Rx for Nation’s Labs: New Role and Less Money

Sometimes sacrifice isn’t just painfully necessary. It can be positively helpful. At precisely the moment when the demands of the federal budget deficit must be balanced against the imperatives of new technology investment, there’s a rare policy opportunity to be both bold and smart.

The most dramatic and effective way to boost America’s industrial competitiveness while slicing billions of dollars from unnecessary federal spending would be to cut the budgets of the national labs in half over the next five years. The move would not only shock the labs into more energetically redefining their missions. It would send an unambiguous signal that the institutions built by the Cold War research Establishment are, in effect, obsolete.

The national labs, which range from the University of California’s Lawrence Livermore to Los Alamos in New Mexico to Brookhaven in New York, were spawned by World War II to guarantee that the United States would always remain the technical leader in nuclear weaponry and other arsenals of national security. At the same time, the labs were pioneers in both physical and life science research.

Make no mistake, the labs are filled with some of the most brilliant and creative scientists in the world. They do good work. But, for the most part, these scientists belong to laboratories essentially forged out of Cold War values and Cold War budgets. The labs grew up and prospered in near-total isolation from markets or market forces. They don’t understand prices; only budgets. Their economics are the economics of central planning, not innovation and entrepreneurship.

Between the departments of Energy and Defense, the annual labs’ budget tops $13 billion a year (with nuclear weapons research accounting for $3.5 billion). The National Aeronautics and Space Administration labs’ budget accounts for $3.5 billion. In the absence of the Cold War, these labs have lost their mission. There is no economic reason why their budgets could not be halved over the next five years without in any way jeopardizing their national security role. That would save tens of billions of dollars by the decade’s end.

To be sure, there has been much pontificating about reorienting the mission of the labs. Some pundits insist that the labs should now focus on the environment and the ecosphere; the competitiveness pundits want the labs to become cradles of industrial innovation and launch technological enterprises.

Besides themselves, who are these people kidding? Why don’t we ask IBM to start making pharmaceuticals? How about asking Boeing to build cars? The reality is that the labs have neither the competencies nor the culture to diversify into radically new missions. Years ago, the Packard Commission encouraged greater commercial innovation by the labs. Little happened. The labs have been trying for more than a decade to become more effective vehicles for technology transfer. On balance, they’ve failed badly.

A December, 1992, Government Accounting Office report on technology transfer concluded that economic incentives, such as royalty sharing, have failed to spur commercial lab innovations. Similarly, Cooperative Research and Development Agreements, designed to spur collaboration with private industry, have an unhappy track record.

“Proposals to consolidate and shut down the national labs have got to be put on the table,” said Dan Burton, executive director of the nonpartisan Council on Competitiveness, which issued a mildly critical report on the labs last year.

“The budgets of the labs should be a consequence of what the labs should do,” said Craig Fields, a former Pentagon official who now runs the Microelectronics and Computing Technology consortium in Austin, Tex. He acknowledged, however, that budget cuts can be a powerful stimulant to creative thinking.

The labs should have the market opportunity to seek matching grants from private industry--both domestic and foreign--to fund quasi-private research initiatives. Perhaps the labs should be able to seek up to 25% of their budgets from outside sources.

Maybe a national labs czar, to oversee and manage the five-year transition from Cold War relic to civilian research network, is necessary. The mission would be clear; the budgets would be established and the time would be fixed. “I have heard worse ideas,” said Erich Bloch, a former National Science Foundation director who oversaw the council’s report on the national labs.