The ATP program is seen by some as a form of corporate welfare, but Michael Borrus, an ATP advisory board member and executive in residence at venture capital firm Mohr Davidow Ventures in Menlo Park, Calif., defended the program, saying that the ATP takes on projects that show promise but are at too early a stage to attract venture capital funding. "It's a classic capital market failure," he said.

The ATP program is part of the National Institute of Standards and Technology (NIST). The Bush administration is recommending, however, a 24 percent increase in the NIST budget for its core programs, from $431 million to $535 million. The increased spending would go toward information security, an area where the NIST's work has an impact. For instance, it developed the Advanced Encryption Standard (AES) to replace the Data Encryption Standard. DES is 56 bits long, while AES keys can be as long as 256 bits. It's also doing work in voting security and biometric standards used in identity cards.

Bruce Schneier, founder and CTO of Counterpane Internet Security Inc., said that while NIST does good work in areas such as in voting security, it has no enforcement capability and no way to ensure that its security developments are implemented. He said that he would like to see the federal government use its purchasing power to require companies to meet certain security standards. "We all benefit when a big player uses its purchasing power," he said.