5
Management Model and Oversight

Beginning in 1980, Congress enacted a series of laws to renew, expand, and strengthen cooperation between the federal laboratories and private industry. The Stevenson-Wydler Technology Act of 1980 (P.L. 96-480) made the transfer of technology developed under federal programs a national priority. This act was amended by the Federal Technology Transfer Act of 1986 (P.L. 99-502), which authorized government-operated laboratories to enter into cooperative research and development agreements (CRADAs) with nonfederal parties to conduct specific R&D. In recent years, a number of government-industry cooperative R&D programs have been established, including PNGV (Partnership for a New Generation of Vehicles), Sematech, and USABC, to name but a few.

Most federal agencies have used CRADAs as a means of conducting R&D projects of mutual interest with industry (see, for example, Wells, 1993; GAO, 1994; Branscomb and Keller, 1998), although no single management structure has emerged as the model most likely to succeed. To the surprise of the committee, a search of the literature did not reveal any attempts to integrate lessons learned from the management of diverse government-industry R&D programs. A comprehensive review of these programs was beyond the scope of the present study, but at the request of the study sponsor, the committee attempted to identify some lessons from the USABC that might benefit government-industry R&D partnerships in the future.

This chapter provides the committee's assessment of the USABC's monitoring and evaluation of contractor performance, followed by a review of lessons learned during the USABC program and a discussion of some common elements between the USABC, PNGV, and Sematech.



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--> 5 Management Model and Oversight Beginning in 1980, Congress enacted a series of laws to renew, expand, and strengthen cooperation between the federal laboratories and private industry. The Stevenson-Wydler Technology Act of 1980 (P.L. 96-480) made the transfer of technology developed under federal programs a national priority. This act was amended by the Federal Technology Transfer Act of 1986 (P.L. 99-502), which authorized government-operated laboratories to enter into cooperative research and development agreements (CRADAs) with nonfederal parties to conduct specific R&D. In recent years, a number of government-industry cooperative R&D programs have been established, including PNGV (Partnership for a New Generation of Vehicles), Sematech, and USABC, to name but a few. Most federal agencies have used CRADAs as a means of conducting R&D projects of mutual interest with industry (see, for example, Wells, 1993; GAO, 1994; Branscomb and Keller, 1998), although no single management structure has emerged as the model most likely to succeed. To the surprise of the committee, a search of the literature did not reveal any attempts to integrate lessons learned from the management of diverse government-industry R&D programs. A comprehensive review of these programs was beyond the scope of the present study, but at the request of the study sponsor, the committee attempted to identify some lessons from the USABC that might benefit government-industry R&D partnerships in the future. This chapter provides the committee's assessment of the USABC's monitoring and evaluation of contractor performance, followed by a review of lessons learned during the USABC program and a discussion of some common elements between the USABC, PNGV, and Sematech.

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--> Effectiveness of Program Management Written material provided to the committee, together with presentations made at committee meetings (see Appendix B), indicate that the three major U.S. automakers, Chrysler, Ford, and GM, have directed the USABC program, and the management structure (see Chapter 2) vests authority for critical decision making in their representatives. DOE contributes a large part of the funding for each project (50 percent in Phase I, 45 percent in Phase II), and DOE's decision-making role is carried out through a combination of consensus management and oversight functions (see Chapter 2). DOE is not represented on the partners' committee, and DOE representatives at management committee meetings are nonvoting participants, but they do provide oversight. DOE representatives are full participants in the TAC and working groups. DOE's formal oversight of the USABC program is spelled out in the cooperative agreement between DOE and the USABC. EPRI also plays a subordinate role to the automakers. EPRI is not represented on the partners' committee, and representatives of EPRI were nonvoting participants on the management committee in Phase I. In Phase II, however, EPRI has a voting member on the management committee. In addition, an EPRI representative from the TAC is responsible for managing one of the major battery development programs (USABC, 1996). The USABC secretary and business manager is also from EPRI. In practice, the relationships among representatives of the automakers, DOE, and EPRI appeared to the committee to be largely collegial rather than directive. For example, although all of the voting members of the management committee are representatives of the automotive companies, any course of action opposed by DOE was not likely to be adopted. In other words, the management process is consensual. The committee strongly supports the involvement and leadership role of managers from the three U.S. automakers in the USABC. Their participation provides the real-world experience, knowledge, and judgment required for this complex undertaking. A large-scale transition from the ICE automobile to EVs—as anticipated by the 1990 CARB mandate—will certainly require an understanding of the demands of the American driving public, including expectations of performance and safety. Representatives of the automakers are well positioned to provide this understanding, and the USABC goals were derived from market-driven vehicle specifications set by Chrysler, Ford, and GM. The committee was favorably impressed by the USABC's use of many proven industry practices for managing projects, controlling costs, auditing, and protecting intellectual property. The USABC has established effective mechanisms to ensure that the original statements of work for USABC programs are being followed or are adjusted according to established procedures. As a result, R&D has been focused on critical technical issues. The industrial leadership

