[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
PRIZES TO SPUR INNOVATION AND
TECHNOLOGY BREAKTHROUGHS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
APRIL 9, 2014
__________
Serial No. 113-71
__________
Printed for the use of the Committee on Science, Space, and Technology
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Available via the World Wide Web: http://science.house.gov
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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
DANA ROHRABACHER, California EDDIE BERNICE JOHNSON, Texas
RALPH M. HALL, Texas ZOE LOFGREN, California
F. JAMES SENSENBRENNER, JR., DANIEL LIPINSKI, Illinois
Wisconsin DONNA F. EDWARDS, Maryland
FRANK D. LUCAS, Oklahoma FREDERICA S. WILSON, Florida
RANDY NEUGEBAUER, Texas SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas ERIC SWALWELL, California
PAUL C. BROUN, Georgia DAN MAFFEI, New York
STEVEN M. PALAZZO, Mississippi ALAN GRAYSON, Florida
MO BROOKS, Alabama JOSEPH KENNEDY III, Massachusetts
RANDY HULTGREN, Illinois SCOTT PETERS, California
LARRY BUCSHON, Indiana DEREK KILMER, Washington
STEVE STOCKMAN, Texas AMI BERA, California
BILL POSEY, Florida ELIZABETH ESTY, Connecticut
CYNTHIA LUMMIS, Wyoming MARC VEASEY, Texas
DAVID SCHWEIKERT, Arizona JULIA BROWNLEY, California
THOMAS MASSIE, Kentucky ROBIN KELLY, Illinois
KEVIN CRAMER, North Dakota VACANCY
JIM BRIDENSTINE, Oklahoma
RANDY WEBER, Texas
CHRIS COLLINS, New York
BILL JOHNSON, Ohio
------
Subcommittee on Research and Technology
HON. LARRY BUCSHON, Indiana, Chair
STEVEN M. PALAZZO, Mississippi DANIEL LIPINSKI, Illinois
MO BROOKS, Alabama FEDERICA WILSON, Florida
RANDY HULTGREN, Illinois ZOE LOFGREN, California
STEVE STOCKMAN, Texas SCOTT PETERS, California
CYNTHIA LUMMIS, Wyoming AMI BERA, California
DAVID SCHWEIKERT, Arizona DEREK KILMER, Washington
THOMAS MASSIE, Kentucky ELIZABETH ESTY, Connecticut
JIM BRIDENSTINE, Oklahoma ROBIN KELLY, Illinois
CHRIS COLLINS, New York EDDIE BERNICE JOHNSON, Texas
BILL JOHNSON, Ohio
LAMAR S. SMITH, Texas
C O N T E N T S
April 9, 2014
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Larry Bucshon, Chairman, Subcommittee
on Research and Technology, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 5
Written Statement............................................ 5
Statement by Representative Daniel Lipinski, Ranking Minority
Member, Subcommittee on Research and Technology, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 6
Written Statement............................................ 7
Statement by Representative Lamar S. Smith, Chairman, Committee
on Science, Space, and Technology, U.S. House of
Representatives................................................ 8
Written Statement............................................ 9
Statement by Representative Eddie Bernice Johnson, Ranking
Member, Committee on Science, Space, and Technology, U.S. House
of Representatives............................................. 10
Written Statement............................................ 11
Witnesses:
Mr. Christopher Frangione, Vice President of Prize Development,
XPRIZE
Oral Statement............................................... 12
Written Statement............................................ 15
Mr. Donnie Wilson, Founder and CEO, Elastec American Marine
Oral Statement............................................... 22
Written Statement............................................ 23
Mr. Narinder Singh, Co-Founder and Chief Strategy Officer,
Appirio and President, [topcoder]
Oral Statement............................................... 28
Written Statement............................................ 30
Dr. Sharon Moe, President, American Society of Nephrology
Oral Statement............................................... 37
Written Statement............................................ 39
Discussion....................................................... 44
PRIZES TO SPUR INNOVATION AND TECHNOLOGY BREAKTHROUGHS
----------
WEDNESDAY, APRIL 9, 2014
House of Representatives,
Subcommittee on Research and Technology
Committee on Science, Space, and Technology,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:04 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Larry
Bucshon [Chairman of the Subcommittee] presiding.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Bucshon. The Subcommittee on Research and
Technology will come to order.
Good morning, everyone. Welcome to today's hearing entitled
``Prizes to Spur Innovation and Technology Breakthroughs.'' In
front of you are packets containing the written testimony,
biographies, and truth-in-testimony disclosures for today's
witnesses.
I now recognize myself for five minutes for an opening
statement.
Earlier this year, our Subcommittee held a hearing about
the scientific activities at the Smithsonian Institution.
Curators from the Smithsonian brought the original check that
was given to Charles Lindbergh for winning the Orteig Prize in
1927 when he flew nonstop from New York to Paris in his
airplane ``The Spirit of St. Louis.'' The Orteig prize--similar
to prizes we will be discussing today--was a $25,000 prize
financed by a New York hotel owner to the first aviator to make
the nonstop flight from New York to Paris. The impact of
Lindbergh's flight was significant and helped spawn an interest
in aviation and grow the emerging aviation industry.
Today, scientific prize challenges still play an important
role in spurring innovation and the federal government and
private sector are crucial to sustaining these challenges.
As a cardiothoracic surgeon, prize competitions in medical
research are of particular interest to me. Rising healthcare
costs are becoming a burden to American families. One example
where cost containment is crucial affects the 450,000 Americans
who suffer from end-stage renal disease, commonly known as
kidney failure. One of our witnesses today, Dr. Sharon Moe who
comes to us from the Indiana University School of Medicine,
will discuss the effects a prize competition in kidney
innovation to find cost-effective alternatives to
transformative dialysis might have on the disease.
Last month, I introduced H.R. 4186, the Frontiers in
Innovation, Research, Science, and Technology--or FIRST--Act.
The FIRST Act contains language that will provide the guidance
necessary to help make this and other potential prizes come to
fruition. We must ensure federal investment is also leveraging
private sector investment in prize competitions.
Our witnesses today will showcase some of the important
efforts that are currently underway and we will be hearing from
a major prize organization, a prize winner, a crowd-source
prize expert, and a prize proposer. I got that all out. I hope
that the work from these witnesses will inspire and produce the
next Charles Lindbergh, transform fields, and develop important
technological breakthroughs.
I look forward to hearing from our distinguished witnesses
and having a productive discussion.
[The prepared statement of Mr. Bucshon follows:]
Prepared Statement of Subcommittee on Chairman Larry Bucshon
I am pleased to call to order this morning's Subcommittee on
Research and Technology hearing that will examine prizes funded by both
the private sector and the federal government to spur innovation and
technology breakthroughs.
Earlier this year, our subcommittee held a hearing about the
scientific activities at the Smithsonian Institution. Curators from the
Smithsonian brought the original check that was given to Charles
Lindbergh for winning the Orteig Prize in 1927 when he flew non-stop
from New York to Paris in his airplane ``The Spirit of St. Louis.'' The
Orteig prize -similar to the prizes we will be discussing today- was a
$25,000 prize financed by a New York hotel owner to the first aviator
to make the non-stop flight from New York City to Paris. The impact of
Lindbergh's flight was significant and helped spawn an interest in
aviation and grow the emerging aviation industry.
Today, scientific prize challenges still play an important role in
spurring innovation and the federal government and private sector are
crucial to sustaining these challenges.
As a cardio thoracic surgeon, prize competitions in medical
research are of particular interest to me. Rising healthcare costs are
burdening to American families. One example where cost containment is
crucial affects the 450,000 Americans who suffer from End-State Renal
Disease (ESRD), commonly known as kidney failure. One our witnesses
today, Dr. Sharon Moe who comes to us from the Indiana University
School of Medicine, will discuss the effects a prize competition in
kidney innovation to find cost effective alternatives to transformative
dialysis might have on the disease.
Last month, I introduced H.R. 4186, the Frontiers in Innovation,
Research, Science and Technology, or FIRST, Act. The FIRST Act contains
language that will provide the guidance necessary to help make this and
other potential prizes come to fruition. We must ensure federal
investment is also leveraging private sector investment in prize
competitions.
Our witnesses today will showcase some of the important efforts
that are currently underway and we will be hearing from a major prize
organizations, a prize winner, a crowd-source prize expert and a prize
proposer. I hope that the work from these witnesses will inspire and
produce the next Charles Lindbergh, transform fields, and develop
important technological breakthroughs.
I look forward to hearing from our distinguished witnesses and
having a productive discussion.
Chairman Bucshon. At this point, I now recognize the
Ranking Member, the gentleman from Illinois, Mr. Lipinski, for
an opening statement.
Mr. Lipinski. Thank you, Mr. Chairman. Thank you for
holding this hearing and I thank our witnesses for being here
this morning.
Prize challenges inspire and help spur technological
advancement by tapping into the strength of American ingenuity,
and both the public and private sectors are increasingly making
use of this tool to accelerate innovation. Recent prize
competitions have challenged inventors to build fuel-efficient
vehicles, develop technology to clean up oil spills, and to
create algorithms for faster mobile applications. Prize
competitions, including the one that the Chairman mentioned,
spurred Charles Lindbergh to make the first nonstop
transatlantic flight. It can also be credited with producing
breakthroughs in aviation, navigation, food preservation, and
many other advances in the modern world.
