01/2003, May 9, 2003
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Letter From The Editor
by Philipp Steger

"Knowledge Will Grow As Long As We Share It."
(a Turkish proverb)


About two years ago, I came across an article regarding MIT’s decision to post its course materials on the Web and thus make them available also to the non-paying public. I still remember the positive excitement at reading this news. After all, the free sharing of information & knowledge is what my generation in Austria grew up with: we enjoyed the tremendous privilege and benefit of universal and free access to higher education. Amongst other things, this afforded us as young graduates, unburdened by student loans, to take the jobs that we really felt like doing, even if that entailed living on what only remotely resembled a salary.

I mention that report from two years ago, because I now see that there could not have been a better suited way, although then unplanned and unintentionally, to kick off what then evolved into “Voices”, the OST’s effort at making available some of the results of its government-funded work. In April 2001 I wrote a few lines summing up the MIT-news and then sent it out to a list of about 30 people who were outside the home agencies that Science Diplomats traditionally report to but were an essential part of my country’s Science & Technology Policy community. This action, based on the assumption that these people would find this news very interesting, triggered a whole series of such brief and informal reports. The impromptu service obviously met a hitherto unfulfilled need: the word spread and the list of subscribers has by now grown to over a thousand. We were surprised to find that about a fifth of the subscribers aren’t even Austrians or people located in Austria, but Europeans from a variety of EU member states and institutions.

We never had any intention of competing with those whose daily and weekly business it is to gather and distribute news about new developments within Science – Science Journalists know their trade and don’t need imitators amongst the uninitiated. In the same vein, we felt we didn’t want to reproduce the works of scholars that concern themselves with Science & Technology Policy.

Instead, we knew that the unique value of “Voices” would lie in the perspective from which we report on a variety of S&T policy related issues, and from the fact that the reports make complex political situations understandable to S&T policy wonks living and working outside the U.S.

Sure, anyone can go on the internet these days and find all sorts of data, articles, essays and the likes on, let’s say, NASA, but it’s a lot tougher if you are trying to find something that gives you a comprehensive overview of what the current situation at and with NASA is.

This is what “Voices” has set out to accomplish: take the S&T related news, the background information, the tremendous breadth and depth of expertise inherent in the Network of Austrian Scientists & Scholars in the U.S. and Canada, a network which the OST has developed over the last two years, and turn it into informative, comprehensive and readable articles on some of the pressing U.S. Science & Technology Policy issues.

“Voices” will be published as a series of reports covering a broad range of S&T topics in irregular, but fairly short intervals of a few weeks. The reports will, for the most part, be prepared by OST staff, but an essential part of them will be outside contributions, from Austrian Scientists in the U.S. and, hopefully, also colleagues from the Science & Technology offices from other European embassies in Washington D.C.

Thus, “Voices” will eventually be truly a chorus of diverse voices, all sharing their insights and knowledge on U.S. Science & Technology Policy related issues.

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The United States' R&D Budget In The Context Of The Economy
by Philipp Steger

A Record $ 122.5 Billion For Federally Funded R&D …

If the R&D spending in the Fiscal Year 2003 (FY2003) and the President’s Budget Proposal for FY2004 are any indication, the likelihood of good news for the scientific community seems high. Final appropriations for FY2003 put the total R&D budget at $ 117.3 billion and this year’s presidential proposal for federal R&D expenses surpasses that number with a proposed increase of 4.4% over FY 2003. That would increase the total of federal tax dollars going to R&D to a record high of $ 122.5 billion, if Congress goes along with the President’s wishes. The President’s budget proposal for FY2004 calls for a total of $ 782 billion in discretionary spending, the “flexible” part of the overall budget that is appropriated annually.

What appears at first to be a rosy picture for the sciences in the U.S. loses some of its glamour when one pauses to consider the details and, more importantly, the overall economic situation in the U.S. and its far-reaching repercussions on a variety of elements of the “national innovation system” that are of crucial importance to R&D.

… In A Sluggish Economy

R&D funding’s fate is not a mere question of what is written in the current federal R&D budget. This is obvious, since the federal R&D budget, part of the discretionary spending at the disposition of Congress and the President, is highly dependent on the overall limit on discretionary spending. This in turn is a reflection of the overall economic situation, not just in terms of tax revenue, but also in terms of the general perception of the strength of the economy.

Therefore, and because the economy affects a multitude of factors that are pivotal to high quality R&D but have little to do with the federal R&D budget, an analysis of the R&D budget is not complete if it is done in a vacuum. Instead, the analysis has to be embedded in the complex context of the economy and economic policy. There is a need to address questions such as whether the current, high overall numbers are sustainable, to what extent the priorities within the R&D budget reflect economic and overall policies, and whether Science & Technology itself is being perceived and used as a long-term strategy for economic growth.

Last but not least, how the sciences fare overall is in large part dependent on the budgetary situations in the individual 50 states. The downturn in the economy has had immediate effects on the revenues that make up the lion’s share of the states’ budgets. A majority of the states faces an enormous shortfall in revenues, but state laws – most of them made during the boom years of the late 90s – force them to balance the budget and make deficit spending impossible. The consequence, across the board cuts that affect social welfare, public health, education and a number of essential public services, is felt all across the U.S.

Stories of teachers and university professors renouncing part of their salaries to keep schools and universities functional abound. While private universities may seem to be fairly immune to the pitfalls of state economics, they are not exempt from the side effects of a weak economy. That is evident in the widespread pattern of tuition increases at a number of private universities, including such notables as Harvard University, which recently raised its undergraduate tuition by 5%. (“Harvard sets 2003-2004 undergraduate tuition and fees”, Harvard Gazette Archives, March 20, 2003)

A Look At The U.S. Economy

Sobering Numbers

Hopes that the U.S. economy would experience a serious rebound after the onset of the recession in early 2001 have been disappointed by persistently weak economic growth. In the last quarter of 2002 the growth in real GDP was 1.4%, and the current estimate for the first quarter of 2003 put growth in real GDP at 1.6% (Numbers are seasonally adjusted at annual rates).

The U.S. employment situation reflects the disappointing growth rate. In the last two years the U.S. economy has lost 2 million jobs. The annual average unemployment rate for 2002 was 5.8% and had been hovering around that figure during the first quarter of 2003, only to rise even higher to 6% in April. This constitutes a sharp increase from previous years with 4.2% in 1999, 4.0% in 2000 and 4.7% in 2001. The numbers take on a particularly dramatic aspect if one takes a look at the net number of jobs lost in recent months: the U.S. economy has lost a total of 525,000 jobs since February 2003 (February: - 353,000; March: - 124,000; April: - 48,000). Bigger net losses in jobs were offset mostly by additional hiring in the public sector.

In addition to the bad news spelled out by the economic indicators, after the giddy years of rather unrealistic, but widely applauded and seldomly questioned gigantic surplus projections, huge budget deficits now loom in the future. The budget deficit for FY2002 was $ 158 billion (1.5% of GDP). For FY2003, the Congressional Budget Office (CBO), the institution that provides the primary budgetary expert advice and analysis to Congress, puts the deficit at $ 199 billion, whereas the Office of Management & Budget (OMB), part of the Executive Office of the President, is projecting a $ 304 billion deficit (2.8% of GDP). The difference between CBO and OMB projections increases in regards to the budget deficit projections for FY2004: $ 145 billion (CBO) vs. US $ 307 billion (OMB). There is a strong likelihood that neither one of them got it right and that the budget deficits for FY2003 and FY2004 will surpass even OMB projections, because none of these calculations included the costs for the war in Iraq. Congress has recently passed legislation for supplemental appropriations to cover war costs of around US $ 75 billion. The eventual costs of the war and its aftermath are expected to be much higher. Most experts now put the expected defict for FY2003 at around $ 400 billion.

