GAO: ARPA-E Should Ask Private Applicants About Prior Private Funding

The Department of Energy’s (DOE’s) Advanced Research Projects Agency-Energy (ARPA-E) funding selection criteria to private companies could be improved by requiring applicants to provide guided explanations of why private investors were unwilling to fund projects, the Government Accountability Office (GAO) finds in a new report.

ARPA-E was created in 2007 by the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science (America COMPETES) Act, and since 2009, it has furnished universities, national laboratories, and public and private companies with $521.7 million to help them overcome long-term and high-risk technological barriers in the development of energy technologies. Award winners generally must meet cost share requirements, through either in-kind contributions or outside funding sources.

Responding to concerns from Congress about how the DOE’s funding arm uses criteria for making those awards, the GAO finds in its new report, “Advanced Research Projects Agency-Energy Could Benefit from Information on Applicants’ Prior Funding,” that ARPA-E uses several selection criteria when awarding funding. These include vetting the potential impact of the proposed technology relative to the state of the art, balancing a variety of technology approaches, and the likelihood that the technology would be brought to market.

Of 121 award winners announced through the ARPA-E’s first three funding rounds, 18 had received some prior private sector investment since 2009. ARPA-E did take steps to understand how this funding was related to the proposed projects, even requiring applicants to explain why private investors were not willing to continue funding them, the GAO found.

However, “ARPA-E did not provide applicants with guidance, such as a sample response, to assist them in completing this requirement, and responses were generally limited,” it says. Some applicants, as a result, only provided general information about prior research—not specifically why private investors would not support projects—forcing ARPA-E program directors to investigate for themselves. The GAO found only one applicant that had provided a letter from its venture capital investor to explain why the investor was not willing to fund the work proposed.

The GAO recommended, and ARPA-E agreed, that the entity consider providing “applicants guidance with a sample response explaining prior sources of funding, requiring applicants to provide letters from investors explaining why they are not willing to fund proposed projects, and using third-party venture capital data to identify applicants’ prior funding,” GAO Director Natural Resources and Environment Frank Rusco told the House Subcommittee on Investigations and Oversight, Committee on Science, Space, and Technology earlier this week.

The congressional investigative body was also asked to examine if ARPA-E-type projects could have been funded through the private sector, and the extent to which ARPA-E coordinates with other DOE program offices to avoid duplicating efforts.

The review found that most ARPA-E projects could not have been funded alone by private investors. One reason for this, as interviews with private venture capital firms reveal, is that the firms “generally do not fund projects that rely on unproven technologies and tend to invest in projects that can be commercialized in less than 3 years,” the GAO reports. Ninety-one projects of the 121 ARPA-E projects from the first three funding rounds had technological concepts that had not yet been proven in a laboratory setting, and nearly all of the ARPA-E award winners and applicants GAO spoke with estimated that their projects were at least three years away from potential commercialization. “In addition, GAO found that few eligible applicants that were not selected for an award later secured private funding,” it says.

ARPA-E officials have been rigorous in coordination efforts with other DOE offices to avoid duplication of awards and in identifying funding gaps in research. Also, program directors have recruited officials from other DOE offices and the Department of Defense (DOD) to review ARPA-E applications, the GAO found. “This cross-agency interaction may also reduce the potential for overlap in funding.”

Source: POWERnews,GAO