Published on August 1st, 2016 | by Alexander Kostura and Daniel Castro0
Three Types of Public-Private Partnerships That Enable Data Innovation
Many government agencies hold valuable data, but they do not always have the talent or resources to put this data to work. In contrast, businesses may have the talent and resources necessary to innovate with data, but they do not have access to certain government resources. To solve this problem, government agencies can form public-private partnerships that leverage the unique capabilities of both the public sector and the private sector. But there are different ways of forming public-private partnerships, and government and business leaders alike should be aware of the different mechanisms available and the benefits and limitations of each. To help fill this void, this article provides an overview of three novel mechanisms for scientific and technical collaboration between the public and private sectors at the U.S. Department of Commerce: Cooperative Research and Development Agreements (CRADAs), Cooperative Agreements, and Joint Venture (JV) partnerships.
Cooperative Research and Development Agreements (CRADAs)
A CRADA is an agreement in which a federal research lab and a non-federal partner share knowledge, personnel, facilities, and equipment in a joint research project. By law, the government partner does not transfer funds to the partnering organization. This broad authority allows the federal lab to seek out the resources it needs to accomplish an ambitious research goal and grants companies and universities access to government facilities and expertise. The broader scientific community benefits from these collaborations as the government shares research results, and the private company often brings these results to the market in the form of useful products like new medicines. In contrast to procurement relationships, government and non-government partners value CRADAs for their flexibility as they authorize the federal agency to set terms of the agreement through a prolonged exchange of ideas and resources.
Because of the flexibility in the CRADA relationship, public and private partners must carefully negotiate terms related to liability and intellectual property. While the government mandates the federal lab make scientific and technical information available to the public, the research partners can also craft agreements to withhold the research results from the public for a certain period of time and to allow the private organization to patent any inventions for commercial use. Additionally, the federal research lab must consider whether pursuing a joint project will limit research freedom or divert public resources. For example, a lab may deem a CRADA inappropriate if it detracts from another research goal or if the long-term, public benefit is unclear.
The National Oceanic and Atmospheric Administration (NOAA) has established the Big Data Project through a series of CRADAs to make the organization’s vast stores of environmental data more accessible to the private sector and the public through cloud-based platforms. The agreements come at no direct cost to the government, cover a term of three years, and allow NOAA to develop and test prototypes of data sharing platforms with each of its collaborators. Collaborators have non-exclusive access to NOAA data and, while they are allowed to charge for access to the data, they are must provide equal access on equal terms to anyone who wants access.
A Cooperative Agreement is a partnership between a government agency and non-profit or for-profit organizations on projects with some public purpose that goes beyond the needs of the government partner. A Cooperative Agreement is different than a procurement contract because it involves more than the purchase of goods or services for the direct benefit of the participating government agency. For example, a procurement contract with a software developer would be to purchase a piece of software to help a government agency perform a certain function whereas a cooperative agreement would be for the government and its private sector partner working together to develop software that will be open to the public for multiple potential uses.
Cooperative Agreements are different than federal grants because there is an expectation of substantial involvement (i.e. a major commitment of staff and resources) from the federal government partner, rather than a transfer of funds without collaboration. Essentially, government scientists will work with their counterparts at private sector partners to solve a common problem, seeking value for the government and the public while creating potential revenue opportunities for the private partner. Organizations in the private sector can search and apply for cooperative agreements on the grants.gov website.
While Cooperative Agreements are different from both procurement contracts and grants, they still involve the transfer of federal government funds to a non-government partner. Each agreement is subject to specific requirements depending on the federal agency and specific office involved, the purpose of the agreement, and any related legislation. Additionally, cooperative agreements depend on Congressional appropriations that can vary from year to year, which means they are not always an option for a given government agency.