For years, I have been a strong supporter of using prizes
to incentivize advancement of emerging technologies, so I like
to feel I was on the cutting-edge here in Congress on this
issue. In 2007, I introduced the H-Prize Act along with a
Republican colleague on this Committee, and that bill was
incorporated into the Energy Independence and Security Act,
which became law. And actually that originally was introduced
in Congress before that in 2005.
So that language that got incorporated into the bill
authorized the Department of Energy to conduct prize challenges
for the development of hydrogen as a transportation fuel. In
2010, I put language in the House NSF Reauthorization Bill
giving prize competition authority to that agency. And the
final version of COMPETES contained prize authority for all
federal agencies. I am glad to know that in Fiscal Year 2012
several agencies conducted 27 prize competitions under this
authority. I would also add that DOE is taking another look at
hydrogen energy, and I am hopeful that this will involve a new
prize competition using these authorities to supplement the
current work.
With today's budget climate, the federal government has to
consider alternative financing tools for R&D funding outside of
the established research grant paradigm in order to meet
research goals. One benefit of prize challenges is that the
prize is awarded only once the challenge has been met. This
allows agencies to incentivize high-risk, high-reward research
that generally constitutes a very small percentage of federally
funded research. Prize competitions also attract participants
who do not typically seek government grants or contracts. This
brings in a diversity of ideas from people of different
disciplines and educational backgrounds and levels.
I would be interested in hearing from the witnesses about
how their organizations encourage competitors to take advantage
of this diversity and to learn from their peers. Also, I would
be interested to hear how the witnesses reach out to students
to encourage a culture of science learning through prize
competitions.
Fundamentally, the federal government supports scientific
and technological breakthroughs with sustained investments in
basic research. Prize competitions cannot replace our tried and
true model for funding R&D but they can serve as another tool
in the toolbox. I am looking forward to hearing from our
witnesses what they have learned in designing and participating
in competitions and how the federal government might further
collaborate with these types of organizations so we can
continue as leaders in innovation.
I want to thank all of our witnesses for being here. I look
forward to their testimony.
Thank you, Mr. Chairman, and with that I yield back.
[The prepared statement of Mr. Lipinski follows:]
Prepared Statement of Subcommittee Ranking Minority Member Dan Lipinski
Mr. Chairman, thank you for holding this hearing, and thank you to
our witnesses for being here this morning.
Prize challenges inspire and help spur technological advancement by
tapping into the strength of American ingenuity, and both the public
and private sectors are increasingly making use of this tool to
accelerate innovation. Recent prize competitions have challenged
inventors to build fuel efficient vehicles, develop technology to clean
up oil spills, and to create algorithms for faster mobile applications.
Prize competitions, including the famous 1927 Orteig Prize that spurred
Charles Lindberg to make the first non-stop transatlantic flight, can
be credited with producing breakthroughs in aviation, navigation, food
preservation and many other advances in the modern world.
For years, I have been a strong supporter of using prizes to
incentivize advancement of emerging technologies. In 2007, I introduced
the H-Prize Act along with a Republican colleague on this Committee and
that bill was incorporated into the Energy Independence and Security
Act which became law. My bill authorized the Department of Energy to
conduct prize challenges for the development of hydrogen as a
transportation fuel. In 2010 I put language in the House NSF
reauthorization bill giving prize competition authority to that agency
and the final version of the COMPETES Reauthorization contained prize
authority for all federal agencies. I am glad to know that in fiscal
year 2012 seven agencies conducted 27 prize competitions under this
authority. I would also add that DOE is taking another look at hydrogen
energy, and I am hopeful that this will involve a new prize competition
using these authorities to supplement their current work. With today's
budget climate the Federal Government has to consider alternative
financing tools for R&D funding outside of the established research
grant paradigm in order tomeet research goals.
One benefit of prize challenges is that the prize is awarded only
once a challenge has been met; this allows agencies to incentivize
high-risk, high-reward research that generally constitutes only a very
small percentage of federally funded research. Prize competitions also
attract participantswho do not typically seek government grants or
contracts.
This brings in a diversity of ideas from people of different
disciplines and educational backgrounds and levels. I would be
interested in hearing from the witnesses about how their organizations
encourage competitors to take advantage of this diversity and to learn
from their peers. Also, I would be interested to hear how the witnesses
reach out to students to encourage a culture of science learning
through prize competitions. Fundamentally, the federal government
supports scientific and technological breakthroughs with sustained
investments in basic research. Prize competitions cannot replace our
tried and true model for funding R&D, but they can serve as another
tool in the toolbox. I am looking forward to hearing from our witnesses
what they have learned in designing and participating incompetitions,
and how the federal government might further collaborate with these
types of organizations so that we can continue as leaders in
innovation.
I want to thank all of the witnesses for being here, and I look
forward to their testimony. Thank you Mr. Chairman, I yield back.
Chairman Bucshon. Thank you, Mr. Lipinski.
I now recognize the Chairman of the full Committee, the
gentleman from Texas, Mr. Smith.
Chairman Smith. Thank you, Mr. Chairman.
Scientific prizes have long played a role in advancing
technology. They encourage creative thinking, spur innovation,
and expand our economy. The Longitude Prize of 1714, offered by
the British Government, resulted in the marine chronometer and
drastically improved shipping safety. Napoleon Bonaparte's 1800
Food Preservation Prize resulted in the development of canning
food as we now know it.
A top priority of the Science Committee is to encourage
such innovation and technological advancements. To maintain our
competitive advantage, we must continue to support fundamental
research and development that encourages the creation and
design of next generation technologies. But there are many
other technological problems that could be solved by taking a
different approach with the use of prizes. These include
transforming kidney dialysis treatments, developing better
surface oil cleanup technologies, and generating a potential
cure for Alzheimer's disease. Prizes also engage the brightest
minds to solve a problem--scientists, entrepreneurs, inventors
and yes, even teenagers.
A great example of creative problem solving was illustrated
recently when a 14-year-old student in Pennsylvania came up
with a simple way to save the federal government hundreds of
millions of dollars. He figured out that by changing the type
of font used by government workers, the federal government
could save more than $130 million each year. This great idea
was the product of a science fair.
Prizes also encourage individual incentive so the burden of
risk, as well as the opportunity for success, is on the team or
individual competitor. This will encourage more people to
engage in high-risk, high-reward research.
Federal science agencies have not fully utilized their
prize competition authority to pursue breakthroughs in areas
such as healthcare, advanced manufacturing, and agriculture.
The FIRST Act improves federal science prize authority. It
allows federal science agencies to better partner with the
private sector to maximize the value of every taxpayer dollar
invested in research and development.
In the words of one witness, Mr. Christopher Frangione,
``Policymakers can continue this great progress in prize-based,
public-private partnerships by supporting prize language such
as that included in the FIRST Act.''
Mr. Chairman, I do want to thank our witnesses for being
here today. I want to thank them for their excellent written
testimony, which I have seen, and apologize to them. I have to
give a speech at 10:30 over in the Capitol so I am going to
have to excuse myself.
But let me just say in conclusion that I think there is
much progress we can make in giving out these prizes. For
instance, the National Science Foundation I think last year
only awarded seven for $10,000 each. That is not really
stepping up to the level that we would like to see them do, for
example.
And there are other ways that we can encourage individuals
to participate and there are other ways that we can encourage
government agencies to offer these prizes as well. They just do
an immense amount of good. I remember in one instance--and I
forget; maybe it had to do with the flying prize--where
individuals actually spent 10 times more than the prize trying
to get the prize just because it was sort of natural
competitive instincts because of a desire to try to achieve a
breakthrough and perhaps even be successful on the profit side
as well. So prizes do a lot of good in a lot of ways.
Thank you, Mr. Chairman, and I yield back.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of Full Committeee Chairman Lamar S. Smith
Thank you, Chairman Bucshon, for holding today's hearing.
Scientific prizes have long played a role in advancing technology.
They encourage creative thinking, spur innovation and expand our
economy.
The Longitude Prize of 1714, offered by the British government,
resulted in the marine chronometer and drastically improved shipping
safety. Napoleon Bonaparte's 1800 Food Preservation Prize resulted in
the development of canning food as we now know it.
A top priority of the Science Committee is to encourage such
innovation and technological advancements. To maintain our competitive
advantage, we must continue to support fundamental research and
development that encourages the creation and design of next generation
technologies.
But there are many other technological problems that could be
solved by taking a different approach with the use of prizes. These
include transforming kidney dialysis treatments, developing better
surface oil cleanup technologies, and generating a potential cure for
Alzheimer's disease. Prizes also engage the brightest minds to solve a
problem-scientists, entrepreneurs, inventors and yes, even teenagers.
A great example of creative problem solving was illustrated
recently when a 14-year-old student in Pennsylvania came up with a
simple way to save the federal government hundreds of millions of
dollars.
He figured out that by changing the type of font used by government
workers the federal government could save more than $130 million each
year. This great idea was the product of a science fair.
Prizes also encourage individual incentive, so the burden of risk,
as well as the opportunity for success, is on the team or individual
competitor. This will encourage more people to engage in high-risk,
high-reward research.
Federal science agencies have not fully utilized their prize
competition authority to pursue breakthroughs in areas such as health
care, advanced manufacturing and agriculture.
