user is a government entity. Leases can be structured, however, to pass on the tax benefits of ownership to the lessor. These methods include a sale-leaseback and third- party lessor, which may be an affiliated foundation (see Chapter 5). Such methods require careful review and professional counsel to ensure that the transaction is structured to meet IRS regula- tions and other federal requirements. State universities have structured leases as a sale-leaseback transaction in which the equipment is sold by the university to purchaser/lessor and then leased back by the university. These arrangements are considered operating leases, allowing the purchaser/lessor to receive the tax benefits. In most cases, however, the sale-leaseback is not the best method relative to other forms of tax-exempt financing available to state univer- sities (e.g., bank line of credit). Private universities, for major projects that include both buildings and equipment, can combine debt financing with leases. This arrangement allows the university to match the economic life of the asset with a comparable financing period. However, the institution should consider tax-exempt financing (e.g., a line of credit or industrial revenue bond) for major funding needs or for aggregate university funding, because tax-exempt financing could be a cheaper form of debt than leasing equipment on an individual basis. Foundations established as separate, incorporated entities can provide additional financing flexibility to state universities. Such foundations can offer a number of benefits by incurring debt and arranging leasing on behalf of a university. An example is the Georgia Tech Research Corporation mentioned in Chapter 3. A state institution and the foundation will have an arm's-length relationship that can provide needed financing while complying with various state regulations. Municipal Leases Municipal leases require the lessee to be a state, city, or government entity, and so do not apply to private universities. PAGENO="0571" 565 For tax and legal purposes, the municipal lease is considered a conditional sales contract. Municipal leases usually include the following provisions: * The university receives title to the equipment for a nominal fee at the end of the lease term. * No down payment is required from the university. * The university makes clearly defined payments of principal and interest. * The lessor receives none of the tax benefits of ownership, but can treat the interest portion of the lease payments as tax- exempt income. * The lease term is generally on a fiscal year-to-year basis with renewable options; the university's liability is limited to the actual lease term (excluding renewable options), so it can cancel the lease at the end of each year. Through a municipal lease, a state university can enter into a lease-purchase agreement and still meet state constitutional or statutory constraints on multiyear debt. The cost of the lease usually ranges from 70 to 90 percent of the prime interest rate; the high cost reflects the lessor's risk that the lease can be can- celled on a year-to-year basis. Interest, however, is the only expense associated with the lease. Also, the ability to cancel on a year-to-year basis provides some insurance against technological obsolescence. Municipal leases generally are used to acquire equipment costing in the range of $100,000 to $1 million. They are also useful for acquiring lower priced equipment: they can be arranged quickly and normally are used to acquire small pieces of equip- ment that depreciate quickly and have questionable salvage value. Mechanics In arranging a municipal lease, the university selects the equip- ment and deals directly with the vendor on the sale terms and price. When the terms are settled, the university negotiates the lease with a third-party lessor. Municipal leases usually include a fiscal funding clause to protect the lessee from any claims the lessor may have against cancellation of the lease. The clause makes the lease conditional on full appropriation of funds to pay the lease in the next fiscal year. If the lease includes such a clause, the lessor may require a nonsubstitution clause to protect against the lessee's cancelling the initial lease on the basis of nonappropriations and then leasing similar equipment from another lessor. PAGENO="0572" 566 Third-Party Lessors An affiliated nonprofit organization or foundation could enter into a municipal lease arrangement for a state university. The foundation would act as a third-party lessor and could provide: * Additional financial security to back the leasing arrangement. * Review of department heads' and principal investigators' municipal-lease requests to ensure that revenue sources are available to cover lease commitments. * Management of the leased equipment. * Support for collecting and paying lease payments. Additionally, the foundation would not be subject to fiscal appropriations and would be able to plan for the funding of long-term lease contracts. Line of Credit A university that anticipates a near-future need for borrowed funds but does not know its specific requirements can negotiate with a bank for a line of credit. The line of credit represents an assurance by the bank that funds will be made available to the university as needed, based on the terms and conditions of the initial agreement and barring any major changes in the financial position of the university. Once a line of credit is negotiated, the university can request funds from the bank. The bank reviews the request(s) and extends the loans up to the stated limit of the line of credit. Lines of credit usually are extended for one to five years and for ceilings of $2 million to $15 million on outstanding loans. A line of credit gives the university a standby source of funds that can be obtained without having to renegotiate terms and con- ditions each time a loan is needed. By paying a fee on the unused portion of the funds, the university can arrange a letter of credit or a standby loan guarantee from the bank to ensure the funds' availability. Mechanics A university with an established credit rating can most likely negotiate with a number of banks before arranging a line of credit with one of them. Depending on its financial strength, the univer- PAGENO="0573" 567 sity may be able to arrange more than one line of credit. The general terms of a line of credit specify: * Interest rate will average 60 to 75 percent of the prime interest rate because the line of credit is considered a tax-exempt debt. * Loan ceiling represents the total amount of credit that the bank will extend to the university under the line of credit. * Put and call provisions state the period in which the bank can request repayment in full of all outstanding loans and the period in which the university can prepay its loan. * Fee represents the bank's compensation forextending the line of credit; it can be expressed as a st~d amount or as a per- centage of the unused line of credit. * Conditions define specific terms of the line of credit, e.g., the bank may ask the university to maintain compensating bank balances, depending on the underlying credit of the university and the bank's loan pricing structure. * Security defines the collateral the bank requires to support the loan (e.g., the university's pledge of unrestricted endowment funds or a lien on the purchased equipment). Procedures for Use Once a bank line of credit is obtained, the university should establish procedures for using it. The line of credit could be drawn upon, for example, to meet loan requests from department heads and principal investigators. Each request would have to be documented to justify the loan and demonstrate a source of reve- nue to repay it. Internal administrative controls would have to be established to review and process requests and ensure that the use of the line of credit conforms to budgetary and research priorities. If numerous small loans were made, additional administrative con- trol would be required to monitor loan limits and debt service. Pooled Revenue Bond A pooled revenue bond is issued under a designated govern- ment authority to meet the aggregate funding requirements of a group of state or private institutions. Bond pools are of two types: a blind pooi does not identify the participating universities or the projects to be funded; a composite pool identifies both. To ensure the marketability of the bond issue, the authority will most likely purchase an insurance policy that guarantees PAGENO="0574" 568 repayment in the event of default by any of the participating universities. The authority may require a participating university that does not have an established credit rating to obtain a letter of credit to guarantee its loan or to pledge cash and securities as collateral. Financially strong universities that can issue their own debt may not gain cost advantages from participating in the pool. The participation of universities with established credit ratings, however, is important to ensure that the pooled revenue bond gets a favorable rating and can be marketed to investors. The pooled revenue bond meets the minimum requirements ($5 million to $10 million) for a marketable, cost-effective issue, and the costs of issuance are shared by the participating institutions. It works well when the participants need similar types of equip- ment: investors are looking for some element of commonality-- such as the useful life of equipment--so that they can better assess their risks. The mechanism permits a university to finance equipment purchases that would not warrant issuance of a revenue bond on its own. Mechanics After the bonds are issued, the authority enters into a loan agreement with each participating institution. The agreement specifies the term and amount of the loan, the repayment sched- ule, and the interest rate. The periods of the participating institutions' loans generally range from three to ten years, but no loan can extend past the maturity date of the bnd issue. IRS regulations give the authority three years to disburse the proceeds of the bond. Within that period, the authority may invest the proceeds at a higher rate than the tax-exempt rate of the bonds to reduce the borrowing costs to the participants. Tax-Exempt Variable Rate Demand Bond Tax-exempt variable rate demand bonds (VRDBs) carry a floating interest rate set periodically in one of three ways: * Percentage of prime interest rate. * Percentage of 90-day U.S. Treasury Bill rate or bond equivalent basis. * Indexed to tax-exempt notes. The VRDB, nominally issued with a 25 to 30 year maturity, gives the university access to long-term debt at short-term rates. When issuing long-term debt is not feasible or is relatively expen- PAGENO="0575" 569 sive, VRDBs permit the university to begin construction of build- ings or procure equipment without funding delays; they permit the issuance of permanent debt to be postponed until conditions in the long-term bond market improve. The short-term feature of the VRDB can offer quite favorable interest rates, which may range three or more percentage points below fixed long-term bond rates. VRDBs entail risks if the university plans eventually to convert them to long-term debt. One such risk is the uncertainty in the regulatory environment, which may restrict the university's ability to issue long-term debt. One of the many varieties of variable rate demand bonds is the adjustable rate option bond described in Example G, Appendix H. Mechanics VRDBs are issued for the university by a designated state or local authority. The bonds are sold to short-term investors, normally tax-exempt money market funds that can only hold securities with maturities of 90 days or less. The terms generally give the investor the option of returning the bonds to the issuer after giving a seven-day notice and give the issuer the option of recalling the bonds from the investors upon a 30-day notice. (The adjustable rate option bond in the example allows only annual returns of the bonds for payment.) Because the investor can return the bonds, the university must demonstrate its ability to pay for them. If the bonds can be immediately resold, the univer- sity can readily repay the investor. If new investors cannot be found, however, the university needs some way to raise the neces- sary capital. The most common way is a bank letter of credit. Through a letter of credit agreement, the bank lends the university the necessary funds at a specified rate of interest and with a set repayment schedule. Borrowing under the terms of the letter of credit can be costly, in that the interest rate is higher than the university is paying on the VRDBs. Most universities will have to use it, however, because the institution may have insuf- ficient cash reserves to ensure repayment of the VRDBs. With the letter of credit the bank may provide other services, including placement of the initial bond offering and assistance in locating new investors if initial investors return the VRDBs. (In many cases, investment bankers provide the marketing and remarketing service.) The university and its bank negotiate the terms of the letter of credit, which generally costs from I to 1.5 percent of the amount of the issue and ii~as a five-year term with cancel- lation and renewal clauses. PAGENO="0576" 570 Tax-Exempt Commercial Paper Tax-exempt commercial paper (TECP) consists of a program or series of short-term obligations with maturities of 270 days or less, issued by a designated authority for, a pool of universities. TECP gives universities the flexibility and liquidity of short-term borrowing at the lower interest rates offered on tax-exempt securities. Issuance costs are shared by the participants. Add i- tionally, the TECP is designed to be rolled over at maturity without delays and added issuance cost, so the university is not locked into long-term debt and can repay the loan at any time without penalty. Mechanics The designated authority would issue the tax-exempt com- mercial paper and provide the funds to participating institutions that request loans to finance the construction or renovation of buildings and the acquisition of equipment. The issued amount of the TECP would reflect the aggregate amount of the participating institutions' loan requests over the period of the program, say, two or three years. The relatively high cost of setting up a tax- exempt commercial paper program makes it necessary to aggre- gate fairly large pools of money. The minimum for the pooi commonly is $50 million. The TECP would be a limited obligation of the authority and would represent no obligation of the authorizing state or county. The financial backing for the issue is the revenues and pledged funds of the participating universities. Before a loan is made, the authority must approve the creditworthiness of the participating institutions. An institution that does not have an established credit rating could obtain a letter of credit or pledge assets as collateral. The authority would make a long-term loan to the institution for a period not greater than the expected life of the debt program, which could be as long as 10 years. The university would repay its loan in equal monthly install- ments that would reflect repayment of principal and the costs of interest, administration, and issuance. The interest on the loan would be determined monthly and reflect the average interest rates of TECPs sold during the month. Repayment of the TECP is based solely on participating institutions' loan payments to the authority. PAGENO="0577" 571 LONG-TERM DEBT INSTRUMENTS Long-term financing commits a university to 10 to 30 years of debt. Tax-exempt revenue bondsand general obligation bonds are the major forms of long-term financing. Certificates of participa- tion, industrial development bonds, and "on behalf of..." debt instruments are specific forms of revenue bonds. Types of Tax-Exempt Bonds For state, local, and other municipal government entities and authorities, municipal bonds are a major means of financing the construction and maintenance of public facilities. Municipal bonds are cost effective because the interest paid to the bond holders is exempt from federal income tax and sometimes from state or local income tax. The tax-exempt status permits issuers of municipal bonds to pay lower interest rates than are paid on corporate bonds. Municipal bonds are differentiated by the type of funds that secure payment. The bonds are of two general types: * General obligation bonds are secured by the taxing power of the state or local government. All sources of the specified government unit's revenues will be used to pay off the debt, unless specifically excluded. The bonds are backed by the "full faith and credit" of the state or local government. * Revenue bonds are issued to finance a specific revenue- generating project. They are secured by the project's revenue and are not backed by the "full faith and credit" of a state or local government. Long-term debt financing for universities generally involves revenue bonds or industrial development bonds. The industrial development bond is issued by a state, local, or other designated government entity to finance the construction or purchase of plant facilities or equipment to be leased and used by a private entity. The bond is backed by the credit of the private entity and not by the issuing government entity. Revenue bonds do not burden the credit capacity of the munici- pality nor require a referendum, as do most general obligation bonds. The state or local government issues the revenue bonds or empowers an authority, commission, special district, or other unit to issue the bonds and constructand operate or lease the specified building/equipment. Revenue and industrial development bonds can be used by both state and private institutions. The tax-exempt bond can be issued 53-277 0 - 86 - 19 PAGENO="0578" 572 as long as it fulfills a "public purpose" under state law in accor- dance with Internal Revenue Code Section 103. State universities enjoy tax-exempt status because they are considered subdivisions of the state. A private university, however, must use a tax- exempt conduit such as a county, industrial development author- ity, educational facilities authority, or similar agency. Revenue bonds issued by both state and private universities are backed by the creditworthiness of the institution. If it does not have suf- ficient collateral to attract investors, the issue would most likely have to be underwritten by an insurance company to ensure its marketability. Other forms of credit enhancement are available. The university might obtain a letter of credit, for example, or, where feasible, set aside a portion of endowments as collateral. Such credit enhancements have the effect of lowering the interest rate that must be paid to attract investors. Mechanics The tax-exempt bond is a legal promise by the backer- municipality, political subdivision, designated public authority, state university, or private university--to pay the investor a specified amount of money on a specified date and to pay interest at the stated period and rate. A bond issuance basically involves four main parties or groups of individuals: * The institution-in this case a state or private university, responsible for paying principal and interest from its own revenues. * The issuer--a governmental entity or designated authority that borrows money through sale of tax-exempt bonds. * The dealers--securities firms or commercial banks that underwrite, trade, and sell securities. * The investors--tax-exempt bond funds, banks, casualty insurers, and individuals. The minimum feasible amount of a bond issue is normally $3 million because of the sizable costs of bringing the issue to mar- ket. These costs would include legal, accounting, and brokerage fees as well as incidental costs such as printing. Individual bonds have a minimum face value of $5,000, but on average are issued in $25,000 denominations. Legal and tax counsel are essential to ensure that all report- ing, tax, and disclosure requirements are met. Municipal security issues do not have to follow the reporting requirements of the Securities and Exchange Commission (SEC), but the Municipal Securities Rulemaking Board, an independent, self-regulatory PAGENO="0579" 573 organization of dealers, banks, and brokers, has established guide- lines for the municipal securities industry. A potential issue would be governed by the antifraud provisions of the Securities Acts and SEC Rule l0b-5. Additionally, a tax-exempt bond must adhere to Internal Revenue Code Section 103, which defines the types of facilities that can be financed with tax-exempt bonds. Certificates of Participation Certificates of participation (CPs) are a relatively new debt instrument that resulted from the need of public institutions to lease high-priced facilities. This form of financing provides access to the equivalent of long-term debt, but does not constitute direct indebtedness. The legal structure of CPs is basically the same as for a lease-purchase agreement. CPs, however, allow a university to lease costly facilities and equipment with several investors acting as the lessor. CPs represent a share in a lease--the certifi- cate holder has an interest in the lease proportional to the per- centage of the investment. The underwriting for CPs is complex and lengthy; the efforts and cost are comparable to those of issuing a revenue bond. CP investors will require some form of security from the university to ensure that funds are available to meet lease payments. In some cases, the university may have to purchase a letter of credit or establish a debt reserve fund to cover one year's debt service. The cost of placement requires that the CPs be issued for at least $1 million. "On Behalf of..." Financing "On behalf of ..." financing is arranged by a third-party guar- antor for a state or private institution. The financing could take the form of either a revenue bond or a lease. Generally, "on behalf of ..." financing is used for special equipment. A tax- exempt foundation (third-party guarantor) issues a revenue bond on behalf of the university to purchase the equipment. When the equipment is acquired, the foundation leases it to the university. The university makes lease payments to the foundation and receives title to the property at the end of the lease. Although the foundation is the guarantor of the "on behalf of ..." issue, the bond or lease represents an indirect obligation of the institution. "On behalf of ..." investors look to the university's revenue- generating capability and creditworthiness to evaluate the riskiness of the issue. * An advantage of "on behalf of ..." financing is that the debt does not appear on. the university's balance sheet. The financial PAGENO="0580" 574 impact on the university is reflected as a contingent liability for future lease payments. The leasing arrangement between the foundation and the university is on a year-to-year basis with annual renewal options. A state university would use "on behalf of ..." financing only when revenue bonds could not be issued. Some state governments have legislative authority over the state university's ability to issue revenue bonds and can restrict the purpose of the bond and the use of the funds. "On behalf of ..." financing would be easier to issue than revenue bonds in these states, but the cost of issuance is higher. INNOVATIVE TECHNIQUES A number of innovative financing techniques have been used for state and private universities. One of these is to structure the bond issue so that the institution's alumni may be investors, not just contributors. The bonds are issued and purchased by alumni. The proceeds are placed in an irrevocable charitable remainder trust from which interest payments are made to the bond holders. The alumni can claim the principal of the bond as a charitable donation for tax purposes and also can treat the interest as tax-exempt income. When the bonds mature, the trust is retired and the principal goes to the university. The financial advantage to the university is a substantial reduction in debt service. The major disadvantage of this type of financing is that the institution does not have use of the funds until the bonds are retired; for this reason, the bonds should be issued with short-term maturity. Grantor Trust A mechanism proposed recently by an investment banking firm involves a lease pool large enough to spread financing costs over many leases with consequent economies of scale. The goal is to finance acquisition of equipment from research awards over three to seven years while avoiding the problems associated with pool- ing funds from different award periods and possibly from different awards. The proposal envisions a grantor trust created to acquire tax-exempt lease obligations of participating universities. (The specific proposal involves a nonprofit corporation of some 55 universities--the Universities Space Research Association-- formed originally for other purposes.) The trust would offer investors certificates of participation that provide tax-exempt income and return of capital in three to seven years. An initial offering on the order of $20 million is contemplated. Addition- PAGENO="0581" 675 ally, corporate guarantees would be sought to cover up to 25 percent of the pool in case of defaults or failure to exercise annual lease-renewal options. Advances made by corporations under these guarantees would be structured as tax-deductible contributions. The guarantees would be designed primarily to make the certificates of participation more attractive to inves- tors, and the grantor trust would not anticipate involving them. RECOMMENDATIONS Universities traditionally have used tax-exempt debt financing to spread payments for costly facilities over periods of years and lately have been using the method to some extent to buy research equipment. A number of financing methods can be adapted to the special characteristics of equipment, such as its relatively short technologically useful life. A noteworthy aspect of debt financing is its imposition of risk on the university as a whole, which re- quires a shift from decentralized toward centralized authority. We recommend... I. That universities explore greater use of debt financing as a means of acquiring research equipment, but with careful regard for the long-term consequences. Universities vary widely in their use of debt financing, but a universal concern is the need for a reliable stream of income to make the debt payments. It should also be recognized that the necessary commitment of institutional resources, regardless of the purpose of the debt financing, erodes the university's control of its future, in part by reducing the flexi- bility to pursue promising new opportunities as they arise. Debt financing also increases the overall cost of research equipment to both universities and sponsors of research. 2. That universities that have not done so develop expertise on leasing and debt financing of equipment. This expertise should include the ability to determine and communicate the true costs of debt financing and should be readily accessible to research administrators and principal investigators. The increasing com- plexity of tax-exempt debt financing, the many participants, the necessary legal opinions, and the various political and/or cor- porate entities associated with debt financing make it essential that universities fully understand the marketplace. PAGENO="0582" 576 REFERENCES I. National Association of College and University Business Officers, "Financial Self-Assessment: A Workbook for Colleges" (Washington, D.C., 1980). 2. Peat, Marwick, Mitchell & Co., Ratio Analysis in Higher Education (Washington, D.C., 1982). 3. Hyman C. Grossman, "Higher Education Credit Rating Criteria" (Presentation to a Symposium on Higher Education Capital Finance, Morgan Guaranty Trust Company, New York, November 2, 1984). PAGENO="0583" 577 5 Private Support of Academic Research Equipment INTRODUCTION Higher education in this country has long enjoyed significant support from private sources, including individuals, foundations, and business and industry. Universities increasingly have been seeking such support, and it has risen steadily in recent years. Private assistance to academe takes various forms, and in some measure is helping to address the need for research equipment. An increase in private support for academic research equip-. ment was one of the aims of the federal Economic Recovery Tax Act (ERTA) of 1981 (PL 97-34). The act resulted from concern over the nation's indu3trial strength and was designed in part to spur research and development, both academic and industrial. It permits special charitable deductions for scientific equipment contributed by its manufacturers to colleges and universities. It also provides tax credits for industrial spending on R&D con- ducted both in-house and by other performers, including universities. The act took effect in August 1981, and, unless extended, certain provisions will expire December 31, 1985. Extent of Private Support Data on trends in funding of academic research equipment do not exist. Data are available, however, from the NSF National Survey of Academic Research Instruments on major instrumenta- tion systems in use in 1982-1983. The data show that industry funded 4 percent of the aggregate acquisition cost of such sys- tems and that individuals and nonprofit organizations funded 5 percent (Table 3, Chapter 2)., The NSF data show also that about 2 percent of the instrumentation systems in use in 1982-1983 were donated, as opposed to being purchased by the universities (Table 7). PAGENO="0584" TABLE 7 Means of Acquisition of Academic Research Instrument Systems in Use in 1982-1983, by Field (Number and Percent of In-Use Systems) I Total Pur- chased New Locally Built Pur- chased Used Donated - New Used Govt. Surplus Other Total, Selected Fields 36,351 100% 32,409 89% 942 3% 1,342 4% 410 1% 317 1% 409 1% 522 1% Agricultural Sciences 1,650 100% 1,575 95% 17 1% 39 2% 4 - 2 - 5 - 9 1% biological Sciences, Total 15,043 100% 14,138 94% 71 - 475 3% 22 - 36 - 43 - 259 2% Graduate Schools 6,358 100% 5,959 94% 40 1% 234 4% 4 - 13 - 10 - 98 2% Medical Schools 8,685 8,179 31 241 17 24 32 162 100% 94% - 3% - - - 2% Environmental Sciences 2,122 100% 1,756 83% 98 5% 103 5% 26 1% 31 1% 88 4% 19 1% Physical Sciences 8,770 100% 7,502 86% 366 4% 428 5% 20 - 98 1% 196 2% 161 2% Engineering 6,786 100% 5,613 83% 379 6% 209 3% 309 5% 126 2% 78 1% 72 1% Computer Science 876 100% 766 87% 0 - 56 6% 30 3% 23 3% 0 - 0 - Materials Science 650 100% 619 95% 7 1% 22 3% 0 - 0 - 0 - 2 - Interdisciplinary, not 454 440 4 1 0 0 0 0 0 elsewhere classified 100% 97% 1% 2% - - - - NOTE: Sum of percents may not equal 100 percent because of rounding. SOURCE: National Science Foundation, National Survey of Academic Research Instruments and Instrumentation Needs. PAGENO="0585" ~579 Trends in funding of R&D presumably apply grossly to the funding of the associated equipment. For example, in 1983 indus- try funded about 5 percent of academic R&D. Industrial funding of academic R&D, in constant dollars, grew at an average annual rate of 6.7 percent during 1967-1983 (Appendix A). The compa- rable growth rate for federal funding was 1.6 percent. Federal funding of academic R&D in 1983, however, totaled $4.96 billion (current dollars), or64 percent of total funding and more than 13 times the industrial contribution. A drop of 1 percent in the fed- eral support of university research would require a 20 percent increase in industry support to make up for it.' In addition to the foregoing NSF data is information on cor- porate support of academe compiled by the Council for Financial Aid to Education (CFAE). The two sets of data partly overlap and so cannot be combined to give totals. In any event, the CFAE data show that voluntary private support of higher education, from all sources, more than tripled during 1966-1983, to $5.15 billion. Corporate support has been rising faster than other private fund- ing and in 1983 comprised 21.4 percent of the total. Corporate support also is more than twice as likely to be earmarked for research as are contributions from other private sources; cor- porate giving so earmarked in 1983 was 25 percent of the total, or $274 million (Figure 9) The most dramatic change in corporate giving between 1980 and 1982, CFAE's most recent survey years~ was in departmental and research grants, which almost doubled' Gifts of equipment accounted for much of the gain. CFAE believes that ERTA contributei significantly to corporate giving of equipment. MECHANISMS OF CORPORATE SUPPORT Companies support acquisition of academic research equip- ment by a variety of means in addition to donations of equipment itself. These mechanisms include cash gifts, contract research, discounts on equipment, industrial affiliate programs, research centers and consortia, and informal loans and sharing. Donations of equipment have been particularly common in computing, microelectronics, and engineering, but less so in other areas. Equipment offered for donation, however, may not be state of the art, particularly in industries where the technology is advancing rapidly. Also common are offers of instrumentation that does not meet the research needs of the proposed recipient. Further, donations of equipment generally do not provide for the costs of renovating space and installing, operating, and maintain- ing the equipment. These costs have prevented some universities from accepting donations. In Chapter 3 we cited the university PAGENO="0586" C 0 0 0 0 c) 580 FIGURE 9 National Estimates of Corporate Voluntary Support of Colleges and Universities Fiscal Years 1975-1983 7" 1200 1000 800 600 400 200 0 75 76 77 78 79 80 FISCAL YEAR 81 82 83 SOURCE: Council for Financial Aid to Education. PAGENO="0587" 581 visited by the study team that declined a gift of computer-aided design equipment because it could not afford the $170,000 per year required to operate it. Cash gifts support a variety of research and instructional needs, including research equipment. Some companies have set up organizations to plan corporate philanthropy, including matching of employees' contributions to colleges and universities. Com- panies sometimes help to support the research of a particular investigator or program. Unrestricted cash gifts often are applied wholly or partly to the costs of acquiring and using instrumenta- tion and sometimes are used to meet federal matching require- ments for buying equipment. Co mpanies generally fund contract research at universities on a project-by-project basis, much as federal agencies support contract research. Academic investigators and administrators, however, report significant differences in the handling of indus- trial and federal research contracts. Negotiations with industry are not hampered by the problems associated with federal reg- ulations identified in Chapter 1. Corporate negotiators, more- over, recognize that state-of-the-art equipment and the costs of operating and maintaining it are part of the price of effective research. Contracts with industry, therefore, are more likely to cover all of these costs than are federal contracts. Companies frequently use discounts and flexible payment schedules, often free of interest, to help universities obtain re- search equipment. These mechanisms in the aggregate can pro- vide substantial benefits to universities. One company visited by the study team used a two-for-one discount on purchase of new equipment to generate goodwill and to institute a series of infor- mal exchanges between its scientists and investigators at the recipient school. Industrial Affiliates Industrial affiliate programs (also called industrial liaison programs) provide substantial support for departments and programs at a number of universities. The companies involved pay annual membership fees that vary with the arrangement, but often are in the range of $30,000 to $50,000 per company. The university in turn generally provides seminars conducted by faculty, preprints of publications, copies of theses and disserta- tions, and informal contact with faculty and students. Some programs also provide a limited amount of consulting by faculty at no charge. These industrial affiliate arrangements can provide considerable discretionary funding, which could be used to pur- chase research equipment. PAGENO="0588" 582 An elaboration of the industrial affiliate concept is the r e- search center or consortium.. These arrangements may be orga- nized to pursue mission-oriented research. Centers for research on very large-scale integration of electronics, for example, are being established at MIT and Stanford. The corporate members of the Stanford center initially contributed $750,000 each. Of the $20 million thus raised, more than $4 million was used to acquire state-of-the-art instrumentation. Annual corporate dues are $100,000 per company and are expected to comprise one-sixth of the center's sponsored research budget, with the remainder to come from federal agencies. The privileges of membership in- clude limited rights to certain aspects of the technology devel- oped in the center's research programs. A somewhat different approach is the Houston Area Research Center (HARC). It was formed in 1982 by four universities--Rice, Texas A&M, Houston, and Texas-Austin--to conduct research that none of them could handle easily alone. HARC received private funding initially, and now has begun to receive federal contract funding. Projects under way in 1984 included raising funds for a supercomputer for the four schools and surrounding industry, development of geological testing techniques and large-scale geological surveys and studies, and support for activities in high-energy physics. Another vehicle of corporate support is a nonprofit corpora- tion, supported by contributions from companies, which funds contract research at universities. The arm's-length sponsored research agreements negotiated can provide significant funding for research equipment. One example of such an arrangement is the Center for Biotechnology Research, in San Francisco, Califor- nia. It is supported by six companies and administered by a three- member board of trustees. Academic investigators occasionally benefit from informal loans or sharing of company-owned equipment. Most often such arrangements result from personal contacts between scientists. Freedom of Inquiry A critical issue in academic-corporate relationships is preser- vation of the academic freedom that contributes so much to the strength of research in our universities. The proprietary interests of a corporate sponsor of research, for example, are inherently in conflict with the academic practice of open and rapid dissemina- tion of research results. Means of managing academic-industrial relationships have been examined increasingly in recent years as such arrangements have proliferated.3'4 The general issue is beyond the scope of this report, but certainly must be considered PAGENO="0589" 583 in arrangements to secure corporate funding of academic research equipment. OTHER PRIVATE SUPPORT The NSF data cited earlier indicate that private individuals, not-for-profit organizations, and foundations fund academic research equipment at a level comparable to corporate support. Philanthropic programs generally support instrumentation through research grants and general program support. Universities have raised matching funds for research equipmer~t from individual private donors and philanthropic organizations. The added lever- age of matching funds, plus the appeal of current sophisticated technology, help scientific research to compete with efforts to raise funds for other activities, such as athletic programs and hospitals. Universities report that fund drives for specific items of research equipment have proved effective. Individuals also may help to fund academic research equipment by investing in bonds issued to raise money for universities (see Chapter 4) or in research and development limited partnerships (see below). TAX INCENTIVES Corporate and other private entities traditionally have been allowed tax deductions for donations of cash and property to col- leges and universities. ERTA, however, in response to the need for research equipment in academe, attached permanent special tax benefits to donations of such equipment by its manufacturers. Also, in accord with its basic goal of spurring technology, ERTA created additional tax credits for industrial investment in re- search and development, including academic R&D. (Unless extended, the R&D tax credit will expire December 31, 1985.) Further, most of the states in recent years have adopted tax incentives identical or similar to the federal provisions relating to contributions of scientific equipment. In addition to these federal and state provisions, tax benefits are available to research and development limited partnerships, which might provide some support for academic research programs. Contributions of Scientific Equipment A company that donates equipment to a charitable (tax- exempt) organization generally is allowed a tax deduction equal to PAGENO="0590" 584 the cost of the equipment to the company (production cost). ERTA increased the deduction to production cost plus half of the difference between cost and fair market value (normal selling price) for equipment donated to institutions of higher education, subject to certain provisos, among them: * The donor must be the manufacturer of the equipment. The cost of parts from outside suppliers may not exceed 50 percent of the donor's cost in the equipment. * The equipment must have been manufactured no more than two years before donation, and the university must be the original user. * At least 80 percent of the use of the equipment must be for research or research training in the physical or biological sciences. Direct education of students in these fields is excluded, and thc social and behavioral sciences are excluded altogether. * The equipment must be used in the United States, and the university may not transfer it to others for money, other property, cr services. The university must verify in writing that it will meet all use and disposition requirements. * The deduction is limited to twice the production cost of the equipment. If the cost of the equipment to the manufacturer is $100, for example, the tax deduction is limited to $200, regard- less of the normal selling price of the equipment. In addition to increasing the deduction for such contributions, ERTA raised the limit for corporate charitable deductions from 5 percent to 10 percent of taxable income. Although many corpor- ate donors do not reach even the 5 percent limit, some do, and the higher limit on deductions clearly could affect the level of cor- porate contributions of equipment to academe. The incentive provided by ERTA for donating qualified equip- ment to colleges and universities can be assessed on two bases: the direct cost of donation (production cost less tax benefit) and the total cost of donation (production cost, plus net income fore- gone by donating rather than selling, less tax benefit).5 These relationships are shown in Table 8, using a production cost of $100 and selling prices of $100, $300, and $400. Note that the tax deduction under ERTA plateaus at a selling price of $200 (twice the production cost). At that point, ERTA confers its maximum reduction, about 28 percent, in total cost of donation. Net in- come foregone, however, continues to rise, so that, at a selling price of $400, ERTA reduces the total cost of donation by about 21 percent. Even so, it would appear that ERTA offers a signif i- cant incentive to donate qualified equipment to academe. If the data of Table 8 are raised to more realistic levels--say, a pr~duc- tion cost of $100,000 and a selling price of $300,000-the direct PAGENO="0591" 585 TABLE 8 Effect of ERTA on Cost of Donating Equipment (in Dollars) ERTA/non-ERTA Production cost 100/ 100 100/100 100/100 Selling price 100/100 300/300 400/400 Tax deduction 100/100 200/100 200/100 Tax benefit 46/46 92/46 92/46 (at 46 percent tax rate) Direct cost of 54/54 8/54 8/54 donating (cost less benefit) Net income foregone 0/0 108/108 162/162 (price less cost less tax on gross profit) Total costof 54/54 116/162 170/216 donating (cost plus net income foregone) SOURCE: Eileen L. Collins, An Early Assessment of Three R&D Tax Incentives Provided by the Economic Recovery Tax Act of 1981 (Washington, D.C.: National Science Foundation, April 1983). PAGENO="0592" 586 cost of donating becomes $8,000 under ERTA and $54,000 without ERTA. Similarly, the total cost of donating becomes $116,000 under ERTA and $162,000 without ERTA. Bargain Sales A company that wishes to provide qualified research equip- ment to a university but is unwilling to donate it outright may still obtain tax benefits under ERTA by means of a bargain sale. A bargain sale is a sale for less than fair market value, often entailing a larger than normal discount. The university gels the equipment at a good price; the donor receives a tax deduction for a charitable contribution, but also must recognize gain on the transaction to the extent that the sales price exceeds the cost basis apportioned to the sale. The calculation is illustrated in Table 9. The university pays $750 for equipment that lists at $1,500. The company receives a $250 after-tax profit under the bargain sale provisions of ERTA, or 85 percent more than the $135 it would have received without ERTA. It should be noted also that the charitable deduction under ERTA is limited to twice the cost basis of the equipment. Company Considerations Companies' decisions on how best to provide research equip- ment to academe on a charitable basis depend on both tax and nontax considerations. The two are necessarily intertwined, but nontax benefits are the primary impetus for giving. Makers of scientific equipment depend very much on academe as a market for their products and as a source of the technically trained manpower and research results essential to their bus i- nesses. They, provide equipment on a charitable basis, therefore, to sustain the quality of teaching and research, to familiarize prospective users and employees with their products, to obtain feedback on the performance of their equipment and on needs for new products, and to maintain relations with faculty. Although tax benefits are not the primary motivator, they do appear to affect the contribution of equipment to universities. A company may prefer, for example, to sell costly, high-profit equipment to a university at a substantial discount, rather than donating it, so as to ease the economic penalty of the contribu- tion.6 This approach has been used both before and after ERTA, but ERTA clearly could affect the decision to sell or donate. Tax benefits also appear to affect the size of contributions, once the decision to contribute has been made. PAGENO="0593" 587 TABLE 9 Calculation of Gain and Charitable Deduction in Bargain Sale List price = $1500 Cost basis = 500 Bargain sale price = 750 Basis for sale = cost basis + (bargain sale price/list price) $500 x ($750/$1500) = $250 Basis in gift = cost basis - basis for sale $500 - $250 = $250 Company's gain = bargain sale price - basis for sale $750 - $250 = $500 Charitable deduction = Basis in gift plus half of the gain foregone by selling at less than list price $250 + ($750 $25o)/2 = $500 ERTA Pre-ERTA Gain on sale $500 $500 Charitable deduction - 500 - 250 Taxable income 0 250 Cash received 750 750 Tax 0 -115 Total benefit 750 635 Equipment cost - 500 - 500 Net benefit to company $ 250 $ 135 SOURCE: Coopers & Lybrand. PAGENO="0594" 588 Some academic opinion holds that company officials who decide whether and how to contribute equipment are not fully abreast of the available tax benefits, even though company tax specialists are well informed. In this respect, for example, it appears that the bargain sale provisions of ERTA have been largely ignored. Research and Development Tax Credit ERTA created a 25 percent tax credit for incremental spend- ing by industry on "research and experimentation," both in-house and under contract. The contract research, however, is restricted to work related to the taxpayer's trade or business, or basic re- search in colleges and universities. The credit is available for expenses incurred after 3une 30, 1981, and before lanuary I, 1986, unless new legislation is passed to extend the credit or make it permanent.* Money spent on scientific equipment under re- search contracts in academe qualifies for the credit. As with the ERTA deduction for equipment donations, the research must be conducted in the United States and is restricted to the physical and biological sciences. Money for basic research may be paid either to the contracting universities or to a fund that awards grants for academic research. The requirements of the law preclude tax credits for research costs incurred by new ventures before they actually engage in business. The 25 percent tax credit is computed on qualified research costs in excess of a floating average of research costs paid or incurred during the prior three years. In-house research costs are fully qualified, but only 65 percent of contract research costs is qualified. The three-year floating average of research costs cannot be less than 50 percent of current-year research costs. Thus the maximum tax credit is 12.5 percent of qualified, current- year research costs and 8.1 percent if only contract research costs are incurred. The calculation is illustrated in Table 10. Company/University Considerations The R&D tax credit reduces a company's costs for contract research at a university. Further, the costs qualified for in-house *The President's Tax Proposal of May 1985 would extend the credit for three years. PAGENO="0595" 589 TABLE 10 Calculation of R&D Tax Credit Qualified research expenses, 1985 In-house $640,000 Contract, nonbasic ($200,000 x 0.65) $130,000 Contract, basic ($200,000 x 0.65) $130,000 Total $900,000 Less base-period research expenses 1982 $ 600,000 1983 $ 500,000 1984 _$]~0,00O Total $1,800,000 Average $ 600,000 (600,000) Excess qualified expenses $300,000 Rate 0.25 1985 Tax credit $ 75,000 SOURCE:' Coopers & Lybrand. PAGENO="0596" 590 research include only wages and supplies, while the full costs of contract research are qualified. On the other hand, the tax credit is based on 100 percent of qualified costs for in-house research and only 65 percent of costs for contract research. Also, contract work at universities is restricted to basic research, which gener- ally is a long-term effort, whereas corporate interests tend to be short term. The university and the company are both potential beneficiaries of patents arising from the research. Additional considerations are involved but, on balance, the R&D tax credit does not appear to provide a special incentive for companies to contract for research at universities, as opposed to the qualified alternatives available. Exceptions would include companies that are committed to supporting basic research in academe, but might support more of it in light of the R&D tax credit. STATE TAX INCENTIVES Most states in recent years have adopted tax provisions designed to stimulate research at colleges and universities. The state incentives include adoption of the federal deduction for company contributions of scientific equipment to colleges or universities, enactment of provisions comparable to the federal deduction, allowance of the federal deduction and an additional state deduction, and enactment of a credit against tax for con- tributions of scientific property. Adoption of the Federal Deduction The federal deduction for contributions of scientific property to colleges and universities has been adopted by 34 states: Arizona Missouri Arkansas Montana Colorado Nebraska Connecticut New Hampshire Delaware New ~Jersey Florida New Mexico Hawaii New York Idaho North Dakota Illinois Oklahoma Indiana Oregon Iowa Pennsylvania Kansas Rhode Island PAGENO="0597" 591 Kentucky Tennessee Maine Utah Maryland Vermont Massachusetts Virginia Michigan West Virginia Adoption of Deduction Other than Federal California has adopted a provision essentially identical to the federal deduction for donations of scientific equipment to aca- deme. As under the federal law, a corporation can deduct its basis in the contributed property plus half of the unrealized appreciation with a limit of twice its basis in the property. Montana allows the federal deduction or a deduction equal to the fair market value of the property contributed, but not greater than 30 percent of the corporate taxpayer's net income. In New Hampshire, a business that contributes scientific property may deduct, in lieu of the federal deduction, its basis in the contributed property plus 50 percent of the unrealized appre- ciation, or twice the basis of the property, whichever is less. Massachusetts allows the federal deduction plus 25 percent of that deduction. Adoption of Credits Seven states, including some that have adopted the federal deduction for contributions of scientific equipment, in addition provide various types of tax credits. Idaho, Indiana, and North Dakota allow corporations a credit against tax as a means of stimulating contributions of scientific equipment to colleges and universities within the state. Louisiana allows corporations to elect a credit in lieu of a charitable deduction. Iowa, Wisconsin, and Minnesota allow a credit for increased research expenditures. In determining expenditures that qualify for research credits, Iowa, Minnesota, and Wisconsin follow the federal definition of "qualified research expenses." The Iowa credit, which is effective for years beginning on or after January 1, 1985, is 6.5 percent of qualifying expenses incurred for research conducted within the state. If the credit exceeds the corporation's tax liability, Iowa refunds the excess with interest unless the corporation elects to apply the credit to its liability for the following year. The Min- nesota credit is 12.5 percent of the first $2 million (and 6.5 per- cent of additional expenses) of the excess of qualified expenses over base-period expenses incurred for research conducted within the state. The Wisconsin credit is 5 percent of the corporation's PAGENO="0598" 592 qualified expenses incurred by research conducted within the state. Wisconsin also provides a 5 percent credit for the purchase of research equipment or construction of facilities to house it. Idaho allows a credit of 50 percent of the aggregate amount of charitable contributions to institutions of higher education within the state during the year, but not exceeding 10 percent of the corporation's total Idaho tax liability or $500, whichever is less. Indiana also allows a credit of 50 percent of the aggregate amount of contributions during the year to institutions of higher education within the state, but not exceeding the corporation's tax liability minus all other credits, or 10 percent of the corporation's total adjusted gross income, or ~l,000, whichever is less. North Dakota allows a credit of 50 percent of charitable con- tributions to nonprofit private institutions of higher education within the state or to the North Dakota independent college fund, but not exceeding 20 percent of the corporation's income tax, or $2,500, whichever is less. Louisiana allows corporations to elect a credit, in lieu of a deduction, for contributions of computer equipment to educa- tional institutions within the state. The credit is 40 percent of the equipment's value or the corporation's total tax liability, whichever is less. R&D LIMITED PARTNERSHIPS Research and development limited partnerships are a source of risk capital that may permit individual investors to support aca- demic research programs while sheltering some of their own income.7 Investors can take current deductions for qualifying research expenditures; subject to certain conditions, they can pay tax at capital gains rates rather than ordinary income rates on royalties or on the sale of patent rights or patentable property. An R&D limited partnership may include a~artner (which could be a university) that contributes ideas or potential products, while other partners contribute capital to finance the necessary research and development. The university need not become a partner, but could license or assign inventions or know-how to the partnership for lump-sum cash payments or royalties. The part- nership could contract with the university to perform research whether or not the university had previously provided anything to the partnership. The partners would share the income from the sale or licensing of products or patents developed. Royalties or capital gains re- ceived by the university would not be unrelated business income, nor would fees paid to the university for research performed. PAGENO="0599" 593 R&D limited partnerships in which the university is a partner potentially have several disadvantages: * Much university research is more basic than is required for a partnership making high-risk investments in the hope of commercial return. The law in this area is still unsettled in many respects, including issues of potential liability. * A limited partnership offering is a securities offering governed by federal and state law and regulations. Legal fees, brokerage commissions, and general partners' fees are substantial. * R&D credits provided by ERTA for contract research are not available to a partnership unless it is engaged in a trade or business, intends to use the products developed in that trade or business, and does not intend to transfer the products for license or royalty payments. To be considered engaged in a tradeor business, the partnership must be soliciting customers to purchase a product or service, but most partnerships do not solicit cus- tomers until after they have developed a product or service. R&D limited partnerships have not been widely embraced by the academic community, although they have attracted a good deal of interest. The study team encountered no instances of universities' having procured scientific equipment through R&D limited partnerships. LEASING For-profit entities that lease equipment to colleges and universities may be able to take advantage of the accelerated depreciation (ACRS) provisions introduced by ERTA to shelter from taxes a part of their income from leasing. (See Chapter 4 for detailed discussion of leasing.) Investment tax credits are not available, however, to for-profit entities that lease to colleges and universities, which is a strong disincentive for such arrange- ments. The Tax Reform Act of 1984 reduced the accelerated depre- ciation benefits previously available to lessors by increasing the number of years for depreciating equipment leased to colleges and universities and by providing that the equipment be depreciated using the straight-line method. The act excludes leasing arrange- ments for specific types of e~quipment from the new constraints. Certain high-technology equipment--including computers and peripheral equipment, sophisticated telephone station equipment installed on campus, and advanced medical equipment--can be depreciated by the lessor using normal ACRS rules if the lease PAGENO="0600" 594 period is five years or less. If the lease period is more than five years, depreciation is on a straight-line basis over five years. DEVELOPING A DONATION STRATEGY Donation transactions examined during this study (Appendix J) suggest a number of actions that could help colleges and univer- sities to obtain donations of scientific equipment. In particular, it appears that involvement of academic representatives (e.g., devel- opment office people, department heads, and principal investiga- tors) with their counterparts in prospective donor companies is vital to building the relationships needed to obtain regular con- tributions In addition, colleges and universities that wish to develop donation strategies might consider the following activities: * Target the manufacturers of equipment most needed by the institution. * Prepare a description of the university's plans for using the equipment for presentation to prospective donors. The description should include information such as the research planned and the number and background of studentsand faculty who will be involved. In this respect, many companies expect to receive a written proposal before donating equipment. * Prepare a description of the mutual benefits of donating equipment. These benefits include the long-range value of strengthening the research and academic programs of the university. More immediate benefits for prospective donors would include: -Research programs that are making scientific advances in which the donor is interested. -Introduction of the donor's products to potential buyers -Students as potential employees -Federal and state tax incentives that reduce the total cost of donating equipment. -Feedback from students and faculty as a source of product improvement and development. -Willingness of academic investigators to permit donors to demonstrate to potential customers the use being made of their equipment and the scientific advances being obtained with it. RECOMMENDATIONS The effects of ERTA have been studied extensively almost since its passage, primarily with a view to deciding whether the PAGENO="0601" 595 R&D tax credit should be extended beyond its statutory expiration date, December 31, 1985, and in what form.5'8 Although many believe that the tax credit has a positive effect, these studies have not produced clear-cut answers for several reasons: the act has been in effect only since August 1981; its effects are entan- gled with other economic variables in a complex manner; and the uncertain future of the act may have skewed its effects. The examination of ERTA also has produced views on the value of the equipment-donation deduction, which is permanent under the act. The Council for Financial Aid to Education, as noted earlier, believes that ERTA has contributed significantly to corporate giving of scientific equipment to academe. Similarly, the National Science Foundation has said that both the R&D tax credit and the deduction for donations of equipment "apparently have helped to stimulate the recent surge of industry support for university science and engineering."9 The consensus appears to be that ERTA, suitably modified, should indeed spur technology, in part by fostering support for academic research and scientific equipment. We agree with this view. We believe also that colleges and universities could seek more aggressively to capitalize on available tax benefits, federal and state, in soliciting donations of equipment. We recommend... 