Written Testimony of Charles V. Shank House Small Business Committee Mr. Chairman, and members of the Subcommittee, it is a pleasure to be here today to discuss technology transfer and the Department of Energy national laboratories. My name is Charles Shank, and I have been the director of the Lawrence Berkeley Laboratory for the past three years. Prior to joining LBL, I spent twenty years at AT&T Bell Laboratories. Having been both in industry and at a national laboratory, I have formed a view on how national laboratories can provide the American taxpayers a return on their investment in research and facilities. Let me first introduce you to the Lawrence Berkeley Laboratory. LBL is the oldest of the DOE national laboratories, founded in 1931 by Ernest O. Lawrence. In its 61 years of existence, LBL has been responsible for pioneering work ranging from particle physics to nuclear medicine. Our research has received international recognition, including nine Nobel prizes. LBL today has a budget of $260 million, a staff of 3,600 scientists, engineers, technicians and other support personnel, and is involved in cutting edge research in the support of the mission of the Department of Energy. We are a lead DOE laboratory in the human genome project; have developed new energy efficient windows and compact fluorescent lights; perform research in advanced materials; and are about to commission the Advanced Light Source, the worlds' brightest source of soft x-rays. None of LBL's work is classified, and being located next to the University of California, Berkeley campus, we have hundreds of graduate students involved in our research programs. LBL, and other DOE national laboratories, have a record of accomplishment in carrying out their energy and defense missions for the Federal government. This has led many including the Secretary of Energy to characterize the DOE laboratories as "the jewels in the crown" of the nation's research enterprise. Today our nation faces new challenges and concerns. We are encountering well organized and effective economic competition. An important and significant element in our ability to create wealth as a nation is the health of our scientific and technological infrastructure. Beleaguered private industry is rapidly reducing and narrowing the focus and time horizon of its investment in research. No time could be more propitious for the government to leverage the investment in its national laboratories by fostering partnerships with industry and academia. We are here today to talk about "technology transfer" which has come to mean much more than the literal meaning of these two words. Technology transfer between national labs and industry includes the transfer of ideas, people, knowledge, intellectual property; and the availability of unique national facilities such as synchrotrons and electron microscopes. It can even mean partnerships, joint research, and providing a focal point for coupling industry, academia and national labs together. In fact, the recent report on the national laboratories by the Council on Competitiveness exhorts the laboratories to view industry as a customer. In the past it has been enough for the laboratories to perform their mission and produce work of the highest scientific quality. Today we are prepared to do more. We must ensure that the value of our work finds its way into the economy. Let me give you a few examples of how this is done. Shortly after the discovery of the new high temperature superconductors, work began at the Lawrence Berkeley laboratory to enhance our basic understanding of these new materials. Efforts at LBL focussed on the conductive properties of these materials which could provide a fundamental limitation on their usefulness. Our work, which was supported by the Office of Energy Research, revealed that indeed these materials could have technological applications. We formed a partnership with a small Bay Area company, Conductus, to pursue research that would lead to a device that would detect minute magnetic fields emanating from the human body. This partnership has led to the development of the first complete high temperature superconducting electronic circuit. The result of this work has been a product manufactured by Conductus that has just come on the market. In another example, LBL recently signed a CRADA with the U.S. Advanced Battery Consortium (ABC), which included the Big Three auto companies. LBL is seeking to apply our work in electrochemistry research to the partnership with ABC, to develop a new kind of solidstate lithium polymer battery for use in electric vehicles. This battery has the potential of being very inexpensive, biodegradable, and delivering the required energy levels with half the weight of today's lead-acid batteries. Our hope is that this partnership will accelerate the development of a successful electric vehicle industry in the 21" century. One point to bear in mind is that the CRADAs just discussed show how accomplishments in fundamental research can be leveraged in partnership with industry to return value to the economy. Continued strong support of high risk fundamental research provides the seed for new concepts, discoveries and even new industries. As a final example, I would like to describe a new and different kind of strategic partnership between laboratories to attack an important problem. LBL and Sandia National Laboratories have proposed a Combustion Dynamics Initiative that would build upon LBL's strength in fundamental science and Sandia's combustion technology capability, to provide new knowledge on how to understand and model the combustion of fossil fuels. The two laboratories will establish joint facilities and work closely with industry to see that this new knowledge contributes to critically important national goals of cleaner and more efficient combustion. Your letter of invitation raises a number of important issues and policy options for improving the technology transfer process, and I would like to address them. Your first point concerns the authority for developing and ultimately signing CRADAS. The Subcommittee should understand that when LBL enters negotiations on a CRADA, industry holds us accountable for the often lengthy delays, and for the excessive documentation and the other DOE requirements. This is frustrating because we have no authority to deliver a CRADA without going through many layers of the risk-averse Department of Energy to get final approval to sign the CRADA. A number of recent studies have recommended that national laboratory directors be given full authority to negotiate, sign, and approve the commitment of funds for CRADAS. Such authority would be a major step in speeding up execution of CRADAS. National laboratory directors, who are contractors of the Department of Energy, should be given both the responsibilities and protections given to directors of civil service laboratories. There should be appropriate oversight to insure the effectiveness of our actions and meet concerns for conflict of interest and fairness of opportunity. In order to achieve timely and business like agreements with industry, this oversight should be retrospective rather than prospective. I strongly agree we should be judged by our results. Your next issue concerns funding of CRADA agreements. As one of the five multiprogram Energy Research National Laboratories we have access to a small program of $10 million for which we are allowed to compete. Your proposal to expand money available for CRADAS is excellent. Providing flexibility for laboratory directors to fund CRADAS at a modest level would be helpful. A point of serious concern is that this funding not be a "tax" on individual laboratories which would raise our overhead rates and reduce our cost competitiveness. I would like to suggest consideration of a more wide-ranging program to help the laboratories be more effective in the role of technology transfer. In additions to funding CRADAS, it is important to make the connection between fundamental research and technology of interest to industry. Often the fruits of fundamental research need to be further amplified and explored in order to evaluate the potential of a technology. I call this technology research. It is an area that is generally not supported by Basic Energy Science programs in the DOE. What I believe is required is the establishment of an Office of Technology Research within the Department of Energy to insure that this kind of research is supported. This office would have the responsibility for providing funds for CRADAs, and would support the technology research that would lead to future CRADAs and other industrial relationships. I would like to conclude my testimony with a few comments on the impediments for national laboratories to accomplish the technology transfer mission. Three questions come to mind. First, can we do the job? Is our culture so different from that of industry that we cannot work together? My view shaped by two decades in industry is that the national laboratory scientists and engineers are not that different from those in industry. At LBL, I feel a groundswell of enthusiasm from the staff to embrace this mission. |