Mr. ROONEY. The second item to which we shall direct your attention this afternoon is entitled "Department of Commerce, Office of State Technical Services, Grants and Expenses," and is to be found at page 2 of House Document 295.

The document states:

This proposed appropriation is to provide funds to implement the State Technical Services Act of 1965, a bill to promote commerce and encourage economic growth by supporting State and interstate programs to place the findings of science usefully in the hands of American enterprise. These funds will initiate a program of grants to State-designated agencies for preparation of plans and conduct of annual technical services programs, and to qualified institutions in support of technical service programs of special merit. These funds will also finance reference services which State-designated agencies may use to obtain information from outside sources, and expenses of administration.

We shall at this point in the record insert pages 1 through 3 and 8 through 15 of the justifications.

(The justification pages follow:)

GENERAL STATEMENT

The funds requested herein are to implement the first year of operation of programs under the State Technical Services Act of 1965, Public Law 89-182, which was signed into law by President Johnson on September 14, 1965.

The principal objective of the law is to raise the technological level of American business, commerce, and industry thereby creating new businesses, products and services, making American products more competitive in foreign and domestic markets, and creating new employment opportunities. This would be done by providing matching Federal grants to the States for cooperative State-university-industry technical service programs, designed to stimulate the use of new technological developments in local businesses and industries. Technical services are defined as activities or programs intended to permit business and industries to acquire and use scientific and engineering information more effectively through such means as (1) preparing and disseminating technical reports, abstracts, microfilms, computer tapes, and similar scientific or engineering information, (2) providing a referral service to scientific and engineering expertise, and (3) sponsoring workshops, seminars, extension courses, demonstrations, field visits, etc.

Technical service programs would be provided by qualified institutions within each State, with the planning, coordination, and administration of the overall State program provided by a single designated agency. All qualified institutions (institutions of higher education granting science, engineering, or business ad

ministration degrees or appropriately qualified nonprofit institutions or State agencies) in each State would be invited to participate in implementing the State program.

Under the terms of the act, the designated agency in each State may receive a Federal grant (nonmatching) of up to $25,000 per year for the first 3 years of participation in the program. These funds are provided to assist the States in developing their long-range plans and annual technical service programs. Upon the approval of a State technical services program by the Secretary of Commerce. he is authorized to provide to the State under appropriate regulations, an amount not to exceed 50 percent of the total cost of the program. The remainder must be provided by the State from non-Federal sources.

Although the bulk of the funds appropriated for implementing the act are provided to the States in support of approved technical service programs, the Seeretary has available to him 20 percent of the total appropriation for the matching fund support of special merit programs at qualified institutions. Five percent of the total appropriation is available to the Secretary for the direct expenses of administering the act.

Since the programs envisaged under the act are undertaken primarily on the initiative of the individual States, estimates of the first-year cost of the total program depend primarily on evaluations of the readiness of the States to ap point their designated agencies, develop long-range plans, and submit technical service programs for approval. Although the act authorizes an appropriation of $10 million for fiscal year 1966, we estimate that the first-year cost of the program will be $7 million which is the amount herein requested.

The motivation for the development of the State Technical Services Act has had a number of aspects. There is the general realization that the continued growth and vitality of our economy depends on the efficient use of technology, that the results of our vast national research and development effort are being transferred to industry generally with only limited success, and that because of the complexity of the technology transfer problem, new mechanisms which meet the particular problems and needs of local business must be developed. A number of our States have already started programs to stimulate their economic development. Increasing the technological content of the States industry and business is an important element of the programs. In no State, however, is the effort adequate to meet the need. We anticipate that this program will help accelerate those State programs which are already begun and provide an incentive for the development of effective programs in all of the States.

In addition to the above grants to States and direct administration costs, the Secretary is authorized and directed, under section 11, to provide a central reference service to aid the States in carrying out their programs. This service will rely on the Clearinghouse for Federal Scientific and Technical Information to supply State requests for technical publications and to help stock the technical reference depositories many States will establish. The Clearinghouse will expand its documentation services to cover selected areas of research sponsored by business and universities, as well as federally supported research.

