The Role of Public Agencies in Fostering New Technology and Innovation in Building (1992)

The three-part strategy—encompassing adoption of new technology for agency projects, enhanced technology transfer, and targeted support for new technology development—responds to the government's overall responsibility to take a leadership role in fostering new building technology. However, the committee recognized that agencies differ in their missions and resources, so this role must be tailored to specific agencies, nongovernmental organizations, and individuals. Each of these agencies, organizations, and individuals (as well as the nation as a whole) will benefit from enhanced innovation in the building-related industries, but there are risks involved also. In any particular instance, a new technology may not work as expected. In turning their attention to the specific actions needed to implement an effective strategic role for government in fostering new building technology, committee members considered carefully how to balance individual and aggregate risk and reward, from the points of view of agencies' programs, the U.S. building-related industries, and the nation as a whole. The committee's recommendations seek to achieve this balance.

Successful development of the government role in fostering new building technology will require action by several groups:

• Mission-oriented government agencies, both those responsible for facilities development and those responsible for policy influencing the building-related industries, are called on to actively encourage the development and broad application of new building technology.

• Government oversight agencies and groups (e.g., the Office of Management and Budget, committees of Congress) must provide a supportive enabling environment for innovation.

• Government agencies and other organizations responsible for funding and conduct of research and development are called on to pursue more aggressively the broad practical application of new technologies that offer significantly enhanced productivity and performance in the building-related industries.

• Private enterprise providing goods and services to government must continue to pursue new technology and work in partnership with government to devise more effective ways to reduce and mitigate the technical and commercial risks that deter innovation.

In addition, all of these groups must work to enhance public understanding of the value of new building technology to our quality of life. Better understanding will lead to more informed decisions about new technology and ultimately to enhanced innovation. An institutional focus within the federal government is needed to provide strong leadership.

As discussed in Chapters 1 and 2, innovation occurs when new ideas are put into practice. The three-part strategic role envisioned for government is meant to foster both the generation of new ideas and the application of these ideas in the design, construction, and management of constructed facilities. However, the degree to which the second step is accomplished, (i.e., putting new ideas into practice) is the measure by which the success of government's role in fostering new building technology should be judged.

An institutional mechanism is needed to focus attention on technology in the building-related industries, to exercise leadership in implementing strategy to foster new building technology, and to monitor and report on the progress of government's efforts. The lack of such leadership and effective information to support technological assessment of the building-related industries places this important sector of the nation's economy at a serious disadvantage in public policy forums.

As explained in earlier chapters, the industry is composed for the most part of many small and regionally constrained firms that construct facilities and

produce building products and materials. There is no single agency or program in the federal government with comprehensive responsibility for dealing with issues of construction and facilities. At the same time, there are many agencies that build facilities and can benefit directly from innovation in these facilities. These agencies have separate missions, operate independently, and are in some senses competitive in their traditions and administrative procedures. For these reasons, the committee concluded that an institutional focus is needed, within or closely linked to government, but outside of any single agency's existing facility programs. Responsibility and resources for coordinating government building-related innovation strategy, taking positive leadership in implementing this strategy, fostering action by construction agencies, and evaluating progress should be assigned to the office or agency in which this focus is established.

This leadership organization could be placed within a government agency (e.g., a unit of the Department of Commerce or the Department of Housing and Urban Development), a federal laboratory, or a government-related but independent organization (e.g., the National Institute of Building Sciences), but it should be clearly separated from the development of facilities or spending for building-related research. Models for the creation of a new organization exist as well, such as the Council on Environmental Quality, and should be given consideration. In either case, a regular and broadly distributed strategy statement and progress evaluation report, prepared perhaps biennially, would facilitate industry involvement in the direction of effort to develop and disseminate new building technology.

This leadership organization or office should be given responsibility and authority to support technology development and demonstration in government facilities. The Department of Transportation, for example, has implemented several such demonstration programs in the past, using federally supported state and local transportation projects to demonstrate new products or procedures.

The organization or office would provide funds for a relatively small number of projects each year, probably 10 or fewer. Funds would come from a 2 to 5 percent set-aside or "tax" on all agencies' construction appropriations, similar in form to the mechanism now used to fund art in public places. Agencies would then effectively compete for support of their specific projects.

Such a funding program should be established with a limited life, perhaps five years, but might be renewed if progress is clearly demonstrated. The evaluation function, however, should continue. In addition, a government-wide program of awards for fostering new technology (similar perhaps to the Malcolm Baldridge Award for quality) should be established, perhaps within the Department of Commerce or the Office of Science and Technology Policy, but explicitly coordinated with the evaluation and demonstration activities already recommended.

Agencies responsible for the design and procurement of facilities must adopt a long-term commitment to the enhanced performance and productivity that new technology can yield. These improvements in performance and productivity may be realized at any stage of a facility's service lifetime and consequently may require higher or lower initial expenditures, compared to conventional practice. Care must be taken to ensure that funds needed to achieve longer-term objectives are not diverted when apparent short-term savings result from applications of new technology.

Each such agency should give particular attention or credit in the design and construction procurement process to bidders or contractors who propose to apply potentially effective new technology. Proposed new technologies should have been developed to the stage of prototypical application but need not have been applied in practice.

Agencies should use in construction, maintenance, and repair procurements, performance specifications which encourage proposers to offer new technology that may not meet more traditional standard specifications. Although such specifications may sometimes be less explicit than traditionally trained procurement officials might wish, careful technical reviews can be used to evaluate competing offers and ensure that the bases for decisions are adequately documented.

Agencies should increase integration in the facility design-procurement-construction process, both to encourage innovators to apply new technology at any stage of the facility life cycle and to permit them to capture the benefits of innovation. Greater use of alternative procurement mechanisms, such as design-build or build-operate-transfer should be encouraged to promote such integration on a broad scale. More comprehensive design contracting (e.g., including interior design with basic architecture) is a more limited tactic that can also be used. Changes in contracting methods to encourage longer-term relationships between contractor and agency, perhaps including multiyear procurements to fund innovation, can also facilitate applications of new ideas.

Each agency should reward efforts to innovate. Agencies can establish programs to promote projects showcasing new technology or establish design competitions based on applications of new technology. Agency design awards programs should include innovation as an evaluation criterion. As already proposed, special government-wide awards for fostering new technology should also be established. Awards citations should highlight the contribution of new technologies to agency effectiveness.

Executive and legislative oversight agencies must establish the supportive environment that will enable—and encourage—agency professionals to act aggressively to foster new building technology. Resources and leadership are needed.³⁶Adequate budgets must be made available to pay the added costs of planning and design analyses that may be required, and responsible officials must have adequate time to oversee projects on which new technology is being applied. In addition, senior agency and congressional officials must accept that new technologies sometimes may not perform as expected. Programs to apply new technology need effective management, but must allow for the uncertainties and failures that may accompany such experiments. Systems are needed to offer insurance and indemnification for both providers and users of new technology.³⁷

Although research and development do not necessarily lead to innovation, the large scale of the building-related industries suggests that small increases in overall productivity will justify limited increases in spending for research, development, and technology transfer. The structure of the industry makes it appropriate that this spending be initiated as a government program activity. In these times of government deficits, substantial spending increases are unlikely even if their payoffs would be substantial, but a relatively modest increase (perhaps 10 to 15 percent) in the estimated $200 million to $230 million spent annually for federally supported building research, development, and demonstration may be possible and could produce significant results,³⁸

particularly if the spending is matched by private sector contributions and concentrated in a relatively few programs and major projects. The building-related industries should petition Congress to establish a program of integrated research, development, and incubation of new building technology to support the establishment or continuation of several ''building technology centers of excellence.''

The program, funded at perhaps $20 million to $30 million annually, might be administered by the National Science Foundation as part of the existing engineering research centers program, but might most effectively be assigned to a mission-oriented agency with broad construction responsibilities. Centers—combining participation of industries, universities, state and local governments, and possibly federal laboratories, and based at any of these locations—would be defined to concentrate on specific themes of broad industry significance, such as development of advanced structural concepts, advanced manufacturing and fabrication technologies, or building environmental control. Federal funds would be matched by other participants in the centers' programs.

These centers might also play a role in testing and verification of new technology. Participation of the insurance industry in these centers might facilitate realistic assessment of the risks inherent in any particular technology, as well as more effective sharing of this risk among those who gain from building-related innovation.

Committee members noted that the transfer of new technology from research to practice is a critically important problem in the building-related industries (and other industries as well). A major objective in virtually all of the committee's recommendations for implementing a more effective government role in fostering new building technology is enhancing technology transfer. The committee agreed that more effort in this area is warranted, particularly with regard to the practices and accomplishments of the federal laboratories involved in building-related research.

The Building Research Board thus plans to conduct a more thorough review of the experience and current practices of the federal laboratories in terms of technology transfer activities. Laboratories working in other technological areas will be considered as well, to search for transferable lessons and opportunities for cross-fertilization of ideas among diverse researchers. Subject to the

availability of funds, this review will be conducted during the latter half of 1992, with Federal Construction Council sponsorship.

Looking to the longer term, the committee found little cause for optimism. New technologies are emerging that offer opportunities for enhanced service, greater efficiency, and protection of natural environmental resources, but much of the new product and process development seems to be occurring outside the United States. The growth of global markets can enhance productivity and the dissemination of improvements to all people but will continue to place political and economic pressure on U.S. industries. Changing international relationships suggest that U.S. resources formerly devoted to military purposes may be increasingly available to seek improvements in our quality of life, but despite the potentially high and widespread payoffs of greater attention to their promotion and output, the building-related industries face substantial competition for support in public policy.

The prospect is daunting. However, committee members observed that U.S. industry and the nation's research establishment continue to produce a stream of new ideas. These new ideas—new technology—are a resource to be tapped. Improving our ability and willingness to put new ideas into practice poses the greatest challenges to the nation's future productivity and continuing high quality of life.

These challenges must be faced. The risks and inevitable discomforts of change must be managed rather than permitted to block progress. The U.S. building industry is being called on to evolve under conditions of uncertainty. Government agencies, as both users of the industry's products and instruments of national policy, have a role to play. These agencies, by trying new ideas and demonstrating that these ideas can indeed yield benefits of improved productivity and performance, can foster the new technology and innovation on which the future of the industry depends. The committee believes that this role is important to the agencies, the industry, and the nation.