The U.S. is, of course, not alone in finding itself in an economic slump. Jean-Philippe Cotis, the OECD’s chief economist, speaks of an “unspectacular recovery” in the organization’s most recent “Economic outlook” for the OECD member states. And, while one might possibly find some solace in the fact that the U.S. is not the only one having to deal with an adverse economy, the numbers for the U.S. are indeed quite sobering.

Revival Ahead?

"So I'm here to thank the folks who work for this fine company, on behalf of the American people, for your contribution to the security of your nation and for the peace of the world. (Applause.) I'm also here for another reason. I'm here to talk about the state of our economy. Today we saw some new statistics on employment. The unemployment number is now at 6 percent, which should serve as a clear signal to the United States Congress we need a bold economic recovery package so people can find work. (Applause.) That 6-percent number should say loud and clear to members of both political parties in the United States Congress, we need robust tax relief so our fellow citizens can find a job. (Applause.)" (President George W. Bush, Remarks to the Employees of United Defense Industries in Santa Clara, California, May 2, 2003)

The answer to the economic situation is, of course, all politics. Democrats seem to have essentially lost most of the political and legislative initiative to an enormously popular war-time president who faces little opposition in Congress. The current debate about addressing the economic challenges is very much centered around a variety of proposals contained in the President's economic growth package.

Now that the war in Iraq is over, the President – omnipresent as a triumphant commander in chief – faces an immediate challenge to his own political fate, the upcoming presidential elections in 2004. There is no question that winning the reelection is high on the President's list of priorities. The White House is often portrayed in the media as being obsessed with a somber lesson from history, history that is deeply personal to the President: his father’s defeat in the 1992 elections (against Bill Clinton) in spite of his enormous popularity after the war victory is often viewed as an immediate effect of the economic downturn following the 1991 war. George H. Bush was widely perceived as being out of touch with the needs and anxieties of the American middle class who bore the brunt of the recession.

The White House is well aware that although there is little in terms of specific action the President can do for an economic revival that is speedy enough to show its effect by the next elections, it is important that the President is being seen as addressing the issues head-on. Therefore, it comes as no surprise that, although ostentatiously focusing on the economy by publicly touting his budget proposal as an economic growth initiative, the White House will center the reelection campaign around issues of "national security" and the "War on terrorism", areas in which Americans attribute George W. Bush with decisive leadership. At the same time he will continue hammering a central message: the economy will only grow if Congress approves his tax cuts. His recent public appearances show the implementation of that strategy: his speeches pushing the tax-cuts at the core of his economic growth initiative and praising the American fortitude in the face of world-terrorism are for the most part set against the backdrop of audiences of workers at various defense industry plants whose products had been of essential use in the war in Iraq.

Mostly due to detractors within his own party, George W. Bush is likely to have to accept a compromise on the economic growth package part that, as a part of his budget proposal, is right now the object of congressional debate. That holds true especially for the tax-cuts of $ 726 billion over a period of ten years. That figure has already been significantly diminished, as Republicans in the House and the Senate came up with seemingly irreconcilable numbers: $ 550 billion in tax cuts over 10 years in the house and $ 350 billion in the Senate. A final decision will be made at the Senate-House conference. If the Senate version were to prevail, the centerpiece of Bush's tax cut, the proposed elimination of income tax on stock dividends, could not be implemented. The dividend tax elimination and the envisioned reduction of income tax for those in the highest tax brackets is heavily criticized by the Democrats who not only oppose the whole idea of a tax cut, but have also voted against the recent budget resolution which, with the votes of the Republican majority in both chambers, set the ceiling for the FY2004 budget at US $ 2.2 trillion. They argue that the tax cuts would benefit only the wealthiest Americans, without having any significant stimulating effect on the economy.

In this later argument the Democrats – and a growing number of moderate Republicans – are supported by an increasing number of economists and by the fact that the first substantial tax cut enacted in 2001 – then a significant victory for the White House – has little to show for itself in terms of stimulating economic growth.

The opposition to the tax cuts is mostly based on the lingering doubts about the sensibility of such cuts in times of war, a shrinking economy and huge budget deficits looming in the future for many years to come. A recent CBO report failed to see the "obviousness" of the "overall macroeconomic effect of the proposals in the President's Budget." The director of CBO, Douglas Holtz-Eakin, is a former member of Bush's Council of Economic Advisers. A similarly cautious assessment of the tax cuts' likelihood of reviving the economy came from Alan Greenspan, the Fed chairman and conservative Republican whose reappointment as head of the Federal Reserve System is expected for next year.

All of this does not seem to faze the President and his "White House sales team" as a recent editorial in the New York Times called George W. Bush's team of close advisers, aides and cabinet members who have not responded kindly to critics and Republican defectors. A recent example are some of the activities of the "Club for Growth", a group of ultraconservative Republicans close to the administration: they have been airing commercials in Maine and Ohio, the home states of Senators Snowe and Voinovic, the most important Republican defectors, comparing these politicians to the French who are currently somewhat unpopular in this country, due to their resistance to the war in Iraq.

Given the steadfastness of the moderate Republican Senators, the President will likely end up having to accept a downsized version of his tax cut. This will not be an altogether unpleasant situation for the White House: whether the tax cuts fail to significantly stimulate the economy or actually succeed in stimulating the economy – the outcome on the vote has the potential of going down as the President’s victory in public perception. In the first case, the White House will be able put the blame on Congress for messing up the President’s proposal, in the later case the White House will still be able to claim that the President’s economic growth package helped after all.

Beyond the measures and debates produced by the short life of politics and opinion polls, there are hardly any measures in place to actively address the economy, except, of course, a seemingly abundant faith in its natural ability for recovery. This is precisely where those that hope for a sustainable and balanced budget for the sciences as the basis for societal wealth and progress will have to rest their hopes.

The So-Called Research & Development Budget

No matter what the economy holds in store for the future, the President has presented his budget proposal for FY 2004 and chances that Congress will – by and large – adopt his wishes for the funding of R&D are traditionally good. Congress might even add a bit here and there, if it continues its self-serving habit of inserting scientific pet-projects into essentially unrelated bills, a practice commonly referred to as “earmarking” or, more bluntly even, “pork barrel”. The main problem with earmarks is not that they don’t serve scientific goals but that they are more often than not the outcome of the political influence of individual legislators rather than a consequence of, for instance, peer-review or a broadly based policy-decision.

Talking about the "R&D Budget" is somewhat misleading since it conveys the idea that there is a specific budgetary decision based on an underlying, coherent and coordinated national R&D Policy. That is, however, not really the case since R&D programs are carried out by a variety of different agencies and the money appropriated to a particular agency is more a reflection of the place that agency holds on a scale of national priorities rather than a statement of the importance (or lack thereof) of a specific set of R&D programs.

