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Learning the R & D System: National Laboratories and Other Non-Academic, Non-Industrial Organizations in Japan and the United States (1989)

Chapter: 3 National Laboratories, Special Corporations and Other Government-Owned Organizations

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Suggested Citation:"3 National Laboratories, Special Corporations and Other Government-Owned Organizations." National Research Council. 1989. Learning the R & D System: National Laboratories and Other Non-Academic, Non-Industrial Organizations in Japan and the United States. Washington, DC: The National Academies Press. doi: 10.17226/9514.
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Suggested Citation:"3 National Laboratories, Special Corporations and Other Government-Owned Organizations." National Research Council. 1989. Learning the R & D System: National Laboratories and Other Non-Academic, Non-Industrial Organizations in Japan and the United States. Washington, DC: The National Academies Press. doi: 10.17226/9514.
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Page 11
Suggested Citation:"3 National Laboratories, Special Corporations and Other Government-Owned Organizations." National Research Council. 1989. Learning the R & D System: National Laboratories and Other Non-Academic, Non-Industrial Organizations in Japan and the United States. Washington, DC: The National Academies Press. doi: 10.17226/9514.
×
Page 12
Suggested Citation:"3 National Laboratories, Special Corporations and Other Government-Owned Organizations." National Research Council. 1989. Learning the R & D System: National Laboratories and Other Non-Academic, Non-Industrial Organizations in Japan and the United States. Washington, DC: The National Academies Press. doi: 10.17226/9514.
×
Page 13
Suggested Citation:"3 National Laboratories, Special Corporations and Other Government-Owned Organizations." National Research Council. 1989. Learning the R & D System: National Laboratories and Other Non-Academic, Non-Industrial Organizations in Japan and the United States. Washington, DC: The National Academies Press. doi: 10.17226/9514.
×
Page 14
Suggested Citation:"3 National Laboratories, Special Corporations and Other Government-Owned Organizations." National Research Council. 1989. Learning the R & D System: National Laboratories and Other Non-Academic, Non-Industrial Organizations in Japan and the United States. Washington, DC: The National Academies Press. doi: 10.17226/9514.
×
Page 15
Suggested Citation:"3 National Laboratories, Special Corporations and Other Government-Owned Organizations." National Research Council. 1989. Learning the R & D System: National Laboratories and Other Non-Academic, Non-Industrial Organizations in Japan and the United States. Washington, DC: The National Academies Press. doi: 10.17226/9514.
×
Page 16
Suggested Citation:"3 National Laboratories, Special Corporations and Other Government-Owned Organizations." National Research Council. 1989. Learning the R & D System: National Laboratories and Other Non-Academic, Non-Industrial Organizations in Japan and the United States. Washington, DC: The National Academies Press. doi: 10.17226/9514.
×
Page 17
Suggested Citation:"3 National Laboratories, Special Corporations and Other Government-Owned Organizations." National Research Council. 1989. Learning the R & D System: National Laboratories and Other Non-Academic, Non-Industrial Organizations in Japan and the United States. Washington, DC: The National Academies Press. doi: 10.17226/9514.
×
Page 18
Suggested Citation:"3 National Laboratories, Special Corporations and Other Government-Owned Organizations." National Research Council. 1989. Learning the R & D System: National Laboratories and Other Non-Academic, Non-Industrial Organizations in Japan and the United States. Washington, DC: The National Academies Press. doi: 10.17226/9514.
×
Page 19

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3 National Laboratories, Special Corporations, and Other Government-Owned Organizations In the United States, there are 400-700 federal labs,~3 ranging from the govern- ment-owned contractor-operated (GoCo) labs of the DOE to the government- owned government-operated (GoGo) labs under other departments.~4 They in- clude large multipurpose labs (eg., Oak Ridge National Laboratory), single- purpose labs (eg., Fermi High Energy Laboratory), and user facilities (eg., the synchrotron light source at Brookhaven National Laboratory). There are 94 national labs under 17 different ministries in Japan. Although Japan has no counterpart to the large multi-program labs of the DOE, its labs are nonetheless varied, ranging from industrial engineering-oriented labs to those with a policy orientation.~5 The U.S. government performs about 12 percent of the nation's R&D, com- pared to the Japanese government, which performs 9 percent of that nation's total R&D. Japan's national laboratories, however, operate on only 3.3 percent of total national R&D expenditures, a share that has been declining with increasing R&D expenditures by Japanese industry. Japan's 1988 national lab budget was 256,544 million yen ($2 billion), compared to U.S. federal lab expenditures for R&D of an estimated $15.5 billion in 1987. If national laboratories are strictly defined, Japanese national labs receive a relatively small share of the government's R&D budget as well 14.1 percent-compared to U.S. federal labs, which re- ceive 25.6 percent.~7 While the share of the government R&D budget allocated to national labs has remained fairly constant in both countries since 1980, the overall U.S. government R&D budget has grown more quickly than the Japanese govern- ment R&D budget. 10

