Presented is an overview of an experiment to explore the free-market approach to public-private collaboration through the development and implementation of a joint venture mechanism to enable formation of R&D projects between government, industry and academia. Some preliminary results related to time-to-commercialization and economic competitiveness are discussed

Shariq, Syed Z.

English

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N93-$0725
A Research Experiment on Facilitation and Formation
of Joint R&D Programs
between Government, Industry & Universities:
Overview, Preliminary Findings and Observations
Syed Z. Shariq, Ph.D.
Chief Executive Officer
American Technology Initiative, Inc.
- Working Paper-
Panel on:
Building Market Driven Research Programs and Consortia
Conference on Technology Commercialization:
Innovative Alliances for Economic Development
Albuquerque, New Mexico
September 12-13, 1991
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https://ntrs.nasa.gov/search.jsp?R=19930021536 2020-03-17T04:30:33+00:00Z
A Research Experiment on Facilitation and Formation of Joint R&D
Programs between Government, Industry & Universities:
Overview, Preliminary Findings and Observations
There are numerous ideas being pursued today, both at the national and local levels,
to build research programs and consortia to best leverage R&D resources across
government, industry and academia. Some of these efforts employ mechanisms that
would incorporate and promote a market-driven approach to public-private sector R&D
collaboration, while others encourage traditional technology transfer and commercial-
ization approaches. An approach or mechanism for R&D collaboration for the most
part will be market-driven depending upon how close the process, pricing and
implementation of the transaction or project resembles a free-market, risk-reward
investment transaction, as is frequently found in the private sector. In a market-driven
transaction for R&D collaboration the parties directly negotiate R&D plans, finances, in-
kind resource contributions, intellectual property rights, commercialization
commitments, and other terms and conditions.
The work in progress at American Technology Initiative (AmTech), a nonprofit, public
benefit research corporation located in California, represents a unique research
program aimed at learning from the facilitation and formation of market-driven
research projects and consortia. AmTech has specifically chosen to focus on a joint-
venture approach to study public-private R&D collaboration. The AmTech effort, which
we call a research experiment, has been based on the following fundamental
premises:
• U.S. competitiveness can be significantly enhanced by improving the
productivity of the U.S. R&D sector.
Enhancing public-private R&D collaboration is a critical need requiring
research and experimentation to develop and implement innovative
mechanisms for effective and accelerated transfer and commercialization
of technology.
A long term focus on institutionalizing market-driven mechanisms for
public-private R&D collaboration is most appealing in the context of the
free-market orientation of the U.S. economy.
Within the framework of these broad premises, one of AmTech's research experiments
is dedicated specifically to the exploration of a free-market approach to public-private
collaboration through the development and implementation of a joint venture
mechanism to enable formation of R&D projects between government, industry and
academia. Joint R&D projects are designed to:
• Leverage the mutual and concurrent, but independent goals of
participants.
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• Trade technology rights in retum for R&D resources.
• Ensure mutual sharing of risks and rewards.
The R&D joint ventures are appropriate when public and private sector research goals
overlap, but may often lead to distinct end uses of resulting technologies. The
government aims to pursue mission objectives, while industry focuses on commercial
products. Of the approximately $140 billion annual U.S. R&D expenditure, the area of
this overlap, represented by federal civilian R&D with a 3-5 year technology
development timeframe, is estimated to be 10% of total federal civilian R&D--well over
a billion dollar opportunity. If this segment of public-private R&D can be more
effectively coordinated through joint ventures, it would go a long way towards
enhancing the productivity of U.S. R&D, while also providing the following specific
tangible benefits to participants in the joint venture:
i) for the government:
• Accomplish more mandated mission R&D objectives by leveraging R&D
expenditures with industry.
• Ensure critically needed transfer of technology from the government and
universities to industry.
• Gain access to manpower and state-of-the-art background technology
residing in universities and industry.
• Generate royalties for government agencies and inventors by promoting
the transfer and commercialization of technology.
ii) for industry:
• Reduce the cost of product development by leveraging R&D expenditures
with the government.
Obtain non-exclusive or exclusive commercial rights to technology
developed in collaboration with the government and the research
institution.
• Foster, negotiate, and incorporate, at the outset, specific industry
concerns in the joint venture agreement.
Provide access to R&D undertaken at universities, nonprofit research
institutions, and government laboratories, and to specialized government
equipment and facilities.
iii) for the university research institution
• Utilize joint ventures to gain support for research programs at the cutting
edge of technologies leading to commercialization.
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Capitalize on the opportunity for researchers, including students, to
contribute to important new discoveries leading to commercial
prod ucts/processes.
• Provide academic researchers, including students, access to state-of-the-
art facilities in government and industry.
• Obtain intellectual property rights that will generate royalty income from
resulting commercialization.
In order to capitalize on this opportunity, AmTech, under NASA sponsorship of
research on legal, financial, business and management issues involving R&D
collaboration between government, industry and academia, set out to a) design an
innovative market-driven mechanism for entering into public-private joint ventures;
b) provide facilitation services to identify, develop, negotiate and draft agreements for
each specific joint R&D project; c) monitor, administer and facilitate the on-going
relationship between the participants throughout the life of the joint R&D project; and
d) create an organization dedicated to learning through research, experimentation and
feedback resulting from real world experience with joint R&D projects.
AmTech has already assisted in pioneering a unique mechanism, called the "Joint
Sponsored Research (JSR)Agreement" which is designed to involve four key
institutional partners: government, industry, a university or nonprofit research
institution and AmTech. Under the JSR Agreement, the research is carried out to
ensure that:
