Critical Tech Loss Predicted if U.S. Congress Slashes R&D Funds

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WASHINGTON — U.S. agencies’ research and development programs are at the center of government efforts to spur innovation in the open market. They help companies take on development projects — and their risks — that they otherwise would not be able to afford.

This year, for example, the Energy Department gave startup companies the opportunity to license technologies developed at its national laboratories for $1,000, a savings of $10,000 to $50,000 on average in license fees.

The Army Research Lab opened its doors in February to battery makers to spark interest in its development of an electrolyte additive that enables lithium-ion batteries to operate at five volts, which is higher than the three to four volts found in cell phones and laptops.

And after a few years of using a public auction to make exclusive license agreements for its patented technologies, NASA is now soliciting information for new services that will make the transfer of its patented technology to businesses and universities easier.

Programs such as these, however, could suffer under large research and development (R&D) budget cuts being pushed by House Republicans.

Congress made small cuts to basic research — the kind of work the National Institutes of Health and National Science Foundation do — in the 2011 budget, said Patrick Clemins, director of the R&D budget and policy program at the American Association for the Advancement of Science here.

But applied research — which several departments do to develop what they need, like ways to feed astronauts in space or make soldiers’ body armor lighter — saw cuts as high as 20 percent, he said. And those cuts will likely continue.

“The president wants to add a lot of money to clean energy and get this economy going and sees this as a route to recovery,” Clemins said. “But Congress is saying, ‘We don’t want the government choosing winners or losers in the applied research arena. We want the market to decide what to invest in.’”

In fiscal 2009, the federal labs at 11 agencies disclosed more than 4,400 inventions, held nearly 11,000 active licenses for federal lab technologies and received about $150 million in total licensing income associated with federal technology transfer activities, according to a National Institute of Standards and Technology annual report.

Tech transfer spokesmen said fees and royalties from licensing help fund more research, but their primary focus is returning the investment that taxpayers made in their programs.

“Our objective really is to maximize the degree to which our technology is out there in the economy, helping to create new products, services, jobs and also create a public good and benefits,” said NASA Partnership Development Director Doug Comstock.

He cited NASA research with algae intended to develop nutritional supplements for astronauts on long missions. They discovered a substance otherwise only produced in human breast milk that is now used in infant formula feeding millions of babies every day.

Officials from various agencies said they receive thousands of solicitations from companies and universities that want to participate in programs that provide funding to develop projects.

But it is more difficult to get companies to take on development at their own risk, said Rob Atkinson, president of the Information Technology and Innovation Foundation think tank. Even if there is public interest in certain technologies, companies, concerned with competition and profit, cannot put up the money needed to develop an early stage product until it is ready for production, he said.

A 2008 report by University of California at Davis researchers shows a significant increase in industry’s dependence on federal and public funds for technology development.

Looking at the annual winners of R&D Magazine’s “100 Awards” for inventions between 1971 and 2006, the researchers found that 86 percent of the awarded innovations in 1971 were developed with only private funding. By 2006, companies were the primary funders of only 31 percent of the award-winning innovations.

John Novak, executive director of federal and industry activities at the Electric Power Research Institute, said the investor-owned and public power companies he works with are regulated and individually cannot increase rates on their customers to invest in technologies, like the capture and storage of carbon dioxide, that would benefit other companies.

The institute pools resources from interested power companies to develop technologies they find at universities and national labs. But even that funding pool can not pay for the development of high-dollar technologies like carbon capture, which can cost up to $1 billion to create on a small scale.

Scott Deiter, chairman of the Federal Laboratory Consortium for Technology Transfer, which supports transfer programs throughout 300 federal labs, said funding cuts will limit both the number and speed of innovations coming out of federal labs. That means a slower rate of technologies getting out to industry and coming back for government use, he said.

For example, the lithium-ion technology developed by the Army Research Lab could be used by companies to make lighter batteries, which now make up 20 percent of the weight a soldier carries into war.

“Government is not in the business of competing with private industry and we recognize that,” said Deiter, who also directs the technology transfer program at the Naval Surface Warfare Center Indian Head Division in Maryland. “But if federal R&D is affected by cuts, that whole process is slowed and could critically affect the national economy.”