(ESTIMATED PUB DATE) THE SOVIET ATTEMPT TO APPROVE APPLIED R&D

Created: 4/1/1971

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CIA HISTORICAL REVIEW PROGRAM RELEASE AS SANITIZED

DI RECTORATE OF INTELLIGENCE

Intelligence Report

Tbe Soviet Attempt To Improve

Secret

ER1

Copy 8

Page

Summary and

Discussion

Problems o(n die Civilian

Faulty Coordination and Communication Among Researchers, Designers.

and

A Scientific Education System Out of Tune With the Needs of Research

Institutes and

A General Neglect of the Development

Inadequate Incentives at AH

Administrative Problems Within the Research

Official Views of

Soviet Attempts to Overcome the Defects in Applied

Description of the Decrees Related to Applied

Description of the Decrees Related to Training of Scientific Personnel

Implementation and Effectiveness of the

Better

Incentives at Research

Incentives for Innovation at the Enterprise

Improved Experimental

Equipment

The Reforms in Scientific

Prospects for Future Reform

APPENDIXES

Appendix A. Abstracts of Decrees Related to

Appendix B. Organization and Administration ofn the USSR 39

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CENTRAL INTELLIGENCE AGENCY Directorate of Intelligence1

INTELLIGENCE REPORT

the soviet attempt to improve

INTRODUCTION

leaders have long been dissatisfied with the rate of technicalthe USSR. According to Kosygin. "the sluggishness and disorganisationwith creation and introduction of new technologyargethe practice of ourolansltiy, Deputy Director of theInstitute, described the technical level of Sovietrelative to that of the United States as follows. There is aand it is becoming wider. It seems to me that technologically theis disappearing beyond thehe official position onwai summarized by Leonid Brezhnev, as follows:

Tbe Communist Party and Soviet government are demoting unabating attention to allout development of Soviet science and technology. Under today's conditioi.v. this is without question one of thc moit important areas in building Communism.

in industrial productivity indicate that Soviet leaders havefor concern. Growth in factor productivity has declined steadily.. factor productivity in industry grew at anratehe comparable figureccordingprevioushe slump in productivity growth is thc result of Ihestrategy of growth. wh-*ch relies on large infections of fixed capitaloutput. Technical progress, in Ihe foim of more efficient equipmenthas been insufficient to offset the tliarply diminished returns toment.

. Inv-ttnwitl and Cro*th In the USSR.ECRET Sou Thu mwtpow* bv ihe Otffcw of Economic Rmtmrth and cootdmMrd

CIA.

e declining growth of productivityide range of measures aimed at reforming the institutions and organizations responsible for technical progress in the civilian economy. Some reforms, such as Khrushchev's massive regional reorganizationffected thc organization of civilian research and developmentther reforms altered the allocation of research re-suomibuibes among ministerial organisations and institutes of the USSR Academy of Sciences. The most important attempt to enhance enterprise Incentives to adopt new technology was the industrial reformrofits were established as the key indicator of enterprise performance, and enterprise managers wereto embrace new technologyeans of lowering production costs and raising profits.

On balance, tho reforms up to and including thc industrial reform5 left the Soviet RAD effort withompetent, largely isolatedector which traditionally has received priority allocations of manpower and materials; (b) first-rate basic research carried out mainly by institutes of the USSR Academy of Sciences and Union Republic Academics of Sciences; and (c) an inefficient appliedetwork which has been characterized by its inability to bridge tbe gap between research laboratory and production line- It is with the problems and prospects of civilianhat this report it concerned.

Today, technical progress in the civilian economy is administeredarge, dispersed bureaucracy coordinated at the top jointly by tbe Statefor Science and Technologyosplan, and the USSR Academy of Sciences. With thc help of the CKNT. the Academy of Sciences and thcministries eachull-fledged system of research institutes, design organizations, and experimentals also carried out in higher educational establishments (VUZY) which are supervised partly by the USSR Academy of Sciences and partly by the Ministry of Higher Education. Thc bureaucracy includes coordinating bodies at all levels that try to keep open the channels linking the theoretical and applied research with users of newOther coordinating bodies are charged with developing lateralamong institutes belonging to ihe ministries, the USSR Academy of Sciences, and tho higher educational establishments.escription of thc organization and administration of civilian, see

here are prr-sendycientific establishments in the USSR, ofre under the jurisdiction nf ministries and statehere under the jurisdiction of thc USSR Academy of Sciences or the Union Republic Academies.9 these establishments employed most of the morecientific workers, almost half of whom worked Inof ministries or statecientific establishments of thc Acad-

retetrtk vuluuta mmdtraOfV MafMc. Ubormlonti.nht 1st*.

"Tht USSR dtftntt "tiiemtltr wfa-nr* to Include all acadtmicumi who are full ormemhtti uf an Academy of Scttncti. allf iht degree uf doktor ofkinduldt of mitnet. allcadtmu IXlei ofdottnt, reforrlc^$ttentt]ic-retearch or KtrMf/ic-pfJaavpcafifh-i

educmltunolarvt ell ipeciduti doingooti tn tndnittia! emteprUti and dnlfn oreamnrlloni. Thiiinclude wl only KirrifUfi ai iho Urm is ukj In ihtlulrj, but alio tconotnlrti. htstixlant. tnnlnoertnu tttentutt. phdoiogltti. t'thitscti.

emy of Sciences employedf all tcienbitcoc-third taught and carrUxl out research in VUZY, and the remainingorked in industrial enterprises and design organization'.

his report deals with attempts made after the industrial reform5 to restructure tho civilianector. Tho first part of the report treats briefly some of tbe specific problems in theector. Next the report describes what Is known about the effectiveness offficial decrees which were issued60 in an attempt to reform. Fin illy, the prospctts for future revolution or radical reshaping of theystem are appraised.

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SUMMARY AND CONCLUSIONS

ecause productivity gains in the Soviet economy have fallen off sharply in the last decade as tbe mult of dimiiushing returns to new investment, Soviet leaders have indicated that future policy with regard to economic growth will center on raising the rate of technical progress. Despite the attention paid toprogress, however, applied BAD in thc civilian economy sector has continued to stumble.

of the specific problems in Soviet applied BAD are the result ofreliance on central planning and control. Coals for research institutesenterprises are imposed from above, and there is little lateralresearchers, designers, and users of new technology. The users ofcannot control the design of the new equipment they receive,are cut off from feedback on the success or failure of theirplanning system also hinders the diffusions of new technology.new machinery is often planned enterprise by enterprise, and innovationsall potential users.

Tbe incentive system prevailing in applied BAD works against rapidof new technology. Bonuses for researchers and designers generally do not depend on successful useew product or process. Enterprises are rewarded mainly for fulfilling output, profit, and sales plans. In contrast, tho financial towards to enterprise managers for raising the quality of output through use of technically advanced capital equipment arc relatively srnalL

Applied BAD work suffersack of physical facilities. In manythe facilities for development and testing are inadequate. The inflexibilily of the system for supplying instruments compounds the problem. Finally the scientific education system is unresponsive to changes in demand for different kinds of specialists, and the curriculum for engineers is overspecialired and too lengthy.

In thc five years following the industrial reform1 decrees were directed at improving applied RAD. The decrees touch on scientific education. HAD management, diffusion of new technology, and allocution of laboratory equipment. The content of the decrees ranges from vague declarations of intenl to specific instnsctions. An important example of the latter is the Instruction to militaries to make engineering facilities at enterprises available to researchfor testing purposes.

The decrees attack the problems of applied RADontradictory manner Some of the provisions extend the role of central control and planning while others grant more autonomy to directors of scientific organizations. Five-year and annual plans for research work and for utilization of research results in production are to be devisM by all branches of industry in republics, scientific invtitutions, and enterprises. "Coordinated plans" which cover all aspects of aresearch to use in live economy are to be drawn up for important scientific projects. The most Important scicolific projects willear forecasts. Central control it further extendedystem of personnel evaluation which is to take place every three years. The evaluation will be carried out by an independent comnuMkw

Tbe decrees, however, alio provide more freedom for BAD organizations to determine their own course of action. Many of these provisions are similar to those of5 reform which applied to industrial enterprises. All RAI) organizations are encouraged to do contract work and may keep most of thr profits for their own use. Directors of BAD organizations were given more latitude to determine expenditures on wages and equipment as well as the structure of their staff.

Other important provisions of the decrees recommend that integrated research, design, and testing bcilitics be formed; that research institutes, higher schools, and enterprises receive experimental facilitiesop priority basis; and that economic incentives of RAD organizations depend on the effectiveness of thc new development in the economy. The piecemeal, seemingly contradictory nature of the decrees ilhistraies thc experimental nature of Soviet attempts to find the best way of managing applied RAD.

IS Thus far the degree of implementation and the effectiveness of tbe decrees are difficult to assess because the evidence is scattered and fragmentary. Overall, the provisions of tho decrees seem to have been introduced sporadically. Uniform, industrywide reform seems to be confined to the Electrotechnical Industry, which has had some success in reducing the gap between research laboratory andline. While it is too soon to assess thc long-run effects of reform in thc Electrotechnical Iridiistry. the conditions created hy tltc reforms favor technical progress. Vertical integration of research institutes, designnd industrial enterprises is said to have aided coordination and cotmnunicationPlanning and financing geared to projects rather than institutes hai probably also helped.

