Order Code RS22815
Updated August 20, 2008
The Technology Innovation Program
Wendy H. Schacht
Specialist in Science and Technology Policy
Resources, Science, and Industry Division
Summary
P.L. 110-69 created the Technology Innovation Program (TIP) at the National
Institute of Standards and Technology (NIST) to replace the Advanced Technology
Program (ATP). The FY2008 Consolidated Appropriations Act, P.L. 110-161, provides
$65.2 million for the program (with an additional $5 million in unobligated FY2007
balances from ATP). The President’s FY2009 budget request contains no funding for
TIP. The FY2009 appropriations bill ordered reported from the House Committee on
Appropriations provides $65.2 million for the program; S. 3182, as reported from the
Senate Committee on Appropriations, includes $65 million for TIP.

Introduction
The America COMPETES Act, P.L. 110-69, authorized a new Technology
Innovation Program (TIP) to replace the Advanced Technology Program (ATP) at the
National Institute of Standards and Technology (NIST). The FY2008 Consolidated
Appropriations Act, P.L. 110-161, provides funding for TIP. This effort is designed “...to
support, promote, and accelerate innovation in the United States through high-risk, high-
reward research in areas of critical national need,” according to the authorizing
legislation. NIST published the final rule prescribing the policies and procedures for the
TIP activity on June 25, 2008 (15 C.F.R. Part 296). The intent of the program is to
provide grants to small and medium-sized firms for individual projects or joint ventures
with other research organizations to undertake work that:
(A) has the potential for yielding transformational results with far-ranging or wide-
ranging implications;
(B) addresses critical national needs within the National Institute of Standards and
Technology’s areas of technical competence; and
(C) is too novel or spans too diverse a range of disciplines to fare well in the
traditional peer-review process.1
1 P.L. 110-69

---

CRS-2
Small or medium-sized for-profit firms are eligible for individual project awards of
up to $3 million over three years. Collaborative research ventures including small or
medium-sized companies, national laboratories, universities, or other non-profit research
institutions may be funded for a total of up to $9 million over five years. A competitive,
merit-based process is to be used to make grants of up to 50% of total project costs.
The FY2008 Consolidated Appropriations Act, P.L. 110-161, provides $65.2 million
(with an additional $5 million in unobligated balances from the FY2007 ATP
appropriation). This is 17.6% less than FY2007 funding for the Advanced Technology
Program which TIP replaces. According to NIST, the major portion of this FY2008
support will be used to meet previous ATP funding commitments. The President’s
FY2009 budget request does not contain any financial support for TIP. The FY2009
appropriations bill ordered reported from the House Committee on Appropriations
provides $65.2 million for the program; S. 3182, as reported from the Senate Committee
on Appropriations, includes $65 million for TIP. These figures are similar to current
fiscal year funding.
Background
The Advanced Technology Program,2 which was replaced by the Technology
Innovation Program, was established by Title V of the Omnibus Trade and
Competitiveness Act (P.L. 100-418). ATP was intended “to serve as a focal point for
cooperation between the public and private sectors in the development of industrial
technology” and to help solve “problems of concern to large segments of an industry,” as
noted in the Conference Report to accompany the bill. Placed within the National
Institute of Standards and Technology (NIST), in recognition of the laboratory’s ongoing
relationship with industry, ATP provided seed funding to single companies or to industry-
led consortia of universities, businesses, and/or government laboratories for development
of generic (broad-based), pre-competitive technologies that had applications across
industries. Awards, based on technical and business merit, were for high-risk work past
the basic research stage but not yet ready for commercialization. Market potential was
an important consideration in project selection.
Awards were for either product or process technology development. Individual firms
were restricted to funding of $2 million over three years. Money was to be used only for
direct R&D costs. Large firms provided at least 60% of total (direct and indirect) projects
costs; small and medium-sized companies were not required to cost-share direct costs.
Joint ventures could receive up to five years of financing for any amount, limited only by
availability. In such cases, the private sector provided more than 50% of funding. While
universities and federal laboratories could participate in collaborative work, the ATP grant
was made solely to companies.
According to NIST, through the end of 2007, 824 projects had been funded, of which
about 28% were joint ventures. Approximately $2.4 billion in federal funds have been
matched by $2.2 billion from the private sector. Small businesses or cooperative efforts
led by such firms made up almost 68% of the awardees. (The legislation creating TIP,
2 For additional information on ATP see CRS Report 95-36, The Advanced Technology Program,
by Wendy H. Schacht.