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--> model has had a very positive influence on the management of the consortium. Decision making has been effective and timely, and projects that have not met defined milestones have been terminated. In the USABC management structure, program managers pay a critical role. Established industry practices require that program managers be experienced personnel capable of evaluating adherence to schedules and assessing progress toward meeting cost and performance goals. Information provided to the committee indicated that USABC program managers are appropriately qualified. However, because their role in the consortium's activities is critical, the committee believes that the selection of program managers should be subject to external peer review. The program managers review the technical status of programs at TAC meetings on a quarterly basis. (Each work group consists of the managers of all programs.) The committee was informed that during Phase I there were 10 to 15 program managers, corresponding to the number of ongoing development programs. Smaller work groups managed individual programs. The committee was concerned that program reviews by the current work group may not be effective because of the collegial relationship among the program managers. Although their reviews may be satisfactory, the committee believes that the consortium as a whole would benefit from external reviews. The committee's principal concern regarding the effectiveness of the USABC management structure was in the area of peer review. Both USABC peer reviews and critical reviews are performed by members of the TAC and are the basis for communicating status and issues to the management committee. Thus, USABC peer reviews are done by personnel within USABC's management structure. Independent, outside experts do not participate—in contrast to the peer review process of other government-supported R&D programs. The committee is concerned that the USABC peer review process may not be sufficiently objective because program managers are likely to defend developers for whom they have oversight responsibility. Lessons Learned A review of lessons learned from the entire process associated with the formation of the USABC was conducted in 1993 (Abacus Technology Corporation, 1993). The purpose of this review, which involved participants from industry and DOE, including the national laboratories, was for both government and industry to obtain a better understanding of the issues and improve the consortium model for future government-industry cooperation. The USABC's negotiations of agreements with subcontractors for the development of advanced batteries, as well as several CRADAs, were evaluated. Seventeen issues were identified, covering areas such as the approach to intellectual property in partnerships, tailoring negotiation processes to accomplish DOE policy objectives, and the

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--> CRADA review and approval process. The major findings of a subsequent review of DOE's implementation of the lessons learned (Abacus Technology Corporation, 1996) are listed below: Intellectual property agreements, which have been shortened and simplified, are significantly easier to implement. DOE fashioned its new patent waiver regulations after the Federal Acquisition Regulations (FARs), which are standard throughout the federal government. The process of negotiating USABC agreements has been significantly improved by increasing the quality and level of communication between DOE and the USABC and by the USABC designating a full-time business manager in 1994. The process of reviewing and approving contracts and agreements has been significantly improved by lifting the requirement for approval of subcontract terms and conditions, while retaining the requirement that cost and pricing information be submitted to the contracting officer for preliminary review and approval. The revised intellectual property agreements have also streamlined the CRADA review and approval process; the technical review and approval of subcontracts remains a responsibility of DOE headquarters. The agreements were streamlined by retaining the applicable cost principles (FAR Part 31) and eliminating the application of cost accounting standards in cooperative agreements. A further assessment of the USABC conducted by the U.S. General Accounting Office (GAO) determined the USABC's progress toward reaching its long-term and midterm goals; the funding that had been spent as of FY 1995 and the additional funds, if any, that will be needed; and the role of DOE in managing the consortium (GAO, 1995). The GAO found that DOE had not adequately responded to the ''lessons learned'' report (Abacus Technology Corporation, 1993) and had, therefore, missed some opportunities to make the consortium, and similar cooperative efforts in the future, more efficient. Following discussions with representatives of the USABC and DOE, the committee concluded that DOE has now addressed the significant issues raised by the "lessons learned" report and has acted upon the ones that are within its jurisdiction. For example, DOE has adopted new procedures that have resulted in the execution of a new cooperative agreement with the Advanced Reactor Corporation and a second cooperative agreement with the USABC for high-power energy storage technology in support of PNGV. Both agreements were executed in significantly less time than the original agreement for the USABC (Heitner, 1997). In the committee's judgment, DOE would benefit by taking advantage of this experience when launching new collaborative government-industry R&D programs, including a possible follow-on program to the USABC.