11 These data do not, however, include Japan's eleven public research corpora- tions, eight of which conduct their own R&D with significant government fund- ing. An additional 21.5 percent of the Japanese government R&D budget goes to these institutions. According to the STA, six of these research organizations received 293,172 million yen ($2 billion)' in government capital funds, and an additional 63,512 million yen ($439 million) in subsidies in 1987.~9 On the U.S. side, the data do not reflect expenditures made in federally funded research and development centers (~KDCs), which are administered by universities, industry, and non-profit institutions. In 1987, the U.S. federal government spent an esti- mated $3.8 billion for R&D in the FFRDCs administered by universities and colleges alone. HISTORICAL EVOLUTION Whereas the overall role of Japanese national labs has been to reinforce the nation's industrial base, increase the Japanese standard of living, and promote science and technology generally, the role of U.S. labs has included a major focus on R&D needed for national security, energy, the environment, and health, and the construction of large user facilities. Japanese national labs have continued to be more oriented toward research that is useful to industry than have their U.S. counterparts. A review of the historical evolution of U.S. and Japanese national labs helps to explain these differences. Government performance of R&D has a long tradition in both the United States and Japan, particularly in areas like agriculture and the standardization of measurements. One of MITI's most prestigious labs, the Electrotechnical Labo- ratory (ETL), for example, began testing porcelain insulators for telegraph cables during the 1870s. Formally established in 1891, ETL has been compared to the U.S. Department of Commerce's NIST, which was founded in 1901 as the Na- tional Bureau of Standards to establish basic measurement standards for industry. In both countries many new government labs were created after World War II. After 1945, the U.S. government reverted to its prewar position that it should not be responsible for private sector R&D, while the Japanese government focused on helping industry as part of its efforts to mend its war-torn economy and "catch up" with Western technology. Between 1945 and the mid-1960s, DOE labs trans- ferred nuclear technology to industry, in part through educational efforts, and moved into basic, non-industrial research areas such as nuclear medicine.20 Dunng the same period, ETL took on a leading role in adapting and developing transistor, integrated circuit, and information processing technologies for industrial use. During the 1960s the Japanese government made its first serious attempt to establish a comprehensive policy concerning its national labs. Japan's Council on Science and Technology made recommendations in 1960 and 1963 that identified fields considered appropriate for national lab R&D, laid the foundations for