1. That industry take greater advantage of the tax benefits provided by the Economic Recovery Tax Act (ERTA) of 1981 for companies that donate research equipment to universities and fund academic research. Universities' experience with industry indicates that company officials may not be fully aware of the benefits available, although company tax specialists generally are well informed. 2. That universities seek donations of research equipment more aggressively by developing strategies that rely in part on the tax benefits available to donors. Sound strategies would stress both federal and state tax benefits as well as other important benefits to both donor and recipient. 3. That Congress modify ERTA so that... ...equipment qualified for the charitable donation deduction include computer software, equipment maintenance contracts and spare parts, equipment in which the cost of parts not made by the donor exceeds 50 percent of the donor's costs in the equipment, and used equipment that is less than three years old. Computers are properly viewed as computing systems, which are incomplete without software. Maintenance of scientific equipment is costly to the point where universities have declined donations of equip- ment because they could not afford to maintain it. Makers of sophisticated equipment rely primarily on their technological PAGENO="0602" 596 knowledge, not their ability to make parts. Thus the limit on parts from outside suppliers is unrealistic, provided that the manufacturer is in fact in the business of developing and making scientific equipment. ..the provisions on the R&D tax credit are made permanent, with revision to create an additional incentive for companies to support basic research in universities. Equipment acquired under research contracts qualifies for the credit, but ERTA currently provides the same incentive for companies to contract for re- search in academe as for research by other qualified organizations. ..the social and behavioral sciences are made qualified fields of academic research in terms of the equipment donation deduc- tion and the R&D tax credit. The social and behavioral sciences contribute to the application and utilization of science and tech- nology, and they rely increasingly on research instrumentation. ...quailfied recipients of equipment donations and R&D fund- ing, in terms of ERTA tax credits, indude research foundations that are affiliated with universities but remain separate enti- ties. Some state universities have established such foundations to receive and dispose of donated equipment because they cannot dispose of it themselves without legislative consent. REFERENCES 1. Donald Kennedy, "Government Policies and the Cost of Doing Research" Science 227: 482 (February 1, 1985). 2. Council for Financial Aid to Education, Inc., Corporate Support of Education--l982 (New York, 3anuary 19841 3. National Science Board, University-Industry Research Relationships (Washington, D.C.: National Science Foundation, October 1982). 4. National Science Board, Industry-University Research Relationships-Selected Studies (Washington, D.C.: National Science Foundation, 1983). 5. Eileen L. Collins, An Early Assessment of Three R&D Tax Incentives Provided by the Economic Recovery Tax Act of 1981 (Washington, D.C.: National Science Foundation, April 1983). 6. R.G. Anderson and R.F. Kane, "An Early Assessment of the Increased Tax Deduction for R&D Equipment Donations to Universities" (Washington, D.C.: Arthur Andersen & Co., August 1982, prepared for use by the National Science Foundation). PAGENO="0603" 597 7. 1W. Bartlett and 1V. Siena, "Research and Development Limited Partnerships as a Device to Exploit University Owned Technology," 3ournal of College and University Law 10: 435 (1984). 8. American Enterprise Institute for Public Policy Research, The R&D Tax Credit-Issues in Tax Policy and Industrial Innovation cWashington, D.C., May 1983). 9. R.S. Nicholson, "Statement before the Subcommittee on Oversight, Committee on Ways and Means, U.S. House of Representatives," August 2, 1984. PAGENO="0604" 598 Appendixes APPENDIX A: R&D EXPENDITURES AT UNIVERSITIES AND 1953-1983 Fed. State/ Local Indus- Inst. All FY Total Govt. Govts. try Funds Other Current Dollars in Millions 1953 255 138 1954 290 160 1955 312 169 1956 372 213 1957 410 229 1958 456 254 1959 526 306 1960 646 405 1961 763 500 1962 904 613 1978 4,625 3,059 414 1979 5,361 3,595 470 1980 6,060 4,094 494 1981 6,818 4,559 540 1982 7,261 4,749 586 1983 7,745 4,960 599 37 42 47 53 60 19 22 25 29 34 35 38 41 43 49 26 28 30 34 38 39 39 40 40 40 53 58 64 70 79 42 47 52 58 66 41 40 41 42 48 89 103 124 148 181 73 83 93 108 119 55 60 61 70 74 218 223 243 274 305 132 145 165 177 187 84 96 113 123 139 318 370 417 446 514 202 218 259 285 314 170 623 359 68 76 85 95 106 118 132 143 156 164 172 197 219 255 269 295 307 332 364 374 1963 1,081 760 1964 1,275 917 1965 1,474 1,073 1966 1,715 1,261 1967 1,921 1,409 1968 2,149 1,572 1969 2,225 1,600 1970 2,335 1,647 1971 2,500 1,724 1972 2,630 1,795 1973 2,884 1,985 1974 3,023 2,032 1975 3,409 2,288 1976 3,729 2,512 1977 4,067 2,726 193 730 374 236 829 409 288 983 448 326 1,098 503 70 1,231 585 PAGENO="0605" 599 COLLEGES BY YEAR AND SOURCE OF FUNDS: FISCAL YEARS Constant Dollars in Millions 1953 427 231 1954 480 265 1955 509 276 1956 591 338 1957 628 351 62 32 70 36 77 41 84 46 92 52 1958 682 380 108 1959 772 449 112 1960 929 582 122 1961 1,084 711 135 1962 1,267 859 149 1963 1,490 1,047 163 1964 1,738 1,250 180 1965 1,967 1,431 191 1966 2,228 1,639 203 1967 2,418 1,774 206 1968 2,611 1,910 209 1969 2,582 1,857 229 1970 2,565 1,809 237 1971 2,615 1,803 267 1972 2,630 1,795 269 1973 2,761 1,900 282 1974 2,698 1,813 274 1975 2,767 1,856 269 1976 2,828 1,905 276 1977 2,889 1,937 266 1978 3,077 2,035 275 1979 3,280 2,199 288 1980 3,412 2,305 278 1981 3,490 2,334 276 1982 3,469 2,269 280 1983 3,559 2,279 275 58 79 57 85 57 92 57 99 56 111 67 265 70 259 67 267 73 287 74 305 80 304 86 330 92 338 93 338 99 365 44 46 49 54 58 63 69 75 82 92 160 168 181 185 187 193 195 210 216 223 Fed. State/ Local Indus- Inst. All FY Total Govt. Govts. try Funds Other 59 63 67 68 75 57 123 101 56 140 113 55 165 124 55 192 140 60 228 150 113 414.~ 239 118 447 229 133 467 230 147 503 229 156 525 240 170 566 269 SOURCE: National Science Foundation, Academic Science! Engineering: R&D Funds Fiscal Year 1982 (Washington, D.C., 1984); and preliminary data for 1983. PAGENO="0606" APPENDIX B: CURRENT FUND EXPENDITURES FOR RESEARCH EQUIPMENT AT UNIVERSITIES AND COLLEGES BY SCIENCE/ENGINEERING FIELD AND SOURCE OF FUNDS: FISCAL YEARS 1982 AND 1983 (Dollars in Thousands) Total Field Federally Financed Nonfederal Percent Percent 1982 1983 1982 1983 Change 1982-1983 1982 1983 Change 1982-1983 Total 408,498 435,402 266,738 273,076 2.4 141,760 162,326 14.5 Engineering 65,861 75,171 43,220 48,837 13.0 22,641 26,334 16.3 Aeron. & Astron. 2,284 2,837 1,376 2,100 52.6 908 737 -18.8 Chemical 6,442 6,172 3,821 3,559 -6.9 2,621 2,613 -.3 Civil 5,164 6,086 2,823 3,422 21.2 2,341 2,664 13.8 Electrical 18,454 20,685 14,058 14,516 3.3 4,396 6,169 40.3 Mechanical 7,390 10,008 4,208 6,563 56.0 3,182 3,445 8.3 Other, NEC 26,127 29,383 16,934 18,677 10.3 9,193 10,706 16.5 Physical Sci. 78,126 79,153 62,642 62,137 -.8 15,484 17,016 9.9 Astronomy 5,127 4,243 3,941 3,465 -12.1 1,186 778 -34.4 Chemistry 33,323 32,826 24,927 23,632 -5.2 8,396 9,194 9.5 Physics 33,189 35,673 28,527 29,588 3.7 4,662 6,085 30.5 Other, NEC 6,487 6,411 5,247 5,452 3.9 1,240 959 -22.7 Environ. Sci. 28,321 31,123 18,423 19,643 6.6 9,898 11,480 16.0 Atmospheric 4,536 5,025 3,287 3,617 10.0 1,249 1,408 12.7 Earth Sci. 10,536 11,584 6,314 6,609 4.7 4,222 4,975 17.8 PAGENO="0607" NEC, not elsewhere classified. SOURCE: National Science Foundation, Academic Science/Engineering: R&D Funds Fiscal Year 1983 (In press), Preliminary Table B-60. 10,928 6,000 6,837 3,586 2,822 2,580 18,177 9,832 11,705 2,668 1,617 1,476 15,509 8,215 10,229 8,879 4,370 15,228 2,556 12,672 199,574 38,921 75,889 78,809 5,955 Oceanography Other, NEC Math/Comp. Sd. Mathematics Comp. Sci. Life Sciences Agric. Sci. Biol. Sci. Medical Sci. Other, NEC Psychology ~Socia1 Sci. Economics ~ Pout. Sci. ) Sociology Other, NEC 2.~ther Sci. NEC 206,587 38,813 75,155 85,942 6,677 13.9 -8.6 19.1 -8.7 24.5 -2.4 -8.2 -4.0 .0 6.8 120,189 11,706 53,183 51,547 3,753 117,342 10,746 51,041 51,546 4,009 4,091 1,006 6,472 1,192 5,280 89,245 28,067 24,114 34,396 2,668 42.1 -35.0 19.9 26.9 18.5 12.4 3.1 6.2 26.2 21.2 5,784 6,526 4,219 4,753 12.7 2,879 1,548 5,396 939 4,457 79,385 27,215 22,706 27,262 2,202 1,565 4,236 1,030 453 1,108 1,645 7,143 8,938 2,907 2,912 1,704 1,911 674 728 765 767 312 319 2,056 1,462 948 939 2,618 4,798 973 926 1,773 13.3 .2 8.0 2.2 -.9 -4.8 8.3 8,461 9,727 5,306 5,747 0 `-I 6,026 1,183 448 523 3,872 42.3 14.9 -1.1 -52.8 135.4 3,155 3,980 26.1 PAGENO="0608" 602 APPENDIX C: FEDERAL INSTRUMENTATION PROGRAMS Department of Defense: DOD-University Research Instrumentation Program Five-year program to upgrade university research instru- mentation sponsored by Army Research Office, Office of Naval Research, and Air Force Office of Scientific Research. Program goals: - To stimulate and support basic research that fur- thers the technological goals of DOD. - To support the training of graduate students in the use of research equipment. Requests are not considered for instrumentation with a total cost to DOD of less than $50,000 or more than $500,000. Requests for specialized re- search configurations of computers that are devoted primarily to specific DOD research programs are con- sidered, provided that the total government contribution to the purchase cost of the computer equipment does not exceed $300,000. Agency, Program Title Description 144 PAGENO="0609" 603 University Matching Matching is encouraged but is not required and is not included in the criteria used for evaluating proposals. DOD funds awarded cannot be used for buildings or facilities modification, although such costs when borne by the university or other funding source may contribute to matching. Set-up costs may be included, but costs for continued operation and maintenance must be met by normal research sup- port mechanisms. Annual Volume of Funding Fiscal year 1983 was Phase I of the program. Thirty million dollars was allo- cated equally among the three armed services for each year of the program. - 2,500 proposals were received totaling $645 million in funding requests. - 200 awards were made to more than 80 universities. Fiscal years 1984 and 1985 comprise Phase II. Sixty million dollars will be equally distri- buted over the two years. 53-277 0 - 86 - 20 PAGENO="0610" 604 Agency, Program Title Description Department of Energy: Program goal is to stimulate University Research and support basic research Instrumentation in those universities with Program existing DOE support. Funds are provided for acquisi- tion costs of instruments. Costs of renovation and installation, operation~ and maintenance, service contracts, and technical support are not provided. The usable life span of the equipment must be estimated and the institution's plans for ensuring its continued availabil- ity during the first five years must be demonstrated. National Science Program provides support for Foundation: development and construction Astronomical of state-of-the-art detectors Instrumentation and and data-handling equipment, Development procurement of detection and Program analysis systems for telescopes at institutions that presently lack such systems, development of interactive picture- processing systems, very long baseline interferometric instrumentation, and applica- tion of new technology and innovative techniques to astronomy. PAGENO="0611" 605 University Matching Annual Volume of Funding No specific fraction of Five-year program pro- matching is specified, jected to last through but the level of match- 1989. ing will be a factor in the evaluation of Fiscal year 1984 funding applications, was $4 million. Matching can include Fiscal year 1985 funding shipping/installation is $6 million. and/or the renovation/ modification of the physical space where the instrument will be located. Matching is not Fiscal year 1981 funding was required. $5.9 million. Fiscal year 1982 funding was $6 million. Fiscal year 1983 funding was $6.7 million. Fiscal year 1984 funding was $9.6 million. Fiscal year 1985 funding is $7.9 million. PAGENO="0612" 606 Agency, Program Title Description National Science Program provides funds for Foundation: purchase of multiple-user Biological instruments in physiologi- Instrumentation Program cal, cellular, and molecular biology. Program supports the devel- opment of new instruments that will either extend current instrument capability in terms of sensitivity of resolution or will provide new and alter- native techniques for detection and observation of physical or biological phenomena. Funds will not be provided for space renovation, in- stallation, maintenance contracts, technical per- sonnel, and operation of commercial instruments. *However, the university must describe how maintenance and operation costs will be met. Personnel and shop costs may be requested for instrument development and construction. National Science Program provides aid to Foundation: universities and colleges in Chemical acquiring major items of Instrumentation multiuser instrumentation Program essential for conducting fundamental research in chemistry. PAGENO="0613" 607 University Matching Annual Volume of Funding Matching is required. Fiscal year 1983 funding The exact amount (in the was $5 million. range of 25 to 50 percent) is negotiated with the Fiscal year 1984 funding university, was $6.2 million. Renovation of space and Fiscal year 1985 funding maintenance are accept- is $7.4 million. able as part of the university's matching only if accompanied by part of the purchase price. Matching is required, Fiscal year 1980 funding but the amount varies, was $4.2 million. In fiscal year 1984 the university share was Fiscal year 1981 funding 33 1/3 percent. was $4.6 million. Fiscal year 1982 funding was $4.1 million. Fiscal year 1983 funding was $6.4 million. PAGENO="0614" 608 Agency, Program Title Description National Science Program does not normally Foundation: provide support for per- Chemical sonnel, indirect costs, Instrumentation installation, or operating Program costs. When such support is (continued) necessary during the instal- lation and start-up period for complex instrumentation, detailed justification must be provided. The university must provide information on the annual budget for maintenance and operation of the proposed instrument, other research support services and total operating budget, and tech~- nical support staff and main- tenance expertise provided by the department. Proposals are evaluated on the basis of the ability of the department to ensure that the instrument will be well maintained and eff i- ciently used. National Science Program provides support for Foundation: purchase of special-purpose Computer Research equipment for computer re- Equipment Grants search. The equipment must be necessary for the pursuit of specific research projects rather than intended to provide general computing capacity. It must be needed by more than one project and difficult to justify for one project alone. The total cost must be at least $10,000. PAGENO="0615" 609 University Matching Annual Volume of Funding Fiscal year 1984 funding totaled $10.2 million. - $1.3 million went to small schools with primarily undergraduate programs. - $80,000 was for a new program that provides funds to universities in states that have not fared well in funding. - $2.2 million was for regional instrumentation facilities. - Remainder of funding was for Ph.D.-granting institutions for equip- ment over $50,000. Fiscal year 1985 funding is about $10.2 million. Universities must provide Fiscal year 1980 funding a minimum of 25 percent of was $2 million. the cost of the equipment and first-year main- Fiscal year 1981 funding tenance as matching. was $1 million. Fiscal year 1982 funding was $1.2 million. Fiscal year 1983 funding was $1.2 million. Fiscal year 1984 funding was $1.4 million. PAGENO="0616" 610 Agency, Program Title Description National Science Funds for maintenance during Foundation: the first year .may also be Computer Research requested. Equipment Grants (continued) The university must provide a detailed plan for the maintenance and operation (M&O) of the instrument including the annual M&O budget that the department will allocate. National Science Program is intended to meet Foundation: the need for specialized Earth Sciences equipment that commonly is Research Instrumenta- too expensive and of too tion Program broad a potential use to be justified by a regular research proposal. Program provides funds to purchase major research equipment, renovate and upgrade existing equipment, and develop new instruments that will extend current research capabilities. Sup- port may be requested for regional facilities to provide access to large items of equip-S ment by a broad segment of the research community. Personnel and shop costs may be requested for equipment development and construc- tion. The costs of space renovation, installation, maintenance, technical per- sonnel, and operation of commercial equipment ordin- arily are not supported. PAGENO="0617" 611 University Matching Annual Volume of Funding Fiscal year 1985 funding is about $1.5 million. No specific fraction of matching is specified, but the university contribution is a deter- mining factor in the award. The university is encour- aged to assume the costs of space renovation, installation, and main- tenance as matching in addition to part of acquisition cost of the instrument. Prior to 1983, funding was variable with most money coming from small research projects. Funding fcr fiscal years 1980 to 1982 was about $750,000 per year. Fiscal year 1983 funding was $2.5 million. Fiscal year 1984 funding the was $5 million. Fiscal year 1985 funding is $5 million. PAGENO="0618" 612 Agency, Program Title Description National Science The university must describe Foundation: the provisions for maintenance Earth Sciences of the equipment or facility Research Instrumenta- and the source of funds to meet tion Program the costs of maintenance and (continued) operation. The ability of the institution to operate and maintain the equipment is a determining factor in the award. National Science New program that supports Foundation: research in instrumentation Engineering-Automation for all engineering disciplines. Instrumentation and The scope will cover everything Sensing Systems from fundamental research on Program instrumentation questions to research leading to develop- ment of instrumentation and/or proof of concept. National Science Program provides funds to Foundation: purchase new equipment or to Engineering Research upgrade existing equipment. Equipment Grants The equipment should be neces- sary for pursuit of specific research projects in areas normally supported by the engineering directorate. Funds are not provided for space renovation, installation, maintenance contracts, and the operation of commercial instruments. However, the university must provide a detailed statement of its intention to provide PAGENO="0619" 613 University Matching Annual Volume of Funding Matching is required, Fiscal year 1980 funding but is negotiated on a was $2.86 million. case-by-case basis. The university share is Fiscal year 1981 funding expected to be at least was $1.8 million. 33 1/3 percent of the total cost of each item Fiscal year 1982 funding of equipment. was $1.9 million. Fiscal year 1983 funding was $3.9 million. Fiscal year 1984 funding was $7.3 million. Fiscal year 1985 funding is about $7 million. PAGENO="0620" 614 Agency, Program Title Description - National Science these facilities, if required. Foundation: The ability of the university Engineering Research to provide essential supporting Equipment Grants facilities and maintenance is (continued) a determining factor in the award. National Science Program provides support for Foundation: purchase of major instruments Materials Research needed for materials research Instrumentation and for development of new Program instruments that extend current measurement capability. Costs of space renovation, installation, maintenance con-S tracts, technical personnel, and operation of commercial instru- ments ordinarily are not sup- ported. Personnel and shop costs may be requested for instrument development and construction. The ability of the university to operate and main- tain the instrument and the ade- quacy of shop and electronics support are determining factors in the award. National Institutes Program began in 1982 in re- of Health Division sponse to recognition of the of Research Resources: long-standing need in the Research Support biomedical research commun- Shared Instrumentation ity to cope with rapid tech- Grants Program nological advances in instrumentation and the PAGENO="0621" 615 University Matching Annual Volume of Funding Matching is required, Fiscal year 1983 funding but no specific frac- was $4 million. tion is specified. The level of funds pro- Fiscal year 1984 funding vided by the university was $6.5 million. is a determining factor in the award. Fiscal year 1985 funding is $6.5 million. Assumption by the uni- versity of costs of space renovation, installation, main- tenance contracts, and technical personnel is encouraged. Matching is not Fiscal year 1982 funding required. was $3.7 million. Fiscal year 1983 funding was $14 million. Fiscal year 1984 funding was $19.7 million. PAGENO="0622" 616 Agency, Program Title Description National Institutes rapid rate of obsolescence of Health Division of existing equipment. of Research Resources: Research Support Program is a subprogram of Shared Instrumentation the Biomedical Research Grants Program Support Grant, and supports (continued) instrumentation used by three or more investigators. Program provides funds to purchase or update expensive shared-use equipment which is not generally available through other NIH mechanisms. Maxi- mum award is $300,000. Program funds the acquisition of equipment only. The institu- tion must meet those costs required to place the equipment in operational order as well as maintenance, support person- nel, and service costs. If the funds requested do not cover the total cost of the instru- ment, an award will not be made unless the remainder of the funding is assured. The institution's ability to provide continued maintenance of the equipment is a determining factor in the award. National Institutes of Program funds regional and Health Division of national shared instrumen- Research Resources: tation centers. Its purpose Biomedical Research is to develop and provide Technology Program access to very sophisticated instrumentation and PAGENO="0623" 617 University Matching Annual Volume of Funding Fiscal year 1985 funding is $31.8 million. Matching is not required, although some institu- tional contribution is encouraged. Fiscal year 1980 funding was $15 million. Fiscal year 1981 funding was $F6.8 million. PAGENO="0624" 618 Agency, Program Title Description National Institutes of technology needed to solve Health Division of basic biomedical and Research Resources: clinical research problems. Biomedical Research Technology Program (continued) These resources include core research programs for instru- ment and methods develop- ment, collaborative research programs, and programs providing service for users in biomedical research. The program provides funds for initial instrument purchase and installation. The grant pays the full cost of the core research not otherwise supported and supports aspects of the program required to provide access to outside users, such as per- sonnel, maintenance, and supplies. Awards exceed S300,000, the ceiling for the BRS Shared Instrumentation Grants Program. The scope of the Biomedical Research Tech- nology Program is broader--its facilities are located to maxi- mize accessibility to a par- ticular region rather than one university or department. National Institutes Program provides funds to of Health Division institutions having an MBRS of Research Resources: award for acquisition of new Minority Biomedical equipment or upgrading of Research Support existing equipment. Program PAGENO="0625" 619 University Matching Annual Volume of Funding Fiscal year 1982 funding was $17.7 million. Fiscal year 1983 funding was $23.5 million. Fiscal year 1984 funding was $31.4 million. Fiscal year 1985 funding is estimated to be $30.9 million. Matching is not Fiscal year 1983 funding required. was $1.3 million. Fiscal year 1984 funding was $1 million. PAGENO="0626" 620 Agency, Program Title Description National Institutes of Health Division of Research Resources: Minority Biomedical Research Support Program (continued) National Institutes of Health National Insti- tute of General Medical Sciences: Shared In- strumentation Program There is no limit on the cost of instrumentation requested; however, the maximum award is $135,000. When the total cost of the instrument exceeds $135,000, an award will not be made unless the remainder of the funding is assured. Support for construction, renovation, maintenance, or personnel is not provided. However, the institution's commitment to support of operation and maintenance of the instrument is a deter- mining factor in the award. Program was begun in 1978 to provide funds for purchasing new or updating existing major analytical research instruments that might not be justified fully for a single project, but can serve several projects on a shared basis. Program goals are to provide NIGMS grantees with better access to modern instrumen- tation and to promote the diffusion of new techniques among potential users. The program provides funds for instruments in the $30,000 to $100,000 price range. When funds exceeding that amount are requested, the application is passed automatically to the DRR Shared Instrumentation PAGENO="0627" 621 University Matching Annual Volume of Funding Fiscal year 1985 funding is $1 million. The university is expected Funding for fiscal years to demonstrate its commit- 1979 and 1980 was $9 ment to the instrument by million. contributing at least half the costs for maintenance No awards were made in and technical support per- fiscal year 1981. sonnel. In addition, the university must provide for Fiscal year 1982 funding installation and any needed was $1.3 million. renovation of existing facilities. Fiscal year 1983 funding was $600,000. Fiscal year 1984 funding was $200,000. Fiscal year 1985 funding is $270,000. PAGENO="0628" Agency, Program Title 622 Description National Institutes of Health National Insti- tute of General Medical Sciences: Shared In- strumentation Program (continued) Program. The NIGMS program will con- tribute to both instrument maintenance and support personnel. The amount of funding extended for the purpose is determined by customary review groups. PAGENO="0629" 623 APPENDIX D: ANALYSIS OF LOAN SUBSIDY PROGRAMS The potential utility of a loan subsidy program for scientific equipment is analyzed here in terms of hypothetical models and cost comparisons. Our assumptions about cost components are based on the experience of the Guaranteed Student Loan (GSL) Program.* The category of special allowance in the GSL program is called interest subsidy in this analysis. (The GSL category named interest subsidy is the interest paid while the student is in school and, hence, is not relevant to this analysis.) We examined three alternatives: loan guarantee, loan guaran- tee with interest subsidy, and direct loan with low interest. The analysis uses the following assumptions:. * Market interest rate is 14 percent. * Tax-exempt interest rate is 7 percent. * Interest subsidy (the amount necessary to guarantee the same rate as tax-exempt borrowing) is 7 percent. * Funding to be made available to the universities to purchase R&D equipment is to be increased by $100 million, about 23 percent of total spending on academic equipment in 1983. * Administrative, insurance, and incidental costs of the loan programs to the government approximate 22 percent of total costs, which is the experience of the Guaranteed Student Loan Program. *Touche Ross & Co., Study of the Costs and Flows of Capital in the Guaranteed Student Loan Program, Final Report to the National Commission on Student Financial Assistance (Washington, D.C., March 1983). PAGENO="0630" 624 LOAN GUARANTEE Federal assistance in the form of a loan guarantee would primarily affect the credit rating of some universities, thus increasing their access to capital and reducing their interest expenses. This reduction, however, is likely to be relatively small. In addition, a loan guarantee program is not likely to increase total resources significantly. LOAN GUARANTEE WITH INTEREST SUBSIDY The loan guarantee with interest subsidy alternative was designed to increase the total capital available to universities for equipment, rather than to reduce the cost of debt for those already participating in the credit markets for that purpose. If an interest subsidy reduces the cost of funds to below the tax- exempt rate the strongest universities can obtain in financial markets, they might substitute federal loans for their own money. Universities that are less solid financially, or are in states that do not authorize the use of tax-exempt bonds for equipment purchases, could thus be crowded out. In addition, the total resources available to all universities might increase very little, if at all. The interest subsidy in this alternative, therefore, was pegged to achieve an interest rate.roughly the equivalent of the tax-exempt rate. Amortization of a $100 million, five-year loan at 14 and 7 percent interest and calculation of the interest ~ubsidy are shown in Table D-l. The subsidy is a residual of interest payments cal- culated at 14 percent (assumed market rate) and 7 percent (assumed tax-exempt rate) and discounted at 7 percent. The interest subsidy would more than double if the repayment period were increased to 14 years. The relative proportions of the costs to the government in this alternative are shown in Table D-2, which is based partly on the GSL program. As the table shows, the interest subsidy constitutes 77 percent of the total cost. Administrative costs for the GSL program tend to be relatively small, between 2 and 3 percent. It is possible, however, that in a smaller program, such as a loan guarantee with an interest subsidy, the administrative costs would be somewhat higher. The overall increase in cost to the govern- ment, nevertheless, should be negligible. Federal reinsurance, which accounts for 16 to IS percent of cost in the GSL program, might be lower in a program of loan guarantees with interest subsidy, because most loans would be made to institutional borrowers rather than individuals. A reduction of 3 percent would PAGENO="0631" TABLE D-1 Amortization Table for $100 Million, Five-Year Loan C;' Year Principal Payment Interest Repayment of Principal Balance Annual Rate of 14 Percent $100,000,000 $29,128,355 $14,000,000 2 84,871,645 29,128,355 11,882,030 3 67,625,320 29,128,355 9,467,545 4 47,964,510 29,128,355 6,715,031 5 25,551,186 29,128,355 3,577,166 $15,128,355 $84,871,645 17,246,325 67,625,320 19,660,810 47,964,510 22,413,324 25,551,186 25,551,166 (3) Annual Rate of 7 Percent $100,000,000 $24,389,069 $ 7,000,000 2 82,610,931 24,389,069 5,78 2,765 3 64,004,627 24,389,069 4,480,324 4 44,095,882 24,389,069 3,086,712 5 22,793,525 24,389,069 1,595,547 $17,389,069 $82,610,931 18,606,304 64,004,627 19,908,745 44,095,882 21,302,357 22,793,525 22,793,522 3 Year Difference in Payment Required Present Discounted Value (7 Percent Discount Rate) I $ 4,739,286 2 4,739,286 3 4,739,286 4 4,739,286 5 4,739,286 $ 4,429,239 4,139,476 3,868,669 3,615,579 3,379,045 Present value of payment difference stream (interest subsidy) $19,432,008 SOURCE: Coopers & Lybrand. PAGENO="0632" 626 TABLE D-2 Cost to the Government of a ~100 Million, Five-Year Loan Program with Interest Subsidy Cost (dollars) Percentage Interest subsidy 19,432,008 77 Reinsurance 4,290,184 17 Administrative All other 504,727 1,009,455 2 4 Total gross 25,236,374 Total offsets 2,894,612 Net outlays 22,341,762 SOURCE: Coopers & Lybrand. be expected to save the government $807,640 on a $100 million loan program. DIRECT LOAN PROGRAM In the direct loan alternative, the government is assumed to raise $100 million, which it then lends to universities at an inter- est rate of 7 percent, the rate available in the tax-exempt debt market. Compared with the loan guarantee with interest subsidy, this alternative entails small additional transaction costs, to raise the $100 million, and administrative costs, to manage the two streams of payables and receivables. On balance, these additional costs are expected to be negligible. The key finding of our projections for the direct loan alterna- tive is that the present discounted value of the cost to the govern- ment is the same, ~I9,432,008, as for the loan guarantee with interest subsidy described above, if the government borrows at the 14 percent rate assumed for the previous projections (see Table D-l). The reason is that the actual amount of subsidy--the difference between annual repayments from borrowers at a 7 percent rate, and the combined principal and interest (at 14 percent) falling due each year--is the same in both programs. If the government is able to borrow the $100 million at a lower rate of interest (as it might well be able to do in the Treasury bill market), then the direct loan program is the cheaper of the two. The direct loan program does involvecertain political considerations. The first is that the additional government borrowing would represent an increase in the national debt. The increase is essentially cosmetic, however, as the amount borrowed would be repaid, except for the interest subsidy, ~ in the loan PAGENO="0633" 627 guarantee with interest subsidy program. The second consider a- tion relates to who receives the subsidies from the government. In a direct loan program, it would be the investors in the Treasury bill market (or other lenders to the government). In a loan guarantee with interest subsidy program, the beneficiaries would be the banks lending low-interest money to the universities by receiving federal payments, making total amounts received equal to receipts from loans at market rates. PAGENO="0634" APPENDIX E: REPRESENTATIVE STATE REGULATIONS Purchasing Controls Financing Controls Utilization Controls Calif ornia~ All contracts for purchase of Higher education financing No formal controls. equipment approved by Dept. authority finances facilities General requirements of General Services, and equipment for independent of demonstrable public institutions, purpose. ComRetitive procurement for Public institution financing Joint public-private all purchases in excess of for facilities may include ventures increasingly $100. all equipment in original common. construction or renovations. Special approvals required Public institution financing for data processing and may incorporate reserves for telecommunications equipment. additions and improvements; unclear if replacement may be included. Act applies only to public Legislation introduced to allow institutions, public institutions to participate in pooled equipment issues. PAGENO="0635" Purchasing Controls Financing Controls Utilization Controls California (continued) Public institution boards have delegated authority to approve contracts up to defined limits. Legislation introduced for high technology financing for public and independent higher education. Connecticu tb All contracts by Dept. of Admin. Services, unless DAS authorizes other state agency to acquire directly. DAS established equipment standardization rules for all agencies. May author- ize noncompetitive procure- ment in emergencies. Competitive procurement required for purchases above $6,000; Health & education facilities authority finances equipment and facilities for public and independent institutions. Equipment financing only as incident to facilities projects. Public and independent institutions may jointly use any facilities and equipment. Extensive use of quasi- public corporations for ownership of property both tangible and intel~ lectual. PAGENO="0636" Purchasing Controls Financing Controls Utilization Controls Connecticut (continued) below ~6,000 preferred; not required below $300. Special rules for data proces- sing and "similar" equipment set by DAS, but may waive for other agencies. Georgiac. All equipment purchases through Dept. of Admin. Ser- vices from certified sources, with preference for items produced in-state. DAS set standard specifi- cations for all equipment. Public and independent institutions have separate higher education financing authorities. For private institutions, equipment financed only as part of original construction or renovation. No explicit limitations. All property of public universities vests with Board of Regents but can be alienated only with approval of Governor. PAGENO="0637" Purchasing Controls Financing Controls Utilization Controls Georgia (continued) Competitive procurement except if cost under $500 or contin- uing procurement. Technical instruments and supplies exempted from most purchasing controls, as is acquisition from U.S. govt. DAS administers statewide telecommunications and EDP, but universities exempted from mandatory provisions. Illinoisci For public institutions, equipment may be separately financed. Purchasing carried out by each public agency, except for specified categories. Educational facilities authority finances facil- ities and equipment of independent institutions. Higher Education Cooper- ation Act encourages interinstitutional coop- eration; has been defined to extend to cooperation between institutions and other public or nonprofit entities. PAGENO="0638" Purchasing Controls Financing Controls Utilization Controls illinois (continued) Competitive procurement required for equipment over $2,500; preferred for all. EFA may issue pooled equipment bonds. Statutory limitations on nonpublic use of equip- ment. Special controls for leasing of computer and telecommunica- tions equipment. Public institutions may issue revenue bonds; other financing through general obligations of state. Statutory limitation on term of all contracts, including leases; one-year maximum or appropriations period, with some exceptions. Capital development authority finances public facilities, including appurtenant equipment. Iowa~ Board of Regents conducts purchasing for public institutions. Financing of equipment at public institutions only as part of facilities construc- tion project. No direct controls. PAGENO="0639" Purchasing Controls Financing Controls Utilization Controls Iowa (continued) Advertise competitively for all procurements in excess of $25,000. Limited competi- tion for other procurement. Operating funds requisitioned on as-needed basis within appropriated, sums. No private institution financing agency. Kentuckyl Institutions may elect to control own purchasing bounded by provisions of the state's Model Procure- ment Code. Smaller institutions may choose to use services of central stores, if greater savings can be achieved by having state order large quan- tities of certain items. Institutions have responsi- bility for financing of capital projects. No state controls-- institutions may have authority to provide best use of money for ser~ vices rendered and goods purchased. PAGENO="0640" Purchasing Controls Financing Controls Utilization Controls Maryland~ Centralized control for all equipment acquisitions for public institutions, through Board of Public Works. Public institutions may capitalize equipment and finance through general obligation bonds if useful life in excess of 15 years. Strong statutory limita- tions on public univer- sity involvement in for-profit ventures. Preference for Maryland suppliers. Special rule for acquisition of computers and software, with additional approval steps. (But legislation introduced to exempt all computer procurements for academic or research purposes.) Competitive sealed bids for items in excess of $750; agencies can adopt "small procurement procedures" for lesser amounts. No higher education facilities authority for private institutions. Some limited use of industrial revenue bond authority for comparable purposes. Extensive development of joint venture financing. PAGENO="0641" Purchasing Controls Financing Controls Utilization Controls Maryland (continued) Strict review of equipment requi- sition by BPW, with power to recommend substitution of "equivalents." New Yorkt~ Purchasing by individual public system (State Univ. of NY, City Univ. of NY, statutory colleges, com- munity college dists). Purchases under $100 exempt from competitive procurement; up to $5,000 need not adver- tise for bids; beyond $5,000 full competitive procurement. State Univ. Const. Fund and CUNY and Dormitory Auth. equivalents may exempt con- tracts under $20,000. Public financing agencies (State Univ. Const. Fund and City Univ. Const. Fund) may finance equipment as well as facilities. State Dormitory Authority may finance facilities for lease to private institutions, with appurtenant equipment. Dependent upon public system. PAGENO="0642" Purchasing Controls Financing Controls Utilization Controls North CarolinaL Secretary of Administration receives requisitions and makes purchases on behalf of state agencies, except Univ. of North Carolina and com- munity colleges. Higher education facilities authority proposed but recently defeated in referendum. Extensive joint public- private activity. Competitive sealed bids for all purchases in excess of $5,000; Advisory Budget Com- mittee sets requirements for lesser amounts. Public financing includes equipment appurtenant to facilities project. Extensive use of quasi- governmental entities. Virginial All purchases made with state funds must be by Dept. of General Services. Higher education facilities authority finances equipment as part of facilities project, but may allow acquisition of equipment for "a period" after construction is completed. Statutory authority for public institutions to contract with private institutions for ser- vices and facilities. PAGENO="0643" Purchasing Controls Financing Controls Utilization Controls Virginia (continued) DGS standardizes all pur- chases and must grant waivers for exceptions. DGS may exempt purchases below specified amount from its direct control, and may exempt classes of equipment. DG'S may authorize state agen- cies to purchase directly; has done so for most higher education. Industrial Revenue Bond Act may be used to equip educa- tional facilities (private), separate from construction. Public institution financing of equipment as part of con- struction project. Legislation approved for joicit public institu- tion-private sector high tech R&D activities; created Center for Innovative Technology. CA~ All contracts competitive, with preference for Virginia goods. Agencies may set procedures for noncompetitive procurement for items less than $10,000, or available from a sole source. PAGENO="0644" ~Ca1. Pub. Con. Code sections 10290-12121, 20650-20659; Ca!. Educ. Code sections 81651-56, 81800-10, 94100-94213; Cal. Gov't. Code sections 11005, 13332-13332.16. ~Conn. Gen. Stat. Ann. sections 3-116a, 3-116b, 4-23j, 4-23k, 4-34, 4-36, 4-69 to 4-124, lOa-22, IOa-89, lOa-98 to IOa-98g, lOa-110 to ba-I lOg, IOa-126 to lOa-136, IOa-150, IOa-176 to lOa-198. ~Ga. Code sections 20-3-53 to 20-3-60, 20-3-150 to 20-3-214, 50-5-10 to 50-5-11, 50-5-50 to 50-5-81, 50-5-160 to 50-5-169, 50-16-81, 50-16-160 to 50-16-162. ~I11. Rev. Stat. ch. 172, sections 213.1 et seq., 307 et seq., 751 et seq.; ch. 144, sections 68 et seq., 181 et seq., 351 et seq., 1201 et seq., 1301 et seq. ~Iowa Code Ann. ch. 262, ch. 262A, ch. 263A. tKy. Rev. Stat. section 164.026; ch. 45A. gMd. Ann. Code art. XII, sections 12-101 to 12-106; art. XVII, sections 17-101 to 17-107. !1N.Y. Educ. Law, tit. 1, art. 8-A, sections 370, 376;tit. 7, art. 125, sections 6201, 6213; tit. 7, art. 125-B, ~ections 6270, 6275. ~N.C. Gen. Stat. sections 116-53, 143-2' to 143-7, 143-49 to 143-56. LVa. Code sections 2.1-422 to 2.1-548, 11-35 to 11-80, 15.1-1373 to 15.1-139!, 23-9.10:3, 23-14 to 23-30.03, 23-30.39 to 23-30.58. SOURCE: Coopers & Lybrand. PAGENO="0645" 639 APPENDIX F: REPRESENTATIVE STATE STATUTES AUTHORIZING THE ISSUANCE OF BONDS TO FUND HIGHER EDUCATION FACILITIES Equipment Included After-Acquired . If Part of New Construction or Equipment* Includable as State/Statutes Major Renovation Separate Project ALABAMA Educational Building Authorities Act, Ala. Code Sec. 16-17-I to 16-17-19 (1983) Yes Yes ARIZONA Industrial Development Plans for Municipal- ities and Counties, Ariz. Rev. Stat. Ann. Sec. 9-1151 to 9-1 196 (1983) Yes No CALIFORNIA California Educational Facilities Authority Act, Cal. Educ. Code Sec. 94100-94213 (1983) Yes Yes CONNECTICUT Connecticut Health and Educational Facilities Authority, Conn. Gen. Stat. Ann. Sec. 10a-176 to lOa-l98 (1983) Yes Pending DISTRICT OF COLUMBIA Taxation and Fiscal Affairs, D.C. Code Ann. Sec. 47-321 to 47-334 (1983) Yes Yes PAGENO="0646" 640 Equipment Included After-Acquired If Part of New Equipment Construction or Includable as State/Statutes Major Renovation Separate Project FLORIDA Higher Education Facil- ities Authority Law, Fla. Stat. Ann. Sec. 243.18 243.40 (1983) Yes No GEORGIA Private Colleges and Universities Authority Act, Ga. Code Ann. Sec. 20-3-200 to 20-3-214 (198); Georgia Educa- tion Authority (Univer- sity) Act, Ga. Code Ann. Sec. 20-3-150 to 20-3-181 (1983) Yes Varies** ILLINOIS Educational Facilities Authority Act, ill. Rev. Stat. ch. 144, Sec. 1301- 1326 (1981); Board of Regents Revenue Bond Act of 1967, III. Rev. Stat. ch. 144, Sec. 351-363 (1983); Bonds for Perma- nent Improvements at State Educational Institutions Ill. Rev. Stat. ch. 127, Sec. 307-313 (1983); Capi- tal Development Bond Act of 1972, 111. Rev. Stat. ch. 127, Sec. 751-765 (1983); State Colleges and Universities Revenue Bond Act of 1967, III. Rev. Stat. ch. 144, Sec. 1201- 1213 (1983); illinois Building Authority Act, ill. Rev. Stat. ch. 127, Sec. 213.1-I to 213.16 (1983) Yes Varies** PAGENO="0647" 641 Equipment Included After-Acquired If Part of New Equipment Construction or Includable as State/Statutes Major Renovation Separate Project INDIANA Indiana Educational Facilities Authority Act, md. Code Ann. Sec. 20-12-63-I to 20-l2-63--29 (1983) Yes Yes IOWA State Universities Buildings Facilities and Services Revenue Bonds, Iowa Code Ann. Sec. 262A. I -262A.1 3; Medical and Hospital Buildings at Univer- sity of Iowa, Iowa Code Ann. Sec. 263A.1-263A.ll Yes No KENTUCKY Property and Buildings Commission, Ky. Rev. Stat. Sec. 56.440- 56.495 Yes No MINNESOTA Minnesota Higher Education Facilities Authority, Minn. Stat. Ann. Sec. 136A.25-l36A.55 (1983) Yes Pending NEW ~JERSEY New 3ersey Education- al Facilities Author- ity Law, NJ. Rev. Stat. Sec. 18A:172A-1 to 18A:72A-39 (1983) Yes No PAGENO="0648" 642 Equipment Included If Part of New Construction or After-Acquired Equipment Includable as State/Statutes Major Renovation Separate Project NEW YORK City University Con- struction Fund Act, N.Y. Educ. Law Sec. 6270-6282; State Uni- versity Construction Fund Act, N.Y. Educ. Law Sec. 370-384; Board of Higher Educa- tion in the City of New York, N.Y. Educ. Law Sec. 6201-6216; New York Dormitory Authority Act, N.Y. Pub. Auth. Law Sec. 1675-1694 Yes Varies** OHIO Higher Educational Facility Commission, Ohio Rev. Code Ann. Sec. 3377.01-3377.16 Yes No SOUTH CAROLINA Educational Facilities Authority Act for Pri- vate Nonprofit Insti- tutions of Higher Learning, S.C. Code Ann. Sec. 59-109-10 to 59-109-180 Yes No TEXAS Higher Education Authority Act, Tex. Educ. Code Ann. Sec. 53.01-53.46 Yes No PAGENO="0649" 643 Equipment Included After-Acquired If Part of New Construction or Equipment Includable as State/Statutes Major Renovation Separate Project VERMONT Educational and Health Buildings Financing Agency, Vt. Stat. Ann. tit. 16, Sec. 3851-3862 Yes No VIRGINIA Industrial Development and Revenue Bond Act, Va. Code Sec. 15.1-1373 to 15.1-1391 (1983); Bonds and Other Obliga- tions, Va. Code Sec. 23-14 to 23-30.03 (1983); Educational Facilities Authority Act, Va. Code Sec. 23-30.39 to 23-30.58 (1983) Yes Yes WASHINGTON Washington Higher Education Facilities Authority, Wash. Rev. Code Ann. Sec. 28B.07.0l 0-28B.07.920 (1984); Wash. Rev. Code Ann. Sec. 28B. 10.300- 28B.l0-335 (1984) Yes No * Equipment acquired after construction of the facility. ** At least one, but not all, of the identified statutes in these states extends to after-acquired equipment. SOURCE: Coopers & Lybrand. PAGENO="0650" 644 APPENDIX G: IOWA STATE UNIVERSITY RESEARCH EQUIPMENT ASSISTANCE PROGRAM THE BEGINNING OF REAP The Research Equipment Assistance Program (REAP) at Iowa State University (ISU) was developed in the early l970s because of a suggestion made by an advisory committee studying equipment problems at the university. This committee believed that an equipment sharing and loan program would make it easier for faculty members contemplating projects involving equipment to perform preliminary experiments. Implementation began with the part-time efforts of the late Alfred J. Bureau, then Assistant Professor of Physics, and Roger G. Ditzel, then Assistant to the Vice-President for Research. As a result of initial studies, a project was initiated in September 1972 to gather information on the use and availability of major research equipment at the uni- versity. On February 1, 1974, the National Science Foundation Re- search Management Improvement Program funded a research proposal on this subject submitted by Iowa State University. The objective of this research was to develop and demonstrate a sys- tem for improved utilization of high-value research equipment that would increase research productivity. The functions involved in the research program included (I) information gathering, (2) inquiry processing based on requests representing equipment needs, (3) user education, (4) computer support, and (5) main- tenance, replacement, and storage requirement studies. Through this study, it was determined that any equipment assistance system should provide: * a means of identifying and locating usable, highly diversi- fied research equipment to allow planned research to be con- ducted without unnecessary new item purchases; * information on availability for use by others of equipment items assigned to and used part of the time by one individual or research unit; * a means of identifying unused equipment so that provision can be made for proper storage and necessary maintenance; * a capability for knowledgeable decision making relative to disposal of obsolete or high maintenance cost items; and * a means of retrieving problem-solving types of informa- tion, for example, potential spare parts sources on the campus. A boundary condition on any such system exists and must be recognized in its structuring and implementation. That boundary PAGENO="0651" 645 is one of acceptance by the university researcher. No matter how sophisticated or well planned the system, it cannot succeed with- out the overt cooperation of the majority of researchers. If re- searchers perceive it as "taking their equipment away," they will not cooperate. RESULTS OF THE RESEARCH PRO3ECT As a result of the research project, investigators believed it was possible and economically feasible to implement an equip- ment information and sharing system to improve the productivity of university research personnel. With proper structuring and a low-key, nonthreatening introduction of a system designed to be responsive to needs, it was thought that researchers would co- operate and take advantage of the benefits offered. When the grant period ended, over 2,500 items of research equipment had been examined and cataloged, acceptance by ISU researchers of the philosophy and mechanics of sharing had been achieved, and four volumes of information on the developed system, plus videotapes and slide shows, were made available to other universities. RESEARCH COMPLETED; REAP CONTINUES Because of the successful findings of the research study, the university has continued to support the REAP program since the grant expired. The program is administe~'ed by the Office of the Vice-President for Research. By 1974, a central office was estab- lished to serve as a communications center and focal point for the program and was staffed by a full-time clerk. This office is pur- posely located in an education and research building and not in the central administrative building. (It was felt that faculty members might be more comfortable and willing to use the service if it were in their own setting.) The central office handles all inquiries and information proces- sing. An inquiry is defined as a request to the REAP central office for assistance in relation to equipment. The inquiry may relate to the need for equipment, spare parts, operating manuals, help in definition of equipment needs to carry out a certain task, etc. Inquiries may be satisfied by a loan of equipment from the REAP office to the researcher's department, by a loan from one department to another, by researchers' sharing a piece of equip- ment in the same location, by finding minor parts, by providing information or manuals, or by referring the inquirer to others who have the same equipment. Since the inception of the program, PAGENO="0652" 646 the rate of inquiries has greatly increased. The tabulation below shows the total inquiries for the 12 years 1973-1984 and includes the number of those inquiries satisfied or not satisfied. It has been found that the high success rate in satisfying inquiries has been a major factor in the positive image the REAP program enjoys. REAP Inquiries calendar Year Total Number Number Satisfied Number Unsatisfied 1973 42 33 9 1974 208 168 40 1975 395 335 60 1976 953 799 154 1977 2,236 1,754 482 1978 2,108 1,672 436 1979 1,924 1,724 200 1980 2,201 2,012 189 1981 2,322 2,175 147 1982 2,173 2,029 .144 1983 2,021 1,904 117 1984* 1,445 1,412 33 *Includes nine months of data (lanuary-September). REAP CATALOG One of the first goals of REAP was to generate a catalog of existing equipment, with an estimate of the availability of the equipment for loan or transfer. The 3une 1984 listing contained nearly 10,000 items (each with an initial acquisition cost of $500 or more) having a total value of nearly $30 million. It is esti- mated that about 90 percent of all research equipment on campus is recorded in the computerized REAP catalog. RESEARCH TECHNICAL ASSISTANCE GROUP One function of the program that has proven to be excep- tionally successful has been the capability of providing expert repair and calibration of most items of equipment. This has led to the recent development of a separate program known as the Re- search Technical Assistance Group (RTAG). RTAG complements PAGENO="0653" 647 the repair service of other university shops by offering minor repairs of balances, microscopes, nuclear counting systems, mass spectrometers, gas chromatographs, spectrophotometers, and electron microscopes. A major service is the diagnosing of equip- ment problems with subsequent referral to other university repair shops. SUCCESSOF REAP Perhaps the ultimate testimony to the importance of REAP was provided in 1978 by an "important notice" addressed to the presidents of U.S. universities by Richard C. Atkinson, then Director of NSF. In it he called attention to the Iowa State REAP system and recommended that others follow suit. The value of REAP and its spin-off, RTAG, to Iowa State University is great. The number of inquiries alone proves that the program is popular and heavily used. In terms of actual dollars saved due to satisfied inquiries, records indicate that the REAP program has saved the university nearly $4 million since it began in 1973. In estimating equipment value as a benefit, the gross value of the item is not used. Instead, the length of time of the loan is taken into account and a "pro rata" value used, in order to arrive at a realistic equipment benefit value. Any equipment on loan for more than 100 days (which includes permanent transfers as well) is assumed to have produced savings equivalent to the full value of the equipment. The following system is used based on acquisition cost or value of the item: * three percent per day for a loan span of one to three days, * ten percent per week for a time span of four days to three weeks, * thirty percent per month for a time span of three weeks to 3 1/3 months, and * one hundred percent for loans over 3 1/3 months. For low-value items, a minimum transaction value of $5 is used. This method for computing savings has been approved by the General Accounting Office in Washington, D.C. In addition to the savings mentioned above, many dollars are saved by RTAG's ability to make expensiveequipment repairs (which sometimes results in the elimination of expensive service contracts). PAGENO="0654" 648 QUESTIONS For further information regarding the REAP program at Iowa State University, please contact Wayne Stensland, Manager, REAP, 103 Physics, Iowa State University, Ames, IA 50011 (telephone: 515/294-5536). SOURCE: Vice-President for Research, Iowa State University (October 1984). PAGENO="0655" 649 APPENDIX H: EXAMPLES OF DEBT FINANCING EXAMPLE 1: REVENUE BOND ISSUE BY STATE UNIVERSITY Description Revenue bonds were issued by a state university to finance: * refunding of existing notes, * construction of new facilities at the university hospital, * debt service reserve of the new issue, equaling the maximum annual debt service, * construction period interest, and * expenses incurred for bond issuance. The bonds represent a limited obligation of the university regents and are secured by the gross revenues of the hospital. The bonds do not represent a debt obligation of the state. Decision Factors There are three main reasons why the university issued long-term debt. 1. The university hospital's funding requirement was substantial. The revenue bonds allowed the institution to minimize its borrowing cost, raise the necessary capital, and provide a debt repayment schedule that could be met out of hospital revenues. 