A private corporation, financed either (1) under an Advanced Research Projects Agency (ARPA) cooperative agreement in the form of a grant or loan, or (2) directly from ONR, could provide a timely and cost-effective interchange of technology and knowledge between ONR and private-sector companies and venture capitalists. In this report, such a company will be referred to as a Technology Transfer Corporation (TTC). The TTC is presented only as an example of the type of potential innovative solution ONR may wish to consider in an effort to increase technology transfer.

Principles of Operation
  • Cost sharing between ARPA and TTC could be arranged such that ARPA provides half the working capital in the form of a grant and half in a loan subject to repayment. The loan portion might be a non-interest-bearing, three-year loan, unsecured, with the possibility of early repayment without penalty. Repayment would be from TTC operational profit after taxes or by allocation of values inherent in equity deals (see below) or royalty income streams, or both.

  • TTC gross income would arise from nominal service fees and participation in joint ventures distribution and royalty income. Some type of sliding-scale service fee, perhaps proportionate to the capital of the inquiring party and based on cost plus 10 percent, would encourage serious inquiry.

  • The engine of any such enterprise is a system of incentives that encourage the creation of something new from the existing “raw material ” represented by ONR technology and private-sector need.

Incentive Structure
  • ONR. Successful implementation of a new organizational mechanism such as TTC would require active participation by ONR. There are several incentives for ONR participation:

    1. Increased license and royalty fees (per Public Law 99-502, Appendix C)

    2. Equity and dividend participation in third-party joint ventures

    3. Fees for increased use of ONR facilities

    4. Restoration to ONR of $1.8 million in budgeted funds resulting from selective transfer of responsibilities now performed in ONR 31, ONR 32, ONR 33, and ONR 36 (David Rossi, ONR, personal communication, 1995)

    5. Active exchange of knowledge and technology with partners in the private sector. Principal investigators (PIs) and ONR project manag-

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