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--> Based on the collective knowledge of committee members of DOE programs, the committee had the impression that several different practices are adopted across the department when setting up cooperative agreements and that little effort has been made to standardize these practices or make them user friendly. In the committee's view, the issue of contracting reforms could be addressed under the auspices of the DOE R&D Council or the Laboratory Operations Board. Rapid implementation of the cooperative agreement between the USABC and DOE was hampered by major differences between government and industry practices with respect to the development and commercialization of technology. Although none of these differences was a "showstopper," their resolution required management attention that detracted from the efficient and expeditious implementation of the technical development program and made an already challenging schedule even more difficult to maintain. For example, the original equipment manufacturers in the automotive industry typically request that suppliers fund or share the cost of developing automotive component technology but do not require access to the technology. In contrast, DOE requires access to both pre-existing and newly developed technology (Abacus Technology Corporation, 1993). The first two years of the USABC's existence were largely taken up with the logistics of establishing the consortium and its operating principles and resolving issues relating to intellectual property. Nevertheless, the committee did not observe any adverse effect of this long induction period on the eventual selection of midterm and long-term battery technologies. Other Management Models The committee considered certain aspects of two other government-industry collaborative R&D programs—PNGV and Sematech—to determine if DOE has benefited, or could benefit, from their management experience. The committee recognizes, however, that PNGV was formed in September 1993 and thus had the benefit of the experience of the USABC's initial experience. Partnership for a New Generation of Vehicles The PNGV program is a cooperative R&D program between the federal government and the USCAR, which is made up of Chrysler, Ford, and GM. The decade-long program was instituted on September 20, 1993, by President Clinton with the goals of (1) significantly improving national competitiveness in manufacturing; (2) implementing commercially viable innovations from ongoing research on conventional vehicles; and (3) developing a vehicle to achieve up to three times the fuel efficiency of today's comparable midsized vehicles (e.g., the Concorde, Taurus, and Lumina) while maintaining or improving current

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--> performance levels, size, utility, and total cost of ownership and meeting or exceeding safety and emissions requirements. Government funding for PNGV is used primarily for development of high-risk technologies (Goal 3). The three USCAR partners will devote more of their resources toward technologies that have a clear, near-term market potential (Goals 1 and 2). They will also have significant efforts directed toward the development of concept and production prototype vehicles. In this regard, PNGV differs from the USABC, where no distinction is made between funding from the government and funding from the automakers. However, DOE funds long-term, high-risk research on batteries under its Exploratory Technology Research program (see Table 2-1). Both PNGV and the USABC involve the development of precompetitive technologies, but in both cases the three automakers all have related proprietary programs. Thus, Chrysler, Ford, and GM are working independently on EVs, in addition to collaborating on EV battery development through the USABC. Each company participates in the development of advanced automotive technology under PNGV, as well as developing its own proprietary concept vehicle that incorporates its own choice of advanced technologies (by 2000) and a production prototype (by 2004). The NRC Standing Committee to Review the Research Program of PNGV noted in its second report that some of the technologies under consideration for PNGV would, if implemented, result in very significant changes in the current highway-vehicle-fuel infrastructure (NRC, 1996). The NRC PNGV committee identified the infrastructure issue as an ongoing, integral part of the PNGV program. Major infrastructure changes would also be necessary if EVs were widely adopted. For example, recharging a vehicle at home or at a recharging station would replace trips to the gas station, which would have serious implications for the electric utility and oil industries. The participation of EPRI in the consortium ensures that the impact of EVs on the electric utility industry will be considered, but infrastructure requirements, such as standardized recharging systems and battery recycling, must also be addressed. As noted in Chapter 2, a number of other groups are addressing many of the infrastructure issues. In its RFPI, the USABC also asks that battery developers include environmental and safety issues in manufacturing, recycling, and the use and disposal of proposed batteries. The NRC PNGV committee found that the PNGV technical road map effectively describes the major technologies, the target performance levels, and the schedule for technology development (NRC, 1996). The present committee believes that a technical road map for battery development and manufacturing, as well as for infrastructure issues, would benefit any follow-on program to the USABC. A common feature of PNGV and the USABC is that both programs have set extremely challenging goals for performance and cost and very aggressive sched-