• Federally funded R&D is undertaken at a university or nonprofit institution.
• The scope of joint R&D and the rights to resulting technology are pre-
negotiated consistent with the needs of the parties.
Technology transfer and commercialization objectives are incorporated
into the R&D process and are implemented from the beginning of the
R&D project.
• Participants share the co-management of the specific technical and
administrative responsibilities of the R&D project.
AmTech, in collaboration with NASA, has successfully implemented two prototype joint
ventures and is in the various stages of identification, development, negotiation and
drafting of agreements for an additional ten JSR projects. The participants in the two
prototype projects have appreciated the benefits of this unique arrangement and the
success of these projects has already been demonstrated:
• The time to commercialization can be significantly reduced. In the first
prototype JSR project, the technology is currently under license
negotiation, less than 12 months after completion of R&D (the norm for
commercialization of federal technology in the past has ranged from 6 to
10 years).
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zA complex research relationship among multiple companies, the
government and a university can lead to a direct identifiable advantage
to U.S. economic competitiveness. A software development effort
undertaken through a consortium under the second prototype JSR
project is leading to a U.S. standard for aircraft design software. (Prior to
this JSR project no one company had the incentive to pursue this
research unilaterally).
While the AmTech research experiment on public-private R&D collaboration continues, the
preliminary findings are as follows:
The facilitation and formation of joint R&D projects is a labor intensive
process. With further experimentation and experience, the efficiency of
this process can be increased. However, at best it is likely to be no more
efficient than perhaps the venture capital-investment-decision making
process. This clearly demonstrates trade offs between effort and
effectiveness and leads to a preliminary conclusion that increased
effectiveness in the transfer and commercialization of technology would
require increased investment in facilitation quality and efforts.
A fair amount of experimentation will be necessary before the concept of
a market-driven R&D arrangement with broad applicability will emerge.
At this stage, public-private R&D collaboration appears to be generating
one of a kind, specific customized relationships.
The role of a neutral third party facilitator is critical to the success of R&D
collaboration. Public and private institutions have developed a wide
cultural void and distrust that cannot be easily or quickly remedied
without offering a neutral playing field for the participants.
At the policy level, incentives are needed to foster and reward innovation
leading to development, experimentation and implementation of
improved market-driven R&D programs.
Formalization of knowledge, ideas and leaming among and between
many national organizations undertaking research and experimentation
involving R&D collaboration and consortium building needs to be
institutionalized as a research program, perhaps within business
schools. In this regard IC 2 Institute already is leading the way.
• Finally, facilitation and formation of R&D collaboration at the earliest
possible opportunity, even at the idea stage, is the wave of the future.
The competitive advantage will be with those nations or institutions that
can master and institutionalize an effective response to address this
need for early collaboration.
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In summation the following points can be made:
Up-front collaboration by the government and the private sector on R&D
accelerates technology transfer and commercialization. Traditional
methods of transferring technology are passive and have had only
limited success. Technology transfer is a direct contact, people-to-
people activity. It cannot be achieved only by the government _ its
ready-made technology into the private sector. It is most successful
when a private sector entity can _ the technology it needs out of the
government laboratory, utilizing it in a cost effective manner to produce
goods or promote services. This "pull" is more likely to occur when the
company or industry directly collaborates with the government in the
research that produces the technology and when industry is willing to put
capital at risk.
Joint sponsored research maximizes R&D efficiencles bY leveraging R&D
resources. Neither the federal government nor the private sector have
the resources necessary to accomplish all R&D objectives. Combining
resources and collaborating on mutually compatible R&D projects which
the government has selected to pursue will maximize the usefulness of
the resulting technology at a cost that is more affordable to the
collaborating parties.
Effective joint sponsored research and advanced technology
development requires govemment/private sector collaboration on a
neutral "playing field." In most traditional contracting and assistance
relationships with the private sector, the govemment directs the work and
specifies the results. Collaborative research requires negotiation and a
much closer co-venturing relationship. The private sector can be
distrustful of the government's intent and capabilities as a potential
partner, and many companies will refuse to work with the government in
any form. Because of this distrust, the use of a neutral facilitator becomes
essential to the success of the joint venture, and provides each
participant with a forum for negotiation.
AmTech is cultivating the experience, capability and desire to facilitate
collaborative research efforts between the government and the private
sector. AmTech was founded for the sole purpose of facilitating
collaboration between the public and private sectors in order to promote
U.S. economic competitiveness. Research is an integral part of
AmTech's function. The AmTech staff has examined numerous legal,
financial, business, and public policy Issues inherent in joint .................
government/private sector collaboration. While other organizations may
provide facilitation services for joint R&D efforts, no other organization
has the background, knowledge, expertise or capability to provide
specific joint R&D program facilitation services to its sponsors, including
the government. The AmTech model is designed to use funds it
generates only to attain self-sufficiency, to improve its own efficiency, and
to maintain the neutrality necessary to continue serving its sponsors.
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A research experiment on facilitation and formation of joint research and development programs between government, industry, and universities: Overview, preliminary findings, and observations

A research experiment on facilitation and formation of joint research and development programs between government, industry, and universities: Overview, preliminary findings, and observations

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