Elsewhere, effects of reform seem to be negligible. The organization and planning of iipplted RAD has not changedesult of thc decrees. Vertical inte. gration In response to the8 decree has occurred in onlyinistries. Planning of applied RAD is still done largely on an institute basis. Efforts lo Improve Incentives in the research institutes have also been largely barren. Only one ministry and one research institute are known to have carried out personnel evaluation experiments. Furthermore, most institutes still pay bonuses for fulfilling output plans rather than for successful assimilation of their research results in industry.

A major reason for the lack of movement in the applied PAD sector Is the failure of most industrial enterprises lo participate actively in the RAD process Enterprise incentives to assimilate new technology have not changed appreciably over the past five years. Half hearted tinkering with enterprise incentives has been overwhelmed by insistence on central direction of the ecoocsoy. The chief engineer of Ihe Corkiy Motor Vehicle Plant describes the end result this way:

The introduction of an important, significant invention calls for new materials, new equipment, iKulitional items. But in order to get them, one has to go through all levels of planning all the way up to (losplan USSR, and years are spent going through these levels. It is sometimes the case today that lesspent on finding an engineering solution than Is spent on corrvincing people, ordering things, having things confirmed, and on getting them.

the lack of success thus far, piecemeal reform in appliedwill continue Soviet leaders are unlikely to admit that central planning

and bureaucratic control are the real obstacles to technical progress. Further reform will almost certainly involve additional vertical integration of research institutes, design organizations, and enterprises. Athough imports ol technology will notongrun solution to the problems in, such unports can be expected to continue. Efforts to break down enterprise resistance to new

technology probably will take the form of new bonus systemsider

use of tbe new pricing methodology.

PROBLEMS OFN IHE CIVILIAN SECTOR

Most of die short comings in Soviet civiIud RAD stem from tbeofrocess with centjahwd direction and bureaucraticTheector piffers from the absence of market prewires more than any other sector of thc economy. Under central control and planning, there is inadequate competition among research ami design organizations. And without the "money votes*arket system, potential consumers of new technology cannot easily communicate their needs to researchmuch lesstheir wishes.esult, priorities are established from above, and theector sees only dimly the technological needs ol industrial

Thcector must function without thc coordinating, driving influence of an entrepreneur. Industrial enterprises also sufferack of entrepreneurial leadership butesser extent than groups conducting. In. the entrepreneur's initiative and willingness to takerucially important.

The nature of therocess makes the planningn ungainly activity. In the first place, planners cannot predict easily thc duration, thc cost, or the outcome ol the research process. Also, planners have no truly meaningful measureoutput" with which to compare thc performance of various firms. Arbitrary measures of output must be used. As an example, "output" in design bureaus is sometimes measured in terms of the number ofpages produced. Despite these difficulties, civilianentrally planned, institute by Institute,arge share of the materials for carryingre allocated centrally.harp separation of civilian research from military-research, to whichf centrallyund* arc devoted, restricts disseminatioii of research results to the civilian sector.esult of these management shortcomings,sby the iouowir* dcaUlirica.

Faulty Coordination ond Communication Among Researchers, Designers, and Customers

Since these groups arc often physically and administratively separate, ifinnliiii usually do not assist designers In translating the results into working drawings and cxperim.-nul models- Designers are not intimately involved with development and csptvtmental production at industrial enterprises, and.enterprises that arc to receive the new equiprncnt do not oversee its dcvclainmmt closely. Thus the enterprise must assimilate thc equipmentinimum of help from designers and developers. This sort of fragmentation compounds thc difficulty llsr central authorities have in overseeing thc innovation process.

Discussion* of coordination problems abound in the Soviet press and in reports of Western scientists who have visited the USSR. One American, for

nam pic. wu told by. Cazenko. former chairman of the International Bioastrooautio Committee, that coordination of thc design and manufacture of equipment for the Soviet space program suffers because all space research and design work is carried out at research institutes and not at the industrial facilities. Cazenko noted thc advantage the United States derives from having unified design and production facilities.

joint ventures by research institutes and industrial enterprisesalways result in continuing and direct contact between Institute andpersonnel. For instance, when the Paton Institute for ElectxowcldingZlatoust Metallurgical Plant tried to collaborate on tbe application ofIn the Zlatoust plant, formidable coordination problemsthe Central Research Irarttute for Ferrous Metallurgy had to specifythe plant's processes needed replacement. This institute also had to set aany new equipment to be installed. Furthermore, the Chelyabinskwhich had been working with the plant, had to approve anybefore It oould be installed.esult, Paton technologyvery slowly, and the Paton Institute received little directthe success or failure of its new technology.

A Scientific Education System Out of Tune With the Needs of Research Institutes and Enterprises

Complaints about the system of educating scientists and engineers center on its Inflexibility. Therehortage of new graduates in some fields (especially computer technology) and an over abundance in others. Because the system trains too few laboratory technicians relative to the number of scientists, thc scientists must do too much routine work The whole higher -education system is short of qualified teachers One surveyection chief of the USSR People's Control Committee found thatf VUZ instructors base advanced academic ilegrees and that this figure Is as lown remote areas.

Thc curriculum in scientific fields is frequently critui/ed for rigidity and excessive specialization and standardization. Mikhail Lavrcnt'yev. head of tho Siberian Division ol the USSR Academy of Sciences, contends that the scientific curriculumears behind the current level of scientific knowledge. Furthermore. C.ovosiluTsk professor, further alleges that the scientific curriculum does not involve rtudents sufficiently in practical work.

evertheless, problems in training scientists and engineers are perhaps the least serious of those that plague civilian BAD in the USSR. Many of the problems In ti.ilning personnel discussed above are not unique to thc USSB. Personnel imbalances, shortages of good teachers, and lagging scientific curricula exist in (he West as well. Market economies, however, respond more readily to shifts in the demand for scientific and professional personnel.

Aeglect of the Development Stage

he overriding emphasis on production in the USSR has led to inadequate investment in development facilities for constructing and testing phototypes and for carrying out experimental prodiHtton.esult, industrial enterprisesare assigned to carry out development, although they arc often poorly prepared lor the task. One enterpriseear designing nnd manufacturing equipment to carry out experimental production of an automatic switch.

be shortage of development facilities means thai many new products reach mass production slowly or not at all. Interested consumers of the product often can obtain it onlyontract with the designersustom-made version. Uncoordinated centra! planning can keep new products from reaching mass production even when experimental facilities are available. In the case of one Special Design Bureau subordinate to thc Ministry of instrument Building, affiliation with an experimental factory did not help get new, highly rated designs into mass production. The factory was producing an entirely different line of instruments and would not fulfill its output plan If capacity had to be used to test new designs.

allocation of reinvestment funds also favors research at thedevelopment. AccordingKNT section chief,nlycentrally allocated, noninveslment WD funds went for developmentIn contrast, the US governmentf its noninvestmenton devrlopmeot

Inadcquate Incentives at All Levels

Research Institutes and design bureaus in general are no! directly concerned with the introduction of their research intoesearch institute earns bonuses by completing its planned research topics within specified financial limits. Although research institutes and design bureaus increasingly contract directly with enterprises, they still receivef their funds from the state budget. Individual scientists are permitted to assist with development, but official pay scales for this service are very low. Institute directors often work around the system In order to pay contractors additional amounts.

At the enterprise level, managers are slow to adopt technically advanced equipment and processes received from the applied RAD sector for severalIn the first place, blueprints received from research or design organizations are often deficient in some respect. The manager frequently must transform these blueprints into new equipment without help from tbe designer. Meanwhile, if pioduction is interrupted for retooling, the enterprise may fail to meet its output plan. Penalties for undcrfulfillnient are severe, and technical progress seems not to be an adequate excuse.

When an enterprise has retooled and Is ready toew product, it faces additional problems. The enterprise may be dealing with unfamiliar nuppliers. If to. raw materials may not be delivered on schedule, and the output plan will be threatened. The enterprise and the ministry sale* organization must also solve the problem of distributing the new output- Inefficiency on tbe part of sales organizations can cause underfuIfUlmcnt of the sales plans.

Ihe Soviet system for setting prices on industrial commodities reinforces thc reluctance of enterprises to undertake production of new products. Prices for new products often arc set al Ihe lovel of average cost In the first year of production. These costs usually fall rapidly in subsequent years Therefore,that weather thc years of retooling, trial production, and initial scries production can reap increasingly large profit thereafter, until tbe price of the new product is lowered.

If enterprises were motivated by expectations of future profits, this pricing system might stimulate production of new products. However, an enterprise Is

oriented, above all. to it* current output and profit plans. Enterprise performance indexes do not take potential profits into account. Therefore, an enterprise that Is comfortably producing an old productigh, or simply adequate, piofit rate is not tempted by future profits to retool ond risk undcrfulfillment of (lie outputailure to fulfill this year's plan isailure tonew technology Ii not

Administrative Problems Within the Research Institutes

Directors of research institutes are plagued by personnel problems and by difficulties in obtaining scientific equipment Directors find it difficult to get rid of incompetent scientists. Furthermore, special research groups formed tnpecific task tend to overstay their time and grow even larger. The central bureaucratic control of scientific research causes highly qualified scientists to spend inordinate time filling out forms, requisitions, and reports for higher authorities.

Management must cope with vexing supply problems- PUruiing requires that all material for future projects be ordered well inbefore the list ofomplete Institute reactions to tbe supply situation make the problem worse. C.epartment head to the Institute ofof the Georgian Academy of Sciences, complains that the shortage of certain instruments and chemical reagents leads to hoarding of supplies that may never be needed. Tho supply agencies, in turn, often sell those Instruments most in demand through "tie-in" sales which require thc institute to purchase additional equipment it docs not want. Worse, certain supply houses will sell instruments only to institutes of certain ministries, leaving other institutes without equipmentonsequence, scientists waste valuable time fasbioriing their own equipment or contracting with industry for the production of custom-made rouiprisent.

