[Senate Report 107-30]
[From the U.S. Government Publishing Office]



                                                        Calendar No. 65

107th Congress                                                   Report
                                 SENATE
 1st Session                                                     107-30

======================================================================



 
       NATIONAL LABORATORIES PARTNERSHIP IMPROVEMENT ACT OF 2001

                                _______
                                

                  June 5, 2001.--Ordered to be printed

                                _______
                                

  Mr. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 517]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 517) to authorize funding the Department 
of Energy to enhance its mission areas through technology 
transfer and partnerships for fiscal years 2002 through 2006, 
and for other purposes, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                         Purpose of the Measure

    The purpose of S. 517 is to improve scientific and 
technical collaborations between the Department of Energy's 
national laboratories and institutions of higher education, 
technology-related business concerns, nonprofit institutions, 
and state, tribal and local government agencies.

                          Background and Need

    The national security and economic growth of the United 
States rests, in large measure, on our leadership in science 
and technology. The Department of Energy (DOE), working through 
its system of national laboratories, is not only responsible 
for the development and stewardship of the Nation's nuclear 
arsenal but is also the third largest government sponsor of 
basic scientific research in the United States. The research 
and development (R&D) conducted by DOE through the national 
laboratories is critically important to the national security, 
economic growth, and quality of life of the United States.
    Since the end of the Cold War, however, the private sector 
has eclipsed the Federal Government in R&D. Between 1987, when 
Federal funding for R&D peaked, and 1999, Federal funding for 
R&D dropped by around 20 percent in real terms, while private 
sector funding for R&D doubled. As a result, private industry 
now funds about 70 percent of our national R&D.
    For DOE and its national laboratories to continue to 
fulfill their national security, energy, science, and 
environmental missions, DOE and the national laboratories must 
take advantage of the scientific and technological expertise 
that exists in colleges and universities, private nonprofit 
institutions, non-Federal government agencies, and technology-
related business concerns in the private sector.
    The Stevenson-Wydler Technology Innovation Act of 1980 (15 
U.S.C. 3701 et seq.) attempted to encourage collaboration 
between Federal laboratories and the private sector through, 
among other things, cooperative research and development 
agreements, known as ``CRADAs.'' CRADAs allow the Federal 
Government, through its laboratories, to share personnel, 
services, facilities, equipment, intellectual property, and 
other resources with non-Federal parties in the conduct of R&D 
that supports the laboratories' missions. Although CRADAs have 
been successful, funding for them within DOE's defense programs 
has been cut dramatically in recent years and the number of new 
CRADAs has been cut in half between 1995 and 1998.
    Additional legislation is needed to ensure adequate funding 
for national security CRADAs and to improve the CRADA process 
generally, to make it faster, more flexible, and more 
attractive to non-Federal participants. In addition, 
legislation is needed to promote closer scientific and 
technological cooperation between the national laboratories and 
non-Federal institutions, and to stimulate the development of 
``technology clusters'' of technology-related businesses and 
academic institutions around the national laboratories, similar 
to the technology clusters found in the Silicon Valley.

                          Legislative History

    S. 517 is similar to S. 1756 in the 106th Congress.

                             106th Congress

    S. 1756. S. 1756 was introduced by Senator Bingaman for 
himself and Senator Murray on October 20, 1999. Senators 
Domenici and Gorton were later added as cosponsors. The 
Committee on Energy and Natural Resources held a field hearing 
on S. 1756 in Albuquerque, New Mexico on February 14, 2000. On 
September 20, 2000, the Committee on Energy and Natural 
Resources adopted an amendment in the nature of a substitute to 
S. 1756, and ordered the bill favorably reported, as amended.
    S. 2549. On July 11, 2000, the Senate adopted legislation 
similar to S. 1756, as reported by the Committee on Energy and 
Natural Resources, as Amendment No. 3770 to S. 2549, the 
National Defense Authorization Act for Fiscal Year 2001. 
Amendment No. 3770 added subtitle E (sections 3161-3169) to 
title XXXI of S. 2549. The amendment was sponsored by Senators 
Bingaman, Domenici, Murray, Gorton, Thompson, Frist, and 
Murkowski, and was agreed to by voice vote.
    H.R. 4205. On July 13, 2000, the Senate passed H.R. 4205, 
the House counterpart to S. 2549, after striking all after the 
enacting clause and inserting the text of S. 2549, including 
subtitle E.
    Public Law 106-398. On October 30, 2000, H.R. 4205, 
including subtitle E, was enacted as the Floyd D. Spence 
National Defense Authorization Act for Fiscal Year 2001 (Public 
Law 106-398). Section 3161 of Public Law 106-398 directed the 
Administrator for Nuclear Security to establish a Technology 
Infrastructure Pilot Program at the national security 
laboratories and nuclear weapons production facilities. Section 
3161 of Public Law 106-398 is similar to section 3 of S. 517, 
which directs the Secretary of Energy to establish a broader 
Technology Infrastructure Pilot Program that includes non-
national security laboratories and non-nuclear-weapons 
facilities. Section 3196 of Public Law 106-398 amended section 
12 of the Stevenson-Wydler Technology Innovation Act of 1980 
(15 U.S.C. 3710a) to permit the National Nuclear Security 
Administration to waive any license retained by the Government 
on inventions resulting from research at an NNSA laboratory to 
facilitate commercialization of the invention. Section 3196 of 
Public Law 106-398 is similar to section 9 of S. 517, which 
further amends the Stevenson-Wylder Act to permit the 
Department of Energy to waive licenses for inventions at all 
DOE national laboratories.
    Public Law 106-404. On November 1, 2000, Congress enacted 
the Technology Transfer Commercialization Act of 2000 (Public 
Law 106-404). Section 11 of the Public Law 106-404 (42 U.S.C. 
7261c.) provides for the appointment of a technology 
partnership ombudsman at each DOE national laboratory. Section 
11 of Public Law 106-404 is similar to section 5 of S. 517.

                             107th Congress

    S. 517. S. 517 was introduced by Senator Bingaman for 
himself and Senators Domenici and Murray on March 12, 2001. 
Senator Crapo was added as a cosponsor on March 20, 2001. At a 
business meeting on May 16, 2001, the Committee on Energy and 
Natural Resources ordered S. 517 favorably reported without 
amendment.

                        Committee Recommendation

    The Committee on Energy and Natural Resources, in open 
business session on May 16, 2001, by a unanimous vote of a 
quorum present, recommends that the Senate pass S. 517.

                          Committee Amendments

    During the consideration of S. 517, the Committee did not 
adopt any amendments.

                      Section-by-Section Analysis

    Section 1 designates the short title.
    Section 2 defines terms used in the Act.
    Section 3(a) directs the Secretary of Energy to establish a 
Technology Infrastructure Program.
    Subsection (b) provides that the purpose of the program is 
to stimulate the development of technology clusters around the 
national laboratories to support their missions; to improve the 
ability of the national laboratories to benefit from commercial 
research, technology, products, processes, and services; and to 
encourage the exchange of scientific and technological 
expertise between the national laboratories and non-federal 
institutions.
    Subsection (c) authorizes the Secretary to divide up to 
$10,000,000 per year for three years equally among up to ten 
national laboratories or facilities.
    Subsections (d), (e), and (f) provide applicable 
requirements and selection criteria for the program.
    Subsection (g) requires the Secretary to report to Congress 
within three years of the program's start on whether the 
program should be continued beyond the pilot stage and to 
recommend any legislation that may be needed to implement a 
follow-on program.
    Section 4 requires the Secretary to direct the Director of 
each national laboratory to establish a small business advocacy 
office to increase small businesses' participation in 
procurement, collaborative research, and technology licensing 
and transfer.
    Section 5 requires the Secretary to direct the Director of 
each national laboratory to appoint an ombudsman to resolve 
complaints or disputes over technology partnerships, patents, 
and licensing.
    Section 6 requires the Secretary to direct the Laboratory 
Operations Board to study and report on: (1) employee mobility 
among the national laboratories; and (2) the need for changes 
in indemnification requirements, royalty and fee schedules, 
patent licensing procedures and rights, and certain other 
matters related to businesses' participation in laboratory 
partnerships and technology licensing. The second group of 
study topics is particularly aimed at finding new ways to 
promote start-ups and stronger networks of technical 
collaboration near the laboratories.
    Section 7 gives DOE ``other transactions'' for cost-shared 
research. Standard government contracts, grants, or cooperative 
agreements can be ill suited to working with a consortia of 
research organizations where the Government is only one 
investment partner among many. ``Other transactions'' authority 
cuts through that problem by giving the Secretary greater 
flexibility to enter into beneficial arrangements without 
regard to the restrictive requirements of standard funding 
instruments. Similar authority has been successfully used for 
many years by the Defense Advanced Research Projects Agency 
(DARPA) to manage many of its innovative relationships with 
industry, particular research consortia. The authority given to 
the Secretary of Energy in section 7 is directly modeled on the 
authority given to DARPA and the Defense Department in section 
2371 of title 10, United States Code.
    Section 8 confirms that all activities under the Act must 
be carried out in accordance with the existing DOE structure, 
including the Nuclear National Security Administration (NNSA).
    Section 9 amends the Stevenson-Wydler Technology Innovation 
Act of 1980 (15 U.S.C. 3710) to streamline the approval process 
for CRADAs at government-owned, contractor-operated (GOCO) 
facilities. Subsection (a) amends section 12(a) of the 
Stevenson-Wydler Act to permit Federal agencies to substitute 
an annual strategic plan for individual joint work statements. 
Subsection (b) adds a new paragraph to section 12(b) of the 
Stevenson-Wydler Act to permit designated officials at the 
Department of Energy to waive licenses retained by the 
Government under enumerated provisions of the Stevenson-Wydler 
Act if the official finds that the retention of the license 
would substantially inhibit the commercialization of an 
invention that would otherwise serve an important Federal 
mission. Subsection (c) amends section 12(c)(5) of the 
Stevenson-Wydler Act to reduce the time allowed to approve 
CRADAs at government-owned, contractor-operated laboratories to 
30 days.
    Section 10(a) establishes CRADA funding goals for the 
National Nuclear Security Administration (NNSA). Subsection (b) 
establishes a goal of obligating 0.5 percent of the funds 
available to the NNSA during fiscal year 2001 and 2002 for 
CRADAs or similar cooperative, cost-shared research 
partnerships with non-Federal organizations. The Committee 
estimates this will amount to about $30 million in each fiscal 
year. Subsection (c) requires the Administrator to submit a 
report to the congressional defense committees recommending an 
appropriate funding objective for subsequent years. Subsection 
(d) requires that CRADAs entered into under section 10 be 
consistent with and support the missions of the NNSA. 
Subsection (e) requires that, beginning in March 2002, and no 
later than the end of March of each year thereafter, the 
Administrator report to Congress on whether the goals of 
section 10 have been met in the previous fiscal year. If the 
goals have not been met, the provision requires the 
Administrator to describe what actions he or she will take to 
achieve such goals and recommend any legislative changes needed 
to achieve them.

