The transfer of technology out of government and university labs into the private sector holds enormous possibilities for the growth of small business. Effective and appropriate transfer through government programs is essential to the realization of this goal.
WHAT
IS TECH TRANSFER?
HISTORY
1982
1988
1992
POST-1992
PROGRAMS
SBIR
MTC
& STEP
ARPA
:
In the last two decades, there has been a great deal
of effort put into technology transfer programs. The federal focus
has changed with administration and congressional preferences, varying
goals regarding commercialization, and changing views of how to assist
small firms. States have shifted to fill in the gaps left by federal
policy and seem to have responded better to the specific needs of business.
To enable programs to become more effective in delivering technology to the private sector, additional comprehensive research is needed to evaluate the reasons for strengths and weaknesses of past initiatives, and to establish links to the economy and the political environment.
WHAT
IS TECHNOLOGY TRANSFER?
Understanding tech transfer is
essential to its evaluation. It can be simply seen as the broad
area of commercializing product development (Tornatzky & Ostrowiecki,
1994). Tech transfer can also be interpreted as the link between
the technology development and product development processes, a step where
many problems can occur. These include underestimating the effort
and time necessary to successfully integrate the technology, discrepancies
between the different goals of the technology and product development processes,
logistical difficulties, and budget deficiencies (Eldred and McGrath, 1997).
Additional obstacles that can slow
innovation include: lack of interaction between the institutions, companies
and other actors in the system; mismatches between basic research in the
public sector and more applied research in industry; malfunctioning of
technology-transfer programs such as extension services; information deficiencies
on the part of enterprises (Stevens, 1977).
1982
The earliest programs focused on
the use of research and development (R&D) in federal and university
labs as a source for practical innovations. In 1982, the Small
Business Innovation Research Program (SBIR) was established under
the Small Business Innovation Development Act. It required
agencies to provide special funds for small business. Administered by the
Small Business Administration (SBA), these funds were to be used for R&D
that was specifically connected to agencies’ missions.
1988
The Federal Technology Transfer
Act gave the responsibility of technology transfer to all federal laboratory
scientists and engineers. Previous research by federal labs and university-based
programs had been for national security. The post-Cold war era created
the need for new missions in order for labs to remain viable (Dietz, 1997).
A charter for the Federal Laboratory Consortium for Technology Transfer
facilitated agreements between laboratories and both large and small companies
regarding title and license to inventions resulting from cooperative R&D
Agreements (Katz, 1996).
The Omnibus Trade and Competitiveness
Act established two programs administered by the National
Institute of Standards and Technology (NIST) that shifted focus
to technology transfer through state programs. The goal of the Manufacturing
Technology Center (MTC) program is to transfer advanced manufacturing
technology to smaller manufacturers to improve their productivity and competitiveness.
Assistance is provided through limited planning grants awarded to state-based
technology extension programs. Seven MTC’s were established within
the first four years, five of which were linked to state programs (Simons,
1993).
Similarly, the State Technology Extension Program (STEP) was created to aid the design of economic development plans through small state grants (Simons, 1993). It was established with a budget of less than $1 million per year, and survived only through annual congressional intervention which preserved its budget at $1.5 million (Reddy, 1993).
Although most of the literature seems to support the idea that the federal response to technology transfer has gradually become more effective, several critics argue otherwise. The effort to bolster the manufacturing industry is viewed by skeptics as having been limited by its focus on basic research and market incentives. Even by 1988, with the state programs outlined above in place, technology assistance was still regarded as a haphazard and half-hearted effort by the government (Feller, 1992).
1992
The Bush administration adjusted
its policy in 1992, when it concurred with Congress that the manufacturing
industry needed the latest technology if the US was to remain competitive
(Simons, 1993). As part of this shift, the Bush and Clinton Administrations
over the next eight years proposed 30 large and 100 small MTC’s.
This was in addition to a proposed revision of the Department of Defense
(DOD) budget to spend $540 million in FY 1993 on state and federal initiatives
for expanding MTC’s and helping state extension programs (Simons, 1993).
