Four DOE Programs Have a Repayment Policy, and the Repayment Mechanisms Are Similar

Although DOE participates with the private sector in many cost-shared technology development programs, only four require repayment of the federal investment if the technology is ultimately commercialized. The mechanisms used for repayment are similar in that they generally require a portion of royalties and fees from licensing technologies and revenues from commercial sales. Also, three programs provide for up to a 20-year repayment period and two allow flexibility on when repayment begins. A major difference in the programs is that one program provides for up to 150-percent repayment, while the other programs limit repayment to 100 percent. Advantages

The primary advantage of a repayment policy is that the government could recover some of its investment in the development of technologies. DOE officials generally believe that repayment would create an administrative burden in negotiating, administering, auditing, and enforcing cost-sharing and repayment agreements. Many DOE officials believe that obtaining increased cost-sharing by industry is preferable to requiring repayment of the federal investment. Nuclear Energy Programs

DOE’s Office of Nuclear Energy administers the Advanced Light Water Reactor Program under cost-shared partnerships with industry. GAO’s Comments

1. 2. 3. Scope and Methodology

To determine the extent to which the Department of Energy (DOE) requires repayment of its investment under cost-shared technology development and demonstration programs, including the similarities and differences in the mechanisms used for repayment, we interviewed DOE officials responsible for administering such programs; reviewed DOE reports and program documents, congressional budget requests, relevant legislation and congressional reports, and various private sector reports and publications that discuss the programs; and drew from our past reviews and reports on such programs. Additional copies are $2 each.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Department of Energy's (DOE) cost-sharing arrangements it has with the private sector to fund technology development programs, focusing on the: (1) extent to which DOE requires repayment of its investment in cost-shared technology development; and (2) advantages and disadvantages of repayment.

What GAO Found

GAO found that: (1) of the many cost-shared technology development programs DOE participates in, only the Clean Coal Technology Program, Metal Initiative Program, Electric Vehicles Advanced Battery Development Program, and Advanced Light Water Reactor Program require repayment of the federal investment if the technology is ultimately commercialized; (2) repayments are collected through royalties and fees from licensing technologies and revenues from commercial sales; (3) each of the programs except the Metals Initiative Program provide for up to a 20-year repayment period; (4) the Metals Initiative Program provides for up to 150-percent repayment, while the other programs limit repayment to 100 percent; (5) while a repayment policy could recover some or all of the federal government's investment, the additional costs and administrative burdens it imposes could discourage industry from commercializing new technologies; (6) the administrative burdens involved in a repayment policy include negotiating, administering, auditing, and enforcing cost-sharing and repayment agreements; and (7) shifting a greater portion of the burden of cost-sharing from government to industry may be preferable to requiring repayment.