The Advanced Technology Program

The Advanced Technology Program
Wendy H. Schacht
Specialist in Science and Technology
Resources, Science, and Industry Division
The Advanced Technology Program (ATP) was created by P.L. 100-418, the
Omnibus Trade and Competitiveness Act of 1988, to encourage public-private
cooperation in the development of pre-competitive technologies with broad application
across industries. Administered by the National Institute of Standards and Technology,
a laboratory of the Department of Commerce, this activity has been targeted for
elimination as a means to cut federal spending. Since FY2000, original House-passed
appropriation bills have not included funding for ATP. Many of the Administration’s
budget requests have proposed termination of the program. However, ATP continued
to be supported, although at levels below that achieved in FY1995 when the activity was
expanded significantly. In FY2007, the program was funded at $79 million. The
President’s FY2008 budget request did not include financing for ATP. The FY2008
Consolidated Appropriations Act, P.L. 110-161, replaces ATP with the Technology
Innovation Program (TIP) and provides $65.2 million (with an additional $5 million in
ATP FY2007 unobligated balances), 17.6% less than the previous fiscal year. P.L. 110-

69, the America COMPETES Act, authorized the creation of TIP.

Program Rationale
Title V of the Omnibus Trade and Competitiveness Act (P.L. 100-418) established
the Advanced Technology Program (ATP). This effort grew out of concerns over the
competitiveness of American companies in the global marketplace. While numerous
factors affect the rate of technical progress in an economy, what was seen as critical is
how quickly and successfully science and technology are transformed into new or better
products, processes, or services. The commercialization and diffusion of goods and
services stood out as significant problems in the ability of U.S. industries to compete.
Underlying the structure of ATP was an effort to foster cooperation among
government, industry, and academia to facilitate the generation of new technologies for
the commercial market. While opponents argue that joint ventures stifle competition,
proponents assert that they are designed to accommodate the strengths and responsibilities
of various sectors. Collaborative projects attempt to utilize and integrate what the

participants do best and to direct R&D activities toward the goal of meeting marketplace
demands. Joint endeavors are seen as reducing risks and costs while permitting work that
crosses traditional boundaries of expertise and experience.
Program Operation
The Advanced Technology Program was designed “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 have many 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. Scientific and technical review generally
was performed by federal and academic experts. Business plan assessments were made
by individuals from the private sector.
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. P.L. 102-245 modified the original law and required that
the recipient of an ATP award be a firm that is U.S.-owned (“a company that has a
majority ownership or control by individuals who are citizens of the United States”) or
a business that is incorporated in the United States and has a parent company established
in a country that affords American firms reciprocal opportunities.
According to NIST, through the end of 2007, 824 projects were 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 first four competitions
(ending August 1994) were general in nature. In 1995, NIST restructured part of ATP to
focus on various groups of projects in “well-defined” programmatic areas designed for
long-range support selected in conjunction with industry. Since FY1999 one competition
has been held in all areas of technology.
The America COMPETES Act, P.L. 110-69, authorized a new Technology
Innovation Program (TIP) to replace ATP. The FY2008 Consolidated Appropriations
Act, P.L. 110-161, provides funding for TIP. While similar to ATP in the intent to
promote high-risk R&D that would be of broad-based economic benefit to the Nation,
there are several differences in the operation of the new activity. 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 dollars 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 for up to 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.
In its first year, FY1991, ATP was funded at $36 million. Appropriations increased
to $48 million in FY1992, $67.9 million in FY1993, and $199.5 million in FY1994. For
FY1995, financial support expanded significantly to $340.5 million (including
rescissions). Funding for FY1996 was $221 million, $225 million in FY1997, and $192.5
million in FY1998. Congress provided $197.5 million in FY1999 (including rescissions).
In FY2000, the appropriations bill originally passed by the House included no funding for
ATP, since, as stated in the accompanying report, “the program has not produced a body
of evidence to overcome those fundamental questions about whether the program should
exist in the first place.” However, ATP was financed $142.6 million for FY2000. The
following year, again the original House-passed appropriations bill did not fund the
program, although $145.7 million was ultimately appropriated.
The Bush Administration’s FY2002 budget proposed suspension of new ATP
projects pending a program evaluation. The initial appropriations bill passed by the House
terminated ATP; final legislation financed the effort at $184.5 million. The following
fiscal year $178.8 million was appropriated (after rescissions). In FY2004, both the
President’s budget request and the original House-passed appropriations bill provided no
support for the program; however ATP was funded at $170.5 million after mandated
rescissions. While the FY2005 budget proposal and the original appropriations legislation
passed by the House once again did not include funding for ATP, $136.5 million was
provided (after mandated rescissions). This situation held for the FY2006 appropriations
process, although $79 million (after mandated rescissions) was finally appropriated by
Congress. For FY2007, the Administration’s budget did not include funding for ATP nor
did the appropriations bill initially passed by the House and reported from the Senate
Committee on Appropriations during the 109th Congress. Final FY2007 legislation
provided $79 million for the program.
The President’s FY2008 budget request contained no support for ATP. The initial
FY2008 appropriations bill that passed by House, H.R. 3093, would have funded ATP at
$93.1 million while the Senate-passed version provided $100 million, $30.8 million of
which was to be directed toward other programs in the Federal Bureau of Investigation
and the U.S. Marshals Service. The final FY2008 appropriations legislation, P.L. 110-

161, finances the new Technology Innovation Program at $65.2 million (with an

additional $5 million from FY2007 ATP unobligated balances). The TIP initiative
replaces ATP.
NIST has undertaken numerous analyses of ATP; the General Accounting Office
(GAO, now the Government Accountability Office) has 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.1 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 are based.2
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.3 An April 2000 progress report reinforced these earlier findings.4 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
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,

1 National Institute of Standards and Technology, Setting Priorities and Measuring Results at the
National Institute of Standards and Technology, January 31, 1994.
2 General Accounting Office, Performance Measurement, Efforts to Evaluate the Advanced
Technology Program, GAO/RCED-95-68, May 1995.
3 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.
4 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.

more than 60% of ATP projects have resulted in commercial products and processes
available in the marketplace.5
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.6 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.”7
Issues and Observations
There have been efforts in the past several years to terminate the Advanced
Technology Program. These actions, along with additional attempts to withdraw
government support for 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 involves varied mechanisms to facilitate technological
advancement. Legislative initiatives have resulted in a body of laws, programs, and

5 National Institute of Standards and Technology, ATP is Meeting Its Mission: Evidence From
ATP Evaluation Studies, available at [].
6 General Accounting Office, Measuring Performance: The Advanced Technology Program and
Private-Sector Funding, GAO/RCED-96-47, January 1996.
7 General Accounting Office, Advanced Technology Program: Inherent Factors in Selection
Process Could Limit Identification of Similar Research, GAO/RCED-00-114, April 2000, 5.

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 ownership policies to
facilitate government-industry-university interaction; and practices to promote technology
transfer. Direct measures involve, among other things, federal funding for ATP and the
Small Business Innovation Research Program. These cost-shared programs have been
supported, in part, because of their potential contribution to the country’s national or
economic security.
Proposals to terminate or severely limit ATP 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 maintain that the absence of market-generated
decisions will result in technologies that can not be utilized productively by participating
companies. Such a program 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 have 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
Advanced Technology Program different from other federal efforts. Replacing ATP with
the Technology Innovation Program may be one response to criticism that large firms
should not be the recipient of this form of federal research funding, one that should be
reserved for small and medium-sized companies that do not have access to the private
capital available to major corporations.