Technology Transfer: DOE Has Fewer Partnerships, and They Rely More on Private Funding
Published: 2001-07-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Congress enacted the National Competitiveness Technology Transfer Act to encourage federal laboratories operated by contractors to enter into cooperative research and development agreements (CRADA) with businesses, universities, and other private partners. This act was designed to improve the United States' competitive position in the world economy by facilitating the transfer of technology from federal laboratories to U.S. businesses. This report reviews the National Nuclear Security Administration's (NNSA) (1) use of CRADAs and (2) views on the advantages and disadvantages of CRADAs.
section_title: What GAO Found
paragraphs: GAO found that NNSA has reduced its use of CRADAs while entering into more agreements fully funded by private partners. Dedicated funding for CRADAs was gradually phased out and program managers at the laboratories were supposed to rely on regular research funding to make up the shortfall. However, NNSA laboratory managers have stated that because the funding has not been replaced with research funds, their laboratories have either prematurely terminated many CRADAs or required the private partners to fully fund the work. According to NNSA officials, CRADAs offers both advantages and disadvantages. CRADAs have enabled laboratories to recruit and retain experienced staff and have improved U.S.' businesses position in the global economy. However, CRADAs also compete for limited funding and generally take longer to execute because of the complexity of the agreements.

section_title: Letter
paragraphs: Since 1980, the Congress has enacted several laws designed to improve the United States’ competitive position in the world economy by facilitating the transfer of technology from federal laboratories to U.S businesses. Specifically, the National Competitiveness Technology Transfer Act of 1989 authorized federal laboratories operated by contractors—including the Department of Energy’s (DOE) national laboratories—to enter into cooperative research and development agreements (CRADA) that are consistent with the laboratories’ mission. By fiscal year 1995, DOE’s three nuclear weapons laboratories—Lawrence Livermore National Laboratory, Los Alamos National Laboratory, and Sandia National Laboratories—were among the leading federal laboratories participating in CRADAs with businesses, universities, and other private partners. In addition, DOE’s Kansas City, Pantex, and Oak Ridge Y-12 nuclear weapons production facilities began entering into CRADAs in the mid-1990s. Within DOE, these laboratories and production facilities are managed by the National Nuclear Security Administration. Both the private partner(s) and the DOE laboratory or production facility generally have provided scientists and facilities for CRADA projects, and private partners have also provided funding to cover a portion of the research costs. According to DOE, the laboratories and production facilities have also transferred technology by, for example, providing technical assistance to small businesses and entering into “work-for-other” agreements, in which the private entity pays the laboratory’s full costs for performing a research project.
To further encourage DOE’s nuclear weapons laboratories and production facilities to enter into partnerships with private entities, the Congress established the Technology Transfer Initiative in fiscal year 1991 to provide funding specifically designated for supporting CRADAs and other types of partnerships. Technology Transfer Initiative funding increased from about $1 million initially to $205 million in fiscal year 1995. However, the Congress began to phase out these dedicated funds in fiscal year 1996 and rely instead on program managers at the laboratories and production facilities to use regular research funding for partnerships that would significantly benefit their programs. While the use of research funds instead of dedicated funds ensures that a CRADA project will have primary benefits to DOE’s research mission, it has raised concerns that DOE’s laboratories will be less likely to support technology development partnerships.
In response to these concerns, the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 directed DOE’s Administrator for Nuclear Security to report on (1) the efficiency and effectiveness with which NNSA and its nuclear weapons laboratories and production facilities have implemented technology development partnerships with nonfederal entities and (2) the advantages and disadvantages of CRADAs.The act also mandated that we provide an assessment of the administrator’s report within 30 days of its issuance. In response to this mandate, we briefed your offices on the NNSA report, issued on April 16, 2001. (See app. I for the report’s highlights.) We also obtained data on technology partnerships at NNSA’s laboratories and production facilities in addition to that presented in NNSA’s report.
As agreed with your offices, this report provides information on (1) the trends in the technology development partnerships used and funding made available by DOE and private partners for each type of partnership and (2) NNSA’s views of the advantages and disadvantages of CRADAs, along with options that NNSA suggested for maintaining or increasing current financial and management support for CRADAs.
subsections: section_title: Background
paragraphs: Technology development partnerships are key elements of the technology transfer program of each NNSA laboratory and production facility. NNSA laboratory and facility managers told us that they have primarily used the following types of partnerships:   CRADAs: An NNSA laboratory or production facility and private partner(s) agree to collaborate on a research project that is consistent with DOE’s mission and has a potential impact on U.S. economic competitiveness. The NNSA laboratory or production facility and its private partner(s) contribute personnel, services, facilities, equipment, intellectual property, and/or other resources to the CRADA project. The private partner(s) may also provide funding, in-kind (noncash) contributions, and other resources directly beneficial and specifically identifiable and necessary in the performance of the project. However, NNSA and its laboratory or production facility are not allowed to transfer funds to the private partner(s). At a minimum, DOE retains a nonexclusive, nontransferable, irrevocable license to use any invention developed under the CRADA on behalf of the U.S. government. The private partner has the option to choose an exclusive license for a pre-negotiated field of use for any inventions developed by the NNSA laboratory or production facility under the CRADA.
