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GAO-01-271R 1 (2001-01-08)

handle is hein.gao/gaocrptamyv0001 and id is 1 raw text is: G AO Accountability * Integrity* Reliability United States General Accounting Office Washington, DC 20548 January 8, 2001 The Honorable Russell D. Feingold United States Senate Subject: Defense Trade: The Use of Intellectual Property Generated at Department of Energy's Laboratories to Satisfy Offset Requirements Dear Senator Feingold: Offsets are benefits that defense contractors provide to foreign governments as inducements or conditions for the countries to purchase military goods and services. Offsets can include a wide range of goods and services, including the transfer of U.S. developed technology or training assistance provided to companies and organizations located in foreign countries. The Department of Commerce reported that for the 5-year period from 1993 to 1997, U.S. defense contractors reported about 230 new offset agreements valued at $19 billion.1 Because of your interest in identifying emerging trends in the use of offsets, you asked us to make inquiries concerning the use by defense contractors of intellectual property generated at the Department of Energy's laboratories to satisfy their offset requirements.2 Specifically, you asked us to identify (1) the use of intellectual property and services of laboratory personnel to satisfy defense contractors' offset requirements and (2) the rights that U.S. contractors that manage Department of Energy laboratories have to intellectual property generated at these laboratories. Based on discussions with your staff on November 2, 2000, we are also providing information as to how the laboratories compute charges for their intellectual property and services. This letter summarizes the results of our work. LIMITED USE OF LABORATORIES' INTELLECTUAL PROPERTY AND OTHER SERVICES TO SATISFY OFFSET REQUIREMENTS The use of Department of Energy laboratories' intellectual property and services to satisfy defense contractors' offset requirements has been limited. Our discussions with Department of Energy and laboratory management contractor officials surfaced 14 instances from as early as 1995, all at one laboratory, where the laboratory's intellectual property and services were involved in offset projects. The 14 instances, valued at about $200 million, involved 4 intellectual property licenses and 10 service arrangements through which laboratory 1 The actual costs of offsets to the U.S. contractors are substantially lower than the total value of the offset requirements. 2 Intellectual property includes, among other things, patents and copyrights protected by federal law. GAO-01-271R Defense Trade

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