The FIRST Act improves federal science prize authority. It allows
federal science agencies to better partner with the private sector to
maximize the value of every taxpayer dollar invested in research and
development.
In the words of one witness, Mr. Christopher Frangione,
``Policymakers can continue this great progress in prize-based, public-
private partnerships by supporting prize language such as that included
in the FIRST Act.''
I thank our witnesses for being here this morning and I look
forward to their testimony.
Chairman Bucshon. Thank you, Mr. Chairman.I now recognize
the Ranking Member of the full Committee, the gentlelady from
Texas, Ms. Johnson.
Ms. Johnson. Thank you very much and good morning. Thank
you for holding this hearing to explore the use of prize
competitions to spur innovation and technology breakthroughs.
We are all very aware of the economic climate and budget
constraints that the nation is facing. While tough choices have
to be made, cuts to our federal R&D enterprise weakens the
country's ability to be a leader in innovation. Our competitors
have the same tough budget choices to make, yet they are not
just maintaining their R&D investments but doubling and
tripling them. Though they are no substitute for the sustained
investment and long-term national outlook that traditional
federal R&D funds provide, prize competitions could play a more
prominent role in how the government funds R&D than they have
in the past.
The broad federal prize authority granted to all federal
agencies in the 2010 COMPETES reauthorization supports
agencies' increased use of prizes to incentivize more high-
risk, high-reward research and reach out to a new audience of
researchers and innovators across all areas of science and
technology. NASA has established itself as a leader in public
sector prize competition. In a survey of nearly 3,000
competitors for NASA prizes, 81 percent reported that they had
never before responded to NASA or other government requests for
proposals.
And we ought to pull ahead of the competition. We must
create opportunities for creative minds from all corners of our
nation to make the next scientific or technological
breakthrough. Prize competitions are yet another effective tool
to tap into our Nation's brain power.
Two of our witnesses here today have spent years perfecting
the design of prize competitions, and I am interested in
learning how they develop specifications and parameters for
challenges while still encouraging what may seem to be the pie-
in-the-sky ideas.
Henry Ford once said, ``If I had asked people what they
wanted, they would have said faster horses.'' Finding the next
Model T is critical to our Nation's competitiveness, and I look
forward to exploring how public-private collaborations and
prize competitions might help.
I thank our witnesses for being here, for their testimony,
and thank you, Mr. Chairman. I yield back.
[The prepared statement of Ms. Johnson follows:]
Prepared Statement of Full Committeee
Ranking Member Eddie Bernice Johnson
Good morning, I would like to thank the Chairman for holding
today's hearing to explore the use of prize competitions to spur
innovation and technology breakthroughs.
We are all very aware of the economic climate and budget
constraints that the nation is facing. While tough choices have to be
made, cuts to our federal R&D enterprise weaken the country's ability
to be a leader in innovation. Our competitors have the same tough
budget choices to make, yet they are not just maintaining their R&D
investments, but doubling and tripling down.
Though they are no substitute for the sustained investment and
long-term national outlook that traditional federal R&D funding
provides, prize competitions could play a more prominent role in how
the government funds R&D than they have in the past. The broad federal
prize authority granted to all federal agencies in the 2010 COMPETES
Reauthorization supports agencies' increased use of prizes to
incentivize more high-risk, high-reward research and reach out to a new
audience of researchers and innovators across all areas of science and
technology.
NASA has established itself as a leader in public-sector prize
competitions. In a survey of nearly 3,000 competitors for NASA prizes,
81% reported that they had never before responded to NASA or other
government requests for proposals. If we are to pull ahead of the
competition, we must create opportunities for creative minds from all
corners of our nation to make the next scientific or technological
breakthrough. Prize competitions are yet another effective tool to
tapinto our nation's brainpower.
Two of our witnesses here today have spent years perfecting the
design of prize competitions, and I am interested in learning how they
develop specifications and parameters for challenges while still
encouraging what may seem to be ``pie-in-the-sky'' ideas. Henry Ford
once said, ``if I had asked people what they wanted, they would have
said faster horses.'' Finding the next Model T is critical for our
nation's competitiveness, and I look forward to exploring how
publicprivatecollaborations in prize competitions might help. I thank
our witnesses for their testimony.
Thank you Mr. Chairman, I yield back.
Chairman Bucshon. Thank you, Ms. Johnson.
If there are Members who wish to submit additional opening
statements, your statements will be added to the record at this
time.
At this time I would like to introduce our witnesses. Our
first witness today is Mr. Christopher Frangione, the Vice
President of Prize Development at XPRIZE. In his role, Mr.
Frangione works with all departments of XPRIZE, prize sponsors,
and other prize stakeholders to develop prize strategy. Prior
to joining XPRIZE, Mr. Frangione ran a market assessment
practice at a boutique management consulting firm where he
consulted to CEOs of major engineering companies on issues
related to strategy. Mr. Frangione has leadership experience
across the energy industry, including serving as Manager of
Operations and Business Development at Green Mountain Energy
Company. In that role, he managed a regional market and defined
new business opportunities, policies, and strategies for the
retail renewable energy company. Mr. Frangione received his
bachelor of arts in environmental policy from Colby College and
a master's of business administration and a master's of
environmental management from Duke.
Our second witness today is Mr. Donnie Wilson, Chairman and
CEO of Elastec/American Marine, one of the largest
manufacturers of pollution control products in the world,
exporting equipment to over 100 countries. Mr. Wilson has over
20 years of experience in the design and production of oil
spill products. Mr. Wilson has provided training and
supervision to global clients for the collection and recovery
of oil spills. Mr. Wilson served as the lead onsite burn
coordinator during the Deepwater Horizon oil spill in the Gulf
of Mexico in 2010, supervising more than 400 offshore
controlled burns. During the spill, there was a void in
mechanical equipment to recover high volumes of oil, prompting
the Wendy Schmidt Oil Cleanup X Challenge. Elastec/American
Marine won with its patented groove disc skimmer winning the $1
million first-place prize out of 350 global entrants. Welcome.
Our third witness today is Mr. Narinder Singh. As the
President of the [topcoder] community and Chief Strategy
Officer at Appirio, Mr. Singh is responsible for overseeing the
company's strategy, technology, and crowdsourcing initiatives.
A co-founder of Appirio, Mr. Singh brings nearly 20 years of
software and business experience and plays a role in keeping
Appirio at the forefront of cloud, social, and mobile
technology. Prior to joining Appirio--am I pronouncing that
correctly--Mr. Singh worked in the office of the CEO as a part
of a corporate strategy group. However, he began his career
with Accenture at Center for Strategic Technology. Mr. Singh
holds a bachelor of science from Northwestern University and an
MBA from the Wharton School. He has won numerous awards for
business and technology leadership, including the San Francisco
Business Times 40 under 40 in 2013.
And our final witness is Dr. Sharon Moe, President-elect of
the American Society of Nephrology and a Stuart A. Kleit
Professor of Medicine at the Indiana University School of
Medicine. She is also a Division Director for Nephrology in the
Department of Medicine at Indiana University School of Medicine
and Section Chief for Nephrology at their Roudebush VA Medical
Center. Dr. Moe is the principal investigator for several
ongoing clinical and basic research studies in the field of
vascular calcification and bone and mineral metabolism and
kidney disease. Her research is funded by the Veterans Affairs
Department, the National Institutes of Health, and
pharmaceutical companies. She has authored over 140 scientific
manuscripts, teaching manuscripts, and textbook chapters. Dr.
Moe received her medical degree from the University of Illinois
College of Medicine in Chicago in 1989, as I did in 1984. She
completed her internship and residency at the Department of
Internal Medicine at Loyola University Medical Center in
Maywood, Illinois.
Thanks again for all our witnesses for being here this
morning. It is a pleasure to have you.
As our witnesses should know, spoken testimony is limited
to five minutes each, after which the Members of the Committee
will have five minutes each to ask questions.
I now recognize Mr. Frangione for five minutes to present
his testimony.
TESTIMONY OF MR. CHRISTOPHER FRANGIONE,
VICE PRESIDENT OF PRIZE DEVELOPMENT, XPRIZE
Mr. Frangione. Thank you. Thank you to the Committee,
Ranking Members and Chairman, for the opportunity to testify
today. And we welcome at XPRIZE the attention that the
Committee is giving prizes as an economically efficient tool to
incentivize innovation.
XPRIZE is a 501(c)(3) nonprofit organization founded in
1995 and we are the global leader in prize competitions. Our
mission is to bring about radical breakthroughs for the benefit
of humanity and to inspire the formation of new industries and
to revitalize broken industries or stuck industries.
To date, we have awarded four prizes worth over $23
million, including our $10 million Ansari XPRIZE for suborbital
spaceflight, and we have four active prizes worth over $44
million, including a handheld health diagnostic to diagnose 15
disease states and vital signs, the Qualcomm Tricorder XPRIZE.
And in most of these competitions, we collaborated with the
U.S. Government, whether it be in a financial mechanism or just
in a partnership.
As you have heard from everybody's statements already,
prizes are powerful tools for innovation. And, as Ranking
Member Lipinski said, you know, the most important of which
include leveraging your investment, democratizing innovation,
and reducing risk. And if you look at leveraging your
investment, you heard it up there earlier, but if you put out a
$5 million grant, you are going to get $5 million worth of
work. In a prize competition, the teams are spending their own
money to compete, so if you put out a $5 million prize, you
expect to get $20-50 million worth of work. In a time of fiscal
constraint, this is a huge benefit.
