Frequent and detailed reporting on the progress of each venture is required. The department heads determine when a project has reached the point where this development work should begin, but the approval of the Executive Committee and the corporate Finance Committee is necessary for the major investments that are required to construct manufacturing facilities and create a marketing staff.

We maintain a number of these ventures in various stages of development. We have about two dozen underway at the present time. Some represent investments of $50 million or more before we can expect any return on them.

In any technical activity as diffuse as ours, there obviously are problems of coordination. It is important for the left hand to know what the right hand is doing. If there is duplication and overlap, we want it to be intentional rather than accidental, so we encourage full sharing of technical information.

The companywide technical groups are kept informed of the research and development programs of the industrial departments. If one of the central laboratories has suggestions to offer, it is expected to come forward with them. The central research department sends its reports to all of the manufacturing departments. Any research finding that appears particularly pertinent to one of these departments is flagged for special attention.

All departments exchange, on a regular basis, detailed reports on their research activities. Managers with research and development responsibilities are expected to maintain close working relationships with one another, and to provide mutual assistance through advice, consultation, and exchanges of personnel and equipment. The departmental research directors meet periodically, and there are frequent seminars for them and their staffs. We have devised an information storage and retrieval system, encompassing technical reports and patent literature. Where overlaps or possible conflicts arise, the departments get together at the earliest possible moment to agree upon a course of action. We resolve problems of this kind before we reach the point where products are ready for commercialization. Proposals for commercialization are presented not only to the Executive Committee but to all other interested departments in the company.

If one of these departments believes it has a better technical position than the originator of the project, or has some other reason to be interested itself, then this department is expected to make a case for itself. In some cases, the development department is asked to act as arbitrator or to prepare for the Executive Committee an analysis of conflicting claims. This creates some pulling and tugging from time to time, but more often than not such cases are settled by mutual agreement.

The great advantage of this decentralized system, as we see it, is the pluralism it provides. A good many different points of view come into play in the initiation, conduct and evaluation of programs. Since none of us can make very accurate predictions about the future, we feel that the more people we have making decisions, and the broader our base of reference, the better it is for the company.

For us as for most people in science, the key problems lie in the selection of ideas to pursue. In research and development, there are always many more projects conceivable than anyone has the skilled manpower

and money to pursue. There is always the problem of objectives and priorities.

In one respect, this is less a problem for industry than for Government. The competitive marketplace provides a clear criterion. Our research and development must produce results that are economically and socially useful, and that can be converted into profits.

When we evaluate a research proposal, we ask ourselves whether the end result would be something really new, or whether it would be similar to existing technology. We ask whether our scientists and engineers can bring a truly novel approach to the problem. We ask whether success in this line of research and development would give us a strong business position, and whether the product can be made at an acceptable

cost.

Let me stress here that it is not enough, from our point of view, for a project to be technically intriguing. Technical novelty is a necessary but not a sufficient condition. It is possible for a research question to be original and fascinating, but not worth the cost of answering. Unless we have some reason to believe that the answer would take us in a direction we want to go, we do not undertake such a quest.

At each step along the way, from laboratory to marketplace, we appraise and reappraise. If prospects turn sour, or we find that we have not been clearheaded enough about our assumptions, we are prepared to kill a project. We try to keep in mind not only the possibility of failure but also the probable value of the results if we are successful. This is salutary, I think, because it helps keep us from wandering off on tangents.

We think our approach to the management of research and development, while it may or may not be appropriate for others, has worked well for us. It works as well as it does, I think, because its multiple inputs maximize opportunities to identify economic and technical needs, because the missions of our departments are clear, because our research and development purposes are susceptible to definition, and because the overall corporate viewpoint is kept paramount.

Occasionally, narrow interest may be put ahead of the corporate interest, but this is rare. The rivalries within the company are open and aboveboard, more productive than destructive in their effect. There is duplication, but we think that we know where it is, and that kept under control it is healthy.

How much if any of this is applicable to the science programs and activities of the Federal Government, I will leave to your judgment. Certainly in size, range, and sheer numbers of programs the Government's involvement in research and development is on a plane far beyond that of any single industrial firm. Nevertheless, I think we face some of the same management problems, and certain points are probably as valid for one as for the other.

One question before you is the degree of centralization desirable in administering the myriad federally funded science programs. At present in-house programs are scattered through dozens of departments and special agencies, and everyone seems to agree that there is overlap, duplication, and drift.

Given current budget limitations and the costly stop-and-start record of some programs, it may be tempting to ponder a thoroughly cen

tralized system. I doubt, however, that this is either feasible or advisable. The diversity of Government-supported programs is simply too great; even with a more manageable technical base, the Du Pont Co. finds it unwise to try to administer all research and development from a single office. Furthermore, as I observed earlier, science has certainly flourished best in a pluralistic system providing many different vantage points.

The experience of the Soviet Union is instructive on both counts. Its state committee for science and technology is the result of several attempts to place all applied research and development activities under a central coordinating agency. Outside investigators report that the committee has been able to deal with only a relatively small number of major projects. At the same time, we are told, the Russians are experimenting with ways to introduce more competition into their research and development. They are doing this in an effort to stimulate more innovation.

In this country, a number of organizational changes short of sweeping centralization have been proposed. I am not prepared to comment on specific proposals but would like to offer some general comments on centralizing Federal science activities.

I think some consolidation is in order, and that now is a good time to consider it. This could provide better coordinating and planning mechanisms for at least a significant portion of the Government's farranging science activities.

