WHO

WORK FOR

COMMERCIALIZATION

OF THEIR

INVENTIONS, LICENSING OF FEDERALLY OWNED INVENTIONS APPEARS TO BE ON THE RISE.

WHILE

SOME LABORATORIES ROUTINELY ENTER INTO COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS WITH INDUSTRY, OTHERS HAVE YET TO RECEIVE AUTHORITY ΤΟ DO SO FROM HEADQUARTERS--EVEN THOUGH THE ACT, AS INTERPRETED BY AN EXECUTIVE ORDER, MANDATES SUCH DELEGATION. A FEW LABS HAVE SYSTEMS IN PLACE ΤΟ EVALUATE INVENTORS' PERFORMANCE IN TECHNOLOGY TRANSFER, BUT MANY HAVE YET TO ESTABLISH THE COMPREHENSIVE SYSTEM ENVISIONED BY THE ACT.

A REPRESENTATIVE OF THE GENERAL ACCOUNTING OFFICE, AS OUR LEAD OFF WITNESS, WILL GIVE GAO'S ASSESSMENT OF THE CURRENT STATE OF TECHNOLOGY TRANSFER FROM THE FEDERAL LABS. TO ASSURE MORE UNIFORM IMPLEMENTATION OF THE ACT, THE COMMITTEE COMMISSIONED THE GAO TO REVIEW THE EXTENT OF LABORATORY AND AGENCY COMPLIANCE WITH THE ACT. GAO WAS ALSO ASKED TO DEVELOP A SERIES OF QUESTIONNAIRES TO PERMIT US TO UNDERSTAND HOW WELL THE ACT IS WORKING AND WHY.

NEXT WE WILL HEAR FROM SOME INNOVATIVE FEDERAL LABORATORIES TO LEARN IF THEIR EFFORTS CAN BE AND FINALLY, WE

APPLIED TO OTHER LABORATORIES.

WILL HEAR

FROM

REPRESENTATIVES FROM THE

DEPARTMENT OF DEFENSE TO FIND OUT WHAT CAN BE DONE TO INCREASE THE TRANSFER OF TECHNOLOGY TO AMERICAN INDUSTRY SINCE THAT DEPARTMENT FUNDS ABOUT ONE-THIRD OF THE RESEARCH AND DEVELOPMENT CONDUCTED IN THIS COUNTRY.

OPENING STATEMENT

BY U.S. REP. JERRY COSTELLO

COMMITTEE ON SCIENCE, SPACE AND TECHNOLOGY

SUBCOMMITTEE ON SCIENCE, RESEARCH AND TECHNOLOGY

JUNE 1, 1989

"IMPLEMENTATION OF THE FEDERAL TECHNOLOGY TRANSFER ACT"

Mr. Chairman, we have seen in recent years many of our trading partners make effective commercial use out of research and technology advances discovered in laboratories funded by the federal government.

The United States has not been as effective in developing these spinoff for our country's commercial or

discoveries

economic gain. The 1986 Federal Technology Transfer Act will allow federally operated laboratories to enter into cooperative research and development agreements with private parties.

I look forward to hearing how the Act has been received and the actual effect it has had on technology transfer and the economic gain it has given to American businesses.

In addition,

given that a large amount of federal research is done through the Department of Defense, I am interested to hear why DOD has been slow in implementing this Act.

Mr. WALGREN. Well, with that, let me introduce to the record the first panel. John Ols, Director of Resources, Community and Economic Development Division of the GAO; accompanied by a number of support people who've worked on this problem with him. We appreciate your coming to be with us this morning and we want to express our appreciation for the time and-and attention that you have given this area in response to our committee's interest.

As you know, written statements for all the witnesses will be made part of the record without more and you can feel free to focus on parts of those statements or particularly underscore points that you would like to have stand out in the verbal part of the transcript for those who work with that document.

Welcome to the Committee, Mr. Ols. We appreciate your being here.

STATEMENT OF JOHN M. OLS, DIRECTOR OF RESOURCES, COMMUNITY AND ECONOMIC DEVELOPMENT DIVISION, GENERAL ACCOUNTING OFFICE; ACCOMPANIED BY LOWELL MININGER, ASSISTANT DIRECTOR; SUMI ARIMA, EVALUATOR-IN-CHARGE; AND CYNTHIA WALFORD, PROJECT MANAGER

Mr. OLS. All right, thank you, Mr. Chairman.

I'd like to introduce the colleagues that are with me today. To my immediate right is Lowell Mininger, who is the Assistant Director on this particular project and does a lot of our work in the technology transfer area; to his immediate right is Sumi Arima, who is the Evaluator in charge on this identical-this specific one we're working on; and to my immediate left is Cynthia Walford, who is the Project Manager on the questionnaire job that you referred to that we're moving forward on.

With that, I'd just like to summarize the detailed report that we've released today, which is available, which was requested by the Chairman and Ranking Minority Member of the Committee on Science, Space, and Technology.

As requested, that report provides information on the progress the 12 Federal agencies in 25 of their laboratories have made in implementing the Act.

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 activities. As of February, 1989, the agencies contacted had entered into a total of 172 agreements under the specific authority of the '86 Act. In addition, some agencies continue to enter into agreements under their respective authorizing acts.

As required by the Act, each of the Federal 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 and that report is in final process as of today.

The agencies have submitted all other reports required by the Act to date. We believe that it is too early to determine the total impact the Act has had on technology transfers. Further, although agencies reported undertaking numerous technology transfer activities, the reported activities are defined differently and, consequently, uniform statistical information has not been made—has not been available to make a comprehensive evaluation.

To resolve this problem and facilitate evaluating the impact of the Act on technology transfer, as you had indicated in your opening statement, we are conducting a separate review to develop criteria for reporting technology transfer activities.

Before discussing some of the details of the work we had performed, I'd 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 public and private sector. Under such an agreement, one or more Federal agencies, through their laboratories, corroborate with one or more non-Federal 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 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 the one I mentioned already by the Secretary of Commerce.

I'd like to summarize the details of our work and only concentrate on a few of the aspects that we-that we covered in the report that is being released today, and it's only because we decided to bring these forward in highlighting those particular activities.

I'll start with the delegation of authority to enter into cooperative agreements. Ten of the 12 agencies we contacted had delegated authority to their laboratories to enter into such agreements. In making the delegations, however, some agencies define laboratories to be headquarters offices at higher organizational levels than field laboratories or research centers. In this regard, the 1986 Act defines laboratories broadly and thus allows agencies a lot of latitude in how they define the laboratory.

For example, the Agricultural Research Service was defined by the Department of Agriculture as a laboratory, but did not consider as laboratories for the purposes of the Act, the Service's approximately 120 research laboratories and facilities. Agriculture officials said that most of these laboratories and research facilities are small and do not have the expertise or resources needed to enter into cooperative agreements.

NASA and the Navy were the only agencies that did not delegate authority to their laboratories. NASA historically has worked with industry using agreements entered into under the Space Act of