U.S. Bureaucracy Stymies Commercial Innovation, Report Says

Coral Davenport

In 1943, the U.S. government opened a top-secret research lab in Los Alamos, N.M., gathering the country’s best scientists to research a breakthrough technology that would advance the nation’s strategic goals in the midst of the Second World War. The Manhattan Project ultimately yielded the world’s first nuclear bomb, and the lab that helped develop the weapon has since grown into a network of 17 national labs around the country, which to date are still charged with performing cutting-edge research that has strategic value to the nation -- research so high-risk, expensive, or long-range that the private sector and academia are unwilling to take them on. 

That network, now run by the U.S. Energy Department, still oversees the nation’s nuclear weapons program. But in the 21st century, it’s charged with researching breakthroughs in other fields, including energy, health care, and telecommunications, that have commercial applications--at a moment when innovative new technologies are potent weapons in the cutthroat competition to secure an advantage in the global economy.

But a report released on Wednesday that combines research from a top liberal think tank, a top conservative think tank, and a top policy shop focused on innovation and technology concludes that while the U.S. national labs remain in the global vanguard of critical research, they are mired in a Cold War-era bureaucracy that hinders them from producing the innovative commercial breakthroughs that could help invigorate the U.S. economy.  

“The labs were born out of the single-minded focus on building the atomic bomb. ... Since the end of the Cold War, however, the nation has struggled to develop a new mission for the labs that effectively harnesses their unique capabilities or even justifies their existence,” concludes the report, entitled “Turning the Page: Reimagining the National Labs in the 21st Century Innovation Economy.” Published by the Information Technology and Innovation Foundation, the report includes authors from the Heritage Foundation and the Center for American Progress. Those groups are generally at opposite ends of the partisan divide in Washington; this marks the first time they have coauthored a proposal on energy issues.

“The sad truth is that the institutional management structures that govern the labs have not advanced far beyond the Cold War, and [are] outdated, inflexible and weakly connected to the marketplace, inhibiting U.S. innovation when we need it most,” write the report’s authors. “While the labs have served the public well in the past, the status quo is ill-adapted for the needs of the 21st century. It wastes precious taxpayer dollars and denies society the benefit of scientific advances. Making the need for reform even greater, the United States finds itself at a time when technological and scientific innovation is becoming ever more important to economic success.”

Fifty years ago, strategic research at national labs was focused on building a better weapon; the labs’ goals now include developing technologies such as carbon capture, which could allow coal-fired power plants to generate electricity without carbon pollution, and electric vehicle technology that could allow the nation’s transportation sector to prosper without depending on oil. 

But those innovative technologies require a far different and more sophisticated kind of deployment than a bomb. In order to give the nation a competitive edge against China and other global economies, the technologies must make it from the labs to the market. The report contends that an outdated management system at the national labs is keeping that from happening.

The report’s authors say that a top-down management system, in which all new proposals must be stovepiped from the labs around the country and through to Washington, creates a slow, duplicative, micromanaged process that traps innovative ideas in the lab and prevents partnerships between government researchers and the private companies that could scale up their ideas.

They propose taking key decision-making authorities and moving them from Washington out to the national labs. Most of the national labs are headed by private contractors -- so the proposal will come at a moment of increased scrutiny on government contractors in the wake of Booz Allen Hamilton contractor Edward Snowden’s leak of National Security Agency classified material.

“Decisions should be made at lower points in the chain of command,” said report coauthor Sean Pool, who recently concluded his tenure as science innovation policy analyst at the Center for American Progress. “Currently, the labs have to run up the whole bureaucratic chain to the Energy Department for every industry agreement they want to do. It should be that lab managers and researchers and not bureaucrats in Washington make those decisions.”

The report also recommends that labs open up their research facilities to private companies, which would pay to use the government resources. In addition, outside companies could hire national labs to perform research in specific areas in which a breakthrough might have commercial applications.

“This allows labs to have more impact on the economy,” said Jack Spencer, senior research fellow at the Heritage Foundation’s Roe Institute for Economic Policy Studies. “It creates an environment where the research that’s being done in the labs that can have a commercial function -- the companies will be able to pull it out and apply it.”

The reforms would require that Congress enact legislation reducing its own and the administration’s direct control over how the lab’s annual budget -- which comes to about $18 billion -- is allocated. “Right now, Congress tells [the labs] exactly what they can spend and where. Let’s get rid of those restrictions. These are barriers from Congress and the Energy Department to the labs collaborating with industry partners,” said Matthew Stepp, an energy policy analyst with the Information Technology and Innovation Foundation. Stepp said he’s optimistic that even today’s partisan Congress may be willing to enact such legislation -- in part because the proposals have come from the chief idea-drivers of each party, think tanks that generally put forth proposals in direct opposition to each other.                                 

Energy policy in particular has been locked in partisan deadlock in Washington recent years. But in the wake of the 2012 election, there are indications that the two parties are managing to find agreement on reforming small slices of energy policy, such as energy efficiency and managing nuclear waste. While reforming the national labs’ management structure won’t overhaul U.S. energy policy, it could be another rare point in the energy debate on which both parties might agree.