On behalf of the members of the Subcommittee on Regulation, Business Opportunities, and Energy we are pleased to submit this addendum report for the consideration of full committee members.

Sincerely,

RON WYDEN,

Chairman.

WILLIAM S. BROOMFIELD,

Ranking Minority Member.

MAJORITY MEMBERS

RON WYDEN, OREGON

CHAIRMAN

ELIOT L ENGEL, NEW YORK

JIM OLIN, VIRGINIA

MICHAEL R. MCNULTY, NEW YORK

TO:

FROM:

Ron Wyden, Chairman, Subcommittee on Regulation, Business
Opportunities and Energy

Subcommittee Staff

SUBJECT: Transfer of Federal Technology to Small Business:

Serious Barriers Block Commercialization of Billions of
Dollars in Federal Research and Hamstring U.S.
Industrial Competitiveness

Mr. Chairman:

Over the last year, the subcommittee staff at your direction has
investigated the role of the federal laboratories as drivers--
or brakes
on the global competitiveness of technology-
dependent U.S. businesses. You have asked us to review the
success or failure of government laboratories to commercialize
billions of dollars of federally financed technology. You have
also asked us to investigate problems in this area specific to
small businesses.

In summary, we have found that the government efforts in this area have been under-staffed, under-directed and only marginally focused.

The result has been frustrated government scientists who can't commercialize their inventions, discouraged businesses who can't get at valuable technologies and penalized taxpayers who have lost untold millions of dollars in unrealized licensing and royalty revenues.

Representative of this failure is the astoundingly small return federal taxpayers receive through commercialization of federal inventions. Royalties accruing to the government in 1988 from licensing of federal inventions and discoveries represented a return on research investment of only .00005 percent.

According to John M. Ols, Jr., a senior manager with the U.S. General Accounting Office who is overseeing a detailed performance analysis of federal tech transfer laws, many government labs and agencies "are at ground zero" in their efforts to conform to the substance of transfer mandates.