12 Japan's public research corporations, and initiated construction of a science city in Tsukuba, now the world's largest. Although the Council included recommen- dations that the labs focus on R&D that would contribute to the improvement of public welfare and long-term R&D that could not be performed by private industry, in retrospect it is clear that in this era of "catching up," the public welfare was defined in terms of industrial and economic strength. In other words, R&D that industry was interested in but that industry itself could not perform was seen as appropriate for national laboratories. One of ETL's raisons d'etre during this period was to adapt Western technology for Japanese industrial use.2t With the rise of environmental concerns and the onset of the first energy crisis, the missions of U.S. federal labs, particularly the DOE labs, were expanded in the late 1960s and 1970s. DOE laboratory missions were expanded to include R&D on all energy technologies and on the generation, conservation, and effects of alternative sources of energy. Japan's AIST labs also began focusing more on alternative energy sources and energy conservation R&D during the 1970s, al- though this was not part of a comprehensive policy to change the role of Japanese national labs. THE CHANGING ROLES OF NATIONAL LABS Although the 1980s have brought a reevaluation of the roles of national labs in both countries, significant, concrete shifts in direction have not yet manifested themselves in either the United States or Japan. Despite recent Japanese policy emphasis on more creative, basic research, many national lab efforts in Japan continue to focus on applied areas expected to be useful to industry. Similarly, despite increased attention in the United States to technology transfer from federal labs to industry, it appears unlikely that technology transfer will become the primary mission of many U.S. federal labs. Recognizing that Japan had "caught up" with the West in industrial technol- ogy, the Council on Science and Technology in 1984 and 1987 encouraged more "creative" research and international cooperation. Japanese policymakers view science and technology as critical to an emerging new role for Japan in the twenty-first century. Because creative research is seen to be hampered by the lack of mobility of technical personnel in Japan, the Japanese government passed the Research Exchange Promotion Law in 1986 to facilitate cooperation between national labs and other sectors through personnel exchange and the use of com- mon facilities. This law also allows national labs to hire foreign researchers as employees. The Research Development Corporation of Japan aRDC) is estab- lishing a new program to promote and administer international research exchange in fundamental fields. The JRDC has also been placed in charge of STA fellow- ships for foreign researchers. This reevaluation of the roles of Japanese national labs was stimulated primar- ily by improvements in the R&D capabilities of Japanese influstry that have made

13 some national lab programs redundant. In the past, Japanese national labs were able to remain one step ahead of private corporations, first by revising Western technology, and later by developing their own. Examples of technology adapted or developed by ETL and transferred to the private sector include transistorized computer technology in the 1950s, pattern recognition in the 1960s, intelligent robot technology in the 1970s, and Josephson junction and synchrotron radiation technology in the 1980s. A basic dilemma of Japanese national labs is how they can, with stagnant government budgets, continue to be of assistance to an indus- trial base that has surpassed them technologically in many areas. In the absence of a consensus on what constitutes "basic research," Japan's current policy emphasis on promoting more basic research raises some questions. On the one hand, in conjunction with a new emphasis on internationalization, Japan's official policy is oriented more toward scientific research that will add to the global pool of knowledge. On the other hand, there is no expectation that national labs should divorce themselves from the needs of industry; nor is there any evidence that they intend to do so. In fact, some national lab representatives see a way to lead private industry by conducting research in fields that are of interest, but unfamiliar, to Japanese companies. Some argue that this amounts to a "reduction theory": national labs should be responsible for R&D not conducted in other sectors of the R&D system. As a result, Japanese national labs have begun to see their role in "high-risk, large-scale" R&D. In keeping with historical trends, however, large-scale projects, such as those sponsored by IvIITI, tend to be in applied areas expected to be useful to future industries and depend upon . . . . Industry participation. Increased concern about global competitiveness and its importance to national security have also made the roles of U.S. national labs increasingly difficult to define. Although many have been charged with more long-term, high-risk re- search since the onset of the 1980s, their role in transferring technology to industry, long taken for granted in Japan, has recently received considerable attention in the United States. This new mission is not, however, universally accepted as a wise one. In order to accomplish more technology transfer from federal labs, a number of steps have been taken. These include the creation of offices of technology transfer in the federal labs, changes in patenting and royalty mechanisms that permit companies to acquire exclusive licenses and federal lab researchers to receive a percentage of the royalties from commercialized technology, and reim- bursement schemes that allow private companies to conduct proprietary research at federal user facilities like the synchrotron light source at Brookhaven National Laboratory. Many of these changes have been embodied in legislation.22 The responsibilities of U.S. federal labs have also grown to include the con- struction and operation of major user facilities, including particle and photon accelerators, environmental research parks, and materials labs. These facilities are open to industry researchers and have become popular with foreign research