Naturally, there are exceptions to that general rule, such as Congress’ successful campaign to double the budget of the National Institutes of Health (NIH) between 1998 and 2003, or the more recent – and so far, less auspicious – effort to double the National Science Foundation's (NSF) budget by 2007. Other examples of distinct R&D policies would be national initiatives such as the Nanotechnology Initiative.

The American Association for the Advancement of Sciences (AAAS) is the non-governmental organization that is to thank for doing the work of analyzing the President's budgetary proposal (and later in the year the outcome of the actual appropriations at the end of the legislative process). In doing this they provide an invaluable service to the scientific community and S&T policy makers. This year's analysis of the presidential R&D budget is contained in the Report "Research & Development FY2004". Most of the R&D budget data used in this article are taken from that source. Since the AAAS report provides an extensive analysis the insights and depth of which are difficult to surpass, this article limits itself to a description of some of the major trends.

The federal tax dollars going into R&D constitute only a part of the overall U.S. investment in R&D. The estimate for 2002, when the total federal R&D budget was about $ 103 billion, puts the total R&D investment at $ 292 billion (2.79% of GDP). 66% of that amount came from industry, 28% from the federal government and the remaining 6% were contributed by universities, private foundations, and state and local governments (Source: National Science Foundation, Division of Science Resources Statistics). To anyone who does the calculation, it will be obvious that the numbers don’t quite add up: there is a discrepancy of about $ 22 billion from the federal R&D budget that is unaccounted for in that statistics. The discrepancy is due to the fact that the R&D funding data is obtained from different sources. The R&D budget analysis provided by AAAS obtains the funding data from funding sources (mostly agencies), whereas the statistics regarding total R&D investment are based on funding data received from funding recipients (universities, industry etc.) whose numbers – especially in regards to defense related R&D are often incomplete. Both the absolute numbers of $ 292 billion and the expression of R&D investment as percentage of GDP (2.79%) put the U.S. clearly ahead of the game. Across the EU as a whole, total R&D expenditure is only about 1.9% of GDP.

Federal Funding of Science & Technology tends to be an early victim when the budget for discretionary spending is tight. Although – especially in times of crisis with particular segments of science playing a pivotal role – the overall numbers for the R&D budget might be on the rise, shifts in priorities within the R&D budget can cause significant cutbacks for other areas of Science. In regards to FY2004, the question, therefore, is whether the focus on national security is causing such major shifts in priorities that make for bad news for some R&D areas in spite of the impressive number of $ 122 billion.

It should come as no surprise that the answer to that question is an unequivocal "yes". An analysis of the allocation of federal money for R&D in the President's budget proposal for FY2004 shows that the distribution neatly reflects the current administration's overall political priorities.

This becomes readily apparent when looking at the role defense R&D is playing in the proposal. R&D related defense has always been the major beneficiary of federally funded R&D. By 2001 – according to AAAS – “non-defense and defense R&D almost reached parity”. This trend is strongly reinforced in the current proposal that would allocate 55% of federal R&D funds to defense research, which is an increase of 7.2% over the current year. That means that a substantial part of the overall increase in the R&D budget (as compared to FY2003) of 4.4% actually goes toward defense R&D. If one takes into account the fact that the remaining part of the overall increase is due to NIH’s funding increase one conclusion becomes obvious: someone is losing funding.

Indeed, if we take health related R&D and defense R&D which together make up 79% of the R&D portfolio – AAAS calls this number “record-breaking” – out of the equation, non-defense R&D experiences a collective decrease in funding. While there are some agencies (and therefore scientific disciplines) that will be the recipients of minor increases, most programs' funding is either flat or reduced. NIH Budget now equals the combined R&D budget of the non-defense agencies.

It is common practice in the analysis of the U.S. R&D budget to look at how much money goes towards specific “missions”, such as defense, health, general science, space, energy or transportation. This approach has the advantage of making international comparisons more feasible. If one looks at the proposed distribution of federal R&D funds from this perspective, supporters of a more balanced distribution that benefits a wider array of scientific fields might experience something akin to relief: after all, general science R&D will increase by 5% (putting it to a total of 7.4 billion). The relief may be short-lived, however, because the majority of that money goes to newly established programs within the Department of Homeland Security (DHS) and will thus, again, serve to address issues of "national security".

Still looking at the R&D budget from the "mission" point of view, one cannot fail to notice that there are steep cuts to environment R&D (1.7%) as a results of cuts made across the board at a variety of traditional strongholds of environmental research, agencies such as the Environmental Protection Agency (EPA).

The National Science Foundation (NSF), supposedly on the way to doubling its budget by 2007, will – if Congress doesn’t significantly alter the White House proposal – receive a total of $ 5.5 billion. That constitutes an increase of 3.2% which is, however, well below the numbers necessary to effectively put the agency on the doubling trajectory. This is worrisome, since NSF is after all the primary funding source for basic research in mathematics and the physical sciences. It is of particular importance to the behavioral and social sciences, an area that by and large receives very little attention from policy makers.

The R&D Budget, an integrated part of the appropriations bills that make up the budget of the federal government, will now be the object of the legislative process in Congress before going back to the President. If the experience with the budget for FY2003 is any indicator, a lengthy process lies ahead: on February 20, 2003, nearly five months after FY2003 had actually started, the President signed the remaining appropriation bills into law.

Then Again, Money Is Not Everything

The same way the R&D budget doesn’t occur in a political void, but evolves in the real world of politics, the research that is funded from that budget is not happening in some abstract far-away places, but is being carried out in a specific framework, the national innovation system. The educational system is part of the foundation of the national innovation system. Its quality determines a society’s ability to carry out research and put its outcomes to wise use. The current economic crisis and the lack of substantial counter-measures threaten to undermine that basis.

Higher Education Under Very High Pressure

To many Europeans, the financial sacrifice most Americans have to make in order to receive a university education is still a mostly foreign concept. Between 1988 and 1998 the tuition at all universities experienced annual tuition increases at a faster rate than inflation. Currently, the average cost (annual tuition and fees) is $ 4,081 for a four-year public college or university $ 18,273 for a four-year private college or university. In spite of the steep tuition rates, American universities have always had to come up with funding resources other than the tuition paid by students. The average tuition being paid is well below the average cost associated with training a student. Thus – depending on whether they are private or public institutions – they rely heavily on state appropriations, earnings from their endowments, private donations and financial aid given to students by the federal government.

Limited Flexibility

Usually, when one of these resources fails to deliver, universities can decide to rely more heavily on one of the other contributing sources. The most flexible source is tuition. In the current situation, however, there is such an intense confluence of a number of very unfavorable circumstances that there is very little room left to maneuver:

(1) Due to the extended downturn in the overall economy the financial yield on the endowments does not meet the levels projected, or rather hoped for, by individual institutions of higher education. This significantly diminishes the operating budget available to the university. According to the National Association of College and University Business Officers, college endowments fell an average of 6 percent in 2002. This is the steepest drop since 1974.

(2) Another, usually fairly reliable source of income, donations from foundations and alumnis, has experienced setbacks as well. According to a survey from the Council for Aid to Education (CAE), donations to universities and colleges experienced a sharp decline in 2003. The drop of 13.6 % in contributions from alumnis constitutes the first such decline in 15 years.

(3) The bad economy has caused one of the worst budget crises at the state level in history which, in turn, has led state legislators in the majority of states to dramatically cut their appropriations for the publicly funded universities and colleges.

(4) An increase in tuition rates, an immediate consequence of the above factors, is especially tough on the middle class which already has to shoulder a large part of the burden of a slow economy.