JUSTIFICATION

The State Technical Services Act of 1965 authorizes grants to State-designated agencies for (1) preparation of plans, (2) conduct of technical service programs and (3) payments to qualified institutions in support of projects of special merit. These grant programs are authorized under sections 10(e) (1), 10(b), and 10(c) of the act, respectively. To develop and carry out these responsibilities, section 10(d) of the act provides that not more than 5 percent of the funds appropriated for activities under section 10 may be spent for direct administrative expenses. In addition, section 11 of the act authorizes a central technical reference service.

1. Grants, $6,150,000

(a) To States for the preparation of plans, $1 million. To participate in the program, each State is required to develop a 5-year plan for its economic and industrial development. The plan shall (1) outline the technological and economic conditions of the State taking into account its industrial potential and identifying the major regional and industrial problems it faces, (2) identify the general approaches and methods to be used in the solution of these problems and outline the means for measuring the impact of the planned programs on the

local economy, and (3) explain the methods to be used in administering and coordinating the program. The development of this overall, long-range plan within each State is held to be essential to assure the maximum effectiveness of each State program.

It is the responsibility of the designated agency in each State to develop this plan by drawing upon all sources of competence available to it. To help in this task and in developing the State's annual technical service programs, the Secretary of Commerce may provide to the designated agency in each State up to $25,000 per year (nonmatching) for the first 3 years of its participation in the program, as authorized under section 10 (e) (1) of the act. We estimate that during the first year, about 40 States will designate appropriate agencies and apply for these grants.

(b) Program grants to the States, $3,750,000.-The principal disbursement of funds under this act by the Secretary of Commerce is to the States for the conduct of their annual technical service programs, as authorized under section 10(b). These are the activities carried out by the qualified institutions in each State. They are explicitly designed to bring to local business and industry appropriate scientific and engineering information in a useful form. The mechanisms by which this can be accomplished are left to the imagination and initiative of the States but typical activities would be workshops, seminars, demonstrations, establishing a local referral center of technical expertise, and preparing and disseminating technical information.

Before the Secretary can accept a State program for approval he must be assured by the Governor or his designee that (1) all qualified institutions in the State have been invited to participate in the State program, (2) the activities proposed under the act have been coordinated with other publicly supported activities within the State and with other States, as appropriate, (3) adequate rules to avoid conflict of interest have been established, (4) appropriate nonFederal matching funds will be available, (5) the activities proposed do not provide a service provided as practicably by private consultants or institutions, (6) the services anticipated do not serve an industrial firm or company to the disadvantage of its competitors, and (7) provision has been made for making available to the public all reports prepared in the course of furnishing the technical services under this program.

During the remainder of this fiscal year, it is probable that only a limited number of States will be ready to submit annual technical service programs for approval. These will be those States which already have programs in being and have developed the required long-range plans. Another probable limitation on the rate at which the States can actively participate in the program is their ability to raise the required matching funds. It is estimated that about 30 States will be ready to conduct technical service programs during fiscal year 1966, at a minimum effective program level of $100,000 in Federal matching grants in each State. Of these 30 States, about 10 will be sufficiently advanced to conduct such programs at a higher level up to $250,000.

(c) Special project grants, $1,400,000.-Although there are several factors which tend to limit the number of State programs which will be submitted to the Secretary during the first year of the program, these factors are not all operative in connection with the matching grants for special merit programs under section 10(c), and a large number of proposals are envisaged. These proposals can be made directly by any qualified institution and are outside the State plan. They must be programs of special merit which for good reason are best not included in a State program. They may, for instance, be programs of greater national interest rather than purely local interest. We expect that many qualified institutions, with matching funds provided by local industry, will submit proposals for worthwhile programs.

2. Direct administration by the Department of Commerce, $275,000

The administration of this program at the Federal level will be provided by an organizational unit in the Department of Commerce called the Office of State Technical Services which will report directly to the Assistant Secretary for Science and Technology. A highly competent professional staff will be required to carry out the following functions:

(a) Allocation of funds to each State to assist in the development of its 5-year plan for technical services, as authorized by section 10(e) (1), consultation with States on plan development.

(b) Review and approval of State plans and programs, and allocation d annual Federal matching grants to designated agencies, as authorized by sectie 10(b).