OFFICIAl VIEWS OFROBLEM

Soviet leaders themselves describe theroblem in amanner. First, there is the official party-government analysis which proceeds on the assumption that central planning is wholly compatible withurrent difficulties are seen officially as tlie result of imdequalcly coordinated central plans On the other hand, official publication* also cite the lack of incentives in research institutes ami the lack of influence of cus-locners as primary causes of the research-production gap, and some of the blame is laid on deficiencies at the enterprise level A. M. Banian, prorector of the Moscow Institute of the National Economy, blame* the lack of stable long-run plans, the lack of funds with which to buy new equipment, and Improper pricing of new products.

Unofficially, however, there is growing awareness that cenUalliud plan. ninE and control may not be compatible withzheiman Cvishiani. Deputy Chairman of the State Committee for Science and Technology, admits that "it is not easy to plan scientific and technical development, because we are not able to predict the results of fiirklamrntalther highly placed officials have indJcated that competition play* an important role inrocess. N.aspian official, says that,esult of competition, the United States has an advantage over socialist countries in the introduction

of new teeonoiofy. The Deed for competition was also stressed recently by K. D. Kalantarov. Director of the Medical Research Institute of the Ministry of the Medical Industry. "The reason it takes five to ten years for our factories to mass produce an advanceds our system itself. It aDows for neither competition nor worker incentive plans."

SOVIET ATTEMPTS TO OVERCOME THE DEFECTS IN APPLIED RAD

Eleven decrees issued between6 and0 form tbe core of the most recent reform with respect to civilian RAD. The decrees lacUe problems in thc areas of (a) training and assignment of scientific(fourb) management and operation of research Institutes (fourc) design and estimate work (oned) diffusion of new technology among branches of industry and construction (onond (e) scientific equipment for research and design organizations (one decree).*

As is the case with most Soviet decrees, theecrees considered hereood deal of fairly general rhetoric and vague exhortations, such as "Executives of ministries and departrnerits have been instructed to increase thc responsibility of enterprises, research, and drafting-design organizations forthe established plan to produce new types of output andhc decrees, hosvevcr. also contain operational, direct orders for someone to do something or at least strong suggestions that such orders have been given. This report deals only with tho operational portion of the decrees.

To repeat, the decrees are uncertain and often not very specific. Some, such as the ones on diffusion of new technology and scientific equipment, do little more than articulate some of tbe serious problems that exist in applied RAD. Furthermore, tbe decrees offerpproaches to the problems, although this Is not surprising In view of the leadership's uncertainty over how to improve. For example, the decrees call formarket elements and tighter central planning. Provisions granting research managers morecan be found side by side with provisions strengthening and extending the role of bureaucratic direction. Cviuhlanl, thc CKNT Deputy Chairman,this approach to the managementn his pronouncement:

anagement of science should be combinedertain flexibility of organizational forms of administration which would ensure planning and control, unhampered research, freedom of opinion, and creative Initiative.

In other words, thc leadership is striving Inrea for the .same conflicting goals as those vainly sought in5 economicrelease ofinitiativeeakening of central control.

some degree the decrees are an extension of Ihe economicector. Indeed, one purpose of the most recent decree is to extendreform to scientific organizations Other examples Include theresearch managers of more freedom to maneuver within the overalla given wage fund, the earmarking of some profits for the research organiza-

of ihe decrees exceptm resolution of ihe Ctrj'al Committee of ihe CnramunMi 1'n-iy and tho USSR Council of Mlntrtm. The Council ot MtnMart alone imted the decree onequipment.ompleteof ail II dcceci. auk Appendix A

r

don's own use. and some tinkering with charges for thc use of fixed capital.reform in the sense of wider use of economic levers and freedom for management is not the predominant aspect of the decrees, however. Instead tho overall impression is one of experimentation in variousout new methods of organization and reshuffling tho roles of the principal elements of Soviet BAD. Theretrong emphasis on increasing thc participation of both uaMversitiej and enterprises in applied research Various kinds ofof laboratories, design bureaus, and serial production plants have been initiated or proposed by the decrees. Nevertheleas. both the experimental and the economic reform aspects of the decrees clash direcdy with the other theme running through thereliance on new and stronger top-levelto resolve problems of coordination in the RAD process. Thus the reformsirror tlie general Soviet indecision regarding how best to manage the economy.

Description of the Decrees Related to

Tbe seven decree* which pertain to the management and operation of applied PAD were issued successively in0nd

Thc decree of7 extends aspects of the economic reform5 toector by giving managers of research institutes more freedom to decide how the institutes funds will be spent, Tlie major provisions are:ay now work out staff structure and change wage rates within the overall limits of the wage fund, (b) directors are free to work outexpendiluros within tbe framework of total planned expenditures, (c) upf profits from contract work may now be spent on new equipment and facilities, and (d) directors may sell obsolete and unused equipment and purchase new equipment with the proceeds. Thus this decree tries to introduce flexibility into research institute management by reducing aspects of central control.

The7 decree, which elaborated on some features of5 imlustriai reform. Includes one provision applicable. It permits the interest charge on fixed capital to be waived for research institutes, design bureaus, and cxperimrnlal production units serving entire branches.

The most important decree on BAD. however, was issued in8 andifferent approach. Thb decree, instead of emphasizingand special privileges, concerns itself equally with planning and control and new rules. Hoping to strengthen control over the science sector, the decree provides for additional plans. Besides thc present five-year plan for scientific research projects, there arc to be national, multi-year "coordinated plans" as well as annual plans for introducing new machinery and equipment Into tbe economy. The decree defines coordinated plans as those whichhole complex of projects starting with research and ending wilh practical application of researchn addition, all branches, republics, scientific institutions, ant) enterprises are to have five-year and annual plans for research work and for utilization of research results in production

At the same time, the decree attempts lo strengthen the role of Incentives in. It provides for widespread planned competition among research

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institutes. To this end, projects are to be assigned to several restitutions, and the best solution ia to be chosen fornew system of economic incentives and material rewards" based on the economic effectiveness of the new technology is to be introduced in research, design, drafting, and technological organizations and enterprises of the Ministry of the Electrotechnical Industry. Other irHJustrial ministries arc allowed to extend the "new system"ew research and design organizations. Institutes in this experiment are to receive bonuses deducted from the profit* of enterprises using equipment designed by the institutes.

In perhaps Its moat widely reported provision, the8 decree approaches incentives intick rather than the carrot of revised bonus schemes. It causuality certification system for all employees in research and design organizations and an evaluation of the workrganizations subordinate to the ministries and tlie Academy of Sciences. The certification of institutions is to be conducted at least every three years by the hierarchy supervising these institutes. Three-year personnel certification Is to be carried out by groups of scientists and Party and trade union officials, and these certifications are to affect bonuses and dismissals

To improve coordination with prospective users of new technology, the decree allows Academy of Science institutes to perform contract research and gives research institutes the same responsibility for quality and meeting schedules as enterprises selling .goods and services on contract. The decree stipulates that enterprise consumers of new technology are to bo determined in advance so that they can help with documentation and development. The most promisingto improve coordination, however, involve new forms of organization which have been borrowed from industry. According to the decree, integrated scientific Institutes will perform both research and design work. In addition, associations of Industrial enterprises and research institutes, while maintaining their financial independence, will cooperate descry in research and development, and more closely knit specialized 'khenraschet' associations of enterprises and design bureaus will be fomved. Meanwhile, research institutes are to be transferred from ministerial jurisdiction to the jurisdiction ol major Industrial enterprises where feasible.

Finally, thc October decree outlines an agenda for future reform. First. GKNT, Gosplan. tlie Ministry of Finance, and the Academy of Sciences are jointly charged withorkable way of measuring the effectiveness of research work. Second, the decree states that new development facilities will be providedop-prioritytatute on prototype testing procedures, additional incentives to master new technology,ew methodology for price formation on new products are also promised.

Thc decree of9 applies to design-drafting organbations. To insure that new enterprises are equipped with technically advanced equipment, the decree simply forbids construction using outdated designs The focus is on forcing the design bureaus to work more efficiently and to be more responsive to their customers. The decree stales that (a) beginningustomers will pay for design work onlv after it has been entirely completed or at specificb) also beginninghe volume of project design work will be setertain percent of the value of capital investment; and (c) cost estimates will include

% reserve which can be spent only wilh ihe permission ol the customer. Al tho same time, however, tbe decree offers bonuses to design organizations which help to start up ihe units they design, permits the design organizations lo contract for extra work above and beyond their set plan, and standardizes pay rates in the design bureaus. Machine building and metal working (MBMW> ministries are to work out five-year plans with their customers, specifying delivery times for the eqmpeneot sold while mrorming other design organizations of new equipment under development so that the new equipment can be incorporated in new designs throughout tho economy.

Two decrees were Issued Inne is concerned withdiffusion of new technology among organizations of industry andTbe cfuef complaint is that new products and processes do not reach all potentialhe decree contains few real operational provisions to promote diffusion. Organizations of industry and cms!ruction are (a) "to adopt measures" to facilitate exchanges of information; (bj to produce completeof technology successfully introduced so that other enterprises can benefit; and (c) to prepare suggestions to improve the stale system o( scientific-technical information.