(5) Not surprisingly, a significantly higher number of students than in the past are now competing for student aid, the total of which has, by and large, remained unchanged.

Washington, Do You Read Me?

There is a general recognition, not just limited to the Higher Education Community and the millions of parents who face stiff costs if they want to provide their children with a college education, that the U.S. needs to do something to address the issue of already exorbitant and still rising college costs. Still, little is being done at the federal level to address the problem.

Little help is to be expected from a federal government, run by an administration that wants to keep deficit spending at the absolute necessary minimum while financing the war in Iraq, beefing up “national security” and cutting taxes. One of the initiatives to alleviate the burden on the universities, the students and their families comes from a Republican member of the House, Hower P. McKeon. McKeon wants to introduce legislation that would, in effect, put a ceiling on the tuition increases universities can implement without having to face a series of federally imposed penalties, including the specter of losing the eligibility for federal student-aid programs. Critics of that proposal contend that – given the limited number of options available – this would force universities to decrease services, which in turn would have a negative effect on the quality of education available to individual students.

There is little doubt that this has the potential to seriously undermine the quality and efficacy of the national research enterprise which is not only dependent on federal funding but on the health and vitality of the university system.

Back To The R&D Budget

By focusing on issues pertinent to “national security” and the “war on terrorism” at the expense of some of the science areas that have historically proven to be the foundation of the long-term health of the national economy the President’s R&D Budget for FY2004 offers little response and resistance to the multifarious challenges to Science & Technology inherent in a weak economy.

The budget proposal in its entirety also appears to make light of the problems that eat away at high quality R&D: the worsening crisis of the educational system, the projected shortage of highly qualified science graduates, the imbalance of funding among the various science areas and the depth of public misunderstanding of Science & Technology.

Philipp Steger has been Austria's Attaché for Science & Technology to the U.S. since March 2000 and has established the Office of Science & Technology at the Austrian Embassy in Washington, D.C.. He can be contacted at steger@ostina.org.
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NASA Under Scrutiny:
The Columbia Disaster Sparks Debate Over NASA’s Future
by Stephan Neuhäuser


The loss of the Space Shuttle Columbia on February 1, 2003, and Ronald D. Dittemore’s more-or-less immediate resignation as NASA’s Shuttle Program Manager thereafter, has refueled the debate about the direction of U.S. space research policy and the future of NASA. There is widespread concern that NASA has lost much of the technical expertise that distinguished it during the “race to the moon.” This renewed interest in NASA’s future comes as investigators on the Columbia Accident Investigation Board (CAIB) are taking a close look not only at the Columbia disaster, but at NASA’s governance and culture as a whole.

There had been a number of warning signs leading up to the Columbia tragedy. The March 2002 Annual Report of the NASA Aerospace Advisory Panel (ASAP) stated that NASA’s “current and proposed budgets are not sufficient to improve or even maintain the safety risk level of operating the Space Shuttle and the International Space Station (ISS). Needed restorations and improvements cannot be accomplished under current budgets and spending priorities [while the] risk that scheduled safety upgrades will never be completed [keeps growing].” These statements underscored an earlier ASAP-report from 2001 where similar safety issues where mentioned. Indeed, the widespread perception of NASA has been all but positive. It seems clear that NASA and its contractors continue their “corporate culture of denial”, and, as a result, did not follow up accident reports from earlier incidents. At this time, NASA seems to live up to these allegations made in the ongoing investigations conducted by CAIB, as it has carefully limited public access to internal documents. NASA supervisors have warned employees and engineers not to communicate with journalists without getting formal approval to do so beforehand.

There have been quite a number of incidents involving Space Shuttles since the 1986 Challenger-explosion. In 1999 – the year in which NASA’s Mars Polar Lander and Mars Climate Orbiter were lost – over 100 exposed conductors required new wiring protection and repair efforts on several Shuttles. The overhaul of electrical wiring on board the ill-fated Columbia alone took 17 months to complete at a total cost of $145 million. Another incident, allegedly not followed up by NASA, occurred in August 2001 as technicians at Kennedy Space Center in Florida accidentally released a highly toxic gas from a Shuttle tank causing the evacuation of nearby buildings occupied by NASA staff. Such incidents are even more disturbing when the condition of the Space Shuttle fleet is taken into consideration. The Fleet, in its entirety, has a long history of impact damage during lift-off, also blamed for the Columbia tragedy, with the Shuttle Columbia suffering similar incidents at least twice before its final mission.

The “Space Race” Is Over

What has gone wrong with the one-time figurehead of American cuttingedge space research? Founded in 1958 as a result of the “Sputnik Crisis,” the National Aeronautics and Space Administration (NASA) initiated successful projects such as the Mercury, the Gemini and the Apollo programs, and finally won the politically prestigious race to the moon in 1969. In the late 1970s, NASA undertook one of the United States’ biggest space endeavors: the development of the Space Shuttle. Howard McCurdy, Professor at the School of Public Affairs at American University and author of "Inside NASA," claims that President Nixon’s approval of the Shuttle Program in 1972 was not prompted primarily by scientific needs, but rather to get California’s stagnant economy back-on-track in the wake of the Vietnam War.

The first Shuttle mission, “Space Transportation System-1” (STS-1), successfully took to the skies in 1981. Only 5 years later, the Space Shuttle Challenger was lost on mission “STS-51L”. In 1989, after a total of 32 shuttle missions, NASA was deprived of its convenient geopolitical excuse for its consistent over-budget shuttle missions as a result of having lost its major competitor the Soviet Union.

Since then, various arguments have been used to justify the costly American human space flight program. Economical arguments dominated in the 1990s, but failed to convince the public. “Claims of miracle cures and mystery crystals were widely disbelieved, and rightly so,” says John Pike, a space technology expert and director of globalsecurity.org, a Washington, D.C.-based research group.

The prevailing, scientific justification for the Shuttle Program by NASA is to help build the International Space Station (ISS). However, also the ISS is coming under closer scrutiny amidst a political climate becoming increasingly hostile to funding international programs. John Pike: “With the space station consuming several billion dollars each year, nearly as much as the entire research budget of the National Science Foundation,” (the budget of the National Science Foundation for the fiscal year 2002 is $ 4.77 billion; NASA’s budget for 2003 is approximately $ 15 billion), “logic alone dictated that the cost of the space station was unlikely to be justified by its scientific merits.” In fact, every single Space Shuttle round-trip costs American taxpayers $ 400 million – approximately ten times the price estimated in 1972. Considering that there are approximatly 4-5 missions a year, the price tag of NASA’s Shuttle Program is enormous.

Furthermore, the grounding of the U.S. Shuttle Fleet after the Columbia tragedy means reducing the ISS crew from three to two members in the near future. This is due to the smaller Russian spacecraft which can only adequately supply two ISS crew. It is important to remember that shuttle missions were halted for as long as almost two-and-a-half years following the Challenger explosion. The current situation also may warrant an extended pause in the Shuttle Program. This only strengthens the case of the growing number of Shuttle- and ISS-critics who maintain that a crew of at least seven astronauts is necessary to run the ISS as a top-quality laboratory for the purposes of life sciences and microgravity research. A report by the National Research Council (NRC) (“Factors Affecting the Utilization of the International Space Station for Research in the Biological and Physical Studies”) is quite clear about this: "Without a solution to the crew availability problem, and other limitations in facility access and operations, the ISS can never achieve the status of a world-class research laboratory. [The current situation] provides a space station with less time available for research than 30 years ago on the U.S. Skylab."