In terms of democratizing innovation, a prize does not care
if somebody has had 20 years of experience or 20 days of
experience as long as they can accomplish the goal you set out.
And, most likely, you would have never given a grant or
contract to these people that are competing for our
competitions because 1) it would have been too risky for you;
2) you would have gone to your known solver community; 3) you
would have never known they existed; and 4) they didn't know
they were interested in competing. They didn't know they had
the expertise.
And somebody brought up the question of high school
students. We actually had a group of high school students in
our Progressive Insurance Automotive XPRIZE and we have a group
of high school students in that Qualcomm Tricorder XPRIZE, that
handheld health diagnostic.
And in terms of reducing risk, prizes are great in that
they only pay the winner. So you put out a prize purse and
these people are competing against each other to achieve that
prize, so they are willing to take huge risks that really lead
to disruptive innovations, risks that the people that you are
going to give your normal grants or contracts to are not going
to take because they don't want to let you down and you don't
want them to take because you are on the hook for all the
money.
So we say at XPRIZE that the impact does not begin at the
launch of the prize but at its award and that we want to make
it extremely simple and rewarding for teams to compete. So we
focus heavily on marketing and education. We focus heavily on
recruiting teams and we focus heavily on supporting those teams
so that they can all enter the marketplace at the end of the
competition and be successful and change the world.
In terms of private-public partnerships, we believe that
they are the key to success in prize competitions. One example
in one of our competitions in that Qualcomm Tricorder XPRIZE
where we have actually partnered with the FDA, and it is not a
financial partnership. The FDA is assisting teams in preparing
for future regulatory clearance for post-competition while the
prize competition is actually helping the FDA maximize its own
readiness for new regulatory submissions in the direct-to-
consumer medical marketplace. And that is great. We also
partnered with the Department of Energy in our Progressive
Insurance Automotive XPRIZE. That was a financial partnership
where they gave us $10 million to help support the competition.
We believe that the private and public sectors must work
together to utilize every tool available. As you heard up
there, tools are not--prizes are not the solution; they are one
tool in the innovation toolkit that complements the other tools
we have. And understanding how and when prizes work will ensure
that they are used most effectively and efficiently.
The federal government, since 2010, not only under America
COMPETES but more broadly, has launched 300 competitions
through 55 agencies. And in 2012--or, excuse me, 2013, 25
agencies self-reported a total of 87 prizes, which is an 85
percent increase year-over-year.
Congress can use policy as a driver for innovation by
including language that you have in your current bill,
supportive of prizes, and we believe that that language sends a
strong signal to federal agencies and also the private sector
that prizes are a good innovation tool.
So we look forward to continuing the dialogue with the
Committee and Congress as a whole about the power of prizes.
Thank you.
[The prepared statement of Mr. Frangione follows:
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Chairman Bucshon. Thank you very much.
I now recognize Mr. Wilson for five minutes for his--to
present his testimony.
TESTIMONY OF MR. DONNIE WILSON,
FOUNDER AND CEO,
ELASTEC AMERICAN MARINE
Mr. Wilson. Thank you, Committee, for the opportunity to be
here.
As you can imagine, winning the $1 million XPRIZE makes us
a leading fan of this competition.
My company has been manufacturing oil spill equipment for
20 years. We have been exporting globally to over 100 countries
during that time.
On April 20th, 2010, approximately 42 miles offshore of the
Southwest Pass, the Deepwater Horizon drilling rig exploded,
causing the worst oil spill in U.S. history. The Deepwater
Horizon incident prompted the XPRIZE Foundation and Wendy
Schmidt was invited to be involved in the oil spill recovery
XPRIZE challenge.
It was going to be a daunting task what they requested from
industry to produce a skimmer that is capable of 2,500 gallons
per minute recovery at 70 percent efficiency, three times the
industry standard. So as we would all agree, XPRIZE always asks
for audacious challenges. When we saw the challenge, we were
not sure that we wanted to enter because it was much larger
than any skimmer we had built. At that time it was 400 gallons
a minute is our--was our current design.
What was interesting for us in this challenge was not only
the $1 million opportunity but to be able to prove that we
could build the best skimmer in the world from the cornfields
and oilfields of southern Illinois, 1,000 miles from the
nearest coast. So I would agree that people that are not
typically involved in such contests can be when you do it
through competition.
Three hundred and forty-nine teams from around the world
took part in the challenge. Ten finalists from five nations
were involved. This was done at the Ohmsett facility in New
Jersey, which is funded by the government and a fantastic
place. Anyone ever gets a chance to go, they should. It is
cutting-edge and the only place in the world that this could be
done.
The Wendy Schmidt oil spill challenge brought together
teams throughout the industry and were looking for new, fresh
ideas.
It is hard to describe the benefits of such a prize because
of the competition and what it can do to encourage people to
think outside the box. There were contestants from all over the
world, some doing things from their garage in Alaska to very
focused competitors from different countries. To date, we
have--we are starting to commercialize this product and we have
sold nearly $3 million worth of product in three different
continents and we will be introducing versions of this X
SKIMMER design in the coming months.
This competition gave Elastec/American Marine the faith and
financial incentive to develop a new technology to keep our
world clean, and I am pleased to comment about that today.
Thank you.
[The prepared statement of Mr. Wilson follows:]
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Chairman Bucshon. Thank you very much.
I now recognize Mr. Singh for five minutes to present his
testimony.
TESTIMONY OF MR. NARINDER SINGH,
CO-FOUNDER AND CHIEF STRATEGY OFFICER,
APPIRIO AND PRESIDENT, [TOPCODER]
Mr. Singh. Chairman, Ranking Members of the Subcommittee,
Members of the Subcommittee, I thank you for the invitation to
speak before you.
My testimony here today will seek to expand even your view
of prizes and show how we can act bigger by thinking smaller.
In 2006, myself and three others formed Appirio. Today, we
have over 900 people with headquarters in San Francisco and
Indianapolis. We have received numerous awards on ``Best Places
to Work,'' innovation awards. We were named the World Economic
Forum Technology Pioneer in 2012.
[topcoder] enables that. It is a community of over 620,000
designers, developers, and data scientists, and it is based on
prizes. We use this community to crowdsource hundreds of
projects for commercial companies across the world, including
private sector organizations like Comcast and Ferguson. What we
do is we break down large projects into smaller pieces and we
use prizes against each of those and hold many competitions. As
a result, we run 5 to 10,000 competitive challenges each year.
Our average prize amount for these challenges ranges from a few
hundred to a few thousand dollars.
For example, recently with [topcoder], Appirio helped the
research organization of a large pharmaceutical company improve
the performance of software that runs Genome Wide Association
Studies, or GWAS. GWAS is an approach to rapidly scanning
markers across complete set of DNA. We reduced the time it took
for them to run this from 10 hours to less than 30 seconds.
What is remarkable is that the core of this advancement was
driven by a series of about a dozen contests with about only
$50,000 in prizes. The firm plans to share this with the
scientific community and it will completely change the way
research is done with GWAS.
In government, we have partnered with NASA and Harvard
Business School to create the NASA Tournament Lab at HBS. This
lab focuses on creating insights on the optimal design of
contest and also how the federal government can be more
effective in using them. So essentially not only do we have to
achieve results but we have got a bunch of researchers from
Harvard peering over our shoulders while we do it.
So we have used this concept repeatedly of stringing
together a series of smaller challenges to create some
outstanding outcomes. So, for example, we used a set of
challenges to reduce the time it took for NASA to optimize
medical safety supplies on space excursions from 3 hours to 30
seconds. We have created a mobile application for International
Space Station that will help astronauts manage their nutrition
and health, and it was developed through a series of 18
challenges for less than $60,000 in prize money, and it is in
final testing for spaceflight now.
We also just launched the NASA Asteroid Grand Challenge on
[topcoder] with Harvard and Planetary Resources to improve the
detection algorithms of detecting asteroids. It consists of a
series of 10 related challenges and we hope for a similar leap
forward in accuracy of algorithms, and the total prize will be
under $100,000.
We have also worked with other government agencies through
NASA's Center of Excellence for Collaborative Innovation. One
of the projects was for the Center of Medicare and Medicaid
Services seeking to modernize the CMS infrastructure for the
State of Minnesota so that healthcare providers could register
more easily. This project spanned 11 months, had more than 140
challenges on [topcoder], and the total cost including labor
was about $1.5 million. Research from Harvard Business School
and the NASA Tournament Lab shows that done through traditional
approaches, it would have been $7.5 million or nearly five
times as much.
I believe in large prizes and their capability to create
entire markets by--proven by my colleagues from XPRIZE. But
breaking problems down allows for giant leaps forward to occur
inside of existing markets. And by breaking problems down, we
can increase the power of prizes to be applied to a much wider
set of activities.
To do so, we do need more scalable rules for government.
For example, it appears in the current language of FIRST that
it would require private-sector judges to disclose their
financials. For challenges to a few hundred to a few thousand
dollars, this is an onerous burden, especially given that, for
example, all of our reviews are publicly available and often
evaluated by a computer program.
