Reducing the Cycle Time in Lab/Industry Partnerships

Since the National Technology Transfer Act was passed in 1989, Sandia's technology transfer efforts have been quite successful. Sandia had its first cooperative research and development agreement (CRADA) in place just five months after agreements were signed between DOE and AT&T giving Sandia the authority to enter into partnerships with private-sector companies. Since then, Sandia has obtained DOE approval for 69 more CRADAS with a total value of almost $180 million. But with any new initiative, particularly in the uncharted area of forming cooperative agreements between federal laboratories and private-sector companies, difficulties can be expected to arise -- and, of course, they have. While some of these difficulties have yet to be satisfactorily resolved, it can truly be said that Sandia has come a long way on a sometimes bumpy, uncertain road in a relatively short time.

Statement of Problem

One of the particularly troublesome difficulties not yet resolved is the amount of time required to get a partnership agreement into place. The whole process simply takes too long. The causes of these delays are varied and complex.

Analysis

Because of the many ways of partnering with industry -- and of customizing individual agreements no two cooperative arrangements are likely to be identical. Nevertheless, as shown in the flow diagram in the attachment, the partnering process includes a number of steps that are associated with four distinct phases common to all cooperative agreements: (1) recognizing the opportunity, (2) selecting a partnership mechanism, (3) formalizing the agreement, and (4) conducting the collaboration. Delays can occur for a variety of reasons during each of these phases.

Phase 1: Recognizing the Opportunity

The major cause of delays in the first phase involve the failure to effectively communicate industry needs and laboratory capabilities. Industry representatives aren't always successful at communicating their technology needs to a laboratory audience. Similarly, Lab representatives don't always do well at identifying and pinpointing relevant laboratory strengths and capabilities. I assume that with more experience both the laboratories and industry will get better at this.

Phase 2: Selecting the Partnership Mechanism

The selection of a mechanism for any particular partnership will be based to a great extent upon the kinds of funds available to support it. The absence of a clear direction at the Agency and Congressional level for technology transfer strategy at the Labs promotes uncertainty and random ad hoc efforts to line up appropriate funding for a potential partnership. Compounding the problem is the lack of focused industry-wide market pull that is needed to guide government decision makers in setting Lab R&D agendas.

Clear government policies concerning fairness of opportunity, the question of ensuring maximum U.S. benefit, and the appropriate role of the Laboratories in the commercialization process could also shorten the cycle time for Lab/industry partnerships.

Phase 3: Formalizing the Agreement

Issues such as government antitrust policies and the lack of fiscal policies for providing technology investment incentives to business often complicate and delay the process of formalizing collaborative agreements, as does uncertainty on the part of some government agencies in areas such as product liability.

Phase 4: Conducting the Collaboration

Because of our limited experience so far in conducting work under collaborative agreements we can only speculate that some difficulties will be associated with balancing a Lab's natural focus on long-term R&D and industry's need to develop a commercial product to address near-term markets.

Recommendations

Recommendations for improving cycle time in lab-industry partnerships include the following:

The role of technology transfer at the laboratories should be clarified by the sponsoring agency. Is technology transfer a stand-alone mission of the laboratories or is it conducted in support of other laboratory missions? A clearly articulated direction in this respect would allow laboratories to aggressively pursue partnerships meeting strategic requirements and to focus their efforts on achieving the agreed-upon national objectives.

While sponsoring agencies should continue the role of approving Lab technology transfer agreements, the approval process should be streamlined for government-owned, contractor-operated (GOCO) laboratories as it has already

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been done for government-operated laboratories. For example, a CRADA entered into by a Lab should receive automatic approval unless disapproved by the sponsoring agency within 30 days. (If the issue concerning the GOCO Lab Directors' liability can be resolved, these Lab Directors should also be granted approval authority.)

• An industry/government task force should be convened to provide recommendations on legal/policy issues related to improving the terms and conditions of partnerships (CRADAs) such as U.S. preference, product liability, and the handling of exclusive intellectual property rights.

In the area of funding, we believe that approximately twenty percent of Laboratory budgets should be allocated for technology transfer:

(1) About eight percent of the government agency's operating budget should be set aside for technology transfer initiatives. These should be market-driven, cost-shared programs that are national in scope. The national labs should compete for these funds to provide the best technology solutions. DOE's Technology transfer Initiative (TTI) is an excellent start in this direction.

(2) Approximately eight percent of each Lab's base program funds should be made available to encourage Lab/industry partnerships to address significant technological challenges faced by industry. These efforts should be managed at the Labs. Performance targets to achieve this objective should be developed by each agency and should include meaningful incentives, which could include performance metrics for lab directors.

(3) Funding of technology transfer infrastructure within the Laboratories should be supported directly by the agency at a level sufficient to carry out an effective program. One to two percent of the Laboratories' operating budgets could be allocated to each lab by the sponsoring agency. Perhaps one percent should be a minimum, not a cap as currently practiced. In addition, two percent of the operating budget could be allocated to each Lab by the sponsoring agency to manage small business technology assistance programs that are national in scope.