Although the university system in theFRG is largely regulated by the state, the freedom of research, teaching and study guaranteed by the constitution leaves room for competition between the universities. In research, there is competition with institutions outside the universities and with the research departments of large companies. There is also severe competition for the research funds provided by the Federal Government, theDeutsche Forschungsgemeinschaft and German trade and industry. In teaching, research projects are being carried out in order to develop criteria for the measurement of performance. This, together with a system of reporting, will facilitate comparisons and thus encourage competition. TheBMBW has contributed to these processes in teaching and research by funding projects on the development of performance criteria and by preparing legislative measures designed to promote competition.