The Lower You Go, The Less Time You’ve Got

In addition to the crew-issue on the International Space Station, NASA is facing the major challenge this year of keeping the ISS in space. Until now, a Space Shuttle must occasionally nudge the ISS in order to lift it as high as 8 miles each time to keep it from sinking. If delays persist for a year or more, some experts say, it may even become difficult to prevent the station from falling into earth’s atmosphere. “The lower you go, the less time you’ve got,” says John Pike, “Maybe the answer is that there’s more than enough, or just enough, or more than enough for this year, but after that there’s a real problem.”

Withstanding all difficulties – 5 Shuttle flights were planned for 2003 in support of the ISS – NASA is determined to see this through. “We’re going to find this problem and we’re going to fix it and we’re going to get back to flight,” says Michael C. Kostelnik, the NASA Deputy Associate Administrator for the ISS and the Space Shuttle Programs, as quoted in the New York Times. Kostelnik also emphasizes that the Bush Administration was committed to seeing ISS expand, as it is “a key and essential staging ground for what comes next.”

NASA Crisis: Action Needed

NASA is not troubled only by the problem-ridden, and now grounded, Shuttles and having to maintain an obviously insufficient, but nevertheless, costly space station.

According to the General Accounting Office (GAO), human capital management is one of the top challenges NASA faces now and in the near future: Since 1993, NASA has cut jobs down from 25,000 to approximately 19,000 today. About 25% of the remaining, highly-qualified workforce – 60% of NASA employees hold either a masters or doctorate degree in science and engineering – is eligible for retirement within the next 5 years. In some NASA Centers, expertise is only “one-deep,” meaning that even a single retirement can be critical. “NASA’s challenges will soon become its crisis in human capital management…. Today, NASA’s ability to maintain a world-class workforce with the talent it needs to perform cutting-edge work is threatened by several converging trends. Each trend in isolation is a concern; in concert, the indicators are alarming.” This warning was recently voiced by Sean O’Keefe, NASA’s current administrator.

A Troubleshooter For NASA: Sean O’Keefe

O’Keefe began his career on Capitol Hill as a key aide to Republican Senator Ted Stevens from Alaska. In 1989, O’Keefe was named Chief Comptroller of the Pentagon by then Defense Secretary, Dick Cheney, and earned a reputation of not only being a skillful accountant, but also of combining analytical abilities with networking and rhetorical talents. It was no surprise when he was promoted to the rank of a Navy secretary at the Pentagon at age 36. With his predecessor, Lawrence Garrett, forced to resign in the aftermath of the “Tailhook Affair,” (the affair was about sexual harrasment in the Navy) O’Keefe was able to establish himself as a successful troubleshooter. His overall qualifications made him a prime candidate to take over the troubled Space Agency. O’Keefe’s appointment as NASA’s administrator in January 2002 was made in an effort to reestablish the Agency’s former glory.

The “Shrinking Scientist And Engineer Pipeline”

According to O’Keefe, NASA’s ongoing troubles reflect a general crisis of America’s science and technology capabilities. This crisis has been emerging during the last decade. The number of American students pursuing degrees in disciplines essential to NASA – science, mathematics and engineering – has been declining over the last decade, as the NSF’s Report on “Science and Engineering Indicators” proves:

  • The number of students enrolling in undergraduate engineering decreased by more than 20% between 1983 and 1999; graduate science & engineering enrollment also dropped by almost 20% between 1992 and 1999.
  • From 1995 to 2000, the number of doctorates awarded annually in engineering has declined by 15%, in physics by 22% and even in computer sciences the number of doctorates dropped between 1999 and 2000.
  • A decrease in enrollments can also be seen in aerospace programs.
  • Whilst the number of American science and engineering students is dwindling, foreign students now account for 40% of graduate students in the United State’s engineering, mathematics, and computer science programs; in the fields of natural sciences the number of non-U.S.-citizens has grown to almost 25%.

Harsh Facts…

The U.S. Commission on National Security for the 21st Century also known as the “Hart-Rudman Commission,” recently published some serious warnings considering the future of science and engineering in the United States: “The harsh fact is that the U.S. need for the highest quality human capital in science, mathematics, and engineering is not being met…There will not be enough qualified American citizens to perform the new jobs being created today – including technical jobs crucial to the maintenance of national security. We lack not only the homegrown science, technology, and engineering professionals necessary to ensure national prosperity and security, but also the next generation of teachers of science and math at the K-12 level… The nation is on the verge of a downward spiral in which current shortages will beget even more acute future shortages of high-quality professionals and competent teachers.”

As a consequence of the “shrinking science & engineering pipeline,” (O’Keefe in his statement before the Senate’s Committee on Governmental Affairs’ Subcommittee on Oversight of Government Management, the Federal Workforce and the District of Columbia on March 6, 2003) increased competition for people with technical skills arises as a further nationwide trend. Simply stated, scientists and engineers are no longer limited to traditional technical companies, but are sought after by various industries such as the banking and the entertainment industries and even academic institutions now offering very competitive salaries to world-class academics. Making things worse for NASA is that highly qualified science and engineering graduates’ interest in government employment is steadily declining (“The Unanswered Call to Public Service”).

In addition to these trends shared by NASA with other employers, NASA is also troubled by internal skill gaps. Too few scientists work in new and emerging technologies (nanotechnology, systems engineering, propulsion systems, information technology etc) whilst too many are employed in the traditional aeronautics field where NASA is proposing to cut funding by 4.5% over the next five years.

Chronically over-spent budgets, especially in the Shuttle and ISS programs, and incomprehensive accounting add to NASA’s ongoing problems. Regarding NASA’s accounting practices, the “U.S. House of Representatives Hearing Charter on NASA’s Fiscal Year 2004 Budget Request” reads: “The problem in making comparisons is exacerbated by the frequent previous changes NASA has made in its budget presentation. These changes make it difficult for Congress to conduct oversight of various programs – particularly the Space Shuttle and the ISS by making it difficult if not impossible to make year-to-year budget comparisons. (This is one reason it is difficult to answer the seemingly simple question of how much has been spent on Shuttle safety).”

Beyond Einstein…

Looking past the fiscal, political and administrative problems, genuine research continues at NASA. Two astronomical telescopes are expected to be launched using rockets (Pegasus XL and Boeing Delta II, respectively) in the next three months. Launches are also scheduled in May and June of two “Mars Exploration Rover” spacecraft headed to Mars where they will arrive in January 2004. They may answer questions about water sources believed to once have existed there.

In April 2003, NASA anounced that $ 135 million for the development of an Orbital Space Plane (OSP) – a next generation space vehicle providing crew rescue and transport capabilities to and from the ISS – will be awarded to three companies (Boeing, Lockheed Martin and a team including Orbital Sciences and Northrop Grumman). Though the OSPs may be safer than the Shuttles, they lack the capability of carrying large payloads. Thus NASA’s OSP-concept has already met some criticism and only the future will tell if the concept is a viable one.

