can look at the kinds of accounts that Motorola and the National Center for Manufacturing Sciences brings us because they describe a process that doesn't work. They describe a process that simply is not producing the kind of technology transfer that you want and I want and everybody else wants in the interests of our country. I really have only one question, as incredible as it seems, because normally I would want to ask you all questions for a long time. But it is something Dr. Bloch really inspired, and I think all of you are very interested in, and I think would be most helpful to me and to my colleagues. To get the kind of enhanced laboratory performance that everybody wants to see, what is your judgment of how Congress should measure success at the critical stages of the process? If we could get a handle on that and develop consensus now with Congress, private industry, people like yourselves on the front lines, that is the most important issue. You are not going to have any quarrel with me, and I think a lot of others, as to the matter of liability protection. If we are going to ask laboratory managers to do more, we have to insure that they don't spend the rest of their lives in Federal Court. I am very sympathetic to that. But I must tell you, I am most interested in trying to get a grip on how you measure success in this process, from the beginning all the way to the post audit stage. Why don't we start with you, Dr. Bloch. Dr. BLOCH. There are many ways one could do that, but I wanted to restrict myself to two measures only. By the way, let me reiterate what I think Dr. Narath has said before. The number of CRADA's is not a good measure, certainly not in the long haul. Maybe today it is, but certainly not in the long haul. But I would suggest that Congress, first of all, understand that what we are undertaking is a process that takes a long period of time. You cannot measure success after 6 or 12 months or even after 2 years, which is a congressional time horizon. It takes 5 or 10 years or longer. But let me suggest the following: If you allocate funds for this particular purpose, I would ask the question after a year, after 2 years, after 3 years, and after 5 years what has been the matching of these funds by industry? I think that is an indication of what comes out, especially when you look at repeats. Nobody is going to go back to Los Alamos or Livermore or wherever unless they are satisfied. That is one. The second measure that I would suggest is in the beginning of the program; namely, how long does it take from the time a laboratory sits down with a company in a collaborative effort until one has achieved an understanding and the work starts. These are the two measures that I would identify. Chairman WYDEN. Very sensible, and based on what we have heard this morning, I think that is at the top of the list. If the private sector is willing to put dollars into it, that is an important measuring rod, and second, that initial timeframe is the key. All right, Dr. Narath, you have to get on a plane. I am going to have to get on a plane after a bit, too, so your theories of how you best measure labs' success in key stages of the process. Dr. NARATH. I think Erich has already put his finger on it. There are two things you can measure. You can measure the process that creates the alliance, and I am confident that we are going to fix whatever is now ailing in that process before too long, either legislatively or, I think, for the most part just by the way we practice it, so that will become an unimportant measure. I think we will overcome those difficulties. The much more fundamental, much more difficult thing to measure is what is the economic value created by a taxpayer investment in a laboratory project that is carried out in cooperation with industry. Now, the only way to measure that in the final analysis is to ask the industrial partner, and I know it is difficult for industry frequently, when it comes to forward looking work, to identify what the contribution of the profitability of the company is that arises from that activity, but I maintain that I cannot judge the economic benefit. That has to be done by the industrial partner, and I would challenge our partners to come up with methodologies and metrics for establishing that value. One thing, incidentally, we have done at Sandia, I now insist that for every CRADA there be a detailed project plan with milestones, cost estimates, deliverables, and so on, and on a quarterly basis for each CRADA I expect a report which includes comments from our industrial partner, so we are actively seeking feedback from our partners as to how well they think we perform. Chairman WYDEN. It is a very interesting idea, and it seems to me what you have done is taken Dr. Bloch's first suggestion a step further. The question is going to be whether the private sector stays in there, and what Dr. Narath suggests is now in addition to determining whether they are going to stay in the arena, we may want to try to set up an economic value assessment. What is interesting about that is that Dr. Kramer, I gather, with some of the collaborative work that is being done at NIST, is almost touching on that area to try to measure economic value. Is that right? Dr. KRAMER. In the statement we submitted, we submitted charts of some economic studies that have been done in particular areas. I want to repeat one thing Dr. Bloch and Dr. Al Narath said. Those studies we have done are not done over a short term. You cannot start a project and expect to evaluate it within 6 months. There are ways of looking at the economic return, and on those, we have to go to industry to get that data on what is the effectiveness of the research. I also would agree with the comments made before that, because of nothing else, counting the number of CRADA's, is a false indicator. One CRADA can have far greater impact. One CRADA can be with a consortia and have a far greater impact across a large area of industry, so the comments made I agree with. There are ways of looking at the economic benefits. It is in the statement. Chairman WYDEN. Dr. Shank. Dr. SHANK. Well, I believe that the report on the Council on Competitiveness asked us to look at industry as a customer, and I