More than anything I have said here today, the one thing I
feel confident about is that the rate of change of advancement
of technology will not slow down. 3-D printing, robotics,
biotech, artificial intelligence, and even wearables, many
other domains are just getting started. More than ever, we will
need the ability to quickly and efficiently tap into the right
skills instantaneously.
So the nature of our economic system is built upon a free
market and for a good reason. In most cases it is the most
efficient way. Crowdsourcing taps into the power of the market,
but also democratizes participation beyond a few select firms
that can compete in large institutions and allows anybody to
jump in and to try their hands. Crowdsourcing itself is an
innovation, but in this context, even more importantly it
allows you to keep pace with innovation.
I want to thank the Committee for the opportunity to share
my perspectives and would be happy to take any questions.
[The prepared statement of Mr. Singh follows:]
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Chairman Bucshon. Thank you very much.
I now recognize Dr. Moe for her testimony.
TESTIMONY OF DR. SHARON MOE, PRESIDENT,
AMERICAN SOCIETY OF NEPHROLOGY
Dr. Moe. Chairman Bucshon, Congressman Lipinski, and
Members of the Committee, my name is Dr. Sharon Moe and I am
President of the American Society of Nephrologist, better known
as ASN. I am a kidney doctor in Indianapolis, Indiana, and
Professor of Medicine, Director of the Division of Nephrology
at the Indiana University School of Medicine. I thank the
Committee for calling this hearing to discuss the role of prize
competitions in promoting innovation. We would like to put
forth the innovation in dialysis as a worthy topic for a prize.
With nearly 15,000 physicians, scientists, nurses, and
other healthcare professionals, ASN leads the fight against
kidney disease. Kidney disease is the 8th leading cause of
death the United States. It is a silent killer that destroys
lives and places a staggering burden on our society. Of the
more than 20 million Americans with kidney disease, nearly
450,000 have progressed to complete kidney failure and rely on
Medicare End-Stage Renal Disease Program for lifesaving
dialysis. The ESRD program costs $35 billion annually and
covers all Americans, regardless of age or disability. Despite
this spending, kidney care has not advanced in the 25 years
that I have been practicing nephrology. ASN believes that a
prize competition is an optimal way to promote innovation,
reduce costs, and improve patient outcomes and quality of life.
Dialysis keeps patients alive but it doesn't come close to
replacing normal kidney function. It does not return patients
to full health or allow them to pursue full-time employment.
Innovation has been stymied by a lack of competition among
payers and a payment system that doesn't support novel
therapies. If Congress uses a prize competition to signal that
it wants alternatives to currently available dialysis care, I
believe the private sector will produce life-changing, cost-
saving alternatives to dialysis.
I have a 48-year-old patient who epitomizes the need for
innovation, 48. He survived cancer but damage from the
radiation treatment caused kidney failure. He is on dialysis,
still awaiting a kidney transplant despite three years on the
list. He tried dialyzing at night so he could continue to work
but was too sick to function. He had to quit work and go on
disability. He recently told me, Doc, I just can't take it
anymore. I hate the needles. I hate feeling bad all the time. I
can't work. It seems like a transplant will never happen. I
would like to stop dialysis. Will you be my doctor while I die?
A 48-year-old went from working full-time to contemplating
death over dialysis in just one year. That is because the few
options available to him have not significantly advanced in the
last 25 years.
This reality is in stark contrast to dramatic therapeutic
advances for other chronic diseases. We have developed insulin
pumps that deliver accurate insulin doses, implantable
defibrillators that shock the heart back to function, and
robotic surgery to minimize hospital stays and pain after
gallbladder and prostate surgery, just to name a few.
In contrast, dialysis machines have become smaller,
computerized, and more portable so that some patients can
dialyze at home. However, patients still endure getting stuck
with two needles three times a week at minimum and their blood
being filtered through for an average of 12 hours a week.
We need breakthroughs, not incremental changes to old
technology. A prize competition that helps harness the power of
the private sector can spur the scientific and technological
breakthroughs to deliver improved technology for kidney
replacement therapy. The FIRST Act would help pave the way for
such an incentive by providing the guidance that federal
agencies need to make prize competitions a reality. We need to
transform dialysis or prevent the need for it altogether.
Prize competitions are a powerful lever, as you have heard,
that would draw a diverse group of inventors, scientists, and
investors to innovate and develop better alternatives. Such
innovation would improve the lives of thousands of Americans on
dialysis covered by the Medicare ESRD program and offer hope to
the 20 million Americans facing the possibility of dialysis in
the future.
I appreciate the opportunity to testify and would welcome
any questions. Thank you.
[The prepared statement of Dr. Moe follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Bucshon. Thank you very much.
At this time I would like to recognize the newest Member of
the Subcommittee and the full Committee of Science, Space, and
Technology, Mr. Johnson from Ohio. Welcome to the Committee and
to the Subcommittee.
Mr. Johnson. Well, Mr. Chairman, it is good to join.
Science and technology is a passion of mine as a patent holder
myself and an innovator, which is a long way from the mule farm
that I grew up on, by the way, so I am excited about being here
and I look forward to working with all of our colleagues to
move things along.
Chairman Bucshon. Thank you.
I would like to thank the witnesses for your testimony. It
is fascinating testimony from all of you.
Reminding Members that the Committee rules limit
questioning to five minutes, and the Chair at this point will
open the round of questions. I recognize myself for five
minutes.
Dr. Moe, more specifically, how does the legislative
language in the FIRST Act advance and help scientific prize
competitions do you think?
Dr. Moe. I think there is a lot of interest in prize
competitions, but as we have talked to committees and
organizations, there is some confusion as to what their role is
and how they can actually go about competing or being part of a
prize competition. And so I think that will actually enable
more associations such as our ASN to go together with
Congressional offices, with Committees, with other Committees
on the Hill to actually improve the ability to conduct a prize.
I think a prize, particularly in our field, is important. A
lot of these have not been in the healthcare field and I think
that is really an important problem, particularly when we look
at dialysis patients and the cost that is to society and the
fact that we are not really bringing these people--we are not
really advancing the technology that we can do in other areas
of medicine and we have done in other areas of medicine.
Chairman Bucshon. Mr. Frangione, do you want to make some
comments about that?
Mr. Frangione. Sure. I think the America COMPETES did a
great job giving broad authority to agencies to do prizes, but
every agency is interpreting it a little bit differently.
Dr. Moe. Yes.
Mr. Frangione. And any clarification that can encourage
agencies to use it in a more systematic way or a more universal
way would be extremely helpful.
And there are a couple of things that we think are
important in a prize. If you throw a prize, just like if you
throw a party, nobody is going to come unless you invite them,
right? And so we actually actively go out and recruit teams. We
go to conferences and we talk and we market and that really
helps draw teams in. And I think that is an important thing for
the agencies to understand.
The other really important thing is supporting the teams
during the competition. We don't give them money to compete but
we give them the support. We connect them with potential
funders. We teach them how to do business plans because, as
everybody knows, the best innovators aren't necessarily the
best business people and we want every single team out there to
be successful after the prize competition is over in that
market.
So the key is really ensuring that you support the
competition as it is occurring, the teams, the marketing, the
media, the education. Otherwise, you are going to have one or
two people show up to compete and you are not going to get the
results that a prize can bring you.
Chairman Bucshon. So what principles do you use to select
the prize targets and find appropriate sponsors? And can you go
over what some of the best practices to develop these public-
private prize----
Mr. Frangione. Sure.
Chairman Bucshon. --partnerships might be?
Mr. Frangione. Sure. So we--when we design a prize, we
crowdsource our prizes, not from the general public but we end
up interviewing anywhere from 50 to 150 experts. We spend six
to nine months just designing a prize because once you launch
it, you don't really have the opportunity to change the rules,
right, because the teams are spending their own money at that
point in time. So we believe in really making sure you reach
out to all potential stakeholder groups, including the
potential competing teams to make sure you get those targets
right.
Somebody said earlier, you know, how do you put a big
moonshot out there, a big, audacious goal and get the teams to
compete, right? So you do that by understanding where the
market is going in ten years and trying to make it go there in
three years and you do it by supporting them.
So I think the best practices that we see in designing is
really understanding the true market failures. As a doctor, you
know, you don't--you want to cure the disease, not the
symptoms, so you have to dig down. What are those market
failures? Have a prize aligned with those market failures, make
sure you are not presupposing a solution, and opening it up to
the world.
Chairman Bucshon. Thank you.
Mr. Wilson, what characteristics or key criteria for your
winning your competition and what recommendations would you
have to make competitors in the future--help them win
competitions? I mean what were the--kind of the things that you
all did to make yourselves successful in winning your
competition?
Mr. Wilson. Well, I would like to go back to an earlier
comment that when we looked at the competition we wanted to
know is it put together well. Our industry is rather niche so
we might see something that would be very strange, you know,
recovery rates or speeds or something that would sort of derail
our opportunity. So putting the effort into establishing a good
contest, knowing the details, getting experts involved would be
very important to us so that we know we are putting our best
foot forward in a contest.
The other interesting part is when you do something this
audacious, the general public is probably not going to believe
you. If I just did this myself and could find somebody to
actually publicize it, they would say, well, you guys are nuts.
How did you do that? So when you have a contest, there is so
much emphasis on the goal and the end result that everybody
assumes that if you got there, you certainly got there based on
good performance. Those are characteristics that were important
to us.
