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Page i The Advanced Technology Program: Assessing Outcomes CHARLES W. WESSNER, EDITOR Board on Science, Technology, and Economic Policy Policy and Global Affairs National Research Council NATIONAL ACADEMY PRESS Washington, D.C.
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Page ii NATIONAL ACADEMY PRESS 2101 Constitution Avenue, N.W. Washington, D.C. 20418 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This study was supported by Contract No. 50SBNB9C1080 between the National Academy of Sciences and the National Institute of Standards and Technology. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number 0-309-07410-X Limited copies are available from Board on Science, Technology, and Economic Policy, National Research Council, 1055 Thomas Jefferson Street, N.W., Suite 2014, Washington, D.C. 20007; 202-334-2200. Additional copies of this report are available from National Academy Press , 2101 Constitution Avenue, N.W. , Lockbox 285, Washington, D.C. 20055 ; (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area); Internet, http://www.nap.edu . Printed in the United States of America Copyright 2001 by the National Academy of Sciences . All rights reserved.
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Page iii THE NATIONAL ACADEMIES National Academy of Sciences National Academy of Engineering Institute of Medicine National Research Council The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. William A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. William A. Wulf are chairman and vice chairman, respectively, of the National Research Council.
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Page v Steering Committee for Government-Industry Partnerships for the Development of New Technologies * Gordon Moore, Chair Chairman Emeritus Intel Corporation M. Kathy Behrens Managing Partner Robertson Stephens Investment Management and STEP Board Michael Borrus Managing Director The Petkevich Group, LLC Iain M. Cockburn Professor of Finance and Economics Boston University Kenneth Flamm Dean Rusk Chair in International Affairs LBJ School of Public Affairs University of Texas at Austin James F. Gibbons Professor of Engineering Stanford University W. Clark McFadden Partner Dewey Ballantine Burton J. McMurtry General Partner Technology Venture Investors William J. Spencer, Vice-Chair Chairman Emeritus SEMATECH and STEP Board Mark B. Myers Senior Vice-President, retired Xerox Corporation and STEP Board Richard Nelson George Blumenthal Professor of International and Public Affairs Columbia University Edward E. Penhoet Dean, School of Public Health University of California at Berkeley and STEP Board Charles Trimble Vice-Chairman Trimble Navigation John P. Walker Chairman and Chief Executive Officer Axys Pharmaceuticals, Inc. Patrick Windham President, Windham Consulting; and Lecturer, Stanford University * As of February 2001.
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Page vi Project Staff * Charles W. Wessner Study Director Duncan Brown Consultant McAlister T. Clabaugh Program Associate David E. Dierksheide Program Associate Contributors ** David Austin Resources for the Future Alan P. Balutis * National Institute of Standards and Technology Tayler H. Bingham Research Triangle Institute Jeffrey H. Dyer Brigham Young University Maryann P. Feldman Johns Hopkins University Maryellen R. Kelley * National Institute of Standards and Technology Barbara Lambis National Institute of Standards and Technology Albert N. Link University of North Carolina at Greensboro Molly Macauley Resources for the Future Benjamin C. Powell University of Pennsylvania Rosalie Ruegg Technology Impact Assessment (TIA) Consulting *As of February 2001. **Biographies of the contributors are included in Annex B.
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Page vii For the National Research Council (NRC), this project was overseen by the Board on Science, Technology and Economic Policy (STEP), a standing board of the NRC established by the National Academies of Sciences and Engineering and the Institute of Medicine in 1991. The mandate of the STEP Board is to integrate understanding of scientific, technological, and economic elements in the formulation of national policies to promote the economic well-being of the United States. A distinctive characteristic of STEP's approach is its frequent interactions with public and private-sector decision makers. STEP bridges the disciplines of business management, engineering, economics, and the social sciences to bring diverse expertise to bear on pressing public policy questions. The members of the STEP Board * and the NRC staff are listed below: Dale Jorgenson, Chair Frederic Eaton Abbe Professor of Economics Harvard University M. Kathy Behrens Managing Partner Robertson Stephens Investment Management Vinton G. Cerf Senior Vice-President WorldCom Bronwyn Hall Professor of Economics University of California at Berkeley James Heckman Henry Schultz Distinguished Service Professor of Economics University of Chicago Ralph Landau Consulting Professor of Economics Stanford University Richard Levin President Yale University William J. Spencer, Vice-Chair Chairman Emeritus SEMATECH David T. Morgenthaler Founding Partner Morgenthaler Mark B. Myers Senior Vice-President, retired Xerox Corporation Roger Noll Morris M. Doyle Centennial Professor of Economics Stanford University Edward E. Penhoet Dean, School of Public Health University of California at Berkeley William Raduchel Chief Technology Officer AOL Time Warner Alan Wm. Wolff Managing Partner Dewey Ballantine *As of February 2001.
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Page viii STEP Staff * Stephen A. Merrill Executive Director Philip Aspden Senior Program Officer Camille M. Collett Program Associate David E. Dierksheide Program Associate Charles W. Wessner Program Director Craig M. Schultz Research Associate McAlister T. Clabaugh Program Associate *As of February 2001.
