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FEI)ERAL SUPPORT OF APPLIED RESEARCH A REVIEW OF THE UNITED STATES EXPERIENCE Albert H. Teich American Association for the Advancement of Science The federal government is deeply involved in applied research and development (R&D) associated with technical innovation in ache commercial marketplace. In fiscal year 198S, the government spent an estimated $4. 9 billion, or nearly lO percent of itch tott1 R&D expenditures an applied R&D of commercial significance. Although this represents a major commitment of resources, federal polity concerning support of commercially significant applied research has long been characterized by confusion, ambivalence, and a general lack of ache kind of consensus that underlies federal support for basic research or for applied research that relates directly to an agency's mission. This paper reviews, briefly and in rather broad brush, some aspec~cs of the U. S . experience over the past 20 years with federal programs chat support applied research intended to serve ache commercial marketplace. It examines a number of Ambitious, highly visible efforts to promote industrial innovation or deco respond to specific national problem, such as energy. It also looks at a variety of less visible, more lasting program associated with specific agencies, sectors, or industries. lye policy context for federal support of commercially sigslificant applied research has been influenced heavily by the mount of attention given to a number of a~hitious, high-le~rel efforts 9 none of which are regarded as really successful. This paper contends that the more positive experience witI% other less publicized programs should not be overlooked in Ache development and implementation of policy in this read. PRESIDENTIAL E"ORTS TO STI2fUlATE INl)USl~IAL INNOVATION Over the past two decades, successive administrations have confronted the problems cuff lagging economic growth and declining productivity and international competitiveness, and tuned to technological innovation as a means of taking action. The success of technology- based programs in such areas as defense and space has led policymakers to seek repeatedly in technology a means of addressing 37
other pressing concerns of the day. Presidents Kennedy j Nixon, and Carter all followed remarkably similar paths and developed ambitious schemes- for s~cimulating industrial innovation. None of chose programs ever yielded the kind of results they had promised. The reasons, however, lie less in technology and more tn shifting political winds. CIVILLY I=US=~ TE~O== PROG~ Federal support for CiYiii~ ~ intended to stimulate economic growth began to receive serious consideration during the Kennedy Adminis~cration. 2 . lathe notion grew out of parallel discussions among ache President9 s economic and scientific advisers. Me Council of Economic Advisers as well as the Cabinet Committee on Growth believed in the importance of technological progress deco economic growth. They saw barriers to this progress resulting from the divergence between private and social rates of return to investment in civilian R&1). At the same time members of Me Civil Technology Panel of the Presiden~c's Science Advisory Committee were concerned that large investments In military and space R&D were diverting ~cechnical resources from activities related directly to the civilian economy They suggested that federal civilian technology programs were needed to offset the impacts of military and space §&D arid to maintain U.S. technological leadership in other key areas Ye no~cior~ of an expanded federal role in civilian technology reflected Ye Kennedy Administrationts Ilberal°ac~civist poli~cical philosophy, and presidential. advisers apparently were t20t concerned about the government ' ~ ability deco eke decisions that traditionally had been left to the marketplace. They identified Area sectors as meriting special anion: textiles, coal, and housing. Each was seen as relevant deco basic societal needs ~ lagging in innovation, and ripe for Me application of science and technology. From Weir discussion Merged ~e Civilian Industrial Technology Program (CITE), designed by J. Herbert Hollomon, a former industry R&D executive who had been named to the newly created post of Assistant Secretary of Commerce for Science and Technology. The CITE was intended to foster innovation in industries detrained by the go~rers~ment to be cri~cical to national needs but whose performance was ~nadequatee I&c was an ambitious plan; Hollomon saw the CHIP as e~ren~ly Being on ~ part with to National Science Foundation (NSF). Through the program, the govar.=ent would s~c~ulats ind~tzg-university cooperation, funding academic scientists to work on industrial problems ant supporting generic research in industry. In addition, an extension service' modeled on the Agricultural Extension Service, and a nether of new technical infor~a~elon programs would be created. - 38
The CITE encountered strong opposition from the very industries it was intended to benefit and never received congressional approval. Opponents questioned whether the government could be more successful than Ache priorate sector in selecting and funding R&D programs and saw threats of government interference in a system they felt was operating reasonably well. Eventually, a much scaled- down derivative known as ache S tate Technical Services (STS) program was steered Trough Congress by the Johnson Administration in 1965. Instead of supporting R&D, the STS program sought merely to deliver ~eechnical ln£ormat:1on, using stance and local. agents and efforts developed Joins y by indds try, universities, and the federal government. Without the kind of strong ties to specific research programs that backed up Ache Agricultural Extension Service, the STS program never really took hold. I-c was terminated by Congress in 1969. NED TECXNOLOGI CAL OPPORll~ITI ES PROM Despite its very different ideological coloration, the Nixon Administration, Music a few years later, developed a civilian technology initiative that had much in common witch the CITE. Like the Kennedy and Johnson Administrations before it, the Nixon Administration was concerned about the economic situation it faced-°sluggish economic growth, a slowdown in produc~civity growth, and an unfavorable balance of trade. the Nixon Administration's response was formu3.ated in an atmosphere influenced on one side by the dr~-cic success of the Apollo ProJect and on the other by growing demands to apply the nation's scientific and technological capabilities deco pressing social and economic needs. As the Presiden~c h~m~e3~f put it in a 1971 message to Congress on economic policy, he hoped to blind the means to insure that. . O the remarkable technology that took...Americans5to the moon can also be applied to reaching our goals here on earth.. he Presidency' hopes, furler ar~cicula~ced in subsequent speeches, led him, in early 1972, to declare a new national R&~) policy emphasizing the role of the federal government in encouraging priorate sector R&D in areas where market forces are not sufficient Consistent witch that policy, the Nixon Administration began a program development exercise that became know as the New 'rechnological Opportunities (NTO) program. Conducted by the Whi~ce House Domestic Council and led by William Magruder, who earlier had headed the unsuccessful attempt to obtain congressional approval of the supersonic transport project, the effort was intended to further technological initiatives that could be developed with government resources, transferred to industry, and sold in the regular commercial marketplace. 39