Chairman Bucshon. So people that--competing for prizes
should look into the quality of the prize and whether the
organization offering it has the ability to hold a good
competition. That is the bottom line it sounds like.
At this point I yield to Mr. Lipinski for five minutes.
Mr. Lipinski. Thank you, Mr. Chairman.
The first thing I want to ask, does anyone have any
experience themselves or can anyone talk about what they have
heard, what they have learned about any of the prize
competitions that any agencies--federal agencies are doing? I
was just wondering are there--is there anything that is not
being done right now or you think should be done differently
with the way these prize competitions have been done up to this
point? Does anyone have any comments on that?
Mr. Frangione. So I can't speak specifically about specific
agencies or specific prizes. I think there is a couple key
things that will make them be better, part of which was already
talked about, marketing and media and recruiting teams.
Mr. Lipinski. Um-hum.
Mr. Frangione. I think the other important thing is to not
legislate a specific prize, right? You want to legislate the
ability to do prizes and give them the tools--give the agencies
the tools to do them in a consistent manner. But we want to
make sure that we don't legislate a specific prize because, as
I said, designing it--and as Donnie also said, designing it is
really important. So if it is legislated that it has to meet
these goals, those goals may be totally wrong.
And the other thing that is important for the agency is
when they put out an RFP or an RFI to design a prize, they also
have to recognize that they can't put the goals in the RFP and
say you have to meet these goals if you design this prize
because you want to be able to throw out those goals that you
want to find the right prize to design.
So I think it is more--I think a lot of agencies are doing
a really good job, NASA's Centennial Challenges, DOE has done a
great job. I think it is more just knowing what other tools fit
within the prize tool that could help them be more successful.
So nobody is doing a bad job; they are just not taking full
advantage of the prizes.
Mr. Singh. Congressman, I would say there is a Yogi Berra
quote that I like. It is ``In theory there is no difference
between theory and practice. In practice, there is.'' And it
kind of applies to how things tend to work. For example, we
have been very effective with running challenges with certain
agencies. However, a lot of times the overall preparation, some
of the things that Chris was describing, require us to then
sometimes get in a situation where we have to contract with the
government in a normal way, right?
And for us as a commercial organization, we don't focus on
government as a sector. We look at the challenge as a way of
saying this is a more efficient mechanism of engaging with
government. But if we then get pulled into the rest of the
cost-plus world of how things work, our tendency is to say, you
know what, let's go look for commercial customers or let's find
some third party to try to deal with government for us. And so
we end up in a situation where unless we have got really great
support from an agency that is willing to navigate all sorts of
rules for us, that we will choose not to enter and engage in
that area because of the friction of the engagement.
Mr. Lipinski. Mr. Singh, you had talked about the--how you
sort of--you separate bigger--you separate it into smaller
pieces what you are trying to, you know, then pull together to
come up with a solution to a problem. Is there--does the
federal government--have you seen agencies doing that or could
it be done better?
Mr. Singh. Yes. So the challenge I described with NASA that
we just launched around detecting asteroids, like who doesn't
want to find asteroids? So that challenge is actually already
broken down into 10 parts. And so the first three or four parts
of that is to define the problem statement. We do kind of a
test data set with the community so we make sure the problem is
set up right. We break it down into certain components, and
then the main event, so to speak, is like the sixth or seventh
challenge along the way and then there is a refinement.
So we have done that pattern with NASA and the NASA
Tournament Lab at HBS quite successfully. And they have
actually gotten to where they understand how to break those
down as well or better than we do now. And so it is a matter
of--I think it gives us more surface area. It is not a way of
discovering a new industry but it is certainly a way of
exponential leaps forward in existing problem areas.
Mr. Lipinski. And are there areas that you think--Dr. Moe
said that--you say you think this could be used better in
healthcare. Are there areas that have not--other areas you
think the federal government has not--federal agencies have not
gotten into that they could use these prize competitions in?
And are there areas that the federal government probably cannot
serve a good role--that these prize competitions will not serve
a good role in trying to solve?
Mr. Singh. That is to me. So I think a couple things. Right
now, the federal government is using prizes .0000001 percent,
so there is a certainly opportunity for expansion without a
doubt.
I think the key piece that I was saying is that I believe
and what XPRIZE is doing with creating these large incentive
pools. I think the micro challenges give you an opportunity to
increase the surface area of the kinds of problems government
can work on, so all of a sudden it is not just the exponential
pieces but it is building applications, it is building things
in order of magnitude cheaper or faster. And so it give you an
opportunity to apply it in more places and I think that is a
great complement.
There are certainly areas where this will never work,
particularly where the data is too sensitive or there is
information where it is so difficult to break the problem down
that you can't do it. So there are limitations, but I think we
are not even close to approaching those yet, so there is a lot
of opportunity to expand and try this in other places.
Mr. Lipinski. All right. Thank you very much. I yield back.
Chairman Bucshon. Thank you. I now recognize Mr. Massie,
five minutes.
Mr. Massie. Thank you, Mr. Chairman.
I have got questions--I am sure this is well thought out,
but I have questions about how intellectual property
interweaves with some of these XPRIZEs or prizes in general. So
could you just give us a quick statement on that, Mr.
Frangione, and then I have some questions specifically.
Mr. Frangione. Sure. So in an XPRIZE competition, because
we believe the teams are competing for the market at the end of
the day, they are not competing for that check, we don't hold
any of their IP, nor do our sponsors. And that is extremely
important to us. First of all, we are 501(c)(3) nonprofit; we
can't do it. But also we would see fewer and fewer teams
compete if that is the case. And that is an important thing for
the government to understand because often the government likes
to hold the IP. And so you should look at more innovative ways
of licensing IP versus holding it or saying, you know what,
this is a challenge that is important enough. You keep your IP.
Because again, if you keep their IP, they are competing for a
$10 million check and then you are not going to have as many
competitors. They would rather compete for the multibillion-
dollar market that is there at the end of the day.
Mr. Massie. So that might explain why we are getting 4 or
10 times as much----
Mr. Frangione. Oh, absolutely.
Mr. Massie. --investment because----
Mr. Frangione. Absolutely.
Mr. Massie. --all of the participants claim the right to
their IP?
Mr. Frangione. Sure. Right. So we are building the market
that then they get to go enter into. They are helping us build
it, but together we are building it.
Mr. Massie. So the prize just kind of puts them over the
edge and sort of--it is not the straw that breaks the camel's
back but it is the last little incentive that causes them to go
after it?
Mr. Frangione. Absolutely.
Mr. Massie. So--but if there is a $10 million prize out
there--and this is back to IP--so, for instance, a patent is
not a right to do something; it is a right to exclude somebody
from doing something.
Mr. Frangione. Um-hum. Um-hum.
Mr. Massie. So to what extent can participants use in-house
IP--which I assume that they could; I mean that would make
sense--but if they are coming up with the XPRIZE, are they
allowed to use other intellectual property from other
portfolios? And do they have to license it as a condition of
winning the prize----
Mr. Frangione. So----
Mr. Massie. --or to win the prize?
Mr. Frangione. So every team competing is its own company
so they have to follow whatever rules any company has to follow
to license technology or to build a new technology or to get a
patent or license the patent, right? So that all sort of takes
care of itself. We--you know, we make sure that our competitors
follow all normal business rules, follow--you know, we can take
competitors from around the world but we can't take any
competitors that the United States has sanctions against,
right? So it is the same idea, right? They have to follow all
their applicable business laws where they are located and where
we are located.
Mr. Massie. But if they are going to use somebody else's
goose that lays golden eggs, they have to license it?
Mr. Frangione. Absolutely. Absolutely. And we see,
interestingly enough, prizes are about competition but we see a
lot of collaboration. In our Google Lunar, our $30 million
XPRIZE to land a lunar on the Moon, the teams are all merging,
right, because they will say, oh, you have this technology and
I don't have that so let's merge and compete as one team. And
you see people jumping from other teams. So it is a really
great model to not only get competition but----
Mr. Massie. It sounds like a great model, but as we start
to understand it in Congress----
Mr. Frangione. Yeah.
Mr. Massie. --and propose it as a--you know, the prize
incentive as a way to direct research and to spend taxpayer
dollars----
Mr. Frangione. Right.
Mr. Massie. --ultimately, I am worried that the public
won't appreciate that, that we are paying for somebody--giving
them a prize and then the taxpayer doesn't necessarily hold
rights to the intellectual property and the intellectual
property is not public domain, although----
Mr. Frangione. Right.
Mr. Massie. --I wouldn't argue----
Mr. Frangione. Yes.
Mr. Massie. --that making it public domain is actually a
good way to have it promoted. I think it is quite the opposite.
But----
Mr. Frangione. So you can--like I said, you can hold the
IP, you can do most-favored nation pricing, you can do
licensing. There are lots of ways you can get around that. We
actually have a competition we are probably going to launch
this year that the solutions are open source because we believe
it is as important to the world. And the teams know going in
that their solutions are going to be open source at the end.
Great. So I think you shouldn't let that get in the way of
encouraging agencies to use it because there is such a broad
spectrum of what they can do with that IP and that licensing
and you just have to find that sweet spot to maximize the
number of competitors while also maximizing the benefit to the
U.S. taxpayer.
Mr. Massie. Right. Because if there is no intellectual
property protection, they are going to have a hard time getting
the dollars to back the idea.