The other decree of0ritical problem of research institutes and designshortage of laboratory equipment. Two steps are taken. First, engineering facilities and enterprises are to be put at tbe disposal of certain unspecified research institutes, presumably those designing laboratory equipment. Second, the CKNT and thc Ministry of Instrumentwith the concurrence of tbe USSR Academy of Sciences, are to approve assignments for developing instruments for scientific research and for putting them into series production,

A0 decree specifies the rights and duties of the various organizations engaged. This decree, promised in the8 docrec. covers all independent organizations that conduct scientific research, design, drafting or technological work. Thus the decree appear* to coverof the Academies of Sciencea as well as those subordinate to industrial ministries.

Seetioa III of the decree contains most of the provisions thai deal directly wilh accelerating technical progress; the other sections deal mainly with legal and administrative matters. The avowed purpose of the decree is to extend to scientific organizalions provisions of Ihe industrial reform5 and to extend to design and technological organizations rights previously granted only toinstitutes. Therefore, many of ihe provisions of Section III arc taken directly from earlier decrees. For example, the financial authority that waslo research institute directors in7 is now extruded to directors of all organizations covered by the new decree- Simdariy, the right ofto sell unused equipment is extended torganizations, as are thc rules for promulgating5 year) plans which were set out in tho8 decree.

The new decree, however, is more concerned with coordination in BAD than were earlier decrees Organizations suliordinate to industrial ministries an mctnirlrd tom sni't. rinii new technology In addition all research organizations engaged in basic research are irxstiuoted lo participate in

introducing tbe results of their research into practice. Furthermore, organizations of "general scientific configuration" (presumably those organizationsto Academies of Sciences and to State Committees) are instructed to assist branch (of industry) organizations and enterprises in the execution ofprojects.

statute also centers on tbe use of foreign innovations.by the decree must submit recommendations for obtaininglicenses and prototypes of foreign scientific equipment andmust also earmark those Soviet licenses suitable for export.more general (and inscrutable) sense,rganizations are totcieutif ic-technical coo pen boo svith foreign countries In order to solvebranch and interbranch problems.

Description of the Decrees Related to Training of Scientific Personnel

The four decrees directed at the trainingersonnel were issued innd in9he first two decrees deal mainly with scientific education while the others tackle more general problems in the education and placing of personnel. The general aim of these decrees Is to make thc scientific education system more responsive to the needs of crrganizations hiring scientific personnel

The decree of6 seeks to improve the training of specialists and to involve higher educational estabJishments (VUZY) more extensively in civilian research. Thc decree provides that enterprises are to be assigned to schools as bases for practical training of students and that managrn of enterprises are to accept instructors as apprentices to familiarize them with production.

Other provisions aimed at raising the quality of instruction within the schoolsreater teaching role for experienced researcher* from the Academy of Sciences, research institutes, and design bureaus, as wellromise of facilities to upgrade Instructor qualifications. Teachers doing research are tn have their teaching loads lightened.

eeking to raise the participation of VUZY and technical Institutes in con-traot work, the decree calls for special bonuses for school persorrnel who create and apply new technology.f profits from contract research con be kept by thc school and used for expansion. Additional financial support may be provided by ministries that are allowed to donateillion rubles each per year to higher educational institutions.

hc decree of7 complains of the current level of quality of graduate dissertations and directs the supervising minislrimtake steps" to remedy the situation Enterprises and others interested In research results will help evaluate dissertations. The only specific- operational provisions in the decree grant enterprises the right to set up classes to help specialists prepare for graduate study entrance exams and to give preference for admission tostudy to specialists who pass the exams Scientists are to be sent to staff research institutes and higher schools in remote areas.

ne of the decrees issued in9 Ls intended to raise the number of advanced production workers studying at higher educationalTo do this, the decree set up special departments at VUZY, industrial

enterpriser, construction profects, traruportation andims. These departments, staffed by instnictors of higher andll zed secondary educational institutions, arc to conduct0 month course to prepare students for study in VUZY. All students must have at least one year's practical experience. At the end of the course, students svho pass final exams will bo admitted to first-year VUZ study. Evidently. VUZ entrance exams are waived in their cases. The decree goes on to specify who may apply, what facilities enterprises must supply, and rates of pay for full-time students. By increasing thc number of science students who have practical experience, the quality of applied research in VUZ laboratories is hoped to be raised.

hortly after the decree was. Krasoov. First Deputyof Higher and Specialized Secondary Education, elaborated on some of Its provisions Tbe preparatory departments arc for individuals who did not go directly from secondary schools to VUZY. Thus the departments are open to demobilized soldiers and to workers and collective farmers who have worked at least one year: these individuals presumably need refresher courses io qualify for VUZ entrance. Krasnov also indicatedtudent's course of study would prepare him for entrancepecific VUZ.

other decree of8 is an effort to improve thegraduate students. Tbe State Committee for Science and Technology,of Sciences, and the Ministry of Higher and Specialized Secondaryare to compile long-run and annual plans for the assignment ofFirst priority in staffing goes to remote schools, researchenterprises. The decree restates thc old rule that students must workyears wherever they are sent.

IMPLEMENTATION AND EFFECTIVENESS OF THE DECREES

Evidence on implementation of the decrees is found mainly in scattered and fragmentary reporting of the Sovietairly complete documentation of the experiment in the Electrotechnical Industry has been presented, however, by Aleksei Antooov, Minister of the Ekctrotechmeal Industry. Reports of Western visitors to thc USSR also provide some Insight into the current status of the reform. Thb section presents available evidence on how successful tbe decrees have been.

In general, the decrees seem to have been applied only sporadically fn theector. Some provisions of the decrees have been carried out In Isolated research institutes, but uniform, industry-wide implementation seems to bo confined to the Electrotechnical Industry. Furthermore, many promised reforms, such as thc statute on prototype testing procedures, do not appear to have been issued Indeed Soviet officials and economists generally are not impressed with the pace of reform over the last five years. The well-known liberal econrmrist A. M. Birman comments that "there is no breakthrough in the acceleration of technical progress" In speaking of thchat scientificot concentrated on tbe most importarst scientific. P. Ydyutin. USSR Minister of Higher Education said, "we are still slow to eliminate thisfficial opinion as reflected in Pravda Is that "thc turn toward scientific and technological progress is being nude slowlyumber of blanches of tho national economy."

Better Coordination

Some attempt* have been mademprove coordination among research institutes, design bureaus, and enterprises. Experiments which call lor vertical integration ol research, design, and development facilities have been carried out in tbe Electrotechntcal Industry, the Petrochemical Industry, and the Shipbuilding Industry. Cooperative arrangements have also been made between several branches of industry and various institutes of the Siberian Division of the USSR Academy of Sciences Each of these arrangements is discussed in more detail below.

As part of the experiment outlined in the8 decree, extensive organizational reform has been carried out in the Electrotechnlcal Industry. Fifteen "head" institutes, two of their branches, and two "specialized'" institutes were combined to formntegrated institutes with research, design, andproduction facilities. In addition, an unspecified number of researchand corresponding enterprises were combined Into four production associations with research and (probably) design facilities.

Design bureaus in the Electrotcchnical Industry have also been reassigned and resubordinated. Various enterprises have been given Jurisdiction overesign bureaus which before were subordinate to the ministry. Ten design bureaus have been transferred to what Antonov calls "scientific and technologicalesign and development facilities have been created at eight large enterprise* where these facilities did not exist. The Ministry retained control over ten design bureaus which serve groups ol enterprises. Finally.lant research laboratories at large enterprises have been accorded the status of "scientific organizations."

Pravda provides information on vertical Integration in other branches of industry. The Ministry of thc Petrochemical Industry hasarge design association which Includes several design organization* and their branches. The Ministry ol the Shipbuilding Industry is presentlyroduction association containing the Scientific Research Institute of Shipbuildingexperimental production facilities, and three serial production enterprises.

Thc promising organizational link between the Industrial ministries and thc Siberian Division of the USSR Academy of Science* Is known as "dual subordination" In this system, ministries create and finance research institutes, design bureaus, and experimental production facilities near the Academyin Novosibirsk. Personnel of the Siberian Division plan the scientific activities of ministerial research, design, and experimental facilities and are responsible for the application of the new technology. The ministries, however, retain administrative control over tbe facilities they have built According to Mikhail Lavrent'yev. the head of the Siberian Division of the USSR Academy of Sciences, dual subordination of design and experimental facilities will permit scientific ideas of the Acailcmy institutes to "ripen, acquire flesh, and befirst into blueprints, mockups, models, and then into experimental model* which It will be possible to transmit for further assimilation."also intends to use these facilities for training apprentice engineering students at Novosibirsk University. As ofloven all-union ministries were building or acquiring design and caperimental fadlllloi near Novosibirsk.

work, whichoordination bet worn customers andof new products and processes, has increased over the past fiveCKNT section chief reported thatudgeta share of total nan investment science expenditures fell fromosubstantia] amounts of contract work are being performed byestablishments.ontract workf allscientific research projects carried out in VUZY under the Ministry ofSecondary Specialized Education.9 these VUZYrubles worth of research work, ofillion rubleswork.

Planning

As suggested above, fragmentation within theector makes planning difficult. Ideally, thc work of diverse research institutes, designand experimental factories should be planned soow design can proceed smoothly from one phase to the next. Plans of the consumer enterprise should allow for any retooling Of equal importance, plans for constructing new enterprises and plans for annual investment In industry should make use of developed and available innovations.

