House Subcommittee Hearing on DOE Cooperative R&D Agreements
Funds for federal R&D are not easy to come by in this era of constrained budgets. At an August 1 hearing of the House Energy and Environment Subcommittee, Chairman Dana Rohrabacher (R-CA) questioned whether efforts to recover the costs of some of the government’s R&D investments might ease budget pressures. Rohrabacher gathered Department of Energy officials and other experts to discuss whether DOE could benefit from efforts to recoup more from its investments in public-private R&D partnerships, once a product was successfully commercialized by industry. Noting that the concept of cost recovery was “within the philosophy of both parties,” Rohrabacher said he was looking for “innovative financing solutions” and hoped to introduce legislation sometime in the next few months. “We cannot,” he announced, “cut poor people off of welfare while permitting large corporations to make...millions of dollars of profit at the expense of the taxpayer.”
Most of the witnesses believed that DOE could get more return on its R&D investment through greater emphasis on various forms of cost-sharing partnerships, repayment agreements, royalties and licensing fees, but warned that inflexible policies might discourage industry participation. They agreed that the costs recovered would likely be small compared to the department’s overall R&D budget. As Daniel Hartley of Sandia National Laboratory remarked, certain types of research projects were not appropriate for cost recovery: for example, basic or generic research is difficult to associate with a particular product and the benefits do not accrue to a single company. Lawrence Livermore National Laboratory Executive Officer Ron Cochran pointed out that much of the work done at the DOE labs is large scale, long-term, high-risk research, with benefits that are “often diffuse and difficult to quantify.”
While there was agreement that incorporating business practices and cooperating with industry could make federal R&D investments more efficient, National Renewable Energy Laboratory Director Charles Gay commented that public and private investments have different objectives. Private sector investments are made to gain a profit, he said; public sector investments are made for the public good. Hartley cited the macroeconomic benefits of public-private partnerships: successful commercialization by industry leads to more profits, jobs, and increased tax revenues. He also pointed out that DOE and its national labs have specific mission objectives which, as Senior DOE Advisor for Strategic Computing and Simulation Roger Lewis noted, can be accomplished “either solely with our own resources, or by involving others,” such as industrial partners. Since R&D supporting those missions would be performed by the government anyway, he added, cost-sharing with industry is “the ultimate means of reducing the taxpayers’ cost.” Gay said that a DOE group, headed by Deputy Energy Secretary Charles Curtis, is currently examining alternative financing mechanisms for cooperative R&D, and expects to produce a report this fall.
A June 1996 GAO report on this topic, entitled, “Energy Research: Opportunities Exist to Recover Federal Investment in Technology Development Projects,” (GAO/RCED-96-141) is available on the Internet at GAO’s HomePage: http://www.gao.gov or send an email message stating “info” to: info@www.gao.gov
