Concerning Federally Sponsored Inducement Prizes in Engineering and Science (1999)

Workshop to Assess the Potential for Promoting Technological Advance through Government-Sponsored Prizes and Contests

Workshop to Assess the Potential for Promoting Technological Advance through Government-Sponsored Prizes and Contests

April 30, 1999

National Academies Building

2100 C Street, N.W.

Washington, D.C. 20418

Erich Bloch, Chair*

President

The Washington Advisory Group, LLC

Bruce Alberts

President

National Academy of Sciences

Alan H. Anderson

Consultant

Claude Barfield

Research Scholar

American Enterprise Institute for Public Policy Research

Joseph Bordogna

Acting Deputy Director

National Science Foundation

David Brown

Executive Director

U.S. FIRST

Rita R. Colwell

Director

National Science Foundation

Marc D. Cummings

Assistant for Policy Development

Office of the Under Secretary for Technology

U.S. Department of Commerce

Peter H. Diamandis

Chairman and President

X Prize Foundation

Richard L. Dunn

General Counsel

Defense Advanced Research Projects Agency

Robert W. Galvin

Chairman of the Executive Committee

Motorola, Inc.

Lori Garver

Associate Administrator for Policy and Plans

National Aeronautics and Space Administration

Penelope Gibbs

Administrative Assistant, Program Office

National Academy of Engineering

Newt Gingrich

Senior Fellow

American Enterprise Institute

Greg Henry

Program Examiner, National Security Division

Office of Management and Budget

Harry S. Hertz

Director, Baldrige National Quality Program

National Institute of Standards and Technology

David F. Heyman

Special Assistant

Office of the Secretary of Energy

U.S. Department of Energy

Christopher T. Hill

Vice Provost for Research and Professor of Public Policy and Technology

George Mason University

Neen Hunt

Executive Director

The Lasker Foundation

Steve Isakowitz

Branch Chief, Science and Space Programs

Office of Management and Budget

Anita K. Jones

University Professor

Department of Computer Science

University of Virginia

Thomas A. Kalil

Senior Director

National Economic Council

Ronald L. Kerber

Executive Vice President and Chief Technical Officer

Whirlpool Corporation

Genevieve J. Knezo

Specialist, Science and Technology Policy

Congressional Research Service

Library of Congress

Sylvia K. Kraemer

Director of Policy Development

National Aeronautics and Space Administration

John S. Langford

President

Aurora Flight Sciences Corp.

Stephen A. Merrill

Executive Director

Board on Science, Technology and Economic Policy

National Research Council

William G. Morin

Vice President

R. Wayne Sayer and Associates

David C. Mowery*

Haas School of Business

University of California at Berkeley

Proctor P. Reid

Associate Director, Program Office

National Academy of Engineering

Del Ritchhart

Vice President, Domestic Operations

Lockheed Martin Corporation

Daniel Rodriguez

Senior Evaluator

U.S. General Accounting Office

Nam P. Suh

Professor

Massachusetts Institute of Technology

James Turner

Senior Democratic Staff Member for Technology and Counsel

House Committee on Science

U.S. House of Representatives

Harold Varmus

Director

National Institutes of Health

Robert S. Walker*

President

The Wexler Group

R. Thomas Weimer

Director, Program Office

National Academy of Engineering

Steve Wesbrook

Gingrich Group

Robert M. White

Principal

The Washington Advisory Group, LLC

Patrick H. Windham

Windham Consulting

Wm. A. Wulf

President

National Academy of Engineering

Workshop to Assess the Potential for Promoting Technological Advance through Government-Sponsored Prizes And Contests

In response to a request from the President's National Economic Council, the National Academy of Engineering is organizing a day-and-a-half workshop on April 29–30, 1999 to assess the potential of government-sponsored prizes in stimulating technological innovations of significant societal impact. Erich Bloch, President of the Washington Advisory Group, chairs the NAE workshop steering committee. The project will result in a summary report from the NAE steering committee to the NEC, the workshop sponsor (the National Science Foundation), other interested federal agencies, and members of Congress. NSF has provided a grant of $65,115 to the NAE to cover costs associated with the workshop.

Throughout recent history, governments, private foundations, companies, and individuals have sponsored contests and prizes designed to promote technological advance in particular fields for the public good. For example:

• In response to the loss of 4 warships and over 2,000 sailors and officers of the British Navy in a wreck off the Scilly Isles attributed to navigational error, the British Parliament passed the Longitude Act of 1714, which offered 20,000 pounds (the equivalent of millions of dollars today) to anyone who could solve the problem of determining longitude at sea. A British clockmaker named John Harrison rose to meet the challenge by developing the first stable nautical chronometer in 1737.

• Prizes played an important role in the development of the civil aviation industry in the early 20th century by rewarding advancements in speed, distance, safety, and endurance. New York hotel owner Raymond Orteig offered $25,000 as a prize for the first aviator to cross the Atlantic from New York to Paris, a prize won by Charles A. Lindbergh in 1927. Between 1926 and 1927, Daniel Guggenheim offered aviation-related cash awards and trophies worth approximately $100 million in today 's dollars.