As part of thc reform, the Elccrrotochnlcal Industry has improvedthe planning of research, design, and development work. In compliance with the9 decree, the Elec4rotechnical Industry has prepared five-year plans for design, manufacture, and delivery of new equipment. Although all machine building ministries were to prepare these plans, only the Ministry of Tractor and Farm Machine Buildmg and the Electrotechnical Industry have done so.

In the Electrotechnical Industry, tbe focus of planning has been shifted from an institute basisrotect basis. The planning period is now the length of time the project wig take, ratherigid calendar period. For eachead organization is chosen to assume responsibility for the project. All institutes, design bureaus, and enterprises involved in the project areIn the projectthe manufacturer of thc finished product.

Now financial regulations in the Electrotechnical Industry reinforce the cluingcs in the planning system. Funds ate allocated to projects rather than to institutes and the sources of funds have been reduced to two: the centralized ministry fund which Is formedf nil types of profit in tlie ministry's enterprises and Organizations and contracts wilh organizations outsideroject within thc ministry, funds are allocated from the central fund lo the bead organization which, in tum. pay* for contributions to the project by other organizations.

SO. Although Soviet leaders appear topleased with tlie results of thoin tho Elcctrc4echnical Industry, other branches of industry apparently havo made little headway in coordinating tlie planning processes. Where planning is still on an institute basis, complaints such as those of A. Yamnov. the CPSU Central Committer section chief tor Heavy Industry are common. Yamnov said in0 that research is not geared to industrial needs, partly because production organizations do not establish precise objectives for researchThere is also unjustified dupbcation among research projects which arc clsosen on the basis of the presence of certain specialists ratlier than on the

basis of industrial needs. Finally, special groups formed toiven problem frequently duplicate the work of existing organizations.

n. S. Sitnikov, the Deputy Director of the Institute ofof the Byelorussian Academy of Sciences, described the efforts to plan construction of new enterprises and to introduce technically advancedinto existing enterprises. In surveying conditions in Byelorussian industry, Sitnikov found that "almost all new plants were constructed according to tbe same principles as the old ones and old technologicalere also preserved a! rcconstru led snd eipandcd plants" Sitnikos probablyituation typical of most of Soviet industry.

xisting industrial enterprises, however, wereew mandatory target ingoal for technical progress. Ihe measure of technical progressew indicator known as the indicator for "technical-economict attempts to measure (a) the volume of production produced according to the "highest achievements of foreign and domestic technology*'; (b) the amount of old equipment replaced; and (c) the pace of mechanization, automation, and product quality. Presumably this goal is secondary to the profit and sales indicators. It is too soon to observe any effect the new Indicator may have had.

Incentives of Research Institutes

The chief provision of the decrees bearing on incentives calls forto scientists to be based on the practical effectiveness of their work. These payments are being made inew places, und the whole incentive system seems to be up in the air. According to Sitnikov, "it remains vague whether toremium in relation to the economic effect of development or fulfillment of the quarterlyitnikov concludes thatajority of planning and design organizations pay premiums for fulfillment of the plan andew pay for the effectiveness" Where incentive payments arc based on effectiveness,probably has Improved. Inear's experience on what he callsew system of planning and economicu. Kess, assistant director of scientific work al the Tallin Scientific Research and PlanningInstitute, declared that bonuses based on the effectiveness of tho work stimulated responsible planning practices. Several projects were changed because their effectiveness was suspect. Enterprises, he said, are much more disposed to introduce new technology- if the institute has carried out all testing and development.

The CKNT has put into effect some sort of regulation for evaluatingscientific-technological work (as promised in thc8ut nothing is known of its provisions except that it fails to say how bonus laymcnts should beew system for calculating bonus payments (presumably based on effectiveness of new technology in use) was lo have been applied to research and design organizations of thc Ministry ofBuilding, Means of Automation, and Control Systems, but the fate of this measure is unknown.

The Ministry of theIndustry has put intoystem of bonus payments financed fiom the savings resulting from use of newHowever,ntonov complains that the new bonus funds aroin camiwrlson with bonus funds; from other sources. Antonov,

thelcss. boasts that tho time required to research, develop, and introduce new technology has been cut in hallesult of thc financial and organizational experiments.

The most publicized provision of tbe reforms designed to improve in-ceirtjves, the three-year certification of research institutes and their personnel, is not practiced sjridely. according to the Sovietravda editorial in0 noted that "many ministers and heads of scientific institutes make little use of this possibility for improving the elficacy of the work of thc scientificnly the Ministry of Power and Electrification is known to have con-ducted ao evaluation of the work of most of thc institutes under its jurisdiction. Pravda singles out the Ministry of Ferrous Metallurgy, the Ministry- of the Pulp-Paper Industry, and the Ministry of the Wood-Processing Industry as "feeble" users of the certification process

A promising offshoot of the certification provisionersonnelexperiment conducted in Moscow's Karpov Physical Chemistry Institute. In the esTaeriment. each category of scientists and senior engineers wasuaranteed minimumow the current wage. Supplements to thc minimum wage were granted by the director of the institute for two years, based on the individual's contribution to science. The supplements could result In wages as highbove current levels Inf the Karpov scientists were left with their wageseceived higherower wages. Most of those penalized were elderly sensor scientists who had long since ceased to be effective but remained safely ensconced in high positions.

Incentives for Innovation at the Enterprise Level

for innovation within the enterprises have yet to be madewith incentives at research institutes. Enterprises are still reluctantproduction In order to introduce new technology. This not onlyintroduction of now technology butaffects incentives of researchthe institutes on the new incentive system are penalized lotenterprises because their bonuses depend on enterprise us-ingsthe utilization of new technology.here any evidence thatexchanging new technology among themselves.

ew system of pricing new products--promised in the8 decree and presented by Cosplan inout as the major effort made thus far to improve Incentives at the enterprise level. Caspian's methodology is devoted mainly to procedures for setting prices on new goods that arewith goods currently in production. For these products, upper and lower hmits are established between which the wholesale price is set. The upper limit is the price at which the consumer is indifferent to the use of old and new products because the difference in their prices is just offset by differences in their effect on production costs. The lower limit is the price at whichof either the old or new products Is equally advantageous to theIn terms of tho expected profits from their manufacture. By setting the svholesale price between the two limits, production as well as consumption is supposed to be stimulated. Finally, the new methodologyliding scale of prices by which prices are reduced gradually in relation to obsolesence of the product and to reduction in the cost of Its production.

jaaawi.1

This pricing procedure departs from current practice in two important way's. First, the sliding scale of prices should reduce the preterit attractiveness ofold products rather than new. Equally important, the utility of the new product to the consumer is taken into account in setting prices. From thepoint of view, higher prices are justified only for new products of higher quality or greater utility than the old products. If enforced rigorously, the new methodology should curb the present tendency of enterprises to raise product prices on the basis of minor design changes. Enterprises prefer to remodel, which adds more to cost than to utility, because remodeling involves fewerof production. The new system will not allow higher prices unless the new productenuine technical improvement over thc model currently in production.

Gosplan intended the new pricing system toet of generalfor price formation on new products. At the time the guidelines wereGosplan promised more detailed instructions on price formation in each industry, but these insbuctioris have not been published yet, at least not in open sources Nor is there any evidence that the rules set forth in the pricingare in use in any of the branches of industry.ectrotrxhnical Industry, however,hree Her price system which attaches higher prices to new, high-quality goods and lower prices to sower quality, obsolete goods. I* Is not known whether thc pricing system in the Electrotcchnical Industry is related to Gosplan's pricing methodology.

Improved Experimental Facilities

Tho decree of8 promised that more experimental faculties would be constructed. The decree "specifies measures for further equipping research institutes, higher schools, and enterprises in the next three or four yearsop-priority basis with experimental apparatus, testing units, and means of mechanization of scientific and engineeringhe goal is thatesults of research and design projects can be tested in one year."

As yet. there is no evidence that ministries are building development facilitiesop-priority basis. Pravda In9 indicatedfesearch tnsti lutes under the Ministry of Ferrous Metallurgy bave up-to-date experimental bases. The situation was no better in other ministries.hops planned for conumssioniiig Iry the Ministry of the Petroleum Industrynly three were actuallyection chief of the State Committee for Science and Technology wrote, "many ministries continue lo allocate an ^considerable amount of resources for building empirical and experimental. A- Trapeznikov. deputy chairman of the GKNT, puts tliis allocation as low asf investment funds for some ministries.

Equipment Shortages

the0 decree on the provision ofs Its time frame, steps have beta taken to Improvethe allocation of the current supply of laboratory equipment. Instate supply organization (Cossnab) set up three regional centerssupply of scientific research institutes, design bureaus, and researchVUZY. One of the centers is located at the Odessa Polytechnics!locaboos of the oilier two are unknown.

be Odessa ccotrr allocates equipment and supplies normally distributed by Goasaab and Gosplan. Tbe description of the center indicates that, at present, it lacks three important powers: (a) it cannot obtain instruments directly from manufacturers on short notice, (b) it does not bave access to reserves ofdirectorates and consumer supply organizations; and (c) it allocates only those materials that bave been ordered in advance. Without authority in these three areas, the centers probably can do little to improve the supply of scientific equipment.

cientists arc anxious toolution to problems in supply of scientific equipment. V. Arutyunov, Director of the All-Union Scientific Research Institute for Metrology' in Leningrad, contends that the equipment rental system outlined In the8 decree would save "tens of millions ofccording to hisf all instruments in all the research institutes and design bureaus of Leningrad arc not used at all; one-third are used aboutear, and only barf are used continuously.

ot all research institutes suffer from equipment shortages. While visitors have reported on poorly equipped laboratories In the fields of fluid dynamics and inorganic fluorine chemistry, well-equipped laboratories were found In institutes devoted to nuclear physics. The good fortune of these laboratories attests to the high priority of the sector or to the ingenuity of the laboratory director In working around thc supply system.