2. The project was long term and included the construction of new buildings. The bonds allow the institution to match the life of the asset to the period over which the debt will be repaid. 3. During the past decade, the issuance of revenue bonds has become the primary source of capital for construction projects and major equipment purchases. PAGENO="0656" 650 Terms Amount of Issue: $110,000,000. Period: The total issue was for 30 years. How- ever, the individual bonds have matur- ities scheduled annually over the 30 years. The university also has the option to buy back the bonds from the investors before the maturity date (i.e., early redemption of bond). Interest Rate: Varies by bond dependent upon the date of maturity. The interest rate ranges from 6.5 percent to 9.875 percent. The interest rate on the bond is referred to as the coupon rate. Additional Fees: The issuance cost of the bonds totaled $3.5 million, which included financing and related costs and original issue discount. Security Required A portion of the bond proceeds was by Lender: set aside to establish a debt service reserve fund. Terms Required The bond represents a limited by Borrower: obligation of the university and is secured by the hospital's revenue. Type of Project: Ambulatory care facility. Features Obligation The bonds are secured by the financial resources of the hospital. The hospital is required to maintain certain financial operating ratios, which would ensure that there are sufficient funds to meet the bond debt service. The rate covenant states, The hospital's annual net revenues (gross revenues minus expenses) are at least 125 percent of the annual debt service payments (interest plus principal). PAGENO="0657" 651 If this ratio is not maintained, the university regents are respon- sible for taking corrective action. The bonds will be serviced by the revenues generated by the institution and the debt service reserve fund. Security The bonds are secured by the debt service reserve fund, which is established at the time the bonds are sold. The reserve contains sufficient funds to cover the maximum possible annual debt service. Preparation of Official Statement The revenue bond statement presents detailed financial information on the university and the hospital to demonstrate the source of revenues to potential investors. Additionally, a detailed financial feasibility study was pre- pared for the construction project. These studies are used both to demonstrate financial soundness to investors and, when necessary, to provide required data for the State Certificate of Need process, through which state health planning agencies control the expansion of health care facilities. In this study, the investor was shown: * assessment of the need for hospital services in the area, * review of economic factors that would affect the success of hospital operations, * review of forecasts for the hospital's utilization rates for services, and * review of the financial forecasts, including the factors influencing revenue and cost estimates. EXAMPLE 2: REVENUE BOND POOL Description Revenue notes were issued by a state educational authority to finance equipment purchases and rehabilitation projects for 15 private colleges within the state. The notes are limited obliga- tions of the authority, payable only out of revenues and pledged funds of the participating private institutions. The revenues consist primarily of the loan repayments made by the colleges according to their debt repayment schedule as stated in their individual loan agreements with the authority. PAGENO="0658" 652 Decision Factor Fifteen institutions participated in the program. The individual institutions' loans ranged from $17,745,000 to $120,000 for a period of two to seven years. One institution, a large private university, had the largest loan amount of $1 7.7 million for equipment acquisition and construction over a five- to seven-year period. Participation in the pool provided both large and small institutions access to tax-exempt debt. Generally, only large institutions would be able to issue their own bonds because of their established credit ratings. Terms Amount of Issue: Total issue was approximately $50 million. Period: The issue has maturities scheduled over two- to seven-year periods as stated on the individual bonds. Interest Rate: Varies by bond dependent upon the date of maturity. The interest rate ranges * from 6.25 percent to 8.75 percent. The interest rate on the bond is referred to as the coupon rate. Additional Fees: The issuance cost of the bonds totaled $2 million, including basic issuance cost, insurance premium, and under- writers' discount. Security Required $5 million of the bond proceeds by Lender: were set aside to establish a debt service reserve. Terms Required The participating institutions by Borrower: enter into an individual loan agreement with the educational foundation authority. Type of Equipment: Computers and other equipment for research, telecommunications, and energy conservation; and building renovations. PAGENO="0659" 653 Features Administration Each college or university enters into a separate loan agree- ment with the authority. These loan agreements are based on the useful life of the college's equipment purchase and the college's credit worthiness. The college is required to make semiannual debt service payments to the authority, reflecting principal and interest payments, insurance premium amortization, issuance cost amortization, administrative cost, investment earnings shortfall, and any other authority-required payment. Credit Requirements The participating colleges entered into three types of loan agreements: (1) an unsecured general obligation to make debt service payments; (2) a general obligation to make debt service payments secured by real or personal property of the college; and (3) a general obligation to make debt service payments secured by real or personal property of the college, as well as a bank letter of credit. In this issue, the pool includes both colleges with strong credit ratings and those without any proven credit experience. The three types of loan agreements provide for the necessary credit enhancements to obtain a favorable credit rating for the issue without penalizing the financially stronger colleges with a higher interest rate than these larger institutions would normally obtain on an individual bond. Evaluation Criteria The authority and the insurer of the issue reviewed the indi- vidual college's financial condition to determine eligibility in the program. Thecolleges were required to maintain a minimum two-to-one available assets to general liabilities ratio for the latest fiscal year, as well as to generate positive unrestricted current fund earnings after expenditures and mandatory trans- fers. Additionally, nonfinancial indicators were reviewed, such as enrollment data and trends. Special Considerations The insurer has committed to the issue an insurance policy that will insure the payment of principal of and interest pn the PAGENO="0660" 654 bond. In the event there are not sufficient amounts available in the debt service fund and the debt service reserve fund to make debt service payments, the authority's trustee notifies the insurer of the deficient amount, and the insurer is obligated to pay the deficient amount according to the terms of the insurance policy. EXAMPLE 3: INDUSTRIAL DEVELOPMENT BOND Description The industrial development bonds were issued by two county development authorities to provide funds to the research foun- dation for the construction of and equipment for a scientific and technical research facility and the purchase of an existing re- search facility from a private corporation. The research foun- dation, a state nonprofit corporation, has entered into a loan agreement with each issuer, in which the issuers loan the bond proceeds to the foundation for the research facility projects. The loan agreements require the foundation to pay the principal, premium (if any), and interest on the bonds, together with all associated costs and expenses. The foundation will lease the facilities to an affiliated research corporation of the state university and to a private corporation. The lease to the private corporation is incidental to the transaction with only a small portion leased back to the corporation selling the facility as a condition of the sale. These lease payments will be the revenue source for the debt repayment. The university has planned to fund its lease payments (i.e., bond retirement) entirely through indirect cost recovery. Decision Factor The university had considered raising the funds through a state building authority. However, the construction costs would have been $25 per square foot higher under the state authority than with the industrial development bonds. Additionally, the state building authority's financing process is oriented to academic rather than research projects; it is cumbersome and slow, with numerous regulations. In issuing the industrial development bonds, there is some risk if the federal government contests the arms' length relationship between the university and the foun- dation. However, in the instant case, the arm's length relation- ship has been recognized by the government. PAGENO="0661" 655 Terms Amount of Two Approximately $17.2 million and Issues: $7.3 million. Period: The larger issue has maturities scheduled over 1- to 20-year periods as stated on the individual bonds. The smaller issue has maturities varying over 10 years. Interest Rate: Varies by bond dependent upon the date of maturity. The interest rate ranges from 5.5 percent to 9.625 percent. The interest rate on the bond is referred to as the coupon rate. Additionally, 1.25 percent of the amount of 103 percent of outstanding bonds is payable annually as a letter of credit fee. Additional Fees: The issuance cost of the bonds totaled $696,000, including financing, legal, printing, and miscellaneous expenses. Legal fees alone were $90,000. The first year's letter of credit fee was $340,000. Security Required As part of the debt service require- by Lender: ments, a sinking fund will be started in year 13 for bonds maturing in year 20. (Note: A sinking fund represents an accumulation of funds by the issuer over a period of time to be used for retirement of debt, either periodically or at one time.) The letter of credit bank required security interests in the assets of the projects. Terms Required Though two counties issued the by Borrower: industrial development bond, the bonds are to be repaid by the foundation. Type of Project: The smaller issue was used by the foundation to purchase and renovate an existing research complex consisting of 50+ acres of land and 130,000 square PAGENO="0662" 656 feet of office and laboratory space. The larger issue was used to purchase land and to design and construct a six-story 190,000 square foot laboratory building adjacent to the campus. Features Obligation The bond investors will look to the letter of credit bank, which will look to the foundation for repayment. The bonds are a limited obligation of the issuing authorities and do not represent any indebtedness of the state. Security The primary security for the issue is the letters of credit and confirming letters of credit. In the event the foundation defaults on its loan agreement, the bond trustee will draw the necessary funds from the letter of credit bank to buy all bonds from the bond holders. If the letter of credit bank dishonors its obligation, the bond trustee will draw upon the confirming letter of credit bank to make payment. This arrangement allowed a Standard & Poor's AAA rating, though the foundation was essentially without assets. The letter of credit banks are secured by security inter- ests in the research facility's land, buildings, and equipment. The foundation has assigned the facility's rents and leases. The uni- versity's affiliated research corporation is obligated to pay one year's debt service to the letter of credit bank in the event of foundation default and agrees to maintain its net worth at least at that level. Administration The foundation was formed for the purpose of supporting research activities of public and nonprofit colleges and univer- sities i~ the state. It is considered a charitable, educational, and scientific organization exempt from federal income taxes. The foundation has no plans to undertake any fundraising and expects to rely upon rent charges from the research institute for the use of the facilities. The foundation has no long-term lease or con- tractual commitments from the research institute and its affiliated university. PAGENO="0663" 657 EXAMPLE 4: STATE UNIVERSITY LINE OF CREDIT Description The university established a standby line of credit with a state commercial bank for the purpose of purchasing self-liquidating equipment. The line of credit is drawn upon by department heads or principal investigators on an as-needed, project-by-project basis. Their requests for funds are presented in loan agreements that specify the use of funds, the period of need, and the revenue source for repayment. Once these requests are reviewed, the funds are drawn from the line of credit within funding limits set by the Board of Regents and the lending limit agreed to by the bank. Decision Factor The university had experienced difficulty in finding adequate funding for equipment related to instructional and research activity. Funds from general operating budgets had been largely used for instructional equipment needs and had not adequately met the needs of the research programs. The university has found that its faculty's ability to continue a high level of externally sponsored research is dependent on its ability to obtain state-of- the-art equipment. With the recent changes in 0MB Circular A-2l which allow the university to be reimbursed for interest on equipment purchases over $10,000, the university decided to obtain a line of credit, which could be used to acquire self- liquidating equipment over $50,000. Equipment financed through the line of credit in connection with external grant or contract arrangements would qualify as self-liquidating because both principal and interest on borrowed funds would be fully recovered from the grant or contract over the financing term. Since establishing the equipment financing plan, the university has encountered some difficulty in receiving specific grant approvalfrom at least one agency for the reimbursement of financing cost. When the line of credit plan was being considered, a description of the plan was sent to and discussed with Depart- ment of Health and Human Services, National Institutes of Health, National Science Foundation, Office of Naval Research, and the National Aeronautics and Space Administration. All agreed that the plan was appropriate and conformed to A-2 I guidelines. The line of credit has only been used to acquire equipment for one grant. The cost of the equipment will be covered by the grant funds. However, the interest costs are being paid out of a private PAGENO="0664" 658 gift fund because the sponsoring agency denied the request for reimbursement of interest cost. Terms Amount of Issue: The ceiling for the line of credit was negotiated at $2 million. Period: The line of credit was negotiated for a five-year period with options to renew. Either the bank or university can ter- minate the contract at any time except with respect to outstanding loans. Interest Rate: Stated at about two-thirds of the bank's prime interest rate. Additional Fees: None. Security Required None. by Lender: Terms Required The bank will make loans to the by Borrower: university on a project basis with actual lending occurring only if the grant is awarded or if user fee terms are agreed upon to coverdebt service. Type of Project: Various scientific instruments. Features Agreement The university's Board of Regents approved the line of credit agreement after a competitive bid process in which a number of bank proposals were reviewed. The terms of the agreement specified: * the ceiling of the line of credit, * a commitment for lending on a project basis rather than in a lump sum, * interest on a tax-exempt basis, * interest rate established as an index to the bank's prime interest rate, with the rate for each individual loan set at the time a draw on the line of credit is negotiated, and PAGENO="0665" 659 that the agreement can be terminated at any time by either party except with respect to outstanding loans. University Procedures The principal investigator or department head seeking external funds for research equipment over a prescribed amount prepares a request for funds to the vice-president for educational develop.. ment and research. This request presents a justification for the need and the funding requirements. The request has to describe the method for repayment as follows: 1. Existing grants that have a multiple year funding period could be rebudgeted. This could represent one or more principal investigators. 2. Equipment financing could be proposed in a grant application. 3. User charges and fees could be from external and/or internal users. The request will be reviewed~ and the cost analysis performed to determine the financial resoutces required to liquidate the debt. Approved requests are forwarded to the university business officer who maintains the banking relationships with the line of credit bank. The business officer will contact the bank to deter- mine the terms of the new loan. If the terms, interest rate, index, and maturity are favorable, the business officer will request the bank to commit the funds to the new loan. Once the loan is executed and funds transferred to the uni- versity, a loan account is established in the university plant fund. The equipment is purchased from this account. To provide an audit trail for liquidation of the debt, plant fund expenditures will be reimbursed through charges to the grant account in the current restricted fund or through transfers of depreciation amounts from the service account. The Board of Regents is to receive a monthly status report on the loans made from the line of credit. Addition- ally, the Board of Regents is to be notified when the line of credit ceiling has been reached. EXAMPLE 5: ACQUIRING BIOMEDICAL EQUIPMENT Description The university obtained a demand note for a variety of funding requirements, including both instructional uses and research PAGENO="0666" 660 Terms Required None. by Borrower: Type of Project: State-of-the-art equipment for the radiology department costing $1.4 million. Features The radiology department had an immediate need for the equipment but had insufficient funds to purchase the item. Access to the demand note proceeds enabled the department to acquire the equipment and pay for it later. The demand note is serving as an intermediate financing instrument. The radiology department pays only the interest on the loan, and the hospital will repay the loan principal in two years from its capital outlay budget. In two years, the hospital will be able to justify the use of the equipment in patient care. Until that time, the department will cover the line of credit interest cost through user charges. At the time the equipment is transferred from experimental to clinical use, it may be necessary to apply to the state health planning agency for a Certificate of Need under health planning statutes. The procedures vary from state to state and also over time, so that the precise requirements will not be known until the time for transfer. EXAMPLE 6: MUNICIPAL LEASE Description Telecommunications equipment was acquired for a state uni- versity through its affiliated foundation. In this municipal lease, the university was the lessee and a bank was the lessor. The title to the equipment passed to the university at the end of the lease term. Decision Factor The municipal lease was used by the university to finance equipment acquisition because the state restricted the university from entering into multiyear indebtedness. The university was able to acquire the equipment with the municipal lease because the lease is renewed each fiscal year. The cost of the lease can PAGENO="0667" 661 needs. The specific demand note was obtained after a competi- tive bid process in which proposals from a number of lending institutions were reviewed. The demand note was used to finance the acquisition of a specialized piece of equipment for the radiology department of the medical school. The department needed to acquire the equip- ment immediately for research, but the hospital would not be able to use it for patient care, as third-party payers, specifically Blue Cross, considered its use experimental. Decision Factor The university decided to obtain a demand note to acquire equipment that the university had normally leased. The note pro- vided a cheaper form of financing than leasing. However, the university still leases small pieces of equipment such as copiers. When the university was first considering the demand note, there were several projects, academic as well as research, that needed temporary or short-term funding. The university had a general set of guidelines for selecting the projects to fund with the demand note proceeds. All funds had to be used within six months because of arbitrage restrictions. Since the time the demand note was obtained, several projects have repaid their debt or replaced the debt with long-term financing. Other projects have been substituted as funds are replaced. Terms Amount of Issue: $15 million. Period: Five-year period with cancellation clauses. Interest Rate: Stated at about one-half of prime interest rate. Additional Fees: The university obtained a backup line of credit that cost an additional 1/2 percent. Security Required The lender was a mutual fund. The by Lender: university pledged its unrestricted endowment funds as collateral. PAGENO="0668" 662 also be passed on to federal grants and contracts for which the equipment is used. - Terms - Amount of Issue: $500,000. Period: Municipal lease is written on a yearly basis with annual renewal options. The effective length of the lease, including renewal options, is six years. At the end of this time, the university will receive title to the equipment. Interest Rate: Less than 10 percent. Additional Fees: Administrative fee to the foundation calculated as a percent of the principal amount of the lease. Security Required Security interest in the purchased by Lender: equipment. Terms Required The university had the option to by Borrower: cancel the lease on a year-to-year basis in the event that funds were not appropriated for the lease. Type of Project: Telecommunications equipment. Features The foundation handles the administrative and control pro- cedures for arranging the municipal lease. In this case, the university Atmospheric Science Department had need for telecommunications equipment. This need was documented and reviewed. The municipal lease was open for bid, and the proposal with the most favorable terms was accepted. Because of state require- ments, the finalization of the municipal lease agreement requires a lengthy approval process. A municipal lease transaction may require a tax-exempt opinion from legal counsel if the lessor requests one. In the department's lease request, the equipment acquisition has to be justified. The department also has to explain the source PAGENO="0669" 663 and frequency of revenue to repay the debt and has to incur the cost of equipment insurance. The department is responsible for funding the debt. It should be noted that the university in this case cannot borrow except for self-sustaining enterprises. EXAMPLE 7: ADJUSTABLE RATE OPTION BOND Description The revenue bonds were issued by a state educational author- ity to fund a facilities project at a private university, including: * construction of the university computing center, * purchase of existing land and buildings for use as research, education, and student activities facilities, * renovation and construction of laboratory facilities for the biology and chemistry departments, * acquisition of equipment for the computing center, * acquisition of apartment buildings for student housing, and * construction and renovation of civil and chemical engineering laboratories. The university will initially lease to the authority the various existing facilities referred to under project facilities. In turn, the university will sublease the facilities back from the authority and use the bond proceeds to complete renovation and construction of these facilities. The bonds will be payable solely from the univer- sity's sublease payments to the authority. The bonds are limited obligations of the authority. The bonds are not a liability of the state or any political subdivision of the state. Decision Factors The major reason that the university issued an adjustable rate bond (ARB) was the low interest rates in the short-term market versus the long-term fixed rate debt market. In the first year, the ARB had 6 1/4 percent interest. If the university had issued a long-term fixed rate debt instrument, the interest rate would have been 10 percent. The savings in first-year interest were significant. Though the bond's interest rate will be adjusted annually, the university has the option to convert to a fixed rate if long-term interest rates become favorable. Many institutions are using ARBs because of the favorable market conditions, including low short-term interest rate as compared to long-term rates and quick placement of bonds with investors. PAGENO="0670" 664 Terms Amount of issue: $35,000,000. Period: The total issue was for 20 years. However, the bond holders have the right to tender (i.e., to have their bonds repurchased by the university) at a price equal to 100 percent of the prin- cipal amount on the annual anniversary of the issue date. The university has the option to redeem the bonds (i.e., to buy back the bonds from the bond holders) after one year from the date of issue. There are also optional redemp- tion provisions that the university may exercise. Additionally, if the bonds are converted to a fixed interest rate, the bond holders will no longer have the right to tender their bonds. Interest Rate: The interest rate at the date of issue was 6 1/4 percent. Annually, on the anniversary of the issue date the inter- est rate will be adjusted to reflect changes in the interest rate index. The indexing agent of the issue will be responsible for determining the adjusted interest rate on an annual basis, according to an average yield of at least 20 twelve-month tax-exempt securities with a comparable debt category and rating of the university's bond. Additional Fees: The issuance cost of the bonds totaled more than $500,000. Security Required Under the indenture agreement, the by Lender: university is required to maintain cash and securities with a trustee to pay principal and interest to bond holders in the event that sublease revenues are insufficient to cover debt service. Initially, the university pledged to maintain unrestricted assets in the amount of $37 million, which will be jç.duçed as bonds are retired. PAGENO="0671" 665 Terms Required The university has the right to convert by Borrower: the bonds from an adjustable interest rate to fixed interest rate. Prior to the conversion to a fixed interest rate, the bond holders have the right to tender (i.e., return) their bonds for purchase by the university. Type of Project: Various research and institutional facilities as described above. Features Administration The authority will issue the bonds and place the bond proëeeds with the trustee for distribution to the university. Under a sub- lease agreement with the authority, the university will receive the bond proceeds for construction and renovation of project facilities. In turn, the university's sublease payments to the authority will cover the principal, premium (if any), and interest payments. The university would be required to fund any tendered bonds if the returned bonds could not be remarketed and replenish the debt service reserve fund if the reserve is reduced. In the event that a bond holder tenders his bond to the university, the remarketing agent will try to the best of its ability to resell the tendered bonds. Adjustable Interest Rate The interest rate on the bonds will be adjusted on an annual basis based on the index defined above under interest rate in the section on terms. The rate will be determined by the remarketing agent to be the rate that equals but does not exceed the interest rate necessary to sell all of the bonds tendered. Conversion to a Fixed Interest Rate At the direction of the university, the bonds may be converted to a fixed interest rate, which would hold constant until the date of maturity. The university could convert the bonds to a fixed rate if interest rates were anticipated to increase. The bond holders would have the right to tender (i.e., return) their bonds to the university prior to the bonds' being converted to a fixed interest rate. PAGENO="0672" 666 Security The unique feature of this ARB is that it was done without a backup letter of credit. Normally, a bank letter of credit would cost annually 1/2 percent to 1 percent of the principal balance. The university was able to receive an AA rating and sell the issue because it pledged to maintain unrestricted assets at $37 million. Therefore, the university reduced its net interest cost as compared to similar issues. SOURCE: Coopers & Lybrand. PAGENO="0673" 667 APPENDIX I: DEBT FINANCING INSTRUMENTS Leasing Private college or tax-exempt foundation Municipal Leases Short- Leasing is considered term a long-term rental 1-10 agreement in the form years of operating lease or capital lease State $100,000 to $i,00o,ooo 53-277 0 - 86 - 22 1 year A municipal lease is considered a condition- al sale lease where the payments are scheduled like a lease but the lessee is considered the property owner at the lease inception. The lessor receives tax- exempt status on the interest portion of the lease payment. This form of debt is used when the entity (state, municipality, or state university) is precluded by state law from entering into debt for a longer period than a single fiscal year. Applicable Institution Financing Range Term General Description $100,000 to $1 ,000,00 PAGENO="0674" 668 Advantages Disadvantages Institution acquires the use of equipment without making a substantial initial cash outlay. Leasing provides a means for financing small equipment acquisitions. Lessee has some protection against equipment obsolescence. Of f the balance sheet debt. Quick and easy form of financing. Short-term financing with annual renewal options allowing for long-term financing as needed. Leasing provides some pro- tection against technical obsolescence of the equip- ment. If the institution has substantial capital needs and can issue debt, long-term financ- ing would be more cost effective than leasing. Leasing requires trade- offs to be made on whether the institution acquires title to the equipment. Leasing is another form of debt which will have an impact on the insti- tution's cash flow. Lessors consider muni- cipal leases risky because the government is legally committed only for a single fis- cal year. The lessor will charge more to cover the risk of can- cellation. PAGENO="0675" 669 Line of Credit State or private university or foundation Pool Revenue Bonds I to 5 Represents an assur- years ance by a lending institution that funds will be made available as specific project needs arise. A university establishes a line of credit agreement with a bank, defining the terms, conditions, and interest rate to be required before an actual loan is made. The agreement states the aggregate ceiling of the loans to be outstanding at any one time. Minimum $5 million 10 years Offers tax-exempt bond financing to a group of colleges and universities to finance numerous small projects. Two types of bond pools: blind pools do not identify the individual borrowers or the projects; composite pools identify all partici- pants and projects and loan amounts to be included in bond issue. Applicable Institution Financing Range Tet~ General Description $l-l5 million State or private institution PAGENO="0676" 670 Advantages Disadvantages Insurance of funds avail- ability against likely but uncertain needs. Ability to debt finance low- priced equipment on more favorable terms than leasing. Ready access to funds so that equipment procurement is not delayed until grant or contract funds arrive. Availability of funds until permanent debt financing can be secured. Insurance of funds availability if unexpected needs develop. Institutions are ableto pool their capita! needs when institutions have insufficient capita! needs to make an individual Administrative cost and time required to review loan request and moni- tor debt repayment. Risk that the debt re- payment guarantees of dept. heads and princi- pal investigators will not be honored. Pool Revenue Bonds have the same disad- vantages as revenue bonds. PAGENO="0677" 671 Applicable Financing Institution Range Tethi General Description Pool Revenue Bonds (continued) The bonds are issued by a state educational author- ity, which disburses the bond proceeds to partici- pating colleges and univer- sities. While the authority holds the bond proceeds until the institutions need funds, the aUthority may invest the funds at a higher interest rate than the bond interest rate. The net interest income earned on available funds is used to partially cover administra- tive cost. The IRS requires that all bond proceeds be disbursed to pool partici- pants within three.years. The period of the institu- tions' loans range from three to ten years but cannot exceed the term of the bond issue. The financial liability of the participating institu- tions is limited to the amount of their individual loan agreements. PAGENO="0678" 672 Advantages Disadvantages revenue bond cost effective or an institution does not have a credit rating to issue debt on its own. Allows smaller institution access to tax-exempt debt financing. Spreads the cost of issuance among a number of institutions. If sizable debt re- serves and insurance premiums are required to protect against the risk of loan defaults, the more creditworthy institutions in the pool may be subsidizing the cost of debt for the less creditworthy institutions. The finan- cially stronger institutions may be able to obtain lower interest rates through individual bond issues and may not wish to participate in the pool. PAGENO="0679" 673 Applicable Financing Institution Range Ter~n~ General Description Pool Revenue Bonds (continued) The individual institution's interest rate may vary per loan agreement with the authority to properly reflect differences in loan risk between a financially strong institution and a small college. Tax-Exempt Variable Rate Demand Bond (VRDB) Nominal Bond carrying a float- maturi- ing interest rate which ties of is set periodically to 25-30 a percentage of prime years interest rate or trea- sury bills. The bond is priced as a short-term security with a nominal long-term maturity. Minimum $3 million State or private university with the assistance of govern- ment authority PAGENO="0680" 674 Advantages Disadvantages Provides the university access to lower interest rate debt instruments. Raise substantial funds for major projects when long-term rates are too high to issue permanent financing. Risk and cost associ- ated with the constant change and movement in the short-term debt market (i.e., if a bond is returned and cannot be immediately resold to a new investor, the university will have to draw on its letter of credit to repay the bond holder). Risk that the university may not be able to roll over the VRDBs into long-term debt. PAGENO="0681" 675 TECP are short-term obligations with stated maturitiesof 270 days or less, comparable to corporate commercial paper except interest rate is tax-exempt. A pool program can be established by a designated government authority which issues the TECP and lends the funds to participating institutions. The TECP is designed to be rolled over at its maturity without delays and addi- tional issuance cost. The interest rates on the par- ticipating institutions' loans are determined monthly, based on the average interest rates of the TECPs sold in a month. General Obligation 20-30 Long-term bond secured years by the full faith, credit and, usually, taxing power of the state or local gov- ernment. Applicable Institution Financing Range Term General Description Tax-Exempt Commercial Paper (TECP) State Pool TECP- university program 270 days or private minimum $50 or less college million Pool or program foundation 10 years mdiv- idual loans minimum $100,000 Indiv- idual loans 1-10 years State university Minimum $3 million PAGENO="0682" 676 Advantages Disadvantages A university has access to short-term debt at favorable interest rates. Issuance costs are shared by all participants. Because the TECP has a short-term maturity and is continually rolled over, the university is not lockedinto long-term debt and can repay anytime with- out penalty. Favorable credit ratings can be obtained for the issue because it is backed by the state or local government. For major, long-term project to fund, a Revenue Bond or another long-term debt instru- ment would match the useful life of the asset. For less cost a uni- versity with an established credit rating may be able to access short-term f i- nancing through a line of credit. Legislative approval is required for the bond. If approval is delayed, project would have to be delayed or postponed. PAGENO="0683" 677 Revenue Bonds State university or private university or college or tax-exempt foundation For a private institution to use revenue bond financ- ing, the institution must obtain the assistance of a county, industrial devel- opment authority, educa- tional facilities authority, or similar agency. The bond investor will look at the institution's overall revenue-generating capabil- ity as a means of assessing its ability to meet interest obligations and principal payments. State requirements vary on the authority state univer- sities have in issuing revenue bonds. Applicable Financing Institution Range TiI~ General Description Minimum $3 million 20-30 years Long-term bonds issued to finance a specific revenue-generating project. The bonds are secured either by the project's revenue or the revenue of the institution as a whole. PAGENO="0684" 678 Advantages Disadvantages Revenue bonds are cheaper than any form of commercial financing because interest to revenue bond investors is exempt from federal taxes. The high issuance, le- gal, and brokerage fees associated with bonds mean that a substantial dollar amount is neces- sary to make the bond cost effective. The Revenue Bonds are direct obligations of a state university or college with the bond holders' looking to the university (not the state) for repay- ment of principal and interest. The attractiveness of revenue bonds is influenced by the investor's need to protect from taxes. With any lowering of tax rates, the investor will have less need to shelter income through revenue bonds. PAGENO="0685" 679 Applicable Financing - _____________________ Institution Range Term General Description Industrial Development Bonds Private Minimum 20-30 A security issued by college or $1 years state, local government, university million designated. agency, or or development corporation tax-exempt to finance the construction foundation or purchase of buildings and/or equipment to be leased to a private corporation (institution). The credit of the private institution is. considered to be the credit backing the issue. PAGENO="0686" 680 Advantages Disadvantages As that happens, to keep attracting investors, institutions will have to offer revenue bonds with higher interest rates, which will increase the institution's borrowing cost. Revenue bonds are long term in nature and not appropriate for financing short-term equipment needs. Industrial Development Bonds The Industrial Devel- provide private institutions opment Bonds have the a means of raising substan- same disadvantages as tial capital, revenue bonds. Industrial Development Bond interest is also exempt from federal taxes. PAGENO="0687" 681 Life of Certificates of Parti- asset cipation are similar to On Behalf of... leases except there is no third- party. guarantee. The purchaser of the certif i- cates hasan interest in the equipment lease. The certificates represent a lien on the asset. Third-party guaranteed revenue bonds or leases issued by a foundation on behalf of a state or private institution. Title to equipment is held by the foundation and passes to the institution when the debt is retired. Applicable Institution Financing Range Ter~ General Description Certificates of Participation State or private univer- sities On Behalf of... Tax-exempt foundation Minimum $1 million Minimum $1 million Life of asset PAGENO="0688" 682 Advantages Disadvantages Institutions that do not have tax-exempt foundations can issue the certificates. Institutions are able to finance large dollar value equipment through public securities investors at longer terms and at lower interest rates than other debt instruments require. Debt does not affect the university or college's balance sheet. Lease would be on a year- to-year basis with annual renewal. State institutions which need legislative approval for Revenue Bonds can use On Behalf of... financing without state government approval. The foundation funds and enters into the long-term lease. Institutions will have to plan for the annual funding of the certifi- cates as a fixed obligation. The purchaser will look to the institution's revenue-generating capability to meet this fixed obligation and assess his risk position. On Behalf of... financ- ing is viewed as an indirect obligation of the institution. Investors will look to the institution's reve- nue-generating capabil- ity to assess the risk of the issue. SOURCE: Coopers & Lybrand. PAGENO="0689" 683 APPENDIX 3: EXAMPLES OF EQUIPMENT DONATIONS Examples I through II below describe equipment donations involving 14 universities and 12 corporations. Equipment donated includes computed axial tomography scanners, digital fluoro- scopes, nuclear magnetic resonance spectrometers, mainframe computers, microcomputers, software, oscilloscopes, spectrom- eters, laser units, processing equipment for very large-scale inte- grated circuitry, computer-aided design systems, and semiconduc- tor manufacturing equipment. EXAMPLE I Circumstances of Donation * Principal investigators contacted research colleagues at the corporation. * The university faculty had produced innovative ideas; these were then licensed to the donor and developed into successful products. * The university was viewed as a recruiting source. * The university would be used to market the donor's equipment; principal investigators would be requested to show equipment to potential purchasers; results of equipment usage would be provided for trade and scientific shows. Special Considerations * The donor receives license for any marketable research; the university receives the copyright. The donor must sublicense upon request; both share the royalties from sublicenses. * The donor expects the marketing activities to be performed. * In order to have time to obtain patents, the donor has occasionally requested that scientific results be withheld from publication. Although university guidelines provide that publica- tion can only be withheld for 90 days, the university often com- plies with the request. 226 PAGENO="0690" 684 Institution's View * The donation of equipment was seen as the only feasible alternative, since the level of funding ne.cessary for such special- ized machinery is unavailable through the National Institutes of Health. * The equipment is generally high level, although not top-of--the--line. * The donor has paid all maintenance costs. * Students have developed the necessary software. The donor has provided an on-site programmer. * The donor's equipment has been compatible with other equipment. Major items were self-contained. * The equipment has worked well. * The researchers feel that the promotional activity is an imposition. * Patent-related issues have been problematic. Corporate View The donor has been happy with the university's work. EXAMPLE 2 Circumstances of Donation * University faculty and corporate counterparts had professional contacts prior to the donation. * The university has an active research faculty that has pursued innovations. * The university is attractive to corporations because of its accomplishments and innovative ideas. * Corporations are interested in recruiting university students. * Tax incentives have made contributions even more attractive. Special Considerations * A license to patentable inventions may be made available to the donor. * There are no restrictions on the publication rights of work undertaken by the university. PAGENO="0691" 685 Institution's View The donor does not cover all costs. Researchers believe that they are more motivated to use the equipment if there is some cost tothem. Maintenance costs, however, are quite high. Corporate View The university is very attractive because of its faculty, programs, and record of success. EXAMPLE 3 Corporation View I * Relationships were established among university develop- ment office, department heads, researchers, and corporate counterparts. * The university identified the equipment that was already available, plans for using the equipment, the potential users of the equipment, and their areas of interest. Corporation View 2 * The corporation had announced its intention to assist uni- versity programs similar to that at the university; there was no previous relationship with the university. * The corporation's program was focused on a specific area of engineering; the university had one of the country's first engi- neering schools in this field. General Corporate View * Donors were interested in exposing future users to state-of-the-art equipment. * The tax benefits have not been a primary incentive to small companies. * Excess inventory resulting from lower sales has been a minor factor. PAGENO="0692" 686 Special Considerations No special considerations were identified. Institution's View State-of-the-art equipment is now available, although main- tenance and technical support costs are a problem. For this reason, not all equipment that is offered is accepted. EXAMPLE 4 Circumstances of Donations * For research and development purposes, faculty members and department heads work through corporate contacts to obtain contracts. * The university has had limited success with sending letters to organizations with no prior contact. Often, the corporation may like something about the program being undertaken, and this will provide a .floor for establishing a relationship. * With scientific equipment, personal contacts are very important. The foundation and development officers will help faculty members and department heads develop plans to inform corporate representatives about proposed projects. * Scientific equipment is almost never given in isolation. Generally, the university has developed a program that the donor is interested in, and the donor will provide the equipment and money. Special Considerations * Scientific equipment never has any quid pro quo. With research and development equipment, the nonexclu- sive use of patents is provided to the contracting corporation, and the university holds the patent. Sometimes the university will receive royalties, depending upon the ~rrangement. Institution's View * Since the donor does not cover all costs, maintenance and operating costs are a major problem. PAGENO="0693" 687 * The university generally has been happy with the arrange- ments. Corporate View The donating org~nization appears to be pleased with the way the arrangements have worked out. EXAMPLE 5 Circumstances of Donation * The university has a good reputation in many scientific areas. * The donors receive feedback on prototype equipment to work out bugs. * The university has productive relations with contributors, which leads to many coming back repeatedly. * The university faculty conceives interesting projects and establishes personal contacts with donors. * Tax benefits are helpful but are not a major factor. Special Considerations * Certain corporations give many micros to faculty, and there is an agreement to share any software developed. The university has the copyright, but the donor often has exclusive license. * The donor expects feedback on prototypes. * There are sometimes restrictions on publication for up to one year, which must be complied with (does not normally cause problems). Institution's View * The university is generally happy. * Often the maintenance costs are covered by the donor. * Many corporations come back many times. * Sometimes they are offered more equipment than they can take. They only accept it when it is well matched to their needs. * They get a good deal of state-of-the-art equipment and prototypes. PAGENO="0694" 688 Corporate View There was no specific feedback, but the university assumes they are satisfied since they keep returning. EXAMPLE 6 Circumstances of Donations Corporate ~` Corporations are interested in exposing future users to state-of-the-art equipment. * Corporations seek researchers' feedback in order to improve equipment. * Corporations donate equipment to demonstrate general support for higher education. University * The university strictly enforces the conditions under which it will accept gifts: exclusive licensing arrangements are never provided; nonexclusive agreements are acceptable. * The university will not provide the donor with written feedback; however, oral discussions are acceptable. Special Considerations * Donor corporations often contribute ancillary expenses such as maintenance and software along with the equipment. * Both the university and the corporations initiate contacts. Corporate contacts are developed through visiting committees and other visits by corporate executives and researchers. Individual faculty members develop relationships with corporate counterparts. Institution's View Generally, the university has been able to obtain whatever equipment has been needed. PAGENO="0695" 689 EXAMPLE 7 Circumstances of Arrangements * Money is primarily given under research contracts. Equip- merit is supplied if it is needed. * Contacts are often made through established relationships with universities. * One university is a popular donee since many alumni work at the corporation. * Arrangements are often entered into when an institution has begun working on a program in which the corporation is interested. * Tax benefits have a significant impact on the level of contributions. * The corporation feels an obligation to help fund university research since more is needed. It cannot fund the amounts it would like to because of the costs. Additional tax benefits would be a desirable way of lowering costs. Special Considerations The corporation installs the equipment and for awhile maintains it and provides backup support. Institution's View It appears that colleges are satisfied with the arrangements. Corporate View Results have been good so far. If they had not been, the corporation would not continue contract research and scientific equipment donations. EXAMPLE 8 Circumstances of Donation * The corporation ordinarily makes a grant after a written proposal is submitted; proposals come about as a result of con- tinuing dialogue with university researchers. PAGENO="0696" 690 * Considerations include the corporation's desire to support education; the quality of the institution, its faculty, and its stu- dents; its ability to undertake proposed projects; its fiduciary capability; and the importance to the corporation of the tech- nology under study. * Ordinarily, R&D expenditures are joint study contracts under which the corporation provides money, equipment, and personnel. * The R&D tax credit is an incentive for the corporation (1) in making positive decisions on marginal projects, and (2) because credit ameliorates impact on after-tax profit margins of increased R&D spending. Special~ Considerations * No conditions or restrictions are placed on the institutions to which it provides grants of equipment. * Maintenance contracts are usually provided for the war- ranty period, after which the institution must absorb the cost. * The corporation is flexible in structuring research con- tracts, but its primary concern is access to results; no restrictions are made as to use or publication of results. Corporate View * The corporation looks for institutions with ne~ësSary technical know-how to perform a project. * Success Of projects is viewed in broad terms. Any advance- ment of the knowledge base in a particular area is considered a success. EXAMPLE 9 Circumstances of Arrangements * Primary motiVation of contributions is to help upgrade university research facilities, since many are outdated. * The corporation hopes to provide well-trained engineers in the fields the corporation is interested in with the hope that there will be a supply of good engineers for futL hiring. Corporations also make donations with the hope that users will be happy with them and purchase additional products of those corporations. PAGENO="0697" 691 Tax incentives are important regarding the level of charitable contributions. This is because the higher the per- centage of product cost that can be offset with tax benefits, the greater the number of products that can be donated at the same cost. Equipment donations are initiated by colleges interested in obtaining a product and by a corporation when it identifies institutions that are performing research in areas it is interested in. Contacts between the corporation and the institutions have been in existence prior to some contributions, although this is not true in a large number of instances. Special Considerations Equipment is not usually provided under research con~ tracts, which are normally with large research institutions. The reason for this is that when the corporation enters a research contract, it does not have adequate personnel on hand to do the work itself; it looks for colleges or universities with facilities in place in the particular field of study and specialized personnel. * Basic research contracts are not often. entered into, since they will not necessarily provide the corporation with any direct benefits and they are difficult to justify to shareholders. Also, since a fair amount of basic research is performed at the corpora~ tion in fields it is interested in, it has less of an incentive to fund basic research elsewhere. * When a corporation donates equipment, it also installs it and provides the same warranty a paying customer receives. If a service contract is ordinarily provided with the equipment, that is also included. Corporations would be more willing to provide ser- vice contracts if additional tax benefits were associated with them. Corporate View The corporation expects colleges to take some responsibil- ity for operating and maintaining the equipment and does not feel that it should incur all costs. The corporation has an interest in seeing the property maintained, because if students repeatedly observe the equipment malfunctioning, they will develop a negative image of it and will be less likely to purchase it in the future. PAGENO="0698" 692 EXAMPLE 10 Circumstances of Arrangements * Primary concerns are with expertise of the institution and its ability to assist with product application and development. * Tax incentives make scientific contributions and research contracts more desirable. * Arrangements result from informal contacts between corporate and university counterparts. Special Considerations * There is no quid pro quo for contributions of scientific equipment, although access to data regarding equipment use is anticipated. * If research produces any patentable results, the corpora- tion acquires a license. Institution's View Generally there is a favorable perception. If institutions were not happy, they would not continue to accept equipment and undertake research arrangements. Corporate View Favorable feedback has been received. There was only one instance where an arrangement was not considered successful. EXAMPLE II Circumstances of Donations Research and Development * In the case of research and development projects, the company is mainly looking at what it can receive in return, such as technology that can be .marketed or put to use in-house for designing new products (e.g., software). * Marketing of equipment is also important in the hope that (I) institutions will purchase additional equipment from the PAGENO="0699" 693 donating company, and (2) that students' experience with the equipment will encourage future sales. * Receipt of proposals in which the company is interested and a proven capacity to conduct high-quality research are influential in decisions to donate equipment for R&D contracts. * Tax benefits are helpful in the decision to donate. Scientific Equipment * Tax benefits are important in the decision to donate. The company prefers to donate more expensive items, since there is a higher markup and they can take advantage of scientific equip- ment deductions. * Major contributions were made to one institution for the following reasons: the company could not enter into an R&D contract, since the university will not provide exclusive rights to anyone; informal feedback is useful to the company regarding equipment performance; the institution has a good research reputation; close personal ties have developed over the years, since many high-level employees are graduates of that university; and since the company's engineers will be working on the equip- ment with that university's counterparts, the company will have first-hand knowledge of the information being developed and its possible uses (the type of work the equipment is being used for Is important to the company). Special Considerations * The university holds the copyright or patent, but the com- pany has nonexclusive license with no royalty payments to the univer5lty. The company has the right to review material before it is published to ensure that no pi oprietary information is released. * No special considerations are involved for scientific equip- ment Contributions. The equipment is given outright without restrictions. Institution's View The company was not aware of any specifics. PAGENO="0700" 694 Corporate View The company is happy with the past record of a number of institutions. It has recently dramatically increased the level of contributions and has not yet received the results of most new projects. SOURCE: Coopers & Lybrand. PAGENO="0701" 695 APPENDIX 4 Prepared Under the Direction of the Ad Hoc interagency Steering Committee on Academic Research Facilities with the Assistance of the NSF Task Group on Academic Research Facilities ADEQUACY OF ACADEMIC RESEARCH FACILITIES A Brief Report of A Survey of Recent Expenditures and Projected Needs In Twenty-Five Academic Institutions April 1984 PAGENO="0702" 696 Adequacy of Academic Research Facilities* ABSTRACT Recent studies have raised serious questions about the adequacy of academic research facilities -- the bricks and mortar (and mobile or remote research spaces such as ships, airplanes, aquaculture facilities, and monitoring stations), which house and support academic research and research instrumentation. An ad hoc interagency steering Committee was formed in November 1983 and is planning a detailed study of academic research facilities. The committee has recently analyzed data on past expenditures and future needs for academic research facilities as derived from capital facilities planning documents of 25 major research institutions which perform about 38% of all federally funded research and development at universities and colleges. From a scaling of these results, it is estimated that about $1.3 billion per year of Construction, remodeling, and refurbishment of science, engineering, and medical research facilities is currently being planned by all universities and colleges over the next five years. This estimate is consistent with a 1981 study of 15 institutions carried out by the Association of American Universities. As a percentage of total expenditures, the findings are also Consistent with capital outlays at industrial research and development laboratories, and at the university administered Federally-Financed Research and Development Centers. Introduction Several recent studies~3 of academic research capabilities concluded that the quality of research instrumentation in university laboratories has seriously eroded. Strengthened programs in the Department of Defense, the National Science Foundation and other Federal agencies are now addressing the replacement and renewal of research instru- mentation. However, these same studies have also raised serious questions about the adequacy of academic research facilities -- the bricks and mortar, (and mobile or remote research spaces such as ships, airplanes, aquaculture facilities, and monitoring stations), and services which house and support the research instrumentation. Prepared under the direction of the Ad Hoc Interagency Steering Committee on Academic Research Facilities with the assistance of the NSF Task Group on Academic Research Facilities. (Lists of members in the Appendix). PAGENO="0703" ~97 More recently, Federal Agencies and the Congress have received many expressions of concern that deteriorating research facilities are becoming a serious problem for academic scientists and engineers, materially Impairing their ability to work competi- tively at the frontiers of scientific and engineering knowledge. The House Authorization Act for the FY 1984 Budget of the Deoartment of Defense directed that a study be undertaken by the Secretary of Defense on the need to modernize university science and engineering laboratories essential to long-term national security needs. The Congress also directed NSF to be an aggressive lead agency in encouraging other Federal agencies, state and local governments, and the private sector to support the renewal of university research facilities, and encouraged the Foundation to estimate the magnitude of the current facilities problem and to assess the success of programs for facilities renewal. Furthermore, during the past 30 years the National Institutes of Health have provided major su~port for health research facilities construction, and the Congress has periodi- cally requested assessments of the status and needs for these research facilities. Interagency Steering Committee In view of the important role that a strong academic research effort plays in underpinning the Nation's economy, health and national defense, the Department of Defense, the National Institutes of Health, the Department of Energy the U. S. Department of Agriculture, and ~the National Science Foundation are cooperating in an effort to determine the magnitude of the problem related to academic research facilities. An ad hoc steering committee formed with representation from these agencies is planning an in- depth study of academic research facilities. The objective of this study will be to obtain a detailed understanding of the condition of academic facilities currently being used for science, engineering, and medical research and the estimated future nee'is for construc- tion, remodeling and refurbishment. it is presently planned that this study will be carried out by the National Academy of Sciences. An internal NSF Task Group has also been formed to examine available data on research resources, determine what additional information is needed, develop a credible study design, and work with the interagency steering committee in formulating a government-wide study of academic scientific and engineering research facilities. PAGENO="0704" 698 Initial Study Discussions with a number of university presidents indicated that their institutions already -- had prepared five year facility plans as well as detailed figures on expenditures for new construction and the remodeling and refurbishment of existing structures over the past five year period and were willing to share the information with the interagency steering committee. Such information was subsequently requested and received from 25 major research institutions which perform about 38% of all federally-funded research and development at universities and colleges. From an analysis of these data, it is estimated that about $495 million per year of construction, remodeling, and refurbishment of science, engineering, and medical research facilities is planned by these 25 institutions over the next five years. (See Table I for a breakdown by discipline.