• In 1992, the Super Efficient Refrigerator Program (SERP), a nonprofit corporation of 24 major public and private American utilities, pooled together $30 million to reward the manufacturer who could build the most efficient CFC-free refrigerator at the lowest cost. The winner, Whirlpool Corporation, received guaranteed rebates from the SERP pool to offset the incremental product cost. SERP would be the first of a series of “Golden Carrot” programs, whereby utilities have offered financial incentives to manufacturers to make major advances in energy efficiency and product performance.

• The Feynman Prize in Nanotechnology was established in 1993 to recognize researchers whose recent work has most advanced the development of molecular nanotechnology.

• The European IT Prize, organized by the European Commission and the European Council of Applied Sciences and Engineering, offers cash awards and widespread promotion to companies that have made outstanding contributions in generating and converting innovative ideas and R &D results in information technology into marketable products. The objectives of the annual IT Prize are to promote excellence in European Information Technology performance and to stimulate innovation and competitiveness in industry.

In essence, the logic or rationale for “innovation” prizes and contests such as these is quite similar to that of government R&D tax credits or other “extra-market” incentives to private investment in research and technological innovation. In general, technology prizes or contests seek to advance technological solutions to important societal challenges (safety, energy efficiency, public health, etc.) in areas where market forces alone have been unable to induce adequate private-sector investment in R&D and innovation. As is the case with tax credits, sponsored prizes would allow the government to set a goal without dictating how it should be achieved, thereby leveling the playing field for researchers or companies that want to experiment with unconventional approaches. However, by underscoring through publicity the linkages between science and technology and particular societal challenges, sponsored prizes would seem to offer greater opportunity for public outreach and education than many other government incentives to technological advance.

At present, innovation prizes of this type are not part of the U.S. federal government's portfolio of science and technology policy instruments. Current Federal Acquisition Regulation (FAR) appears to present legal impediments to the use of such prizes by federal agencies. More importantly, public understanding of the potential costs and benefits of innovation prizes as an instrument of federal technology policy is very limited, i.e., the knowledge base for making intelligent policy decisions in this area is underdeveloped. The objective of the planned workshop is to build a useful knowledge base regarding innovation prizes and their potential as federal policy tools for fostering technological innovation of benefit to society.

To assess the potential of sponsored prizes and contests as an additional tool of federal science and technology policy, the National Academy of Engineering will convene experts at a day and a half workshop dedicated to the subject on April 29–30, 1999. The meeting will involve roughly 35 invitees from industry, academia, and government with expertise regarding R&D, innovation, technology commercialization, the history of technology, and science and technology policy. A background paper on the role of sponsored technology prizes and contests in advancing technology is being prepared by the NAE for distribution to participants in advance of the workshop.

Topics to be explored by the workshop and the commissioned background paper will include

• Case studies of previous or existing prizes

• Issues associated with the design of contests and prizes, including partnerships with foundations and the private sector

• Current barriers to the use of prizes as an instrument of technology policy

• Possible technical areas and goals for prizes

In December 1998, NAE President Wm. A. Wulf appointed a five-member workshop steering committee,* chaired by Erich Bloch, President of the Washington Advisory Group. The committee met on January 12, 1999 to identify prospective workshop participants, structure the workshop agenda, review the draft background paper, and identify additional background materials for distribution to attendees in advance of the meeting. Following the workshop, the committee, with support from NAE staff, will prepare a brief report for delivery to the Chairman of the National Economic Council, the Director of the National Science Foundation, the heads of other interested agencies, and members of Congress.

The committee report will be reviewed in accordance with Academy procedures and will draw on the workshop discussion, but will not necessarily reflect any consensus reached during the workshop.

The Academy has developed interim policies and procedures to implement the Federal Advisory Committee Act, 5 U.S.C. § 1 et seq. (FACA), as amended by the Federal Advisory Committee Amendments Act of 1997, H.R. 2977, signed into law on December 17, 1997 (FACA Amendments). The FACA Amendments exempted the Academy from most of the requirements of FACA, but added a new Section 15 that includes certain requirements regarding public access and conflicts of interest that are applicable to agreements under which the Academy, using a committee, provides advice or recommendations to a Federal agency. In accordance with Section 15 of FACA, the Academy shall deliver along with its final report to the National Science Foundation a certification by the Responsible Staff Officer that the policies and procedures of the National Academy of Sciences that implement Section 15 of FACA have been complied with in connection with the performance of the contract/grant/cooperative agreement.

For further information regarding the project, please contact Proctor Reid, Associate Director, Program Office, National Academy of Engineering at tel. 202–334–2467, or fax 202–334–1595; or email <preid@nae.edu>.

Workshop to Assess the Potential for Promoting Technological Advance through Government-Sponsored Prizes and Contests

April 29–30, 1999

National Academies Building

2100 C Street, N.W.

Washington, D.C. 20418

Panel 1

• What are the motivations and goals of prize sponsors and prize recipients?

• How would you define and measure the effectiveness of the existing prize?

• What elements are critical to the effective structuring and administration of prizes and contests?

• Lessons for potential government sponsors of prizes?

• How would you compare the role of prizes with that of other factors (e.g., the availability of venture funding) that have promoted technological advance in the field or industry?

Panel 2

• Are there areas where federal inducement prizes are likely to be useful?

• What can prizes or contests do that other policy instruments cannot? (E.g., innovative procurement mechanisms, CPIF contracts, etc.?) What are the advantages and disadvantages of prizes?

• How should inducement prizes be structured and administered in the federal context? (E.g., treatment of intellectual property generated? How to fund?)