The federal agencies, industrial firms, and other organizations from which Magruder sought proposals responded with a range of large - scale, costly, and technologically Ambitious ideas, including a new high~speed ground ~cransportation system for the Northeast corridor, new nuclear power systems for commercial ships9 a campaign against kidney diseases and development of offshore ports for deep - draft tankers O The first year costs of the total package were estimated at S10 5 billion; over five years they came to about $1 billion. - U~ike the Kennedy Administra~cion's CITP, the ~0 initiative did not fall at the hands of Congress. Unwilling, in a period of budget constraint, to commit funds on that scale for efforts of unproven technical feasibility and merit, the administration itself decided not to seek funds for any of the ideas. In what seemed deco many a face°saving gesture, it chose instead to establish two ~s~l experimental programs - - the Experimental Technology Incentives Program at the National Bureau of Standard and the Experimental R&D ~ Incentives Program at NSF. Those program-. were intended deco ex=mine--on a scale- several orders of magnitude smaller than the NTO program had planned--how government policies can be employed to influence innovation in the priorate sector. Each of the programs lasted a number of years and yielded some interesting results, but not in ache Inner envisioned by the architects of the TO program. INDUSTRIAL INNOVATION ~ITLATIYES Civilian technology received relatively lit~c~le action, at least at Me Ice House level, during the Ford Administration, but interest waxed again in the iate 1970's as the Carter Administration looked for ways to respond to the Awe types of economic problems that had plagued its predecessors. In April. 1978, the President ordered a full-scalz Domestic Policy Review of Industrial Innova~cion aimed at iden~cifying poten~cial federal 8CtiO~ in Mat hew. The review was broader based and more comprehensive than else NTO review had been. Seven approaches deco stimulating ~nnova~cion were . ~ _ . . . . . ~ ~ _ ~ ~ ~ ~ ~ ~ ~ _ ~ ~ _ ~ examined in ache one and a halt year study, tuclu~ing detract Several support of commercially relevant R&D. Under that heading, the Beast force recommended several initiatives, including increased federal funding of ~mi~rersit:y-indu-.try cooperative research and direct federal" stxppor~e (in cooperation with industry) of generic applied research. President Carter incorporated these two recommendations in his Industrial Innovation Initiatives, announced with some fanfare in October 1979. The notion of federal support for generic applies research--research underlying specific industrial sectors°-was given special emphasis, and the President proposed creating four generic a 40
o technology ~enters, three sponsored by the Department of Commerce and one by NSF. Most observers at the time regarded the plan- - and other elements of the President' s initiatives--as modest in comparison to ache scale of the Domestic Policy Review and the expectations it had raised. In any case, a similar plan had been introduced already in Congress by Senator Adlai Stevenson, chairman of ache Senate Subcommittee on Science, Technology, and Space . The final legislation that Came OUt of Stevenson' s initiative (the Steve~on° Wydler Technology Inno~ra~cion Act of 1980) incorporated the President' s proposal as a Coopera~cive Generic Technology Program (COGENT), and the Depasmen~c of Commerce began implementing the program i~edla~ely. Three generic technology centers were planned: in powder metallurgy, welding, and tsibology. The centers were Deco be independent nonprofit corporations conducting in-house research. Initial. federal funding would be phased down gradually, and the centers were supposed deco become self- supporting after five years . . Before the centers could be established, however, the political winds shifted, and the Reagan Administration came into power with a new political agenda reflecting budgetary austerity, ~ much different view of public asked private sector roles, and a negative predisposition Coward new civilian programs and agencies of all kinds Thus, the Cooperative Generic Technology Program nearer was imp lemen~ced . AGENCY AND SECTORAL INITIATIVES A distinguishing characteristic of ache presidential initiatives described above is their broad-based origins in high-level policy discussions of the federal role in industrial innovation. While each initiative eventually honed 4n on a few specific technological sectors, all derived from an overview of the nation' industry and economy and the presumed points at which government intervention flight be of value. A somewhat different variety of federal in~rol~rement in civilian applied research grew up in the context of particular agencies or problems in specific sectors. By their nature, those involvements were narrower, although, in some cases, they were no less ~ - hitious. The NSF experience win applied research in the Interdisciplinary Research Relevant to Problems of Our Society (IRRPOS) and Research Applied to National Needs (RANN) programs is an instance of a program deriving from a single science-based agency. The alternative energy and automotive research programs are examples of sectoral initiative . 41 -
THE NSF EXPERIE~NC~ '-Ir`I IRRPOS AND RANN Although the National Science Foundation was established as a basic research agency, it has been involved over ache years in a variety of applied research actf~rities and cooperative programs with Aldus try. On the whole, those activities have been imposed on NSF by forces in the Office of Hanagemen~c and Butge~c (OMB) and Congress eager to see NSF's scientific Id technical capabilities put to use is: ways with more direct and obvious benefit deco the nation. Me largest and probably best known of the efforts was the program of Research Applied to National Needs of the early 1970Cs. - The RANN program grew out of Me smaller Interdisciplinary Research Relet c to Problems of Our Society program established by NSF in 1969. The IRRPOS program had been created tn response to revisions that Congress had made in NSF's Organic 8c~c the year before, permitting it to support applied research. At a yearly fading Clever of about $13 million, INTROS suppor~ced a variety of interdisciplinary research projects in universities national laboratories, and nonprofi~c organiza~cions. When NSE suited its fiscal year L972 budget request, however, OMB made the agency an offer it could not resist. The budget office indicated that if NSF were willing to give increased emphasis to research project support at the expense of institutional and educational support, it would receive an unprecedented $100 million increase in its budget~-nearly 20 percent--including about $SO million In new money for applied research. The National Science Foundation agreed, and' in early 1971, incorporated IBRPOS into a new Research Applications Directorate with an activist, problem-solving philosophy Id a first-year budget of $34 million. The BANN program grew to an ar,~.