~ If these plans are scaled up in proportion to the share of federally funded R&D all universities and colleges would require over the next five years about $1.3 billion 2.!E ~ for these purposes. This estimate is consistent with a 1981 survey of 15 universities carried out by the Association of American Universities3. Both estimates are probably conservative because the plans were constrained by the perceived availability of funds. The planned major study will obtain more detailed and definitive data, and could well result in a higher figure. Other sources of data were analyzed to see how the estimate of $1.3 billion per year compared. A private-sector survey4 of industrial research and develooment laboratories found that 12.7% of total R&D funds are spent on R&D plant. An NSF survey5 shows that the university-administered Federally-Financed Research and Development Centers (FFRDc'S) spent 13.6% of their total R&D budget in FY 1983 on R&D plant. Based on the estimated6 $7.8 billion total R&D at universities and colleges in 1984, these figures would predict a range of $990 million to $1.06 billion for total R&D plant expenditures at universities and colleges. The slightly higher estimate of need from our recent study may result from pressure to recover from past underinvestment. These figures should also be compared to the estimated7 1984 federal obligation of $(LO million to universities and colleges for R&D Plant, and the 1981 figure8 of $155 million for the total Federal contribution to science and engineering facilities for research, development, and instruc tion. (no breakdown is available). PAGENO="0705" 699 Table I Recent Survey of Facilities Expenditures and Needs at 25 Major Academic Research Institutions o Summary of past and planned capital expenditures from an analysis of long-range plans. o The 25 institutions supplied existing planning documents (typically 5 years) and data on past plus present (usually 1983) capital expenditures (typically 5 years). o These institutions received 38% of the total Federal R&D obligations to universities and colleges in Fiscal Year 1981. They performed 34% of all academic R&D in Fiscal Year 1981. o Although planning cycles were typically 5 years, they varied from two to seven years. Therefore, the data are standaradized as yearly averages. ($ millions) (current dollars) Past & Current No. of Institutions Avg. annual $185 22 Future Avg. annual 495 25 Future by Field (supplied by 22 respondents) (Avg. annual) Engineering 77 16 15 Phys. Sci., Math., Comp. Sci. 121 26 15 Medical .Sci. 94 20 14 Agric. Sci. 35 7 7 Life Sci.-Bio. 65 14 13 Environmental 28 6 6 Other. 50 11 11 470 100 53-277 0 - 86 - 23 PAGENO="0706" 700 REFERENCES `Bruce L. R. Smith and 3oseph 3. Karlesky, The State of Academic Science, The Unjversities in the Nation's Research Effort, Change Magazine Press, New York, 1977. 2The Scientific Instrumentation Needs of Research Universities, A Report to the National Science Foundation by the Association of American Universities, 3une 1980. 3The Nation's Deteriorating University Research Facilities, Prepared for the Committee on Science and Research of the Association of American Universities, 3uly 1981. * - 4ç~pital Spending Study of Research and Development Laboratories, Flad and Associates, Inc., Madison, Wisconsin, December 10, 1982. 5Federal Funds for Research and Development - Fiscal Years 1981, 1982, and 1983, Vol. XXXI, Detailed Statistical Tables, National Science Foundation, NSF 82-326, pp.l14,15. 6Defense and Economy Major Factors in 7% Real Growth in National R&D Expenditures in 1984, Science Resources Studies Highlights, National Science Foundation, NSF 83-316, July 22,1983. 7Federal Funds for Research and Development - Fiscal Years 1982, 1983, and 1984, ~`o1. XXXII, Detailed Statistical Tables, National Science Foundation, NSF 83-319, p.15. 8Academic Science/Engineering R&D Funds - Fiscal Year 1981, Detailed Statistical Tables, National Science Foundation, NSF 83-308, p.120. PAGENO="0707" 701 Ad Hoc Interagency Steering Comittee on Academic Research Facilities Dr. Helen Gee Dr. James Wilson Chief Staff Specialist Program Evaluation Branch Office of the Deputy Undersecretary of Office of Program Planning Defense for Research and Engineering and Evaluation Department of Defense Office of the Director National Institutes of Health Dr. N. Kent Wilson Deputy Assistant Director Dr. Michael Goldberg Directorate for Mathematical and Associate Director for Program Physical Sciences Planning and Evaluation National Science Foundation Office of the Director National Institutes of Health Dr. Leo Young Director Dr. Clare Harris Research and Laboratory Managerment Associafe Administrator Office of the Deputy Undersecretary of Cooperative State Research Science Defense for Research and Engineering U. S. Department of Agriculture Department of Defense Dr. Chris E. Kuyatt Senior Policy Analyst Observers: Controller's Office National Science Foundation Mr. Nathaniel B. Cohen Di rector Dr. P.ichard Stephens Managemeiit Support Division Director Office of External Relations Division of University and National Aeronautics and Space Inc~ustry Programs Administration Office o~ Field Operations Management Office of Energy Research Mr. Frank Owens Department of Energy Chief University Training and Research Dr. Israel Warshaw Programs Program Manager Office of External Relations Division of University and Industry National Aeronautics and Space Programs Administration Office of Field Operations Office of Energy Research Department of Energy NSF Task Group on Academic Research Facilities Will3am S. Kirby Lewis G. Mayfleld Carlos E. Kruytbosch William T. Dosterhuls Chris E. Kuyatt James C. Tyler Ronald R. LaCount p1. Kent Wilson PAGENO="0708" National Science Foundation Washington. D.C. 20550 Ofhcal Bus:YesS PENALTY FOR PR'VATE USE. $3~ 01*1*01. INCLUDING ZIP CODE). 702 THIRD CLASS ButkRat. ~ L POSTAGE AND FEES PAID NATIONAL SCIENCE FOUNDATION P4SF440 PAGENO="0709" 703 APPENDIX 5 NIH Program Evaluation Report Academic Research Equipment and Equipment Needs in the Biological and Medical Sciences Executive Summary April 1985 ~ j * * * * * * * * * * * * * * * * * * *`~~ * S S S S S S S S S S S S S S S S S S ~ S S S S S 555555555******* : U.S. Department of Health and Human Services National Institutes of Health PAGENO="0710" 704 NIH Program Evaluation Report ACADEMIC RESEARCH EQUIPMENT AND EQUIPMENT NEEDS IN THE BIOLOGICAL AND MEDICAL SCIENCES Executive Summary Howard J. Hausman, Ph.D. Research Consultant Westat, Inc. Kenneth Burgdorf, Ph.D. Westat, Inc. Prepared for: Program Evaluation Branch Office of Program Planning and Evaluation National Institutes of Health Bethesda, MD 20205 Submitted by: Westat, Inc. 1650 Research Blvd. Rockvjlle, MD 20850 April 1985 This project, Project Evaluation No. NIH-83-3ll, Contract No. NO1-OD-3-2l20, received support from the evaluation set-aside Section 513, Public Health Service Act. PAGENO="0711" 705 EXECUTIVE SUMMARY Because of continuing concerns about the age and condi- tion of research equipment in academic institutions, and about the effect of obsolescent equipment on the quality of research in the nation's universities and medical schools, the Congress of the United States charged the National Science Foundation with conducting inventories of, and analyses of the needs for, * scientific instrumentation. NSF initiated a feasibility study to determine how pertinent information could be obtained and how suitable indicators of the status of research instrumentation could be developed. That study was followed by specifications for a baseline national survey, which was funded by NSF as a two-phase study starting in 1982. Using a stratified proba- bility sample of 43 universities, the Phase I survey of existing research instruments and instrumentation needs was conducted during the 1982-83 academic year for the physical and computer sciences and engineering. The report of this survey is available ** from the National Science Foundation. For Phase II of the study, which encompasses the bio- logical, agricultural, and environmental sciences, the National Institutes of Health joined the National Science Foundation by funding a survey of the biological sciences in medical schools to provide a comprehensive picture of instrumentation in those sciences. NIH also provided for a limited study to determine the feasibility of obtaining the same data for medical (i.e., *An Act to Authorize Appropriations for the National Science Foundation for Fiscal Year 1980, and for Other Purposes. Public Law 96-44, Section 7. **Academic Research Equipment in the Physical and Computer Sciences and Engineering: An Analysis of Findings from Phase I of the National Science Foundation's National Survey of Academic Research Instruments and Instrumentation Needs. Westat, Inc., December 1984. 1 PAGENO="0712" 706 clinical) sciences as for the biological sciences. For this purpose departments of medicine were chosen. After a stratified probability sample of 24 medical schools was selected, Phase II was conducted during the 1983-84 academic year. The results of the Phase II survey for the biological sciences and departments of medicine are the subject of this report. Overview From the results of this study of instrumentation needs and instrument systems in the biological sciences and departments of medicine, it is apparent that there are def i- ciencies in the current levels of instrumentation. The extent of the deficiencies varies significantly among the subfields of research. More advanced instrumentation is needed to allow investigators to perform critical experiments which cannot now be adequately conducted. Better maintenance and repair facilities are needed. Although 18 percent of the current national stock of equipment is considered state-of-the-art, that status is lost very rapidly; the need for replacement by upgrading is continuous and of the highest importance. Department-Level Findings More than half of the heads of departments/facilities, in assessing the needs and priorities of their departments, stated that critical scientific experiments could not be con- ducted because their departments lacked appropriate instru- mentation. This was more often stated for the biological sciences than for departments of medicine, and for public institutions than for private institutions. 2 PAGENO="0713" 707 The capability of existing equipment to enable researchers to pursue their major interests was rated excellent for tenured faculty by only one-sixth of the departments, while over one- fourth re~garded their capability as insufficient. For untenured faculty the proportion of equipment rated insufficient was one- third. More than twice as many graduate school departments as departments in medical schools answered "insufficient," however, and three times as many departments in public institutions as in private institutions did so. Compared with other fields of science, the current stock of equipment in the biological sciences as a whole was more favorably assessed than in any other field, but this was primarily due to medical schools. For biological science departments in graduate schools, the degree of insufficiency matched that given for graduate school departments in other fields, such as physical sciences and engineering. The same patterns were found f or assessments of instru- mentation support services (i.e., machine and electronics shops), with about half of the departments calling them insufficient or nonexistent. Departments of medicine considered their support better than did the biological sciences, and private institutions better than public institutions. Although these assessments are based not on quanti- tative data but rather on informed opinion, the consistency with which some large groups report more inadequacies than other groups indicates a widespread perception of a problem. If increased Federal funding were available for pur- chase of research equipment, two-thirds of heads of departments! facilities would put funds into instruments costing between $10,000 and $50,000, while another one-fifth desired instruments between $50,000 and $1 million. Private institutions wanted more instruments in the upper range than public institutions. PAGENO="0714" 708 In other fields of science, there was more of a need for instruments in the range of $50,000 to $1 million than was found in the biological sciences, and even for systems costing above $1 million -- which none of the department heads in the biological sciences mentioned as a top priority need. When asked to list the three research instruments costing between $10,000 and $1 million that were most urgently needed, department heads often listed various types of prepara- tive instruments. For most disciplines, these were the most frequently needed items. Nearly 80 percent of the instruments mentioned were in categories where the median cost of the instrument was under $75,000. Instruments with a median cost over $100,000 most frequently mentioned were electron microscopes and NMRs. The biological sciences and departments of medicine spent a total of $158 million on research equipment costing over $500 in FY 1983, and an additional $36 million on maintenance and repair. The mean amount spent for research equipment in FY 1983 was $48,000 per doctoral degree awarded annually. The mean amount per faculty-level researcher was $5,900. Medical schools spent about twice the amount per doctoral degree and researcher as graduate schools, and private institutions consid- erably more than public institutions. The National Stock of Academic Research Equipment There were over 21,000 instrument systems in the cur- rent inventories of the biological sciences and departments of medicine, with an aggregate purchase cost of $555 million. In terms of constant 1982 dollars, the cost of these instruments is estimated at $863 million. The biological sciences had more PAGENO="0715" 709 instrument systems than any other field of academic science, but the mean cost per instrument system ($27,000) was the lowest for any field except agricultural sciences. About three-fourths of all presently existing academic research instruments in the biological and medical sciences cost between $10,000 and $25,000. Only five percent cost between $75,000 and $1 million, but they accounted for one-fourth of all funds spent for equipment. Since the amount of research activity in the several biological sciences subfields varies considerably, numerical comparisons between the subfields are dominated by the relative "size' of each enterprise. In an attempt to normalize between- subfield and institutional comparisons, instrument numbers and costs were calculated per researcher and per graduate degree awarded. The resulting ratios are indices only and do not repre- sent actual one-time costs per researcher or per degree awarded. Mean dollar amount of research instrumentation per researcher in the biological sciences was about $21,000, but the amount in medical schools per researcher was 50 percent higher than in nonmedical schools. For departments of medicine, the mean equip- ment investment per researcher was $15,000. Mean aggregate equipment cost per doctoral degree awarded in 1982-83 in the biological sciences was $l43r500, but for medical schools that cost was more than twice as much as in nonmedical schools. Private institutions had higher investments per researcher and per graduate degree than public institutions. State-of-the-art instruments constituted 18 percent of the national stock in 1983, although the percentage was larger in private institutions than public institutions. Another 65 percent were in active research use, although not classified as state-of-the-art. Instruments that were not in active use PAGENO="0716" 710 because of technological obsolescence or inoperable mechanical condition, but that were still physically present at the insti- tution, constituted another 16 percent of the national stock. Departments of medicine, however, had twice as large a per- centage of obsolete or inoperable instruments on their inven- tories as the biological sciences. Age and Condition of Academic Research Equipment For all instruments in the national stock, 44 percent were from 1 to 5 years old, and 27 percent were over 10 years old. Omitting the inactive systems from consideration, the proportion of instruments aged 1 to 5 years was 50 percent, and 22 percent were over 10 years old. For instrument systems that were in active research use, departments of medicine had a higher proportion of newer instruments than did the biological sciences, and private institutions were higher than public institutions. Compared with other fields of science, instruments in the biolog- ical sciences were somewhat older. Most state-of-the-art instruments in 1983 were relatively new. Fifty percent of instruments purchased in 1983 were state- of-the-art, but of those purchased two years earlier (in 1981), only 37 percent were still considered state-of-the-art. Six- year old instruments were classified as state-of-the-art only 13 percent of the time. Altogether, 85 percent of the state-of- the-art instruments were from 1 to 5 years old, and only 3 percent were over 10 years old. About half of all instrument systems actively in use for research were in excellent working condition. As would be expected, there is a relationship between working condition and age of the instrument. Thus, 78 percent of instruments from 1 6 PAGENO="0717" 711 to 3 years old were in excellent condition; of instruments 4 to 6 years old, 57 percent were in excellent condition; and of those 10 to 12 years old, only 26 percent were rated as excellent. Accompanying this decline in operating condition with age of instrument was the `retirement" of instruments as they got older. In the biological sciences, 60 percent of instruments that were inactive (presumably because of mechanical or technological obsolescence) were over 10 years old. Of the state-of-the-art systems, which were relatively new, 85 percent were considered to be in excellent condition. Only 44 percent of those not considered state-of-the-art were in excellent condition, however. These "other" systems were considerably older and they constituted nearly 80 percent of all equipment in active use. A substantial amount of other than state-of-the-art equipment is to be expected. Much laboratory research does not require the most advanced instrumentation. A problem arises, however, when investigators using non-state-of-the-art equipment do not have access to more advanced equipment when needed. This problem was found frequently; nearly half of the non-state-of- the-art instruments in research use were the most advanced instru- ments of their kind to which users had access. This situation is an obstacle for investigators attempting to engage in more sophisticated research. The entire research effort in the biological sciences is hindered when problems such as mechan- ically unreliable equipment and lack of access to advanced instrumentation become prevalent. 7 PAGENO="0718" 712 Funding of Equipment in Active Research Use Almost all research instruments (94%) in the biologi- cal sciences and departments of medicine were acquired new. Sources of funding were evenly split between Federal and non- Federal sources for the biological sciences, but for departments of medicine, nearly two-thirds of the funds came from non-Federal sources. For private institutions, a larger proportion of equip- ment funds came from Federal sources than for public institutions. NIH was the principal source of Federal funds for acquisition of research equipment in the biological and medical sciences, contributing 44 percent of all funds for medical schools and 31 percent for graduate schools. NSF was the only other significant Federal source, contributing a larger proportion of graduate school funds than of medical school funds. The insti- tutions were the major source of non-Federal funds. State governments and private foundations gave only small amounts for research equipment. The amount contributed by business and industry for equipment was negligible. NIH funds, while accounting for 38 percent of all equipment purchases, contributed 47 percent of the support for purchases of instruments in the $10,000 to $25,000 range but only 28 percent of the dollar support for existing equipment costing $75,000 or more. Institutions, however, which con- tributed 37 percent of all funds for equipment, purchased 31 percent of the instruments costing under $25,000 and 41 percent of those costing $75,000 or more. NSF-supported purchases for equipment followed the same pattern as that for institutions. Sixty percent of all biological science instruments received full or partial Federal funding, compared to 48 percent of those in departments of medicine. PAGENO="0719" 713 Location and rise of Academic Research Equipment About 65 percent of all equipment in the biological sciences and 70 percent in departments of medicine were located in the laboratories of individual investigators. The remainder were in inherently shared-access facilities, mostly department- managed common laboratories. Costly instruments were frequently located in the inherently shared-access facilities; this held true to a greater extent for graduate schools than for medical schools, and for public institutions than for private institu- tions. Older instruments were also more likely to be- located in inherently shared-access facilities. The location of most instruments within laboratories of individual-investigators did not necessarily mean that they were not shared. The mean number of users-of all instruments was 11 per instrument. The large majority of instrument systems were available for general purposes, as opposed to being dedi- cated for specific experiments. For these general purpose instru- ments, the mean number of users was almost 12 per instrument. About 95 percent of all instruments in the biological sciences were used by faculty within the same department, and 85 percent were also used by graduate students, medical students, and postdoctorates from the departments. Additionally, 36 per- cent were used by faculty from other departments in the insti- tution. Visiting researchers from other universities and visiting nonacademic researchers used the more costly instruments far more frequently than the lower cost ones; this held true also for researchers from other departments at the same institution. The average instrument in an investigator's laboratory was freely accessible to other research investigators, as evidenced by-the numbers of users and the origins of users. From this PAGENO="0720" 714 observation, together with the finding that 35 percent of all instruments were located in facilities that are -- by their very nature -- shared-access, it is evident that sharing of research equipment is common in academic facilities. Maintenance and Repair of Academic Research Equipment Only 16 percent of departments in the biological and medical sciences considered their maintenance and repair (M&R) facilities as excellent. Nearly 50 percent reported either insufficient or nonexistent facilities. On the whole, departments of medicine were more satisfied with their M&R facilities than were departments in the biological sciences. All departments of medicine had such facilities, while 18 percent of biological science departments did not. In FY 1983, 22.5 cents were spent on M&R for every dollar spent for new equipment. The mean expenditure per depart- ment for M&R was $30,200. Nearly two-thirds of this amount was spent for service contracts and field service as needed. Service contracts, used more frequently than any other means of servicing instruments, cost an average of $2,300 per instrument, compared to $700 per instrument for field service and less for university- based M&R staff and research personnel, who sometimes performed this function. The amount spent per instrument for M&R rose after the instrument became six years old. While the overall mean expendi- ture per instrument was $1,100, it was $900 for those between 1 and 5 years old, and over $1,300 for those over 5 years of age. The mean M&R expenditure for instruments costing from $75,000 to $1 million, $6,300, was far more than the $700 expended for N&R for those costing between $10,000 and $29,999. 10 PAGENO="0721" 715 Group Comparisons Thus far, findings have been summarized with respect to topic areas. In addition, numerous differences have been observed among groups of institutions, among subfields of research within the biological and medical sciences, and between the biological sciences and the other fields of science encompassed in the larger two-year study of academic research equipment. These group comparisons are briefly summarized here. Differences Among Institutions (1) Medical and graduate (nonmedical) schools. Levels of investment in research instrumentation were substantially higher for medical schools than for other academic institutions. For all indices examined -- equipment per institution, per instru- ment, per faculty-level researcher, per doctoral degree awarded -- medical schools had larger instrumentation investments, both aggregate and current, than graduate (nonmedical) schools. (2) Private and public institutions. Privately con- trolled institutions consistently showed an advantage over public institutions on a number of important dimensions. Their research instruments generally cost more, were newer, and were better able to meet research needs. Private institutions also had better maintenance facilities and spent more for maintenance and repair of their instruments. 11 PAGENO="0722" 716 Differences Among Subfields of Research in the Biological Sciences Certain subfields of research stand out from the others in some characteristics. A brief summary of major differences follows. * Biochemistry had the largest number of instruments costing over $10,000 -- nearly 4,500. It also had a higher proportion of instruments funded by Federal agencies than any other subfield. * In many respects, molecular/cellular biology appeared to be the best equipped research subfield. It had the second largest number of instruments, 2,900. In percentage of instruments in excellent working condition, it ranked very high. Department heads in this discipline were more satisfied with the quality of their current instrumentation than in any other sub- field. Equipment expenditures per faculty researcher in 1983 exceeded by a large amount those for all other disciplines. * Anatomy and pathology were two of the smaller subfields in numbers of instruments. They had the highest costs per instrument, $32,000 and $31,000 respectively. Both subfields, particularly anatomy, also had unusually high proportions of instruments over 10 years old in active research use. * Zoology, botany, and food/nutrition were disciplines found almost entirely in nonmedical subdivisions of universities. They were the three subfields with the smallest numbers of instru- ments. Very high proportions of department heads stated that their staff could not perform critical experiments in these disciplines because they lacked appropriate instrumentation. 12 PAGENO="0723" 717 Food/nutrition had the lowest cost per instrument ($22,000) of any subfield, the poorest maintenance, and had, by far, the lowest percentage of Federal funding for its equipment. Differences Between Departments of Medicine and Biological Science Fields Departments of medicine, included in the survey as an experiment to assess the feasibility of obtaining instrumentation indicators for medical (clinical) sciences, apparently can pro- vide data on samples of research instruments as easily as the biological sciences. With respect to Department/Facility Ques- tionnaires, however, it was learned that some of the larger, more diverse departments of medicine had difficulty in assembling expenditure, funding and needs data for all the clinical fields subsumed within their jurisdictions. A better approach to collecting such data might be to go directly to each of the component clinical programs or subunits of departments of medicine. For most of the analyses performed in this report, departments of medicine (and presumably, the clinical sciences) had somewhat different results than the biological sciences. Departments of medicine apparently retired instruments at an earlier age than did the biological sciences. Within medical schools, the average costs of equipment per researcher were nearly twice as large for the biological sciences as for depart- ments of medicine. This difference on an index of equipment intensity is probably a function of the kinds of research performed by physician-researchers in clinical departments, compared with those in the basic biological sciences. Whereas over half of the funds for purchase of equipment in the biological sciences came from Federal agencies, 38 percent of equipment funds came 13 PAGENO="0724" 718 from those sources for departments of medicine. The difference was made up by institutional funds, indicating a possible differ- ence in institutional resources between the clinical and biological sciences. Differences Between Biological Sciences and Other Fields of Science The biological sciences differed from the other fields of science addressed in the field survey. They accounted for 38 percent of the instruments in all the fields surveyed; the next largest field was the physical sciences, with 25 percent of all instruments. The mean cost per instrument in the biological sciences was $27,000, compared to $41,000 for the physical sciences and $35,000 for engineering. Instruments in the biological sciences were somewhat older than those in other fields, but there were proportionately fewer instruments in the national stock in biology that were technologically or mechanically obsolete. The average instrument in the biological sciences was used by somewhat fewer investigators than was the case in other fields. The func~ing pattern for the biological sciences was unlike that for any other field, because of the prominence of NIH as a funding source in the biological sciences: NIH directly contributed 39 percent of the costs of all academic instrumentation in this field. 14 PAGENO="0725" 719 APPENDIX 6 NIH Program Evaluation Report Academic Research Equipment and Equipment Needs in the Biological and Medical Sciences April 1985 *****.*.***. * * * S * * * S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S ~ S S S S *55555555* ~ S S S S S S S S S S 555555555.*****. : : : : : : : : : : : : : : : : U.S. Department of Health and Human Services National Institutes of Health PAGENO="0726" 720 NIH Program Evaluation Report ACADEMIC RESEARCH EQUIPMENT AND EQUIPMENT NEEDS IN THE BIOLOGICAL AND MEDICAL SCIENCES Howard J. Hausman, Ph.D. Research Consultant Westat, Inc. Kenneth Burgdorf, Ph.D. Westat, Inc. Prepared for: Program Evaluation Branch Office of Program Planning and Evaluation National Institutes of Health Bethesda, MD 20205 Submitted by: Westat, Inc. 1650 Research Blvd. Rockville, MD 20850 April 1985 This project, Project Evaluation No. NIH-83-3ll, Contract No NOl-OD-3-2l20, received support from the evaluation set-asid Section 513, Public Health Service Act. PAGENO="0727" 721 HIGHLIGHTS This report presents findings from a survey of existing research instruments and instrumentation needs in biological science departments and faci- lities in a national sample representative of the 249 U.S. universities and medical schools with the largest R&D funding. The data are part of a larger survey of academic research instrumentation in all major fields of science and engineering. The survey focuses on instrument systems in the $10,000 - $1 million range. As a test of the feasibility of collecting data for clinical fields as well as for basic science fields, medical school departments of medicine were included in the data collection. No major feasibility or response problems were encountered and data from these departments were included in the analysis of findings. * At all levels of data collection, from central administration to department heads to faculty researchers, response rates were extraordinarily high -- in the 95-100 percent range. This excep- tional response appears to indicate high levels of interest and concern about the adequacy of existing research equipment. * Less than one in five biological science depart- merit heads characterized the adequacy of their current research instrumentation as "excellent," and nearly 60 percent reported that there are important subject areas in which researchers in their departments cannot conduct critical experi- ments because of a lack of necessary equipment. * The 1983 national stock of academic research equipment in the biological sciences and depart- ments of medicine is estimated to have an aggre- gate original cost of $555 million and a replacement cost (in constant 1982 dollars) of $863 million. Per faculty-level researcher, the average amount of equipment (in original-cost dollars) is $21,200 per person. * Most items of equipment in the 1983 national stock were comparatively inexpensive. The mean purchase cost per instrument system was only $27,000 in this field, far lower than for most other major fields of science and engineering. ii PAGENO="0728" 722 The unit costs of the most urgently needed research equipment, as reported by biological science department heads, were also comparatively low. Many of the most frequently mentioned items of needed equipment had purchase costs of $30,000 or less. * Only 18 percent of instruments in the 1983 national stock were classified by their principal users as state-of-the-art. About that same amount (i.e., 16 percent of the total stock) appeared to be totally obsolete and no longer useful in research. * Of the equipment in active research use in 1983: - Half the systems were in some degree of disrepair (i.e., in less than excellent working condition); - 80 percent were not state-of-the-art; and - Of these latter instruments, half were the most advanced instruments to which their users had access. * Facilities for the maintenance and repair of research instrumentation were characterized as insufficient or nonexistent by nearly half of the department heads. * About 22.5 cents were spent for maintenance and repair (M&R) of research instruments in FY 1983 for every dollar spent to acquire equipment in that year. Most M&R was performed through ser- vice contract or field services as needed. The mean cost per instrument for a service contract was $2,3000, compared to $700 for field service and less for service performed by university- based personnel. * The mean expenditure per instrument system for M&R in 1983 was $1,100. It was $900 for instru- ments up to 5 years old, but more than $1,300 for those six years and older. While an average of $700 was spent for M&R on instruments with an original purchase cost less than $25,000, $6,300 was spent in 1983 for an instrument costing between $75,000 and $1 million. 111 PAGENO="0729" 723 * Most equipment that was used for research in 1983 was used extensively. The mean number of users per system per year was 11, and most systems were used by several types of users (faculty,, graduate students, etc.) both from the host department and from other locations. * Within the general parameters of need/condition! obsolescence just described, private institutions were typically somewhat better equipped than public institutions: the research equipment in private institutions tended to be newer, more costly, more voluminous and in better repair than that in public institutions. Similar differences, in favor of medical schools, were found between medical schools and nonmedical academic institutions. iv PAGENO="0730" 724 ACKNOWLEDGMENTS The two-phase, baseline National Survey of Academic Research Instruments and Instrumentation Needs was designed and conducted by Westat, Inc., initially under the sponsorship and direction of the Universities and Nonprofit Institutions Study Group, Division of Science Resources Studies, of the National Science Foundation (NSF). Phase I of the research, involving collection of data for the physical and computer sciences and engineering, was conducted under NSF Contract No. SRS-8017873. Phase II, a part of which is the subject of this report, involved collection of data for biological sciences, departments of medi- cine, and other fields; it was supported jointly by NSF under the above contract and by the Program Evaluation Branch, Office of Program Planning and Evaluation (OPPE) of the National Insti- tutes of Health (NIH). The NIH support provided for collection and analysis of data from a nationally representative sample of medical schools (under NIH Contract No. NO1-OD-3-2120), in addi- tion to the NSF-sponsored data collection from nonmedical compo- nents of U.S. colleges and universities. Preparation of this report was also supported by the above-referenced NIH contract. At the NIH Program Evaluation Branch, Helen Hofer Gee, Ph.D. (Branch Chief), and Charles Sherman, Ph.D. (Project Officer), performed major roles in the development of the Phase II design and analysis plan and provided technical oversight during the survey. In addition, niajor contributions were made by Marvin Cassnan, Ph.D. (National Institute of General Medical Sciences), W. Sue Badman, Ph.D. (Division of Research Resources, NIH), and Rachel E. Levinson (OPPE, NIH), who developed the instrument typology that was used for the analysis of instruments identified by respondents as being most urgently needed at the current time. V PAGENO="0731" 725 The following contractor staff performed significant roles in the survey and in preparing this report: Lance Hodes, Ph.D., Westat Corporate Officer-in-Charge Kenneth Burgdorf, Ph.D., Principal Investigator and Second Author of Report Howard J. Hausman, Ph.D. (Westat consultant), University Recruitment and Liaison, and Principal Author of Report Cindy Gray, Data Processing Supervisor Joseph Waksberg, Statistical Advisor Deborah Turner, Table Programmer Kristine White, Editor Carol Hambright, Graphics In addition to the NIH and Westat project teams, the project's Phase II Advisory Group made many valuable contribu- tions both in the refinement of the research design and in the / assessment of the statistical findings. The members of this group are listed in Appendix D. vi PAGENO="0732" 726 CONTENTS Chapter HIGHLIGHTS ii ACKNOWLEDGEMENTS V INTRODUCTION 1-1 1.1 Background of the Survey 1-1 1.2 Overview of the Survey. 1-5 1.3 Objedtives and Limitations of This Analysis 1-7 1.4 Contents of This Report.. 1-8 2 METHODOLOGY 2-1 2.1 Sample Design 2-1 2.2 Survey Procedures 2-7 2.3 Definitions 2-7 2.4 Survey Response 2-12 2.5 Data Collection for Departments of Medicine 2-18 2.6 Treatment of Data 2-19 3 NEEDS AND PRIORITIES FOR RESEARCH EQUIPMENT ASSESSMENT BY DEPARTMENT HEADS 3-1 3.1 Adequacy of Current Instrumentation. . . 3-1 3.2 Priorities for Increased Federal Support 3-5 3.3 Types of Instrumentation Most Urgently Needed 3-7 3.4 Summary 3-12 4 EXPENDITURES FOR RESEARCH EQUIPMENT, FY 1983. 4-1 4.1 Department Expenditures for Instrumen- tation 4-1 4.2 Equipment Expenditures per Research Investigator and per Institution . . . . 4-3 4.3 Summary 4-6 5 THE NATIONAL STOCK OF ACADEMIC RESEARCH EQUIPMENT 5-.1 5.1 Number and Cost of Instrument Systems. . 5-1 5.2 Unit Costs 5-5 5.3 State-of-the-Art and Obsolete Instrument Systems 5-15 5.4 Summary 5-18 viii PAGENO="0733" 727 CONTENTS (continued) Chapter 6 AGE AND CONDITION OF RESEARCH EQUIPMENT . . . 6-1 6.1 Age of Research Equipment 6-1 6.2 Condition of Research Equipment 6-10 6.3 Summary 6-17 7 FUNDING OF EQUIPMENT IN ACTIVE RESEARCH USE . 7-1 7.1 Means of Acquiring Research Equipment. . 7-1 7.2 Funding Sources for Research Equipment . 7-1 7.3 Summary 7-13 8 LOCATION AND USE OF ACADEMIC RESEARCH EQUIPMENT 8-1 8.1 Location of Equipment 8-1 8.2 Availability for General Purpose Use . . 8-6 8.3 Annual Number of Research Users per Instrument System. 8-9 8.4 Summary 8-13 9 MAINTENANCE AND REPAIR 9-1 9.1 Assessment of M&R Facilities 9-1 9.2 The Costs of M&R 9-3 9.3 Relationship of Means of Servicing to Working Condition 9-8 9.4 M&R Costs and Age of Instruments . . . . 9-8 9.5 Summary 9-12 10 SUMMARY 10-1 10.1 Overview 10-1 10.2 Department-Level Findings 10-1 10.3 The National Stock of Academic Research Equipment 10-3 10.4 Age and Condition of Academic Research Equipment 10-4 10.5 Funding of Equipment in Active Research Use 10-6 10.6 Location and Use of Academic Research Equipment 10-7 10.7 Maintenance and Repair 10-8 10.8 Group Comparisons 10-9 ix PAGENO="0734" 728 CONTENTS (Continued) Tables Table 1-1 Percent of NIH research project grant funds allocated for permanent laboratory equipment, fiscal years 1966-1974 1-2 1-2 NIH equipment awards, fiscal years 1975-1984 1-3 2-1 Institution sample design, graduate (nonmedical) schools 2-2 2-2 Institution sample design, medical schools. . 2-3 2-3 Department/facilities survey response rates: Biological and Medical Sciences 2-14 2-4 Equipment survey response rates: Biological and Medical Sciences 2-16 2-5 Status of sampled equipment items: Biological and Medical Sciences 2-17 3-1 Department/facilities reporting important areas in which critical experiments cannot be performed due to lack of needed equipment: Biological and Medical Sciences 3-2 3-2 Department/facility assessment of adequacy of available research instrumentation: Biological and Medical Sciences 3-4 3-3 Department/facility recommendations for increased Federal support for research instrumentation: Biological and Medical Sciences 3-6 3-4 Number of requests and average cost of research instruments most urgently needed in academic settings, by type of instrument: Biological and Medical Sciences 3-8 3-5 Distribution of estimated costs for most urgently needed research equipment, by department: Biological and Medical Sciences. 3-10 x PAGENO="0735" 729 CONTENTS (Continued) Tables (continued) Table 3-6 Types of research instruments most urgently needed by department: Biological and Medical Sciences 3-11 4-1 Instrumentation-related expenditures in FY 1983; Academic departments and facilities: Biological and Medical Sciences 4-2 4-2 Research equipment expenditures per person and institution in FY 1983; Academic departments and facilities: Biological and Mediàal Sciences 4-4 5-1 Amount of academic research equipment, by setting; Instrument systems in 1983 national stock: Biological and Medical Sciences . . . 5-2 5-2 Aggregate cost of academic research equip- ment, by setting; Instrument systems in 1983 national stock: Biological and Medical Sciences 54 5-3 Distribution of academic research equipment, by system cost range; Instrument systems in 1983 national stock: Biological and Medical - Sciences 5-6 5-4 Distribution of aggregate costs Of academic research equipment,by system cost range; Instrument systems in 1983 national stock: Biological and Medical Sciences 5-7 5-5 Mean aggregate original purchase cost of academic research equipment per institution and per instrument system, by setting; Instrument Systems in 1983 national stock: Biological and Medical Sciences 5-9 5-6 Mean aggregate original purchase cost of academic research equipment per doctoral degree awarded and per faculty-level researcher; Instrument systems in 1983 national stock: Biological and Medical Sciences 5-11 xi PAGENO="0736" 730 CONTENTS (Continued) Tables (continued) Table 5-7 Average number of doctorates awarded from 1980 to 1983 and aggregate instrument costs per degree; Instrument systems in 1983 national stock: Biological and Medical Sciences 5-14 5-8 Research status of academic equipment; Instrument systems in 1983 national stock: Biological and Medical Sciences . 5-16 5-9 Aggregate cost of academic research equip- ment, by system research status; Instrument systems in 1983 national stock: Biological and Medical Sciences 5-17 6-1 Age of academic research equipment; Instrument systems in 1983 national stock: Biological and Medical Sciences 6-2 6-2 Percent of academic research equipment that is state-of-the-art, by year of purchase; Instrument systems in 1983 national stock: Biological and Medical Sciences 6-4 6-3 Age of academic research equipment; Instrument systems in research use in 1983: Biological and Medical Sciences 6-6 6-4 Age of academic research equipment; State-of-the-art instrument systems in research use in 1983: Biological and Medical Sciences 6-9 6-5 Percent of academic research equipment in excellent working condition, by research status; Instrument systems in research use in 1983: Biological and Medical Sciences . 6-12 6-6 Research function of academic research equip- ment that is used for research but is not state-of-the-art; Instrument systems in research use in 1983: Biological and Medical Sciences 6-13 xii PAGENO="0737" 731 CONTENTS (Continued) Tables (Continued) Table 7-1 Means of acquisition of academic research equipment; Instrument systems in research use in 1983: Biological and Medical Sciences 7-2 7-2 Acquisition cost of academic research equip- ment, by means of acquisition; Instrument systems in research use in 1983: Biological and MedicalSciences 7-3 7-3 Sources of funds for aôademic research equipment by field and setting Instrument systems in research use in 1983: Biological and Medical Sciences 7-5 7-4 Sources of funds for academic research equipment, by institutional control; Instrument systems in research use in 1983: Biological and Medical Sciences 7-8 7-5 Sources of funds for academic research equipment, by system cost range; Instrument systems in research use in 1983: Biological and Medical Sciences . 7-11 7-6 Federal involvement in funding of academic research equipment; Instrument systems in research use in 1983: Biological and Medical Sciences 7-12 8-1 Location of academic research equipment; Instrument systems in research use in 1983: Biological and Medical Sciences 8-2 8-2 Percent of academic research equipment located in shared-access faäilities, by research status; Instrument systems in research use in 1983: Biological and Medical Sciences 8-4 8-3 Percent of academic research equipment located in shared-access facilities, by system cost; Instrument systems in research use in 1983: Biological and Medical Sciences 8-5 xiii 53-277 0 - 86 - 24 PAGENO="0738" 732 CONTENTS ~Continued) Tables (continued) Table 8-4 Percent of academic research equipment located in shared-access facilities, by age of system; Instrument systems in research use- in 1983: Biological and Medical Sciences. 8-7 8-5 Experimental role of academic research equipment; Instrument systems in research use in 1983: Biological and Medical Sciences. 8-8 8-6 Mean number of research users of academic research equipment, by research function; Instrument systems in research use in 1983: Biological and Medical Sciences 8-10 8-7 Percent of academic research equipment used by various types of research users; Instrument systems in use in 1983: Biological and Medical Sciences 8-12 9-1 Department/facility assessment of available instrumentation support services: Biological and Medical Sciences 9-2 9-2 Mean FY 1983 expenditure per department! facility for maintenance and repair of research equipment: Biological and Medical Sciences 95 9-3 Principal means of servicing in-use academic research instruments: Biological and Medical Sciences 9-7 9-4 Percent of in-use academic research instru- ment systems that are in excellent working condition, by system age: Biological and Medical Sciences 9-9 9-5 Mean expenditure in 1983 per system for maintenance and repair of in-use academic research instrument systems, by system age: Biological and Medical Sciences 9-10 xiv PAGENO="0739" 733 CONTENTS (Continued) Figures Figure 6-1 Percent of equipment in the national stock considered to be state-of-the-art in 1983, by year of purchase 6-5 6-2 Age distribution of academic research equipment in active research use: Biological and Medical Sciences 6-11 6-3 Percent of academic research equipment that is in excellent working condition, by year of purchase: Biological and Medical Sciences 6-14 7-1 Sources of funds for equipment 7-4 Exhibit Exhibit 2-1 Department types and subfields of research for the Biological and Medical Sciences . . . 2-9 APPENDIX A COMPARISON TABLES FOR ALL FIELDS OF SCIENCE . A-i B DEPARTMENT/FACILITY QUESTIONNAIRE B-i C INSTRUMENT DATA SHEET C-i D ADVISORY GROUP, PHASE II SURVEY D-1 E SAMPLING ERRORS E-1 xv PAGENO="0740" "34 1. INTRODUCTION 1.1 Background of the Survey First-rate research requires first-rate equipment. Research instruments in the biological and medical sciences perform a .variety of functions, such as:. sorting cells, visual- izing tissues, sequencing proteins or nucleotides, measuring physical properties, and performing complex computations. Scientific instruments must be in proper working condition, capable of performing their functions, and possess the techno- logical capacity to obtain the kinds of date, quantities of data, and the resolution of data required by the research prob- lems at the frontiers of present knowledge. Lacking such instru- mentation, investigators are either severely handicapped in their ability to design experiments and to collect data, or they must turn away from some of the most important problems of their discipline. The evolution of scientific research problems and equipment has spawned'increasingly complex and expensive instru- mentation. Replacement of obsolete instruments, as well as acquisition of instruments of totally new design and capabilities, is frequently necessary to maintain the level of research that will keep the United States at the forefront of scientific knowl- edge and technology. Many advances in scientific knowledge and in instru- ment technology have originated in university-based labOratories since World War II. However, since the early 1970's, colleges and universities have experienced falling student enrollment and rising costs in all phases of operation. The resulting fiscal retrenchments have reduced the ability of institutions to fund 1-1 PAGENO="0741" 735 the purchase of scientific research equipment at the very time that equipment costs have been rapidly increasing. Simulta- neously, Federal support for the purchase of equipment has been declining.1 For example, the National Institutes of Health, which is the principal source of support for the biological sciences, has experienced a decline in the percentage of research grant and contract awards earmarked for the acquisition of re- search instruments. Table 1-1 shows that the percentage of research project grant funds expended for permanent laboratory equipment declined from nearly 12 percent in 1966 to less than six percent by 1974. Table 1-2 presents a more recent time- series showing the amount and proportion of research and shared instrumentation program awards budgeted for equipment. The percentages vary from 4.6 percent in 1975 to 3.7 percent in 1984. Table 1-1. Percent of NIH research project grant funds allocated for permanent laboratory equipment, fiscal years l966_l974* Year Percent 1966 11.7% 1967 11.8 1968 9.5 1969 7.5 1970 5.9 197]. 6.2 1972 6.6 1973 4.9 1974 5.7 * Includes the National Cancer Institute, the National Institute of General Medical Sciences, and the National Heart and Lung Institute. Source: National Science Foundation, Science Indicators, 1974, Table 2-12. `See Kennedy, Donald. Government Policies and the Cost of Doing Research; Science, 1 February 1985, Vol. 227, pp. 480-484. 1-2 PAGENO="0742" 736 * Table 1-2. NIH equipment awards, fiscal years 1975-1984 [Dollars in thousands] Year . Dollars budgete for equipment d Percent of total dollars awarded 1975 $ 49,693 4.6% 1976 56,673 3.9 1977 - * - 58,697 - 4.3 1978 68,009 . 4.4 1979 85,161 4.6 1980 79,327 3.8 1981 73,359 3.3 1982 74,657 3.2 1983 89,512 3.4 1984 . 109,720 3.7 * Includes all NIH extramural research and shared instrument programs. Source: NIH internal document. Evidence has been accumulating that these funding problems have affected the quality of research in universities. A recent survey of 16 prestigious research universities revealed that leading investigators were already experiencing difficulty in performing experimental research at the frontiers of their fields because of the lack of proper instrumentation.2 While the survey confirmed other accounts of the problem, all of the evidence was anecdotal, and a demand arose for more comprehensive and objective data. In recognition of the need for "objective information in the area," the House Committee on Science and Technology recommended that the National Science Foundation "conduct 2Association of American Universities. The Scientific Instru mentation Needs of Research Universities, Report to NSF, l980~ 1-3 PAGENO="0743" 737 inventories of, and analyses of the needs for, scientific instru- mentation."3 The resulting legislation, when enacted and signed into law, directed the Foundation to "develop indices, correlates or other suitable measures or indicators of the status of scien- tific instrumentation in the United States and of the current and projected need for scientific and technological instrumen- tation."4 In response to this mandate, the Foundation initiated a feasibility study in FY 1980: (a) to design quantitative indicators of current status and trends in the stock, condition, utilization and needs for research instrumentation in academic settings, and (b) to assess the availability of this information and determine the most appropriate data sources and methods of data collection. The advisory group for this study included representation from the National Institutes of Health. The feasibility study, conducted in the fall of 1981 at a national sample of 38 colleges and universities, concluded that it is feasible to obtain reliable quantitative indicators of current status and trends in academic research instrumenta- tion. The feasibility study final report presented recommenda- tions concerning proposed data collection methodologies and statistical indicators to be constructed from the resulting data.5 Final specifications for the baseline national. survey were developed by NSF following extensive review of the feasi- bility study findings by other Federal agencies and by university scientists and research administrators. 