---

CRS-3
P.L. 110-69, requires that the Director of NIST “...continue to provide support originally
awarded under the Advanced Technology Program, in accordance with the terms of the
original award and consistent with the goals of the Technology Innovation Program.”)
Continued support for the Advanced Technology Program was a major funding
issue. Opponents of the program cited it as a prime example of “corporate welfare,”
whereby the federal government invests in applied research activities that, they
emphasize, should be conducted by the private sector. Others defended ATP, arguing that
it assisted businesses (and small manufacturers) in developing technologies that, while
crucial to industrial competitiveness, would not or could not be developed by the private
sector alone.
The National Institute of Standards and Technology undertook numerous analyses
of ATP; the General Accounting Office (GAO, now the Government Accountability
Office) also studied the program. In its first evaluation (1994), NIST concluded the
program had stimulated research that would not have been done without the federal
support; that R&D cycles within companies have been abbreviated; and that “valuable
business alliances” had been created.3 However, in a May 1995 report, GAO argued that
these conclusions can not be adequately substantiated by the information provided in the
NIST study on which they were based.4 Acknowledging that it was too early to determine
the long-term impact of ATP, the GAO report stated that some of the indicators NIST
utilized “may create false expectations of the program’s economic success.” NIST
vigorously defended its methodology.
Additional studies funded by NIST found that ATP shortened R&D cycles by half
and accelerated technological progress within the firm; stimulated productive
collaborative activities among companies and between firms and universities; facilitated
commercialization; and increased private sector investment in high risk technology
development.5 An April 2000 progress report reinforced these earlier findings.6 This
study indicated that “participants in 261 projects have identified more than 1,200 different
applications (or uses) of the technologies under development,” and that the majority of
these are new solutions to market needs or improvements in existing products or
processes. Product cycles are being reduced, and while 24% of respondents said that they
3 National Institute of Standards and Technology, Setting Priorities and Measuring Results at the
National Institute of Standards and Technology, January 31, 1994.
4 General Accounting Office, Performance Measurement, Efforts to Evaluate the Advanced
Technology Program, GAO/RCED-95-68, May 1995.
5 Silber and Associates, Company Opinion about the ATP and Its Early Effects, January 30, 1995;
Acceleration of Technology Development by the Advanced Technology Program: The Experience
of 28 Projects Funded in 1991, by Frances Jean Laidlaw, for the National Institute of Standards
and Technology, Economic Assessment Office, October 23, 1997; National Institute of Standards
and Technology, Advanced Technology Program: Development, Commercialization, and
Diffusion of Enabling Technologies, by Jeanne W. Powell, December 1997; National Institute
of Standards and Technology, Advanced Technology Program Performance of Completed
Projects, Status Report Number 1, by William F. Long, March 1999.
6 National Institute of Standards and Technology, Development, Commercialization, and
Diffusion of Enabling Technologies: Progress Report, by Jeanne W. Powell and Karen L.
Lellock, April 2000.

---

CRS-4
would not have undertaken the project without ATP funding, most others noted that the
R&D would have been significantly slower without such support. NIST found that
“organizations are pursuing different R&D than they would have undertaken without ATP
funding,” and that this work is more technically advanced and risky. The ATP financing
also stimulated additional private sector money in these technical areas than otherwise
would be the case. Over half of the companies are now able to make a new or improved
product. In March 2000 testimony, Raymond Kammer, then director of NIST, stated that
approximately 120 new technologies have been commercialized. According to NIST,
more than 60% of ATP projects have resulted in commercial products and processes
available in the marketplace.7
The concern over whether ATP supports projects that could reasonably attract private
sector investment has been an issue throughout the life of the program. In a report
examining award winners and “near winners” during the first four years of ATP, GAO
found the program funded both projects that would not have progressed without this
federal support and those that would have been financed by the private sector.8 Half of
the awardees stated that they would have continued without ATP financing. Of the “near
winners,” 50% pursued their efforts in the absence of federal money but took longer to
achieve their goals. According to GAO, while 63% of the applicants did not look
elsewhere for funds, about half of the applicants who did “were told by prospective
funders that their projects were either too risky or ‘precompetitive’ — characteristics that
fulfill the aims of ATP funding.” Respondents also noted that the program facilitated
development of joint ventures to pursue ATP activities.
A study undertaken by the American Enterprise Institute concluded that ATP “has
had only limited success” in choosing projects that could not raise private sector funds.
According to the authors, this has occurred because companies are not interested in
pursuing R&D that fails to complement work performed for profit. In addition, the ATP
selection criteria focus on commercial sales and job creation, not on projects for which
there are “broad social benefits” and insufficient private investment. An April 2000
report by GAO, reinforced by May 26, 2005 testimony, noted that “two inherent factors
in ATP’s current award selection process — the need to guard against conflicts of interest
and the need to protect proprietary information — make it unlikely that ATP can avoid
funding research already being pursued by the private sector in the same time period.”9
A Different Approach
The Technology Innovation Program appears to have been designed to avoid what
was seen as government funding of large firms that did not necessarily need federal
support for R&D activities. The committee report to accompany H.R. 1868, part of which
was incorporated into the final legislation, stated that TIP replaces ATP in consideration
7 National Institute of Standards and Technology, ATP is Meeting Its Mission: Evidence From
ATP Evaluation Studies, available at [http://www.atp.nist.gov/factsheets/1-a-1.htm].
8 General Accounting Office, Measuring Performance: The Advanced Technology Program and
Private-Sector Funding, GAO/RCED-96-47, January 1996.
9 General Accounting Office, Advanced Technology Program: Inherent Factors in Selection
Process Could Limit Identification of Similar Research, GAO/RCED-00-114, April 2000, 5.