                   Cost and Budgetary Considerations

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office.

                                Summary

    S. 517 would authorize several new programs at the 
Department of Energy (DOE) that would foster technology 
partnerships between DOE and nonfederal entities. The bill 
would authorize the appropriation of $10 million a year for 
three years for a Technology Infrastructure Pilot Program at 
certain DOE laboratories and facilities. It would direct the 
department to expand support for small businesses at those 
facilities and to appoint an ombudsman to facilitate the 
resolution of complaints or disputes. DOE also would be 
authorized to waive provisions in licenses that are retained by 
the government under cooperative research and development 
agreements (CRADAs) over the next five years and to develop 
alternative contractual arrangements for research and 
development projects. Finally, the bill would direct DOE to 
allocate a fixed percentage of the amounts appropriated for the 
National Nuclear Security Administration (NNSA) for CRADAs, and 
to prepare various reports.
    Assuming appropriation of the necessary amounts, CBO 
estimates that implementing this bill would cost about $50 
million over the 2002-2006 period. The provisions regarding 
CRADAs could affect the collection and spending of royalties 
and other payments governed by licensing agreements, but CBO 
estimates that the net effect on direct spending would 
negligible. Because the bill could affect direct spending, pay-
as-you-go procedures would apply.
    S. 517 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.

                Estimated Cost to the Federal Government

    The estimated budgetary impact of S. 517 is shown in the 
following table. The costs of this legislation fall within 
budget functions 050 (national defense), 250 (general science, 
space and technology, and 270 (energy).


----------------------------------------------------------------------------------------------------------------
                                                                     By fiscal year, in millions of dollars--
                                                                 -----------------------------------------------
                                                                   2001    2002    2003    2004    2005    2006
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Spending under current law for technology partnerships:
    Authorization level \1\.....................................       5       5       0       0       0       0
    Estimated outlays...........................................       0       1       2       2       0       0
Proposed changes:
    Estimated authorization level...............................       0      15      15      15       5       5
    Estimated outlays...........................................       0       3      11      15      13       8
Spending Under S. 517:
    Estimated authorization level...............................       5      20      15      15       5       5
    Estimated outlays...........................................       0       4      13      17      13       8
----------------------------------------------------------------------------------------------------------------

    \1\ Public Law 106-398 authorized $5 million in 2001 and 2002 for a 
technology partnership program, but no funds have yet been 
appropriated.

                           BASIS OF ESTIMATE

    For this estimate, CBO assumes that the authorized and 
estimated amounts will be appropriated for each year, beginning 
in 2002. We assume outlays will follow historical spending 
patterns for similar programs.

Spending Subject to Appropriation

    CBO estimates that implementing this bill would cost a 
total of $50 million over the next five years, assuming 
appropriation of the necessary amounts. Most of this funding 
would support the pilot program, which would promote 
opportunities for commercial research and technology 
development with 10 national laboratories or facilities. The 
$10 million authorized for each of the next three fiscal years 
would be in addition to the $5 million already authorized for 
such pilot programs at the national security labs for 2002. 
Under the bill, the pilot program would require that at least 
50 percent of the funding to be provided from nonfederal 
sources; we expect that spending would start slowly.
    In addition, based on information from DOE, CBO estimates 
that the bill's requirement that DOE expand support for small 
businesses would cost about $5 million annually, assuming 
appropriation of the necessary funds.

Direct spending

    The provisions in S. 517 regarding CRADAs could affect 
direct spending because the federal government collects and 
spends royalties and other payments under these licensing 
agreements. Under current law, the government may grant 
nonfederal entities patent licenses or assignments for 
inventions resulting from CRADAs and other collaborative 
arrangements. Federal agencies are authorized to spend any 
royalties or payments resulting from such licenses or 
assignments without further appropriation.
    The provisions allowing DOE to waive license provisions 
could reduce royalties from existing as well as future CRADAs, 
but CBO estimates that the net effect would not be significant 
because agencies are able to spend any such collections without 
further appropriation. The provisions that would allocate a 
portion of the NNSA's funding for CRADAs could increase 
licensing activity and royalties at some point in the future, 
but the net effect would be negligible because any proceeds 
would be spent by DOE.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. CBO 
estimates that the provisions in S. 517 regarding CRADAs and 
licensing arrangements could affect direct spending, but we 
estimate that the net effect would not be significant.
    Estimated impact on state, local, and tribal governments: 
S. 517 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments. Any costs or benefits accruing to 
intergovernmental entities, including public universities, from 
participation in the Technology Infrastructure Pilot Program 
would be voluntary.
    Estimated impact on the private sector: This bill contains 
no new private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal Costs: Kathleen Gramp. Impact 
on State, Local, and Tribal Governments: Victoria Heid Hall. 
Impact on the Private Sector: Lauren Marks.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 517. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any additional paperwork would result from the 
enactment of S. 517, as ordered reported.

                        Executive Communications

    On October 4, 2000, the Committee on Energy and Natural 
Resources requested legislative reports from the Department of 
Energy and the Office of Management and Budget setting forth 
executive views on S. 1756 (106th Congress). These reports had 
not been received at the time the report on S. 1756 was filed, 
nor had these reports been received at the time the report on 
S. 517 was filed. When these reports become available, the 
Chairman will request that they be printed in the Congressional 
Record for the advice of the Senate.
    The testimony provided by the Director of the Los Alamos 
National Laboratory and the Director of the Sandia National 
Laboratories at the February 14, 2000 Committee hearing on S. 
1756 (106th Congress) follows:

Prepared Statement of Dr. John C. Browne, Director, Los Alamos National 
                               Laboratory


                              Introduction


    I am pleased to have the opportunity to address this 
Committee today. I want to thank our Senators and the Committee 
for the strong support they have shown over many years for our 
Laboratory's mission and for industry-Laboratory partnerships 
and economic development. I am committed to seeing that Los 
Alamos National Laboratory fulfills our national security 
mission while also carrying out our responsibility to achieve 
the goals of the government's technology transfer program.
    I would also like to state my support for the ``National 
Laboratories Partnership Improvement Act of 1999.'' This bill 
will make it easier for Los Alamos to collaborate with industry 
and universities, especially those in the northern New Mexico 
region.
    Los Alamos and the other DOE laboratories facilitate the 
exchange of new technology and advanced technical capabilities 
between the public and the private sectors. Such exchange helps 
us achieve our programmatic mission while providing our 
researchers with stimulating challenges. I am convinced that 
significant benefits derived from our technical collaborations 
with academia and industry.
    I concur with the stated purpose of the government's 
involvement in technology transfer which is to make federally 
developed technology available to industry in a way that will 
provide short- and long-term benefits to the U.S. economy and 
the industrial competitiveness of our nation. These benefits 
include new and higher quality jobs, an enhanced skill base, 
commercialization of new technologies, and a more robust 
domestic economy.
    However, let me state strongly that a clear benefit for Los 
Alamos and the DOE is the opportunity for our researcher to 
solve national problems in collaboration without industrial 
partners. Collaborations with private industry help us to 
assimilate ``best industrial practices'' to maintain and 
develop our skills.
    While I believe that our efforts in technology transfer and 
industrial partnerships have been successful, the funding for 
these effort has dropped significantly in the last several 
years. The FY01 President's budget eliminates this funding 
entirely. If this occurs, then our programmatically funded 
industrial partnerships will have to focus directly on DOE 
program deliverables.
    If there is no longer identified funding for the DOE 
technology partnership program, it would be more efficient to 
conduct our mission-focused partnerships through normal 
contracting and funds-in arrangements. These activities would 
be more timely and cost-effective by eliminating the additional 
DOE management processes that grew up when the government was 
funding a more general technology transfer program with 
hundreds of millions of dollars per year.


      Stockpile Stewardship and the Technology Partnership Program


    A major purpose of partnering with industry is to help us 
achieve our mission objectives more efficiently and 
effectively. The Nuclear Weapon Complex cannot afford to do 
everything itself. In many specialized areas, U.S. industry has 
developed experience, expertise, equipment, and technology that 
eclipses what exists in the Nuclear Weapons Complex. 
Cooperative Research and Development Agreements (CRADAs) with 
industry are essential to achieving our stockpile stewardship 
mission while refurbishing and modernizing the complex. They 
also provide contacts for future, innovative partnerships with 
industry.
    Adoption of the moratorium in nuclear testing hastened the 
need for more powerful computing capabilities. As an element of 
stockpile stewardship the Accelerated Strategic Computing 
Initiative (ASCII) is successfully pushing the frontiers of 
speed and capacity with advanced hardware development at the 
nuclear weapons laboratories. However, a successful Stockpile 
Stewardship Program requires more than hardware. Sophisticated 
computational modeling and simulation programs are being 
created at Los Alamos and the other weapons laboratories to 
solve complex physics and materials problems. Nevertheless, a 
key question remains: How can we validate the results of this 
modeling and simulation effort? Validation of the models is 
essential. It requires actual data to compare with the results 
of calculations. While historical data are available for 
comparison, the fact remains that no new nuclear testing data 
have been generated since 1992.
    The ASCII program is a good example of a government program 
whose goals are synergistic with industrial goals. ASCII is 
advancing the technological frontier for private industry while 
establishing needed partnerships with industry to attain its 
programmatic goals. We have collaborated with many U.S. 
companies. large and small, in which our modeling and 
simulation expertise has resulted in unclassified codes that 
have been used for commercial activities. In return, our 
partner companies provide data that assist the laboratories to 
validate our codes. Without access to the data from our 
industrial collaborators, millions in additional tax collars 
would be required to generate the additional data needed to 
validate our computer models.
    Los Alamos National Laboratory's continuing role in Science 
Based Stockpile Stewardship (SBSS) relies on our ability to 
predict material performance over decades of material lifetime. 
Our partnerships with industry are designed to increase our 
understanding of the aging stockpile. Working with industry has 
provided us with confidence to predict changes in materials 
characteristics and performance and has enhanced our ability to 
manufacture and inspect replacement parts with increased 
precision, at lower cost.
    The Technology Partnership Program (TPP) has been an 
effective tool in building awareness of and advocacy for the 
value of partnerships between industry and the weapons program. 
The Los Alamos TPP effort has successfully catalyzed and 
incubated more than 200 partnerships between industry and the 
weapons program in the following technical thrust areas: 
Advanced Manufacturing; Materials and Chemistry and Materials 
Processing; Advanced Inspection and Surveillance; Advanced 
Diagnostics for Dynamic Experiments; Advance Computation, 
Modeling, and Simulation; and Knowledge Management.
    We also have successfully directed AMTEX and ACTI 
partnerships to provide direct support to weapons programs, and 
have helped several small, high-tech businesses grow and become 
more competitive in Northern New Mexico through R&D 
partnerships under our Small Business Initiative.
    Los Alamos is presently collaborating with two industrial 
partners on polymer aging work with direct applications to 
weapons. These partners are world leaders in the field of 
research and production of urethanes, an essential element in 
the SBSS initiative. These collaborations encompass research in 
materials synthesis, advanced characterization, and predictive 
modeling.
    One of these collaborations is studying accelerated aging 
methods and models to better understand the behavior of 
polymers when subjected to environmental degradation. Part of 
this research incorporates stable isotope labels into polymers, 
a unique laboratory capability that is advancing our materials 
knowledge base. The results of this research improve our 
understanding of lifetime predictions for the stockpile.
    Los Alamos is greatly concerned about DOE's intent to 
eliminate the funding for the TPP program in FY2001. Loss of 
this funding will make it more difficult to continue the 
momentum gained recently in building high-quality, mission-
driven partnerships with industry for the weaponsprogram. The 
funding is also of value in creating the laboratory industry structures 
that are key to economic development in the future. We request your 
continued support for partnering with industry.


