TESTIMONY OF

DEPUTY SECRETARY OF COMMERCE ROBERT MALLETT

ON THE NATIONAL TECHNICAL INFORMATION SERVICE

BEFORE THE HOUSE SUBCOMMITTEE ON TECHNOLOGY

SEPTEMBER 14, 1999

It is a pleasure to be up here on the Hill where I spent my first years in government. I was a Senate staffer then. And we had some tense moments. Some of us used to remind ourselves of the Lyndon Johnson famous remark when he was in the Senate: "When things haven't gone well for you, call in a staffer and chew him out -- you'll sleep better and the staffer will enjoy the attention." Today I appreciate your attention about this very important matter.

Every day, we see new examples of how the Internet is changing the way Americans work, live, and play. This past June, the Department of Commerce released a report -- The Emerging Digital Economy II -- showing how dramatic these changes have been. Indeed, growth in information technologies has accounted for more than one-third of our economic expansion since 1995, and the IT industry has helped cut the overall inflation rate by an average of 0.7 percentage points.

At the Department of Commerce, we are experiencing those changes firsthand. For example, if taxpayers visit the Department's web site, they can go to our e-commerce web page and download this report for free. Alternatively, taxpayers can go to the Department's National

Technical Information Service (NTIS) web page and pay $27 per copy for the report. This, in a nutshell, sums up the problem NTIS faces.

For a long time, NTIS and the Department have struggled with how to ensure the public access to government information, while keeping NTIS self-sufficient. Looking to the future, we knew that the Internet was going to have even more dramatic effects on NTIS' ability to remain

solvent. Therefore, we undertook a serious and comprehensive review of our potential options.

We considered each option along three dimensions: first, what impact would it have on the dissemination of science and technology information to the American people; second, is it consistent with good fiscal management; and third, what impact would it have on the employees of NTIS.

After careful consideration, we decided the most appropriate course of action would be to propose closing NTIS at the end of fiscal year 2000, transfer its collection to the Library of Congress, and take steps to help move NTIS employees into other positions.

To ensure that the public continues to have the best possible access to government information at the lowest possible cost, we want to take steps to ensure that Government agencies provide technical and business reports to the public via the Internet.

Let me explain to the Committee the flaws in NTIS business model.

NTIS was created in 1950 to operate as a clearinghouse within the U.S. Government for the collection and dissemination of technical, scientific, and engineering information of all kinds. However, the rapid growth of the Internet has fundamentally changed the way NTIS' customers acquire and use information. As the Department's Inspector General (IG) noted in March 1999,

"Federal agencies are increasingly bypassing NTIS as a distribution channel, instead offering their publications directly to the public over the Internet."

It is not surprising then that -- largely because of these changes in the marketplace -- sales of publications from the traditional NTIS clearinghouse declined from almost 2.3 million units in Fiscal Year 1993 to 1.3 million units in Fiscal Year 1998. As a result, in the past two years, NTIS has lost millions of dollars, using nearly all of its retained earnings to stay afloat.

It is important to note that to offset losses, NTIS has ventured into other business products; one example is producing and selling a CD-ROM of IRS tax forms. But, as the Department's IG stated earlier this year, "We are also concerned that in order to replace lost sales, NTIS is seeking business opportunities on the perimeter of its statutory mission, where it risks competing against private businesses." Others, including Members of Congress, have raised similar concerns.

To ensure that NTIS not violate the Anti-Deficiency Act in FY 1999, the Department and NTIS have taken a number of aggressive steps to reduce costs. These include transferring 45 staff members to other parts of the Department, vacating a second building and consolidating office space within its warehouse, eliminating performance awards, and limiting travel. In with these steps, the figures for the first 11 months of the fiscal year suggest that NTIS will, at best, break even this year.

To address NTIS' financial situation and to offset the declining revenues from the clearinghouse function, the Department has asked Congress to provide a $2 million appropriation. However, neither the House nor the Senate appropriations bills provide this funding.

We propose the following two actions: first, we transfer NTIS collection to the Library of Congress. If approved by Congress, NTIS' paper, microfiche, and digital collection, and bibliographic database -- nearly three million titles in all -- would be transferred to the Library of Congress in order to maintain them and ensure they remain available to the public.

I should note again that the Department's IG recognized that NTIS may need to be transferred to another agency and suggested consideration of the Library of Congress. The Department is currently working with the Library, the National Archives, and the Government Printing Office and other interested parties so that the public continues to have the best possible access to government information. Of course, the Department will comply with all of its responsibilities under the Federal Records Act and other relevant statutes

In addition, current and future Government technical reports would be electronically transmitted to the Library of Congress, where they would be catalogued, indexed, and electronically archived. And the Department is working with other government agencies and

interested parties in developing policy mechanisms that would help ensure that agencies provide new documents to the Library. These policy mechanisms could include providing the public information on which agencies are not transmitting reports to the central clearinghouse.

Second, to ensure that the American taxpayer has the best possible access to Federal government information, the Department is working to ensure that Government agencies post their technical and business reports on the Internet for long periods of time.

Since the marginal cost of producing a paper copy of a technical report can be high and the marginal cost of an additional digital copy of the report is essentially zero, the Government will be able to provide the American people most technical reports for free, instead of charging a fee.

The American people will be able to use search engines of Government web sites that already exist to find the documents they want. And more powerful search engines - electronic clearinghouses continue to be developed within the Government so that the American people can

more easily find the reports they want.

Finally, as I noted, the Secretary and I are determined to minimize any adverse impact on NTIS' employees resulting from implementation of our proposal. If Congress approves the Department's proposal -- which we will send to the Hill in the coming weeks -- I want to emphasize that we will take every available action to help NTIS' employees move into other jobs within the Government.

The Secretary sent a memorandum to every bureau head within the Department instructing them to work with our Human Resources office to place employees in jobs consistent with their abilities, and when necessary, restructure open positions in order to place as many of the NTIS staff as possible.

Our record at moving employees has been strong: as part of our effort to keep NTIS from becoming deficient in FY 1999, we successfully moved 45 NTIS employees to other bureaus within the Department in just two months. In the event that we cannot place every employee in another job within the Department, the Secretary has asked Office of Personnel Management (OPM) Director Janice Lachance for her assistance, if Congress approves closing NTIS, in placing and retraining NTIS employees for other jobs within the Government.

Thank you again for this opportunity to represent the Department's position. I would be pleased to respond to any questions.