~1 budget level of S84 Minion before being reorganized out of existence in the late 1970's. Among ache types of research the program supported were earthquake engineering c fire safe1:y, technology for Me handicapped, and so lar and geothermal. energy . Experience with the IN program was mixed. Some of Me progress were pioneering efforts and had significant impacts. Until ache Energy Research and Developmen~c Administration (ERDA) was established in -1974, NSF, through the RANN programs was the federal go~rernmen~c's leading agency for solar and geothermal energy R&I). In ERDA, ache NSF efforts became the core of what grew deco be a mefor federal program free the discussion in the next section). Fire safety, later transferred to the National Bureau of Standards, and earthquake engineering also yielded mayor results. Nevertheless, the psogr~ always was controversial, and questions were raise& contin'~Plly about tics effectiveness and itch ~fit. among other NSF programs. _ 42
Much has been said and written about the RANN program, but in essence it seems that the program' s difficulties lay in ache concept of wing an academically oriented basic research agency to conduct applied research in a setting not ~ Inked directly to federal Bliss ions . As Blar~enship and 7=mbright put it several years ago: The primary lesson of the RANN experience...is the extreme difficulty of establishing a ~ free standings applied research program which is supposed deco draw on the scientific and engineering talent of ache nation as a whole in an agency whose primary mission is We support of disciplinary-orientet basic research and whose primary constituency is the academic scientific community. * * * Such a free standings program is caught tn a web of conflicting challenges, pressures, and expectations: a university scientific constituency which wants to do basic research or at. least define its own research agents; other ~mission. agencies which have an understandable concern about the relations of RANN's efforts to ~cheir own; the OMB and Congress which have distinctive, if changing, views about the purposes of ache RANN program and are continually asking that its actions be justified or explained in some rationalistic framework. ~-~vERAL FUNDING OF ALTERNATIVE EN== Ann AND DEMONSTRATION Prior to the energy crisis of the early 1970 ' a, federal involvement in energy Rho was limited mainly to civilian nuclear power. She civilian nuclear power program played a Boor role is coercing a nuclear power incus try in the United Stances. Although the program is controversial in many ways, it is regarded generally as a successful instance of federal support of R&D for the commareial mariceeplace. - However, political opposition associated with environmental and safety concerns, a complex Mediatory piecing, and the high cost of capital began to slow the growth of the nuclear power industry by the late 1960's. At ache same the, the balance between domestic supply and debased in pe~croleum began to shif~c, a process that led eventually to the oil embargo of 1973 and deco a dramatic rise in *le pos ition of energy on the nation's political agenda. Out of the ferment surrounding energy policy doing this period grew a series of federal initiati~res.in nonnuclear, or alternat:ive, energy Rag). The growth in alternative energy program was driven by the influence of the environmental movement, by a series of projections asked forecasts indicating a growing energy shortage in coming years, and by the need--felt both in Congress and in the White House--to
respond in some manner to increasing public demands for action. A small program in solar and other uncon~rentiona1 sources-of energy had been initiated several years earlier within NSF's RANN program, and an Office of Coal Research in the Deparmen~c of the Interior had beer established as well O At the she time, under ~ 1970 mnendmen~c to the Atomic Energy Act, several of the Atomic Energy Commission's large and powerful national laboratories had begun to diversify into nonnuclear energy R&D. All of these program-= were caught up quickly in growing congressional enthusiasm f or alternative energy . lender the umbrella of several pieces of alternative energy legislation passed in the wake of gasoline shortages, funding levels for solar and other renewable energy R&D grew from less mast $SO million per year in the early 1970's deco $800 million per year by the end of the decade. At the same time, proposals for government program-= to develop and test the feasibility of technology es for comer~cing coal to oi1 and gas, which in Me past had not generated broad interest, gained considerable congressional support. Energy R&D was centralized first in a new Energy Research and De~relopment Administration, "later in a Department of Energy (DOE). The alternative energy progr~'nC went beyond applied research and engineering development, encompassing demonstrate on efforts and ocher commercialization activities intended to assist the techrto~ogles in reaching the marketplace more quickly than they would without government support. hey ranged from large°scal~e d~mons~ra~cion projects, to engineering tests and evaluations to reduce technical and economic ~certalnties, to financial incentives such as tax credits. The Cancer Administration based itch support of those efforts con a political philosophy that stressed the federal responsibility deco accelerate the development of new technologies that were important to national priorities, but that the otaricet was unable deco deterrer quickly enough. The demonstration projects, together witch most other elements of DOE's al~cernative energy world, were poli~cically controversial from the outset. As the urgency of the energy crisis diminished and the Reagan Administration°-with a much different political philosophy~- succeeded the Carter Administration, they became political liabilities. The first round of Reagan budget cuts proposed elimination of many of the projects asked drastic reductions in others. Although Congress restored okay proposed cuts, permitting some of the projec~cs to continue, 1:he Reagan Administration persis~ced, proposing similar cuts ant terminations in subsequent years. Over the past five years, it hat suceeeted in scaling down DOE's alternative energy world from ~ level of IS million in fiscal year 19BI to $203 million in fiscal year 1985.