Finally, if NASA’s budget proposal of $ 15.5 billion for the fiscal year 2004 (a 3.1% increase over last year’s request) is approved, the Agency will embark on a number of new activities including the development of nuclear power and propulsion systems (Project Prometheus), research on optical communication technologies, investigating questions left unanswered by Albert Einstein’s theories (“Beyond Einstein”), new initiatives in climate change research, research on the effects of radiation beyond low Earth orbit (ISS is in lowEarth orbit), research on aviation security, quiet aircraft technology, the development of the next generation national airspace system in cooperation with the Federal Aviation Authority (FAA) and the launch of a new educational initiative which would inter alia use scholarships to attract new employees.

Perhaps the future of NASA is not as uncertain as the controversy might suggest. The NASA Administrators’ ties to his former boss, Senator Ted Stevens (R), who happens to be Chairman of the Appropriations Committee, bodes well for the future of NASA. The Appropriations Committee oversees the budget process that annually allocates more than a half-trillion dollars in federal funds to various government programs, agencies and departments, including NASA.


People Cited:
Ron Dittemore
Howard McCurdy
John Pike
Sean O’Keefe
Michael C. Kostelnik
Ted Stevens

Organisations Cited:
NASA
Columbia Accident Investigation Board (CAIB)
NASA Aerospace Advisory Panel (ASAP)
Human Space Flight (NASA’s ISS and Shuttle web site)
GlobalSecurity.org
National Science Foundation
National Research Council
General Accounting Office
U.S. Commission on National Security for the 21st Century (“Hart-Rudman Commission”)
Federal Aviation Agency
NASA orbital space plane concepts

Further Links:
Ronald D. Dittemore’s letter of resignation (April 23, 2003)
ASAP Report 2002
“Shuttle's long history of launch damage” (article in the New Scientist, February 3, 2003)
“Factors Affecting the Utilization of the International Space Station for Research in the Biological and Physical Studies” (report by the National Research Council, December 9, 2003)
Statement of Sean O’Keefe before the U.S. Senate’s Subcommittee on Oversight of Government Management, the Federal Workforce and the District of Columbia, March 6, 2003
Science and Engineering Indicators 2002 (report by the National Science Foundation)
NASA budget proposal for 2004 (overview)

Stephan Neuhäuser works for the Department of International Cooperation within the Austrian Research Ministry. He is currently at the Office of Science & Technology as Senior Visiting Expert and can be contacted at neuhaeuser@ostina.org.
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Academic Mobility And Law Enforcement: The New U.S. Visa Regulations And The Struggle with SEVIS
by Jutta U. Kern


In 2000, approximately one million people entered the United States as students, scholars, researchers or academic exchange visitors on non-immigrant visas. Since January 2003, all of these visa applications must be processed with the Student and Exchange Visitor Information System, better known by its acronym, SEVIS . This web-based technology links together all U.S. embassies, U.S. consulates, U.S. ports of entry, all institutions of higher education with international students, and also all exchange programs. About 75,000 approved U.S. institutions are now required to use SEVIS in order to admit foreigners with SEVIS. These institutions must collect and enter pertinent personal data, including precise travel dates, student schedules course-loads, and fields of research and study. Thus, SEVIS allows the U.S. government, specifically the Bureau of Citizenship and Immigration Services (BCIS) to monitor and track foreign visitors.

Delays And Deficiencies

The implementation of such a significant technology usually requires many initial adjustments until it runs smoothly and all involved personnel are trained properly to use it. The implementation of SEVIS by January 2003 was a result of the USA Patriot Act of 2001, which went in effect in response to September 11th. The push for heightened security pressed the software’s development for time. Administrators running international exchange programs, such as the Fulbright ones, informed the academic community about the vast delays caused by the new technology. They warned that visa applications consume up to twice as much time to process than before. Officials publicly acknowledged seroius flaws in SEVIS. The U.S. Department of Justice, Office of the Inspector General published an Evaluation and Inspections Report on SEVIS in March 2003. This was followed by a hearing in the House of Representatives. Failings of the system included the publishing of confidental forms of NASA’s space propulsion center. Furthermore, to eradicate fraudulent use of student-visas, educational institutions are required to report when registered full-time students fall below the set minimum of credit hours. In Colorado, a student was arrested on those grounds even though the student had not violated any rules.

It is unclear how many students have been rejected from entry to the U.S. because of technical short-comings and defects in SEVIS. Foreign-student advisors report that it takes them up to several hours to enter only one single student record into the system.

Backlogs And National Security

Backlogs are not only created by SEVIS’s deficiencies. In 1996, Congress advised the Immigration and Naturalization Service (INS), formerly in charge of immigration matters, to develop a centralized, electronic system that could keep track of foreign students and scholars in the U.S.. However, new laws in response to September 11th accelerated the need for such a system with a strong emphasis on security – one of the hijackers, Hani Hanjour, had entered the U.S. on a student visa. Significantly enough, the tracking system SEVIS is overseen by the Bureau of Immigration and Customs Enforcement (BICE) , BCIE’s law-enforcement branch and not by its service branch, which would normally deal with almost all matters concerning international students and scholars. Additionally, the burden of proof is on the applicant since the law presumes that anyone applying for a non-immigrant visa does so with the intention of immigration until she or he proves otherwise.

John Marburger, Science Adviser to President Bush, pointed out to the audience at the annual AAAS Science & Technology Policy Colloquium that “the visa process remains essentially the same as it was prior to 9/11.” However, every single file remains in the system for a much longer time until it is cleared by several subsystems and partner agencies. Hence, a tremendous amount of cases is submitted for additional review to systems like CONDOR, a database to single out potential terrorists. As a rule, every application is compared with files in the FBI’s National Criminal Information Center, and also with its database of terrorists, TIPOFF. New in the process is a check with the Technology Alert List (TAL) which aims at finding applications of individuals who are likely to “violate or evade laws governing the export of goods, technology, or sensitive information” (Section 212, the “Immigration and Nationality Act”). Those cases are submitted for review by another database, called MANTIS. The Visas Mantis Program is applicable wherever a consular officer at a U.S. foreign mission abroad has reason to believe that a foreign national may engage in sabotage, espionage, or the unauthorized access to controlled technologies in the U.S..

Whereas INS or BICE officials claim that further centralization of activities will streamline operations and improve efficiency of procecssing visa applications, the numbers present a different picture: In the 2000, approximately 1,000 cases were submitted for MANTIS review. This number rose to about 2500 in 2001. By 2002, 14,000 cases went through MANTIS scrutiny. In many cases consular officers are reluctant, or don’t feel familiar enough with the new regulations, to make a decision und thus assume considerable responsibility and forward the application to additional review. It is no wonder that there is an enormous backlog of pending visa applications. Nonetheless, the situation suggests that there will not be any significant increase of rejected visa applicants in general.

National Security And National Innovation

Crucial to the entire visa application process are also the new definitions of “sensitive areas of study” and “sensitive countries.” The resulting scrutiny of these definitions in the visa application process caused an uproar in the international academic community. (Researchers rage at tightened restrictions on US immigration. In: Nature 422, 2003). The “Chronicle of Higher Education”, America’s leading journal in education, is addressing the problem with a series of articles under the title “Closing the Gates: Homeland Security and Academia.” Applicants from certain countries or interested in certain areas of study, such as chemical engineering, biochemistry and microbiology, can be interviewed for entry to the U.S. by U.S. consular officials in order to rule out any possible terrorist intentions. In addition, the Homeland Security Presidential Directive 2 explicitly states that it wants to “prohibit certain international students from receiving education and training in sensitive areas […]." However, the final definition of “sensitive areas” is still under consideration by the Interagency Panel on Advanced Science and Security (IPASS). Besides the concern that once IPASS is in effect, it could slow down the process even more, lawmakers and scientists are worried about the future development of the national innovation system if the entry to the U.S. remains difficult for the foreign academic workforce.