14 ers as well. Last year, 600 of Oak Ridge's 2,300 guest researchers came from industry, up dramatically from just a few years ago.23 Disagreement continues, however, on the extent to which links between fed- esl labs and industry have been built and on whether they should be attempted. To many, U.S. government labs make research contributions in their own right, and solutions to the specific needs of industry cannot be found by making technology diffusion a major role of the federal labs. Although there is evidence of an increase in the number of patents issued by some federal labs to industry, skeptics wonder if more patents might not have resulted had the same research been conducted within industry.24 It may just be too early to judge the success or failure of efforts to increase technology transfer from U.S. federal labs. Technology transfer takes time; some estimate that it takes thirty years for research results to be fully integrated into product technology and to demonstrate all the potential impacts on the economy. Changes in U.S. judicial attitudes toward antitrust to allow experimentation with cooperative industrial R&D have occurred only recently. There is a long tradition of tension between U.S. government and industry to be overcome before new mechanisms can be created that encourage the two to join forces. In fact U.S. federal labs have already made major contributions to some sectors of U.S. industry. DOE labs, for example, have played a crucial role in interactions with industry in light source research, small angle neutron scattering, polymer research, high temperature aqueous chemistry, and ceramics. Many believe that defense procurement and research contributed to the development of the U.S. computer industry. In some ways, NIST has been a model for govemment-industrial collabora- tion. NIST has a high proportion of guest researchers to staff, published 1,600 papers last year, and holds countless meetings every year that are attended by researchers from universities, industry, other federal labs, and foreign countries. NIST has long been a "meeting ground" for researchers from all sectors. NIST, and its technology transfer activities in particular, have not, however, been well- funded. The controversial nature, even within NIST, of many newly mandated functions related to technology transfer leaves the outcome of these programs in doubt. Thus, although there is some support for the notion that U.S. federal labs can make modest contributions to global industrial competitiveness, few believe that technology transfer is likely to become the major role of the labs. The materials and instrumentation industries are considered likely candidates to benefit from DOE lab contributions, but many U.S. federal labs focus on basic research and some companies have complained that preference for access to expensive user facilities is provided to firms conducting "exotic" research (as opposed to routine qualification work). Corporate researchers do not see federal labs as a major source of technological information useful to industry.

15 ORGANIZATION AND MANAGEMENT OF RESEARCH In both the United States and Japan, the official research program planning process begins with proposals from the lab's researchers, which are reviewed by the lab's management and then presented to the department or ministry in charge. The planning process in both countries involves considerable discussion between the lab and the administrative agency. DOE labs make plans with five and fifteen year horizons. Major changes in the research agenda of both U.S. and Japanese national labs are, however, difficult to accomplish from within. The large, multipurpose DOE labs are organized in a matrix-type management system. Program directors with no permanent research staff of their own are responsible for allocating funds and managing particular projects. These program directors gather their staff for individual projects from a central disciplinary division, which manages the lab's technical research staff. The fact that the disciplinary division is responsible for the quality control of the research staff helps to ensure uniform, high quality research. In a similar type of organization, the Japanese National Institute for Research in Inorganic Materials ~RIM) assembles research teams for particular projects, which usually last about five years. NIRIM is, however, different from most Japanese national labs, in that it is organized around materials that are the subject of research, rather than by scientific discipline. NIRIM's directors also include industry representatives. Most Japanese national labs draw their directors and research division directors from within the national lab or from the lab's parent . . ministry. In theory, Japanese national lab responsibilities are divided by research field. The number of labs involved in materials research, however, belies the ostensible division of labor (see Table 3-1~. In the United States, too, there are many federal labs working in similar fields of research. Basic energy research, for example, is conducted by labs supported by DOE, NSF, and the Department of Defense. INDUSTRY-NATIONAL LAB RELATIONS IN JAPAN As noted above, the role of national labs in transferring technology to industry continues to be somewhat controversial in the United States but has long been accepted in Japan. There are a variety of ways in which industry is involved with the work of Japanese national labs. Although most Japanese national labs are not like NIRIM, where industry has a direct say in oversight of the research agenda, Japanese ministries all have advisory committees consisting of representatives from industry and academe. Through these advisory committees, representatives from other sectors can ex- change information and contribute to national lab agenda setting. Japanese corporations also send researchers to national labs and support contract research

