Fact of the Week: Federal R&D Contracts That Operate as Cooperative Agreements are More Likely to Result in Patents

September 10, 2018

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Federal R&D contracts that operate as cooperative agreements are 28 percent more likely to result in patents than would be expected if the contract had been grant-based.

Source: Joshua Bruce, John de Figueiredo, and Brian Silverman, “Public Contracting for Private Innovation: Government Expertise, Decision Rights, and Performance Outcomes,” NBER Working Paper 24724, July 2018.

Commentary: Federal funding of private R&D comes in two forms: grants, in which the government has very little interaction with the research decisions made, and cooperative agreements, in which the government has significant control over research decisions and much more detailed project monitoring. Whether this higher level of government involvement hinders researchers by increasing bureaucracy or ensures that funding is not misallocated is hotly contested, but a paper released in June gives reason to believe that cooperative agreements are used well.

Between 2000 and 2011, cooperative agreements resulted in a patent in 33 percent of contracts, nearly five times higher than the patent rate for grants. Further, controlling for differences in the types of projects given each type of contract, projects with cooperative agreements had patent rates 28 percent higher than would be expected if the contract had been grant-based. Taken together, this data implies that government agencies are both directing the most oversight to the most promising projects and that that oversight leads to more patents being created.