An Assessment of Federal Funding for Private Research and Development
May 26, 2005
This hearing examined the results of the Advanced Technology Program (ATP), which was created by Congress in 1988 to subsidize high-risk research that would not be undertaken in the absence of federal funding. Several non-partisan examinations of the program revealed that instead of fostering the research of new technologies, ATP acts as an instrument corporate welfare, having granted $730 million to Fortune 500 companies since 1990.
The Government Accountability Office (GAO), which serves as the non-partisan investigative and accounting arm of the federal government, testified at the hearing that ATP quite often funds research that has already been undertaken by the private sector. In addition, GAO found that 63 percent of companies that received funding form ATP did not even seek private financing for their research before turning to the federal government for assistance. In short, this hearing found that ATP serves as an instrument of corporate welfare, subsidizes existing research efforts in contravention of its stated purpose, and does not efficiently or effectively fund high-risk research that has been passed up by the private sector.
• Since 1990, Fortune 500 companies who do not need federal subsidies have received over $730 million from the Advanced Technology Program (ATP).
• The Government Accountability Office found it unlikely that ATP can “avoid funding research already being pursued by the private sector in the same time period.”
• The Office of Management and Budget found that ATP does not address a specific need and is not designed to make a unique contribution.
Impact on Taxpayers:
• In fiscal year 2005, ATP received $136.5 million; it is set to receive $80 million in 2006.
• The elimination of ATP would save taxpayers from spending hundreds of millions of dollars to subsidize billion dollar corporations that do not need federal handouts.
• By eliminating this program, Congress and federal agencies could better devote their resources to those necessary programs with measurable goals and benefits.
These Findings Demand a Response:
• An amendment was offered to the fiscal year 2006 Commerce-Justice-Science appropriations bill to eliminate funding for ATP (a motion to table the amendment passed 68-29, but appropriators initially offered a deal to cut funding to $24 million from $140 million)
• New authorizing language that required successful ventures to pay a percentage of profits back to ATP could eventually result in a self-sustaining program that would no longer need federal funding.
• Additional hearings and agency letters may be necessary to examine whether or not ATP is continuing to fund redundant private sector research or line the pockets of billion dollar corporations