Technical assistance for small businesses: In response to section 3135(b) of the National Defense Authorization Act for Fiscal Year 1993, NNSA’s laboratories and production facilities have provided technical assistance to small businesses.
Work-for-other agreements: An NNSA laboratory or production facility agrees to conduct a defined scope of work or list of tasks, and the private partner pays for the entire cost of the project. While intellectual property rights are negotiable, the private sponsor typically retains title rights to any inventions.
Cost-shared procurement contracts: An NNSA laboratory or production facility and private partner(s) agree to collaborate to develop technologies or computer codes for Defense Program mission requirements. Lawrence Livermore National Laboratory has used these contracts for the Accelerated Strategic Computing Initiative.
Technology licensing agreements: An NNSA laboratory or production facility grants a business an exclusive or nonexclusive license to use its intellectual property in return for a licensing fee and/or royalties.
User facility agreements: An NNSA laboratory or production facility permits outside organizations to use its unique research equipment and/or facilities to conduct research. The private organization pays the full cost of using research equipment or facilities and retains title rights to any intellectual property.
section_title: NNSA Laboratories and Production Facilities Have Reduced Partnership Activities Not Fully Funded by Private Partners
paragraphs: In response to the phasing out of dedicated funding for partnerships, NNSA’s laboratories and production facilities have reduced their CRADAs and technical assistance to small businesses while entering into more agreements that are fully funded by the business partners. The total number of CRADAs at NNSA laboratories and production facilities has declined by more than 60 percent, from a high of 639 in fiscal year 1995 to 244—including only 21 new CRADAs—in the first 6 months of fiscal year 2001. During this period, DOE’s funding for CRADAs dropped even more— from $222 million to $19 million. Similarly, technical assistance for small businesses dropped from about 1,700 actions that assisted small businesses in fiscal year 1995 to 136—including only 59 new assistance agreements—in the first 6 months of fiscal year 2001. While these types of partnerships have declined, work-for-other agreements and technology licenses, which require no DOE funds, grew substantially. (Table 4 in app. II provides partnership data by fiscal year for each NNSA facility.)
Table 1 shows that the number of active CRADAs at the NNSA laboratories and production facilities grew rapidly in the early 1990s and then dropped by more than half through the first 6 months of fiscal year 2001. This trend reflects a similar pattern in the growth and decline of DOE’s dedicated funding for technology partnerships. Sandia National Laboratories has entered into more CRADAs than any other NNSA laboratory. (See table 5 in app. II.) In fiscal year 1995, when CRADA activity peaked, Sandia had 254 active CRADAs—40 percent of all NNSA CRADAs. Sandia participated in 153 CRADAs (44 percent of all CRADAs) in fiscal year 2000 and 120 CRADAs (about 50 percent of all CRADAs) in the first half of fiscal year 2001. The number of CRADAs at Lawrence Livermore National Laboratory has dropped even more—from 159 in fiscal year 1995 to 26 in the first two quarters of fiscal year 2001. Lawrence Livermore has shifted its emphasis from using CRADAs with private partners to using procurement contracts with its contractors to develop new technologies important for its mission, according to laboratory officials.
Figure 1 shows funding sources for CRADAs at NNSA laboratories and production facilities for fiscal years 1991 through 2000. As figure 1 and table 1 show, CRADA expenditures at NNSA’s laboratories and production facilities peaked in fiscal year 1995. In that year, DOE contributed $222 million, including $205 million in Technology Partnership Program funding, and private partners contributed $167 million in direct and in-kind support for CRADA activities. As DOE’s dedicated funding for technology partnerships declined, the proportion of private partners’ direct and in- kind contributions increased and has constituted more than half of all CRADA funding since fiscal year 1997. In the first two quarters of fiscal year 2001, DOE contributed $19 million and private partners contributed $61 million in direct and in-kind support for CRADA activities. (See table 6 in app. II for CRADA funding at individual NNSA facilities.)
Table 2 shows the extent to which NNSA’s laboratories and production facilities used the other primary types of technology development partnerships. Generally, partnerships that relied on DOE funds have decreased, while those predominantly funded by businesses have grown. For example, technical assistance for small businesses, which was primarily funded by DOE’s Technology Partnership Program, dropped sharply—from about 1,700 actions that assisted small businesses in fiscal year 1995 to about 500 in fiscal year 2000. In contrast, work-for-other agreements, which are wholly funded by businesses, grew substantially from 209 agreements in fiscal year 1995 to 987 agreements in fiscal year 2000. Similarly, technology licensing agreements have greatly increased during this period. (See tables 7, 8, and 9 in app. II for each NNSA facility’s participation in each of these partnerships.) User facility agreements, which provide access to unique NNSA experimental research equipment and facilities, increased from 103 in fiscal year 1995 to 165 in fiscal year 1998 and then decreased to 96 agreements in fiscal year 2000. Businesses have provided more direct funding for work-for-other agreements than for any of the other types of partnerships. (See table 10 in app. II.)
section_title: CRADAs Offer Both Advantages and Disadvantages
paragraphs: NNSA officials and laboratory managers identified various advantages and disadvantages of collaborative research under a CRADA. (See table 3.) An advantage of collaborative research under a CRADA is often accompanied by a disadvantage. For example, the ability to leverage research funding, staff, and equipment can be offset by concerns over a CRADA’s relevance to mission objectives and the risk inherent in sharing control over the scope of the research, project time frames, and intellectual property.
Each of the NNSA laboratories we visited provided examples of successful CRADAs for both the laboratory and the CRADA partner(s). For example, in 1997, Sandia, Lawrence Livermore, and Lawrence Berkeley National Laboratory (a DOE energy science laboratory) entered into a CRADA with a consortium of microelectronics manufacturers to develop extreme ultraviolet lithography equipment for making next-generation computer chips with enhanced speed and memory. Consortium members are providing $250 million to develop this technology, which is also important for developing advanced computational capabilities that NNSA needs for its nuclear stockpile stewardship program.
Technology transfer officials at the NNSA laboratories noted that CRADAs have enhanced their laboratories’ research by, for example, bringing together a wide range of scientific disciplines to address technical problems or providing NNSA scientists with access to advanced technology or manufacturing processes. Sandia officials generally preferred a CRADA to a work-for-others agreement because CRADA partners actively participate in the research. Sandia officials told us that the Technology Partnership Program had been an important catalyst for initiating CRADAs because it was the laboratories’ primary source of financial support in the early stages of the CRADA project before researchers could demonstrate that the CRADA would directly benefit a specific DOE program.
However, some DOE managers have questioned the value of certain CRADAs—particularly some related to the Technology Transfer Initiative in the mid-1990s—stating that those CRADAs had used scarce resources for projects not closely tied to NNSA’s mission. Furthermore, negotiating and approving the terms of a CRADA could take more than 1 year to complete in the early 1990s. According to Sandia National Laboratories’ data, this time has been substantially reduced—in fiscal year 2000, CRADAs were processed from initiation to final approval in 86 days, on average, including an average of 4 days for DOE’s review and approval. Laboratory officials attributed this improved efficiency to the use of a standardized format for these agreements and the common practice of amending existing CRADAs to broaden the scope of work in lieu of negotiating a new agreement. In several cases, Sandia used blanket or “umbrella” CRADAs to combine a number of different projects with the same partner into a single agreement.
NNSA laboratory managers identified three primary options for providing financial and management support for CRADAs:   Continue to rely primarily on laboratory research managers to determine whether participating in a CRADA effectively supports their mission research. In addition to research funds, NNSA’s laboratories have used other DOE funds, including their “laboratory-directed research and development” funds and Accelerated Strategic Computing Initiative funds, to support certain CRADAs. DOE has contributed $19.4 million for active CRADAs at NNSA laboratories and production facilities in fiscal year 2001.
Set aside a small portion of research funding specifically to provide initial support for mission-related CRADAs until they show sufficient potential benefits that program managers would be willing to provide financial support.
Establish an advocate within NNSA responsible for facilitating funding for CRADAs.
The laboratory managers noted that the advocate’s office could be combined with one of the two funding options. A senior official at NNSA headquarters stated that the two funding options were reasonable. However, the senior official preferred to assign responsibility for facilitating CRADAs to a senior office within NNSA without giving it responsibility for advocacy.
section_title: Agency Comments
paragraphs: We provided DOE with a draft of this report for its review and comment. NNSA’s Institutional and Joint Programs Division generally agreed with the draft report. NNSA also provided comments to improve the report’s technical accuracy, which we incorporated as appropriate.
section_title: Scope and Methodology
paragraphs: To obtain trend data on technology development partnerships, we asked officials at NNSA and its laboratories to identify the primary types of technology partnerships that they have used with private entities. We then developed a data collection instrument to obtain participation and funding data from NNSA’s three nuclear weapons laboratories and three of its production facilities from fiscal year 1991 through the second quarter of fiscal year 2001. To help ensure consistency across locations, we worked with officials from these laboratories and facilities to establish uniform definitions and resolve any discrepancies. In addition, we (1) interviewed NNSA officials at DOE headquarters and DOE’s Albuquerque and Oakland Operations Offices and (2) visited Lawrence Livermore National Laboratory, Los Alamos National Laboratory, and Sandia National Laboratories to obtain the views of administrators and scientists about their laboratories’ participation in and funding of technology development partnerships.
To identify the advantages and disadvantages of CRADAs, we interviewed NNSA officials at DOE headquarters and obtained the views of laboratory administrators and scientists at Lawrence Livermore National Laboratory, Los Alamos National Laboratory, and Sandia National Laboratories. We also interviewed executives of four businesses that participated in at least one CRADA with an NNSA laboratory to obtain their perspective about CRADAs. We conducted our review from January 2001 through May 2001 in accordance with generally accepted government auditing standards. We did not independently verify the data provided by NNSA’s laboratories and production facilities.
We are sending copies of this report to the Secretary of Energy, the Director of the Office of Management and Budget, and other interested parties. We will make copies available to others on request.
If you or your staff have any questions about this report, please contact me at (202) 512-3841. Key contributors to this report were Richard Cheston, Sandra Davis, and Timothy Minelli.
section_title: Appendix I: NNSA’s Report on Technology Development Partnerships
paragraphs: NNSA’s report entitled Report to Congress on Technology Partnerships With Non-federal Entities Within the National Nuclear Security Administration During Fiscal Year 2000 primarily examined CRADA activities at its laboratories and production facilities. The report stated that with the termination of the Technology Partnership Program’s dedicated funding, CRADA partnerships will obtain either financial support from individual DOE research programs—ensuring that the project is more clearly linked to DOE’s mission—or full funding from the private sector partner. NNSA stated that more than 200 of its 348 CRADAs supported its core missions in fiscal year 2000 and pointed to CRADA- developed technologies that benefited both NNSA and its private partners. For example, a CRADA used NNSA advanced laser technology to develop an improved laser shot peening process to make indentations that reduce fatigue in critical metal parts, such as jet engine fan blades and nuclear waste disposal containers. According to NNSA, the absence of dedicated funding could also result in fewer CRADAs that provide only secondary, or spinoff, benefits for its core mission. A separate NNSA report discussed technical assistance for small businesses, which also was cut back as the Technology Partnership Program was phased out.
NNSA reported that CRADAs are advantageous because they can leverage its laboratories’ resources and bring to bear the expertise of several partners to address technical challenges. CRADAs also allow for more flexibility in the treatment of intellectual property than do other types of partnership agreements. NNSA noted that some laboratory personnel and private sector partners are skeptical about using CRADAs because they believe that negotiations take longer than necessary.
Although the congressional mandate directed NNSA to recommend actions that would make CRADAs more effective in supporting its mission, NNSA made no recommendations.
section_title: Appendix II: The Technology Development Activities of NNSA’s Laboratories and Production Facilities
subsections: section_title: Lawrence Livermore National Laboratory CRADAs Technical assistance for small businesses Work for othersCost-shared procurementsTechnology licenses User facilities
paragraphs: In response to section 3135(b) of the National Defense Authorization Act for Fiscal Year 1993, DOE’s Defense Programs established the Small Business Initiative to facilitate and encourage the transfer of technology to small businesses.
Data were not readily available.
section_title: Lawrence Livermore National Laboratory Newly executed CRADAs Continuing CRADAs Subtotal
paragraphs: 21 223 244 5.7 $4.0 $18.3 13.2 $0.7 $28.1 61.9 $139.6 $122.9 26.3 $2.5 $32.4 0 $0 $1.2 $19.7 4.71.6 10.81.2 88.8 $7.2 $80.4 $184.4 111.9 $255.7 $244.2 Primarily includes research funds. Some CRADAs at NNSA laboratories have used laboratory- directed research and development funds.
Planned in-kind contribution by nonfederal partner(s).
Data were not readily available.
Data were not readily available.
section_title: Lawrence Livermore National Laboratory Newly executed agreements Continuing agreements Subtotal Los Alamos National Laboratory Newly executed agreements Continuing agreements Subtotal Sandia National Laboratories Newly executed agreements Continuing agreements Subtotal Kansas City Plant Newly executed agreements Continuing agreements Subtotal Oak Ridge Y-12 Plant Newly executed agreements Continuing agreements Subtotal Pantex Plant Newly executed agreements Continuing agreements Subtotal All NNSA facilities Newly executed agreements Continuing agreements Total
paragraphs: Data were not readily available.
Data were not readily available on the number of continuing licenses.
Data are not available.
Not applicable.