Organizational location of Central Audit staff

There are many possibilities as to the organizational location of the new Agency. It could be attached to a military or civilian agency. The National Science Foundation, while it has operating programs, also has responsibilities for leadership, guidance, and coordination of scientific research conducted by all Government agencies. Therefore, a persuasive argument can be made for attaching the new Audit Agency to NSF.

Regardless of organizational location, the Central Audit Agency could be subject to a Board of Directors made up of representatives of the Government agencies with research programs. The Board of Directors could confine themselves to overall policy matters and the Audit Agency could be attached to an existing organization for administrative direction and housekeeping services. Financing Central Audit staff

The agencies receiving the services would pay for the services as a reimbursement, on a proration or fee basis. The Audit Agency would not be financed by direct appropriation. It would charge for its services so as to cover the cost of operations.

Staffing of Central Audit staff

Initially the staff could be assembled by transferring personnel of the several agencies who are presently performing audits of the records of colleges and universities on a full-time basis. As the needs demand, additional auditors could be employed.

Mr. DADDARIO. This committee will adjourn until tomorrow morning at 10 o'clock.

(Whereupon, at 12:12 p.m., the committee adjourned until Thursday, May 7, 1964, at 10 a.m.)

DISTRIBUTION OF FEDERAL RESEARCH FUNDS

INDIRECT COSTS RE FEDERAL GRANTS

THURSDAY, MAY 7, 1964

HOUSE OF REPRESENTATIVES,

COMMITTEE ON SCIENCE AND ASTRONAUTICS,

SUBCOMMITTEE ON SCIENCE, RESEARCH, AND DEVELOPMENT,

Washington, D.C.

The subcommittee met at 10 a.m., in room 214B, Longworth House Office Building, Washington, D.C., Hon. Emilio Q. Daddario (chairman of the subcommittee) presiding.

Mr. DADDARIO. This meeting will come to order.

Our first witness this morning is Dr. Gerald Tape, who is the Commissioner of the Atomic Energy Commission. He is an outstanding scientist and one whom this committee is very anxious to have appear before it.

Dr. Tape, you have some other people with you. Would you be kind enough to introduce them before you begin your remarks?

Dr. TAPE. Thank you, Mr. Chairman. Dr. English is sitting on my right to your left, Assistant General Manager for Research and Development of the Atomic Energy Commission. I also have present with me this morning Mr. Enzi DeRenzis, assistant to Dr. English; Dr. Paul McDaniel, Director of the Division of Research; Dr. James L. Liverman, Chief of the Biology Branch for Biology and Medicine; Mr. Walker E. Campbell, our Assistant Comptroller for Accounting; Mr. James Scammahorn, assistant to the Director, Division of Contracts; Ralph Boyer, Chief, Contract Finance Branch; Mr. Donald Derman, Office of the Comptroller.

Mr. DADDARIO. Fine. Will you proceed, please?

STATEMENT OF DR. GERALD F. TAPE, COMMISSIONER, ATOMIC ENERGY COMMISSION; ACCOMPANIED BY DR. SPOFFORD G. ENGLISH, ASSISTANT GENERAL MANAGER FOR RESEARCH AND DEVELOPMENT; ENZI DERENZIS, ASSISTANT TO THE ASSISTANT GENERAL MANAGER FOR RESEARCH AND DEVELOPMENT; DR. JAMES L. LIVERMAN, CHIEF, BIOLOGY BRANCH, DIVISION FOR BIOLOGY AND MEDICINE; WALKER E. CAMPBELL, ASSISTANT COMPTROLLER FOR ACCOUNTING; JAMES SCAMMAHORN, ASSISTANT TO DIRECTOR, DIVISION OF CONTRACTS; DR. PAUL W. MCDANIEL, DIRECTOR, DIVISION OF RESEARCH; RALPH BOYER, CHIEF, CONTRACT FINANCE BRANCH; DONALD DERMAN, OFFICE OF THE COMPTROLLER

Dr. TAPE. Mr. Chairman, members of the committee, I am glad to appear here today and participate in your hearings on research and

development contracts and grants. As you know, a principal mission of the Atomic Energy Commission is research and development. The Atomic Energy Act of 1954 provides for "a program of conducting, assisting, and fostering research and development in order to encourage maximum scientific and industrial progress." The AEC also is directed by the act to "assist in the acquisition of an ever-expanding fund of theoretical and practical knowledge" in fields related to and underlying production and use of atomic energy.

To carry out this mission, close to one-half (about 45 percent) of the total fiscal year 1963 operating costs of the AEC, or about $1,078 million was devoted to research and development. Applied activities with a military orientation, both weapons and reactors, totaled $481 million; the remainder of the expenditures, about $597 million, was devoted to the civilian aspects of atomic energy. Three hundred and seventy-eight million dollars of this sum was directed to applied research and developmental activities encompassing a variety of objectives civilian nuclear power, peaceful uses of nuclear explosives, medical and industrial uses of radioisotopes, development of controlled thermonuclear power, radioisotopic heat and power, and the development of nuclear rockets and nuclear power sources for our national space program. About $219 million was devoted to basic research in the scientific fields related to atomic energy.

In general, this research and development and related work is conducted by AEC on a contract basis. We have essentially no research activities directly operated by the Government. However, we do have large Government-owned contractor-operated atomic energy laboratories at many locations, such as Oak Ridge in Tennessee, Brookhaven in New York, Argonne in Illinois, the Lawrence Radiation Laboratory in California, and Los Alamos and Sandia in New Mexico. The larger and more complex atomic research projects, particularly those requiring large and expensive facilities and equipment or involving weapons development, are handled in our major research facilities.