think that the comments that we have just heard are, are we a preferred collaborator, are our customers happy, do they come back, do they want to use the laboratory facilities to enhance their business, and have we contributed to wealth creation? But the second thing that has to do with success also has to be is our society ready for the success, will we be able to look in hindsight at these activi ties and agree that this was a proper expenditure of Federal funds? I think that one of the many difficulties that we have in achieving success, and the problems that the Department of Energy has, is that society has not, our society has not accepted with great comfort the trust that is required for these kind of activities to take place, and, as a consequence, people construct arrangements that will provide them with a maximum protection from interrogation at later times. I think that success in this will really be are we able to do this with fairness of opportunity and in an understandable way so that not only do our customers in industry recognize this as a success, but society as a whole is comfortable with national labs and Federal entities working with industry? Chairman WYDEN. Dr. Happer, in your domain, your lair for the measuring rod. Dr. HAPPER. Well, I agree with my colleagues here. One thing I would like to stress is that if we do this right, we have to expect some failures, too, and somebody has to give us some protection in the Congress for a few failures. They often say if you don't make some failures, you are not trying hard enough, and so I would like to add that. Chairman WYDEN. Translated, protect me from Congress and oversight. Dr. HAPPER. No Chairman WYDEN. Because this works both ways, you can't ask for more accountability on the part of labs and lab managers and then say they don't have any flexibility, and then bang them over the head anytime something goes wrong. So, I think that your point is well made and one of the questions that I was interested in and wish I had more time. Maybe you could give us a little more insight on this for the record, Dr. Bloch, or spend a few minutes with me and the staff. I am very interested in this area that you touched on in terms of the risk-averse nature of some of these regulations, and I would be very interested in identifying some of those regulations that have contributed to the lack of flexibility and the difficulties that we have in the technology transfer area. Dr. BLOCH. I would be glad to do that. I would think that my other colleagues have something to add on that subject. Chairman WYDEN. That would be very helpful. You all have heard the recommendations I have made. We have worked with Dr. Bloch closely and others in doing this. You all have been very patient and very helpful to work with. Thank you all. Unless anybody has anything further, we will adjourn at this time. The subcommittee is adjourned. [Whereupon, at 12:00 p.m., the subcommittee was adjourned, subject to the call of the Chair.] APPENDIX OPENING STATEMENT BEFORE THE SUBCOMMITTEE ON REGULATION, BUSINESS CONTINUING OBSTACLES TO THE TRANSFER OF INDUSTRIAL TECHNOLOGIES FROM THE ENERGY DEPARTMENT LABS TO THE PRIVATE SECTOR December 4, 1992 Today, the Subcommittee on Regulation, Business Opportunities and Energy revisits an issue of great competitive importance to our technology-driven industries: continuing roadblocks to the transfer of technical innovations from the federal lab network to the private sector. This subcommittee began its inquiry into this matter nearly four years ago. Our initial survey of labs and their private industry customers found that getting these innovations from the laboratory bench to the manufacturing shopfloor is difficult, expensive and fraught with red-tape. Quite simply, technology transfer is the process of getting new innovations into the hands of persons who need solutions to technical problems. In practice, however, the daunting experience of identifying and capturing suitable technologies from our 700 federal laboratories seems geared to discourage rather than encourage this kind of joint venture. In 1989, the subcommittee found that licensing revenues In 1992, technology-driven industries report that the situation may be marginally better thanks to streamlining of certain systems, and the heroic effort of a few lab directors working against the grain of an Executive branch monumentally disinterested in this problem. In most cases, however, the barriers we identified three years ago, remain. These walls are high. Too often, they have the equivalent of regulatory broken bottles embedded at the top. This is a tragedy, both for defense-oriented labs which are going to be closely scrutinized for their future role in a non-Cold War era, and for the domestic industries which could benefit from their world-class science. Here are a few dispatches from the front: --2- Motorola, a $13 billion per year electronics corporation, reports that after 20 months effort they are still trying to complete one joint research agreement with the DOE lab at Lawrence-Berkeley. Their analysis: they "doubt that a smaller business could afford the effort to persevere. - Lanxide Corporation, a Delaware-based, high-tech ceramic products manufacturer with 300 employees, spent six months negotiating a single joint research agreement with the Oakridge Labs for a relatively simple processing tech transfer. This is the company's first, and perhaps the last such agreement, unless the legal red-tape and process time for these contracts can be reduced. Their analysis: Negotiating tech transfer agreements can - Digital Equipment Corporation, a major computer Their analysis: Even when DOE gets a contract signed Cooperation is not a one-way street. Industry also must overcome its mistrust of the federal labs. Part of that unfortunate attitude is the not-invented-here posture of some industries. If the innovation wasn't corporate, it didn't happen, or it isn't useful. While our high-tech employers see federal labs as being mired in red-tape, the labs may disdain joint ventures because of the sometimes unrealistic expectations or outright antagonism of the private sector. These presumtions are dangerous. between the labs and industry. It's time to build bridges |