Policy Memorandum Re: “Department of Commerce Innovation Administration”
Prepared by: Cody Knipfer

In preparation for the Congressman’s upcoming hearings on the topic, you have requested specific background information on the subject of a proposed “Innovation Administration,” to be created within the Department of Commerce. This brief policy memo provides context and details on the particular questions the Congressman has requested of his staff.

Pros and Cons of Centralization

Proponents of centralization of national innovation policy through a top-level administrative agency hold that it would allow for innovation policies that outlive short-term funding trends and survive through frequent election cycles, ensuring strategic continuation of policy separate from political pressures. There is significant merit to these arguments. By virtue of partisan differences in view about the proper role of government in innovation, federal innovation policies and strategies are subject to party control of the White House and Congress. Frequent turnover of that control thereby disrupts standing innovation approaches and policy implementation and is thus prohibitive of long-term innovation strategies. As agencies are subject to federal funding, which in turn is influenced by party control, the sectors of innovation under their particular purview may come to be neglected or deprioritized because of fiscal constraints. A centralized innovation administration overseeing broad innovation strategy would not be inhibited by agencies’ lack of resources and thus allow necessary strategic prioritization and implementation of policy for the most important sectors.

The decentralized manner by which innovation is supported and strategized through disparate federal agencies poses problems. In lack of a coordinating administration, agencies and other government actors tend to act without much awareness of what other institutions have done or the issues they have faced. As such there are, spread across the agencies, both overlaps and gaps in regulation and strategy implementation which lead to inefficiencies and, at worse, create barriers to successful innovation for private-sector and university stakeholders. This lack of coordination can allow agencies to approach innovation through actions in conflict with other agencies or take action outside their area of core expertise. Moreover, a lack of cross-government innovation programs and analysis is particularly challenging for innovations that represent a wide range of applications and technological convergence which spread across the responsibilities of multiple agencies.

There are, however, drawbacks in both implementation and practice to the proposed centralization approach. In practice, the placement of innovation offices across federal agencies has allowed for a level of experimentation and different practices unavailable in a centralized approach; the diversity of possible agency funding sources researchers can apply to has historically been a major benefit to the United States’ research and development activity. Agencies responsible for innovation strategy are also responsible for the regulation of that innovation; separating those functions would put burdens on the competency of the regulatory process. In implementation, the political fights and costs of dislocating responsibility for innovation from agencies would likely be significant and represent a dangerous political battle for an administration to wage. It is also difficult to envision Congress abandoning the agency approach to innovation, as Congress has familiarity with the agencies, the approach has decades of precedent, and the agencies have built up significant institutional knowledge.

Why DoC and Not Another Agency?

Should an “Innovation Administration” be created, the Department of Congress, as the agency with delegated responsibility to foster industry and commerce, would be its natural home. The agency’s interest in innovation stems from its mission to create jobs and establish a stronger balance of trade. While other agencies have missions centered around particular subsets of science and research – the Department of Energy, for example, focusing on nuclear power; NASA focusing on space – the Department of Commerce is focused on the economy at large. It is therefore best poised to coordinate innovation strategies and approaches that impact the whole of the economy and cross-cut sciences. The Department of Commerce would also most easily take on the proposed administration. The agency already houses the two administrations most directly responsible for promotion innovation today, the National Institute of Standards and Technology and the United States Patent and Trademark Office. The competencies of these agencies, dissimilar in capability and scope than those hosted by other agencies, could be applied more aggressive toward successfully encouraging innovation and as such be key elements of an ‘Innovation Administration.’

Creating a New Agency with Cabinet Level Authority?

Another suggested approach would be standing up a new agency with Cabinet level authority to oversee and coordination innovation strategy and implementation. An entity independent of existing federal agencies would have substantially more influence than an administration nestled inside an agency, especially if the head of the agency sits in a position to directly influence the President. The agency head would have the capacity to coordinate and influence other Cabinet level positions, which oversee agencies also responsible for innovation strategy. This proposed agency could dedicate the whole of its resources and personnel to the task; this would contrast with other agencies, in which only portions of resources and energy are allocated to analyzing, promoting, and supporting innovation.

Yet, as is the case with the impediments toward further centralization of responsibility for innovation in the United States’ current structure, this proposed agency would face a number of barriers. As it is Congress’ prerogative to establish the agency, the idea would rely upon Congressional support. Again, Congress may not be inclined to continue centralizing innovation strategy within the government structure considering its familiarity with the current system. The agency would also require funding, provided by Congress, which would necessarily take away from the constrained federal budget. Rather than establishing a new agency, a new office within the administration, created through executive order, could be established which would fulfill the functions of this proposed Cabinet seat without the bureaucratic and fiscal complexities that establishing a new agency would entail.

Suggested Further Resources

If the Congressman wishes to further inform himself on the topic, the following readings are recommended:

Stuart Benjamin & Arti Rai, “Structuring White House Innovation Policy: Creating a White House Office of Innovation Policy,” http://www.itif.org/files/WhiteHouse_Innovation.pdf, June 2009.

Brian Kahin & Christopher Hill, “Innovation Policy around the World: United State: The Need for Continuity,” http://issues.org/26-3/kahin/, Spring 2010.