Technology Acquisition

1
Technology Acquisition

• Norm Thorpe
• General Motors Corporation
• April 22, 2002

2
Govt Funded RD Over Time

• Pre-World War II
• Air Corps Act of 1926
• World War II
• Manhattan Project
• Post World War II (Cold War)
• National Labs, NASA, DARPA
• Post Cold War
• Searching for solutions

3
Commercial RD over Time GMC

• Technology Driving Market Success
• Electric Starting/Lighting/Ignition
• Interchangeable Parts
• All steel bodies
• Automatic Transmission
• Diesel Electric Locomotive
• 1939 Worlds Fair Futurama

4
GMC RD, cont

• Firebirds gas turbine cars
• Commercial gas turbine Class 8 trucks
• Patriot Missile Gen sets
• Electric Vehicles and Advanced Batteries
• Fuel Cell Vehicles
• Catalytic Converters
• Light Weight Structures
• Crash Test Dummies

5
Institutional RD Model

• Large free standing research institutions
• Academic outlook
• Metrics papers published, patents obtained
• Prestige factors, cadre of professionals
• Cost center approach
• high costs typically buried by allocation over
  multiple business units
• Vertical integration Corp. self sufficiency

6
Commercial RD in C 21

• Large institutional RD labs gone
• or greatly reduced
• Alternate solutions
• leverage
• at best cost share
• worst case dilution of goals/results
• transfer to suppliers
• contract out
• move expense down supply chain

7
GM Approach to RD

• Advanced Technology Work ATW
• Science Lab
• Innovation Programs
• WWP/Purchased RD/LOTM purchasing
• Single Mission Challenge Teams
• Product Engineering Centers
• Collaborative Labs
• USCAR

8
RD Acquisition Methods Continuum

• Purchase Order
• Modified P.O.s
• Non evaluation commitments
• IP flexibility
• Joint RD Agreements
• Teaming Agreements
• Equity Relationships

9
Purchased RD and Engineering Services

• Not joint RD
• Not difficult or unusual
• unless buyer is a government agency!
• Engineering/RD in Source Selection
• price/pay methodology
• follows SOW
• negotiated at market rates

10
Collaborative Labs

• Universities
• Institutions
• Equity Partners
• Automotive OEM Alliance Partners
• Joint RD Partner Companies

11
Joint RD Agreements Non-Standard !

• Embedded within larger relationships
• Teaming Agreements
• Equity Investments
• Strategic Alliances
• Consortia
• Umbrella/Master agreements
• Free standing projects
• Walk before running?

12
Joint RD Agreements Variable Factors

• Who is paying? Is there cost sharing?
• Who is bringing IP? Other resources?
• What is the pre-existing relationship?
• What future relationship is expected?
• Are there anti-trust issues?
• Can program results be shared/allocated?
• Is there a need for leadership by one party?

13
Joint RD Agreement Content

• Statement of Purpose
• Funding Agreements
• Program Management Process
• Competition Issues, if any
• Confidentiality/Intellectual Property
• SOW w/Payment Milestones, Deliverables
• Legaleze

14
Joint RD Issues (Usual Suspects)

• Confidentiality/Non-Confidentiality
• Ownership/control/allocation of program IP
• Commercialization issues
• allocation of upside
• access to/compensation for background IP
• free riding competitors

15
Conclusion

• Between companies, pricing issues are important
  as they effect budget, but are rarely
  controversial or difficult
• Commercialization issues which are so difficult
  for collaborating companies, should be
  no-brainers for Govt/Corp
• But only if govt negotiators are competent and
  empowered

16
And a modest proposal

• Melt down RD Acquisition regs
• Repour with goal of permitting user of new
  products/technologies to buy what is needed on
  terms necessary to get it
• enforce business discipline by holding buyers
  accountable for success of their deals
• de-emphasize pricing issues, focussing efforts on
  real issues in negotiation