(c) Development and approval of special merit project grants, as authorized by section 10 (c).

(d) Development and issuance of rules and regulations pertaining to Federal grants for State technical services, as required by sections 10 and 12.

The amount for direct administration includes $128,000 for 21 permanen positions for an average of 6 months' employment during fiscal year 1966, $75.000 for intermittent employment of specialists and consultants, and $72,000 for other items of expense.

3. Central reference services, $575,000

Section 11 of the act authorizes and directs the Secretary of Commerce to aid the States and regions in carrying out their technical service programs by pro viding reference services which they may use to obtain scientific, technical, and engineering information from sources outside the State or region. Another function of this central reference service would be to provide information abu the various State programs. In performing parts of this function the OSTS will make use of the capabilities of the Department of Commerce Clearinghouse for Federal Scientific and Technical Information on a reimbursable basis. We estimate that these reimbursable expenses will amount to $478,000. Costs for management and coordination of the reference services functions are estimated at $97,000. The latter amount will provide $65,000 for 11 permanent positions for an average of 6 months during fiscal year 1966 and $32,000 for other items of

expense.

EXPLANATION OF ESTIMATES BY OBJECT CLASSIFICATION

Personnel compensation, $268,000

The Department will take full advantage of its existing staff resources in carrying out the act. The new Office of State Technical Services will utilize the Clearinghouse for Federal Scientific and Technical Information to service State requests for technical publications and to help stock the technical reference depositories many States will establish. The OSTS will itself provide or obtain the technical services, training, and other forms of referral assistance which States request. Total staffing for the "direct administration" functions for the first year of the program will be limited to 21, with an additional 11 positions required for the technical reference service. These positions are provided at the entrance rates of the appropriate recruitment grades and are lapsed at an average of 6 months per position.

Approximately 40 specialists and consultants will be employed for short periods of time, to provide the States with assistance in particular fields of technology or industry, and tailored to the particular needs of the local businesses within the State.

Personnel benefits, $14,000

This will provide for the Government's share of premiums under the Federal Employees' Group Life Insurance Act; contributions to the retirement fund: employer's contribution for Federal employees health benefits; and repayments to the employees' compensation fund.

Travel and transportation, $25,000

It is expected that each State will be visited at least twice during fiscal year 1966 by the technical and engineering program analysts of the OSTS, to consult with the States on development of their long-range plans for technical services. review and approval of State plans and programs, and on related matters. Some travel will be required by the specialists and consultants to be employed by OSTS.

Transportation of things, $3,000

Provision is made for freight, express, and parcel post charges on shipments of literature, instructions, and reports to the State-designated institutions.

Rent, communications, and utilities, $17,000

The small staff of the OSTS will operate out of the Washington headquarters. This estimate is to provide for initial rental cost of space assigned by General Services Administration; switchboard and telephone service charges and installation costs; charges by Post Office Department for letter mail; and other miscellaneous rent and communication charges.

Printing and reproduction, $20,000

This will provide for printing of literature, regulations, reports, and compendiums of programs for transmittal to State-designated institutions.

Services of other agencies, $478,000

The OSTS will reimburse the Clearinghouse for Federal Scientific and Technical Information, for servicing State requests for technical publications, and for expansion of its documentation services to cover selected areas of research sponsored by businesses and universities, as well as federally supported research. Other Federal agencies, such as NASA, AEC, Agriculture, may also be requested to provide reimbursable technical services in pursuance of the purposes of the act.

Supplies and materials, $2,000

Provision is made for a small amount of office supplies, stationery, publications, copying materials, etc.

Equipment, $23,000

General office equipment will be provided at the Washington headquarters of the new OSTS, including such items as desks, chairs, files, typewriters, calculators, etc. The cost will be minimized through the reassignment wherever practicable of available surplus equipment stocks.

Grants, subsidies, and contributions, $6,150,000

Grants will be made up to as much as one-half of the amount of the State technical services program, with the remainder coming from State or nonFederal sources. Maximum amounts paid to the States will be fixed by regulations, taking into account population, industrial and economic development and productive efficiency, and technical resources.

Distribution of object classification estimates

The above object classification estimates are distributed between the programs authorized under sections 10 and 11 of the act as follows: