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124 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY what intellectual property policies guide successful collaborations in different industries and fields of research? And how can conflicts of interest and exploita- tion be avoided? For policymakers at the state and federal levels there are impor- tant questions regarding, among others, the opportunity costs of diverting re- sources and effort from traditional university missions to strengthen industrial outreach and research collaboration for economic growth, the structure and effec- tiveness of programs designed to foster such university-industry collaboration, the allocation of public research monies more generally, and the disposition of intellectual property generated with public funds. These questions have given rise to a substantial body of research focused on measuring the rate of return of academic research to specific industries, evaluat- ing the performance of particular institutional modes of university industry col- laboration, or extracting generalizable lessons concerning effective strategies and practices for university-industry collaboration from multi-industry, multidisci- plinary surveys, and patent data.55 Nevertheless, the pace of cross-institutional learning remains slow. Many leading U.S. research universities appear to have developed effective policies, practices, and institutional frameworks for engaging private companies in mutually beneficial cooperative research. There is, how- ever, considerable evidence that a great many more U.S. research universities are still struggling to put effective policies and practices in place. U.S. FEDERAL LABORATORIES AND TECHNOLOGY TRANSFER TO INDUSTRY Overview The U.S. federal government maintains over 720 laboratories, encompassing more than 1,500 separate R&D facilities. These facilities were established and developed to support the public missions of federal agencies, such as national security, energy independence, the cure of disease, food production, or science and engineering research. Federal laboratories and research facilities are the sec- ond largest segment of U.S. R&D enterprise, performing nearly $25 billion worth, or 14.4 percent, of all U.S. R&D in 1994. These institutions perform roughly 18 per- cent of all basic research, 16 percent of all applied research, and 13 percent of all technology development in the United States. Collectively, they employ roughly 100,000 scientists and engineers nationwide56 (National Science Board, 1996~. Federal laboratories vary widely in their size, mission, organization, and management. Although the total number of federal laboratories is large, most federal laboratories are either very small, or have a very narrow technical mis- sion. Fewer than 100 federal laboratories have the technologies and resources to *This section draws extensively on a background paper prepared by Robert K. Carr (1995) for the U.S. delegation to the binational panel.

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TECHNOLOGY TRANSFER IN THE UNITED STATES 125 engage in significant technology transfer activities. Included among these are all of the large multiprogram laboratories57 of the Department of Energy, many of the Defense Department's laboratories, most field centers of the National Aero- nautics and Space Administration (NASA), as well as facilities of the USDA, the Public Health Service, including the NIH, and NIST. As agents of technology transfer to industry, federal laboratories rank a dis- tant third behind universities and private companies as measured by licensing revenues. The roughly $19 million in royalties and fees received by federal labo- ratories in 1993 represented less than 8 percent of the total collected by U.S. universities ($250 million) (Association of University Technology Managers, 1995) and less than 0.1 percent of licensing royalties and fees earned by private companies in 1992 ($33 billion) (Internal Revenue Service, 1993~. Most federal labs designate only a small percentage, if any, of their total R&D budget to tech- nology transfer and related activities. A recent survey of technology outsourcing by large U.S. firms found that federal laboratories rank fourth as sources of exter- nal technologies after other firms, universities, and private-sector research data- bases (Roessner, 1993~. THREE TYPES OF FEDERAL LABORATORY MANAGEMENT Most federal laboratories are governmental-owned, government-operated fa- cilities, referred to often by the acronym GOGO. Their land and facilities are usually owned by the federal government, and their employees and managers are career civil servants. A second category of federal research facility, the federally funded research and development centers (FFRDCs), contractor-operated and mostly contractor-owned research facilities established at the request of federal agencies with congressional authorization, draw over 70 percent of their funding from the federal government. FFRDC employees and managers are not civil servants. An important subset of FFRDCs is a small group of large government- owned, contractor-operated laboratories, or GOCOs. Their land and facilities are usually owned or leased directly by the federal government, but the labs them- selves are operated for the government by private contractors, including compa- nies, universities, and nonprofit institutions. Most GOCO laboratories are ad- ministered by the Department of Energy. Because GOCO laboratories and FFRDCs operate largely outside the govern- ment's personnel and contracting systems, they are freed from many of the regu- latory and administrative requirements by which GOGO labs must abide. Be- cause of their special status, FFRDCs are often used by federal agencies to execute new federally funded R&D programs that require rapid start-up.58 FEDERAL LABORATORY R&D EXPENDITURES Federal laboratories spend fully one-third of all federal dollars devoted to research and development (Figure 2.14~. In 1994, GOGO labs (and other intra

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126 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY Total Federal R&D Expenditure $69.6 billion Government Facilitiesa $22.8 billion GOGO Labs $1 7.2B 1 1 'I 1 1 DOD NASA HHS USDA Other $8.8B $2.6B $2.2B $.9B $2.7B FFRDCs l GOCO Labsb Other FFRDCsb $4.3B $1.3B 1 1 DOEb NASAL Otherb $3.4B $.8B $.1 B Nongovernment Facilities $46.8 billion 1 1 1 Industry U&C Other $31 B s', ~$3.9B 1 DOD NASA Other $23.5B $4.3B $3.2B DODb Otherb $.9B $.4B HHS DOD NSF Other $6.3B $1.7B $1.7B $2.2B FIGURE 2.14 Federal R&D funds by selected categories of performers, estimated val- ues for FY 1994. aIncludes costs associated with the administration of intramural and extramural programs by federal personnel as well as actual intramural performance. bAuthor's estimates based on NSF data for all FFRDCs. NOTE: U&C = universities and colleges; DOD = Department of Defense; DOE = Department of Energy; HHS = Health and Human Services (primarily the National Institutes of Health); NASA = National Aero- nautics and Space Administration; NSF = National Science Foundation; and USDA = Department of Agriculture. SOURCE: Carr (1995~. mural facilities) received $17.2 billion in federal R&D support, and FFRDCs an additional $5.6 billion. Of this latter figure, GOCO labs received an estimated $4.3 billion, and other FFRDCs approximately $1.3 billion. Federal Laboratories by Major Mission Area DEFENSE LABORATORIES In this chapter, "defense laboratories" refers to the laboratories of the mili- tary services and the Department of Energy's (DOE's) three nuclear weapons laboratories (Los Alamos, Lawrence Livermore, and Sandia).

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TECHNOLOGY TRANSFER IN THE UNITED STATES 127 Department of Defense Laboratories DOD and the Departments of the Army, Navy and Air Force collectively own and operate 81 GOGOs, many of which are grouped for command and man- agement purposes into larger entities. In fiscal 1994, DOD and the service agen- cies funded $35.6 billion worth of R&D, yet only $8.8 billion, or 25 percent of this total, was performed by the 81 intramural facilities. The vast majority of DOD-funded R&D is performed extramurally by private companies, universities, and FFRDCs. DOD-funded basic research is done primarily in universities, and most DOD technology development is performed by private defense firms. DOD intramural laboratories perform mainly exploratory development. Since the end of the Cold War, the U.S. defense laboratory system has come under increasing pressure to downsize. In recent years, the Air Force and Army have consolidated their laboratory structure, forming a smaller number of "super labs." However, few facilities were closed and few positions eliminated. In 1994, the Defense Science Board (Defense Science Board, 1994) recommended that DOD laboratory personnel be reduced by 20 percent and that "vigorous program- ming of outsourcing of defense laboratory activities" be pursued. Yet, the Base Realignment and Closure Commission has recommended closing only a few R&D facilities. Although rationalization of the defense laboratory system has been slow, the system is certain to involve fewer, smaller laboratories in the future. DOE Laboratories The three DOE defense laboratories, Los Alamos and Sandia National Labo- ratories in New Mexico, and Lawrence Livermore National Laboratory in Cali- fornia, are the largest federal laboratories. Although their annual budgets are declin- ing, the three labs still spend nearly $1 billion each on R&D, and each employs many thousands of scientists and engineers. Los Alamos and Livermore National Laboratories are both managed by the University of California. Their early work focused almost exclusively on nuclear weapons design. However, in the past 50 years, their missions have broadened to include many diverse technology areas. R&D at the two labs is divided roughly equally among weapons R&D, nonde- fense nuclear work, nonnuclear defense work, and nondefense, nonnuclear R&D. Sandia National Laboratories, operated by Lockheed Martin, are engineering laboratories whose mission is to "weaponize" the nuclear weapons designs cre- ated at Los Alamos and Livermore. As is the case with the other defense labs, Sandia has also developed a broad array of technology capabilities in addition to its weapons-related functions. Sandia is perhaps the most industry-oriented of the three nuclear labs. Like the DOD R&D system, DOE' s defense laboratories are also faced with excess capacity. In recent years, these facilities have experienced a steady reduc- tion in their nuclear weapons design work and other programs, with a correspond- ing reduction in personnel. However, they seem less likely to be subject to the

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128 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY same percentage reductions as the DOD laboratories, particularly given their new mission for "science-based stewardship" of the U.S. nuclear stockpile. CIVILIAN LABORATORIES Department of Energy In addition to its defense laboratories, the DOE operates a number of other multiprogram laboratories, most of these under the aegis of the department' s En- ergy Research Program. The largest of these laboratories (all GOCOs) are de- scribed below. Argonne National Laboratory in Chicago, Illinois, encompasses engineering research (advanced batteries, fuel cells, and advanced fission reactor); physical research (materials science, physics, chemistry, high-energy physics, mathemat- ics and computer science); the Advanced Photon Source, (the nation's most bril- liant X-ray beam); and energy and environmental science and technology. Brookhaven National Laboratory, located on Long Island, New York, main- tains user facilities for investigation in a multitude of scientific disciplines, in- cluding experimental and theoretical physics, medicine, chemistry, biology, envi- ronmental research, engineering and many other fields. The Idaho National Engineering Laboratory, located near Idaho Falls, special- izes in natural resource processing and environmental management, spent nuclear- fuel management, environmental technology development, mixed-waste character- ization and treatment, non- and counterproliferation, advanced manufacturing, alternate energy supply and energy efficiency, and transportation technologies. Lawrence Berkeley Laboratory in Berkeley, California, which conducts re- search in advanced materials, biosciences, energy efficiency, detectors, and ac- celerators, focuses on national needs in technology and the environment. The National Renewable Energy Laboratory in Denver, Colorado, is the nation' s primary federal laboratory for renewable energy research. It focuses on alternative fuels, analytic studies, basic sciences, buildings and energy systems, industrial technologies, photovoltaics, and wind technology. Oak Ridge National Laboratory in Oak Ridge, Tennessee, has major pro- grams in energy conservation, materials development, magnetic-fusion energy, nuclear safety, robotics and computing, biomedical and environmental sciences, medical radioisotope development, and basic chemistry and physics. Pacific Northwest Laboratory in Richland, Washington, focuses on resolving environmental issues, such as waste cleanup and global climate change. Other areas of research activity include molecular science, advanced processing technology, bio- technology, global environmental change, and energy technology development. The National Institute of Standards and Technology NIST, formerly the National Bureau of Standards, was established by Con- gress "to assist industry in the development of technology . . . needed to improve

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TECHNOLOGY TRANSFER IN THE UNITED STATES 129 product quality, to modernize manufacturing processes, to ensure product reli- ability . . . and to facilitate rapid commercialization . . . of products based on new scientific discoveries" (National Institute of Standards and Technology, 1997~. An agency of the U.S. Department of Commerce, NIST's primary mission is to develop and apply technology, measurements, and standards and to promote U.S. economic growth. It carries out this mission through work in four areas: research planned and implemented in cooperation with industry and fo- cused on measurements, standards, evaluated data, and test methods; the Malcolm Baldrige National Quality Award and an associated quality- outreach program; the Advanced Technology Program, which provides cost-shared grants to industry for the development of high-risk technologies with significant commercial potential; and the Manufacturing Extension Partnership, which helps small and medium sized companies adopt new technologies. As a GOGO laboratory, NIST's staff of more than 3,200 scientists, engi- neers, technicians, and support personnel are federal employees (National Insti- tute of Standards and Technology, 1997~. In addition, some 1,200 visiting re- searchers work at NIST each year. In fiscal 1994, about 46 percent of NIST's R&D budget went for intramural work. Nearly all of the remainder (52 percent) of the budget supported R&D in private industry. NIST' s intramural R&D and related activities are performed at principally two sites, one in Gaithersburg, Maryland, and the other in Boulder, Colorado. The main areas of research pur- sued by these laboratories are electronics and electrical engineering, manufactur- ing engineering, chemical science and technology, physics, materials science and engineering, building and fire-prevention research, computer systems, and com puting and applied mathematics. National Aeronautics and Space Administration NASA's in-house research and development is carried on in a number of field centers, all of them GOGOs with the important exception of the Jet Propul- sion Laboratory, a GOCO operated by the California Institute of Technology. The field centers conduct about one-third of all R&D funded by the agency. In addition to in-house research, an important function of the centers is the manage- ment of NASA contractors, principally aerospace firms, that perform roughly half of all NASA-funded R&D. NASA's principal research centers and their missions are described below. . Ames Research Center in Moffett Field, California, focuses on fluid dy- namics, life sciences, earth and atmospheric sciences, information, com- munications, and intelligent systems and human factors. Dryden Flight Research Center in Edwards, California, specializes in aero

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130 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY dynamics, aeronautics, flight testing, thermal testing, and integrated sys- tems and validation. Goddard Space Flight Center in Greenbelt, Maryland, is NASA' s center for earth and planetary sciences missions, LIDAR, cryogenic systems, tracking, telemetry and command. Jet Propulsion Laboratory in Pasadena, California, conducts work in near- and deep-space mission engineering, microspacecraft, space communica- tions, information systems, remote sensing, and robotics. Johnson Space Center in Houston, Texas, has technological strengths in artificial intelligence and human computer interface, life sciences, human space flight operations, avionics, sensors, and communications. Kennedy Space Center, near Cape Canaveral, Florida, is the principal NASA launch site and also specializes in emissions and contamination monitoring, sensors, corrosion protection, and biosciences. Langley Research Center in Hampton, Virginia, focuses on aerodynam- ics, flight systems, materials, structures, sensors, measurements, and in- formation sciences. Lewis Research Center in Cleveland, Ohio, specializes in aeropropulsion, communications, energy technology, and high temperature materials re- search. Marshall Space Flight Center in Huntsville, Alabama, has strengths in materials, manufacturing, nondestructive evaluation, biotechnology, space propulsion, controls and dynamics, structures, and microgravity processing. Stennis Space Center in Hancock County, Mississippi, specializes in space propulsion systems, testing and monitoring, remote sensing, and non- intrusive instrumentation. NASA has recently reviewed the activities of its research centers with the goal of reducing technology overlap and bringing more focus to their activities. The National Institutes of Health Begun as the Laboratory of Hygiene in 1887, the NIH is one of eight health agencies of the Public Health Service, which, in turn, is part of the U.S. Depart- ment of Health and Human Services. NIH is made up of 24 separate institutes, centers, and divisions, with a total R&D budget of more than $10 billion in 1994. As of 1992, NIH funded roughly 80 percent of all biotechnology-related R&D supported by the U.S. federal government (National Research Council, 1992d). Eighty-one percent of NIH-funded R&D is performed by extramural institu- tions, three-fourths of this by universities and colleges. Only about 11 percent of the NIH R&D budget supports research within in its own laboratories. NIH on- campus research facilities include: the Research Hospital and its laboratory complex, containing a 470-bed facility where patients participate in clinical studies;

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TECHNOLOGY TRANSFER IN THE UNITED STATES 131 the Outpatient Clinic and the Ambulatory Care Research Facility and laboratories, supporting the NIH Clinical Center's outpatient programs; the Mary Woodard Lasker Center for Health Research and Education, the location for the NIH-Howard Hughes Medical Institute research program for medical students; and the National Library of Medicine, the world's largest medical library, with a collection of 5 million items and its computerized index, MEDLINE. The agency's off-campus facilities include: the National Institute of Environmental Health Sciences, located in Re . . search Triangle Park, North Carolina; the NIH Animal Center in Poolesville, Maryland; the National Institute on Aging's Gerontology Research Center in Balti- more, Maryland; the Addiction Research Center of the National Institute on Drug Abuse, in Baltimore, Maryland; and the National Institute of Allergy and Infectious Diseases' Rocky Moun- tain Laboratories in Hamilton, Montana. In addition to its own research, NIH maintains active and long-standing partner- ships with universities, independent research institutions, private industry, and vol- untary and professional health organizations through which research programs and product development activities based on federally funded research are transferred. Environmental Protection Agency In 1994, the Environmental Protection Agency (EPA) had an R&D budget of $557 million. At that time, work within EPA's intramural laboratories accounted for only one-fifth of the agency's total R&D spending. Academic institutions and state and local governments each received another 20 percent of the R&D budget, while the remaining 40 percent was awarded to private firms. EPA has recently consolidated 12 laboratories and 7 field centers into 3 national laboratories and 2 national centers, all GOGOs, employing a total of 800 scientists and engineers. These reorganized facilities will focus on a redefined science mission based on the National Academy of Science's risk assessment/risk management model (Na- tional Research Council, 1983, 1994~. In a complementary move, EPA is seeking to increase the role of the extramural science community in environmental research. The laboratories and centers in EPA' s new R&D structure are the National Risk Management Research Laboratory in Cincinnati, Ohio, which is the principal EPA research laboratory responsible for environ- mental risk management; the National Health and Environmental Effects Research Laboratory in Research Triangle Park, North Carolina, which is the EPA focal point for

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132 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY toxicological, clinical, epidemiological, ecological, and biogeographic research: . the National Exposure Research Laboratory, also in Research Triangle Park, which has the task of reducing and quantifying the uncertainty in the EPA's exposure and risk assessments for all environmental stressors; the National Center for Extramural Research and Quality Assurance lo- cated near Washington, D.C., which is responsible for managing the agency's extramural research grant programs, the Environmental Tech- nology Initiative, small business innovation research grants, quality as- surance policy and oversight, and conduct of peer reviews; and the National Center for Environmental Assessment located near Wash- ington, D.C., which is responsible for risk assessment research, methods, and guidelines; health and ecological assessments; development, mainte- nance, and transfer of risk assessment information and training; and set- ting research priorities. Department of Agriculture . In fiscal 1994, the USDA spent $1.4 billion on R&D, including about $900 million for work performed intramurally and $450 million for research in U.S. universities and colleges. The Agricultural Research Service (ARS), which con- ducts more than two-thirds of all USDA in-house R&D, oversees some of the oldest federal research facilities in the United States. The ARS is treated as a single entity for the purpose of technology transfer, although it operates a number of small and a few large research facilities. The total number of ARS R&D sites is around 110; some of these facilities are being closed in response to budget pressures. With a staff of 350 scientists, the Beltsville Agricultural Research Center in Beltsville, Maryland, is the largest ARS laboratory. ARS has five regional labo- ratories that are focused on finding new uses for agricultural commodities. There are also two large animal-disease research centers and a series of smaller labora- tories, each with a narrow focus such as a particular crop. In addition, nearly every land grant college has an ARS facility, usually integrated into the research facilities of the institution' s academic departments. ARS research falls into six categories: soil, water, and air (conservation, management, reduction of agricultural environmental impacts, and efficiency of use) plant productivity (crop productivity and quality) animal productivity (productivity and health of farm animals) commodity conversion and delivery (converting raw agricultural com- modities into food, textiles, industrial materials, and other products) human nutrition and well-being (nutrients in foods, how nutrients work in humans, what nutrients are needed by humans, and what nutrients are provided by foods)

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TECHNOLOGY TRANSFER IN THE UNITED STATES 133 systems integration (integrating scientific knowledge into systems that improve the efficiency of resource use and enable technology transfer from laboratory to farm). Federal Laboratories and Technology Transfer: History and Legislation The current era of federal technology transfer began in 1980 with passage of the Bayh-Dole (P.L. 96-517) and Stevenson-Wydler (P.L. 96-480) Acts. A1- though these legislative endeavors marked new directions in federal policy, they were based on nearly a century of federal cooperation with the private sector and on earlier legislation that encouraged technology transfer. These precursors of current federal technology cooperation include still-ongoing programs to support important sectors of the U.S. economy. In 1862, Congress passed the Morrill Act, which provided resources to the states to develop colleges offering practical instruction in agriculture and the mechanical arts. Twenty-five years later, the 1887 Hatch Act created a system of state agricultural experiment stations under the auspices of the land grant colleges and universities. In 1914, the Smith-Lever Act created the Cooperative Agricul- tural Extension Service, a partnership among federal, state, and county govern- ments to deliver the practical benefits of research to citizens through an extension service. The Smith-Lever Act represents the first U.S. law to promote intention- ally technology transfer from federally funded research activities. As late as 1940, research by USDA and state agricultural extension programs accounted for almost 40 percent of the federal R&D budget. Reflecting the changed position of agriculture in the U.S. economy, USDA's share of the federal R&D budget has fallen to 2 percent in recent years. However, the Department of Agriculture re- mains the only federal agency that explicitly allocates a large share (roughly half) of its overall R&D budget to the dissemination and transfer of technology to the private sector. The U.S. Geological Survey (USGS), established by Congress in 1879, pro- vided technical support critical to the development of the nation's natural re- source industries. Placed within the federal Department of the Interior, the USGS was charged with the "classification of the public lands, and examinations of the geological structure, mineral resources, and products of the national domain." During the late 1800s and early l900s, the Survey's mining geology research program served as a primary research base for U.S. minerals industries, and was a major factor in the development of economic geology as a distinct field in geology (Rabbitt, 1997~. The National Advisory Committee on Aeronautics (NACA), the predecessor to NASA, was created in 1915, the result of an early competitiveness concern. NACA' s charge was "to supervise and direct the scientific study of the problems of flight, with a view to their practical solutions" (Bilstein, 1989~. NACA re- search in the post-WWI era was focused on civil aviation and was closely coordi

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134 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY nated with the U.S. aircraft industry, to which much of the resulting technology was transferred. The 1958 Space Act (P.L.85-568), which created NASA, incor- porated NACA and its operations into the new structure. It specifically required that NASA engage in technology transfer, and for many years, NASA had the most active federal technology transfer program outside the USDA. During the 1960s and 1970s, the responsibilities of the federal laboratory system grew to include the construction and operation of major user facilities, such as particle and photon accelerators, environmental research parks, and mate- rials laboratories. These new facilities opened the laboratory system increasingly to U.S. and foreign researchers from industry and academe. Throughout this period, federal agencies relied heavily on the R&D capabilities of academic insti- tutions and private companies to advance public missions, contracting or collabo- rating with a large number of private-sector it&D-performing institutions. In the process, a number of federal labs transferred significant amounts of know-how and other uncodified technology to private firms. Nevertheless, relatively little in the way of codified government-owned intellectual property was commercialized by private companies prior to the 1980s. Through the end of the 1970s, the philosophy behind the dissemination of federally funded research was that if the public paid for the research, the resulting intellectual property should be made equally available to all interested parties. While universal access is a normal feature of most government programs, it is not a typical feature of the business world. Hence, few businesses were willing to risk substantial sums to develop government technologies into commercial prod- ucts when competitors also had free access to the same intellectual property. In 1980, Congress changed that philosophy in the belief that more could be done to increase the contribution of federal research to national competitiveness. The Bayh-Dole and Stevenson-Wydler Acts provided federal laboratories flex- ibility in granting individual companies varying degrees of exclusive access to federal intellectual property. The laws have been subsequently amended and supplemented with new legislation to support additional federal laboratory tech- nology transfer activities. A brief review of the four principal technology transfer laws now on the books follows. The Bayh-Dole Act of 1980 gave nonprofit organizations such as universi- ties, as well as small businesses, the right to take title on inventions they devel- oped with federal support; granted GOGO laboratories the authority to grant ex- clusive licenses to inventions that they patented; and protected inventions from public dissemination under the Freedom of Information Act, to allow for patent applications to be filed. Although Bayh-Dole did not originally apply to any of the DOE contractors responsible for laboratory management and operations, the law was subsequently amended to include them. The Stevenson-Wydler Technology Innovation Act of 1980 mandated that fed- eral laboratories actively seek to conduct cooperative research with state and lo

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140 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY Information Dissemination Large, comprehensive databases of federally developed technologies have been created during the last several decades. The largest, Federal Research in Progress (FEDRIP), is maintained by the Department of Commerce's National Technical Information Service (NTIS). FEDRIP provides information about more than 150,000 research projects under way and contains summaries of U.S. and foreign government-funded work in progress, as well as information about which agencies are providing funding. The database focuses on projects in the health and life sciences, physical sciences, agriculture, and engineering. Each FEDRIP entry describes a research project, its objectives and, when available, its funding and intermediate findings. Project descriptions include project title, starting date, principal investigator, performing and sponsoring organization, and a detailed abstract. Although FEDRIP's coverage is not complete, the scope is very broad. Other databases or collections of databases that facilitate access to technolo- gies developed by federal laboratories have been created and maintained by fed- erally sponsored organizations and, to a lesser extent, by universities and the private sector. NASA operates the largest network of technology-referral and information organizations, consisting of the National Technology Transfer Cen- ter (NTTC), located in Wheeling, West Virginia, and six regional technology transfer centers (RTTCs), located across the United States. While the centers are funded by NASA, their technology focus spans the entire federal laboratory sys- tem. The NTTC's mission is to create a user-friendly system with a single point of contact that will permit business, government, and the general public to locate information on science and technology in the federal laboratory system and be- yond. The NTTC has acquired and created a large set of databases, with more than a million records, that list the technologies and expertise available in federal laboratories and elsewhere. The center's technology agents use these databases to provide information to clients who reach the NTTC through a toll-free tele- phone number and, more recently, through the Internet and other electronic means. Since the NTTC' s Gateway service and its toll-free number (1-800-678-NTTC) opened for business in October 1992, the Center has received over 10,000 requests for assistance in accessing federal technologies; requests are currently coming in at the rate of over 4,000 per year. Just over 60 percent of the requests have been from small businesses (those with fewer than 100 employees), 9 percent have come from medium-sized business (with 100-499 employees), and the balance have come from large firms (500 or more employees). Requests span a range of technolo- gies. The top five areas are materials science (16 percent); manufacturing tech- nology (9 percent); computers, control and information (9 percent); electro- technology (8 percent); and environmental pollution and control (7 percent). The RTTCs were established by NASA in 1992, replacing an older network of industrial application centers. The RTTCs do not build databases as the NTTC does, but rather use existing sources of information to create contacts between federal labs (particularly NASA centers) and private firms. In addition, they

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TECHNOLOGY TRANSFER IN THE UNITED STATES 141 engage in a number of other activities to "move technologies to the marketplace." To this end, they facilitate the marketing of technologies developed at NASA centers by helping to develop and then negotiate deals with commercial firms. RTTCs reported handling over 6,000 requests for technical assistance (database searches, referrals, technical studies, technical problem solving, etc.) in a recent 12- month period. During that same time, RTTCs handled over 4,000 requests for commercial assistance (business plans, technology and market assessments, capi- tal sourcing, and consortium building), assisted with over 100 technology-licens- ing deals, and played a role in over 200 technology-partnership agreements. In addition to the NASA-funded technology transfer information system, the Federal Laboratory Consortium provides a similar function. The consortium op- erates a locator service, which is designed to link potential technology users in industry, government, or academia with federal laboratory capabilities. The FLC has built and maintains a database of federal laboratory expertise and uses a net- work of FLC regional and laboratory representatives to assist it in pinpointing expertise and technologies. During 1994, the locator system handled 832 re- quests, of which 296 sought advice about the technology transfer process and 531 sought technical information from labs. Small businesses were the principal user of the locator system (responsible for 81 percent of requests in 1994), followed by the federal government, including other federal labs (7.5 percent), and large business (5 percent). The consortium is supported by the federal government according to a formula that gives it a small percentage of federal funds appropri- ated for R&D. Finally, a number of individual federal agencies and laboratories have estab- lished databases and retrieval systems for their laboratories' technologies. DOD, DOE, NASA, NIH, and USDA are the principal agencies publishing databases of their own technologies. The DOE has recently created the Technology Informa- tion Network, which makes its technology database available on an Internet home page, . Technical Assistance Most technical assistance provided by federal laboratories is aimed at solv- ing technical problems encountered by mostly small companies located in the same state or region as the laboratory. Technical assistance is often mediated by an intermediary, such as one of the many state technical extension programs or, at the national level, by the FLC or NTTC. NIST' s Manufacturing Extension Pro- gram centers frequently use federal laboratories as resources to provide assis- tance to businesses in their region. DOE estimates that its labs are involved in several thousand technical assistance projects each year. Exchange Programs Exchange programs, as the term implies, promote the short- or long-term exchange of research personnel between federal laboratories and private firms.

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142 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY Exchange programs have considerable technology transfer potential since they involve the most effective transfer agent, people. However, they are not much used. The number of researchers exchanged for significant periods between in- dustry and federal laboratories is measured in the hundreds. Although there is an impetus to increase the number and size of exchange programs, there is a natural reluctance on the part of both management and staff to do so. Managers are reluctant to lose their best staff, and staff are fearful that a prolonged absence will hurt their chance of advancement in their home organization. Work for Others and Use of Facilities Reimbursable work for others consists of R&D services performed by a fed- eral laboratory on behalf of a customer, in most cases another federal lab or agency. Other customers include state and local governments and private firms. Work for others is generally undertaken because the customer wants to take ad- vantage of highly specialized scientific expertise and facilities in a federal labora- tory that cannot be otherwise obtained. The use of a federal research facility may or may not be reimbursed by the customer. A small but growing level of federal laboratory activity is devoted to cost-reimbursed projects. In some cases, the work is performed by the customer's staff, in others, by the federal laboratory scientists and engineers. In recent years, DOE's success with CRADAs has been attributable to a growing volume of in- dustry-funded "work-for-others" business in its laboratories. Between 1992 and 1996, the volume of total "work-for-others" performed by DOE laboratories fluc- tuated between $1.1 and $2 billion. Yet over the 5 year period, the share of total "work-for-others" accounted for by non-federal entities (predominantly private companies) nearly doubled, from 6.5 percent to 12 percent.65 Consulting Consulting is an important form of technology transfer between universities and industry. However, consulting is not as common between federal labs and industry. Most federal laboratory scientists are federal employees and are pro- hibited from working outside the government. To a lesser extent, the same is true for scientists working in GOCO laboratories. Some consulting does take place between firms and federal laboratories, but in these instances consulting staff continue to function as laboratory employees without extra compensation. Such arrangements are very similar to work-for-others arrangements. GOCO staff em- ployees are generally allowed to engage in remunerated consulting activities with other public and private sector clients as long as they do it on their own time. Collegial Interchange, Workshops, and Conferences Collegial interchanges are important in fostering person-to-person contact, the primary channel through which technology transfer occurs. This mechanism is often said to be, in the aggregate, the most important form of technology trans

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TECHNOLOGY TRANSFER IN THE UNITED STATES 143 for between federal labs and industry. These interactions involve informal con- tacts among researchers from the two sectors at a wide range of events, including technical workshops, laboratory tours, and conferences. The resulting exchange of information and technology can have considerable value for all sides, although that value is exceedingly difficult to describe, particularly with quantitative mea- sures. Very often, these informal contacts lead to other, more formal, technology transfer activities. The Special Case of Small and Medium-Sized Firms Federal technology transfer legislation has been particularly supportive of increased interaction between labs and small and medium-sized enterprises (SMEs). The 1986 FTTA requires federal laboratory directors to give preference to small businesses when choosing CRADA partners or when licensing patents. The growth of technology transfer intermediaries, such as the National Technol- ogy Transfer Center and state economic development and technology assistance networks, has provided a new way for SMEs to find and access federal laboratory resources. Based on the recent experience of several agencies, it appears that these and other mechanisms have make it possible for some federal laboratories to serve SMEs effectively. As of 1994, 40 percent of NIST's 250 CRADAs were with small companies. DOE estimates that its national laboratories alone engage SMEs in several thousand technical assistance projects per year.66 LIMITS TO FEDERAL LABORATORY TECHNOLOGY TRANSFER There are a number of factors that make technology transfer more difficult for federal laboratories than for private-sector organizations. Several of these are described below. National Security Particularly for defense laboratories, the classification of some technologies limits possibilities for technology transfer. Nevertheless, the procedures now in place for the commercialization of technologies from classified research pro- grams, while lengthy, are reasonably well understood. Moreover, with the end of the Cold War, national-security concerns pose only a minor constraint to technol- ogy transfer for the defense laboratories. Economic Performance and Reciprocity Requirements The 1986 FTTA specifies that in the negotiation of CRADAs and licensing agreements, preference be given to business units located in the United States, and, when CRADAs are negotiated with foreign-owned companies, the home governments of these firms must permit American firms to participate in coop- erative R&D programs in their country. The 1989 National Competitiveness Technology Transfer Act tightens these provisions and requires that any partici

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144 TECHNOLOGY TRANSFER SYSTEMSIN THE UNITED STATES AND GERMANY patina private firm, U.S. or foreign-owned, commit to undertake in the United States further design, development, and "substantial" manufacturing of products and processes embodying intellectual property resulting from the CRADA. If a firm is foreign-owned, additional reciprocity requirements are imposed. Many U.S. multinationals have voiced strenuous objections to the "substantial" U.S. manufacturing requirement. In response, DOE has relaxed these requirements somewhat in its CRADA agreements.67 Fairness of Opportunity FTTA gives federal laboratories authority to negotiate terms and conditions of CRADAs. However, Congress also enacted a law requiring fair, or equal, access to federal technology transfer programs. Procedures for implementing this requirement have never been spelled out, and labs have adopted a wide range of practices to assure fairness. Although the selection of CRADA partners is not required by law to be competitive, particularly if a firm initiates the project, many laboratory technology transfer offices engage in extensive publicity and advertising prior to deciding on partners for licenses or CRADAs. While such publicity does increase awareness of federal laboratories' cooperative research activities, it adds additional delay to the CRADA negotiation process. More- over, publicity sometimes discourages firms from engaging in partnerships, since they may not want their research aims to become public through a response to a public solicitation. Conflict of Interest In the federal government, conflict-of-interest laws and regulations devel- oped over the past 20 years have placed limits on certain types of employee ac- tivities. While important, these limits have slowed the process of technology transfer, since administrators must focus more on conflict-of-interest issues at the expense of more productive activities, such as technology marketing. Measuring the Performance of Federal Laboratory Technology Transfer Many in government are asking whether increased technology transfer ac- tivities and increased spending on technology programs have had a significant impact on the economy and whether that impact was high relative to the federal dollars spent. The question is important but difficult, perhaps impossible, to an- swer fully. MEASUREMENT OF ACTIVITIES UNDER THE STEVENSON-WYDLER AND BAYH-DOLE ACTS On the surface, there is evidence that Bayh-Dole and Stevenson-Wydler have produced the desired results. The number of CRADAs and license agreements,

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TECHNOLOGY TRANSFER IN THE UNITED STATES 145 as well as royalties resulting from such agreements, are increasing steadily (Fig- ures 2.15 and 2.16~. Several studies support the conclusion of preliminary suc- cess, with one major survey of large it&D-intensive firms concluding that "the tech transfer legislation has 'worked' in the sense that companies are increasingly tapping the knowledge, expertise and facilities in federal labs" (Roessner, 1993~. Nevertheless, aside from demonstrating an increase in the number of transactions between companies and federal laboratories, the activity data say little about the economic or social impact of federal technology transfer activity. To probe the economic impacts of technology transfer and other technology programs requires more sophisticated collection, organization, and interpretation of data.68 Over the past decade, a number of studies have attempted to find ways to detect economic benefits resulting from federally funded basic research. In addi- tion, a few private firms have undertaken efforts to determine the impact of and returns from corporate R&D activities and internal technology transfer. While these two categories of investigation look at phenomena different from technol- ogy transfer, they nonetheless use techniques and produce a body of knowledge that are useful to the study of the economic value of federal laboratory technology transfer. Anecdotal Evidence Much of the early evidence of effectiveness of federal laboratories' technol- ogy transfer activities has been anecdotal. While anecdotes do not permit one to engage in cost/benefit or other systematic analyses, they do provide a form of "existence proof" that most people can relate to. Anecdotal evidence is particu- larly useful in a political context, especially if it can be focused to support the interests of individual politicians. All of the early evidence for the benefits from federal technology transfer came in the form of anecdotes about spin-offs (primarily from work by NASA labs) (Doctors, 1971~. Much of the conventional wisdom attributing specific space-age products (e.g., Teflon and Tang) to NASA is erroneous, but there were some significant outcomes in terms of individual products and, more importantly, the development of new technology areas. For example, the impact of NASA projects on electronics miniaturization (now widely diffused throughout the com- mercial sector) cannot be underestimated. In the past, anecdotes of technology transfer successes were common features of federal agencies' publicity about their technology transfer activities. However, recently this type of evidence has taken a back seat to the promise of more systematic analysis. Formal Evaluations In the past 3 years, federal agencies have begun to establish measurement and evaluation systems for their technology transfer programs. In addition, the Office of Management and Budget has been collecting basic data on technology transfer for several years as part of the federal budget process.69

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146 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY From 1993 to 1995, a federal interagency working group chaired by the De- partment of Commerce met to define data elements describing technology trans- fer activities in most federal R&D agencies. However, the working group ceased its activities in mid-1995, and no data were ever collected using the draft data format it created. Such data could have lead to the creation of a government-wide technology transfer database that would have permitted government-wide identi- fication and analysis of the activities under the Stevenson-Wydler and Bayh-Dole Acts. The working group's data elements were activity measures that would have provided only inferential evidence of economic impacts. However, the collection of activity measures constituted an essential beginning. Without comprehensive data on individual technology transfer claims or "events" as the working group called them, it is extremely difficult to design, collect, and interpret additional information that gauges impact. A number of individual agencies and laboratories are collecting information about and evaluating the impacts of their technology transfer programs. As part of this effort, some agencies are beginning to survey their laboratories' private- sector R&D partners to gauge their satisfaction with the technology transfer pro- grams. Very few of the results of these activities have been published, however. These surveys also shed light on the relative importance it&D-intensive firms assign to the various technology transfer mechanisms employed by federal laboratories. Most survey respondents ranked cooperative R&D as the most likely means of achieving promising payoffs from interactions with federal labs. This was followed by workshops and seminars, visits to labs, technical consul- tation, contract research, and use of facilities, in that order. Licensing and em- ployee exchange were ranked as least likely to have future payoffs (Roessner, 1993~. A 1995 study (Bozeman et al.) sponsored by NSF surveyed 219 private com- panies to get their views on the benefits and costs of working with federal labora- tories. The responses covered a number of technology transfer mechanisms, in- cluding CRADAs, cooperative R&D other than CRADAs, technical assistance, and, to a lesser extent, licensing, use of facilities, and exchanges of research per sonnel. Private-sector R&D partners reported mostly positive results from their ex- periences with federal laboratories. Twenty-two percent reported that the inter- action had already led to a new product, 38 percent said that a product was under development, and 24 percent said that a product was improved. Overall satisfac- tion with the interactions was generally high, with 89 percent reporting that the interaction was a good use of company resources, and many responding compa- nies were repeat customers. Responding companies were asked to estimate in dollar terms the costs and benefits of their federal laboratory interaction. Firms reporting both costs and benefits received an average benefit of $1.8 million and experienced an average cost of $544,000, a three-to-one return on investment. These averages are highly

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TECHNOLOGY TRANSFER IN THE UNITED STATES 147 skewed by a few big winners, however. Interestingly, the big winners were dis- proportionately basic research projects, demonstrating once again the high-risk/ high-payoff nature of this type of inquiry. The survey found that the net impact of the interactions on job creation/retention was essentially zero, although most of the big winners, not surprisingly, reported job creation. The Future of Federal Laboratory Technology Transfer A number of agencies have ongoing processes to review and revise their technology transfer programs in response to stimulus from internal reviews, the administration, and Congress. This continuing analysis is likely to persist for some time, and the outcome of future reviews will depend heavily on the success of efforts to evaluate technology transfer. The most significant reassessment activities are reviewed below. CONGRESS The tenor of Congressional opinion about technology programs changed dra- matically with the Republican victory in the November 1994 elections and their majority in the 104th Congress. Once enjoying modest bipartisan support, federal technology programs such as the Advanced Technology Program and the Penta- gon's Technology Reinvestment Project came under attack. In spite of their public hostility toward the ATP and TRP, the Republican majority did not ex- press significant opposition to federal laboratory technology transfer activities, including licensing and CRADAs.70 Bipartisan legislation (H.R. 2196) spon- sored by Rep. Connie Morella (R-Md.) and Sen. Jay Rockefeller (D-W.V.), which amended the Stevenson-Wydler Act to enhance the incentives for com- mercializing technologies developed at government labs, passed the 104th Con- gress and was praised by both Republican and Democratic leaders. NIH and USDA The technology transfer programs at NIH and USDA remain relatively stable. There have been some administrative changes at NIH to improve the processing of technology transfer agreements, and measured reductions, which have a minor impact on technology transfer, are occurring in the ARS laboratory structure. DEPARTMENT OF DEFENSE The Defense Authorization Act of 1992 (P.L. 102-484) required the secre- tary of defense to encourage technology transfer between the DOD laboratories and research centers and federal agencies, state and local governments, colleges and universities, and the private sector. That same legislation created the Office of Technology Transition in the Directorate of Defense Research and Engineer

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148 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY ing to monitor and encourage technology transfer from defense laboratories. The legislation also created the Federal Defense Laboratory Diversification Program to encourage greater cooperation between defense laboratories and private indus- try. In addition, an exhaustive study was conducted to assess the technology transfer potential of all defense laboratories and recommend ways each could promote additional transfer. In June 1995, the secretary of defense issued a follow-up memorandum stat- ing that domestic technology transfer and dual-use technology development were "integral elements of the Department' s pursuit of its national security mission" (Perry, 1995) The memorandum required all R&D elements of the Defense Department to "make domestic technology transfer and dual-use technology de- velopment a priority element in the accomplishment of their science and tech- nology missions" and gave the DOD's Office of Technology Transition increased oversight authorities. In a sense, these new DOD activities do little more than assure full implementation of the provisions of the 1986 and 1989 technology transfer acts by the military services and their labs. The very high level impetus provided by the secretary's memorandum should serve to accelerate the process, however. DEPARTMENT OF ENERGY The Department of Energy has recently shifted substantially the emphasis in its technology transfer program. The focus now is on activities that support the DOE mission, particularly those with potential for "spin on." In a September 1994 policy statement and review of technology transfer activities called "Our Commitment to Change," DOE focused almost exclusively on partnerships as a means to enhance U.S. industrial competitiveness (U.S. Department of Energy, 1994~. One year later, however, the DOE's statement of objectives and principles demonstrated a significant turnabout, noting that its first objective for technology partnerships was "to contribute to the Department's missions by leveraging the Department's resources with those of others" (U.S. Department of Energy, 1995~. The statement also said that DOE would adhere to a series of principles, the first of which is that "All cost-shared DOE cooperative research and development partnerships will support DOE missions."7i One catalyst for these changes was the so-called Galvin Report (Secretary of Energy Advisory Board, 1995), which recommended that the department no longer pursue industrial partnerships or the development of industrial technologies as a core mission.72 Another was the election of a Republican-controlled Congress that viewed DOE's industrial com- petitiveness activities in a less favorable light than its Democratically controlled predecessor. In 1995, Congress eliminated DOE's line-item appropriation for CRADAs at DOE weapons labs, citing excessive bureaucratic rigidity in admin- istering the funds from DOE headquarters (i.e., the objection was not to CRADAs

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TECHNOLOGY TRANSFER IN THE UNITED STATES 149 per se). While there is little doubt that DOE, like all other federal R&D perform- ing agencies, will continue to engage in CRADAs by drawing on regular labora- tory program funds, the amount of funds available for DOE technology transfer has been reduced by Congress's action. NASA In response to a highly critical internal review (Creedon, 1992), NASA has begun to radically restructure its technology transfer programs. Among other things, NASA has committed to increase the commercialization of technologies developed by its private-sector contractors, who perform the majority of NASA's R&D.73 Indeed, NASA now considers "the Commercial Technology Mission . . . a primary NASA mission, comparable in importance to those in aeronautics and space" (National Aeronautics and Space Administration, 1994~. NASA contin- ues to accelerate its efforts to work with industry in order to meet the Admin- istration's goal of devoting 20 percent of its R&D budget to industrial partner- ships. NASA is also taking steps to move its technologies to industry through more aggressive use of licensing. Finally, NASA has formed partnerships to establish three business incubators near NASA centers to provide assistance to entrepreneurs spinning off NASA technologies. In summary, most federal agencies will continue to conduct technology trans- fer using mechanisms that have been employed since the 1980s and before. NIH and USDA, in particular, are likely to continue what are considered to be success- ful programs. Downsizing and reduced congressional appropriations are likely to limit technology transfer in the DOE weapons laboratories, and downsizing at the DOD laboratories may have the same effect, although the department is attempt- ing to move the defense laboratories in the opposite direction (i.e., placing in- creased emphasis on dual-use research and technology development). Only NASA is involved in a major process of change in its technology transfer pro- gram. The program is ambitious and seeks to make NASA a leading player in federal technology transfer activities. Conclusions Until the 1980s, technology transfer from federal laboratories was tightly linked to the primary missions of the sponsoring federal agencies and, for the most part, involved closely related industries or regions. The Stevenson-Wydler Technology Transfer Act of 1980 and subsequent amendments throughout the decade provided a new technology transfer mandate. This new mandate encour- aged licensing of technologies developed in government labs and allowed entre- preneurially minded lab directors (of some agencies) more discretion to enter into collaborative research with industry in fields less closely related to their agen- cies' traditional public missions.

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150 TECHNOLOGY TRANSFER SYSTEMS IN THE UNITED STATES AND GERMANY For civilian agency laboratories that have long engaged in technology trans- fer to private industry as an integral part of their missions, the implications of these changes have not been as profound as they have been for defense laborato- ries. However, for some DOD and DOE defense laboratories faced with surplus capacity at the end of the Cold War, this new mandate seemed to offer a justifica- tion for significantly reorienting some of their activities and technological capa- bilities to serve commercial industries and thereby avoid downsizing. Questions surrounding the changing role of these latter institutions, particularly the three very large DOE defense laboratories, have fueled much of the debate over what the proper division of labor should be among federal laboratories, academic insti- tutions, private industry, and other institutions in a U.S. innovation system widely perceived to be in a period of rapid and significant change. Clearly, these laboratories are equipped with large numbers of highly trained personnel and in many cases are unique facilities housing valuable equipment. Some of these labs are at the forefront in areas of basic and applied research that are relevant to both public missions and private industry and already have suc- cessfully engaged in technology transfer to private companies. Many federal labs, however, have traditionally performed R&D that has little direct relevance to most civilian industries, and have had limited experience dealing with private companies as clients. For the most part (there are some notable exceptions), federal laboratories are more bureaucratically encumbered than other major R&D performers by virtue of their continuing public-mission focus and management structures (Secretary of Energy Advisory Board, 1995~. At a time of increasingly constrained public R&D budgets and shifting national R&D needs, maintaining these laboratories at or near their present size may not be the most effective way to meet the nation's new public R&D priorities (i.e., other publicly or privately funded R&D performers may be better equipped to take these on). Given the large size of some of these facilities and their resulting economic and employ- ment importance to their host states, however, the political impediments to their downsizing are likely to remain formidable. Ultimately, the nation will have to assess the relative strengths and weaknesses of its federal laboratories and other sectors of the U.S. R&D enterprise and seek to define the most productive role for each sector, while attending carefully to the interfaces between sectors and the potential for greater collaboration between them.74 At the same time, while there is no consensus concerning the appropriateness or cost-effectiveness of more federal laboratories getting into the business of tech- nology transfer to private industry, all federal agencies with significant R&D portfolios are coming to rely more and more heavily on private-sector R&D capa- bilities and commercial components to advance their public missions. In many technology areas, commercial companies operating in competitive international markets are increasingly setting the pace of technological advance in areas criti- cal to federal R&D missions. Yet, some federal agencies, particularly in the areas of defense and space, admit freely that they have much to learn about effectively