In 1992, Clinton outlined a broad technology policy featuring development and dissemination of “advanced manufacturing technology in order to rebuild US manufacturing and create needed jobs (Simons, 1993, p.169). ” Bi-partisan support pushed a 12-fold increase in federal funding for these programs through Congress (Reddy, 1993). This new administration also saw that approximately $200 million from the $1.7 billion DOD conversion and reinvestment package was appropriated for industrial extension. This consolidated the MTC and STEP programs under the Manufacturing Extension Partnership (MEP), also administered by NIST (Reddy, 1993).
Post
1992
With Clinton’s election, federal
programs clearly supported a stronger focus on funding for state programs,
as well as a more significant role for federal agencies. The Small
Business Technology Transfer Program (STTR) and the change at the
Defense Advanced Research Projects Agency
(DARPA) are reflective of this adjustment. The STTR (1992) takes
a hybrid approach to partnerships, crossing the demand-oriented technique
of state programs with the use of agencies by the SBIR. Although
ideas originated in universities and labs, projects developed through a
cooperative agreement with small business (Dietz, 1997). The STTR
paired technology ideas of small business with tech innovations at federally
funded labs and university research programs. Instead of emphasizing
the mission of government agencies, the goal of this program appears to
have been driven by business needs. The STTR was recently re-authorized
by Congress through FY 2000.
One of the first in a series of actions involving federal agencies in the 1990’s was the renaming of DARPA to ARPA, removing its primary focus on defense. At this time, the department was also given responsibility for dual-use technologies; that is, products and services slated for use in both defense and non-defense applications. This was a proactive step to transfer defense technology into the civilian sector (Simons, 1993).
The effects of ARPA were seen in its Technology Reinvestment Project, which it funded with $472 million of re-programmed 1993 funds. The project combines efforts of the Department of Defense, Commerce, & Energy, with the National Science Foundation and NASA in providing tech development, tech deployment and manufacturing education and training. The MEP program is the main recipient, with an $87 million budget (Simons, 1993).
Also in 1993, NIST changed the definition of “advanced manufacturing technology” from leading edge/state-of-the-art (i.e. laser technology or robotics) to off-the-shelf best technology. This change reflects an official shift from supply-side to demand-side policy. Instead of focusing on the transfer of technology out of federal labs, new policy was now aimed at marketing to the actual needs of smaller firms, who are more often better served by existing and proven technologies accompanied by implementation assistance (Simons, 1993).
example one:
Analytical Services & Materials
(AS&M) is an aerospace firm in Virginia that has used SBIR awards to
develop a high-tech turbine blade coating used to combat high speeds and
temperatures. This technology has created competition with large
firms such as Boeing and Lockheed Martin. The SBIR funding assisted
with the typical “cash-draining process of researching and developing new
technologies for small business (Parker, 1997) ” and enabled AS&M to
develop competitively. The award basically became their R&D funding.
The agencies that AS&M have connected to are NASA, and the armed forces
who, in turn, benefit from the additional research personnel available
from the small firm.
example two:
SBIR can also be used to leverage
state investment dollars. The New Jersey Commission on Science and
Technology brought in $32 million in federal SBIR awards to small firms.
Its place in the Department of Commerce creates an emphasis on tech transfer
and job creation. The SBIR money combines with $31 million in federal
funds to universities, and $32 million in private funds, to support over
2,000 jobs and assist over 1,000 companies employing over 10,000 workers
(Prior, 1997).
State
Programs - MTC & STEP
In 1988, little state money was
being spent on the transfer of technology, the majority going toward R&D
(Shapira, 1990; Feller, 1992). Nevertheless, despite low funding,
twenty-six states operated tech transfer programs. They facilitated
the transfer from lab to private sector to create new businesses, introduced
new production lines for existing firms, or worked to revitalize mature
industries. Many states also offered traditional business assistance
programs that included management information, product and process evaluations,
technology operation assistance, and financial and expertise referrals
(Shapira, 1990).