              Comments Regarding the Provisions of S. 1756


1. Regional technology infrastructure: Economic clusters
            Los Alamos regional economic development activities
    In 1997, the University of California and the Department of 
Energy incorporated a new Appendix into the Prime Contract for 
Los Alamos. Appendix M required the establishment of a new 
Technology Commercialization Office (TCO) as a part of the 
Laboratory's technology transfer organization. With the support 
of the DOE and the University of California (UC), $1 million 
annually is allocated to the Technology Commercialization 
Office in support of its regional business development efforts.
    In addition to the $1 million funding for the Laboratory, 
TPP's Small Business Initiative Regional Impact Program has 
provided an additional $2 million annually to fund 
collaborations with regional small business. The program has 
supported more than 45 regional small business CRADAs, the 
Technical Assistance Program, and SBIR Training Workshops. The 
future of the SBI program is in severe jeopardy based on the 
demise of TPP funding for industrial partnerships. This has 
already resulted in the termination of some regional CRADA 
activity and threatens the development of future partnerships.
    Since 1997, Los Alamos has diligently worked to nurture and 
grow new businesses in the Northern New Mexico region. The 
Laboratory has invested more than $7 million to provide direct 
assistance to more than 80 Northern New Mexico clients. Among 
these clients, the Laboratory assisted seven Laboratory 
employees to participate in the new Entrepreneurial Leave-of-
Absence program to pursue business start-ups in the region. 
Some major results of this program include: 34 new Northern New 
Mexico technology firms; 124 new jobs among those 34 firms; and 
external capital invested in these firms exceeds $21M.
    Los Alamos is also a partner with a growing private sector 
technology community in Northern New Mexico helping to create a 
framework for future cluster groupings. Formal working 
relationships have been established with numerous Northern New 
Mexico organizations including Northern New Mexico Small 
Business Development Centers, regional technology incubators 
and business parks, and various investor organizations.
    For example, in the area of information technology and 
software the Laboratory is a co-founder and active participant 
in the NM Information Technology and Software Association 
(NMITSA). Similar cluster initiatives in the biosciences, 
materials, and optoelectronics areas are also under 
development.
    We also are supportive of workforce training initiatives 
that support the information technology cluster. In January 
2000, Los Alamos co-sponsored ``E-Commerce 2000 Summit'' with 
Taos La Plaza Telecommunity, the Town of Taos, the National 
Center for American Indian Enterprise Development and the 
Electronic Commerce Resource Center. This purpose of the summit 
was to educate the local business community on accessing the 
many opportunities available through the Internet.
    Through Appendix M of the UC contract and the Small 
Business Initiative Program, the Laboratory has provided 
approximately $3 million in funding annually to support these 
activities. The demise of TPP eliminates our ability to sustain 
regional CRADAs, the Technical Assistance Program, and SBIR 
training. Although we will continue our efforts to promote 
regional business development, as required by Appendix M, 
passage of Senate Bill 1796 will help us to continue to 
collaborate with regional businesses through CRADAs.
            Los Alamos Research Park project
    The DOE maintains a strong commitment to regional economic 
development to Northern New Mexico. With the lease of 44 acres 
of land to the Los Alamos Commerce and Development Corporation, 
the Los Alamos Research Park will emerge as a preeminent 
location for cooperative projects to thrive amidst Los Alamos 
researchers and their external partners. Motorola, one of the 
Laboratory's strategic partners, has signed a lease as the 
anchor tenant in the park.
    The park will facilitate strategic collaborations with 
industry help diversify the Northern New Mexico economy, and 
increase job opportunities. The park is expected to create a 
more business-friendly infrastructure enabling technology 
clusters in information technology, biotechnology, and 
optoelectronics to develop. Park tenants will help to generate 
new tax revenues for Los Alamos County over the next ten to 
fifteen years.
    Using the model established for the Research Park, DOE is 
investigating other opportunities to lease unique Laboratory 
facilities to private industry. For example, DOE and National 
Institutes of Health (NIH) need carbon-13 and oxygen-18 
isotopes that can be generated for advanced biomedical 
applications at one of the Laboratory's vacant facilities. The 
sublease of the facility to a private company will help the 
government obtain materials needed for further research and 
provide materials required for industrial applications. 
Industry analyses for projects of this nature indicate the 
potential need for up to 100 employees to be hired primarily 
from the Northern New Mexico region.
2. Improved small business procurement opportunities at Los Alamos
    To promote small business in the region, Los Alamos has 
increased small business procurement opportunities. Several 
initiatives will assist small businesses in working with the 
Laboratory: The Small Business Office (SBO) has been elevated 
to report to the Director of Business Operations Division; The 
Small Business Office will be given procurement authority; A 
new Director of Small Business will be appointed to serve as a 
facilitator and advocate for small businesses interested in 
contracting opportunities with LANL; A Small Business and 
Contracting Ombuds function will provide a resource for small 
businesses with complaints and questions about procurement, 
technology transfer and other topics; and The Laboratory will 
convene a series of workshops to assist small businesses in 
working with the Laboratory.
    Los Alamos is conducting mandatory training for purchasing 
agents to raise consciousness regarding the importance of 
subcontracting with small, minority, and woman-owned 
businesses. We are creating a web page to identify upcoming 
subcontracts and maximize small business planning efforts. A 
news bulletin will provide the same information to businesses 
without on-line access. This is consistent with Los Alamos' 
commitment to being a good neighbor in the region and promoting 
regional economic development.
    With these changes, we will make the Laboratory more 
accessible, more consistent, and more transparent to regional 
small-businesses. The result will be a stronger regional 
economy and a more productive partnership between the 
Laboratory and the small business community.
3. Amendments to the Stevenson-Wydler Act
    The ``National Laboratories Partnership Improvement Act of 
1999'', introduced as Senate Bill 1756, will facilitate the 
stated objective to help the national laboratories work better, 
faster and with greater flexibility with industry. The bill 
will also enable Los Alamos to work more closely with regional 
companies, universities and other organizations in Northern New 
Mexico to support the Laboratory's mission and to stimulate 
local economic development.
    The Stevenson-Wydler Technology Innovation Act of 1980 as 
amended, permitted the federal laboratories to transfer their 
technologies and provide a means for external users to access 
laboratory developments. In 1986, The Federal Technology 
Transfer Act (Public Law 99-502), mandated technology transfer 
as a responsibility of all federal laboratory scientists. It 
empowered directors of the Government Owned, Government 
Operated laboratories (GOGO) with the authority to enter into 
CRADAs and to sign them on behalf of their respective agency.
    In 1989, Congress passed the National Competitiveness 
Technology Transfer Act. This legislation granted Government 
Owned, Contractor Operated (GOCO) laboratories such as Los 
Alamos, the opportunity to enter into CRADAs and other 
agreements with universities and private industry, in 
essentially the same ways as was provided GOCOs under the 
Federal Technology Transfer Act of 1986. In 1991, the Defense 
Authorization Act established technology transfer as a mission 
for the nuclear weapons laboratories.
    The primary impediments in implementing technology transfer 
statutes at the laboratories have not resulted from 
legislation, but from the multitude procedural requirements 
partly from DOE's interpretation of federal requirements. These 
procedural requirements have unnecessarily burdened the labs 
with costly and time-consuming efforts. The ability to engage 
industry and academia in a timely fashion has been severely 
diminished.
    The proposed legislation should help streamline the process 
while reemphasizing the goals of Stevenson-Wydler and the 
National Competitive Technology Transfer Act making 
collaborative technology transfer arrangements between federal 
laboratories and the private sector easier and more attractive.
    We are encouraged to see the streamlined approach this bill 
offers for Joint Work Statements and CRADAs. However, under the 
present bill, DOE has the discretion to approve CRADAs and JSWs 
on a case-by-case basis or to permit submission of an annual 
strategic plan in lieu of review. We would prefer to see the 
elimination of the DOE review of both Joint Work Statements and 
final CRADAs. The time that would be saved by eliminating case-
by-case review and approval would benefit the laboratory and 
our CRADA partners, translating into dollar savings in almost 
all instances.
    The maturation of the CRADA process with approximately 450 
CRADAs executed at Los Alamos over the past decade suggests 
that it is reasonable to allow us to negotiate and adopt CRADAs 
and joint work statements without case-by-case review 
(analogous to our procurement subcontracting process). The DOE 
has established performance-based metrics for our technology 
transfer efforts that are part of our annual science and 
technology evaluation. These DOE audits and reviews could 
address concerns regarding the quality of Joint Work Statements 
and CRADAs prepared by the Laboratories. Our most recent audit 
was rated outstanding.
    Recommendation: S. 1756 should be amended to allow the 
Department's contractors to adopt Joint Work Statements and 
CRADAs without the requirement of case-by-case DOE approval. 
Annual audits and reports would be more than sufficient to 
ensure that high quality Joint Work Statements and CRADAs are 
adopted.
4. Other transactions
    Los Alamos supports the bill's provisions to allow DOE to 
utilize the method of ``other transactions'' as an 
exceptionally flexible contracting authority that allows a 
``clean sheet of paper'' negotiation with non-federal 
organizations.


  Other Areas for Improving DOE Policies and Procedures for Economic 
                              Development


    With the inclusion of Appendix M in the UC Prime Contract, 
the DOE has demonstrated strong support for entrepreneurial 
activities that enhance and diversify the economic base of 
Northern New Mexico and facilitate the start-up and growth of 
new technology based businesses in the region. The DOE can 
further exhibit its support for these emerging New Mexico 
businesses by modifying the Fairness of Opportunity policies to 
allow preferential consideration for regional firms interested 
in licensing Laboratory technologies.
    The Laboratory is required to satisfy existing Fairness of 
Opportunity requirements prior to granting an exclusive license 
agreement. When the Laboratory issues an advertisement for 
potential licensees, small regional businesses as well as large 
national firms typically respond to the call for proposals. 
Without a long-term track records or the vast resources large 
established firms have to commit to commercialization 
initiatives, small regional businesses are often placed at a 
disadvantage. The addition of ``proximity to the Laboratory'' 
as an additional selection criterion when advertising 
technology licensing opportunities would help regional firms 
start up, grow, and remain in the area, further complementing 
the cluster development objectives of S. 1756.