3House of Representatives Report No. 96-61 (1979), p. 30. 4An Act to Authorize Appropriations for Activities for the National Science Foundation for Fiscal Year 1980, and for Other Purposes. Public Law 96-44, Section 7. 5lndicators of Scientific Research Instrumentation in Academic Institutions: A Feasibility Study. Westat, Inc., March 1982. 1-4 PAGENO="0744" 738 1.2 Overview of the Survey The National Survey of Academic Research Instruments and Instrumentation Needs calls for the development of quanti- tative baseline indicators of the national status and of emerging trends in the stock, cost/investment, condition, obsolescence, utilization, and need for major research instruments in academic settings. . - This baseline survey was conducted in two phases. Phase I, conducted during the 1982-83 academic year at a strati- fied probability sample of 43 universities, was concerned with existing academic research instruments and instrumentation needs in the physical and computer sciences and in engineering. Phase I was conducted entirely under NSF sponsorship.6 The National Institutes of Health joined the study for Phase II, which was conducted during the 1983-84 academic year with the collection of data for the biological, agricultural, and environmental sciences. The same sample of universities that participated in Phase I contributed to Phase II. In addition, a separately drawn sample. of 24 medical schools was added, under NIH sponsorship, to provide a comprehensive picture of academic instrumentation in the biological sciences. A limited study was also undertaken to determine the feasibility of obtaining the same data for medical (i.e., clinical) sciences as for the biological sciences. Departments of Medicine in the medical schools were chosen for this purpose. The partic- ular medical sciences included in Departments of Medicine are 6Academic Research Equipment in the Physical and Computer Sciences and Engineering: An Analysis of Findings From Phase I of the National Science Foundation's National Survey of Academic Research Instruments and Instrumentation Needs. Westat, Inc., December 1984. 1-5 PAGENO="0745" 739 not consistent from one institution to another, but include a variety of clinical subspecialty areas. This segment of the study is not equivalent to the sampling survey done for the biological sciences, since no defined set of disciplines is covered, but it can be considered a case study to be evaluated for the possibility of more formal investigation. In each phase, two kinds of data were collected. First, all departments and nondepartmental research facilities in appli- cable fields were asked to provide information about the department or facility as a whole, particularly as regards research equipment costs and needs. Department/facility heads provided this infor- mation. Second, from equipment listings supplied by the university, a sample of research instrument systems was selected from each department and facility, and the principal investigator (or other knowledgeable individual) was asked to provide information about the sampled instrument's cost, age, condition, use, etc.7 These latter data were used to construct quantitative statistical indicators of these variables for the national stock of existing academic research instruments in the fields surveyed. The equipment survey component of each phase was restricted to instrument systems with an original purchase cost of $10,000 to $1 million. Systems above this range are generally well-known throughout the research and policymaking communities and are individually subject to ongoing policy analysis. The lower limit was set at $10,000 for efficient survey coverage. According to the feasibility study, instruments priced at $10,000 or more accounted for over 80 percent of the aggregate costs, but only 10 to 1.5 percent of the total number of systems, 7Until very recently, it would not have been feasible to obtain the kinds of equipment lists required for the selection of instrument samples. Most of the computerized university property inventory systems that were so useful in generating sampling lists for the study had come into being, or had been substantially upgraded, within the past 1-3 years. 1-6 PAGENO="0746" 740 of all academic research instruments costing $500 and over. Also, it was the consensus of the NSF Interagency Working Group advisors that individual pieces of equipment below $10,000 are seldom of critical importance in determining whether an academic scientist or engineer is able to pursue his or her research interests. 1.3 Objectives and Limitations of This Analysis This analysis is concerned primarily with the biolog- ical sciences in medical schools and in the nonmedical components of colleges and universities, the latter being referred to as graduate schools. Additional data are reported for Departments of Medicine in the medical schools as part of an exploration of the feasibility of obtaining information on instruments used in clinical research. The study provides a baseline for measuring future changes in instrument costs, quantity, obsolescence, condition, and utilization. It also provides, for the first time, a set of quantitative statistical indicators for measuring these changes. The statistics presented here function as a snapshot of the current status of instrumentation in academic settings, couched in terms of the indicators. Not only do these figures describe what has been found for 1983 in the biological and medical sciences, but they also permit comparisons with different fields of science. In addition, the most important needs of departments and iiondepartment research facilities are summarized in general terms. terms. While this study offers the potential for assessing changes over time, that potential can be realized only by repli- cations of the survey at suitable periods. To a limited extent, 1-7 PAGENO="0747" 741 there are some data in the present study that display trends for the last few years of instrument acquisition;, these data are suggestive of the total picture but are not definitive, and they need determination from a separate survey. This survey did not collect information on the total number, cost, and condition of all equipment in academic research settings, since the instruments included were limited to those costing between $10,000 and $1 million. Moreover, in this study no account has been taken of instrumentation that may be available to at least some university and medical school investigators in nonacademic research facilities, a factor that may influence the need for research instruments. The principal analytic objectives'of the present study are: (a) `to construct and examine a variety of quantitative statistical indicators of major characteristics of the current national stock of academic research equipment in several fields, and (b) to document differences among research fields and among types of institutions in amount, age, condition, obsolescence, sharing/usage, and perceived current needs for equipment. 1.4 Contents of This Report This report focuses on statistical findings from the survey of the biological sciences and departments of medicine. There are eight more chapters. Chapter 2 is a brief description of the survey methodology and of the response rates for the survey. Chapters 3 through 9 present statistical findings in each of six broad topic areas: Needs and Priorities for Research Equipment: Assessments by Department Heads 1-8 PAGENO="0748" 742 Expenditures for Equipment, FY .1983 * The National Stock of Academic Research Equipment * Age and Condition of Research Equipment * Funding of Equipment in Active Research Use * Location and Use of Research Equipment * Maintenance and Repair Chapter 10 is a summary of the principal findings of the survey. The appendices include a set of comparison tables for all fields of science (see Appendix A), offered so that major results for the biological sciences may be compared with those for all other fields surveyed in Phases I and II. The questionnaire forms used in the survey may be found in Appendices B and C. Appendix D lists the members of the project's Phase II Advisory Group, and Appendix E presents informaiton about the statistical precision of the major types of national estimates derived from the survey examples. 1-9 PAGENO="0749" 743 2. METHODOLOGY 2.1 San~p1e Design 2.1.1 Institutions 2.1.1.1 Graduate Schools The graduate school segment of this study, perhaps more accurately termed the nonmedical school component, consisted of the same set of 43 institutions selected as the stratified probability sample for the NSF Phase I study referenced previously. The universe' from which this sample was drawn constituted the largest academic research and development (R&D) institutions in the nation: the 157 nonmedical, nonmilitary U.S. colleges and universities that had $3 million or more in separately budgeted science and engineering (S/E) R&D expenditures in any of the fiscal years FY 1977 - FY 1980.8 One of the sampled institu- tions, a technical college, had no research equipment in the biological sciences; therefore, this report was based on data collected from 42 sampled institutions. The 157 institutions in the graduate school universe collectively account for 95 percent of all nonmedical S/E R&D expenditures reported to NSF for FY 1980 by all U.S. colleges and universities. Thus, although the survey represents only a small fraction of the nation's approximately 3,000 postsecondary 8Academic Science R&D Funds, Fiscal Year 1980: Detailed Statistical Tables. Surveys of Science Resources Series, National Science Foundation, 1982 (GPO Publication No. NSF82-300). 2-1 PAGENO="0750" 744 institutions, it encompasses most institutions with significant capabilities for the kinds of advanced research that require instrumentation in the $l0,000+ range. Such capabilities are assumed to be very limited, or nonexistent, at most of the thousands of other U.S. institutions of higher education that have been excluded from the study universe. In selecting the study sample of 43 institutions, the probability of selection of each institution in the survey uni- verse was approximately proportional to its R&D size, as indi- cated by its FY 1980 nonmedical S/E R&D expenditures. Within R&D size classes, the proportion of private (or public) insti- tutions in the sample was approximately the same as in the nation as a whole. The design is summarized in Table 2-1. Table 2-1. Institution sample design, graduate (nonmedical) schools FY 1980 S/E R&D No. institutions in nation No. institutions in sample expenditures Total Private Public Total Private Public Total, all institutions over $3 million 157 53 104 43 15 28 Large institu- tions, total 38 11 27 23 7 16 Over $90 million 3 2 1 3 2 1 $52. 5-$89. 9 million 15 3 12 10 2 8 $33-$52.4 million 20 6 14 10 3 7 Smaller institu- tions, total 119 42 77 20 8 12 $19-s 32.9 million 30 11 19 10 4 6 $3-$18.9 million 89 31 58 10 4 6 2-2 PAGENO="0751" 2.1.1.2 Medical Schools 745 For the medical school component of the study, a sample of 24 medical schools was selected from the universe of all medical schools with at least $3,000,000 in total NIH awards in l982.~ The 92 schools in this universe accounted for 97 percent of all NIH awards made in FY 1982 to U.S. medical~schools. For the sample; six schools were selected from each of four strata, as shown in Table 2-2. Table 2-2. Institution sample design, medical schools FY 1980 S/E R&D expenditures No. institutions in nation No. institutions in sample Total Private Public Total Private Public Total, all institutions over $3 million 92 40 52 24 10 . 14 Large institu- tions, total Over $43.6 million $25.0-$42.2 million 20 8 12 13 6 7 7 2 5 12 6 .6 6 4 2 . 6 2 4 Smaller institu- tions, total $l3.5-$24.7 million $3.l-$l3.4 million 72 18 ~ 54 27 . 9 ~ 18 45 9 36 12 6 6 4 3 1 8 3 5 The selection procedure was one that maximized overlap with the original NSF institutionsample. The probability of selection of each institution in the survey universe was approxi- mately proportional to its FY 1982 NIH award size. 9Summary of NIH FY 1982 Extramural Awards to Medical Schools, Internal document, National Institutes of Health. 2-3 PAGENO="0752" 746 2.1.2 Departments and Facilities At each sampled graduate and medical school, the follow- ing departments and facilities were identified as candidates for inclusion in the survey: * All academic departments in the biological sciences; All institutfonally operated, nondepartmental research or instrumentation facilities in the biological sciences; and * Departments of medicine in the medical schools. All departments/facilities that contained one or more research instrument systems in the $10,000 to $1,000,000 cost range were asked to participate. A total of 195 biological science departments/facilities in the graduate schools and 168 in the medical schools, in addition to 24 departments of medicine, were identified as `in-scope.' Each department/facility was asked to complete a Department/Facility Questionnaire concerning its instrumentation-related expenditures, needs and priorities, and sources of funding support. (See Appendix B.) 2.1.3 Research Instruments The survey.was limited to instrument systems that (a) were used primarily for research in 1983 or were intended for such use; and (b) originally cost $10,000 to $1,000,000, including the cost of any separately-purchased, dedicated acces- sories or components. The sequence of steps taken at each department/facility to obtain a sample of such instruments is described in the following paragraphs. 2-4 PAGENO="0753" 747 A preliminary listing of all $10,000+ items of research equipment was obtained, usually from the institution's computerized central property inventory system. Often, the pre- liminary lists were overly inclusive, containing in addition to items of research equipment, miscellaneous property such as laboratory and other furniture, physical plant equipment (e.g., exhaust hoods, heating and air conditioning units), field trans- portation equipment (trucks-or vans), secretarial equipment (word processors, reproduction units), and the like. After preliminary screening out of entries that were unquestionably inappropriate, a random probability sample of $l0,0O0-~- items was selected from each department/facility. All items costing $50,000 or more were included in the survey. For items in the $10,000 to $49,999 range, sampling rates ranged from 100 percent for departments/facilities with from 1 to 11 such items down to a simple random sample of 14.3 percent (1/7) for departments/facilities with 97 or more such items. The intent of this design was to ensure adequate sample sizes for analysis without overburdening large departments and facilities. Across the 387 eligible departments/facilities in the 66 sampled institutions (42 graduate schools and 24 medical schools), a total of 9,238 equipment items were identified in preliminary listings; of these, 4,555 were selected for the survey sample. Overall, the equipment sample included 190 items costing between $100,000 and $1,000,000; 452 items costing between $50,000 and $99,999; and 3,913 items in the $10,000 to $49,999 range. For each sampled instrument, department/facility administrators were asked to arrange for the brief Instrument Data Sheet to be filled in by the responsible principal investi- gator or other person knowledgeable about the instrument's status, cost, and condition. (See Appendix C.) 2-5 PAGENO="0754" 748 2.1.4 Estimation Procedures In later chapters, all results are reported in the form of national estimates statistically weighted to represent all applicable research departments and nondepartmental research facilities in the biological and medical sciences at institutions in the study universe. As noted earlier, the universe to which survey estimates apply consists of the l~7 largest nonmedical R&D universities in the nation and the 92 medical schools with the largest total NIH awards. The estimation weights that were applied to depart- ment/facility questionnaire data were not complex. Since all applicable departments and facilities in a sample university were asked to participate in the survey and since most of them actually did provide survey responses, the estimation weight for each responding department was simply the inverse of the selec- tion probability of the university or medical school in which the department or facility was located, multiplied by a small nonresponse adjustment factor. Estimation weights for the survey of $10,000 to $1,000,000 instruments were somewhat more intricate. The weight for a completed instrument questionnaire was the product of: The university sampling weight -- the inverse of the university's probability of selection; * The instrument sampling weight -- the inverse of the probability of selection of the particular instrument from the department or facility equip- ment list; * An adjustment to the initial instrument sampling weight in situations where the instrument was part of a larger system with two or more separately 2-6 PAGENO="0755" 749 listed components in the $10,000 to $1,000,000 range (in which case, the system selection proba- bility was larger than the selection probability for any one component); and A nonresponse adjustment, where needed. Information about the statistical accuracy of national estimates derived from the study samples of departments and instrument~ is presented in Appendix E. 2.2 Survey Procedures At each institution, all data collection arrangements were handled by a survey coordinator appointed, for graduate schools, by the office of the president of the university and, for medical schools, by the dean of the school. Typically, coordinators were themselves senior administrators, such as deans of the graduate schools or vice presidents of research. These individuals were responsible for identifying all the relevant departments and facilities; obtaining needed preliminary lists of equipment; and after equipment samples had been selected by the survey contractor, arranging for the distribution, completion, and return of survey questionnaires. 2.3 Definitions The following definitions and guidelines are provided to assist the reader in using the data in this report. 2-7 PAGENO="0756" 750 2.3.1 Field of Science This report is concerned with two broadly defined fields: (a) biological sciences, and (b) the clinical (or medical) sciences, which are represented by departments of medicine. Nationally, departments of medicine comprise 40 percent of faculty in clinical departments. The bulk of the data was reported either by c~epartment type or by subfield of research. Data obtained from the Department/Facility Questionnaire were broken out by department type, based largely on the name of the depart- ment or facility. The analysis categories are shown in Exhibit 2-1. The category of biology, general and n.e.c. (riot elsewhere classified), is a combination of biological science departments and facilities that do not fit into any of the other classifications. The majority of these are departments of general (undifferentiated) biology, which are not uncommon in nonmedical schools. However, a few miscellaneous medical school department facilities conducting research in a variety of biological science fields (i.e., cancer research centers and other interdisciplinary biomedical science research centers) are included in this classification. When findings about instrument systems are based on information from the Instrument Data Sheet, the data are broken out by subfield of research, rather than by type of department. This is because an instrument may be carried on the inventory of a department in one discipline while actually being used in a discipline other than the one implied by the department name. For example, many instruments assigned to departments of general biology were actually used for research in biochemistry or molec- ular biology. The user of the instrument was asked on the questionnaire to list_the principal field of research in which the instrument was employed, and the researcher's description 2-8 PAGENO="0757" 751 Exhibit 2-1. Department types and subfields of research for the biological and medical sciences Biochemistry Microbiology (includes immunology, bacteriology, virology) Molecular/Cellular Biology (includes genetics, embryology, developmental biology) Physiology/Biophysics Anatomy Pathology (excludes laboratory medicine, clinical pathology, clinical chemistry) Pharmacologyfl oxicology (excludes clinical pharmacology) Zoology/Entomology (includes parasitology) Botany Food and Nutrition Biology, General and n.e.c. (includes cancer research centers, interdisciplinary biomedical science research facilities) Departments of Medicine* Interdisciplinary, n.e.c.** *For subfields of research, the designation is Medical Sciences! Departments of Medicine, and includes instruments located in other departments. ** This category is used only for subfields of research; n.e.c. means not elsewhere classified. ~-Q. PAGENO="0758" 752 for classifying the instrument into its subfield of research. There were significant differences between the number of instru- ments assigned to departments named for a discipline and the number used in the subfield of research carrying the name of that discipline. One designation change was necessary in the parallel naming of the two sets. Several subfields of medical sciences research were present in most departments of medicine. Instruments used for research in one or another of the medical sciences -- most of which were located in departments of medicine -- were given a generic subfield classification of Medical Sciences/Departments of Medicine. A subfield category was also needed to account for a small number of instrument systems that were carried on the inventories of departments in the biological sciences but were actually used in fields outside the biological sciences -- biomedical engineering, chemistry, etc. This subfield category was named "Interdisciplinary, n.e.c.' 2.3.2 Institution Control Institutions were classified according to the nature of the controlling body; i.e., private vs. public ownership. 2.3.3 ~y~qp For purposes of data collection, an instrument system was defined as a sampled instrument or component, selected from a department/facility property inventory list, plus any separately acquired `add-ons" or components that, as of December 31, 1983, were dedicated solely for use with the sampled items. The instrument system was the basic counting unit in the equipment survey, and all reported cost figures reflected costs for the full system -- 2-10 PAGENO="0759" 753 the base unit plus all dedicated accessories. The equipment survey was limited to systems with an original purchase cost of $10,000 to $1,000,000. 2.3.4 1983 National Stock of Academic Research Equipment Th this report, the "national stock" of academic re- search equipment refers to all instrument systems costing $10,000 to 1,000,000 that, as of December 31, 1983, were physically located at an academic institution in the survey universe and were principally used ~or intended for use) in original scientific research in one or more of the fields encompassed by the survey. The term national stock includes systems actually used for research in 1983 as well as existing components of nonoperational systems still under construction at the end of 1983. Research systems that were physically present but inoperable or inactive through- out 1983 are also included as part of the national stock. 2.3.5 Purchase Cost The purchase cost refers to the manufacturer's list price at the time of original purchase (i.e., when new). For multi-component systems, the purchase cost is the aggregate list price of all components and accessories. Except where clearly specified otherwise, all cost/value/investment statistics in this report refer to system purchase cost. 2.3.6 Acquisition Cost In this report, this is the actual cost to acquire the instrument system at the present university, including trans- portation and construction/labor costs. For used, discounted, 2-11 PAGENO="0760" 754 or rebated equipment, it is the price actually paid to the seller plus transportation and installation costs; for donated, loaned, transferred, or surplus equipment, it is just the transportation and installation costs, if any. 2.3.7 1982 cost-Equivalent This is the original purchase cost converted to 1982 dollars using the Machinery and Equipment Index of the Annual Producer Price Index (PPI) to adjust for inflation. Arith- metically, the value is calculated by multiplying the original purchase cost by the ratio of the 1982 Annual PPI for Machinery and Equipment to the index for the year in which the instrument system was originally purchased or constructed. 2.4 Survey Resppp~q In a complex, multistage survey such as this, there are several levels or types of response to consider. The first level is the institution; participation by the institution makes possible all other data collection. The next level is the depart- ment, or nondepartmental research facility, with its response to the Department/Facility Questionnaire addressed to the department head. The third level is the faculty researcher asked to com- plete the Instrument Data Sheet. The final level is the response to individual items on the questionnaires, i.e. the percentage of respondents giving usable answers to each item. 2-12 PAGENO="0761" 755 2.4.1 Institution Response The rate of response for institutions was 100 percent. At each of the 24 sampled medical schools, the deans promptly agreed to participate and appointed coordinators, who arranged for the preparation and delivery of preliminary equipment list- ings for all applicable departments/facilities and subsequently arranged for the delivery and return of survey materials to and from these departments/facilities. Similarly, there was a 100 percent response rate among the 42 sampled graduate schools that had been sampled in Phase I of the study. 2.4.2 De~partment/Facility Questionnaires Completed Department/Facility Questionnaires were received from 95 percent of the department heads -- 367 of the 387 eligible departments and facilities. Table 2-3 reports these returns in detail. Three of the department categories had a 100 percent response rate. With the exception of departments of medicine, 91 percent of the questionnaires were returned. Departments of medicine had a response rate of 83 percent. In a few departments of medicine, the organizational structure was such that an overall response for all the clinical subdivisions in those departments was not feasible. There was essentially the same response rate for institutions with large R&D expenditures as for those with small expenditures. Departments in private institutions, however, responded with slightly less frequency than did those in public institutions (90 percent vs. 97 percent). 2-13 PAGENO="0762" 38:; 28 `~3 8 ~8 a ~ ~ I ~ `~1 a I ~I ox 2 PAGENO="0763" 757 2.4.3 Instrument Data Sheet Faculty researchers returned completed Instrument Data Sheets for 4,397 instrument~, constituting 97 percent of the 4,555 instruments in the equipment sample (see Table 2-4). As would be expected with an overall response rate this high, no differences worth noting were found by type of department, size of R&D expenditures, institution controlr cost of equipment, or age of equipment. In Table 2-5 an analysis of the Instrument Data Sheet returns is shown by status, or classification as to eligibility for inclusion in the study. Of the 4,555 instruments for which Instrument Data Sheets were forwarded, 3,358 were found to be actively in research use. Another set of 582 instruments were found to be either inactive or inoperable throughout the year, or not yet placed into service. These two sets of instruments, numbering 3,940 or 83.5 percent of the sample, constituted the national stock that formed the basis for the analysis. An additional 457 instruments were classified as out of scope for this study for a variety of reasons. No response was received for 158 instruments. Refusals accounted for 90 of these nonre- sponses. For the remaining 68, no knowledgeable person could be found to answer the detailed questions asked about the instrument, e.g., the principal investigator was absent from the institution and no one else was familiar with the instrument. 2.4.4 Questionnaire Item Response Most questionnaire items had response rates close to 100 percent. For this reason, in most of the tables in the body of this report, it did not seem worthwhile to present a category labeled "not ascertained." Such a category would usually have 2-15 PAGENO="0764" a ~ ~cn ~ ~1 &~ c.,1 PAGENO="0765" 759 Table 2-5. Status of sampled equipment items: Biological and Medical Sciences Item response status * Total Graduate schools Medical schools No. f Percent No. Percent No. j Percent Total, all sampled items 4555 100.0 1984 100.0 2571 100.0 Instrument/system in research use 3358 73.7 1516 76.4 1842 71.6 Other items in national stock, total - 582 25 557 12.8 0.5 12.2 237 12.0 11 0.6 226 11.4 345 13.4 14 0.5 331 12.9 Not yet in use No longer in use: inactive or inoperable through 1983 Out-of-scope, total 457 10.0 165 8.3 292 11.4 No longer present -- sold, scrapped, traded-in, cannibalized, etc. Not research equipment - teaching, office, etc.1 Dedicated accessory of instrument! system in research use2 Other, e.g., cost out of range, duplicate listing 179 170 46 62 3.9 3.7 1.0 1.4 67 3.4 61 3.1 14 0.7 23 1.2 112 4.4 109 4.2 32 1.2 39 1.5 Nonresponse, total 158 3.5 66 3.3 92 3.6 Refusal Other3 90 68 2.0 1.5 43 2.2 23 1.2 47 1.8 45 1.8 110 the extent possible, items in this category were edited from institution equipment listings prior to sampling. Otherwise, the number and percent of such items would have been larger. 2lnformation about accessories is contained in the data record for the principal instrument or component of the system. 3Other nonr-eaponae was due principally to unavailability of person knowledgeable about the instrument -- ill, on sabbatical, etc. 2-17 PAGENO="0766" 160 contained less than 2 percent of all responses. Consequently, however, different tables dealing with the same basic data (such as the estimated total number of instrument systems or the estimated total cost of equipment) may show slightly different totals. 2.4.5 Summary Statement-on Response The exceptionally high response rates obtained in this study suggest that the major topic of ~the survey -- the adequacy of academic research equipment in the biological and medical sciences -- is a matter of widespread interest and concern at all levels of the academic research community, from central administration to front-line principal investigators. Response rates of the same magnitude were also obtained in Phase I of the study. 2.5 Data Collection for Departments of Medicine One objective of the study was to assess the feasibility of applying the survey methodology to the medical (clinical) sciences in medical schools. From Table 2-4, it appears that instrument data could be obtained from departments of medicine at about the same level of response as was achieved from depart- ments in the biological sciences at medical schools. However, departments of medicine had more difficulty with the Department/Facility Questionnaire. Four of the 24 departments of medicine in the medical school sample did not respond to that questionnaire (Table 2-3). It was learned from the institution coordinators that the difficulty lay with the structure of these departments. In at least some medical schools, 2-18 PAGENO="0767" 761 departments of medicine are larger and more diverse than most departments in the biological sciences. The several clinical divisions or units that constitute departments of medicine in those instances operate with relative independence. Information about equipment expenditures, funding sources, etc., is often not maintafned for the department of medicine as a whole. Also, judgments on major departmental needs and priorities become too difficult when-so many diverse interests-are involved. While the response to the Department/Facilities Questionnaire was a "respectable" 83 percent among departments of medicine, the problem of one person responding for a number of diverse clinical fields suggests that it might be better, when seeking instrumen- tation information for specific clinical sciences, to ask each clinical division or unit head directly. All things considered, however, the conclusion is that it is feasible to obtain data on the clinical sciences with the survey methodology used for this study. The data actually obtained in the current survey of departments of medicine, while not easily interpreted in terms of fields or subfields of science, were obtained from a nationally representative sample of such departments. In this report, these sample data have been aggre- gated to produce national estimates for departments of medicine in the same way that all other survey data were treated. 2.6 Treatment of Data Discussion of the study results is organized around specific tables, each table being based on an item in one of the two survey questionnaires. Most of these tables follow the same format. In general, responses to questions on the survey question- naires are broken outby department type (in. the case of data from the Department/Facilities Questionnaire) or by subfield of 2-19 PAGENO="0768" 762 research (in the case of data from the Instrument Data Sheet). These breakdowns typically are followed by two sets of summary groupings (1) field and setting which separates biological sciences from the medical schools' departments of medicine, and also divides biological sciences into graduate (nonmedical) schools and medical schools; and (2) institution control, which separates private from public institutions. It has already been noted that the tables in subsequent chapters report results in the form of national estimates, statis- tically weighted to represent all departments in the survey universe. Typically, estimates are rounded to a level of pre- cision judged appropriate for the particular table (e.g., percent- ages in integers, dollars in thousands). Because each estimate is rounded individually, numbers and percentages may not sum exactly to the totals shown in a given table. This analysis of the biological and medical sciences is part of a study of larger scope which includes all fields in the physical and life sciences, engineering, and computer sciences. As a result, it is possible to place the biological sciences in perspective with the other sciences. A few such comparison tables are included in Appendix A of this report. Relevant comparisons are discussed in the body of the report with references made to the appropriate appendix tables. 2-20 PAGENO="0769" 763 3. NEEDS AND PRIORITIES FOR RESEARCH EQUIPMENT: ASSESSMENT BY DEPARTMENT HEADS A stratified probability sample of 367 biological and medical science department heads provided an overview of the condition of their research instrumentation for this study. The selected department heads represented over 1,200 departments and research facilities at institutions conducting 95 percent of the nation's academic research in the biological and medical sciences. The assessments made by these department heads constitute a significant front-line view of the current stock of instrumenta- tion, the scope of maintenance and repair activities within departments, and the nature of the most pressing needs for new or replacement equipment. 3.1 Adequacy of Current Instrumentation A set of questions was asked of department/facility heads relating to adequacy of the instrumentation in place during 1983. In reply to a question on whether there were important subject areas in which critical scientific experiments could not be conducted in 1983 because needed equipment was lacking, 58 percent of the departments/facilities responded in the affirmative. (See Table 3-1.) The percentages ranged from only 27 percent in molecular/cellular biology to about 75 percent for botany and general biology and 87 percent for food/nutrition. This problem existed in 59 percent of the biological sciences departments, compared to 41 percent of the departments of medi- cine. A large difference appears for institution control, with only 42 percent of departments in private institutions reporting such a deficiency, compared to 65 percent of those in public institutions. 3-1 53-277 0 - 86 - 25 PAGENO="0770" 764 TABLE 3-1 V!PARTPIENTStFACILXTIEE REPORTING IMPORTANT AREAS IN WHICH CRITICAL EXPERIMENTS CANNOT BE PEF~0RMED DUE TO LACK OF NEEDED EGUIPPIENTI BIOLOGICAL AND MEDICAL SCIENCES PERCENT REPORTING INABILITY TO NUMBER OF CONDUCT CRITICAL EXPERIMENTS DEPARTPIENTS/FACILITIES DUE TO LACK OF NEEDED EQUIPMENT TOTAL 1219 58 DEPARTMENTS BIOCHESISTRY- - 144 - 42 MICROBIOLOGY 151 50 MOLECULARICELLULAR BIOLOGY 74 27- PHYSIOL0GY~0I0PHY5ICS 132 56 ANATOMY B2 60 PATHOLOGY 80 -62 PHARMACDLOGY~TOXIC~LOGY 104 60 ZODLOGY1ENTONOLOGY 69 - 69 BOTANY - 33 78 FOOD AND NUTRiTION Xl 87 BIOLOGY. GENERAL AND N.E.C. 210 75 DEPARTMENTS OF MEDICINE 81 41 FIELD AND BETTING BIOLOGICAL SCIENCES. TOTAL 1138 59 GRADUATE SCHOOLS - 500 60 NEDICAL SCHOOLS 588 - 58 DEPARTMENTS CF MEDICINE 81 41 INSTITUTION CONTROL PRIVATE 379 42 PUSLIC -840 65 3-2 PAGENO="0771" 765 Relative to other fields of science, departments in the biological sciences reported less frequently that they were unable to perform critical experiments. Comparison Table A-l in Appendix A reveals that about 90 percent of departments in the physical sciences and engineering, and 95 percent of those in the computer sciences, reportedly lacked the equipment needed for frontier experiments -- in contrast to 59 percent for the biological- sciences. - When asked to rate the adequacy of available research instrumentation for tenured and untenured faculty-level researchers (Table 3-2), department heads described the current stock of equipment as excellent for tenured facult~i in only 16 percent of the departments, and for untenured faculty in 15 percent. It was considered insufficient in 27 and 33 percents of the depart- ments respectively. Once more, there were large differences by department type, with molecular/cellular biology departments considering themselves better equipped than any other discipline. Botany and food/nutrition again had the largest proportion of departments reporting insufficient instrumentation, particularly for: untenured researchers. Biological science departments in medical schools were far less likely to report insufficient equipment (15% to 38% for tenured faculty) than were similar departments in graduate schools. There was also a large difference in response to this question in favor of private institutions, with 36 percent of private school departments considering their equipment excellent. Only seven percent of the public institutions considered their equipment excellent. Comparing the biological sciences with other fields of science (Appendix Table A-2) again indicates that, for tenured faculty, biology has a more favorable assessment of existing 3-3 PAGENO="0772" TOTAL DEPART RENTS BIOCHEMISTRY FIELD AND SETTING BIOLOGICAL SCIENCES. TOTAL 100 GRADUATE SCHOOLS 100 MEDICAl. SCHOOLS 100 DEPARTMENTS OF REDICINE 100 INSTITUTION CONTROL PRIVATE TABLE 3-f 0EPNRTIIENTIFACILITT ASSESSMENT OF ADENUACY OF AVAILABLE RESEARCH INSTRUMENTATION BIOLOGICAL AND MEDICAL SCIENCES PERCENT OF DEPARTIIEMTB/FACILITIES ASSESSING INSTRUMENTATION AVAILABLE TO TENURED FACULTY AND ENUIVALENT P.I.N ASs PERCENT OF 0EPANTIIENTS/PACILITIES ASSESSING INSTRUMENTATION AVAILABLE TO UNTENUNED FACULTY AND EQUIVALENT P.1.. ASP TOTAL EICELLENT ADESUATE INSUFFICIENT TOTAL EOC~LLENT ADEQUATE INSUFFICIENT 100 16 57 27 100 15 52 33 100 25 61 14 100 27 36 17 MICROBIOLOGY M0LECU1.AR/CELLULAR BIOLOGY 100 lb 42 42 100 40 51 9 100 17 31 52 100 40 4? Il PHYSIOLOGY/BIOPHYSICS 100 25 57 15 100 31 51 15 ANATOMY PATHOLOGY 100 II 67 22 100 14 75 II 100 0 75 22 100 S * 67 25 PHARRACOLOGY/TOIICOLOGY ZOOLOGT/ENTOHOLOGT 100 7 75 15 lID 7 4B 45 100 0 78 22 100 7 34 59 ~I ~ C~ BOTANY 100 14 1? 67 100 14 IS 65 FOOD AND NUTRITION 100 0 44 56 100 4 04 72 BIOLOGY. GENERAL AND N.E.C. 100 4 A? 27 . 100 7 * 65 2S DEPARTMENTS OF MEDICINE 100 24 41 35 100 20 33 47 15 89 26 100 13 33 32 14 45 38 100 13 42 43 16 69 15 100 IS 63 22 24 41 35 100 20 33 47 100 36 53 II 100 37 46 17 100 7 59 34 100 6 54 40 PUBLIC PAGENO="0773" 767 research equipment than any other field except materials science. The lower percentage of insufficient instrumentation for biological sciences as a whole, however, can be traced to the particularly low proportion of medical school departments giving this rating. Biological science departments located in graduate schools show much closer agreement with departments in the physical sciences, engineering, and computer science when reporting insufficient instrumentation. - 3.2 Priorities for Increased Federal Support Department/facility heads were asked to choose how they would allocate increased Federal funding for research equip- ment from the viewpoint of investigators in their departments/ facilities. Each head was asked to select one of four options. Table 3-3 presents their choices. Overall, two-thirds of depart- ment heads in the biological sciences and departments of medicine identified instrument systems in the $10,000 to $50,000 cost range as the top priority need for their departments. Another 20 percent selected systems costing between $50,000 and $1,000,000. Only 12 percent recommended increased funding for equipment under $10,000, and not a single department/facility head chose large scale facilities costing over $1,000,000. This pattern of recommendations is a strong validation for the decision to confine the present study to equipment in the cost range of $10,000 to $1,000,000. Differences among disciplines are complex. Chair- persons in departments of microbiology, pathology, and botany, showed a statistically "normal" distribution of needs ranging across all three cost categories, while 90 percent of the pharma- cology departments' priority needs were concentrated in the middle cost range. Molecular/cellular biology had the largest 3-5 PAGENO="0774" TABLE 3~3 DEPARTMENT/FACILITY RECOMRENDATIONS FOR INCREASED FERERAL SUPPORT FOR RESEARCH INSTRUMENTATION BIOLOGICAL AND MEDICAL SCIENCES PERCENT OF DEPARTMENTS/FACILITIES RECOMRENDING AS TOP PRIORITY AREA FOR INCREASED FEDERAL SUPPORT OF ACADEMIC RESEARCH ENUIPMENTI OYSTERS IN SYSTEMS IN LARGE SCALE 150.000-HI MILLION SIO.000-$50,000 LAD ENUIPMENT TOTAL FACILITIES RANGE RANGE UNDER 110.000 OTHER TOTAL 100 DEPARTMENTS BIOCHEMISTRY MICROBIOLOGY MOLECULAR/CELLULAR BIOLOGY PHYSIOLOGY/BIOPHYSICS ANAT DRY PATHOLOGY PHARMACOLOGY/TOO ICOLOGY ZOOLOGY/ENTOMOLOGY BOTANY FOOD AND NUTRITION BIOLOGY. GENERAL AND N.E.C. DEPARTRENTS OF MEDICINE FIELD AND SETTING BIOLOCICAL SCIENCES. TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS DEPARTMENTS OF MEDICINE INSTITUTION CONTROL PRIVATE 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 0 20 66 12 2 0 24 59 8 9 * 0 20 55 25 0 0 31 54 IS 0 0 17 81 2 0 0 17 76 7 0 0 24 56 20 0 0 8 90 2 0 0 5 70 25 0 0 25 49 26 0 0 15 74 7 4 0 22 64 11 3 0 2B 72 0 0 0 19 86 12 3 0 21 63 15 I 0 19 69 10 2 0 29 57 13 1 11 2 PUBLIC 100 0 18 71 PAGENO="0775" 769 proportion (31%) needing comparatively expensive ($50,000 to $1 ,000,000) systems. Private institutions reported needs for systems in the $50,000 to $1,000,000 range more often than did the public institutions (29% to 16%). Most fields of science indicated a need for more expen- sive equipment than was reported in the biological sciences (Appendix Table A-3). While 20 percent of departments in the biological sciences professed a need for systems in the $50,000 to $1,000,000 cost range, 36 percent of those in the environmental sciences and 43 percent in the physical sciences reported needing equipment in that price range. Conversely, the biological sciences and agriculture were the only fields with an appreciable number of departments describing their top priority as laboratory equip- ment costing less than $10,000. 3.3 Types of Instrumentation Most Urgently Needed Department/facility heads were asked to list up to three pieces of research equipment costing between $10,000 and $1 million that were most urgently needed. They were also asked to indicate the approximate cost of each piece of equipment. Responses were classified according to a typology developed for this study by a team of NIH scientists,1° and they were then statistically weighted to reflect all biological science and medicine departments represented by responding departments in the sample. Table 3-4 shows the resulting response frequencies for each instrument type. It also presents the mean and median costs for each instrument type. Perhaps the most striking finding in this table is that the research instruments most urgently Sue Badman, Ph.D. ,Tharvjn Cassman, Ph.D., and Rachel Levinson developed the study typology. 3-7 PAGENO="0776" TOTAL. ALL TYPES INSTRUMENT TYPE PREPARATIVE (,.g., CENTRIFUGES. SC1NTI LLATION COUNTERS, INCUBATORS) DNA ANALYZERS-SYNTHESIZERS ELECTRON MICROSCOPY (ER) GENERAL SPECTROSCOPY HIGH PRESSURE LIGUID CHR01IATOCRA~HY (HPLC) X-RAY 25 CLINICAL DEVICES E23 25 MISCELLANEOUS 152 113 DATA ARE NATIONAL ESTIMATES BASED ON LISTINGS OF UP TO THREE TD~-PRIORITY NEEDS, AS REPORTED BY THE STUDY SAMPLE OF 367 DEPARTMENTS. TOTAL NUMBER OF REGUESTS IS 927. (23 SAMPLE CONSISTS OF ONLY SEVEN ITEMS. ONE OF WHICH HAD AN UNUSALLY HIGH COST. 770 TADLE 34 NURSER OF REG'JESTS AND AVERAGE CXCI OF RESEARCH INSTRUMENTS MOST URGENTLY NEEDED IN ACADEMIC SETTINGS, DY TYPE OP INSTRUMENT; BIOLOGICAL AND MEDICAL SCIENCES 113 NUMBER OF ---ESTIMATED COST--- REGUESTS MEAN MEDIAN 3203 *87.300 *40.000 1030 45.900 29.500 COMPUTERS NUCLEAR MAGNETIC RESONANCE (NMR) LIGHT MICROSCOPY CELL SORTERS MASS SPECTROSCOPY (MS) IMAGE ANALYZERS 367 B4.100 35? 190.100 283 38.600 2fl 31.500 150 89.500 111 316.700 128 61.100 124 l5B.9~O B! 178.300 77 77.500 184.800 154.000 SB, 000 71.000 145,000 25.000 26.500 45.000 250,000 29,000 140,000 90.000 38.000 95.000 20.000 30.000 3-8 PAGENO="0777" 771 needed in the biological sciences and departments of medicine are, for the most part, comparatively inexpensive. Even though cost was not a factor as department heads constructed their `wish lists," the overall median cost of most urgently needed instruments was only $40,000. The most frequently cited type of needed equipment, "preparative instruments," had a median cost of only $29,500. "Big-ticket" items, those with a median cost above $l00-,000, were mentioned comparatively infrequently: electron microscopes (359 of 3,203 mentions), cell sorters (124 mentions), and NMR spectrometers (111 mentions). Departments varied considerably in the level of cost of the equipment on their "wish lists." (See Table 3-5.) For departments of microbiology, physiology/biophysics, pharmacology! toxicology, and food/nutrition, 70 percent or more of the top priority instruments cost less than $60,000. For departments of anatomy and medicine, on the other hand, about 50 percent cost more than $60,000. Table 3-6 shows the types of research instruments needed most by departments in different fields. For this analysis, the 14 types of equipment were consolidated into 7 categories by combining instrument types with similar functions. The HPLC and preparatory instrument category, which had the least expensive and the greatest number of items listed, was especially prevalent for departments of microbiology (50 percent of all items identified) and pharmacology/toxicology (52 percent). Most types of departments had a peak frequency in this category, but also had secondary peaks in other categories unique to the discipline represented by the department. Departments of anatomy were an exception, with a peak (38 percent of the top priority equipment) in the relatively costly category of electron microscopy. 3-9 PAGENO="0778" 772 TABLE 2-0 DIETROITIOT4 OF EET!YATED COST! FOR YOST URGENTLY NEEDED RESEARCH INSTRUMENTS. BY DEPARTMENT; EIDLOGICAL AND MEDICAL SCIENCES 013 INSTRUMENT COST RAYGE $10000- 121.000- $41.000- $61~000- $101,000- $201000- IOTA. 120.000 $40000 $60.000 $100,000 $200,000 AND OVER TOTAL 3203 090 1060 422 434 362 329 100% 18% 33% 13% 147. 11% 100 DE~ART!ENTS DIOCM%TIISTF:Y 366 . 65 113 44 78 21 36 1000 187. 31% 12% 217. 8% 10% MICROBIOLOGY 441 69 183 68 70 36 16 100% 16% 41% 15% 16% 8% 4% PIOLECULAR/CELLULAR EIOLOGY 167 42 48 9 22 34 13 100% 20% 29% 6% 13% 20% 8% PMYS1OLDGYIBIOPHYSICS 324 38 144 44 23 35 40 100% 12% 44% 14% 7% 11% 12% ANATOIY 223 24 62 24 43 16 55 100% 11% 28% 11% 19% 7% 28% PATHDLDGY 230 26 92 20 20 48 20 100% 11% 40% 9% 9% 21% 11% FH4R"AOLDGY~TDD1CDL0GY 296 0% 148 21 34 21 22 100% 18% 50% 7% 11% 7% 7% ZOOLO%YFEETOTIOLDGY 163 61 20 26 23 15 17 100% 38% 12% 16% 14% ~% 10% BOTANY 100 8 38 22 10 0 14 100% 8% 38% 22% 10% 8% 14% FOOD 6010 NUTRITIDT 126 36 34 28 20 7 0 1007. 29% 27% 23% 16% 6% 0% BIDLO%Y, GENERAL AND N.E.C. 594 142 143 ~1 62 99 57 100% 24% 24% 10% 10% 17% 10% DEPARTMENT! OF MEDICINE 172 27 42 25 30 13 35 100% 15% 24% 142 17% 8% 210 013 DATA ARE NATIONAL ESTIMATES BASED ON LISTINGS OF UP TO THREE TOP-PRIORITY NEEDS. AS REPORTED BY THE STUDY SAMPLE OF 367 DEPARTMENTS. TOTAL NUMBER OF REQUESTS IN THE SAMPLE -IS 927. 3-10 PAGENO="0779" 366 13 7 177 1002 47. 22 482 441 44 57 220 1002 102 132 502 67 3 24 61 1002 22 142 372 324 38 40 125 1002 122 122 392 223 41 85 49 1002 182 382 222 230 5 78 68 1002 22 34~ 382 296 35 8 154 1002 122 32 522 163 16 43 63 1002 102 262 392 100 2 17 47 1002 22 172 472 126 2 7 50 1002 22 62 402 594 19 104 233 1002 32 182 402 172 11 16 54 1002 62 92 312 25 12 301 92 54 152 95 262 5 12 14 42 35 82 16 lOX 2? 92 47 112 46 282 12 42 0 02 3 22 5 22 38 92 13 82 75 232 19 92 13 62 5 22 13 62 21 92 20 92 0 02 18 82 35 122 43 152 0 02 21 72 9 62 11 72 2 12 20 122 18 182 5 52 0 02 11 112 43 342 13 102 0 02 11 92 100 09 5 42 13 55 0 25 82 322 02 152 TABLE 3-6 TYPES OF RESEARCH INSTRUMENTS MOST URGENTLY NEEDED. BY DEPARTMENT; BIOLOGiCAL AND MEDICAL SCIENCES (13 COMPUTERS EM AND NMR AND MS AND CLINICAL AND AND IMAGE LIGHT HPLC AND GENERAL ANALYZERS- CELL SORTERS TOTAL ANALYZERS IIICROSCOPY PREPARATIVE SPECTROSCOPY SYNTHESIZERS X-RAY AND MISC. TOTAL 3203 227 487 1322 1002 72 152 412 394 44a 122 142 DEPARTMENTS BIOCHEMIDTRY MICROdIOLOGY MOLECULAR/CELLULAR BIOLOGY PHYSIOLOGY/BIOPHYSICS AMATORY P A TH OLD GY PHARMACOLOGY/TOO I COLOGY ZOOLOGY /ENTDMOLOGI BOTANY FOOD AND NUTRITION BIOLOGY, GENERAL AND N.E.C. DEPARTMENTS OF MEDICINE (13 DATA ARE NATIONAL ESTIMATES BASED ON LISTINGS OF UP TO THREE TOP-PRIORITY NEEDS, AS REPORTED BY THE STUDY SAMPLE OF 367 DEPARTMENTS. TOTAL NUMBER OF RESUESTS IN THE SAMPLE IS 927. PAGENO="0780" 774 3.4 Summary Department heads in the biological sciences and in departments of medicine varied by discipline in the degree to which they considered presently available equipment adequate for current research needs. Overall, over half reported that critical experiments in their disciplines could not be performed because suitable instrumentation was not available. While about one- fourth of all departments considered their instrumentation for tenured faculty researchers to be insufficient, in some disci- plines the percentage was much higher. A larger proportion of insufficient instrumentation was reported for nontenured research- ers. On both of these adequacy parameters, private institutions reported more favorable conditions than public institutions, by wide margins. There was a marked need in the biological and medical sciences for upgrading/expansion of equipment in the $10,000 to $50,000 cost range, with some disciplines also expressing a need for more expensive items ranging from $50,000 to $1,000,000. Compared to those in other fields, biological science departments appeared to judge themselves as less severely impaired by lack of equipment needed to perform critical experiments and by insufficient instrumentation for investigators to conduct research in their major interests. In the latter instance, however, only the medical schools had this advantage, for biology departments in the graduate schools closely resembled departments in other graduate school fields on the degree of perceived insuf- ficiency of current instrumentation. Concerning priority needs for equipment in different cost ranges (when compared to other fields of science), the biological sciences in both graduate and medical schools were more likely to need systems in the $10,000 to $50,000 category. They were correspondingly less likely to need instrumentation costing more than that. 3-12 PAGENO="0781" 775 The types of research equipment that were most needed, according to department heads, were predominantly below $75,000 in cost, although there was considerable variation among departments on cost distribution. The most common need across departments was for instruments in the preparative or HPLC category, and these were the least costly of the needed instrument types. The remainder of their instrument needs were unique to each department. 3-13 PAGENO="0782" 776 4. EXPENDITURES FOR RESEARCH EQUIPMENr, FY 1983 Current expenditures for scientific research equipment are one indicator of the economic well-being of the scientific enterprise. Analyzing expenditures by appropriate units -- dollars spent per faculty-level researcher, and per institution -- permits comparisons, of rela~tive funding among various groups of institutions and other areas of interest. When comparable data are obtained for future years, trends in expenditure rates can be monitored. 4.1 Department Expenditures for Instrumentation Table 4-1 presents information on FY 1983 department! facility instrumentation-related expenditures in three categories: (1) purchase of research equipment costing $500 or more; (2) purchase of research-related computer services, where separate charges are incurred for this purpose; and (3) maintenance and repair of research equipment. Nearly three-fourths of all instrumentation-related expenditures are used to purchase equip- ment, with the rest being almost evenly divided between the cost of purchased computer services and maintenance and repair expenses. The greatest variation among departments occurs in the percentage of total instrumentation expenditures for purchases of computer services. Several types of departments are much heavier purchasers of computer services than others. Aside from any computers used *within the departments that do not practice separate billing, departments of molecular/cellular biology spent 27 percent of their instrumentation funds for services from institutional or other computing facilities. A similar proportion was spent by food/nutrition, and almost as much by pathology. Departments of anatomy, biochemistry, and microbiology were the least likely to purchase computer services from outside the departments. 4-1 PAGENO="0783" 777 TABLE 4-I INSTRUMENTATION-RELATED EXPENDITURES IN FY 1983 ACADER1C DEPARTMENTS AND FACILITIES, BIOLOGICAL AND MEDICAL SCIENCES 000LLARS IN MILLIONSI ~---PY 19B3 EIPENOITURE5 AND PERCENT OF EXPENDITURES- PURCHASE OP PURCHASE OF RESEARCH- MAINTENANCE, RESEARCH RELATED REPAIR OF EQUIPMENT COMPUTER RESEARCH TOTAL $500 OR BORE SERVICES EQUIPMENT TOTAL DEPARTMENTS BIOCHEMISTRY MIC000IXLOGT MOLECULAR/CELLULAR BIOLOGY PHYSIOLOGT/BIOPHTSICO ANATOMY PATHOLOGY PHARMACOLOGYFTOX ICOLOGY ZOOLOGY /ENTXROL000 BOTANY FOOD AND NUTRITION BIOLOGY GONORAL AND N.E.C. DEPARTMENTS OF MEDICINE FIELD AND SETTING BIOLOGICAL SCIENCES TOTAL 192.3 1000 GRADUATE SCHOOLS 79.0 loot MEDICAL SCHOOLS 103.3 1000 DEPARTMENTS OF MEDICINE 31.4 1000 INSTITUTION CONTROL PRIVATE - 100.6 1000 PUBLiC 123.1 100% MD23.B 1000 $158.2 710 M29.9 130 H35.7 160 24.4 1000 19.1 782 1.1 5% 4.3 13.8 1000 10.7 781 .4 3% 17% 2.6 08.9 1000 IB.4 640 7.9 270 0.6 91 24.9 1000 17.8 70% 2.7 11% .4.4 181 . 12.7 1000 9.7 77% . .3 20.. 2.6 13.1 1000 8.0 610 2.7 21% 2.4 IB.B 1000 13.3 71% 2.7 14% 180 2.8 150 7.0 1000 4.9 70% . .8 11% 1.3 181 3.9 1000 3.0 77% .3 7% .6 6.1 100% 3.8 62% 1.1 25% 161 .8 041 38.7 100% 03.6 61% 7.3 09% 7.7 20% 31.4 0000 21.9 820 2.1 7% 3.~ 111 132.4 690 27.8 14% 32.2 51.8 66% 13.0 170 14.0 80.5 710 14.5 13% 18% 18.3 25.9 . 2.0 161 3.5 69.2 69% 89.0 70% 16.8 14.1 17% 14% 13.0 21.1 XIX 171 4-2 PAGENO="0784" 778 Amounting to one-sixth of total instrumentation expendi- tures in 1983 funds spent for equipment maintenance and repair were an important component of the total investment in instru- mentation. These expenditures are well worth tracking over time to detect trends and any relationship to equipment performance. In the field and setting breakout, departments of medicine spent a much smaller proportion of their instrumentation funds on computer services and maintenance than did biological science departments located in either graduate or medical schools. There were no noteworthy differences between private and public institutions. 4.2 Equipment Expenditures per Research Investigator and per Institution Department/facility heads were also asked how many faculty-level researchers were employed in their departments that year. Table 4-2 presents, by department type, survey find- ings concerning numbers of faculty-level researchers, the dollars spent on research equipment (previously shown in Table 4-1), and the unit values -- dollars spent in 1983 per faculty-level researcher and per institution. A cautionary note: the only source used for numbers of faculty and research equipment expenditures in FY 1983 was information provided by departments. While the department is usually the principal base for research in a discipline, many of the members of a department may be engaged in research in sub- fields outside that discipline. For example, some members of a department of microbiology may actually be engaged in research in the subfields of biochemistry or molecular biology. Therefore,. 4~3 PAGENO="0785" TABLE 4-S RESEARCH EQUIPMENT EXPENDITURES IN FY 1983 PER FACULTY RESEARCHER AND INSTITUTION ACADEMIC DEPARTMENTS AND FACILITIES: BIOLOGICAL AND MEDICAL SCIENCES CDOLLARS IN THOUSANDS 3 -EXPENDITURES PER PERSON AND INSTITUTION- FACULTY-LEVEL RESEARCHERS C13 FY 1933 EQUIP. EXP. PER ElF. NUMBER PERSON TOTAL - M15~.2XO 26.633 *3.9 DEPARTMENTS BiOCHEMISTRY 19.100 2.216 8.6 - t23 MICROBIOLOGY 10.700 2.187 4.9 - MOLECULAR/CELLULAR BIOLOGY 18.400 843 21.8 PHYSIOLOGYIBIOPHySICS 17.800 2.446 7.3 - ANATOMY 9.700 1.314 6.4 PATHOLOGY 8.000 2.041 3.9 - FHARMACOLDGYITOXICOLOGy 13.300 1.799 7.4 - ZOOLOGY/ENTOMOLOGY 4.900 1.213 4.0 - BOTANY 3.000 752 4.0 - FOOD AND NUTRITION 3.800 730 5.2 - BIOLOGY, GENERAL AND N.E.C. 23.600 4.305 3.2 - DEPARTMENTS OF MEDICINE 25.900 6.386 4.1 . - FIELD AND SETTING BIOLOGICAL SCIENCES, TOTAL 132,300 20.248 6.3 249 331.3 GRADUATE SCHOOLS 51.800 9.654 5.4 157 330.3 MEDICAL SCHOOLS 50.500 10.594 7.6 92 873.0 DEPARTMENTS OF MEDICINE 25.900 6.386 4.1 92 iNSTITUTION CONTROL PRIVATE 69,200 8.366 8.3 ~3 744.1 PUBLIC 89.000 18.268 4.9 136 370.5 C13 NUMBER OF FACULTY AND EQUIVALENT NON-FACULTY RESEARCHERS (FULL-TIRE AND FART-TIME) WHO PARTICIPATE IN ONGOING RESEARCH PROJECTS AND WHO ARE MEMBERS OF THE DEPARTMEUTE OF THE GRADUATE AND YEDICAL SCHOOLS IN THE SURVEY UNIVERSE. AS REPORTED BY DEPARTFENT HEADS. C!) SINCE SOME NINDS OF DEPARTMENTS EXIST tARGELY EITHER IN MEDICAL SCHOOLS OR OUTSIDE MEDICAL SCH3OLS~ NO SIYGLE DENOMINATOR WOULD BE APPROPRIATE. 