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 appoint 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 State's 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.

(a) To States for the preparation of plans___.

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 three years of its participation in the program, as authorized under sec. 10(e) (1) of the act. We estimate that during the 1st year, about 40 States will designate appropriate agencies and apply for these grants.

$6, 150, 000

1, 000, 000

(b) Program grants to the States_.

The principal disbursement of funds under this act by the Secretary of Commerce is to the States for conduct of their annual technical service programs, as authorized under sec. 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 non-Federal 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 program 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--

Although there are several factors which tend to limit the number of State programs which will be submitted to the Secretary during the 1st year of the program, these factors are not all operative in connection with the matching grants for special merit programs under sec. 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 rather than purely local interest. We expect that many qualified institutions, with matching funds provided by local industry, will submit proposals for worthwhile programs.

$3,750,000

1,400,000

2. Direct administration by the Department of Commerce_

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 sec. 10(e) (1), consultation with States on plan development.

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

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

(d) Development and issuance of rules and regulations pertaining to Federal grants for State technical services, as required by secs. 10 and 12. The amount for direct administration includes $128,000 for 21 permanent 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___

Sec. 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 providing 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 about 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 reimburs able basis. We estimate that these reimbursable expenses will amount to $478,000. Costs for management and coordination of the reference services function are estimated at $97,000. The latter amount will provide $65,000 for 11 permanent positions for an average of 6 months during 1966, and $32,000 for other items of expense.

EXPLANATION OF ESTIMATES BY OBJECT CLASSIFICATION

Personnel compensation, $268,000

$275,000

575, 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 purpose 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 non-Federal 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:

Mr. BALDWIN. Mr. Chairman, Assistant Secretary J. Herbert Hollomon will testify for the Department on this matter.

Mr. HOLLOMON. Senator, I have a prepared statement which, if I may, I would like to submit for the record, and then comment on it briefly, to save your time.

Senator PASTORE. All right, sir. Without objection, so ordered. (The statement follows:)

Mr. Chairman and members of the committee, I am here today to appeal the House allowance of $3,500,000 and request a full restoration to $7 million to implement the recently enacted State Technical Services Act of 1965.

This legislation is designed to permit the Federal Government to join with State governments, universities, and local industry to transfer technology and know-how from where it exists to where it is needed in businesses and commerce and can be put to use to promote economic growth and industrial development.

The key to the State technical services program is local leadership, local initiative, local resources, and local participation. Federal funds, on a matching basis up to a maximum of 50 percent, will encourage the establishment of State programs specifically designed to meet the needs of the local economy.

Each participating State will designate an agency or institution to coordinate and administer the program within the State and develop a long-range plan for the technical services considering the economic growth and industrial development of the State. The designated agency will also prepare the detailed technical services program for its State. These technical services will be provided largely through the qualified universities and colleges in the State. Typical examples of services which could be provided are (1) preparing and disseminating technical reports, abstracts, microfilm, computer tapes, and similar scientific and technical information, (2) providing a referral service to scientific and engineering expertise; and (3) sponsoring workshops, seminars, extension courses, demonstrations, and field visits.