                           Concluding Remarks


    We all recognize the vast scientific and technological 
capabilities available in federal laboratories such as Los 
Alamos and Sandia. The opportunity to meet our DOE mission, to 
benefit the federal taxpayers through the development of new 
partnerships, and to assist in the development of economic 
clusters in our region, are all part of the Los Alamos 
strategic plan for the coming decade. These activities allow 
DOE research to reach mission goals while strengthening or 
overall economy.
    It is critical that the federal government supports a 
sustained effort in technology partnerships if these efforts 
are to continue to have a positive impact. We cannot engage our 
best people in these endeavors if the funding fluctuates as 
dramatically as it has over the past eight years. Our present 
economic boom in the U.S. has lowered the interest of many 
national leaders in technology transfer but the nation must be 
prepared to continue its investment in the economic engine 
provided by high technology developments such as those that 
occur at the national laboratories. Senate Bill 1756 will help 
the DOE, its laboratories and industry meet this challenge.
                                ------                                


 Prepared Statement of Dr. C. Paul Robinson, Director, Sandia National 
                              Laboratories


                              Introduction


    Mr. Chairman, members of the committee, and distinguished 
guests, thank you for the opportunity to testify today. I am 
Paul Robinson, Director of Sandia National Laboratories. Sandia 
is managed and operated for the U.S. Department of Energy (DOE) 
by Sandia Corporation, a subsidiary of the Lockheed Martin 
Corporation.
    I am pleased to testify in support of S. 1756, the 
``National Laboratories Partnership Improvement Act.'' The bill 
acknowledges that research collaborations with industry and 
universities are crucial to the ability of the DOE laboratories 
to accomplish their missions. This point is stated in the 
``Findings'' section of the bill:
    ``To be able to help the Department to achieve its missions 
in the most cost-effective manner, the National Laboratories 
must take advantage, to the greatest practicable, of the 
scientific and technological expertise that exists in the 
private sector, as well as at leading universities, through 
joint research and development projects, personnel exchanges, 
and other arrangements.''
    The truth of this statement is not widely appreciated. The 
DOE laboratories are often regarded as prolific sources of 
advanced technology. And while that is often true, it must be 
acknowledged that we are also voracious users of technology 
developed in the larger community of science and engineering. 
We are, in a sense, hunter-gathers of technology that can 
support our DOE missions. The laboratories cannot be an island; 
they must interact extensively with industry and universities 
to keep their research foundations up-to-date with the fast-
moving pace of progress in technology.
    A wide range of opinion exists concerning the appropriate 
role of technical collaboration between federal research and 
development (R&D) institutions and the private sector and 
academia. Some have claimed that cost-shared research with 
national laboratories amounts to corporate welfare. Although 
there are undoubtedly some examples of corporate welfare in 
federal programs, the DOE Defense Programs partnership effort 
is not one of them. In recent years it has become quite clear 
that the DOE laboratories are major beneficiaries of such 
collaborative research. Partnerships are an important strategic 
response of the science and technology enterprise as R&D 
budgets in both industry and government have come under stress. 
It has been amply demonstrated that collaborative R&D programs 
involving the DOE laboratories can be of great value to 
industry and small businesses. But there should be no 
misunderstanding that such partnerships are also of great 
benefit to the DOE laboratories in performance of their 
strategic mission responsibilities.
    In my statement today, I will give examples of how 
industrial partnerships have contributed to DOE missions at 
Sandia National Laboratories. I will discuss the origins and 
intent for the partnership policies DOE adopted and the 
implementation of partnership programs at Sandia National 
Laboratories. I will then describe the negative impact of the 
steady decline in partnership funding since fiscal year 1996 
and conclude with some observations on revitalizing the DOE 
partnerships program. Specific comments on the draft language 
of S. 1756 are offered in an appendix to my statement.


     How Industrial Partnerships Contribute to the DOE Lab Missions


    Our laboratory's core competencies have been strengthened 
and its capabilities enhanced through interaction with 
industrial and academic researchers and engineers. This 
interaction permits us to cultivate relationships with key 
suppliers and contributors, explore technical frontiers with 
those who have a common interest, and maintain critical 
mission-related competencies at world-class levels during a 
period of reduced federal investment. Partnerships have 
directly benefited DOE missions as we have learned of new 
approaches and technologies and applied them to support our 
internal programs.
    As you know, the mission responsibilities of Sandia 
National Laboratories and Los Alamos National Laboratory are 
centered on stewardship of the nation's nuclear weapons 
stockpile. This is a long-term obligation that requires 
sustained expertise in many technical disciplines. We must 
exercise, maintain, and continuously improve the technical 
competencies required for this work. Nuclear weapons 
stewardship requires advanced technology, some of which is 
specific to nuclear weapons, but much of which is common to the 
standard science and engineering disciplines. If we don't keep 
up with the advancing frontiers in electronics, materials 
science, computer science, nanotechnology, and so forth, we 
cannot perform our mission in the long term. Cooperative work 
with industry often helps support technologies that are 
strategic for the nuclear weapons program.
    For example, microelectronics technology is critical to the 
DOE defense mission, and it is especially important for 
Sandia's responsibilities in component design. To meet our 
mission obligations, Sandia has developed a broad-based 
competency in microelectronics, from the fundamental science of 
semiconducting materials to device design and fabrication. In 
the past two decades, there has been explosive growth and 
innovation across the microelectronics industry, with advance 
after advance being stacked up to increase the performance of 
computers and other high-performance electronic systems. We can 
only hope to stay abreast of developments through partnerships 
with the leaders in this field. In the 1990s we collaborated 
extensively with the Sematech Consortium, as well as with 
several major semiconductor companies and research 
universities. Those arrangements have proved to be crucially 
important to the weapons program at Sandia.
    As a result of our cooperative research and development 
work with Sematech, we were able to revitalize our 
microelectronics fabrication facility through a major donation 
of equipment and research instrumentation from IBM valued at 
over $20 million. The facility became a dual-benefit project 
with industry and hosted partnership projects with U.S. 
microelectronics manufacturers and universities. Without the 
major support provided by IBM and other industrial partners 
through collaborative research programs, Sandia would not have 
a modern semiconductor fabrication facility today. And this 
facility is absolutely critical to our mission. We are the only 
government laboratory with both research and production 
capability supporting radiation-hardened microelectronic 
components for defense and space applications.
    In another example, about a year ago Intel Corporation 
granted a royalty-free license of its Pentium processor design 
to Sandia so that we can develop a radiation-hardened version. 
The Pentium offers a ten-fold increase in processing power over 
currently available radiation-hardened microprocessors for 
applications such as earth satellites, space probes, missile 
defense, and other military and intelligence systems. Our 
agreement with Intel will save U.S. taxpayers millions of 
dollars in research and development--costs that would have been 
required to emulate this capability with a new design. In 
addition, the savings in time and money by being able to adapt 
proven commercial software to operate the Pentium, rather than 
write new software, will be enormous. Several government 
agencies will participate with DOE in the radiation-hardened 
redesign of the pentium chip, including NASA, the Air Force, 
and the National Reconnaissance Office. Intel's patriotic 
action built on a partnering relationship that Sandia fostered 
over many years and involved numerous cooperative research and 
development projects.
    It is simply wrong to label these partnerships ``corporate 
welfare''; the government clearly got more value out of these 
interactions than it put in. Ironically, I have heard exchanges 
such as these referred to as ``government welfare,'' which is 
perhaps not far off the mark!