779 INSTITUTIONS ElF. PER NUMBER INST. 249 *633.3 4-4 PAGENO="0786" 780 the numbers given within departments for researchers and equipment expenditures do not necessarily indicate the figures applicable to the various subfields of research. With this reservation, it is still useful to examine indicators of relative funding for research equipment in different types of departments. Overall, FY 1983 expenditures were $5,900 per facult~~-level researcher'. Except for molecular/cellular biology, which had an extraordinary level of expenditures of $21,800 per researcher, the expenditure ratio among departments ranged from $3,900 for pathology to $8,600' for biochemistry. The larger institution-level groupings in Table 4-2 eliminate the interpretive ambiguities noted for the department- level statistics, since assuming the expenditures and numbers of researchers for all departments is equivalent to the summations for all subfields o~ research. For FY 1983, the research equip- ment expenditures per researcher in the biological sciences exceeded by a large amount those of departments of medicine: $6,500 to $4,100 per person. It was also observed that the 92 departments of medicine had an average of 69.4 faculty-level researchers per department, larger than the average per depart- ment of 21.2 for all,, 1,255 departments represented in the study. In the clinical fields, physician/researchers must allocate their time to patient care and residency teaching as well as research. This may contribute to a research environment in departments of medicine that is not comparable to that in the biological sciences. Excluding departments of medicine, medical schools had nearly twice as many researchers per institution as graduate schools, 115.2 to 61.5, and medical schools outspent graduate schools by $7,600 to $5,400 on new research equipment in FY 1983 per researcher. Medical schools also had nearly twice as many 4-5 PAGENO="0787" 781 researchers per institution as graduate schools, 115.2 to 61.5. Per institution, medical schools spent about two and a half tines as much as graduate schools for research equipment in FY 1983. Private schools spent nearly twice as much for research equipment per researcher as public institutions. Expenditures per institntion for private schools were $744,100, compared to $570,500 for public institutions. 4.3 Summary In the biological sciences and in departments of medicine, instrumentation-related expenditures accounted for about $223 million in FY 1983. Nearly three-fourths went for purchase of research equipment costing $500 and up, with one-sixth going for maintenance and repair. Purchase of computer-related services showed the widest variation among departments. Expenditures for research equipment in FY 1983 were analyzed on a per capita and per institution basis. For all departments, the expenditure rate was $5,900 per faculty-level researcher. However, for departments of molecular/cellular biology, expenditures per researcher were $21,800, far greater than those for other types of departments. Apparently, there was a large influx of money into this field in FY 1983. Medical schools in general had higher expenditures for research equipment than graduate schools within the biological sciences. Expenditures per researcher were 40 percent higher in medical schools, and medical schools spent two and a half times more than graduate schools, per institution,, for research equipment in FY 1983. 4-6 PAGENO="0788" 782 Private institutions spent nearly twice as much per researcher and 30 percent more per institution than did institutions under public control. 4- 7 PAGENO="0789" 783 5. THE NATIONAL STOCK OF ACADEMIC RESEARCH EQUIPMENT A major objective of this survey is to provide baseline estimates for the numbers and costs of instrument systems devoted to research in the nation's universities and medical schools. This chapter also provides estimates for the proportions of instrumen systems consider~d state-of-the-art and obsolete, and unit costs of existing equipment per researcher, doctoral degree granted, and institution. These estimates are important indicators of the current national stock of academic scientific research equipment. Furthermore, as a baseline against which future changes can be measured, they will be the initial points for determining trends in the status of academic research equipment. The format of the tables around which discussion will be organized is that appropriate to subfields of research. The data were obtained from the Instrument Data Sheet of the survey, rather than from the Department/Facility Questionnaire used for the two preceding chapters. Each instrument was classified according to the subfield of scientific research in which it was employed, rather than according to the department that carried it on inventory. 5.1 Number and Cost of Instrument Systems Table 5-1 shows the numbers of instrument systems for graduate schools and medical schools. Between the two settings, there are over 21,000 systems. However, medical schools have more than twice as many systems as graduate-schools. 5~ 1 PAGENO="0790" TABLE 01 AMOUNT OF ACADEMIC REEEARCF EQUIPMENT. BY SETTING INSTRUMENT SYSTEMS IN 1903 NATIONAL ETOCK BIOLOGICAL AND MEDICAL SCIENCES NUMBER AND PERCENT OF SYSTEMS---- SETTING GRADUATE MEDICAL TOTAL SCHOOLS SCHOOLS 01480 7010 0446? 100% 1000 1000 4479 1543 2936 21% 220 200 1640 533 1107 8% 87. 6% 0943 1460 1483 140 210 100 2720 734 1986 13% 100 14% 538 79 459 3% 10 3% 0014 69 940 5% 10 77. 0089 186 1903 10% 3% 13% 501 328 173 2% 57. 1% 469 447 22 27. 60 - 410 393 18 2% 6% - 1656 1103 553 87. 167. 4% 2836 57 2779 03% 10 197. 191 84 107 1% 00 1% 784 TOTAL SUBFIELD OF RESEARCH BIOCHEMISTRY MICROBIOLOGY MOLECULAR/CELLULAR BIOLOGY PHTSIOLOGY/EIOPHYSI CS ANATOMY PATHOLOGY PHARMACOLOGY/lOS ICOLOGY ZOOLOGY /ENTOEOLOGY BOTANY FOOD AND NUTRITION BIOLOGY, GENERAL AND N.E.C. MEDICAL SCIENCES/DEPIB MED INTERDISCIPLINARY, N.E.C. INSTITUT000 CONTROL PRIVATE PUBLIC 7180 14305 67% 2204 4976 31% 34% 4512 9493 69% 660 5-2 PAGENO="0791" 785 The number of instrument systems in the various sub- fields of research ranged widely, with a larger number in bio- chemistry than in any other subfield -- almost 4,500 (21 percent of all instrument systems). The subfields of botany, zoology, and food/nutrition, found almost exclusively in graduate schools, and anatomy, a medical school subfield, had relatively few sys- tems. Five of the larger subfields -- biochemistry, micro- biology, molecular/cellular- biology, physiology/biophysics, and general biology -- had significant representation in both settings. Instrument systems used in pathology, pharmacology, and medical sciences were located almost entirely in medical schools. Turning to the aggregate purchase costs of equipment shown in Table 5-2, the original purchase cost for all $lO,000+ equipment in the biological sciences and departments of medicine was about $555 million. The dollar value (aggregate purchase cost) of existing equipment in the fields surveyed was twice as great in medical schools as in non-medical schools. Using the Machinery and Equipment Index of the annual Producer Price Index, these costs were converted into constant 1982 dollars. The total cost was estimated at $863 million. The variation of aggregate costs among the subfields approximates that found for numbers of instruments. Appendix Table A-4 provides the numbers of instrument systems and their costs for all fields of research. Of all instruments found in both Phase I and Phase II of the study, the biological sciences accounted for 38 percent -- more than any other field. In aggregate costs biology was second by a small amount to the physical sciences, although the latter possessed only 25 percent of the instrument systems. The field with the third largest numberof. systems was engineering, with 20 percent; all other fields had between 2 and 6 percent of the instrument systems. 5-3 PAGENO="0792" 786 TABLE 72 AO7.RETATE COST OF ACADEF.IC RESEARCH ESUIPSENT~ BY SETTING INSTRURENT OYSTERS IN 1953 NATIONAL STOCK: SIDLOGICAL AND MEDICAL SCIENCES 500LLARS IN MILLIONS) COST OF SYSTEMS AND PERCENT OF COST SETTING TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS COST IN COST IN COST IN ORIGINAL CONSTANT ORIGINAL CONSTANT ORIGINAL CONSTANT PURCHASE 1982 PURCHASE 1982 PURCHASE 1982 COST DOLLARS COST DOLLARS COST DOLLARS $505.7 $063.6 $175.) $272.2 $380.4 $591.4 1007. 100% 100% 100% 100% 100% TOTAL SUBFIELD OF RESEARCH BIOCHEMISTRY 104) 108.9 36.9 53.9 67.4 100.0 197. 16% 21% 20% 16% 16% T1CROOIOLDGY 40.B 64.1 12.8 20.7 28.0 43.0 77. 7% 7% 8% 7% 7% TOLECULARICELLULAR SIOLOGY 84.5 124.8 38.6 58.5 45.9 66.3 15% 14% 22% 21% 12% 11% FHYSIOLOGY/BIOFHYEICS 73.9 112.0 18.1 28.8 00.7 83.2 13% 13% lOX 11% 15% 14% ANATOMY 17.4 31.7 2.1 3.7 15.4 27.9 3% 4% 1% 1% 4% 0% PATHOLOGY 31.5 53.9 2.1 3.8 29.4 50.2 6% 1% 1% 8% 6% F!-ARMACOLDTY/TOXICOLOGY 46.8 69.0 3.8 5.2 43.1 63.8 El 8% 2% 2% 11% 11% 200L0GY/ENTOP1OLOGY 13.1 20.6 7.3 11.9 0.8 8.7 27. 2% 4% 4% 2% IX BOTANY 11.4 16.3 10.3 15.2 1.1 1.1 2% 2% 6% 6% - - FOOD AND NUTRITION 8.9 13.3 8.0 12.9 .4 .5 .2% OX 5% 5% - - BIOLOGY GENERAL AND N.E.C. 47.3 82.2 31.0 52.4 16.3 29.8 9% lOX 187. 19% 4% OX REOICAL SCIENCES/DENS NED 69.1 107.2 1.0 1.3 68.1 106.0 12% lOX 1% - 18% 10% INTERDISCIPLINARY, N.E.C. 6.8 9.3 2.9 3.8 3.9 5.5 1% IX 2% 1% IX IX INSTITUTION CONTROL PRIVATE PUBLIC 203.8 299.4 58.7 84.0 140.1 215.4 - . 377. 35% 337. . 31X 38% 36% 351.9 564.2 116.6 188.2 235.3 376.0 63% 65% 67% 6fl 62X 64% 5-4 PAGENO="0793" 787 Overall, about three-fourths of existing research instruments in the survey cost range fell in the $10,000 to $24,999 range, and only five percent cost $75,000 or more (Table 5-3). The cost pattern varied considerably among the subfields, however. More than 75 percent of the instruments in biochemistry, microbiology, pharmacology, botany, and medical sciences were in the lowest cost category. The other subfields ranged downward to a low of 55 percent for anatomy. A differencewas also found between the biological sciences (72 percent in the lowest cost group) and departments of medicine (78 percent in that group). The distribution of aggregate purchase costs among the cost categories (Table 5-4) indicated that the 5 percent of all instruments costing $75,000 or more actually consumed 24 percent of all the money spent on major equipment purchases. Private institutions had 32 percent in the upper cost category, compared to 20 percent for public institutions. With the exception of agriculture, all other fields of science had a higher proportion of systems costing $75,000 or more than did biology (see Appendix Table A-5). For the physical sciences, 47 percent were in this group, and for engineering 40 percent. Computer science had 57 percent, with materials science and the environmental sciences having almost as much. 5.2 Unit Costs With varying numbers of instruments and users in the different institutions and subfields of research, it is useful to examine aggregate instrumentation costs in terms of units, such as the number of instrument systems, the number of researchers, and the number of doctoral degrees awarded within a subfield. 5-5 PAGENO="0794" SUBFIELD. OF RESEARCH BIOCHEMISTRY PATH OLOGY PHARMACOLOGY/TOOICDLOGY ZOOLOGY/ENTOMOLOGY DEPARTMENTS OF MEDICINE INSTITUTION CONTROL PRIVATE PUBLIC TOTAL `PHYSIOLOGYIBIDPHYSICS 788 TABLE 1-3 DISTRIBUTION OF ACADEMIC RESEARCH ENUIPIIENT. BY SYSTEM COST RANGE INSTRUMENT SYSTEMS IN 19B3 NATIONAL STOCK' BIOLOGICAL AND MEDICAL SCIENCES NUMBER AND PERCENT OF SYSTEMS ORIGINAL PURCHASE COST $10000- $05,000- $75000- TOTAL $24,999 $74999 RI 000000 21470 15638 4826 1006 1000 731 220 50 4479 3475 893 110 1000 7B1 200 20 MICROBIOLOGY 1640 0239 343 58 1000 760 210 41 MOLECULAR/CELLULAR BIOLOGY 2939 1939 860 139 1000 660 290 50 2720 1951 627. 142 1000 720 030 50 ANATOMY 535 290 200 43 1000 550 371 00 1014 609 306 90 1000 600 310 90 2089 1638 381 69 1000 780 . 180 30 493 357 107 28 1000 730 221 60 BOTANY 469 . 369 73 27 1000 790 . 160 60 FOOD AND NUTRITION 410 293 109 B 1000 710 270 20 BIOLOGY, GENERAL ANO N.E.C. 1656 1178 374 104 1000 711 231 60 MEDICAL 0CIENCES/DEFTS MED 2836 2173 498 16S 1000 770 180 60 191 125 43 23 1000 650 231 120 BIOLOGICAL SCIENCES. TOTAL 17582 12592 4164 826 1000 720 240 50 GRADUATE SCHOOLS 7006 5045 1678 283 1000 721 240 40 MEDICAL SCHOOLS 10577 7547 2486 543 1001 710 241 50 3880 3046 662 180 1000 780 170 Dl 7167 5092 . 1640 434 1000 710 031 60 04303 10546 318S 572 1000 740 220 40 INTERDISCIPLINARY, N.E.C. FIELD AND SETTING 5-6 PAGENO="0795" 789 TABLE 8-4 IISTRIBUTION IF AGGREGATE COSTS OF ACADEMIC RESEARCH ENUIYMENT, BY OYSTER COST RANGE INSTRUMENT SYSTEMS IN 1983 NATIONAL OTOCRI BIOLOGICAL AND MEDICAL SCIENCES EDOLLARS IN BILLIONS] -DOLLARS AND PERCENT OF AGGREGATE PURCHASE COST- -ORIGINAL SYSTEM PURCHASE COST--- N1O,000- $25,000- $75,000- TOTAL N04.999 $74,999 $1,000,000 TOTAL $564.1 NO43.O $184.6 $136.4 1005 435 331 245 SUBFIELD OF RESEARCH BIOCHEMISTRY 104.8 00.6 32.4 16.9 1002 535 315 165 HICROBIOL009 40.9 19.7 12.8 8.5 1001 4S2 311 215 MOLECULAR/CELLULAR BIOLOGY $4.8 30.0 33.0 01.7 1002 351 395 265 PHYSIOLOGT/EIOPHYSICS 78.9 30.3 24.0 22.0 1005 391 315 292 ANATOMY 17.7 4.3 9.2 4.2 1002 245 322 245 PATHOLOGY 31,6 9.1 12.7 9.7 1005 092 405 315 PHAHRACOLOGY/TOIICOLOGY 40.0 25.6 13.7 8.8 1005 532 295 185 200LOGY/ENT000LOGY 13.1 1.4 4.2 3.5 1002 411 325 271 BOTANY 11.4 5.9 0.0 2.8 1005 512 232 242 FOOD AND NUTRITION 9.4 4.6 4.1 .7 1005 491 442 71 BIOLOGY, GENERAL AND N.E.C. 49.1 17.9 13.1 16.1 1002 362 311 332 MEDICAL SCIENCES/DEPTS MED 69.5 32.0 18.7 17.9 1002 472 072 261 INTERDIDCIFLIIqART. N.E.C. 6,S 1.0 2.0 3.0 1002 262 291 452 FIELD AND SETTING BIDLO2ICAL SCIENCEI, TOTAL 469.8 198.9 138.5 114.4 1002 421 342 242 GRADUATE SCHOOLS 177.6 77.5 62.0 35.1 1002 442 302 212 MEDICAL OCHOOLS 292.0 119.4 96.4 76.3 1002 411 332 262 DEPARTMENTD OF MEDICINE 94.3 48.1 28.0 22.0 1002 492 005 232 INSTITUTION CDNTBOL PRIVATE 229.1 79.0 63.7 66.9 1002 392 301 322 PUBLIC 354.5 164.0 120.9 69.6 1002 462 345 205 5-7 PAGENO="0796" 790 Table 5-5 shows mean purchase costs per institution and per instrument system. Overall, the dollar cost of the current instrumentation inventory in medical schools is nearly four times as large per institution as it is in graduate schools. In this table, medical school totals include the aggregate costs of instrumentation in departments of medicine, so the aggregate cost per institution for only the biological sciences in medical schools w5uld be $3,176,000 -- about three times the mean amount per graduate school. This difference is about the same as that noted earlier in analyses of FY 1983 equipment expenditures (see Table 4-2). For most subfields (except those located almost entirely outside medical schools -- botany, general biology, etc), the average dollar amount of research equipment per institution was substantially higher in medical schools than in other academic institutions. Public institutions, primarily because they were larger and contained more departments, had slightly larger dollar amounts of research equipment per institution than private schools. Turning to mean costs per instrument system, there was a notable difference between medical and graduate schools, with medical schools having invested about $1,000 more per instrument system on the average. T.he difference appeared consistently among the subfields as well. In private institutions the average system cost $29,200, considerably more than the $24,800 cost found in public institutions. The mean cost of instrument systems in the biological sciences can be compared with mean instrument costs for other fields of science (see Appendix Table A-4). The mean for bio- logical sciences ($27,000) was the lowest for any field except agriculture. Computer science had the highest mean cost, $54,000. Costs for environmental sciences averaged $47,000, and the mean was $41,000 for the physical sciences. 5-8 PAGENO="0797" 791 IABL.E ~ MEAN AGGREGATE ORIGINAL PURCHASE COST OP ACADEMIC RESEARCH EGUIPRENT PER INSTITUTION AND PER INSTRUMENT SYSTEM, BY SETTING 1NSTRUP.ENT SYSTEM! iN 1983 NATIONAL STOCK; BIOLOGICAL AND MEDICAL SCIENCES IPIEAN COST DOLLARS IN THOUSANDS3 COST PER COST PER INSTITUTION INSTRUMENT SYSTEM GRADUATE MEDICAL GRADUATE MEDICAL SCHOOLS SCHOOL! SCHOOLS SCHOOLS TOTAL $3116.6 94.135,0 $23.0 $26.3 SUBFIELD OF RESEARCH BIOCHZGISTV~Y 235.? 732.2 23.9 23.0 MICROBIOLOGY 61.7 303.9 24.0 25.3 PIOLECULARICELLULAR BIOLOGY 24A.O 496.9 26.4 31.0 PHYSIOLOGY,DIDPHySICS 113.4 605.6 24.7 26.0 ANATOMY 13.1 166.9 26.6 33.6 13.1 319.6 30.4 31.1 24.0 466.1 20.4 22.6 46.4 63.4 22.3 33.3 65.7 11.9 23.0 * FOOD AND NUTRITION 53.9 4.3 21.6 BIOLOGY. GENERAL AND N.E.C. 197.3 177.1 26.1 29.5 MEDICAL SCIEDCES/DEPTS MED 6.3 740.6 17.5 24.3 INTERDISCIPLINARy, N.E.C. 16.4 42.2 34.5 36.4 -INSTITUTIOD CONTROL PRIVATE l.107.4 3.628,6 26.6 29.2 PUBLIC 1.12I.4 4,524.6 24.2 24.8 * NUMBER OF CASES IN THE UNDERLYING SAYPLE WAS INSUFFICIENT FOR A RELIABLE ESTIMATE. PATHOLGGY FHARñACOLOGYI TOE ICGLOGY ZOILOGYIEGT000LDGY BGT.~NY 5-9 PAGENO="0798" 792 Since the amount of research activity in the several biological science subfields varies considerably, numerical com- parisons among the subfields are dominated by the relative `size" of the enterprise. In an attempt to normalize between-subfield comparisons, instrument numbers and costs were calculated per researcher and per doctoral student. The resulting ratios are only indices and do not represent actual one-time costs per researcher- or per degree awarded. In Table 5-6, mean aggregate costs of existing instru- ment systems per researcher and per doctoral degree awarded are shown by field and setting and by institution control. The numbers of researchers and doctoral degrees are also shown in Table 5-6. The overall mean aggregate cost of equipment per researcher was $21,000. There was a sizable difference in the biological sciences, however, between medical schools (where the mean is $27,600 per researcher), and graduate schools (with a mean of $18,400 per researcher). For private institutions the cost per researcher was $25,000, while for public institutions it was $19,400. These aggregate equipment costs per researcher may be compared with the analogous FY 1983 expenditures shown in Table 4-2. The ratio of aggregate equipment cost per researcher for medical schools to graduate schools is 1.5; for 1983 equipment expenditures, the ratio is 1.41. The corresponding ratios for private institutions *to public institutions are 1.29 for aggregate equipment costs and 1.69 .f or 1983 equipment expenditures. Another comparison is the ratio of the biological sciences in medical schools to departments of medicine. For aggregate equipment costs that ratio is 1.86; it is 1.85 for 1983 equipment expenditures. 5-10 PAGENO="0799" 793 TABLE 5-6 MEAN AGGREGATE PURCHASE COST CF ACADEMIC RESEARCH EQUIPMENT PER DOCTORAL DEGREE AWARDED AND PER FACULTY-LEVEL RESEARCHER INSTRUMENT SYSTEMS .11) 1963 NATIONAL STOCK; BiOLOGICAL AND MEDICAL SCIENCES EMEAN COST DOLLARS IN THOUSANDS3 FACULTY-LEVEL DOCTORAL DEGREES El) RESEARCHERS (2) COST PER COST PER NUMBER DEGREE NUMBER RESEARCHER TOTAL 3,275 $172.2 26.635 $21.2 FIELD AND SETTING BiOLOGICAL SCIENCES, TOTAL 3, 275 143.5 20.246 23.2 GRADUATE SCHOOLS 1~946 91.3 9,654 16.4 MEDICAL SCHOOLS 1,329 219.9 10,594 27.6 DEPARTMENTS OF MEDICINE - - 6.386 14.6 INSTITUTION CONTROL PRIVATE 919 226.0 6,366 25.0 PUBLIC 2,362 150.1 18.268 19.4 -CI) RESEARCH DOCTORATES AWARDED DURiNG 1952-93 DV DEPARTMENTS IN THE GRADUATE AND MEDICAL SCHOOLS OF THE SURVEY UNIVERSE, AS REPORTED DY DEPARTMENT HEADS. (23 NUMBER OP FACULTY AND E0'JIVALENT NON-FACULTY RESEARCHERS (FULL-TIME AND PART-TIME) WHO PARTICIPATE IN ONGOING RESEARCH PROJECTS AND WHO ARE MEREERS OF THE DEPARTMENTS OF THE GRADUATE AND MEDICAL SCHOOLS IN THE SURVEY UNIVERSE, AS REPORTED DY DEPARTMENT HEADS. 5-11 PAGENO="0800" 794 Of course, the expenditures for 1983 are reflected in the aggregate equipment costs. The 1983 numbers, however, are the latest available single year estimates of level of investment in research instrumentation for the institutions and fields repre- sented in this survey, while aggregate costs are an accumulation of more than 15 years of equipment investments. There is a notable consistency in the patterns these two sets of statistics follow, suggesting that current expenditure levels are generally consistent with long-range historical trends. However, for the comparison of private and public institutions, the ratios show a wider gap for 1983 equipment expenditures than for the long term aggregate costs. While this is an observation for only one year, this finding suggests that the long-standing gap in equipment expendi- tures between private and public institutions may be increasing. The average dollar amount of instrumentation per doc- toral degree awarded in the biological sciences was $143,500. Biological science departments in medical schools had a far higher mean per degree than did graduate schools, $219,860 to $91,300. Since departments of medicine do not award doctoral degrees, this statistic is not applicable to them. Private institutions' mean amount of equipment per degree was $228,000, compared to $150,000 for public institutions. The dollar amount of research equipment per doctoral degree can be estimated for each subfield, but it is necessary to consult another source for the denominator data. The National Research Council conducts an annual survey of doctorate recipi- ents and reports not only by broad discipline, but also by fine field within disciplines.11 By grouping the data for the fine 11Summary Report 1983, Doctorate Recipients from United States Universities, Office of Scientific and Engineering Personnel, National Research Coüñcil, National Academy Press, 1983, p.47. 5-12 PAGENO="0801" 195 fields to correspond to the subfield categories used in this study it was possible to compute the mean dollar amount of research equipment per doctoral degree, by subfield. To smooth out the effects of annual fluctuations, especially for subfields with small numbers of degrees, the mean annual number of doctorates awarded, averaged over the four-year period, 1980 to 1983, was used as the denominator in the calculations. Table 5-7 shows that the annual number of doctoral degrees, 3,864, is larger than the 3,281. found earlier from the data reported by depa~rtment heads. The difference results primarily from the larger base of institutions from which the National Research Council (NRC) collected its data. While the base of institutions for this.study was the 249 universities and medical schools that collectively spend 95 percent of the nation's R&D funds, NRC used all doctorate-granting institutions. The aggregate costs of instrument systems per doctoral degree awarded for biological sciences as a whole becomes $121,600 by~this measure. The subfields of research varied widely in instrument costs per degree awarded. The four subfields that are almost entirely located in graduate schools -- zoology, botany, food! nutrition, and general biology -- were far lower in mean dollar amount of research equipment per degree than the other subfields. At the upper end was pathology (largely a medical school field) with a mean of $310,000 of equipment per degree. Molecular! cellular biology, physiology/biophysics, biochemistry, and pharmacology also had means of over $160,000 in research equip- ment per degree. The remaining fields had substantially lower amounts of equipment per degree than those mentioned. 5-13 53-277 0 - 86 - 26 PAGENO="0802" 796 TABLE 1-7 AVERAGE NWIDER O~ DOCTORATES AWARDED ANNUALLY FROPI 19BD TO 1983 AND AGGREGATE INETRUPIEP4T COSTS PER DECREE INSTRUMENT SYSTEMS IN 1903 NATIONAL STOCK; BIOLOGiCAL AND MEDICAL SCIENCES (DOLLARS IN THOUSAND!) NUMBER OP INSTRUMENT DOCTORAL COST PER DEGREES £13 DEGREE £23 DIOLOGICAL SCIENCES, TOTAL 3~864 $121.6 EUBTIELD OF RESEARCH BIOCHEMISTRY 653 160.5 MICROBIOLOGY 482 84.3 MOLECULAR/CELLULAR BIOLOGY 434 195.4 PHYS1DLDGY/BIOPHYSICS 401 191.8 ANATOMY 142 124.6 PATHOLOGY 102 309.8 PHARMACOLOGY/TOE ICOLOGY 272 176.5 200LCGY!ENTDTOLDGY 436 30.0 BOTANY 206 55.3 FOOD AND NUTRITION 219 42.9 BIOLOGY, GENERAL AND N.E.C. 514 95.5 (13 SOURCE OP DATA; SUMMARY REPORT 1983, DOCTORATE RECIPIENTS FROM UNITED STATES UNIVERSITIES OFFICE OF SCIENTIFIC AND ENGINEERING PERSONNEL, NATIONAL RESEARCH COUNCIL. NATIONAL ACADEMY PRESS. 1983. p.47. (23 AGGREGATE ORIGINAL PURCHASE COST. 5-14 PAGENO="0803" 797 5.3 State-of-the-Art and Obsolete Instrument Systems State-of-the-art instruments constituted 18 percent of all biological and medical science instruments in the 1983 national stock of academic research equipment (see Table 5-8). Other instruments in research use in 1983 accounted for an additional 65 percent of the national stock, so that a total of 83 percenf of all instrument systems in the national stock were in active research use in 1983. The remainderof the national stock consisted of a negligible number (less than one percent) of systems waiting to be put into service and 16 percent that were no longer in use although they were still physically present at their respective institutions. The instruments in the latter group were, presumably, technologically obsolete and/or mechanically inoperable. As compared to public institutions, private institu- tions have proportionately more state-of-the-art research equipment (23% of the private school national stock vs. 16% of the public school national stock). For the most part, however, there are remarkably few differences between institutions or subfields in the research status of the current stock of research equipment. Table 5-9 reveals that the 18 percent of instruments classified as state-of-the-art were responsible for 25 percent of the aggregate cost of all equipment in the national stock; these instruments had a mean cost of $36,200 per system. Other instruments in research use averaged $24,700 per system, and those no longer in research use averaged $21,100. Means were calculated by dividing aggregate costs in Table 5-9 by numbers 5-15 PAGENO="0804" 9451.! 58 RESEARCH STATUS OF ACADEHIC RESEARCH ESUIPRENT IROTRUNENT OYSTERS IN 1903 NATIONAL STOCR' BIOLOGICAL AND 5001CM. SCIENCES NURSER AND PERCENT OF SYSTENS --SYSTEN RESEARCH STATUS-------. ----IN RESEARCH USE--" HOT YET IN NO LONGER STATE-OF- RESEARCH IN RESEARCH TOTAL THE-ART OTHER USE USE 2*485 3881 1402* *42 3440 1002 152 650 II 161 2 373 - 82 O 186 - 111 O 101 32 41 338 22 121 O 87 162 17 223 22 222 3! 296 22 142 S 77 - 151 O 33 71 8 55 21 130 21 638 11 380 18 1034 10 362 O 0 798 TOTAL SUDFIELO OF RESEARCH BIOSHEHISTRY 4479 801 3304 1000 180 741 HICROBIOLOSY 1840 242 lEON 1002 ISO 742 HOLECU1.ARICELI.UI.NR BIOLOGY 2943 832 2010 1002 282 652 PHTSIOLOOY/SIOPHYSICS 2700 SIt 1822 1000 190 670 ANATOHY 038 135 316 *002 251 090 RATHDL009 1014 175 601 1001 172 592 PHARIRACOLOOTFTOIICGLOGY 2S0~ 237 1524 1000 1.10 731 001LOOY/ENTONOLOOY 501 *24 098 1002 251 590 BOTANY 469 106 330 1002 032 700 FOSS -AND NUTRITION 410 88 259 1002 222 632 8101.009, GENERAL AND N.E.C. 1856 177 821 *002 112 500 NEDICAL SCIENCESFDEPTS NED 2838 369 1415 1002 130 502 IHTERSISCIPLINARR. N.E.C. 191 77 114 1002 400 600 FIELD AND SETTING DIOLOGICAL SCIENCES. TOTAL ORA208TE SCHOOLS lOGICAL SCHOOLS OEPA#TRENTS OF PIED1CONE INSTITUTION CONTROL PRIVATE PUBLIC 17597 3251 1*8*6 124 2408 1002 *81 671 12 *41 7015 135! 4757 32 874 1001 192 682 - 122 10582 1899 7059 92 1532 1002 181 672 12 III 3858 631 2206 IN 1034 1002 162 571 - 271 7*80 1641 4522 44 973 1002 231 . 632 II 142 14305 2041 9500 98 2466 1001 162 662 12 171 5-16 PAGENO="0805" 799 AGGREGATE COST OF ACADEMIC RESEARCH EIUIPMENT BY OYSTER RESEARCH STATUS ONSTRUMENT SYSTEMS IN 1913 NATIONAL 010CR: BIOLOGICAL AND MEDICAL SCIENCES (DOLLARS IN NILLIBNS3 AGGREGATE PURCHASE COST AND PERCENT OF COBT-------- SYSTEM RESEARCH STATUS ----IN RESEARCH ABE--- NOT YET IN NO LONGER STATE-OF- RESEARCH IN RESEARCH TOTAL THE-ART OTHER USE USE TOTAL 8564.0 9140.5 9346.5 N4.5 872.6 1000 250 610 12 132 SUBFIELD OF RESEARCH BIOCHEMISTRY 104.8 20.7 72.2 .5 6.4 1552 052 692 12 62 MICROBIOLOGY 40.9 9.1 08.1 .0 3.6 1002 DOG 690 - 92 MOLECULAR/CELLULAR BIOLOGY 94.8 34.5 48.0 0 2.1 1002 410 572 32 PHYIISLSIYIBIOPHYSIC$ 78.9 2U.2 49.4 .9 6.5 1522 260 642 12 Ri ANATOMY 17.8 4.4 10.7 S 2.6 1002 252 602 152 PATHOLOGY 31.8 6.U 19.3 .5 5.8 1502 192 612 20 IRS. PHARMACOLSGY/TOIICOLOGY 48.0 9.1 31.0 .9 7.0 1000 190 652 02 150 ZOOLOGY/ENTOMOLOGY 13.1 3.8 7.7 .5 1.6 1002 290 590 - 120 BOTANY 11.4 3.6 7.0 5 .6 1002 300 632 50 FOOD AND NUTRITION 9.4 0.4 5.4 .5 1.1 1002 252 582 52 102 BIOLOGY, GENERAL AND N.E.C. 49.1 8.7 20.1 .6 14.8 1001 IRS 510 12 300 MEOICHL SCIEHCEI/DEPTS RED 69.5 11.2 37.4 .3 20.5 0002 162 540 - 302 INTERDISCOPLINARY, N.E.C. 6.B 2.0 4.8 0 1005 300 710 FIELD HNS SETTING BIOLOGICAL SCIENCES, TOTAL 469.8 121.8 091.7 4.0 00.1 1000 062 622 00 112 GRADUATE SCHOOLS 177.6 46.2 110.8 1.7 18.9 1002 262 602 12 112 MEDICAL OCHOSLU 292.2 75.7 180.9 2.5 33.2 1002 262 602 12 112 DEPARTMENTS OF MEDICINE 94.3 18.7 54.8 .3 20.5 1502 200 582 - 221 INSTITUTION C2NTRSL PRIVATE 209.6 65.3 120.0 1.8 22.5 1052 312 572 12 112 PUBLIC . - 354.5 75.3 226.5 2.7 50.1 1002 212 642 12 142 5-17 PAGENO="0806" 800 of systems from Table 5-8. These average costs must be inter- preted with some caution, however, for state-of-the-art instru- ments were acquired almost entirely within the last five years, as will be shown in the following chapter on Age and Condition of Equipment. Other instruments still in research use had a much broader spread of acquisition dates, while the majority of those no longer in research use were over 10 years old. Infla- tion was a significant factor over this period of time, and expenditures for instruments in each of these research status categories were affected differently by inflation. Among subfields, there were substantial differences in mean costs of state-of-the-art systems. General biology1s state- of-the-art instruments cost an average of $49,200, and those for molecular/cellular biology cost an average of $41,500. Those with the least expensive state-of-the-art instruments were food/ nutrition ($27,300) and medical sciences ($30,300). The mean cost of state-of-the-art instruments in biochemistry, the sub- field with the largest number of items, was $32,100. Private institutions again showed a bias toward more expensive equipment, with a state-of-the-art average of $39,800, as compared to a $33,600 average for public institutions. 5.4 Summary There were over 21,000 instrument systems, with an esti- mated aggregate original purchase cost of $555 million, in the biological sciences and departments of medicine encompassed by this survey. The cost of these instrument systems in constant 1982 dollars was estimated to be $863 million. The largest single subfield of the biol~gical sciences, with nearly 4,500 instru- ments in the $10,000 to $1 million cost range, was biochemistry. 5-18 PAGENO="0807" 801 The biological sciences had more instrument systems than any other field of science surveyed, 38 percent. The physical sciences had 25 percent of all systems, but their aggregate cost was slightly greater than that for the biological sciences. The mean cost per instrument system for biological sciences was $27,000, the lowest for any field of science except agriculture. By comparison, the average cost per instrument for physical sciences was $41,000. About five percent of all instruments included in the study had an original purchase cost between $75,000 and $1 million; however, these accounted for about one-fourth of the aggregate cost of all extant research instrument systems costing over $10,000. Almost three-fourths of the systems cost between $10,000 and $24,999. Medical schools spent three times as much per institu- tion for instrumentation in biological sciences as graduate schools. The mean dollar. amount of equipment per researcher for the biological sciences, about $21,000 overall, was about 50 percent higher for medical schools than for graduate schools. For departments of medicine the cost per researcher was lower, about $15,000. This, apparently, was reflective of the excep- tionally large numbers of faculty-level researchers associated with departments of medicine. Private institutions had higher instrument investments per researcher than public institutions. The levels of the differences found for aggregate cost of equip- ment per researcher and per institution closely paralleled those found in Chapter 4 for FY 1983 equipment expenditures. Appar- ently, there is a consistency over time in relative expenditures for these groups. During 1982-83 the mean dollar amount of research instrumentation per doctoral degree awarded in the biological 5-19 PAGENO="0808" 802 sciences was $143,500. However, for medical schools the mean was $220,000, compared to $91,000 for graduate schools. Private institutions also had somewhat higher costs per doctoral degree awarded than public institutions. State-of-the-art instruments constituted 18 percent of the national stock, while instruments that were not state-of-the- art but were in active research use accounted for another 65 percent of the national stock. Another 16 percent were no longer in active use, apparently because of technological obsolescence or mechanical disrepair. State-of-the-art instruments cost, on the average, over $36,000 per instrument, but other instruments that were in active use (and were usually purchased earlier) cost a little less than $25,000 per instrument. There was also a difference in mean cost for state-of-theart instruments in favor of private institutions over public institutions, about $40,000 to about $34,000. 5-20 PAGENO="0809" 803 6 AGE AND CONDIT ION OF RESEARCH EQUIPMENT The age and operating condition of research instrumen- tation available to the nation s academic researchers has been the subject of many anecdotal reports, and it has been a major subject of inquiry in the present survey. It was disclosed in the preceding-chapter (Table 5-8) that, for the biological sciences and departments of medicine as a whole, 16 percent of the 1983 national stock of academic research instrumentation was not used at all during the year, apparently because of mechanical or technological obsolescence. A few new instruments were still being prepared for -use in the - laboratory. The remainder were actively used for research in 1983. In this chapter, statistics will first be presented on the age of all equipment in the national stock. Then, the emphasis will shift to instrument systems in active research use in 1983, the 83 percent of the national stock still in use. 6.1 Age of Research Equipment For the biological sciences and departments of medicine as a whole, 44 percent of the systems in the 1983 national stock were 5 years old or less, and 29 percent were between 6 and 10 years old. The remaining 27 percent were over 10 years old (Table 6-1). There was variation among subfields of research: three of the subfields that are predominately in graduate schools (zoology, botany, and food/nutrition) had more than half of their instrument systems in the one-to-five year age range. At the other extreme, anatomy and general biology had the highest proportions of systems over 10 years old, with 41 percent. for anatomy and 37 percent for general biology. - 6-1 PAGENO="0810" 804 ACE OF ACA009IC RESEARCH ENUIPNENT INSTR090NT OYSTERS IN 1983 NATIONAL STOCO) BIOLOGiCAL AND NEDICAL SCIENCES MENDER AND PERCENT OF SYSTENS SYSTEM AGE (FRON YEAR OP PURCHASE) UVER 10 1-5 YEARS 6-10 YEARS YEARS (1973 TOTAL (1979-93) (1974-78) OR SEFORE) TOTAL 01373 9408 6239 2706 1002 442 292 272 SUBFIELD OF RESEARCH BIOCHEMISTRY 4463 2024 1278 1)61 1002 422 292 262 MICROBIOLOGY 1633 630 266 439 1002 392 322 272 MOLECULAR/CELLULAR BIOLOGY 2933 1416 825 663 1002 482 292 232 PRYSIOLOCY/BIEP14TSICS 2703 1320 716 667 1S02 492 282 252 ANATOMY 238 21! 108 219 1002 392 202 412 PATHOLOGY 1014 390 296 328 1002 382 292 322 PHHRRACOLOOY/TSESCOLOGY 2005 925 599 258 1002 442 292 272 000LOCTIENT090LOCT 301 280 98 122 1502 362 202 242 BOTANY 469 247 112 110 1002 232 242 232 FEDS AND NUTRITION 400 207 101 92 1002 522 221 232 BIOLOGY. GENERAL AND N.E.C. 1631 487 544 800 1002 302 332 372 MEDICAL SCIENCES/OEPTO 000 2912 1170 911 73) 1002 402 322 262 INTERDISCIPLINARY. N.E.C. I!) 115 26 17 1002 622 302 92 FIELD AND SETTING BIDLECICAL SCIENCES. TOTAL 17009 7670 2027 4811 .1002 442 291 272 GRADUATE SCHOOLS 6966 3240 1821 1906 1002 472 262 272 MEDICAL SCHOOLS 10243 4431 3207 2906 1002 422 302 292 DEPARTMENTS OP MEDICINE 3864 1728 .1212 995 1002 451 312 232 INSTITUTION CONTROL PRIVATE 7142 3403 2118 161, 1002 482 302 232 PUBLIC 14231 ~O23 4121 4097 1002 422 292 292 6-2 PAGENO="0811" 805 Private institutions had 6 percent more instruments that were 1 to 5 years old than did public institutions, with 6 percent fewer in the over-b-year category. The biological sciences had somewhat older instrument systems than did most other fields of science (Appendix Table A-7). Several fields -- agricultural sciences, environmental, sciences, engineering, and particularly computer science -- had larger proportions of instruments that were from 1 to 5 years old than did the biological sciences. State-of-the-art systems constituted 18 percent of all biological and medical science instruments in the national stock (Table 6-2). The percentages of systems acquired each year that were still considered to be state-of-the-art in 1983 are charted in Figure 6-1. For example, 50 percent of the systems acquired in 1983 were state-of-the-art, while 41 percent of those pur- chased the year before were still state-of-the-art. This diminished to 37 percent of those purchased in 1981; it was down to 8 percent of those acquired during 1974 to 1978 and was practically zero for the earlier years. One conclusion is that f.ive years is essentially the outer limit for equipment to remain state-of-the-art, with the falling off starting after the first year. At private institutions, 23 percent of the instruments were classified as state-of-the-art, while 16 percent of those in public institutions were so classified. The decline with instru- ment age is roughly parallel for the two groups of institutions. The remaining tables in this chapter describe systems in active research use in 1983, a subset of all instruments in the national stock. Table 6-3 shows the age distribution of actively used equipment. Fifty percent were five years old or 6-3 PAGENO="0812" FIELD AND SETTING BIOLOGICAL SCIENCES~ TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS DEPARTMENTS OF MEDICINE INSTITUTION CONTROL PRIVATE PUBLIC 806 TABLE 6! PERCENT OF ACADEMIC RESEARCH ESUIPRENT THAT IS STATE-OF-THE-ART BY YEAR OF PURCHASE INSTRUMENT SYSTEMS IN 1983 NATIONAL STOCK BIOLOGICAL ~ND MEDICAL SCIENCES ---PERCENT OF SYSTEMS CLASSIFIED AS STATE-OF-THE-ART--- YEAR OF PURCHASE 1974- BEFORE TOTAL 1983 1982 1981 1980 1979 1975 1974 TOTAL 18% 80% 41% 37% 23% 22% 8% 2% 18% 49% 19% 83% 18% 48% 16% 84% 41% 38% 44% 38% 38% 44% 40% 32% 28% 19% 9% 2% 26% 16% 12% 1% 24% 22% 7% 3% 15% 32% 4% 1% 23% 83% 42% 44% 28% 30% 10% 2% 16% 48% 40% 33% 22% 18% 6% 2% 6-4 PAGENO="0813" 807 Figure 6-1. Percent of Equipment in the Netional Stock ThQt Is St~te-of-the-4rt in-I 963, by Year of Purchase. ip ~ 1983 1982 1981 1980 1979 1978 1977 1976 1975 1974 1973 and ~ar1ier Year Equipment was Purchased 6-5 PAGENO="0814" 808 TABLE 6-3 ACE OF ACADEMIC RESEARCH EQUIPMENT INBTRUMENT SYSTEMS IN RESEARCH USE IN 19533 BIOLOGICAL AND MEDICAL SCIENCES --NUMBER AND PERCENT OF IN-USE SYSTEMS SYSTEM AGO (FROM YEAR OF PURCHASE) OVER 10 1-3 YEARS 610 YEARS YEARS (1973 TOTAL (1979-83) (1974-78) OR BEFORE) TOTAL 17855 8896 0117 3B43 1000 001 .91 220 SUBFIELD OF RESEARCH BIOCHEMISTRY 4097 0006 1110 981 1000 491 270 240 MICROBIOLOGY 1430 613 526 312 1001 420 361 212 MOLECULAR/CELLULAR BIOLOGY 2832 1406 824 602 1000 500 290 211 PHYSIOLOGY/BSOFHYIICS 0331 1261 612 457 1000 040 262 202 ANATOMY 430 208 ¶5 105 1000 441 210 350 PATHOLOGY 770 334 038 003 1000 430 310 261 PHARMACILOGY/T001COLOGY 1736 BOB SIN 381 1022 490 290 221 000LOGYIENTOROLOGY 422 263 86 AM 1000 632 201 162 BOTANY 436 243 103 09 1000 060 240 200 FOOD ANG NUTRITION 343 198 RU 60 1001 182 050 182 BIOLOGY GERERAL AND NEC. 986 402 300 233 1000 412 360 241 MEDICAL SCIERCES/OEFTO BED 1704 989 211 284 1002 000 292 162 INTERDISCIPLINARY. N.E.C. 1,0 118 06 17 1000 621 300 92 FIELD AND SETTING BIOLOGICAL DCIEHCES TOTAL 10019 73(9 4303 3393 1000 492 292 232. GRAOUATE SCHOOLS 6288 3132 1368 1387 1002 OIl 260 231 REDICAL SCHOOLS 8931 4187 2737 2008 1002 471 312 222 DEPARTMENTS OF MEDICINE 2836 1377 811 447 1001 060 291 162 INSTITUTION CONTRIL PRIVATE 6136 3284 1787 1060 1001 042 291 171 PUBLIC 11719 0612 3329 3778 1001 482 281 242 6-6 PAGENO="0815" 809 less., 29 percent were from 6 to 10 years old, and 22 percent were over 10 years old. The major difference :befween these and the national stock statistics shown in Table 6-1 was in the number of instrument systems that were over 10 years old. This difference of 1,863 systems in the over-b--years old category was 54 percent of the total number of systems that were no longer in research use (Table 5-8). Thus, as would be expected, obsolete and mop- erable equipment tended to be older. All the subfields had substantial numbers of instru- ments removed from the over-l0-years old category in the change from national stock to instruments actively in research use. The subfields with the largest proportions of instruments removed were general biology and medical sciences. Even after removal of instruments not in use, 35 percent .of the in-use instruments in anatomy were over 10 years old, more than any other subfield. Apparently, older instruments are more useful in research for this discipline than for the other subfields. Departments of medicine displayed a different pattern than the biological sciences in age of instruments in research use. They had 56 percent of their instruments in the 1-to-S year range, compared to 49 percent for the biological sciences, and they had 16 percent over 10 years old, whereas the biological sciences had 23 percent in this category. The contrast between departments of medicine- and the biological sciences extends to their difference in prevalence'of instruments no longer in research use. Departments of `medicine contained twice the proportion of such instruments as biological sciences in the national stock (Table 5-8). When these were removed from the count to determine the proportions of instru- ments actually in research use it was discovered that only 44 percent of the instruments that were no longer in use in G-7 PAGENO="0816" 810 departments of medicine in 1983 were over 1Q. years old, whereas for the biological sciences 60 percent of those no longer in use were over 10 years old. This difference indicates a tendency to discard instruments at an earlier age in departments of medicine than in the biological sciences. It also suggests that fields, institutions, or departments that have large amounts of unused, retired instrumentation lying about are not necessarily ill- equipped. In some circumstances, this may actually indicate a comparatively well-funded instrumentation situation. There was a difference between private and public institutions in age distribution. For private institutiom~, 54 percent of in-use systems were from 1 to 5 years old, and 17 percent were over 10 years old. For public institutions the comparable figures were 48 percent for instruments 1 to 5 years old and 24 percent for those over 10 years old. Compared with other fields of science (Appendix Table A-8), the tendency of the biological sciences to have older instrument systems becomes even more pronounced when only those systems still in active use are examined. In the instrument age range of 1 to 5 years, the differences between biology and the other fields were somewhat larger for instruments in active use than they were for the full national stock. State-of-the-art systems constituted 22 percent of all those that were in use during 1983. This percentage was calcu- lated from the data in Table 5-8, after eliminating the inactive equipment. The age distribution of state-of-the-art instruments in active use is shown in Table 6-4. For all subfields combined, 85 percent were between 1 and 5 years old. Anatomy and general biology, however, had only about 65 percent of their state-of- the-art instruments in the 1 to 5 year group. For departments of medicine, 91 percent of the state-of-the-art instruments were 6-8 PAGENO="0817" 811 AGE OF ACADENIC RESEARCH ENUIPRENT STATE-OF-THE-ART INSTRUNERT OYSTERS IN RESEARCH USE IN 1953' BIOL500CAI. AND NEDICA(. SCIENCES RWIBER AND PERCENT OF STATE-OF-THE-ART SYSTESS OYSTER AGE lYNCH YEAR OF PURCHASE) OVER 10 1-2 YEARS 6-10 YEARS YEARS (1973 TOTAL 1979-83) 11914-78) OR BEFORE) TOTAL 3864 3289 482 114 1002 852 122 32 SUBFIELD OF RESEARCH BIOCHENISTRY 796 709 67 20 1002 890 82 32 RICR0010LOGY 242 2)2 31 1000 872 130 ROLECULAR/CELLULAR BIOI.IGY 832 627 150 22 1000 792 182 32 PHYSIOLOGY/BIOPHYSICS 218 445 65 6 1002 862 132 12 ANATORY 132 9) 38 8 1000 680 272 62 PATHOLOGY 175 133 * 24 17 1002 782 142 102 PHARSACOLO0YITOSIcOLOOY 033 201 19 13 1002 862 82 52 100LOGY/ERTOROLOGY 124 017 1 6 1502 942 12 52 BOTANY 108 93 10 3 1002 082 92 32 FOOD AND NUTRITION 88 80 8 0 1002 902 10.2 BIOLOGY. GENERAL AND N.E.C. 171 109 51 11 1002 842 302 72 NEDICAL SCIENCESJOEPTS NED 389 356 10 3 1002 972 30 12 INTERDIOCIPL.INARY. N.E.C. 77 66 9 1002 882 122 22 FIELD AND SETTING BIOLOGICAL SCIENCES. TOTAL 3234 2896 434 103 1002 032 130 32 GRADUATE SCHOOLS 1348 1106 215 27 1002 802 182 22 REDICA). SCHOOLS 1886 1591 219 17 1002 142 122 42 OEPARTRENTS OF NEDICINE 831 572 08 II 1000 910 82 02 INSTITUTION CONTROL PRIVATE 1825 1378 214 38 1002 852 132 22 PUBLIC 2236 1092 280 76 1002 850 120 32 6-9 PAGENO="0818" 812 five years old or less, compared with 83:percent for the biological sciences. Overall, only 3 percent of state~of-the-art instruments were ten or more years old. The remaining instrument systems in research use were not state-of-the-art. This group had a very different age pattern than that for the state-of-the-art systems. Figure 6-2 illus- trates the contrast. Whereas 85 percent of the state-of-the-art systems were from 1 to 5 years old, the others were more widely distributed over the age categories: 40 percent were from 1 to 5 years old, 33 percent between 6 and 10 years old, 19 percent from 11 to 15 years old, and 8 percent over 15 years. 6.2 Condition of Research Equipment Aside from the age of the equipment, an important issue addressed by this study is how well academic research equipment is actually performing. The next two tables provide some insight into this question. Table 6-5 details how many of the instruments in active research use were in excellent working condition, and Table 6-6 reveals what function they served in the laboratory. About half of all instrument systems in the study were considered by the responsible research investigator to be in excellent working condition (Table 6-5). Since a relationship has already been found between the age of instruments and their removal from active research use (Table 6-3 and ensuing dis- cussion), it can reasonably be assumed that there is a relation- ship between the working condition of instruments and their age. This relationship is shown in Figure 6-3, which gives the per- centage of instruments in excellent condition by year of purchase, grouped into three-year periods. For instruments purchased between 1981 and 1983, 78 percent were in excellent condition. 6-10 PAGENO="0819" 813 Figure 6-2. Age Distribution of Academic Research Equipment in Active Research Use: 8iological and Medical Sciences. 100% __________ 8% 19% Cl) z U, cC C- z 0 L&J a- YEAR OF PURCHASE 1979-83 1974-78 1969-73 1968 AND BEFORE STATE-OF-THE NOT STATE-OF- ART THE-ART 6-1]. PAGENO="0820" TOTAL SUBFIELD OF AESEARCH BIOCHEMISTRY MICROBI OLOGY MOLECULAR/CELLULAR BIOLOGY PHYSIOLOGY/BIOPHYSICS ANATOMY PATHOLOGY PHARMACOLOGY/TOO ICOLOGY ZOOLOGY /ENT000LOGY BOTANY FOOD AND NUTRITION BIOLOGY~ GENERAL AND N.E.C. `MEDICAL SCIENCES/DEPTS MED INTERDISCIPLINARY, N.E.C. FIELD AND SETTING BIOLOGICAL SCIENCES TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS DEPARTMENTS OF MEDICINE INSTITUTION CINTROL PRIVATE PUBLIC B70 441. 830 44% 814 lADLE 6-S PERCENT OP ACADEMIC F:ESEARCN EQUIPOE~T IN EXCELLENT WORKING CONDITION, BY RESEURCH STATUS - INSTR500NT SYSTEMS IN RESEARCH USE IN 1982: BIOLOGICAL AND MEDICAL SCIENCES PERCENT CF SYSTEMS IN EXCELLENT WORKING CONDITION ----1983 RESEARCH STATUS---- STATE-SF-THE- OTHER IN-USE TOTAL ART SYSTEMS SYSTEMS 85% 44% 470 790 40% 49% 81% 42% 09% 900 46% 800 890 02% 080 810 48% 000 88% 37% 48% DIX 40% 64% 940 01% 35% 700 00% 600 860 01% 09% 890 02% 49% 810 41% 030 730 41% 03% 850 . 44% 04% 880 44% 02% 820 43% 05% 830 47% 6-12 PAGENO="0821" 815 TABLE 6-8 RESEARCH FUNCTION OF ACADEMIC RESEARCH ESUIPRENT THAT 25 USED FOR RESEARCH BUT IS NOT STATE-OF-THE-ART INSTRUMENT SYSTEMS IN RESEARCH-USE IN 1983: BIOLOGICAL AND MEDICAl. SCIENCES NURSER AND PERCENT SF NON STATE-OP-THE-ART SYSTEMS--- RESEARCH FUNCTION THE MOST ADVANCED USED FOR RESEARCH. BUT INSTRUMENT TO AHOCH MORE ADVANCED EQUIPMENT TOTAL STS USERS HAVE ACCESS IS AVAILABLE TOTAL. SELECTED FIELDS 13991 0787 5204 1000 412 192 SUBFIELD OF RESEARCH BIOCHEMISTRY NICROBIOLOGY MOLECULAR/CELLULAR BIOLOOY PHYSIOLOGY FBI OPHYSS CS ANAT DRY PATHOLOGY PHARMACOLOOY/TDSSCOLOOY 005LOGYIENTOMOLOOY BOTANY FOOD AND NUTRITION BIOLOGY. GENERAL AND N.E.C. MEDICAL. SCOENCES/OEPTS MED INTERDISCIPLINARY. N.E.C. FIELD AND SETTING BIOLOGICAL SCIENCES. TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS DEPARTMENT OF MEDICINE INSTiTUTION CONTROL PRIVATE PUBLIC 3300 1052 1235 372 -2564 632 I20~ 1002 488 400 721 602 1990 1002 746 382 I2N3 622 1818 1002 742 412 1076 590 318 1002 11, 572 136 432 601 1000 290 482 311 520 1504 1002 . 678 452 846 552 298 1002 181 612 * 117 390 330 1002 141 432 188 072 259 0002 148 572 * Ill 432 01, 1002 411 502 408 502 1405 1002 490 - 351 903 650 114 1002 54 472 60 11185 1002 4995 421 6790 382 4739 0002 ZOOS 422 2739 582 7047 1002 1995 432 4050 572 2206 1001 792 361 1413 642 * 4511 1002 1802 402 2709 600 9079 1000 3905 422 1494 582 6-13 PAGENO="0822" 816 crc cc) (1) U) Q z c-c cx 0~ Figure 5-3. Percent or Academic Research Equipment That s in Exceflent Working Condition, by Year of Purchase: ~iologica1 and Medical Sciences- 1981-1983 1978-1980 1975-1977 1972-1974 1969-1971 1968 ~nd before YEAR OF PUR~HA5E 6-14 PAGENO="0823" 817 The percentage drops for successive three-year periods to 21 percent for those purchased from 1969 tà 1~971. A small rise to 30 percent occurs for instruments 14 years and older. This small rise may be explained by another factor underlying the age-condition relationship. As shown in Figure 6-2, the proportion of instruments in active use decreases with age. Instruments that are in poor condition are routinely removed from use and disposed of, so that an ever-decreasing number of older instruments are retained in the laboratories. Thus, only 6 percent of all instruments in use are more than fifteen years old. Undoubtedly, these are the instruments that have been maintained sufficiently well to leave them in at least average working condition. Technological obsolescence is probably not a consideration for the functions that these instru- ments perform. State-of-the-art systems, recently acquired for the most part1 had 85 percent in excellent working condition. By contrast, only 44 percent of the non-state-of-the-art systems were rated as being in excellent condition. These other in-use systems constitute nearly 80 percent of the systems in active use. By itself, the existence of a substantial amount of non-state-of-the-art research equipment is not a problem. Even the best-equipped research facilities would be expected to have such equipment -- for use in routine analyses, as backups for more advanced instruments, etc. Non-state-of-the-art equipment is a problem only in situations where its users do not have access to more advanced equipment when needed. Table 6-6 shows that this problem situation is not uncommon: nearly half (41%) of all non-state-of-the-art instrument systems in research use 6-15 PAGENO="0824" 818 in the fields surveyed are the most advanced instruments of their kind to which their research users have access Among subfields, thereis. relatively little variation in the percent of instruments in excellent working condition. However, there is considerable variation in the percent of non- state-of-the-art instruments for which more advanced instruments are available. The subfields that hadthe largest;proportions of more advanced instruments available (over 60 percent) were medical sciences, biochemistry, and.molecular/ cellular biology..: The subfields that. had to rely more than half the time on non- state-of-the-art equipment as the most advanced available were anatomy, zoology, and food/nutrition. . Departments of medicine had advanced instruments available when needed more frequently than did the biological sciences. Other fields of science reported approximately the same proportions of instruments in excellent working condition as the biological sciences (Appendix Table A-9). However, biology had somewhat higher proportions.of instruments that were not state- of-the-art, for which more advanced equipment was available when needed, than did most other fields (Appendix Table A-b). The adequacy of research instruments in the biological sciences must be questioned when half of the equipment is in some degree of disrepair (i.e., is in less than excellent working condition and when nearly half of instruments that are not state- of-the-art are the most advanced to which investigators have access -- especially when these other instruments constitute nearly 80 percent of all equipment in use. Is the research corn- munity well .served by so widespread a lack in capabilities for front-line research? Granted that not every procedure in bio- logical research. requires the most advanced instrumentation, a number of disciplines appear to have too little advanced equipment compared to the subfields that are best endowed. 6-16 PAGENO="0825" 819 6.3 Summary For the subfields of research included in this study, 44 percent of the instrument systems in the 1983 national stock were from one to five years old, while 27 percent were over 10 years old. However, for the subset of systems actively used for research in 1983, the proportion of systems in the age range 1-5 years was a much larger 50 percent, and those over 10 years old constituted only 22 percent. Departments of medicine had a higher proportion of the newer instruments than the biological. sciences. They also replaced instruments more quickly. Private institutions had proportionately more of the newer instruments than public institutions and fewer of the older ones. Compared with other fields of science in the survey, instruments in the biological sciences tended to be somewhat older. The percentage of systems acquired in years prior to 1983 that were still considered state-of-the-art in 1983 fell off sharply with increasing age of the instrument. Of those purchased in 1983, 50 percent were considered state-of-the-art. However, only 37 percent of those purchased two years earlier, in 1981, were still considered state-of-the-art. Six-year-old instruments were classified as state-of-the-art only 13 percent of the time. Evidently, the life span for classification as state-Of-the-art is very short. The age distribution of state-of-the-art instruments dropped off very sharply; however, for their instruments in active research use that were not classed as state-of-the-art there ~as a more moderate decline in age distribution, from 40 percent of those from I to 5 years old to 27 percent for those over 10 years old. 6-17 PAGENO="0826" 820 An important issue is how well research equipment is actually performing. `~bout half of the insfrument systems were considered to be in excellent working condition -- 85 percent for state-of-the-art instruments but only 41 percent for other in-use instruments. As would be expected, there was a strong relation- ship between age of instruments and their working condition, with 78 percent of those from 1 to 3 years old in excellent condition but only 21 percent of those between 11 and 13 years old. A small number of instruments even older than that were still performing adequately in their presumably routine functions. Systems that were not state-of-the-art accounted for nearly 80 percent of all instruments in actual research use. Such instruments play an important role in research laboratories when state-of-the-art equipment is not required. However, when research investigators do not have access to more advanced equipment, thus having to "make do" with older, less capable instruments, they face an obstacle in their attempt to engage in more sophisticated research. This is apparently the situation generally in some subfields of research, and in other subfields in at least a large proportion of laboratories. Overall, nearly half of the non-state-of-the-art instruments in the biological sciences were the most advanced to which investigators had access. For departments of medicine, that percentage was closer to one-third. To the extent that these obstacles to instrument performance and capability appear, the entire research effort in the biological sciences is hampered. 6-18 PAGENO="0827" 821 7. FUNDING OF EQUIPMENT IN ACTIVE RESEARCH USE - Two questions of interest concerning the funding of research equipment are: (1) where do the funds come from to purchase equipment in the biological and medical sciences; and (2) aside from purchasing equipment, what other means are commonly employed to acquire equipment. It is not possible to determine from this study if any changes over time have occurred. However, the data do provide a baseline against which to measure future changes. 7.1 Means of Acquiring Research Equipment Both the numbers of instrument systems and the costs of these systems (Tables 7-1 and 7-2) indicate that the only significant method of procurement was purchasing new equipment. Ninety-four percent of the systems, with a total cost of 95 percent of all funds spent, were obtained this way. Locally built systems scarcely appeared as a factor in the biological and medical sciences. There was practically no donated equip- ment, and the purchase of used items was negligible. 7.2 Funding Sources for Research Equipment Federal agencies and non-Federal sources each provided one-half of the money for research equipment. Figure 7-1 illus- trates the amounts contributed by the several sources. More details are provided in Table 7-3, which also reveals that the departments of medicine did not follow the funding pattern of the biological sciences: departments of medicine obtained their funds in nearly a two-to-one ratio from non-Federal sources. 7-1 PAGENO="0828" 822 DEANS OF ACQUISITION OF ACAOEMIC RESEARCH EQUIPMENT INOTRURENT OYSTERS IN RESEARCH USE IN 19831 BIOLOGICAL AND MEDICAL SCIENCES NURSER AND PERCENT OF IN-USE SUNlESS MEANS OF ACQUISITION FUR- PUR- CHASED LOCALLY CHASES ----OONATED---- GOVT TOTAL NEW BUILT USED NEW USES SURFLUO OTHER TOTAL 17809 16734 78 540 26 38 43 370 1000 942 - 32 - - - 22 SUBFIELD OP RESEARCH BIOCHEMISTRY 4090 3874 4 ISA 0 17 0 94 1002 952 - 32 - 22 RICROBIOLOGY 1443 1367 0 34 4 12 9 15 1000 952 - 22 - IX 12 IX MOLECULAR/CELLULAR BIOLOGY 0818 2680 2 79 0 0 0 26 1002 952 - 32 22 PHYSIOLOGY/BIOPHYSICS 0314 2095 02 Ba 6 6 01 78 1002 912 IX 42 - - 12 32 AMATORY 450 406 0 35 0 0 0 10 1000 902 82 22 PATHOLOGT 775 729 0 SO 9 0 0 15 1002 942 32 IX OX PHARIMACOLOGT/TIIICOLOGT 1760 1660 15 00 0 0 9 05 0000 942 10 32 - IX 100LO0YIENTOPIOLOGY 420 386 6 23 2 0 0 1002 922 IX OX - II BOTANY 438 400 0 8 0 0 4 2 1002 972 SI 15 - FOOD AND NUTRITION 347 325 2 17 0 3 0 0 IOOX 942 - OX IX BIOLOGY, GENERAL AND N;E.C. 993 900 16 40 3 0 0 15 1002 932 22 42 - IX MEDICAL ICIENCESIDEPIS MED 1754 1690 0 35 2 0 0 56 1002 952 OX - 32 INTERDISCIPLINARY N.E.C. 191 178 9 4 0 0 0 0 1002 93X 50 22 FIELD AND SETTING BIOLOGICAL SCIENCES TOTAL 12008 14130 78 451 20 36 43 050 1002 942 12 32 - - - 22 GRADUATE SCHOOLS 6074 5712 35 010 3 13 10 89 1002 942 12 32 - - - IX MEDICAL SCHOOLS 8933 0418 40 241 17 24 30 162 1002 942 - 32 - - - SI DEPARTHENTS OF HEOICINE 2521 2604 0 90 8 2 0 119 1002 922 3X -. - 42 INSTITUTION CONTROL PRIVATE 6132 5811 41 156 .10 23 9 83 1002 952 12 32 - - - 12 PUBLIC 11697 10923 37 384 16 16 34 287 1002 932 - 32 - - - 22 7-2 PAGENO="0829" 823 AC1010ITIGN COST UP ACADERIC RESEARCH ENUOPRENY. BY REAMS CF AC$U051TIOII INSTRUMENT OYSTERS IN RESEARCH USE IA (9$3t BIOLOGICAL. AND MEDICAL. SCIENCES (DOLLARS IN RILLIOOS3 ----ACN015ITION COST AND PERCENT OP COSTS OF IN-USE OYSTERS---- -----NEARS OF AClUIS1TODN--.