Raymond G. Kammer, Director, National Institute of Standards and Technology, Department of Commerce (Appearance on March 6, 1998)

Testimony: Mr. Kammer began his testimony by describing the National Institute of Standards and Technology (NIST). For FY 1998, NIST received $715 million in direct appropriations and approximately $100 million in receipts from other Federal agencies. Industry is a primary consumer of the information produced by NIST.

NIST operations, including the salaries of 3,400 employees, are funded though direct appropriations which are roughly the same amount each year (adjusted for inflation). For capital investments, such as laboratory improvements, NIST utilizes a working capital fund. The NIST working capital fund was initially funded by a $10 million capitalization and receives additional funds transferred from the agency's operating fund. The fund now has about $215 million.

Mr. Kammer explained how his agency had set aside funds from its annual appropriation to construct an advanced measurement laboratory. The project was estimated to cost $218 million and would have caused a significant spike in the agency's funding request. However, Congress rescinded the funds set aside for this project in order to finance other priorities.

Subsequently, NIST worked with the U.S. Office of Management and Budget to develop an advance appropriation. This would allow NIST to accumulate budget authority incrementally for the construction of an advanced measurement laboratory. The Congress could still rescind this authority. However, once a construction contract has been approved and the work has begun, there would be pressure to continue funding the project. Mr. Kammer concluded by stressing the need for additional capital maintenance funds to maintain existing NIST facilities.

Questions from the Commissioners:

Q.    Is the appropriation process biased for or against physical capital invest as opposed to human capital investment or biased in favor of operations and maintenance instead of construction?
A.    The only bias against physical capital is that it is easy to postpone physical capital investment in order to fund other seemingly more urgent needs. It is particularly difficult to fund large physical capital projects that would require steep cuts in operating funds.

Q.    Does NIST charge the industry user fees for services provided?
A.    Yes. NIST receives approximately $100 million each year for services including providing technical advice. The Institute has authority to retain these receipts for programmatic purposes.

President's Commission to Study Capital Budgeting