16 TABLE 3-1 Sampling of the Vanety of Japanese National Laboratories in Materials Research involved Ministry of InternationalTrade andIddustry, Agency for Industrial Science end technology: Mechanical Engineering Laboratory National Chemical Laboratory for Industry Research Institute for Polymers and Textiles Electrotechnical Laboratory Government Industrial Development Laboratory, Hokkaido Government Industrial Research Institute, Tohoku Government Industrial Research Institute, Nagoya Government Industrial Research Institute, Osaka Government Industrial Research Institute, Kyushu Government Industrial Research Institute, Shikoku Industrial Products Research Institute Science and Technology Agency: National Research Institute for Metals National Institute for Research in Inorgamc Matenals by paying for the work of national lab researchers. The National Research Insti- tute for Metals (TRIM), for example, conducts creep and fatigue tests for indus- try. The number of joint programs between industry and national labs has also been on the rise in recent years. Whereas there were only six such programs between industry and the national labs of the STA, MITI, the Ministry of Con- struction, and the Ministry of Agriculture, Forestry, and Fisheries in fiscal year 1985, that number had increased to 32 by fiscal year 1988. The government budget for these programs has correspondingly increased from 157 million yen to 547 million yen.25 Japanese industry also makes considerable use of Japanese national lab equip- ment and facilities. One quarter of the companies surveyed by the STA in 1988 and 40 percent of those worth over 10 billion yen made use of national lab facilities.26 ETL also has a "tutoring" program, through which it has transferred many newly developed technologies to industry. ETL offers over 200 tutoring programs every year; all five of the aforementioned technological advances made by ETL have been transferred to industry via its tutoring program. Despite recent efforts to encourage greater researcher exchange from national labs to the private sector, the flow continues to be one-sided in Japan. A recent survey indicated that for nearly 500 industry researchers dispatched to national labs in 1988, there was only one national lab researcher who spent time in an industry laboratory.27 There are a number of specialized organizations that have been created in

17 Japan specifically to serve a technology transfer function from government labs to industry. These include the Japan Industrial Technology Association PITA), established by MITI. JITA participates in MITI's R&D planning process, publi- cizes national lab research accomplishments, and conducts technological ex- change activities and technology assessments. The JRDC, mentioned above, is particularly active in technology transfer. Established in 1961 by the STA, the JRDC functions primarily to exploit govern- ment-owned patents by selecting and supporting companies that develop technol- ogy based on national university and government lab research results that might not otherwise be exploited in the commercial marketplace. If the company is successful, JRDC support is considered a loan to be repaid and the company is permitted to license the patent from JRDC; if the company is not successful, it is under no obligation to repay.28 The JRDC funds and administers the Exploratory Research for Advanced Technology (ERATO) program, created in 1981 to join the research efforts of the private and public sectors in creative, multidisciplinary research in advanced technologies. The ERATO program, which is open to foreign researchers, con- sists of a number of five-year projects, for which researchers from public and private institutions are hired on one or two-year contracts. As it has no research facilities of its own, ERATO research is conducted at the home institutions of the researchers involved or in rented laboratories all over Japan. The JROC coordi- nates the projects and moves the research results into technology development by licensing resulting patents.29 Despite a lack of consensus on the most appropriate relationship between federal labs and industry in the United States, there are a number of mechanisms through which U.S. industry and federal labs can cooperate. These include sponsored research, employee exchange, industrial use of special facilities such as that at Brookhaven National Laboratory, recently instituted regulations that allow exclusive licenses to be issued from federal labs to private companies, and the activities of the Federal Laboratory Consortium, established in part to help indus- try identify appropriate research under way in federal labs. NTT A SPECIAL CASE One former public corporation, N=, deserves special mention. With 1988 sales of nearly $40 billion, NUT ranks among the world's largest corporations.30 The company's operating revenues are about $43 billion and, with 270,000 employees,3i it is Japan's largest employer.32 A public corporation for over thirty years before it became legally privatized pursuant to the Nippon Telegraph and Telephone Corporation Law in 1985,33 N1l, with 50 million subscribers, contin- ues to dominate Japan's telecommunications market. NIT devotes $1.6 billion (3.8 percent of its yearly operating revenues) to R&D, employing 6,000 people in its eleven laboratories and two development