David Ward, President of the American Council on Education, reported in a Hearing at the House Science Committee on the visa backlog that, according to the U.S. Commerce Department, higher education is the nation's fifth-largest service-sector export, and that approximately 580,000 foreign students spend an estimated $ 12 billion per year in the United States. The U.S. National Science and Engineering Indicators show that in April 1999, 27% of doctorate-holders in S&E in the U.S. labor force were born in foreign countries. Moreover, the S&E Indicators predict that “during the 2000–2010 period, employment in S&E occupations is expected to increase about three times faster than the rate for all occupations.” Sherwood L. Boehlert (R-NY), chairman of the House Committee on Science, addressed America’s historical role in integrating the foreign academic labor force and reminded the committee of the crucial role foreign scientists played in the Manhattan Project. He expressed concern that the ongoing discouragement of foreign scholars, scientists and students from pursuing their careers in the U.S. would compromise the U.S. innovation system in general. Consequently, he believes that “unnecessarily impeding the flow of students and scholars, in and of itself” could erode U.S. national security.


Sources And Further Information:

U.S. Department of Justice, Office of the Inspector General, Evaluation and Inspections Report: Follow-up Review on the Immigration and Naturalization Service’s Efforts to Track Foreign Students in the United States through the Student and Exchange Visitor Information System

National Science Foundation: Science and Engineering Indicators 2002

U.S. House of Representatives, Committee on Science: Academic Leaders concerned about backlog of student visas and problems with tracking of foreign students

Committee on Science, Full Science Committee on Hearing "Dealing with Foreign Students and Scholars in the Age of Terrorism: Visa Backlogs and Tracking Systems." March 26, 2003:

Student and Exchange Visitor Information System: Technical guide

Researchers rage at tightened restrictions on US immigration, Nature 422, 457 – 458 (2003);

2001 Statistical Yearbook of the Immigration and Naturalization Service

Watchful Eyes: The FBI steps up its work on campuses, spurring fear and anger among many academics, April 11, 2003, The Chronicle of Higher Education, Section: Special Report, Volume 49, Issue 31, Page A14

Reorganization of U.S. Agencies Leaves Colleges Worried About How Foreign Students Will Be Treated, March 7, 2003, The Chronicle of Higher Education, Section: Government & Politics, Volume 49, Issue 26, Page A28.

John Marburger, Director, Office of Science and Technology Policy, Executive Office of the President. On “Closing the Gates: Homeland Security and Academia” at the American Association for the Advancement of Science (AAAS) Science and Technology Policy Colloquium, Washington, D.C., April 10, 2003

CLOSING THE GATES. An Adviser Bound in Red Tape, April 11, 2003, The Chronicle of Higher Education, Section: Special Report, Volume 49, Issue 31, Page A13

Problems Continue to Plague Database That Tracks Foreign Students, April 4, 2003, The Chronicle of Higher Education, Section: Government & Politics, Volume 49, Issue 30, Page A26

Reorganization of U.S. Agencies Leaves Colleges Worried About How Foreign Students Will Be Treated, March 7, 2003, The Chronicle of Higher Education, Section: Government & Politics, Volume 49, Issue 26, Page A28

Bureau of Immigration and Customs Enforcement

H. Black, "Visa statement: National Academies chiefs say US science suffering due to barriers to foreign researchers," The Scientist, December 17, 2002

P. Brickley, "Fortress US: Growing frustration over losing research and goodwill due to barriers to foreign scholars," The Scientist, February 11, 2002

Foul-ups test foreign students and schools. The Scientist, March 27, 2003

Lawmakers Suggest Using Biometric Data in System for Tracking Foreign Students, April 3, 2003, The Chronicle of Higher Education

Justice Department Proposes Fingerprint Registry for Some Foreign Visitors, June 6, 2002, The Chronicle of Higher Education

Views Differ on System for Tracking Foreign Students. The Washington Post, April 3, 2003


Jutta Kern is Senior Expert in residence with the Office of Science & Technology. She is responsible for OST’s knowledge management and can be contacted at kern@ostina.org.

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Funding for Technology-Oriented Small Businesses in the U.S.A.
by Sabine Herlitschka


Small Business Innovation Research (SBIR) Provides Approximately $ 1.6 Billion In 2003 To Small Businesses In The U.S.

The Small Business Innovation Research (SBIR) and its "sister program," the Small Business Technology Transfer Research (STTR), are the major competitive funding sources for technology-oriented small businesses in the U.S.A. Via Phase I, small businesses can receive funding for feasibility studies up to $ 100,000. Phase II allows technological research up to $ 750,000 for prototype development, thus providing the incentive to profit from its commercialization in Phase III. Whereas SBIR can be applied for by individual companies, STTR provides funding for small businesses working with research organizations. In 2001, almost 4,500 small businesses received funding from SBIR and STTR.

Under the general guidance of the Small Business Administration (SBA), 10 federal agencies are involved in administering SBIR and STTR proposals, including:

  • Department of Agriculture (USDA)
  • Department of Commerce (DoC)
  • Department of Defense (DoD)
  • Department of Education (ED)
  • Department of Energy (DoE)
  • Department of Health and Human Services (HHS)
  • Department of Transportation (DoT)
  • Environmental Protection Agency (EPA)
  • National Aeronautics and Space Administration (NASA)
  • National Science Foundation (NSF)

These agencies designate R&D topics and accept proposals following SBIR-Program directives. These agencies are required to reserve up to 2.5% of their extra-mural R&D budget for SBIR, and up to 0.3% for STTR proposals (not all of the 10 agencies are involved in both SBIR and STTR). In the case of the National Institutes of Health (NIH), approximately $556 million will be spent on SBIR and STTR in 2003.

Agencies implement the SBIR Program into their specific structure. Therefore, each agency has defined its individual requirements and guidelines for SBIR and STTR proposals, respectively. There is no general instruction on how to prepare SBIR and STTR proposals. Parties wishing to submit a proposal are required to consult the specific agencies for their SBIR/STTR instructions and requirements, and get in contact with the responsible agency officers.

The SBA has the authority and the responsibility for monitoring and coordinating the government-wide activities of the SBIR Program and reporting its results to Congress. The Federal agencies participating in SBIR have the responsibility to (a) select SBIR topics, (b) release SBIR solicitations, (c) evaluate SBIR proposals and (d) award SBIR funding agreements on a competitive basis

To participate in the SBIR program, a small business must meet certain eligibility requirements, such as:

  • It must be American-owned and be independently operated
  • It must be for-profit
  • A Principal Researcher must be employed by the small business
  • Company size must be limited to no more than 500 employees.

As for international cooperation, limited opportunities exist. For both Phase I and Phase II, R/R&D work must be performed in the United States. However, following a Policy Directive, some international cooperation is possible if "based on a rare and unique circumstance, agencies may approve a particular portion of the R/R&D work to be performed or obtained in a country outside of the United States, for example, if a supply or material or other item or project requirement is not available in the United States. The funding agreement officer must approve each such specific condition in writing." (Small Business Innovation Research Program Policy Directive, page 46)

Funding is available in the form of grants or contracts depending on the individual agencies.
Accordingly, evaluation is performed either by peer review with external experts or by means of an internal agency procedure.

