Overview: Federal Policy in Support of a National Innovation System

Technological innovation and the science that enables innovation have been America's competitive edge for improving health, prosperity, and quality of life and for providing national security. Half of the nation's economic productivity in the last half century is attributable to innovation. The economic benefits of technological advances have contributed to the competitiveness not only of the traditional "technology sector", including manufacturing and processing industries, but also has driven the creation of a vibrant and globally competitive service industry. The knowledge-based society of the next century only increases the centrality of scientific and technological advances as our principal strengths.

A national innovation system has developed around America's ability to commercialize cutting edge science and technology advances for the benefit of our society. This system contains many elements, both formal and informal, that generally can be classified according to their ability to enable either the production or the application of new knowledge. The production elements of the system incorporate mechanisms for research and development (research performers, laboratories and equipment, institutions, policies, and funding sources) that facilitate innovation through scientific discovery. The application elements support deployment and diffusion of knowledge for use throughout the economy, through problem solving, creation of new products and services, and development of more efficient processes. A key and essential component of the entire system is strong and sustained support for education, training, and workforce development. Federal government has important roles in all of these areas, but must be viewed only as one partner in a national effort which includes the private sector, universities and other non-profit institutions, and state and local governments.

Over the past decade, the pace of technical innovation has increased dramatically, due in no small part to past Federal efforts to sustain and nurture the science and technology enterprise. Yet some elements of the national innovation system have not been able to adapt as rapidly as others to accommodate these changes. For example:

• Changing business models in the high tech industry are increasingly leading to an emphasis on research geared towards shorter-term objectives such as applied product development. Yet the regulatory environment may inhibit the formation of consortia and partnerships that could share knowledge and risks for supporting longer-term research.
• Technical advances sometimes outpace the ability of government to facilitate development of standards and critical interoperable interfaces needed to both increase use of technology and encourage continued private investment in technical innovation. For example, a proliferation of non-interoperable communications standards within the public safety sector hinders the ability of law enforcement officials to cooperate with their counterparts in other jurisdictions or at different levels (local, state, Federal) of government.
• The process for introducing new technologies and concepts into the marketplace can often be long and costly due to lack of harmonization in local, state, and Federal laws and policies. Companies attempting to commercialize new ideas must address a plethora of criteria including procurement practices, environmental regulations, product liability, intellectual property and data and patent rights. There are no mechanisms for coordinated or harmonized testing and/or certification to ensure that new technologies and concepts meet the technical and non-technical standards demanded by each level of government.
• Many technological innovations developed in Federal research facilities are documented in agency databases. However, only a small percentage of these innovations are researched by or transferred to the private sector for development and commercialization.

Issue Paper Solicitation

The Committee on Technology (CT) of the National Science and Technology Council (NSTC) is seeking to develop and implement an action plan for Federal policy and regulatory reform that will enhance innovation. While numerous reviews and articles have appeared in recent years about the innovation process and the Federal government's role, this will be the first attempt to develop a specific national reform program for Federal support of innovation and establish priorities for Federal action.

As a first step, the CT is soliciting via this announcement input from industry, academia, non-profits, and state, local and Federal government on opportunities for Federal policy and regulatory reforms that will enhance our national innovation system. The CT is inviting submissions in the form of "issues papers" that identify top priorities and outline ideas for reforming Federal support of innovation in four areas:

• Federal policy and/or regulation that have impacts on the ability of capital markets to serve as sufficient drivers of innovation, including both those which address market failures and those which hinder or limit market incentives for innovation
• Federal policy and/or regulation that fosters basic and applied research by any participant in the national innovation system
• Federal policy and/or regulation that fosters opportunities arising from crossing technology streams to stimulate innovative products and services
• Federal policy and/or regulation that have impacts on state, local, and international innovation policy, including opportunities to promote greater harmonization and coordination

Potential areas that might be addressed in an issues paper include, but are not limited to:

• Nature of the peer review process
• Intellectual property (IP) ownership and protection at various stages in the innovation process
• Federal funding mechanisms for graduate research
• Performance and evaluation criteria for Federally-funded research
• Availability and accessibility of research infrastructure
• Risk sharing - Federal policies and regulations affecting partnerships, collaborations, consortia
• Current Federal partnership programs
• Tax and general regulatory incentives and disincentives
• Accounting principles for R&D in the private and public sectors
• Anti-trust regulations
• Mechanisms for standards development
• Multiple levels of policy: international, national, state, local
• Ability of Federal policy to address the globalization of innovation
• Mechanisms for addressing complex (multi-discipline and/or cross-sectoral) innovations
• Organization of policy/regulatory development and enforcement
• Adaptability of policy/regulations to business models in specific industry sectors

Deadline for issues paper submissions is September 17, 1999. We encourage you to submit your papers electronically (in Microsoft Word or Word Perfect formats) to information@ostp.eop.gov  Please include PRIORITIES FOR FEDERAL INNOVATION REFORM in your subject line. The Title Page of the issues paper should also be clearly marked PRIORITIES FOR FEDERAL INNOVATION REFORM and include the following information:

• Submitting Organization
• Contributing Organizations
• Contact Name, Address, telephone, fax number and e-mail address

National Science and Technology Council

Committee on Technology

Old Executive Office Building, Room 423

Washington, DC 20502

For further information, please send your inquiries to the Attention of the NSTC Committee on Technology at information@ostp.eop.gov  or fax to 202-456-6023.

Cover Letter from Dr. Lane
 

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Office of Science and Technology Policy
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