The Department of Energy' s experience with alternative energy demonstration programs often is cited by critics of federal civilian R&D as an example of how and why the interventionist approach does not work. The projects are described as failures, as "expensive white elephants, ~ with little Chance of commercial success, demonstrating only how "misguided. federal efforts can waste vast sums of money. Ire fact, a more e~ren-handed appraisal of those efforts would probably conclude that: most were nearer given a chance to succeed or fail on technical grounds. As in so many other instances of federal civili~ast R&D, the programs were cut off before real assessment court be made. THE COOPERATIVE AUlOMOTINtE.=SEARClI PROGRAM Like energy the automobile Industry posed problems for the nation in the late 1970' s - - the automobile' s prodigious use of petroleum and the industry's inability to keep pace with foreign competitors. Also, as with energy, the au~comobile indu~ery's problems seemed in need of a technological solution, one to which the federal gover~en~c court contribute. Thus, in late 1978, the Secretary of Trar,~porta~cion called for a gover`=ent°industry program, on Me scale and with the priority of Apollo, deco Bee- in~ren~c. the automobile . The c811 was taken up by the Office of Science and Technology Policy in the White One, ant, within a few months, the Science Advisor and his staff had developed ~ plan for a Cooperative Automotive Research Program (CARP). The program faced a host of difficulties from the outset, perhaps the most significant-of which was the lack of ~en~hustasm on the part of the automotive industry. Spokesmen for the industry questioned the need for such a program and expressed doubts about the government's ability to conduct the kint of R&D the industry needed. The resulting program was described by Ives designers as a basic research effort, but, as Logston points out, tt:~ounded Rather like applied resaarch...in basic research clothing.. he program aimed to contribute to the Improvement of automotive technology, using capabilities of industry, universities, and the federal government, not necessarily for joint efforts j but in a coordinated manner, under supervision of a Joint oversi Ups committee. KQY C0 the program was cost-sharing by industry. The federal government (through the Department of Transportation and the National Science Foundation) was to put in $800 million over ten years; industry was to contribute an additional $500 million. These Pious plans were scaled down somewhat when they encountered fiscal realities. The budget request for the first year of the program was $12 million; industry contributions were waived because of financial problems. 45
Even at this scald-down level, CARP never really got rolling. The program was deleted from ache federal budget in early 1981 by the Reagan Administration as inappropriate for government. As the program lacked a strong constituency in either the automotive industry or Congress, its deletion was not contested. In the program ' s wake remains some confusion about Ache hype of proj eats that it was intended deco undertake. Critics claim them to be studies that industry could and would have done on its own, and defenders counter that the program was des igned to support generic research ~ too far removed from Mediate applications to gain support from individual rlrms . SOME LONG-TERM SUCCESSES Several other areas of federal involvement in civilian applied research are noteworthy for operating successfully over many years without attracting the same rype of a~ctenelon as did the efforts described above . They include aeronautical, agricu1 tural, and b iomedical research in, respectively, the National Aeronautics and Space Admin~s~cration, the Department of Agriculture, and the Na~cionai Ins.~cutes of Hesith, as well as broader generic applied research in the National Bureau of Standards and the Department of Defense. A~ONAUTI CAL RES EARCH Lee role of the National Advisory Committee on Aeronautics (NACA) and its successor agency, the National Aeronautics and Space Administration (NASA), in commercial aviation research often is cited as ~ prototype for federal involvement in civilian applied research. Indeed, since ache estab1 ishment of NACA in 1915, the federal government has contributed in important ways to innovation in the commercial. aircraft industry . Actually, NACA was established during World War I primarily to support Ache go~rernment's interest in military uses of aviation. Despite Chat mandate, in ache years following ache war (1920~1935), NACA worked on problems of aeronautics And aerodynamics common deco both military and commercial aircraf~c.t During ~c}tis formative period, =e agency's main role for the commercial aircraf~c industry was in constructing and using :large-scale test facilities--especially wind tunnels--and making performance and Incest dla~ca in aerod~rnamics available to ache industry. Test results from NACA's facilities led to many important improvements in ache design of airframes 9 such as the nNACA cowl," which cut drag by reducing wind resistance around engines. Other inr~ovations to which NACA work contributed included retractable landing gear and better positioning of aircraft engines _ !~6
on the wing. 1- The engine location principle developed by NACA "had a revolutionary effect on military and commercial aviation the world over [permi~cting] the speeding up of cruising scheduled on ache air lines from 120 miles per hour. . . to 180 miles per hour. " As emphasis on mili~cary needs grew in the late 1930' s, NACA' s work shifted to severe those needs. tactile NACA' s impacts an civilian aviation were still substantial, they were derived more frequently from military applications. The Na~cional Advisory Co~i~ctee on Aeronautics grew up with the American aviation industry and provided a research infrastructure for it during a period when ache industry's own resources were quince modest. In its early days, it did little of what today might be termed basic or even generic applied research, but it was a key element on the commercial aircraft scene. During World War II, .~ACA's work was, of course, directed toward military needs. As the war ended and the postwar ~cransition in U. S . science asked technology began, NACA found itself in a much different environment. The military retained a large role in aircraft research, and ache aircraft manufacturers themselves had grown and matured to ache point where they were capable of sustaining their own R&D efforts. So, NACA turned to sponsoring fundamental aeronautical research in a more academic style as its own research efforts Severe eclipsed by those of DOD and industry. For more than a decade, NACA played a background role as ache federal R&D es tab lishment, led by the military, grew to an entire lay new scale of operations. In 1958, when ache appearance of Sputnik suddenly made space a high national priority, NACA was absorbed into ache newly formed NASA, contributing its basic structure and three aeronautical research centers (Langley, Ames, and Lewis) eo ache cause. As NASA's space activities grew, aeronautical research was squeezed. The Department of Defense Scoop over a Larger share of the responsibility for mili~cary-related work, and many aeronau~cical researchers were transferred to work on space. Subsequently, in the late 1960' s, aircraf~c noise problems and concerns about energy led to ache revitalization of NASA' s aeronautics programs . An indication of the value of NASA's role in aeronautics and the dep th of Sacs support by incus try and ache larger aeronautics communi Icy is the response to an early Reagan Administration effort deco eliminate Cue program. Regarding the aeronautics program as yet Archer example of federal. in~rol~remen~c ire ast area more appropriate to ache priorate sector ~ like energy arid automo~cive research), the new administration proposed to make deep cuts in it. Substan~cial opposition from both industry and Congress persuaded the adminis tration to recons ider its proposal in favor of an interagency review of the program. The resulting report, published by ache Office of Science and Technology Policy in November 1982, affirmed the need for NASA's aeronautical research and technology program. It cited aeronautics as a clearly established area of government _ JO _