Tho Reforms in Scientific Education

be problems in the training of scientists and technicians remain.in thc Soviet press about tbe low quabty of dissertations (probably for the latululalhortages of teaching personnel, and unsatisfactoryecho those printed five years ago. According to Soviet exchange students at the Massachusetts Institute of Technology, cortsidcrable dissatisfaction still exists in thc USSR svith tbe system for training jcicnl if ic-technical personnel.

of thc few educational reforms mentioned in the Soviet pressthc preparatory departments which wero to he organized underecree. MoreUZY have organized preparatoryAccording to the directorcientific research instihitc inat preparatory departments raised the rate of acceptance intoinstitutions. However, there is no evidencedepartments have been established at industrial enterprises,projects, and the other locations stipulated in tbe decree.

Some provisions of the6 decree aimed at raising the quality of mstructton are known to have been carried out at Kiev Stale University. Tbe viceelianeeUor for scientific work reported that the school received additional instructors and teaching assistants whose contribution allowed the teaching load of scientists doing research to be loweredours per year.

Little headway seems to have ben made In improving allocation ofAccording to thc9 decree, the GKNT was totatute on assignments for students who have completed full-time graduate study. This statute does not appear to have been issued. Furthermore, sdentists are still reluctant to work in remote areasndustrialeputy chairman

-StXauU

of Cosplon reported that as ofets thanf tbe kandldelt ofscience* aod lessf the dokton of teohnolotacal sciences wae employed at industrial enterprises.

PROSPECTS FOR FUTURE REFORM

iperimcots in thc management oflearly will continue. Some of Ihe reforms whicb were promised In thc8 decree but which still have not been issued probably will be fortlKOming. Ioew decree being considered by the CKNT on prototype testing procedures may be Issued. As lor future innovations. Soviei scientists, planners, and economists have proposed solutions to problems which were cither not covered or not treated adequately in the decrees.

One proposal madeumber of Soviet scientists concerns Ihe planning of scteaotic research. MehedlishvUi of the Institute of Physiology of the Ceorgiari Academy of Sciences urges that research be planned in stages without regard to calendar periods. Believing the year by-year planning process to bewilh the nature of research, scientists generally single out present criteria for enterprise plan fulfillment as having an adverse effect on technical progress. Trapoznlkov, CKNTs deputy chairman, for example, wants toechnical progress indicator lo evaluate tho performance of Industrial enterprises. Indicators of profit, output, and aales would be relegated to secondary importance.

Trapeznikov has also advanced the theory that restrictions onof the industrial ministries on research, design, and technological workbe removed. Ministries should be permitted to determine their own allocations lo RAD within the overall limits of their total funds lor wages and capital Investment. This proposal resembles provisions of the7 decree which gave similar freedom to research Institutes.

ecent Pravda article, however. K. Ycfimov, chairman ofepartment for Planning thc Introduction of the Achievements of Science and Technology into the National Economy, restated the traditional, olfictal opinion thai lagging technical progress is the result of "inadequately preciseefimovumber ol remedies, most of which reflect the principle thai technical progress can be Speeded through more efficient administration and planning What is needed, be says, isethodology for planning foreignicenses; (b) diffusion of new technology through centralized state control and planning (Yefimov argues thai ministries must not be given complete control over developing new equipment In their areas, as this hinders plannedc) enterprise output Indexes which reflect quality of output; and (d) further concentration of small and medium-sized firms in production associations.

lthough be recommends two changes In enterpriseenterprise.reimbursed for kisses during assimilation of new technology and that larger bonuses be given in enterprises for higher qualityb not concerned with solving other basic problems toavorablefor technical progress, lie dors not mention, for example, the lack of communication between researchers, dWigncrs. and customers, and he ignores

the effect of price policy on new products and thc lack of development facilities and toboratory equipment.

Schemes for altering scientific and technical education are plentiful, particularly those directed at the engineering curriculum which is said to be out of phase with the requirements of industrial enterprises and researchOne reform of engineer training was suggested jointly by the rectors of the Moscow Physical Technical Institute and the Moscow Engineering Physics institute. Theyhree-stage engineering curriculum. The first stage would be two or three years of general, theoretical engineering which would qualify students for roughly half of the existing engineers jobs while an additional two or three years would prepare engineers to work In production. The first two stages are approximately equal to the current engineering curriculum in VUZY; the final stage would prepare gifted students for scientific research.

Another educational reform has been suggested by the indefatigable A. M. Birman. He advocates the reduction (or elimination, it is not clear which) of budget financing of VUZY. Revenue would be derived from scientific research contracts, consulting fees from enterprises, and payments by enterprises for training enterprise personnel. According to Birman, this financial arrangement would make higher educational establishments much more responsive to current needs of science and industry,

An academician of the Siberian Department of thc USSR Academy of Sciences hasolution to the problem of useless dissertations in scientific fields. He suggests that kandidal and dehor degrees be awarded for creation of new designs, machines, technologies, and the like rather than for dissertations.

Apart from piecemeal reform of organizations and incentives in civilian RAD, the USSR might pursue two other avenues to faster technical progress. One approach is simply to allocate more resources to. Trapcznikov. who claims that investment In RAD is three and one-half times more profitable than capital investment In plant and equipment, has called for doubling the investment. Apart from this prirpoial. expenditures onre growing rapidly., expenditures onncluding mvestment grew at an annual ratehe comparable figurehe total number of scientific workers in the USSR rose about two and one-half times0

In the long run,olicy would undoubtedly raise thc rate of technical progress definedarrow sense. It would, however, take time to create new facilities and to train personnel. Itoot question, moreover, as to how much of an increase in the scaleould be managed by an already overburdened bureaucracy or whether diminishing returns toffort might not swamp the attempt. Still, thc USSR is increasing resources inector.

technology also can be imported from Western countries. Thcindicates that greater efforts will be made in the future to obtainforeign innovations. Although the USSR can purchaseew machine or process, Soviet scientists and engineersthe drawings into usable products. Few ol the coordination andinherent In Sovietre avoided by importation of

Alternatively, tbe USSR can purchase capital equipment directly. This system hu Its drawbacks in that (peat difficulty has been encountered inforeign equipment. To as-old this problem, the USSR has resorted to an another form of technological borrowing, the purchase of entire plantsturn-key"estern firm or group of firms is responsible forconstruction of the plant, initiation of serial production, and training of Soviet personnel. In effect, the Soviet applied RAD sector is bypassed while Western entrepreneurs carry out much of the planning, coordination, and marketing.

'Turn-key" plants to produce investment goods theoretically couldcapital stock in Soviet industry. New machinery probably could be mass-produced in an imported planthorter timeesign could lie created and implemented by tbe Soviet applied RAD sector. However, there arceven with "turn-key" plants. For one. the low quality of construction of these plants hasumber of (hem from reaching full capacity. Furthermore, industrial enterprises would be no more receptive to new machinery from this source than they are to domestic machinery. Beyond this, the USSR cannot depend on imported technology, because it is too expensive and because it involves acceptance of permanent technological inferiority.

appendix a

ABSTRACTS OF DECREES RELATED TO

On Measures for Improving the Training of Specialisti and Perfecting the Guidance of Higher ond Specialized Secondary Education in the Country

Cited

Ministry of Higher and Specialized Secondary Education doessystematically to raise the qualifications of Instruction at

Ministry fans to publish the necessary volume of textbooks.

c Higher educational institutions svith highly qualified scientific staffs are not concentrating on the most pressing national problems.

Taken

umber of higher educational institutions have been transferred to thc direct jurisdiction of the USSR Ministry of Higher and Specialized Secondary Education to write textbooks and lo prepare study aids and

the like.

Ministry Is charged with Mate mspection of all theeducational institutions.

improve practical training of futurerocedure bas

and ttkhnikvms as permanent bases for the students' practical training

of enterprises, higher schools, and researchobliged to provide higher school instructorseriod ofwith technology and production.

is proposed that well-qualified specialists from thc Academyand branch research and design organisations teach In higherinstitutions.

staffs of professors and Instructors are lo bethe Ministry at theeading higher educational institutions so asthe teaching load of scientists in research.

will be granted to prolussors and instructors for creatingnew technology.

educational institutions are permitted toffrom contract work on expanding their own facilities.

i. Kach minimis and department, with thr consent of the appropriate planning organ* is permitted toillionear to higher educational iristirutioos.

J. Speciabicd secondary educational institutions will be constructed and equipped through allocations to ministries ond departments whose specialist* are being trained.

umber of measures have been outlined for supplying higher schools with special Instructional and scientific equipment.

On Expanding the Rights of Managers of Research Institutes

Cited

Funds allotted for research work are not used effectively.

