1958. As allowed by the 1986 Act, NASA opted to continue its technology transfer activities under its existing authority and, therefore, has taken little action under the authority of the '86 Act.

Navy officials said it has not delegated authority to enter into cooperative agreements because its laboratories do not have the expertise to address liability issues that might arise. Without established procedures, the Navy official said that the laboratories lack the legal capabilities to ensure that the government's interests are protected. These officials added that after the laboratories have more experience with cooperative research and development agreements, the Navy might delegate such authority to its laboratories. In summary, we at the 25 laboratories that we visited, 15 had not delegated-had delegated authority to enter into agreements, while 10 laboratories were either not considered to be individual labs under the Act or their respective agencies had not delegated such authority to the laboratory level.

The 12 agencies we contacted reported, as part of their fiscal year 1989 budget submissions to the Office of Management and Budget and their appropriation committee, that they had entered into a total of 1200 agreements in each of fiscal years 1987 and 1988. However, the 1986 Act provides agencies flexibility in defining what is a cooperative agreement and we found that agencies were reporting different types of agreements because of the confusion of what could be covered under that particular reporting mechanism.

For example, some agencies include cooperative agreements entered into under the authority of their respective authorizing acts, while others did not. They only included what was provided for under the '86 Act.

As of February, 1989, the 12 agencies contacted reported entering into a total of 172 agreements under the 1986 Act.

The agencies with the most agreements were the Department of Agriculture, the National Institutes of Health, the National Institute of Standards and Technology, and I should note that these agencies had prior experience working with the private sector in other industry activities prior to the 1986 Act, which I think it made it easier for them to get off and run a lot quicker than maybe some of the other agencies.

The agencies contacted had taken some actions to implement the Act's incentive provisions. The Act, as amended, requires that agencies distribute at least 15 percent of royalties and other income, such as licensing fees, up to a maximum of $100,000 a year per person per invention to Federal inventors and others that assign rights to inventions or intellectual property to the Federal Government.

From 1986 through September, 1988, nine agencies collected about $4.6 million from royalties and licensing fees. These agencies had distributed or plan to distribute to the Federal inventor at least 15 percent of the royalties collected. The three agencies that had not yet collected any royalties-each planned to distribute at least 15 percent to the Federal inventors once royalties are collected.

The National Institutes of Health collected the most royalties, about 3.9 million. This amount was for agreements made prior to

the 1986 Act, primarily for the National Cancer Institute's AIDSrelated inventions. No royalties had been collected to date for inventions made as part of the 1986 Act agreements because, according to NIH officials, it generally takes two to three years for inventions to be made to reach the commercial marketplace.

The Agricultural Research Service has established a new cash awards program focused primarily on technology transfer. The Service established the program in September of 1988 and plans to make its first initial awards sometime this month.

Other agencies are relying on their existing cash awards program to reward their employees for promoting technology transfer. Agencies disseminate information on these programs, as well as the possibility of royalties, through formal and informal mechanisms such as internal directives, memoranda, newsletters and scientific meetings.

With regard to the mandated reports, we found that agencies had submitted to the Congress all but one of the reports mandated by the '86 Act. The only exception is the Commerce's first biennial report to the President and the Congress on the Act's implementation. Commerce has prepared a draft report, which is presently undergoing final review at the department.

In April, 1988, the Federal Laboratory Consortium for Technology Transfer issued a report to the Congress and the Federal agencies that contributed funds to its program. In May, 1988, the Secretary of Commerce issued a report dealing with various software issues. These reports cite numerous examples of technology transfer activities and portray the implementation of the '86 Act in a very positive light.

The agencies reported their activities performed in carrying out the Act's technology transfer provisions in their fiscal year 1989 budget materials submitted to the Office of Management and Budget and their appropriations subcommittee. However, as I mentioned earlier, the reports do not provide uniform statistical information that can be aggregated to show the impact of the Act on technology transfer activities.

Mr. Chairman, this concludes our statement. We would be pleased to respond to any questions you or members of the subcommittee might have.

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss our just released report on the Implementation Status of the Federal Technology Transfer Act of 1986. This report was prepared at the request of the Chairman and Ranking Minority Member of the Committee on Science, Space, and Technology. As requested, it provides information on the progress that 12 federal agencies and 25 of their laboratories have made in implementing the act. The agencies and laboratories included in our study are listed in attachment I.

I would like to summarize the key aspects of the act that we examined. Federal agencies have taken numerous actions to implement the Federal Technology Transfer Act of 1986. Ten of the agencies we contacted had delegated authority to their laboratories to enter into cooperative research and development agreements. As of February 1989, the agencies contacted had entered into a total of 172 agreements under the specific authority of the 1986 act, in addition to agreements some agencies continued to enter into under their respective authorizing acts. As required by the act, each of the agencies either had distributed or planned to distribute to federal inventors at least 15 percent of the royalties collected; and one agency had established a new cash awards program focused solely on technology transfer. The Department of Commerce has drafted its first biennial report on the extent to which federal agencies have implemented the 1986 act. The agencies have submitted all other reports required by the act to date.

GAO believes it is too early to determine the impact the act has had on technology transfer. Further, although agencies reported undertaking numerous technology transfer activities, the reported activities are defined differently and, consequently, uniform statistical information has not been available to make a comprehensive evaluation. To resolve this problem and facilitate evaluating the impact of the act on technology transfer, we are

technology transfer activities. The status of this work is presented in attachment II.

KEY ASPECTS OF THE FEDERAL TECHNOLOGY TRANSFER ACT OF 1986

Before discussing the details of our work I would like to present some background on the act.

As you know, the Federal Technology Transfer Act amended the Stevenson-Wydler Technology Innovation Act of 1980 to permit federal agencies to delegate authority to government-operated laboratories to enter into cooperative research and development agreements with entities in both the public and private sector.1 Under such an agreement, one or more federal agencies, through their laboratories, collaborate with one or more nonfederal parties in conducting specified research and development efforts that are consistent with the laboratories' missions. The act sought to make entering into such agreements as easy as possible, while protecting the legitimate concerns of the government.

To provide incentives for federal employees to promote technology transfer, the act also established royalty sharing for federal inventions and directed agencies to provide cash awards focused on technology transfer. In addition, the act contains a number of reporting requirements, including a biennial report from the Secretary of Commerce on the agencies' implementation of technology transfer legislation. The act requires the Federal Laboratory Consortium for Technology Transfer, which it formally established to help federal laboratories transfer technologies, to annually report its activities and expenditures to the Congress.

1The 1986 act made agency delegation of authority to laboratory directors permissive. Executive Order 12591, April 10, 1987, as amended, states that agencies shall, within overall funding allocations and as permissible by law, delegate authority to their laboratories to enter into cooperative research and development agreements.