Congressman Randy Hultgren (R–IL) and seven original cosponsors introduced the Department of Energy Laboratory Modernization and Technology Transfer Act of 2014 on July 17. The bill would create a seamless pathway for private innovators to transition the basic research at America’s national labs to commercial success stories.
Representative Hultgren remarked in his press release:
It is essential we update Cold War–era policies, acknowledge the rapid pace of technological change, and improve the labs’ capacity to partner with private enterprise and convert their cutting-edge research into marketplace innovation.
A current challenge to transferring research from government labs to the market is cultivating a better relationship between the labs and industry. Currently, industry can utilize technologies at labs now and pay for that use with their own money, but that partnership is not as strong as it could be. Reducing the bureaucracy will help identify new commercialization opportunities, or enhance or develop a product would drive innovation and economic growth.
One of the mechanisms to enhance that relationship while protecting the taxpayer is to introduce a market-based pricing mechanism that would add a competitive element to lab utilization and also help determine the actual values of lab assets. Flexible pricing could lead to the divestiture of resources if such a high demand demonstrates that a profit could be made, or it could lead to reducing the lab’s capabilities if there is no longer a need from the federal government or outside parties.
The legislation does not take away the essence of basic research, nor does it aim to transform America’s labs into commercial entities. Instead, the legislation would allow the Department of Energy (DOE) to conduct the basic research to meet government needs that the private sector would not undertake and allow the private sector, using private funds, to tap into that research and commercialize it when there is an attractive opportunity to do so. The reforms would also allow workers at the federal labs, when appropriate and without violating conflict of interest rules, to push research into the marketplace if they see an opportunity.
The legislation would help create that path of pushing and pulling innovation while not denigrating the value of basic research and not having Washington push the technology all the way to market. Using taxpayers’ money and DOE infrastructure to develop politically preferred technologies is an inappropriate and ineffective role for the federal government.
When the government attempts to drive technological commercialization, it circumvents the competitive process that properly assigns risk and reward in an open market. By pulling capital out of the private sector to support government-supported projects, this intervention also creates a dependency on the taxpayer that can hinder innovation over the long term.
Basic research that has promising commercial application will attract private investment. Some of those investments will succeed, and others will fail. Other research will not ultimately be commercialized, and using taxpayer dollars to force commercialization is wasteful and disregards how markets and private investment efficiently determine how to allocate investments.
The Hultgren bill would remove bureaucratic obstacles, devolve decision making, and introduce market elements into the lab system. Doing so is a far more effective and appropriate strategy for driving innovation and job creation at the labs.