The U.S. Census Bureau utilizes cooperative agreements to engage companies, universities, and nonprofits in projects that support and promote statistical research and methodology and improve their mission to make statistical data accessible to the research community. For example, the Census Bureau and the National Science Foundation, an independent federal agency that funds research in science, health, and national security, have awarded cooperative agreements to over 50 public and private partners to create a national network of Federal Statistical Research Data Centers, which provide non-government researchers with secure access to otherwise restricted government data sets. The Census Bureau and its partner institutions share the costs of running and maintaining the data centers, where researchers from all participating partners can collaborate.
Joint Venture Partnerships
A Joint Venture (JV) partnership is a public-private partnership in which a government agency and its business partner jointly plan, invest resources in, and carry out a project to meet an agency mission need and share any revenue generated from the project. The National Technical Information Service (NTIS), an agency within the Department Commerce charged with managing its information resources, holds the unique authority within the Department to form these partnerships. NTIS matches up client agencies in the federal government with private sector partners who have the expertise to advance the government’s research and development goals. Any federal agency can engage in one of these JV partnerships provided they have the appropriated funds available. NTIS serves as the relationship manager, signing a memorandum of understanding with the selected private partner and an interagency agreement directly with the federal client agency.
JV partnerships can be simpler and more flexible than other contracting arrangements, making them ideal for projects that require fast execution and new technologies. A potential pitfall of contracting with the federal government is being locked into a work plan and final deliverable before the process begins, a rigidity that can lead to projects that are over budget or unfinished. This flexibility is especially important for partnerships around data as the value of data is unknown at the beginning of the process, and agile management allows the partners to change their work plan in response to new discoveries.
As in business, JV partnerships with the federal government involve sharing both risk and reward. Because NTIS does not receive direct funding from the federal government and instead relies solely on fees for its services, each partnership must include terms for revenue sharing. This implies an element of risk for both the public and private sector partners that is not necessarily present for a cooperative agreement or CRADA. NTIS and its JV partner also openly share ideas during the proposal process, and NTIS does not typically sign non-disclosure agreements to protect those ideas. They do, however, commit to protect intellectual property developed as part of the project in accordance with applicable laws and regulations and the project agreements.
As an approved provider of electronic training and knowledge management services to the federal government, NTIS uses joint venture partnerships to help other federal agencies manage their data resources for better government performance and services. For example, NTIS previously brokered a partnership between Carney, Inc. and the National Archives and Records Administration (NARA) to launch History Hub, a pilot crowdsourcing platform for government researchers, professional academics, and amateur historians alike to share information and collaborate on projects. A JV partnership in this cases allowed for a collaborative process between NARA and the private company to customize and test a platform that facilitates data sharing.
Secretary of Commerce Penny Pritzker has expanded the mission of NTIS to explicitly include a role in making federal government data on the nation’s economy, population, and environment more accessible and useful. NTIS recently announced a request for proposals from for-profit, non-profit, and research performing service organizations to enter into JV Partnerships with federal agencies to improve the way the government collects, analyzes, uses, and shares data to drive economic growth, make government operations more efficient, or improve public services. NTIS will review the proposals and generate a pool of organizations who are available to work on projects related to priority issues like big data, open data, open access, smart cities, and the Internet of Things. For example, NTIS describes a potential JV in which a data analytics partner enhances the capabilities of federal agencies to connect different data sets from across the government and derive new insights to improve public services.
The three collaboration mechanisms described above—Cooperative Research and Development Agreements, Cooperative Agreements, and Joint Venture Partnerships—represent opportunities for the government and private sector to form partnerships with closer interaction and more flexible terms than traditional procurement contracts. By distributing risk and sharing resources among multiple partners, these agreements allow the government and interested partners to pursue research that may be high-risk but is also high-reward, with opportunities for non-government partners to develop value-added products and services. Not only are these partnerships good for the government, but private sector partners benefit from these arrangements by gaining access to federal government data, learning through their collaboration with government scientists, and getting the opportunity to work on projects which can be profitable while advancing public goals.
Given these benefits, government agencies beyond the Department of Commerce should explore alternative contracting arrangements such as these because leveraging private sector resources and talent can improve how the government uses data and create new business opportunities from the reuse of government data in other industries.