Mr. Frangione. Exactly.
Mr. Massie. Final question for anybody that wants to
answer, are there any problems that our federal government
faces where you say, gee, they need to do a prize there and
they could--we could solve that? Yes, Dr. Moe.
Dr. Moe. Clearly, kidney disease is a major burden and----
Mr. Massie. Okay.
Dr. Moe. --the key is is that dialysis--I mean you could
break it down. You could do so many different prizes. You can
do an implantable kidney. You could even just take the current
dialysis procedure where you have needles going into an access
that often fails, you have water system problems, you have
hydrodynamics, you have filters, so you have membranes that
need experiments, you could add cells to those membranes. And
here, yet, we have done nothing in 25 years. We are still
putting needles in, taking blood out, running it through a
filter. I mean we have to do something like that and it is a
perfect, perfect item. We are there from technology, we are
there from the science level, we understand the kidney.
Anything can be better than what we are doing now.
Mr. Massie. I will put that on my list. My time is expired
but I would love to hear the other answers to that question.
Chairman Bucshon. Yeah. That is true. I have taken care of
many, many end-stage renal patients and they--no one knew in
the 1970s when they first developed dialysis that it would--it
was only supposed to be for a few people, right? Nobody knew
that the technology would advance and suddenly that is why
people are all on the Medicare program because it was so
expensive but nobody knew it would explode into what it is
today--at such a big cost to the government and to the
patients.
With that, I recognize Ms. Kelly, five minutes.
Ms. Kelly. Thank you, Mr. Chair, and welcome.
Mr. Frangione and Mr. Singh, engagement in STEM education
is critical for the future competitiveness of our Nation. Many
experts have testified before this committee and said that
success in the STEM fields must start at an early age and be
seen as something achievable for all students. How have or
might your organizations use prize competitions as a tool to
promote STEM education and to engage diverse groups of students
in STEM?
Mr. Singh. Thank you, Congressman, for the question.
So obviously for us it is the supply chain of our future,
right, not just as a country, as a company overall. And so a
few things that we do to promote growth overall that we are
looking to extend into the areas that we run challenges for
free on a weekly basis that draw 2 or 3,000 competitors. They
take about 90 minutes. There are some code challenges. And they
compete for readings and they compete for learning. Like people
are trying to get better. So these are not for paid prizes but
we invest in creating these so they are like applied
challenges.
So one of the things that we have done is we have run those
in special ways for high school or college competitions as
well. Later this year we will be making it self-service so any
high school or college computer science teacher can go and say,
hey, let me run my own virtual competition against our databank
of 2,000 problems that have been accumulated over the past
dozen years. So that is some of the things that we will go
through and do. That really addresses though the, I would say,
post-``I have learned to code,'' for example, stage. We are
not--that we are not any further out. But it is really
effective.
I was at a high school technology conference called
TechOlympics in Cincinnati. It is one of the largest high
school competitions in the country, and we ran a mini
[topcoder] tournament for the kids there. And it was exciting
to see the winners and the like, and one of the things that
really struck me with the computer science teacher is he was
like, you know, we have to teach for a certain band and this is
an area that has so much spectrum of beginner to advanced that
no curriculum in my school can cover all my students. So this
is such a great opportunity for me to really be able to shuffle
those people who got a spark or interest in it to be able to
give them a way of learning and finding an outlet for their
creativity regardless of how old they are or where they sit.
So those are some of the things that we are looking at. I
think there is a lot more that we could do. One of the
particular pieces for us is girls in STEM. Last year, we did a
poster design contest for how to encourage girls in STEM at a
young age. I think that is an area that we would like to invest
and do more in in the future.
Ms. Kelly. Thank you.
Mr. Frangione. And so at XPRIZE we are trying to create the
next Apollo moment, right? And hopefully that in amongst itself
is going to excite kids into STEM education. But we recognize
that is not, right, so we have these giant competitions out
there to get us to the next Apollo moment but we spend a lot of
time and effort getting kids involved either through smaller
competitions like FIRST Robotics or other competitions that we
support. We do a lot of documentaries. We just created a dome
show for planetariums focused on the Moon and our Google Lunar
XPRIZE.
So our goal is to get kids really excited at a very young
age, getting them in smaller competitions that they can then,
you know, compete on, and we--but what we are realizing is--and
it is great. We used to have these smaller competitions, and we
still do, but we now have high school teams competing for our
$10 million competitions. So it is almost like, okay, I guess
we are going to go to 13-month-olds, right, with our stuff
because the eighth graders are going to start competing for our
competitions next. So we focus a lot on the STEM education and
we really want to get people excited and kids excited about
science because they are our future and we need them to be
excited.
Ms. Kelly. Thank you so much. I don't know if Mr. Wilson or
Dr. Moe have a comment.
Dr. Moe. Yeah. I think one of the things to keep in mind,
too, is that we have shortages of various types of physicians
in the country, and particularly nephrology is facing a true
workforce challenge, lack of interest in our field. And kids
today are very technological, far more than I certainly was
going through medical school. I wanted the physiology. Kids
today want to apply that physiology to technology, and I think
that is where prize competitions to get those integrated is
really important.
We offer a course for first-year medical student at Mount
Desert Island to go through physiology and I would love to add
a little bit of technology to that where we can--here, here is
what the kidney does. What if you could create a chip that
actually puts these pieces together? And people are doing that.
People are actually working on the kidney on a chip.
Ms. Kelly. I don't know if you have any comments.
Thank you. I yield back.
Chairman Bucshon. Thank you.
I recognize Mr. Johnson from Ohio, five minutes.
Mr. Johnson. Thank you, Mr. Chairman. And by the way, I
have got young grandchildren. I have got a 13-month-old that is
already using an iPad, so there might be some value in that. I
don't know.
For all of you, though, in light of ongoing budget pressure
and our current state of fiscal austerity, how can prize
competitions conducted by the private and public sectors serve
as an efficient and effective tool for spurring innovative
solutions to advance high-tech industries? Now, I know this is
kind of a 30,000 foot view, but for my first entry at the
Committee, I want to understand--I want to get your perspective
on that. I think it is important but I want to hear why you
think it is important.
Mr. Frangione. Sure. So the key to prize competitions, as
you heard briefly, is that they push all the risk onto the
teams so you can use a small amount of money--a small amount of
government money--and you have to support them, right. There
are operating costs. You can use a small amount of money to
push the risk onto the teams so that these folks are developing
technologies and solutions to achieve your goal.
And in doing so, those teams are spending significantly
more than that prize purse. The example I gave in my testimony
is you could give out a $5 million grant and get $5 million
worth of work or you can put out a $5 million prize and we see
in our prize competition anywhere from 4 to 10 times leverage.
So you are going to get $20-50 million worth of work. When you
are talking about fiscal constraint, that is amazing.
If you look back over history, the Lindbergh prize was a
$25,000 prize and all the teams spent $400,000. And our Ansari
XPRIZE, the $10 million prize, there are 27 teams from--or 26
teams from seven nations, spent over $100 million. And the
winning team actually spent $26 million to win $10 million. We
don't see that a lot but we do see that big number a lot. So
they are great tools specifically for that reason.
Mr. Johnson. Okay. Any of the rest of you? Dr. Moe.
Dr. Moe. Sorry. For healthcare in particular and for
dialysis, because of the way the reimbursement system is set
up, there is--it is not a disincentive but there isn't an
incentive to actually do innovation. And I think by having a
prize, that kind of goes outside of the main reimbursement
system, outside of the main way that we do business actually is
a way to jumpstart that. In particular, I mean a dialysis
patient--dialysis itself is very, very expensive but these
patients are sick, they are hospitalized, they are on over 30
pills a day, they are on Medicare Part D. They also require
surgeries and so their cost is beyond just the procedure. And
so even if we can fix one of those problems with a prize, we
can actually impact long-term cost to the government with a
minor investment compared to the $35 billion we spent annually.
Mr. Johnson. Sure. Mr. Singh, you have a comment?
Mr. Singh. I was going to say I think it works because
markets work. And what we have shown the last dozen years
because of technology is it went from where you had done
something to do something to where you need access. And so, for
example, if you are fans of hotels or car services, Uber and
Airbnb are companies that have hundreds of thousands of units
of capacity that they don't own, but because of technology,
they allow you to get to. And what this created is the
opportunity for leverage.
And so today what one person, what 10 people can do is
tremendously transformed because of what technology has done.
And with prizes, you allow that supply and demand of talent to
find each other and you get the opportunity for the market to
work in an even broader way. And so I think that applies to
every industry.
Mr. Johnson. What about on an efficiency spectrum? You
know, we talk about the need for empowering American workers
and American businesses to compete on a level playing field.
Competition demands that companies are effective, that they are
efficient in their operations. How do you think these science
prizes like this sponsored by the federal government, does that
encourage marketplace efficiency?
Mr. Singh. I mean from my perspective, absolutely, right? I
mean I think there is obviously the two edges to that equation,
right? It requires investment in kind of core skills. We talked
about STEM. We have to have the raw materials that enable us to
be the most efficient in those areas, but absolutely, it is
actually ruthlessly efficient, right? It works and rewards the
best outcome, and that is something that in general can save a
lot of money but also requires that we arm ourselves with the
right tools to be able to participate in that kind of
marketplace.