In my opinion, the best candidates for consolidation and realinement are those agencies that have research and development as their primary function, and those agencies that grew up in the older departments but are really tangential to their missions. I would exempt research undertaken by departments and agencies to aid in accomplishing or improving a broader mission. I think the heads of these organizations should be free to sponsor technical work they regard as necessary to their missions, with Congress and the White House providing general oversight and authorization.

It is my belief, based on research experience in profit-motivated enterprise, that Federal research with short-range objectives and research with an engineering or technological content have little to gain, and probably as much to lose, from centralized control.

On the other hand, federally funded research which is truly long range, exploratory, and scientific in its orientation might possibly be made more effective by economies resulting from centralized administration. Here I think centralization should be considered. A central agency could determine whether planned research should be conducted by in-house agencies, by academic institutions on a contract or grant basis, or by a combination of the two.

For long-range investigations not directly tied to an agency mission, I believe the Government should rely as much as possible on the universities. For one thing, they have a built-in motivation in this direction, and enough people to provide the critical mass that is necessary. For another, this approach offers the Government maximum flexibility. It can place contracts and grants discretely, and when projects are completed, it can channel funds to other purposes without going through the agonies of reorganizing an in-house agency or laboratory.

I think all university research contracts and grants for basic scientific research should be cleared through a single agency such as the National Science Foundation rather than being awarded independently by many different governmental organizations. I would favor enlarging the authority of such an agency to permit it to coordinate these basic research activities and to determine which projects shall be pursued.

This would provide a locus for congressional oversight. It could provide the framework for future U.S. participation in scientific projects with other countries. It would give us a balance wheel for federally funded basic research, but would not destroy the pluralism we cherish.

I would also hope that more can be done by government to increase the stability of its research commitments to the universities. With Federal support of academic science on a plateau, it is particularly important that we not jeopardize the research programs necessary to attract and train tomorrow's scientists and engineers. Basic research is comparatively inexpensive. We should assure that reasonable sums go to new basic studies and to the younger faculty members, who occupy a pivotal role in higher education. Dr. Philip Handler, the new President of the National Academy of Sciences, has made this point, and I am wholly in accord with it.

I think that Federeal support of academic science, where provided, should be on a realistic, full-cost basis, adequate to cover overhead as well as the direct costs of research. Otherwise, universities have no choice but to divert funds from other projects, and the academic programs we should be protecting are hurt.

Whatever mechanisms may be developed for administering federally sponsored research and development, there is need for a common set of terms and criteria-consistent and specific guidelines for describing the purpose of diverse projects, comparing alternatives, and appraising potential results. To merely assert that a research project will expand basic knowledge is not enough. No one should indulge himself in a development project and this can be as much a problem in industry as government-merely because it is technically fascinating and he sees a way to attack it. Project proposals should not only explain technical content but also should contain a justification related to potential uses of the findings.

In summary, I believe there is a need to develop better mechanisms for the establishment of priorities in Federal science, for the clarification of program objectives, and for the review and coordination of the Nation's scientific efforts. In part this may be accomplished by some centralization of administration, and in part through development of improved guidelines and criteria.

Your subcommittee's efforts in this direction are to be commended, and I would like to express once again my thanks for the opportunity to participate in these hearings.

Thank you.

Mr. DADDARIO. Thank you, Dr. Lenher.

One sentence of yours sticks in my mind and that is the overall corporate viewpoint is kept paramount. I would expect that your

proposal to us leads to the idea that in government that same possibility is available.

Dr. LENHER. Yes; it does.

Mr. DADDARIO. You buttress that up, at the end of your statement, by touching on the point that research projects which merely assert that they will expand basic knowledge is not enough, that the work can be explained with such technical contents so you can see whether or not it does have direction and purpose, and that Government research in this area of activity is susceptible to this kind of examination. Dr. LENHER. Yes. I make those comments with regard to scientific research in which the Government or important parts of the Government feel they have an interest. I don't think that should apply to Government grants or contracts supporting research in the universities, Mr. Daddario. I think that is a different field where discrimination should be on a very much more broader basis, but I think where it is a matter of security or welfare of the people, where the Federal Government is moved to support scientific research in those areas, that this ought to be looked at on a centralized basis or with a centralized overview.

Mr. DADDARIO. Well, somewhere along the line, then, that fits in with the Du Pont approach, where you keep on top of those things which are ready to go ahead and you allow the basic research to be pretty much done at the discretion of the industrial managers. In the central area, I guess the analogy you could draw would be to the NSF, you allow more latitude and yet everything it does your Board has complete supervision over and must approve.

Dr. LENHER. Yes. They have broad control in approving annual budgets. The content of the budget is usually expressed in terms of fields of work rather than in specific projects, so the central control is quite a general direction rather than a closely coupled one. This, I think, provides a good analogy between our research setup and that possible in the Federal Government because both interests are very broad and as I pointed out in my prepared remarks in a science-based program the research part of the program is really quite cheap. A large institution can afford to range fairly free in a research area looking for opportunities, in the Federal Government for improved security or improved health, and in business for improved profit opportunities, but once that opportunity is apprehended or there is an opinion that there is an opportunity there, then interests begin to narrow and development and commercialization become quite costly, and there I think closer control is quite important, because the amounts involved, the commitment of people, and the commitment of money, become fairly long term, even in a developing project. So changes are not as easily made as they are in the research phase of the project.

Mr. DADDARIO. You see the value of the pluralistic approach in both the Government and in industry insofar as the development of knowledge and its application is concerned. In the background material, you have given us insofar as how Du Pont works, your industrial managers who would be as we draw an analogy here, somewhat on the same basis as our laboratory manager are given great deal of latitude and a great deal of flexibility in spending moneys for research. I wonder how much flexibility our managers of national laboratories ought