      The Adoption of Partnership Policy for DOE Defense Programs


    In the late 1980s, DOE began to look favorably on the 
concept of R&D partnerships to attract private industrial 
participation with the labs in areas of mutual interest to 
industry and to Defense Programs. DOE had become concerned with 
a developing shortage of reliable component suppliers to the 
nuclear weapons program which began to manifest itself in the 
mid-1980s. This trend became more pronounced after the collapse 
of the Soviet Union and the subsequent decrease in spending on 
weapons production and the closing of many of the dedicated 
plants for nuclear weapon components.
    Defense Programs' approach differed from the ``technology 
transfer'' model envisioned earlier for government-owned and 
government-operated (GOGO) federal laboratories in the 
Stephenson/Wydler Act. Stephenson/Wydler was intended as a 
vehicle for transferring government-developed technologies to 
the private sector for commercialization. Defense Programs, on 
the other hand, envisioned collaborative work on technologies 
of mutual interest to both the DOE and industry. There was an 
expectation of benefit to DOE programs as well.
    Prior to 1989, only GOGO laboratories were allowed to enter 
into cooperative research and development agreements (CRADAs) 
with industrial partners (as permitted by the Federal 
Technology Transfer Act of 1986). Basically, the only way 
government-owned, contractor-operated (GOGO) labs like Sandia 
and Los Alamos could partner with industry was through 
procurements. Fortunately, the CRADA mechanism was extended to 
GOCO laboratories by the National Competitiveness Technology 
Transfer Act of 1989.
    In the FY 1991-92 time frame, Defense Programs implemented 
a program of R&D partnerships by creating a formal technology 
transfer program financed by a specific defense appropriation 
and conducted by an independent program initiative within 
Defense Programs that did not ``tax'' existing programs. This 
new program, the Technology Transfer Initiative (TTI)--later 
changed to the Technology Partnerships Program (TPP)--provided 
seed money for catalyzing new relationships with industrial 
entities that had never before collaborated with DOE 
laboratories.
Sandia's implementation of partnerships
    Sandia's implementation of partnerships includes 
Cooperative Research and Development Agreements (CRADAs) with 
both large and small companies, large-scale strategic alliances 
with industry groups, expanded offerings of DOE laboratory user 
facilities, and direct technical assistance to small and 
medium-sized enterprises.
Cooperative research and development agreements
    In the first few years after the National Competitiveness 
Technology Transfer Act of 1989, cooperative research and 
development agreements (CRADAs) became the preferred 
arrangement for undertaking collaborative research. Work under 
a CRADA is cost-shared with the partner, and intellectual 
property resulting from the collaborative work can be 
protected. Implementation of CRADAs was rather difficult at 
first, however. Companies were unhappy with bureaucratic delays 
and some of the contractual terms imposed by DOE's original 
regulations. Fortunately, problems with the CRADA rules and 
processes were worked out to the general satisfaction of the 
labs, their partners, and DOE within the first two years.
    Sandia signed CRADAs with many local firms, most of them 
small businesses. Many of those CRADAs led to new products and 
permitted the licensing of technology developed at Sandia for 
commercial applications. Sandia has also executed many CRADAs 
with some of the nation's largest companies. With Intel 
Corporation, for example, we have performed 12 CRADAs since 
1991 with a total value approaching $30 million.
    By fiscal year 1995, Sandia had developed the largest 
portfolio of industry partnerships of any federally sponsored 
institution. Our partnering strategy evolved beyond simple 
CRADAs with individual companies. We found, for example, that 
consortia involving industry, universities, and other labs were 
effective vehicles for sharing research during the 
precompetitive stages of a technology's development, 
effectively ``raising the level of all ships'' and probably 
increasing U.S. technological competitiveness. We established 
or participated in several consortia in areas such as specialty 
metals, investment casting, computational structural analysis, 
and microelectronics and optoelectronics. In the last decade, 
Sandia signed several multiple-partner CRADAs with consortia of 
companies and universities. Many of these newer CRADAs comprise 
a substantial segment of a specific industry or involve working 
with umbrella organizations that represent an entire industry.
    At the same time, it was also becoming clear that CRADAs 
with individual companies in the private sector often went far 
beyond technology transfer by creating strategic benefits for 
both parties. An outstanding example of mutual benefits in 
Sandia's CRADA work with the Goodyear Tire and Rubber Company. 
Engineers at Sandia and Goodyear collaborated to improve a 
computational engineering tool for solving structural mechanics 
problems common to tire design and to the design of reliable 
neutron generators for nuclear weapons. Sandia's investment in 
this work was marginal, but in the process we acquired valuable 
improvements in our capability from Goodyear's expertise.
    The benefit to Goodyear--and to the nation--was 
substantial. Consider that Goodyear is the only manufacturer of 
tires that is U.S.-based and majority-owned by U.S. investors. 
The company has faced aggressive technical and price 
competition from foreign manufacturers who are subsidized by 
their governments. With its healthy volume of international 
sales, Goodyear measurably improves the U.S. trade deficit, 
creates U.S. jobs, and generates profits that are taxable here 
or are reinvested in a U.S.-based enterprise.
DOE user facilities
    Another important vehicle for collaborative research is the 
Department of Energy's user facility program. DOE's 
laboratories have distinguished themselves in the development 
and operation of major scientific and engineering facilities 
that would be difficult to reproduce in a different setting. 
Today, most of these facilities are operated as user 
facilities, and their unique capabilities are available to 
researchers from industry, academia, and other government 
agencies. Sandia has 40 such facilities representing most of 
the laboratory's core technical capabilities for DOE missions. 
One of the great advantages of the user facility concept is 
that it provides a physical environment conducive to 
collaboration. Researchers from industry, universities, and the 
national laboratories frequently work side-by-side in these 
settings on problems of mutual interest.
    An example of a Sandia user facility with important 
collaborative programs is our Electronics Quality/Reliability 
Center, which supports research and development in reliability 
physics, reliability engineering, and failure analysis for 
electronic devices. Sandia has trained a great many electronics 
specialists from U.S. companies in the processes, techniques, 
and diagnostics for producing extremely high-reliability 
electronic systems--a hallmark of our defense work. In turn, we 
continuously learn of the new components and technologies of 
the commercial electronic industry, to move us ahead with the 
ever-changing state of the art. Together, we have merged these 
capabilities for the advantage of our respective programs.
    Sandia's Intelligent Systems and Robotics Center provides 
an environment for research and development on applications of 
intelligent systems and robotics to manufacturing, 
environmental cleanup, weapons production and dismantlement, 
and medicine. The Liquid Metal Processing and Thermal Spray 
Laboratories user facility features a wide range of prototype 
and industrial-scale furnaces, melting and investment casting 
facilities, thermal spray labs, and computational resources. 
These are just a few examples of Sandia's diverse user 
facilities.
    Sandia's user facilities will become increasingly important 
for generating cooperative work with industrial partners and 
for building alliances involving industry, university, and 
government entities.
Technical assistance to small enterprises
    Sandia has made a special effort to provide technical 
assistance directly to small business enterprises. Sandia, 
Lawrence Livermore, and Los Alamos national laboratories and 
the Y-12 production facility at Oak Ridge are partners in the 
Department of Energy's Small-Business Initiative. Technical 
assistance to small companies increases the return on the 
federal investment in DOE's technical assets to the tax-paying 
public at minimal incremental cost.
    Sandia works directly with individual businesses to solve 
problems that are beyond the technical means of the business to 
resolve. Often these have been problems that--unless the 
troubles could be quickly diagnosed and solved--would have led 
to the failure of the small business. We also work with small-
business associations to reach a greater number of participants 
by addressing common problems and opportunities and matching 
laboratory capabilities with the generic needs of groups of 
small businesses.
    The Small-Business Initiative (SBI) at Sandia has four 
program elements: Technical Assistance: Use of Sandia expertise 
or equipment to solve a specific, short-term technical problem. 
The SBI supports individual facility costs up to $5,000 for 
each transaction; Partnership Agreements: Joint, cost-shared or 
funds-in, dual-benefit development of technology, with SBI 
support limited to $50,000; Facility Utilization: Identifies 
user facilities of value to small business. Helps support the 
costs associated with a small business' use of a user facility; 
and Intermediary Relationships: Linkage of Sandia to the local, 
regional, and national small-business communities. 
Intermediaries pre-qualify small business requests for Sandia.
    We believe Sandia's Small-Business Initiative has had a big 
impact, both regionally and nationally. Sandia National 
Laboratories has executed 1,500 technical assistance agreements 
with small businesses in 45 states since its inception in 1994. 
Our program has assisted 450 small businesses in New Mexico, 
helping to sustain the local industrial base and the jobs and 
economic benefits that it provides.
    Locally, Sandia has helped many small businesses with 
technical problems. Here are a few examples:
    Quatro Corporation: This electronics manufacturer turned to 
Sandia for help in developing a process for recovering solid 
waste from printed wiring boards during manufacture. Sandia 
helped the company build a prototype process for extracting and 
reclaiming waste material. Quatro is evaluating the 
patentability of the process and whether to build an 
environmentally safe manufacturing plant based on it. If such a 
facility is built, it could create approximately 50 jobs.
    Radiant Technologies, Inc.: Engineers from Sandia helped 
Radiant Technologies develop a manufacturable prototype read/
write optical disk, for commercial computer memories based on 
ferroelectric thin films. Under the Small-Business Initiative's 
technical assistance program Radiant obtained a license for 
this technology.
    SCB Technologies, Inc.: SCB secured an exclusive license 
from Sandia several years ago to commercialize the 
semiconductor bridge igniter, which provides precise ignition 
of explosives. The company developed a version that is 
insensitive to radio frequency signals, which can cause 
conventional detonators to fire prematurely. Under a small-
business technical assistance agreement, an SCB engineer, 
together with Sandia explosives experts, verified the 
performance of the new circuit in a radio frequency 
environment.
    Waveront Research, Inc. (WRI): WRI requested technical 
assistance in demonstrating connectivity of an optical device 
to a digital computer interface. Sandia provided use of a 
special microlaser array, unavailable commercially and 
necessary for early prototyping. WRI credits the assistance 
with keeping the fledgling business afloat. In addition, the 
company expects successful commercialization and the creation 
of at least four new jobs.
    Southwest Tire Processors: An example of a small-business 
assistance project in rural New Mexico, Southwest Tire 
Processors of Socorro recycles rubber tires into chunks, 
powders, and sprays for use as insulation, water and sound 
barriers, and playground/patio materials. Assistance provided 
by Sandia in adhesive development enabled the company and its 
partners to develop a new product line of full-circle waste 
tire recycling. In addition, a new small business, Material 
Recovery of North America (MRNA), was created to commercialize 
the equipment, process, and end products.
    These are just a few examples of the many successful small-
business technical assistance projects between Sandia and local 
companies. Unfortunately, DOE has now substantially reduced its 
budgetary support for the Small-Business Initiative. In fact, 
our small-business assistance program will be in jeopardy in FY 
2001 when DOE terminates the Technical Partnerships Program.
    Expanded state support would be very helpful in 
strengthening Sandia's small-business assistance program. A 
bill entitled, ``Laboratory Partnership with Small Business Tax 
Credit Act,'' is before the New Mexico state legislature at 
this moment. The proposed legislation would provide a limited 
gross receipts tax credit to national labs for assisting small 
businesses in New Mexico. This credit will stimulate new 
economic activity, new jobs, and new taxes. An analysis by 
Brian McDonald, former director of the Bureau of Business and 
Economic Research at the University of New Mexico, showed that 
the average business assistance project of $4,300 yields about 
$70,000 in payroll created or retained and approximately $6,000 
in additional tax revenue to the state of New Mexico in its 
first year. If the state legislature of New Mexico enacts this 
bill, it will send a positive signal to DOE and Congress that 
New Mexico regards the small business assistance programs of 
the national laboratories as very important activities that 
should be continued.
Entrepreneurial separations
    Several years ago Sandia offered an entrepreneurial 
separation program for employees who wanted to venture into the 
private sector to start a business based on technology in their 
area of expertise. Entrepreneurial ventures are notoriously 
risky, and Sandia's entrepreneurial separation policy can 
permit a former employee to return if the venture fails.
    Optomech Design Company is a small business owned by two 
former Sandia employees who elected to take advantage of our 
entrepreneurial leave of absence. They are trying to spin-off 
laser-engineered net-shaping (LENS) technology into a 
commercializable process. If they succeed, Defense Programs 
will benefit greatly, Sandia is especially interested in LENS' 
design flexibility and low-volume production capabilities for 
highly specialized nuclear weapon components, among other 
technical advantages. This entrepreneurial venture holds 
promise for developing a viable supplier of LENS services and 
the general enhancement of LENS technology through stimulation 
of interest throughout the wider industrial community.
    Perhaps our most outstanding example of a successful 
entrepreneurial venture under this separation program is the 
MODE Division of EMCORE Corporation. MODE (Micro Optical Device 
Engineering) was founded by an employee of Sandia National 
Laboratories who had a vision of commercializing a new 
semiconductor laser based on fabrication techniques explored in 
Sandia's Microelectronics Development Laboratory. His start-up 
was acquired by EMCORE Corporation of New Jersey, a 
manufacturer of photovoltaic panels and other electro-optical 
devices. MODE's vertical-cavity surface-emitting laser (VCSEL) 
products have found a spectacular market in the internet and 
telecommunications industries. In addition to the MODE 
division, EMCORE built a manufacturing plant of photovoltaic 
arrays in Sandia Science and Technology Park. EMCORE is the 
first high-tech company to locate in that development, which we 
hope will become the nucleus of a high-technology cluster in 
New Mexico.


