585 



APPROACHES TO ENHANCE ONR TECHNOLOGY TRANSFER 37 



A POTENTIAL NEW ORGANIZATIONAL MECHANISM 



A private corporation, financed either (1) under an Advanced Research 

 Projects Agency (ARPA) cooperative agreement in the form of a grant or loan, or 

 (2) directly from ONR, could provide a timely and cost-effective interchange of 

 technology and knowledge between ONR and private-sector companies and ven- 

 ture capitalists. In this report, such a company will be referred to as a Technology 

 Transfer Corporation (TTC). The TTC is presented only as an example of the 

 type of potential innovative solution ONR may wish to consider in an effort to 

 increase technology transfer. 



Principles of Operation 



• Cost sharing between ARPA and TTC could be arranged such that ARPA 

 provides half the working capital in the form of a grant and half in a loan subject 

 to repayment. The loan portion might be a non-interest-bearing, three-year loan, 

 unsecured, with the possibility of early repayment without penalty. Repayment 

 would be from TTC operational profit after taxes or by allocation of values 

 inherent in equity deals (see below) or royalty income streams, or both. 



• TTC gross income would arise from nominal ser\'ice fees and participa- 

 tion in joint ventures distribution and royalty income. Some type of sliding-scale 

 service fee, perhaps proportionate to the capital of the inquiring party and based 

 on cost plus 10 percent, would encourage serious inquiry. 



• The engine of any such enterprise is a system of incentives that encourage 

 the creation of something new from the existing "raw material" represented by 

 ONR technology and private-sector need. 



Incentive Structure 



• ONR. Successful implementation of a new organizational mechanism 

 such as TTC would require active participation by ONR. There are several incen- 

 tives for ONR participation: 



1 . Increased license and royalty fees (per Public Law 99-502, Appendix 

 C) 



2. Equity and dividend participation in third-party joint ventures 



3. Fees for increased use of ONR facilities 



4. Restoration to ONR of $1.8 milUon in budgeted funds resulting from 

 selective transfer of responsibilities now performed in ONR 3 i , ONR 

 32, ONR 33, and ONR 36 (David Rossi, ONR, personal communica- 

 tion, 1995) 



5. Active exchange of knowledge and technology with partners in the 

 private sector. Principal investigators (Pis) and ONR project manag- 