18 centers. NTT has always focused on applied, industry-oriented R&D. The fact that Japanese industry has long been willing to send its best researchers to work on collaborative projects with NTT is testimony to the high quality of NTT's applied research. NTT's R&D efforts include telecommunications network de- velopment and services (ISDN, intelligent networks, personal communications), components technology (LSI, photonics, software engineering, satellite commu- nications), and related technological areas such as artificial intelligence and new materials. With no manufacturing capability of its own, one of NTT's chief roles has been to disseminate the results of its research widely to industry; technology is transferred through licensing. The company is composed of R&D and business sectors. NTT maintains close relationships with industry through its business sec- tors, and can translate the needs of industry into efficient R&D targets via close ties between NTE's internal business and R&D sectors. The movement of technology from basic to applied research and to developmental stages is accom- plished in part by the fluidity of personnel within NTT: Some of the researchers involved in the early stages of a research project are later assigned to the devel- opment of the technology, shortening development time and increasing produc . . tlVlty. FUNDING AND EMPLOYMENT Together, the eight DOE multipurpose labs spend about $4.5 billion a year, with the average DOE lab budget about $400 million. While the DOE labs are some of the largest in the United States and there are no multipurpose labs in Japan with which to accurately compare them, some Japanese national labs also have large budgets. JDA's 1988 national lab budget, for example, was 81,756 million yen (about $638 million);34 the next largest agency in terms of national lab budget was the Ministry of Agriculture, Forestry and Fisheries, which received 56,502 million yen ($441 million). The sixteen MITI labs specifically created to conduct research useful to indus- try together had a budget of 113 billion yen ($885 million) in 1988.35 The largest of these, ETL, had a budget in 1987 of 9,447 million yen ($65 million), smaller than NIST's total budget of $225 million for the same year.36 In terms of both share of GNP and of government R&D budgets, however, NIST is smaller than similar labs in Japan.37 NIST's technology transfer activities have also received scant funding. Only a small percentage of its R&D budget is allocated for the dissemination of results. Similarly, although NIST has recently been tasked with establishing Manufactur- ing Technical Centers (MTCs) for technology transfer, extension services similar to those of the Department of Agriculture, a coordinating function for state services, and an advanced technology program to support government-industrial

19 academic consortia, only three MTCs were funded in 1989 Both countries' national labs have multiple funding mechanisms to allow flexibility in choosing research projects. Japan distinguishes between "ordinary" and "special project" research. Funds allocated for "ordinary" ongoing research efforts represent steady annual funding for the lab and amount to about 1.4 million yen per researcher per year. These funds can be spent with more flexibility than those allocated for special research projects, which are larger projects selected by the lab. Special research project funding is obtained by a separate request to the Ministry of Finance. In the United States, DOE labs have a seed money system that allows individ- ual researchers to propose projects. Formally, DOE lab directors are empowered to set aside 2 percent of the lab's research funds under this system. Creative researchers can also receive funding by developing a cooperative program with industry or another federal lab. The Advanced Energy Project program of basic energy sciences at DOE is one mechanism by which creative, unusual proposals that might not be funded through regular channels can be pursued. In addition, U.S. federal agencies are required to allocate 1.25 percent of their R&D budgets to Small Business Innovative Research grants. U.S. federal labs are much larger than their Japanese counterparts in terms of employment. Most civilian DOE labs, for example, employ 2,000-5,000 people; DOE weapons labs can be twice as large. In comparison, all of Japan's national labs employ less than 16,000 people. ETL, one of Japan's largest national labs, employs only 560 research staff. Japanese national labs are also troubled by government budget stagnation, which has resulted in a leveling off in the number of new hires.38 In the United States, visiting and guest researchers account for a significant portion of the work conducted at federal labs. The 2,300 guest researchers at Oak Ridge National Laboratory, which has a total scientific and engineering staff of 1,600-1,800, for example, represented the equivalent of 600 full time employees. The contribution of guest researchers to a lab like NIST is especially significant. Although not expressed in terms of full-time equivalence, the numbers are none- theless striking. With nearly 3,000 employees, about half of whom are profes- sional and technical staff, NIST hosted 1,090 guest researchers in residence during 1988. Information on visiting researchers in Japanese national laboratories is incom- plete, but available data indicate that they do not play as significant a role in Japan as they do in some U.S. federal labs. In fiscal year 1987, for example, the AIST labs invited a total of 382 guest researchers 145 from abroad and 237 from within Japan (most from universities). This can be compared to a total researcher force in 1988 of 2,577.39 Other national labs on which data are available invited far fewer guest researchers.

Next: 4 Consulting Organizations »
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