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Public/Private Partnerships: Implications for Innovation in TransportationPrevious Section | Table of Contents | Next Section
III. Representative Partnerships in Transportation: Three Modal ExamplesThe synergy that results from transportation-related projects provides a unique opportunity for public/private partnerships. Three innovative partnerships stand out as collaborative examples: Partnership for a New Generation of Vehicles (PNGV) (surface transportation); Advanced General Aviation Transport Experiments (AGATE) Consortium (aviation); and the Fuel Cell Technology Development for Marine Applications initiative (maritime). These three examples have produced innovations that benefit a broad spectrum of clearly established federal interests. The PNGV relates to governmental concerns with the environment and natural resources. The AGATE Consortium addresses government concerns over industrial revitalization and safety. The Fuel Cell Technology Development for Marine Applications initiative demonstrates the federal government's support for alternative technologies.11 A. Surface Transportation Case Study: Partnership for a New Generation of Vehicles (PNGV)
1. Partnership Description The Partnership for a New Generation of Vehicles is a ten-year collaboration between the federal government and the U.S. auto industry. It focuses on improving the fuel-efficiency of passenger cars, with the specific intent of decreasing automobile emissions and increasing energy efficiency three-fold, without adversely affecting automobile size, safety, and cost. The partnership was announced in September 1993 by President Clinton and Vice President Gore, who described the program's technological challenges as "comparable to or greater than the Apollo project." It is a new model for government-industry interactions, replacing adversarial and confrontational relationships with cooperative efforts designed to preclude the need for regulatory actions through technological innovation. a. Partners Core participants in the PNGV are seven federal agencies, nineteen national laboratories, and the "Big Three" U.S. automobile companies. Over 300 organizations are also involved. The major federal partners are:
The mechanism for industry participation is the United States Council for Automotive Research (USCAR), an organization formed in 1992 by the Chrysler Corporation, the Ford Motor Company and the General Motors Corporation to coordinate administrative and information services for Big Three research consortia and tackle shared technological and environmental concerns. In addition, more than 300 other entities, including small businesses, major automotive suppliers, universities, and individual inventors, have provided ideas and research support to the major partners. This effort has involved contracts, subcontracts, CRADAs, SBIR grants, and various shared research arrangements. b. Partnership Structure and Roles The historical role of the government has been to undertake long-term, high-risk basic research in support of national priorities. In the case of the PNGV program, the public interest in increased fuel efficiency and reduced emissions is clear and important, although market demand is not yet sufficient to motivate private-sector firms to make the necessary R&D investment. Government thus dominates the research component of PNGV. The auto industry will implement development and commercialization of program results. In addition, USCAR and PNGV provide a framework for cooperation among the U.S. automobile manufacturers on pre-competitive technical issues, thus enabling them to compete more effectively in the global marketplace. Overall PNGV policy is coordinated by an operational steering group consisting of senior level officials from government and industry, broken into subgroups. The government group includes representatives from participating agencies, the Office of the Vice President, the Office of Science and Technology Policy, and the Office of Management and Budget. Short-term coordination and management is the responsibility of subject-specific technical teams of government and industry representatives. Governmental policy and administrative functions are the responsibility of the Department of Commerce. The Department of Energy plays a major technical role: it receives the majority of federal PNGV funding; it has a variety of related R&D programs; and it is responsible for ten National Laboratories with relevant facilities and capabilities. The PNGV is reviewed annually by a distinguished standing committee of the National Research Council, which assesses the overall balance and adequacy of the program. c. Scale/Funding PNVG represents a major transportation R&D initiative, with FY98 funding of $227 million. Of this total, $145 million is closely aligned with the collaborative R&D efforts, while the balance is directed at long-term R&D needs. As the program focus shifts from basic research to prototype development, the primary financing burden will fall on industry. d. Policy Objectives The specific objective of the PNGV enterprise is to develop a concept vehicle. The research objective is fuel efficiency three times that of current standards (80 mpg for a mid-sized family sedan). Furthermore, the resulting vehicle should not require a compromise in performance, size, or utility; it should be fully compliant with current safety and emission standards; and it should have a cost of ownership equivalent to existing vehicles. Concurrently, the program seeks to develop advanced manufacturing techniques that will speed the delivery of new products to markets. Technologies that can lead to near-term improvements in vehicle fuel efficiency, safety, and emissions are another goal. More broadly, key policy objectives include diminished U.S. dependency on foreign energy sources, reduction of harmful emissions and gases that can contribute to global warming, and a more competitive automotive industry. e. Time Frames The basic schedule for PNGV calls for a concept vehicle to be ready by 2000, with a pre-production prototype available by 2004. Late in 1997 the program met an important interim milestone: selection of four key technologies most promising for the achievement of PNGV goals. Continuing efforts will focus on these key technologies. In addition, all three auto manufacturers have unveiled advanced concepts suggesting real progress. 