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--> ules for meeting them. The NRC PNGV committee noted in its third report that ambitious goals stimulate the rapid development of required technology and that significant improvements in fuel economy may result even if the target of "three times" today's fuel economy is not met (NRC, 1997a). In the case of the development of EV batteries, however, the present committee is not convinced that the USABC program will necessarily have a beneficial effect on the development of a competitive EV, especially if the lithium-polymer long-term battery technology fails to meet expectations. As the GAO noted in its assessment of the program, "the benefits of long-term batteries are clear, but their feasibility is uncertain" (GAO, 1995). Although DOE's participation in the USABC is a valuable addition to the consortium, the committee is concerned that DOE may not maintain a balanced portfolio of short-term development programs (under the USABC) and long-term research on EV batteries. For example, DOE may not be devoting sufficient resources to exploratory research on battery systems that might have longer-term applications in EVs beyond the dates specified by the CARB for market sales of EVs and that might provide a backup technology in case the batteries under development by the USABC do not meet their goals. Unlike the USABC, the PNGV declaration of intent includes a requirement for unbiased peer review (NRC, 1994): An unbiased organization acceptable to both the industry and the government, such as the National Academy of Sciences, will be asked to set up a peer review process to comment on the technologies selected for research and on progress made. The present committee considers that an objective, external peer review would also be beneficial for the USABC, as well as for any follow-on program involving government-industry collaboration. If a requirement for external peer review had been established at the time DOE agreed to participate in the USABC, it would not only have enhanced the USABC management process, but would also have helped communicate nonproprietary results to a broader technical audience, as has been the case with PNGV. The role of external peer reviews is widely regarded in the engineering and science community as an important component of the effective management of technical programs. In a recent study of energy R&D, for example, the President's Committee of Advisors on Science and Technology (PCAST) called for external peer reviews of DOE programs (PCAST, 1997). Sematech Sematech is a nonprofit R&D consortium of U.S. semiconductor manufacturers. Sematech has several features in common with the USABC (Daverse, 1997). Both consortia were stimulated by enabling legislation, and both initially received equal funding from government and industry. Both are focused on

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--> midterm development over a three-to five-year timeline, and both have focused on applied, rather than basic, research. In addition, R&D is conducted by supplier companies, rather than by member companies of the consortium. There is one major difference between Sematech and the USABC, however. Because the Sematech consortium members were threatened by overseas competition, their top management enthusiastically supported the consortium. A sense of urgency based on an imminent threat to existing business was not as strong for the USABC, which may partly explain the low financial stake of the three U.S. automakers in the USABC program. However, some innovative approaches to fuel and emissions announced recently by several Japanese car manufacturers may change this situation. Ford recently announced that it will invest about $420 million in a partnership with Daimler Benz and Ballard Power Systems to develop and manufacture fuel-cell powered cars by 2005 (Detroit News, 1997). Sematech has been very successful. It has fostered an unprecedented degree of precompetitive cooperation among companies that compete directly with each other in the marketplace. A concrete measure of Sematech's success is that, after 10 years of government co-funding, Sematech is now thriving with only member support. The U.S. semiconductor industry has also increased its worldwide market share, which was one of Sematech's objectives. The GAO found that Sematech not only spent government funds wisely, but also concluded that Sematech should be considered a model for future government-industry partnerships (GAO, 1992). The Sematech experience shows that an industry-led consortium can be very successful, and its many parallels with the USABC are encouraging for the USABC. Some other aspects of Sematech's experience could also improve USABC's strategies, especially the use of technical road maps. Sematech periodically issues detailed documents describing the future needs of the semiconductor manufacturing industries in all of the limiting technology areas. These documents are available to all interested parties, including suppliers to the industry and potential innovators. In the committee's opinion, a USABC technical road map would have been useful for informing the broader technical community of the consortium's activities and needs (subject to proprietary limitations), as well as a valuable tool for guiding battery development. Findings Finding 1. The industry-style management model adopted by the USABC has been effective in focusing development on well defined technical targets. The involvement of managers from Chrysler, Ford, and GM has provided valuable real-world experience, knowledge, and judgment, and under their leadership proven industry practices for project management and cost control have been used effectively.

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--> Finding 2. Even though the USABC program appears to have been managed responsibly, the lack of a true peer review process by independent, outside experts in a program that receives significant federal funding raises concerns about the program's accountability for taxpayer dollars. Finding 3. The resolution of differences between government and industry practices with respect to contractual and organizational issues drew management attention away from the technical development program in the early stages of the USABC, although there is no evidence that the choices of midterm and long-term battery technologies were adversely affected by the differences in business practices. Finding 4. DOE has addressed the significant issues raised by the "lessons learned" report from GAO and has acted upon items within its jurisdiction. New procedures implemented by DOE have resulted in more rapid implementation of some government-industry cooperative agreements. Finding 5. The experience of both Sematech and PNGV has shown the value of a technical road map for guiding cooperative government-industry R&D and communicating technical requirements to potential program participants.