Study looks at benefits of technology funding An internal evaluation of the economic val­ue of the Commerce Department's Ad­vanced Technology Program concludes that ATP is meeting its legislated objective of stimulating successful industrial re­search. This latest in a series of analyses of ATP is the most extensive so far and in­cludes data from nearly 500 participants in the program.

ATP was established in 1990 and is administered by the National Institute of Standards & Technology. Its purpose is to aid U.S. industry and fund the develop­ment of high-risk and enabling technolo­gies that probably would not be funded by industry alone. As of the end of last year, ATP had funded 352 projects with more than 840 participants. Total awards were $1.15 billion, with industry com­mitting an additional $1.17 billion.

The new study is an internal analysis that uses what's called the Business Re­porting System—a comprehensive data system begun in 1994 by ATP to track the

program's participants. This system tracks company data on how the awards are being implemented and the projected economic benefits from the funded research. In this way, the study differs from previous ATP evaluations that used external surveys.

Highlights of the review conclude that there is strong evidence the technologies funded through ATP are beginning to spread broadly into the economy. Partici­pants have reported more than 1,000 po­tential applications for these technologies and are developing commercial applica­tions for nearly 800 of these. Lura J. Pow­ell, director of ATP, says this is one of the most significant findings in the study. "If we are to get broad benefits from this pro­gram into the U.S. economy, we have to be getting more than the original pro­posed application from the research," she says. As the research progresses, partici­pants are finding more potential commer­cial uses for the developing technology, and that means that technology will have wider impact.

A second significant finding is ATP's impact on acceleration of research. Ac­cording to the study, 86% of the ATP-fund-

ed organizations indicate they have moved ahead of their R&D schedule and are speeding their products to market. This "speed-to-market" factor is considered crit­ical to most ATP applications and some participants say they will be two years or more ahead of anticipated commercializa­tion because of ATP assistance.

In regard to actual payoffs for these projects, some preliminary data are pre­sented. About 10% of the companies, rep­resenting 15% of the projects, indicate they have already earned some early reve­nue from sales or prototypes and early spin-off products from ATP ventures. For about one-fourth of the applications, com­panies believe they will make money from spin-off activities even before the end of ATP funding. Most companies think they will be receiving revenue from the project within three years after the funding ends.

Powell stresses that these data reflect early results. "We didn't begin the [Busi­ness Reporting System] until 1993, and some of the early projects are not includ­ed," she says. "But we are seeing consis­tency with other, outside surveys, which asked similar questions."

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ATP uses the data on its progress to de­fend itself from a variety of critics of indus­trial technology funds from government. Some members of Congress have tried to eliminate ATP by eliminating its budget, but have not been successful. Ammunition against ATP has come from private ven­ture capital firms who see ATP as direct competition to their businesses and from studies done by the General Accounting Office (GAO) that have questioned the appropriateness of ATP awards and their value.

Robin Nazzaro, assistant director at GAO for energy, resources, and science is­sues, says the agency's oversight of ATP continues. "We have two ongoing efforts on ATP," she says. "The reason interest continues to be high is because the Presi­dent keeps trying to raise ATP's budget." GAO will complete a study on the ATP awards for 1997 by the end of this month, Nazzaro says, and a second, broader study on the challenges to implementing ATP is due in early March.

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The R&D budget: Why a 'fund'? News Analysis There it is, as spectacular as any Super Bowl commercial—$78.2 billion total R&D spreading across all federal agencies, $31 billion for a "Research Fund For Amer­ica" (RFFA) that covers civilian science and technology. The fund provides an 8% increase for R&D next year, and a rise to $38 billion projected over the next five years.

But wait a minute: "Fund"? Since when has the federal research budget be­come a fund? What is a fund? And what does it mean to have the R&D budget transformed into one?

The answer is complicated and re­quires some delving into the Office of Management & Budget's (OMB) impos­ing, almost forbidding, budget books. You can apparently blame the whole thing on tobacco and on some arcane thinking by OMB's budgeteers as they sought ways to accommodate new pro­grams whose spending would rise above caps set by last year's balanced budget agreement. The fund is, in budgetary par­lance, an "offset," because it comes from a special set of revenues not directly part of public taxation.

Calling the R&D budget a fund adds considerably more politics to R&D be­cause it will challenge Congress to de­note a special place for R&D in the set of the country's priorities. Here, apparently, is what is going on.

The key point is that the Clinton Ad­ministration is expecting considerable rev­enues from last year's big settlement with the tobacco companies. Never mind for a moment that legislation has yet to be passed determining how much of that sum will go to the states (many of them say they should get all of it, and Washing­ton nothing). And never mind that many, many other social demands are competing for those funds as well. Under the Clinton plan, R&D gets a slice as a so-called dedi­cated offset from the tobacco deal. For fis­cal 1999, $3.6 billion of that dedicated off­set will go to RFFA—$4.6 billion in 2000, $5 billion in 2001, $5.7 billion in 2002, and $6.3 billion in 2003.

Out of this sum, NIH and NSF will get the lion's share. Most other R&D agen­cies will get scraps because their budgets are not slated by OMB to grow very much. Moreover, defense R&D is exclud­ed—one might even say protected—

50 FEBRUARY 23, 1998 C&EN CIRCLE 51 ON READER SERVICE

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