the Lanxide Corp. Lanxide is by any measure a very unique company. We are a small business, approximately 300 people, headquartered in Newark, Delaware. However, we have, since our inception 9 years ago, developed a new process technology which enables the low-cost manufacture of an entire new class of materials. These materials allow us to make widgets that people in a wide range of industries are anxious to purchase. These industries include electronics industry, automotive, aerospace, biotech, basic processing industries, and the like.

For a small business with such a large opportunity, that means that we need, wherever possible, to leverage our resources to optimize or maximize our opportunity. Hence our interest in establishing a CRADA. We were interested in doing a CRADA for quite awhile, and the story that I am going to tell you, it will be a short story, just quickly as to how that all transpired and then make some suggestions as to how the process of establishing a CRADA might be improved.

Ironically, our case, having talked to staff previously, I had indicated that the process of establishing a CRADA with the Oak Ridge National Lab had taken 6 months. It actually took a year. The interesting thing there is that, unlike many other companies with no prior experience with the labs, we at Lanxide were very much aware of the capabilities and the resources at Oak Ridge. They are very much aware of our technology, and both its capabilities and some of its difficulties, so with that as a starting point, one might have hoped that we would have been one of the faster CRADA's to be concluded. That was not the case.

As I say, it was a year-long process that concluded this past September, the first 3 months of which were taken up with ORNL trying to convince the Department of Energy that the CRADA they wished to perform with us was one that the department should support. So, that was the first 3 months. The next 6 months, basically back and forth about a number of issues. The two major stumbling blocks turned out to be some liability concerns, an effort we felt to lay on us unfair liability which we were able to satisfy through negotiations and then very serious problems in the area of intellectual property rights.

Our only asset-at this point, Mr. Chairman, we will have $6 million in sales this year-our only asset is our technology. We are not interested at all in jeopardizing that asset, certainly not in the context of a CRADA. We essentially threw the towel in on that one because we felt like there would be no inventions made under the auspices of this CRADA, so, it was unlikely that the intellectual property aspects would ever become an issue.

I must say, however, that if the intellectual property demands that were attempted to be imposed on us are the rule, that that will probably preclude us from seeking other CRADA opportunities with the Federal labs.

In conclusion, let me say that I think you have hit the nail right on the head, especially with your first recommendation, especially with our case. Had the director of the lab been empowered to sign off on the CRADA on his own, that takes 3 months out of the process right there, so, clearly, that is something we wholeheartedly support as we do your other recommendations.

I might suggest for other small businesses that there be an encouragement of the so-called blanket CRADA's which were mentioned earlier or umbrella CRADA's which were mentioned earlier which serve as sort of the template and eliminate some of the legal wranglings that can be so costly and time consuming, especially for a small business.

Thank you.

Chairman WYDEN. Very helpful. Whenever someone's initial comment is that there was a long wait, and then they come before us and say it was even longer than they originally said, it just drives home how important

Mr. EAGLESON. One other comment I meant to make so that there is no misunderstanding, there is no lack of enthusiasm, at least at Oak Ridge, for doing these things. I must say that. It is the process of taking that enthusiasm and executing on it that is the problem.

Chairman WYDEN. I think that is a fair comment, and the Chair wants to be very clear, I don't think people who run Federal laboratories out in the field get up in the morning and say, "gee, let's figure out a way to bollix up this process and make a mess for private industry." I don't think that is the case.

I think the vast majority are very frustrated, as you have described, and want to do the right thing. But there has not been leadership at the top, and what we have seen over our 4-year effort again and again in Washington, DC is lip service to such things as we are discussing here about accountability and Dr. Shanley's all too logical proposal of saying there be, for example, a 4-week turnaround time in terms of the initial effort. Unless we make these kinds of changes, my sense is we are going to continue to miss much of the potential that our country has for being able to compete in global markets. What is especially ironic about this, especially after an election campaign, is everybody, both sides of the aisle, is always blowing hard about jobs programs, jobs, jobs, jobs. Political figures wave their arms around in political campaigns and get red in the face and talk about jobs programs.

