10 Steps for Creating Jobs, Improving Technology Commercialization and Building Communities of Innovation
In the Power of Place, the Association of University Research Parks demonstrates how geography and connected communities play a large role in innovation. In it, we called on Congress to view research universities, research parks, technology incubators, and federal lab incubators, and federal lab campuses as innovation zones.
In the Power of Innovation, we offer ten steps – from policy changes to selected investments – that the federal government can take quickly to leverage existing federal assets and, without developing new bureaucracies, to create jobs, technology companies, and Communities of Innovation.
These steps, in brief, are:
1. Support research park infrastructure and the development of Communities of Innovation
The U.S. Senate and House of Representatives are considering legislation that would provide planning grants and loan guarantees to build research parks and technology incubators, aligned with the President’s regional cluster strategy. National Institute of Science and Technology (NIST) senior economic Dr. Greg Tassey has identified research parks as a key element in the U.S. manufacturing strategy. The primary sponsor of this legislation, Senator Mark Pryor (D-Ark.), remarks, “Science parks provide a launch pad for economic activity in a community. They have a strong record of fostering talent, high tech innovation and job growth. Providing seed funding to create or expand these parks is necessary investment for our economy as well as our global competitiveness.”
2. Improve university technology transfer by reforming the Office of Management and Budget federal grant and contract funding model to encourage commercialization efforts by principal investigators and support “cash for commercialization.”
Federal grant and contract policies to provide no funding or administrative flexibility by principal investigators for technology commercialization or initial proof of concept funding to bridge the first “valley of death” in making technologies attractive for follow-on investment. We urge the reform of restrictions on the use of federal contract and grant funds by
- Giving principles investigators more authority to direct charge initial commercialization efforts on research-and-development contracts and grants;
- Increasing by 1 percent overhead negotiated rates with federal agencies for cost reimbursement for patent expenses and for seeding commercialization funds at universities for technologies they elect to take title; and
- Removing costs of university technology-transfer offices from the overall 26 percent federal administrative cap.
3. Support proof-of-concept funding.
The national Science Foundation FY 2011 budget, based on concepts developed by Krisztina Holly, has a pilot program to develop-of-concept funding to support follow-on efforts to commercialize university owned technology. We urge that this program be fully supported.
4. Improve technology commercialization from federal laboratories by creating a congressionally chartered technology intermediary organization.
To improve the rate of technology commercialization coming out of $25 billion in internal research and development spent at federal laboratories, we recommend the creation of a congressionally chartered commercialization intermediary organization, based on best practices of technology commercialization intermediary models found at research universities, state agencies, and individual federal laboratories. This can be done through expanding the funding, authority, venture staffing and venture acceleration capacity of the Federal Lab Consortium. According to Wendy Schacht of the Congressional Research Service, the FLC is currently funded by set-aside of only 0.008 percent of each agency’s R&D budget used for labs. Its mission, funding, and staffing could be expanded to increase the administrative flexibility and tools available to federal laboratory technology-transfer offices to align their decisions more closely with those of the private sector. The taxpayers are already investing heavily in federal research in federal laboratories. We need to make sure that those laboratories have the financial, legal, administrative and staffing tools such as embedded professionals from the venture community, to transfer technology to the private sector and create jobs.
5. Connect federal researchers with private companies.
The Obama Administration has called on federal researchers to be more involved with private sector companies. No comprehensive agency-wide program exists, however, to allow federal research assignments with private-sector companies in a transparent way. We comment that a Presidential Executive Order on federal lab technology commercialization and private sector partnerships be issued, based on the NASA Ambassadors Program to allow federal research talent to support private companies. We further recommend that the Department of Energy’s Entrepreneur in Residence Program be expanded to all federal agencies.
6. Create more private sector involvement near federal lab and regional research clusters.
We recommend the expansion of Enhanced Use Lease (EUL) authority, which allows leasing of federal land and equipment, to all federal agencies, not just Department of Defense agencies. We recommend as well that an Executive Order be issued to encourage federal leasing of research assets near existing innovation assets, such as universities, research parks, and technology incubators, and technology incubators to create innovation clusters.
7. Expand the corporate R&D tax credit.
Information Technology and Innovation Foundation (ITIF) President Robert D. Atkinson has demonstrated that expanding the Alternative Simplified Tax Credit (ASC) for research and development from 14 to 20 percent would not only spur job creation at a time when this is desperately needed but would also boost the country’s long term innovation capacity. In particular, his report models how expanding the ASC from 14 to 20 percent would create a number of critical economic benefits, including:
- 162,000 jobs in the near term
- A $90 billion increase in GDP as the nation struggles through economic recovery
- 3,850 new American patents as nations compete for dominance in tomorrow’s technologies
- $17 billion in new tax revenues as congress and Administration face daunting budget deficits
8. Reform export controls.
In his recent State of the Union Address, President Obama called for reform in the federal government’s export-control system. Reforming export controls and removing troublesome clauses from research projects not affecting the fundamental security of our country will encourage more partnerships between academia and industry. Uncertainty and the too strict application of the current export-control system have proved barriers in developing research relationships.
9. Keep corporate R&D in the United States by eliminating the link to university intellectual property licensing in “private use” restrictions in university facilities.
Congress should remove the federal IRS tests related to intellectual-property licensing by universities to corporate research facilities funded by tax exempt bonds. Negotiations between corporations and universities on intellectual property licensing should be a business decision, and not one linked to the tax status of the facility; otherwise, corporations will continue to ship R&D to countries whose governments, in many cases, provide financial support for the facilities where the corporate R&D is conducted and do not intervene in the negotiations on intellectual property licensing.
10. Encourage entrepreneurship as a national goal, and include entrepreneurship in STEM initiatives.
Job creation in the United States will largely depend on start-up companies and individual entrepreneurs. We need to embed the concept of entrepreneurship in all of our STEM (Science, Technology, Engineering, and Math) activities and policies. The new paradigm should be ESTEEM (Encouraging Science, Technology, Engineering, Entrepreneurship and Math).
To view the full report, please visit http://www.aurp.net/more/AURPPowerofPlace2.pdf
