Why High Tech Will Become a Battleground in Washington

Right up until a week ago Tuesday, Arati Prabhakar was a supersmart 35-year-old technocrat running the fastest-growing agency in the Clinton Administration. Come next year, Prabhakar will still be a supersmart Clinton Administration technocrat. Her agency, however, won’t be growing quite so fast. In fact, she will be lucky if the new Republican Congress doesn’t cut it to ribbons.

Prabhakar directs the National Institute of Standards and Technology--the centerpiece of this Administration’s efforts to boost America’s high-tech competitiveness. Once an obscure backwater agency in the Commerce Department, NIST has become the Administration’s innovation agency: Its annual budget has soared from $383 million in the 1993 fiscal year to $854 million two years later, and was set to top $1.4 billion by 1997.

NIST now does everything from administering the Baldrige quality awards to overseeing manufacturing extension programs to co-investing with industry in the high-risk, high-reward projects funded by the Advanced Technology Programs. In other words, NIST offers a perfect microcosm of the Administration’s ambitions to create a new generation of public-private partnerships.

“In my mind,” says Prabhakar, “the bottom line of what this is all about is to try to get government and industry to work together to do the jobs that can’t be done separately. . . . You have to believe that government can do positive things.”

As the first woman to win a Caltech Ph.D in applied physics and a veteran of the Pentagon’s Advanced Research Projects Agency--long a high-tech hotbed--Prabhakar was impeccably qualified to transform what was once the National Bureau of Standards into an aggressive promoter of innovation investment. Politically suitable and technically superb, Prabhakar represents both the symbol and substance of what the Clinton Administration is trying to do in high-tech competitiveness.

Consequently, she is also the symbol and substance of what the New Republican Majority fundamentally opposes: a technocrat who wants to pick winners and losers in emerging high-tech markets; chief of a bureaucracy that uses taxpayer dollars to subsidize risky ventures by private enterprise; a strong believer in the notion that government participation in the marketplace is more of a help than a hindrance to entrepreneurs who want to transform academic ideas into economic realities.

The essential conflict here is not one between better government leadership or more effective allocation of funds; it’s about more government involvement versus less government involvement. Ideology--not competence--is the issue.

While federal funding for basic science and national security technology enjoys bipartisan support, “there is not yet a full consensus on an additional mission for federal R&D; to promote economic growth,” Prabhakar concedes.

However, she sees a NIST-like role as economically inevitable. “This kind of a strategic shift is mandatory over the long term,” she says. “It will either happen now or it will happen later. . . . That timing will largely be a perception of industry and what value does industry see in partnering with government.”

Without question, the most controversial piece of NIST’s portfolio is the Advanced Technology Program, which Prabhakar describes as “cost-shared funding to individual companies and industry-led joint ventures to develop the high-risk, high-payoff technologies that can enable significant commercial progress.” Those areas include rapid response manufacturing, thermoplastics, machine tools and auto body construction. All kinds of companies--from small entrepreneurial firms to industry giants such as General Motors, Ford, Texas Instruments and General Electric--now receive ATP funding from NIST. Isn’t this funding--which runs into the hundreds of millions--simply a direct subsidy to commercial industry?

“Industry is precisely the place in the economy where we wish to deliver value with our programs,” Prabhakar responds. “I’m not embarrassed about that.”

Indeed, Prabhakar asserts that NIST programs “are delivering value and that moots a lot of the basis for the theological discussions. . . . The theology is that it’s bad for government and industry to be working together. I haven’t heard any arguments that are much deeper than that.”

She adds that NIST’s proposed 1997 budget would amount to only 2% of total federal research and development spending, and she describes her agency as “a 2% experiment to see if we can do things that tackle those jobs that require government and industry to work together. . . . This is all about risk. Our program would be an utter failure if everything we did was a glorious success.”

Ideally, Prabhakar notes, “my greatest dream for an ATP manager is for that person to become a noted leader in his or her field by creating a vision by working with the industry--not dictating to it--to facilitate investment and innovation.”

In many respects, what Prabhakar is describing is a civilian notion of the Advanced Research Projects Agency, where she once worked. Just as ARPA helped the national security infrastructure develop a culture of rapid innovation, says Prabhakar, NIST needs to help foster a comparable culture of innovation in the civilian domain.

And that’s precisely why NIST is destined to be a political battleground between the Administration and Congress: Does Washington best create an innovation culture by encouraging more and better public-private partnerships? Or does industrial innovation flow more readily when government supports only basic science and technology--and then gets out of the way?

NIST is going to be the medium through which America’s innovation policy is determined.

* More Innovation: For a collection of recent Innovation columns by Michael Schrage, sign on to the TimesLink on-line service and “jump” to keyword “Innovation.”