In summary, SBIR&STTR are the major funding sources for early-stage technology in the U.S. small businesses are eligible to participate either by themselves or jointly with research organizations. International cooperation is possible to a limited extent if it is justified and clearly in the interest of the Agency.


For Further Information:

Small Business Administration (SBA)
Small business research at the National Science Foundation (NSF)
Tech-net

Sabine Herlitschka is Deputy Director of the Vienna-based BIT – Bureau for International Research and Technology Cooperation in Austria. She is currently completing internships with the AAAS and the NSF and can be contacted at herlitschka@bit.ac.at
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Recent Developments In U.S. Copyright Law:
Does Copyright Law Impede Innovation?
by Roland Vogl, Esq.


In January of this year, the U.S. Supreme Court issued its ruling in the famous Eldred v. Ashcroft case. The court decided that the ‘Sonny Bono Copyright Term Extension Act,’ a law that extended the term of copyright protection for another 20 years, is constitutional. The 1998 law was widely referred to as the ‘Mickey Mouse Act,’ since it came into existence upon persistent lobbying efforts by the powerful Hollywood lobby The extension of the copyright term was considered important for the movie industry, since many of the cartoon characters, such as Mickey Mouse and Donald Duck that were created in the 1920s were soon bound to fall into the public domain. In addition, a variety of classic movies produced in this era stood to fall victim to the same future. In light of the fact that the European Union had extended the term of copyright protection before the United States, the Hollywood lobby found itself in the fortunate position of being able to claim that it was not only representing its own interests, but also those of U.S. musicians and authors, who – in the absence of corresponding legislation – would find themselves in a competitive disadvantage towards their European peers.

The Supreme Court’s decision was considered a landmark success for the media corporations and entertainment industry, and a defeat for those opposing the continuing expansion of copyright protection. In particular, since the increase in commercial Internet use, there has been a fierce debate in the U.S. regarding the question of whether the U.S. copyright regime has begun to impede innovation by providing copyright owners with ever increasing rights to monopolize their creations. The proponents of more limited copyright protection argue that in order to create new original works, one has to be able to build upon the works of others. Thus, if access to prior works is denied or too restricted by law, the advancement of science, innovation and creativity will be significantly decelerated.

The court’s decision was also regarded as supporting Hollywood’s battle for more control over new technologies. The so-called ‘peer-to-peer’ file sharing, which enables Internet users to easily share music, movies and other digital files, with other Internet users, presents of course a significant threat to the traditional film and music business. In the meantime, the music industry has prevailed in a suit against ‘peer-to-peer’ icon ‘Napster’ by successfully asserting that the company was a contributory copyright infringer. Napster has since gone bankrupt, and a number of other ‘peer-to-peer’ companies, such as Kazaa and Morpheus, are very likely to face the same future.

Most recently it became clear that the Recording Industry Association of America (RIAA) is no longer only focusing its battle against peer-to-peer providers, but has since widened its litigation efforts to also include individual users of file sharing technologies. The RIAA recently succeeded in procuring a preliminary injunction against the Internet Service Provider Verizon, requiring the company to disclose the identity of an Internet user who allegedly distributed pirated copies of songs over the Internet.

In addition to peer-to-peer technologies, there are numerous other technologies troubling the content industry. For example, the Directors’ Guild Association (DGA) and a number of movie studios have recently sued the Utah company ClearPlay, Inc., which offers a software product that enables DVD player owners to filter-out unwanted language or sex scenes from movies. Another technological nuisance to the industry is a new generation of digital video recorders, such as TIVO or ReplayTV, which – through so-called “time-shifting” – record TV programs and then enable viewers to bypass commercials. This of course presents a major threat to TV networks, since their traditional business model is premised on a constant stream of advertising revenue. Thus, ReplayTV was also recently sued for contributory copyright infringement.

However, the battle for more control over content is not only taking place in front of U.S. courts. With the support of the content lobby, a number of legislative initiatives were submitted to the U.S. Congress, which – among other things – are aimed at requiring electronics manufacturers to design software, computers and other electronic products in a way, that provides for efficient tracing methods of non-authorized copying. Parallel to their efforts in the U.S. Congress, representatives of the media and entertainment industries are now increasing lobbying efforts towards the European institutions for expansion of copyright protection. Unexpectedly it appears as if that the EU decision-makers are at times less inclined to resist the demands of the content industry than U.S. decision-makers. This tendency is surprising in light of the fact that European and U.S. copyright law stem from different backgrounds. While European copyright law was developed from an author’s right (droit d’auteur) tradition, which covers both personal and economic rights, American copyright law emerged from a utilitarian tradition, which emphasized primarily economic rights.

The request for the expansion of copyright protection incorporated in some of the most recent legislative proposals extends beyond what has already been accomplished by the Digital Millennium Copyright Act (DMCA). Critics of the very controversial DMCA, which was passed in 1998, have repeatedly warned, that the law would put a muzzle on scientists and journalists, keep foreign scientists from pursuing research in the U.S., and would undermine legitimate uses by private individuals as well as libraries. In addition, it has been argued that an increasing number of companies are using the DMCA to control the after-market of their products. A recent lawsuit by printer manufacturer Lexmark against a company producing less expensive cartridges for Lexmark printers appears to provide an illustration of this effect. In fact, a large proportion of companies quickly resort to a DMCA-action, such as Sony, which sued a hobbyist, who published additional programs for Sony’s electronic puppy, Aibo. In the meantime, DMCA critics have found support by the chief of cyber-security Richard Clarke, who at the end of last year declared, that DMCA actions could impede legitimate work in the field of Internet-security.

In many instances, new technologies do in fact present a real danger to the content industry. However, in numerous occasions they also unveil opportunities to develop new sources of revenue. A frequently cited example of this is the action brought by the movie studios against Sony in the early 1980s. At that time Sony was sued for contribution to copyright infringement, which was allegedly committed by owners of the newly marketed video recorders. Ironically not long after the Supreme Court had concluded that the sale of video recorders was in fact legal, the video rental business began to flourish, which added a strong source of revenue to the film industry. Today, the video rental business greatly outperforms the theatrical release business.

There is no doubt that it is a great challenge for any legislator to create a legal framework, which protects the legitimate interests of authors and publishers while leaving enough room for innovation. The European version of the DMCA, the European Copyright Directive, has recently been implemented in Austria. Whether it will provide a fair balance of interests between those of authors, media and entertainment industry on one hand and technology companies, users of new technologies and the public at large on the other, remains to be seen.

Roland Vogl is Executive Director and Lecturer in Law, Stanford Program in Law, Science and Technology. He can be contacted at rvogl@law.stanford.edu
Editorial Information
Voices on U.S. Science & Technology Policy is published by the Office of Science & Technology at the Embassy of Austria in Washington, D.C., U.S.A. Publisher and Editor in Chief: Philipp Steger. Contributors: Sabine Herlitschka, Jutta Kern, Stephan Neuhäuser, Philipp Steger, Roland Vogl. Proofreading: Ilona F. Aberl. Web implementation: Jutta Kern, Stephan Neuhäuser
The views and opinions expressed in Voices on U.S. Science & Technology Policy do not necessarily state or reflect those of the Embassy of Austria.