Here is an instance where the taxpayers have already put $70 billion into these Federal labs, and the question is can we now transfer the fruits of this huge investment out to private enterprise so people like yourselves can do your own thing. Government really doesn't create jobs. You all create jobs. The question is whether we can create a climate so you can, in effect, do your own thing, and particularly do it in an instance where the taxpayers have already ponied up such large sums of money. I told my friend from Michigan that I wanted him to start, and he is very much under the gun. So, let me recognize Congressman Camp.

Mr. CAMP. Thank you, Mr. Chairman. I have a question directed to Mr. Cummins, who is also from the great State of Michigan. Given the progress that has been made, as you mentioned in your verbal testimony, and as I also read in the statement, and given that you also testified to this new spirit within Government and industry to find these solutions, is it your feeling that legislation is the best answer to speeding up the process and overcoming these obstacles if these unnecessary delays and these roadblocks, as you mentioned, do exist?

Mr. CUMMINS. I think we pointed out several in the written testimony. I think I covered some of it on the verbal testimony as well, that there are some things that would have to be legislated. There are, in some cases, laws that exist that can be interpreted through a wide range and that makes it very difficult to negotiate.

We are in the process-we are a consortium, and, as I mentioned, we have hundreds of projects, and we intend to have many CRADA's or many activities involved in the CRADA process, and we need to close up the loopholes and really some of the flexibility that is in there so that these agreements can be put in place much faster, and, yes, the legislation at this point in time is very critical because our companies work as a consortium, and staff of the consortia. This is our business, putting together partnerships, but our companies are not so patient, and, as a matter of fact, I have a case, and I am not going to mention the company, but it is a major Fortune 50 corporation that has already told its lawyers that there shall be no more legal time put into these negotiations, and if there is any time put in, it will be on their own time.

Now, that is a great potential loss because every one of these major corporations brings a significant amount of technology to the table in a collaborative effort. If you lose that component of the technology, you may kill the project, or you may make the cost of that project significantly higher.

Chairman WYDEN. Would the gentleman yield for just a moment?

Mr. CAMP. Yes.

Chairman WYDEN. In this instance you are talking about a Fortune 500 company, one of the largest, with a judgment that the technology transfer project would make good business sense, but they have been put through so much bureaucratic water torture trying to get it out, one of our corporate leaders has told their lawyers, "you can't spend any more time on it, and if you do it, you are in effect going to do it as a volunteer. We are not going to put any additional corporate dollars into it."

Mr. CUMMINS. That is correct. That is a Fortune 5 company, I should mention, by the way.

Mr. CAMP. Fortune 5, that narrows it down.

Mr. CUMMINS. It is a very large corporation. So, it is very important.

Mr. CAMP. You mentioned these bureaucratic problems. Are some of them in reality legal problems, product liability problems, copyright problems, so it is not necessarily all the bureaucracy or the lack of cooperation? Some of it is based legally, I understand, and that is why you feel the need for changing legislation?

Mr. CUMMINS. That is correct. These are not necessarily lab level issues. They are issues at the agency level or they are issues Government-wide. We are not putting the blame on any particular lab. As a matter of fact, we have developed, over the years, very good relations with these people. They are honest, hard working people, and the people who are following on the panels, we have a great deal of respect for, and we are not suggesting that the problems reside there.

There are problems in industry as well, and as the brokers of these partnerships at the NCMS, we have to press on both sides. I

may be testifying to the Government here today and a few days from now talking to senior executives of our companies about some problems that they have in trying to make these things work.

Mr. CAMP. Are liability or product liability concerns a major part of the impediments to these consortia arrangements?

Mr. CUMMINS. Yes; they are. We did not get into details, but I think the gentleman from Motorola has gone through that issue very clearly. The product liability issues are definitely a part of that.

Mr. CAMP. Thank you very much.

Chairman WYDEN. I thank the gentleman. I share his concern on product liability issues. I am still feeling the scars of voting for product liability reform on the Energy and Commerce Committee a few years ago. I share the interests that are being conveyed here. What is the track record of the Department of Energy, Mr. Cummins, in trying to address special concerns of smaller businesses? I understand that you all, in addition to the Fortune 5's and 500's, do a lot of work with small businesses. How would you evaluate the department's performance in trying to work with smaller business

es?

