"The ATP Program, with appropriate reforms, can play
a useful role in the Federal science and technology portfolio."
- Commerce Department Report on ATP Program
The Commerce Department's Advanced Technology Program (ATP) has been
controversial since it was first authorized in 1988. The ATP provides
competitive, cost-shared grants to the private sector to help support
early-stage, high-risk R&D on emerging technologies that promise
widespread benefit to industry and the nation. The dispute over the
program was described by Christopher Hill of George Mason University
at a March 14 hearing: "ATP's major problem is that it operates
at the nexus of the debate over the appropriate role of the federal
government in support of commercial industrial innovation." Many
unsuccessful attempts have been made in Congress to eliminate funding
for it (see FYI #80, 2000), and the FY 2003 budget request would cut
ATP funding by 41.5 percent from the FY 2002 level, to $107.9 million.
In February, Commerce Secretary Donald Evans proposed six program reforms
for Congress to consider, in a report entitled "The
Advanced Technology Program: Reform with a Purpose." The six
proposed reforms, with explanatory quotes from the report, follow:
REFORM #1: Institutions of higher education should
be allowed to lead ATP joint ventures. In the past 20 years, the report
notes, "American universities have become increasingly active
in undertaking sophisticated commercially-focused, high-risk research,"
and "ATP should leverage the growing capabilities that universities
REFORM #2: Universities and other non-profit members
of ATP joint ventures should be permitted "to negotiate for rights
in intellectual property resulting from these ventures." The
report says "current ATP legislation restricts how intellectual
property can be shared with universities participating as subcontractors
or in joint venture arrangements" and "universities often
see this feature of ATP as putting them at a competitive disadvantage."
REFORM #3: Fortune-500 size companies (generating
more than $2.5 billion annually) should be allowed to participate
"only as a part of a joint venture. This would enhance the Program's
ability to ensure broad diffusion of results.... By partnering with
large firms, universities and small- and medium-sized firms also would
benefit from the larger firms' marketing and technological insights."
REFORM #4: Recipients of ATP awards should be required
"to pay an annual royalty to the Federal government of 5 percent
of any gross revenues derived from a product or invention supported
by or created as a result of ATP funding." This money would be
reinvested in the program, to a limit of 500 percent of the original
REFORM #5: The program should "explicitly restrict
project support of later-stage commercial projects.... ATP's project
selection criteria and operational procedures should be strengthened
to ensure that the Program only supports projects that can be expected
to remove scientific or technological barriers to product development..."
REFORM #6: ATP should "conduct a study of its
evaluation boards to determine if additional non-proprietary input
from non- governmental sources would assist the Program in better
assessing whether a specific technology is being adequately supported
by the private sector."
Looking ahead to both the appropriations cycle and reauthorization
of the Commerce Department's Technology Administration, the House Science
Subcommittee on Environment, Technology and Standards heard from Commerce
Department officials and users of NIST's industrial services programs
at a March 14 hearing. Most of the hearing focused on the proposed budget
reductions of 41.5 percent to the ATP and 87.9 percent to the Manufacturing
Extension Partnership (MEP). While subcommittee members seemed willing
to reserve judgment on the budget and reforms proposed for ATP, they
expressed particular concern over the impacts of reductions to MEP funding.
NIST Director Arden Bement said the budget request reflected "not
so much a judgment on the effectiveness of the programs in question,"
as the need to give priority to NIST's role in homeland security and
Michael Wojcicki, president of the Modernization Forum, and Birgit
Klohs, president of The Right Place program, described the benefits
of MEP centers to jobs and the manufacturing base both regionally and
state-wide. They testified that loss of federal support would result
in the shutting down of many centers, while others would shift their
emphasis away from small manufacturers to larger companies that could
pay more for their services. The national MEP system would be damaged
and the program's goals no longer fulfilled, they said.
Commenting on the proposed ATP reforms, Christopher Hill, a professor
and vice provost at George Mason University, agreed that letting universities
lead joint ventures and have access to intellectual property rights
were reasonable reforms. But he urged that large firms not be limited
only to joint participation with smaller firms, since, he said, participating
companies are merely a means to accomplish the program's purpose of
promoting development and widespread application of key new technologies.
Hill strongly took issue with the recommendation for recouping five
percent of revenues from successful projects. This, he said, assumes
that the federal investment will always lead to an identifiable product
and profit for participants. It also might encourage firms to save the
most promising ideas for non-ATP projects and "hide" evidence
of success, thus damaging the program's success rate. There is an alternative
to recoupment that captures the broader benefits to whole industries,
he declared; it is the federal tax system.
Subcommittee members pressed the Commerce Department officials on what
criteria the Administration used to justify the ATP and MEP budget reductions.
Rep. Lynn Rivers (D-MI) charged that, like grade school students, Administration
officials did not "show your work" in explaining how they
arrived at those funding decisions. Bement said that the request for
ATP would allow the program to meet its ongoing obligations and fund
about $34.7 million in new awards next year, while Congress considered
the proposed program reforms. Under Secretary for Technology Phillip
Bond said there were indications that large firms might help support
some MEP centers, but acknowledged that no companies had yet made such
a commitment. "Be prepared," warned full committee chairman
Sherwood Boehlert (R-NY), "we're going to treat [the programs]
better than the request." Added subcommittee chairman Ehlers, "Congress is likely
to work its will on this." He said he expected the ATP and MEP
programs to be continued, although possibly with some changes to both.
Audrey T. Leath
Media and Government Relations Division
American Institute of Physics