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Page ix National Research Council Board on Science, Technology, and Economic Policy Sponsors The National Research Council gratefully acknowledges the support of the following sponsors: National Aeronautics and Space Administration Office of the Director, Defense Research & Engineering National Science Foundation U.S. Department of Energy Office of Naval Research National Institutes of Health National Institute of Standards and Technology Sandia National Laboratories Electric Power Research Institute International Business Machines Kulicke and Soffa Industries Merck and Company Milliken Industries Motorola Nortel Proctor and Gamble Silicon Valley Group, Incorporated Advanced Micro Devices Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the authors and do not necessarily reflect the views of the project sponsors.
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Page xi Contents FOREWORD 1 EXECUTIVE SUMMARY 3 I. PREFACE 11 II. INTRODUCTION 25 A. Background 25 B. Overview of the Papers 59 C. Summary of Symposium Proceedings 63 III. FINDINGS AND RECOMMENDATIONS 85 IV. PROCEEDINGS Welcome Charles Wessner, National Research Council 101 Introduction to the Symposium Clark McFadden, Dewey Ballantine 103 Panel I: The ATP Objective: Addressing the Financing Gap for Enabling Technologies Moderator: Charles Trimble, Trimble Navigation 105
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Page xii The View from Industry: A Start-up's Perspective Elizabeth Downing, 3D Technology Laboratories 105 The Venture Capital Perspective David Morgenthaler, Morgenthaler Venture Capital 108 Lowering Hurdle Rates for New Technologies Kathleen Kingscott, International Business Machines Corporation 112 Panel II: ATP's Assessment Program Moderator: David Goldston, Office of Congressman Sherwood Boehlert 117 Delivering Public Benefits with Private-Sector Efficiency Through the ATP Rosalie Ruegg, Advanced Technology Program 117 Perspectives on Program Evaluation Irwin Feller, Pennsylvania State University 123 Discussants: Nicholas Vonortas, George Washington University James Turner, House Science Committee 126 Panel III: Stimulating R&D Investment Moderator: David Finifter, College of William & Mary 131 Assessing the ATP: Halo Effects and Added Value Maryann Feldman, Johns Hopkins University 131 Cheap Gas?: Joint Ventures and Fuel Efficiency Mark A. Ehlen, National Institute of Standards and Technology 136 Design Freedoms and Enhanced Value Larry Rhoades, Extrude Hone Corporation 140 Panel IV: Assessing Progress: Case Study Cluster Moderator: David Austin, Resources for the Future 145 Xeno-Organ Transplant David Ayares, PPL Therapeutics, Inc. 146
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Page xiii Extending Case Study Methodologies For Technology Policy Evaluation Todd A. Watkins, Lehigh University 149 Economic Returns to New Medical Technologies Tayler Bingham, Research Triangle Institute 154 Discussant: Henry Kelly, White House Office of Science and Technology Policy 157 Panel V: Assessing the ATP Assessment Program: Challenges and Policy Issues Moderator: Charles Wessner, National Research Council 160 Panelists: John Yochelson, Council on Competitiveness Maryann Feldman, Johns Hopkins University William Bonvillian, Office of Senator Joseph Lieberman David Goldston, Office of Congressman Sherwood Boehlert Todd A. Watkins, Lehigh University 160 Concluding Remarks Charles Wessner, National Research Council 169 Boxes within the Summary Report Box A. Partnerships Reviewed by the Government-Industry Partnerships Study 18 Box B. Principal Federal Legislation Related to Cooperative Technology Programs 27 Box C. R&D Programs: The Challenge for Policymakers 34 Box D. What is the Advanced Technology Program? 40 Box E. Critical Characteristics of the Advanced Technology Program 41 Box F. GAO Reviews of the ATP 45 Box G. “Picking Winners and Losers” and the Advanced Technology Program 51 Box H. Why Should Government Fund Promising Technologies? 65 Box I. A Venture Capitalist's Perspective on the ATP 66 Box J. Advancing the Art of Program Assessment 68 V. RESEARCH PAPERS The ATP Competition Structure Alan P. Balutis and Barbara Lambis, National Institute of Standards and Technology 175
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Page xiv Leveraging Research and Development: The Impact of the Advanced Technology Program Maryann P. Feldman, Johns Hopkins University, and Maryellen R. Kelley, National Institute of Standards and Technology 189 Estimating Economic Benefits from ATP Funding of New Medical Technologies Tayler H. Bingham, Research Triangle Institute 211 Enhanced R&D Efficiency in an ATP-funded Joint Venture Albert N. Link, University of North Carolina at Greensboro 223 Estimating Future Benefits from ATP Funding of Digital Data Storage David Austin and Molly Macauley, Resources for the Future 239 Perspectives on the Determinants of Success in ATP-sponsored R&D Joint Ventures: The Views of Participants Jeffrey H. Dyer, Brigham Young University, and Benjamin C. Powell, University of Pennsylvania 249 Taking a Step Back: An Early Results Overview of Fifty ATP Awards Rosalie Ruegg, Technology Impact Assessment (TIA) Consulting 259 VI. ANNEX A. Authorizing Legislation for the Advanced Technology Program 281 B. Biographies of Contributors 287 C. Participants List 25 April 2000 Conference 295 D. Internal and External Reviews of the ATP, Analyses Commissioned by the Office of Economic Assessment 299 E. Bibliography 303