2. Discussion of Four Common Characteristics a. Motivations Although government and industry participants in the PNGV collaboration have very different motivations, these differing goals are not inherently in conflict and may be complementary. The primary Federal objectives are to mitigate adverse impacts of the nation's high level of petroleum consumption (e.g., vulnerability to oil price shocks and reduced supplies) and to reduce emissions of greenhouse gases and air pollutants. Additionally, there is concern that the absence of market demand for fuel-efficient vehicles would ultimately cause U.S. manufacturers to fall behind in the world market, damaging the national economy and causing unemployment in the auto industry. Intertwined with these concerns is the desire to achieve fuel economy and emission improvements through a more efficient mechanism than the regulatory approaches of the past. For industry, the primary motivations includes a desire to avoid a regulatory solution, which industry sees as a highly inefficient means to achieve the desired end; and a desire to achieve advances in vehicle technology and manufacturing even in the absence of clear market demand. b. Resources Government funding for PNGV is distributed among multiple agencies. The program often involves a redefinition, expansion, or redirection of existing programs; it also draws on results of related programs in various agencies. At present, the PNGV budget is embodied explicitly in the R&D programs of DOE, EPA, DOT, DOC, and NSF. Since inception of the partnership, annual federal funding has ranged from $220 million to slightly over $260 million. Estimates for private expenditures are unavailable, but the original agreement calls for industrial investments equal to those of the federal government over the ten-year technology development and validation phase of the program. c. Legal and Institutional Framework Technical collaboration among automobile firms has generally been rare, due to competitive concerns and antitrust requirements. However, strong foreign competition in the 1970s and 1980s and passage of the 1984 Cooperative Research Act motivated a wide range of pre-competitive research collaborations involving industrial competitors. Compliance with government regulations also required the development of innovative automotive components. Industry became attracted to technical collaboration when: 1) research was long-range and pre-competitive; 2) technology led to no customer differentiation; 3) R&D was directed at a societal good; and 4) the supply base was important to R&D success. In the latter case, collaboration encouraged component suppliers to innovate and led to acceptance of standards that benefited all parties. USCAR, formed to promote this type of research, provided a structure that greatly facilitated the PNGV collaboration. It would have been a difficult and politically sensitive undertaking for the federal government to have developed an individual partnership with one or more of the major auto manufacturers. Thus, the existence of USCAR was a key element in the government's ability to work equitably with the industry to establish the PNGV. d. Agendas The partnership has followed approximately the path initially described. Descriptive materials now put more emphasis on global warming than energy security, but the goals and schedule are unchanged. The Department of the Interior was originally a modest participant, primarily in connection with recyclability and availability of materials; it is no longer listed as a participant. Unlike the early years, DOD and NASA no longer receive any of the PNGV budget, although they pursue complimentary R&D. Each automobile manufacturer now plans to produce its own concept vehicle and prototype, rather than a joint PNGV vehicle. But overall, the program has changed little in approach, scale, or objective. 3. Conclusions The longevity and accomplishments of the PNGV program reflect complementary motivations, significant resources, and a high level of commitment among the participants. The objectives and roles were clearly defined, and the program built on an existing pattern of R&D investment. PNGV created a stronger awareness and interest regarding vehicle technology R&D; it has spurred innovative thinking both within and outside of that program. Its beneficial impacts include increased coordination and communication among government and industry. Participants describe many "success stories" related to specific individual technologies or component improvements attributable to the Partnership. Despite appreciable progress to date, significant technical challenges remain and overall success is by no means assured. Considerable optimism exists regarding the fuel efficiency goal; however, uncertainties remain regarding the cost objective, which will determine whether such cars come to market. Critics have argued that PNGV, a relatively short-term and low-risk program, has undervalued technological approaches taking longer to implement but resulting in more dramatic improvements. Advances by foreign manufacturers (many supported by their governments) may ultimately provide sufficient market motivation for the industry to resume its historical role as the prime mover in automotive innovation. Although PNGV developed largely out of existing R&D activities, its focused goals and program management accelerate the progress toward advances in fuel economy and advanced automotive technologies. The program offers a strong focus for the efforts of many parties; it has stimulated a high degree of coordination and collaborative decisions concerning identification of the most potentially rewarding research pathways. Major technological advances have been achieved. Five years after initiation of the PNGV, government and industry partners remain publicly supportive and enthusiastic. The PNGV Program is a clear, current example of a true partnership among public and private sector entities. The program benefits from wide participation by government, industry, and academia; significant investments by all partners; a joint steering group; objective technical oversight; clear delineation of roles; and explicit goals. B. Aviation Case Study: Advanced General Aviation Transport Experiments (AGATE) 1. Partnership Description In the early 1990s, the ailing general aviation (GA) industry needed a solution that would revitalize the industry and provide the foundation for future growth. Statistics from the early 1980s showed that GA production had declined significantly. Cessna had not produced piston-powered aircraft since 1986; Piper Aircraft was in bankruptcy; and the Raytheon Corporation, a major defense contractor, had bought out Beech Aircraft. After being approached by congressionally supported GA industry executives, NASA Administrator Dan Goldin convened the General Aviation Task Force to examine the industry and to explore the possible role of NASA in its revitalization. In September of 1993, the task force made three recommendations:
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