----"~- PUN- PUR- CHASES LOCALLY CHASED ----DONATED---- COV~T TOTAL NEW BUILT USES NEW USES SURPLUS OTHEN TOTAL $472.9 4448.2 $6.4 1(4.9 1.6 1.1 5.1 $1.8 1000 932 02 32 - - - - SUBFIELD OP NEMEANCH SIOCHENIOTRY 95.1 90.2 .1 2.2 0 0 0 .3 1842 972 - 22 12 N1~NO11SLSUY 36.4 35.0 S .7 0 .1 A .4 0002 962 - 22 - - 12 NOLECULARICELLULAN SIDLOGY *1.0 77.4 1.0 2.1 0 0 S .2 1002 961 12 32 - PNY$IDL5OY~BIDPHY55c5 65.0 60.0 S.D 2.2 .5 0 $ .3 1002 90* 30 32 - 10 AMATORY 14.9 24.1 S .8 0 0 S 0 0002 93! 32 PATHOLOGY 04.7 03.7 0 .A .3 0 0 0 1002 96* 22 2! PHANRACOLOGYtTOXICOLOGT 38.6 37.6 .4 .0 0 0 0 0 1000 902 1* 10 000LOOTFENT000LOCY 10.7 9.9 .4 .4 0 0 0 .1 1002 902 3* 4% 12 BOTANY 10.7 10.3 0 .0 0 ~0 0 0 1002 90* 02 - FOOD AND NUTRITION 7.7 7.0 .1 .4 0 0 0 0 100* 932 22 32 BIOLOGY. GENERAL AND N.E.C. 34.3 31.0 2.2 1.2 0 U 4 0 1000 902 62 32 - RESICAL SCOENcESFSEFTS NED 46.7 43.1 0 3.5 0 0 0 .1 1002 92* I! - INTER010CIPtiNA0Y. N.E.C. 6.9 6,3 .3 .2 0 0 0 0 1002 942 45 02 FIELD AND OETTINE 000L000CAL SCIENCES. TOTAL 403.7 384.4 6.4 10.2 .6 .1 .1 1.3 1002 93* 21 32. - - - - GRADUATE SCHOOLS 103.! 144.0 3.2 4.9 0 0 0 .5 1002 942 22 32 - - RESICAL SCHOOLS 249.9 239.7 3.1 33 .6 .1 0 .8 1002 96* II 22 - - - - DEPARTMENTS OP MEDICINE 09.1 A3.N 0 4.7 0 0 0 .4 IOU! 922 72 12 INSTITUTION CONTROL PRIVATE 180.3 171.3 -4.3 3.7 .2 .1 0 .4 - 1002 912 20 20 - - - PUBLiC 292.4 27-6.8 1.9 11.2 .5 0 .1 1.4 100* 952 11 40 - - - 7-3 PAGENO="0830" 824 Figure 7- 1 Sources of Funds for Acodemic Reseerch Equipment in Active Reseerch Use: Oiologicel end Medicel Sciences. Other INSTITUTIONS ~ Government Private NON-FEDERAL; 5O~Z Foundations 7-4 PAGENO="0831" 825 TAStE 7-3 SDURCES OF FUNDS FOR ACADEMIC RESEARCH EGUIPRENT. BY FIELD AND SETTING INSTRUMENT SYSTEMS IN RESEARCHUSE IN 1983: BIOLOGICAL AND MEDICRL SCIENCES CDOLLARS IN IIILLIONS3 FUNDS CONTRIBUTED AND PERCENT OF FUNDS FIELD AND SETTiNG BIOLOGICAL SCIENCES GRADUATE MEDiCAL DEPARTMENTS TOTAL SCHOOLS SCHOOLS OF MEDICINE TOTAL. ALL SOURCES $446.8 $148.3 $232.0 1002 1002 100% $68.8 100% FSDERAL SOURCES, TOTAL 251.4 302 73.? 312 120.0 362 23.2 35% NSF 33.6 82 22.3 132 10.9 32 .4 12 NIH 171.3 382 46.4 312 102.6 442 22.6 34% DOD 4.0 12 1.0 12 1.2 IX 1.8 37. OTHER FEDERAL SOURCES 12.3 32 6.1 4% 5.3 22 .8 1% NON-FEDERAL SOURCES. TOTAL 221.4 30% 72.4 492 112.0 482 41.0 82% INSTITUTION OR DEPARTMERT FUNDS 163.6 37% 47.2 322 16.9 372 31.5 47% STATE GRANT/APPROPRIATION 18.4 42 11.4 CX 6.0 32 1.0 IX PRIVATE NONPROFIT FOUNDATION 27.0 6% 7.3 52 14.0 6% 5.7 9% BUSINESS OR iNDUSTRY 7.7 2% 4.5 32 2.4 1% .7 IX OTHER NON-FEDERAL SOURCES 6.6 12 1.? 12 . 2.6 1% 2.1 3% 7... 5 PAGENO="0832" 826 NIH was the principal source of Federal funds for equipment. Graduate schools obtained 31 pe~er~t of their equip- ment funds from NIH, while the biological sciences in the medical schools secured 44 percent. For departments of medicine, NIH was the only significant Federal source. NSF contributed 15 percent of the graduate schools' equipment funds, but only 5 percent of the medical schools'. Institutional funds were reported to be the principal source for non-Federal moneys, with 32 percent of the graduate schools' equipment funds, 37 percent of the medical schools', and nearly half of all funds for departments of medicine. The meaning of institutional funds in this context is not entirely clear. The research investigators who supplied information on the funding sources for the instruments for which they were responsible could not be expected to know the sources of money supplied by the institution unless it had been earmarked by a specific donor. It is possible that some of the institution's funds originated with the FederaL government through programs such as the Biomedical Research Support Grants, which are dis- bursed through a formula based on an institution's total research funding and intended to provide unrestricted support to biomedical research. Another possible source is the indirect cost portion of research grants, which may be redirected by the institution into equipment funding or, in the case of some States that receive the indirect costs for state-supported institutions, routed back to the institution for the same purpose. Technically, these can be considered to be institutional funds, although they do not originate from within the institution's own resources. To what extent the total that was designated institutional fund- ing contained this re-routed Federal funding -- or similar non- Federal unrestricted grants -- cannnot be determined from these data. 7-6 PAGENO="0833" 827 Another source that may be included in the institu- tional fund category f or medical schools, ad~ which may also account for some of the differential in equipment funding between graduate and medical schools, is the revenue generated from clinical activities of the faculty. No estimate can be given for that element from the data in this survey. Besides the institutional funds, no matter what their origins may have been, other non-Federal sources played minor roles in equipment funding. State funds constituted 3 percent of equipment money for medical schools, but 8 percent for graduate schools (which had a considerably higher proportion of public institutions). Private nonprofit foundations contributed about 5 percent of equipment spending for the biological sciences and 9 percent for departments of medicine. Business and industry, a source that might relieve the Federal government of some of the burden for research support, contributed only 2 percent of all equipment funds in the biological and medical sciences. Private institutions fared a little better proportion- ately from the Federal government than did public institutions. They received 53 percent of their equipment funds from Federal agencies compared with the 47 percent received by public insti- tutions (Table 7-4). The average Federal contribution for research equipment to 93 private institutions was $992,000 per institution, whereas the 156 public institutions averaged $828,000. Institutional funds,' however, were about the same for private and public universities and medical schools, both in terms of percentage of funds and in average dollars per institution. The only other significant difference in funding sources was the 7 percent of the total contributed by state governments to public institutions compared to practically no State government contri- butions to private institutions. 7-7 `53-277 0 - 86 - 27 PAGENO="0834" 828- TASLE 7-4 SOURCES CF FUNDS FQR -ACADEMIC RESEARCH EGUIPNENT~ BY INSTITUTIONAL CONTROL INSTRUNENT SYSTEMS IN RESEARCH USE IN 1983 BIOLOGICAL-AND MEDICAL SCIENCES - tDDLLARS IN M1L.LIONS3 -FUNDS CONTRIBUTED AND PERCENT OF FUNDS- -CONTROL OF INSTITUTION-- PRIVATE PUELIC TOTAL INSTITUTIONS INSTITUTIONS TOTAL. ALL SOURCES $446.8- $172.7 1274,1 _I-OOx - 100% - - 100% FEDERAL SOURCES, TOTAL - 221.4 92.3 129.1 - 00% 03% - 47% NSF - - - 33.6 11.8 21.8 - 8% 7% 8% NIH - 171.0 71.7 - 99.8 - 38% 42% 36% DOD 4.0 3.1 - - .9 - - 1% 2% - - OThER FEDERAL SOURCES - - 12.3 5.7 - -6.6 - 3% 3% 2% NON-FEDERAL S3URCES~ TOTAL 225.4 80.4 145.0 00% 47% 03% INSTITUTION DR DEPARTMENT FUNDS 165.6 61.7 103.9 37% 36% 38% STATE GRANT/APPROPRIATION 18.4 .6 17.9- 4% - - - 7% PRIVATE NONPROFIT FOUNDATION - 27.0 12.0 - 14.0 6% 7% 5% BUSINESS OR INDUSTRY 7.7 4.0 3.7 - 2% 2% - 1% OTHER NON-FEDERAL SOURCES 6.6 1.7 4.9 - 1% 1% 2% 7-8 PAGENO="0835" 829 The funding sources for biological sciences are com- pared with those for other fields in Appendi~Tables A-li and A-l2. In A-li, the proportions of funds each field received from the various sources are summarized, and in A-12 the distri- bution of each source's funds by field is shown. Table A-li shows that the biological sciences received a larger portion of their equipment funds from Federal sources than any other surveyed field except the physical and materials sciences. By far the largest part of the Federal funds for the biological sciences came from NIH. Each of the other fields had its own pattern of funding sources, none of which resembled that for the biological sciences. For example, about half of the funds for agricultural sciences came from the institutions themselves, whereas all other fields had much lower proportions of funding from the institutions. Business and~ industry were not much of a factor except for computer science and, perhaps, environmental sciences. Appendix Table A-l2 indicates the principal, interest of each Federal agency f or the surveyed fields of science, as well as the distribution of funds from all of the other sources. NIH, for example, distributed almost all of its equipment funds to the biological sciences, with nearly all of the remainder to the physical.sciences. NSF, on the other hand, granted about half of its funds to the physical sciences and about a sixth each to engineering and the biological sciences. Department of Agriculture funds went mostly to agricultural sciences. The next highest level of Department of Agriculture funding-went to the.biological sciences. in graduate schools. `While more of the university funds went to the biological sciences than to any other field, equipment funds from that source are broadly dis- tributed among all fields, roughly in proportion to their total funding. 7-9 PAGENO="0836" 830 Another perspective concerning funding is shown in Table 7-5, which illustrates the pattern of lunding from various sources by system cost categories. The Federal sources accounted for 50 percent of all equipment funding, as did the non-Federal sources. However, 55 percent of funding for equipment costing less than $25,000 came from Federal sources, with the remaining 45 percent coming from non-Federal sources. Conversely, 46 percent of the funding for instruments costing $75,000 or more was purchased with Federal money, compared to 54 percent from non-Federal money. NIH, which contributed 38 percent of all equipment funding, provided 47 percent of the funds for instruments costing under $25,000 and 28 percent for those costing $75,000 or more. NSF showed the reverse pattern, providing 8 percent of all equip- ment funding but 5 percent of the funds for instruments costing less than $25,000 and 12 percent for those costing $75,000 or more. Institutional funds were also skewed toward the more expensive items, with 31 percent for all instruments under $25,000 and 41 percent for those costing $75,000 or more. Federal involvement as a source of funding is examined in Table 7-6. For example, 42 percent of the equipment items were funded without any Federal money, while 48 percent were funded exclusively with Federal funds. Wide variations among the subfields occurred, ranging from 59 percent of the biochemistry items receiving full Federal funding to 36 percent of microbiology instruments to 13 percent for food/nutrition. Non-Federal fund- ing was the dominant source for medical sciences and food/nutrition, along with pathology and microbiology. Shared funding was used to purchase only 10 percent of all instrument systems. The percentage of shared costs was at a low level for all subfields, with medical sciences the lowest of all at 4 percent. 7-10 PAGENO="0837" 831 TABLE 70 SOURCES OF FUNDS FCR ACADEMIC RESEARCH ESUIPRENT, BY SYSTEM COST RANGE INSTRUMENT SYSTEMS 101 RESEARCH USE ON 1953: BIOLOGICAL AND MEDICAL SCIENCES (DOLLARS IN MILLIONS) FUNDS CONTRIBUTED AND PERCENT CF FUNDS SYSTEM ACQUISITION COST UNDER $25,000- $75000 TOTAL $25,000 $74,999 OR MORE TOTAL, ALL SOURCES 5446.8 $104.7 $143.0 0119.1 1002 1002 1002 100% FEDERAL SOURCES. TOTAL 221.4 102.5 64.6 24.3 207. 55% 457. 46% NSF 03.8 10.0 8.9 14.8 8% 0% 6% 12% NIH 171.0 86.6 01.7 33.2 38% 477. 36% 282 DOD 4.0 1.7 1.2 1.1 1% 17. 1% 1% OTHER FEDERAL SOURCES 12.3 4.2 2.9 0.2 3% 2% 2% 4% NON-FEDERAL SOURCES. TOTAL 220.4 82.2 78.4 64.8 00% 40% 05% 547. INSTITUT1ON CR DEPARTMENT PONDS 160.6 57.8 09.0 48.3 377. 31% 42% 417. STATE GRANT/APPROPRIATION 15.4 5.4 8.6 3.4 4% .0% 02 3% PRIVATE NONPROFIT FOUNDATION 27.0 11.1 7.7 8.1 6% 67. 5% 77. BUSINESS OR INDUSTRY 7.7 2.3 3.2 2.3 2% 1% 22 2% * OTHER NON-FEDERAL SOURCES 6.6 2.6 1.3 2.7 1% 1% 1% 2% 7-11 PAGENO="0838" 832 TABLE 76 FEDERAL INVOLVEMENT IN FUNDING OF ACADERIC RESEARCH EQUIPMENT INITRDRENT SYSTEMS IN RESEARCH USE IN 19R3 BIOLOGICAL AND MEDICAL SCIENCES NU9DER AND PERCENT OF SYSTEMS -FEDERAL FUNDING INVOLVEMENT- NO PARTIAL 1000 TOTAL FUNDING FUNDING FUNDING 16334 6818 1704 7772 1000 402 100 480 3742 1000 1311 1000 0615 1000 0181 1000 371 1000 711 1000 1589 1000 399 1000 422 1000 326 1000 811 1000 1632 1000 175 1000 1081 467 2195 290 120 590 682 178 491 502 132 360 1158 240 1217 440 92 472 811 255 1111 372 120 510 154 38 17? 410 100 480 377 47 291 532 72 410 665 124 SOD 420 82 500 172 42 184 432 112 460 143 61 210 342 140 520 250 33 43 772 102 132 335 124 356 410 152 442 946 65 622 580 42 382 81 31 63 460 180 360 TOTAL SUBFIELD OF RESEARCH BIOCHEMISTRY MICROBIOLOGY MOLECULAR/CELLULAR BIOLOGY PHYSIGLOGYFBIGPHYSICS ANATOMY PATHOLOGY PHARMACDLOGY/TOOICOLOGY 200LOGY/ENTINOLOGT BOTANY FOOD AND NUTRITION BIOLOGY. GENERAL AND N.E.C. MEDICAL SCIEO4CES/OEFTS RED INTERDISCIPLINARY. N.E.C. FIELD AND SETTING BIOLOGiCAL SCIENCES. TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS DEPARTMENTS CF MEDICINE INSTITUTION CGNTRGL PRIVATE PUBLIC 13785 5540 1604 1002 400 022 5729 2363 792 1002 410 142 8056 3178 811 1000 392 102 2548 1317 100 1002 520 42 6640 482 2574 452 4066 502 1132 442 5733 2289 426 3019 1002 402 70 532 10600 4569 1278 4753 1000 432 120 450 7-12 PAGENO="0839" 833 The summary totals in Table 7-6 reveal a considerable difference between the extent of non-Federal funding for the biological sciences and departments of medicine. For the latter, 52 percent of their instruments were completely funded by non- Federal sources, while for the biological sciences only 40 percent were completely dependent on those sources. In private institu- tions, 53 percent of the instruments received total funding from Federal agencies, compared with 45 percent for public institutions. About half of the instruments in the biological sciences were completely funded by Federal sources, the same proportion as found for physical sciences; however, the physical sciences had partial funding from Federal sources about twice as often as biology (Appendix Table A-13). Agricultural science instruments rarely had any Federal funding, but almost all those in materials science had at least partial Federal funding. 7.3 Summary Almost all instrument systems in the biological, sciences and departments of medicine were purchased new. No other means of acquisition played a significant role. Funding sources for the biological sciences in graduate schools differed from those in medical schools. While both received about half of their funds from Federal sources -- `and NIH `was by far the largest Federal contributor to both settings -- NSF contributed three times as much to the graduate schools as it did to medical schools. Among the non-Federal sources, the institutions were the major contributors, with a slightly higher proportion of institutional funds going to medical schools than to "graduate schools. Institutional funds, however, contain an undetermined component of money originating from Federal sources. 7-13 ` PAGENO="0840" 834 Funds from the state were a minor factor, but they went mostly to graduate schools. - Departments of medicixie, however, received 62 percent of their funding from non-Federal sources, three- fourths of that being from their institutions. Private institu- tions received a higher proportion of their equipment funds from Federal sources than did the public'institutions. Federal sources as a whole funded a larger percentage of instruments costing under $25,000 than did non-Federal sources, which in turn funded .a larger' percentage of those costing over $25,000.' The funds granted by NIH wer,e used for instruments costing `less than $25,000, far more than for those costing $75,000 and more. The reverse was true for NSF's funds. Private institutions had a higher percentage of instru- ments completely funded by Federal sources when compared `with public institutions. ` ` `7-14 ` PAGENO="0841" 835 8. LOCATION AND USE OF ACADEMIC RESEARCH EQUIPMENT Questions have been raised periodically concerning the extent to which research equipment in academic laboratories is available to qualified research investigators in other laboratories. Is sharing of expensive instrument systems a common practice, or do academic investigators tend to duplicate desirable instruments even though the equipment may lie unused within their own labor- atories for considerable periods of time? The present survey cannot answer all of these questions; the need for similar instruments in separate laboratories is a matter for local evaluation of how best to use the time and effort of skilled research teams. Nevertheless, many institutions have departmental laboratories where commonly used equipment is shared by. most investigators and their staff members. In this chapter, data are presented on the location of equipment -- whether in individual investigators' laboratories or in shared facilities -- and on how many research personnel use instruments in each type of facility. 8.1 Location of Equipment In the biological sciences, for both graduate and medical schools, about 65 percent of all equipment was located in within-department laboratories of individual principal inves- tigators (P.I.s) (Table 8-1). For departments of medicine, the comparable number was 70 percent. Almost all of the remaining instrument systems were in department-managed common laboratories, with about 3 percent -- less for departments of medicine -- in nondepartmental instrumentation facilities and 1 percent in 8-1 PAGENO="0842" 836 TABLE D1 LOCATTDN OF ACADEMIC RESEARCH EBUIPHENT - INSTRUMENT SYSTEMS IN RESEARCH USE IN 1983: BiOLOGICAl. AND NED1CAL SCIENCES NURSER AND.ffRCENT OF SYSTEMS FIELD AND SETTING BIOLOGICAL SCIENCES GRADUATE MEDICAL DEPARTMENTS SCHOOLS SCHOOLS OF MEDICINE TOTAL. ALL LOCATIONS 6069 8912 2810 - 1002 1002 1002 WITHIN DEPARTMENT lAB iF 3930 0692 1962 INDIVIDUAL PRINCIPAL INVESTIGATORS 602 642 702 SHARED-ACCESS FACILITIES. TOTAL 2139 3219 848 302 362 302 * NATIONAL. REGIONAL OR INTER- 48 06 04 UNIVERSITY INSTRUMENTATION 12 12 22 FACILITY NON-DEPARTMENTAL RESEARCH 202 324 37 FACILITY 32 42 12 DEPARINETIT-RANAGED COMMON LAB 1860 2824 686 312 322 242 OTHER 29 16 71 - - 32 8-2 PAGENO="0843" 837 national or regional facilities. For convenience, these latter three locations are collectively referred to as inherently shared-access facilities. Compared with other fields of science (Appendix Table A-l4), the location pattern for the biological sciences agrees most closely with those in agriculture and the physical sciences. The environmental sciences and engineering each had about half their systems in P.1.-controlled laboratories. In the remaining fields, nondepartmental facilities played a more prominent role. Table 8-2 displays the percentage of systems in shared- access facilities by subfield of research and by state-of-the- art status. About 35 percent of both state-of-the-art and other in-use systems were in shared-access facilities. Several subfields had about 30 percent in shared facilities: biochemistry, molecular! cellular biology, physiology/biophysics, pharmacology/toxicology, and zoology. The other subfields ranged upward to as high as 50 percent. In a majority of the subfields it appears that state- of-the-art instruments were somewhat less likely to be in shared facilities than were other in-use instruments. In Table 8-3, the proportions of instrument systems in shared-access facilities are presented within cost categories. Of systems costing between $10,000 and $24,999, only 31 percent were in shared facilities, whereas 63 percent of those costing between $75,000 and $1,000,000 were in shared facilities. In the biological sciences, graduate schools and medical schools had the same overall proportions of instruments in shared- access facilities, yet 71 percent of the graduate school instru- ments in the top cost category were in such locations, compared 8-3 PAGENO="0844" 838 TABLE B-! PERCENT CF ACADEMIC RESEARCH ESUIPHENT LOCATED IN SHARED-ACCESS FACILITIES. BY RESEARCH STATUS - INSTRUMENT SYSTEMS IN RESEARCH USE IN 19821 BIOLOGICAL AND MEDICAL SCIENCES PERCENT OF SYSTEMS IN SHARED-ACCESS FACILITIES ---1983 RESEARCH STATUS--'-- STATE-OF-THE- OTHER SYSTEMS TOTAL ART SYSTEMS RESEARCH USE TOTAL 332 34% 33% SUBFIELD OF RESEARCH BIOCHEMISTRY 29% 23% 30% MICROBIOLOGY 482 54% 462 MOLECULAR/CELLULAR BIOLOGY 312 31% 312 PHYSIOLDGY/BIIPHYSICS 272 29% 27% ANATOMY 49% 42% 33% PATHOLOGY 40% 32% 422 PHARMACOLOGY/TOO ICDLOGY 302 312 302 ZGOLOGY/ENTOMOLOGY 282 28% 29% BOTANY 442 23% 31% FOOD AND NUTRITION 47% 44% 482 BIOLOGY~ GENERAL AND N.E.C. 53% 46% 34% MEDICAL SCIENCES/DEPTS MED 392 46% 37% INTERDISC1PLINARY. N.E.C. 41% 40% 42% FIELD AND SETTING BIOLOGICAL SCIENCES. TOTAL 362 33% 36% GRADUATE SCHOOLS 35% 31% 38% MEDICAL SCHOOLS 36% 33% 36% DEPARTMENTS CF MEDICINE 30% 34% 2Y% INSTITUTION CONTROL PRIVATE 31% 34% 31% PUBLIC 37% 34% 37% 8-4 PAGENO="0845" TOTAL S'JBF1ELD OF RESEARCH BIOCHEMISTRY MICROS! ILOGY MOLECULAR/CELLULAR BIOLOGY PHYSIILOGYIBI DPHYSI CS ANATOMY PATHOLOGY PHARMACOLOGYF TOO ICOLOGY ZOOLOGY/ENTOPIOLOCY BOTANY FOOD AND NUTRITION BIOLOGY, GENERAL AND N.E.C. MEDICAL SCIENCES/DEPTS PIED IHTERDISCIPLINARY, N.E.C. FIELD AND SETTING BIOLOGICAL SCIENCES, TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS DEPARTMENTS OP MEDICINE INSTITUTION CONTROL PRIVATE PUBLIC 297. 27% 337. 457. 4E7. 45% 561 61% 317. 277. 337. 747. 277. 247. 327. 467. 37% 837. 707. 247. 641 68% 297. 33% 417. 217. 39% 37. 407. 427. 1007. 467. 49% 7.01 467. 57% 93% 33% 49% 38% 467. 467. 367. 32% 417. 647. 35% 327. 397. 717. 367. 327. 417. 81% 307. 257. 437. 58% 317. 25% 35% 57% 37% 32% 44% 677. 839 TA8LE 8-3 PERCENT CF ACADEMIC RESEARCH EQUIPMENT LOCATED IN SHARED-ACCESS FACILITIES. DY SYSTEM COST - INSTRUMENT SYSTEMS IN RESEARCH USE IN 1983; BIOLOGICAL AND MEDICAL SCIENCES PERCENT OF SYSTEMS IN SHARED-ACCESS FACILITIES SYSTEM PURCHASE COST $10,000- $25,010- 175.000- TOTAL $24,999 $74.999 $1,000,000 357. 31% 417. 63% 497. 407. 307. 287. 44% 477. :3% 391 417. 8-5 PAGENO="0846" 840 with 61 percent for medical schools. Public institutions had somewhat higher proportions in shared-access facilities across all cost categories than private institutions. Older instruments were more frequently located in shared-access facilities (Table 8-4). Of those over 10 years old, 41 percent were in such locations, compared to 32 percent of those between 1 and 5 years old. This trend was apparent in 10 of the 13 subfields. It was truealso for both private and public institutions. .8.2 Availability for General Purpose Use About 17 percent of all research instruments in the fields surveyed were dedicated for use in a particular experiment or series of experiments (Table 8-5). About one-third of these dedicated instruments had been physically modified in some way to make them suitable for their intended use. The rest were reserved intact for the specified experiments, their calibration and position undisturbed by outside use. Physiology/biophysics had the largest proportion of dedicated systems, 32 percent. The biological sciences had a smaller proportion of dedicated systems than most other fields of science (Appendix Table A-l5). The physical sciences (39%), engineering (37%), environmental sciences (33%), and agricultural sciences (24%) all had larger proportions of their research equipment reserved for special purpose use than did the biological sciences. 8-6 PAGENO="0847" TOTAL SUBFIELD OF RESEARCH BIOCHEMISTRY MICROBIOLOGY MOLECULAR/CELLULAR BIOLOGY PHYSIOLOGY/BI OPHYSECS ANATOMY PATHOLOGY PHARMACOLOGY/TOXICOLOGY ZOOLOGY/ENTOMOLOGY BOTANY FOOD AND NUTRITION BIOLOGY~ GENERAL AND N.E.C. MEDiCAL SC1ENCEB/DEPTS RED INTERDISCIPLINARY, N.E.C. FIELD AND SETTING BIOI.OGICAL SCIENCES~ TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS DEPARTMENTS OF MEDICINE INSTITUTION CONTROL PRIVATE PUBLIC 29% 29% 48% 37% 317. 26% 27% 24% 49% 47% 40% 37% 30% 30% 28% 227. 447. 317. 47% 427. 7.3% 7.6% 39% 37% 417. 38% 24% 34% 50% 64% 37.7. 37% 287. 36% 7.3% 7.0% 38% 47% 247. 39% 37% 44% 647. 7.77. 48% 7.8% 7.1% 47% 44% 38% 7.4% IY% 29% 33% 36% _33% 37% 43% 8-7 841 TABLE 8-4 PERCENT OF ACADEMIC RRSEARCH EGUIFMENT LOCATED IN SHAREO~ACCESS FACILITIES BY AGE OF SYSTEM INSTRUMENT SYSTEMS IN RESEARCH USE IN 1983: BIOLOGICAL AND MEDICAL SCIENCES PERCENT IF SYSTEMS IN SHARED-ACCESS FACILITIES SYSTEM AGE (FROM YEAR OF PURCHASE) OVER 10 1-5 YEARS 6-10 YEARS YEARS (1973 TOTAL (1979-83) (1974-78) OR BEFORE) 35% 32% 367. 41% 36% 30% 31% 387. 417. 36% 33% 35% 44% 30% 30% 32% 29% 31% 37% PAGENO="0848" 842 7*5*2 8-5 ESPERORENTAL ROLE OF ACADESOC RESEARCH ESUOPHEST INST005EST OYSTERS 05*ESEARCN USE IN l~53* BIOLOGICAL ASS REDACAL SCIENCES NURSER AND PERCENT OF OYSTERS - 1953 EOPERINESTAL ROLE ---OEOICATEO CII------ GENERAL TOTAL NSD*FIES SOT R000FIED PURPOSE TOTAL *7441 554 0036 14S20 1000 01 122 832 505FIELD OF RESEARCH SOOCKERISTRY 4019 17* 349 3500 1000 42 92 872 NOC000IOL009 1449 30 45 0374 1002 22 32 951 POLECULARFCELLULAR BIOLOGY 0735 21 540 2469 1002 12 92 HOG PHY500LOIYIBIOPHYSOCS 2290 292 431 0574 1002 130 102 652 ANATOSY 439 12 74 353 1002 32 172 502 PATHOLOGY 750 13 65 650 1002 52 92 902 PNANNACOLOGYIT505COLOGY 1707 - 80 345 12,0 1002 02 202 752 050LOEYIEST500LOGY 401 12 79 319 1000 30 102 752 BOTANY 412 IA 41 325 1002 42 102 062 FOOD ASS NUTRITION 307 21 47 259 0002 62 042 792 5102.009. SESERAL ASS S.E.C. 994 76 115 S04 -1002 52 122 512 SEDIcAL SCSENCES/DEPTO 200 1708 109 1A7 1410 1002 82 152 332 *STEB015CIPLINASY. S.E.C. 177 10 30 130 1002 60 072 772 FIELD ASS SETTING SSSLD0SCAL SCSESCES. TOTAL 14705 655 1106 10060 *002 40 *22 832 GSA2UATS SCSOOLI 5935 205 582 5044 *002 32 lOG $72 R000CAL OC500LD 5757 451 1224 7112 - 1002 52 140 812 DEPA#TRSNTS OF SEDOCISE 0707 223 230 2062 - 1002 52 32 532 ISISTOTUTIOS CONTROL PRIVATE 596* 241 755 4912 - 0002 52 131 322 - PUSLIC 11400 093 1077 9600 1002 52 lOG 842 £15 DEDICATED FOR USE IN A SPECIFIC EIPEROYENT OS SERIES OF EIPESINESTS. AS DISTINCOIOHED PROS GESERAO. PURPOSE SSST0UNESTS. DEDICATES 0NSTRURENT SYSTORS SAY OR SAY NOT INVOLVE * SODSFOCATIOSO* `ANY SPECIAL CALODSATSON. PRSG2APRRISG.OR OTHER NODIFSCATI0S 84001 NESDESCO 1148 ISSTNUIIEST UNSUITABLE -FOR GENERAL PURPOSE uSE.' 8-8 PAGENO="0849" 843 8.3 Annual Number of Research Users per Instrument System An index of how widely academic research equipment is used is the mean annual number of users per instrument system. In Table 8-6 it is seen that the average instrument system in the biological sciences and departments of medicine was used by 10.9 researchers in 1983. This number varied among subfields, from a low of 8.0 users per system per year in zoology and 8.6 in medical sciences to a high of 14.2 for both microbiology and general biology. General purpose instruments had a mean of 11.8 users, in contrast to about 6.6 users for dedicated instruments. As shown in the second .part of Table 8-6, graduate schools had more users per instrument than did medical schools, and biological sciences as a whole had considerably more than departmentsof medicine. Private institutions had slightly more users per system than did public institutions, and state-of-the- art instruments were used by slightly more researchers than other, in-use instruments. However, purchase cost showed the only noteworthy differential: instrument systems in the cost range of $75,000 to $1,000,000 had much larger mean numbers of users than did those in the two lower cost ranges. In all of these comparisons, general purpose instruments weremore broadly used than were dedicated ones, as would be expected. Appendix Table A-16 shows that the biological sciences, along with agricultural sciences, had fewer users per instrument than all other fields of science. The physical sciences, which had the same proportion of instruments in the laboratories of principal investigators as did the biological sciences (Appendix~ Table A-iS), nevertheless had 15.5 users per instrument, noticably more than the biological sciences 8-9 PAGENO="0850" TOTAL SUBFIELD OP RESEARCH BIOCHEMISTRY MICROBIOLOGY MOLECULAR/CELLULAR BIOLOGY PHYBIOLOGYIBIOPHYSICD GNAT DRY PATHOLOGY PHAMMACDLDGY/TOIICOLOGY ZOOLOGY /ENTOMOLGGY BOTANY FOOD AND NUTRITION BIOLOGY. GENERAL AND N.E.C. MEDICAL OCIENCEO/OEPTS MED ONTER015CIPLINARY. N.E.C. FIELD AND NETTING BIOLOGICAL SCIENCES. TOTAL GRADUATE ICHOOLD MEDICAL SCHOOLS DEPARTMENTS OF MEDICINE INSTITUTION CONTROL PRIVATE PUII.IC RESEARCH STATUS STATE OP THE ART OTHER PURCHASE COOT NII.DOOSD4.9?5 $05. UIS-N7N.9~ N75.USONI .000,000 11.0 4.9 AS 14.2 U 7.9 12.0 -0 10.1 9.2 6.7 4.6 9.6 0 7.3 11.7 0 12.4 9.2 10.0 5.5 0.0 U 6.0 12.3 U 6.4 11.1 N 3.5 14.2 5.0 6.2 l.A 0.6 6.3 13.0 N 4.4 11.8 14.0 10.1 10.9 10.4 11.0 00.1 B.B 13.2 12.3 16.1 9.1 14.6 844 MEAN NURSER IF REIEARCH USERS OF ACADEMIC RESEARCH EENUSPRENT BY RESEARCH FUNCTION INSTRUMENT SYSTEMS IN RESEARCH USE IN Ii83~ :BIOLOGOCAL-AMS MESICAL:ECIENCED MEAN NURSER OP RESEARCH USERS-- - 1903 RESEARCH FUNCTION--- -----OCOICATEO III------ .GEREMAL TOTAL MODIFIED NOT HODIFIED PURPOSE 10.9 7.0 6.4 11.0 11.4 7.8 10.3 11.0 10.8 AU 8.2 4.8 6.5 10.3 6.2 13.0 6.7 11.8 5.5 8.8 11.3 7.0 7.0 12.1 10.7 A.Y 6.1 11.A 11.2 ~5.0 .6.6 12.7 IS.B 7.8 63 11.5 10.3 5.7 5.5 11.2 11.2 8.4 7~7 11.8 18.1 11.7 10.0 19.9 * NUMBER IF CASES IN THE UNDERLYING-SAMPLE HAS INSUFFICIENT FOR A RELIABLE ESTIMATE. ElI B0000AY!O FOR USE IN A SPOCIFOCEOPERBMENTUM.00R0050? EBPEBDMEHTS.AB B1STSNSUOSM!B FROM GENERAL PURPOSE INSTRUMENTS. DEDICATED INOTRUHEAT OYSTERS MAYOR MAY HOT INVOLVE MODIFICATIONSI ANV SPECIAL CALIBRATION, PROGRAMMING OR OTHER M050FICATION NHICH RENDERED THE INSTRUMENT UNSUITABLE FOR GENERAL PURPOSE SSE.~ 8-10 PAGENO="0851" 845 Another approach to quantification of instrument usage is the extent to which instruments are used by researchers from outside the departments in which they are located. In Table 8-7, researchers are classified according to their origin: first being faculty or faculty-equivalent researchers from within the department; then graduate students, medical. students, and post- doctorates from within the department; and then researchers from increasingly remote origins, Of course, individual instruments could be used by more than one category of user. For all subfields, 95 percent of the instruments were used by faculty of the host department. In addition, 36 percent of these same instruments were used by researchers from other departments of the same institution, 10 percent were used by researchers from other universities, and 14 percent were used by nonacademic researchers. Eighty-two percent of all instruments were also used by graduate students, medical students, and post- doctorates within their own departments. There was little variation among subfields in the percentage of instrument systems used by faculty from the host department. There was also little variation among subfields for percent of instruments used by graduate and medical students and postdoctorates, except for pathology and medical sciences, which had significantly lower percentages than other fields. For these two subfields, there is probably a relationship between the reduced usage of instruments and the lack of graduate students. Pathology, for example, had the smallest number of doctoral degrees awarded of all the subfields studied (Table 5-7). For medical sciences, the research was performed mostly in departments of medicine, which do not award graduate degrees. With the exception of microbiology, all of the major subfields had a little over 30 percent of their instruments used by researchers 8-11 PAGENO="0852" 846 SUBFIELD OF RESEARCH BIOCHEPIISTRY 93.20 84.2! 39.7! 8.3! 12.00 RICROBIOLO!Y 96.10 86.50 49.80 5.9% 9.5% NOLECULAR/CELLULAR BIOLOGY 97.4! 88.50 32.10 6.40 19.70 PHYSIOLOGY/BIOPHYSICS 95.9% 81.6! 33.80 9.7% 8.20 ANATORY 96.6% 81.2% 31.60 6.2! 10.30 PATHOLOGY 97.00 64.70 29.40 7.9% 7.1% PHARRACOLOGY/TOOICOLOGY 92.90 89.90 33.4! 10.4! 16.20 100LOSY/ENTOPIOLOGY 96.77. 86.7! 31.00 8.0% 9.90 BOTANY 97.00 88.1! 34.8! 12.9! 17.6! FOOD AND NUTRIT108 94.3! 83.6! 32.80 8.52 17.6% BIOLOGY. GENERAL AND N.E.C. 93.20 77.32 36.2! 14.4! 10.40 REDICAL OCIENCES/DEPTS RED 97.40 69.0% 35.3% 16.4! 23.5! INTERDISCIPLINARY. N.E.C. 89.1! 74.8! 51.2! 34.4% 16.9% FIELD AND SETTING BIOLOGICAL SCIENCES. TOTAL 95.0! GRADUATE SCHOOLS 90.20 REDICAL SCHOOLS 94.9% EEPARTSENTS OFREDICINE 96.3! INSTITUTION CONTROL 95.90 81.50 31.00 8.80 13.60 94.9% 83.1% 39.3% 10.1! 14.10 TABLE B-i PERCENT OF ACADERIC RESEARCH ESUIPPIENT USED DY VARIOUS TYPED IF RESEARCH USERS IN8TRUPIENT OYSTERS IN RESEARCH ODE IN 1983: BIOLOGICAL AND REDICAL SCIENCES PERCENT OF IN-USE OYSTERS USED IN 1983 BY: GRADUATE AND REDICAL STUDENTS AND RESEARCHERS FACULTY. POST DOCS.. FROR OTHER RESEARCHERS THIS DEPT.! THIS DEPT.! DEPTS. THIS FROR OTHER NONACADERIC FACILITY FACILITY INSTITUTION UNIVERSITIES RESEARCHERS TOTAL 93.2! 82.5! 36.4! 9.6! 13.90 83.22 36.3! 9.1% 12.9! 86.6% 33.4! 8.1! 13.1! 84.3! 38.2! 9.8% 12.7! 68.2% 36.9! 12.4! 19.3! PRIVATE PUBLIC RESEARCH STATUS STATE OF THE ART OTHER PURCHASE COST SIS.000-124999 823.000-174999 175,200-81.000.000 96.7! 82.2% 32.8! 12.0! 18.00 94.8! 82.6% 37.4% 9.0% 12.8% 95.1% 83.3% 33.1% 6.1% 12.2% 95.3! 81.1% 40.6% 15.8! 16.5% 93.0! 78.6! 60.9! 31.0! 25.4! 8-12 PAGENO="0853" 847 from other departments at the same institution. For microbiology, a remarkably high 50 percent of their instruments were used by~ researchers from other departments in the same institution. Non-academic researchers were most frequently found in molecular! cellular biology and in the medical sciences. The second part of Table 8-7 shows that departments of medicine shared equipment most extensively with nonacademic researchers than did biological sciences. Public institutions shared with researchers from other departments at the same univer- sity a little more than did private institutions. It was some- what more cornnion for state-of-the-art instruments to be shared with researchers from other universities and with nonacademic researchers than it was for other instruments. As with many other statistics examined in this report, instrument usage varied most notably by instrument purchase cost level. For graduate students and postdoctorates, there was a slight tendency for the usage proportions to decline with increasing cost of the equipment. However, a very pronounced usage increase with increasing cost of equipment was evident for researchers from other departments within the same institution, fo~ researchers from other institutions, and for nonacademic researchers. Evidently, more expensive equipment is more likely to be shared with invest- igators from outside. 8.4 Summary About 65 percent of all equipment for the biological sciences was located in the laboratories of individual investigators; for departments of medicine, 70 percent were in those locations. The remainder were in inherently shared-access facilities, the most common of which were department-managed common laboratories. 8-13 PAGENO="0854" 848 Costly instrument systems were more likely to be located in shared facilities than were those with lower purchase costs. About two-thirds of instruments costing between $75,000 and $1 million were in shared facilities, compared to about one-third of those costing from $10,000 to $24,999. Graduate schools tended to have higher proportions of their most costly instruments in shared facilities than did medical schools, as did somewhat more of the public institutions than the private institutions. Older instruments were more likely to be located in shared facilities. Overall, 41 percent of the instruments over 10 years old were so located, compared to 32 percent of those 5 years old or less. This pattern appeared consistently in the biological science subfields, but did not appear at all in departments of medicine. Only 17 percent of instruments in the biological sciences were dedicated to specific experiments or series of experiments, the remainder being available for general use. This proportion of dedicated equipment was about half that for most other fields of science. The average number of users for instrument systems in the biological sciences was about 12 per instrument for general purpose instruments and about 7 for dedicated instruments. It was lower for instruments in departments of medicine. The biological sciences had fewer users per instrument than all other fields of science except agriculture. The most costly instruments in the biological sciences (those costing between $75,000 and $1 million) had substantially more users per instrument than those in lower cost categories. 8-14 PAGENO="0855" 849 The more costly instrument systems_ (over $75,000) were very likely to have been used by investigators from outside the department, and even, from outside the institution. There was also a tendency for state-of-the-art instruments tobe used by a wider range of users than equipment not considered state-of-the- art. ` In the biological sciences, considerable sharing routinely takes place, especially with instruments not dedicated to specific experiments. The percentages of instruments used by researchers from within.the same department, by graduate and medical students and postdoctorates, and by members of other departments in the same institution -- all indicate an impressive amount of cross- * usage of instruments. Additionally, a high percentage of instruments are located in inherently shared-access facilities, and there ~ especially widespread use of the most expensive instruments. Thus, one can conclude that in academic sciences sharing of equipment is the rule and not the exception. 8-15 PAGENO="0856" 850 9. MAINTENANCE AND REPAIR The effective cost of research instrumentation extends beyond original acquisition cost. The quality of an instrument's performance and its longevity depend on ade4uate maintenance practices throughout its working life. A number of questions relating to the quality and costs of maintenance and repair (M&R) were asked in the survey of both department heads and users of instruments. This chapter presents the findings on M&R for the biological and medical sciences. 9.1. Assessment of M&R Facilities Department/facility heads assessed the instrumentation support services available to their departments, including such facilities as electronics and machine shops. Their evaluations are reported in Table 9-1. Overall, only 16 percent regarded their facilities as excellent, and nearly 50 percent reported insufficient or non- existent facilities. The patterns of response among the depart- ments were quite varied. Departments of molecular/cellular biology and physiology/biophysics assessed 32 percent of their M&R facilities as excellent. Departments of food/nutrition, however, could find no facilities to rate as excellent, while for botany and pathology there were only 6 percent and 8 percent respectively, of excellent facilities. Thirty-eight percent of the pharmacology/ toxicology departments reported that they had no M&R facilities at all. 9-1 PAGENO="0857" TOTAL DEPARTNENTS BIOCHENISTRY NICROBIDLDGY ROLECULARICEL.LULAR BIOLOGY PXfYSIOLOGY/BIO?HYSICS M4ATORY PATHOLOGY PHARRACOLOGY/TOX ICOLOGY ZODLOIVIENTOROLOGY BOTANY FOOD AND NUTRITION BIOLO~Y. GENERAL AND N.E.C. DEPARINERTS OF NEDICINE FIELD AND SETTING 100 16 30 37 100 12 37 33 100 32 35 100 32 38 100 22 46 100 8 26 100 20 18 100 12 31 100 6 54 100 0 33 100 13 33 100 6 64 BIOLOGICAL SCIENCES. TOTAL 100 GRADUATE SCHOOLS 100 PIEDICAL SCHOOLS 100 DEPARTPIENTS OF MEDIcINE 100 INSTITUTION CONTROL PRIVATE 100 PUBLIC 100 17 18 9 24 17 13 22 44 22 24 38 39 18 18 22 53 14 38 lb 30 0 851 TABLE 9-1 DEPARTMENT/FACILITY ASSESSMENT ~F AVAILABLE INSTRUMENTATION SUB.PQRT SERVICES BIOLOGICAL AND MEDICAL SCIENCES PERCENT OF DEPARTMENTS/FACILITIES ASSESSING INSTRUMENTATION SUPPORT SERY1CES AS: TOTAL EXCELLENT ADEQUATE INSUFFICIENT NONEXISTENT 100 16 36 31 17 31 18 33 17 29 20 30 `0 19 22 36 16 16 34 16 34 17 34 6 64 30 29 9 39 9-2 PAGENO="0858" *852 Only 6 percent of the departments of medicine viewed their M&R facilities as excellent, but 64. percent stated that they were adequate, for a total of 70 percent rated adequate or better. All departments of medicine reported that they had some kind of M&R facility. The biological sciences as a whole had a less satisfactory view of their M&R facilities, with a total of 50 percent having adequate or better facilities and 18 percent reporting none at all. Private institutions rated 30 percent of their facili- ties as excellent, a much larger proportion than the 9 percent for public institutions. Private institutions also reported a higher proportion of departments without M&R facilities -- 22 percent to 16 percent. 9.2 The Costs of M&R It has already been shown (Table 4-1) that $35.7 million was spent for M&R in FY 1983 by academic departments and facilities in the biological and medical sciences, compared to $158.2 million in reported purchases by `the same departments and facilities for items of research equipment costing $500 or more. This amounted to 22.5 cents spent on M&R for every dollar spent to acquire new equipment in that year. There are several facets of expenditures f or M&R. They may be described as: (1) costs of services provided by sources `outside .the institution -- i.e., service contracts and field service as needed; (2) salaries for university-employed M&R personnel; and (3) costs of supplies, equipment, and facili- ties used for `M&R within the department. 9-3 PAGENO="0859" 853 The mean expenditure per department for all these costs was $30,200 in FY 1983, of which nearly two-thirds was spent for outside services, as shown in Table 9-2. There was considerable variation by department in mean expenditure. Among the biological sciences, the largest mean expenditures were found for general biology ($36,200), physiology/biophysics ($35,900), and molecular/ cellular biology ($35,700). The small- est mean expenditures were made by food/nutrition ($15,100), botany ($16,900), and microbiology ($17,300). The biological science departments also varied in their relative use of outside services as opposed to university- based M&R staff and facilities. While the overall proportion spent by biological science departments for outside services was 62 percent of M&R funds, departments of zoology/entomology used only 38 percent of their funds for outside services, with the remainder going into university staff salaries and the supplies and facilities used by those staff members. Similarly, for physiology/biophysics 47 percent went into outside services. At the other end were botany (80 percent for outside services), pharmacology/toxicology (77 percent), and Microbiology (73 percent). M&R expenditures for departments of medicine were quite different from those for the biological sciences, averaging $59,700 per department, compared to $25,800 for graduate schools and $31,300 for biological sciences in medical schools. More- over, departments of medicine relied on outside services more heavily, spending 76 percent of their M&R funds for this purpose compared to 62 percent for the biological sciences. The larger mean expenditure for departments of medicine can be traced to their greater size; there were more than twice as many instru- ments in use per department for departments of medicine as there were for the average biological sciences department. The differ- ential in mean expenditures disappears when this factor is controlled. 9-4 PAGENO="0860" 854 TABLO 9D MEAN FY 1983 EXPENDITURE PER DEPARTMENT/FACILITY FOR RAINTENANCE AND REPAIR DF RESEARCH EAUIPRENTI BIOLOGICAL AND MEDICAL SCIENCES - 000LLARS IN THOUSANDS 3 PER DEPARTMENT REAM FT 1983 EXPENDITURE FOR MAiNTENANCE AND REPAIR OF RESEARCH E8UIPMENT R/R SERVICE UNIVERSITY-EMPLOYED RIM SUPPLIES CONTRACTS AND fIR PERSONNEL E8UIPRENT TOTAL FIELD SERVICE SALARIES AND FACILITIES TDTAL~ SELECTED FIELDS $30.0 $19.0 *6.4 84.8 DEP ART REM TI BIOCHEMISTRY 29.7 19.6 6.0 4.0 RICROBIOLDGT 17.3 12.7 1.9 2.7 MOLECULAR/CELLULAR BIOLOGY 30.7 22.7 8.0 0.0 PHYSIOLOGY/BIOPHYSICS 30.9 16.7 12.8 6.4 ANATOMY 3U.5 18.0 4.1 7.9 PATHOLOGY 28.9 19.4 6.2 3.2 PHARMACOLOGTITOIICOLOGY 27.0 21.1 0.6 3.7 000LOGY/ENTIMOLOGY 21.3 8.1 7.0 0.7 BOTANY 16.9 13.6 1.9 1.3 FOOD AND NUTRITION 10.1 8.7 3.7 2.7 BIOLOGY. GENERAL AND N.E.C. 36.2 21.2 9.0 0.0 DEPARTMENTS OF MEDICINE 0Y.7 40.4 6.7 7.6 FIELD AND SETTING BIOLOGICAL SCIENCES. TOTAL DB.6 17.6 6.4 4.6 GRADUATE SCHIOLS 20.8 16.1 0.7 4.1 MEDICAL SCHOOLS 31.3 19.0 7.1 0.2 DEPARTMENTS OFREDICINE 39.7 45.4 6.7 7.6 INSTITUTION CONTROL PRIVATE 39.6 26.3 7.3 5.8 PUBLIC 26.0 13.6 6.0 4.3 9-5 PAGENO="0861" 855 Private institutions spent 50 percent more per depart- ment on M&R than public institutions. Sixty-seven percent of their M&R expenditures went into outside services, compared to 60 percent for public institutions. The methods of providing M&R service are presented in more detail in Table 9-3. These data, and those for the remain- ing tables in this chapter, were supplied by instrument users on the Instrument Data Sheet. As shown in Table 9-3, 39 percent of the instrument systems were maintained unaer service contract. Field service as needed was employed for 27 percent of the instru- ments, university-based M&R staff serviced 10 percent, and research personnel handled 8 percent. Overall, 17 percent of the systems did not have service contracts and did not require any servicing during the year. About 50 percent of the instruments used in microbiology and molecular/cellular biology were under service contract, whereas only 9 percent of those in food/nutrition, 18 percent of those in zoology/entomology, and 23 percent of those in physiology/ biophysics had service contracts. Food/nutrition tended to use local M&R staff and research personnel instead of service contracts to perform the necessary service, and zoology/entomology often used field service. In both these subfields, about 30 percent of their instruments required no service at all. Physiology/ biophysics also used university staff and research persons more frequently than other subfields instead of service contracts. There were essentially no differences between depart- ments of medicine and the biological sciences in patterns of M&R servicing. Private institutions, however, tended to use service contracts and field services about 20 percent more often than public institutions. 9-6 PAGENO="0862" 856 TABLE ?~3 PRINCIPAL NEARS OF SERVICING IN-UOE ACADEMIC RESEARCH INSTRUMENTS; BIOLOGICAL AND MEDICAL SCIENCES (1] PERCENT OF IN-USE SYSTEMS BY PRINCIPAL REARS OF SERVICING (2] SERVICE NONE FIELD UNIV. R/R RESEARCH TOTAL CONTRACT REQUIRED SERVICE PERSONNEL PERSONNEL TOTAL, SELECTED FIELDS SUBFIELD OP RESEARCH BIOCHEMISTRY 150 MICROBIOLOGY 100 MOLECULAR/CELLULAR BIOLOGY 100 PHYSIOLOGY/BIOPHYSICS 100 ANATOMY 100 PATHOLOGY 100 PHARMACOLOGY/TOO ICOLOGY 100 ZOOLOGY/ENTOMOLOGY 100 BOTANY 105 FOOD AND NUTRITION 100 BIOLOGY, GENERAL AND N.E.C. 100 MEDICAL SCIENCES/DEPTS. MED ZOO INTERDISCIPLINARY N.E.C. SOD FIELD AND SETTING 1000 390 570 271 100 80 42 14 26 9 8 02 17 20 6 6 Dl 13 08 4 0 23 20 27 16 50 36 33 25 1 5 44 13 31 7 6 38 17 24 8 13 18 31 37 8 6 32 14 30 17 7 9 30 29 02 11 35 19 23 16 8 38 15 31 13 4 27 16 19 11 OS 23 9 5 29 10 10 BIOLOGICAL SCIENCES. TOTAL 100 GRADUATE SCHOOLS 100 MEDICAL SCHOOLS 100 DEPARTMENTS (F MEDICINE 100 INSTITUTION CONTROL PRIVATE PUBLIC 39 17 38 56 40 18 38 15 26 50 26 11 26 B 31 11 8 9 S 100 44 19 100 36 16 (1] PERCENTS NAY NOT SUM 10.100 BECA5IDE OP ROUNDING. (23 IF MORE THAN ONE PORN OF SERVICING WAS USED IN 1Y83, THE INSTRUMENT SYSTEM WAS ASSIGNED TO THE FIRST-LISTED CATEGORY THAT APPLIED. 9-7 PAGENO="0863" 857 Relationship of Means of Servicing to Working Condition In Table 9-4~, an analysis is presented of the propor- tion of. instruments in excellent working condition by the means used to service the instrument .in 1983, with age of -equipment held constant. It has already been shown (Figure 6-3) that a strong relationship exists between the age of an instrument and its working condition; this relationship is also reflected in Table 9-4. Within each age category, however, there seems to.be little difference in proportion of instruments in excellent condition between those under service contract and those receiv- ing M&R by any other means. ~The category No Service Required, of course, is excluded in this analysis.) This lack of relationship between 1983 nieans of ser- vicing and 1983 working condition, while interesting, does not necessarily imply a wider lack of relationship between an instru-. ment's history of M&R and its mechanical longevity. Longitudinal data would be required for the examination of .such cause-and- effect relationships. 9.4 M&R Costs and Age of Instruments M&R for an instrument system in the biological and medical sciences costs more after the instrument is over five years old, according to Table 9-5. Overall, the sean expendi- ture per system for M&R in FY 1953 was .$90L~ ~for systems from 1 to 5 years -old, $1,400 for those between 6 soil 10 years old, and $1,300 for those 11 years and older. The pattern of lower M&R costs during the first five years held true for all subfields. 9-8 PAGENO="0864" 858 TAStE 4-4 PEYCENT CF IS-USE ACADEMIC RESEARCH INSTRUMENT OYSTERS THAT ARE IN EXCELLENT WORKING CONDITION BY SYSTEM AGE: BIOLOGICAL AND MEDICAL SC1ENCES - PERCENT OF IN-USE SYSTEMS IN EXCELLENT WORKING CONDITION El] BY SYSTEM AGE 1-0 YEARS 6-10 YEARS 11+ YEARS TOTAL 1979-83) 1974-79) BEFORE 1974) TOTAL SELECTED FIELDS 537. 717. 41% 25/. PRINCIPAL MEANS OF SERVICING 02] SERVICE CONTRACT 49 66 40 29 NO SERVICE RESUIRED 76 BR 64 40 FIELD SERVICE. AG NEEDED DI 71 39 24 UNIVERSITY-SMFLOYEO 39 06 29 22 MAINTENANCE/REPAIR STAFF RESEARCH PERSONNEL 44 65 42 20 FACULTY FOST-OOCS, GRADUATE STUDENTS) (13 BASED ON USER CHARACTERIZATION. ED] IF ROME THAN ONE FORM OF SERVICING WAS USED IN 1993 THE INDTRUMENT SYSTEM WAS ASSIGNED TO THE FIRST-LISTED CATEGORY THAT APPLIED. 9-9 PAGENO="0865" 859 TABLE `-3 MEAN EXPENDITURE IN 1953 PER SYSTEM FOR MAINTENANCE AND REPAIR OF IA-USE ACADEMIC RESEARCH INSTRUMENT SYDTEMS. DY SYSTEM AGE: BIOLOGICAL AND )IEDICAI. SCIENCES - PER SYSTEM MEAN EXPENDITURE IN 1983 FOR MAINTENANCE HAD REPAIR SY SYSTEM AGE 1-3 YEARS 6-lU YEARS hA YEARS - TDTAL (1979-83) (1974-78) (BEFORE 1974) TOTAL SELECTED FIELDS 85.100 8900 NO.400 NO.300 SUBFIELD OF RESEARCH BIOCHEMISTRY 1.000 800 1.300 1.000 MICROBIOLOGY 0.200 900 1.100 1.800 MOLECULAR/CELLULAR BIOLOGY 1.200 850 1.600 l.A0O PHRXIOLOGY!BI5PMY5105 MOO 805 0.000 900 ANATOMY 1.600 800 2.000 2.40D PATHOLOGY 1.600 1.000 1.600 0.400 PRARMACOLOGY/TOZICOLOGY 1.100 1.100 1.300 700 000LOGY/ENTOMOLSGY TOO 300 1.300 1.400 BOTANY 800 000 1.100 BOO FOSS AND NUTRITION 600 300 300 1,000 BIOLOGY. GENERAL AND N.E.C. TOO 1.300 1.300 2.A0S MEDICAL SCIENCES/DEPTS. MED 0.400 1.200 2.000 1.000 ONTERDISCIPLINARY. N.E.C. 2.000 1.400 1,900 3.800 FIELD AND SETTING BIOLOGOCAL SCIENCES. TOTAL thUS 000 0.300 1,400 GRADUATE SCHOOLS 1.000 700 1.300 I.OOD ME000AL SCHOOLS 1000 900 1.300 1.000 OEPARTMETATS OF MEDICINE 1.200 1.000 1.600 1.000 INSTITUTION CONTROL PRIYATE 1.000 MOO 0.300 0.300 PSSLIC 1000 800 1.300 0.300 S1O.000-824.R99 700 300 900 TOO $23.005-$74.R99 1.400 BOO l.ROO 0.400 173.000-55 .000.000 6.300 0.900 6.200 6.300 PRINCIPAL MEANS OF SEMY100NG 110____ SERVICE CONTRACT 0.3U0 2.000 2.300 2.300 AS SERVICE RESUORES 0 U 0 0 FIELD SERVICE. AS NEEDED 700 300 800 1.000 UNIYEMSITY-EMPLOYED 600 300 300 500 MAINTENANCE/REPAIR STAFF RESEARCH PERSONNEL 400 300 300 300 FACULTY. POST-OOCS. GRADUATE STUDENTS) 000 IF MORE THAN ONE FORM OF SERVICING WAS USED ON 1983, THE INSTRUMENT SYSTEM WAS ASSIGNED TO THE FOR5T-iISTEO CATEGORY THAi APPLIED. 9-10 53-277 0 - 86 - 28 PAGENO="0866" 860 The mean expenditure for all instruments was $1,100. The subfields with the lowest M&R expendi.tur~s were food/nutrition ($600), zoology/entomology ($700), botany ($800), and physiology/ biophysics ($900). The highest expenditures were made by general biology ($1,700) and pathology and anatomy ($1,600 each). Departments of medicine and biological sciences had nearly the same mean expenditures. Private institutions spent $1,300 per instrument on M&R, while public institutions spent $1,100. Large differences in mean M&R expenditures were found for size of instrument purchase cost. For instrument systems costing between $10,000 and $24,999, an average of $700 was spent for M&R. The mean expenditure for those costing between $25,000 and $74,999 was $1,400, and for the most costly instru- ments, the mean expenditure was $6,300. This M&R cost differen- tial was reflected in each of the age categories, especially for those 11 years and older. Service contracts were by far the most costly means of performing M&R service with an average of $2,300 per instrument, compared to $700 for field service, $600 for M&R staff within the university, and $400 for research personnel. The costs for all means of servicing increased with age of instrument, the increment in cost for instruments 5 years old or less and that for instruments 11 years and older being 25 percent for service contracts, 100 percent for field service, 60 percent for M&R staff, and 67 percent for research personnel. 9-11 PAGENO="0867" 861 9.5 Summary Only 16 percent of departments in the biological and medical sciences considered their facilities for maintenance and repair as excellent, while nearly 50 percent reported insufficient or nonexistent facilities. Departments of medicine were more satisfied with their M&R facilities than were departments in the biological sciences. All departments of medicine had such faci- lities, while 18 percent of biological science departments did not. In FY 1983, 22.5 cents were spent on M&R for every dollar spent for new equipment. The mean expenditure per depart- ment for M&R was $30,200. Nearly two thirds of this amount went into service contracts and field service as needed. Private institutions spent 50 percent more per department than public institutions. Instruments were serviced under contract more frequently than by any other means, followed by field service. No servicing was required for 17 percent of the instruments. Negligible differences were found in the proportions of instruments in excellent working condition between instruments under service contract and those maintained by other means, when age of instru- ments was held constant. The amount spent per instrument for M&R rose after the instrument became six years old. While the overall mean expendi- ture per instrument was $1,100, it was $900 for those between 1 and 5 years old, and over $1,300 for those over 5 years of age. The mean M&R expenditure for instruments costing from $75,000 to $1 million, $6,300, was far more than the $700 expended for those costing between $10,000 and $29,999. Service contracts cost an average of $2,300 per instrument, compared to $700 for field service and less for other means of servicing. 9-12 PAGENO="0868" 862 In comparisons among the biological science disciplines, those with the most favorable (and satisfactory) M&R resources were consistently molecular/cellular biology and physiology/ biophysics, followed by general biology. The least satisfactory was food/nutrition. 9-13 PAGENO="0869" 863 10. SUMMARY 10.1 Overview The results of this study indicate that there are deficiencies in the current levels of instrumentation. The extent of the deficiencies varies significantly among the sub- fields of research. More advanced instrumentation is needed to allow investigators to perform critical experiments which cannot now be adequately conducted. Better maintenance and repair facilities are needed. Although 18 percent of the current national stock of equipment is considered state-of-the-art, that status is lost very rapidly; the need for upgrading is continuous and of the highest importance. 10.2 Department-Level Findings More than half of the heads of departments/facilities, in assessing the needs and priorities of their departments, stated that critical scientific experiments could not be con- ducted because their departments lacked appropriate instrumenta- tion. This was more often stated for the biological sciences than for departments of medicine, and for public institutions than for private institutions. The capability of existing research equipment to enable researchers to pursue their major research interests was rated excellent for tenured faculty by only one-sixth of the departments, while more than one-fourth rated their capability as insufficient. The proportion rated insufficient for untenured faculty was one-third. More than twice as many graduate school departments as departments in medical schools answered "insufficient," how- ever, and three times as many departments in public institutions 10-1 PAGENO="0870" 864 as in private institutions did so. Compared with other fields of science, the biological sciences as a who~.le had a more favor- able assessment of their current stock of equipment than any other field, but this was primarily due to medical schools. For biological science departments in graduate schools, the degree of insufficiency matched that given by graduate school depart- inents in other fields, such as physical sciences and engineering. Although these assessments are based not on quantitative data but rather on informed opinion, the consistency with which some large groups report more inadequacies than other groups indicates a widespread perception of a problem. If increased Federal funding were available for pur- chase of research equipment, two-thirds of heads of departments! facilities would put funds into instruments costing between $10,000 and $50,000, while another 20 percent desired instruments costing between $50,000 and $1 million. Private institutions preferred more instruments in the upper range than public insti- tutions. In other fields of science, there was more of a need for $50,000 to $1 million instruments than was found in the biological sciences, and even for systems costing above $1 million -- which none of the department heads in the biological sciences mentioned as a top priority need. When asked to list the three research instruments costing between $10,000 and $1 million that were most urgently needed, department heads often listed various types of preparative instruments. For most disciplines, these were the most frequently needed items. Nearly 80 percent of the instruments mentioned were in categories where the median cost of the instrument was tinder $75,000. Instruments with ~ median cost over $100,000 that were mentioned most frequently were electron microscopes and NMRs. 10-2 PAGENO="0871" 865 A total of $158 million was spent on rcsearch equipment costing over $500 in FY 1983 by the biological sciences and departments of medicine, with an additional $36 million spent on maintenance and repair of research equipment. The mean amount spent for research equipment in FY 1983 was $48,000 per annual coctoral degree awarded. The mean amount per faculty-level researcher was $5,900. Medical schools spent about twice the amount per doctoral degree and researcher as graduate schools, and private institutions considerably more than public institutions. 10.3 The National Stock of Academic Research Equipment There were over 21,000 instrument systems in the current inventories of the biological sciences and departments of medicine, with an aggregate purchase cost of $555 million. In terms of constant 1982 dollars, the cost of these instruments is estimated at $863 million. The biological sciences had more instrument systems than any other field of academic science, but the mea~i cost per instrument system ($27,000) was the lowest for any field except agricultural sciences. About three-fourths of all presently existing academic research instruments in the biological and medical sciences cost between $10,000 and $25,000. Only 5 percent cost between $75,000 and $1 million, but they accounted for one-fourth of all funds spent for equipment. Mean dollar amount of research instrumenta- tion per researcher in the biological sciences was about $21,000, but the amount in medical schools per researcher was 50 percent higher than in nonmedical schools. For departments of medicine, the mean equipment investment per researcher was $15,000. Mean aggregate equipment cost per doctoral degree awarded in 1982-83 in the biological sciences was $143,500, but for medical schools that cost was more than twice as much as for nonmedical schools. 