              The Importance of a High-Technology Cluster


    Many studies have demonstrated the importance of technology 
clusters to the economic progress of a region. It is an 
unfortunate paradox that New Mexico is home to several world-
class institutions of science and technology and yet it remains 
one of the most economically disadvantaged states in the 
nation. We have a vision to pilot the cluster concept to create 
a more integrated technological community in New Mexico that 
can be a stimulus for greater investment by high-technology 
industry. If successful, we believe this model can be 
propagated around the nation, ensuring that the benefits of 
technology innovation--a proven driver of economic prosperity--
can benefit all.
    Business and industry have an opportunity to tap into an 
extraordinary concentration of technological assets in what can 
be called the New Mexico Technology Corridor, stretching from 
Los Alamos National Laboratory in the north to New Mexico State 
University in the south. This corridor contains a world-class 
array of technology-based organizations, including Sandia and 
Los Alamos national laboratories, the U.S. Air Force Phillips 
Research Laboratory, the Santa Fe Institute, White Sands 
Missile Range, the Lovelace Respiratory Research Institute, the 
University of New Mexico, New Mexico State University, New 
Mexico Highlands University, and the New Mexico Institute of 
Mining and Technology, Sandia Science and Technology Park is 
situated at the crossroads of this corridor.
    Sandia National Laboratories, working with Technology 
Ventures Corporation (TVC), the City of Albuquerque, and 
several landowners, is planning a 285 acre, campus-style 
technology center adjacent to Sandia Laboratories in 
southeastern Albuquerque. In a campus-like setting just outside 
Kirtland Air Force Base, the Sandia Science and Technology Park 
will be a short bike ride away from some of Sandia's 
outstanding user facilities, including the Microelectronics 
Development Laboratory, the Robotic Manufacturing Science and 
Engineering Laboratory, the Advanced Manufacturing Processes 
Laboratory, and Sandia's Integrated Materials Research 
Laboratory, as well as Sandia's teraflops supercomputer, 
currently the world's fastest scientific computer. Partners 
will be only a short drive away from other exceptional research 
facilities that are ready for collaborative projects that will 
not only incubate new technologies but will harness them for 
economic growth.
    We believe the Sandia Science and Technology Park, as an 
intersection of a statewide high-technology cluster, will help 
the laboratory preserve and enhance its technical capabilities 
and human talent for DOE missions into the future.


                The Decline of DOE Partnership Programs


    Funding for the DOE Technology Partnerships Program has 
been in a steep decline for the past six years: from peak 
funding in fiscal year 1995 of $212 million to only $14.5 
million in FY 2000. The share of the DOE TPP funding available 
to Sandia National Laboratories has declined in direct 
proportion. From a peak of $94 million in FY 1995, we are 
allocated only $4 million for the Technology Partnerships 
Program in FY 2000. To adjust to this steep decline in funding, 
Sandia sharply reduced the number of new CRADAs it would accept 
in subsequent years and had to terminate many partnership 
agreements prematurely. The number of new CRADAs has dropped 
from a peak of 83 in FY 1994 to approximately 30 in FY 2000. 
The TPP funding problem has also forced us to dramatically cut 
back on the number of small-business assistance projects we can 
perform.
    At the outset, the DOE Defense Programs Technology Transfer 
Initiative (later changed to Technology Partnership Program) 
was intended as a dual-benefit program for both industry and 
the laboratories. Unfortunately, when large amounts of funding 
were allocated for the TTI program (on the order of $200 
million in fiscal years 1994 and 1995) it attracted a 
significant lobbying effort by some industrial/political 
sectors to ``get their share,'' (notably the automobile, 
textiles, and oil and gas sectors). DOE Defense Programs was 
unable in some cases to prevent ear-marking of TTI funds for 
industry sectors for which the alignment with Defense Program's 
mission needs was not clear. Consequently, DOE's Office of 
Defense Programs began to ramp-down the ``fenced'' funds (i.e., 
the line item allocation) for partnerships in its budget 
requests and pursue instead a program of partnerships 
controlled directly by managers of individual programs and 
campaigns \1\ in Defense Programs.
---------------------------------------------------------------------------
    \1\ Campaigns are technically challenging, multi-year, multi-
functional efforts conducted across Defense Programs designed to 
develop and maintain specific capabilities.
---------------------------------------------------------------------------
    This change in strategy has further harmed the partnership 
effort because of a fundamental incompatibility in operating 
approaches that has arisen. Managers of DP programs and 
campaigns have time horizons for deliverable that have caused 
them to refrain from investing in partnerships with only 
strategic, rather than immediate, value to the program. Some 
key DP managers would favor a paradigm of collaborative R&D 
only being a procurement function, rather than a strategic 
relationship. This is a very different approach. Sandia's 
relationships with Intel, IBM, and Goodyear (mentioned earlier 
in my statement)--which have been of such great value to our 
mission--required a decade or more of CRADAs and other 
interactions in order to develop the trust needed for truly 
strategic partnerships.
    Another major problem with the centralization of 
partnership decisions within headquarters is that laboratory 
directors have a greatly diminished role in the decision 
process. The DP campaign managers, quite appropriately, have a 
programmatic focus. But the laboratory directors are 
responsible for nourishing the institutional competencies 
required for their missions over the long term. they take a 
strategic view of their laboratories' need and use industrial 
partnerships as a tool for strengthening essential 
institutional competencies. Earlier in my statement I described 
how this tool has been used at Sandia to strengthen our 
institutional competencies in microelectronics, for example.
    This strategic view of each laboratory's requirements has 
not been a central concern of the more narrow focus of the 
campaigns, which reformulated the work into deadline-driven 
time lines. But as a result of these changes and lower R&D 
budgets, the laboratories were put into a position where it was 
necessary to cancel CRADA commitments that had been made in 
good faith to industrial partners. The precipitous shrinkage of 
TPP funding beginning in FY 1996 forced Sandia to cancel 
several active CRADAs. The problem repeated itself this year as 
the Technology Partnerships Program at Sandia dropped from $21 
million in FY 1999 to $4 million in FY 2000. The result was a 
need to cancel 21 CRADAs with work in process, affecting a 
total of 38 participating companies--a very painful and 
destructive action. You can understand that some of our 
industrial collaborators have now begun to question whether we 
can be a reliable business partner. When we do not live up to 
our commitments, it seriously damages our relationship with 
industry in general and our partner companies in particular.
    DOE's budget request for FY 2001 would close out the 
Technology Partnerships Program line item altogether. DP's 
explanation is that CRADAs will be funded at approximately the 
same level as FY 2000 ($14.5 million) but from general Defense 
Programs funds rather than a line item. But in general, the 
reductions in our DP budget have not allowed us to complete 
existing CRADA commitments from program funds. Instead, the 
pattern has been to leave the laboratories to dispose of any 
commitments they can no longer fund. If we get a TPP budget of 
zero in FY 2001, I expect that Sandia National Laboratories 
will be forced to terminate as many as 30 additional in-process 
CRADAs again next year.
    Thus, I see the future of Defense Programs partnerships at 
a crossroads. The mission benefit of our CRADA portfolio is 
undeniable. Yet, since FY 1996, almost all TPP-funded 
partnerships have been more narrowly driven by immediate 
Defense Programs needs rather than by a strategic view of the 
essential role that partnerships play in keeping the 
laboratories' technologies robust and at the state-of-the-art 
over the long term. The present course will close down the 
partnership programs as currently administered by individual 
laboratories.
    Interestingly, while we have fewer CRADAs today than five 
years ago, there is a greater percentage of industry funds-in 
with many of our new CRADAs. This trend is encouraging to me in 
attesting to the value that our industrial partners place on 
their partnerships with us. Companies that have experience with 
us have increasingly been willing to foot a larger percentage 
of the bill for joint R&D as changes in our program approach 
and funding have occurred.
    Unfortunately however, companies that have never had 
experience with the DOE laboratories are unlikely to enter into 
collaborative agreements without cost-sharing. Thus, there is a 
definite need for ``seed money'' for catalyzing the initial 
partnerships that can build the trust for longer-term 
collaborations. Yet, with the demise of TPP funds, very little 
seed money will be available for initiating new strategic 
relationships with industry.


 Observations on Revitalizing the Defense Programs Partnerships Program


    I was encouraged that Secretary Richardson accepted the 
recommendations of DOE's Research and Development Council 
Technology Transfer Working Group, which issued a report in 
August 1999, offering several suggestions for strengthening 
DOE's technology transfer program. Those suggestions included 
streamlining CRADA procedures, promoting public awareness of 
opportunities for technology partnerships, developing clear 
guidance on intellectual property, and implementing management 
reforms. The Secretary also appointed a high-level advisor to 
provide leadership on technology transfer issues in the 
Department. I applaud these actions; they are steps that are 
certainly needed.
    It is doubtful in the absence of an explicit appropriation 
for partnerships whether sufficient support for strategic 
industrial partnerships will be afforded from within the 
Defense Programs campaigns. Funding on the level of 
approximately $60 million is required for a really useful 
Technology Partnerships Program. The total value of the 
partnerships portfolio at Sandia in any year will total 
approximately twice Sandia's TPP allocation when industry 
funds-in are added in. Moreover, as he has already been 
demonstrated with the TPP program of the 1990s, the seed money 
provided by DOE's investment will often mature into long-term 
alliances that will materially benefit the program for many 
years to come.
    Small business technical assistance is now funded solely 
from the Defense Programs Technology Partnerships Program and 
must also meet DP expectations for mission benefit. These are 
in fact often incompatible, and it places on the table the 
question ofhow such activities should be funded. Perhaps 
technical assistance efforts should be funded outside of 
Defense Programs; or by recognizing that the small dollar 
volume required for this worthwhile activity provides 
sufficient benefit to the overall health of the laboratories, 
it should agree that DP support for such effort is appropriate. 
S. 1756 is very important in this respect. It specifies that 
small business technical assistance is to be conducted for all 
DOE mission areas, although the funding source is not 
identified. Without this legislation, the laboratories would 
have no legal authority to conduct small business technical 
assistance if TPP funding is ultimately zeroed-out.
    To revitalize the Technology Partnerships Program, line 
item funding will be required. I would hope that a supplemental 
appropriation will not be necessary. You and other committees 
of Congress can legitimately argue why a $60 million 
partnerships effort--in light of its demonstrated value in the 
past--cannot be provided from within a $4.6 billion program. As 
shown by DOE's own study, the 30-Day Review of the Stockpile 
Stewardship Program, Defense Programs is perhaps over-committed 
and its resources ``stretched too tightly'' to carry out all of 
its responsibilities. The recent Report of the Panel to Assess 
the Reliability, Safety, and Security of the United States 
Nuclear Stockpile, commissioned by Congress in the Defense 
Authorization Act of 1999, expressed similar concerns for 
resource shortfalls. I believe it is important to very 
seriously review funding requirements, particularly when an 
effort with as much demonstrated success and promise as the 
Partnership activities hangs in the balance.