Taken

total outlays and the wage fund will be fixed for mstitutJonsresearch work planned by the State Committee for ScienceThe number of personnel nnd their average wages willestablished from above.

directors can work out and confirm the staffing of theconformity with the standard structure and staff. They can changewithin the bounds of thc wage fund, using tbe official schedulepay rates.

directors have the right to determine, within the totaloutlays, expenditures on individual items of adrranlstranon andDirector? are permitted to economize on some funds, such asfund, in order to increase expenditures on other itemsnd research materials.

of institutes have been granted the right toprofits from research work performed under contract for expansionfacilities.

institution* are authorized to sell obsolescent andand spend thc receipts on new apparatus and materials.

Supplement To the5 Revolution on the Socialist State Production Enterprise (Efconomichesfcoyo gazeta, September

CM

Completion of work and the commissioning of important facilities must be accomplished more quickly.

Taken

With ihe consent of the Ministry ol Finance, ministries, departments, and Union Republic Councils of Ministers canhe interest charge on fixed capital for eaperimental production units thnt workranch

hole. The charge may also be waived for research laboratories and design bureaus.

On Improving tho Training of Scientific Cadres (izvosfiyo,

Cried

institutes and higher educational institutes arc notstudents for graduate study in the sciences.

are often late, some are low in quality and do notuseful to science or practice.

c The plans for the number of graduate students is consistently under-fulfilled in certain branches of science.

ministry awards academic degrees for work with no scientificvalue.

and departments do not exercise sufficient control overinstitution* nnd research institutes.

Taken

of enterprises, research, nnd design organization! andinstitutions may set up classes for specialists who arecandidate or entrance exams.

raise tbe quality of dissertations, preference io enrollment for gradustudy will Iw given to ipecialists who have passed candidatr exams.

c Executives of research institutes and higher schools are to intensify control over teacher training and accrediting

institutions, and organizations having an interest Inshould help evaluate dissertations.

research institutes and higher educational Institutions atestrengthened by sending highly qualified students io work in them.

On Measures To Raise tho Efficacy of tbe Work of Scientific Organization* and To Accelerate the Utilization of Scientific and Technicalin the National Economy (fzvesriya,

I. Problems Cited

a Scientific mstimtions do not take sufficient responsibility tnr the level of performance of scientific protects, aod enterprises do not take sufficient responsibility for producing new items promptly.

b. Specialization of scientific organizations is inadequate; competition is poorly developed.

c The existing system of incentives for research and assimilation of results of research does not istoinolc clflciency.

d Tbe supply of technical cquipmenl to research institutes and VUZY is inadequate

easures Taken

'itir.5 years) scientific forecasts will be made for thcscientific problems.

to be drawn up on trends of scientific development willlevel of development by the end of the plan period.

necessary, pilot organiratioos will be appointed to dealscientific problems.

plans will be drawn up to solve basic scientificwill also be annual plans for applying new technology In the economy.

c. Ministries, departments, and Union Republic Councils of Ministers may keep up tof budge) appropriations as an undistributed reserve to be used on thc most important scientific problems

institutions belonging to tbe Academy of Sciences,Academies of Sciences, and to several ministries and Statehave been permuted to undertake contract protects above theof research expenditures.

State Committee for Science and Technology, Cosplan, theFinance, and the Academy of Sciences arc toystem ofaccounting indexes for scientific and technical development to beevaluating thc actual economic effectiveness of applied research results.

will be developed by assigning research to severalThese organizations will produce experirnental models, the bestwill be used in production.

L It is essential to determine beforehand the enterprises and construction sites which will use the results of the most important research. They will then work with the scientific institutions on technical documentation and preparation for production.

j. The Stale tlommittec for Science and Tcclinology together with the ministries and Caspian are to drawodel statute on the procedure for testing samples of newf equipment.

k. Additional proposals will bo made to give enterprises and scientific institutions greater incentive to master new equipment.

cientific institutions failing to meet the technical-economic indexes stipulated in contracts musl pay for adjustments if the client wishes. Also, rule* regarding responsibility for quality and the time limits of contract work have been made applicable to research organisations.

m. The ministries and Academic* of Science will evaluate thc work of sukirdin.it' organizations at least every three years.

n. Whore necessary, the follosving forms or organization urn recommended lor ministries and departments:ntegrated scientific institutions to

perform research, design drafting, and technologicalcientific production associations, including research institutes with design, drafting, and technological subdivisions as well aspecialized khozraschet technical-productionesearch institutes at major industrial enterprises.

o. Executives of enterprises and orgaitfzations havo the right to paywith academic degrees the salary paid to scientific personnel at institutes.

p.hree-year certification of employees in research and design organizations will begin. Bonuses or dismissals may be affected depending on the evaluation, which it to be conductedommittee of scientists. Party, and trade union offtcfab.

q. Research institutes, higher .schools, and enterprises will receiveapparatus -ml testing units In thc next three or four years. Industrial output will not be assigned to experimental apparatus, and designs for new enterprises must provide for mandatory construction of the experimental laboratories, shops, and testing units necessary for researching, perfecting, and testing new products.

r. Economic incentives for research institutions, scientific subdivisions of higher schools and enterprises, and their employees will depend on the effect of scientific projects and new equipment on thc national economy.

j.ew system of economic incentives Is to beexperimentally in scientific and production organizations of theof thc Electrotechnical Industry. Other industrial ministries and the Ministry of Agriculture will he allowed to transfer one to three research or design organizations to (ho new system. Under the new syHtem. thc volume of research and design work will he plannedunction of commodity Output. These projects will be financed exclusivelyund formed from tbe profits which result from technical progress in the relatedand organizations.

t. The price committee of Gosplan is instructed toystem for pricing new products which allows part of the savings from inventions to go to the (lesigners. Also, there is torocedure lor reducing prices oo obsolete products.

u. Contract profits and license revenues willevelopment fund In each scientific organization to finance investment, equipment purchases, etc. Unused funds may lm carried over to the following year and will not be confiscated.

v Annual plans must provide for allocation of resources lor scientific work. Instrurneiits and materials may be exchanged among scientificThe USSR Council of Ministers Committee on Standards. Measurements, and Measuring Instruments will rent measuring devices to scientific institutions. The Ministry of the Chemical Industry will sell laboratory chemicals on contract

w. Within six months there willeneral statute on research institutes, design drafting, and technological organizations svhich will specify obliga-

lions and rights of Ihesc inililutions. There will alsotatute on contract

procedures.

On Improving Design ond Estimate Work {livestiyo,

Cited

There are serous shortcomings in the work of design organizations and in the expert examination of designs and estimates.

Taken

and departments are to draw up integrated plans fordesign work oa tbe creation of new processes on the basis of theplans for capital construction.

building ministries are to work out five-year plans formanufacture, and delivery of equipment and are to .stipulateperiods in which customers are to provide technical specificationseqUprneot These ministriei are also to develop and produceequipment stipulated by design bureau.*.

c Inc.lu.sivo construction cost estimates are to be drawn up ol the design stage. These estimates will%eserve for unforeseen costs. The reserve may be spent only with thc permission of the enterpiUe being built.

dustomers will pay for design work at completion or at specific stages of the work.

ft. If they assist with the start-up. design organizations will receive up tof all Imnuscs provided for commissioning construction unit*.

f. Ministries and departments must riot permit constructioit of unitsto outdated designs,

g Beginninghe planning of the volume of design work inand Union Republic Councils of Ministers is lo be carried oufin percentages of the volume of capital investments

departments, and Union Republic Councils ofgranted the right to have several design organizations work onIn orsler to find the optimum solution These bodies arc alsoto accept above-plan corrfracts provided that the customerswages, and they may authorize changes in standard designs toadvanced processes.

Statute on the Socialist State Productionill lie applied to those WiozroscM state design, surveying, andorganizations that work on capital construction proiecU.

On the Organization of Preparatory Departments at Higher Educational Institutions

roblem Cited

Enterprises, organizations, collective farms, and state farms have not sent enough advanced production workers to higher educational institutions.

34

lkll

easures Taken

departments are bains- established at higherand at enterprises, construction projects, and farms tofor entrance into higher educational institutions.

econdary education who are production workersleast one year's experience or wlw have boon discharged from theare eligible.

c Higher educational institutions, enterprises, construction projects, farms, etc. svill provide all facilities and supplies for these preparatory departments.

will be paid by the organizations- that send them at theas first-year students in higher educational institutions.

will be drawn from higher and specialized secondaryinstitutions.

On the Assignment of Persons Completing Graduate Study

Cited

Too many graduate students evade the rule which requires them to serve three years wherever they are sent. By means of influence, many manage to get employment in good locations.

Taken

State Committee for Science ami Technology, thc USSRSciences, and the USSR Ministiy of Higher and Specializedare charged with drawing up long-run and annual plansof graduate students.

Councils of Mlnhtcri. Ministries, and Departmentsto submit applications for specialists to fill vacancies in their areas.

c Firs! priority in staffing goes to higher educational institutions, research institutes, and enterprises in remote areas.

d All graduate students are to work three years in the organizations to which theyare sent. No one will be hired elsewhere without papers certifying completion of the three yean or an official esemption.

c- The State Committee for Science and Technology has been instructed to draw up andtatute on the Assignment of Persons Completing Full-Time Graduate Study that willbinding on all ministries and

On Development of Production of Instruments for Scientific Research (fxvesfiyo,

I. Problem Cited

The equipping of scientific organizations with the newest scientificnnd measuring apparatusey condition for highly effective scientific research.

2. Mrjiurri taken

enterprises and engineering sections an- to be builtfor tbe use of scientific research and project design

State Comrnittee for Science and Technology and theInstrument Building, Moans of Automation, and Control Systemswith the coocnirtnoe of the USSH Academy of Sdences,for development of mstrumenU for scientific research and forinto series production.