10-3 PAGENO="0872" 866 Private institutions had higher investments per researcher arid per graduate degree than public institutions- State-of-the-art instruments constituted 18 percent of the national stock in 1983, although the percentage was larger in private institutions than public institutions. Another 65 percent were in active research use, although not classified as state-of-the-art. Instruments that were not in active use because of technological obsolescence or inoperable mechanical condition, but that were still physically present at the insti- tution, constituted another 16 percent of the national stock. Departments of medicine, however, had twice as large a percentage of obsolete or inoperable instruments on their inventories as the biological sciences. 10.4 Age and Condition of Academic Research Equipment For all instruments in the national stock, 44 percent were from one to five years old, and 27 percent were over 10 years old. Omitting the inactive systems from consideration, the proportion of instruments aged 1 to 5 years was 50 percent, and 22 percent were over 10 years old. For instrument systems that were in active research use, departments of medicine had a higher proportion of newer instruments than did the biological sciences, and private institutions had a higher proportion than public institutions. Instruments in the biological sciences were somewhat older than those in other fields of science. Most of the state-of-the-art instruments in 1983 were relatively new. Fifty percent of instruments purchased in 1983 were state-of-the-art, but of those purchased two years earlier (in 1981), only 37 percent were still considered state-of-the- art. Six-year-old instruments were classified as state-of-the- art only 13 percent of the time. Altogether, 85 percent of the 10-4 PAGENO="0873" 867 state-of-the--art instruments were from 1 to 5 years old, and only 3 percent were over 10 years old. -. About half of all instrument systems actively in use for research were in excellent working condition. As would be expected, there is a relationship between working condition and age of the instrument. Thus 78 percent of instruments from 1 to 3 years old were in excellent condition; of the instruments 4 to 6 years old, 57 percent were in excellent condition; and of those 10 to 12 years old, only 26 percent were rated as excellent. Accompanying this decline in operating condition with age of instrument was the `retirement' of instruments as they got older. In the biological sciences, 60 percent of instruments that were inactive (presumably because of mechanical or technological obsolescence) were over 10 years old. Of the state-of-the-art systems, which were relatively new, 85 percent were considered to be in excellent condition. Only 44 percent of those not considered state-of-the-art were in excellent condition, however. These "other" systems were con- siderably older and they constituted nearly 80 percent of all equipment inactive use. A substantial amount of other than state-of-the-art equipment is to be expected. Much of laboratory research does not require the most advanced instrumentation. A problem arises, however, when investigators using non-state-of-the-art equipment do not have access to more advanced equipment when needed. This problem was found frequently; nearly half of the non-state-of- the-art instruments in research use were the most advanced instruments of their kind to which users had access. This situation is an obstacle for investigators attempting to engage in more sophisticated research. The entire research effort in the biological sciences is hindered when problems such as 10-5 PAGENO="0874" 868 mechanically unreliable equipment and lack of access to advanced instrumentation become prevalent. -. 10.5 Funding of Equipment in Active Research Use Almost all research instruments (94%) in the biological sciences and departments of medicine were acquired new. Sources of funding were evenly split between Federal and non-Federal sources for the biological sciences, but for departments of medicine, nearly two-thirds of the funds came from non-Federal sources. For private institutions, a larger proportion of equip-~ ment funds came from Federal sources than was the case for public institutions. NIH was the principal source of Federal funds for acquisition of research equipment in the biological and medical sciences, contributing 44 percent of all funds for medical schools and 31 percent for graduate schools. NSF was the only other major Federal source, contributing more to graduate schools than to medical schools. The institutions were the majo~ source of non-Federal funds. State governments and private foundations gave only small amounts for research equipment. The amount contributed by business and industry for equipment was negligible. NIH funds, while accounting for 38 percent of all equipment purchases, contributed 47 percent of the support for purchases of instruments in the $10,000 to $25,000 range, but only 28 percent of the dollar support for existing equipment costing $75,000 or more. Institutions, however, which contributed 37 percent of all funds for equipment, purchased 31 percent of the instruments costing under $25,000 and 41 percent of those costing $75,000 or more. NSF-supported purchases for equipment followed the same pattern as that for institutions. 10-6 PAGENO="0875" 869 Sixty percent of all biological science instruments received full or partial Federal funding, coEparedto 48 percent of those in departments of medicine. 10.6 Location and Use of Academic Research Equipment About 65 percent of all equipment in the biological sciences and 70 percent in departments of medicine was located in the laboratories of individual investigators. The remainder was in inherently shared-access facilities, mostly department- managed common laboratories. Costly instruments were frequently located in the inherently shared-access facilities; this held true to a greater extent for graduate schools than for medical schools, and for public institutions than for private institutions. Older instruments were also more likely to be located in inherently shared-access facilities. Location of instruments within laboratories of individual investigators did not necessarily mean that they were not shared. The mean number of users of all instruments was 11 per instrument. The large majority of instrument systems were available for general purposes, as opposed to being dedicated for specific experiments. For these general purpose~instrurnents, the mean number of users was almost 12 per instrument. About 95 percent of all instruments in the biological sciences were used by faculty within the same department, and 85 percent were also used by graduate students, medical students, and postdoctorates from the departments. Additionally, 36 percent were used by faculty from other departments in the institution. Researchers from other universities and nonacademic researchers used the more costly instruments far more frequently than the lower-cost ones; this held true also'for researchers from other departments at the same institution. 10-7 PAGENO="0876" 870 The average instrument in an investigator's laboratory is freely accessible to other research investigators, as evi- denced by the numbers of users and the origins of users. From this conclusion, together with the 35 percent of all instruments located in faciliti~s that are -- by their very nature -- shared- access, it is evident that sharing of research equipment is common in academic :acilities. 10.7 Maintenance and Repair Nearly 50 percent of department/facilities heads assessed their maintenance and repair (M&R) facilities as either insuffi- cient or nonexistent. Overall, only 16 percent regarded their facilities as excellent. In private institutions, however, 30 percent rated their facilities as excellent, compared to 9 percent for public institutions. M&R expenditures in FY 1983 were $35.7 million, which amounted to 22.5 cents spent for M&R in that year for every dollar spent to acquire new equipment. The mean expenditure per department for M&R in FY .1983 was $30,200. Nearly two-thirds of that expenditure was used for outside services, i.e., service contracts or field services as needed. For instruments in research use during 1983 the mean M&R expenditure was $1,100. Instruments that were from 1 to 5 years old, however, had a mean M&R expenditure of $900, compared to over $1,300 for those more than 5 years old. The original purchase cost of inst:~uments gave rise to the largest differences in mean M&R expenditures: for those costing under $25,000 the mean M&R outlay was $700 in 1983; for those costing between 10-8 PAGENO="0877" 871 $25,000 and $74,999 it was $1,400; and for those costing between $75,000 and $1 million the mean 1983 expendiTture for M&R was $6,300. Service contracts cost an average of $2,300 per instru- ment, compared to $700 for field service and less for other means of servicing. They were used to maintain 39 percent of the instruments. An additional 27 percent of the instruments were given field service as needed. Research personnel and university- based M&R staff performed this service for 18 percent of the instruments. The remaining 17 percent neither had service con- tracts nor required M&R in 1983. 10.8 Group Comparisons Thus far, findings have been summarized with respect to topic areas. In addition, numerous differences were observed among groups of institutions, among subfields of research within the biological and medical sciences, and between the biological sciences and the other fields of science encompassed in the larger two-year study of academic research equipment. These group comparisons are brief ly.summarized here. 10.8.1 Differences Among Institutions (1) Medical and graduate (nonmedical) schools. Levels of investment in research instrumentation were substantially. higher for medical schools than for other academic institutions. For all indices examined -- equipment per institution, per instru- ment., per faculty-level. researcher, per doctoral degree awarded -- medical schools had larger instrumentation investments, both aggregate and current, than graduate (nonmedical) schools. 10-9 PAGENO="0878" 872 (2) 1?rivate and public institutions. Privately con- trolled institutions consistently showad an advantage over public institutions on a number of important dimensions. Their research instruments generally cost more, were .newer, and were better able to meet research needs. Private ±nstitutions also had better maintenance facilities. 10.8.2 Differences Among Subfields of Research in the Biological Sciences Certain subfields of research stand out from the others in some characteristics. A brief summary of major differences follows. * Biochemistry had the largest number of instruments costing over $10,000 -- nearly 4,500. It also had a higher proportion of instruments funded by Federal agencies than any other subfield. * In many respects, molecular/cellular biology appeared to be the best equipped research subfield. It had the second largest number of instruments, 2,900~. In percentage of instruments in excellent working condition, it rsnked very high. Department heads in this discipline ware more satisfied with the quality of their current instrumentation than in soy other sub- field. Equipment expenditures per :f:acalty researcher in 1983 exceeded by a large amount those icr all other ~disciplines. Anatomy and pathology were two of the smaller subfields in numbers of instruments. They had the highest costs per instrument, $32,000 and $31,000 :raspectivaly. Both subfields, particularly anatomy, also. had nnusuaily high proportions of instruments over U) years old in active research. use. 10-10 PAGENO="0879" 873 Zoology, botany, and food/nutrition were disciplines found almost entirely in nonmedical subdiv*isi~ons of universities. They were the three subfields with the smallest numbers of instru- ments. Very high proportions of department heads stated that critical experiments could not be performed in these disciplines because they lacked appropriate instrumentation. Food/nutrition had the lowest cost per instrument ($22,000) of any subfield, the poorest maintenance, and had, by far, the lowest percentage of Federal funding for its equipment. 10.8.3 Differences Between Departments of Medicine and Biological Science Fields Departments of medicine, included in the survey as an experiment to assess the feasibility of obtaining instrumentation indicators for medical (clinical) sciences, apparently can pro- vide data on samples of research instruments as easily as the biological sciences. With respect to Department/Facility Ques- tionnaires, however, it was learned that some of the larger, more diverse departments of medicine had difficulty in assembling expenditure, funding, and needs data for all the clinical fields subsumed within their jurisdictions. A better approach to collecting such data might be to go directly to each of the component clinical programs or subunits of departments of medicine. For most of the analyses performed in this report, departments of medicine (and presumably, the clinical sciences) had somewhat different results than the biological scid'nces. Departments of medicine apparently retired instruments at an earlier age than did the biological sciences. Within medical schools, the average costs of equipment per researcher were nearly twice as large for the biological sciences as for depart- ments of medicine. This difference on an index of equipment intensity is probably a function of the kinds of research performed 10-il PAGENO="0880" 874 by physician-researchers in clinical departments, compared with those in the basic biological sciences. Wh~reas over half of the funds for purchase of equipment in the biological sciences came from Federal agencies, 38 percent of equipment funds came from those sources for departments of medicine. The difference was made up by institutional funds, indicating a possible difference in institutional resources between the clinical and biological sciences. Departments of medicine also had better maintenance and repair facilities than the biological sciences. 10.8.4 Differences Between Biological Sciences and Other Fields of Science The biological sciences differed from the other fields of science addressed in the survey. They accounted for 38 percent of the instruments in all the fields surveyed; the next largest field was the physical sciences, with 25 percent of all instruments. The mean cost per instrument in the biological sciences was $27,000, compared to $41,000 for the physical sciences and $35,000 for engineering. Instruments in the biological sciences were somewhat older than those in other fields, but fewer instruments in the national stock in biology were techno- logically or mecha:~iically obsolete. The average instrument in the biological sciences was used by somewhat fewer investigators than was the case In other fields. The funding pattern for the biological sciences was unlike that for any other field, because of the prominence of NIH as a funding source in the biological sciences: NIH directly contributed 39 percent of the costs of all academic instrt~mentation in this field. 10-12 PAGENO="0881" 875 APPENDIX A COMPARISON TABLES FOR ALL FIELDS OF SCIENCE A-i PAGENO="0882" 876 INDEX OF COMPARISON TABLES FOR ALL SURVEYED FIELDS OF SCIENCE. Table A-i Number of departments and facilities and percent reporting important subject areas in which criticai experiments cannot be performed due to lack of needed equipment, by field A-5 A-2 Department/facility assessment of adequacy of available research instrumentation, by field A-6 A-3 Department/facility recommendations for increased federal support for research instrumentation, by field A-7 A-4 Total amount and cost of academic research instrumentation in national stock, by field A-8 A-5 Distribution of aggregate costs of academic research instrument systems in national stock, by system purchase cost and by field A-9 A-6 Research status of academic research instru- ment systems in national stock, by field A-lO A-7 Age of academic instrument systems in national stock, by field A-li A-8 Age of academic instrument systems in research use, by field A-l2 A-9 Percent of in-use research instrument systems in excellent working condition, by system research status and by field A-13 A-b Research function of academic instrumentation that is used for research but is not state- of-the-art, by field A-l4 A-il Sources of funds for acquisition of in-use academic research equipment, by field A-l5 A- 3 PAGENO="0883" 877 INDEX OF COMPARISON TABLES FOR ALL SURVEYED FIELDS OF SCIENCE (Continued) Table A-12 Fields receiving funding support for acquisition of in-use research equipment, by source of funds A-16 A-13 Federal involvement in funding of in-use academic research instrument systems, by field A-17 A-14 Location of in-use academic research instrument systems, by field A-18 A-15 Research function of in-use academic research instrument systems, by field A-19 A-16 Mean Number of research users of in-use academic research instrument systems, by research function and by field A-20 A- 4 PAGENO="0884" TABLE A-i NUMBER OF DEPARTMENTS AND FACILITIES AND PERCENT REPORTING IMPORTANT SUBJECT AREAS IN WHICH CRITICAL EXPERIMENTS CANNOT BE PERFORMED DUE TO, LACK OF NEEDED EQUIPMENT BY FIELD El] PERCENT REF'ORTING INABILITY TO CONDUCT CRITICAL NUMBER OF EXPERIMENTS DUE TO LACK DEPARTMENTS/FACILITIES OF NEEDED EOU1PMENT TOTALS SELECTED FiELDS 2507 74 FIELD OF RESEARCH AGRICULTURAL SCIENCES 241 83 BIOLOGICAL SCIENCES~ TOTAL 1136 59 GRADUATE SCHOOLS 550 60 MEDICAL SCHOOLS 588 50 ENVIRONMENTAL SCIENCES 235 63 PHYSICAL SCIENCES 367 89 ENGINEERING 652 90 COMPUTER SCIENCE a9 95 MATERIALS SCIENCE 19 100 INTERDISCIPLINARY7 N.E.C. 65 76 El] ALL STATISTICS ARE NATIONAL ESTIMATES ENCOMPASSING THE 157 LARGEST R & 0 UNIVERSITIES AND THE 92 LARGEST R 0 0 MEDICAL SCHOOLS IN THE NATION. FOR PHASE II FIELDS (AGRICULTURAL~ BIOLOGICAL AND ENVIRONMENTAL SCIENCES)~ ESTIMATES ARE AS OF DECEMBER 1963. FOR ALL OTHER FIELDS; ESTIMATES ARE AS OF DECEMBER 1982. SAMPLE IS 697 DEPARTMENTS AND FACILITIES. PAGENO="0885" TOTAL, SELECTED FIELDS FIELD OF RESEARCH AGRICULTURAL SCIENCES DIOLOSICAL SCIENCES, TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS ENVIRONMENTAL SCIENCES FHYSICAL SCIENCES ENGI NEER INS COMPUTER SCIENCE MATERIALS SCIENCE INTENDISCIFL INARV, N.E C 100/. 151. 59/. 26/. 1007. 147, 487. 397. 1007. 16/ 697. 15% 1001. 10/. 66/. 257. 1007. 47. 547. 427. 1007. 9/. 427. 50/, 100/, 2/ 57/. 457. 1007. 27/, 587. 157. 1007. 3O~ 337. 377. 52% 100% 15% 53% 327. 100% 15% 427. 437. 100% 15% 63% 223 100/. 107. 54% 367. 1007. 27. 49% 49% 1007. 6% .37% 577. 1007. ` 27. 527. 467. 1 007. 20% 357. 45T 1007. 32% 307. 377. TA8LE A-S DEPARTMENT/FACILITY ASSESSMENT OF ADEQUACY OF AVAILABLE RESEARCH INSTRUMENTATION. BY FIELD El] PERCENT OF DEFARTHENTS/FACILITIES PERCENT OF DEPARTMENTS/FACILITIES ASSESSING INSTRUMENTATION AVAILABLE TO ASSESSING INSTRUMENTATION AVAILABLE TO TENURED FACULTY AND EQUIVALENT P.1.' s AS1 UNTENURED FACULTY AND EQUIVALENT P.1. s AS; TOTAL EXCELLENT ADEQUATE INSUFFICIENT TOTAL EXCELLENT ADEQUATE INSUFFICIENT 1007. 11% 53% 36% 100% 10% 47% 43% 100% 8% 47/. 44% 100% 8% 39% [1] ALL STATISTICS AXE NATIONAL ESTIMATES ENCOTFASS!N12 THE 157 LARGEST N B UNIVERSITIES AND THE 92 LARGEST S B B MEDICAL SCHOOLS IN THE NATION. FOR PHASE II ILLSS (AGRICULTURAL. T:IULUGICAL AND ENVIRONMENTAL SCIENCES), ESTIMATES ARE AS OF DECEMBER 1983. FOR ALL OTHER FIELDS, ESTIMATES APE AS OF DECEMBER l151. SANFLE IX 897 DEFARTMENTS AND FACILITIES. PAGENO="0886" TOTAL SELECTED FIELDS 1007. FIELD OF RESEARCH 1007. 67. 797. 157. 1007. - 207. 667. 137. 1007. - 217. 637. 157. 1007. - 197. 697. 107. 1007. 6/. 367. 547. 27. 1007. 7.7. 437. 447. 67. 1007. 37. 28/. 607. 97. 1007. - 25/. 757. 1007. - 637. 177. 1007. - 487. 457. TABLE A-3 DEPARTMENT/FACILITY RECOMMENDATIONS FOR INCREASED FEDERAL SUPPORT FOR RESEARCH INSTRUMENTATION, DY FIELD (1) PERCENT OF DEPARTMENTS/FACILITIES RECOMMENDING AS TOP PRIORITY AREA FOR INCREASED FEDERAL SUPPORT OF ACADEMIC RESEARCH EQUIPMENT: SYSTEMS IN SYSTEMS IN LARGE $50,000- $10,000- SCALE $1,000,000 $50000 TOTAL FACILITIES RANGE RANGE LAB EQ UI PM EN I UNDER $10000 OTHER 27. 267. 617. 107. `17. AGRICULTURAL SCIENCES SIOLOGICAL SCIENCES TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS ENVIRONMENTAL SCIENCES PHYSICAL SCIENCES ENGI NEERING COMPUTER SCIENCE MATERIALS SCIENCE INTERDISCIPLINARY N.E.C. 7/. [1] ALL STATISTICS ARE NATIONAL ESTIMATES ENCOMPASSING THE 157 LARGEST R B D UNIVERSITIES AND THE 92 LARGEST R & D MEDICAL SCHOOLS IN THE NATION. FOR PHASE II FIELDS (AGRICULTURAL BIOLOGICAL AND ENVIRONMENTAL SCIENCES) ESTIMATES ARE AS OF DECEMITER 1983. FOR ALL OTHER FIELDS ESTIMATES ARE AS OP DECEMBER 1982. SAMPLE 17. 597IJEPARTMENTS AND FACILITIES. 27. 17. 27. 27. 27. PAGENO="0887" 881 TABLE A~4 TOTAL AMOUNT AND COST OF ACADEMIC RESEARCH INSTRUMENTATION IN NATIONAL STOCH, BY FIELD El] C DOLLARS IN THOUSANDS] NUMBER AND ACCRECATE PERCENT OF PURCHASE COST MEAN PURCHASE INSTRUMENT AND PERCENT COST PER SYSTEMS OF COST SYSTEM TOTAL, SELECTED FIELDS 46738 116307S0 $35 1007. 1007. FIELD OF RESEARCH AGRICULTURAL SCIENCES 1934 42599 47. 37. BIOLOGICAL SCIENCES, TOTAL 17513 471286 27 387. 297. GRADUATE SCHOOLS 7290 186272 26 167. 117. MEDICAL SCHOOLS 10326 283016 28 227. 177. ENVIRONMENTAL SCIENCES 2679 126231 47 67. 87. PHYSICAL SCIENCES 11544 481861 41 257. 307. ENGINEERING 9423 .333613 207. 207. COMPUTER SCIENCE 1113 50026 34 27. 47. MATERIALS SCIENCE 731 37120 51 27. 27. INTERDISCIPLINARY, N.E.C. 1371 76022 SO 37. 57. El] ALL STATISTICS ARE NATIONAL ESTIMATES ENCOMPASSING THE 137 LARGEST F UNIVERSITIES AND THE 92 LARGEST R 0 MEDICAL SCHOOLS IN THE NATION. FOR PHASE II FIELDS (AGRICULTURAL BIOLOGICAL AND ETIV1RCMMEUTAL SCIENCES) ESTIMATES A~E AS OF DECEMBER 1963. FOR ALL OTHER FIELDS, ESTIMATES ARE AS CF DECEMEER 1922. SAMPLE IS 8704 INSTRUMENT SYSTEMS. A- 8 PAGENO="0888" 882 TABLE A-S DISTRIDUTION OF AGGREGATE COSTS OF ACADEMIC RESEARCH INSTF:LMENT SYSTEMS IN NATIONAL STOCM~ BY SYSTEM ~URCHAEE COST AND BY FIELD I 1] EDCLLAAS IN MILLIONS] -AGGREGATE PURCHASE COST AND PERCENT OF COST-- SYSTEM PURCHASE COST $10000- $25000- $75000- TOTAL $24999 $74,999 $1000000 TOTAL SELECTED FIELDS $1630.73 $463.77 $020.37 E646.64 1007. 287. 327. 407. FIELD OF RESEARCH AGRICULTURAL SCIENCES 42.60 23.33 14.33 4.94 1007. 557. 347. 127. BIOLOGICAL SCIENCES. TOTAL 471.29 1~7.29 160.13 113.87 1007. 427. 347. 247. GRADUATE SCHOOLR 186.27 81.04 64.32 40.91 1007. 447. 357. 227. MEDICAL SCHOOLS 280.02 116.20 90.81 72.96 1007. 417. 347. 267. ENVIRONMENTAL SCIENCES 126.23 22.24 36.04 67.95 1007. 187. 297. 547. PHYSICAL SCIENCES 4S1.88 100.21 103.94 227.73 1007. 217. 327. 477. ENGINEERING 333.61 S9.~6 111.99 132.16 1007. 277. 347. 407. COMPUTER SCIENCE 60.03 5.54 17.03 33.95 1007. 147. 297. 577. MATERIALS SCIENCE 37.12 0.91 11.0.6 20.15 1007. 167. 307. 547. INTERDISCIPLINARY N.E.C. 78.02 16.79 15.30 40.88 1007. 227. AO7. 597 Cl) ALL STATISTICS ARE NATIONAL ESTIMATES ENCOMPASSING THE 157 LARGEST F 1 D UNIVERSITIES AND THE 92 LARGEST R 0 MEDICAL SCHOOLS. IN THE NATION. FOR PHASE II FIELDS (AGRICULTURAL SIOLOGICAL AND ENVIRONMENTAL SCIENCES) ESTIMATES ARE AS OF DECEMBER 1983. FOR ALL OTHER FIELDS, ESTIMATES ARE AS OF DECEMBER 1982. SAMPLE IS S704 INSTRUMENT SYSTEMS. A- 9 PAGENO="0889" I.,, 60 46767 5075 25399 1007. 177. 61/. 1'.) 0 TABLE A-b RESEARCH STATUS OF ACADEMIC RESEARCH INSTRUMENT SYSTEMS ITT NATIONAL STOCI4 BY FIELD (1) NUME:ER AND PERCENT OF SYSTEMS SYSTEM RESEARCH STATUS ----IN RESEARCH USE---- NOT YET IN NO LONGER STATE-OF- RESEARCH IN RESEARCH TOTAL THE-ART OTHER USE USE TOTAL, SELECTED FIELDS 771 9522 .27. 207. FIELD OF RESEARCH AGRICULTURAL SCIENCES 1904 437 . 1215 24 277 100/. 22/. 627. 17. 14/. BIOLOGICAL SCIENCES, TOTAL 17633 3268 11834 124 2406 1007. 197. 677. 17. 147. GRADUATE SCHOOLS 7300 1435 4958 32 874 1007. 207. 657. - 127. MEDICAL SCHOOLS 10333 1833 6876 92 1532 1007. 187. 677. 17. 157. ENVIRONMENTAL SCIENCES 2682 518 1608 48 508 100/. 197. 607. 27. 197. PHYSICAL SCIENCES 11656 1725 7076 161 2694 1007. 157. 617. 17. 237. ENGINEERING 9425 16~9 5111 327 2288 1007. 157. 547. 37. 247. COMPUTER SCIENCE 1115 186 692 65 172 1007. 177. 627. 67. 157. MATERIALS SCIENCE 731 116 534 3 78 1007. 167. 737. - 117. INTERDISCIPLINARY. N.E.C. 1571 135 329 19 1099 1007. 87. 217. 17. 707. (13 ALL STATISTICS ARE NATIONAL ESTIMATES ENCOMPASSING THE 157 LARGE21 R .5 D UNIVERSITIES AND THE 92 LARGEST R I B MEDICAl. SCHOOLS 1N.THT NATION. POT PHASE II FIELDS (AGRICULTURAL. BIOLOGICAL AND ENVIRONMENTAL SCICT4CEY( ESTIMATES ARE AS OP DECEMBER 1983. POT ALL OTHER FIELDS~ ESTIMATES ARE AS OF DECENELE 1982. SAMPLE IS 8704 INSTRUMENT SYSTEMS. PAGENO="0890" 884 TABLE A-7 AGE OF ACADEMIC RESEARCH INSTRUMENT SYSTEMS IN NATIONAL 870CM. BY FIELD U] NUMBER AND PERCENT OF SYSTEMS SYSTEM AGE (PROM YR OF FURC~ASE)C2] OV~ 10 TOTAL 1-5 YEARS 6-10 YEARS. YEARS TOTALS SELECTED FIELDS 45890 21663 10885 13342 * 1007. 477. 247. 297. FIELD OF RESEARCH * AGRICULTURAL SCIENCES 1950 1028 518 407 * - 1007. 537. - 287. 217. * BIOLOGICAL SCIENCES, TOTAL 17545 7768 498~ 4812 1007. 447. 287. 277. - GRADUATE SCHOOLS 7250 3431 1854 1965 * . 1007. 477. 287. 277. MEDICAL SCHOOLS. lC39~ 4337 3111 2847 1007. 437. 307. 287. ENVINONMENTAL SCIENCES 2864 1412 660 592 1007. 537. 257. 227. PHYSICAL SCIENCES 11484 5155 2461 3869 1007. 457. 217. 347. ENGINEERING 9224 4845 1723 2656 1007. 537. 197. 297. COMPUTER SCIENCE 1073 9~9 87 116 1007. 817. 87. 117. * MATERIALS SCIENCE 731 239 113 379 1007. 337. 157. 527. INTERDISCIPLINARY. N.E.C. 1219 34& 361 - 511 1007. 297. 307. 427. U] ALL STATISTICS ARE NATIONAL ESTIMATES ENCOMPASSING THE 157 LARGEST P & B UNIVERSITIES AND THE 92 LARGEST P D MEDICAL SCHOOLS IN THE NATION. FOR PHASE II FIELDS (AGRICULTURAL~ BIOLOGICAL AND ENVIRONMENTAL SCIENCES) ESTIMATES ARE AS OF DECEMBER 1993. FOR ALL OTHER FIELDS ESTIMATES ARE AS OF DECEMBER 1982. SAMPLE 1.8 87-34 INSTRUMENT SYSTEMS. C23 FOR PHASE II FIELDS~ AGE INTERVALS ARE I~5 YEARS (1979-93) 6-10 YEARS ((974-78); OVER 10 YEARS (1973 CR BEFORE). FOR PHASE I FIELDS INTERVALS ARE 1-5 YEARS (1978-82); 6-10 YEARS (1973-77); OVER 10 YEARS 1972 OR BEFORE). A-il PAGENO="0891" 885 9757 9174 247. 22% 447 23 277. I:1. 4242 3396 28% 237. 1602 1447 2:7. 237. 2641 1949 307. 227. 546 361 267. 177. 1872 2260 217. 267. 1299 1509 SI 10 103 312 167. 48% TABLE A-B AGE OF ACADEMIC INSTAUMENT SYSTEMS IN RESEARCH USE. BY FIELD El] NUMBER AND PERCENT OF IN-USE SYSTEMS SYSTEM AGE FROM YR OF FURCHASEC2] OVER 10 TOTAL 1-5 YEARS 6-10 YEARS YEARS 36350 19419 100% 53% TOTAL, SELECTED FIELDS FIELD OF RESEARCH AGRICULTURAL SCIENCES BIOLOGICAL SCIENCES, TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS ENVIRONMENTAL SCIENCES PHYSICAL SCIENCES ENGINEER 1MG COMPUTER SCIENCE MATERIALS SCIENCE INTERDISCIPLINARy, N.E.C. 1653 100% 10050 1 007. 6372 100% 8683 1 00% 2123 1007. 5763 1 00% 6777 1 00% 674 1 007. 650 1 00% 952 087. 7416 49% 3323 :57. 4093 477. 1217 577. 4431 037. 092 813 93% 235 404 155 73 100% 41% ~3% 14% I I~] ALL STATISTICS ARE NATIONAL ESTIMATES ENCCMPASSINC THE 157 LARGEST N B 0 UNIVERSITIES AND THE 92 LAROEST S B D MEDICAL SCHOOLS IN THE NATION. FOR CHASE II FIELDS (AGRICULTURAL. BIOLOGICAL AND ENVIRONMENTAL SCIENCES). ESTIMATES ARE AS OF DECEMBER 1983. FOR ALL OTHER FiELDS, ESTIMATES ARE AS OF DECEMBER 1982. SAMPLE IS .5950 INSTRUMENT SYSTEMS. ES] FOR ~HASE II FIELDS AGE INTERVALS ARE I-S ~E~S5 (l~~9-83 ; 6-10 YEARS (1974-78); OVER 10 YEARS 1973 OP BE~OPE. FOR FHASEI FIELDS INTEPVALS ARE 1-5 YEARS 197S-85); 4-10 ~EARS (1973-77)I OVER IG IEARS 1972 OR BEFORE). A-12 PAGENO="0892" TA8LE A-9 PERCENT OF IN-USE RESEARCH INSTRUMENT SYSTEMS IN EXCELLENT WORKING CONDITION. BY SYSTEM RESEARCH STATUS AND BY FIELD (1] PERCENT OF SYS-TEMS IN - EXCELLENT. WORKING CONDItION RESEARCH STATUS------ STATE-OF-THE- OTHEF~ IN-USE -- TDTAL ART SYSTEMS SYSTEMS TOTAL. SELECTED FIELDS 527. D4% 43% FIELD OF RESEARCH AGRICULTURAL SCIENCES 567. 817. 477. BIOLOGICAL SCIENCES. TOTAL 537. 867. . 44% GRADUATE SCHOOLS 557. 90% 44% MEDICAL SCHOOLS S~7. 627. 447. ENVIRONMENTAL SCIENCES 507. 827. 40% PHYSICAL SCIENCES 527. 64% 447. ENGINEERING 517. 657. 40% COMPUTER SCIENCE 567. 897. 477. MATERIALS SCIENCE 321. 747. 237. INTERDISCIPLINARY, N.E.C. 447. 587. 397. (13 ALL STATISTICS ARE NATIONAL ESTIMATES ENCOMPASSING tHE 157 LARGEST R & 0 UNIVERSITIES AND THE 92 LARCEST F 0 MEDICAL SCHOOLS IN THE NATION. FOR PHASE II ~IELD6 (AGRICULTURAL. DIOLOGICAL AND ENVIRONMENTAL SCIENCES), ESTIMATES ARE AS OF DECEMSER 1983. FOR ALL OTHEF FIELDS. ESTIMATES ARE AS OF DECEMBER 1982. SAMPLE IS 698S INSTRUMENT SYSTEMS. PAGENO="0893" 887 TABLE A-1O RESEARCH FUNCTION OF ACADEMIC INSTRUMENTATION THAT IS USED FOR RESEARCH BUT IS NOT STATE-OF-THE-ART, BY FIELD (1] NUMBER AND PERCENT OF NON STATE-OF-THE-ART SYSTEMS RESEARCH FUNCTION THE MOST ADVANCED USED FOR RESEARCH INSTRUMENT TO BUT MORE ADVANCED WHICH ITS USERS EQUIPMENT IS AVAIL- TOTAL HAVE ACCESS ABLE WHEN NEEDED TOTAL, SELECTED FIELDS 28335 13172 15163 1007. 467. 54*f, FIELD OF RESEARCH AGRICULTURAL SCIENCES 1215 681 535 1007. 567. 447. BIOLOGICAL SCIENCES TOTAL 11804 5076 6728 1007. 437. 577. GRADUATE SCHOOLS 4940 2i58 2782 1007. 447. 567. MEDICAL SCHOOLS 6864 2918 3945 1007. 437. 577. ENVIRONMENTAL SCIENCES 1598 756 841 1007. 477. 537. PHYSICAL SCIENCES 7067 3470 3549 1OCS 497 517. ENGINEERING 5097 2536 2561 1007. 507. 50/. COMPUTER SCIENCE 692 351 341 1007. 51/. 497. MATERIALS SCIENCE 534 164 350 1007. 357. .55/. INTERDISCIPLINARY, N.E.C. 329 118 211 1007. 367. 54~. Cl) ALL STATISTICS ARE NATIONAL ESTIMATES ENCOMPASSING T~5 1S7 LARGEST ~ D UNIVERSITIES AND THE 92 _APGEST 4 0 MEDICAL SCHOOLS IN THE NATION. FOR PHASE II FIELDS (AGRICULTURAL, BIOLOGICAL AND ENVIRONMENTAL SCIENCES ESTIMATES ARE AS OF DECEMBER 1993. FOR ALL OTHER FIELDS, ESTIMATES ARE AS OF DECEMBER 1982. SAMPLE IS S393 INSTRUMENT SYSTEMS. A- 14 PAGENO="0894" TA8LE A-Il SOURCES OF FIflIDS FOR ACQUISITION OF IN-USE ACADEMIC RESEARCH EQUIPMENT DY FIELD (I) (DOLLARS IN MILLIONS) -ACQUISITION COST AND PERCENT OF COST SOURCE OF FUNDS FEDERAL UNIV. STATE DUSI- TOTAL TOTAL NSF NIH 000 DOE NASA USDA OTHER FUNDS GOVT. NESS OTHER TOTAL SCLECTED FIELDS $1178.0 $640.3 $230.6 $176.5 $I03.~? $83.1 $30.8 $5.0 $30.2 $371.5 $61.5 $43.2 $61.5 1007. 547. 20% 157. ~7. 5% 3% - 37. 327. 5~/. 47. 5% FIELD OF RESEARCH AGRICULTURAL SCIENCES 36.1 7.8 1.7 1.3 0 .3 * .3 2.7 1.5 17.8 6.7 1.8 2.1 100% 217. 5% 47. - 1% 1% 77. 4% 497. 167. 57. 6% DIOLOGICAL SCIENCES TOTAL 381.3 198.5 35.3 149.7 2.1 3.5 .4 1.9 5.5 131.2 18.6 6.5 26.5 1007. 52% 9~ 397. 1% 1% - - 17. 347. 57. 27. 75 GRADUATE SCHOOLS 156.1 80.6 24. 48.9 1.0 .7 .4 1.7 3.5 48.2 13.0 4.3 10.0 1007. 52% l6~ 31'. 1% - - 17. 2% 31% 87. 3% 6% MEDICAL 5CHOOLS 225.2 117.9 10.8 100.8 1.2 2.9 0 .2 2.1 83.0 5.5 2.3 16.4 (1) 1007. 52% 5% 457. 17. 17. - 1% 37% 2% 1% 7% ENVIRONMENTAL SCIENCES 92.3 45.7 16.5 .5 6.6 8.2 5.4 0 8.5 27.5 7.2 8.4 3.5 100% 507. 107. - 7% 9% 67. 9% 30% 87. 9% 4% PHYSICAL SCIENCES 351.9 229.1 116.1 19.5 32.3 33.0 22.3 .1 5.7 92.2 6.6 4.1 20.0 100% 65% 337. 67. 9% 9% 6% - 2% 267. 27. 17. 67. ENGINEERING 218.9 106.4 35~I 2.7 45.8 14.4 2.2 .3 5.8 78.5 13.5 13.1 7.4 100% 497. 167. 1% 21% 7% 1% - 3% 36% 6% 6% 3% COMPUTER SCIENCE 46.9 21.5 10.6 .3 9.1 .3 0 0 1.0 11.5 4.9 7.7 1.2 100% 467. 237. 17. 197. 17. - 2% 25% 10% 16% 3% MATERIALS SCIENCE 34.1 24.3 13.5 .7 5.4 3.4 0 0 1.3 6.0 2.6 .6 .6 100% 717. 40% 27. 167. 10% 4% 18% 87. 2% 2% INTERDISCIPLINARY. N.E.C. 16.6 7.0 1.8 1.9 2.4 0 0 0 .9 6.8 1.5 .9 .4 100% 427. 117. 117. l~% - - - 57. 417. 9% 67. 2% (I] ALL STATISTICS ARE NAT IO~1AL ESTIMATES ENCOMPASSTNG THE 157 LARGEST R 0 UNIVERSITIES AND THE 92 LARGEST R Z~ 0 MEDICAL SCHOOLS IN THE NATION. FOR PHASE II FIELDS AGRICULTURAL. BIOLOGICAL AND ENVIRONMENTAL SCIENCES) ESTIMATES APE AS OF DECEMBER 1963. FOR ALL OTHER FIELDS EStIMATES ARE AS OF DECEMBER 1962. SAMPLE IS 6985 INSTRUMETIT SYSTEMS. PAGENO="0895" TABLE A-IS FIELDS RECEIVING FUNDING SUPPORT FOR ACQUiSITION CF IN-USE RESEARCH EQUIPMENT BY SOURCE OF FUNDS (I] (DOLLARS IN MILLIONS) - - ACQUISITION COST AND PERCENT OF COST SOURCE OF FUNDS FEDERAL UNIV. STATE DUSI- TOTAL TOTAL NSF NIH DOD DOE NASA USDA OTHER FUNDS GOVT. NESS OTHER TOTAL SElECTED FIELDS $1178.0 $640.3 $230.8 $176.5 $103.9 $63.1 $30.8 $5.0 $30.2 $3715 $61.5 $43.2 $61.5 1007. 100/. 1007. 1007. 100/. 1007. 1007. 1007. 1007. 1007. 1007. 1007. 1007. FIELD OF RESEARCH AGRICULTURAL SCIENCES 36.1 7.B 1.7 1.3 0 .3 .3 2.7 1.5 17.8 6.7 1.8 2.1 37. 17. 17. 17. - - 17. 547. 5% 5% 117. 4% 3/. BIOLOGICAL SCIENCES TOTAL 341.3 198.5 35.3 149.7 2;1 3.5 .4 1.9 3.5 13l~2 18.6 6.5 26.3 327. 317. 157. 83/. 27. 6% 17. 377. 187. 357. 307. 157. 437. GRADUATE SCHOOLS 136.1 80.6 24.5. 48.9 1.0 .7 .4 . 1.7 3.5 48.2 13.0 4.3 10.0 137. 13/. 11% 287. 17. 17. 1% 34% 117. 137. 217. 107. 167. MEbICAL SCHOOLS 225.2 117.9 10.8 100.8 1.2 2.9 0 .2 2.1 83.0 5.5 2.3 16.4 197. 167. 5/. 577. 17. 57. 37. 7% 22% 97. 5/. 277. ET~VihONMET~TAL SCIENCES 92.3 45.7. 16.5 .5 6.6 8.2 5.4 0 8.5 27.5 7.2 a.4 3.5 87. 77. 77. - 67. 137. 18% 28% 7% 127. 197.. 67. PHYSICAL SCIENCES 351.9 229.1 116.1 19.5 32.3 33.0 22.3 .1 5.7 92.2 6.6 4.1 20.0 307. 367. 507. 11/. 317. 527. 737. 27. 19% 257. 117. 107. 32% EIthINEERI)Th 216.9 102.4 35.1 2.7 45.8 14.4 2.2 .3 5~8 78.5 u.s 1~.1 1 7.4 19/. 177. 15/. 27. 44% 237. 77. 77. 19% 21% 227. 30% 12% CdM~WTER SCIENCE 46.9 21.5 10.8 .3 9.1 .3 0 0 1.0 11.5 4.~ 7.7 1.2 4z 37. SC - 97. - - 37. 3% [17. 18% 27. MAtERIALS SCIENCE 34.1 24.3 13.5 .7 5.4 3.4 0 0 1.3 6.0 2.6 .6 .6 17. 47. 67. - . 57. 57. 4% 27. 47. 17. 17. INTERDISCIPLINARY. N.E.C. 16.6 7.0 1.8 1.9 2.4 0 0 0 .9 6.8 1.5 .9 .4 1% 17. IL 17. 27. - - - 3% 2% 2% 2% 17. (11 ALL STATISTICS ARE. NATIONAL ESTIMATES ENCOMPASSING THE 157 LARGEST R 6 D UNIVERSITIES AND THE 92 LARGEST R 6 MEDICAL SCHOOI.S IN THE NATION. FOR PHASE II FIELDS (AGRICULTURAL, BIOLOGICAL AND ENVIRONMENTAL SCIENCES). ESTIMATES ARE AS OF DECEMSEN 1983. FOP ALL OTHER FIELDS. ESTIMATES ARE AS OF DECEMEER 1982. SAMFLEIS 6985 INSTRUMENT SYSTEMS. PAGENO="0896" * TAIILE A-13 FEDERAL INVOLVEMENT IN FUNDING or IN-USE ACADEMIC RESEARCH INSTRUMENT SYSTEMS, DY FIELD (1] PERCENT OF SYSTEMS --FEDERAL FUNDING INVOLVEMENT- NO PARTIAL 1007. FUNDING FUNDING FUNDING TOTAL. SELECTED FIELDS 1007. 337. 187. 447. FIELD OF RESEARCH AGRICULTURAL SCIENCES 1007. 727. 107. 187. BIOLOGICAL SCIENCES, TOTAL 1007. 40% 12'!. 497. GRADUATE SCHOOLS 1007. 417. 14'!. 457. MEDICAL SCHOOLS 1007. 397. 107. 517. ENVIRONMENTAL. SCIENCES 100% 43% 187. 387. PHYSICAL SCIENCES 1007. 247. 277. 497. EUGINEERIr1c, 1007. 43% 207. 377. COMPUTER SCIENCE * * 100% 427. 297. * 297. MATERIALS SCIENCE * 1007. 137. 321'. 557. IN1ERDIsC'.PL (NARY. rLE.C. ioo:~ bOX 27% 237. (1) ALL STAT.IFTICS ARE HAT IlirIAL ~T fl-TAlES ENCIiI1PASS(NG THE 157 LARGEST R T 0 UNIVERSI TIES AND THE 92 LA~LS I F 1 2 liE DI CAL CrlCOLS Iii THE NAT ION. FOR PHASE 11 F IELDE (AGE ICUL (HEAL I: ITJLIID (CAL Allil ENVI R2FMEI( IAL SC IENCE~) * EDT IIIATES ARE AS OF DECEMIER 193.3. FiT!: ~.L 0 IFS! TIELDIfi ESLILAISS AEE i~3 OF OECEMI3ER 1902. SANFLE I C ~9DF I NSTF:uMLri I FYSTENC - TOTAL PAGENO="0897" I4ESEAFCH INSTRUMENT SYSTEMS, ITY FIEI.D [1] -- - ------------ NUMEER ANp PERCENT OF SYSTEMS- - ~~-- --- ------- LOCATION LAB OF NAT'L OR NOIIDEFYRT- DEPARTMENT OTHER INDIVIDUAL REGIONAL MENTAL MANAGED SHARED TOTAL F. I. LAB FACILITY COMMON LAB ACCESS H co 2340 11466 532 67. 32~/. 17. TADLE A- 14 LOCAT I 014 OF 111-USE ACADEIII TOTAL, SELECIED FIELDS FIE1~D OP RESEARCH AGE CUlTURAl. SçI ElITES AIOLOEICAL SCIENCES TOTAL GRADUATE SCHOOLS IIEDICAL SCHOOLS EIIVI I:ONMEIITAL SCIENCES PHYSICAl. SCIENCES 11-101111 ER 1140 CITMFU I sr~ SC I Fl-ICE ITATCITIAI. 3 STJEIICE 111 El'I)IDCIPL Il-lAST 11.E.i. 36212 21390 1007. 597. 1631 1037 1007. 647. 15016 9739 1007. 657. 6353 4168 1007. 667. 8663 5571 1007. 647. 2083 1080 1007. 027. 8731 5708 1007. 657. 4777 3412 1007. 507. 578 170 1007. 197. 642 121 10D7. 197. 454 124 100/. 277. 484 17. 17. I 08 17. 62 17. 46 17. 56 37. 1 96 27. 56 17. 2 37 67. 17 47. 61 504 47. 31% 483 4641 37. 317. 223 1871 47. 297. 260 2770 37. 327. 280 550 137. 287. 546 2118 67. 247. 430 2673 67. 39'!. 122 573 147. 657. 309 176 48% 27% 109 203 24% 457. 18 1% 45 29 16 88 47. 163 27. 205 3% 11 17. 0 2 (1) ALL 0441 ISIICS ARE 1-IR1IOIIAL ESTIIIATES EI4COI-IFASSII1G TIlE 157 LARG~ST S ID UNIVERSITIES AND Till: 10 L AI1NE9I IT I S MOD! CII. OCIIOOLS IN THE NA 11011. FOR PHASE II F IELDS (AGR ICULTURAL LIIOLON CAL Al-ID EOV IRUNI-IEIJI AL SCI EIICEII) , ESTIMATES AIIE AS OF DECEMDEII 1983. FOR ALL OTHEII F I EI.Llii, ES TI hAlES AIlS AS DI IIIECEI-113E11 1982. SAMPLE IS 6985 INSTRUMENT SYS TENS. PAGENO="0898" 892 * TASLE.A-15 ~E5EARCH FUNCTION OF IN-USE ACADEMIC RESEARCH INSTRUMENT SYSTEMS, DY FIELD 111 . NUMBER AND FERctNT OF SYSTEMS RESEARCH FUNCTION DEDICATED GENERAL TOTAL MODIFIED NOT MODIFIED PURPOSE 4OTAL~ SELECTED FIELDS 35768 7432 26014 - 1007. 21% 737. . FIELD OF RESEARCH * AGRICULTURAL SCIENCE! 1602 64 316 1222 - 100% 47. 20% 767. * * . BIOLOGICAL SCIENCES. TOTAL 14760 660 1935 12265 1007. 4% 12% 83% . . GRADUATE SCHOOLS 6212 226 652 . 5334 100% 47. 11% 867. . MEDICAl. SCHOOLS . . 5048 434 1183. 6931 . . 1007. 5% . .14% 81% ENVIRONMENTAL SCIENCES 2103 189 . 499- 1414 1007. 47. 24% 677. PHYSICAL SCIENCES 8630 771 2604 5205 100% 207. 617. ENGINEERING 6724 592 . 1896 4246 100% . 47. 28% 63% ** COMPUTER SCIENCE 866 . 4 140 722 . . 1007. - 167. 93% * MATERIALS SCIENCE 637 36 . 95 506 100% 6% 157. 79% INTERDISCIPLINARY~ N.E.C. 445 16 46 283 100% 4% 10% 867. tI) ALL STATISTICS ARE NATIONAL ESTIMATES ENCOMPASSING THE l57 LARGEST P & 0 UNIVERSITIES AND THE 92 LARGEST P & B MEDICAL SCHOOLS IN THE NATION. FOR PHASE Ii FIELDS (AGRICULTURAL~ BIOLOGICAL AND ENVIRONMENTAL SCIENCES~ ESTIMATES ARE AS OF DECEMBER 1483. FOR ALL OTHER FIELDS~ ESTIMATES ARE AS OF DECEMBER 1992. SAMPLE IS 6985 INSTRUMENT SYSTEMS. A-19 PAGENO="0899" OF IN-USE ACADEMIC F:ESEARCH INSTRUMENT AND DY FIELD (1) MEAN NUMOER OF RESEARCH USERS (2) ------------F:ESEARCH FUNCTION DEDICATED - CENERAL TOTAL MODIFIED NOT MODIFIED PURPOSE 7.5 6.4 16.6 TABLE A-b MEAN NUMEER OF RESEARCH USERS SYSTEMS, DY RESEARCH FUNCTION TOTAL, SELECTED FIELDS FIELD OF RESEARCH AGRICULTURAL SCIENCES BIOLOGICAL SCIENCES, TOTAL GRADUATE SCHOOLS MEDICAL SCHOOLS ENVIRONMENTAL SCIENCES PHYSICAL SCIENCES EN G I NE ER I N C cD 14.3 11.0 11.5 12.4 10.8 12.4 13.3 14.1 8. 1 7.9 11.0 6.3 7.7 6.3 6.6 12.0 6.6 12.4 6.5 13.1 6.7 11.9 6.1 13.3 8.0 20.6 00 6.3 10.8 16.8 COMPUTER SCIENCE 32.6 32.6 20.2 SB.B I MATERIALS SCIENCE 24.3 27.0 6.8 27.5 INTERDISCIPLINARy, N.E.C. 13.0 19.3 16.6 14.8 (1] ALL STAT1STICS ARE NATIONAL ESTIMATES ENCOMPASSING THE 137 LARGEST R & D UNIVERSITIES AND THE 92 LARGEST N & I) MEDICAL SCHOOLS IN THE NATION. FOR PHASE II FIELDS (AGRICULTURAL, OIOLOGIc.AL AND ENVIRONMENTAL SCIENCES), ESTIMATES ARE AS OF DECEMBER 1963. FOR ALL OTHER FIELDS, ESTIMATES ARE AS OF DECEMBER 1982. SAMPLE IS 6963 INSTRUMENT SYSTEMS. (23 FOR FHASE II FIELDS ESTIMATES ARE OF USERS DURING 1963; FOR PHASE I FIELDS, ESTIMATES ARE OF USERS DURING 19O~. PAGENO="0900" 894 APPENDIX B DEPARTMENT/FACILITY QUESTIONNAIRE B-i PAGENO="0901" 895 Form Number 0MB No. 3145-0067 Expiration Date 9/30/85 NATIONAL SCIENCE FOUNDATION DIVISION OF SCIENCE RESOURCES STUDIES NATIONAL SURVEY OF ACADEMIC RESEARCH INSTRUMENTS AND INSTRUMENTATION NEEDS DEPARTMENT/FACILITY QUESTIONNAIRE THIS REPORT IS AUTHORIZED BY LAW (P.L. 96-44). WHILE YOU ARE NOT REQUIRED TO RESPOND, YOUR COOPERATION IS NEEDED TO MAKE THE RESULTS OF THIS SURVEY COMPREHENSIVE, ACCURATE, AND TIMELY. INFORMATION GATHERED IN THIS SURVEY WILL BE USED ONLY FOR DEVELOPING STATISTICAL SUMMARIES. INDIVIDUAL PERSONS, INSTITU- TIONS, AND DEPARTMENTS WILL NOT BE IDENTIFIED IN PUBLISHED SUMMARIES OF THE DATA. PAGENO="0902" 896 BACKGROUND AND INSTRUCTIONS In recent years, widespread concern has developed about whether university research scientists and engineers have sufficient access to the kinds of equipment needed to permit continuing research at the frontier of scientific knowledge. To assist the National Science Foundation and other Federal agencies in setting appropriate equip- ment funding levels and priorities, this Congressionally mandated survey is intended to document, for the first time: (a) the amount, cost, and condition of the scientific research equipment currently available in the nation's principal research universities, arid (b) the nature and extent of the need for upgraded or expanded equipment in the major fields of science and engineering. The survey is being conducted in two phases. The current phase deals with research equipment in the physical sciences and engi- neering/computer science. Next year, in Phase II, the emphasis will be on the biological, environmental, and agricultural sciences. This Department (or nondepartmental research facility) Ques- tionnaire seeks a broad overview of equipment-related expenditures and needs in this department (or facility). Items 1-10 (Parts A and B) are factual in nature and maybe delegated to any person or persons who can provide the requested data. In these sections, informed estimates are acceptable whenever precise information is not avail- able from annual reports or other data sources. Items 11-16 (Part C) call for judgmental assessments about equipment-related research needs and priorities of the department (or facility) as a whole and should be answered by the department chairperson (or facility director) or by a designee who is in a position to make such judgments. We urge that particular attention begiven to item 16, which asks for this department's (or facility's) recommendations about needed changes in equipment funding policies and procedures. This form should be returned by May 30, 1983. Your cooperation in returning the survey form promptly is very important. Please direct any questions about this form either to your university study coordinator or to Ms. Dianne Walsh at Westat, Inc., the NSF con- tractor for this study (301-251-1500). PAGENO="0903" 897 PART A. DESCRIPTIVE INFORMATION 1. Institution name: _____________________________________ 2. Department (or nondepartmental research facility)~ name: 3. This is a: (CHECK ONE) I_I 1. Department (CONTINUE WITH ITEM 4) I_I 2. Nondepartmental research facility (SKIP TO ITEM 6) 4. Number of doctoral degrees awarded in 1981-82 academic year to students in this department: 5. Number of members of this department who participate in ongoing research projects (do not include graduate students or postdoctorates): ________ Total number of persons (full-time and part-time) ________ FTE* nu~nber of persons PART B. RESEARCH-RELATED FUNDING AND EXPENDITURES 6. Department (or facility) FY 1982 and anticipated FY 1983 expenditures for scientific research equipment. [SCIENTIFIC RESEARCH EQUIPMENT IS ANY ITEM (OR INTERRELATED COLLECTION OF ITEMS COMPRISING A SYSTEM) OF NONEXPENDABLE TANGIBLE PROPERTY OR SOFTWARE HAVING A USEFUL LIFE OF MORE THAN TWO YEARS AND AN ACQUISITION COST OF 5500 OR MORE WHICH IS USED WHOLLY OR IN PART FOR RESEARCH. INCLUDE ALL SCIENTIFIC RESEARCH EQUIPMENT ACQUIRED IN THIS DEPART- MENT (OR FACILITY) IN FY 1982, FROM ALL SOURCES -- FEDERAL, STATE, INSTITU- TIONAL, INDUSTRIAL, ETC.) $_________________ FT 1982 expenditures for scientific research equipment $_________________ Anticipated FY 1983 expenditures for scientific research equipment *In computing number of FTE5 (full-time equivalents), persons employed in this department on less than a full-time basis should be counted to reflect their decimal fraction of full-time equivalency. Example: if a department employs 25 pertinent faculty members, 20 full-time and 5 with half-time appointments, the FTE number is 20 + (5 x .5) = 22.5. 3 PAGENO="0904" 898 * 7. Please provide an approximate breakdown by source of funds for this department's (or facility,'s) FY 1982 expenditures andestimated FY 1983 expenditures for scientific research -equipment. (NOTE: ENTRIES IN EACH COLUMN SHOULD SUM TO 100 PERCENT; ESTIMATES ARE ACCEPTABLE.) ` Source of funds * Percent of expenditures for scientific research equipment . FY'1982 PT 1983 (anticipated) a. Federal government b. Internal university funds c. State equipment or capital develop- ment appropriations d. Private nonprofit foundations! organizations - e. Business or industry f. Other (SPECIFY) - . . S - S 100 5 100 5 TOTAL, ALL FUNDING SOURCES 8. FY'1982 expenditures for purchCseof research-related computer.services at: $____________ On-campus computing facilities $___________ Off-campus computing facilities 9. FY 1982 expenditures for maintenance and repair of all scientific research equipment in this department' (or facility): $ - Service contracts or field service for maintenance and repair of individual instruments $____________ Salaries of university maintenance/repair personnel (pro- rate if personnel do not work full-time in this department! facility or on servicing of researcJ~ equipment) - $___________ Other -direct costs of supplies-, euipment and facilities for servicing of research instruments in this department! facility $ Total 1. Excellent II 2. Adequate I_I 3. Insufficient I_I 4. Nonexistant 10. Are the instrumentation support services (e.g~, machine shop, electronics shops) at this department or facility: (CHECK ONE) 4 PAGENO="0905" 899 PART C. ADEQUACY OF AND NEED FOR SCIENTIFIC RESEARCH EQUIPMENT In terms of itscapability to enable investigators to pursue their major research interests, is the research equipment in this department (or facility) generally: (CHECK ONE IN EACH COLUMN) * - Type of- investigator - Tenured faculty t'rtenured faculty (and equivalent (and equivalent P.1. ~s) P.1. `5) 1. Excellent - 1. (_) - 1. I_I 2. Adequate - 2. (_( 2. I_I 3. Insufficient - 3. (_( - 3. 12. Are there any important subject areas (e.g., recombitant DNA, microcircuitry, plasma physics) in -which investigators in this department/facility are unable to perform critical experiments, in their areas of research-interest due to lack of needed equipment? -1. Yes -~ 12a. What are the top priority subject areas for expansion/upgrading of presently available equipment? -(SPECIFY UP TO - THREE AREAS) - (_I 2. No - 13. Assuming future total Federal research support to your department/facility- - remains roughly constant at present levels,- how - if at -all - would your department (or-facility) redistribute its research funds. FOR EACH AREA, PLEASE INDICATE WHETHER FUNDING SHOULD BE PROPORTIONATELY INCREASED, DECREASED. OR MAINTAINED AT ABOUT THE PRESENT LEVEL. (NOTE: PROPORTIONATE INCREASES IN ONE OR MORE AREAS MUST BE ACCOMPANIED BY CORRESPONDING DECREASES IN OTHER AREAS. IF THE CURRENT BALANCE SHOULD BE MAINTAINED, CHECK "No CHANGE" COLUMN FOR ALL AREAS.) - - - Area of -Federal support Recommended redis - tribution of research - - - fundi 1. Increase - J 2. Decrease 3. No change a. Faculty salaries - . (_) 1 I_I b. Postdoctorate salaries (_) - f_I , f_f - c. Graduate student support *. . (_)` - f__I d. Non-professional salaries (_) - -- )_l I_f e. Equipping of startup labs . I.) - 1_f - f_I f. Equipment purchases (other than e. above) f_I - - I) - I_I g. Equipment maintenance - f_f - I_I I_I h. Other (SPECIFY) . - - f__I `I_f f_I - 5 11. PAGENO="0906" 900 14. If greater Federal funding of research equipment were possible, in which area would increased investment be most beneficial to investigators in this department/facility? (CHECK ONE) 1. Large scale regional and national fE~ilities (large tele- scopes, reactors, oceanographic vessels, high performance computers, etc.) 2. Major shared access instrument systems (550,000-$l,000,000) not presently available to department/facility members 3. Upgrading/expansion of equipment in$lO,000-$50,000 range I_I 4. General enhancement of equipment and supplies in labs of individual P.1. `s (items generally below $10,000) 5. Other (SPECIFY) ________________________________________ 15. In the $10,000-$l,000,000 cost range, what three items of research equipment (if any) are most neededat this time in this department/facility? Item description Approximate cost 14. How could current Federal equipment funding policies-and/or procedures be modified to better meet the research -needs of researchers in this department/facility? 17. Please note in the space below: (a) any additional information needed to describe the research equipment and equipment-related needs in this department/ facility, or (b) any suggestions to -improve this survey questionnaire. 18. Person who prepared this submission: - NAME AND TITLE - AREA CODE - EXCH - NO. - EXT. 19. How many person-hours were required to complete this form? - _______ - HOURS MINUTES 6 PAGENO="0907" 901 APPENDIX C INSTRUMENT DATA SHEET C-i PAGENO="0908" Number: 902 0MB No. 3145-0067 Expiration Date 9/30/85 NATIONAL SURVEY OF ACADEMIC RESEARCH INSTRUMENTS AND INSTRUMENTATION NEEDS NATIONAL SCIENCE FOUNDATION AND NATIONAL INSTITUTES `OF HEALTH INSTRUMENT DATA SHEET This data sheet is part of a major national assessment of the condition of academic research instrumentation. The data sheet concerns a particular instrument or instrument system component selected from university central inventory re- cords as part of a national sample of research instruments in your field. The item described below (in ID BOX) is assumed to be an instrument or instrument system component: (a) assigned to this department or research facility and (b) used in 1983 for original scientific research-as distinguished from teaching, patient care or other nonresearch uses, or from inactive or inoperable equipment not used at all in 1983. Please note in the comm eats see lion (Question 17) if either assumption is incorrect; however, please complete as much of this form as possible. We ask that the requested factual information (items 1-8) and functional assessment data (items 9-16) be obtained from the person or persons who ore most knowledgeable about the history and current statns of this instrument. Where enact cost (or other) data are sot available, eslimotes are acceptable. Your estimates will be better thus oars. This study is authorized by law (P.L. 96-44). While you are not required to respond, your cooperation is seeded In make the results of this survey comprehensive, accurate, and timely. Information gathered in this survey will be used only for developing statistical summaries. Individual per- sons, institutions, and departments will not be identified in published summaries of the data. Your cooperation in returning the survey form promptly is very important. Please direct any questions about this form either to'your university study coordinator or to Ms. Dianne Walsh at Westot, Inc., the NSF/NIH contractor for this study (301-251-1500). DEFINITiON OF KEY TERMS INSTRUMENT PURCHASE PRICE (initial value) The original price of the instrument (or its components, if built locally) at time of original purchase from the mona- factarer. Do not include Cost of separately parchased accessories; do not subtract any discount (e.g.. for trade-in) which may hove been received. Please estimate if original records are not available. ACQUSSrIION COST The actual cost of this instrument when acquired at this institution. If purchased new by this university, acquisition cost = purchase price, less discount from manufacturer, if applicable. If built at this institution, acquisition cost = cost of parts v estimated cost of labor. If purchased used, acquisition cost = price paid to seller. If donated or loused (e.g.. by industry) or obtained at so cost from government surplus, acquisition Cost = SO. REPLACEMENT COST The estimated cost to purchase this instrument (or its components, if bout locally) or one of roughly eqaivolent function and capability, at todays prices. DEDICATED ACCESSORIES Separately acquired "add-oss" to or components of the instrumentation system of which the instrument described below is the principal element. This includes accessories that are presently dedicated solely for use with the reference instrument but are sot included in its purchase cost (in item G, below). Examples: specimen preparation and photographic accessories for a particular e(ectrnn microscope; oscilloscope, microprocessor, (PLC, or dots syslem accessories for a particular spectrometer; key entry. disc drive, printer or plotter accessories for a particular microcompaler. YEAR OF PURCHASE The calendar year when this instrument (or its principal companents( was originally purchased from the manafuc- A. Institution B. Deportment or Facility C. Instrument Description D. Centrul Records ID C E. Locution: ID BOX - INSTRUMENT IDENTWYING DATA Year of Purchase: 19 C. Instrument Purchase Price: PAGENO="0909" 903 Please review the identifying data (from your institution's central inventory records) in the page..l ID BOX and make any needed corrections or additions, with special attention to items F (YEAR OF PURChASE) and C (INSTRUMENT PURCHASE PRICE). - SEE PAGE 1 FOE DEFINITION OF ALL BOLDFACE TERISS 2. Where was this instrument located during 1983 when is use? (CHECK ONE) (I I Inactive or inoperable throughout 1983 (SKIP TO ITEM 17) 2 Lab or facility used almost exclusively for undergraduate instruction or other nonresearch activity (SKIP TO ITEM 17) I,,,,) 3 National, regional, or interuniversity research instrumentation lab (CONTINUE TO ITEM 3) I_I 4 Nondepartmental research facility (CONTINUE TO ITEM 3) I_I 5 Department-managed common lab or research instrumkntatihn facility (CONTINUE TO ITEM 3) (I 6 Within-department research lab of principal investigator (CONTINUE TO ITEM 3) I_I 7 Other (SPECIFY) ________________________________________________________________________ Does this instru BOX. item Cl? ment hove any DEDICATED ACCESSORIES not included in the INSTRUMENT PURCHASE PRICE (from ID (See page 1 definitions of key terms) I 1 Yes -~" 3a. Estimated aggregate purchase price of all DEDICATED ACC~ORIES not included in ID BOX item C. S___________ I 2 No 3b. Please describe and estimate the purchase price for each separately purchased DEDICATED ACCESSORY costing $19,000 or more. (If additionat space is needed, continue in Question 17 or attach a separate continuation sheet.) Description of accessories $10,000 or more Purchase cost 1. S_______________ 2. 3.__________________________________________________ 0 4. S______________ 4. Year instrument acquired at this institution: 19 ~ 5. ACQU~ITION COST for this instrument and its accessories (see page 1 definition): S_____________ Instrument acquisition cost 6. Estimated REPLACEMENT COST for this instrument and its accessories (see page 1 definition): $_____________ Instrument replacement cost S_____________ Accessory replacement cost 0 Total $_____________ Accessory acquisition cost S_____________ Total . PAGENO="0910" 904 7. How was this instrument acquired at this institution? )CIOECI< ONE) () 2 I) 3 I) 4 I) S I) 6 I) 7 () 8 _____________ Purchased new Purchased used Locally built (at or for this institution) Transferred from another institution, e.g.. by incoming faculty member 1SKIP TO ITEM 9) Government surplus (SKIP TO ITEM 9) Donated new (SKIP TO ITEM 9) Donated used (SKIP TO ITEM 9) Other (SPECIFY) _______________________ 8. Source(s( of funds for acquisition of this instrument (and accessories) at this institution. (SPECIFY AP- PROXIMATE PERCENTAGE CONTRIBUTION TO TOTAL ACQUISITION COST FOR EACH APPLICABLE SOURCE.) Funding contribution (percent) _______________ Funding source Federal sources: NSF (National Science Foundation) NIH (National )nstitutes of Health) DOD (Deportment of Defense) DOE (Department of Energy) USDA (Department of Agriculture) Other Federal sources (SPECIFY): Nan-Federal sources: Institution or department funds State grunt or appropriation Private nonprofit foundation Business or industry Other (SPECIFY) ________________ 9. How much was spent for maintenance and repair (not far operation( of this instrument and its accessories in 1983? 10. Means of servicing (maintenance/repair) this instrument during 1903: (CHECK ALL THAT APPLY) ),__) 1 None required )_) 2 Service contract (_) 3 Field service, as needed (_) 4 Institution-employed maintenance/repair staff )_( S Research personnel (faculty, students, past-does) )_( 6 Other (SPECIFY) _____________________ 11. Instrument's general working condition daring 1903: (CHECK ONE) )) 1 Excellent 2 Average )_) 3 Poor (e.g., unreliable, frequent breakdowns. difficult to maintain or service) )_) 4 Inoperable entire year 12. Research function of this instrument during 1903: (CHECK ONE) 1 Most advunced instrument of its kind that - is accessible to those who use it in their I 2 Used for research; more advanced iustru- - ments are available to users when needed 3 Not used for research during 1903 13. Technical capabilities of this instrument (i.e., the base inslrament. excluding accessories) (CHECK ONE) (I I State-of-the-art (mast highly deve)oped and scientifically sophisticated instrument avail- able) 2 Adequate to meet researcher needs () 3 taadequate for research (PLEASE EXPLAIN): 100% Total PAGENO="0911" 14. ~ Techni sories. (_( cal capabilities of instrument's current acres- (CHECK ONE) ~ 1 Not applicable Instrument does not have IS.. * In 1983, was this a general purpose instrument within an area of research or was it dedicated for a partic- aim experiment or series of experiments? (CHECK ONE) - . ~ 1_I I__I - 2 State-of-the-art (most highly developed and scientifically sophisticated available) 3 Adequate to meet researcher needs . . 4 I ad q I I ese h (PLEASE EXPLAIN) * I General purpose (SKIP TO ITEM 16) - II 2 Dedicated ~ 15 Dd ttu lype unsuitable for general purpose use? (CHECK ONE) (I 1 Yes I_I .2 No . . 16. How many research investigators made use of this instrument for research purposes during 1983: (ESTIMATE APPROXIMATE NUMBER IN EACH APPLICABLE CATEGORY) . 1 Faculty, and equivalent nonfaculty researchers, this department/facility . 2 Gruduateand medical students'and postdoctorates. this deportment/facility 3 Faculty and equivalent nonfaculty researchers, other departments, thin university 4 Gruduate and medical students und postdoetorutes, other departments, this university S Researchers from other universities 6 Nonacademic researchers 7 Other (SPECIFY) ______________________________________________________________________ Total number of research users iSa. Instrument's principal field of resqurch use in l9C3 (e.g., geology, biophysics, plant pathology, pharmacology): 17. Please note in space below: (a) Any additional information needed to clarify the nature, function and quality of this instrument, or (b) any suggestions tu improve this questionnaire or its instructions. 905 18. Person who prepared this submission: NAME AND TITLE AREA CODE - EXCH - NO - EXT 19, (low many person-hours were required to complete this form? ((OURS tIlt-JUTES PAGENO="0912" 906 APPENDIX D ADVISORY GROUP, PHASE II SURVEY D-1 PAGENO="0913" 907 Phase II Advisory Group- Dr. Michael Beer Department of Biophysics Jenkins Hall, Rn. 416 The Johns Hopkins University Charles and 34th Streets Baltimore, MD 21218 Dr. Elkan R. Blout Professor of Biological Chemistry Department of Biological Chemistry Harvard Medical School Boston, MA 02115 Dr. Cohn Bull Dean, College of Mathematical and Physical Sciences Ohio State University Columbus, OH 43210 Dr. Brian Chabot Associate Director Office for Research Agricultural Experiment Cornell University 292 Roberts Hall Ithaca, NY 14853 5~...277 (915). Dr. Murray Eden Chief, Biomedical Engineering and Instrumentation National Institutes of Health Bldg 13 3W13 Bethesda, MD 20205 Dr. Larry Vanderhoef Office of the Chancellor 573 Mrak Hall University of California - Davis Davis, CA 95616 Dr. John Williamson Professor of Biochemistry and Biophysics B601 Biology Building/G2 University of Pennsylvania Philadelphia, PA 19104 Dr. Ian Jardine Department of Pharmacology Mayo Foundation Station 200 1st Street, S.W. Rochester, MN 55905 o~ PAGENO="0914"