longer focus on high-performance computing (e.g., KAI, PGI, Pallas, APR, and Parasoft). No new companies have entered this field to replace those that left.

In all of these possible modes of intervention, one thing is clear. Success in creating the suppliers depends on long-term, stable, predictable acquisitions and on the fruits of long-term, government-funded R&D.

The Need for Stability

The committee heard repeatedly from people with whom members spoke about the difficulties and the disincentives caused by the lack of long-term planning and the lack of stability in government programs. In order to undertake ambitious projects, retain highly skilled people, achieve challenging goals, and create and maintain complex ecosystems, organizations of all kinds need to be able to depend on predictable government commitments—both to programs and to ongoing funding for those programs.7 If that stability is absent, companies will go out of business or move in other directions, researchers will shift to other topics, new professionals will specialize in other skills, corporate memory is lost, and progress on hard problems slows or stops. Once interruptions occur, it may be difficult and expensive, or even impossible, to recover from lost opportunities or discarded activities.8

Ongoing commitments are not entitlements; the government should demand accountability and performance. However, priorities and long-term objectives need to be sufficiently clear that when funded efforts are performing well, they have stability.

The committee heard of many areas where stability has been lost. Following are a few examples.


For example, approximately 80 percent of Cray’s sales in 2003 were to the U.S. government. Cray’s revenue dropped from over $100 million in 2003 to less than $20 million in 2004 due to a drop in a defense appropriation and a delay in DOE’s Oak Ridge National Laboratory project (see Lawrence Carrel, 2004, “Crunch Time at Cray,” available online at <http://yahoo.smartmoney.com/onedaywonder/index.cfm?story=20040727>).


The same issue has been studied for other long-term government procurements. For example, a RAND study examined in 1993 the costs and benefits of postponing submarine production; even though no new submarines were needed until 2006, the cost of the lost of expertise was believed to outweigh the savings from postponing production by 10 years (J.L. Birkler, J. Schank, Giles K. Smith, F.S. Timson, James R. Chiesa, Marc D. Goldberg, Michael G. Mattock, and Malcolm Mackinnon, 1994, “The U.S. Submarine Production Base: An Analysis of Cost, Schedule, and Risk for Selected Force Structures,” RAND document MR-456-OSD; summary at <http://www.rand.org/publications/RB/RB7102/>).

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