                               Conclusion


    I support S. 1756, the ``National Laboratories Partnership 
Improvement Act.'' This legislation will permit the national 
laboratories to continue to benefit from working 
collaboratively wth the private sector. In addition, it will 
improve the laboratories' flexibility to enter into partnership 
agreements and reduce the time required to negotiate, approve, 
and execute agreements. I am particularly encouraged that it 
will also help the laboratories foster the regional technology 
clusters that provide a local technology base synergistic with 
DOE institutions.
    The success that we have had working with industry during 
the last decade has amply demonstrated the value of industrial 
collaborations for DOE laboratories in support of their 
missions. It is clearly good public policy to support and 
encourage these mutually beneficial, cost-shared partnerships. 
National statistics show that the balance has shifted: a 
majority of R&D funds are provided by the private sector for 
their commercial needs, rather than by federal government for 
defense. Increasingly the national laboratories must take 
advantage of the scientific and technological advances that are 
occurring in the private sector if they are able to be 
successful in accomplishing their missions cost-effectively.
                                ------                                


 Appendix--Specific Comments on Language, Senate Bill 1756, ``National 
               Laboratories Partnership Improvement Act''


         Section 4: Regional Technology Infrastructure Program


    4(c)(1) Pilot Phase: The funding source for the $1 million 
pilot project is not defined. Therefore, the required funding 
will reduce funding available for programs. Providing 
independent funding would be helpful.
    4(e)(1) Minimum Participants: Requiring that every 
agreement include a minimum of three parties may slow the 
implementation significantly. It is generally easier and faster 
to enter into multiple two-party agreements and still meet the 
full intent of the legislation. We recommend providing for that 
option.
    4(e)(3) Competitive Selection: We recommend that this 
section be modified to allow for the competitive selection 
process to be determined by the laboratory and approved by the 
Secretary or his designee. This could be accomplished by 
inserting the words ``by the Laboratory Director'' between 
``selected'' and ``using'' and by adding the words ``or his 
designee'' after ``the Secretary''.


           Section 5: Small Business Advocacy and Assistance


    This section is well aligned with initiatives we are 
currently pursuing at Sandia, and we fully support the 
objectives. However, we have concerns about placing into 
federal statute a requirement for an organizational office and 
function for small business advocacy, rather than to leave to 
the laboratories how to best meet that need. We strongly 
support the language that will provide for small business 
technical assistance within our full mission space, expanding 
it beyond our defense mission alone and, thereby, increasing 
our ability to provide value to the U.S. small business 
community.
    5(a) Advocacy Function: Sandia already has initiatives in 
place that fully meet the intent and objectives of this 
section. We believe it is important that national laboratories 
be allowed to have flexibility in how to best accomplish the 
small-business advocacy function in view of rapidly changing 
environments, and we believe that there is no need to prescribe 
by statute the detailed approach or organizational structure.
    5(b) Establishment of Small Business Assistance Program: 
This is a valuable and important piece of this legislation that 
will formally authorize and institutionalize our small business 
assistance program. However, it is unclear what funding 
source(s) can be used for this effort. If DOE DP/TPP funding 
goes away in FY 2001, the Defense Programs laboratories will 
have no authorized funding for small business assistance. 
Therefore, it would be helpful to indicate that the Secretary 
and the laboratories are authorized to use existing 
programmatic funding for this activity, through some type of 
overhead charge, or better still, to provide specific funding 
for this program.


              Section 6: Technology Partnerships Ombudsman


    Sandia strongly supports this action and has implemented 
this initiative at the request of the Secretary. However, we 
believe the required organizational structure [(6)(a)(2) 
wherein the ombuds ``reports to the Director of the National 
Laboratory or facility''] is best if not prescribed by federal 
statute and should be left to the laboratories to determine.


               Section 7: Mobility of Technical Personnel


    While we support the concept embodied in this section, we 
believe that implementation will be extremely problematic. We 
support the idea of a study [(7)(c)] to determine feasibility. 
However, we believe that moving personnel between government 
laboratories, private companies, and universities with their 
significant differences in benefits and salary practices may 
not be practical. We suggest that this may best be left to the 
free market activity of parties negotiating their own 
employment contracts. However, if this section of the 
legislation remains, we feel that it should not exclude non-
technical staff members. Therefore, we suggest that 
``scientific and technical personnel'' be changed to 
``scientific, technical, and business personnel.''


                Section 8: Other Transactions Authority


    This authority will be of substantial value in increasing 
our partnership agreement flexibility. However, it will 
undoubtedly require that the Secretary and DOE General Counsel 
issue guidelines and an implementation order. It would be 
helpful to include a timetable that would drive the schedule 
for implementing this new authority within DOE and the 
laboratories.


             Section 9: Amendments to Stevenson-Wydler Act


    We fully support the intent and proposed improvements in 
expediting the agreement process between federal agencies 
(DOE), the national laboratories, and our private sector 
partners. However, the revised language still indicates that 
two separate documents (the Joint work Statement (JWS) as well 
as the CRADA) must receive agency approval. With the experience 
base now in place in federal agencies and national 
laboratories, we believe that should no longer be necessary. We 
recommend that approval by the agency of the CRADA alone would 
meet all necessary reviews and oversight requirements.
    9(a) Strategic Plans: The language, ``or, if permitted by 
the agency, in an agency approved strategic plan,'' is 
undoubtedly driven by the need to obtain DOE support for this 
innovative legislation; that is, to allow the laboratory 
directors authority to approve JWSs and CRADAs after DOE 
approves an annual strategic plan. We fully support this 
strategy. Removing the current requirement for case-by-case 
approval for every partnership agreement offers the potential 
for a significant time and work reduction in negotiating 
agreements. Therefore, it would also be helpful to require DOE 
to grant that authority on at least a pilot basis at one or 
more laboratories so that it could be implemented and evaluated 
on a timely basis.
    9(b) Federal Waivers: We are unsure what is driving this 
part of the legislation. Sandia has never had a CRADA partner 
walk away because of the government's reserved rights. This has 
the potential to raise issues (an expectation that the 
government's right to ``make or have made'' using the CRADA-
developed intellectual property should be given up) where now 
there are none. In addition, even if the government's rights 
are waived, we believe it would not be wise for the laboratory 
to waive its rights, because of our need to continue to perform 
programmatic responsibilities requiring the technology. Unless 
there is additional information of which we are unaware, we 
would recommend that this clause be removed. We note, however, 
that the legislation does indicate that this is expected to be 
a fairly rare occurrence, and we can live with the language if 
other sites have found this to be an issue.
    9(c) Time Required for Approval: 9(c)(4)(v): This is a 
particularly progressive and encouraging clause and we endorse 
it most heartily. We would look forward to an open negotiation 
and DOE that would establish the boundaries and ground-rules 
under which the laboratories would be allowed to fully 
negotiate and approve partnership agreements.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill S. 517, as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

                 DEPARTMENT OF ENERGY ORGANIZATION ACT


                      Public Law 95-91, as Amended


 AN ACT To establish a Department of Energy in the executive branch by 
the reorganization of energy functions within the Federal Government in 
 order to secure effective management to assure a coordinated national 
energy policy, and for other purposes.

           *       *       *       *       *       *       *


                               Contracts

    Sec. 646. (a) The Secretary is authorized to enter into and 
perform such contracts, leases, cooperative agreements, or 
other similar transactions with public agencies and private 
organizations and persons, and to make such payments (in lump 
sum or installments, and by the way advance or reimbursement) 
as he may deem to be necessary or appropriate to carry out 
functions now or hereafter vested in the Secretary.

           *       *       *       *       *       *       *

    (g) Other Transactions Authority.--(1) In addition to other 
authorities granted to the Secretary to enter into procurement 
contracts, leases, cooperative agreements, grants, and other 
similar arrangements, the Secretary may enter into other 
transactions with public agencies, private organizations, or 
persons on such terms as the Secretary may deem appropriate in 
furtherance of basic, applied, and advanced research functions 
now or hereafter vested in the Secretary. Such other 
transaction shall not be subject to the provisions of section 9 
of the Federal Nonnuclear Energy Research and Development Act 
of 1974 (42 U.S.C. 5908).
    (2)(A) The Secretary of Energy shall ensure that--
          (i) to the maximum extent practicable, no transaction 
        entered into under paragraph (1) provides for research 
        that duplicates research being conducted under existing 
        programs carried out by the Department of Energy; and
          (ii) to the extent that the Secretary determines 
        practicable, the funds provided by the Government under 
        a transaction authorized by paragraph (1) do not exceed 
        the total amount provided by other parties to the 
        transaction.
    (B) A transaction authorized by paragraph (1) may be used 
for a research project when the use of a standard contract, 
grant, or cooperative agreement for such project is not 
feasible or appropriate.
    (3)(A) The Secretary shall not disclose any trade secret or 
commercial or financial information submitted by a non-federal 
entity under paragraph (1) that is privileged and confidential.
    (B) The Secretary shall not disclose, for five years after 
the date the information is received, any other information 
submitted by a non-federal entity under paragraph (1), 
including any proposal, proposal abstract, document supporting 
a proposal, business plan, or technical information that is 
privileged and confidential.
    (C) The Secretary may protect from disclosure, for up to 
five years, any information developed pursuant to a transaction 
under paragraph (1) that would be protected from disclosure 
under section 552(b)(4) of title 5, United States Code, if 
obtained from a person other than a federal agency.
                                ------                                


         THE STEVENSON-WYDLER TECHNOLOGY INNOVATION ACT OF 1980


                     Public Law 96-480, as Amended


   AN ACT To promote United States technological innovation for the 
achievement of national economic, environmental, and social goals, and 
for other purposes

           *       *       *       *       *       *       *


SEC. 12. COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENTS.