responsibility, noted that the benefits of aeronautical research and technology were not likely deco be appropriable by priorate firms, and concluded that The mission was of sufficiently high priority to compete for available federal funds. The report emphasized that the grounds for government support were strongest where the research is long berg and/or high risk, and it indicated that government support of civilian technology demonstration generally is inappropriate O AGRICTJLTURAL RESEARCH Federal involvemen~c in agricultural research has a long and distinguished his~cory--longer, in fact, than almost any ocher area of federal R&D o lathe history began with the establishment of the Department of Agriculture (USDA) and ache passage of the Land-Grant College Act in the mid-1860's. It was Ascended with ache Hatch Act of 1887, which created a system of federal funding for agricultural research in each state. lye ins~ci~cu~cional arrangements that have evolved within that system include ~ large federal establishment with government Laboratories and field stations throughout ache country and a parallel. structure of state agricul~cural experiment stations. Generally, the experiment stations are integrated with academic (land-grant) institutions and witch state agricultural extension programs, which bring innovations directly to the farmers. Although many cri~cicisms have been leveled at ache federal agricultural research establishment in recent years, the system nevertheless is widely regarded as responsible for the enormous productivity of UO S . agriculture. In the words of former Presiden~cial Science Advisor Donald Hor`.ig, "The system is probably the most successful governmen~c effort to date in s~cimulating the innovative process." Under current arrangements, the Agricultural Research Service, USDA' s in-house research agency, supports basic and applied research on plant and animal production; use and improvement of soil, water, and air resources; processing, storage, distribution, food safety, and consumer services; and human nutrition. Work includes improving availability of micronutrients in soil, improving harvesting methods, reducing food spoilage, and increasing yields. The Cooperative S. tate Research Service ~ CSRS ~ supports research at state agricultural experiment s~ca~cions and other eligible institutions. Most CSRS funds are distributed under a formula system rather than through peer review. In recent years, however, CSRS also has begun programs of competitive basic research grants and special grants for.research on such urgent problems as desertifica~cson. Key elements in the success of the agricultural research system are said to be its deceneralization and its close ties to the users of its technologies, the farmers. Decentralization allows the formulation of research priorities and the conduct of programs in a manner responsive to rapidly changing focal and regional needs. finis _ 48
same factor is regarded by some as weakness in the system, in that i. leads to fragmentation, lack of coordination, and duplication of effort . What some see as respons iveness to local user needs, others see as lack of long- range planning and priority setting. As one recent study noted, Agricultural research has been subj ect to ~ the paradox of success.'' Several points with regard to the agricultural research system and its impact on inno~z~cion in the private sector are worth noting. First, the need for ~ government effort is influenced heavily by the character of the agricultural industry in ache United Stances. The market system in which most producers (farmers) operate exerts substantial pressure to innovate in order to remain economically competitive. Farmers spend a considerable portion of their Dime searching for, screening ~ and experimenting we th new technology- - as well as adapting it to their specific needs. 2 Few farmers, however, can afford to conduct any formal Rat) of their own. Thus, they are ideal clients for a government- funded research system that produces generic technology and makes it readily available to users. Second9 as csi~cics have noted, ache decentralized manner in which research priorities are set and programs are carried out tends to neglect new areas of basic research and favor more specialized problems of immediate relevance to users. Until this lack was recognized and programs were established in response, USDA was felt deco be lagging in areas of knowledge essential to continued progress in agriculture ~ for example, biochemistry of photosynthesis and the new biotechnology. Third, ache Agricultural Extension Service, with Inca ne two tic of agents who work direc~cly with farmers, is an essential element ins the success of acre overall system. Ex~cension agents have close links deco the users and ~ an the some time, have act ess to the technical resources of the land-grane uni~rersi~cies and USI)A. There have been several attempts deco emulate aches system in other sectors ~ for example, see the earlier discussion of the Civilian Industrial Technology Program), but none have achieved the some mix as in the agricultural sector. Finally, the decen~cralization in all parts of ache system has helped engender a broad base of political support and this--as well as the fun~,nental" position of agricul~cure in the nation' s economic and social structure--has produced a rancher stable budgetary environment. Stability in funding is desired universally by researchers- and research institutions. On the other side of stabili~cy, however, is bureaucratic rigidity and resistance to change, and the agricultural research system has been criticized often on such grounds. _ 49 _