---

CRS-5
of a changing global innovation environment focusing on small and medium-sized
companies. The structure of TIP also “...acknowledges the important role universities
play in the innovation cycle by allowing universities to fully participate in the program.”10
While similar to ATP in the promotion of high-risk R&D that would be of broad-
based economic benefit to the Nation, there are several differences in the expected
operation of the new Technology Innovation Program primarily associated with the size
of eligible companies. Financial support under TIP is limited to small and medium-sized
businesses whereas grants under ATP were available to companies regardless of size. In
addition, in the Advanced Technology Program, joint ventures were required to include
two separately owned for-profit firms and could include universities, government
laboratories, and other research establishments as participants in the project but not as
recipients of the grant. In the TIP initiative, a joint venture may involve two separately
owned for-profit companies but may also be comprised of one small or medium-sized
firm and a university (or other non-profit research institution). A single company could
receive up to $2 million for up to three years under ATP; under TIP, the participating
company (which must be a small or medium-sized business) may receive up to $3 million
over three years. In ATP, small and medium-sized companies were not required to cost
share (large firms provided 60% of the total cost of the project) while in TIP there is a
50% cost sharing requirement which, again, only applies to the small and medium-sized
businesses that are eligible. There were no funding limits for the five-year funding
available for joint ventures under ATP; the TIP limits joint venture funding to $9 million
for up to five years. The Advisory Board that was created to assist in the Advanced
Technology Program included industry representatives as well as federal government
personnel and representatives from other research organizations. The Advisory Board for
the Technology Innovation Program would be comprised of only private sector members.
Issues and Observations
The effort to terminate the Advanced Technology Program, along with additional
attempts to withdraw government support for certain other technology development
efforts, appear to reflect a philosophy that eschews direct federal financing of private
sector R&D efforts aimed at the commercialization of new technologies and production
processes. Such activities are seen by opponents as “industrial policy,” the means by
which government rather than the marketplace “picks winners and losers.” Instead,
measures that would occasion a better investment environment for industry to expand
their innovation-related efforts would, proponents argue, be preferable to government
funding.
The current approach, including the new Technology Innovation Program, involves
varied mechanisms to facilitate technological advancement. Legislation has created a
body of laws, programs, and policies that involve both indirect and direct measures to
stimulate technology advancement in the private sector. Indirect incentives include a
research and experimentation tax credit; changes to the antitrust laws to encourage
collaborative R&D and cooperative manufacturing ventures; alterations of patent
10 U.S. Congress, House Committee on Science and Technology, Technology Innovation and
Manufacturing Stimulation Act of 2007, Report to accompany H.R. 1868, H.Rept. 110-115, April
30, 2007, 21.

---

CRS-6
ownership policies to facilitate government-industry-university interaction; and practices
to promote technology transfer. Direct measures involve, among other things, federal
funding for TIP and the Small Business Innovation Research Program. These cost-shared
programs have been supported, in part, because of what proponents argue is their potential
contribution to the country’s national or economic security.
The elimination of ATP and the creation of TIP have renewed the debate over the
role of the federal government in promoting commercial technology development. In
arguing for less direct federal involvement, advocates believe that the market is superior
to government in deciding technologies worthy of investment. Mechanisms that enhance
the market’s opportunities and abilities to make such choices are preferred. It is suggested
that agency discretion in selecting one technology over another can lead to political
intrusion and industry dependency. On the other hand, supporters of direct methods argue
that it is important to focus on those technologies that have the greatest promise as
determined by industry and supported by matching funds from the private sector. They
assert that the government can serve as a catalyst for cooperation.
Technological progress is important to the nation because of its contribution to
economic growth and a high standard of living. How best to achieve this continues to be
debated. Critics viewed ATP as a means for a federal agency to select commercial firms
and/or technologies for support. They maintained that the absence of market-generated
decisions will result in technologies that can not be utilized productively by participating
companies. Such a program, they argue, encourages selection of well-written proposals
rather than assistance for truly important technologies. However, proponents stressed that
ATP was market driven and that the technical areas for investment had been developed
in conjunction with industry. In addition, companies were required to put up significant
amounts of funding and survive a rigorous business review; procedures that made the
ATP different from other federal efforts. Replacing ATP with the Technology Innovation
Program may be one response to criticisms that large firms should not be recipients of this
form of federal research funding, support that should be reserved for small and medium-
sized companies which do not have the financial resources available to major
corporations.

---