RECOMMENDED READING — On the front page of (8/23) Saturday’s NY Times business section, there was an extensive article on the relationships between DOE National Labs and private industry.

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August 23, 1997 The Private-Sector Life of a Government Lab By CLAUDIA H. DEUTSCH

[G] oodyear Tire and Rubber Co. wanted to predict, without weeks of test drives, how its tires would perform under various conditions. So it went to the Energy Department’s Sandia National Laboratories in Albuquerque, N.M., for help. “Their computer models show how a nuclear weapon will react to different conditions, so why shouldn’t they show how a tire will react?” said William Sharp, president of Goodyear’s global support operations.

A federal weapons laboratory might seem an unlikely partner for a tire maker, but with the Cold War over and military spending shrinking, Sandia is putting out the welcome mat to private industry. And U.S. corporations, which have emerged in this era after downsizing as far more willing to turn to outside sources, are lining up to tap into its technology storehouse.

They are using Sandia to develop new manufacturing processes, to run what-if simulations on new products, to solve environmental problems. In the process, they are helping Sandia move beyond its once single-minded focus on the arms race.

For example, a consortium of 17 casting and forging companies, recognizing that few young engineers were joining their industry, asked Sandia to help it simplify software so that employees who were not engineers could create and test new casting equipment. “None of us have the time or money to do this ourselves,” said Robert Kervick, chief executive of Komtek, a casting company in Worcester, Mass.

And Motorola asked Sandia to run reliability tests on computer chips without using the standard chemical cleaning agents — the chlorofluorocarbons that destroy the atmosphere’s ozone layer. “Customers feel more comfortable buying a product whose reliability is verified by a government lab,” said James Landers, a manager in Motorola’s Space and Systems Technology Group.

For Sandia, the money pouring in from its corporate partners helps keep many of its 7,642 employees — about 800 fewer than two years ago — gainfully employed. But the real winner, Sandia insists, is the U.S. economy. “National security starts with economic security, and that means helping our industries compete,” said Paul Robinson, Sandia’s president.

Sandia (pronounced san-DEE-uh) is not the only Energy Department lab sounding that theme. Although documents emerged last week indicating that some of the labs, including Sandia, are still hard at work on new or modified designs for nuclear arms, private-sector projects are nonetheless occupying an ever-larger share of their time.

Los Alamos, Oak Ridge, Lawrence Livermore — the heart, lung and brain of the Manhattan Project’s atomic bomb and its progeny — all have been accelerating their industrial endeavors since 1989. That was when Congress removed many of the legal impediments that had kept them from transferring intellectual property or licensing technologies to private industry.

Brookhaven National Laboratory on Long Island, N.Y., which is grappling with environmental problems caused by the leak of radioactive tritium from a research reactor’s storage tank, is looking to commercialize its medical and environmental technologies.

In the last eight years the labs have written more than 3,000 Cradas — the acronym for cooperative research and development agreements — that spell out who pays for what, and how the results can be used. Some call for companies to foot the entire bill in return for proprietary rights to anything that is developed.

But more typically, the labs chip in some cash, retain the rights to the resulting technology and give the corporations that contributed several years of free, exclusive use.

The federal labs, even when shrouded in secrecy, have always intermingled with industry. Many of them have been managed by private corporations — under contract to the Energy Department and its predecessors — for several decades. Sandia, for one, was run by AT&T for nearly 44 years and is now managed by Lockheed Martin.

But while all of the labs are devoting more time and resources to projects in the private sector, the effort seems most crucial at Sandia. Unlike Oak Ridge, which has always been a multipurpose energy lab, Sandia’s raison d’etre has always been the arms race.

And Sandia, which designs the non-nuclear components of nuclear weapons, also is responsible for stockpiling spare parts and for maintaining the existing supply of nuclear weapons. So, unlike Lawrence Livermore and Los Alamos, which design and develop nuclear warheads, its duties have not lessened much with the end of the Cold War.

Even so, Sandia’s operating budget is slowly being whittled away. It was down almost $50 million this year, to about $1.28 billion, and Sandia expects it will drop to $1.1 billion in 1999. And a lot of those cuts have come out of the money available for use as matching funds for industrial projects.

In 1995, Sandia got about $100 million from the government for those purposes; it received $56 million last year and $20 million this year. Warren Siemens, Sandia’s director of technology partnerships, doubts it will rise above that again. “Apparently Congress has said, ‘Oops, this is corporate welfare,”‘ Siemens said.

So, while most of the laboratories are looking for ways to apply their existing technologies to corporate use, Sandia is the most willing to develop new processes for industry, with the hope that the companies will kick in most of the costs.

Right now, for example, Sandia is working with a consortium of electronics companies on a project to miniaturize certain types of semiconductor chips to handle 30 times more functions than they typically do now. It is collaborating with numerous manufacturers on ways to cast tools directly from powdered metals.

And it is encouraging industry to tap into its supercomputer — a machine that Sandia says is 300 times more powerful than Deep Blue, IBM’s chess-playing champion — not only to answer questions about products and processes but also to suggest what questions should be asked.

“We hold the record for speed of computing,” Siemens said. “We have great strength in microelectronics, and these are exactly the areas companies look to for help in making products more reliable.”

Progress in convincing industry to chip in has been slow. Five years ago, about $9 million of Sandia’s funds came from industry. Last year corporations provided $27 million. But Siemens thinks private funding will hit $35 million this year, and soar to $100 million by 2000.

And Sandia wants more from industry than simply money. Since it can no longer afford to hire many new researchers, it must rely on industry to keep abreast of new technologies.

Moreover, industrial projects often have implications for the military. “It’s a lot cheaper to maintain an Air Force whose planes need less rebuilding or repairing,” said Gernant Maurer, vice president of technology for Special Metals Corp., a maker of nickel-based superalloys that is part of a consortium working with Sandia to develop defect-free alloys for engine aircraft.

Similarly, weapons and satellites are loaded with semiconductor chips. “Our nation’s defense systems rely on semiconductors, and it would not be great if they had to buy all those chips from overseas,” said Chris Daverse, manager of national resources for Sematech Inc., a nonprofit research consortium of semiconductor makers and equipment suppliers, which has signed on for numerous projects to develop lower-cost production methods and contamination-free chips.

Sandia’s new reliance on industry comes at an opportune time. Companies have grown more comfortable with the idea of outsourcing all kinds of tasks, so letting outsiders work on their research is not as radical as it would have been in the do-it-yourself ’80s. Moreover, many have formed strategic alliances with suppliers and competitors, which has made them less averse to sharing their technologies with others.

“The thinking is, it is better to get half the rights to a product that is first to market, than all the rights to one that comes in late,” said Mary Good, a former undersecretary of commerce who helped set up a project for the auto industry and several national laboratories to develop a fuel-efficient car.

If repeat business is a sign of satisfaction, the corporations that have tried it clearly believe they have gotten their money’s worth. Goodyear, which has completed four cooperative projects in which it used computer modeling to predict how different tread designs and materials would perform, just signed on for its fifth Sandia project. It is aimed at analyzing and improving rubber processing technology.

A deal between Delphi Saginaw Steering Systems, an arm of General Motors Corp., and Sandia to develop better finishing processes for auto parts has metamorphosed into a Detroit-wide project to develop electronic controls for industrial heating and hardening processes.

“We’ll save tens of millions just by eliminating destructive testing,” said James Farago, Delphi’s supervisor of controls engineering. “And we’re going to get better insights into the materials we use.”
Copyright 1997 The New York Times Company