AP PLI ED RES OX IN rrIE B I OMED I CAL FI ELD Generally, the main miss ion of the National Institutes of Health (NIH) is regarded as teas ic b iomedical research a In fact ~ NTH is the largest supporter of basic research among all federal agencies. At the she time, however, NIH is also ~ mission agency whose goals are the advancement of the nation' s health and the improvement of medical practice . I-n federal Rho statis~cics, more than one third of NIH2tupported R&D is considered deco be applied research and development. Much of this falls under the NIH category of cl inical research, in which the fundamental knowledge developed through basic research is used to classify pathological conditions and identify methods for intervention, prevention, and amelioration of those conditions. Such studies include clinical investigations in humans and preclinical research22o develop disease models, diagnostic tests, and prosthetic devices . The Na~c~onal Cancer Institute, a unit of NIH, also has had a subs~cantial Drug Development Program since i9S5. The program is involved in virtually all stages of drug development synthesis, screening, and toxicology testing, as well as clinical trials. Drugs developed under the program are licensed deco priorate firms for commerc ial production and marice tiny a Technology- related programs at NIN have supported the development of artificial joints through R&D on problems of implant design and materials and on surgical techniques and postoperative rehabilitation. In ocher areas of technology, NIH has played a key role in ache development of such new diagnostic ~cectsniques as computerized axial tomography (CAT), positron emission tomography (PET), and ultrasonic scanning. Attention in recent months has focused on an NIH-de~reloped AIDS diagnostic test kit, currently in the early stages of marketing and commercialization. An area of special policy interest in recent years has been that of so-called orphan drugs. This. are drugs hat treat disorders of limited incidence, drugs for which there is not a market large enough to a~ctract commercial R&D and production. Lobby groups associated with low- incidence disorders have made a strong case for special government respons~biliq in this applied research area, and an orphan drug and derrick program has been established in the Food ant Drug Administration ~ ~A) ~ Applied research activi~cies at NIH have attracted relatively little a~c~cention in the realm of federal innovation policy. Most policy debates relating deco biomedical research have focused on the level of federal support--~che number of grants for basic research. Discussions of the federal. role in biomedical innovation have encored on issues associated witch regulation (for example, the impact of the FDA approval process on new drug development) and cost 30
containment. Nevertheless, it is difficult deco imagine the U. S . health care system functioning and advancing in the same manner as it has without the support of NIH The intimacy of the ties between baste and applied research in ache biomedical area and the widespread public support for almost any government program that promises to contribute to improved health probably are key factors in making the federal role productive and relatively noncontroversial over ache long team ~ GENERIC RESEARCt] IN THE NATIONAL BUREAU OF STA~ARI:)S The National Bureau of Standards (NBS) in the Department of Commerce is another agency that has long played an important and relative ly uncontroversial role in support of technology development for the commercial marketplace. lye agency was established at the turn of the century as a means of providing U.S. commerce and industry with national standards of physical measurement. Its research programs, as well as its ties to the priorate sector (which applies its standards and me~chods) and to state and local go~rernmen~cs (which enforce the laws employing those standards ), grew naturally out of its mission. In Ache early part of the 20~h century, before the federal R&D Scab lishmen~ grew to its present scale, the National Bureau Q f Standards played a central role in raising the scientific Petrel of industry and in supporting other government agencies. As U. S . industry evolved its own technological resources, NBS moved more heavily into fundamental research, studying basic physical standards and contributing to nuclear phys ics, mathematics, electronics, and a host of over fields. The agency also was called upon increasingly to use its technical. exper~c~se in support of other federal. agencies. More recently, NBS has been shifting the balance of its efforts back toward its traditional role in support of industry through generic applied research. Current programs include research on materials characterization, processing, and performance; fundamental measurements and standards for physical zincs of time and frequency, eempera~cure, pressure, length, mass, voltage, and electrical resistance, for such uses as industrial process control and instrument calibration; and radiation measurement, which contributes JO ache technical base for industries ranging from nuclear power to photography. A new NBS program is developing generic measurement methods and standards for industrial applications of bio~cechnology. Archer ac~ci~rities include building research (aimed at removing technological market barriers and improving the safety of the building construc~c~on industry), signals and systems metrology (developing measurement methods and standards for use in electronics, satellite communications, and optical fibers), and chemical engineering necrology. The National Bureau of Standards also has established an Automated Manufacturing Research Facility for research in robotic it
systems, are' Licit intelligence, hierarchical control theory, and software engineering. Questions about ache appropriateness of the go~rernmen~c role in this area, as well as in building research and in fire research, have been raised a number of times in recent years, but the political consensus generally has favored ache programs' contin,'= tion 9 and NBS is widely regarded among those familiar with its work as a Marital contributor to industrial innovation in ache United S talcs . SOME CONTENTS ON THE ROLE OF HE DEPOT OF DEFENSE Although its main mission is, of course, national defense, the Department of Defense (DOD) probably has had more influence on technology for the civilian marketplace in recent decades than has any other government agency. This is due to the size and scope of DOI) activities, to the technology- intensiveness of military factions, and to the extreme competi~cion of the ares race, which drives R&D forward at a rapid ranch. A detailed discussion of the role of DOD in the promotion of civilian ~cechnology is well beyond the scope of ehis paperO The paper would be incomplete, however, without at least a brief mention of the charac~cer of DOD influence Defense R&D affects civilian t.echnology in several distinct but interrelated ways: ( 1) Defense requirements push forward the broad frontiers of technology, and the civilian n~ariceeplace takes advantage of the new technologies made available. A classic case is in microelectronics e As is well known, the advances in semiconductor technology, which led from transistors to integrated circuits deco large-scale integration, were given echoic initial impetus by the need to miniaturize components for ballistic missiles and other weapons systems. Commercial firms°-in many cases the see ones that conducted R&D under defense contracts°-subsequently employed these technologies in computers, consumer electronics, and a variety of other products. A similar story can be seen in the aircraft industry. As noted in an earlier section, the growing role of DOD in this area eclipsed that of NACA after World War II. (2) Specific ~cechstologies developed for miti~cary applications may be adapted for use in the civilian economy. Early commercial ~cransports were direct descendants of military aircraft. Boeing' s jet were direct aescencrancs or Mary a~rcra~. toeing- s famous 707 used vir~cually ache sue airframe, design as that company's KC~ 135 Canker developed for the Air Force . 5 Numerous smaller examples of spinoffs and technology transfer have been identified as well. Officials at DOD.°-par~cicularly at the in-house laboratories-- have long sought to encourage such applications. A go~rernmer`twide Federal Laboratory Consortium for Technology Transfer had its origins in the effor~cs of a Navy R&D center. ~ 2
