Strategic Planning Document -
Civilian Industrial Technology
Research and Development


A. Goals and Opportunities

For decades following World War II, U.S. Government science and technology policy was focused on support for basic science and government-mission R&D -- predominantly defense, followed by health, aerospace, and energy. New discoveries in science laboratories were assumed to move more or less automatically through a pipeline of applied research, development, design, and commercialization. R&D and procurements for defense and other government missions were assumed to spin off into commercial products and services.

That approach worked well at a time when our Nation's top priority was winning the Cold War, and when U.S. companies dominated world markets. It does not answer the Nation's needs as well today. The biggest challenges for our country now are to promote national economic security, to regain our position as world leader in important industries, to create good new jobs, and to raise living standards for all Americans.

Of course, Federal policy must continue to fully support basic scientific research -- the foundation for all technological advance -- and the technology required for vital agency missions, including national security. But equally important in today's world is a government technology policy that aims at promoting long-term economic growth while protecting the environment, building a stronger, more competitive private sector, and creating productive jobs.

Technology is a powerful driver of economic growth. Many economic studies over the past four decades credit technology, or "the advance of knowledge," with most of U.S. productivity growth in the postwar period and at least one-quarter -- and perhaps as much of one-half -- of overall economic growth [1].

As we near the turn of the 20th century, technology is even more dominant in the economy. It is not just the "high-technology" industries themselves, such as telecommunications and semiconductors, that depend on rapid cycles of innovation. It is also their customer industries, including very traditional ones. For example, the apparel and textile industries in the United States depend to an increasing degree on rapid, accurate communication all the way from fiber producers to retailers. Bar coding at the point of sale and electronic ordering back through the supply chain allow quick response to customers' demands. For another example, the automobile industry is one of the largest customers for semiconductors; as much as 20 percent of the value of today's automobile is in its electronic systems.

While the private sector is the major actor in putting technology to work for economic growth, the government has several clear responsibilities:

Another element can also be critical -- prudent government investment, in partnership with industry, in the advance of civilian technology. These partnerships are especially important in areas where the potential rewards to society are large, but the costs of technology development are high, risks are great, and payoffs are distant. In particular, adequate private investment is unlikely in cases where no single firm can expect to reap returns that justify the risk, because the rewards are widely shared with competitors, firms in non-competing or follow-on markets, and the general public. Economic studies over several decades have found that the average private rate of return on R&D investments, to the individual company making the investment, is 20 to 30 percent. The total social rate of return -- to the investing firm, competitors, other companies, and customers -- has averaged about 50 percent [2].

For many years, government has been a valued partner in developing technologies that drive growth in some civilian sectors -- e.g., agriculture, starting with the Morrill Act in 1872, and civilian aircraft, beginning with the creation of the National Advisory Committee on Aeronautics in 1915. The laboratories of the National Institute of Standards and Technology (NIST), working on more generic infrastructural technologies in standards, metrology, and manufacturing and materials, are over 90 years old and continue to enjoy widespread support.

More recently, government R&D has gained wider recognition as a contributor of valuable technology to numerous industrial sectors. For example, the Stevenson-Wydler and Bayh-Dole Acts of 1980 inaugurated a decade of legislation encouraging technology transfer from Federal laboratories to industry. NIST programs in manufacturing extension for small and medium-sized firms, and cost-shared R&D with a variety of industrial partners were created in 1988, and have since grown from pilot-size to full-scale programs.

The Committee on Civilian Industrial Technology (CCIT) of the National Science and Technology Council (NSTC) is responsible for coordination and oversight of government-wide R&D and allied technology programs that can help to promote industrial competitiveness and economic growth. CCIT is chaired by the Under Secretary of Commerce for Technology with a co-chair from the White House Office of Science and Technology Policy and a vice-chair from the Department of Energy; the Departments of Defense, Interior, and Transportation, and the Environmental Protection Agency, the National Aeronautics and Space Administration, and the National Science Foundation are also represented on CCIT. CCIT and its subcommittees work with industry to set priorities for government R&D that support economic growth and to align government R&D appropriately with these priorities, while also meeting important public needs such as environmental protection.

The major task for CCIT is to see that the government's R&D resources relevant to industrial competitiveness are used efficiently and effectively. In the face of a large Federal debt, fiscal constraints are tight, and the R&D budget is virtually level. R&D investments must be designed to get the best possible return on each dollar spent.

B. CCIT Principles

Several principles guide CCIT strategy:

Close coordination with private industry is central to CCIT activities. Industry brings to the table crucial market experience in selecting areas for technology investment. For its part, government can provide a long-term outlook, support for infrastructure that benefits industry broadly, and reduction of risk in investments with potentially high social payoffs but questionable returns to individual companies. In addition, government can act as convener in bringing together efforts that individual companies cannot accomplish on their own.

Exchanges with other interested parties outside the Federal Government also include labor organizations, universities and community colleges, non-profit research organizations, State and local governmental bodies, and regional economic development agencies.

C. Range of Activities in CCIT

While all the programs coordinated by CCIT have the central purpose of promoting economic growth, they also include public benefits that are external to the market, and they differ in emphasis. Some of the programs focus on enabling technologies that apply across a broad range of industries. For example, one focus area in infrastructural technologies is R&D for rapid prototyping, both virtual and real. Another is technologies that enable virtual manufacturing, including the standards and interfaces needed for electronic interchange of data among distant industrial partners. Enabling programs also include manufacturing extension centers and education and training for manufacturing engineers and technicians.

Some CCIT activities are focused on specific industrial sectors in which industry leaders see a clear need for cooperation with government R&D to solve technology problems. An example is the Partnership for a New Generation of Vehicles (PNGV). The goal is to develop a prototype family-size car by 2003 that gets three times the fuel efficiency of today's auto, with no sacrifice in comfort, convenience, cost, or safety. The technology challenge is enormous, but the potential payoffs are also huge: large, growing markets for U.S.-made cars in the twenty-first century, the creation and maintenance of good jobs, improved urban air quality and a lesser burden of greenhouse gases on the world environment, and reduced dependence on foreign oil.

CCIT initiatives are achieved through several different mechanisms -- often by adjustment or realignment of existing agency programs directed toward agency missions (e.g., energy science and technology, space and aeronautics). Several industry-led, cost-shared cooperative public-private R&D programs also make important contributions to the priorities established by CCIT, as well as carrying out the general goals of the Committee and Administration priorities. These programs include NIST's Advanced Technology Program (ATP), designed to promote the Nation's economic success; and, in the context of an integrated military-civilian industrial base that can meet military needs for leading-edge technologies at affordable cost, the Technology Reinvestment Project (TRP). These two programs are industry-led, cost-shared, high priority initiatives. In addition, Cooperative Research and Development Agreements (CRADAs) and other kinds of cooperative arrangements between the private sector and Federal labs contribute to CCIT and Administration goals.

ATP, for example, concentrates much of its effort in well-defined technology focus areas, as proposed by industry. Then, companies or consortia submit proposals for individual projects in the focus areas, with awards based on the technical and business merit of the project, as judged by independent experts. Several of the focus areas chosen through the ATP process have the potential for valuable contributions to CCIT initiatives. For example, affordable manufacturing of strong, lightweight composite structural materials, which is a linchpin for success of the PNGV clean car initiative, is an ATP focus area. TRP projects for advanced automotive technologies with major military as well as civilian uses are also of potential value to PNGV. So are several CRADAs between private companies, consortia, and the Department of Energy laboratories.