    (a) General Authority.--Each Federal agency may permit the 
director of any of its Government-operated Federal 
laboratories, and, to the extent provided in an agency-approved 
[joint work statement,] joint work statement or, if permitted 
by the agency, in an agency-approved annualstrategic plan, the 
director of any of its Government-owned, contractor-operated 
laboratories--
          (1) to enter into cooperative research and 
        development agreements on behalf of such agency 
        (subject to subsection (c) of this section) with other 
        Federal agencies; units of State or local government; 
        industrial organizations (including corporations, 
        partnerships, and limited partnerships, and industrial 
        development organizations); public and private 
        foundations; nonprofit organizations (including 
        universities); or other persons (including licensees of 
        inventions owned by the Federal agency); and
          (2) to negotiate licensing agreements under section 
        207 of title 35, United States Code, or under other 
        authorities (in the case of a Government-owned, 
        contractor-operated laboratory, subject to subsection 
        (c) of this section) for inventions made or other 
        intellectual property developed at the laboratory and 
        other inventions or other intellectual property that 
        may be voluntarily assigned to the Government.
    (b) Enumerated Authority.--
          (1) Under an agreement entered into pursuant to 
        subsection (a)(1), the laboratory may grant, or agree 
        to grant in advance, to a collaborating party patent 
        licenses or assignments, or options thereto, in any 
        invention made in whole or in part by a laboratory 
        employee under the agreement, for reasonable 
        compensation when appropriate. The laboratory shall 
        ensure, through such agreement, that the collaborating 
        party has the option to choose an exclusive license for 
        a pre-negotiated field of use for any such invention 
        under the agreement or, if there is more than one 
        collaborating party, that the collaborating parties are 
        offered the option to hold licensing rights that 
        collectively encompass the rights that would be held 
        under such an exclusive license by one party. In 
        consideration for the Government's contribution under 
        the agreement, grants under this paragraph shall be 
        subject to the following explicit conditions:
                  (A) A nonexclusive, nontransferable, 
                irrevocable, paid-up license from the 
                collaborating party to the laboratory to 
                practice the invention or have the invention 
                practiced throughout the world by or on behalf 
                of the Government. In the exercise of such 
                license, the Government shall not publicly 
                disclose trade secrets or commercial or 
                financial information that is privileged or 
                confidential within the meaning of section 
                552(b)(4) of title 5, United States Code, or 
                which would be considered as such if it had 
                been obtained from a non-Federal party.
                  (B) If a laboratory assigns title or grants 
                an exclusive license to such an invention, the 
                Government shall retain the right--
                          (i) to require the collaborating 
                        party to grant to a responsible 
                        applicant a nonexclusive, partially 
                        exclusive, or exclusive license to use 
                        the invention in the applicant's 
                        licensed field of use, on terms that 
                        are reasonable under the circumstances; 
                        or
                          (ii) if the collaborating party fails 
                        to grant such a license, to grant the 
                        license itself.
                  (C) The government may exercise its right 
                retained under subparagraph (B) only in 
                exceptional circumstances and only if the 
                Government determines that--
                          (i) the action is necessary to meet 
                        health or safety needs that are not 
                        reasonably satisfied by the 
                        collaborating party;
                          (ii) the action is necessary to meet 
                        requirements for public use specified 
                        by Federal regulations, and such 
                        requirements are not reasonably 
                        satisfied by the collaborating party; 
                        or
                          (iii) the collaborating party has 
                        failed to comply with an agreement 
                        containing provisions described in 
                        subsection (c)(4)(B). This 
                        determination is subject to 
                        administrative appeal and judicial 
                        review under section 203(2) of title 
                        35, United States Code.
          (2) Under agreements entered into pursuant to 
        subsection (a)(1), the laboratory shall ensure that a 
        collaborating party may retain title to any invention 
        made solely by its employee in exchange for normally 
        granting the Government a nonexclusive, 
        nontransferable, irrevocable, paid-up license to 
        practice the invention or have the invention practiced 
        throughout the world by or on behalf of the Government 
        for research or other Government purposes.
          (3) Under an agreement entered into pursuant to 
        subsection (a)(1), a laboratory may--
                  (A) accept, retain, and use funds, personnel, 
                services, and property from a collaborating 
                party and provide personnel, services, and 
                property to a collaborating party;
                  (B) use funds received from a collaborating 
                party in accordance with subparagraph (A) to 
                hire personnel to carry out the agreement who 
                will not be subject to full-time equivalent 
                restrictions of the agency;
                  (C) to the extent consistent with any 
                applicable agency requirements or standards of 
                conduct, permit an employee or former employee 
                of the laboratory to participate in an effort 
                to commercialize an invention made by the 
                employee or former employee while in the 
                employment or service of the Government; and
                  (D) waive, subject to reservation by the 
                Government of a nonexclusive, irrevocable, 
                paid-up license to practice the invention or 
                have the invention practiced throughout the 
                world by or on behalf of the Government, in 
                advance, in whole or in part, any right of 
                ownership which the Federal Government may have 
                to any subject invention made under the 
                agreement by a collaborating party or employee 
                of acollaborating party.
          (4) A collaborating party in an exclusive license in 
        any invention made under an agreement entered into 
        pursuant to subsection (a)(1) shall have the right of 
        enforcement under chapter 29 of title 35, United States 
        Code.
          (5) A government-owned, contractor-operated 
        laboratory that enters into a cooperative research and 
        development agreement pursuant to subsection (a)(1) may 
        use or obligate royalties or other income accruing to 
        the laboratory under such agreement with respect to any 
        invention only--
                  (A) for payments to inventors;
                  (B) for purposes described in clauses (i), 
                (ii), (iii), and (iv) of section 14(a)(1)(B) 
                [15 USCS 3710c(a)(1)(B)(i), (ii), (iii), and 
                (iv)]; and
                  (C) for scientific research and development 
                consistent with the research and development 
                missions and objectives of the laboratory.
          (6)(A) In the case of a Department of Energy 
        laboratory, a designated official of the Department of 
        Energy may waive any license retained by the Government 
        under paragraph (1)(A), (2), or (3)(D), in whole or in 
        part and according to negotiated terms and conditions, 
        if the designated official finds that the retention of 
        the license by the Department of Energy would 
        substantially inhibit the commercialization of an 
        invention that would otherwise serve an important 
        federal mission.
          (B) The authority to grant a waiver under 
        subparagraph (A) shall expire on the date that is 5 
        years after the date of the enactment of the National 
        Defense Authorization Act for Fiscal Year 2001.
          (C) The expiration under subparagraph (B) of 
        authority to grant a waiver under subparagraph (A) 
        shall not effect any waiver granted under subparagraph 
        (A) before the expiration of such authority.
    (c) Contract Considerations.--
          (1) A Federal agency may issue regulations on 
        suitable procedures for implementing the provisions of 
        this section; however, implementation of this section 
        shall not be delayed until issuance of such 
        regulations.
          (2) The agency in permitting a Federal laboratory to 
        enter into agreements under this section shall be 
        guided by the purposes of this Act.
          (3)(A) Any agency using the authority given it under 
        subsection (a) shall review standards of conduct for 
        its employees for resolving potential conflicts of 
        interest to make sure they adequately establish 
        guidelines for situations likely to arise through the 
        use of this authority, including but not limited to 
        cases where present or former employees or their 
        partners negotiate licenses or assignments of titles to 
        inventions or negotiate cooperative research and 
        development agreements with Federal agencies (including 
        the agency with which the employee involved is or was 
        formerly employed).
          (B) If, in implementing subparagraph (A) an agency is 
        unable to resolve potential conflicts of interest 
        within its current statutory framework, it shall 
        propose necessary statutory changes to be forwarded to 
        its authorizing committees in Congress.
          (4) The laboratory director in deciding what 
        cooperative research and development agreements to 
        enter into shall--
                  (A) give special consideration to small 
                business firms, and consortia involving small 
                business firms; and
                  (B) give preference to business units located 
                in the United States which agree that products 
                embodying inventions made under the cooperative 
                research and development agreement or produced 
                through the use of any industrial organization 
                or other person subject to the control of a 
                foreign company or government, as appropriate, 
                take into consideration whether or not such 
                foreign government permits United States 
                agencies, organizations, or other persons to 
                enter into cooperative research and development 
                agreements and licensing agreements.
          (5)(A) If the head of the agency or his designee has 
        an opportunity to disapprove or require the 
        modification of any such agreement presented by the 
        director of a Government-operated laboratory, the 
        agreement shall provide a 30-day period within which 
        such action must be taken beginning on the date the 
        agreement is presented to him or her by the head of the 
        laboratory concerned.
          (B) In any case in which the head of an agency or his 
        designee disapproves or requires the modification of an 
        agreement presented by the director of a Government-
        operated laboratory under this section, the head of the 
        agency of such designee shall transmit a written 
        explanation of such disapproval or modification to the 
        head of the laboratory concerned.
          [(C)(i) Except as provided in subparagraph (D), any 
        agency which has contracted with a non-Federal entity 
        to operate a laboratory shall review and approve, 
        request specific modifications to, or disapprove a 
        joint work statement that is submitted by the director 
        of such laboratory within 90 days after such 
        submission. In any case where an agency has requested 
        specific modifications to a joint work statement, the 
        agency shall approve or disapprove any resubmission of 
        such joint work statement within 30 days after such 
        resubmission, or 90 days after the original submission, 
        whichever occurs later. No agreement may be entered 
        into by a Government-owned, contractor-operated 
        laboratory under this section before both approval of 
        the agreement under clause (iv) and approval under this 
        clause of a joint work statement.
          [(ii) In any case in which an agency which has 
        contracted with a non-Federal entity to operatea 
laboratory disapproves or requests the modification of a joint work 
statement submitted under this section, the agency shall promptly 
transmit a written explanation of such disapproval or modification to 
the director of the laboratory concerned.
          [(iii) Any agency which has contracted with a non-
        Federal entity to operate a laboratory or laboratories 
        shall develop and provide to such laboratory or 
        laboratories one or more model cooperative research and 
        development agreements, for the purposes of 
        standardizing practices and procedures, resolving 
        common legal issues, and enabling review of cooperative 
        research and development agreements to be carried out 
        in a routine and prompt manner.
          [(iv) An agency which has contracted with a non-
        Federal entity to operate a laboratory shall review 
        each agreement under this section. Within 30 days after 
        the presentation, by the director of the laboratory, of 
        such agreement, the agency shall, on the basis of such 
        review, approve or request specific modification to 
        such agreement. Such agreement shall not take effect 
        before approval under this clause.
          [(v) If an agency fails to complete a review under 
        clause (iv) within the 30-day period specified therein, 
        the agency shall submit to the Congress, within 10 days 
        after the end of that 30-day period, a report on the 
        reasons for such failure. The agency shall, at the end 
        of each successive 30-day period thereafter during 
        which such failure continues, submit to the Congress 
        another report on the reasons for the continuing 
        failure. Nothing in this clause relieves the agency of 
        the requirement to complete a review under clause (iv).
          [(vi) In any case in which an agency which has 
        contracted with a non-Federal entity to operate a 
        laboratory requests the modification of an agreement 
        presented under this section, the agency shall promptly 
        transmit a written explanation of such modification to 
        the director of the laboratory concerned.]
          [(D)] (C) (i) Any Non-Federal entity that operates a 
        laboratory pursuant to a contract with a Federal agency 
        shall submit to the agency any cooperative research and 
        development agreement that the entity proposes to enter 
        into [with a small business firm] and the joint work 
        statement if required with respect to that agreement.
          (ii) A Federal agency that receives a proposed 
        agreement and joint work statement under clause (i) 
        shall review and approve, request specific 
        modifications to, or disapprove the proposed agreement 
        and joint work statement within 30 days after such 
        submission. No agreement may be entered into by a 
        Government-owned, contractor-operated laboratory under 
        this section before both approval of the agreement and 
        approval of a joint work statement under this clause.
          (iii) In any case in which an agency which has 
        contracted with an entity referred to in clause (i) 
        disapproves or requests the modification of a 
        cooperative research and development agreement or joint 
        work statement submitted under that clause, the agency 
        shall transmit a written explanation of such 
        disapproval or modification to the head of the 
        laboratory concerned.
          (iv) Any agency that has contracted with a non-
        Federal entity to operate a laboratory may develop and 
        provide to such laboratory one or more model 
        cooperative research and development agreements, for 
        the purposes of standardizing practices and procedures, 
        resolving common legal issues, and enabling review of 
        cooperative research and development agreements to be 
        carried out in a routine and prompt manner.
          (v) A federal agency may waive the requirements of 
        clause (i) or (ii) under such circumstances as the 
        agency considers appropriate. However, the agency may 
        not take longer than 30 days to review and approve, 
        request modifications to, or disapprove any proposed 
        agreement or joint work statement that it elects to 
        receive.

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