~ 3 ~ From time to time, the Department of Defense has sponsored programs to advance civilian or dual-use technology to support defense needs. The current Celery High Speed Integrated Circuit (VHSIC) program has some aspects of this, as does DOI) ' s Manufacturing Technology Program, which is intended to improve the efficiency of manufacturing technologies (such as fabricating, assembling, and machining) used for defense and nondefense goods. The Defense Advanced Research Projects Agency' ~ Strategic Computing Program, aimed at accelerating the availability of artificial intelligence, might be put in this category also Probably the most important curren~c area of potential D01) influence on ache civilian marketplace is the Stra~cegic Defense Ini~cia~ci~re (SDI). Secondary applications of advanced technologies developed under this large - scale program- - for example, lasers and minia~cure particle accelerators - - already are being con~c~m6pl~.ced and coup d have significant impacts on the domestic economy. LESSONS FROM ME U. S . EXPERIENCE Often, the record of government in~'olvemen~c in industrial innovation through direct support of R&D is characterized as rathei7dismal-- ''expensi~re folly, n to borrow the words of one observer. There is a kind of folklore--used by those opposed to expanding federal civilian applied research psograms--tha~c such programs do riot work, that they fail because they subs~citute the decisions of go~rernment bureaucra~cs for the wisdom of the marketplace. This review does not support such a position. Direct support of R&D by the federal government has, in numerous instances, contributed subs tantially to indus~cria1 innovation. Such programs can supplement Industrial R&D and facilitate innovation without interfering with market j udgments . The preceding sec~cion of this paper described a variety of ways in which federal programs can and do work in fields ranging from agriculture to medicine to materials. What9 then, is one to make of the less successful programs? Many of them, as discussed in the second section of the paper, have been introduced witch much fanfare, attracted a great deal of attention, and failed to live up Deco their promise O Other programs and attempts- - such as the supersonic transport, the Morgantown Personal Rapid Transit System, and Operation Breakthrough--could have been added to the list. that is striking about these cases is how few of them actually reached the implementation stage. Witch only a few exceptions, these progr~-C--whose failure is cited as evidence that direct federal support of civilian technology does not work--were either aborted in their launch phase, or ~cer~ina~ced before any real results could be seen. They were political failures, not technical fai lures . :3
Lo~,sdon, citing Preach, suggests that the failure of such initiatives as the Civilian Industrial Technology Program, ache New Technology Opportunities Program, or the Industrial Innovation Initiatives to win sufficient political support to su~ive more than a brief period is dub to the fabric that they have been argued as a matter of prtrtciple. 8 lye programs reflect what Averch characterizes as an "engineering strategy" approach to ache solution of broad economic or social problems (such as declining productivity). In opposition to this approach is the "market strategy, n implying a minimum of direct government intervention in economic affairs. Ad~roca~ces of the innovation ini~ciatives find themselves confronting- - at ache level of high policy- ~ a dominant and deeply held perspective on the rote of government in society, rather than arguing the merits of ache specific proposals in pragmatic terms . Their lack of success in such debates is not surpris ing . A comparison between the long- term successes and the failed initiatives suggests a few lessons that might bear discussion by Chose concerned witch federal policy for applied research. Four points seem parch cularly Celebrant: ~ l) Modesty in defining and promoting the programs seems useful . Grandiose plans tend to enter the realm of high policy debate, are opposed on principle, and, often as not, become political footballs. Less fanfare may produce more results. ~ 2) The character of "he industry that is the presumed beneficiary of the program is central deco its potential for success. Me structure of the industry must lend itself to taking advantage of the program's results, and the industry's leaders must be interested in and not opposed to the program. Government industry ties need to be based on trust and perception of mutual benefit. ( 3 ) Careful atten~cion needs deco be given to the balance between user needs and the technical and ins~citutiona1 capabilities of the it&l) insti~cutions in designing programs. lithe programs should be built on strength, while yielding results that can be put to use in commercial applications. (4) Pro grams of generic applied research seem to be a particularly- fruitful avenue of collaboration. The precise nature of such generic research may vary from one field or area of application to another, however, a:tt the conduct of such research in and of itself is not sufficient to assure that it is used productively in the appropriate industry. In this ~ i ght, i Sac is ir`teres ring Deco look at the current NSF program of Engineering Research Centers. lathe program has a good deal in common with the Cooperative Generic Technology Program of a few years ago. The capabilities of universities are being tapped to assist industry in what is expected to be a productive and mutually
to beneficial partnership. The same admirtistra~cion that summarily killed ache CITP's generic technology centers is highly enthusiastic about the new pram and, by some reports, is suggesting that i: be greatly expanded. There are9 of course, some differences between the programs, and some political learning may have taken place in the system during the past several years. Bu~c ~ key difference is that discuss ions of the Engineering Research Centers have been pragmatic and have not hinged on issues of high policy. One is hesitant to label a new program, which may yet fall victim to an unfavorable budget or policy climate, as successful, but ache Engineering Research Centers program shows promise, insofar as it seems to follow the guidelines suggested above. Experience with the . centers will need to be monitored carefully, not only for the sake of the program itself, but for the sake of future federal efforts to put R&D deco work in support of the nation's economy. .