On Mutual Use of Scientific-Technical Achievements by Ministries and Departments of the USSR and Enterprises and Organizations in their Jurisdiction (Jzvesfiya,

Cited

is insufficient mutual exchange of scientilic-tcchnicalamong ministries, enterprises, andndustry and

new products and processes do not receive full distributionnational economy.

Taken

and departments in industry and comtruction areadopt measures for improved use of scientific-tec hrucal achievementsbranches of the national economy and for transfer of theirto these branches.

for work implemented in enterprises nndIndustry nnd construction must be complete in order to facilitatebranches.

organizations" have been charged with working outto raise incentive* for exchanging scientific- technicalfor using methods developed by others.

same "responsible organizations" have In-en charged withsuggestions for further improvement of the state system ofInformation.

General Statute for Scionl If ic-Research Design, Design-Drafting and Technological Organizations

Section III 'The Scientific, Scientific-Technical, ond Economic Activity of Organizations" (Economic he ska yo gazeta.

L Prohlom Cited

None.

frrnrT_

easures Taken

a. Scientific research organizations wilh "general scientific DOnfigaration" shall:

Conduct basic research, assess its possibilities for technical progress, recommend practical use for research results, and assist in implementing research results;

Workear forecasts of principal soentifkteehmcal de-veloprneats;

Study achievements of Soviet and foreign science and preparefor practical utilization of such achievements;

Give sdenfific assistance to branch organizations and enterprises; and

Bear responsibility for the technical level of their research and for Its effective practical utilization.

cientific research, design, design-drafting mid technologicalof "branch configuration'* shall:

Conduct basic and appliod research in their fields and participate in its implementation;

Design new enterprises and modernize existing ones, and develop new products, processes, machinery and equipment;

Study tbe technical level of production in branch enterprises, study Soviet and foreign technical achievements, and recommend their use in branch enterprises;

Participate in enterprise efforts to master new technology.

Exercise author's supervision over assirmUtion of new technology into production; and

Finance any corrections necessary to make work completed onmeet specifications.

c. All organizations shall:

Engage in scientific cooperation svllh foreign countries to solve important branch and inter/branch problems;

Conduct joint research and development with organizations of other countries that would actually do pari of the workroject;

Conduct mutual exchange of scientific Information, specialists,and prototypesorganizations of other countries.

Submit recommeodatxmi for acquiring foreign licenses that would contribute to accelerating technical progress:

Fue prompt reports on their projects so that scientific inforniatioo materials will be up to date;

Ensure vride use of domestic and foreign patent material byavailable patents before carrying out projects;

Submit orders for equipment and supplies early while refraining from building up above-plan stocks ol supplies;

Cut administrative expenditures by automation and progressive methods of administration;

Ensure Use turning of scientists and systematic improvement of workers' skills while creating the necessary conditio us for workers to TfttnHrrt work and graduate study; and

given incentives for fulfilling their jobs in accordancelegislation.

d. Organizations which aro the "head" organizations for their branches, production sectors, problems, basic assignments or topics shall:

Coordinate sclent die development; and check on fuUillmcnt of assignments in subordinate organizations and any other organizations that arc contributing to work for which the head institute is responsible;

Obtain draft project plans from subordinate organizations and make recommendation* concerning these drafts;

Draft coordinated plans for svork to solve problems in question, and

Obtain detailed scientific technical information from allcarrying out work under cooidinatcd plans and compile summary reports.

An evaluation of scientific and technical activity of organisations shall be made according to established procedures at least once every three years.

APPENDIX B

ORGANIZATION AND ADMINISTRATION OFN THE USSR

As Ibe USSR defines if, applied research {prikladnyye issledovartiya) entails creation of new materials, products, and processes as well as improvement of existing ones. Applied RsVD is carried oui primarily in research institutes and design organizations subordinate to the Industrial ministries- Importanthowever, are made by higher educational establisliments andby research laboratories at industrial enterprises. The USSR Academy of Sciences also hu statutory responsibility for applied research in thc technical sciences. Tlie role of each of these institutions is discussed below.

Although ministerial research institutes do basic research in technical sciences, their main concern is with applied research. The "output" may be workingor an experimental model Some ministerial research institutes have their ownen tai-testing facilities and produce fully tested prototyes. Institutes equipped to carry out thc entire RAD process arc most often found whereconstruction involves great technical difficulties, as In electronics, or where ii new process Is to be used by many diverse enterprises, as in electrowulding.

The title "design organizations" covers numerous groups involved In various aspects ofrocess. In general, "design bureaus" create new products. If they havo experimental-tracing facilities, design bureaus produce fully tested prototypes Otherwise, working drawings arc prepared for prototype construction. In these cases, testing and development are assigned to an industrial enterprise. Design bureaus can be independent khoiraschfi organizations or component parts of research institutes or industrial enterprises.

Other institutions tlsat can be loosely grouped under the heading of designare (a) "project technological organizations" which design new processes for given branches of industry, and (b) "project organizations serving capital cotistruction" which design new enterprises and prepare construction plans

Higher educational establishments alsoole in applied research and Id bask research assigned by the Academy of Sdenoes in addition to their primary responsibility for scientific education. Higher educational establishments (VUZY) include universities which are concerned mainly with the basic sciences and higher educational institutions which are primarily occupied svith applied research. Roughly two-thirds of the VUZY are subordinate to the Ministry of Higher and Specialized Secondary Education, while the rest are under thc Jurisdiction of nonindiistrial ministries (Agriculture, Health, Trade,nd Other organizations.

o applied research for industry In "problem" research laboratories and in "twanch-of-industry" laboratories. Problem laboratories work on specificof interest to industry or to another VUZ department. As ofhereroblem laboratories under tbo USSR Mmistry of Higher and Specialized Secondary Education. Branch-of-industry laboratories acceptfrom ministries or industrial enterprises to work on specific problems.

Education In the VUZY stresses engineering and the natural sciences.f scientific workers employed in VUZY were engaged in teaching and research in these fields. Programs leading to advanced degrees in the technical and natural sciences and assistance In VUZ research projects provide research experience for the students.

Since production is the foremost concern of industrial enterprises, the priority given to enterprise RAD is very low. Funds devoted to PAD atery small share of total RtkD expenditures- Highly qualifiedprefer to work in research organizations where salaries are higher and equipment nnd working conditions are bettor.esult, quality control is the main concern of many enterprise laboratories.

Despite all obstacles, enterprises doignificant contribution toffort. In one survey of patents (author's certificates) issued during the last half, enterprises received more than any other single type ofexcept for miriisterial research institutes Enterprises received more certificates than independent design bureaus aod substantially more than either VUZY or organizations subordinate to the Academies of Sciences

Statutory responsibility belongs to thc Academy of Sciences for applied research in electrification, mechanization, and automation of production. chemicaIi/,ntioti; new synthetic materials; radio electronics; new sources of energy; and new methods of energy conversion. Applied research Is carried out In the Academy by the four sections of the Division of Technical Sciences. The Academy of Sciences is also partly responsible for translating the results of its basic research to new equipment and processes. Tbe Academy must point out the technical possibilities of its fundamental research and indicate the best utilization ofresults.

Past debate has centered on the best role of the Academy in applied research At the present time the Academy institutes are concerned mainly with basic research.owever, the Academyarge share of Its resources to Industrial research projects.

ADMINISTRATION AND FINANCE OF

Industrial ministriesnd technical progress through their Technical Administrations. Each Technical Administration plans and supervises activities of research institutes within the ministry. Production AdrrUnirtrations within the ministry, oversee implementation of output plans, and compile plans for introduction of new technology in enterprises under their jurisdiction. Plans are cleared by tbe Technical Administration and sent for confirmation to the ministry. The Technical Administration alsoatents department

To facilitate planning and coordination, each ministry has aCouncil made up of scientists, svorkers, Party members, and trade union representatives, The Council is responsible fornified technical

policy for tbe rrurustry and for introducing new technology In enterprises under (be ministry The Soenhfk--Technical Council also sets up groups lo work oo tbe main problems of the industry.

On the national level, the State Committee for Science and Technologyosplan, and the Academy of Sciences are Jointly responsible forof all science. The CKNTnified state policy forand technical progress aivd annuallyist of the roost important research projects and research institutes. Thc CKNT also selects the mostbasic research of the Academy of Sciences and of VUZY for elaboration in Industrial development facilities. The CKNT has numerous other responsibilities under Its broad charter to ensure the Introduction of new technology witheffectiveness at minimum cost. To implement its decisions, the CKNT has jurisdictionf thc BAD budget.

Gosplan is responsible for long-term planning of research and development. Planning is believed to be carried out in the Department for Coirrprehensivc Planning of (he Introduction of New Technology in thc National Economy. Gosplan also allocates material inputs to science with the help of the State Committee for Material-Technical Supply.

Ministerial research and design organizations are financed by state budget funds and by proceeds from research contracts with ministries and errtcrprises. Ahhough many muusterial BAD organizations are on khozraachei, they are given budget funds for meoretical research or for research of national ognificance.roup the industrial ministriesf their funds from the union and republic budgets, but this share varies among ministries.6 the Ministry of the Chemical Industryf funds from tho budgets while the Ministry of Energy and Electrification received.

Research departments of VUZY are financedimilar fashion. Union and republic budget funds comprisef research funds. Contracts for research made between VUZY and industrial enterprises and iriiriistries provide the.

APPENDIX C

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Original document.

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