Mr. Johnson. Again, all of you, do you think we have too
many of these federally funded science prize programs, too few?
I think I know what your answer is but----
Dr. Moe. Few.
Mr. Johnson. Okay. Mr. Chairman, I yield back three
seconds.
Chairman Bucshon. Thank you for that extra time.
I now recognize Mr. Kilmer for five minutes.
Mr. Kilmer. Thank you, Mr. Chairman.
First of all, thank you all for being here. I think this
is--has a huge upside, a tremendous opportunity to drive
innovation and to appeal to talented people to come up with
good solutions.
I will throw in just in response to Mr. Massie's question.
I know we have been speaking with the XPRIZE folks and others
about looking at using that--this model and working with NOAA
to provide a prize competition around addressing the ocean
acidification, which in my neck of the woods is a very big deal
that affects our shellfish industry and others, sort of similar
to the one Wendy Schmidt XPRIZE ocean health prize competition.
A lot of the questions that I had have been asked. I guess
I am curious just from a public policy standpoint if you can
provide some direction to us. You know, it seems like the role
for Congress kind of could fit a few areas. 1) you know, in
terms of funding, kind of be encouraging, authorizing,
appropriating for the purposes of prizes; 2) trying to
establish some method of coordination as agencies are sort of
contemplating doing prizes, have some sort of coordinating
mechanism to make sure that it is done right and that they are
not sort of reinventing the wheel when each agency contemplates
this; and then 3) there is, you know, obviously sort of
directing it. You know, go do a prize on this or that or, you
know, ocean acidification or something else.
Am I missing anything big? And then as you look at those
sorts of levers, any advice if I airdropped you into Congress
as to how best to approach those ways of engaging?
Mr. Frangione. Sure. So I will take that and then I will
pass it off.
And funding is great. We always like more funding to the
agencies to do prizes and helping to clarify what they can do
and what they can't do and how they can do it. So, for example,
I mentioned earlier we really believe you need to support the
teams and you need to market and educate the public and the
world and the teams. And so giving them that ability to use
every element of a prize to make that prize most effective is
extremely helpful.
We also are in favor of directing to certain areas. We are
not in favor of legislating specific metrics of prizes. That is
when you get into big trouble because you end up possibly
picking metrics that aren't the best metrics.
As Donnie said earlier, you know, he really looked at the
metrics of the competition to see if it was worthwhile. And
there is an art and science to prize design and you need to
allow the agencies and the public and private sector partners
to design that in the appropriate manner.
So I think you have got them all. I would just caution on
how you direct the types of prizes.
Mr. Kilmer. Thank you.
Mr. Frangione. Um-hum.
Mr. Singh. So I don't--I am not a public policy expert but
I will act like the government is a really big company, which I
do know how to deal with, okay. And so what we tell really big
companies is we say, look, you need to create some centers of
excellence that allow for skills to be there but you don't want
to throttle all work through that because----
Mr. Kilmer. Yeah.
Mr. Singh. --even big companies are too big for things to
go through one central location. So centers of excellence that
allow you to cluster experience and knowledge sharing are
important but you certainly don't want to throttle things
through that.
The other piece that we sometimes give advice to large
companies is create incentives for people who do things well,
right? So if agency--and this--in your context, if agency X
does something well that receives an exponential return, well,
guess what? You get to do more of that. And so what that does
is it creates the incentive and behavior where somebody says,
oh, it spreads around. We did something; it receives this
return. That led to this positive outcome. And now I want to go
to the center of excellence and learn. So if that process is
emulatable in the government context, that is a something that
has worked for large organizations looking to absorb new
innovations.
Dr. Moe. I think one of the things that can be done is to
identify really problem areas. Obviously dialysis is one of
those. But I think within those agencies, as part of the ASN,
go and talk to individuals within CMS, for example, there is
recognition that there is not enough innovation. There is
recognition that the current payment structure is for the
purpose of containing cost but doesn't do anything to reduce
cost and improve innovation.
So within those agencies, there is recognition of the need
for something new and different, and by, you know, doing a
prize within your various offices of who can come up with the
best idea for a prize competition or best needed area would be
a way to spur people to think about it. I think that is the
important thing is to somehow encourage offices to think about
a prize.
Mr. Kilmer. Thank you. And to give 10 more seconds, I yield
back. Thank you. I did better than three.
Chairman Bucshon. There you go.
I recognize Mr. Hultgren for five minutes.
Mr. Hultgren. Thank you, Mr. Chairman. Thank you all for
being here. This really is a crucial hearing for this
Subcommittee as we continue to ensure federal government is
playing a smart role in advancing innovation and breakthrough
discoveries that I believe will dramatically change our world
and make it a better world to live in.
Prizes are an important mechanism where private sector
partners such as yours certainly can have a dramatic effect. I
also believe the federal government should be learning best
practices from you as the administrators have approached prizes
in a very different manner, having more numerous but smaller
prizes that often serve mainly PR purposes. It is also
important they understand how prizes work together with our
greater federal R&D enterprise, and they both play crucial
roles in a symbiotic relationship.
Mr. Frangione, is that it? Sorry. Frangione. Is your
written testimony--in your written testimony you touched on the
multiplier effect these prizes have on R&D. Teams, I think you
stated, spend 4 to 10 times the value of the prize in
aggregate. Why do you think XPRIZE has been successful in
getting people to spend more than a prize purse to win the
prize? Is it simply the prestige of winning the prize? Also,
how do you build prize branding so that there is prestige in
winning your prize and thereby attract a diverse group of
participants?
Mr. Frangione. So there are a lot of reasons teams compete
for our prizes. One is the prize purse obviously. Two is the
legitimization of an industry. Nobody believed that private
companies could put a plane in space. Only government could do
that. And our prize legitimized that. And as Donnie said
earlier, one of the other things is you can first go out there
and you can market your result and say I have done this but
nobody believes it because your company is marketing it. When
you go through a prize competition, the prize has all these
different stages whether it is independent third-party verified
data that they can now use to make the products better and to
go out and sell their product.
Another real reason teams compete is for the competition
resources. When we used Ohmsett where the oil spill cleanup
XCHALLENGE was held, that cost us $1 million to rent the
facility and $1 million in donated oil. We had 10 finalist
teams so it is $200,000 per team and it was on a U.S. Navy base
so you wouldn't have been able to use it anyway. So they got to
test at an independent third-party verified testing center
because of the competition. So the key is and the reason we are
successful is that we provide lots of reasons for the team to
compete that is not about that check. Once it is about that
check, you are not going to get a lot of teams competing. So
you have to make it rewarding and simple for them to compete.
You have to make sure that they are all heroes so that they all
compete for that end market at the end of the day. Once you
limit it to a $10 million check, nobody is going to compete.
Well, you will have a few but not a lot.
Mr. Hultgren. Do you think it is more difficult for the
government to build similar branding when we have so many
different and smaller prizes?
Mr. Frangione. I do not. I think the government can do a
great job in this and many have. NASA's Centennial Challenges
are doing great. USAID is investigating prizes and doing a
fantastic job. I think the key is that you have to pull all
these other levers in the prize--the marketing, the media, the
competition resources--and make them rewarding for teams to
compete.
I think people would be excited to compete for a government
prize, right? I mean XPRIZE is a great brand but I actually
think it would be cooler to compete for a NASA prize. People at
home will kill me for saying that but, you know, it is--NASA
holds so much more stature than we do, right? So I think the
government's brands that they have--USAID, NASA, DOE--are big
enough amongst themselves and I do encourage them to do much
larger prizes than they are currently doing.
Mr. Hultgren. I don't know if you want to put the Congress
brand on--I don't know how that would go over.
Let me touch on again the multiplier effect these prizes
have. I wonder if you could give the Committee any examples of
companies that competed for prizes, did not win, but still
started successful businesses from their work. In your
testimony you spoke about ``disruptive innovation'' and
``democratizing innovation.'' How does your process give
previously overlooked teams both the experience and exposure
they need to then enact a workable business model and attract
private capital?
Mr. Frangione. Sure. So for us we have lots of examples
of--and I can't give you specifics just because I don't know
them off the top of my head, but we have lots of examples of
teams going out and competing. We just have so many teams it is
hard to keep track. For example, on our oil spill technology
prize, we had a team that was a tattoo artist and they came in
seventh place. They didn't win any money but they still did
better than industry standard at the time on one of the metrics
and they are out there competing in the marketplace.
Unfortunately, I don't know how successful they are. Maybe
Donnie knows how successful they are now. But still, they would
have never competed. They didn't even have an interest in the
industry until the prize existed.
So the key is that you don't know who the solver community
is until you launch the prize, and that is why they are so much
better than a traditional grant or contract in certain places.
Basic research where there is no end market, prizes don't work.
You need that end market. But in certain places where there is
a big end market, prizes work really well.
Mr. Hultgren. Well, thank you all very much. I guess I have
only three seconds that I can yield back like my colleague from
Ohio. So I yield back, Chairman.
Chairman Bucshon. Thank you very much.
At this point I would like to thank all the witnesses. This
is a very fascinating hearing. I thank you for your valuable
testimony and the Members for questions. The record will remain
open for two weeks for additional comments and written
questions from Members.
The witnesses are excused and the hearing is adjourned.
Thank you very much.
[Whereupon, at 11:19 a.m., the Subcommittee was adjourned.]
[all]