NOTES AND REFERENCES 1. Albert H. Teich and Jill H Pace. Public Secror Financing of Civilian Appl ~ ed Research and Developrr~ene: A Preliminary Analysis. Washington, DC: American Association for the Advancement of Science, 1984, Table 8, p. 590 John M. Logsdon. The Federal Role ire Applied Research and I:)evelopmene: A Policy History. Prepared for the National Science Foundation , Washington ~ DC, July 19 8 S ,. p 0 5 . 3. Harvey A. Averch. A Strategic Analysis of Science & Technology Policy. Baltimore, MD: The Johns Hopkins Univers ity Press, 1985, p. S7. Logsdon, op. cit. p. 7. 5. Quoted in Logsdan, ibid., p. 10. 6. Ibid., p4 1l. 7. Ibid., p. 1.7. 8. Milton Lomask. A Minor Miracle: An Informal Ristory of che Naciora1 Science Four.dat ~ on. Washington, DC: U. S . Government Printing Office, 1976, pp ~ 237 - 25C) . 9. L. Vaughn Blankenship and WO Henry I~mbright. "Applying University Research to National Needs: Lessons from NASA- SUP and NSF~RANN.~ Reprinted in House of Representatives, Committee on Science and Technology. ROR. 6910, National Technology Foundation Ace of 1980, Bearings. September 1980, p. 241. Quoted in I-ogsdon, op. cit., p. 32. 10 . Willis H e Shapley, Albert H. Teich, and Gail J e Breslow. Research and t:)evelopmene: ALAS Report VI. Washington, OC: American Association for the Advancement of Science, 1981; and Intersociety Working Group. AMES Report X: Research and Development, F1. 1984. Washington, DC: American Association for the Advancemen~c of Science, 1985 e tit Logsdon, op. cit., p. 20. 12. Madrid C. Mowery and Nathan Rosenberg. "The Commercial Aircraft Industry. ~ .In Government and Technical Progress. Edited by Richard R. Nelson. New York: Fergamon Press., 1982' p. 128. 13. Ibid., p. 129 :6
14. J. C. Hunsaker. "Research in Aeronautics . n In National Resources Planning Board. Research--A National Resource. Washington, DC: U. S. Government Printing Office, 1941, p. 139. Quoted in Mowery and Rosenberg, op. cit. 15. Mowery and Rosenberg, op. city' p. 1300 16. Aeronautical Research and Technology Policy, Volume I: S,,~=rSr Report. Washington, DC: Office of Science and Technology Policy, November 1982, p. 29. 17. Technological Innovation in cbe '80s. Edited by James S. Coles. Englewood Cliffs, NJ: Prentice-Hall, 1983, p. 36. 18. Reich and Pace, op. cit., p. 47. 19 . Mean Lipman- Blumen and Susan Schram. The Paradox of Success: The Impact of Pr~or:~:T Seating on Agricultural Research Ad Extension . Washington, DC: UO S . Department of Agriculture, June 1984. 20. R. E. E'renson. "agriculture O ~ In Government and Technical Progress. Edited by Richard R. Nelson. New York: Pergamon Press, 1982, p. 237. 21. Teich and Pace, op. civic., p. 52. 22. Ibid., pp. 23-24. 23. Henry G. Grabowski and John M. Vernon. "The Pharmaceutical Industry. ~ Irt Government and Technical Progress. Edited by Richard R. Nelson. New York: Pergamon Press, 1982, p. 311. 24. Long Range Plan of the National Bureau of Standards. Washing~con, OC: National Bureau of S tandards, June 19 8 1, p . 6 . 2S. Mowery and Rosenberg, op. cit., p. 131. 26. Willis J. Broad. "Space Arms Sc~en~cists in U.S. Selling Rights to Discoveries," New Yoric Times, (November 4, 198S), p. 1. 27. GOVQrnmenC and Technical Progress. Edited by Richard R. Nelson. New York: Pergamon Press, 1982, p. 20. Nelson uses this term--although he does not share this view. 28 . Logston, op . cite, pp . 37- 38 . 29. "Keyworth Urges Boost for NSF Engineering Program, n Science and Government Report, (October 15, 198S), p. 5. _ ~ / _