In addition, many large applied research and development projects, such as those involving design of new reactors, development of heat transfer systems, and so forth, lend themselves to accomplishment in commercial facilities and are handled by industrial concerns. Finally certain basic and applied nuclear and biomedical research, especially of a fundamental nature, is conducted at university laboratories, medical centers, and other not-for-profit laboratories.

In short, AEC uses whatever source-Government-owned contractor-operated laboratory, commercial facility, university laboratory, hospital facility, and so forth-which appears best suited to accomplish the particular task at hand, taking into account relative ability to perform, overall cost to the Government, and other pertinent factors of interest or concern to the Government.

In answer to your staff request, we have provided by separate transmittal tables showing the broad distribution of our research and development effort. We also have submitted separately our explanation of the distribution.

With your permission, I will complete this prepared statement; I will be happy to answer questions regarding the supplementary information after the direct testimony.

I would now like to turn to the specific areas with which you are most concerned. Let me first discuss the concept of "uniformity in the geographical distribution of Federal contracts and grants." As noted in our supplementary information for the record, essentially all of AEC's contract research and development is carried out in "on-site" laboratories, that is, Government-owned and contractor-operated centers, or in "off-site" facilities, that is, contractor owned and operated. The AEC national laboratories are illustrative of on-site operations while university research activities carried out within the laboratories of the university are typical of the latter.

The AEC's on-site facilities are reasonably well distributed throughout the country on a broad regional basis. The original choice of location was made on the basis of factors such as the location of needed technical talent, of particular organizations having the competence to do the job, of availability of electrical power, of large and sometimes isolated available land areas, and so forth. With a few exceptions these selections were made during the war by the Manhattan District. The AEC in taking over these facilities in 1946 continued their operation for their intended use, and, in addition, extended the programs of these centers to meet the scientific needs of the Nation on both a regional and national basis.

Where smaller research and development projects are involved and especially where the facilities of a university or industrial concern are utilized, the present distribution of contracts falls according to the distribution of that specialized scientific and engineering talent interested in and having competence in atomic energy. Obviously, some institutions are more heavily involved in atomic energy research and development than others; the same is true for other institutions with respect to space, defense, or health research and development. Thus one should not expect to find a uniform geographical distribution by agency. Furthermore, since institutions are not distributed on any uniform geographical basis, this further modifies the picture.

The fact that effort in a given specific field of interest is not uniformly geographically distributed can be illustrated. One specific scientific field for which the AEC has primary responsibility is basic radiation chemistry. The AEC probably supports 90 percent of the Nation's most competent radiation chemists; the cost to the AEC per year is about $5 million. Many of these chemists are employed in our AEC-owned laboratories because of the existence of necessary facilities. The radiation chemists supported through our program for research at non-AEC-owned laboratories on the other hand are employed under AEC contracts at their home institutions. Not all universities do nor should they support strong programs in this field. Because AEC is supporting most of the better qualified radiation chemists, it follows that AEC's support of basic radiation chemistry is based predominantly on the distribution of the radiation chemist population. When one adds all such special fields together, one hopes that variations in interest from institution to institution will smooth out the distribution to some extent, but it is unlikely that this procedure will or should result in a uniform geographical distribution of contract funds for the AEC or even all agencies.

It is not clear what one should use as a yardstick in measuring a "more uniform distribution." Certainly we don't mean land as such, nor do we mean to be fine grained, for example, making comparisons

on a State-by-State basis. Perhaps for AEC the distribution of research should be based on scientific population. But here too, there are difficulties. AEC does not have statutory responsibility in all fields of science but only in certain, rather specifically designated nuclear-related scientific fields.

Perhaps the example of the radiation chemists above points up the basic problem. The research dollars tend to flow to those places where the best researchers are located. By and large, I believe this is as it should be. The very nature of research dictates that the best people be supported, wherever they may be. There is a great difference between pretty good and the very best. In fact, the difference is crucial. A system of scientific training and research institutions that can produce and support the very best scientists will be profoundly more effective than one which fails to do so. The real key, then, is to get a wider distribution of our better scientists by encouraging the development of new centers of research excellence, where, hopefully, graduate teaching can also be done. These will attract more and more capable scientists and will develop more and more new capable scientists; and in turn more and more support will flow to them. It could be hoped that such new centers can be developed in various parts of the country. This will not be an easy task because a base must exist on which to build, with the appropriate assistance. In other words, the potential must be there.

I think that our own AEC experience tends to bear out that this process can work. A perusal of the supplementary information submitted for the record regarding the rationale for the distribution of our research effort will demonstrate that, in our nuclear field, new strong research centers have been built through cooperative efforts between us and the institution or institutions concerned. Perhaps our opportunity to promote such growth and to widen the participation in our program has been unusual; but there is no reason why it cannot work for others. Of course, although we in AEC believe that we have been fairly successful in broadening the base of the national effort in nuclear science, we recognize our statutory limitation in any attempt by us to increase the nonnuclear related scientific base. This does not mean that we are not concerned about the general problem. We are vitally concerned. The nuclear sciences are usually offshoots from more broadly based sciences. Thus, inhibitions on the general growth and distribution of science will adversely affect our own programs.

However, we hope that there are practicable approaches to the general problem. Your committee as well as agencies within the executive branch are diligently studying the problem, and these studies will undoubtedly lead to improvements in the present system without sacrificing quality. For example, we believe there is much merit in the views expressed in the recent 1964 report of the Committee on Science and Public Policy of the National Academy of Sciences on "Federal Support of Basic Research in Institutions of Higher Learning." That report makes the point that a desirable pattern of distribution of research capability cannot be achieved by wholesale redistribution of Federal research funds made available to the agencies through the project system; but rather that a program of development grants should be started in support of research and graduate education in institutions with potentiality for becoming strong in the future.