	Background

ATP, which began funding projects in fiscal year 1990, was intended to  fund high-risk research and development (R&D) projects with broad  commercial and societal benefits that would not be undertaken by a single  company or group of companies, either because the risk was too high or  because the economic benefits of success would not accrue to the  investors. The three projects that we reviewed received funding through the ATP  competitions announced in 1990 and 1992. Three ATP Projects Addressed Similar Research Goals to Projects in the Private Sector

The three completed projects that we reviewed addressed research goals  that were similar to goals the private sector was addressing at about the  same time. Each of the three projects was from a different sector of  technology—computers, electronics, and biotechnology. The projects  include (1) an on-line handwriting recognition system for computer input,  (2) a system to increase the capacity of existing fiber optic cables for the  telecommunications industry, and (3) a process for turning collagen into  fibers for human prostheses use. ATP Project on Handwriting Recognition

Both the ATP project and several private sector projects had a similar  research goal of developing an on-line system to recognize natural or  cursive handwritten data without the use of a keyboard. CIC used its ATP funding of  $1.2 million from 1991 to 1993 to build its own algorithms and models for  developing its handwriting recognition system. ATP’s Award Selection Process Is Unlikely to Avoid Funding Similar Research

Two factors in ATP’s award selection process could result in ATP’s  funding research similar to research that the private sector would fund in  the same time period. Also, the  information available about private sector research is limited because of  the private sector practice of not disclosing research results. Therefore, it is difficult for  the reviewers to identify other cutting-edge research. To minimize possible conflicts of  interest, the technical reviewers are generally federal government  employees who are experts in the specific technology of the research  proposal but are not directly involved with the proposed research area. Although this approach helps to guard against conflict of interest, it has  inherent limitations on the program’s ability to identify similar research  efforts. Our retrospective look at the three ATP research projects  showed that their goals were similar to research goals already being  funded by the private sector. Examining the process that ATP uses to  select projects, we found two inherent factors—the need to guard against  conflicts of interest and the need to protect proprietary information—that  limit ATP’s ability to identify similar research efforts in the private sector. These two factors have not changed since the beginning of the program. However, we believe that it may be  impossible for the program to ensure that it is consistently not funding  existing or planned research that would be conducted in the same time  period in the absence of ATP financial assistance.
Why GAO Did This Study

The Advanced Technology Program (ATP) supports research that accelerates the development of high-risk technologies with the potential for broad-based economic benefits for the nation. Under the program, administrators at the National Institute of Standards and Technology are to ensure that they do not fund research that would be conducted in the same period without ATP funding. Between 1990 and September 2004, ATP funded 768 projects at a cost of about $2.3 billion. There is a continuing debate over whether the private sector has sufficient incentives to undertake research on high-risk, high-payoff emerging technologies without government support, such as ATP. This testimony discusses the results of GAO's April 2000 report, Advanced Technology Program: Inherent Factors in the Selection Process Could Limit Identification of Similar Research (GAO/RCED-00-114) and provides updated information. GAO determined (1) whether ATP had funded projects with research goals that were similar to projects funded by the private sector and (2) if ATP did, whether its award selection process ensures that such research would not be funded in the future.

What GAO Found

The three completed ATP-funded projects GAO reviewed, which were approved for funding in 1990 and 1992, addressed research goals that were similar to those already funded by the private sector. GAO chose these 3 projects from among the first 38 completed projects, each representing a different technology sector: computers, electronics, and biotechnology. These three technology sectors represent 26 of the 38 completed ATP projects, or 68 percent. The projects included an on-line handwriting recognition system, a system to increase the capacity of existing fiber optic cables for the telecommunications industry, and a process for turning collagen into fibers for human prostheses use. In the case of the handwriting recognition project, ATP provided $1.2 million to develop a system to recognize cursive handwriting for pen-based (i.e., without a keyboard) computer input. GAO identified several private firms that were conducting similar research on handwriting recognition at approximately the same time the ATP project was funded. In fact, this line of research began in the late 1950s. In addition, GAO identified multiple patents, as early as 5 years prior to the start of the ATP project, in the field of handwriting recognition. GAO found similar results in the other two projects. Two inherent factors in ATP's 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. These factors, which have not changed since 1990, make it difficult for ATP project reviewers to identify similar efforts in the private sector. For example, to guard against conflicts of interest, the program uses technical experts who are not directly involved with the proposed research. Their acquaintance with ongoing research is further limited by the private sector's practice of not disclosing its research efforts or results so as to guard proprietary information. As a result, it may be impossible for the program to ensure that it is consistently not funding existing or planned research that would be conducted in the same time period in the absence of ATP financial assistance. GAO made no recommendations in its April 2000 report.