Mr. CUMMINS. Well, we represent, as I said, in our consortium, about 90 percent of our members, 150 or so smaller firms, and many of these smaller firms are participants in the projects. I probably am not as capable to talk about the specific issue. We handle, as an organization, a relationship with the Department of Energy, and I would say that there has not necessarily been a very special effort within that organization to have small businesses involved, but we do have them involved on several of the projects. I guess that is about as far as I can get into it.

One of the things that we provide is the ability for many small firms to get involved and not be involved in the individual negotiations, so our smaller firms there can be brought along in a sense, and the resources that are put in to negotiate these things are really more handled by the larger firms that have the resources to bring to bear, so, although 10 percent of our membership is large, much of the resource is there to support that. Smaller firms, by the way, do not have the lawyers and cannot afford them.

Chairman WYDEN. My sense is that the small firms are just written out of the process. Dr. Shanley comes and talks about the predicament of the Motorolas of the world. You have got to say to yourself, what are all those small entrepreneurs who are sort of Motorola aspirants, Motorola wanna-bes, and some day be in a position to grow their business. How are they even going to begin to get into the ball game?

Is there anything you wanted to add on this point, Ms. Philips? I saw you scribbling some notes on this. We are particularly interested. My State, for example, is a small business State. The State of Oregon, when you are done counting a couple of timber companies and a couple of utilities and Tektronics, the high technology firm, you are done counting the big businesses in the State of Oregon. So, technology transfer is a small business issue.

It is one of the reasons we got the demonstration projects off the ground, and it is not by accident that the good people of Oregon showed that they were capable of getting them because their small

businesses have been very interested in doing it, so, if you would like to add anything on this, we are most interested.

Ms. PHILIPS. Well, judging from our experience in constructing our projects, many of our smallest firms are software companies that design special manufacturing applications. When we have these companies involved on a potential project, that presents special problems of copyright rights which flow on to the laboratory that might be working in software areas.

Chairman WYDEN. Are these laboratories helping the small businesses cut through all of these obstacles so that they actually get in?

Ms. PHILIPS. Well, the issue ends up being in the intellectual property rights area in that the laboratory wants to retain ownerships of those codes, of course, and the copyrights, and they want to license back to participating members at a fee what is needed by the small company in order to take his product or his process to the next level. Many of these small firms can't afford to do that. Chairman WYDEN. They just can't afford, is what you are saying, to meet the intellectual property requirements that some of the labs are imposing.

Ms. PHILIPS. That is correct.

Chairman WYDEN. That doesn't sound to me like much of an effort to reach out to the small businesses, and to tell you the truth, when I said earlier that these technology transfer programs were a full employment program for lawyers, what Mr. Cummins has really described, again, just sounds to me like, hitting the jackpot, another payday if you are a technical transfer lawyer, and we are supposed to be doing something else in the Government other than running that kind of program.

Now, Mr. Cummins, you mentioned that your center, the Center for Manufacturing Sciences, has assigned a blanket CRADA with the Department of Energy that covers multiple labs. I gather that with the blanket CRADA, you can get in once and then be off to the races. That general rule, if properly structured, you think that makes sense.

Is this something that you would like to see Congress encourage the Department of Energy and the appropriate industries to look more to these blanket CRADA's?

Mr. CUMMINS. I would say that, first of all, if an individual CRADA is difficult, a blanket CRADA is significantly more difficult. Because what the blanket CRADA allows you to do is, the intent is on an agency-wide basis to have the CRADA include most of the terms and conditions in a CRADA that would cover all the labs and all programs underneath that. So, you have to take into account all different situations.

In that sense, it is probably not an appropriate mechanism to try for a small business, especially to try to negotiate, whereas the model CRADA that CSPP has put together may be more appropriate. In our case, our blanket CRADA, we can get into a project with multiple labs, three or four labs at one time with a dozen companies. It is based on a very large project, and it does require significantly more resources.