ATP, which began funding projects in fiscal year 1990, was intended to fund high-risk research and development (R&D) projects with broad commercial and societal benefits that would not be undertaken by a single company or group of companies, either because the risk was too high or because the economic benefits of success would not accrue to the investors. ATP is viewed as a mechanism for fostering investment in areas in which societal returns would exceed private returns. ATP has addressed other opportunities to achieve broader societal goals, such as small business participation, as well as the establishment of joint ventures for high-risk technologies that would be difficult for any one company to justify because, for example, the benefits spread across the industry as a whole. Thus, ATP is seen by some as a means of addressing market failure in research areas that would otherwise not be funded, thereby facilitating the economic growth that comes from the commercialization and use of new technologies in the private sector. Advocates of the program believe that the government should serve as a catalyst for companies to cooperate and undertake important new work that would not have been possible in the same time period without federal participation. Critics of the program view ATP as industrial policy, or the means by which government rather than the marketplace picks winners and losers. ATP provides funding through cooperative agreements—a type of financial assistance in which the federal government is substantially involved in project management. ATP offers these agreements through announced annual competitions. It provides multiyear funding to single companies and to industry-led joint ventures. The proposal review and selection process is a multistep process based on NIST regulations. In general, these steps include a preliminary screening, technical and business reviews, semifinalist identification, oral reviews, ranking, and final selection. At the beginning of each round of ATP competitions, NIST establishes Source Evaluation Boards (SEBs) to ensure that all proposals receive careful consideration. Each SEB is comprised of NIST technical experts as well as outside specialists with backgrounds in business and economics. ATP supplements the SEBs with outside technical reviewers, generally federal government experts in the specific industry of the proposal. Independent business experts are also hired on a consulting basis, including high-tech venture capitalists, people who teach strategic business planning, retired corporate executives from large and small high- tech businesses, as well as economists and business development specialists. All SEB members and outside reviewers must sign nondisclosure statements, agree to protect proprietary information, and certify that they have no conflicts of interest. As part of the proposal evaluation process, ATP uses the external reviewers to assess the technical and business merit of the proposed research. Each proposal is sponsored by both technical and business SEB members, whose roles include identifying reviewers, summarizing evaluative comments, and making recommendations to the SEB. The SEB evaluates the proposals, selects the semifinalists, conducts oral interviews with semifinalists, and ranks the semifinalists. A source selecting official makes the final award decisions based on the ranked list of proposals from the SEB. The three projects that we reviewed received funding through the ATP competitions announced in 1990 and 1992. In those years, the selection criteria included scientific and technical merit, potential broad-based benefits, technology transfer benefits, the proposing organization’s commitment level and organizational structure, and the qualifications and experience of the proposing organization’s staff. Each of the five selection criteria was weighted at 20 percent. Today, these same selection criteria are used but are grouped into two categories, each weighted at 50 percent. The “Scientific and Technical Merit” category addresses a variety of issues related to the technical plan and the relevant experience of the proposing organization. The second category, “Potential for Broad-Based Economic Benefits,” addresses the means to achieving an economic benefit and commercialization plans, as well as issues related to the proposer’s level of commitment, organizational structure, and management plan. Technical and business reviewers complete documentation, referred to as technical and business evaluation worksheets, that address various aspects of these criteria. The three completed projects that we reviewed addressed research goals that were similar to goals the private sector was addressing at about the same time. Each of the three projects was from a different sector of technology—computers, electronics, and biotechnology. The projects include (1) an on-line handwriting recognition system for computer input, (2) a system to increase the capacity of existing fiber optic cables for the telecommunications industry, and (3) a process for turning collagen into fibers for human prostheses use. Both the ATP project and several private sector projects had a similar research goal of developing an on-line system to recognize natural or cursive handwritten data without the use of a keyboard. This technology would make computers more useful where keyboard use is limited by physical problems or in situations where using a keyboard is not practical. On-line handwriting recognition means that the system recognizes handwritten data while the user writes. The primary technical problem in handwriting recognition is that writing styles vary greatly from person to person, depending upon whether the user is in a hurry, fatigued, or subject to a variety of other factors. While the technology for obtaining recognition of constrained careful writing or block print writing was commercially available, systems for cursive writing recognition were not commercially available because of the greater handwriting variability that was encountered. The ATP project we reviewed sought to develop an on-line natural handwriting recognition system that was user-independent and able to translate natural or cursive handwriting. Communication Intelligence Corporation (CIC) was the award recipient. CIC used its ATP funding of $1.2 million from 1991 to 1993 to build its own algorithms and models for developing its handwriting recognition system. During the project, CIC created a database that includes thousands of cursive handwriting samples and developed new recognition algorithms. Some of this technology has been incorporated into a registered software product that has the ability to recognize cursive writing in limited circumstances. According to the experts we interviewed, as well as literature and patent searches, several companies were attempting to achieve a similar goal of handwriting recognition through their research around the same time that the ATP project received funding. Some of the key players in the private sector conducting research on cursive handwriting recognition included Paragraph International (in collaboration with Apple Computer) and Lexicus (which later became a division of Motorola). For example, Apple licensed a cursive handwriting recognition system from a Soviet company, Paragraph International, according to articles published in computer magazines in October 1991. According to these sources, this technology provided Apple with a foundation for recognizing printed, cursive, or block handwritten text. Another indication of research with a similar goal appeared in the October 1990 edition of PC Week, which reported that “handwriting recognition is an emerging technology that promises increased productivity both for current microcomputer owners and for a new breed of users armed with hand-held ‘pen-based’ computers.” Similarly a technical journal article indicated that there was renewed interest in the 1980s in this field of on- line handwriting recognition, from its advent in the 1960s, because of more accurate electronic tablets, more compact and powerful computers, and better recognition algorithms. Moreover, according to the U.S. Patent and Trademark Office’s (PTO) database, over 450 patents were issued on handwriting recognition software, concepts, and related products from 1985 through 1999, indicating that research of a similar goal was being conducted around the time of the ATP project. Given the fact that it can take many years between the time a research project takes place and the time that an outcome is realized, this time period for a patent search allowed us to determine whether there was research ongoing during the time of the ATP project. The dates of the patents actually occurred sometime after the research was conducted. And, as we reported in a prior report, the time between the point when a patent application is filed until the date when a patent is issued, or the application is abandoned, ranged from 19.8 months to 21 months, adding additional time to when the research was done. Another ATP project we reviewed, which proposed to develop a system to increase the capacity of existing fiber optic cables for the telecommunications industry, also had a similar goal to that of research in the private sector. At the same time, firms in the private sector were attempting to increase the number of light signals that can be transmitted through a single strand of fiber optic cable using a technology called wavelength division multiplexing (WDM). In the 1980s, telephone companies laid fiber optic cables across the United States and other countries to create an information system that could carry significantly more data than the copper wires they replaced. Tremendous increases in cable traffic, primarily from the Internet, have crowded these cables. WDM technology was aimed at providing a cost-effective alternative to the expensive option of installing additional fiber optic cables. Accuwave Corporation (Accuwave) was the ATP award recipient. Accuwave used its ATP funding of approximately $2 million from March 1993 through March 1995 to develop a wavelength division multiplexing system that would substantially increase the number of signals that could be transmitted through a single optical fiber strand, using the concept of volume holography. Volume holography uses holograms to direct multiple light signals simultaneously through a single fiber strand. Accuwave was able to make improvements on these issues but not enough to fully develop and market a successful WDM system for the telecommunications market. In 1996, a competitor beat Accuwave to the market. After the completion of the ATP project, Accuwave filed for bankruptcy protection due to its inability to successfully commercialize a wavelength division multiplexing system. Other private firms were involved in research with a similar goal of increasing the capacity of fiber optic cable at about the same time as Accuwave was conducting its research. Conceptual research on such systems dates back to the early 1980s, but development and commercialization did not flourish until the mid- to late-1990s.