One explanation for this type of state action is that it responded to the lack of region and sector-specific economic development programs supported by the 1980’s administration. It is also possible that crisis situations developing around single-industry regions caused states to rebuild and help diversify local economies. Traditionally, state industrial attraction programs used tax breaks and other subsidies, but 1988 saw a new awareness develop about strengthening existing firms and creating new local business (Shapira, 1990; Feller, 1992). New state technology programs were often accompanied by strategies to “reinvigorate manufacturing, stimulate new firm growth, [and] upgrade education and training (Shapira, 1990, p.188).” Although the literature does not evaluate federal aid to state programs, the focus of these programs intuitively indicates a successful route to reach businesses.
MTC's
The continued operation of state
programs, along with the additional funding provided to MTC’s, seems to
reveal some level of confidence in this approach by state government and
industry. MTC’s are designed to transfer advanced manufacturing technology
to small business. A demonstration of how MTC’s work is through the
program in Minnesota. This serves as an example of the simple methods
that are possible to meet this goal. An information hotline, operated
by TelTech, is used as a technology-access system and provides immediate
advice and referrals. The hotline links to specialists and can refer
customers to more than 6,000 experts who are under contract to TelTech.
For better access by small firms, the SBA & NIST combined to offer
the service free or at low cost in six states. As of 1992, the hotline
had assisted over 1,500 smaller companies (Reddy, 1993).
STEP
STEP was established to directly
aid states in the design of economic development plans. Operating
on a budget of $1.5 million, the program built and improved technology
assistance infrastructure in 38 states and helped several states start
their own industrial extension programs (Reddy, 1993). In comparison
to the initial MTC budget of $10 million and its performance in the first
few years, STEP has appears to have had a remarkably broad impact.
More research into the success of establishing economic development on
the state level would be helpful in evaluating what appears to be a successful
and low cost method of technology transfer.
DARPA
-- ARPA
Despite the creation of ARPA in
1993, case studies reflect a shift in federal agencies away from cooperation
with the small business sector. The goal of DARPA’s redesign was
to transfer defense technology to the civilian sector. It appears
that agencies are choosing to ignore this intention, which is also being
undermined by a recent political shift.
example:
The director of Lawrence Livermore
National Lab in CA, speaking in 1995 for that lab as well as Sandia and
Los Alamos national labs, announced “economic competitiveness is not going
to be a prime responsibility for the DOE (Weisman, 1995). ” Weismann
interpreted this as a sign that labs believe the defense mission will remain
viable and that partnering with private industry is no longer the goal.
However, it would also seem that this turn could be a result of the inability
of federal programs to fill the goals of agency labs, and not reveal a
lack of government support for small business.
current development:
In the mid-1990’s, Congress pushed
through budget cuts in renewable energy programs, dropping solar technology
transfer programs from a 1995 budget of $20 million, to $11 million in
1996, and then eliminating it in 1997. A House report at this time
took the view that “DOE must participate in the government-wide downsizing
effort, shift its emphasis from commercial technology development to basic
research, reverse its efforts to expand into new areas and focus on its
core commitments (DeMoss, 1996).” DeMoss makes the point that an
area like renewable energy needs funding to survive and to become a low-cost
leader; it will not survive on market forces alone. This congressional
shift may eliminate many technology programs potentially important to small
business.
There are still some supporters for the agency role in technology transfer. The Navy has historically led in sharing non-classified technology with the private sector. Some obstacles do exist, primarily funding, which comes out of overhead budgets rather than separate congressional appropriations. This creates a situation dependant on leadership since some individuals will not want to spend overhead on commercializing their products (Ventura County Star, 1997). For others, sharing Navy inventions and databases can improve profits, and partnerships can create a need for bases to stay operational in the face of mass closures (Wilson, 1997).
Some university laboratories also continue to realize the advantage of work with the private sector. The Tokamak Fusion Test Reactor (TFTR), at Princeton Plasma Physics Lab (PPPL) was to be retired and replaced with the world’s most advanced fusion devise. Plans have been discarded after DOE cut funding, and the lab has been forced to find other activities. They have now turned to developing commercial technology from their research. For example, the lab is working with a small high tech firm in New Jersey on a fire suppression sprinkler system that will not harm office equipment (Wilson, 1997).
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