DOE labs offer new, business-friendly option for partnering with industry

Eight Department of Energy national laboratories are participating in a pilot program to establish a new, more flexible contracting mechanism for companies that want to commercialize technologies developed at the labs. The new vehicle, called an agreement for commercializing technology (ACT), offers an alternative for industry-lab collaborations that uses terms more typical of business-to-business agreements.

Compared with the two long-standing DOE contracting mechanisms—the cooperative R&D agreement (CRADA) and the work for others (WFO)—the ACT will enable the lab contractor to negotiate more flexible terms with its clients concerning intellectual property rights, payment arrangements, and indemnification. The ACT also is expected to ease the negotiation of R&D partnerships that involve groups of companies, universities, and other entities.

“The agreements for commercializing technology will cut red tape for businesses and startups interested in working with our nation’s crown jewels of innovation, the national laboratories,” said Energy Secretary Steven Chu. According to Erik Stenehjem, director of Lawrence Livermore National Laboratory’s Industrial Partnerships Office, the ACT will be a legal arrangement between the lab’s contractor and the client companies, with DOE not a party. “What you have that’s different is the contractor in its private role can construct terms with the clients that are strictly commercial, not governed by regulation or statute,” he said. The lab expects that ACT agreements will be negotiated in a week or two, which is prompt compared with an average review time of 37 days—and sometimes much longer—for DOE approval of CRADAs.

Easing the indemnification burden

Stenehjem said that many companies are put off from working with the labs by WFO and CRADA provisions that require essentially open-ended indemnification of the federal government. With an ACT, the contractor is at risk, and the client can be relieved of any indemnification burden. The contractor also may waive the up-front 60-day funding requirement of a CRADA. “We take on that risk in exchange for charging a fee over and above the full-cost recovery of using the laboratory. That’s the business proposition,” he said.

In addition to LLNL, labs participating in the ACT pilot are Brookhaven, Idaho, Oak Ridge, Pacific Northwest, and Savannah River National Laboratories, as well as Ames Laboratory and the National Renewable Energy Laboratory. Stenehjem expects it will take about 60 days for the labs to set up the processes and systems needed to manage the work internally. In ACTs, the government waives its rights to intellectual property produced in the lab. A designated “IP lead"—chosen jointly by the contractor and the client—will distribute portions of the IP to each of the parties and will manage the patents and the patent maintenance fees.

The ACT is unlikely to replace CRADAs and WFOs, however, says Stenehjem. The WFO, he notes, works well in cases where the lab simply performs work for the client under a contract, with no collaboration involved. And a CRADA is a great vehicle for more research-oriented activities where a specific outcome can’t be guaranteed. “What we do under a CRADA is best efforts or reasonable efforts, in exchange for compensation for a statement of work,” he explained. Under an ACT, labs will have the flexibility to assure the client that it will receive a deliverable on a set date, if the lab chooses to make that commitment.

To approve ACTs, DOE must determine that they are appropriate for the lab’s mission and don’t interfere with the work the lab performs for the agency.